SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

SECURITIES EXCHANGE ACT OF 1934

(Mark One) x   ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003 OR For the fiscal year ended December 31, 2005 ¨ OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period fromto For the transition period fromto Commission file number 1-3932 WHIRLPOOL CORPORATION (Exact name of registrant as specified in its charter) Delaware 38-1490038 (State of Incorporation)   38-1490038 (I.R.S. Employer Identification No.) 2000 North M-63, Benton Harbor, Michigan 49022-2692 (Address of principal executive offices)   49022-2692 (Zip Code) Registrant’sRegistrant'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 Exchange Preferred Stock Purchase Rights   Chicago Stock Exchange and New York Stock Exchange 73/4% Debentures due 2016   New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Exchange Act of 1934.    Yes ý No o         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act.    Yes o No ý Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.    YesxýNoo¨ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’sregistrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    xý Indicate by check mark whether the registrant is a large accelerated filer, or an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Securities Exchange Act. (check one) Large Accelerated Filer    ý                    Accelerated Filer    o                    Non-Accelerated Filer    o         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).    Yes xo No ý¨ The aggregate market value of the voting stock of the registrant held by stockholders not including voting stock held by directors and executive officers of the registrant and certain employee plans of the registrant (the exclusion of such shares shall not be deemed an admission by the registrant that any such person is an affiliate of the registrant) at the close of business on June 30, 20032005 (the last business day of the registrant’sregistrant's most recently completed second fiscal quarter) was $4,186,853,343.$4,561,751,600. On February 23, 2004,22, 2006, the registrant had 68,588,95668,035,716 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: Document Part of Form 10-K into which incorporated The registrant’sregistrant's proxy statement for the 20042006 annual meeting of stockholders (the “Proxy Statement”"Proxy Statement")   Part III PART I ITEM 1.    1.BusinessBusiness. .          General Whirlpool Corporation, thea leading worldwideglobal manufacturer and marketer of major home appliances, was incorporated in 1955 under the laws of Delaware as the successor to a business that traces its origin to 1898. The Company manufactures in 1312 countries under nine majorprincipal brand names and markets products to distributors and retailers in more than 170 countries. As of December 31, 2003,2005, the Company had approximately 68,00066,000 employees.         As used herein, and except where the context otherwise requires, the terms “Company”"Company" and “Whirlpool”"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 for home use. The Company’sCompany's principal products are home laundry appliances, home refrigerators and freezers, home cooking appliances, home dishwashers, room air-conditioning equipment, and mixers and other small household appliances. Approximately 10% of the Company’s unit sales volume is purchased from other manufacturers for resale by the Company. The Company also produces hermetic compressors and plastic components, primarily for the home appliance and electronics industries.refrigeration systems.          The following table sets forth information regarding the total net sales contributed by each class of similar products which accounted for 10% or more of the Company’sCompany's consolidated net sales in 2003, 2002,2005, 2004, and 2001.2003.      Percent in 2003     Year ended December 31 (millions of dollars) Class of Similar Products      2003    2002    2001 Home Laundry Appliances    32 %   $ 3,856    $ 3,381    $ 3,096 Home Refrigerators and Freezers    29 %   $ 3,465    $ 3,272    $ 3,106 Home Cooking Appliances    16 %   $ 1,903    $ 1,672    $ 1,603 Other    23 %   $ 2,952    $ 2,691    $ 2,538              Net Sales    100 %   $ 12,176    $ 11,016    $ 10,343                      Year ended December 31 (millions of dollars) Class of Similar Products   Percent in 2005   2005   2004   2003 Home Laundry Appliances   31 % $ 4,425   $ 4,070   $ 3,856 Home Refrigerators and Freezers   32 % $ 4,506   $ 3,879   $ 3,465 Home Cooking Appliances   15 % $ 2,186   $ 2,021   $ 1,903 Other   22 % $ 3,200   $ 3,250   $ 2,952           Net Sales   100 % $ 14,317   $ 13,220   $ 12,176           The        In North America, the Company markets and distributes major home appliances inunder a variety of brand names. In the United States, the Company markets and distributes products under theWhirlpool,KitchenAid,Roper, andEstate, and Inglis brand names primarily to retailers, buying groups,distributors, and builders.KitchenAid portable appliances, such as mixers, are sold directly to retailers. The Company sells products to the builder trade both directly and through distributors. Additionally, the Company sells to Crosley Corporation under theCrosley private label brand, and to Costco Wholesale Corporation under theKirkland Signature brand. Major home appliances are manufactured and/or distributedmarketed in Canada under theInglis,Admiral,Speed Queen,Whirlpool,Roper, andKitchenAid brand names. In Mexico, major home appliances are manufactured and marketed under theWhirlpool,Acros,KitchenAid, Estate, Roper,andSupermatic brand names. Some products are sold in limited quantities by the Company to other manufacturers and retailers for resale in North America under theirthose manufacturers' and retailers' respective brand names. The Company has beenmanufacturing facilities in the principal supplier of home laundry appliances to Sears, RoebuckUnited States and Co. (“Sears”) for over 80 years.Mexico.         The Company is also the principal supplier to Sears of residential trash compactors and a major supplier to Sears of dishwashers, freestanding ranges,laundry, refrigerator, dishwasher, and trash compactor home refrigerators and freezers, and microwave-hood combinations. Theappliances. Some of the products that the Company supplies products to Sears for saleare marketed by Sears under Sears’Sears'Kenmore brand name. Sears hasis also been a major outlet for the Company’sCompany'sWhirlpool andKitchenAid brand products since 1989.products. In 2003,2005, approximately 18%16% of the Company’sCompany's consolidated net sales were attributable to sales to Sears. 2 In Europe, WhirlpoolWhirlpool's European region, the Company markets and distributes its major home appliances under theWhirlpool,Bauknecht,Ignis,Laden, andPolar brand names and its portable appliances under theKitchenAid brand name. In addition to its extensive operations in Western Europe, the Company has sales subsidiaries in Hungary, Poland, the Czech Republic, Slovakia, Greece, Romania, Bulgaria, Latvia, Estonia, Lithuania, Croatia, and Morocco, and representative offices in Russia, Ukraine, Kazakhstan, Yugoslavia, and Slovenia. In certain Eastern European countries, products bearing theWhirlpool, Polar, andIgnis brand names are sold through distributors. The Company manufactures refrigerators and freezers and markets a full line of products under theWhirlpool,KIC, andIgnis brand names in South Africa. Whirlpool’sWhirlpool's European operations also sell products carrying theWhirlpool,Bauknecht, andIgnis brand names to distributors and dealers in Africa and the Middle East. The Company has manufacturing facilities in France, Germany, Italy, Poland, Slovakia, South Africa, and Sweden. In Latin America, the Company markets and distributes its major home appliances through regional networks under theWhirlpool,Brastemp,Consul, andEslabon de Lujo brand names. Appliance sales and distribution in Brazil, Argentina, and Chile are managed by the Company’sCompany's Brazilian subsidiary, and in Bolivia, Peru, Paraguay, and Uruguay through distributors. Appliance sales and distribution in Central American countries, the Caribbean, Venezuela, Colombia, and Ecuador are managed by Whirlpool’sWhirlpool's North America Regionregion and through distributors. In Latin America, the Company has manufacturing facilities in Brazil. In Asia, the Company has organized the manufacture, marketing and distribution of its major home appliances into fivefour operating groups: (1) Greater China, which includes mainland China;China, Hong Kong, and Taiwan; (2) South Asia, which includes India, Bangladesh, Sri Lanka, 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)(4) Southeast Asia, which includes Thailand, Singapore, Malaysia, Indonesia, Vietnam, the Philippines, Korea, and the Philippines.Japan. The Company markets and sells its products in Asia under theWhirlpool,KitchenAid,Bauknecht, andIgnis brand namesWhirlpool,KitchenAid,Bauknecht,andIgnis by a combination of direct sales to high-volumeappliance retailers and chain stores, and through full-service distributors to a large network of electronicsretail stores. In Asia, the Company has manufacturing facilities in China and India. Competition          The majorCompetition in the home appliance businessindustry is highly competitive.intense. In addition to traditional competitors such as Electrolux, GE, Kenmore, and Maytag, there are new and expanding foreign competitors such as LG, Bosch, Samsung, Fisher & Paykel, and Haier. Moreover, the U.S. customer base is characterized by large, sophisticated trade customers who have many choices and demand competitive products, services and prices. In most major markets throughout the world, 20032005 was a challenging year infor the industry with continued unprecedented rising material costs (particularly steel)in the areas of steel and intenseother metals, oil based materials such as resins, and transportation. Competition in the Company's markets is based upon a wide variety of factors, including, principally, cost, selling price, competition. In North America, there has been continued polarization in retail distribution channels with most retailers 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.other financial incentives (such as cooperative advertising, co-marketing funds, sales person incentives, volume rebates, and terms), performance, innovation, product features, and quality. The Company firmly believes that it can best compete in the current environment by providingincreasing productivity, lowering costs, introducing innovative new products, enhancing trade customer and consumer value added productswith its product offerings, continuing to expand its global footprint, expanding trade distribution channels and, services under its strong brand names.where appropriate, taking other efficiency-enhancing measures.          The Company believes that, in terms of units sold, itIn addition, on August 22, 2005, as discussed below, Whirlpool entered into an agreement to acquire Maytag Corporation ("Maytag"), for which regulatory approval is the largest North American manufacturer of home laundry 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 North America 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 and marketers of major home appliance products, out of approximately 35 European manufacturers, the majority of which manufacture a limited range of products for a specific geographic region. There continues to be significant merger 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 Companypending. Whirlpool believes that its Pan European organizational structure and strategy of marketing brand names that are recognized throughout the region are competitive advantages in the European market. The Company believes that it is well-positioned in the Latin American appliance market due tocombination with Maytag will enhance its ability to respond to these competitive conditions, and will benefit trade customers and consumers of the combined company by generating significant cost savings that will enable it to continue to offer competitive prices across a broad rangewide array of products under well-recognized brand names to meet the specific requirements of consumers in the region. The Company believes that it is about twice the size of its nearest competitor and that there 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 marketers of varying size and position on a country-by-country basis. The Company believes that it is one of the industry leaders 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, productwell as increased quality and performance, service, warranty, advertising, and promotion. As a result of its global position, the Company believes it has a competitive advantage by reason of its ability to leverage engineering capabilities across regions, transfer best practices, purchase raw materials and component parts in large volumes, and economically produce a finished product. innovation. Other Information          The Company’s interests outside the United States are subject to risks which may be greater than or in addition to those risks which are currently present in the United States. Such risks may include currency exchange rate fluctuations; high inflation; the need for governmental approval of and restrictions on certain financial and other corporate transactions and new or continued business operations; the convertibility of local currencies; government price controls; restrictions on the remittance of dividends, interest, royalties, and other payments; restrictions on imports and exports; duties; political and economic developments and instability; the possibility of expropriation; uncertainty as to the enforceability of commercial rights and trademarks; and various types of local participation in ownership. The Company is generally not dependent upon any one source for raw materials or purchased components essential to its business. In those areas where a single supplier is used, alternative sources are generally available and can be developed within the normal manufacturing environment, although some unanticipated costs may be incurred in transitioning to a new supplier where a prior single supplier is abruptly terminated. While there are pricinghave been continued significant cost pressures onin some areas, such as metals and oil based materials, and significant demand for certain components, the Company believes such raw 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 importantvaluable to the conduct of the Company’s business. The Company is licensed under a number of patents, none of which individually is considered material to its business.Company. The Company is the owner of a number of trademarks and registrations therefor in the U.S. and foreign countries. The most important for itstrademarks owned by the Company in North American operationsAmerica are the trademarksWhirlpool,KitchenAid,Estate,Roper, andAcros.The most important trademarks owned by the Company in Europe areWhirlpool,Bauknecht, andIgnis.In. In Latin America, the most important trademarks owned by the Company areWhirlpool,Brastemp, andConsul. The most important trademark owned by the Company in Asia isWhirlpool. The Company also receives royalties from licensing its trademarks to third parties to sell and service certain products bearing theWhirlpool andKitchenAid brand names.          Expenditures for Company-sponsored research and engineering activitiesdevelopment relating to the development of new products and the improvement of existing products are includedwere approximately $339 million in Note 1 to the Consolidated Financial Statements contained2005, $315 million in the Financial Supplement to this report.2004, and $285 million in 2003.          The Company’sCompany's manufacturing facilities are subject to numerous laws and regulations designed to protect or enhance the environment, many of which require federal, state, or other governmental licenses and permits with regard to wastewater discharges, air emissions, and hazardous waste management. The Company’sCompany's policy is to comply with all such laws and regulations. Where laws and regulations are less restrictive, the Company has established 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 it has manufacturing operations. Compliance with these environmental laws and regulations has not had a material effect on capital expenditures, earnings, or the Company's competitive position. Capital expenditures and expenses for manufacturing operations directly 4 attributable to compliance with suchthese environmental provisions worldwide amounted to approximately $28 million in 2005, $28 million in 2004, and $26 million in 2003, $32.5 million in 2002, and $23 million in 2001.2003. It is estimated that in 20042006, environmental capital expenditures and expenses for manufacturing operations will be approximately $25$27 million. Capital expenditures and expenses for product related environmental activities were not material in any of the past three years and are not expected to be material in 2004.2006.          Globally, the entire major home appliance industry, including the Company, must contend with the adoption of stricter governmental energy and environmental standards to be phased in over the next several years. These include the general phase-out of ozone depleting chemicals used in refrigeration and energy standards rulemakings for other selected major appliances produced by the Company. Compliance with these various standards, as they become effective, will require some product redesign. However, the Company believes, based on 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. Additionally, on February 13, 2003, the Waste Electrical and Electronic Equipment Directive ("WEEE") was published in Europe. Among other provisions, WEEE stipulates that "producers" be responsible for the cost of collection, disposal, and recycling of waste for many electrical and electronic products as of August 13, 2005. For more information on WEEE, see Note 2 to the Consolidated Financial Statements contained in the Financial Supplement to this report.          The Company has been notified by state and federal environmental protection agencies of its possible involvement in a number of “Superfund”"Superfund" sites in the United States. However, based upon evaluation of the facts and circumstances relating to these sites by the Company and its technical consultants, the Company does not presently anticipate any material adverse effect upon the Company’sCompany's earnings, financial condition, or competitive position arising out of the resolution of these matters or the resolution of any other known governmental proceeding regarding environmental protection matters.          For information on product recalls,about the challenges and risks associated with the Company's foreign operations, see Note 14"Risks Relating to our Business" under Item 1A below.         For certain other financial information concerning the Company's business segments and foreign and domestic operations, see Notes 1 and 15 to the Consolidated Financial Statements contained in the Financial Supplement to this report.          For an update ofinformation on the Company's global restructuring plan announced by the Company in December 2000,plans, see Note 1311 to the Consolidated Financial Statements contained in the Financial Supplement to this report.          For information on the Company’s acquisitions in Poland, Mexico, and China,product recalls, see Note 412 to the Consolidated Financial Statements contained in the Financial Supplement to this report. Pending Maytag Acquisition         On August 22, 2005, Whirlpool entered into a definitive merger agreement with Maytag to acquire all outstanding shares of Maytag common stock. The aggregate transaction value, including the payment to Maytag stockholders of approximately $850 million in cash and between 9.2 million and 11.3 million shares of Whirlpool common stock and assumption of approximately $972 million of Maytag debt (based on Maytag stock, exercisable stock options, and debt reported outstanding as of December 31, 2005), is approximately $2.7 billion. The number of shares of Whirlpool common stock to be issued will depend on the volume weighted average trading prices of Whirlpool common stock during a twenty trading day period ending shortly before completion of the merger. The transaction was approved by Maytag shareholders on December 22, 2005 and is pending regulatory clearance as discussed below. For certain other financial information concerning        Whirlpool has sufficient resources to finance the Company’s business segmentsacquisition. The acquisition and foreignupcoming debt maturities of the combined company are expected to be financed initially through commercial paper supported by existing bank agreements and domestic operations, see Notes 1with new committed bank facilities as discussed in "Management's Discussion and 17 to the Consolidated Financial StatementsAnalysis" contained in the Financial Supplement to this report. The Company expects to eventually refinance a portion of its commercial paper in the capital markets.         Whirlpool currently expects the merger with Maytag to generate approximately $300 million to $400 million of annual pre-tax cost savings by the third year following completion of the merger. Efficiencies are expected to come from all areas across the value chain, including product manufacturing and marketing, global procurement, logistics, infrastructure and support areas. Achieving these efficiencies will require one-time costs and capital investments currently estimated to be in the range of $350 million to $500 million, a majority of which currently are anticipated to be capitalized or accrued in purchase accounting. Whirlpool currently anticipates incurring these costs during the first two years following completion of the merger.         The merger is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and other customary closing conditions. On December 1, 2005, Whirlpool and Maytag announced that they had certified substantial compliance with the Antitrust Division of the Department of Justice in response to a request for additional information ("second request") and had agreed not to close the proposed merger before February 27, 2006, without the Antitrust Division's concurrence, recognizing that the Antitrust Division could request additional time for review. On February 13, 2006, Whirlpool and Maytag announced that they agreed with the Antitrust Division to a limited extension of time to complete the review of the proposed merger. The companies have agreed not to close the transaction before March 30, 2006 without the Antitrust Division's concurrence.         Whirlpool and Maytag are working closely with the Department of Justice and continue to cooperate fully with its investigation and respond promptly to its inquiries.         On August 22, 2005, Whirlpool paid Maytag $40 million to reimburse Maytag for its payment of a fee to terminate its prior merger agreement with Triton Acquisition Holding Co. Whirlpool has agreed to pay up to $15 million to assist Maytag in retaining key employees while the merger is pending. Whirlpool also has agreed to pay Maytag a "reverse break-up fee" of $120 million under certain circumstances if the transaction cannot be closed due to an inability to obtain regulatory clearance. Executive Officers of the Registrant          The following table sets forth the names of the Company’sCompany's executive officers at December 31, 2003,on January 1, 2006, the positions and offices with the Company held by them aton such date, the year they first became executive officers, and their ages at December 31, 2003:on January 1, 2006: Name   Office   First Became an Executive Officer   Age               Jeff M. Fettig   Director, Chairman of the Board and Chief Executive Officer   1994   48 David L. Swift   Director and President, Whirlpool North America   2001   47 Michael A. Todman   Director and President, Whirlpool International   2001   48 Marc R. Bitzer   Executive Vice President and President, Whirlpool Europe   2006   40 Mark K. Hu   Executive Vice President and President, Whirlpool Asia   2005   52 Paulo F. M. Periquito   Executive Vice President and President, Latin America   1997   59 Roy W. Templin   Executive Vice President and Chief Financial Officer   2004   45 Michael D. Thieneman   Executive Vice President and Chief Technology Officer   1997   57 W. Timothy Yaggi   Executive Vice President, Market Operations, North America   2006   45          Name    Office    First Became an 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 first meeting of the Board of Directors following the annual meeting of stockholders in 20042006 and until his successor is chosen and qualified or until his earlier resignation or removal. Each of the executive officers of the Company has held the position set forth in the table above or has served the Company in various executive or administrative capacities for at least the past five years, except for (a) Mr. Swift, who, prior to joining the Company in October 2001, for the previous 20 years held various executive or administrative positions with the Eastman Kodak Company (photographic equipment and supplies), the most recent being President, Kodak Professional Group, and (b) Mr. BarrettTemplin, who, prior to joining the Company in September 2002,July 2003, for the previous 2412 years held various financial and executive positions with Procter & Gamble Co.Kimball International, Inc. (office furniture), the most recent being Vice President, Finance and Chief Accounting Officer, and (c) Mr. Hu, who, prior to joining the Company in January 2004, for P&G’s European-based global Fabricthe previous seven years held various executive or administrative positions with Philips Electronics N.V., the most recent being Senior Vice President and Home Care business.General Manager, Philips Lighting East Asia. Available Information Financial results and investor information (including Whirlpool's Form 10-K, 10-Q and 8-K reports) can be accessed through Whirlpool’sWhirlpool's website atwww.whirlpoolcorp.com; click on the “Investors”"Investors" tab, and then “SECclick on "SEC Filings.”" Copies of Whirlpool’sWhirlpool's Form 10-K, 10-Q, and 8-K reports, as well as amendments to them, are available free of charge through Whirlpool’sWhirlpool's website on the same day they are filed with, or furnished to, the Securities and Exchange Commission. ITEM 2.    1A.PropertiesRisk Factors. .         This report contains statements referring to Whirlpool that are not historical facts and are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which are intended to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, are based on current projections about operations, industry conditions, financial condition, liquidity, and the impact of the pending merger with Maytag. Words such as "may," "will," "should," "plan," "predict," "potential," "anticipate," "estimate," "expect," "project," "intend," "believe," "may impact," "on track," and words and terms of similar substance used in connection with any discussion of future operating or financial performance, the merger, or our businesses, identify forward-looking statements. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Those statements are not guarantees and are subject to risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results could differ materially and adversely from these forward-looking statements. These risks and uncertainties include, but are not limited to, the following: Risks Relating to Our Business We face intense competition in the home appliance industry and failure to successfully compete may negatively affect our business and financial performance. Each of our business segments operates in a highly competitive business environment and faces intense competition from a growing number of competitors, including an increasing number of foreign-based competitors, which have strong consumer brand equity. Several, such as LG, Samsung, and Bosch, are large well-established companies that rank among the Global Fortune 150 and have demonstrated a commitment to North America through competitive imports and North American production. The elements of competition include cost, selling price, distribution and other financial incentives (such as cooperative advertising, co-marketing funds, sales person incentives, volume rebates, and terms), performance, innovation, product features, and quality. In particular, in the past, our competitors, especially global competitors with low-cost sources of supply outside the United States, have aggressively priced their products and/or introduced new products in order to increase market share. If we are unable to successfully compete in this highly competitive environment, our business and financial performance could be negatively affected. The loss of or decline in sales to any of our key trade customers, including Sears, Lowe's, and Best Buy, could adversely affect our financial performance. We sell to a customer base characterized by sophisticated and powerful trade customers that have significant leverage as buyers over their suppliers. Most of our products are sold through purchase orders and not through long-term contracts, which facilitates the trade customers' ability to change volume among suppliers to obtain competitive terms. As the trade customers continue to consolidate and become larger, our trade customers may seek to use their position to improve their profitability, including through improved efficiency, lower pricing and increased promotional programs. If we are unable to respond by meeting their requirements, our profitability or volume growth could be negatively affected. We have been a principal supplier of home appliances to Sears for many years. In 2005, approximately 16% of Whirlpool's consolidated net sales of $14 billion were attributable to Sears. Although no other customer accounted for greater than 10% of consolidated net sales in 2005, other customers may account for more than 10% of our consolidated net sales in future periods. It should also be noted Maytag has reported that in 2005, approximately 10% of Maytag's consolidated net sales were attributable to Sears and approximately 14% to Home Depot. The loss of, or decline in volume of, sales to Sears, Lowe's, Best Buy or any other trade customers to which we sell a significant amount of products could adversely affect our financial performance. Additionally, any loss of market share by any such trade customers could have a negative impact on our financial performance. Our business could be adversely affected by changes in economic conditions.Demand for our products is generally affected by a number of economic factors, including, but not limited to, gross domestic product, consumer interest rates, consumer confidence, retail trends, housing starts, sales of existing homes, and the level of mortgage refinancing. A decline in economic activity in the United States and any other markets in which we operate could adversely affect our financial condition and results of operation. Our financial performance could be adversely affected by an inability to effectively execute and manage our business objectives. The highly competitive nature of our industry requires that we effectively execute and manage our business including our global operating platform initiative, which aims to reduce costs, drive productivity and quality improvements and accelerate our rate of innovation. Our inability to effectively control costs and drive productivity improvements could affect our profits. In addition, our failure to provide high-quality, innovative products could adversely affect our ability to maintain or increase our sales, which could negatively affect our revenues and overall financial performance. Additionally, our success is dependent on anticipating changes in customer preferences and on successful new product and process development and product relaunches in response to such changes. Our future results and our ability to maintain or improve our competitive position will depend on our capacity to gauge the direction of our key markets and upon our ability to successfully and timely identify, develop, manufacture, market and sell new or improved products in these changing markets. Fluctuations and volatility in the cost of raw materials and purchased components could adversely affect our profits. The primary materials used to produce and manufacture our products are steel, oil, plastic resins, and base metals such as copper and zinc. On a global and regional basis, the sources and prices of those materials and components are susceptible to significant price fluctuations due to supply/demand trends, transportation costs, government regulations and tariffs, changes in currency exchange rates, price controls, the economic climate, and other unforeseen circumstances. During 2005, our business incurred approximately $530 million of higher material and oil-related costs. Continued significant increases in these and other costs in the future could materially affect our profits. Our global business performance could be affected by the ability of suppliers to deliver parts, components and manufacturing equipment to our manufacturing facilities. We use a wide range of materials and components in the global production of our products and use numerous suppliers to provide materials and components. We generally do not have guaranteed supply arrangements with our suppliers and some key parts may be available only from a single supplier or a limited group of suppliers. Operations at suppliers' facilities are subject to disruption for a variety of reasons, including but not limited to work stoppages, fire, earthquake, flooding, or other natural disasters. Such disruption could interrupt our ability to manufacture certain products. Any significant disruption could negatively impact our revenue and earnings performance. Our financial results could be adversely affected by significant differences between actual results and estimates of the amount of future funding for our pension plans and post-retirement health care benefit programs, significant changes in funding assumptions, or significant increases in funding obligations if pending U.S. pension reform legislation is adopted. We have both funded and unfunded noncontributory defined benefit pension plans that cover substantially all of our North American employees and certain foreign employees. We also have unfunded post-retirement health care benefit plans for eligible retired employees. The funding obligations for our U.S. pension plans, which are our principal pension plans, are governed by the Employee Retirement Income Security Act of 1974 (ERISA).         As of December 31, 2005, our projected benefit obligations under our pension plans and post-retirement health care benefit programs exceeded the fair value of plan assets by an aggregate of approximately $1.28 billion ($576 million of which was attributable to pension plans and $701 million to post-retirement health care benefits). Estimates for the amount and timing of the future funding obligations of these pension plans and post-retirement health care benefit plans are based on various assumptions. These include, among others, the discount rates, expected long-term rate of return on plan assets and health care cost trend rates. These assumptions are subject to change based on interest rates on high quality bonds, stock and bond market returns, and medical assets and health care cost trend rates. Significant differences in results or significant changes in assumptions may materially affect our post-retirement obligations and related future expense.         Pension reform legislation is pending in Congress including, among other things, proposals for new funding targets, changes to Pension Benefit Guaranty Corporation premiums, and restrictions on nonqualified benefit payments to certain employees in situations where the plan fails to meet certain minimum funding thresholds. If any of these legislative proposals are enacted into law, our funding obligations to the U.S. pension plans could be increased, which could adversely affect our financial results.         It should be noted that as of December 31, 2005, Maytag's reported projected benefit obligations under its pension plans and post-retirement health care benefit programs exceeded the fair value of plan assets by an aggregate of approximately $1.33 billion ($580 million of which was attributable to pension plans and $751 million to post-retirement health care programs). We may be adversely affected by environmental, and health and safety laws and regulations. We are subject to various laws and regulations relating to the protection of the environment and human health and safety. We incur and will continue to incur capital and other expenditures to comply with these regulations. Complying with recently passed and enacted regulations in Europe such as the WEEE directive may increase our costs and adversely affect our ability to sell certain products in Europe, which could negatively affect our financial performance. Additionally, we could be subjected to future liabilities, fines, or penalties, or the suspension of product production for failing to comply with environmental regulations. If cleanup obligations arise at any of our manufacturing sites or if more stringent environmental laws are imposed in the future, we could be adversely affected. We may be adversely affected by product liability claims.We face an inherent business risk of exposure to product liability claims in the event that the use of any of our products results in personal injury or property damage. In the event that any of our products proves to be defective, we may be required to recall or redesign such products. There can be no assurance that our insurance coverage against certain product liability claims will continue to be available on acceptable terms or that such coverage will be adequate for liabilities actually incurred. We also face certain class action litigation regarding allegedly defective products that are not covered by insurance. A successful claim in excess of, or outside of, our available insurance coverage may have a material adverse effect on our financial performance. In addition, any claim or product recall that results in significant adverse publicity may also negatively affect our business, financial condition or results of operations.         Lastly, we are currently investigating a supplier-related quality and potential product safety problem that may affect up to 3.5 million appliances manufactured between 2000 and 2002. We currently estimate that the potential cost from this matter could be in the range of $0 to $235 million, depending on numerous factors, such as whether some or all of the appliances must be repaired or replaced, whether the supplier will bear the cost of any corrective action, whether we will initially bear the cost of any corrective action, and if we initially bear the cost of any corrective action, whether we will be successful in recovering those costs from the supplier at a later date. In addition, we could incur other costs arising out of this matter, which cannot currently be estimated but could be material. Our global business could be negatively impacted by a deterioration in labor relations. As of December 31, 2005, we had approximately 66,000 employees. Of those employees, approximately 60% are represented by various labor unions with separate collective bargaining agreements. Our current collective bargaining agreements generally have three year terms. Due to the large number of collective bargaining agreements, we are periodically in negotiations with certain of the unions representing our employees. We cannot be assured that at some point we will not be subject to work stoppages by some of our employees and, if such events were to occur, that there would not be a material adverse effect on our business, financial condition or results of operations. Further, we cannot be assured that we will be able to renew the various collective bargaining agreements on the same or similar terms, or at all, which could affect our business, financial condition or results of operation. Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brands. We consider our intellectual property rights, including patents, trademarks and licensing agreements, to be a significant and valuable aspect of our business. We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements and third party nondisclosure and assignment agreements. Our failure to obtain or adequately protect our trademarks, products, new features of our products, or our processes may diminish our competitiveness.         We have applied for patent protection in the United States and other jurisdictions with respect to certain innovative and new products, product features, and processes. We cannot be assured that any of our patent applications will be approved by the U.S. Patent and Trademark Office or any other jurisdiction. Additionally, the patents we own could be challenged, invalidated or designed around by others and may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage. Further, the laws of certain foreign countries in which we do business or contemplate doing business in the future do not recognize intellectual property rights or protect them to the same extent as do the laws of the United States. As a result, our competitive advantage with respect to our products, services, and brands could be reduced in foreign jurisdictions, which could adversely affect our financial performance.         Moreover, while we do not believe that any of our products infringe the valid intellectual property rights of third parties, we may be unaware of intellectual property rights of others that may cover some of our technology, brands, products or services. Any litigation regarding patents or other intellectual property could be costly and time-consuming and could divert the attention of our management and key personnel from our business operations. Claims of intellectual property infringement might also require us to enter into costly license agreements. We also may be subject to significant damages or injunctions against development and sale of certain products. Foreign currency fluctuations may affect our financial performance.We generate a significant portion of our revenue and incur a significant portion of our expenses in currencies other than the U.S. dollar. The value of our revenue, earnings and cash flows from our foreign operations are affected by changes in the functional currencies of those operations. We use currency forwards and options to manage our foreign currency transaction exposures but do not directly hedge our exposure on translation of reported earnings. As a result, we cannot completely eliminate our exposure to foreign currency fluctuations, which may adversely affect our financial performance. In addition, because our consolidated financial results are reported in dollars, if we generate sales or earnings in other currencies the translation of those results into dollars can result in a significant increase or decrease in the amount of those sales or earnings. If we cannot manage the additional challenges presented by our international operations, our financial performance may suffer. For the year ended December 31, 2005, we derived approximately 40% of our net sales from outside of North America, including 14% in Latin America, 3% in Asia, and 22% in Europe. We expect that international sales will continue to account for a significant percentage of our net sales in the foreseeable future. Accordingly, we face numerous risks associated with conducting international operations, any of which could negatively affect our financial performance. These risks include the following: • Changes in foreign country regulatory requirements; • Various import/export restrictions and the availability of required import/export licenses; • Imposition of foreign tariffs and other trade barriers; • Political, legal and economic instability; • Foreign currency exchange rate fluctuations; • Inflation; • Work stoppages and disruptions in the shipping of imported and exported products; • Government price controls; • Extended payment terms and the ability to collect accounts receivable; and • The ability to repatriate cash.         Additionally, we are subject to the Foreign Corrupt Practices Act which may place us at a competitive disadvantage to foreign companies that are not subject to similar regulations.         Terrorist attacks, armed conflicts, natural disasters and epidemics could affect our domestic and international sales, disrupt our supply chain and impair our ability to produce and deliver our products. Such events could directly impact our physical facilities or those of our suppliers or customers, both in the United States and elsewhere. Risks Relating to the Pending Maytag Acquisition Our inability to complete the merger for regulatory or other reasons, or our inability to close the transaction in a timely manner, could adversely affect our financial performance. The Antitrust Division of the Department of Justice is reviewing the proposed merger and we cannot be assured that the proposed merger will obtain regulatory clearance or that the other conditions to closing will be satisfied. We currently expect the merger with Maytag will enhance our ability to compete by generating approximately $300 to $400 million of annual pre-tax savings by the third year following completion of the merger. Failure to close the merger would prevent us from realizing the expected synergies and would also subject us to substantial additional costs. In connection with the transaction, Whirlpool has paid $40 million to reimburse Maytag for its payment of a fee to terminate its prior agreement with Triton Acquisition Holding Co. and has agreed to pay Maytag up to $15 million to assist Maytag in retaining key employees while the merger is pending (irrespective of whether the merger occurs), as well as a "reverse break-up fee" of $120 million under certain circumstances if the transaction cannot be closed due to an inability to obtain regulatory clearance. In addition, Whirlpool has and will incur other significant transaction-related costs. Maytag is subject to business uncertainties while the merger is pending which may subsequently adversely affect our business after the merger is completed. Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Maytag and consequently on us once the transaction is completed. These uncertainties may impair Maytag's ability to retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with Maytag to defer purchases or other decisions concerning Maytag, or to seek to change existing business relationships with Maytag. If key employees depart because of uncertainty about their future roles and the potential complexities of integration, we could be harmed following completion of the merger. Whirlpool may be unable to successfully integrate the businesses of Maytag in a timely manner which may affect our ability to realize the full anticipated benefits of the merger. The merger involves the integration of two companies that have previously operated independently. As with every merger, there are potential difficulties of combining the companies' businesses. These may include the integration of Maytag's sales and marketing, distribution, manufacturing, engineering, finance, and administrative operations, both domestic and international, with and into our operations. Our process of integrating operations could cause an interruption of, or loss of momentum in, the activities of one or more of the combined company's businesses and the loss of key personnel. The diversion of management's attention and any delays or difficulties encountered in connection with the merger and the integration of the two companies' operations of these businesses could have an adverse effect on our business, results of operations, financial condition or prospects after the merger.         We expect certain efficiencies to arise from the merger, generating certain cost savings, and expect that achieving these efficiencies will require one-time costs and capital investment currently estimated to be in the range of $350 million to $500 million. Achievement of these benefits will depend in part upon how and when our business is integrated with Maytag and whether there are any additional costs incurred in connection with the integration. If the anticipated benefits are not realized fully or in a timely manner, or if there are significant additional costs, our financial results could be adversely affected. ITEM 1B.Unresolved Staff Comments.         None. ITEM 2.Properties.         The Company's principal executive offices of Whirlpool Corporation are located in Benton Harbor, Michigan. AtOn December 31, 2003,2005, the Company's principal manufacturing operations of the Company were carried on at 4140 locations worldwide, 3130 of which are located in 1211 countries outside the United States.States, primarily in the European region, and to a lesser extent in Asia, Latin America, and Mexico. The Company occupied a total of approximately 48.751.7 million square feet devoted to manufacturing, service, administrative offices, warehouse, distribution, and sales space. Over 14.321.1 million square feet of such space is occupied under lease. In general, all facilities are well maintained, suitably equipped, and in good operating condition. ITEM 3.    3.Legal ProceedingsProceedings. . Information with respect to legal proceedings can be found under the heading “"Contingencies”" in Note 97 to the Consolidated Financial Statements contained in the Financial Supplement to this report. ITEM 4.    4.Submission of Matters to a Vote of Security HoldersHolders. .          There were no matters submitted to a vote of security holders in the fourth quarter of 2003.2005. 6 PART II ITEM 5.    5.Market for Registrant’sRegistrant's Common Equity, and Related Stockholder Matters and Issuer Purchases of Equity Securities. .          The Company’sCompany's common stock is traded on the New York Stock Exchange and the Chicago Stock Exchange. As of February 23, 2004,22, 2006, the number of holders of record of the Company’sCompany's common stock was approximately 8,078.7,438.          High and low sales prices (as reported on the New York Stock Exchange composite tape) for the Company’sCompany's common stock for each quarter during the years 20032005 and 20022004 are set forth below: Market Price   High   Low   Close 4Q 2005   $ 86.52   $ 67.89   $ 83.76 3Q 2005   $ 85.70   $ 69.01   $ 75.77 2Q 2005   $ 74.05   $ 60.78   $ 70.11 1Q 2005   $ 71.25   $ 61.53   $ 67.73 4Q 2004   $ 69.77   $ 54.53   $ 69.21 3Q 2004   $ 68.88   $ 58.15   $ 60.09 2Q 2004   $ 70.98   $ 61.05   $ 68.60 1Q 2004   $ 80.00   $ 66.60   $ 68.87          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 Cash dividends declared on the Company’sCompany's common stock for each quarter during the years 20032005 and 20022004 are set forth in Note 1816 to the Consolidated Financial Statements contained in the Financial Supplement to this report.         There were no repurchases of Company stock by the Company or any affiliated purchaser in the fourth quarter of 2005. ITEM 6.    6.Selected Financial DataData. .          The selected financial data for the five years ended December 31, 20032005 with respect to the following line items are shown under the “Eleven"Eleven Year Consolidated Statistical Review”Review" contained in the Financial Supplement to this report: Total net sales, earnings from continuing operations, earnings from continuing operations per share of common stock, dividends declared per share of common stock, total assets, and long-term debt. See the material incorporated herein by reference in response to Item 7 of this report for a discussion of the effects on such data of business combinations and other acquisitions, disposition and restructuring activity, restructuring costs, accounting changes, earnings of foreign affiliates, and other significant activity impacting or affecting the comparability of reported amounts. ITEM 7.    7.Management’sManagement's Discussion and Analysis of Financial Condition and Results of OperationsOperations. .          See “Management’s"Management's Discussion and Analysis”Analysis" contained in the Financial Supplement to this report. ITEM 7A.    7A.Quantitative and Qualitative Disclosures about Market RiskRisk. .          Information with respect to market risk can be found under the caption “Market Risk”"Market Risk" in “Management’s"Management's Discussion and Analysis”Analysis" contained in the Financial Supplement to this report. ITEM 8.    8.Financial Statements and Supplementary DataData. .          The Consolidated Financial Statements of the Company are contained in the Financial Supplement to this report. Supplementary financial information regarding quarterly results of operations (unaudited) for the years ended December 31, 20032005 and 20022004 is set forth in Note 1816 to the Consolidated Financial Statements. For a list of financial statements and schedules filed as part of this report, see the Table of Contents to the Financial Supplement to this report on page F-1. 7 ITEM 9.    9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureDisclosure. .          None. ITEM 9A.    9A.Controls and ProceduresProcedures. . Evaluation of        Disclosure controls and procedures.    The Company maintains disclosure controls and procedures. The Company’sprocedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) that are designed to provide reasonable assurance that information required to be disclosed in the Company's filings under the Securities Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, after evaluatingas appropriate, to allow timely decisions regarding required disclosure.         Prior to filing this report, the Company completed an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s “disclosuredesign and operation of the Company's disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e))procedures as of December 31, 2003, have2005. Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company’sCompany's disclosure controls and procedures were adequateeffective at the reasonable assurance level as of December 31, 2005.         Management's report on internal control over financial reporting.    Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and designedthe rules and regulations adopted pursuant thereto, Whirlpool included a report of management's assessment of the effectiveness of its internal control over financial reporting as part of this report. Whirlpool's independent registered public accounting firm also attested to, ensure that material information relatingand reported on, management's assessment of the effectiveness of internal control over financial reporting. Management's report and the independent registered public accounting firm's attestation report are included in Whirlpool's Consolidated Financial Statements contained in the Financial Supplement to this report under the Companycaptions entitled "Management's Report on Internal Control Over Financial Reporting" and its consolidated subsidiaries would be made known to them"Report of Independent Registered Public Accounting Firm" and are incorporated herein by others within those entities.reference. Changes in internal controlscontrol over financial reporting.    There were no changes in the Company’sCompany's internal controlscontrol over financial reporting that occurred during the most recent fiscalfourth quarter of 2005 that have materially affected, or are reasonably likely to materially affect, the Company’sCompany's internal controlscontrol over financial reporting. 8 PART III ITEM 9B.Other Information.         There was no information required to be disclosed in a report on Form 8-K during the fourth quarter of 2005 that was not previously reported. PART III ITEM 10.    10.Directors and Executive Officers of the RegistrantRegistrant. .          Information regarding the Company’sCompany'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 Section 16(a) compliance appearscan be found under the captions “Directors"Directors and Nominees for Re-ElectionElection as Directors,” “Board" "Board of Directors and Corporate Governance—Audit Committee,”" and “Section"Section 16(a) Beneficial Ownership Reporting Compliance”Compliance" in the Proxy Statement, which is incorporated herein by reference.         There have been no material changes to the procedures by which stockholders may recommend nominees to the Company's Board of Directors since March 18, 2005, the date of the Company's last proxy statement. 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’sCompany's code of ethics is posted on its website atwww.whirlpoolcorp.com; click on the “Governance”"Governance" tab, and then “Codeclick on "Code of Ethics.”" The Company intends to disclose future amendments to, or waivers from, certain provisions of the code of ethics for executive officers and directors on the Company’sCompany's website within fivefour business days following the date of such amendment or waiver. Stockholders may request a free copy of the code of ethics from: Tom Filstrup Larry M. Venturelli Investor Relations Whirlpool Corporation 2000 North M-63 Mail Drop 2800 Benton Harbor, MI 49022-2692 Telephone: (269) 923-3189 923-4678 Whirlpool has also adopted written charters for its Audit, Finance, Human Resources, and Corporate Governance and Nominating Committees, and Corporate Governance Guidelines, all of which are posted on the Company’sCompany's website atwww.whirlpoolcorp.com; click on the “Governance”"Governance" tab, then click on "Board of Directors," and then “Board of Directors.”click on "Committee Charters." Stockholders may request a free copy of the charters and guidelines from the address or telephone number set forth above. ITEM 11.    11.Executive CompensationCompensation. .          Information with respect to compensation of executive officers and directors of the Company can be found under the captions “Executive"Executive Compensation,” “Stock" "Stock Option Grants and Related Information,” “Stock" "Stock Option Exercises and Holdings,” “Long-Term" "Long-Term Incentive Awards,” “Agreements" "Agreements with Executive Officers” “Retirement and Related Party Transactions," "Retirement Benefits,” “Human" "Human Resources Committee Interlocks and Insider Participation,”" and “Compensation"Compensation of Directors”Directors" in the Proxy Statement, which is incorporated herein by reference. ITEM 12.    12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersMatters. .          Information with respect to security ownership by any person(s) known to the Company to beneficially own more than 5% of the Company’sCompany's stock and by each director of the Company, each named executive officer of the Company, and all directors and executive officers of the Company as a group, can be found under the captions “Security Ownership”"Security Ownership" and “Beneficial Ownership”"Beneficial Ownership" in the Proxy Statement, which is incorporated herein by reference.          Information relating to securities authorized under equity compensation plans can be found under the caption “Equity"Equity Compensation Plan Information”Information" in the Proxy Statement, which is incorporated herein by reference. 9 ITEM 13.    13.Certain Relationships and Related TransactionsTransactions. .          None. Information regarding certain relationships and related transactions can be found under the caption "Agreements with Executive Officers and Related Party Transactions" in the Proxy Statement, which is incorporated herein by reference. ITEM 14.    14.Principal Accounting Fees and ServicesServices. .          Information relating to the Company’sCompany's auditors and the Audit Committee’sCommittee's pre-approval policies can be found under the caption “Matters"Matters Relating to Auditors”Independent Registered Public Accounting Firm" in the Proxy Statement, which is incorporated herein by reference. The “Audit"Audit Committee Report”Report" is not incorporated herein by reference. 10 PART IV ITEM 15.    15.Exhibits, Financial Statement Schedules, and Reports on Form 8-KSchedules. . (a) The following documents are filed as a part of this report: (a) The following documents are filed as a part of this report: 1. The financial statements and related notes, and reports of management and the independent auditors and management,registered public accounting firm, listed in the Table of Contents to the Financial Supplement to this report. Individual financial statements of the registrant’sregistrant's affiliated foreign companies, accounted for by the equity method, have been omitted since no such company individually constitutes a significant subsidiary. 2. “Schedule II— "Schedule II - - Valuation and Qualifying Accounts”Accounts" contained in the Financial Supplement to this report. Certain schedules for which provisions are made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. 3. The exhibits listed in the “Exhibit Index”"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” announced the 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” announced the 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 2003 earnings. 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 the Company’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 registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.         WHIRLPOOL CORPORATION         (Registrant) WHIRLPOOL CORPORATION (Registrant) By: By: /s/ R. STEPHEN BARRETT, JR.        ROY W. TEMPLIN R. Stephen Barrett, Jr. (Principal Financial Officer) Roy W. Templin Executive Vice President and Chief Financial Officer March 1, 2006          Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Signature Title SignatureJEFF M. FETTIG* Jeff M. Fettig   Title Date DAVID R. WHITWAM* David R. Whitwam Director, Chairman of the Board and Chief Executive Officer (Principal Executive Officer) ý ï ï ï ï ï ï ï ï ï ï ï ï ï ï ï ï ï ï ï þ ï ï ï ï ï ï ï ï ï ï ï þ     JEFF M. FETTIG* DAVID L. SWIFT* Jeff M. Fettig David L. Swift   Director and President, and Chief Operating Officer (Principal Operating Officer) Whirlpool North America     R. STEPHEN BARRETT, JR.* MICHAEL A. TODMAN* R. Stephen Barrett, Jr. Michael A. Todman   Director and President, Whirlpool International /s/ ROY W. TEMPLIN Roy W. Templin Executive Vice President and Chief Financial Officer (Principal (Principal Financial Officer)     ROY W. TEMPLIN* LARRY M. VENTURELLI* Roy W. Templin Larry M. Venturelli   Vice President and Controller (Principal (Principal Accounting Officer)     GARY HERMAN CAIN* Herman Cain Director GARY T. DICAMILLO*DICAMILLO* Gary T. DiCamillo   Director     ALLAN ALLAN D. GILMOUR*GILMOUR* Allan D. Gilmour   Director     KATHLEEN KATHLEEN J. HEMPEL*HEMPEL* Kathleen J. Hempel   Director     March 12, 2004 MICHAEL MICHAEL F. JOHNSTON*JOHNSTON* Michael F. Johnston   Director     JAMES M. KILTS* ARNOLD G. LANGBO* James M. Kilts Arnold G. Langbo   Director     ARNOLD PAUL G. LANGBO*STERN* ArnoldPaul G. Langbo Stern   Director     PAUL G. STERN* JANICE D. STONEY* Paul G. Stern Janice D. Stoney   Director     JANICE MICHAEL D. STONEY*WHITE* JaniceMichael D. Stoney White   Director       *By: /s/ DANIELDANIEL F. HOPPHOPP Daniel F. Hopp Attorney-in-Fact       Attorney-in-Fact   March 1, 2006 12 WHIRLPOOL CORPORATION FINANCIAL SUPPLEMENT TO 2003 ANNUAL REPORT ON FORM 10-K, ANDWhirlpool Corporation TO 2004 PROXY STATEMENT TABLE OF CONTENTSFinancial Supplement to 2005 Annual Report on Form 10-K, and to 2006 Proxy Statement Table of Contents Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations   F-2 Consolidated Statements of Operations   F-18 F-23 Consolidated Balance Sheets   F-19 F-24 Consolidated Statements of Cash Flows   F-20 F-25 Consolidated Statements of Changes in Stockholders’Stockholders' Equity   F-21 F-26 Notes to Consolidated Financial Statements   F-22 F-27 Eleven-Year Consolidated Statistical Review   F-48 F-56 Reports of Management and Independent Registered Public Accounting Firm F-58 Reports of Independent Auditors and Management F-50 Schedule II—II — Valuation and Qualifying Accounts   F-52 F-62 F-1 MANAGEMENT’S MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EXECUTIVE LEVEL OVERVIEW Whirlpool Corporation is the largesta global manufacturer of major home appliances worldwide with 20032005 revenues of $12.2$14.3 billion and net earnings of $414$422 million. The Company’sCompany's four reportable segments are based on geography and consist of North America (64%(61% of revenue), Europe (22% of revenue), Latin America (11%(14% of revenue), and Asia (3% of revenue). The Company is the market share leadera leading producer of major home appliances in North America and Latin America and has a significant market presence in markets throughout Europe, India and China. Whirlpool’s brands and operationsWhirlpool received worldwide have received well-deserved recognition for accomplishments in a variety of business and social efforts, including energy efficiency leadership, diversity, innovative product design, business ethics, social responsibility and community involvement, support of women’s issues, and excellence in design, to name a few. involvement. The Company’sCompany's growth strategy over the past several years has been to introduce innovative new products, enhance customer recognition of its brands, continue to expand its global footprint, add or enhanceexpand distribution channels and, evaluate potentialwhere appropriate, make strategic acquisitions which enhance the Company’sCompany's cost competitiveness, innovative global product offering.offering and efficiency. Competition in the home appliance industry is intense worldwide. In the U.S., in addition to traditional competitors such as Electrolux, GE, Kenmore and Maytag, there are new and expanding foreign competitors such as LG, Bosch, Samsung, Fisher & Paykel, and Haier. Moreover, the U.S. customer base is characterized by large, sophisticated trade customers who have many choices and demand competitive products, services and prices. On August 22, 2005, Whirlpool entered into an agreement to acquire Maytag, for which regulatory approval is pending. The transaction is subject to certain conditions. Whirlpool believes that its' combination with Maytag will enhance its ability to respond to these competitive conditions, and will benefit trade customers and consumers of the combined company by generating significant cost savings that will enable it to continue to offer competitive prices across a wide array of products as well as increased product quality and innovation. The Company monitors countrycountry-specific economic factors such as gross domestic product, consumer interest rates, consumer confidence, housing starts, sales of existing home saleshomes and mortgage refinancing as key indicators of industry demand. Management also focuses on country, brand, product and channel market share,sales, 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, as it continuesintends to reduce its total global costs to operate the business and fund future growth. The Company has, and will continue to evaluateutilize its global operating platformmanufacturing, procurement and technology footprint to strengthen Whirlpool’s brand leadershipenhance Whirlpool's position in the global appliance industry. The Company plans to continue its comprehensive worldwide effort to optimize its regional manufacturing facilities, supply base, product platforms and technology resources to better support its global brands and customers. Management’sManagement's Discussion and Analysis discusses, among other things, the results of operations, cash flow,flows, financial condition and liquidity, contractual obligations and forward-looking cash requirements, other matters, critical accounting policies and estimates, new accounting pronouncements, market risk and the nature of, and risk associated with forward-looking statements. Included within the results of operations and financial condition and liquidity section is management’s forward-looking perspective.statements contained herein. In addition, the Company has included comments regarding regional business unit performance, where appropriate. RESULTS OF OPERATIONS   The consolidated statementsConsolidated Statements of operations summarizeOperations present the Company's operating results for the last three years. This section of Management’sManagement's Discussion and Analysis highlights the main factors affecting changes in the Company’sCompany's financial condition and results of operations and should be read along with the Consolidated Financial Statements. NET SALES   The total number of units, which includes primarily major and small appliances, sold in 20032005 increased 5.6%1.3% over 2002.2004. Consolidated net sales increased 10.5%8.3% over 2002, which includes a positive impact from currency fluctuations.2004. Excluding currency impact,fluctuations, net sales increased approximately 7%6%. Total number of units sold in 2004 increased 4.9% over 2003. Consolidated 2004 net sales increased 8.6% over 2003. Excluding currency fluctuations, and the acquisitions of Vitromatic (Whirlpool Mexico) and Polar, as described in Note 4 to the Consolidated Financial Statements, the total number of units and dollars soldnet sales increased approximately 4% and 5%, F-2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) respectively. Consolidated net sales in 2002 were up approximately 7% over 2001 after excluding the negative currency impact.6%. The tables below provide the breakdown ofpresent units sold and net sales by region. In thousands    2003     Change     2002     Change     2001   Units Sold:                                      North America      26,146     7.5 %     24,324     13.6 %     21,404   Europe      11,591     5.1       11,024     2.0       10,803   Latin America      4,269     (2.7 )     4,386     (7.4 )     4,738   Asia      2,346     2.9       2,279     11.2       2,050   Other/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 %   $ 6,581   Europe      2,691     22.4       2,199     6.9       2,058   Latin America      1,350     6.7       1,266     (14.9 )     1,487   Asia      416     6.6       391     4.8       373   Other/eliminations      (156 )   —         (146 )   —         (156 )              Consolidated    $ 12,176     10.5 %   $ 11,016     6.5 %   $ 10,343                In thousands   2005   Change   2004   Change   2003   Units Sold                       North America   27,572   0.8 % 27,353   4.6 % 26,146   Europe   12,351   2.1   12,100   4.4   11,591   Latin America   4,979   1.5   4,904   14.9   4,269   Asia   2,212   3.1   2,145   (8.6 ) 2,346   Other/Eliminations   (18 ) —   (17 ) —   (37 )               Consolidated   47,096   1.3 % 46,485   4.9 % 44,315                 Millions of dollars   2005   Change   2004   Change   2003   Net Sales                             North America   $ 8,913   8.0 % $ 8,254   4.8 % $ 7,875   Europe     3,160   3.2     3,062   13.8     2,691   Latin America     1,962   17.2     1,674   24.0     1,350   Asia     422   10.5     382   (8.2 )   416   Other/Eliminations     (140 ) —     (152 ) —     (156 )               Consolidated   $ 14,317   8.3 % $ 13,220   8.6 % $ 12,176                 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 acquisition impact of Whirlpool Mexico, strong performance in Canada, and volume gains inWhirlpool andKitchenAid brands, partially offset by weakerKenmore shipments. Excluding the acquisition of Whirlpool Mexico, North American unit volumes increased 5%. The North American net sales increase adjusted for acquisitions and currency impact was slightly greater than growth in unit volumes due to favorable brand mix as well as the introduction of higher sales value innovative products. The Company’s market share in the region was essentially flat, with gains in Whirlpool brands offset by lowerKenmore 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 reduced average sales values. European • In 2005, North America unit volumes increased 5.1% versus 2002. Excludingapproximately 1% as compared to the acquisition2004 period reaching record levels. Volume increases, driven by continued consumer demand for the Company's new product innovations, were partially offset by lower OEM shipments. Net sales increased 8% during 2005, or approximately 7% excluding currency fluctuations, to a record $8.9 billion. The higher net sales were driven by the combination of Polar,cost-based price adjustments and volume increases in theWhirlpool andKitchenAid brands during 2005. In 2004, North America unit volumes increased 4%.4.6% as compared to 2003, due to higher sales growth inWhirlpool andKitchenAid branded products combined with strong Canadian performance. Net sales increased 22.4%4.8% as compared to 2003, to $8.3 billion. Currency fluctuations did not materially impact net sales comparisons. • In 2005, Europe unit volumes increased 2.1%, reaching record levels and outpacing industry growth. Solid demand forWhirlpool branded products and continued strong performance within the Company's built-in appliance business drove the increase. Net sales increased 3.2%, to a record $3.2 billion in 2005. Currency did not have a material impact on sales during the year. In 2004, Europe unit volumes increased 4.4%, ahead of industry growth, as compared to 2003, driven largely by strongWhirlpool brand performance and expansion of the Company's built-in appliance business. Europe's net sales increased 13.8%, or approximately 3% excluding currency fluctuations. Overall market share improved due toWhirlpool brand performance and new product introductions. • In 2005, Latin America unit volumes increased 1.5% versus 2004, due mainly to increases in the Brazilian appliance market. Net sales increased 17.2% as compared to 2004, or approximately 6% excluding currency fluctuations, to $2.0 billion, due primarily to increased unit volumes and cost-based price adjustments on compressors and appliances. Strong demand for home appliances in Latin America during 2004 resulted in a 14.9% increase in unit volumes versus 2003. Economic conditions within Brazil were strong during 2004 driven by GDP expansion, lower unemployment and positive currency impact. Excluding currency impact and the Polar acquisition, netreal wage growth. Net sales increased 24% in the region during 2004, and were approximately 3%, lagging unit growth20% higher excluding currency fluctuations, due to marketplace pricing pressures. The region experienced improvement in industry volumes as overall economic indicatorsmarket share gains, strong volume, cost-based price adjustments and consumer confidence edged up in several key markets within the region. Europeanfavorable product mix. • In 2005, Asia unit volumes increased 2% in 2002 when3.1% as compared to 20012004, driven mainly by industry growth and new product introductions. Net sales improved 10.5%, or approximately 8% excluding currency fluctuations, due largely to an improved product mix and cost-based price adjustments implemented in 2005. In 2004, Asia unit volumes declined 8.6% versus 2003 with a corresponding decline in net sales increased by a larger percentage due to the Polar acquisition and currency impact. Appliance unit volumes in Latin America declined 2.7% versus 2002 due primarily to the weak economic environment in the region. Overall demand in Brazil declined by 11% for the year. The region’s sales increased 6.7% and increased approximately 9% excluding currency impact when compared to 2002, mainly the result of price increases necessitated by higher material costs. F-3 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) Unit shipments and net sales were 7.4% and 14.9% lower, respectively, in 2002 versus 2001 due in part to a volatile political and economic environment in the region. The significant currency 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%8.2%. Excluding currency impact,fluctuations, net sales increaseddeclined approximately 1%12%. The region experiencedManagement's decision to implement a number of challenges whichtrade inventory reduction strategy in India negatively impacted its performance, including significant pricing pressures in China2004 volume and India. In 2002, unitsales. The strategy change improves the speed, flexibility and overall efficiency within sales and net sales increased 11.2%distribution processes, and 4.8% versus 2001, respectively. Product mixenables the Company to launch new product introductions more frequently and pricing pressures combinedfaster to reduce the benefit of higher volumes. market. GROSS MARGIN  The consolidated gross margin percentage in 2005 decreased 40 basis points versus 2004. Consolidated results in 2005 were significantly impacted by higher material and oil-related cost increases which were mitigated by the combination of cost-based price adjustments and productivity improvements. Consolidated gross margin also benefited from the Brazilian government's export incentive program ("Befiex") tax credits (See Critical Accounting Policies and Estimates to this Management's Discussion and Analysis of Financial Condition and Results of Operations) and was negatively impacted by higher incentive compensation. The consolidated gross margin percentage in 20032004 decreased 6090 basis points versus 20022003 due primarily to higher U.S. pensionsecond half material cost increases and medical expenses coupled with reduced Befiex credits, an increase 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 Europe and lower restructuring and related expense. The consolidated gross margin percentage declined slightly in 2002 versus 2001 with continued global pricing pressurespressures. These increases were partly mitigated by higher volume and lower pension and Befiex credits offsetting productivity improvements. record levels of controllable productivity. The table below outlines the gross margin percentages by region, excluding the impact of the 2003, 2002 and 2001 restructuring relatedregion.     2005   Change       2004   Change       2003   Gross Margin                               North America   21.1 % (0.8 ) pts   21.9 % (0.7 ) pts   22.6 % Europe   23.0   (0.7 )     23.7   0.1       23.6   Latin America   19.5   2.5       17.0   (2.6 )     19.6   Asia   17.3   0.4       16.9   (3.8 )     20.7                         Consolidated(1)   21.3 % (0.4 ) pts   21.7 % (0.9 ) pts   22.6 %                       (1) Restructuring charges of $7 million, $43 million and $53 million, respectively, from the regional percentages. The Company believes this comparison of gross margin percentages excluding restructuring related charges provides management and shareholders a better understanding of the ongoing performance of the regions. The Company evaluates segment performance based upon each segment’s operating income, which exclude, among others, one-time charges (See Note 17). The restructuring related charges are included in the consolidated percentages in each of the three years presented.        2003     Change            2002     Change            2001   Gross Margin                                                North America      22.6 %   (1.0 )   pts      23.6 %   0.1     pts      23.5 % Europe      23.6     1.4            22.2     0.9            21.3   Latin America      19.6     (3.8 )          23.4     (2.6 )          26.0   Asia      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. Consolidated, excluded from regions. Significant regional trends were as follows: • The 2005 North AmericanAmerica gross margin decreased 10080 basis points as compared to 2004, largely due to higher material and oil-related costs. Results also reflect the impact of cost-based price adjustments, productivity improvements and higher incentive compensation. The 2004 gross margin decreased 70 basis points compared to 20022003, due primarily due to higher material costs for steel and resins. In addition, the market continued to experience increased pension and medical expensepricing pressures during 2004. Margin declines were partially offset by productivity improvements. The improvement in 2002 versus 2001 was due tohigher volume, productivity improvements and some cost-based price adjustments. • The 2005 Europe gross margin decreased 70 basis points as compared to 2004, largely driven by higher material and oil-related costs, partially offset by lower pension creditsincreased productivity, an improved product mix and, increased warranty costs. The Europeanto a lesser extent, a gain on the sale of assets. In 2004, Europe gross margin increasedimproved slightly versus 2002 due to an improvement in the product and brand mix and2003 as productivity improvements partiallyand sales volume more than offset by pricing pressures.pressure. European operations continue to realize savings from ongoing restructuring efforts in Europe. In 2002, the • The 2005 Latin America gross margin increased from 2001 levels250 basis points as compared to 2004, as the combination of cost-based price adjustments, increased productivity and Befiex tax credits more than offset higher material and oil-related costs, unfavorable currency and increased incentive compensation. In 2004, Latin America gross margin declined 260 basis points versus 2003, due primarily to higher material costs for steel and resins. Higher costs were partially offset by increased volume and cost-based price adjustments on both appliances and compressors and favorable product mix. • The 2005 Asia gross margin increased 40 basis points as compared to 2004, due to improved product mix, productivity improvements and the benefits from the restructuring efforts. Latin American gross margin declined versus 2002 due to significantly higher material costs, and reduced Befiex credits. The decline wascost-based price adjustments partially offset by higher appliance pricing. Price F-4 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) increases throughout the year helped mitigate the margin erosion but were not enough to offset the increase in materials costs. The 2002 gross margin declined over 2001 due to lower sales levels and higher materials costs. The Asianmaterial and oil-related costs. Asia gross margin declined 380 basis points versus 20022003 due primarily to significant pricing pressure across the regiontrade inventory reduction strategy in India and unfavorable product mix. Asian gross margin decreased in 2002 versus 2001 due to unfavorable product mix andregional pricing pressures. SELLING, GENERAL AND ADMINISTRATIVE ConsolidatedIn 2005, consolidated selling, general and administrative expenses, as a percent of consolidated net sales, declined 50 basis points as compared to 2004, as administrative cost reductions and scale efficiencies offset higher freight and warehousing costs and incentive compensation in North America and Latin America. Europe results primarily reflect the positive impact from administrative productivity improvements and business scale. The Asia region also benefited from scale efficiencies. The consolidated selling, general and administrative expenses in 2003,2004, as a percent of consolidated net sales, remained relatively unchanged versus 20022003. Higher freight rates in North and 2001. HigherLatin America in 2004 were partially offset by productivity in other non-logistic areas. Europe results reflect the positive impact from administrative productivity improvements and business scale. The increase in Asia's selling, general and administrative expenses as a percent of sales in 2004 was due primarily to lower overall sales and higher administrative support costs. In 2003, 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 and administrative expenses while Latin America’sAmerica's improvement was primarily driven by lower bad debt expense in 2003. Asia’sAsia's higher selling, general and administrative expenses as a percent of sales in 2003 were due to increasedhigher operating reserves. The table below outlines the selling, general and administrative expenses as a percentage of sales by region, excluding the impact of 2003, 2002 and 2001 restructuring relatedregion. Millions of dollars   2005   As a % of Sales   2004   As a % of Sales   2003   As a % of Sales   Selling, General & Administrative                                 North America   $ 1,073   12.0 % $ 1,031   12.5 % $ 970   12.3 % Europe     563   17.8     560   18.3     510   19.0   Latin America     256   13.0     220   13.1     175   13.0   Asia     96   22.7     89   23.4     79   19.0   Other/Eliminations     211   —     189   —     186   —                   Consolidated(1)   $ 2,199   15.3 % $ 2,089   15.8 % $ 1,920   15.8 %                 (1) Restructuring-related charges of $4 million, $17 million and $9 million, respectively, from the regional amounts. The Company believes this comparison of selling, general and administrative expenses excluding restructuring related charges provides management and shareholders a better understanding of the ongoing performance of the regions. The Company evaluates segment performance based upon each segment’s operating income, which exclude, among others, one-time charges (See Note 17). The restructuring related charges are included in the “Corporate/Other” line. Millions of dollars    2003    As a % of Sales     2002    As a % of Sales     2001    As a % of Sales   Selling, general & administrative expenses                                         North America    $ 970    12.3 %   $ 894    12.2 %   $ 788    12.0 % Europe      510    19.0       407    18.5       386    18.8   Latin America      175    13.0       189    15.0       250    16.8   Asia      79    19.0       70    17.8       74    19.9   Corporate/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 of operating profit. During 2002, Whirlpool recognized additional recall related pre-tax charges of approximately $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 oven hood units. Beyond this, the Company expects that no further liability will be incurred related to these two product recalls. See Note 14 to the Consolidated, Financial Statements for a more detailed description of these charges. excluded from regions. RESTRUCTURING AND RELATED CHARGES Restructuring initiatives resulted in pre-tax restructuring charges of $57 million, $15 million and $3 million $101 millionin 2005, 2004 and $150 million in 2003, 2002 and 2001, respectively. These amounts have been identified as a separate F-5 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) component of operating profit. AsThe Company expects to expense up to $100 million for restructuring during 2006. At December 31, 2005, a resultliability of $6 million remains for actions yet to be completed under the Company’sglobal restructuring activity, it also recognized $11 million, $60 million and $62 million, respectively,plan that was originally announced in pre-taxDecember of 2000. The remaining liability pertains to lease exit costs. The restructuring related charges during 2003, 2002 and 2001, respectively,plan included the elimination of over 7,100 positions worldwide, of which were recorded primarily within cost of products sold.substantially all had left the Company through December 31, 2005. See Note 1311 to the Consolidated Financial Statements for a more detailed description of these charges and the Company’sCompany's restructuring program. During the fourth quarter of 2002, the Company recognized the vast majority of remaining charges for the global restructuring plan that was originally announced in December of 2000. The plan, which had 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 the elimination of over 7,500 positions worldwide, of which approximately 6,900 had been eliminated as of December 31, 2003. OTHER INCOMEINTEREST AND SUNDRY INCOME/EXPENSE   Interest income and sundry expense, which includes foreign currency gains and losses, improved approximately 24% as compared to 2002. The improvement is largely attributable to lower foreign currency losses as well as lower losses in asset dispositions and a 2002 fire loss within a Mexican facility. Interest income and sundry expense increased slightlyby $51 million versus 2004. The primary drivers of this increase were an increase in 2002 whenlegal reserves of approximately $21 million, higher foreign currency losses on balance sheet positions, the absence of prior year interest received on foreign tax audit settlements in Latin America and a $9 million gain on the sale of a partial interest in an equity investment during 2004. Interest and sundry expense for 2004 decreased $27 million compared to 2001,2003. The improvement was primarily attributable to lower losses of $17 million on foreign currency balance sheet positions, primarily in Europe, and a $9 million gain on the sale of a partial interest in an equity investment in Latin America. INTEREST EXPENSE  Interest expense in 2005 increased $2 million as compared to 2004. The increase was due primarily to lowerhigher interest income. Interestrates and a shift in global borrowing positions. The primary impact was in Brazil, which experienced both increased borrowing levels and higher interest rates on a year over year basis. The interest expense decreased $6reduction during 2004 of $9 million versus 2002, which was $19 million lower than 2001. The decrease was attributable to a lower overall U.S. interest rate environment, and a decrease in overall borrowings. borrowings in countries with higher interest rates, primarily Europe, and maturity of the $200 million 9% Debentures in March 2003, which was replaced with lower rate debt. INCOME TAXES   The effective income tax rate from continuing operations was 35%28.6% in 2003, 39%2005, 33.9% in 2002,2004 and 46%35.0% in 2001. The impact2003. A primary driver of restructuring and related charges, the write-off of the equity interest and advances to Wellmann, the goodwill impairment and the product recall related charges impacted the effective tax rates in 2002rate reduction during 2005 was the realization of foreign tax credits associated with a comprehensive plan that simplified the Company's legal structure, thereby permitting the tax-efficient repatriation of offshore cash via foreign tax credits. Additional items impacting the effective tax rate during all periods presented included the settlement of global tax audits and 2001. Seethe overall dispersion of global income. (See the income tax rate reconciliation included in Note 1513 to the Consolidated Financial Statements for a description of the significant items impacting the consolidated effective income 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 million after-tax impairment charge related to the Company’sChanges in equity in earnings (loss) of affiliated companies and minority investmentsinterests reflect higher earnings in Latin America and advances to Wellmann, a German kitchen cabinet manufacturer. During 2003, the Company’s investmentIndia in the equity of Wellmann was sold to Alno, a prominent German kitchen cabinet manufacturer. The sale did not have a material impact to the Company’s financial position or results of operations. The 2002 results were also impacted by a $4 million charge incurred related to a minority interest2005 and lower earnings in an Asian entity. Latin America and India during 2004. NET EARNINGS FROM CONTINUING OPERATIONS   Earnings from continuing operationsNet earnings were $422 million in 2005 versus $406 million and $414 million in 2004 and 2003, versus $262 million and $34 million in 2002 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, F-6 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) strong volume growth,2005 earnings were impacted by cost-based price adjustments, productivity improvements, administrative cost controls and an equity investment write-off,a reduction in the effective tax rate. These items were partially offset by an increasesignificantly higher material costs (particularly steel and resins), unfavorable currency fluctuations, increased incentive compensation expense, higher restructuring spending and increased legal reserves. 2004 earnings were significantly impacted by increases in expense due tomaterial and logistics costs, particularly in the declinesecond half of the U.S. dollar.year. The significant increasehigher costs in 2002 versus 2001 is due primarily to the product recall2004 were partially offset by productivity improvements, lower foreign currency losses on balance sheet positions, an effective tax rate reduction, lower financing costs, and restructuring expenses recognized in 2001.reduced minority interest earnings. Millions of dollars, except per share data    2003    2002     2001 Earnings from continuing operations    $ 414    $ 262     $ 34 Diluted earnings per share from continuing operations      5.91      3.78       0.50 Net earnings (loss)      414      (394 )     21 Diluted 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 related investment in leveraged aircraft leases during the fourth quarter of 2002. The write-off resulted in a non-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 aircraft portfolio that was also owned by Whirlpool Financial Corporation. The write-off, due primarily to the softening aircraft leasing industry, resulted in a loss from discontinued operations of $35 million, or $21 million after-tax. Although most of its assets have been divested, Whirlpool Financial Corporation remains a legal entity with assets consisting primarily of a leveraged lease portfolio. The portfolio includes an investment in aircraft leveraged leases and is affected by the economic conditions of the aviation industry. As of December 31, 2003 and 2002, the portfolio totaled $42 million and $43 million, respectively, net of related reserves. See Note 5 to the Consolidated Financial Statements. The Company continues to monitor 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 and Other Intangible Assets,” on January 1, 2002. As a result of this adoption, the Company recorded a non-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, in stockholders’ equity in 2001. See Notes 1 and 3 to the Consolidated Financial Statements for a more detailed description of these changes in accounting principles. Millions of dollars, except per share data   2005   2004   2003         Net earnings   $ 422   $ 406   $ 414         Diluted net earnings per share   $ 6.19   $ 5.90   $ 5.91         FORWARD-LOOKING PERSPECTIVE  During 2005, the Company incurred approximately $530 million of higher material and oil-related costs. In response to these increases, the Company introduced new innovative products, improved productivity, reduced discretionary costs and implemented global cost-based price adjustments in key regions around the world. The combination of these actions contributed to the ability of the Company to deliver a record year of results. The Company expects positive earnings momentum to continue during 2006. New product introductions, productivity improvements, continued expansion of the Company's global operating platform and strong cost controls are expected to more than offset continued increases in material and oil-related costs. Whirlpool enters 2004 withIn 2006, the Company will launch the largest number of new products to market in its history. The Company's innovation product pipeline continues to grow, consumer and trade response to its new offerings has been positive, industry and economic momentum in the Company continues to consistently execute its strategy of delivering consumer-relevant innovation to markets worldwide. North America and Europe, the Company’sCompany's two largest segments. The Company expects gradually improving economic conditions in these regions throughout the year. The Company anticipates that the North Americasegments, expect 2006 industry growth of approximately 2 to 3% and Europe regions will drive the majority of Whirlpool’s net earnings increase during 2004. Despite projected1 to 2%, respectively. F-7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) increases in steel prices and raw materials, the Company’s efforts to improve total cost productivity are expected to offset the negative swings in the total manufacturing cost of its products. The Company is forecasting a 2% increase in industry demand in North America during 2004 and 3% in Europe. Weak economicMacro-economic conditions in Latin America higher material costs and unfavorable currency resulted in lower overall operating profit for its third largest segment during 2003. The Company expects gradual improvement in the economic environment during 2004 and is forecasting a 5% to 10% increase in overall demand. Higher material costs are expected to continueremain positive during 2006 and will not be completely offset by productivity improvements. As a result, the Company will continueexpects industry shipments to raise prices on selected products. Finally, Whirlpool expects a gradual devaluation of the Brazilian real during the course of the year. increase 6 to 8%. The Company expects industry shipments within Asia to drive both growth and operating profit margin expansionincrease 5 to 7% in Asia, its smallest segment, during 2004. First, the Company will continue to expand its China procurement and technology base. This is a growing and important part of Whirlpool’s global operating platform. The Company will continue to expand its China domestic sales and increase finished goods exported to its global sales networks. The Company is revising its trade management strategy in India, 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 product introductions more frequently and faster to the market as trade terms are reduced from 60 to 90 days, to 20 to 30 days. This initiative will be launched in the first quarter of 2004 and will be completed sometime in the second quarter of 2004. The Company expects this initiative will result in reduced volumes over the first half of 2004. The ongoing benefits of this program, including improved gross margins and cash flow, are expected to be realized starting in the latter part of the second quarter. 2006. In December 1996, Multibras and Empresa Brasileira de Compressores S.A. (Embraco)("Embraco"), Brazilian subsidiaries, were granted additional export incentives in connection with the Brazilian government’s export incentive program (Befiex).Befiex. These incentives allowed the use of credits as an offset against current Brazilian federal excise tax on domestic sales. During the fourth quarter of 2005, the Company recognized $23 million in export credits. The Company recognized no credits in 2004 and credits of $5 million in 2003, $42 million in 2002 and $53 million in 20012003. The credits are treated as a reduction of current excise taxes payable and, therefore, as an increase in net sales. The Company’sAt December 31, 2005, the Company's remaining credits are approximately $200$600 million at December 31, 2003. However, we do not expectafter adjusting for currency fluctuations and a monetary adjustment. Currently, the Company is unable to recognize additional Befiexthese credits until the calculationbut is exploring possible strategies which may permit future recognition of the credit, which is currently under review, is confirmed by the Brazilian courts. these credits. CASH FLOWS   The statementsConsolidated Statements of cash flowsCash Flows reflect the changes in cash and equivalents for the last three years by classifying transactions into three major categories: operating, investing and financing activities. OPERATING ACTIVITIESOperating Activities   Whirlpool’sWhirlpool's main source of liquidity is cash flow isgenerated from operating activities, consisting of net earnings adjusted for non-cash operating items, such as depreciation, and changes in operating assets and liabilities such as receivables, inventories and payables and for non-cash operating items, such as depreciation. payables. The Company’sCompany's cash provided by operating activities in 2005 increased $87 million over 2004. Cash provided by operating activities benefited from lower inventories, reduced pension contributions and higher accrued expenses for payroll, incentive compensation, restructuring and promotional spending. Results were partially offset by higher accounts receivable balances due mainly to higher sales and lower payables primarily a result of lower inventory levels. Cash flow was also negatively impacted by a decrease in net taxes payable of $105 million, due, in part, to a reduction in tax expense. In 2004, cash provided by operating activities benefited from lower after-tax pension contributions of approximately $62 million and lower restructuring spending of approximately $56 million. In 2004, cash flow was negatively impacted by higher working capital requirements of about $70 million, driven largely by material cost increases and higher inventory levels to support higher volumes and increased trans-regional shipments. In 2003, cash provided by operating activities benefited from higher earnings, primarily within our European and North American business segments, as well as continued improvement in working capital management. Cash flow was negatively impacted by a voluntary after-tax pension contribution to the Company's U.S. pension plans of $97 million to the Company’s U.S. pension plans. In comparison, after-tax U.S. pension contributions made during 2002 and 2001 were $5 million and $7 million, respectively.million. The 2003 F-8 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) results were cash flow was also negatively impacted by restructuring spending, primarily related to 2002 projects, as well as the timing of promotional payments. Combined, these negative 2003 The Company's free cash outflows were essentially offset byflow was $412 million versus $241 million for the absence of $239 million in product recall spending which occurred during 2002. Cashyears ended December 31, 2005 and 2004, respectively. The table below reconciles cash provided by operating activities was also negatively impacteddetermined in 2002accordance with accounting principles generally accepted in the U.S. ("GAAP") to free cash flow, a non-GAAP measure. Management believes that free cash flow provides both management and shareholders with a relevant measure of liquidity and a useful basis for assessing the Company's ability to fund its activities and obligations. There are limitations to using non-GAAP financial measures, including the difficulty associated with comparing companies that use similarly named non-GAAP measures but whose calculations may differ from the Company's calculations. As defined by the Company, free cash flow is cash provided by operating activities after capital expenditures, proceeds from the sale of business/assets and dividends paid. The following is a one-time tax paymentreconciliation of $86 million on a cross-currency interest rate swap gain, which occurred during 2001. The decreasecash provided by operating activities to free cash flow.     Year ended December 31   Millions of dollars   2005   2004   Cash Provided by Operating Activities   $   881   $   794   Capital expenditures     (494 )   (511 ) Proceeds from sale of business/assets     141     74   Dividends paid     (116 )   (116 )         Free cash flow   $   412   $   241           Beginning in 2002 versus 2001 relates primarily to2006, the $239 million in product recall payments made duringCompany will exclude dividends paid from the year and to changes in deferred and current taxes. definition of free cash flow. INVESTING ACTIVITIESInvesting Activities   The principal recurring investing activities are capital expenditures,property additions, which were $494 million, $511 million and $423 million $430 millionin 2005, 2004 and $378 million in 2003, 2002 and 2001, respectively. CapitalThese expenditures are incurred to support distinctiveprimarily for equipment and innovative solutionstooling, driven by product innovation initiatives, more efficient production methods, and replacement for consumers which lead to new revenue growth.normal wear and tear. Expenditures are also made to support the Company’sCompany's global operating platform footprint moves to lower cost locations as well as replacement, regulatory and infrastructure changes. DuringIn each of 2005, 2004 and 2003, Whirlpool entered into separate sale-leaseback transactions whereby the Company sold and leased back fourcertain of its owned properties. Proceeds related to the sale-leaseback transactions,of four properties in 2005, net of related fees, were approximately $67 million. In 2004, proceeds related to sale-leasebacks of six properties, net of related fees, were approximately $66 million. In 2003, proceeds related to the sale-leaseback of four properties, net of related fees, were approximately $65 million. Cash proceeds of $48 million resulted from the sale of a non-core business in Latin America during 2005. See Note 4 to the Consolidated Financial Statements for additional information. Cash paid in 2005 in connection with the proposed Maytag acquisition totaled $77 million, primarily consisting of $40 million to reimburse Maytag for its payment of a fee to terminate its prior merger agreement with Triton Acquisition Holding Co. and $37 million of professional fees incurred in connection with the proposed acquisition. These costs have been capitalized and are recognized in the other assets line within the Company's Consolidated Balance Sheet. If consummation of the transaction does not occur, the costs will be reclassified to expense. On November 18, 2002, the Company acquired the remaining 20% interest in Whirlpool Narcissus Shanghai Company Limited (“Narcissus”("Narcissus") for $9 million. Subsequent to the purchase, Narcissus was renamed 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 bewas paid induring 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 purchase price was $151 million in cash plus assumption of outstanding debt at the time of acquisition, which totaled $143 million. On June 5, 2002, the Company acquired 95% of the shares of Polar S.A. (Polar), a leading major home appliance manufacturer in Poland. The aggregate purchase price was $27 million in cash plus outstanding debt at the time of acquisition, which totaled $19 million. During 2003, Whirlpool acquired the remaining 5% of the shares of Polar. On October 5, 2001, the Company closed its position in a portfolio of cross currency interest rate swaps resulting in the receipt of $209 million. FINANCING ACTIVITIESFinancing Activities   Total repayments of short-term and long-term debt, net of new borrowings, were $131 million, $58 million and $208 million $236 millionin 2005, 2004 and $579 million in 2003, 2002 and 2001, respectively. During March 2003, the Company redeemed its $200 million 9% Debentures using short-term notes payable. In July 2001, Whirlpool issued 300 million Euro denominated 5.875% Notes, due 2006. The proceeds were used for general corporate purposes. F-9 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) Dividends paid to stockholders totaled $116 million, $116 million and $94 million $91 millionin 2005, 2004 and $113 million in 2003, 2002 and 2001. The large payment in 2001 was affected by the timing of funding for the fourth quarter 2000 dividend, which was paid on January 2, 2001. respectively. Under its stock repurchase program,programs, Whirlpool purchasedused $34 million, $251 million, and $65 million to purchase approximately 0.5 million, 3.7 million and 1 million shares ($65 million)of common stock in 2005, 2004, and 2003, 0.7 million shares ($46 million) in 2002 and 0.7 million shares ($43 million) in 2001.respectively. See Other Matters for stock repurchases subsequent to December 31, 2003 and Note 119 to the Consolidated Financial Statements for additional detail on the Company’sCompany's stock repurchase program. The Company also redeemed $33 million and $25 million in 2003 and 2002, respectively, in preferred stock of its discontinued finance company, Whirlpool Financial Corporation.Corporation, in 2003. See Note 86 to the Consolidated Financial Statements for additional detail on the Whirlpool Financial Corporation preferred stock. Whirlpool received proceeds of $102 million in 2005, $64 million in 2004 and $65 million in 2003 $80 million in 2002 and $81 million in 2001 related to the exercise of Company stock options. The Company’sCompany's stock option program is discussed in Notes 1 and 1210 to the Consolidated Financial Statements. FINANCIAL CONDITION AND LIQUIDITY   The Company’sCompany's objective is to finance its business through thean appropriate mix of long-term and short-term debt. By diversifying its maturity structure, the Company avoids concentrations of debt, reducing liquidity risk. Whirlpool has varying needs for short-term working capital financing as a result of the nature of its business. The volume and timing of refrigeration and air conditioning production impact the Company’sCompany's cash flows, and consists ofwith increased production in the first half of the year to meet increased demand in the summer months. The Company finances its working capital fluctuationsneeds primarily through the commercial paper markets in the U.S., Europe and Canada, whichCanada. These commercial paper programs are supported by committed bank lines. In addition, outside the U.S., short-term funding is also provided by bank borrowings on uncommitted lines. The Company has access to long-term funding in the U.S., European and other public bond markets. The Company’sCompany's financial position remains strong. At December 31, 2003, Whirlpool’s2005 and 2004, Whirlpool's total assets were $7.4 billion versus $6.6 billion at December 31, 2002. Stockholders’$8.2 billion. Stockholders' equity increased from $0.7$1.6 billion at the end of 20022004 to $1.3$1.7 billion at the end of 2003.2005. The increase in equity is primarily attributed to net earnings retention a $118 million increaseand proceeds received from the exercise of stock options. These increases were offset by decreases in equity due to reduce the U.S. defined benefitminimum pension plans’ minimum liability adjustments and $129 million increase in equity through foreign currency translation adjustments. share repurchases. The Company’sCompany's overall debt levels have declined approximately $110 million.decreased since 2004. Cash flows from operations and proceeds from sales of assets/businesses have been used to reducerepay debt, fund capital expenditures and pay dividends. On December 2, 2005, the Company’s indebtedness.Company entered into an Amended and Restated Long Term Five-Year Credit Agreement (the "Amended and Restated Credit Agreement") by and among the Company, certain other borrowers, the lenders referred to therein, Citibank N.A., as administrative agent and fronting agent, JPMorgan Chase Bank, N.A., as syndication agent, and ABN Amro Bank N.V., Royal Bank of Scotland and Bank of America, as documentation agents, which amends and restates the Amended and Restated Long Term Credit Agreement dated as of May 28, 2004. On December 2, 2005, the parties to the Amended and Restated Credit Agreement also entered into a 364-Day Credit Agreement (the "364-Day Credit Agreement" and together with the Amended and Restated Credit Agreement, the "Credit Facilities"). The Credit Facilities provide for an aggregate of $2.7 billion in committed unsecured revolving credit facilities. The Amended and Restated Credit Agreement consists of a $2.2 billion 5-year credit facility, which includes a $200 million letter of credit subfacility. The 364-Day Credit Agreement consists of a $500 million 364-day credit facility, which may be converted into a term loan. Borrowing capacity of $1.2 billion under the Amended and Restated Credit Agreement became available on December 2, 2005. Borrowing capacity of $500 million under the 364-Day Credit Agreement and the remaining $1.0 billion under the Amended and Restated Credit Agreement will become available upon the Department of Justice's final clearance of the acquisition of Maytag. Borrowings under the Credit Facilities will be available to the Company and designated subsidiaries for general corporate purposes, including commercial paper support. Subsidiary borrowings under the facilities, if any, will be guaranteed by the Company. Interest under the Credit Facilities accrues at a variable annual rate based on the London Interbank Offered Rate (LIBOR) plus a margin dependent on the Company's credit rating at that time. The Credit Facilities require the Company to meet certain financial tests, including a leverage ratio of not more than 3.0 to 1.0 and an interest coverage ratio of not less than 2.0 to 1.0. The Credit Facilities also contain covenants which, among other things, require the Company to deliver to the lenders specified financial information, including annual and quarterly financial information, and limit the Company's ability to (or to permit any subsidiaries to), subject to various exceptions and limitations, (i) merge with other companies, (ii) create liens on its property; (iii) incur debt or off-balance sheet obligations at subsidiary level; (iv) enter into transactions with affiliates, except on an arms-length basis; (v) enter into agreements restricting the payment of subsidiary dividends or restricting the making of loans or repayment of debt by subsidiaries to the Company or other subsidiaries; and (vi) enter into agreements restricting the creation of liens on its assets. On February 7, 2006, the Company filed a shelf registration statement with the United States Securities and Exchange Commission ("SEC") relating to an indeterminate amount of Debt Securities. In May 2003,August 2005, in connection with its proposed acquisition of Maytag, Whirlpool renewed its existing $400 million committed 364 daywas placed on credit facility for another 364 days.watch with negative implications by Standard & Poor's, Moody's Investors Service and Fitch Ratings. No action has been taken by any of the rating agencies concerning the Company's rating, and action, if any, would be taken after the acquisition of Maytag. The Company alsodoes not anticipate that any future adjustments to these ratings would have a material impact on its liquidity. The Company's short-term credit rating has been confirmed, and accordingly, availability of the commercial paper markets remains unchanged. The Company's Eurobonds of EUR 300 million principal amount will mature in June 2006. The Eurobonds U.S. dollar value at December 31, 2005 was $357 million. The Company anticipates replacing the Eurobonds with a $800 million committed credit facility that wasdomestic bond offering and commercial paper. On September 9, 2005, the Company entered into an agreement with Harbor Shores Community Redevelopment Inc. ("Harbor Shores"), a not-for-profit entity, whereby Whirlpool Corporation agreed to loan up to $12 million to Harbor Shores, secured by a mortgage on June 1, 2001real estate owned by Harbor Shores. As of December 31, 2005, $4.5 million had been loaned under this agreement. Membership interests in Harbor Shores are held by three U.S. not-for-profit entities, including Whirlpool Foundation. Certain current and maturesformer members of the Whirlpool Corporation management team are involved in the Harbor Shores project, including Whirlpool's current CFO and its former CEO, both of whom are trustees and officers of Harbor Shores. None of these individuals receives any compensation from the Company or the Whirlpool Foundation for their services to Harbor Shores. The purpose of the Harbor Shores project is to transform approximately 530 acres in Benton Harbor and St. Joseph, Michigan, into a residential and commercial community with a goal of spurring economic development and further increasing the attractiveness of employment in southwest Michigan. On December 12, 2005, the Company announced that it invested $250 million in its North American manufacturing base during 2005. In the last 12 months, the Company has made improvements to its washer and dryer facilities in Ohio, began production of formed door refrigerators in Fort Smith, Arkansas and begun production of a new clothes washer in Monterrey, Mexico. In addition, the Company has completed the construction of a refrigerator plant in Ramos Arizpe, Mexico that will begin producing refrigerators later in 2006. These committed facilities support commercial paper programsinvestments continue the Company's ongoing effort to expand its innovation capability and otheroptimize its global operating needs. There were no borrowings under these facilities during 2003 or 2002. Whirlpool was in full compliance with its bank covenants throughout both 2003 and 2002. None of the Company’s material debt agreements requires accelerated repayment in the event of a decrease in credit ratings. platform. OFF-BALANCE SHEET ARRANGEMENTS   The Company guarantees the indebtedness of Wellmann, a former European affiliate, and certain trade related obligations of customers of Wellmann andhas guarantee arrangements in place in a Brazilian subsidiary. As a standard business practice in Brazil, the subsidiary as discussed in Note 9 F-10 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) guarantees customer lines of credit at commercial banks, supporting purchases from the Company, following its normal credit policies. If a customer were to default on its line of credit with the bank, the subsidiary would be required to satisfy the obligation with the bank, and the receivable would revert back to the Consolidated Financial Statements.subsidiary. As of December 31, 20032005 and December 31, 2002,2004, these amounts totaled $236 million and $184 million, respectively. The only recourse the Company had approximately $18 million and $30 million, respectively, of guarantees outstanding for the bills of exchangehas related to Wellmann, which expired in January and February 2004. The Company will continue to provide guarantees of certain trade related obligations of customers of Wellmann, however,these agreements would be legal or administrative collection efforts directed against the amounts are expected to be de minimus. Whirlpool does not expect these guarantees to have a material effect on its financial condition or liquidity. customer. CONTRACTUAL OBLIGATIONS AND FORWARD-LOOKING CASH REQUIREMENTS   The following table summarizes the Company’sCompany's expected cash outflows resulting from financial contracts and commitments.   Payments due by period Millions of dollars Millions of dollars   Total   2006   2007 & 2008   2009 & 2010   Thereafter Debt obligations(1) Debt obligations(1)   $ 1,110   $ 365   $ 136   $ 367   $ 242 Operating lease obligations Operating lease obligations   250   85   112   44   9 Purchase obligations Purchase obligations   1,131   224   429   389   89 Long-term liabilities(2) Long-term liabilities(2)   107   107   —   —   —              Payments due by period Total   $ 2,598   $ 781   $ 677   $ 800   $ 340 Millions of dollars    Total    2004    2005 & 2006    2007 & 2008    Thereafter Debt obligations    $ 1,153    $ 19    $ 386    $ 136    $ 612 Operating lease obligations      266      68      108      65      25 Purchase obligations      187      34      84      61      8 Long-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 pension funding requirements and expected benefits payments to the unfunded pension and postretirement health care benefit plans. Required contributions for future years depend on certain factors that cannot be determined at this time. (1) The amounts in debt obligations do not include an estimate of future interest payments. See Note 6 to the Consolidated Financial Statements for additional information regarding the Eurobond maturity in 2006. (2) The amounts in long-term liabilities include the Company's expected 2006 voluntary U.S. pension and foreign pension fund contributions, and expected benefit payments under the postretirement health care benefit plans. Required contributions for future years depend on certain factors that cannot be determined at this time. The goal of the Company’sCompany's global operating platform is to strengthen Whirlpool’s brand leadershipenhance the Company's competitive position in the global home appliance industry. The Company plans to continue its comprehensive worldwide effort to optimize its regional manufacturing facilities, supply base, product platforms and technology resources to better support its global products, brands and customers. The Company intends to make additional investments to strengthenimprove its competitiveness and brand leadership position in fiscal 2004.2006. Capital spending is expected to increase to approximatelybe between $500 million and $525 million in 20042006 in support of the Company’sCompany's investment in innovative product technologies and its global operating platform initiatives. The Company expects that higher cash flow from operations will more than offset increased capital spending. In December 2003, Whirlpool Corporation’sDuring 2004, Whirlpool's Board of Directors announced a first quarter 2004increased the quarterly dividend offrom 34 cents per share to 43 cents per share, 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 the Company’s annual dividend payments by approximately $24 million to $118 million. The Company believes that its capital resources and liquidity position at December 31, 20032005, coupled with its planned cash flow generated from operations in 20042006, are adequate to support higher capital spending, a highercontinued dividend paymentpayments, repayment of debt and to meet anticipated business needs to fund future growth opportunities.opportunities, including the cash portion of the consideration for the proposed acquisition of Maytag and assumption of Maytag debt. 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 (defined as cash provided by operating activities plus proceeds from asset disposals less capital spending and dividends). Management intends to use these funds to reduce debt, repurchase stock and fund additional business opportunities as they become available. F-11 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued)PENDING MAYTAG ACQUISITION   OTHER MATTERS PursuantOn August 22, 2005, Whirlpool entered into a definitive merger agreement with Maytag to acquire all outstanding shares of Maytag common stock. The aggregate transaction value, including the Company’s stock repurchase program authorized by the Boardpayment to Maytag stockholders of Directors, the Company repurchased a combined total 1approximately $850 million in cash and between 9.2 million and 11.3 million shares of Whirlpool common stock and assumption of approximately $972 million of Maytag debt (based on Maytag stock, exercisable stock options and debt reported outstanding as of December 31, 2005), is approximately $2.7 billion. The number of shares of Whirlpool common stock to be issued will depend on the volume weighted average trading prices of Whirlpool common stock during a twenty trading day period ending shortly before completion of the merger. The transaction was approved by Maytag shareholders on December 22, 2005 and is pending regulatory clearance as discussed below. Whirlpool has sufficient resources to finance the acquisition. The acquisition and upcoming debt maturities of the combined company are expected to be financed initially through commercial paper supported by existing bank agreements and with new committed bank facilities. The Company expects to eventually refinance a portion of its commercial paper in the open market subsequentcapital markets. Whirlpool currently expects the merger with Maytag to generate approximately $300 million to $400 million of annual pre-tax cost savings by the third year following completion of the merger. Efficiencies are expected to come from all areas across the value chain, including product manufacturing and marketing, global procurement, logistics, infrastructure and support areas. Achieving these efficiencies will require one-time costs and capital investments currently estimated to be in the range of $350 million to $500 million, a majority of which currently are anticipated to be capitalized or accrued in purchase accounting. Whirlpool currently anticipates incurring these costs during the first two years following completion of the merger. The merger is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and other customary closing conditions. On December 1, 2005, Whirlpool and Maytag announced that they had certified substantial compliance with the Antitrust Division of the Department of Justice in response to a request for additional information ("second request") and had agreed not to close the proposed merger before February 27, 2006, without the Antitrust Division's concurrence, recognizing that the Antitrust Division could request additional time for review. On February 13, 2006, Whirlpool and Maytag announced that they agreed with the Antitrust Division to a limited extension of time to complete the review of the proposed merger. The companies have agreed not to close the transaction before March 30, 2006 without the Antitrust Division's concurrence. Whirlpool and Maytag are working closely with the Department of Justice and continue to cooperate fully with its investigation and respond promptly to its inquiries. On August 22, 2005, Whirlpool paid Maytag $40 million to reimburse Maytag for its payment of a fee to terminate its prior merger agreement with Triton Acquisition Holding Co. Whirlpool has agreed to pay up to $15 million to assist Maytag in retaining key employees while the merger is pending. Whirlpool also has agreed to pay Maytag a "reverse break-up fee" of $120 million under certain circumstances if the transaction cannot be closed due to an inability to obtain regulatory clearance. OTHER MATTERS  On February 25, 2005, the Company announced the recall of approximately 162,000 under-the-counter plastic tall tub dishwashers due to a potential safety issue. There have been no reports of personal injury or property damage associated with these dishwashers. The Company also is undertaking the repair of up to an additional 223,000 of these dishwashers for a separate quality issue. The Company accrued $17.1 million related to the quality issues within cost of products sold during the fourth quarter of 2004. During 2005, the estimated cost to recall and repair these units was reduced to $13.7 million primarily due to the recovery of certain costs from a parts supplier. The remaining accrual amount for cost and a receivable from the supplier were not material at December 31, 2005. Two purported class action lawsuits have been filed against the Company, one in a Missouri state court and one in an Illinois state court, each alleging breach of warranty, fraud, and violation of state consumer protection acts in selling tall tub dishwashers. There are no allegations of any personal injury or property damage and the complaints seek unspecified compensatory damages. The Company believes these suits are without merit, intends to vigorously defend these actions, and at this point cannot reasonably estimate a possible range of loss, if any. Whirlpool is currently monitoring a supplier-related quality and potential product safety problem that may affect up to 3.5 million appliances manufactured between 2000 and 2002. Whirlpool currently estimates that its potential cost from this matter ranges from zero to $235 million, depending on whether the cost of any such corrective action is borne initially by Whirlpool or the supplier, and, if initially borne by Whirlpool, whether Whirlpool will be successful in recovering its costs from the supplier. In addition, Whirlpool could incur other costs arising out of this matter, which cannot currently be estimated but could be material. No amounts have been recognized as of December 31, 2005. In 2003, at an aggregate purchase pricethe Company recognized pre-tax charges of $75 million.$16 million primarily for final expenses related to the 2001 recall of microwave oven hood units. Pension and Postretirement Medical Benefit Plans 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$15 million after-tax to theits U.S. pension plans during 2003,2005, of which $97$13 million was voluntary. As a result of these actions, the unfunded obligation declined,voluntary contribution to its funded plans and the$2 million was required. The Company reducedalso contributed $25 million to its minimumforeign pension liability equity charge by $118 million, after-tax, to $38 millionplans during 2003.2005. At December 31, 2003,2005, the Company’sCompany's defined benefit pension plans still remain underfunded on a combined basis. For the obligations and funded status of the U.S. and foreign plans, see Note 14 to the Consolidated Financial Statements. The Company recognized consolidated pre-tax pension cost (credits) of $94 million, $91 million and $78 million $(37)in 2005, 2004 and 2003, respectively. Consolidated pension cost in 2006 is anticipated to be approximately $95 million, and $(70) million in 2003, 2002 and 2001, respectively.relatively unchanged from 2005. The Company currently expects that U.S. pension costcosts for 20042006 will be approximately $60$72 million, based uponusing an expected rate of return on assets assumption of 8.75%8.5% and a lower discount rate of 6.00%5.6%. The $60$72 million compares to pension cost of $63$66 million in 2003. Consolidated2005. U.S. pension cost in 2004 is anticipated to be approximately $72 million compared to $78 million in 2003. plans comprise 86% of the Company's projected benefit obligation. The discount rate and expected return on asset assumptions used in determining the Company’sCompany's U.S. pension benefit obligations and costs are as follows:      Discount rate     Expected return on assets   Benefit obligation—December 31              2003    6.00 %   N/A   2002    6.75 %   N/A   Pension cost              2004    6.00 %   8.75 % 2003    6.75 %   8.75 % 2002    7.50 %   10.00 %     Weighted-average discount rate   Expected return on assets Benefit obligation — December 31           2005   5.60 % N/A   2004   5.80 % N/A Pension cost           2006   5.60 % 8.50%   2005   5.80 % 8.75%   2004   6.00 % 8.75% The Company’sCompany's expected return on assets assumption of 8.75% is8.5% was based on historical marketasset returns for publicly traded equity and fixed income securities tracked between 1926 and 2003 applied2005 and the historical returns for private equity. The historical equity returns were adjusted downward to its target allocationreflect future expectations. This adjustment was based on published academic research. The expected returns are weighted by the targeted asset allocations. The resulting weighted average return was rounded to the nearest quarter of plan assets. The annualized discount rate approximates Moody’s Aa corporate bond rate at the measurement date.one percent. The Company uses a measurement date of December 31. On November 14, 2005, the Company amended the Whirlpool Employees Pension Plan (the "WEPP"). The amendment will be reflected in the Company's 2006 pension cost and did not affect the accumulated benefit obligation (the "ABO") or projected benefit obligation (the "PBO") at December 31, 2005. In January 2005, the Company amended the WEPP. The Company remeasured the net periodic cost and funded status of the plan at January 1, 2005 to reflect the amendment. The amendment reduced the PBO by approximately $80 million. The ABO was not affected by the amendment since the accrued benefits as of December 31, 2005 were not affected by this change. See Note 14 to the Consolidated Financial Statements for additional information. In addition to pension plans, the Company sponsors plans to provide postretirement health care benefits for eligible retired U.S. employees. Eligible retirees are those who were full-time employees with 10 years of service who attained age 55 while in service with the Company. The postretirement health care plans are generally contributory with participants’participants' contributions adjusted annually and include cost-sharing provisions that limit the Company’sCompany's exposure for recent and future retirees. The plans are unfunded. The Company has reserved the right to modify the benefits. In June 2003, the Company announced a modification to its U.S. retiree health care plans that affects certain future and current retirees The new planand is based on a Retiree Healthcare Savings Account (RHSA)("RHSA"), where notional accounts will beare established for mosteligible active U.S. paid employees. The notional account reflectsaccounts reflect each year of service beginning at age 40 and is designed to provide employees who retire after December 31, 2003 from Whirlpool with notional fundscredits to apply towards health care premiums. In F-12 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) June 2003, the Company recorded a one-time curtailment gain of $13.5 million, net of tax, related to the modification of its retiree health care plan. The Company provides no significant postretirement medical benefits to non-U.S. employees. At December 31, 2004 and 2005, discount rates were determined individually for each of its pension plans and the post-retirement plan based on the yield of AA rated non-callable (or callable with make whole provisions) bonds. OnIn December 8, 2003, President Bush signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) into law. This law introduced"Act") was enacted. The Act established a prescription drug benefit program under Medicare, (Medicareknown as Part D) as well asD, and a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. In general, accounting rules require that2004, the changes in relevant laws and government benefit programs be considered in measuring postretirement benefit costs andCompany measured the Accumulated Postretirement Benefit Obligation (APBO). However, certain accounting issues raised by the Act—in particular, how to account 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 ancillary effects on plan participants’ behavior and health care costs. The FASB issuedfollowing the guidance in FASB Staff Position (FSP) No. 106-1, “Accounting("FSP") 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003”, (FSP 106-1) that allows sponsors2003." For the year ended December 31, 2004, the Company reflected the estimated federal subsidy under the Act as an actuarial gain as required by FSP 106-2, which caused the accumulated other postretirement benefit obligation to electdecrease by $104 million, and reduced the cost recognized by approximately $15 million. Legal Proceedings The Company is currently a defendant in 11 purported class action lawsuits in 11 states related to defer recognitionits Calypso clothes washing machine. Two of the effectsoriginal purported class actions have been dismissed. The complaints in these lawsuits generally allege violations of state consumer fraud acts, unjust enrichment, and breach of warranty based on the allegations that the washing machines have various defects. There are no allegations of any personal injury, catastrophic property damage, or safety risk. The complaints generally seek unspecified compensatory, consequential, and punitive damages. The Company believes these suits are without merit and intends to vigorously defend these actions. At this point, the Company cannot reasonably estimate a possible range of loss, if any. In early 2004, Maytag filed a lawsuit against the Company for patent infringement. The suit seeks unspecified damages and an injunction against the continued production or sale of the Act until guidancealleged infringed patented product. The Company believes this suit is issued bywithout merit, and at this point cannot reasonably estimate a possible range of loss, if any. The suit has been stayed pending the FASB. In accordance with FSP 106-1, the Company has elected to defer recognitionoutcome of the effects of the Act. Accordingly, any measures of the APBO or net periodic postretirement benefit cost in the financial statements or the accompanying footnotes do not reflect the effects of the Act on the plan. Specific authoritative guidance on the accounting for the federal subsidy is pending and that guidance, when issued, could require the Company to change previously reported information. In September 2003, the Company completed the sale of Wellmann to Alno, a prominent German kitchen 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 a material impact to the Company’s financial position or results of operations. The Company analyzed the provisions of FIN 46, “Consolidation of Variable Interest Entities”, with respect to its 10% interest in Alno and determined that Alno did not meet the definition of a variable interest entity under FIN 46. Maytag acquisition. In 1989, a Brazilian affiliate (now a subsidiary) of the Company brought an action against a financial institution in Brazil seeking a “Declaration"Declaration of Non-Enforceability of Obligations”Obligations" relating to loan documentation entered into without authority by a senior officer of the affiliate. The original amount in dispute was approximately $25 million. In September 2000, a decision in the declaratory action adverse to the Company became final. In 2001, the financial institution began a collection action, and the Company responded with a counterclaim. The lower court has dismissed the counterclaim in 2002 and a discretionary appeal of this dismissal has been requested. A finalthe Superior Court confirmed the lower court decision in the collection action is not expected for several years.December 2005. The Company plansprovided for the potential exposure resulting from this litigation during 2005. The Company is involved in various other legal actions arising in the normal course of business. Management, after taking into consideration legal counsel's evaluation of such actions, is of the opinion that the outcome of these matters will not have a material adverse effect on the Company's financial position or results of operations. Other The Brazilian Constitution provides the basis for tax credits on purchases of raw materials used in production. The credit applies to continue to aggressively defendpurchases of raw materials that are tax exempt or have a zero tax rate. Several court decisions supported that tax credit and, during 2003 and 2004, the Company calculated tax credits under this matter, and atprovision. The original amount recorded as tax credits is approximately $22 million. The recorded tax credits are currently being challenged in Brazilian courts. At this point, the Company cannot reasonably estimate a possible rangethe potential impact, if any, to its consolidated financial position or consolidated results of loss. operations. No tax credits were recorded in 2005. CRITICAL ACCOUNTING POLICIES AND ESTIMATES   Management has evaluated the accounting policies used in the preparation of the accompanying Consolidated Financial Statements and related notes and believes those policies to be reasonable and appropriate. The Company’sCompany's accounting policies are described in Note 1 to the Consolidated Financial Statements. Certain of these accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. The Company’sCompany's critical accounting policies include the following: F-13 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) Pension and Other Postretirement Benefits — Accounting for pensions and other postretirement benefits involves estimating the costs of future benefits and attributing the cost over the employee’semployee's expected period of employment with the Company. The determination of the Company’sCompany's obligation and expense for these costs requires the use of certain assumptions. Those assumptions are included in Note 1614 to the Consolidated Financial Statements and include, among others, the discount rate, expected long-term rate of return on plan assets and health care cost trend rates. These assumptions are subject to change based on, stock and bond market returns, interest rates on high quality bonds, stock and bond markets and medical cost inflation, respectively. As permitted by generally accepted accounting principles,GAAP, actual results that differ from the Company’sCompany's assumptions are accumulated and amortized over future periods and therefore, generally affect its recognized expense and accrued liability in such future periods. While the Company believes that its assumptions are appropriate given current economic conditions and its actual experience, significant differences in results or significant changes in the Company’sCompany's assumptions may materially affect its pension and other postretirement obligations and related future expense. As required by FASStatements of Financial Accounting Standards ("SFAS") No. 87, FASSFAS No. 132 (revised 2003) and FASSFAS No. 106, Whirlpool’sWhirlpool's pension and other postretirement benefit obligations as of December 31, 20032005 and preliminary retirement benefit costs for the 20042006 fiscal year were prepared using the assumptions that arewere determined as ofat December 31, 2003.2005. The following table highlights the sensitivity of Whirlpool’sWhirlpool's December 31, 20032005 retirement obligations and 20042006 retirement benefit costs of its U.S. plans to changes in the key assumptions used to determine those results: Millions of dollars Change in assumption   Estimated increase (decrease) in 2004 Pension Cost     Estimated increase (decrease) in Projected Benefit Obligation for the year ended December 31, 2003     Estimated increase (decrease) in 2004 Other Postretirement Benefits cost     Estimated increase (decrease) in Accumulated Postretirement Benefit Obligation for the year ended December 31, 2003   Millions of dollars                         25 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             Change in assumption   Estimated increase (decrease) in 2006 pension cost   Estimated increase (decrease) in Projected Benefit Obligation for the year ended December 31, 2005   Estimated increase (decrease) in 2006 Other Postretirement Benefits cost   Estimated increase (decrease) in Other Postretirement Benefit Obligation for the year ended December 31, 2005   0.25% increase in discount rate   $ (6.1 ) $ (58.2 ) $ (1.1 ) $ (16.6 )             0.25% decrease in discount rate   $ 6.1   $ 59.9   $ 1.1   $ 17.1               0.25% increase in long-term return on assets   $ (4.2 )   N/A     N/A     N/A               0.25% decrease in long-term return on assets   $ 4.2     N/A     N/A     N/A               0.50% increase in discount rate   $ (12.1 ) $ (114.8 ) $ (2.3 ) $ (32.8 )             0.50% decrease in discount rate   $ 12.3   $ 121.7   $ 2.3   $ 34.6               0.50% increase in long-term return on assets   $ (8.5 )   N/A     N/A     N/A               0.50% decrease in long-term return on assets   $ 8.5     N/A     N/A     N/A               The analysis is an estimate only. These sensitivities may not be appropriate to use for other years’years' financial results. Furthermore, the impact of assumption changes outside of the ranges shown above may not be approximated by using the above results. Income Taxes — As part of the process of preparing its Consolidated Financial Statements, the Company estimates its income taxes in each of the taxing jurisdictions in which itsit operates. This process involves estimating actual current tax expense together with assessing any temporary differences resulting from the different treatment of certain items, such as the timing for recognizing expenses, for tax and accounting purposes in accordance with Statement of Financial Accounting StandardsSFAS No. 109, “Accounting"Accounting for Income Taxes.”" These differences may result in deferred tax assets and liabilities, which are included F-14 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) in the Company’s consolidated balance sheets.Company's Consolidated Balance Sheets. The Company is required to assess the likelihood that its deferred tax assets, which include net operating loss carryforwards and temporary differences that are expected to be deductible in future years, will be recoverable. Realization of the Company's net operating loss deferred tax assets is supported by specific tax strategies and consider planned projections of future profitability. If recovery is not likely, the Company provides a valuation allowance based on its estimates of future taxable income in the various taxing jurisdictions, and the amount of deferred taxes that are ultimately realizable. If future taxable income was lower than expected or if tax-planning strategies were not available as anticipated, the Company may record additional valuation allowances through income tax expense in the period such determination is made. Likewise, if the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amounts, an adjustment to the deferred tax asset would increase income in the period such determination is made. As of December 31, 2003,2005 and 2004, the Company had total deferred tax assets of $703$923 million and $885 million, respectively, net of valuation allowances of $51$114 million and $105 million, respectively (see Note 1513 to the Consolidated Financial Statements). The Company’sCompany's effective tax rate has ranged from 35%28.6% to 46%46.2% over the past five years and has been influenced by restructuring and recall activity,audit settlements, tax planning strategies, enacted legislation, and enacted legislation.dispersion of global income. A 1% increase in the Company’sCompany's effective tax rate would decreasehave decreased 2005 earnings by approximately $6.5 million based on 2003 earnings.$6 million. Future changechanges in the effective tax rate iswill be subject to several factors, including enacted laws, tax planning strategies, and business profitability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. These audits can involve complex issues, which may require an extended period of time to resolve. In the opinion of management, adequate provisions for income taxes have been made for all years. Product Recall — The establishment of a liability for product recall expenses is occasionally required and is impacted by several factors such as customer response rate, consumer options, field repair costs, inventory repair costs, 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 number of units to be serviced as a percentage of the total number of units impactedaffected by the recall, is the most significant factor in estimating the total cost of each recall. This rate is impacted byreflects several factors, including the type of product, the year manufactured, age of the product sold and current and past experience factors. Significant differences between the Company’sCompany's assumptions and its actual experience or significant changes in its assumptions could have a material impact on the Company’sCompany's product recall reserves. Befiex Credits — As discussed above, prior to 2005, the Company’sCompany's Brazilian subsidiaries have been recognizing benefitsoperations had recognized tax credits under the Brazilian government’s export incentive program (Befiex) as an offset against currentBefiex, which reduces Brazilian federal excise taxtaxes on domestic sales, resulting in an increase in the operations' recorded net sales. SinceBased on a recalculation of available credits and a favorable court decision in the initial grantingfourth quarter of these2005, the Company recognized approximately $23 million of export credits in 1996, it has beenDecember 2005 that is expected to be monetized by the Company’s policy to recognize these credits as they have been monetized. There have, however, been ongoing legal proceedings relating to this program and it is presently under review within the Brazilian court system. The Company has chosen not to recognize anyend of the remaining creditsfirst quarter of $200 million under the program until the Brazilian courts have confirmed the method used to calculate those remaining credits. 2006. Warranty Obligations — The estimation of warranty obligations is determined in the same period that revenue from the sale of the related products is recognized. The warranty obligation is based on historical experience and reflect management’sreflects management's best estimate of expected costs at the time products are sold. Warranty accruals are adjusted for known or anticipated warranty claims as new information becomes available. Future F-15 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) events and circumstances could materially change the Company’sCompany's estimates and require adjustments to the warranty obligation. New product launches require a greater use of judgment in developing estimates until historical experience becomes available. See Note 97 to the Consolidated Financial Statements for a summary of the activity in the Company’sCompany's product warranty accounts for 20032005 and 2002. 2004. NEW ACCOUNTING PRONOUNCEMENTS   In January 2003,December 2004, the Financial Accounting Standards Board (FASB)("FASB") issued InterpretationSFAS No. 46, “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin123 (R), "Share-Based Payments." SFAS No. 51” (Interpretation or FIN 46) as amended, December 2003. The Interpretation123 (R) requires consolidation, beginning December 31, 2003, of entities in which the Company absorbsto measure all employee stock-based compensation awards using a majorityfair-value method and record such expense in its consolidated financial statements. SFAS No. 123 (R) was originally effective for periods beginning after June 15, 2005; however, in April 2005, the SEC changed the effective date of SFAS No. 123 (R) to fiscal years beginning after June 15, 2005 for non-small business issuers. SFAS No. 123 (R) provides alternative methods of adoption, which include a modified prospective application and a modified retroactive application. On January 1, 2006, the entity’sCompany will adopt the provisions of SFAS No. 123 (R) and will apply the modified prospective method that requires entities to recognize compensation costs in financial statements issued after the date of adoption for all share-based payments granted, modified or settled after the date of adoption as well as for any awards that were granted and unvested prior to the adoption date. The adoption of FAS 123 (R) is expected losses, receivesto result in additional pre-tax expense of approximately $7 million in 2006. In November 2004, FASB issued SFAS No. 151, "Inventory Costs, an Amendment of ARB No. 43 Chapter 4." SFAS No. 151 requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling be recognized as current-period charges rather than being included in inventory, regardless of whether the costs meet the criterion of abnormal as defined in ARB 43. SFAS No. 151 is applicable for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company will adopt this standard beginning the first quarter of fiscal year 2006 and does not believe the adoption will have a majoritymaterial impact on the Company's results of operations or financial position as such costs have historically been expensed as incurred. In December 2004, the entity’sFASB issued SFAS No. 153, "Exchanges of Non-Monetary Assets — an Amendment of APB Opinion No. 29," which addresses the measurement of exchanges of non-monetary assets. SFAS No. 153 eliminates the exception to fair value for exchanges of similar productive assets and replaces it with a general exception for exchange transactions that do not have commercial substance. SFAS No. 153 specifies that a non-monetary exchange has commercial substance if the future cash flows of an entity are expected residual returns, or both,to change significantly as a result of ownership, contractual or other financial interests in the entity. Currently, entities are consolidated when the Company has a controlling financial interest, typically through ownershipexchange. SFAS No. 153 is effective for fiscal periods after June 15, 2005. The implementation of a majority voting interest in an entity. The adoption of FIN 46SFAS No. 153 did not materiallyhave a material impact on the Company’s financial position orCompany's results of operations. operations or financial position. In December 2003,March 2005, the FASB issued revisedInterpretation No. ("FIN") 47, "Accounting for Conditional Asset Retirement Obligations — an interpretation of FASB Statement No. 132 (SFAS 132), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” The revised143." FIN 47 clarifies that SFAS 132No. 143, "Accounting for Asset Retirement Obligations," requires additional disclosures aboutthat an entity recognize a liability for the typesfair value of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit cost recognized during interim periods (see Note 16 toa conditional asset retirement obligation when incurred if the Consolidated Financial Statements). This Statementliability's fair value can be reasonably estimated. FIN 47 is effective for financial statements withno later than the end of fiscal years ending after December 15, 2005. The implementation of FIN 47 did not have a material impact on the Company's results of operations or financial position. In June 2005, the FASB issued FSP No. 143-1, "Accounting for Electronic Equipment Waste Obligations." The FSP addresses accounting by commercial users and producers of electrical and electronic equipment, in connection with WEEE issued by the EU on February 13, 2003. This Directive requires EU-member states to adopt legislation to regulate the collection, treatment, recovery, and environmentally sound disposal of electrical and electronic waste equipment, and sets forth certain obligations relating to covering the cost of disposal of such equipment by commercial users. Producers will also be required to cover the cost of disposal of such equipment under the WEEE legislation if they are participating in the market as of August 13, 2005. As of December 31, 2005, while many EU-member states had enacted legislation, several major EU-member states were still in the drafting process. As a result, final estimates regarding the financial impact from WEEE legislation on the Company cannot be made at this time. The adoptionCompany continues to evaluate the impact of the revised SFAS 132 did not impact the Company’s financial position or results of operations.WEEE legislation as EU-member states implement guidance and will account for related costs accordingly. MARKET RISK   The Company is exposed to market risk from changes in foreign currency exchange rates, domestic and foreign interest rates, and commodity prices, which can affect the Company’sCompany's operating results and overall financial condition. Whirlpool manages 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 tools and are not used for speculation or for trading purposes. Derivative financial instruments are entered intocontracted with a diversified group of investment grade counterparties to reduce its exposure to nonperformance on such instruments. The Company’sCompany's sensitivity analysis reflects the effects of changes in market risk but does not factor in potential business risks of the counterparties or appropriate use of instruments. risk. Whirlpool uses foreign currency forward contracts, currency options and currency swaps to hedge the price risk associated with firmly committed and forecasted cross-border payments and receipts related to its ongoing business and operational financing activities. Foreign currency contracts are sensitive to changes in foreign currency exchange rates. At December 31, 2003,2005, a 10% unfavorable exchange rate movement in each currency in the Company’sCompany's portfolio of foreign currency forward contracts would have resulted in an incremental unrealized loss of approximately $121$54 million, while a 10% favorable shift would have resulted in an incremental unrealized gain of approximately $111$47 million. Consistent with the use of these contracts to neutralize the effect of exchange rate fluctuations, such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying exposures. F-16 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(Continued) The Company enters into commodity swap contracts to hedge the price risk associated with firmly committed and forecasted commodities purchases that are not fixed directly through supply contracts. As of December 31, 2003,2005, a 10% unfavorable shift in commodity prices would have resulted in an incremental loss of approximately $4$18 million in the commodity swap contracts, while a 10% favorable shift would have resulted in an incremental gain of approximately $4$19 million. Whirlpool utilizes interest rate swaps to hedge the Company’sCompany's interest rate risk. As of December 31, 2003,2005, a 10% shift in interest rates would have resulted in approximately an incremental $0.5$7 million gain or loss related to these contracts. FORWARD-LOOKING STATEMENTS   The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. Management’sManagement's Discussion and Analysis and other sections of this report may contain forward-looking statements that reflect the Company’sCompany's current views with respect to future events and financial performance. Certain statements contained in this Financial Supplement, including those within the forward-looking perspective section within this Management’sManagement's Discussion and Analysis, and other written and oral statements 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”"forward-looking statements" which provide current expectations or forecasts 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,”"anticipate," "believe," "estimate," "expect," "intend," "may," "could," "possible," "plan," "project," "will," "forecast," and similar words or expressions. The Company’sCompany's forward-looking statements generally relate 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 variety of 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. Forward-looking statements in this document include, but are not limited to, statements regarding expected earnings per share, cash flow and material and oil-related costs, as well as expectations as to the closing of the proposed merger with Maytag. Many factorsrisks, contingencies and uncertainties could cause actual results to differ materially from the Company’sWhirlpool's forward-looking statements. Among these factors are: (1) competitive pressure to reduce prices;intense competition in the home appliance industry reflecting the impact of both new and established global, including Asian and European, manufacturers and the strength of trade customers; (2) theWhirlpool's ability to gain or maintain market share in intensely competitive global markets; (3) the success of the Company’s global strategy to develop brand differentiation and brand loyalty; (4) the ability to control operating and selling costs and to maintain profit margins during industry downturns; (5) the success of the Latin American business operating in challenging and volatile environments; (6) continuation of the Company’scontinue its strong relationship with Sears Roebuck and Co.Holding Corporation in North America which accounted(accounting for approximately 18%16% of Whirlpool's 2005 consolidated net sales of $12 billion in 2003; (7) currency exchange$14 billion) and other significant trade customers, and the ability of these trade customers to maintain or increase market share; (3) industry demand, which reflects factors such as gross domestic product, consumer interest rates, consumer confidence, housing starts, sales of existing homes and the level of mortgage refinancing; (4) the ability of Whirlpool to achieve its business plans, including productivity improvements, cost control, leveraging of its global operating platform and acceleration of the rate fluctuations; (8) social, economic, and political volatility in developing markets; (9) continuing uncertaintyof innovation; (5) fluctuations in the North American, Latin American, Asiancost of key materials (including steel, oil, plastic resins, copper and European economies; (10)zinc) and components and the ability of Whirlpool to offset cost increases; (6) the ability of suppliers of critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective manner; (7) changes in North America’s consumer preferencesmarket conditions, health care cost trends and pending regulation that could increase future funding obligations for pension and post-retirement benefit plans; (8) the cost of compliance with environmental and health and safety regulations, including new regulations in Europe regarding howappliance disposal; (9) potential exposure to product liability claims including the outcome of Whirlpool's previously-announced investigation of a supplier-related quality and potential product safety problem that may affect up to 3.5 million appliances are purchased; (11) the effectiveness of the series of restructuring actions the Company has announced and/or completed through 2003; (12) the threat of terrorist activities ormanufactured between 2000 and 2002; (10) the impact of war;labor relations; (11) Whirlpool's ability to obtain and protect intellectual property rights; (12) the ability of Whirlpool to manage foreign currency and its effective tax rate; (13) global, political and/or economic uncertainty and disruptions, especially in Whirlpool's significant geographic markets, including uncertainty and disruptions arising from natural disasters, including possible effects of recent U.S. interest rates;hurricanes or terrorist activities; and (14) new Asian competitors;risks associated with operations outside the U.S. Other such factors relate to Whirlpool's pending merger with Maytag, including (1) the ability of Whirlpool and (15) changesMaytag to satisfy the obligations as presentedconditions to closing (including regulatory approval) and the costs and consequences of not closing; (2) the effect on Maytag's business of the pending transaction; and (3) in the contractual obligations table. event the merger is completed, Whirlpool's ability to integrate the business of Maytag on a timely basis and realize the full anticipated benefits of the merger within the current estimate of costs. The Company undertakes no obligation to update everyany forward-looking statement, and investors are advised to review disclosures in the Company’sCompany's filings with the Securities and Exchange Commission.SEC. It is not possible to foresee or identify all factors that could cause actual results to differ from expected or historic results. Therefore, investors should not consider the foregoing factors to be an exhaustive statement of all risks, uncertainties, or factors that could potentially cause actual results to differ.differ from forward-looking statements. Additional information concerning these factors can be found in "Risk Factors." See Item 1A, Risk Factors, to Part I of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2005. F-17 WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Year endedEnded December 31 (Millions of dollars, except per share data)      2003     2002     2001   Net sales    $ 12,176     $ 11,016     $ 10,343   Expenses                          Cost 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       50   Equity in loss of affiliated companies      —         (27 )     (4 ) Minority interests      (10 )     (13 )     (12 )          Earnings From Continuing Operations      414       262       34   Discontinued 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       66.7   Diluted      70.1       69.3       68.0       2005   2004   2003   Net sales   $ 14,317   $ 13,220   $ 12,176   Expenses                     Cost of products sold     11,269     10,358     9,423   Selling, general and administrative     2,199     2,089     1,920   Restructuring costs     57     15     3             Operating profit     792     758     830   Other income (expense)                     Interest and sundry income (expense)     (65 )   (14 )   (41 ) Interest expense     (130 )   (128 )   (137 )             Earnings before income taxes and other items     597     616     652   Income taxes     171     209     228               Earnings before equity earnings and minority interests     426     407   �� 424   Equity in income (loss) of affiliated companies     1     (1 )   —   Minority interests     (5 )   —     (10 )           Net earnings   $ 422   $ 406   $ 414             Per share of common stock                     Basic net earnings   $ 6.30   $ 6.02   $ 6.03             Diluted net earnings   $ 6.19   $ 5.90   $ 5.91             Dividends   $ 1.72   $ 1.72   $ 1.36   Weighted-average shares outstanding (in millions):                     Basic     67.1     67.4     68.7   Diluted     68.3     68.9     70.1   See Notes to Consolidated Financial Statements F-18 WHIRLPOOL CORPORATION CONSOLIDATED BALANCE SHEETS (Millions of dollars)      December 31     December 31        2003      2002     2005   2004   ASSETS             ASSETS           Current Assets             Current Assets           Cash and equivalents      $ 249      $ 192   Cash and equivalents   $ 524   $ 243   Trade receivables, less allowances (2003: $113; 2002: $94)        1,913        1,781   Trade receivables, less allowances (2005: $76; 2004: $107) Trade receivables, less allowances (2005: $76; 2004: $107)   2,081   2,032   Inventories        1,340        1,089   Inventories   1,591   1,701   Prepaid expenses        62        64   Prepaid expenses   95   74   Deferred income taxes        129        83   Deferred income taxes   134   189   Other current assets        172        118   Other current assets   285   275                 Total Current Assets        3,865        3,327   Total Current Assets   4,710   4,514                 Other Assets             Other Assets           Investment in affiliated companies        11        7   Investment in affiliated companies   28   16   Goodwill, net        165        161   Goodwill Goodwill   169   168   Other intangibles, net        85        187   Other intangibles, net   115   108   Deferred income taxes        268        437   Deferred income taxes   472   323   Prepaid pension costs        357        43   Prepaid pension costs   —   329   Other assets        154        131   Other assets   243   140                   1,027   1,084          1,040        966         Property, Plant and Equipment             Property, Plant and Equipment           Land        84        87   Land   80   91   Buildings        1,004        954   Buildings   1,033   1,073   Machinery and equipment        5,391        4,793   Machinery and equipment   6,108   5,933   Accumulated depreciation        (4,023 )      (3,496 ) Accumulated depreciation   (4,710 )   (4,514 )                      2,456        2,338     2,511   2,583                 Total Assets      $ 7,361      $ 6,631   Total Assets   $ 8,248   $ 8,181                 LIABILITIES AND STOCKHOLDERS’ EQUITY             LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES AND STOCKHOLDERS' EQUITY           Current Liabilities             Current Liabilities           Notes payable      $ 260      $ 221   Notes payable   $ 131   $ 244   Accounts payable        1,944        1,631   Accounts payable   2,330   2,297   Employee compensation        303        273   Employee compensation   352   300   Deferred income taxes        48        100   Deferred income taxes   61   57   Accrued expenses        701        664   Accrued expenses   880   811   Restructuring costs        45        122   Restructuring costs   19   13   Income taxes Income taxes   18   110   Other current liabilities        269        283   Other current liabilities   145   146   Current maturities of long-term debt        19        211   Current maturities of long-term debt   365   7                 Total Current Liabilities        3,589        3,505   Total Current Liabilities   4,301   3,985                 Other Liabilities             Other Liabilities           Deferred income taxes        236        117   Deferred income taxes   167   240   Pension benefits        298        358   Pension benefits   467   367   Postemployment benefits        489        487   Postemployment benefits   511   499   Product warranty        53        57   Other liabilities        198        198   Other liabilities   220   256   Long-term debt        1,134        1,092   Long-term debt   745   1,160                        2,408        2,309     2,110   2,522                 Minority Interests Minority Interests   92   68   Stockholders' Equity Stockholders' Equity           Common stock, $1 par value: Common stock, $1 par value:   92   90   Authorized—250 million shares           Minority Interests        63        78   Issued—92 million shares (2005); 90 million shares (2004)           Stockholders’ Equity             Common stock, $1 par value:        88        87   Authorized—250 million shares             Issued—89 million shares (2003); 87 million shares (2002)             Outstanding—69 million shares (2003); 68 million shares (2002)             Outstanding—68 million shares (2005); 67 million shares (2004)           Paid-in capital        659        582   Paid-in capital   863   737   Retained earnings        2,276        1,985   Retained earnings   2,902   2,596   Accumulated other comprehensive income (loss)        (757 )      (999 ) Treasury stock—20 million shares (2003); 19 million shares (2002)        (965 )      (916 ) Accumulated other comprehensive loss Accumulated other comprehensive loss   (862 )   (601 ) Treasury stock—24 million shares (2005); 23 million shares (2004) Treasury stock—24 million shares (2005); 23 million shares (2004)   (1,250 )   (1,216 )               Total Stockholders’ Equity        1,301        739   Total Stockholders' Equity Total Stockholders' Equity   1,745   1,606                 Total Liabilities and Stockholders’ Equity      $ 7,361      $ 6,631   Total Liabilities and Stockholders' Equity Total Liabilities and Stockholders' Equity   $ 8,248   $ 8,181                 See Notes to Consolidated Financial Statements F-19 WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31 (Millions of dollars)      2003     2002     2001   Operating Activities                          Net 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       4   Loss on disposition of assets      6       5       2   Loss on discontinued operations      —         43       21   Depreciation and amortization      427       405       396   Changes in assets and liabilities, net of business acquisitions:                          Trade receivables      4       (67 )     116   Inventories      (127 )     101       (26 ) Accounts payable      163       63       230   Product recalls      6       (239 )     239   Restructuring charges, net of cash paid      (89 )     33       74   Taxes 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 Activities                          Capital 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 Activities                          Net 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                2005   2004   2003   Operating Activities                     Net earnings   $ 422   $ 406   $ 414   Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:                     Equity in (earnings) losses of affiliated companies, less dividends received     (1 )   1     —   (Gain) loss on disposition of assets     (39 )   (7 )   6   Gain on disposition of business     (9 )   —     —   Depreciation and amortization     442     445     427   Changes in assets and liabilities, net of business acquisitions:                       Trade receivables     (173 )   (16 )   4     Inventories     37     (266 )   (127 )   Accounts payable     87     253     163     Restructuring charges, net of cash paid     8     (33 )   (89 )   Taxes deferred and payable, net     (105 )   (18 )   55     Accrued pension     47     6     (109 )   Accrued payroll and other compensation     79     (23 )   24     Other—net     86     46     (24 )           Cash Provided By Operating Activities   $ 881   $ 794   $ 744             Investing Activities                     Capital expenditures   $ (494 ) $ (511 ) $ (423 ) Proceeds from sale of assets     93     74     75   Proceeds from sale of business     48     —     —   Acquisitions of businesses, less cash acquired     (77 )   (2 )   (4 )           Cash Used For Investing Activities   $ (430 ) $ (439 ) $ (352 )           Financing Activities                     Net (repayments) proceeds of short-term borrowings   $ (124 ) $ (37 ) $ 7   Proceeds of long-term debt     —     —     6   Repayments of long-term debt     (7 )   (21 )   (221 ) Dividends paid     (116 )   (116 )   (94 ) Purchase of treasury stock     (34 )   (251 )   (65 ) Redemption of WFC preferred stock     —     —     (33 ) Common stock issued under stock plans     102     64     65   Other     12     3     (10 )           Cash Used For Financing Activities   $ (167 ) $ (358 ) $ (345 )           Effect of Exchange Rate Changes on Cash and Equivalents   $ (3 ) $ (3 ) $ 10             Increase (Decrease) in Cash and Equivalents   $ 281   $ (6 ) $ 57   Cash and Equivalents at Beginning of Year     243     249     192             Cash and Equivalents at End of Year   $ 524   $ 243   $ 249             See Notes to Consolidated Financial Statements F-20 WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’STOCKHOLDERS' EQUITY Year ended December 31 (Millions of dollars)      Common Stock    Treasury Stock/ Paid-in Capital     Accumulated Other Comprehensive Income (Loss)     Retained Earnings     Total   Balances, December 31, 2000    $ 84    $ (444 )   $ (495 )   $ 2,539     $ 1,684   Comprehensive loss                                         Net earnings      —        —         —         21       21   Cumulative effect of change in accounting principle, net of tax of $9      —        —         (11 )     —         (11 ) Unrealized loss on derivative instruments      —        —         (6 )     —         (6 ) Minimum pension liability adjustment, net of tax 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       —         —         88   Dividends declared on common stock      —        —         —         (90 )     (90 )               Balances, December 31, 2001    $ 86    $ (401 )   $ (697 )   $ 2,470     $ 1,458                 Comprehensive loss                                         Net loss      —        —         —         (394 )     (394 ) Unrealized loss on derivative instruments      —        —         (3 )     —         (3 ) Minimum pension liability adjustment, net of tax of $100      —        —         (151 )     —         (151 ) Foreign currency items, net of tax of $0      —        —         (148 )     —         (148 )                                     Comprehensive loss                                     (696 )                                     Common stock repurchased, net of reissuances      —        (35 )     —         —         (35 ) Common stock issued      1      102       —         —         103   Dividends declared on common stock      —        —         —         (91 )     (91 )               Balances, December 31, 2002    $ 87    $ (334 )   $ (999 )   $ 1,985     $ 739                 Comprehensive income                                         Net earnings      —        —         —         414       414   Unrealized loss on derivative instruments      —        —         (5 )     —         (5 ) Minimum pension liability adjustment, net of tax of $75      —        —         118       —         118   Foreign currency items, net of tax of $5      —        —         129       —         129                                       Comprehensive income                                     656                                       Common stock repurchased, net of reissuances      —        (49 )     —         —         (49 ) Common stock issued      1      77       —         —         78   Dividends declared on common stock      —        —         —         (123 )     (123 )               Balances, December 31, 2003    $ 88    $ (306 )   $ (757 )   $ 2,276     $ 1,301                     Total   Retained Earnings   Accumulated Other Comprehensive Income (Loss)   Treasury Stock / Paid-in-Capital   Common Stock Balances, December 31, 2002   $ 739   $ 1,985   $ (999 ) $ (334 ) $ 87 Comprehensive income                                 Net earnings     414     414     —     —     —   Unrealized loss on derivative instruments     (5 )   —     (5 )   —     —   Minimum pension liability adjustment, net of tax of $75     118     —     118     —     —   Foreign currency items, net of tax of $5     129     —     129     —     —                             Comprehensive income     656                                                     Common stock repurchased, net of reissuances     (49 )   —     —     (49 )   — Common stock issued     78     —     —     77     1 Dividends declared on common stock     (123 )   (123 )   —     —     —             Balances, December 31, 2003   $ 1,301   $ 2,276   $ (757 ) $ (306 ) $ 88             Comprehensive income                                 Net earnings     406     406     —     —     —   Unrealized gain on derivative instruments     13     —     13     —     —   Minimum pension liability adjustment, net of tax of $14     (31 )   —     (31 )   —     —   Foreign currency items, net of tax of $14     174     —     174     —     —                             Comprehensive income     562                                                     Common stock repurchased, net of reissuances     (251 )   —     —     (251 )   — Common stock issued     80     —     —     78     2 Dividends declared on common stock     (86 )   (86 )   —     —     —             Balances, December 31, 2004   $ 1,606   $ 2,596   $ (601 ) $ (479 ) $ 90             Comprehensive income                                 Net earnings     422     422     —     —     —   Unrealized gain on derivative instruments     12     —     12     —     —   Minimum pension liability adjustment, net of tax of $141     (248 )   —     (248 )   —     —   Foreign currency items, net of tax of $12     (25 )   —     (25 )   —     —                             Comprehensive income     161                                                     Common stock repurchased, net of reissuances     (34 )   —     —     (34 )   — Common stock issued     128     —     —     126     2 Dividends declared on common stock     (116 )   (116 )   —     —     —             Balances, December 31, 2005   $ 1,745   $ 2,902   $ (862 ) $ (387 ) $ 92             See Notes to Consolidated Financial Statements F-21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) SUMMARY OF PRINCIPAL ACCOUNTING POLICIES Nature of Operations Whirlpool Corporation is the world’sa leading global manufacturer and marketer of major home appliances. The Company manufactures in 1312 countries under 9 majornine principal brand names and markets products to distributors and retailers in more than 170 countries. Principles of Consolidation The Consolidated Financial Statements include all majority-owned subsidiaries. An investment consistingInvestments in affiliated companies consist of a direct40% voting interest of 40% in an affiliated Company, principallyinternational company engaged in the sale of major home appliances, isa 30% interest in an international company engaged in the sale of extended warranty contracts and a 25% interest in an international company engaged in the sale of kitchen cabinets. These companies are accounted for by the equity method. All intercompany transactions have been eliminated upon consolidation. Use of Estimates Management is required to make estimates and assumptions that affect the amounts reported in the financial statementsConsolidated Financial 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 by the shipping terms, which generally designate a transferterms. For the majority of the Company's sales, title is transferred to the customer as soon as the product is shipped. For a portion of the Company's sales, primarily in Europe, title is transferred to the customer upon receipt of the product at the customer's location. Allowances for estimated returns are made on sales of certain products based on historical return 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 doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes the allowance for doubtful accounts based on a combination of specific customer circumstances and credit conditions and based on a history of write-offs and collections. The Company’sCompany evaluates items on an individual basis when determining accounts receivable write-offs. The Company's policy is generally to not charge interest on trade receivables after the invoice becomes past due. A receivable is considered past due if payments have not been received within agreed upon invoice terms. Freight and Warehousing Costs Freight-outFreight and warehousing costs included in selling, general and administrative expenses in the statements of operations were $800 million, $723 million and $576 million $520 millionin 2005, 2004 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 are considered cash equivalents. Inventories Inventories are stated at first-in, first-out (FIFO)("FIFO") cost, except U.S. production inventories, which are stated at last-in, first-out (LIFO)("LIFO") cost, and Brazilian inventories, which are stated at average cost. Costs do 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 computed using the straight-line method based on the estimated useful lives of the assets. Useful lives for buildings range from 25 to 40 years and for machinery and equipment range from 3 to 10 years. Assets recorded 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$339 million, $282$315 million and $231$285 million in 2005, 2004 and 2003, 2002 and 2001, respectively. Advertising Costs Advertising costs are charged to expense as incurred. Such costs were $239 million, $221 million and $170 million $176 millionin 2005, 2004 and $177 million in 2003, 2002 and 2001, respectively. Contingent Tax Matters The Company establishes liabilities for probable and estimable assessments by taxing authorities resulting from known tax exposures. Such amounts represent a reasonable provision for taxes ultimately expected to be paid, and may need to be adjusted over time as more information becomes known. Foreign Currency Translation The functional currency for the Company’sCompany's international subsidiaries and affiliates is typically the local currency. 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 Financial Accounting Standards (“SFAS”("SFAS") No. 133, “Accounting"Accounting for Derivative Instruments and Hedging Activities,”" 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 been designated. 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 cash flow hedge is reported as a component of accumulated other comprehensive income and reclassified into earnings in the same line item associated with the hedged transaction in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the unrealized gain or loss on the derivative instrument, if any, is recognized in other income (expense)interest and sundry income/expense in current earnings during the period of change. Fair value hedges are hedges that eliminatemitigate the risk of changes in the fair values of assets, liabilities and certain types of firm commitments. The gain or loss on a derivative instrument designated as a fair value hedge and the offsetting loss or gain on the hedged item are recognized in the same line item associated 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 to hedge the foreign currency exposure of a net investment in a foreign operation. For those derivatives that qualify as net investment hedges, the effective portion of any unrealized gain or loss is reported in accumulated other comprehensive income as part of the cumulative translation adjustment. Any ineffective portion of net investment hedges is recognized in other income (expense)interest and sundry income/expense in current earnings during the period of change. F-23 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) For derivative instruments not designated as hedging instruments, the unrealized gain or loss is recognized in other income (expense)interest and sundry 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 with Accounting Principles Board Opinion No. 25, “Accounting"Accounting for Stock Issued to Employees,”" and related Interpretations. The Company has adopted the disclosure provisions of SFAS No. 148, “Accounting"Accounting for Stock-Based Compensation—Compensation — Transition and Disclosure”Disclosure" but has not adopted the fair value recognition provisions of SFAS No. 123, “Accounting"Accounting for Stock-Based Compensation,”" as amended. Had the Company 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 )   $ 21 Pro-forma      402      (407 )     8 Basic net earnings (loss) per share                       As reported    $ 6.03    $ (5.79 )   $ 0.31 Pro-forma      5.86      (5.99 )     0.12 Diluted net earnings (loss) per share                       As reported    $ 5.91    $ (5.68 )   $ 0.31 Pro-forma      5.74      (5.87 )     0.12 Year ended December 31 (Millions of dollars, except per share data)   2005   2004   2003 Compensation cost included in earnings as reported (net of tax benefits)   $ 15   $ 9   $ 13 Pro-forma total fair value compensation cost (net of tax benefits)   $ 19   $ 17   $ 25 Net earnings:                     As reported   $ 422   $ 406   $ 414   Pro-forma     418     398     402 Basic net earnings per share:                     As reported   $ 6.30   $ 6.02   $ 6.03   Pro-forma     6.23     5.90     5.86 Diluted net earnings per share:                     As reported   $ 6.19   $ 5.90   $ 5.91   Pro-forma     6.13     5.78     5.74 Net Earnings Per Common Share (in thousands) Diluted net earnings per share of common stock includes the dilutive effect of stock options and stock based compensation plans. For the years ended December 31, 2003, 20022005, 2004 and 2001,2003, a total of 1,803approximately 576,000 options, 1,8851,831,000 options and 6191,803,000 options, respectively, were excluded from the calculation of diluted earnings per share because their exercise prices would render them anti-dilutive. Basic and diluted earnings per share were calculated as follows: Millions of dollars and shares   2005   2004   2003 Numerator for basic and diluted earnings per share — net earnings   $ 422   $ 406   $ 414         Denominator for basic earnings per share — weighted-average shares     67.1     67.4     68.7 Effect of dilutive securities — stock-based compensation     1.2     1.5     1.4         Denominator for diluted earnings per share — adjusted weighted-average shares     68.3     68.9     70.1 Reclassifications Certain reclassifications have been made to prior year data to conform to the current year presentation which had no effect on net income reported for any period. (2) NEW ACCOUNTING STANDARDS In January 2003,December 2004, the Financial Accounting Standards Board (FASB)("FASB") issued InterpretationSFAS No. 46, “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin123 (R), "Share-Based Payments." SFAS No. 51” (Interpretation or FIN 46). The Interpretation123 (R) requires consolidation, beginning December 31, 2003, of entities in which the Company absorbsto measure all employee stock-based compensation awards using a majorityfair-value method and record such expense in its consolidated financial statements. SFAS No. 123 (R) was originally effective for periods beginning after June 15, 2005; however, in April 2005, the Securities and Exchange Commission ("SEC") changed the effective date of SFAS No. 123 (R) to fiscal years beginning after June 15, 2005 for non-small business issuers. SFAS No. 123 (R) provides alternative methods of adoption, which include a modified prospective application and a modified retroactive application. On January 1, 2006 the entity’sCompany will apply the modified prospective method which requires entities to recognize compensation costs in financial statements issued after the date of adoption for all share-based payments granted, modified or settled after the date of adoption as well as for any awards that were granted and unvested prior to the adoption date. The adoption of FAS 123 (R) is not expected losses, receivesto have a majoritymaterial impact on the Company's results of operations or financial position. In November 2004, FASB issued SFAS No. 151, "Inventory Costs, an Amendment of ARB No. 43 Chapter 4." SFAS No. 151 requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling be recognized as current-period charges rather than being included in inventory, regardless of whether the entity’scosts meet the criterion of abnormal as defined in ARB 43. SFAS No. 151 is applicable for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company does not believe the adoption of SFAS No. 151 will have a material impact on the Company's results of operations or financial position; as such costs have historically been expensed as incurred. In December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-Monetary Assets — an Amendment of APB Opinion No. 29," which addresses the measurement of exchanges of non-monetary assets. SFAS No. 153 eliminates the exception to fair value for exchanges of similar productive assets and replaces it with a general exception for exchange transactions that do not have commercial substance. SFAS No. 153 specifies that a non-monetary exchange has commercial substance if the future cash flows of an entity are expected residual returns, or both,to change significantly as a result of ownership, contractual or other financial interests in the entity. Previously, entities were consolidated whenexchange. SFAS No. 153 is effective for fiscal periods after June 15, 2005. The implementation of SFAS No. 153 is not expected to have a material impact on the Company had a controlling financial interest, typically through ownership of a majority voting interest in an entity. The adoption of FIN 46 did not materially impact the Company’s financial position orCompany's results of operations. F-24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) operations or financial position. In December 2003,March 2005, the FASB issued revisedInterpretation No. ("FIN") 47, "Accounting for Conditional Asset Retirement Obligations — an interpretation of FASB Statement No. 132 (SFAS 132), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” The revised143." FIN 47 clarifies that SFAS 132No. 143, "Accounting for Asset Retirement Obligations," requires additional disclosures aboutthat an entity recognize a liability for the typesfair value of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit cost recognized during interim periods. This Statementa conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. FIN 47 is effective for financial statements withno later than the end of fiscal years ending after December 15, 2005. The implementation of FIN 47 did not have a material impact on the Company's results of operations or financial position. In June 2005, the FASB issued FASB Staff Position ("FSP") No. 143-1, "Accounting for Electronic Equipment Waste Obligations." The FSP addresses accounting by commercial users and producers of electrical and electronic equipment, in connection with Directive 2002/96/EC on Waste Electrical and Electronic Equipment ("WEEE") issued by the European Union ("EU") on February 13, 2003. This Directive requires EU-member states to adopt legislation to regulate the collection, treatment, recovery, and environmentally sound disposal of electrical and electronic waste equipment, and sets forth certain obligations relating to covering the cost of disposal of such equipment by commercial users. Producers will also be required to cover the cost of disposal of such equipment under the WEEE legislation if they are participating in the market as of August 13, 2005. As of December 31, 2005, while many EU-member states had enacted legislation, several major EU-member states were still in the drafting process. As a result, final estimates regarding the financial impact from WEEE legislation on the Company cannot be made at this time. The adoptionCompany continues to evaluate the impact of the revised SFAS 132 did not impact the Company’s financial position or results of operations. WEEE legislation as EU-member states implement guidance and will account for related costs accordingly. (3) GOODWILL AND OTHER INTANGIBLES Goodwill On January 1, 2002, the Company adopted Statement of Financial Accounting StandardsUnder SFAS No. 142, (SFAS 142), “Goodwillgoodwill and Other Intangible Assets,”indefinite-lived intangibles are no longer amortized and recorded a non-cash after-tax charge of $613 million, or $8.84 per diluted share, as a cumulative effect of a change in accounting principle. An additionalare subject to an annual impairment of $9 million, after-tax, was recognized as a charge to operationsanalysis, performed during the fourth 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 aneach year. The Company determines the fair value of each reporting unit using a discounted cash flow approach. The Company has determined its reporting units are: North America, Europe, Multibras and Embraco (which combined are Latin America), and Asia. The Company performed the annual impairment analysis. The following table provides comparative net earnings (loss)tests and net earnings (loss) per share haddetermined there was no impairment of remaining goodwill for the non-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 )   $ 21 Goodwill amortization      —        —         27           Adjusted net earnings (loss)    $ 414    $ (394 )   $ 48           Basic earnings per share                       Reported net earnings (loss)    $ 6.03    $ (5.79 )   $ .31 Goodwill amortization      —        —         .40           Adjusted net earnings (loss)    $ 6.03    $ (5.79 )   $ .71           Diluted earnings per share                       Reported net earnings (loss)    $ 5.91    $ (5.68 )   $ .31 Goodwill amortization      —        —         .40           Adjusted net earnings (loss)    $ 5.91    $ (5.68 )   $ .71           years ended December 31, 2005, 2004 and 2003. The following table summarizes the changes in the carrying amount of goodwill for the year ended December 31, 2003:goodwill: Reporting Unit—Millions of dollars    Beginning of Year    Other    End of Year North America    $ 157    $ 4    $ 161 Latin America      4      —        4            Total    $ 161    $ 4    $ 165                December 31 Reporting Unit — Millions of dollars   2005   2004 North America   $ 165   $ 164 Latin America     4     4       Total   $ 169   $ 168       The $4$1 million increase in the carrying value of North America goodwill is related to the effects of currency translation for its Canadian subsidiary. F-25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Other Intangible Assets OtherThe carrying amounts of other intangibles are comprised of the following: December 31—Millions of dollars    2003    2002 Trademarks (indefinite-lived)    $ 51    $ 49 Patents and non-compete agreements      1      5 Pension related      33      133         Total other intangible assets, net    $ 85    $ 187             December 31 Millions of dollars   2005   2004 Trademarks (indefinite-lived)   $ 51   $ 53 Patents and non-compete agreements     —     3 Pension related     64     52       Total other intangible assets, net   $ 115   $ 108       The balances include trademarks acquired as part of the Whirlpool Mexico and Polar S.A. ("Polar") acquisitions (See Note 4)in 2002 and intangible assets related to minimum pension liabilities (See(see Note 16)14). Accumulated amortization totaled $25$4 million and $21$3 million at December 31, 20032005 and 2002. 2004. During 2005 and 2004, fully amortized intangible assets were removed from the Company's Consolidated Balance Sheet. (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, the Company’s 49% ownership in Whirlpool Mexico was accounted for as an equity investment. Whirlpool Mexico has been included in the Consolidated Financial Statements within the North American operating segment since the acquisition date. The aggregate purchase price was $151 million in cash plus outstanding debt at the time of acquisition, which totaled $143 million. The transaction is expected to result in synergies and operational benefits, and generated goodwill of $89 million. The transaction also generated approximately $15 million in indefinite-lived intangible assets related to trademarks owned by Whirlpool Mexico. The Whirlpool Mexico opening balance sheet is summarized (in millions) as follows: ASSETS           LIABILITIES AND STOCKHOLDER’S EQUITY Current assets           Current liabilities        Trade receivables, net    $ 130    Accounts payable    $ 112 Inventories      60    Notes payable      132 Other current assets      15                          Total Current Assets      205    Total Current Liabilities      244              Other assets           Other liabilities        Property, plant and equipment      245    Other liabilities      80                  Goodwill      89    Total Other Liabilities      80                  Other intangibles      15                         Total Stockholder’s Equity      230              Total Assets    $ 554    Total Liabilities and Stockholder’s Equity    $ 554              F-26 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Polar On June 5, 2002, the Company acquired 95% of the shares of Polar, S.A. (Polar), a leading major home appliance manufacturer in Poland. The results of Polar’sPolar's operations have been included in the Consolidated Financial Statements within the EuropeanEurope operating segment since that date. The aggregate 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 intangible assets related to trademarks owned by Polar. The operations of Polar have been included in the Company’s European operating segment. During 2003, Whirlpool acquired the remaining 5% of the shares of Polar. MASA In September 2005, the Company completed the sale of its 93% interest in Multibras da Amazonia S.A. ("MASA"), an injection molding subsidiary located in Manaus, Brazil, to Flextronics Plasticos Ltda. Proceeds from the sale were $48 million, and a $9 million pre-tax gain from the sale is included in the interest and sundry income/expense line of the Company's 2005 Consolidated Statements of Operations. Whirlpool will continue to purchase certain products from Multibras da Amazonia S.A. The entity was not a significant subsidiary, and accordingly, pro-forma results of operations have not been provided. Other On September 30, 2003, the Company completed the sale of its interest in Wellmann to Alno, aboth companies being prominent German kitchen 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.manufacturers. The sale did not have a material impact to the Company’sCompany's financial position or results of operations. The Company has a 25% interest in Alno after increasing its interest from 13% during 2005. The increased investment, as well as the Company's interest in the results of operations of Alno during 2005 were not material. The Company analyzed the provisions of FINFASB Interpretation No. ("FIN") 46 with respect to its 10% interest in Alno and determined 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 Narcissus Shanghai Company Limited (“Narcissus”) for $9 million. Subsequent to the purchase, the Company was renamed Whirlpool Home Appliance (Shanghai) Co. Ltd. (“Whirlpool Shanghai”). Whirlpool Shanghai is a home appliance manufacturing Company located in Shanghai, China. The transaction was largely necessitated by the exercise of a put option by the minority partner arising out of an amendment to the joint venture contract agreed to in February 1998. The purchase resulted in $9 million of goodwill which was subsequently written off as impaired goodwill under the requirements of SFAS No. 142, “Goodwill and Other Intangible Assets.” The entity is now a wholly owned subsidiary of the Company. entity. (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 a portfolio of leveraged leases which are recorded in other non-current assets in the balance sheets and totaled $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 aircraft leases 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 securitized aircraft leases. The write-off, due primarily to the softening aircraft leasing industry, resulted in a loss from discontinued operations of $35 million, or $21 million after-tax. F-27 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (6) INVENTORIES December 31—Millions of dollars    2003     2002   Finished products    $ 1,118     $ 928   Work in process      64       71   Raw materials      284       226                 1,466       1,225   Less excess of FIFO cost over LIFO cost      (126 )     (136 )        Total inventories    $ 1,340     $ 1,089          December 31 — Millions of dollars   2005   2004   Finished products   $ 1,361   $ 1,410   Work in process     64     57   Raw materials     299     353                 1,724     1,820   Less excess of FIFO cost over LIFO cost     (133 )   (119 )         Total inventories   $ 1,591   $ 1,701           LIFO inventories represent approximately 31%28% and 33%23% of total inventories at December 31, 20032005 and 2002,2004, respectively. (7) ASSET IMPAIRMENTS During the fourth quarter of 2003, the Company determined a production line would no longer be utilized in its Mexican operations. Accordingly, an impairment analysis was performed, and the total non-discounted future cash flows of the equipment was less than its carrying value. As a result, the Company 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 statements of operations. The Company recorded a $22 million after-tax impairment charge in the second quarter of 2002 related to its minority investments in and advances to Wellmann. The Company acquired its initial investment in 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, which resulted in the business revising its estimated future cash flows. These circumstances prompted the Company to conduct an impairment review, resulting in the above charge, which is reflected in equity earnings (loss) in the consolidated statements of operations. See Note 4 regarding the sale of the Company’s interest in Wellmann. (8)(6)  FINANCING ARRANGEMENTS Notes Payable and Debt AtOn December 31, 2003,2, 2005, the Company hadentered into an Amended and Restated Long Term Five-Year Credit Agreement (the "Amended and Restated Credit Agreement") by and among the Company, certain other borrowers, the lenders referred to therein, Citibank N.A., as administrative agent and fronting agent, JPMorgan Chase Bank, N.A., as syndication agent, and ABN Amro Bank N.V., Royal Bank of Scotland and Bank of America, as documentation agents, which amends and restates the Amended and Restated Long Term Credit Agreement dated as of May 28, 2004. On December 2, 2005, the parties to the Amended and Restated Credit Agreement also entered into a 364-Day Credit Agreement (the "364-Day Credit Agreement" and together with the Amended and Restated Credit Agreement, the "Credit Facilities"). The Credit Facilities provide for an aggregate of $2.7 billion in committed unsecured revolving linescredit facilities. The Amended and Restated Credit Agreement consists of a $2.2 billion 5-year credit facility, which includes a $200 million letter of credit available from banks totaling $1.2 billion.subfacility. The lines of credit are comprised364-Day Credit Agreement consists of a committed $800 million credit agreement which expires in June 2006, and a committed $400$500 million 364-day credit agreement maturing in May 2004. These committed lines supportfacility, which may be converted into a term loan. Borrowing capacity of $1.2 billion under the Company’sAmended and Restated Credit Agreement became available on December 2, 2005. Borrowing capacity of $500 million under the 364-Day Credit Agreement and the remaining $1.0 billion under the Amended and Restated Credit Agreement will become available upon clearance of the acquisition of Maytag by the Antitrust Division of the Department of Justice. Borrowings under the Credit Facilities will be available to the Company and designated subsidiaries for general corporate purposes, including commercial paper programs and other liquidity needs. The interest rate for borrowingsupport. Subsidiary borrowings will be guaranteed by the Company. Interest under the credit agreements is generallyCredit Facilities accrues at a variable annual rate based on the London Interbank Offered Rate ("LIBOR") plus a spread that reflectsmargin dependent on the Company’s debt rating. Company's credit rating at the time of borrowing. The credit agreementsCredit Facilities require that the Company maintainto meet certain financial tests, including a maximum debtleverage ratio not greater than 3.0 to EBITDA ratio1.0 and a minimuman interest coverage ratio. ratio not less than 2.0 to 1.0. The Credit Facilities also contain covenants which, among other things, require the Company to deliver to the lenders specified financial information, including annual and quarterly financial information, and limit the Company's ability to (or to permit any subsidiaries to), subject to various exceptions and limitations, (i) merge with other companies; (ii) create liens on its property; (iii) incur debt or off-balance sheet obligations at the subsidiary level; (iv) enter into transactions with affiliates, except on an arms-length basis; (v) enter into agreements restricting the payment of subsidiary dividends or restricting the making of loans or repayment of debt by subsidiaries to the Company or other subsidiaries; and (vi) enter into agreements restricting the creation of liens on its assets. At December 31, 2003,2005 and 2004, the Company was in compliance with itsthe financial covenants. Thecovenants under these credit agreements provide the Company with access to adequateagreements. During 2005 and competitive funding under usual or unusual market conditions. During 2003,2004, there were no borrowings outstanding under these credit agreements. F-28 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Notes payable consist of the following: December 31—Millions of dollars    2003    2002 Payable to banks    $ 170    $ 208 Commercial paper      90      13         Total notes payable    $ 260    $ 221         December 31 — Millions of dollars   2005   2004 Payable to banks   $ 131   $ 244 Commercial paper     —     —       Total notes payable   $ 131   $ 244       The fair value of the Company’sCompany's notes payable approximates the carrying amount due to the short maturity of these obligations. The weighted averageweighted-average interest rate on notes payable was 3.8%4.7% and 5.7% at3.5% for the years ended December 31, 20032005 and 2002,2004, respectively. Long-term debt consists of the following: December 31 — Millions of dollars   2005   2004 Eurobonds (EUR 300 million) — 5.875% due 2006   $ 357   $ 407 Debentures — 9.1% due 2008     125     125 Notes — 8.6% due 2010     325     325 Debentures — 7.75% due 2016     243     243 Other (various interest rates with maturities through 2010)     60     67           $ 1,110   $ 1,167 Less current maturities     365     7       Total long-term debt, net of current maturities   $ 745   $ 1,160       December 31—Millions of dollars    2003    2002 Debentures—9% due 2003    $ —      $ 200 Eurobonds (EUR 300 million)—5.875% due 2006      374      310 Debentures—9.1% due 2008      125      125 Notes—8.6% due 2010      325      325 Debentures—7.75% due 2016      243      243 Other (various interest rates with maturities of 2003-2012)      86      100              $ 1,153    $ 1,303 Less current maturities      19      211         Total long-term debt, net of current maturities    $ 1,134    $ 1,092         The Company's Euro-denominated Eurobonds mature in June 2006. The Company anticipates replacing the Eurobonds with the proceeds of a domestic bond offering and commercial paper. Annual maturities of long-term debt in the next five years are $19 million, $5 million, $381$365 million, $9 million, $127 million, $2 million and $127 million. $365 million, respectively. The Company paid interest on short-term and long-term debt totaling $137 million, $141$124 million and $151$137 million in 2005, 2004 and 2003, 2002 and 2001, respectively. The fair value of long-term debt (including current maturities) was $1,323$1,213 million and $1,457$1,315 million as of December 31, 20032005 and 2002,2004, respectively, and was estimated using discounted cash flow analyses based on incremental borrowing rates for similar types of borrowing arrangements. On February 7, 2006, the Company filed a shelf registration statement with the SEC, covering an indeterminate amount of debt securities. Preferred Stock Although most of its assets have been divested, WFC remains a legal entity with assets consisting primarily of leveraged leases (see Note 5).leases. WFC also has 17,500 shares of Series B preferred stock outstanding as of December 31, 20032005 and 2004 with a face value of $100 per share, an annual dividend of $6.55 per share and a mandatory redemption date of September 1, 2008. As of December 31, 2002, WFC had 349,300 shares of Series B preferred stock outstanding. On February 1, 2002, the Series C preferred stock was redeemed on the mandatory redemption date. The preferred stock amounts are included within minority interests in the consolidated balance sheets and the carrying amounts approximate fair value. The preferred stockholders are entitled to vote together on a share-for-share basis with WFC’sWFC's common stockholder, Whirlpool Corporation.Whirlpool. Preferred stock dividends are payable quarterly. At its F-29 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) option, WFC may redeem the Series B at any time on or afterOn September 1, 2003.2003, WFC redeemed 331,800 shares of the seriesSeries B preferred stock on September 1, 2003 at a price of $100 per share (at par). The redemption terms requirerequired the payment of any accrued unpaid dividends in addition to the applicable redemption premium, if redeemed early. Aand accordingly, a total of $0.6 million was paid on September 1, 2003 related to dividends. The terms of the preferred stockholders agreement providedprovides for an annual contribution, beginning September 1, 2003, of $1,750,000 to a sinking fund with a final payment of $26,250,000 due on theSeptember 1, 2008 (the mandatory redemption date. The sinking fund contributions are not required duedate) equal to the redemptionnumber of 95% of the outstanding Series B preferred stock on September 1, 2003. outstanding multiplied by the face value of $100 per share. The Company and WFC are parties to a support agreement. Pursuant to the agreement, if at the close of any quarter, WFC’sWFC's net earnings available for fixed charges (as defined) for the preceding twelve months is less than a stipulated amount, the Company is required to make a cash payment to WFC equal to the insufficiency within 60 days of the end of the quarter. The Company was not required to make any payments under this agreement during 2003, 20022005 or 2001.2004. The support agreement may be terminated by either WFC or the Company upon 30 days notice provided that certain conditions are met. The Company has also agreed to maintain ownership of at least 70% of WFC’sWFC's voting stock. (9)(7)  GUARANTEES, COMMITMENTS AND CONTINGENCIES Guarantees The Company guarantees bills of exchange related to Wellmann, a German kitchen cabinet manufacturer, in which the Company previously held a 49.5% interest. The Company sold its interest in Wellmann to Alno, a prominent German kitchen cabinet manufacturer, during the quarter ended September 30, 2003 (See Note 4). These bills of exchange are short-term agreements, usually for 90 days, which allow the (issuer) receiver to convert its receivables into cash, less a minor fee paid to the bank. The bills of exchange are issued both by the Company for loans made to Wellmann and by Wellmann for its trade accounts receivable. In the event Wellmann defaults on its obligations under any of the bills of exchange, the Company would be liable for the related amounts. The Company has limited 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 in January and February 2004. The Company will continue to provide guarantees of certain trade-related obligations 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 standard business practice in Brazil, the subsidiary guarantees customer lines of credit at commercial banks, supporting purchases from the Company, at commercial banks following its normal credit policies. In the event thatIf a customer waswere to default on its line of credit with the bank, the subsidiary would be required to satisfy the obligation with the bank, and the receivable would revert back to the subsidiary. As of December 31, 20032005 and December 31, 2002, these2004, the guaranteed amounts totaled $109$236 million and $66$184 million, respectively. The only recourse the Company has relatedwith respect to these agreementsarrangements would be legal or administrative collection efforts directed against the customer. The Company provides guarantees of indebtedness and lines of credit for various consolidated subsidiaries. The maximum amount of credit facilities under guarantee for consolidated subsidiaries totaled $1.7 billion and $1.4 billion at both December 31, 20032005 and December 31, 2002, respectively. The Company’s total outstanding bank indebtedness, including2004. Outstanding credit facility amounts under guarantee totaled $225$79 million and $212$148 million at December 31, 20032005 and December 31, 2002,2004, respectively. F-30 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Product warranty reserves are established in the same period that revenue from the sale of the related products is recognized. The amounts of those reserves are based on established terms and the Company’sCompany's best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. The product warranty reserves increased in 2003 when compared to 2002 due to increased sales volume and final costs recognized in 2003 primarily related to final costs in connection with the 2001 recall (See Note 14). The following represents a reconciliation of the changes in product warranty reserves for the periods presented: December 31—Millions of dollars    2003     2002   Balance at January 1    $ 128     $ 108   Warranties issued during the period      262       228   Warranties acquired      —         7   Settlements made during the period      (248 )     (214 ) Other changes      6       (1 )        Balance at December 31    $ 148     $ 128          Current portion    $ 95     $ 71   Non-current portion      53       57          Total    $ 148     $ 128          Commitments and Contingencies December 31 — Millions of dollars   2005   2004     Balance at January 1   $ 165   $ 148     Warranties issued during the period     277     270     Settlements made during the period     (294 )   (258 )   Other changes     1     5               Balance at December 31   $ 149   $ 165               Current portion   $ 89   $ 104     Non — current portion     60     61               Total   $ 149   $ 165               Commitments At December 31, 2003,2005, the Company had noncancelable operating lease commitments totaling $266$250 million. The annual future minimum lease payments are detailed in the table below. Millions of dollars      2004    $ 68 2005      61 2006      47 2007      37 2008      28 Thereafter      25      Total noncancelable operating lease commitments    $ 266      Millions of dollars         2006   $ 85     2007     63     2008     49     2009     26     2010     18     Thereafter     9             Total noncancelable operating lease commitments   $ 250             The Company’sCompany's rent expense was $84$123 million, $72$100 million and $98$84 million for the years 2005, 2004 and 2003, 2002 and 2001, respectively. Contingencies In early 2004, Maytag filed a lawsuit against the Company for patent infringement. The suit seeks unspecified damages and an injunction against the continued production or sale of the alleged infringed patented product. The Company believes this suit is without merit, intends to vigorously defend this suit and at this point cannot reasonably estimate a possible range of loss, if any. The suit has been stayed pending the outcome of the pending Maytag acquisition. In 1989, a Brazilian affiliate (now a subsidiary) of the Company brought an action against a financial institution in Brazil seeking a “Declaration"Declaration of Non-Enforceability of Obligations”Obligations" relating to loan documentation entered into without authority by a senior officer of the affiliate. The original amount in dispute was approximately $25 million. In September 2000, a decision in the declaratory action adverse to the Company became final. In 2001, the financial institution began a collection action, and the Company responded with a counterclaim. The lower court has dismissed the counterclaim in 2002 and a F-31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) discretionary appeal of this dismissal has been requested. A finalthe Superior Court confirmed the lower court decision in the collection action is not expected for several years.December 2005. The Company planshas provided for the potential exposure resulting from this litigation during 2005. The Company is currently a defendant in 11 purported class action lawsuits in 11 states related to continueits Calypso clothes washing machine. Two of the original purported class actions have been dismissed. The complaints in these lawsuits generally allege violations of state consumer fraud acts, unjust enrichment, and breach of warranty based on the allegations that the washing machines have various defects. There are no allegations of any personal injury, catastrophic property damage, or safety risk. The complaints generally seek unspecified compensatory, consequential and punitive damages. The Company believes these suits are without merit and intends to aggressivelyvigorously defend these actions. At this matter,point, the Company cannot reasonably estimate a possible range of loss, if any. Two purported national class action lawsuits have been filed against the Company, one in a Missouri state court and one in an Illinois state court, each alleging breach of warranty, fraud, and violation of state consumer protection acts in selling tall tub dishwashers. There are no allegations of any personal injury or property damage and the complaint seeks unspecified compensatory damages. The Company believes these suits are without merit, intends to vigorously defend these actions, and at this point cannot reasonably estimate a possible range of loss.loss, if any. Whirlpool is currently monitoring a supplier-related quality and potential product safety problem that may affect up to 3.5 million appliances manufactured between 2000 and 2002. The Company currently estimates that its potential cost from this matter ranges from zero to $235 million, depending on whether the cost of any such corrective action is borne initially by Whirlpool or the supplier, and, if initially borne by Whirlpool, whether Whirlpool will be successful in recovering its costs from the supplier. In addition, Whirlpool could incur other costs arising out of this matter, which cannot currently be estimated but could be material. The Company is party toinvolved in various other claims and litigation proceedingslegal actions arising in the normal course of business. Management, after taking into consideration legal counsel’scounsel's evaluation of such actions, is of the opinion that the outcome of these matters will not have a material adverse effect on the Company’sCompany's financial position. position or results of operations. (10)(8)  HEDGES AND DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to market risk from changes in foreign currency exchange rates, domestic and foreign interest rates, and commodity prices. Fluctuations in these rates and prices can affect the Company’sCompany's operating results and financial condition. The Company manages its exposure to these market risks through its operating and financing activities and through the use of derivative financial instruments. The Company does not enter into derivative financial instruments for speculative or trading purposes. Using derivative markets means assuming counterparty credit risk. Counterparty risk relates to the loss the Company could incur if a counterparty defaulted on a derivative contract. The Company deals only with investment-grade counterparties and monitors its overall credit risk and exposure to individual counterparties. The Company does not anticipate nonperformance by any counterparties. The amount of counterparty credit exposure is generally the unrealized gains on such derivative contracts. The Company does not require, nor does it post, collateral or security on such contracts. The following summarizes the outstanding derivative contracts at December 31, 20032005 and 20022004 and the exposures to which they relate:         Notional Amount in                 Millions of dollars         Exposure   Derivative   2003   2002   Hedge Type   Term Forecasted cross currency cash flows   Foreign exchange forwards   $ 652   $ 345   Cash flow or fair value hedge   Various, up to 36 months Non-functional currency asset/liability   Foreign exchange forwards   $ 683   $ 533   Undesignated   Various, up to 12 months Raw Material Purchases   Commodity swaps   $ 17   $ 29   Cash flow hedge   Various, up to 18 months Floating Rate Debt   Interest rate swaps   $ 100   $ 100   Cash flow hedge   2006 Fixed Rate Debt   Interest rate swaps   $ —     $ 200   Fair value hedge   2003         Notional Amount in Millions of dollars         Exposure               Derivative   2005   2004   Hedge Type   Term Forecasted cross currency cash flows   Foreign exchange forwards/options   $ 1,277   $ 1,035   Cash flow or fair value hedge   Various, up to 15 months Non-functional currency asset/liability   Foreign exchange forwards/options   $ 479   $ 580   Undesignated   Various, up to 11 months Raw Material Purchases   Commodity swaps   $ 122   $ 18   Cash flow hedge   Various, up to 15 months Floating Rate Debt   Interest rate swaps   $ 100   $ 100   Cash flow hedge   2006 Fixed Rate Debt   Interest rate swaps   $ 100   $ 50   Fair value hedge   2008 Anticipated Debt Issuance   Interest rate swaps   $ 200   $ —   Cash flow hedge   2013 Forecasted cross currency cash flows relate primarily to foreign currency denominated expenditures and intercompany financing agreements, royalty agreements and dividends. Non-functional currency asset and liability hedges are undesignated but relate primarily to short term payables and receivables and intercompany loans. Commodity swaps relate to raw material purchases (for example, copper and aluminum) used in the manufacturing process. Unrealized gains relating to these foreign exchange forwards/options and losses on the above foreign currency exchange contracts and commoditiescommodity swaps were not significant$44 million as of December 31, 20032005. The unrealized gains and 2002, respectively. F-32 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) losses for 2004 were not significant. The Company’sCompany's $100 million interest rate swapswaps maturing in 2006 is designated and is effective as a hedge of future cash payments and is treated as a cash flow hedge for accounting purposes. The fair value of this contract wasis a loss of $10$2.8 million as of December 31, 20032005 and a loss of $12$6 million as of December 31, 2002. 2004. The Company’s $200Company's $100 million interest rate swap which maturedswaps maturing in 2003 was2008 are designated and wasare effective as a hedgehedges of the fair value of the fixed ratefixed-rate debt and wasare treated as a fair value hedgehedges for accounting purposes. The fair valuevalues of this contract wasthese contracts are a gainloss of $1 million as of December 31, 2002. 2005. The Company has designated a portion of its euro-denominatedEuro-denominated fixed-rate debt as a hedge to protect the value of its net investments in its European subsidiaries. Translation adjustments related to this debt are not included in the income statement, but are shown in the cumulative translation adjustment account included in accumulated other comprehensive income. During the year ended December 31, 2003,2005, the Company recognized $16$29 million of net losses included ingain within the cumulative translation adjustment related to this net investment hedge. During the years ended December 31, 20032005 and 2002,2004, the Company’sCompany's gains and losses related to the ineffective portion of its hedging instruments were immaterial. The Company did not recognize any material gains or losses during the years ended December 31, 20032005 and 20022004 for cash flow hedges that were discontinued because the forecasted transaction was not probable to occur. The amount of unrealized gains and losses on derivative instruments included in other comprehensive income related to contracts maturing, and expected to be realized, during 2006 is approximately $42 million at December 31, 2003 that will be reclassified into earnings during 2004 is not material. 2005. (11) STOCKHOLDERS’(9)  STOCKHOLDERS' EQUITY On February 15, 2000, the Company announced that itsThe Company's Board of Directors approved an extension of the Company’s stockauthorized a new share repurchase program of up to $1 billion.$500 million on June 15, 2004. The additional $750share repurchases are made from time to time on the open market as conditions warrant. Share repurchases authorized from the $500 million share repurchase authorization extendsprogram occurred in 2005 and 2004. During the previously authorized $250 million repurchase program that was announced March 1, 1999. Theyear ended December 31, 2005, the Company repurchased 530,100 shares are to be purchasedof Whirlpool common stock in the open market and through privately negotiated sales asat an aggregate purchase price of $34 million. During the year ended December 31, 2004, the Company deems appropriate.repurchased 20,000 shares of Whirlpool common stock in the open market at an aggregate purchase price of approximately $1 million. During 2004, the Company concluded the share repurchase programs approved by the Company's Board of Directors on March 1, 1999 ($250 million) and February 15, 2000 ($750 million). The Company has purchased 13.7repurchased 17.4 million shares at a cost of $749 million through December 31, 2003 under this stock repurchase program,$1 billion, of which 0.7 million shares ($43 million) were purchased in 2001, 0.7 million shares ($46 million) were purchased in 2002, and 1.0 million shares ($65 million) were purchased in 2003.2003 and 3.7 million shares were purchased in 2004. The 2004 shares were purchased in the open market at an average cost of $68.39 per share. The 2003 shares were purchased from one of the Company’sCompany's U.S. pension plans at an average cost of $67.24 per share, which was based upon an average of the high and low market prices on the date of purchase. The 2002 shares were purchased 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, the Company repurchased a combined total 1 million shares of Whirlpool common stock in the open market 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. F-33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 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 )        Millions of dollars   2005   2004         Foreign currency translation adjustments   $ (545 ) $ (520 )       Derivative financial instruments     —     (12 )       Minimum pension liability adjustments     (317 )   (69 )                     Total   $ (862 ) $ (601 )                     Preferred Stock Purchase Rights One Preferred Stock Purchase Right (Rights)("Rights") is outstanding for each share of common stock. The Rights, which expire May 22, 2008, will become exercisable 10 days after a person or group (an Acquiring Person)"Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding common stock (the Trigger Date)"Trigger Date") or 10 business days after the commencement, or public disclosure of an intention to commence, a tender offer or exchange offer by a person that could result in beneficial ownership of 15% or more of the outstanding common stock. Each Right entitles the holder to purchase from the Company one one-thousandth of a share of a Junior Participating Preferred Stock, Series B, par value $1.00 per share, of the Company at a price of $300 per one one-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 a Right, other than Rights that are or were beneficially owned by the Acquiring Person (which will thereafter be void), shall thereafter have the right to receive upon exercise of such Right that number of shares of common stock (or other securities) having at the time of such transaction a market value of two times the exercise price of the Right. If a person becomes an Acquiring Person and the Company is involved in a merger or other business combination transaction where the Company is not the surviving corporation or where common stock is changed or exchanged or in a transaction or transactions in which 50% or more of its consolidated assets or earning power are sold, proper provision shall be made so that each holder of a Right (other than such Acquiring Person) shall thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring company which at the time of such transaction would have a market value of two times the exercise price of the Right. In addition, if an Acquiring Person does not have beneficial ownership of 50% or more of the common stock, the Company’sCompany's Board of Directors has the option of exchanging all or part of the Rights for an equal number 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, but not in part, at a price of $.01 per Right, payable in cash, shares of common stock or any other consideration deemed appropriate by the Board of Directors. Immediately upon action of the Board of Directors ordering redemption of the Rights, the ability of holders to exercise the Rights will terminate and 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 and are attached to, and do not trade separately from, the common stock. The Company covenants and agrees that it will cause to be reserved and keptkeep available at all times a sufficient 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 to time outstanding. F-34 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (12)(10)  STOCK OPTION AND INCENTIVE PLANS   Stock option and incentive plans are accounted for in accordance with Accounting Principles Board Opinion No. 25, “Accounting"Accounting for Stock Issued to Employees,”" and related Interpretations. Generally, no compensation expense is recognized for stock options with exercise prices equal to the market value of the underlying shares of stock at the date of grant. Stock options generally have 10 year10-year terms, and vest and become fully exercisable over a two or three year period after date of grant. Compensation expense related to the Company’s stock basedCompany's stock-based incentive plans is recognized ratably over each plan’splan's defined vesting period. Pre-tax expenses under the Company’s stock basedCompany's stock-based incentive plans were $24 million, $15 million and $21 million $20 millionin 2005, 2004 and $26 million in 2003, 2002 and 2001. respectively. The Company’sCompany's stock option and incentive plans permit the grant of stock options and other stock awards covering up to 14.510.5 million shares to key employees of the Company and its subsidiaries, of which 3.9options and awards covering up to 2.6 million shares are available for grant at December 31, 2003.2005. Outstanding restricted and phantom shares totaled 1,322,9171,500,125 with a weighted-average grant-date fair value of $56.28$67.56 per share at December 31, 20032005 and 1,557,1231,249,759 with a weighted-average grant-date fair value of $56.01$61.55 per share at December 31, 2002.2004. Under the NonemployeeWhirlpool has a Non-employee Director Stock Ownership Plan, each nonemployee director is automatically granted 400Equity Plan. This plan provides for (a) a one time grant of 1,000 shares of common stock annually and is eligible forupon a stock optiondirector joining the Board of Directors; (b) an annual grant of 600 shares ifstock options valued at $36,000 with the Company’s earnings meetnumber of options to be based on dividing $36,000 by the product of the then current fair market value of a prescribed earnings formula. In addition, each nonemployee director is awarded annually deferred compensation insingle share of the form of 400 shares of phantom stock, which is converted into common stock on a one-for-one basismultiplied by 0.35; and paid when(c) an annual grant of stock worth $54,000 with the number of shares to be issued to the director leavesdetermined by dividing $54,000 by the Board. This plan providesthen current fair market value of the common stock of the Company. The exercise price under each option granted is the fair market value of the common stock as of the final trading day before the annual meeting of stockholders. These options are exercisable for 20 years or, if earlier, two years after a non-employee director ceases to serve on Whirlpool's Board of Directors, provided that no option is exercisable within the grantfirst six months of up to 300,000its term, unless death or disability of the director occurs. In the event of a non-employee director's death, such options will be exercisable for one year from the date of death. Payment of the exercise price may be made in cash or, if permitted by law, Whirlpool common stock, valued at its market price at the time of exercise. At December 31, 2005, there were 275,782 shares as either stock or stock options, of which 132,140 shares are available for grant at December 31, 2003. The stock options vest and become exercisable six months after date of grant. There were no significant expenses under this plan for 2003, 2002 or 2001. plan. The fair value of stock options used to compute pro formapro-forma net earnings and diluted net earnings per share disclosures, as presented in Note 1, is the estimated present value at grant date using the Black- Scholes Black-Scholes option-pricing model with the following assumptions for 2003, 20022005, 2004 and 2001:2003: expected volatility of 31.7%25.5%, 33.8%28.7% and 32.6%31.7%; dividend yield of 2.2%2.4%, 2.2%2.6% and 2.3%2.2%; risk-free interest rate of 3.2%4.4%, 2.7%3.6% and 4.3%3.2%, and a weighted-average expected option life of 5five years for all three years. A summary of stock option information follows:      2003    2002    2001 Thousands of shares, except per share data    Number of Shares     Weighted- Average Exercise Price    Number of Shares     Weighted- Average Exercise Price    Number of Shares     Weighted- Average Exercise Price Outstanding at January 1    5,965     $ 55.63    6,066     $ 51.83    6,437     $ 50.86 Granted    1,315       50.06    1,466       67.07    1,401       54.30 Exercised    (1,251 )     48.60    (1,395 )     51.48    (1,508 )     50.19 Canceled 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 granted during the year          $ 12.67          $ 18.28          $ 15.59                              F-35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)     2005   2004   2003 Thousands of shares, except per share data   Number of Shares   Weighted- Average Exercise Price   Number of Shares   Weighted- Average Exercise Price   Number of Shares   Weighted- Average Exercise Price Outstanding at January 1   5,325   $ 58.46   5,892   $ 55.82   5,965   $ 55.63 Granted   256     63.99   666     72.91   1,315     50.06 Exercised   (1,731 )   54.54   (1,124 )   52.84   (1,251 )   48.60 Canceled or expired   (117 )   67.59   (109 )   61.82   (137 )   58.37               Outstanding at December 31   3,733   $ 60.37   5,325   $ 58.46   5,892   $ 55.82               Exercisable at December 31   3,156   $ 58.76   4,237   $ 57.62   3,937   $ 55.78               Fair value of options granted during the year       $ 15.55       $ 17.07       $ 12.67                     Of the outstanding options at December 31, 2003, 3.82005, 1.8 million options, of which 2.51.7 million are exercisable at a weighted-average price of $51.25,$51.57, have exercise prices ranging from $38.38$45.75 to $54.44$62.64 and a weighted-average remaining life of 6.95 years. The remaining 2.11.9 million outstanding options, of which 1.4 million are exercisable at a weighted-average price of $64.11,$67.69, have exercise prices ranging from $55.38$62.98 to $77.85$79.14 and a weighted-average remaining life of 6.6 years. (13)(11)  RESTRUCTURING AND RELATED CHARGES Under Whirlpool's ongoing global operating platform initiatives, the Company implemented certain restructuring initiatives to enhance Whirlpool's competitive position in the global appliance industry. The Company plans to continue its comprehensive worldwide effort to optimize its regional manufacturing facilities, supply base, product platforms and technology resources to better support its global brands and customers. In addition to the global operating platform initiatives, the Company began to implement organizational initiatives designed to increase efficiencies in support functions throughout the Company. The restructuring plan primarily relates to headcount reductions in European sales and supporting offices, moving manufacturing capacity to lower cost locations throughout Europe, and headcount reductions in an Asian manufacturing location. Restructuring Charges Under a restructuring initiative begun in 2004, the Company incurred restructuring charges of $57 million and $22 million in 2005 and 2004, respectively. The Company also recognized a ($7) million credit in 2004 resulting from final settlements of prior year restructuring initiatives. Net charges of $57 million and $15 million are included in the restructuring costs line in the Company's Consolidated Statements of Operations. As of December 31, 2005, approximately 2,000 employees have been terminated as a result of this initiative. The Company expects that this restructuring initiative may reduce up to 3,500 positions in total. Through December 31, 2003, the Company had approved all phases of a restructuring program that began in the fourth quarter of 2000 and resulted in cumulative pre-tax restructuring charges of $254$247 million, of which $3 million was recognized during 2003, $101 million was recognized during 2002 and $150 million was recognized during 2001.2003. These charges have been identified as a separate componentare included in the restructuring costs line on the Company's Consolidated Statements of operating profit.Operations. The restructuring plan and related charges relaterelates primarily to the closing of a refrigeration plant in the Company’sCompany's Latin AmericanAmerica region, a parts packing facility and a cooking plant in the North AmericanAmerica region, a plastic components facility in the AsianAsia region, the relocation of several laundry manufacturing facilities in Europe and a restructuring of the Company’sCompany's microwave business in its EuropeanEurope region. Employees terminated to date under the plan include both hourly and salaried employees, however, the majority areof which were hourly personnel at the facilities listed above. For the initiatives announced through December 31, 2003, the Company expectsexpected to eliminatereduce over 7,500 employees7,100 positions; substantially all of which approximately 6,900whom had left the Company throughas of December 31, 2003. Other Related Charges As a result of the Company’s restructuring activity, $133 million of pre-tax restructuring related charges, of which $11 million was recognized during 2003, $60 million was recognized during 2002 and $62 million was recognized during 2001, have also been recorded primarily within cost of products sold. The 2003 charges include net asset write-downs of $2 million as well as $9 million of various cash costs. The 2002 charges include $4 million and $1 million write-downs of buildings in the North American and Latin American regions, inventory write-offs of $1 million in Europe and $16 million of miscellaneous equipment in North America, Europe and Latin America as well as $38 million in cash costs incurred during the year for various restructuring related activities such as relocating employees and equipment and concurrent operating costs. The 2001 charges included $12 million in write-downs of various fixed assets, primarily buildings that are no longer used in the company’s business activities in its Latin American region, $7 million of excess inventory due to the parts distribution consolidation in North America, $25 million in various assets in its North American, European and Asian regions, which were primarily made up of equipment no longer used in its business, and $18 million in cash costs incurred during 2001 for various restructuring related activities. F-36 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 2005. Details of the restructuring liability balance and full year restructuring and related activity for 20032005, 2004 and 20022003 are as follows: Millions of dollars   Beginning Balance   Charge to Earnings     Cash Paid     Non-cash     Translation     Acquisitions   Ending Balance 2003                                                   Restructuring                                                   Termination costs   $ 116   $ 3     $ (89 )   $ —       $ 11     $ —     $ 41 Non-employee exit costs     6     —         (5 )     —         3       —       4 Related Charges                                                   Miscellaneous buildings     —       (1 )     —         1       —         —       —   Inventory     —       1       —         (1 )     —         —       —   Miscellaneous equipment     —       2       —         (2 )     —         —       —   Various cash costs     —       9       (9 )     —         —         —       —                   Total   $ 122   $ 14     $ (103 )   $ (2 )   $ 14     $ —     $ 45                 2002                                                   Restructuring                                                   Termination costs   $ 73   $ 92     $ (60 )   $ —       $ 4     $ 7   $ 116 Non-employee exit costs     4     9       (7 )     —         —         —       6 Related Charges                                                   Miscellaneous buildings     —       5       —         (5 )     —         —       —   Inventory     —       1       —         (1 )     —         —       —   Miscellaneous equipment     —       16       —         (16 )     —         —       —   Various cash costs     —       38       (38 )     —         —         —       —                   Total   $ 77   $ 161     $ (105 )   $ (22 )   $ 4     $ 7   $ 122                 2001                                                   Restructuring                                                   Termination costs   $ 5   $ 134     $ (64 )   $ —       $ (2 )   $ —     $ 73 Non-employee exit costs     —       16       (12 )     —         —         —       4 Related Charges                                                   Miscellaneous buildings     —       12       —         (12 )     —         —       —   Inventory     —       7       —         (7 )     —         —       —   Miscellaneous equipment     —       25       —         (25 )     —         —       —   Various cash costs     —       18       (18 )     —         —         —       —                   Total   $ 5   $ 212     $ (94 )   $ (44 )   $ (2 )   $ —     $ 77                 Millions of dollars   Beginning Balance   Charge to Earnings   Cash Paid   Non-cash   Revision of Estimate   Translation   Ending Balance 2005                                             Termination costs   $ 9   $ 50   $ (42 ) $ —   $ —   $ (2 ) $ 15   Non-employee exit costs     4     7     (1 )   (6 )   —     —     4                 Total   $ 13   $ 57   $ (43 ) $ (6 ) $ —   $ (2 ) $ 19                 2004                                             Termination costs   $ 41   $ 16   $ (41 ) $ —   $ (7 ) $ —   $ 9   Non-employee exit costs     4     6     (2 )   (4 )   —     —     4                 Total   $ 45   $ 22   $ (43 ) $ (4 ) $ (7 ) $ —   $ 13                 2003                                             Termination costs   $ 116   $ 3   $ (89 ) $ —   $ —   $ 11   $ 41   Non-employee exit costs     6     —     (5 )   —     —     3     4                 Total   $ 122   $ 3   $ (94 ) $ —   $ —   $ 14   $ 45                 (14)(12)  PRODUCT RECALLS In 2001,On February 25, 2005, the Company announced a voluntarythe recall of 1.8 million microwave hood combination units sold under theWhirlpool,KitchenAid, and SearsKenmore brands.approximately 162,000 under-the-counter plastic tall tub dishwashers due to a potential safety issue. There have been no reports of personal injury or property damage associated with these dishwashers. The Company recognized product recall pre-tax chargesalso is undertaking the repair of $221up to an additional 223,000 of these dishwashers for a separate quality issue. The Company accrued $17.1 million ($136 million after-tax) during 2001 and recorded these charges as separate components of operating profit. During 2002, the Company incurred additional charges of approximately $9 million ($6 million after-tax) for costs related to this recall.the quality issues within cost of products sold during the fourth quarter of 2004. During 2005, the estimated cost to recall and repair these units was reduced to $13.7 million primarily due to the recovery of certain costs from a parts supplier. The remaining cost accrual and supplier receivable were not material at December 31, 2005. During 2003, the Company incurred an additional $16 million ($10 million after-tax) primarily related to final expenses in connection with thea 2001 recall. Approximately $6 million of accrued product recall costs is reflected in other 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 sold under theWhirlpool, ComfortAire, and SearsKenmore brands. The Company recognized a product F-37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) recall pre-tax charge of $74 million ($45 million after-tax) during the fourth quarter of 2001 and recorded this charge as a separate component of operating profit. The Company does not expect further liabilities related to these two product recalls. (15)(13)  INCOME TAXES Income tax expense from continuing operations areis as follows: Year ended December 31—Millions of dollars    2003     2002     2001   Current:                          Federal    $ 75     $ 101     $ 201   State and local      7       (6 )     14   Foreign      88       109       34                   170       204       249   Deferred:                          Federal      48       47       (121 ) State and local      (3 )     3       (21 ) Foreign      13       (61 )     (64 )                 58       (11 )     (206 )          Total income tax expense    $ 228     $ 193     $ 43            Year ended December 31 — Millions of dollars   2005   2004   2003   Current:                       Federal   $ 57   $ 202   $ 36     State and local     10     18     5     Foreign     117     73     76                   184     293     117   Deferred:                       Federal     (9 )   (119 )   88     State and local     (3 )   (4 )   (1 )   Foreign     (1 )   39     24                   (13 )   (84 )   111             Total income tax expense   $ 171   $ 209   $ 228             Domestic and foreign earnings (loss) from continuing operations before income taxes and other items are as follows: Year ended December 31—Millions of dollars    2003    2002    2001   Domestic    $ 473    $ 485    $ 204   Foreign      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. Year ended December 31 — Millions of dollars   2005   2004   2003 Domestic   $ 347   $ 402   $ 473 Foreign     250     214     179         Total earnings before taxes and other items   $ 597   $ 616   $ 652         Reconciliations between tax expense at the U.S. federal statutory income tax rate of 35% and the consolidated effective income tax rate for earnings from continuing operations before income taxes and other 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      $ 33   State and local taxes, net of federal tax benefit        3        3        (4 ) Tax effect of permanent differences        12        12        9   Nondeductible goodwill amortization        —          —          6   Foreign tax rate differential        5        7        13   Foreign dividends and subpart F income        20        7        13   Foreign tax credits        (41 )      (19 )      (9 ) Foreign withholding taxes        22        13        6   Foreign government tax incentive        (4 )      (15 )      (22 ) Expired foreign loss carryforwards        12        —          3   Deductible interest on capital        2        (8 )      (18 ) U.S. government tax incentives        (3 )      (3 )      (3 ) Valuation allowances        (14 )      36        13   Other items, net        (15 )      (13 )      3                Income tax expense      $ 228      $ 193      $ 43                F-38 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Year ended December 31 — Millions of dollars   2005   2004   2003   Income tax expense computed at U.S. federal statutory rate   $ 209   $ 217   $ 229   State and local taxes, net of federal tax benefit     7     9     3   Tax effect of permanent differences     11     4     12   Medicare Part D subsidy     (11 )   —     —   Foreign tax rate differential     7     8     5   U.S. tax on foreign dividends and subpart F income     81     3     20   U.S. foreign tax credits     (144 )   (53 )   (41 ) Foreign withholding taxes     18     10     22   Foreign government tax incentive     —     (2 )   (4 ) Expired foreign loss carryforwards     2     —     —   Deductible interest on capital     (1 )   (7 )   2   U.S. government tax incentives     (5 )   (5 )   (3 ) Settlement of global tax audits     (30 )   45     12   Valuation allowances     4     6     (14 ) Other items, net     23     (26 )   (15 )           Income tax expense   $ 171   $ 209   $ 228             Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’sCompany's deferred tax liabilities and assets are as follows: December 31 — Millions of dollars   2005   2004   Deferred tax liabilities               Property, plant and equipment   $ 230   $ 224   Financial services leveraged leases     37     61   Pensions     116     193   Software costs     6     7   LIFO inventory     15     18   Other     141     167             Total deferred tax liabilities   $ 545   $ 670   Deferred tax assets               Postretirement obligations   $ 184   $ 261   Pensions — includes additional minimum liability     191     34   Restructuring costs     7     1   Product warranty accrual     36     22   Receivable and inventory allowances     68     68   Loss carryforwards     271     275   Employee payroll and benefits     57     76   Foreign tax credit carryforwards     58     57   Other     165     196             Total deferred tax assets   $ 1,037   $ 990             Valuation allowances for deferred tax assets   $ (114 ) $ (105 )           Deferred tax assets, net of valuation allowances   $ 923   $ 885           Net deferred tax assets   $ 378   $ 215           December 31—Millions of dollars      2003      2002   Deferred tax liabilities                     Property, plant and equipment      $ 214      $ 150   Financial services leveraged leases        43        69   Pensions        131        11   Software costs        17        16   Contested liabilities        25        24   LIFO Inventory        23        17   Other        137        108             Total deferred tax liabilities        590        395   Deferred tax assets                     Postretirement obligations        200        205   Restructuring costs        7        29   Product warranty accrual        23        21   Receivable and inventory allowances        58        47   Loss carryforwards        252        260   Employee payroll and benefits        61        71   Other        153        130             Total deferred tax assets        754        763   Valuation allowances for deferred tax assets        (51 )      (65 )           Deferred tax assets, net of valuation allowances        703        698             Net deferred tax assets      $ 113      $ 303             At December 31, 2005, the Company has foreign net operating loss carryforwards of $893 million, $689 million of which do not expire with substantially all of the remaining $204 million expiring in various years through 2014. As of December 31, 2005, the Company had $58 million of foreign tax credit carryforwards available to offset future payments of federal income taxes, expiring in varying amounts between 2012 and 2015. The Company has recorded valuation allowances to reflect the estimated amount of net operating loss and foreign tax credit carryforwards that may notwill be realized. AtThe valuation allowance of $114 million at December 31, 2003, the Company has2005 is made up of $94 million of foreign net operating loss carryforwards of $839 million, $591and $20 million of which doother deferred tax assets that the Company currently believes are more likely than not expire with substantiallyto remain unrealized in the future. Other than earnings specifically noted below, the Company has historically reinvested all of the remaining $248unremitted earnings of its foreign subsidiaries and affiliates. Due to a restructuring of selected foreign subsidiaries, the Company plans to distribute approximately $102 million expiringof foreign earnings over the next several years. This distribution is presently forecast to result in various years through 2007. The Company providestax benefits which have not been recorded currently because of its contingent nature. There has been no deferred taxestax liability provided on the undistributedremaining amount of unremitted earnings of $1.23 billion at December 31, 2005. Should the Company make a distribution from the unremitted earnings of its foreign subsidiaries and affiliates, it would be subject to additional U.S. taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the extent suchvarious foreign countries. It is not practicable to estimate the amount of the deferred tax liability associated with these unremitted earnings because of the complexities associated with this hypothetical calculation. During the fourth quarter of 2005, the Company repatriated approximately $25 million of foreign earnings from its affiliates in Hong Kong and Colombia under the American Jobs Creation Act of 2004. The repatriation occurred for purposes of balancing the Company's cash position abroad and had an immaterial impact on the Company's tax provision. In August 2005, President Bush signed into law the Energy Policy Act of 2005 (the "2005 Energy Act"). Among the many provisions of this legislation are manufacturer's tax credits in 2006 and 2007 for the accelerated production of super-efficient washers, refrigerators and dishwashers to meet 2007 Energy Star standards. Whirlpool has historically, and will continue to, invest in innovative and energy efficient products for its customers and has products in development that will support utilization of these tax credits over the two-year period. As of December 31, 2005, the Company was in various stages of audits by various governmental tax authorities. The Company establishes liabilities for probable and estimable assessments by taxing authorities resulting from known tax exposures. Such amounts represent a reasonable provision for taxes ultimately expected to be remitted. Generally, earnings have been remitted only when no significant net tax liability would have been incurred. No provision has been made for U.S. or foreign taxes thatpaid, and may result from future remittances of the undistributed earnings ($509 million at December 31, 2003) of foreign subsidiaries and affiliates expectedneed to be reinvested indefinitely. Determination of the deferred income tax liability on these unremitted earnings is not practicableadjusted over time as such liability, if any, is dependent on circumstances existing when remittance occurs. more information becomes known. The Company paid income taxes of $276 million in 2005, $277 million in 2004 and $261 million in 2003, $126 million in 2002 and $148 million in 2001. Income taxes payable of $95 million and $186 million are included in other current liabilities at December 31, 2003 and 2002. F-39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) 2003. (16)(14) PENSION AND POSTRETIREMENT MEDICAL BENEFITS PLANS The Company has both funded and unfunded noncontributory defined benefit pension plans that cover substantially all of its North American employees and certain BrazilianEuropean and EuropeanBrazilian employees. The U.S. salaried employees receive defined benefits based on years of service and final average salary, while U.S. hourly 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 within five years following a change in control of the Company, any assets held by the plans in excess of the amounts needed to fund accrued benefits would be used to provide additional benefits to plan participants. A change in control generally means either a change in the majority of the incumbent Board of Directors or an acquisition of 25% (30% for purposes of the Whirlpool Production Employees Retirement Plans) or more of the voting power of the Company’sCompany's outstanding stock, 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 who attained age 55 while in service with the Company. The health care plans are generally contributory with participants’participants' contributions adjusted annually. The postretirement health care plans include cost-sharing provisions that limit the Company’sCompany's exposure for recent and future retirees. The plans are unfunded. The Company has reserved the right to modify the benefits. In June 2003, the Company announced a modification to its U.S. retiree health care plans affectingthat affects certain future retirees. The new planand current retirees, and is based on a Retiree Healthcare Savings Account (RHSA)("RHSA"), where notional accounts will beare established for eligible active U.S. paid employees. The notional account reflectsaccounts reflect each year of service beginning at age 40 and is designed to provide employees who retire from the Company after December 31, 2003 with notional fundscredits to apply towards health care premiums. In June 2003, the Company recorded a one-time curtailment gain of $13.5 million, net of tax, related to the modification of its retiree health care plan. No significant postretirement medical benefits are provided by the Company to non-U.S. employees. The Company was required to remeasure the net periodic cost and funded status of one of its pension plans and the Whirlpool Retiree Healthcare Plan at February 29, 2004. The interest rate used for this remeasurement was 6%, the same as at year-end 2003. OnIn December 8, 2003, President Bush signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) into law. This law introduced"Act") was enacted. The Act established a prescription drug benefit program under Medicare, (Medicareknown as Part D) as well asD, and a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. In general, accounting rules require that2004, the changes in relevant laws and government benefit programs be considered in measuring postretirement benefit costs andCompany measured the Accumulated Postretirement Benefit Obligation (APBO). However, certain accounting issues raised by the Act – in particular, how to account 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 ancillary effects on plan participants’ behavior and health care costs. The FASB issued FASB Staff Position (FSP) No. 106-1, “Accountingfollowing the guidance in FSP 106-2, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003”, (FSP 106-1)2003." For the year ended December 31, 2004, the Company reflected the estimated federal subsidy under the Act as an actuarial gain as required by FSP 106-2, which caused the accumulated other postretirement benefit obligation to decrease by $104 million, and reduced the cost that allows sponsors to elect to deferotherwise would have been recognized in 2004 by approximately $15 million. Lump sum retirement distributions were made from the Company's nonqualified pension plans in the third and fourth quarters of 2004 resulting in the recognition of settlement charges of $9.5 million. As a result of these settlements, the effectsCompany remeasured the nonqualified pension plans at July 1, 2004 using a discount rate of 6.25% and at December 31, 2004 using a discount rate of 5.85%. On November 14, 2005, the Company amended the Whirlpool Employees Pension Plan (the "WEPP"). The amendment will be reflected in the Company's 2006 pension cost and did not affect the accumulated benefit obligation (the "ABO") or projected benefit obligation (the "PBO") at December 31, 2005. In January 2005, the Company amended the WEPP. The Company remeasured the net periodic cost and funded status of the Act until guidance is issuedplan at January 1, 2005 to reflect the amendment. The effect of this amendment was to reduce the PBO by approximately $80 million. The ABO was not affected by the FASB. In accordance with FSP 106-1,amendment since the Company has elected to defer recognitionaccrued benefits as of the effects of the Act. Accordingly, any measures of the APBO or net periodic postretirement benefit cost in the financial statements or the accompanying footnotes doDecember 31, 2005 were not reflect the effects of the Act on the plan. Specific authoritative guidance on the accounting for the federal subsidy is pending and that guidance, when issued, could require the Company to change previously reported information. affected by this change. 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’sCompany's annual operating results and the level of individual participants’participants' contributions, amounted to $20 million, $12 million and $15 million $16 millionin 2005, 2004 and $12 million in 2003, 2002 and 2001, respectively. F-40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The Company uses a December 31 measurement date for the majority of its pension and other postretirement benefit plans. Obligations and Funded Status 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 benefit obligations)      (221 )     (313 )     (107 )     (91 )     (741 )     (655 ) Amounts not recognized:                                                  Unrecognized transition obligation      —         —         —         1       —         —     Unrecognized net loss      412       407       20       17       297       215   Unrecognized 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 )                December 31—Millions of dollars     U.S. Pension   Foreign Pension   Post Employment Benefits       2005   2004   2005   2004   2005   2004   Fair value of plan assets   $ 1,695   $ 1,672   $ 111   $ 112   $ —   $ —   Benefit obligations     2,053     1,985     329     331     701     676                   Funded status (plan assets less than benefit obligations)   $ (358 ) $ (313 ) $ (218 ) $ (219 ) $ (701 ) $ (676 ) Amounts not recognized:                                       Unrecognized transition obligation     —     —     —     —     1     1   Unrecognized net loss     556     479     51     35     262     237   Unrecognized prior service cost (benefit)     57     140     6     7     (73 )   (61 )                 Prepaid (accrued) cost   $ 255   $ 306   $ (161 ) $ (177 ) $ (511 ) $ (499 )                     U.S. Pension   Foreign Pension   Post Employment Benefits       2005   2004   2005   2004   2005   2004   Prepaid benefit cost   $ —   $ 329   $ —   $ —   $ —   $ —   Accrued benefit cost     (277 )   (163 )   (190 )   (204 )   (511 )   (499 ) Intangible asset     60     48     4     4     —     —   Accumulated other comprehensive income     472     92     25     23     —     —                   Prepaid (accrued) cost   $ 255   $ 306   $ (161 ) $ (177 ) $ (511 ) $ (499 )                 The accumulated benefit obligation for all U.S. defined benefit pension plans was $1,611$1,972 million and $1,348$1,772 million at December 31, 2003,2005 and 2002,2004, respectively. The accumulated benefit obligation for all foreign pension plans was $196$304 million and $170$303 million at December 31, 20032005 and 2002,2004, respectively. At the end of 20032005 and 2002,2004, the projected benefit obligation (PBO), accumulated benefit obligation (ABO),PBO, ABO, and fair value of plan assets (FV)FV for pension plans with a projected benefit obligation in excess of plan assets, and pension plans with an accumulated benefit obligation in excess of plan assets, were as follows: December 31—Millions of dollars      PBO Exceeds FV U.S. Pension    PBO Exceeds FV Foreign Pension    ABO Exceeds FV U.S. Pension    ABO Exceeds FV Foreign Pension December 31—Millions of dollars    2003    2002    2003    2002    2003    2002    2003    2002 PBO    $ 1,517    $ 1,463    $ 185    $ 171    $ 237    $ 1,463    $ 151    $ 169 ABO      1,356      1,307      170      169      225      1,307      142      168 FV      1,292      1,119      69      76      115      1,119      41      75 F-41     PBO Exceeds FV U.S. Pension   PBO Exceeds FV Foreign Pension   ABO Exceeds FV U.S. Pension   ABO Exceeds FV Foreign Pension End of Year   2005   2004   2005   2004   2005   2004   2005   2004 PBO   $ 2,053   $ 1,985   $ 298   $ 331   $ 2,053   $ 536   $ 258   $ 330 ABO     1,972     1,772     274     303     1,972     524     239     302 FV     1,695     1,672     80     112     1,695     422     45     110 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)Change in Benefit Obligation — Millions of dollars     U.S. Pension   Foreign Pension   Post Employment Benefits       2005   2004   2005   2004   2005   2004   Benefit obligation as of January 1   $ 1,985   $ 1,771   $ 331   $ 206   $ 676   $ 741   Service cost     84     88     11     12     14     12   Interest cost     113     110     17     16     37     37   Plan amendments     (74 )   25     —     1     (20 )   (22 ) Participant contributions     —     —     1     —     9     6   Actuarial (gain)/loss     46     88     22     10     38     (48 ) Curtailments     —     —     4     —     —     —   Benefits paid     (101 )   (97 )   (27 )   (22 )   (54 )   (50 ) New plans     —     —     3     86     —     —   Foreign currency exchange rate     —     —     (29 )   23     1     —   Settlements     —     —     (4 )   (1 )   —     —                   Benefit obligation as of December 31   $ 2,053   $ 1,985   $ 329   $ 331   $ 701   $ 676                   Change in Plan Assets — Millions of dollars     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     $ 525   Service cost     66        56       5        6       13       14   Interest cost     101        95       12        11       42       41   Plan amendments     21        29       1        (11 )     (25 )     (9 ) Business combinations     —          —         —          25       —         —     Actuarial loss     169        124       4        12       92       123   Curtailments     —          —         —          (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   Foreign Pension   Post Employment Benefits       2005   2004   2005   2004   2005   2004   Fair value of plan assets as of January 1   $ 1,672   $ 1,550   $ 112   $ 99   $ —   $ —   Actual return on plan assets     109     170     12     5     —     —   Company contributions     15     31     25     21     45     44   Plan participant contributions     —     —     1     1     9     6   Settlements     —     18     (4 )   (1 )   —     —   Benefits paid     (101 )   (97 )   (27 )   (22 )   (54 )   (50 ) New plans     —     —     1     —     —         Foreign currency exchange rates     —     —     (8 )   8     —     —                   Fair value of plan assets as of December 31   $ 1,695   $ 1,672   $ 111   $ 112   $ —   $ —                       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        39   Plan 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 Cost     U.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     $ 11 Interest cost     101       95       89       12       11       12       42       41       34 Expected return on plan assets     (125 )     (175 )     (177 )     (7 )     (7 )     (12 )     —         —         —   Amortization of transition obligation (asset)     —         (1 )     (2 )     1       2       2       —         —         —   Amortization of prior service cost     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                     F-42 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)                             Post Employment Benefits       U.S. Pension   Foreign Pension   Millions of dollars     2005   2004   2003   2005   2004   2003   2005   2004   2003   Service cost   $ 84   $ 88   $ 66   $ 11   $ 12   $ 5   $ 14   $ 12   $ 13   Interest cost     113     110     101     17     16     12     37     37     42   Expected return on plan assets     (154 )   (160 )   (125 )   (5 )   (7 )   (7 )   —     —     —   Amortization of transition obligation     —     —     —     1     1     1     —     —     —   Amortization of prior service cost     9     19     16     —     —     —     (7 )   (6 )   (4 ) Amortization of net loss     14     1     5     —     1     1     15     11     11                         Net periodic cost   $ 66   $ 58   $ 63   $ 24   $ 23   $ 12   $ 59   $ 54   $ 62                         Curtailments     —     —     —     —     —     —     —     —     (23 ) Special termination benefits     —     —     3     —     —     —     —     —     —   Settlements     —     10     —     4     —     —     —     —     (1 )                       Total pension cost   $ 66   $ 68   $ 66   $ 28   $ 23   $ 12   $ 59   $ 54   $ 38                         Additional Information                     Post Employment Benefits       U.S. Pension   Foreign Pension   Weighted-average assumptions used to determine benefit obligations at December 31     2005   2004   2005   2004   2005   2004   Discount rate   5.60 % 5.80 % 4.0% - 11.3 % 4.5% - 11.3 % 5.50 % 5.50 % Rate of compensation increase   4.50 % 4.50 % 2.5% -  7.1 % 2.5% -  7.1 % N/A   N/A   Health care cost trend rate assumed for next year   N/A   N/A   N/A   N/A   9.00 % 10.00 % Rate that the cost trend rate gradually declines to   N/A   N/A   N/A   N/A   5.00 % 5.00 % Year that ultimate rate is reached   N/A   N/A   N/A   N/A   2010   2008   Weighted-average assumptions used to determine benefit obligations 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/A Health care cost trend rate assumed for next year   N/A   N/A    N/A   N/A    11.00%   9.5%–10.5% Rate that the cost trend rate gradually declines to   N/A   N/A    N/A   N/A      5.00%   5.50% Year that ultimate rate is reached   N/A   N/A    N/A   N/A    2008   2007 Weighted-average assumptions used to determine net cost for year 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 rate assumed for next year   N/A   N/A   N/A    N/A   N/A   N/A Rate that the cost trend rate gradually 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 to determine net cost for year ended December 31   Other Benefits   2003   2002   2001 Discount Rate   6.75% at 1/1/2003 5.75% at 6/1/2003 6.50% at 8/1/2003   7.50%   8.00% Expected return on plan assets   N/A   N/A   N/A Rate of compensation increase   N/A   N/A   N/A Health 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/A Year that ultimate rate is reached   2007   2007   N/A     U.S. Pension   Foreign Pension   Post Employment Benefits Weighted-average assumptions used to determine net cost for year ended December 31   2005   2004   2003   2005   2004   2003   2005   2004   2003                                     6.75% at 1/1/2003 Discount Rate   5.80 % 6.00 % 6.75 % 4.5% - 11.3 % 5.0% - 11.3 % 5.5% - 11.3 % 5.50 % 6.00 % 5.75% at 6/1/2003                                     6.50% at 8/1/2003 Expected return on plan assets   8.75 % 8.75 % 8.75 % 4.5% - 11.3 % 5.0% - 11.3 % 5.5% - 11.3 % N/A   N/A   N/A Rate of compensation increase   4.50 % 4.50 % 4.50 % 2.5% - 8.15 % 2.5% - 8.15 % 2.5% -  8.0 % N/A   N/A   N/A Health care cost trend rate assumed for current year   N/A   N/A   N/A   N/A   N/A   N/A   10.00 % 11.00 % 9.50%/10.50% Rate that the cost trend rate gradually declines to   N/A   N/A   N/A   N/A   N/A   N/A   5.00 % 5.00 % 5.50% Year that the ultimate rate is reached   N/A   N/A   N/A   N/A   N/A   N/A   2010   2008   2007 In the U.S., the expected rate of return on plan assets was determined by using the historical asset returns for publicly traded equity and fixed income securities tracked from 1926 through 20032005 and the historical returns for private equity. The historical equity returns were adjusted downward to reflect future expectations. This adjustment was based on published academic research. The historical returns and adjusted historicalexpected returns are weighted by the targeted asset allocations. The resulting weighted averageweighted-average return was rounded up to the nearest quarter of one percent. For foreign pension plans, the expected rate of return on plan assets was determined by observing historical returns in the local fixed income and equity markets and computing the weighted average returns with the weights being the asset allocation of each plan. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-pointone percentage point change in assumed health care cost trend rates would have the following effects: Millions of dollars    One Percentage Point Increase    One Percentage Point Decrease   Effect on total of service and interest cost    $ 3    $ (3 ) Effect on postretirement benefit obligation      37      (39 ) F-43 Millions of dollars   One Percentage Point Increase   One Percentage Point Decrease   Effect on total of service and interest cost   $ 3   $ (3 ) Effect on postretirement benefit obligation     40     (41 ) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) Plan Assets The Company’sCompany's investment philosophy is to diversify the pension assets subject to a specified asset allocation policy. The Company rebalances the asset classes to stay within an acceptable range around 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 to bear the added variability of return in exchange for the greater long-term expected return. The assets are invested in both indexed funds and actively managed funds, depending on the asset class. Whirlpool’sWhirlpool's pension plan asset allocation at December 31, 2002,2005 and 2003,2004, and target allocation for 2004,2006, by asset category are as follows:      U.S. Pension     Foreign Pension        Target Allocation 2004     Percentage of Plan Assets at December 31     Target Allocation 2004     Percentage of Plan Assets at December 31   Asset Category      2003     2002       2003     2002   Equity securities    70 %   72 %   74 %   41 %   43 %   42 % Debt securities    30     28     26     55     52     56   Other    —       —       —       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 plan assets) at December 31, 2002. The Company repurchased the equity securities from the pension plan in October 2003 at an approximate cost of $66 million. The stock repurchase program is discussed further in Note 11.     U.S. Pension   Foreign Pension           Percentage of Plan Assets at December 31       Percentage of Plan Assets at December 31   Asset Category   Target Allocation 2006   Target Allocaton 2006     2005   2004   2005   2004   Equity securities   70 % 71 % 70 % 53 % 54 % 43 % Debt securities   30   29   30   46   44   55   Other   —   —   —   1   2   2                   Total   100 % 100 % 100 % 100 % 100 % 100 %                 Cash Flows   The Company’sCompany's funding policy is to contribute to its U.S. pension plans amounts sufficient to meet the minimum funding requirement as defined by employee benefit and tax laws, plus additional amounts which the Company may determine to be appropriate. In certain countries other than the U.S., the funding 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 Employer Contributions — Millions of dollars   U.S. Pension   Foreign Pension   Post Employment Benefits 2006 (expected)   $ 32   $ 23   $ 52 The $19$32 million expected to be contributed to the U.S. pension plans during 20042006 represents the sum of $4 million of expected benefit payments from corporate cash for the unfunded non-qualified pension plans and $15$28 million of expected voluntary contributions to its funded pension plans. The Company expects no minimum required contributions to its funded pension plans. plans in 2006. The $15$23 million estimated contributionexpected to its U.S. fundedbe contributed to the foreign pension plans may change based upon several factors including issues related to legislation providing interest rate relief for the 2002–2003 plan years. The legislation expired at the end of 2003, and the U.S. Congress has not yet passed an extension of the 2002–2003 relief legislation or a different form of relief legislation. The unfunded U.S. pension plan is not subjectduring 2006 represents contributions to the legislative interest rate relief being discussed by the U.S. Congress. Company's pension plans. The $45$52 million expected to be contributed to fund the other postretirement benefit plans during 20042006 represents expected benefit payments from corporate cash. Contributions by participants to the other post retirementpostretirement benefit plans were $4$9 million and $6 million for the yearyears ending December 31, 2003.2005 and 2004, respectively. The payments from the majority of U.S. pension plans and certain foreign pension plans come from a trust which the Company funds from time to time. F-44 Estimated Employer Benefit Payments — Millions of dollars   U.S. Pension   Foreign Pension   Post Employment Benefits- (Gross)   Post Employment Benefits- Part D Subsidy   2006   $ 111   $ 18   $ 65   $ (5 ) 2007     120     16     71     (6 ) 2008     130     18     77     (6 ) 2009     144     21     82     (7 ) 2010     153     22     88     (8 ) 2011 - 2015     862     141     518     (47 ) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (17)(15) BUSINESS SEGMENT INFORMATION Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance of the segment. The Company identifies such segments based upon geographical regions of operations because each operating segment manufactures home appliances and related components, but serves strategically different markets. The chief operating decision maker evaluates performance based upon each segment’ssegment's operating income, which is defined as income before interest income and sundry, interest expense, taxes, minority interests and before one-time charges. Total assets by segment are those assets directly associated with the respective operating activities. The “Other/Elimination”"Other/Elimination" column primarily 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 of Latin America which are included in Other/Eliminations. Sales activity with Sears, Roebuck and Co., a North American major home appliance retailer, represented 18%16%, 21%17% and 21%18% of consolidated net sales in 2003, 20022005, 2004 and 2001,2003, respectively. Related receivables were 22%21%, 23%19% and 25%22% of consolidated trade receivables as of December 31, 2005, 2004 and 2003, 2002 and 2001, respectively. The Company conducts business in two countries that individually comprised over 10% of consolidated net sales andand/or total assets within the last three years. The United States represented 57%56%, 59%56% and 59%,57% of net sales for 2003, 20022005, 2004 and 2001,2003, respectively, while Brazil totaled 6%8%, 8%6% and 9%6% for 2005, 2004 and 2003, 2002 and 2001.respectively. As a percentage of total assets, the United States accounted for 41%42%, 40%39% and 44%41% at the end of 2003, 20022005, 2004 and 2001,2003, respectively. Brazil accounted for 11%15%, 11%12% and 14%11% of total assets at the end of 2005, 2004 and 2003, 2002 and 2001, respectively. As described above, the Company’sCompany's chief operating decision maker reviews each operating segment’ssegment's performance based upon operating income excluding one-time charges. In 2003, these one-time charges, consisted of primarily restructuring and other related charges.restructuring. These charges are included in operating profit on a consolidated basis and included in the Other/Eliminations column in the tables below. For 2003 year-to-date amounts,2005, the operating segments recorded total restructuring and related charges (See Note 13) as follows: North America—$7America — $4 million, Europe—$6Europe — $36 million, Latin America—$0America — $8 million, Asia—$1Asia — $7 million and Corporate—$0Corporate — $2 million for a total of $14$57 million. In 2002,For 2004, the operating segments recorded total restructuring and related charges(See Note 11) as follows: North America—$43America — $2 million, Europe—$79Europe — $7 million, Latin America—$24America — $6 million, Asia—$11Asia — $0 million and Corporate—$4Corporate — $0 million, for a total of $161$15 million. Also included in Other/Eliminations during 2002 is $9 million of product recall related charges (See Note 14) recorded in the fourth quarter and $9 million in goodwill impairment charges (See Note 4). In 2001,For 2003, the operating segments recorded total restructuring and related charges as follows: North America—$35America — $1 million, Europe—$92Europe — $2 million, Latin America—$68America — $0 million, Asia—$13Asia — $0 million and Corporate—$4Corporate — $0 million, for a total of $212$3 million. Also included in the Other/Eliminations column during 2001 is $295 million of product recall charges related to the North American region. F-45     GEOGRAPHIC SEGMENTS Millions of dollars   North America   Europe   Latin America   Asia   Other/ Eliminations   Total Whirlpool Net sales                                       2005   $ 8,913   $ 3,160   $ 1,962   $ 422   $ (140 ) $ 14,317   2004   $ 8,254   $ 3,062   $ 1,674   $ 382   $ (152 ) $ 13,220   2003   $ 7,875   $ 2,691   $ 1,350   $ 416   $ (156 ) $ 12,176 Intersegment sales                           2005   $ 47   $ 489   $ 136   $ 198   $ (870 ) $ —   2004   $ 46   $ 458   $ 148   $ 163   $ (815 ) $ —   2003   $ 46   $ 359   $ 153   $ 126   $ (684 ) $ — Depreciation and amortization                           2005   $ 211   $ 104   $ 99   $ 16   $ 12   $ 442   2004   $ 214   $ 104   $ 95   $ 16   $ 16   $ 445   2003   $ 217   $ 92   $ 83   $ 15   $ 20   $ 427 Operating profit (loss)                           2005   $ 808   $ 164   $ 127   $ (23 ) $ (284 ) $ 792   2004   $ 778   $ 166   $ 65   $ (25 ) $ (226 ) $ 758   2003   $ 810   $ 124   $ 89   $ 7   $ (200 ) $ 830 Total assets                           2005   $ 3,745   $ 2,650   $ 1,748   $ 530   $ (425 ) $ 8,248   2004   $ 3,465   $ 2,976   $ 1,737   $ 534   $ (531 ) $ 8,181   2003   $ 3,290   $ 2,405   $ 1,395   $ 523   $ (252 ) $ 7,361 Capital expenditures                           2005   $ 280   $ 104   $ 87   $ 18   $ 5   $ 494   2004   $ 261   $ 129   $ 91   $ 18   $ 12   $ 511   2003   $ 185   $ 111   $ 96   $ 16   $ 15   $ 423 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)      GEOGRAPHIC SEGMENTS Millions of dollars    North America    Europe    Latin America    Asia    Other/ Eliminations     Total Whirlpool Net sales                                            2003    $ 7,875    $ 2,691    $ 1,350    $ 416    $ (156 )   $ 12,176 2002    $ 7,306    $ 2,199    $ 1,266    $ 391    $ (146 )   $ 11,016 2001    $ 6,581    $ 2,058    $ 1,487    $ 373    $ (156 )   $ 10,343 Depreciation and amortization                                            2003    $ 217    $ 92    $ 83    $ 15    $ 20     $ 427 2002    $ 197    $ 83    $ 80    $ 16    $ 29     $ 405 2001    $ 176    $ 91    $ 94    $ 20    $ 15     $ 396 Operating profit (loss)                                            2003    $ 810    $ 124    $ 89    $ 7    $ (200 )   $ 830 2002    $ 830    $ 81    $ 107    $ 14    $ (340 )   $ 692 2001    $ 758    $ 39    $ 134    $ 19    $ (644 )   $ 306 Total assets                                            2003    $ 3,290    $ 2,405    $ 1,395    $ 523    $ (252 )   $ 7,361 2002    $ 2,913    $ 2,015    $ 1,054    $ 516    $ 133     $ 6,631 2001    $ 2,591    $ 2,067    $ 1,339    $ 653    $ 317     $ 6,967 Capital expenditures                                            2003    $ 185    $ 111    $ 96    $ 16    $ 15     $ 423 2002    $ 165    $ 103    $ 112    $ 15    $ 35     $ 430 2001    $ 191    $ 87    $ 80    $ 10    $ 10     $ 378 (18)(16)  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)      Three Months Ended Millions of dollars, except per share data    Dec. 31    Sept. 30    Jun. 30    Mar. 31 2003                             Net sales    $ 3,359    $ 3,113    $ 2,988    $ 2,716 Cost of products sold      2,579      2,418      2,318      2,092 Earnings from continuing operations      124      105      94      91 Net earnings      124      105      94      91 Per share of common stock                             Basic earnings from continuing operations    $ 1.82    $ 1.51    $ 1.37    $ 1.33 Basic net earnings      1.82      1.51      1.37      1.33 Diluted earnings from continuing operations    $ 1.76    $ 1.48    $ 1.35    $ 1.32 Diluted net earnings      1.76      1.48      1.35      1.32 Dividends    $ 0.34    $ 0.34    $ 0.34    $ 0.34 F-46     Three Months Ended Millions of dollars, except per share data   Dec. 31   Sept. 30   Jun. 30   Mar. 31 2005:                         Net sales   $ 3,954   $ 3,599   $ 3,556   $ 3,208 Cost of products sold     3,094     2,831     2,825     2,520 Net earnings     126     114     96     86 Per share of common stock:                         Basic net earnings   $ 1.87   $ 1.70   $ 1.44   $ 1.28 Diluted net earnings   $ 1.83   $ 1.66   $ 1.42   $ 1.26 Dividends   $ 0.43   $ 0.43   $ 0.43   $ 0.43     Three Months Ended Millions of dollars, except per share data   Dec. 31   Sept. 30   Jun. 30   Mar. 31 2004:                         Net sales   $ 3,632   $ 3,318   $ 3,264   $ 3,007 Cost of products sold     2,895     2,604     2,539     2,320 Net earnings     97     101     106     101 Per share of common stock:                         Basic net earnings   $ 1.46   $ 1.53   $ 1.56   $ 1.47 Diluted net earnings   $ 1.44   $ 1.50   $ 1.53   $ 1.43 Dividends   $ 0.43   $ 0.43   $ 0.43   $ 0.43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(17)  PENDING MAYTAG ACQUISITION On August 22, 2005, Whirlpool entered into a definitive merger agreement with Maytag to acquire all outstanding shares of Maytag common stock. The aggregate transaction value, including the payment to Maytag stockholders of approximately $850 million in cash and between 9.2 million and 11.3 million shares of Whirlpool common stock and assumption of approximately $972 million of Maytag debt (based on Maytag stock, exercisable stock options and debt reported outstanding as of December 31, 2005), is approximately $2.7 billion. The number of shares of Whirlpool common stock to be issued will depend on the volume weighted-average trading prices of Whirlpool common stock during a twenty trading day period ending shortly before completion of the merger. The transaction was approved by Maytag shareholders on December 22, 2005 and is pending regulatory clearance as discussed below. Whirlpool has sufficient resources to finance the acquisition. The acquisition and upcoming debt maturities of the combined company are expected to be financed initially through commercial paper supported by existing bank agreements and with new committed bank facilities. The Company expects to eventually refinance a portion of its commercial paper in the capital markets. The net loss (andmerger is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and other customary closing conditions. On December 1, 2005, Whirlpool and Maytag announced that they had certified substantial compliance with the Antitrust Division of the Department of Justice in response to a request for additional information ("second request") and had agreed not to close the proposed merger before February 27, 2006, without the Antitrust Division's concurrence, recognizing that the Antitrust Division could request additional time for review. On February 13, 2006, Whirlpool and Maytag announced that they agreed with the Antitrust Division to a limited extension of time to complete the review of the proposed merger. The companies have agreed not to close the transaction before March 30, 2006 without the Antitrust Division's concurrence. Whirlpool and Maytag are working closely with the Department of Justice and continue to cooperate fully with its investigation and respond promptly to its inquiries. On August 22, 2005, Whirlpool paid Maytag $40 million to reimburse Maytag for its payment of a fee to terminate its prior merger agreement with Triton Acquisition Holding Co. At December 31, 2005, paid and accrued costs related per share amounts) forto the restated first quarterpotential merger total $77 million and included the above mentioned fee, as shown below differ fromwell as $37 million of professional fees incurred in connection with the originally filed amountsproposed acquisition. These costs have been capitalized and are recorded in the other assets line within the Company's Consolidated Balance Sheet. If consummation of the transaction does not occur, the costs will be reclassified to expense. Whirlpool has agreed to pay up to $15 million to assist Maytag in retaining key employees while the merger is pending. Whirlpool also has agreed to pay Maytag a "reverse break-up fee" of $120 million under certain circumstances if the transaction cannot be closed due to the adoptionan inability to obtain regulatory clearance. ELEVEN-YEAR CONSOLIDATED STATISTICAL REVIEW (Millions of dollars except share and employee data)   2005   2004   2003   CONSOLIDATED OPERATIONS                     Net sales   $ 14,317   $ 13,220   $ 12,176   Operating profit(1)   $ 792   $ 758   $ 830   Earnings (loss) from continuing operations before income taxes and other items   $ 597   $ 616   $ 652   Earnings (loss) from continuing operations   $ 422   $ 406   $ 414   Earnings (loss) from discontinued operations(2)   $ —   $ —   $ —   Net earnings (loss)(3)   $ 422   $ 406   $ 414   Net capital expenditures   $ 494   $ 511   $ 423   Depreciation   $ 441   $ 443   $ 423   Dividends   $ 116   $ 116   $ 94   CONSOLIDATED FINANCIAL POSITION                     Current assets   $ 4,710   $ 4,514   $ 3,865   Current liabilities   $ 4,301   $ 3,985   $ 3,589   Working capital   $ 409   $ 529   $ 276   Property, plant and equipment—net   $ 2,511   $ 2,583   $ 2,456   Total assets   $ 8,248   $ 8,181   $ 7,361   Long-term debt   $ 745   $ 1,160   $ 1,134   Stockholders' equity   $ 1,745   $ 1,606   $ 1,301   PER SHARE DATA                     Basic earnings (loss) from continuing operations before accounting change   $ 6.30   $ 6.02   $ 6.03   Diluted earnings (loss) from continuing operations before accounting change   $ 6.19   $ 5.90   $ 5.91   Diluted net earnings (loss)(3)   $ 6.19   $ 5.90   $ 5.91   Dividends   $ 1.72   $ 1.72   $ 1.36   Book value   $ 25.54   $ 23.31   $ 18.56   Closing Stock Price—NYSE   $ 83.76   $ 69.21   $ 72.65   KEY RATIOS(4)                     Operating profit margin     5.5 %   5.7 %   6.8 % Pre-tax margin(5)     4.2 %   4.7 %   5.4 % Net margin(6)     2.9 %   3.1 %   3.4 % Return on average stockholders' equity(7)     24.6 %   30.3 %   42.9 % Return on average total assets(8)     5.1 %   5.2 %   5.9 % Current assets to current liabilities     1.1 x   1.1 x   1.1 x Total debt-appliance business as a percent of invested capital(9)     40.4 %   45.7 %   50.9 % Price earnings ratio     13.5 x   11.7 x   12.3 x Interest coverage(10)     5.6 x   5.8 x   5.7 x OTHER DATA                     Number of common shares outstanding (in thousands):                     Average—on a diluted basis     68,272     68,902     70,082   Year-end     67,880     66,604     68,931   Number of stockholders (year-end)     7,442     7,826     8,178   Number of employees (year-end)     65,682     68,125     68,407   Total return to shareholders (five year annualized)(11)     14.5 %   3.7 %   8.1 % (1) Restructuring charges were $57 million in 2005, $15 million in 2004, $3 million in 2003, $101 million in 2002, $150 million in 2001, $343 million in 1997, and $30 million in 1996. (2) The company's financial services business was discontinued in 1997. (3) Includes cumulative effect of accounting changes: 2002—Accounting for goodwill under SFAS No. 141 and 142 and impairments 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. (4) Key ratios include charges for restructuring charges, as discussedwell as other non-recurring items, which increased (decreased) operating profit, earnings before tax and net earnings in Note 3.      Three Months Ended                        Restated   Millions of dollars, except per share data    Dec. 31     Sept. 30    Jun. 30    Mar. 31   2002                                Net sales    $ 2,947     $ 2,759    $ 2,737    $ 2,574   Cost of products sold      2,266       2,114      2,103      1,982   Earnings from continuing operations      14       101      63      84   Net earnings (loss)      (29 )     101      63      (529 ) Per share of common stock                                Basic earnings from continuing operations    $ 0.20     $ 1.48    $ 0.93    $ 1.25   Basic net earnings (loss)      (0.43 )     1.48      0.93      (7.86 ) Diluted earnings from continuing operations    $ 0.20     $ 1.46    $ 0.91    $ 1.21   Diluted net earnings (loss)      (0.42 )     1.46      0.91      (7.63 ) Dividends    $ 0.34     $ 0.34    $ 0.34    $ 0.34   F-47 the following years: 2002—Accounting for goodwill under SFAS No. 141 and 142 and impairments of $0, $0, and $(613) million, restructuring charges $(101) million, $(101) million and $(76) million, discontinued operations and accounting changes of $(19) million, $(19) million and $(57) million, and a minority investment write-off in a European business of $0, $0 and $(22) million; 2001—Restructuring charges of $(150) million, $(150) million and $(110) million, product recalls of $(295) million, $(295) million and $(181) million, and discontinued operations and accounting changes of $0, $0 and $(13) million; 1999—Brazil devaluation of $0, $(158) million and $(60) million; 1998—Gain from discontinued operations of $0, $0 and $15 million; 1997—Restructuring charges of $(343) million, $(343) million and $(213) million. Eleven-Year Consolidated Statistical Review Millions of dollars, except share and employee data   Consolidated Operations    2003     2002     2001   Net 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 Position                          Current 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 data                          Basic 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 x Total 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 x Interest coverage(10)      5.8 x     4.5 x     1.6 x Other Data                          Number 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 %     2002   2001   2000   1999   1998   1997   1996   1995                                                           $ 11,016   $ 10,343   $ 10,325   $ 10,511   $ 10,323   $ 8,617   $ 8,523   $ 8,163       $ 692   $ 306   $ 807   $ 875   $ 688   $ 11   $ 278   $ 366       $ 495   $ 93   $ 577   $ 514   $ 564   $ (171 ) $ 100   $ 214       $ 262   $ 34   $ 367   $ 347   $ 310   $ (46 ) $ 141   $ 195       $ (43 ) $ (21 ) $ —   $ —   $ 15   $ 31   $ 15   $ 14       $ (394 ) $ 21   $ 367   $ 347   $ 325   $ (15 ) $ 156   $ 209       $ 430   $ 378   $ 375   $ 437   $ 542   $ 378   $ 336   $ 483       $ 391   $ 368   $ 371   $ 386   $ 399   $ 322   $ 318   $ 282       $ 91   $ 113   $ 70   $ 103   $ 102   $ 102   $ 101   $ 100                                                           $ 3,327   $ 3,311   $ 3,237   $ 3,177   $ 3,882   $ 4,281   $ 3,812   $ 3,541       $ 3,505   $ 3,102   $ 3,303   $ 2,892   $ 3,267   $ 3,676   $ 4,022   $ 3,829       $ (178 ) $ 209   $ (66 ) $ 285   $ 615   $ 605   $ (210 ) $ (288 )     $ 2,338   $ 2,052   $ 2,134   $ 2,178   $ 2,418   $ 2,375   $ 1,798   $ 1,779       $ 6,631   $ 6,967   $ 6,902   $ 6,826   $ 7,935   $ 8,270   $ 8,015   $ 7,800       $ 1,092   $ 1,295   $ 795   $ 714   $ 1,087   $ 1,074   $ 955   $ 983       $ 739   $ 1,458   $ 1,684   $ 1,867   $ 2,001   $ 1,771   $ 1,926   $ 1,877                                                           $ 3.86   $ 0.51   $ 5.24   $ 4.61   $ 4.09   $ (0.62 ) $ 1.90   $ 2.64       $ 3.78   $ 0.50   $ 5.20   $ 4.56   $ 4.06   $ (0.62 ) $ 1.88   $ 2.60       $ (5.68 ) $ 0.31   $ 5.20   $ 4.56   $ 4.25   $ (0.20 ) $ 2.08   $ 2.78       $ 1.36   $ 1.36   $ 1.36   $ 1.36   $ 1.36   $ 1.36   $ 1.36   $ 1.36       $ 10.67   $ 21.44   $ 23.84   $ 24.55   $ 26.16   $ 23.71   $ 25.93   $ 25.40       $ 52.22   $ 73.33   $ 47.69   $ 65.06   $ 55.38   $ 55.00   $ 46.63   $ 53.25                                                             6.3 %   3.0 %   7.8 %   8.3 %   6.7 %   0.1 %   3.3 %   4.5 %       4.5 %   0.9 %   5.6 %   4.9 %   5.5 %   (2.0 )%   1.2 %   2.6 %       2.4 %   0.3 %   3.6 %   3.3 %   3.0 %   (0.5 )%   1.7 %   2.4 %       (26.5 )%   1.3 %   20.7 %   17.9 %   17.2 %   (0.8 )%   8.2 %   11.6 %       (5.8 )%   0.3 %   5.4 %   4.7 %   4.0 %   (0.2 )%   2.0 %   2.9 %       0.9 x   1.1 x   1.0 x   1.1 x   1.2 x   1.2 x   0.9 x   0.9 x       65.1 %   48.0 %   49.4 %   37.7 %   43.5 %   46.1 %   44.2 %   45.2 %       (9.2) x   236.5 x   9.2 x   14.3 x   13.0 x   —     22.4 x   19.2 x       (0.4) x   1.4 x   4.1 x   4.3 x   3.1 x   0.9 x   2.5 x   3.4 x                                                                                                               69,267     68,036     70,637     76,044     76,507     74,697     77,178     76,812         68,226     67,215     66,265     74,463     76,089     75,262     74,415     74,081         8,556     8,840     11,780     12,531     13,584     10,171     11,033     11,686         68,272     61,923     62,527     62,706     59,885     62,419     49,254     46,546         1.4 %   12.2 %   0.3 %   7.9 %   (1.2 )%   6.8 %   6.3 %   20.8 % (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 under statements and impairments 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— 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 %   1.0 x     1.1 x     1.2 x     1.2x       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 x   4.2 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 %     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 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 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 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. F-49 (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), divided by average stockholders' equity. Average stockholders' equity is computed on a 13 month average beginning in 2001. (8) Net earnings (loss), divided by average total assets. (9) Debt divided by debt, stockholders' equity and minority interests. (10) Ratio of earnings before interest and income tax expense to interest expense. (11) Stock appreciation plus reinvested dividends. Report by Management on the Consolidated Financial Statements The management of Whirlpool Corporation has prepared the accompanying financial statements. The financial statements have been audited by Ernst & Young LLP, Independent Auditorsan independent registered public accounting firm, whose report, based upon their audits, expresses the opinion that these financial statements present fairly the consolidated financial position, results of operations and cash flows of Whirlpool and its subsidiaries in accordance with accounting principles generally accepted in the United States. Their audits are conducted in conformity with the auditing standards of the Public Company Accounting Oversight Board (United States). The financial statements were 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 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 of the Company is composed of five independent directors who, in the opinion of the board, meet the relevant financial experience, literacy, and expertise requirements. The audit committee provides independent and objective oversight of the Company's accounting functions and internal controls and monitors (1) the objectivity of the Company's financial statements, (2) the Company's compliance with legal and regulatory requirements, (3) the independent registered public accounting firm's qualifications and independence, and (4) the performance of the Company's internal audit function and independent registered public accounting firm. In performing these functions, the committee has the responsibility to review and discuss the annual audited financial statements and quarterly financial statements and related reports with management and the independent registered public accounting firm, including the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations," to monitor the adequacy of financial disclosure. The Committee also has the responsibility to retain and terminate the Company's independent registered public accounting firm and exercise the committee's sole authority to review and approve all audit engagement fees and terms and preapprove the nature, extent, and cost of all non-audit services provided by the independent registered public accounting firm. /s/ ROY W. TEMPLIN Roy W. Templin Executive Vice President and Chief Financial Officer February 28, 2006 Management's Report on Internal Control Over Financial Reporting The management of Whirlpool Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Whirlpool's internal control system is designed to provide reasonable assurance to the Company's management and board of directors regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The management of Whirlpool assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2005. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control—Integrated Framework. Based on our assessment and those criteria, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2005. Whirlpool Corporation's independent registered public accounting firm has issued an audit report on our assessment of the Company's internal control over financial reporting. This report appears on page F-61. /s/JEFF M. FETTIG Jeff M. Fettig Chairman of the Board and     Chief Executive Officer February 28, 2006 /s/ROY W. TEMPLIN Roy W. Templin Executive Vice President and     Chief Financial Officer February 28, 2006 Report of Independent Registered Public Accounting Firm The Stockholders and Board of Directors Whirlpool Corporation Benton Harbor, Michigan We have audited the accompanying consolidated balance sheets of Whirlpool Corporation as of December 31, 20032005 and 2002,2004, and the related consolidated statements of operations, stockholders’changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 2003.2005. Our audits also included the financial statement schedule listed in the index at Item 15(a). These financial statements and schedule are the responsibility of the Company’sCompany's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditingthe standards generally accepted inof the United States.Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about 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 audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Whirlpool Corporation as ofat December 31, 20032005 and 2002,2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 20032005, in conformity with accounting principlesU.S. generally accepted in the United States.accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic financial statementsstatement taken as a whole, presents fairly in all material respects the information set forth therein. As discussed in Note 3 to the consolidated financial statements, in 2002 the Company changed its method of accounting for goodwill and other intangible assets. Also, in 2001 the Company changed its method of accounting for derivative instruments and hedging activities. /S/    ERNST & YOUNG, LLP Chicago, Illinois February 3, 2004 F-50 Report by Management on the Consolidated Financial Statements The management of Whirlpool Corporation has prepared the accompanying financial statements. The financial statementsWe also have been audited, by Ernst & Young LLP, independent auditors, whose report, based upon their audits, expresses the opinion that these financial statements present fairly the consolidated financial position, results of operations and cash flows of Whirlpool and its subsidiaries in accordance with accounting principlesthe standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Whirlpool Corporation's internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2006 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP Chicago, Illinois February 28, 2006 Report of Independent Registered Public Accounting Firm The Stockholders and Board of Directors Whirlpool Corporation Benton Harbor, Michigan We have audited management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, that Whirlpool Corporation maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Whirlpool Corporation's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted inaccounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the United States. Their audits are conducted in conformity with auditing standards generally accepted in the United States. The financial statements were prepared from the Company’s accountingmaintenance of records books and accounts which,that, in reasonable detail, accurately and fairly reflect all material transactions. The Company maintains a systemthe transactions and dispositions of internal controls designed tothe assets of the company; (2) provide reasonable assurance that the Company’s books and records, and the Company’s assetstransactions are maintained and accounted for,recorded as necessary to permit preparation of financial statements in accordance with management’s authorizations. The Company’sgenerally accepted accounting records, policiesprinciples, and internal controls are regularly reviewed by an internal audit staff. The audit committeethat receipts and expenditures of the Boardcompany are being made only in accordance with authorizations of Directorsmanagement and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, management's assessment that Whirlpool Corporation maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Whirlpool Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company is composedAccounting Oversight Board (United States), the consolidated balance sheets of five independent directors who,Whirlpool Corporation as of December 31, 2005 and 2004, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2005 and our report dated February 28, 2006 expressed an unqualified opinion of the board, meet the relevant financial experience, literacy, and expertise requirements. The audit committee provides independent and objective oversight of the Company’s accounting functions and internal controls and monitors the objectivity of the Company’s financial statements, (2) the Company’s compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications and independence, and (4) the performance of the Company’s internal audit function and independent auditors. In performing these functions, the committee has the responsibility to review and discuss the annual audited financial statements and quarterly financial statements and related reports with management and independent auditors, include the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” to monitor the adequacy of financial disclosure; and to retain and terminate the Company’s independent auditors and exercise the committee’s sole authority to review and approve all audit engagement fees and terms and preapprove the nature, extent, and cost of all non-audit services provided by independent auditors.thereon. /s/ Ernst & Young LLP Chicago, Illinois February 28, 2006 /S/    R. STEPHEN BARRETT, JR. R. Stephen Barrett, Jr. Executive Vice President and Chief Financial Officer February 26, 2004 F-51 SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS WHIRLPOOL CORPORATION AND SUBSIDIARIES Years Ended December 31, 2003, 2002,2005, 2004, and 2001 2003 (Millionsmillions of dollars) COL. A   COL. B   COL. C   COL. D   COL. E         ADDITIONS         Description   Balance at Beginning of Period   (1) Charged to Costs and Expenses   (2) Charged to Other Accounts / Other   Deductions— Describe   Balance at 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             COL. A   COL. B   COL. C   COL. D   COL. E         ADDITIONS         Description   Balance at Beginning of Period   (1) Charged to Costs and Expenses   (2) Charged to Other Accounts / Other   Deductions — Describe   Balance at End of Period Year Ended December 31, 2005:                               Allowances for doubtful accounts — trade receivables   $ 107   $ 7   $ —   $ 38 — A   $ 76             Year Ended December 31, 2004:                               Allowances for doubtful accounts — trade receivables   $ 113   $ 17   $ —   $ 23 — A   $ 107             Year Ended December 31, 2003:                               Allowances for doubtful accounts — trade receivables   $ 94   $ 34   $ —   $ 15 — A   $ 113             Note A—The amounts represent accounts charged off, less recoveries of $1 million in 2003,2005, $0 million in 2004, and $1 million in 2002 and $2 million in 2001,2003, translation adjustments and transfers. F-52 ANNUAL REPORT ON FORM 10-K ITEMS 15(a)(3) and 15(c) EXHIBIT INDEX YEAR ENDED DECEMBER 31, 20032005 The following exhibits are submitted herewith or incorporated herein by reference in response to Items 15(a)(3) and 15(c). Each exhibit that is considered a management contract or compensatory plan or arrangement required to be filed pursuant to Item 15(a)(3) of Form 10-K is identified by a “(Z)"(Z).” " Number and Description of Exhibit 2 Agreement and Plan of Merger, dated as of August 22, 2005, among Whirlpool Corporation, Whirlpool Acquisition Co. and Maytag Corporation. [Incorporated by reference from Exhibit 2.1 to the Company's Form 8-K filed August 22, 2005.] [File No. 1-3932] 3(i)   Restated Certificate of Incorporation of the Company. [Incorporated by reference from Exhibit 3(i) to the Company’sCompany'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 by reference from Exhibit 3(ii) to the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 1999] [File No. 1-3932] 4(i)   The registrant hereby agrees to furnish to the Securities and Exchange Commission, upon request, thea copy of instruments defining the rights of holders of each issue of long-term debt of the registrant and its subsidiaries. 4(ii)   Rights Agreement, dated April 21, 1998, between Whirlpool Corporation and First Chicago Trust Company of New York, with exhibits. [Incorporated by reference from Exhibit 4 to the Company’sCompany's Form 8-K datedfiled April 22,27, 1998] [File No. 1-3932] 10(iii) (a) Amended and Restated Long-Term Five-Year Credit Agreement dated as of December 1, 2005 among Whirlpool Corporation, Whirlpool Europe B.V., Whirlpool Finance B.V., Certain Financial Institutions and Citibank, N.A., as Administrative Agent and Fronting Agent and JPMorgan Chase Bank, N.A., as Syndication Agent, ABN AMRO Bank N.V., The Royal Bank of Scotland PLC and Bank of America, N.A., as Documentation Agents, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., Lead Arrangers and Joint Bookrunners. [Incorporated by reference from Exhibit 10.1 to the Company's Form 8-K filed December 6, 2005] [File No. 1-3932] 10(iii)(a) (b) 364-Day Credit Agreement dated as of December 1, 2005 among Whirlpool Corporation, Whirlpool Europe B.V., Whirlpool Finance B.V., Certain Financial Institutions and Citibank, N.A., as Administrative Agent and Fronting Agent and JPMorgan Chase Bank, N.A., as Syndication Agent, ABN AMRO Bank N.V., The Royal Bank of Scotland PLC and Bank of America, N.A., as Documentation Agents, Citigroup Global Markets Inc. and J.P. Morgan Securities Inc., Lead Arrangers and Joint Bookrunners [Incorporated by reference from Exhibit 10.2 to the Company's Form 8-K filed December 6, 2005] [File No. 1-3932]   10(iii) (c) Indenture between Whirlpool Retirement Benefits RestorationCorporation and Citibank, N.A., dated as of March 20, 2000 [Incorporated by reference from Exhibit 4(a) to the Company's Registration Statement on Form S-3] [File No. 333-32886] 10(iii) (d) Whirlpool Corporation Nonemployee Director Stock Ownership Plan (as amended February 16, 1999, effective April 20, 1999).(Z) [Incorporated by reference from Exhibit A to the Company's Proxy Statement for the 1999 annual meeting of stockholders] [File No. 1-3932] 10(iii) (e) Whirlpool Corporation Charitable Award Contribution and restated effective January 1, 2002)Additional Life Insurance Plan for Directors (effective April 20, 1993).(Z) [Incorporated by reference from Exhibit 10(iii)(a)(p) to the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 2002]1994] [File No. 1-3932] 10(iii) 10(iii)(b) (f) Whirlpool Supplemental Executive Retirement Plan (as amended and restated effective December 31, 1993) Nonemployee director compensation arrangement (effective January 1, 2005).(Z) [Incorporated by reference from Exhibit 10(iii)(c) toItem 1.01(i) - Entry into a Material Definitive Agreement, of the Company’s Annual ReportCompany's Form 8-K filed on Form 10-K for the fiscal year ended December 31, 1993]22, 2004] [File No. 1-3932] 10(iii) 10(iii)(c) (g) Resolution adopted on December 12, 1989 by the Board of Directors of the Company adopting a compensation schedule, life insurance program and retirement benefit program for eligible Directors.(Z) [Incorporated by reference from Exhibit 10(iii)(d) to the Company’s Annual Report 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 a Flexible Compensation Program for the Corporation’s nonemployee directors.(Z) [Incorporated by reference from Exhibit 10(iii)(e) to the Company’s Annual Report on Form 10-K for the fiscal 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 the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932] 10(iii) 10(iii)(f) (h) Form of Agreement providing Whirlpool Corporation Deferred Compensation Plan II for severance benefits for certain executive officers.Non-Employee Directors (effective January 1, 2005).(Z) [Incorporated by reference from Item 5 – Other EventsExhibit 10 to the Company’sCompany's Form 8-K dated April 26, 2000]filed on December 22, 2004] [File No. 1-3932] 10(iii) (i) Whirlpool Corporation Nonemployee Director Equity Plan (effective January 1, 2005).(Z) [Incorporated by reference from Exhibit 99.1 to the Company's Form 8-K filed on April 21, 2005] [File No. 1-3932] 10(iii)(g)   (j) Whirlpool Corporation 1989 Omnibus Stock and Incentive Plan (as amended, July 1, 1991).(Z) [Incorporated by reference to Exhibit 10(iii)(h) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932] 10(iii) (k) Amendment of the 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’sCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 1995] [File No. 1-3932] E-1 Number and Description of Exhibit 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) [Incorporated by reference from Exhibit 10(iii)(i) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File 1-3932] 10(iii)(i) Administrative Guidelines for the Whirlpool Corporation Executive Stock Appreciation and Performance Program (pursuant to one or more of Whirlpool’s Omnibus Stock and Incentive Plans).(Z) [Incorporated by reference from Exhibit 10(iii)(j) to the Company’s Annual Report on 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 the Company’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 and April 20, 1999).(Z) [Incorporated by reference from Exhibit B to the Company’s proxy statement 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 Report on 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 Form 10-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 for Directors (effective April 20, 1993).(Z) [Incorporated by reference from Exhibit 10(iii)(p) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1994] [File No. 1-3932] 10(iii)(o) Form of agreement for the Whirlpool Corporation Career Stock Grant Program (pursuant to one or more of Whirlpool’s Omnibus Stock and Incentive Plans).(Z) [Incorporated by reference from Exhibit 10(iii)(q) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1995] [File No. 1-3932] 10(iii)(p) Whirlpool Corporation 1996 Omnibus Stock and Incentive Plan (as amended, effective February 16, 1999).(Z) [Incorporated by reference from Exhibit 10(iii)(r) to the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 1999] [File No. 1-3932] 10(iii)(q)   10(iii) (m) Whirlpool Corporation 1998 Omnibus Stock and Incentive Plan (as amended, effective February 16, 1999).(Z) [Incorporated by reference from Exhibit 10(iii)(s) to the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 1999] [File No. 1-3932] 10(iii) 10(iii)(r) (n) Employment Agreement with Paulo F.M.O. Periquito.(Z) [Incorporated by reference from Part II Other 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.Plan (effective January 1, 2000).(Z) [Incorporated by reference from Exhibit A to the Company’s proxy statementCompany's Proxy Statement for the 2000 annual meeting of stockholders] [File No. 1-3932] 10(iii) (o) Whirlpool Corporation 2002 Omnibus Stock and Incentive Plan (effective January 1, 2002).(Z) [Incorporated by reference from Exhibit A to the Company's Proxy Statement for the 2002 annual meeting of stockholders] [File No. 1-3932] 10(iii)(t)   (p) Administrative Guidelines for the Whirlpool Corporation Restricted Stock Value Program (pursuant to one or more of Whirlpool's Omnibus Stock and Incentive Plans).(Z) [Incorporated by reference from Exhibit 10(iii)(i) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File 1-3932] 10(iii) (q) Form of Agreement for the Whirlpool Corporation Career Stock Grant Program (pursuant to one or more of Whirlpool's Omnibus Stock and Incentive Plans).(Z) [Incorporated by reference from Exhibit 10(iii)(q) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995] [File No. 1-3932] 10(iii) (r) Form of Stock Option Grant Document for the Whirlpool Corporation Stock Option Program (pursuant to one or more of Whirlpool’sWhirlpool's Omnibus Stock and Incentive Plans)(Rev. 02/17/04).(Z) [Incorporated by reference from Exhibit 10(i) to the Company's Form 8-K filed on January 25, 2005] [File No. 1-3932] 10(iii) (s) Administrative Guidelines for the Whirlpool Corporation Special Retention Program (pursuant to one or more of Whirlpool's Omnibus Stock and Incentive Plans).(Z) [Incorporated by reference from Exhibit 10(iii)(t)(w) to the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 2001] [File No. 1-3932] 10(iii) (t) Form of Whirlpool Corporation Strategic Excellence Program Grant Document (pursuant to one or more of Whirlpool's Omnibus Stock and Incentive Plans)(Rev. 02/17/04).(Z) [Incorporated by reference from Exhibit 10(ii) to the Company's Form 8-K filed on January 25, 2005] [File No. 1-3932] 10(iii) (u) Form of Agreements providing for severance benefits for certain executive officers.(Z) [Incorporated by reference from Exhibit 1 and Exhibit 2 to the Company's Form 8-K filed April 27, 2000] [File No. 1-3932] 10(iii) (v) Whirlpool Corporation Performance Excellence Plan (as amended January 1, 1992, January 1, 1994 , January 1, 1999 and January 1, 2004).(Z) [Incorporated by reference from Exhibit A to the Company's Proxy Statement for the 2004 annual meeting of stockholders] [File No. 1-3932] 10(iii)(u)   10(iii) (w) Whirlpool Corporation Executive Deferred Savings Plan (as amended effective January 1, 1992).(Z) [Incorporated by reference from Exhibit 10(iii)(n) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993] [File No. 1-3932] 10(iii) (x) 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 Form 10-K for the fiscal year ended December 31, 1994] [File No. 1-3932] 10(iii) (y) Whirlpool Corporation Key Employee Treasury Stock Ownership Plan (effective October 16, 2001).(Z) [Incorporated by reference from Exhibit 10(iii)(u) to the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 2001] [File No. 1-3932] E-2 Number and Description of Exhibit 10(iii) 10(iii)(v) (z) Whirlpool Corporation Nonemployee Director Treasury Stock Ownership Plan (effective October 16, 2001). Employment Agreement with Paulo F.M.O. Periquito, dated January 1, 1998.(Z) [Incorporated by reference from Exhibit 4(d)10 to the Company’s Registration Statement onCompany's Form S-8 filed on November 20, 2001]10-Q for the period ended March 31, 1998] [File No. 333-73726] 1-3932] 10(iii) 10(iii)(w) (aa) Administrative Guidelines for the Whirlpool Corporation Special Retention Program (pursuant to one or more of Whirlpool’s Omnibus StockRetirement Benefits Restoration Plan (as amended and Incentive Plans)restated effective January 1, 2002).(Z) [Incorporated by reference from Exhibit 10(iii)(w)(a) to the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended December 31, 2001]2002] [File No. 1-3932] 10(iii) 10(iii)(x) (bb) Whirlpool Corporation 2002 Omnibus StockSupplemental Executive Retirement Plan (as amended and Incentive Plan. restated effective December 31, 1993).(Z) [Incorporated by reference from Exhibit A10(iii)(c) to the Company’s proxy statementCompany's Annual Report on Form 10-K for the 2002 annual meeting of stockholders]fiscal year ended December 31, 1993] [File No. 1-3932] 10(iii) 10(iii)(y) (cc) Long-Term Credit Agreement dated as of June 1, 2001 among Whirlpool Corporation Whirlpool Europe B.V., Certain Financial Institutions and BankForm of Amercia, N.A. as Administrative Agent and Citibank, N.A. as Syndication Agent, ABN AMRO Bank, N.V., Fleet National Bank and The Chase Manhattan Bank, as Documentation Agents, Banc of America Securities LLC and Salomon Smith Barney Inc., Co-Lead Arrangers and Joint Book Managers.Indemnity Agreement.(Z) [Incorporated by reference from Part II – Other Information, Item 6Exhibit 10.1 to the Company’s Quarterly ReportCompany's Form 8-K filed on Form 10-Q for the period ended June 30, 2002]February 23, 2006] [File No. 1-3932] 11 Computation of Earnings Per Share 11 Statement Re: Computation of Per Share Earnings 12   Statement Re: Computation of the Ratios Ratio of Earnings to Fixed Charges 21   List of Subsidiaries 23.1 Consent of Independent Registered Accounting Firm 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, andPursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31(b) Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32 Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 QuickLinks E-3 PART I ITEM 1 . Business. ITEM 1A . Risk Factors. ITEM 1B . Unresolved Staff Comments. ITEM 2 . Properties. ITEM 3 . Legal Proceedings. ITEM 4 . Submission of Matters to a Vote of Security Holders. PART II ITEM 5 . Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. ITEM 6 . Selected Financial Data. ITEM 7 . Management's Discussion and Analysis of Financial Condition and Results of Operations. ITEM 7A . Quantitative and Qualitative Disclosures about Market Risk. ITEM 8 . Financial Statements and Supplementary Data. ITEM 9 . Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. ITEM 9A . Controls and Procedures. ITEM 9B . Other Information. PART III ITEM 10 . Directors and Executive Officers of the Registrant. ITEM 11 . Executive Compensation. ITEM 12 . Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. ITEM 13 . Certain Relationships and Related Transactions. ITEM 14 . Principal Accounting Fees and Services. PART IV ITEM 15 . Exhibits, Financial Statement Schedules. SIGNATURES Table of Contents MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31 (Millions of dollars, except per share data) WHIRLPOOL CORPORATION CONSOLIDATED BALANCE SHEETS (Millions of dollars) WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31 (Millions of dollars) WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Year ended December 31 (Millions of dollars) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS WHIRLPOOL CORPORATION AND SUBSIDIARIES Years Ended December 31, 2005, 2004, and 2003 (millions of dollars) ANNUAL REPORT ON FORM 10-K ITEMS 15(a)(3) and 15(c) EXHIBIT INDEX YEAR ENDED DECEMBER 31, 2005