Published: 2021-10-22 00:00:00 ET

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General Information

The accompanying unaudited Consolidated Condensed Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information or footnotes required by U.S. GAAP for complete financial statements. As a result, this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Form 10-K for the year ended December 31, 2020.

Management believes that the accompanying Consolidated Condensed Financial Statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods.

We are required to make estimates and assumptions that affect the amounts reported in the Consolidated Condensed Financial Statements and accompanying Notes. Actual results could differ materially from those estimates.

Certain prior year amounts in the Consolidated Condensed Financial Statements have been reclassified to conform with current year presentation.

We have eliminated all material intercompany transactions in our Consolidated Condensed Financial Statements. We do not consolidate the financial statements of any company in which we have an ownership interest of 50% or less, unless that company is deemed to be a variable interest entity ("VIE") of which we are the primary beneficiary. VIEs are consolidated when the company is the primary beneficiary of these entities and has the ability to directly impact the activities of these entities.

Risks and Uncertainties

COVID-19 continues to impact countries across the world, and the duration and severity of the effects are currently unknown. The pandemic has impacted the Company and could materially impact our financial results in the future. The Consolidated Condensed Financial Statements presented herein reflect estimates and assumptions made by management at September 30, 2021.

Such estimates and assumptions affect, among other things, the Company’s goodwill, long-lived asset and indefinite-lived intangible asset valuation; inventory valuation; assessment of the annual effective tax rate; valuation of deferred income taxes and income tax contingencies; and the allowance for expected credit losses and bad debt. Events and changes in circumstances arising after October 22, 2021, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.

Goodwill and indefinite-lived intangible assets

Our Critical Accounting Policies and Estimates for goodwill and other indefinite-lived intangibles are disclosed in Note 1 to the Consolidated Financial Statements and in Management's Discussion and Analysis of our annual report on Form 10-K for the fiscal year ended December 31, 2020.

We continue to monitor the significant global economic uncertainty to assess the outlook for demand for our products and the impact on our business and our overall financial performance. The goodwill in our EMEA reporting unit and our Indesit, Hotpoint*, Maytag and JennAir trademarks continue to be at risk at September 30, 2021. The goodwill in our other reporting units or indefinite-lived intangible assets are not presently at risk for future impairment.

The potential impact of demand disruptions, production impacts or supply constraints could negatively effect revenues for the Indesit, Hotpoint*, Maytag and JennAir trademarks and the EMEA reporting unit, but we remain committed to the strategic actions necessary to realize the long-term forecasted EBIT margins.

*Whirlpool ownership of the Hotpoint brand in EMEA and Asia Pacific regions is not affiliated with the Hotpoint brand sold in the Americas.

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As a result of our analysis, and in consideration of the totality of events and circumstances, there were no triggering events of impairment identified during the third quarter of 2021.

A lack of recovery or further deterioration in market conditions, a sustained trend of weaker than expected financial performance in EMEA or for our Indesit, Hotpoint*, Maytag or JennAir trademarks or a lack of recovery or a decline in the Company’s market capitalization, among other factors, as a result of the COVID-19 pandemic or other unforeseen events could result in an impairment charge in future periods which could have a material adverse effect on our financial statements.

Income taxes

Under U.S. GAAP, the Company calculates its quarterly tax provision based on an estimated effective tax rate for the year and then adjusts this amount by certain discrete items each quarter. Potential changing and volatile macro-economic conditions could cause fluctuations in forecasted earnings before income taxes. As such, the Company's effective tax rate could be subject to volatility as forecasted earnings before income taxes are impacted by events which cannot be predicted. In addition, potential future economic deterioration brought on by the pandemic or other factors may negatively impact the realizability of certain deferred tax assets.  

Other Accounting Matters

Synthetic lease arrangements

We have a number of synthetic lease arrangements with financial institutions for non-core properties and assets. The leases contain provisions for options to purchase, extend the original term for additional periods or return the property. At September 30, 2021 and December 31, 2020, these arrangements include residual value guarantees of up to $238 million and $220 million, respectively, that could potentially come due in future periods. We do not believe it is probable that any material amounts will be owed under these guarantees. Therefore, no material amounts related to the residual value guarantees are included in the lease payments used to measure the right-of-use assets and lease liabilities.

The majority of these leases are classified as operating leases. We have assessed the reasonable certainty of these provisions to determine the appropriate lease term. The leases were measured using our incremental borrowing rate and are included in our right of use assets and lease liabilities in the Consolidated Condensed Balance Sheets. Rental payments are calculated at the applicable LIBOR rate plus a margin. The impact to the Consolidated Condensed Balance Sheets and Consolidated Condensed Statements of Income (Loss) is nominal.

Supply Chain Financing Arrangements

The Company has ongoing agreements globally with various third-parties to allow certain suppliers the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions.

We have no economic interest in the sale of these receivables and no direct financial relationship with the financial institutions concerning these services. Our obligations to suppliers, including amounts due and scheduled payment terms, are not impacted. All outstanding balances under these programs are recorded in accounts payable on our Consolidated Condensed Balance Sheets, approximately $1.3 billion and $1.2 billion has been issued to participating financial institutions at September 30, 2021 and December 31, 2020, respectively.

A downgrade in our credit rating or changes in the financial markets could limit the financial institutions’ willingness to commit funds to, and participate in, the programs. We do not believe such risk would have a material impact on our working capital or cash flows.

Due to the completed partial tender offer for Whirlpool China and subsequent deconsolidation of the subsidiary during the second quarter of 2021, we no longer have material supply chain financing arrangements in China. For additional information see Note 15 to the Consolidated Condensed Financial Statements.

*Whirlpool ownership of the Hotpoint brand in EMEA and Asia Pacific regions is not affiliated with the Hotpoint brand sold in the Americas.

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Inventories

Effective January 1, 2021, the Company changed its accounting principle for inventory valuation for inventories located in the U.S. from a last-in, first-out ("LIFO") basis to a first-in, first-out ("FIFO") basis. All prior periods presented in the Consolidated Condensed Financial Statements have been retrospectively adjusted to apply the effects of the change in accounting principle.

Equity Method Investments

After May 6, 2021, Whirlpool holds an equity interest of approximately 20% in Whirlpool China, an entity which was previously controlled by the Company. We account for the remaining interest under equity method accounting and Whirlpool China and its subsidiaries continue to supply the Company in the normal course of business. Whirlpool China was also granted a license to sell Whirlpool-branded products in China.

Subsequent to the completion of the partial tender offer for Whirlpool China and deconsolidation of the entity in the second quarter of 2021, we made purchases from Whirlpool China of $86 million and $152 million for the three and nine months ended September 30, 2021, respectively. The outstanding amount due to Whirlpool China and its subsidiaries is $139 million as of September 30, 2021. The licensing revenue and outstanding accounts receivable from Whirlpool China and its subsidiaries are not material for the periods presented.

As of September 30, 2021, the value of the equity interest in Whirlpool China is $210 million and is included in Other noncurrent assets in the Consolidated Condensed Balance Sheet.

The Company’s share of the results of equity method investments and elimination of intra-entity results are included in Interest and sundry (income) expense in the Consolidated Condensed Income Statement and Other noncurrent assets in the Consolidated Condensed Balance Sheet. The impact of equity method investments is not material for the periods presented.

For additional information, see Note 15 to the Consolidated Condensed Financial Statements.

Related Party Transactions

In 2018, Whirlpool of India Limited (“Whirlpool India”), a majority-owned subsidiary of Whirlpool Corporation, acquired a 49% equity interest in Elica PB India Private Limited (“Elica PB India”) for $22 million. On September 27, 2021, the Company entered into a share purchase agreement to acquire an additional 38% equity interest in Elica PB India for $57 million, which resulted in a controlling equity ownership of 87%. Following the closing of the transaction on September 29, 2021, Elica PB India is consolidated in Whirlpool Corporation's financial statements and is reported within our Asia reportable segment. The transaction resulted in a gain of approximately $42 million on the Company’s previously held equity interest. This gain was recorded within Interest and sundry (income) expense during the third quarter.

The Company is in the process of finalizing independent appraisals for the purpose of allocating the purchase price to the individual assets acquired and liabilities assumed in the acquisition. The preliminary allocation of the purchase price included in the Consolidated Condensed Balance Sheet at September 30, 2021 is based on the best estimates of management and is subject to revision of the final determination of asset fair values and useful lives. Any changes to the preliminary estimates of the fair values of the assets and liabilities could potentially impact goodwill as well as future depreciation and amortization expense.

On a preliminary basis, goodwill of $100 million, which is not deductible for tax purposes, has been allocated to the Asia reportable segment. The allocation has been made on the basis that the anticipated synergies identified will primarily benefit this reportable segment.

Both Whirlpool India and the non-controlling interest shareholders retain an option for Whirlpool India to purchase the remaining equity interest in Elica PB India for fair value, which could be material to the financial statements of the Company, depending on the performance of the business.

Adoption of New Accounting Standards

We adopted the following standard, which did not have a material impact on our Consolidated Condensed Financial Statements:

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Standard						Effective Date
2019-12			Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes			January 1, 2021

All other newly issued and effective accounting standards during 2021 were not relevant or material to the Company.

Accounting Pronouncements Issued But Not Yet Effective

In March 2020, the FASB issued Update 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting". The amendments in Update 2020-04 are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The new guidance provides the following optional expedients: simplify accounting analyses under current U.S. GAAP for contract modifications, simplify the assessment of hedge effectiveness, allow hedging relationships affected by reference rate reform to continue and allow a one-time election to sell or transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform. In January 2021, the FASB issued Update 2021-01, "Reference Rate Reform (Topic 848): Scope". The update provides additional optional guidance on the transition from LIBOR to include derivative instruments that use an interest rate for margining, discounting or contract price alignment. The standard will ease, if warranted, the requirements for accounting for the future effects of the rate reform. An entity may elect to apply the amendments prospectively through December 31, 2022. We continue to monitor the impact the discontinuance of LIBOR or another reference rate will have on our contracts, hedging relationships and other transactions.

All other issued and not yet effective accounting standards are not relevant or material to the Company.

Disaggregation of Revenue

The following table presents our disaggregated revenues by revenue source. We sell products within all product categories in each operating segment. For additional information on the disaggregated revenues by geographic regions, see Note 14 to the Consolidated Condensed Financial Statements.

			Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars			2021						2020						2021						2020
Major product categories:
Laundry			$	1,498					$	1,588					$	4,447					$	3,989
Refrigeration			1,762						1,701						5,016						4,368
Cooking			1,348						1,159						4,097						3,011
Dishwashing			479						509						1,403						1,320
Total major product category net sales			$	5,087					$	4,957					$	14,963					$	12,688
Spare parts and warranties			302						247						860						681
Other			99						87						347						289
Total net sales			$	5,488					$	5,291					$	16,170					$	13,658

The impact to revenue related to prior period performance obligations is less than 1% of global consolidated revenues for the three and nine months ended September 30, 2021.

Allowance for Expected Credit Losses

We estimate our expected credit losses primarily by using an aging methodology and establish customer-specific reserves for higher risk trade customers. Our expected credit losses are evaluated and controlled within each geographic region considering the unique credit risk specific to the country, marketplace and economic environment. We take into account past events, current conditions and reasonable and supportable forecasts in developing the reserve.

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The following table summarizes our allowance for expected credit losses by operating segment for the nine months ended September 30, 2021:

Millions of dollars			December 31, 2020			Charged to Earnings			Write-offs			Foreign Currency			Other (1)			September 30, 2021
Accounts receivable allowance
North America			$	7		$	4		(3)			—			$	—		$	8
EMEA			67			1			(15)			(6)			—			$	47
Latin America			44			4			(2)			(1)			—			$	45
Asia			14			—			—			—			(11)			$	3
Consolidated			$	132		$	9		$	(20)		$	(7)		$	(11)		$	103
Financing receivable allowance
Latin America			$	27		$	—		$	—		$	(1)		$	—		$	26
Asia			21			—			—			—			(21)			—
			$	48		$	—		$	—		$	(1)		$	(21)		$	26
Consolidated			$	180		$	9		$	(20)		$	(8)		$	(32)		$	129

(1)Accounts receivable and financing receivable allowance of Whirlpool China which were previously classified under accounts receivable and noncurrent assets, respectively, have been removed as part of the deconsolidation of Whirlpool China. For additional information, see Note 15 to the Consolidated Condensed Financial Statements.

The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported within our Consolidated Condensed Statements of Cash Flows:

			September 30,
Millions of dollars			2021						2020
Cash and cash equivalents as presented in our Consolidated Condensed Balance Sheets			$	2,875					$	3,528
Restricted cash included in prepaid and other current assets(1)			—						13
Cash, cash equivalents and restricted cash as presented in our Consolidated Condensed Statements of Cash Flows			$	2,875					$	3,541

			December 31,
Millions of dollars			2020						2019
Cash and cash equivalents as presented in our Consolidated Balance Sheets			$	2,924					$	1,952
Restricted cash included in prepaid and other current assets (1)			10						—
Cash, cash equivalents and restricted cash as presented in our Consolidated Statements of Cash Flows			$	2,934					$	1,952

The following table summarizes our inventories at September 30, 2021 and December 31, 2020:

Millions of dollars						September 30, 2021						December 31, 2020
Finished products						$	2,134					$	1,635
Raw materials and work in process						742						666
Total Inventories						$	2,876					$	2,301

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The following table summarizes our property, plant and equipment at September 30, 2021 and December 31, 2020:

Millions of dollars						September 30, 2021						December 31, 2020
Land						$	83					$	92
Buildings						1,289						1,517
Machinery and equipment						7,968						8,370
Accumulated depreciation						(6,627)						(6,780)
Property, plant and equipment, net (1)						$	2,713					$	3,199

(1) Decrease of $379 million in property, plant and equipment is due to the deconsolidation of Whirlpool China and divestment of

Turkey subsidiary entity. For additional information, see Note 15 to the Consolidated Condensed Financial Statements.

Debt Offering

On April 29, 2021, Whirlpool Corporation (the “Company”), completed its offering of $300 million in principal amount of 2.400% Senior Notes due 2031 (the “2031 Notes”), in a public offering pursuant to a registration statement on Form S-3 (File No. 333-255372). The 2031 Notes were issued under an indenture (the “Indenture”), dated March 20, 2000, between the Company, as issuer, and U.S. Bank National Association (as successor to Citibank, N.A.), as trustee. The sale of the 2031 Notes was made pursuant to the terms of an Underwriting Agreement, dated April 26, 2021 (the “Underwriting Agreement”), among the Company, as issuer, and BNP Paribas Securities Corp., BofA Securities, Inc., J.P. Morgan Securities LLC, and Wells Fargo Securities, LLC, as representatives of the several underwriters in connection with the offering and sales of the 2031 Notes. The 2031 Notes contain covenants that limit the Company's ability to incur certain liens or enter into certain sale and lease-back transactions. In addition, if we experience a specific kind of change of control, we are required to make an offer to purchase all of the notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest. The Company used the net proceeds from the sale of the 2031 Notes to redeem $300 million aggregate principal amount of 4.850% senior notes which was paid June 15, 2021. Consistent with the Company’s Sustainability Bond Framework, the Company intends to allocate an amount equal to the net proceeds from the sale of the 2031 Notes to fund one or more new or existing environmental and social Eligible Projects, as defined in the Company’s prospectus supplement dated April 26, 2021.

On May 7, 2020, the Company completed its offering of $500 million in principal amount of 4.60% Senior Notes due 2050 (the “2050 Notes”), in a public offering pursuant to a registration statement on Form S-3 (File No. 333-224381). The 2050 Notes were issued under the Indenture. The 2050 Notes contain covenants that limit the Company's ability to incur certain liens or enter into certain sale and lease-back transactions. In addition, if we experience a specific kind of change of control, we are required to make an offer to purchase all of the notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest. The Company used the net proceeds from the sale of the 2050 Notes to repay a portion of the outstanding borrowings under the Company’s revolving credit facility, as amended and restated, dated as of August 6, 2019, among the Company, certain other borrowers, the lenders referred to therein, JPMorgan Chase Bank, N.A. as administrative agent and Citibank, N.A., as syndication agent.

On February 21, 2020, Whirlpool EMEA Finance S.à r.l., an indirect, wholly-owned finance subsidiary of Whirlpool Corporation, completed a bond offering consisting of €500 million (approximately $540 million at closing) in principal amount of 0.50% Senior Notes due in 2028 (the "2028 Notes") in a public offering pursuant to a registration statement on Form S-3 (File No. 333-224381). The 2028 Notes were issued under an indenture, dated February 21, 2020, among Whirlpool EMEA Finance S.à r.l, as issuer, the Company, as parent guarantor, and U.S. Bank National Association, as trustee. Whirlpool Corporation has fully and unconditionally guaranteed the Notes on a senior unsecured basis. The 2028 Notes contain covenants that limit Whirlpool

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Corporation's ability to incur certain liens or enter into certain sale and lease-back transactions. In addition, if we experience a specific kind of change of control, we are required to make an offer to purchase all of the 2028 Notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest.

Credit Facilities

On August 6, 2019, Whirlpool Corporation entered into a Fourth Amended and Restated Long-Term Credit Agreement (the "Amended Long-Term Facility", or "revolving credit facility") by and among the Company, certain other borrowers, the lenders referred to therein, JPMorgan Chase Bank, N.A. as Administrative Agent, and Citibank, N.A., as Syndication Agent. The Amended Long-Term Facility provides aggregate borrowing capacity of $3.5 billion. The Amended Long-Term Facility has a maturity date of August 6, 2024, unless earlier terminated. The interest and fee rates payable with respect to the Amended Long-Term Facility based on our current debt rating are as follows: (1) the spread over Eurocurrency Rate is 1.125%; (2) the spread over prime is 0.125%; and (3) the unused commitment fee is 0.100%. The Amended Long-Term Facility contains customary covenants and warranties including, among other things, a debt to capitalization ratio of less than or equal to 0.65 as of the last day of each fiscal quarter, and a rolling twelve month interest coverage ratio required to be greater than or equal to 3.0 for each fiscal quarter. In addition, the covenants limit our ability to (or to permit any subsidiaries to), subject to various exceptions and limitations: (i) merge with other companies; (ii) create liens on our property; (iii) incur debt at the subsidiary level.

We are in compliance with both our debt to capitalization ratio and interest coverage ratio under the revolving credit facility as of September 30, 2021.

On April 27, 2020, Whirlpool Corporation entered into a revolving 364-Day Credit Agreement (the “364-Day Facility”) by and among the Company, the lenders referred to therein, and Citibank, N.A. as Administrative Agent. The 364-Day Facility provided aggregate borrowing capacity of $500 million, and expired on its termination date of April 26, 2021 with no outstanding borrowings.

In addition to the committed $3.5 billion Amended Long-Term Facility, we have committed credit facilities in Brazil and India. These committed credit facilities provide borrowings up to approximately $197 million at September 30, 2021 and $206 million at December 31, 2020, based on exchange rates then in effect, respectively. Committed credit facilities are maturing through 2023.

Facility Borrowings

On March 13, 2020, the Company initiated a borrowing of approximately $2.2 billion under the Amended Long-Term Facility, for which a portion of the proceeds from the borrowing were used to fund commercial paper repayment. The Company repaid $500 million of this Amended Long-Term Facility borrowing with the proceeds from its May 2020 Notes offering. The Company repaid an additional $500 million of this Amended Long-Term Facility borrowing by drawing on the full amount of the 364-Day Facility. All facility borrowing were repaid as of December 31, 2020 and no amounts were borrowed on the facility during the nine months ended September 30, 2021.

Notes Payable

Notes payable, which consist of short-term borrowings payable to banks or commercial paper, are generally used to fund working capital requirements. The fair value of our notes payable approximates the carrying amount due to the short maturity of these obligations.

The following table summarizes the carrying value of notes payable at September 30, 2021 and December 31, 2020:

Millions of dollars						September 30, 2021						December 31, 2020
Short-term borrowings due to banks						12						12
Total notes payable						$	12					$	12

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Transfers and Servicing of Financial Assets

In an effort to manage economic and geographic trade customer risk, from time to time, the Company will transfer, primarily without recourse, accounts receivable balances of certain customers to financial institutions resulting in a nominal impact recorded in interest and sundry (income) expense. These transactions are accounted for as sales of the receivables resulting in the receivables being de-recognized from the Consolidated Condensed Balance Sheets. These transfers do not require continuing involvement from the Company.

Embraco Antitrust Matters

Beginning in February 2009, our former Embraco compressor business headquartered in Brazil ("Embraco") was notified of antitrust investigations of the global compressor industry by government authorities in various jurisdictions. Embraco resolved the government investigations and related claims in various jurisdictions and certain other claims remain pending.

Whirlpool agreed to retain potential liabilities related to this matter following closing of the Embraco sale transaction. We continue to defend these actions. While it is currently not possible to reasonably estimate the aggregate amount of costs which we may incur in connection with these matters, such costs could have a material adverse effect on our financial statements in any particular reporting period.

BEFIEX Credits and Other Brazil Tax Matters

In previous years, our Brazilian operations earned tax credits under the Brazilian government's export incentive program (BEFIEX). These credits reduced Brazilian federal excise taxes on domestic sales.

Our Brazilian operations have received tax assessments for income and social contribution taxes associated with certain monetized BEFIEX credits. We do not believe BEFIEX credits are subject to income or social contribution taxes. We believe these tax assessments are without merit and are vigorously defending our positions. We have not provided for income or social contribution taxes on these BEFIEX credits, and based on the opinions of tax and legal advisors, we have not accrued any amount related to these assessments at September 30, 2021. The total amount of outstanding tax assessments received for income and social contribution taxes relating to the BEFIEX credits, including interest and penalties, is approximately 2.0 billion Brazilian reais (approximately $368 million at September 30, 2021).

Relying on existing Brazilian legal precedent, in 2003 and 2004, we recognized tax credits in an aggregate amount of $26 million, adjusted for currency, on the purchase of raw materials used in production ("IPI tax credits"). The Brazilian tax authority subsequently challenged the recording of IPI tax credits. No such credits have been recognized since 2004. In 2009, we entered into a Brazilian government program ("IPI Amnesty") which provided extended payment terms and reduced penalties and interest to encourage taxpayers to resolve this and certain other disputed tax credit amounts. As permitted by the program, we elected to settle certain debts through the use of other existing tax credits and recorded charges of approximately $34 million in 2009 associated with these matters. In July 2012, the Brazilian revenue authority notified us that a portion of our proposed settlement was rejected and we received tax assessments of 259 million Brazilian reais (approximately $48 million at September 30, 2021), reflecting interest and penalties to date. We believe these tax assessments are without merit and we are vigorously defending our position. The government's assessment in this case relies heavily on its arguments regarding taxability of BEFIEX credits for certain years, which we are disputing in one of the BEFIEX government assessment cases cited in the prior paragraph. Because the IPI Amnesty case is moving faster than the BEFIEX taxability case, we could be required to pay the IPI Amnesty assessment before obtaining a final decision in the BEFIEX taxability case.

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We have received tax assessments from the Brazilian federal tax authorities relating to amounts allegedly due regarding unemployment/social security insurance taxes (PIS/COFINS) for tax credits recognized since 2007. These credits were recognized for inputs to certain manufacturing and other business processes. These assessments are being challenged at the administrative and judicial levels in Brazil. The total amount of outstanding tax assessments received for credits recognized for PIS/COFINS inputs is approximately 305 million Brazilian reais (approximately $56 million at September 30, 2021). We believe these tax assessments are without merit and are vigorously defending our positions. Based on the opinion of our tax and legal advisors, we have not accrued any amount related to these assessments.

In addition to the BEFIEX, IPI tax credit and PIS/COFINS inputs matters noted above, other assessments issued by the Brazilian tax authorities related to indirect and income tax matters, and other matters, are at various stages of review in numerous administrative and judicial proceedings. The amounts related to these assessments will continue to be increased by monetary adjustments at the Selic rate, which is the benchmark rate set by the Brazilian Central Bank. In accordance with our accounting policies, we routinely assess these matters and, when necessary, record our best estimate of a loss. We believe these tax assessments are without merit and are vigorously defending our positions.

Litigation is inherently unpredictable and the conclusion of these matters may take many years to ultimately resolve. We may experience additional delays in resolving these matters as a result of COVID-19-related administrative and judicial system temporary delays and closures in Brazil. Amounts at issue in potential future litigation could increase as a result of interest and penalties in future periods. Accordingly, it is possible that an unfavorable outcome in these proceedings could have a material adverse effect on our financial statements in any particular reporting period.

ICMS Credits

We also filed legal actions in Brazil to recover certain social integration and social contribution taxes paid over gross sales including ICMS receipts, which is a form of Value Added Tax in Brazil. During 2017, we sold the rights to certain portions of this litigation to a third party for 90 million Brazilian reais (approximately $27 million at December 31, 2017). In the first quarter of 2019, we received a favorable decision in the largest of these ICMS legal actions. This decision is final and not subject to appeals. Based on the opinion of our tax and legal advisors, we recognized a gain of approximately $84 million, after related taxes and fees and based on exchange rates then in effect, during the first quarter of 2019 in connection with this decision. This amount reflects approximately $142 million in indirect tax credits ("credits") that we are entitled to monetize in future periods, offset by approximately $58 million in taxes and fees, which have been paid.

In the second quarter of 2019, we received favorable final, non-appealable decisions in two smaller ICMS legal actions. Based on the opinion of our tax and legal advisors, we recognized a gain of approximately $35 million, after related taxes and fees and based on exchange rates then in effect, during the second quarter of 2019 in connection with this decision. This amount reflects approximately $54 million in credits that we are entitled to monetize in future periods, offset by approximately $18 million in taxes and fees, which have been paid. The ICMS credits and related fees were recorded in interest and sundry (income) expense in our Consolidated Statements of Comprehensive Income (Loss).

The Brazilian tax authorities sought clarification before the Brazilian Supreme Court (in a leading case involving another taxpayer) of certain matters, including the amount of these credits (i.e., the gross rate or net credit amount), and other matters that could have affected the rights of Brazilian taxpayers regarding these credits. In May 2021, the Supreme Court ruled that the gross rate, which is the rate Whirlpool applied, is the appropriate rate, and that taxpayers that filed legal actions prior to the Supreme Court's original decision in 2017, such as Whirlpool, were entitled to credits for amounts paid prior to the original decision. The Supreme Court's ruling is final, and a formal written opinion has been issued. This favorable ruling affirms the position we have taken with respect to the credits at issue in our ICMS legal actions noted above, and our actions in recognizing and monetizing these credits.

Competition Investigation

In 2013, the French Competition Authority ("FCA") commenced an investigation of appliance manufacturers and retailers in France, including Whirlpool and Indesit. The FCA investigation was split into two parts, and in December 2018, we finalized a settlement with the FCA on the first part of the investigation. The second part of the FCA investigation, which is expected to focus primarily on manufacturer interactions with retailers, is ongoing. The Company is cooperating with this investigation.

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Although it is currently not possible to assess the impact, if any, that matters related to the FCA investigation may have on our financial statements, matters related to the FCA investigation could have a material adverse effect on our financial statements in any particular reporting period.

Trade Customer Insolvency

The Company was a former indirect minority shareholder of Alno AG, a longstanding trade customer that filed for insolvency protection in Germany. In 2020, we paid a settlement of €52.75 million (approximately $59 million) to resolve any potential claims the insolvency trustee might have against the Company. We are also defending third-party claims related to Alno's insolvency that we believe are without merit, and believe the ultimate resolution of these claims will not have a material adverse effect on our financial statements.

Grenfell Tower

On June 23, 2017, London's Metropolitan Police Service released a statement that it had identified a Hotpoint–branded refrigerator as the initial source of the Grenfell Tower fire in West London. U.K. authorities are conducting investigations, including regarding the cause and spread of the fire. The model in question was manufactured by Indesit Company between 2006 and 2009, prior to Whirlpool's acquisition of Indesit in 2014. We are fully cooperating with the investigating authorities. Whirlpool was named as a defendant in a product liability suit in Pennsylvania federal court related to this matter. The federal court dismissed the case with prejudice in September 2020. The dismissal is being appealed. In December 2020, lawsuits related to Grenfell Tower were filed in the U.K. against approximately 20 defendants, including Whirlpool Corporation and certain Whirlpool subsidiaries. Given the preliminary stage of the proceedings, we cannot speculate on their eventual outcomes or potential impact on our financial statements; accordingly, we have not recorded any significant charges as of September 30, 2021. Additional claims may be filed related to this incident.

Other Litigation

See Note 13 for information on certain U.S. income tax litigation. In addition, we are currently defending against two lawsuits that have been certified for treatment as class actions in U.S. federal court, relating to two top-load washing machine models. In December 2019, the court in one of these lawsuits entered summary judgment in Whirlpool's favor. That ruling remains subject to appeal, and the other lawsuit is ongoing. We believe the lawsuits are without merit and are vigorously defending them. Given the preliminary stage of the proceedings, we cannot reasonably estimate a range of loss, if any, at this time. The resolution of these matters could have a material adverse effect on our financial statements in any particular reporting period.

We are currently vigorously defending a number of other lawsuits related to the manufacture and sale of our products which include class action allegations, and may become involved in similar actions. These lawsuits allege claims which include negligence, breach of contract, breach of warranty, product liability and safety claims, false advertising, fraud, and violation of federal and state regulations, including consumer protection laws. In general, we do not have insurance coverage for class action lawsuits. We are also involved in various other legal actions arising in the normal course of business, for which insurance coverage may or may not be available depending on the nature of the action. We dispute the merits of these suits and actions, and intend to vigorously defend them. Management believes, based upon its current knowledge, after taking into consideration legal counsel's evaluation of such suits and actions, and after taking into account current litigation accruals, that the outcome of these matters currently pending against Whirlpool should not have a material adverse effect, if any, on our financial statements. We may experience additional delays in resolving these and other pending litigation matters as a result of COVID-19-related temporary court and administrative body closures and postponements.

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Product Warranty and Legacy Product Corrective Action Reserves

Product warranty reserves are included in other current and other noncurrent liabilities in our Consolidated Condensed Balance Sheets. The following table summarizes the changes in total product warranty liability reserves for the periods presented:

						Product Warranty
Millions of dollars						2021						2020
Balance at January 1						$	273					$	383
Issuances/accruals during the period						258						178
Settlements made during the period/other						(220)						(272)
Balance at September 30						$	311					$	289
Current portion						$	211					$	186
Non-current portion						100						104
Total						$	311					$	289

In the normal course of business, we engage in investigations of potential quality and safety issues. As part of our ongoing effort to deliver quality products to consumers, we are currently investigating certain potential quality and safety issues globally. As necessary, we undertake to effect repair or replacement of appliances in the event that an investigation leads to the conclusion that such action is warranted.

As part of this process, we investigated incident reports associated with a particular component in certain Indesit-designed horizontal axis washers produced in EMEA. In January 2020, we commenced a product recall in the UK and Ireland for these EMEA-produced washers, for which the recall is ongoing. In the third quarter of 2019, we accrued approximately $105 million in estimated product warranty expense related to this matter. Reserve assumptions were updated in the fourth quarter of 2020 based on the latest available data including take rate assumptions and unit population resulting in a $30 million release to the reserve. This estimate is based on several assumptions which are inherently unpredictable and which we may need to materially revise in the future. For the three and nine months ended September 30, 2021, settlements of approximately $1 million and $4 million have been incurred related to this product recall, respectively. The total settlements since the beginning of this campaign are approximately $60 million.

For the twelve months ended December 31, 2019, we incurred approximately $26 million of additional product warranty expense related to our previously disclosed legacy Indesit dryer corrective action campaign in the UK. For the three and nine months ended September 30, 2021, or for the year ended December 31, 2020, we incurred no additional material product warranty expense related to this campaign. We continue to voluntarily cooperate with the UK regulator with respect to the washer and dryer actions.

Guarantees

We have guarantee arrangements in a Brazilian subsidiary. For certain creditworthy customers, the subsidiary guarantees customer lines of credit at commercial banks to support purchases following its normal credit policies. If a customer were to default on its line of credit with the bank, our subsidiary would be required to assume the line of credit and satisfy the obligation with the bank. At September 30, 2021 and December 31, 2020, the guaranteed amounts totaled 1,096 million Brazilian reais (approximately $202 million at September 30, 2021) and 297 million Brazilian reais (approximately $57 million at December 31, 2020), respectively. The fair value of these guarantees were nominal at September 30, 2021 and December 31, 2020. Our subsidiary insures against a significant portion of this credit risk for these guarantees, under normal operating conditions, through policies purchased from high-quality underwriters.

We provide guarantees of indebtedness and lines of credit for various consolidated subsidiaries. The maximum contractual amount of indebtedness and lines of credit available under these lines for consolidated subsidiaries totaled approximately $3.4 billion at September 30, 2021 and $3.5 billion at December 31, 2020. Our total short-term outstanding bank indebtedness under guarantees was nominal at both September 30, 2021 and December 31, 2020.

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The following table summarizes the components of net periodic pension cost and the cost of other postretirement benefits for the periods presented:

						Three Months Ended September 30,
						United States Pension Benefits												Foreign Pension Benefits												Other Postretirement Benefits
Millions of dollars						2021						2020						2021						2020						2021						2020
Service cost						$	1					$	1					$	1					$	1					$	—					$	1
Interest cost						20						25						4						4						1						1
Expected return on plan assets						$	(39)					$	(42)					$	(9)					$	(7)					$	—					$	—
Amortization:
Actuarial loss						$	17					$	15					$	4					$	3					$	—					$	—
Prior service credit						—						—						—						—						(12)						(12)
Settlement and curtailment (gain) loss						2						—						—						1						—						—
Net periodic benefit cost (credit)						$	1					$	(1)					$	—					$	2					$	(11)					$	(10)

						Nine Months Ended September 30,
						United States Pension Benefits												Foreign Pension Benefits												Other Postretirement Benefits
Millions of dollars						2021						2020						2021						2020						2021						2020
Service cost						$	2					$	2					$	4					$	4					$	—					$	4
Interest cost						58						74						11						13						4						7
Expected return on plan assets						(118)						(124)						(26)						(22)						—						—
Amortization:
Actuarial loss						52						46						14						9						—						—
Prior service credit						—						—						—						—						(35)						(16)
Settlement and curtailment (gain) loss						5						—						—						1						—						(4)
Net periodic benefit cost (credit)						$	(1)					$	(2)					$	3					$	5					$	(31)					$	(9)

The following table summarizes the net periodic cost recognized in operating profit and interest and sundry (income) expense for the periods presented:

						Three Months Ended September 30,
						United States Pension Benefits												Foreign Pension Benefits												Other Postretirement Benefits
Millions of dollars						2021						2020						2021						2020						2021						2020
Operating profit (loss)						$	1					$	1					$	1					$	1					$	—					$	1
Interest and sundry (income) expense						—						(2)						(1)						1						(11)						(11)
Net periodic benefit cost						$	1					$	(1)					$	—					$	2					$	(11)					$	(10)

						Nine Months Ended September 30,
						United States Pension Benefits												Foreign Pension Benefits												Other Postretirement Benefits
Millions of dollars						2021						2020						2021						2020						2021						2020
Operating profit (loss)						$	2					$	2					$	4					$	4					$	—					$	4
Interest and sundry (income) expense						(3)						(4)						(1)						1						(31)						(13)
Net periodic benefit cost						$	(1)					$	(2)					$	3					$	5					$	(31)					$	(9)

401(k) Defined Contribution Plan

During March 2020, we announced that the company matching contributions for our 401(k) defined contribution plan, equal to up to 7% of participants' eligible compensation, covering substantially all U.S. employees, would be contributed in company stock starting from May 2020. As of January 1, 2021, we have resumed funding our matching contributions with cash.

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Other Postretirement Benefit Plans

During the third quarter of 2020, the Company announced changes to a postretirement medical benefit program for certain groups of retirees. These plan amendments were effective January 1, 2021 and reduced reimbursement amounts available under certain postretirement medical benefit programs and eliminated these benefits effective January 1, 2024 for these same retiree groups.

During the second quarter of 2020, the Company announced changes to a postretirement medical benefit program for certain groups of active employees. These plan amendments were effective July 1, 2020 and reduced medical benefits for these pre-Medicare eligible and Medicare-eligible active employees who retired on or after July 1, 2020 and eliminated certain benefits effective January 1, 2024.

These plan amendments resulted in a reduction in the accumulated postretirement benefit obligation of approximately $157 million with a corresponding adjustment of $118 million in other comprehensive income, net of $39 million in deferred taxes for the nine months ended September 30, 2020. This amount is being amortized as a reduction of future net periodic cost over approximately 3.4 years, which represents the future remaining service period of eligible active employees. The interim plan remeasurement associated with these amendments resulted in an actuarial loss of $12 million recorded in the Other Comprehensive Income (Loss) for the nine months ended September 30, 2020.

For additional information, see Note 11 to the Consolidated Condensed Financial Statements.

Derivative instruments are accounted for at fair value based on market rates. Derivatives where we elect hedge accounting are designated as either cash flow, fair value or net investment hedges. Derivatives that are not accounted for based on hedge accounting are marked to market through earnings. If the designated cash flow hedges are highly effective, the gains and losses are recorded in other comprehensive income (loss) and subsequently reclassified to earnings to offset the impact of the hedged items when they occur. In the event it becomes probable the forecasted transaction to which a cash flow hedge relates will not occur, the derivative would be terminated and the amount in accumulated other comprehensive income (loss) would be recognized in earnings. The fair value of the hedge asset or liability is presented in either other current assets / liabilities or other noncurrent assets / liabilities on the Consolidated Condensed Balance Sheets and in other within cash provided by (used in) operating activities in the Consolidated Condensed Statements of Cash Flows.

Using derivative instruments means assuming counterparty credit risk. Counterparty credit risk relates to the loss we could incur if a counterparty were to default on a derivative contract. We generally deal with investment grade counterparties and monitor the overall credit risk and exposure to individual counterparties. We do not anticipate nonperformance by any counterparties. The amount of counterparty credit exposure is limited to the unrealized gains, if any, on such derivative contracts. We do not require nor do we post collateral on such contracts.

Hedging Strategy

In the normal course of business, we manage risks relating to our ongoing business operations including those arising from changes in commodity prices, foreign exchange rates and interest rates. Fluctuations in these rates and prices can affect our operating results and financial condition. We use a variety of strategies, including the use of derivative instruments, to manage these risks. We do not enter into derivative financial instruments for trading or speculative purposes.

Commodity Price Risk

We enter into commodity derivative contracts on various commodities to manage the price risk associated with forecasted purchases and sales of material used in our manufacturing process. The objective of these hedges is to reduce the variability of cash flows associated with the forecasted purchases and sales of commodities.

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Foreign Currency and Interest Rate Risk

We incur expenses associated with the procurement and production of products in a limited number of countries, while we sell in the local currencies of a large number of countries. Our primary foreign currency exchange exposures result from cross-currency sales of products. As a result, we enter into foreign exchange contracts to hedge certain firm commitments and forecasted transactions to acquire products and services that are denominated in foreign currencies. We enter into certain undesignated non-functional currency asset and liability hedges that relate primarily to short-term payables, receivables, intercompany loans and dividends. When we hedge a foreign currency denominated payable or receivable with a derivative, the effect of changes in the foreign exchange rates are reflected currently in interest and sundry (income) expense for both the payable/receivable and the derivative. Therefore, as a result of the economic hedge, we do not elect hedge accounting.

We also enter into hedges to mitigate currency risk primarily related to forecasted foreign currency denominated expenditures, intercompany financing agreements and royalty agreements and designate them as cash flow hedges. Gains and losses on derivatives designated as cash flow hedges, to the extent they are included in the assessment of effectiveness, are recorded in other comprehensive income (loss) and subsequently reclassified to earnings to offset the impact of the hedged items when they occur.

We may enter into cross-currency interest rate swaps to manage our exposure relating to cross-currency debt. The notional amount of outstanding cross-currency interest rate swap agreements was $1,275 million at September 30, 2021 and December 31, 2020.

We may enter into interest rate swap agreements to manage interest rate risk exposure. Our interest rate swap agreements, if any, effectively modify our exposure to interest rate risk, primarily through converting certain floating rate debt to a fixed rate basis, or certain fixed rate debt to a floating rate basis. These agreements involve either the receipt or payment of floating rate amounts in exchange for fixed rate interest payments or receipts, respectively, over the life of the agreements without an exchange of the underlying principal amounts. We may enter into swap rate lock agreements to effectively reduce our exposure to interest rate risk by locking in interest rates on probable long-term debt issuances. Outstanding notional amounts of interest rate swap agreements were $300 million at September 30, 2021 and December 31, 2020, respectively.

Net Investment Hedging

The following table summarizes our foreign currency denominated debt and foreign exchange forwards/options designated as net investment hedges at September 30, 2021 and December 31, 2020:

						Notional (Local)												Notional (USD)												Current Maturity
Instrument						2021						2020						2021						2020
Foreign exchange forwards/options						MXN	7,200					MXN	7,200					$	350					$	362					August 2022

For instruments that are designated and qualify as a net investment hedge, the effective portion of the instruments' gain or loss is reported as a component of other comprehensive income (loss) and recorded in accumulated other comprehensive loss. The gain or loss will be subsequently reclassified into net earnings when the hedged net investment is either sold or substantially liquidated. The remaining change in fair value of the hedge instruments represents the ineffective portion, which is immediately recognized in interest and sundry (income) expense on our Consolidated Condensed Statements of Comprehensive Income. As of September 30, 2021 and December 31, 2020, there was no ineffectiveness on hedges designated as net investment hedges.

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The following table summarizes our outstanding derivative contracts and their effects in our Consolidated Condensed Balance Sheets at September 30, 2021 and December 31, 2020:

																		Fair Value of
						Notional Amount												Hedge Assets												Hedge Liabilities																		Maximum Term (Months)
Millions of dollars						2021						2020						2021						2020						2021						2020												2021						2020
Derivatives accounted for as hedges(1)
Commodity swaps/options						$	268					$	215					$	48					$	39					$	3					$	4					(CF)						21						30
Foreign exchange forwards/options						2,871						3,028						107						58						62						110						(CF/NI)						125						134
Cross-currency swaps						1,275						1,275						25						23						27						86						(CF)						89						98
Interest rate derivatives						300						300						—						—						7						28						(CF)						44						53
Total derivatives accounted for as hedges																		$	180					$	120					$	99					$	228
Derivatives not accounted for as hedges
Commodity swaps/options						$	1					$	1					$	—					$	—					$	—					$	—					N/A						0						0
Foreign exchange forwards/options						2,970						4,161						33						25						17						96						N/A						11						12
Total derivatives not accounted for as hedges																		33						25						17						96
Total derivatives																		$	213					$	145					$	116					$	324
Current																		$	205					$	103					$	80					$	152
Noncurrent																		8						42						36						172
Total derivatives																		$	213					$	145					$	116					$	324

(1)Derivatives accounted for as hedges are considered either cash flow (CF) or net investment (NI) hedges.

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The following tables summarize the effects of derivative instruments on our Consolidated Condensed Statements of Comprehensive Income for the periods presented:

																		Three Months Ended September 30,
																		Gain (Loss) Recognized in OCI (Effective Portion ) (2)
Millions of dollars																		2021						2020
Cash flow hedges
Commodity swaps/options																		$	9					$	23
Foreign exchange forwards/options																		62						(37)
Cross-currency swaps																		40						(62)
Interest rate derivatives																		1						13
Net Investment hedges
Foreign currency																		7						(14)
																		119						(77)
																		Three Months Ended September 30,
						Location of Gain (Loss) Reclassified from OCI into Earnings (Effective Portion)												Gain (Loss) Reclassified from OCI into Earnings (Effective Portion)(3)
Cash Flow Hedges - Millions of dollars																		2021						2020
Commodity swaps/options						Cost of products sold												$	21					$	(4)
Foreign exchange forwards/options						Net sales												(2)						2
Foreign exchange forwards/options						Cost of products sold												(9)						11
Foreign exchange forwards/options						Interest and sundry (income) expense												14						(21)
Cross-currency swaps						Interest and sundry (income) expense												37						(51)
																		61						(63)
																		Three Months Ended September 30,
						Location of Gain (Loss) Recognized on Derivatives not Accounted for as Hedges												Gain (Loss) Recognized on Derivatives not Accounted for as Hedges
Derivatives not Accounted for as Hedges - Millions of dollars																		2021						2020
Foreign exchange forwards/options						Interest and sundry (income) expense												$	38					$	(18)

(2)Change in gain (loss) recognized in OCI (effective portion) for the three months ended September 30, 2021 is primarily driven by fluctuations in currency and commodity prices and interest rates compared to prior year. The tax impact of the cash flow hedges was $(14) million and $2 million for the three months ended September 30, 2021 and 2020, respectively. The tax impact of the net investment hedges was $(2) million and $5 million for the three months ended September 30, 2021 and 2020, respectively.

(3)Change in gain (loss) reclassified from OCI into earnings (effective portion) for the three months ended September 30, 2021 was primarily driven by fluctuations in currency and commodity prices and interest rates compared to prior year.

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																		Nine Months Ended September 30,
																		Gain (Loss) Recognized in OCI (Effective Portion)(4)
Millions of dollars																		2021						2020
Cash flow hedges
Commodity swaps/options																		$	63					$	(8)
Foreign exchange																		69						58
Cross-currency swaps																		84						33
Interest rate derivatives																		21						(53)
Net investment hedges
Foreign currency																		4						39
																		$	241					$	69
																		Nine Months Ended September 30,
						Location of Gain (Loss) Reclassified from OCI into Earnings (Effective Portion)												Gain (Loss) Reclassified from OCI into Earnings (Effective Portion)(5)
Cash Flow Hedges - Millions of dollars																		2021						2020
Commodity swaps/options						Cost of products sold												$	50					$	(21)
Foreign exchange forwards/options						Net sales												—						5
Foreign exchange forwards/options						Cost of products sold												(3)						20
Foreign exchange forwards/options						Interest and sundry (income) expense												43						(52)
Cross-currency swaps						Interest and sundry (income) expense												88						(40)
																		$	178					$	(88)
																		Nine Months Ended September 30,
						Location of Gain (Loss) Recognized on Derivatives not Accounted for as Hedges												Gain (Loss) Recognized on Derivatives not Accounted for as Hedges
Derivatives not Accounted for as Hedges - Millions of dollars																		2021						2020
Foreign exchange forwards/options						Interest and sundry (income) expense												$	70					$	(1)

(4)Change in gain (loss) recognized in OCI (effective portion) for the nine months ended September 30, 2021 is primarily driven by fluctuations in currency and commodity prices and interest rates compared to prior year. The tax impact of the cash flow hedges was $(20) million and $(25) million for the nine months ended September 30, 2021 and 2020, respectively. The tax impact of the net investment hedges was $(1) million and $(12) million for the nine months ended September 30, 2021 and 2020, respectively.

(5)Change in gain (loss) reclassified from OCI into earnings (effective portion) for the nine months ended September 30, 2021 was primarily driven by fluctuations in currency and commodity prices and interest rates compared to prior year.

For cash flow hedges, the amount of ineffectiveness recognized in interest and sundry (income) expense was nominal for the periods ended September 30, 2021, and 2020. There were no hedges designated as fair value for the periods ended September 30, 2021, and 2020. The net amount of unrealized gain or loss on derivative instruments included in accumulated OCI related to contracts maturing and expected to be realized during the next twelve months is a gain of $54 million at September 30, 2021.

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active markets that are observable, either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The following table summarizes the valuation of our assets and liabilities measured at fair value on a recurring basis at September 30, 2021 and December 31, 2020 are as follows:

																		Fair Value
Millions of dollars						Total Cost Basis												Level 1												Level 2 (2)																		Total
Measured at fair value on a recurring basis:						2021						2020						2021						2020						2021						2020																		2021						2020
Short-term investments (1)						$	2,105					$	2,164					$	1,926					$	1,603					$	179					$	561																	$	2,105					$	2,164
Net derivative contracts						—						—						—						—						97						(179)																		97						(179)

(1)Short-term investments are primarily comprised of money market funds and highly liquid, low risk investments with initial maturities less than 90 days.

(2)Change in level 2 short-term investments is primarily driven by the deconsolidation of Whirlpool China. For additional information, see Note 15 to the Consolidated Condensed Financial Statements.

Elica PB India Acquisition

As of September 30, 2021, the Company consolidates Elica PB India. As a result, the previously held equity interest of 49% was remeasured at a fair value of $74 million (Level 2 input) on the acquisition date, resulting in an implied fair value of approximately $150 million.

For additional information, see Note 1 to the Consolidated Condensed Financial Statements.

Whirlpool China Equity Method Investment

During the second quarter of 2021, the partial tender offer for Whirlpool China was completed and the entity was deconsolidated. Subsequent to the share transfer, which was completed on May 6, 2021, the Company holds an equity interest of approximately 20% in Whirlpool China. The fair value of the retained investment in Whirlpool China at the date of deconsolidation was calculated based on the Whirlpool China stock price (Level 1 input), the portion of interest retained and the shares outstanding, resulting in a fair value of $214 million.

For additional information see Note 15 to the Consolidated Condensed Financial Statements.

Turkey Subsidiary Divestment

During the second quarter of 2021, we entered into a share transfer agreement to sell our Turkish subsidiary and the sale was completed on June 30, 2021. Fair value was calculated based on the cash purchase price, subject to customary adjustments at closing (Level 2 input), and we recorded a loss on sale and disposal of businesses of $40 million for the write-down of the assets to the fair value of $111 million. An immaterial adjustment to the loss on sale and disposal of business was recorded in the third quarter of 2021.

For additional information see Note 15 to the Consolidated Condensed Financial Statements.

Other Fair Value Measurements

The fair value of long-term debt (including current maturities) was $5.86 billion and $6.13 billion at September 30, 2021 and December 31, 2020, respectively, and was estimated using discounted cash flow analysis based on incremental borrowing rates for similar types of borrowing arrangements (Level 2 input).

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The following table summarizes the changes in stockholders' equity for the periods presented:

												Whirlpool Stockholders' Equity
						Total						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Treasury Stock / Additional Paid-In-Capital						Common Stock						Non-Controlling Interest (1)
Balances, December 31, 2020						$	4,795					$	8,725					$	(2,811)					$	(2,142)					$	113					$	910
Comprehensive income
Net earnings						440						433						—						—						—						7
Other comprehensive income						124						—						124						—						—						—
Comprehensive income						564						433						124						—						—						7
Stock issued (repurchased)						(141)						—						—						(141)						—						—
Dividends declared						(79)						(79)						—						—						—						—
Balances, March 31, 2021						5,139						9,079						(2,687)						(2,283)						113						917
Comprehensive income
Net earnings						580						581						—						—						—						(1)
Other comprehensive income						229						—						228						—						—						1
Comprehensive income						809						581						228						—						—						—
Stock issued (repurchased)						8						—						—						7						1						—
Dividends declared						(88)						(88)						—						—						—						—
Divestitures						(783)						—						—						—						—						(783)
Balances, June 30, 2021						5,085						9,572						(2,459)						(2,276)						114						134
Comprehensive income
Net earnings						486						471						—						—						—						15
Other comprehensive income						46						—						47						—						—						(1)
Comprehensive income						532						471						47						—						—						14
Stock issued (repurchased)						(419)						—						—						(419)						—						—
Dividends declared						(88)						(86)						—						—						—						(2)
Acquisitions(2)						19						—						—						—						—						19
Balances, September 30, 2021						$	5,129					$	9,957					$	(2,412)					$	(2,695)					$	114					$	165

(1)Decrease of $783 million in noncontrolling interest is mainly due to the deconsolidation of Whirlpool China. For additional information, see Note 15 to the Consolidated Condensed Financial Statements.

(2)Amount reflects the fair value of Elica PB India non-controlling interest.

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Other Comprehensive Income (Loss)

The following table summarizes our other comprehensive income (loss) and related tax effects for the periods presented:

						Three Months Ended September 30,
						2021												2020
Millions of dollars						Pre-tax			Tax Effect			Net						Pre-tax			Tax Effect			Net
Currency translation adjustments (2)						$	8		(2)			$	6					$	(117)		5			$	(112)
Cash flow hedges						50			(14)			36						—			—			—
Pension and other postretirement benefits plans						9			(5)			4						118			(29)			89
Other comprehensive income (loss)						67			(21)			46						1			(24)			(23)
Less: Other comprehensive income (loss) available to noncontrolling interests						(1)			—			(1)						—			—			—
Other comprehensive income (loss) available to Whirlpool						$	68		$	(21)		$	47					$	1		$	(24)		$	(23)

						Nine Months Ended September 30,
						2021												2020
Millions of dollars						Pre-tax			Tax Effect			Net						Pre-tax			Tax Effect			Net
Currency translation adjustments (2)						$	334		$	(1)		$	333					$	(350)		$	(12)		$	(362)
Cash flow hedges						58			(21)			37						118			(25)			93
Pension and other postretirement benefits plans						42			(13)			29						180			(44)			136
Other comprehensive income (loss)						434			(35)			399						(52)			(81)			(133)
Less: Other comprehensive income (loss) available to noncontrolling interests						—			—			—						2			—			2
Other comprehensive income (loss) available to Whirlpool						$	434		$	(35)		$	399					$	(54)		$	(81)		$	(135)

(2)Currency translation adjustments includes net investment hedges.

Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

The following table provides the reclassification adjustments out of accumulated other comprehensive income (loss), by component, which was included in net earnings for the three and nine months ended September 30, 2021:

			Three Months Ended						Nine Months Ended
Millions of dollars			(Gain) Loss Reclassified						(Gain) Loss Reclassified			Classification in Earnings
Pension and postretirement benefits, pre-tax			$	9					$	34		Interest and sundry (income) expense
Currency translation related to divestitures			$	—					$	(198)		(Gain) loss on sale and disposal of businesses
Total			$	9					$	(164)

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Net Earnings per Share

Diluted net earnings per share of common stock include the dilutive effect of stock options and other share-based compensation plans. Basic and diluted net earnings per share of common stock for the periods presented were calculated as follows:

						Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars and shares						2021						2020						2021						2020
Numerator for basic and diluted earnings per share - Net earnings (loss) available to Whirlpool						$	471					$	392					$	1,485					$	576
Denominator for basic earnings per share - weighted-average shares						62.2						62.6						62.7						62.6
Effect of dilutive securities - share-based compensation						0.5						0.7						0.5						0.5
Denominator for diluted earnings per share - adjusted weighted-average shares						62.7						63.3						63.2						63.1
Anti-dilutive stock options/awards excluded from earnings per share						0.1						1.1						0.1						1.7

Share Repurchase Program

On July 25, 2017, our Board of Directors authorized a share repurchase program of up to $2 billion. As of September 30, 2021, there were no remaining funds available under this program. On April 19, 2021, our Board of Directors authorized an additional share repurchase program of up to $2 billion, which has no expiration date. At September 30, 2021, there were approximately $1.9 billion in remaining funds authorized under this program. During the nine months ended September 30, 2021, we repurchased approximately 3.0 million shares under these share repurchase programs at an aggregate price of approximately $641 million

We periodically take action to improve operating efficiencies, typically in connection with business acquisitions or changes in the economic environment. Our footprint and headcount reductions and organizational integration actions relate to discrete, unique restructuring events, primarily reflected in the following plans.

On June 26, 2020, the Company committed to a workforce reduction plan in the United States, as part of the Company's continued cost reduction efforts. The workforce reduction plan included a voluntary retirement program and involuntary severance actions which were effective as of the end of the second quarter of 2020. These actions were completed in 2020 and the Company incurred $102 million in employee termination costs related to these actions. The remaining cash settlement of $15 million will occur throughout 2021, 2022 and 2023.

During the third quarter of 2020, the Company committed to workforce reductions outside of the United States, as part of the Company’s previously announced continued cost reduction efforts. The Company has incurred $93 million of the approximately $148 million total costs and the action will be substantially complete in 2021. Cash settlement of $80 million has been paid to date with the remaining cash settlement expected to be paid primarily over the duration of 2021.

On May 31, 2019, we announced our intention to reconvert our Naples, Italy manufacturing plant and potentially sell the plant to a third party. On September 16, 2019, we entered into a preliminary agreement to sell the plant to a third-party purchaser and to support costs associated with the transition. In October 2019, we announced that, based on further discussions with unions and the Italian government, we will continue production at the Naples manufacturing plant in the near-term and resume negotiations with unions and the Italian government related to our exit of the plant. Our preliminary agreement to sell the plant to a third-party purchaser terminated in accordance with its terms in March 2020. We ceased production in the plant and exited the facility in 2020 as previously disclosed.

In connection with this action, we have incurred approximately $141 million total costs comprising $43 million in asset impairment costs, $25 million in other associated costs and $73 million in employee-related costs through September 30, 2021. The Company has commenced the collective dismissal process which had been

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previously postponed in Italy as a result of the COVID-19 pandemic, and expects substantially all of the remaining $59 million cash settlement to occur in 2021, subject to the outcome of current litigation involving the unions, which should be resolved in 2021. Any negative outcome is not currently expected to materially impact cost, but could delay cash settlement into 2022.

The following table summarizes the changes to our restructuring liability during the nine months ended September 30, 2021:

Millions of dollars			December 31, 2020			Charges to Earnings			Cash Paid			Non-Cash and Other			September 30, 2021
Employee termination costs			$	145		$	32		$	(72)		$	—		$	105
Asset impairment costs			8			1			—			(1)			8
Facility exit costs			—			1			(1)			—			—
Other exit costs			20			1			(16)			(6)			(1)
Total			$	173		$	35		$	(89)		$	(7)		$	112

The following table summarizes the restructuring charges by operating segment for the period presented:

			Nine Months Ended
Millions of dollars			September 30, 2021
North America			$	—
EMEA			32
Latin America			—
Asia			2
Corporate / Other			1
Total			$	35

Income tax expense was $100 million and $353 million for the three and nine months ended September 30, 2021, respectively, compared to income tax expense of $141 million and $231 million in the same periods of 2020.

For the three months ended September 30, 2021, the decrease in tax expense from the prior period is primarily due to a tax benefit from tax audits and settlements related to the favorable outcome of certain tax litigation in Brazil. Specifically, on September 24, 2021, the Brazilian Supreme Court rendered a favorable decision in a case involving an unrelated taxpayer but applicable to Whirlpool and certain other companies, that exempts interest income received from the Brazilian government from income tax, resulting in a tax benefit of approximately $34 million. For the nine months ended September 30, 2021, the increase in tax expense from the prior period is due to higher overall earnings and related tax expense, partially offset by the tax effect of divestitures, audits and settlements and legal entity restructuring.

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The following table summarizes the difference between income tax expense (benefit) at the U.S. statutory rate of 21% and the income tax expense (benefit) at effective worldwide tax rates for the respective periods:

			Three Months Ended September 30,												Nine Months Ended September 30,
Millions of dollars			2021						2020						2021						2020
Earnings before income taxes			$	586					$	534					$	1,859					$	793
Income tax expense computed at United States statutory tax rate			123						112						390						167
State and local taxes, net of federal tax benefit			17						15						49						22
Valuation allowances			3						6						5						12
Audit and settlements			(32)						14						(17)						31
U.S. foreign income items, net of credits			(1)						(2)						(1)						(1)
Changes in enacted tax rates			—						(6)						(14)						(6)
Divestiture tax impact			(1)						—						(22)						—
Legal entity restructuring tax impact			—						—						(46)						—
Other			(9)						2						9						6
Income tax expense (benefit) computed at effective worldwide tax rates			$	100					$	141					$	353					$	231

At the end of each interim period, we estimate the effective tax rate expected to be applicable for the full fiscal year and the impact of discrete items, if any, and adjust the quarterly rate as necessary.

Divestiture Tax Impact

For the second quarter of 2021, the divestitures detailed in Note 15 generated an overall gain of $120 million, however for tax purposes, a taxable loss was incurred with no tax benefit recognized, resulting in a corresponding impact to tax expense of $21 million. As part of the legal entity restructuring associated with the Whirlpool China divestment, a tax deductible loss was generated in a separate jurisdiction with a related tax benefit in the amount of $46 million.

An immaterial adjustment to the loss on sale and disposal of business was recorded in the third quarter of 2021.

For additional information see Note 15 to the Consolidated Condensed Financial Statements.

Other Income Tax Matters

During its examination of Whirlpool’s 2009 U.S. federal income tax return, the IRS asserted that income earned by a Luxembourg subsidiary via its Mexican branch should be recognized as income on its 2009 U.S. federal income tax return. The Company believed the proposed assessment was without merit and contested the matter in United States Tax Court (US Tax Court). Both Whirlpool and the IRS moved for partial summary judgment on this issue. On May 5, 2020, the US Tax Court granted the IRS’s motion for partial summary judgment and denied Whirlpool’s. The Company has appealed the US Tax Court decision to the United States Court of Appeals for the Sixth Circuit, which heard arguments in June 2021. The Company believes that it will be successful and has not recorded any impact of the US Tax Court’s decision in its consolidated financial statements.

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restructuring costs, asset impairment charges and certain other items that management believes are not indicative of the region's ongoing performance, if any. Intersegment sales are eliminated within each region.

The tables below summarize performance by operating segment for the periods presented:

						Three Months Ended September 30,
						OPERATING SEGMENTS
						North America						EMEA						Latin America						Asia (1)						Other / Eliminations			Total Whirlpool
Net sales
2021						$	3,113					$	1,256					$	841					$	278					$	—		$	5,488
2020						2,961						1,258						719						353						—			5,291
Intersegment sales
2021						$	89					$	30					$	327					$	47					$	(493)		$	—
2020						84						31						344						117						(576)			—
Depreciation and amortization
2021						$	43					$	39					$	17					$	4					$	16		$	119
2020						53						42						16						19						16			146
EBIT
2021						$	553					$	28					$	73					$	24					$	(48)		$	630
2020						560						43						77						6						(101)			585
Total assets
September 30, 2021						$	7,990					$	10,032					$	4,148					$	1,646					$	(3,422)		$	20,394
December 31, 2020						7,597						11,296						4,244						2,573						(5,274)			20,436
Capital expenditures
2021						$	42					$	31					$	34					$	6					$	9		$	122
2020						34						29						12						10						11			96

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						Nine Months Ended September 30,
						OPERATING SEGMENTS
						North America						EMEA						Latin America						Asia (1)						Other / Eliminations			Total Whirlpool
Net sales
2021						$	9,200					$	3,676					$	2,336					$	958					$	—		$	16,170
2020						8,002						2,973						1,771						912						—			13,658
Intersegment sales
2021						$	244					$	76					$	950					$	239					$	(1,509)		$	—
2020						203						70						894						275						(1,442)			—
Depreciation and amortization
2021						$	132					$	129					$	48					$	22					$	47		$	378
2020						143						123						47						52						49			414
EBIT
2021						$	1,716					$	80					$	209					$	50					$	(62)		$	1,993
2020						1,176						(38)						119						(28)						(294)			935
Total assets
September 30, 2021						$	7,990					$	10,032					$	4,148					$	1,646					$	(3,422)		20,394
December 31, 2020						7,597						11,296						4,244						2,573						(5,274)			20,436
Capital expenditures
2021						$	107					$	78					$	77					$	18					$	26		$	306
2020						87						61						38						33						32			251

(1) Decrease in Total assets of Asia region is mainly due to the deconsolidation of Whirlpool China. For additional information, see Note 15

to the Consolidated Condensed Financial Statements.

The following table summarizes the reconciling items in the Other/Eliminations column for total EBIT for the periods presented:

			Three Months Ended September 30,									Nine Months Ended September 30,
in millions			2021			2020						2021			2020
Items not allocated to segments:
Restructuring costs			$	(7)		$	(63)					$	(35)		$	(186)
Gain (loss) on previously held equity interest			42			—						42			—
Gain (loss) on sale and disposal of businesses			(13)			7						107			7
Corrective action recovery			—			13						—			13
Corporate expenses and other			(70)			(58)						(176)			(128)
Total other/eliminations			$	(48)		$	(101)					$	(62)		$	(294)

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A reconciliation of our segment information for total EBIT to the corresponding amounts in the Consolidated Condensed Statements of Comprehensive Income (Loss) is shown in the table below for the periods presented:

						Three Months Ended September 30,									Nine Months Ended September 30,
in millions						2021			2020						2021			2020
Operating profit						$	552		$	563					$	1,854		$	897
Interest and sundry (income) expense						(78)			(22)						(139)			(38)
Total EBIT						$	630		$	585					$	1,993		$	935
Interest expense						44			51						134			142
Income tax expense						100			141						353			231
Net earnings (loss)						$	486		$	393					$	1,506		$	562
Less: Net earnings available to noncontrolling interests						15			1						21			(14)
Net earnings (loss) available to Whirlpool						$	471		$	392					$	1,485		$	576

Whirlpool China Divestment

On August 25, 2020, Guangdong Galanz Household Appliances Manufacturing Co., Ltd. (“Galanz”) announced its intention to pursue a tender offer for majority control of Whirlpool China Co. Ltd. (“Whirlpool China”), a majority-owned subsidiary of the Company with shares listed on the Shanghai Stock Exchange. In its announcement, Galanz noted that it expected to offer RMB 5.23 per share (approximately $0.76 per share as of August 25, 2020) to obtain no less than 51% and no more than 61% of Whirlpool China’s outstanding shares. This share price offer was equal to the daily weighted average trading price for Whirlpool China stock over the 30 trading days prior to the announcement.

In the first quarter of 2021, our Board of Directors approved the sale of Whirlpool China, which was reported within our Asia reportable segment and met the criteria for held for sale accounting during the first quarter of 2021. The operations of Whirlpool China did not meet the criteria to be presented as discontinued operations.

On May 6, 2021, the tender offer was completed and the share transfer was executed for a consideration of RMB 1.25 billion (approximately $193 million on the date of completion). Subsequent to the share transfer, the Company holds an equity interest of approximately 20% in Whirlpool China.

In connection with the sale, we recorded a gain, net of transaction and other costs, of $284 million during the second quarter of 2021. The gain on sale is equal to the difference between the total transaction amount and carrying value of Whirlpool China, which includes $74 million of cumulative foreign currency translation adjustments and $80 million of goodwill allocated to the disposal group. The total transaction amount includes $193 million of consideration received from the sale of Whirlpool China shares, $214 million for the fair value of the interest retained and the $783 million carrying value of the equity interest in Whirlpool China. The fair value of the interest retained was based on the ownership amount and the stock price of Whirlpool China as of the closing date of the transaction and we account for the remaining equity interest under the equity method accounting as of June 30, 2021.

Earnings before income taxes prior to the share transfer of Whirlpool China were not material to the Company for the period presented.

The following table presents the carrying amounts of the major classes of Whirlpool China’s assets and liabilities as of September 30, 2021 and December 31, 2020.

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Millions of dollars																		September 30,						December 31,
																		2021						2020
Cash and cash equivalents																		$	—					$	324
Accounts receivable, net of allowance of $0 and $11, respectively																		—						85
Inventories																		—						98
Prepaid and other current assets																		—						93
Property, net of accumulated depreciation of $0 and $189, respectively																		—						309
Other noncurrent assets (1)																		—						283
Total assets																		$	—					$	1,192
Accounts payable																		$	—					$	216
Accrued expenses																		—						53
Other current liabilities																		—						254
Other noncurrent liabilities																		—						7
Total liabilities																		$	—					$	530

(1) Other non current assets include allocated goodwill of $80 million.

Turkey Subsidiary Divestment

On May 17, 2021, we entered into a share transfer agreement with Arçelik A.Ş. ("Arçelik") to sell our Turkish subsidiary for a cash purchase price of €78 million (approximately $93 million on June, 30 2021), subject to customary adjustments at closing.

On June 30, 2021, we completed the sale of the Turkish subsidiary. In connection with the sale, we recorded a loss on disposal of $164 million in the second quarter of 2021. The loss includes a charge of $40 million for the write-down of the assets of the disposal group to fair value and allocated goodwill, and $124 million of cumulative foreign currency translation adjustments included in the carrying amount of the disposal group. During the third quarter of 2021, amounts for working capital and other customary post-closing adjustments were finalized and an additional $13 million loss related to the sale of business was recorded.

The Turkish subsidiary, whose primary asset was a manufacturing plant, was reported within our EMEA reportable segment. The operations of Turkey did not meet the criteria to be presented as discontinued operations. Earnings before income taxes for Turkey were not material for the periods presented.

For additional information see Note 10 to the Consolidated Condensed Financial Statements.

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