UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 ________________________________________________________
FORM 10-Q
  ________________________________________________________
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20192020
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-3932
whirlpoolcorplogoa26.jpg
WHIRLPOOL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-1490038
(State of Incorporation) (I.R.S. Employer Identification No.)
    
2000 North M-63  
Benton Harbor,Michigan 49022-2692
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (269923-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Common stock, par value $1.00 per share WHR Chicago Stock ExchangeandNew York Stock Exchange
0.625% Senior Notes due 2020WHR 20New York Stock Exchange
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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No       
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
Number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
Class of common stock Shares outstanding at October 18, 2019July 17, 2020
Common stock, par value $1$1.00 per share 63,199,77662,293,822




WHIRLPOOL CORPORATION

QUARTERLY REPORT ON FORM 10-Q
Three and NineSix Months Ended SeptemberJune 30, 20192020
TABLE OF CONTENTS
  PAGE
 
Item 1. 
 
 
 
 
Item 2.
Item 3.
Item 4.
   
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
   



FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. Certain statements contained in this quarterly report, including those within the forward-looking perspective section within this report'sthe Management's Discussion and Analysis, and other written and oral statements made from time to time by us or on our behalf do not relate strictly to historical or current facts and may contain forward-looking statements that reflect our current views with respect to future events and financial performance. As such, they are considered "forward-looking statements" which provide current expectations or forecasts of future events. Such statements can be identified by the use of terminology such as "may," "could," "will," "should," "possible," "plan," "predict," "forecast," "potential," "anticipate," "estimate," "expect," "project," "intend," "believe," "may impact," "on track," and similar words or expressions. Our forward-looking statements generally relate to our 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.
This document contains forward-looking statements about Whirlpool Corporation and its consolidated subsidiaries ("Whirlpool") that speak only as of this date. Whirlpool disclaims any obligation to update these statements. Forward-looking statements in this document may include, but are not limited to, statements regarding expected earnings per share, cash flow, productivity and raw material prices.prices, and the impact of COVID-19 pandemic on our operations and financial condition. Many risks, contingencies and uncertainties could cause actual results to differ materially from Whirlpool's forward-looking statements. Among these factors are: (1) COVID-19 pandemic-related business disruptions and economic uncertainty; (2) intense competition in the home appliance industry reflecting the impact of both new and established global competitors, including Asian and European manufacturers, and the impact of the changing retail environment; (2)environment, including direct-to-consumer sales; (3) Whirlpool's ability to maintain or increase sales to significant trade customers and the ability of these trade customers to maintain or increase market share; (3)(4) Whirlpool's ability to maintain its reputation and brand image; (4)(5) the ability of Whirlpool to achieve its business plans, productivity improvements, and cost control objectives, and to leverage its global operating platform, and accelerate the rate of innovation; (5)(6) Whirlpool's ability to obtain and protect intellectual property rights; (6)(7) acquisition and investment-related risks, including risks associated with our past acquisitions, and risks associated with our increased presence in emerging markets; (7)(8) risks related to our international operations, including changes in foreign regulations, regulatory compliance and disruptions arising from political, legal and economic instability; (8)(9) information technology system failures, data security breaches, data privacy compliance, network disruptions, and cybersecurity attacks; (9)(10) product liability and product recall costs; (10)(11) the ability of suppliers of critical parts, components and manufacturing equipment to deliver sufficient quantities to Whirlpool in a timely and cost-effective manner; (11)(12) our ability to attract, develop and retain executives and other qualified employees; (12)(13) the impact of labor relations; (13)(14) fluctuations in the cost of key materials (including steel, resins, copper and aluminum) and components and the ability of Whirlpool to offset cost increases; (14)(15) Whirlpool's ability to manage foreign currency fluctuations; (15)(16) impacts from goodwill impairment and related charges; (16)(17) triggering events or circumstances impacting the carrying value of our long-lived assets; (17)(18) inventory and other asset risk; (18)(19) the uncertain global economy and changes in economic conditions which affect demand for our products; (19)(20) health care cost trends, regulatory changes and variations between results and estimates that could increase future funding obligations for pension and postretirement benefit plans; (20)(21) changes in LIBOR, or replacement of LIBOR with an alternative reference rate; (22) litigation, tax, and legal compliance risk and costs, especially if materially different from the amount we expect to incur or have accrued for, and any disruptions caused by the same; (21)(23) the effects and costs of governmental investigations or related actions by third parties; and (22)(24) changes in the legal and regulatory environment including environmental, health and safety regulations, and taxes and tariffs.
We undertake no obligation to update any forward-looking statement, and investors are advised to review disclosures in our filings with the 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 from forward-looking statements.
Additional information concerning these and other factors can be found in "Risk Factors" in Part II, Item 1A of this report.    
Unless otherwise indicated, the terms "Whirlpool," "the Company," "we," "us," and "our" refer to Whirlpool Corporation and its consolidated subsidiaries.




2


Website Disclosure
We routinely post important information for investors on our website, whirlpoolcorp.com, in the "Investors" section. We also intend to update the Hot Topics Q&A portion of this webpage as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investors section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our webpage is not incorporated by reference into, and is not a part of, this document.



3


PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS

TABLE OF CONTENTS
 PAGE
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 

 PAGE PAGE
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.



4



WHIRLPOOL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
FOR THE PERIODS ENDED SEPTEMBERJUNE 30
(Millions of dollars, except per share data)

 Three Months Ended Nine Months Ended
 2019 2018 2019 2018
Net sales$5,091
 $5,326
 $15,037
 $15,377
Expenses       
Cost of products sold4,350
 4,431
 12,552
 12,790
Gross margin741
 895
 2,485
 2,587
Selling, general and administrative491
 550
 1,580
 1,596
Intangible amortization17
 18
 53
 58
Restructuring costs56
 28
 142
 216
Impairment of goodwill and other intangibles
 
 
 747
(Gain) loss on sale and disposal of businesses(516) 
 (437) 
Operating profit (loss)693
 299
 1,147
 (30)
Other (income) expense    
 
Interest and sundry (income) expense(29) 24
 (222) 106
Interest expense45
 52
 148
 141
Earnings (loss) before income taxes677
 223
 1,221
 (277)
Income tax expense313
 7
 311
 52
Net earnings (loss)364
 216
 910
 (329)
Less: Net earnings available to noncontrolling interests6
 6
 14
 24
Net earnings (loss) available to Whirlpool$358
 $210
 $896
 $(353)
Per share of common stock       
Basic net earnings (loss) available to Whirlpool$5.62
 $3.25
 $14.04
 $(5.18)
Diluted net earnings (loss) available to Whirlpool$5.57
 $3.22
 $13.93
 $(5.18)
Dividends declared$1.20
 $1.15
 $3.55
 $3.40
Weighted-average shares outstanding (in millions)       
Basic63.6
 64.5
 63.8
 68.2
Diluted64.2
 65.3
 64.3
 68.2
        
Comprehensive income (loss)$419
 $130
 $1,002
 $(573)


 Three Months Ended Six Months Ended
 2020 2019 2020 2019
Net sales$4,042
 $5,186
 $8,367
 $9,946
Expenses       
Cost of products sold3,411
 4,254
 7,036
 8,202
Gross margin631
 932
 1,331
 1,744
Selling, general and administrative421
 584
 841
 1,089
Intangible amortization15
 18
 30
 36
Restructuring costs118
 60
 123
 86
(Gain) loss on sale and disposal of businesses
 79
 
 79
Operating profit77
 191
 337
 454
Other (income) expense    
 
Interest and sundry (income) expense(15) (63) (16) (193)
Interest expense49
 52
 92
 103
Earnings before income taxes43
 202
 261
 544
Income tax expense (benefit)18
 130
 89
 (2)
Net earnings25
 72
 172
 546
Less: Net earnings (loss) available to noncontrolling interests(10) 5
 (15) 8
Net earnings available to Whirlpool$35
 $67
 $187
 $538
Per share of common stock       
Basic net earnings available to Whirlpool$0.55
 $1.04
 $2.98
 $8.42
Diluted net earnings available to Whirlpool$0.55
 $1.04
 $2.97
 $8.35
Dividends declared$1.20
 $1.20
 $2.40
 $2.35
Weighted-average shares outstanding (in millions)       
Basic62.4
 63.8
 62.6
 63.9
Diluted62.7
 64.3
 63.0
 64.4
        
Comprehensive income$9
 $16
 $61
 $583
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


5


WHIRLPOOL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Millions of dollars, except share data)
(Unaudited)  (Unaudited)  

September 30, 2019
December 31, 2018June 30, 2020
December 31, 2019
Assets





Current assets





Cash and cash equivalents$993

$1,498
$2,546

$1,952
Accounts receivable, net of allowance of $127 and $136, respectively2,588

2,210
Accounts receivable, net of allowance of $135 and $132, respectively1,998

2,198
Inventories2,883

2,533
2,129

2,438
Prepaid and other current assets911

839
906

810
Assets held for sale
 818
Total current assets7,375

7,898
7,579

7,398
Property, net of accumulated depreciation of $6,331 and $6,190, respectively3,203

3,414
Property, net of accumulated depreciation of $6,497 and $6,444, respectively3,132

3,301
Right of use assets746
 
905
 921
Goodwill2,420

2,451
2,433

2,440
Other intangibles, net of accumulated amortization of $572 and $527, respectively2,217

2,296
Other intangibles, net of accumulated amortization of $618 and $593, respectively2,178

2,225
Deferred income taxes2,031

1,989
2,172

2,238
Other noncurrent assets414

299
277

358
Total assets$18,406

$18,347
$18,676

$18,881
Liabilities and stockholders' equity





Current liabilities





Accounts payable$4,229

$4,487
$3,328

$4,547
Accrued expenses626

690
633

652
Accrued advertising and promotions755

827
510

949
Employee compensation430

393
343

450
Notes payable941

1,034
1,712

294
Current maturities of long-term debt546

947
298

559
Other current liabilities973

811
901

918
Liabilities held for sale
 489
Total current liabilities8,500

9,678
7,725

8,369
Noncurrent liabilities


 

Long-term debt4,105

4,046
4,886

4,140
Pension benefits530

637
485

542
Postretirement benefits310

318
279

322
Lease liabilities617
 
741
 778
Other noncurrent liabilities395

463
635

612
Total noncurrent liabilities5,957

5,464
7,026

6,394
Stockholders' equity





Common stock, $1 par value, 250 million shares authorized, 112 million shares issued, and 63 million and 64 million shares outstanding, respectively112

112
Common stock, $1 par value, 250 million shares authorized, 112 million shares issued, and 62 million and 63 million shares outstanding, respectively112

112
Additional paid-in capital2,786

2,768
2,822

2,806
Retained earnings7,659

6,933
7,902

7,870
Accumulated other comprehensive loss(2,603)
(2,695)(2,731)
(2,618)
Treasury stock, 49 million and 48 million shares, respectively(4,926)
(4,827)
Treasury stock, 50 million and 49 million shares, respectively(5,087)
(4,975)
Total Whirlpool stockholders' equity3,028

2,291
3,018

3,195
Noncontrolling interests921

914
907

923
Total stockholders' equity3,949

3,205
3,925

4,118
Total liabilities and stockholders' equity$18,406

$18,347
$18,676

$18,881

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


6


WHIRLPOOL CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE PERIODS ENDED SEPTEMBERJUNE 30
(Millions of dollars)

Nine Months EndedSix Months Ended

2019
20182020
2019
Operating activities





Net earnings (loss)$910

$(329)
Net earnings$172
 $546
Adjustments to reconcile net earnings to cash provided by (used in) operating activities:


   
Depreciation and amortization443

491
268
 302
Impairment of goodwill and other intangibles
 747
(Gain) loss on sale and disposal of businesses(437) 

 79
Changes in assets and liabilities:


   
Accounts receivable(517)
(585)56
 (251)
Inventories(525)
(271)223
 (574)
Accounts payable(110)
(122)(982) (182)
Accrued advertising and promotions(62)
(95)(414) (180)
Accrued expenses and current liabilities29

196
(135) (41)
Taxes deferred and payable, net(59)
(105)33
 (179)
Accrued pension and postretirement benefits(72)
(433)(27) (39)
Employee compensation77

35
(70) 7
Other(243)
(144)131
 (309)
Cash used in operating activities(566)
(615)
Cash provided by (used in) operating activities(745)
(821)
Investing activities





Capital expenditures(306)
(330)(155) (197)
Proceeds from sale of assets and business1,034

27
27
 5
Proceeds from held-to-maturity securities
 60
Investment in related businesses

(25)
Other(5)
(4)
 (3)
Cash provided by (used in) investing activities723

(272)(128)
(195)
Financing activities





Net proceeds from borrowings of long-term debt699

703
1,029
 697
Repayments of long-term debt(946)
(381)(568) (943)
Net proceeds (repayments) from short-term borrowings(63)
1,761
1,417
 1,119
Dividends paid(229)
(232)(155) (149)
Repurchase of common stock(100)
(1,102)(121) (50)
Common stock issued5

7
3
 4
Other(7)
(6)
Cash provided by (used in) financing activities(641)
750
1,605

678
Effect of exchange rate changes on cash, cash equivalents and restricted cash(55)
(74)(138) 9
Decrease in cash, cash equivalents and restricted cash(539)
(211)
Cash, cash equivalents and restricted cash at beginning of period1,538

1,293
Cash, cash equivalents and restricted cash at end of period$999

$1,082
Increase (decrease) in cash, cash equivalents and restricted cash594

(329)
Cash, cash equivalents and restricted cash at beginning of year1,952

1,538
Cash, cash equivalents and restricted cash at end of year$2,546

$1,209

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


7


NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
(1)    BASIS OF PRESENTATION
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, 2018.2019.
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.
Out-of-Period AdjustmentsRisks and Uncertainties
During
COVID-19 continues to spread throughout the third quarterUnited States and other countries across the world, and the duration and severity of 2019, we recorded a net adjustmentthe effects are currently unknown. The pandemic has materially impacted and could in future periods materially impact our financial results. The Consolidated Condensed Financial Statements presented herein reflect estimates and assumptions made by management at June 30, 2020 and for the six months ended June 30, 2020.
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 $34 million related to prior yearsthe 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 July 23, 2020, including those resulting from the one time transition tax deemed repatriation on earningsimpacts of certain foreign subsidiaries that were previously tax deferredCOVID-19, will be reflected in management’s estimates for future periods.
Goodwill and related impacts. This adjustment resultedindefinite-lived intangible assets
Our Critical Accounting Policies and Estimates for goodwill and other indefinite-life intangibles are disclosed in a decrease of net earnings available to Whirlpool of $34 million and a decrease of $0.53 in diluted earnings per share for the three and nine months ended 2019. The Company determined the impact was not material to the prior years' financial statements and is not expected to be materialNote 1 to the Consolidated StatementFinancial Statements and in Management's Discussion and Analysis of Comprehensive our annual report on Form 10-K for the fiscal year ended December 31, 2019.

We continue to monitor the significant global economic uncertainty as a result of COVID-19 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* and Maytag trademarks continue to be at risk at June 30, 2020. The goodwill in our other reporting units or indefinite-lived intangible assets are not presently at risk for future impairment.

The potential impact of COVID-19 related demand disruptions, production impacts and supply constraint impacts on our operating results for the EMEA reporting unit in the short-term is uncertain, but we remain committed to the strategic actions necessary to realize the long-term forecasted EBIT margins and expect that the macroeconomic environment will recover in the medium to long-term. The potential negative demand effect on revenues for the Indesit and Hotpoint* trademarks and the Maytag trademark is also uncertain given the volatile environment, but we expect that demand and production levels will also recover.

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 second quarter of 2020.



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


8




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* and Maytag trademarks or a lack of recovery or further 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 (Loss)taxes
Under U.S. GAAP, the Company calculates its quarterly tax provision based on an estimated effective tax rate for the year ending December 31, 2019.
and then adjusts this amount by certain discrete items each quarter. The changing and volatile macro-economic conditions connected with the COVID-19 pandemic may 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, duringcontinued economic deterioration brought on by the third quarterpandemic may negatively impact the realizability of 2019 we recorded an adjustment of $22 million related tocertain deferred tax assets.  
Other Accounting Matters
Synthetic lease arrangements
In the first quarter of 2019 resulting from other foreign subsidiary income items2020, we entered into a synthetic lease arrangement with a financial institution for non-core properties in the North America region. The term of these leases commenced in the first quarter of 2020 and corresponding tax credit impacts. This adjustment resultedwill expire five years after commencement. The leases contain provisions for options to purchase, extend the original term for additional periods or return the property. We have assessed the reasonable certainty of these provisions to determine the appropriate lease term. These arrangements include a residual value guarantee that could potentially come due in a decreasefuture periods. The current obligation residual value guarantee is not material as of $22 millionJune 30, 2020.
We assessed the lease classification of the agreements and determined they were operating leases. These leases were measured using our incremental borrowing rate and are included in net earnings available to Whirlpoolour right of use assets and a decrease of $0.34lease liabilities in diluted earnings per share for the three months ended September 30, 2019. The Consolidated Condensed Statement of Comprehensive Income (Loss)Balance Sheets for a nominal amount. Rental payments are calculated at the nine months ended September 30, 2019 isapplicable LIBOR rate plus a margin and the annual lease payments are not impacted by this adjustment.material.
Adoption of New Accounting Standards
On January 1, 2019,2020 we adopted Accounting Standards Update (“ASU”("ASU") No. 2017-12, "Derivatives2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." The guidance in ASU 2016-13 creates a new impairment standard replacing the current "incurred loss" model. The incurred loss model required that for a loss to be impaired and Hedging (Topic 815): Targeted Improvementsrecognized on the financial statements it must be probable that it has been incurred at the measurement date. The new standard utilizes an "expected credit loss" model also referred to Accountingas "the current expected credit loss" (CECL) model. Under CECL, there is no threshold for Hedging Activities."impairment loss recognition, but it instead reflects a current estimate of all expected credit losses. The adoption of this standard did not have a material impact on our Consolidated Condensed Financial Statements, however we have expanded our use of hedge accounting to hedge contractually specified components in commodity contracts designated as cash flow hedges. For additional information on the required disclosures related to the impact of adopting this standard, see Note 10 to the Consolidated Condensed Financial Statements.

On January 1, 2019, we adopted ASU No. 2016-02, "Leases (Topic 842)" and as part of that process the Company made the following elections:

The Company did not elect the hindsight practical expedient, for all leases.
The Company elected the package of practical expedients and, as a result, did not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs for all leases.
In March 2018, the FASB approved an optional transition method that allows companies to use the effective date as the date of initial application on transition. The Company elected this transition method, and as a


8



result, did not adjust its comparative period financial information or make the newly required lease disclosures for periods before the effective date.
The Company elected to make the accounting policy election for short-term leases resulting in lease payments being recorded as an expense on a straight-line basis over the lease term.
The Company elected to not separate lease and non-lease components for all leases.
The Company did not elect the land easement practical expedient.

Upon adoption, we recognized the cumulative effect of initially applying this new standard resulting in the addition of approximately $858 million of right of use assets, of which $46 million were classified as held for sale, as well as the corresponding short-term and long-term lease liabilities. Additionally, the Company has sold and leased back a group of properties in our Latin American region and, upon adoption, the Company recorded a cumulative adjustment to retained earnings of approximately $82 million related to deferred gains associated with these transactions.
For additional information on the required disclosures related to the impact of adopting this standard, see Note 3 to the Consolidated Condensed Financial Statements.
For additional information on held for sale assets, see Note 162 to the Consolidated Condensed Financial Statements.
We adopted the following standard,standards, none of which havehad a material impact on our Consolidated Condensed Financial Statements:
Standard Effective Date
2019-072018-13Codification UpdatesFair Value Measurement (Topic 820) Disclosure Framework - Changes to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Final Releases No. 33-10532,the Disclosure UpdateRequirements for Fair Value MeasurementJanuary 1, 2020
2018-15Intangibles - Goodwill and Simplification,Other - Internal-Use Software (Subtopic 350-40) Customer's Accounting for Implementation Costs Incurred In a Cloud Computing Arrangement That Is a Service ContractJanuary 1, 2020
2018-18Collaborative Arrangements (Topic 808) - Clarifying the Interaction between Topic 808 and Nos. 33-10231 and 33-10441, Investment Company Reporting Modernization, and Miscellaneous UpdatesTopic 606JulyJanuary 1, 20192020


All other newly issued and effective accounting standards during 20192020 were not relevant or material to the Company.


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


9



Accounting Pronouncements Issued But Not Yet Effective
In November 2018,March 2020, the FASB issued ASU 2018-18, "Collaborative ArrangementsUpdate 2020-04, "Reference Rate Reform (Topic 808)848): ClarifyingFacilitation of the Interaction between Topic 808Effects of Reference Rate Reform on Financial Reporting". The amendments in Update 2020-04 are elective and Topic 606."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 standard clarifiesguidance 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. The amendments are effective for all entities from the beginning of an interim period that includes the issuance date of the ASU. An entity may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact of adopting this guidance.
In December 2019, the FASB issued Update 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". The amendments in this Update affect entities within the scope of Topic 740, Income Taxes. The amendments in this Update simplify the accounting for income taxes by removing certain transactions between participantsexceptions to the general principles in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer for a good or service that is a distinct unit of account.740. The amendments also precludeimprove consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For public business entities, from presenting consideration from transactions with a collaborator that is not a customer together with revenue recognized from contracts with customers. The new standard isthe amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted in any interim period for entities that have adopted ASC 606. The standard should be applied retrospectively to the period when ASC 606 was initially adopted.2020. The Company is currently evaluating the impact of adopting this guidance.
The FASB has issued the following relevant standards, which are not expected to have a material impact on our Consolidated Condensed Financial Statements:
Standard Effective Date
2016-13Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial InstrumentsJanuary 1, 2020
2018-13Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value MeasurementJanuary 1, 2020
2018-14Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit PlansJanuary 1, 2021
2018-15Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred In a Cloud Computing Arrangement That Is a Service ContractJanuary 1, 2020
2018-17Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest EntitiesJanuary 1, 2020

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


9




(2)    REVENUE RECOGNITION

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 1514 to the Consolidated Condensed Financial Statements.

Revenues related to our former compressor business were fully reflected in our Latin America segment through June 30, 2019. We completed the sale of our compressor business on July 1, 2019. For additional information on the sale of Embraco, see Note 16 to the Consolidated Condensed Financial Statements.

 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
Millions of dollars 2019 2018 2019 2018 2020 2019 2020 2019
Major product categories:                
Laundry $1,576
 $1,580
 $4,531
 $4,605
 $1,071
 $1,492
 $2,401
 $2,975
Refrigeration 1,673
 1,577
 4,694
 4,474
 1,305
 1,656
 2,667
 3,019
Cooking 1,183
 1,204
 3,289
 3,342
 909
 1,075
 1,852
 2,119
Dishwashing 414
 421
 1,169
 1,229
 439
 398
 810
 762
Total major product category net sales $4,846
 $4,782
 $13,683
 $13,650
 $3,725
 $4,621
 $7,731
 $8,875
Compressors(1) 
 266
 557
 847
 
 323
 
 635
Spare parts and warranties 227
 246
 749
 768
 206
 180
 434
 371
Other 18
 32
 48
 112
 111
 62
 201
 65
Total net sales $5,091
 $5,326
 $15,037
 $15,377
 $4,042
 $5,186
 $8,367
 $9,946


(1)
Change in compressors compared to the prior year is due to the divestiture of the Embraco compressor business.
The impact to revenue related to prior period performance obligations was not material for the three and ninesix months ended SeptemberJune 30, 2019.2020.

Bad Debt Expense

Bad debt expense was not material for the three and nine months ended September 30, 2019.
(3)    LEASES

Leases

We lease certain manufacturing facilities, warehouses/distribution centers, office space, land, vehicles, and equipment. At lease inception, we determine the lease term by assuming the exercise of those renewal options that are reasonably assured. Leases with an initial term of 12 months or less are not recorded in the Consolidated Condensed Balance Sheets and we recognize lease expense for these leases on a straight-line basis over the lease term. The Company had operating lease costs of approximately $150 million for the nine months endedSeptember 30, 2019.

As of September 30, 2019, we have approximately $82 million of non-cancelable operating lease commitments, primarily for warehouses, that have not yet commenced. These operating leases are expected to commence between fiscal year 2019 and fiscal year 2020 with lease terms of up to 15 years.

At September 30, 2019, we have 0 leases classified as financing leases and we have approximately $885 million of non-cancelable operating lease commitments, excluding variable consideration. The undiscounted annual future minimum lease payments are summarized by year in the table below:


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Maturity of Lease Liabilities
Operating Leases
(in millions)
2019$45
2020166
2021139
2022119
2023107
After 2023309
Total lease payments$885
Less: interest123
Present value of lease liabilities$762
Allowance for Expected Credit Losses and Bad Debt Expense

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. The long-term portionadoption of the lease liabilities included in the amounts above is $617 million. The remainder of our lease liabilities are included in other current liabilities innew credit loss standard did not have a material impact on the Consolidated Condensed Balance Sheets.Financial Statements.

At September 30, 2019,The following table summarizes our allowance for doubtful accounts by operating segment for the weighted average remaining lease term and weighted average discount rate for operating leases was 7 years and 5%, respectively.

During the ninesix months ended SeptemberJune 30, 2019 the cash paid for amounts included in the measurement of the liabilities and the operating cash flows was $147 million. The right of use assets obtained in exchange for new liabilities was $39 million in the nine months ended.2020.
Millions of dollarsDecember 31, 2019Charged to EarningsWrite-offsForeign CurrencyJune 30, 2020
North America$4
$4
$(1)$
$7
EMEA83
5
(10)(3)75
Latin America33
15
(7)(7)34
Asia12
7


19
Consolidated$132
$31
$(18)$(10)$135

As the Company's lease agreements normally do not provide an implicit interest rate, we apply the Company's incremental borrowing rate based on the information available at commencement date in determining the present value of future lease payments. Relevant information used in determining the Company's incremental borrowing rate includes the duration of the lease, location of the lease, and the Company's credit risk relative to risk-free market rates.

Many of our leases include renewal options that can extend the lease term. The execution of those renewal options is at our sole discretion and reflected in the lease term when they are reasonably certain to be exercised.

Certain leases also include options to purchase the underlying asset at fair market value. If leased assets have leasehold improvements, typically the depreciable life of those leasehold improvements are limited by the expected lease term. Additionally, certain lease agreements include lease payment adjustments for inflation.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We rent or subleasealso have an allowance on certain real estatefinancing receivables that are recorded in prepaid and other current assets and other noncurrent assets on our Consolidated Condensed Balance Sheets. The allowance at June 30, 2020 and December 31, 2019 was approximately $41 million and $48 million, respectively. The amount charged to third parties. Our sublease portfolio primarily consists of operating leases within our warehouses, resulting in a nominal amount of sublease income in 2019.earnings and write-offs for the six months ended June 30, 2020 were not material.
(4)(3)    CASH, CASH EQUIVALENTS AND RESTRICTED CASH
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,June 30,
Millions of dollars2019 20182020 2019
Cash and cash equivalents as presented in our Consolidated Condensed Balance Sheets$993
 $1,032
$2,546
 $1,178
Restricted cash included in prepaid and other current assets (1)
6
 45

 25
Restricted cash included in other noncurrent assets (1)

 5
Cash included in assets held for sale
 6
Cash, cash equivalents and restricted cash as presented in our Consolidated Condensed Statements of Cash Flows$999
 $1,082
$2,546
 $1,209
(1)Change in restricted cash reflects realization of foreign currency translation adjustments of $1 million and $3 million, respectively, for the nine months ended September 30, 2019 and 2018 compared to the prior fiscal year end.

Change in restricted cash reflects realization of foreign currency translation adjustments of $(1) million for the six months endedJune 30,2019 compared to the prior fiscal year end.

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December 31,December 31,
Millions of dollars2018 20172019 2018
Cash and cash equivalents as presented in our Consolidated Balance Sheets$1,498
 $1,196
$1,952
 $1,498
Restricted cash included in prepaid and other current assets40
 48

 40
Restricted cash included in other noncurrent assets
 49
Cash, cash equivalents and restricted cash as presented in our Consolidated Statements of Cash Flows$1,538
 $1,293
$1,952
 $1,538


Restricted cash can only bewas used to fund capital expenditures and technical resources to enhance Whirlpool China's research and development and working capital, as required by the terms of the Whirlpool China (formerly Hefei Sanyo) acquisition completedacquisition. In 2019, we spent the remaining amount for these purposes resulting in October 2014. restricted cash of $0 at December 31, 2019.


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(5)


(4)    INVENTORIES
The following table summarizes our inventoryinventories at SeptemberJune 30, 20192020 and December 31, 2018:2019:
Millions of dollars
September 30, 2019
December 31, 2018
June 30, 2020
December 31, 2019
Finished products
$2,414

$2,076

$1,638

$1,979
Raw materials and work in process
627

617

619

602


3,041

2,693

2,257

2,581
Less: excess of FIFO cost over LIFO cost
(158)
(160)
(128)
(143)
Total inventories
$2,883

$2,533

$2,129

$2,438

LIFO inventories represented 44%40% and 41%43% of total inventories at SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively.
(6)(5)    PROPERTY, PLANT &AND EQUIPMENT
The following table summarizes our property, plant and equipment at SeptemberJune 30, 20192020 and December 31, 2018:2019:
Millions of dollars
September 30, 2019
December 31, 2018
June 30, 2020
December 31, 2019
Land
$98

$102

$89

$97
Buildings
1,585

1,593

1,518

1,540
Machinery and equipment
7,851

7,909

8,022

8,108
Accumulated depreciation
(6,331)
(6,190)
(6,497)
(6,444)
Property, plant and equipment, net
$3,203

$3,414

$3,132

$3,301

During the ninesix months ended SeptemberJune 30, 2019,2020, we disposed of buildings, machinery and equipment no longer in use with a net book value of $57 million, primarily related to$20 million. The net gain on the Naples asset impairment charges.
For additional information, see Note 13 to the Consolidated Condensed Financial Statements.disposals were not material.
(7)(6)    FINANCING ARRANGEMENTS
Debt Offering

On May 7, 2020, Whirlpool Corporation (the “Company”), completed its offering of $500 million in principal amount of 4.60% Senior Notes due 2050 (the “Notes”), in a public offering pursuant to a registration statement on Form S-3 (File No. 333-224381). The 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, as supplemented by a Certificate of Designated Officers establishing the terms and providing for the issuance of the Notes. The notes contain covenants that limit Whirlpool 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 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 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 "Notes") in a public offering pursuant to a registration statement on Form S-3 (File No. 333-224381). The Notes were issued under an indenture, dated February 21, 2020, among Whirlpool EMEA Finance S.à r.l, as issuer, Whirlpool Corporation, 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 Notes contain covenants that limit Whirlpool 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 Notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest.


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On February 26, 2019, Whirlpool Corporation completed a bond offering consisting of $700 million in principal amount of 4.75% Senior Notes due in 2029. The notes contain covenants that limit Whirlpool 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 notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest. The notes are registered under the Securities Act of 1933, as amended, pursuant to our Registration Statementa registration statement on Form S-3 (File No.333-224381) previously filed with the Securities and Exchange Commission. 


12



No. 333-224381).
Debt Repayment
On March 12, 2020, €500 million (approximately $566 million at repayment) of 0.625% senior notes matured and were repaid.
On August 9, 2019, we repaid $1.0 billion pursuant to our April 23, 2018 Term Loan Agreement with Citibank, N.A., as Administrative Agent, and certain other financial institutions, representing full repayment of amounts borrowed under the term loan. As previously disclosed, we agreed to repay this term loan amount with the net cash proceeds received from the sale of our Embraco business unit to Nidec Corporation, which closed on July 1, 2019.
On March 1, 2019, $250 million of 2.40% senior notes matured and were repaid.
On February 27, 2019, we repaid €600 million (approximately $673 million) pursuant to our June 5, 2018 Term Loan Agreement with Wells Fargo Bank, National Association, as Administrative Agent, and certain other financial institutions (the "Whirlpool EMEA Finance Term Loan"), representing full repayment of amounts borrowed under the Whirlpool EMEA Finance Term Loan. On March 1, 2019, $250 million of 2.40% senior notes matured and were repaid. On April 26, 2018, $363 million of 4.50% senior notes matured and were repaid.
Credit Facilities
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 provides aggregate borrowing capacity of $500 million, and has a termination date of April 26, 2021. The interest and fee rates payable with respect to the 364-Day Facility based on the Company’s current debt rating are as follows: (1) the Eurodollar Margin is 1.625%; (2) the spread over prime is 0.625%; and (3) the unused commitment fee is 0.400%, as of April 27, 2020. The 364-Day Facility contains customary covenants and warranties which are consistent with the Company’s $3.5 billion revolving credit facility, 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 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; and (iii) incur debt at the subsidiary level.
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, an increase of $500 million from the Company's prior amended and restated credit agreement. The Amended Long-Term Facility has a maturity date of August 6, 2024, unless earlier terminated,terminated. On March 13, 2020 we initiated a borrowing of approximately $2.2 billion under this agreement and amends and restates in its entirety our previously existing Third Amended and Restated Long-Term Credit Agreement, dated May 17, 2016, as amended.
for which a portion of the proceeds from the borrowing were used to fund commercial paper repayment. 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 EURIBOR is 1.125%; (2) the spread over prime is 0.125%; and (3) the ticking 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 to 1.00 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 to 1.0 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 facilities as of June 30, 2020.
In addition to the committed $3.5 billion Amended Long-Term Facility and the $500 million 364-Day Credit Agreement, we have committed credit facilities in Brazil.Brazil and India. The committed credit facilities in Brazil and India provide borrowings up to 1.01 billion Brazilian reais (approximately $240and 1 billion Indian rupees (totaling approximately $196 million at SeptemberJune 30, 20192020 and $258$262 million at December 31, 2018)2019), maturing through 2022. On August 5, 2019 we terminated a €250 million


13



European revolving credit facility that we entered into in July 2015. The termination of this facility did not have a material impact on our Consolidated Condensed Financial Statements.
We had 0 borrowings outstandingFacility Borrowings
On March 13, 2020, we 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. We repaid $500 million of this Amended Long-Term Facility borrowing with the proceeds from our May 2020 Notes offering. We repaid an additional $500 million of this Amended Long-Term Facility borrowing by drawing on the full amount of the 364-Day Facility.

As of June 30, 2020, we had aggregate borrowing capacity of approximately $2.5 billion on our committed credit facilities, at September 30, 2019 or December 31, 2018.consisting of $2.3 billion under the Amended Long-Term Facility and approximately $200 million under our committed credit facilities in Brazil and India.

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. As previously disclosed, during the third quarter of 2019 we repaid the $1 billion term loan.
The following table summarizes the carrying value of notes payable at SeptemberJune 30, 20192020 and December 31, 2018:2019:
Millions of dollars September 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019
Commercial paper $711
 $
 $
 $274
Short-term borrowings due to banks 230
 1,034
 1,712
 20
Total notes payable $941
 $1,034
 $1,712
 $294


Short-term borrowings due to banks include amounts outstanding under the Amended Long-Term Facility, which are expected to be repaid in the next twelve months.
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.


13



These transfers primarily do not require continuing involvement from the Company, however certain arrangements include servicing of transferred receivables by Whirlpool. Outstanding accounts receivable transferred under arrangements where the Company continues to service the transferred asset were $203$206 million and $161$348 million as of SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively.
(8)(7)    COMMITMENTS AND CONTINGENCIES
Embraco Antitrust Matters
Beginning in February 2009, theour 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 has resolved the government investigations and related claims in various jurisdictions and certain other claims remain pending.
Whirlpool has 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.




14


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. Prior to the adoption of Topic 606, the excise taxes in our Brazilian operations were reflected in revenue. In accordance with Topic 606, we made a policy election to exclude non-income taxes from the transaction price. As a result, these credits were reflected in interest and sundry (income) expense as they were monetized in 2017 and 2018.
In December 2013, the Brazilian government reinstituted the monetary adjustment index applicable to BEFIEX credits that existed prior to July 2009, when the Brazilian government required companies to apply a different monetary adjustment index to BEFIEX credits. Whether use of the reinstituted index should be given retroactive effect for the July 2009 to December 2013 period has beenwas subject to review by the Brazilian courts. In the third quarter of 2017, the Brazilian Supreme Court ruled that the reinstituted index should be given retroactive effect for the July 2009 to December 2013 period, which ruling was subsequently affirmed by the Brazilian Supreme Court, but remains subject to further proceedings.and is now final. Based on this ruling, we were entitled to recognize $72 million in additional credits, which were recognized in prior periods. As of SeptemberAt June 30, 2019, no20200 BEFIEX credits remain to be monetized.
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 as of Septemberat June 30, 2019. 2020. 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 1.9 2.0 billion Brazilian reais (approximately $465$360 million as of Septemberat June 30, 2019)2020).
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 tax payers 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 253256 million Brazilian reais (approximately $61$47 million as of Septemberat June 30, 2019)2020), 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.


14


In 2001, Brazil adopted a law making the profits of controlled foreign corporations of Brazilian entities subject to income and social contribution tax regardless of whether the profits were repatriated ("CFC Tax"). Our Brazilian subsidiary, along with other corporations, challengedWe have received tax assessments on foreign profits on constitutionalityfrom 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 grounds. In April 2013,business processes. These assessments are being challenged at the Brazilian Supreme Court ruled on one of our cases, finding thatadministrative and judicial levels in Brazil. We estimate the law is constitutional, but remanded the casepossible losses related to a lower court for consideration of other arguments raised in our appeal, including the existence of tax treaties with jurisdictions in which controlled foreign corporations are domiciled. As of September 30, 2019, our potential exposure for income and social contribution taxes relatingthese assessments to profits of controlled foreign corporations, including interest and penalties and net of expected foreign tax credits, isbe approximately 114294 million Brazilian reais (approximately $27$54 million as of Septemberat June 30, 2019)2020). 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 0t accrued any amount related to these assessments as of September 30, 2019.assessments.
In addition to the IPI tax credit and CFC TaxPIS/COFINS inputs matters noted above, other assessments issued to us by the Brazilian tax authorities related to non-incomeindirect 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 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.


15


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 $43$58 million in taxes and fees, which have been paid, and $15 million in fees that we anticipate will be fully paid in 2019.

paid.
In the second quarter of 2019, we received favorable final, non-appealable decisions in 2 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, which have been paid, and $1 million in fees that we anticipate will be paid in 2019.2020.
The ICMS credits and related fees are recorded in interest and sundry (income) expense in our Consolidated Condensed Statements of Comprehensive Income (Loss). The Brazilian tax authorities have 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 certain other matters that could affect the rights of Brazilian taxpayers regarding these credits, and a scheduled hearing has been delayed and it is scheduled for December 2019.not known when such hearing will be rescheduled. If the Brazilian tax authorities challenge our rights to these credits, we may become subject to new litigation related to credits already monetized and/or disallowance of further credit monetization. Based on the opinions of our tax and legal advisors, we have not accrued any amounts related to potential future litigation regarding these credits.
The Company has similar cases with other Brazilian subsidiaries related to approximately $15 million in potential ICMS credits for which we have yet to receive a ruling. There is substantial uncertainty about both the amount and timing of any recovery, and as such, no amounts have been recognized.
Competition Investigation
In 2013, the French Competition Authority ("FCA") commenced an investigation of appliance manufacturers and retailers in France. The investigation includes a number of manufacturers,France, including the Whirlpool and Indesit operationsIndesit. The FCA investigation was split into two parts, and in France.



15


On June 26,December 2018, Whirlpool France SAS, a subsidiary of the Company, reached an agreementwe finalized settlement with the staff of the FCA to settleon the first part of its investigation, which relates tofor a 14-month period during partstotal fine of 2006-07 and 2008-09. In the third quarter of 2018, we accrued €95 million after entering into a preliminary settlement agreement with the FCA. On December 6, 2018, the FCA's college issued its final decision, setting the final amount of the fine at €102 million, with €56 million attributable to Whirlpool's France business and €46 million attributable to Indesit's France business. Payment of the Indesit portion of the FCA fine (€46 million, or approximately $52 million at March 31, 2019) wasfinal amounts were made in the first quarter2019, including payment by Indesit's previous owners of 2019 and payment of the Whirlpool portion of the FCA fine (€56 million, or approximately $63 million) was made in April 2019. Under the terms of a settlement with Indesit's former owners, the former owners paid €17 million out of escrow to the Company in the second quarter of 2019.

Company. 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.
Although it is currently not possible to assess the impact, if any, this matterthat matters related to the FCA investigation may have on our financial statements, the resolution of the second part ofmatters related to the FCA investigation could have a material adverse effect on our financial statements in any particular reporting period.
Trade Customer Insolvency

In 2017, Alno AG and certain affiliated companies filed for insolvency protection in Germany. Bauknecht Hausgeräte GmbH, a subsidiary of the Company, was a long-standing supplier to Alno and certain of its affiliated companies. The Company was also a former indirect minority shareholder of Alno. In August 2018, the insolvency trustee asserted €174.5 million in clawback and related claims against Bauknecht. We are reviewing theIn January 2020, we entered into an agreement to settle all potential claims made bythat the insolvency trustee. Based on our preliminary understanding of the facts and the applicable law, we expecttrustee may have related to vigorously defend against the claims. Although it is currently not possible to assess the impact this matter, may have on ourresulting in a one-time charge of €52.75 million (approximately $59 million as of December 31, 2019), which was recorded in interest and sundry (income) expense in the Consolidated Condensed Financial Statements of Income for the resolution of this matter could have a material adverse effect on our financial statementsyear ended December 31, 2019 and paid in any particular reporting period.

2020 as planned.
Other Litigation
WeSee Note 13 for information on certain U.S. income tax litigation. In addition, we are currently defending against two2 lawsuits that have been certified for treatment as class action treatmentactions in U.S. federal court, relating to two2 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


16


of loss, if any, at this time. The resolution of this matterthese 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.


16


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.
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
Product Warranty
Millions of dollars
2019
2018
2020
2019
Balance at January 1
$268

$277

$383

$268
Issuances/accruals during the period
329

218

108

128
Settlements made during the period/other
(208)
(216)
(203)
(143)
Balance at September 30
$389

$279
Balance at June 30
$288

$253
        
Current portion
$262

$204

$187

$178
Non-current portion
127

75

101

75
Total
$389

$279

$288

$253


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. WhirlpoolIn January 2020, we commenced a product recall in the UK and Ireland for these EMEA-produced washers, for which the recall is discussing the issue with the appropriate regulatory authorities, and is assessing corrective action.ongoing. In the third quarter of 2019, we accrued approximately $105 million in estimated product warranty expense related to this matter. This estimate is based on several assumptions which are inherently unpredictable and which we may need to materially revise in the future. For the six months ended June 30, 2020, settlements of approximately $50 million have been incurred related to this product recall.

For the three and ninetwelve months ended SeptemberDecember 31, 2019, we incurred approximately $14 million and $26 million respectively, of additional product warranty expense related to our previously disclosed legacy Indesit dryer corrective action campaign in the UK. For the three and six months ended June 30, 2020, we incurred no additional product warranty expense related to this campaign. We continue to cooperate with the UK regulator, which continues to review the overall effectiveness of the modification program.

Guarantees

We have guarantee arrangements in a Brazilian subsidiary. For certain credit worthycreditworthy customers, the subsidiary guarantees customer lines of credit at commercial banks to support purchases following its normal credit policies. If


17


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 SeptemberJune 30, 20192020 and December 31, 2018,2019, the guaranteed amounts totaled $116162 million Brazilian reais (approximately $30 million at June 30, 2020) and $146577 million Brazilian reais (approximately $143 million at December 31, 2019), respectively. The fair value of these guarantees were nominal at SeptemberJune 30, 20192020 and December 31, 2018.2019. 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 facilities available under these lines for consolidated subsidiaries totaled $2.7 billion and $3.5$3.4 billion at SeptemberJune 30, 20192020 and $2.6 billion at December 31, 2018, respectively.2019. Our total short-term outstanding bank indebtedness under guarantees was $19 millionnominal at Septemberboth June 30, 20192020 and $21 million at December 31, 2018.2019.


17


(9)(8)    PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
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
2019
2018
2019
2018
2019
2018
Service cost
$1

$1

$1

$1

$2

$2
Interest cost
30

30

5

5

4

3
Expected return on plan assets
(44)
(43)
(6)
(8)



Amortization:











Actuarial loss
11

14

2

2




Prior service credit
(1)
(1)




(2)
(3)
Settlement and curtailment (gain) loss
10





1



4
Net periodic cost
$7

$1

$2

$1

$4

$6



Three Months Ended June 30,


United States
Pension Benefits

Foreign
Pension Benefits

Other Postretirement
Benefits
Millions of dollars
2020
2019
2020
2019
2020
2019
Service cost
$

$

$1

$2

$1

$1
Interest cost
24

31

5

6

3

4
Expected return on plan assets
(41)
(45)
(7)
(8)



Amortization:











Actuarial loss
16

12

3

2




Prior service credit








(2)
(3)
Settlement and curtailment (gain) loss








(4)

Net periodic benefit cost (credit)
$(1)
$(2)
$2

$2

$(2)
$2
                        
 Nine Months Ended September 30, Six Months Ended June 30,
 United States
Pension Benefits
 Foreign
Pension Benefits
 Other Postretirement
Benefits
 United States
Pension Benefits
 Foreign
Pension Benefits
 Other Postretirement
Benefits
Millions of dollars 2019 2018 2019 2018 2019 2018 2020
2019
2020
2019
2020
2019
Service cost $2
 $2
 $4
 $4
 $5
 $5
 $1
 $1
 $3
 $3
 $3
 $3
Interest cost 92
 89
 17
 17
 12
 10
 49
 62
 9
 12
 6
 8
Expected return on plan assets (133) (128) (21) (25) 
 
 (82) (89) (15) (15) 
 
Amortization: 
                      
Actuarial loss 35
 40
 6
 7
 
 
 31
 24
 6
 4
 
 
Prior service credit (2) (2) 
 
 (7) (2) 
 (1) 
 
 (4) (5)
Settlement and curtailment (gain) loss 10
 
 1
 (2) (7) 4
 
 
 
 1
 (4) (7)
Net periodic cost $4
 $1
 $7
 $1
 $3
 $17
Net periodic benefit cost (credit) $(1) $(3) $3
 $5
 $1
 $(1)

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 2019 2018 2019 2018 2019 2018
Operating profit (loss) $1
 $1
 $1
 $1
 $2
 $2
Interest and sundry (income) expense 6
 
 1
 
 2
 4
Net periodic benefit cost $7
 $1
 $2
 $1
 $4
 $6
            
 Nine Months Ended September 30, Three Months Ended June 30,
 United States
Pension Benefits
 Foreign
Pension Benefits
 Other Postretirement
Benefits
 United States
Pension Benefits
 Foreign
Pension Benefits
 Other Postretirement
Benefits
Millions of dollars 2019 2018 2019 2018 2019 2018 2020 2019 2020 2019 2020 2019
Operating profit (loss) $2
 $2
 $4
 $4
 $5
 $5
 $
 $
 $1
 $2
 $1
 $1
Interest and sundry (income) expense 2
 (1) 3
 (3) (2) 12
 (1) (2) 1
 
 (3) 1
Net periodic benefit cost $4
 $1
 $7
 $1
 $3
 $17
 $(1) $(2) $2
 $2
 $(2) $2



18


On September 15, 2018,
             
  Six Months Ended June 30,
  United States
Pension Benefits
 Foreign
Pension Benefits
 Other Postretirement
Benefits
Millions of dollars 2020 2019 2020 2019 2020 2019
Operating profit (loss) $1
 $1
 $3
 $3
 $3
 $3
Interest and sundry (income) expense (2) (4) 
 2
 (2) (4)
Net periodic benefit cost $(1) $(3) $3
 $5
 $1
 $(1)


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 will be contributed $358in company stock starting from May 2020.

Other Postretirement Benefit Plans
During the quarter, the Company announced changes to a postretirement medical benefit program for certain groups of active employees. These plan amendments are effective July 1, 2020 and reduce medical benefits for these pre-Medicare eligible and Medicare-eligible active employees who retire on or after July 1, 2020 and eliminate certain benefits effective January 1, 2024.
These plan amendments resulted in a reduction in the accumulated postretirement benefit obligation of approximately $45 million with a corresponding adjustment of $34 million in cash contributionsother comprehensive income, net of $11 million in deferred taxes as of June 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.
For additional information, see Note 11 to the pension trustConsolidated Condensed Financial Statements.
Subsequently, on July 15, 2020, the Company announced additional changes to a postretirement medical benefit program for our U.S. definedcertain groups of retirees. These plan amendments are effective January 1, 2021 and reduce reimbursement amounts available under certain postretirement medical benefit pension plans,programs and eliminate these benefits effective January 1, 2024 for these same retiree groups.
These additional plan amendments will result in a reduction in the accumulated postretirement benefit obligation of approximately $112 million with a corresponding adjustment of $84 million in other comprehensive income, net of $28 million in deferred taxes. This amount will be amortized as a reduction of future net periodic cost over approximately 3.4 years, which included $350 millionrepresents the future remaining service period of discretionary contributions. There have been no contributions to the pension trust for our U.S. defined benefit plan during the nine months ended September 30, 2019.eligible active employees.

(10)(9)    HEDGES AND DERIVATIVE FINANCIAL INSTRUMENTS
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. The accounting for changesIf the designated cash flow hedges are highly effective, the gains and losses are recorded in the fair value of a derivative depends on the intended useother comprehensive income (loss) and designation of the derivative instrument. Hedging ineffectiveness and a netsubsequently reclassified to earnings impact occur when the change in the fair value of the hedge does notto offset the change in the fair valueimpact of the hedged item. The ineffective portion ofitems when they occur. In the gain or loss isevent 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 presentedpresent in either other current assets/liabilities or other noncurrent assets/liabilities inon the Consolidated Condensed Balance Sheets and in other within cash used inprovided 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.


19


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 and commodity prices.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 of materials used in our manufacturing process. The objective of these hedges is to reduce the variability of cash flows associated with the forecasted purchase of commodities.
Foreign Currency Exchangeand 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, and intercompany loans. These forecasted cross-currency cash flows relate primarily to foreign currency denominated expenditures and intercompany financing agreements, royalty agreementsloans 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 thisthe economic hedge, we do not elect hedge accounting.
Commodity Price RiskWe 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 commodity derivative contracts on various commoditiescross-currency interest rate swaps to manage the price risk associated with forecasted purchasesour exposure relating to cross-currency debt. Notional amount of materials used in our manufacturing process. The objective of these hedges is to reduce the variability of cash flows associated with the forecasted purchase of commodities.


19


Interest Rate Riskoutstanding cross-currency interest rate swap agreements was $1,275 million at June 30, 2020 and December 31, 2019.
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, and 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 also may utilize a cross-currency interest rate swap agreement to manage our exposure relating to certain intercompany debt denominated in one foreign currency that will be repaid in another foreign currency. At September 30, 2019 there was a notional amount of $1,275 million of outstanding interest rate swap agreements. At December 31, 2018 there were 0 outstanding interest rate swap agreements. The increase in the notional amount of cross-currency interest rate swaps during the nine months ended September 30, 2019 was designed to mitigate the risk from newly created intercompany debt agreements.
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. There was a notional amount of $300 million of outstanding interest rate swap agreements at June 30, 2020 and December 31, 2019.
Net Investment Hedging
The following table summarizes our foreign currency denominated debt and foreign exchange forwards/options designated as net investment hedges at SeptemberJune 30, 20192020 and December 31, 2018:2019:
 Notional (Local) Notional (USD) Current Maturity Notional (Local) Notional (USD) Current Maturity
Instrument 2019 2018 2019 2018  2020 2019 2020 2019 
Senior note - 0.625% 500
 500
 $545
 $573
 March 2020 
 500
 $
 $569
 March 2020
Foreign exchange forwards/options MXN 7,200
 MXN 7,200
 $365
 $366
 August 2022 MXN7,200
 MXN7,200
 $312
 $382
 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 (OCI)(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 inon our Consolidated


20


Condensed Statements of Comprehensive Income (Loss).Income. As of SeptemberJune 30, 20192020 and December 31, 2018,2019, there was 0no ineffectiveness on hedges designated as net investment hedges.


20


Due to the volatility in the macroeconomic environment caused by the COVID-19 pandemic, we have evaluated and dedesignated a nominal amount of certain foreign exchange cash flow hedges in the first quarter of 2020. No amount was dedesignated during the three months ended June 30, 2020.
The following table summarizes our outstanding derivative contracts and their effects in our Consolidated Condensed Balance Sheets at SeptemberJune 30, 20192020 and December 31, 2018:2019:

 
Fair Value of
Type 
of
Hedge
(1)

 
 
Fair Value of


 


Notional Amount
Hedge Assets
Hedge Liabilities
Maximum Term (Months)
Notional Amount
Hedge Assets
Hedge Liabilities
Maximum Term (Months)
Millions of dollars
2019
2018
2019
2018
2019
2018

2019
2018
2020 2019
2020 2019
2020 2019

2020 2019
Derivatives accounted for as hedges(1)

























Commodity swaps/options
$235
 $174
 $7
 $4
 $24
 $10
 (CF) 36 21
Foreign exchange forwards/options
$3,093

$3,126

$113

$49

$43

$48

(CF/NI)
35
44
2,962
 3,177
 132
 94
 10
 84
 (CF/NI) 140 32
Commodity swaps/options
181

216

4

1

18

27

(CF)
21
30
Cross-currency swaps 1,275
 1,275
 90
 25
 
 23
 (CF) 104 110
Interest rate derivatives 1,275
 
 27
 
 3
 
 (CF) 113 0 300
 300
 
 6
 60
 
 (CF) 59 65
Total derivatives accounted for as hedges






$144

$50

$64

$75









$229

$129

$94

$117


Derivatives not accounted for as hedges

























Foreign exchange forwards/options
$2,952

$4,382

$46

$27

$22

$69

N/A
13
21
Commodity swaps/options
3

3









N/A
10
0
1
 1
 
 
 
 
 N/A 1 7
Foreign exchange forwards/options(2)

$3,719
 $3,182
 $41
 $15
 $41
 $22
 N/A 15 12
Total derivatives not accounted for as hedges






46

27

22

69









41

15

41

22


Total derivatives




$190

$77

$86

$144







$270

$144

$135

$139



Current




$97

$60

$48

$95







$141
 $55
 $51
 $61


Noncurrent






93

17

38

49









129
 89
 84
 78


Total derivatives




$190

$77

$86

$144







$270

$144

$135

$139



(1)
Derivatives accounted for as hedges are considered either cash flow (CF) or net investment (NI) hedges.
(2)
Foreign exchange forwards/options have increased due to hedging of a future intercompany loan.
(1) Derivatives accounted for as hedges are considered either cash flow (CF) or net investment (NI) hedges.



21


The following tables summarize the effects of derivative instruments and foreign currency debt designated as net investment hedges in our Consolidated Condensed Statements of Comprehensive Income (Loss) for the periods presented:
   Three Months Ended September 30,   Three Months Ended June 30,
 
Gain (Loss)
Recognized in OCI
(Effective Portion )
(2)
 
Gain (Loss)
Recognized in OCI
(Effective Portion )
(3)
Cash Flow Hedges - Millions of dollars 2019 2018 2020 2019
Commodity swaps/optionsCommodity swaps/options $24
 $(22)
Foreign exchange forwards/optionsForeign exchange forwards/options $79
 $11
Foreign exchange forwards/options (10) (4)
Commodity swaps/options (5) (19)
Cross-currency swapsCross-currency swaps (25) 
Interest rate derivativesInterest rate derivatives 54
 (2)Interest rate derivatives 5
 (5)
    
Net Investment HedgesNet Investment Hedges    Net Investment Hedges    
Foreign currencyForeign currency 55
 (14)Foreign currency (14) (20)
 $183
 $(24)  (20) (51)
        
 Three Months Ended September 30, Three Months Ended June 30,
 
Location of Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
 
Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
 
Location of Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
 
Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
Cash Flow Hedges - Millions of dollars 2019 2018 2020 2019
Commodity swaps/options (4)
 Cost of products sold $(10) $(6)
Foreign exchange forwards/options Net sales $(1) $(1) Net sales 3
 (1)
Foreign exchange forwards/options Cost of products sold 5
 1
 Cost of products sold 9
 6
Foreign exchange forwards/options Interest and sundry (income) expense 49
 33
 Interest and sundry (income) expense 1
 (4)
Commodity swaps/options (3)
 Cost of products sold (7) 1
Interest rate derivatives Interest expense 3
 
Cross-currency swaps Interest and sundry (income) expense (16) (8)
Interest rate derivatives Interest and sundry (income) expense 47
 
 Interest expense 
 3
   $96
 $34
   (13) (10)
        
 Three Months Ended September 30, Three Months Ended June 30,
 Location of Gain (Loss) Recognized on Derivatives not
Accounted for as Hedges
 
Gain (Loss) Recognized on Derivatives not
Accounted for as Hedges
 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 2019 2018 2020 2019
Foreign exchange forwards/options Interest and sundry (income) expense $53
 $(1) Interest and sundry (income) expense $(25) $(35)
(2) The tax impact of the cash flow hedges was $(8) million and $11 million for the three months ended September 30, 2019 and 2018, respectively. The tax impact of the net investment hedges was $(15) million and $4 million for the three months ended September 30, 2019 and 2018, respectively.
(3) Cost for commodity swaps/options are recognized in cost of sales as products are sold.
(3)
Change in gain (loss) recognized in OCI (effective portion) for the three months ended June 30, 2020 is primarily driven by currency fluctuations and declines in commodity prices and interest rates compared to the prior year. The tax impact of the cash flow hedges was $(4) million and $5 million for the three months ended June 30, 2020 and 2019, respectively. The tax impact of the net investment hedges was $7 million and $5 million for the three months ended June 30, 2020 and 2019, respectively.
(4)
Cost for commodity swaps/options are recognized in cost of sales as products are sold.


22


    
 Nine Months Ended September 30, Six Months Ended June 30,
 
Gain (Loss)
Recognized in OCI
(Effective Portion)
(4)
 
Gain (Loss)
Recognized in OCI
(Effective Portion)
(4)
Cash Flow Hedges - Millions of dollars 2019 2018 2020 2019
Commodity swaps/optionsCommodity swaps/options $(31) $
Foreign exchangeForeign exchange $103
 $87
Foreign exchange 95
 24
Commodity swaps/options (5) (34)
Cross-currency swapsCross-currency swaps 95
 
Interest rate derivativesInterest rate derivatives 32
 (2)Interest rate derivatives (66) (22)
    
Net Investment HedgesNet Investment Hedges    Net Investment Hedges    
Foreign currencyForeign currency 36
 (8)Foreign currency 53
 (19)
 $166
 $43
 $146
 $(17)
        
 Nine Months Ended September 30, Six Months Ended June 30,
 
Location of Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
 
Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
 
Location of Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
 
Gain (Loss) Reclassified from
OCI into Earnings
(Effective Portion)
Cash Flow Hedges - Millions of dollars 2019 2018 2020 2019
Commodity swaps/options (3)
 Cost of products sold $(17) $(9)
Foreign exchange forwards/options Net sales $(3) $(3) Net sales 3
 (2)
Foreign exchange forwards/options Cost of products sold 16
 (11) Cost of products sold 9
 11
Foreign exchange forwards/options Interest and sundry (income) expense 82
 89
 Interest and sundry (income) expense (31) 33
Commodity swaps/options (3)
 Cost of products sold (16) 24
Interest rate derivatives Interest expense 7
 (1)
Cross-currency swaps Interest and sundry (income) expense 11
 
Interest rate derivatives Interest and sundry (income) expense 47
 
 Interest expense 
 4
   $133
 $98
   $(25) $37
        
 Nine Months Ended September 30, Six Months Ended June 30,
 Location of Gain (Loss) Recognized on Derivatives not
Accounted for as Hedges
 
Gain (Loss) Recognized on Derivatives not
Accounted for as Hedges (2)
 Location of Gain (Loss) Recognized on Derivatives not
Accounted for as Hedges
 
Gain (Loss) Recognized on Derivatives not
Accounted for as Hedges (2)
Derivatives not Accounted for as Hedges - Millions of dollars 2019 2018 2020 2019
Foreign exchange forwards/options Interest and sundry (income) expense $47
 $(6) Interest and sundry (income) expense $17
 $(6)

(4) The tax impact of the cash flow hedges was $2 million and $11 million for the nine months ended September 30, 2019 and 2018, respectively. The tax impact of the net investment hedges was $(9) million and $3 million for the nine months ended September 30, 2019 and 2018,
(4)
Change in gain (loss) recognized in OCI (effective portion) for the six months ended June 30, 2020 is primarily driven by currency fluctuations and declines in commodity prices and interest rates compared to the prior year. The tax impact of the cash flow hedges was $(27) million and $10 million for the six months ended June 30, 2020 and 2019, respectively. The tax impact of the net investment hedges was $(17) million and $6 million for the six months ended June 30, 2020 and 2019, respectively.

For cash flow hedges, the amount of ineffectiveness recognized in interest and sundry (income) expense was nominal for the periods ended SeptemberJune 30, 20192020, and 2018.2019. There were no hedges designated as fair value for the periods ended SeptemberJune 30, 20192020, and 2018.2019. 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 $22$76 million at SeptemberJune 30, 2019.2020.
(11)(10)    FAIR VALUE MEASUREMENTS
Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions market participants would use in pricing an asset or liability. Assets and liabilities measured at fair value are based on a market valuation approach using prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. As a basis for considering such assumptions, a three-tiered fair value hierarchy is established, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in 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.


23


The non-recurring fair values represent only those assets whose carrying values were adjusted to fair value during the reporting period. See Note 17 to the Consolidated Condensed Financial Statements for additional information on the goodwill and other intangible impairment during the second quarter of 2018.

The following table summarizes the valuation of our assets and liabilities measured at fair value on a recurring basis at SeptemberJune 30, 20192020 and December 31, 20182019 are as follows:






Fair Value




Fair Value
Millions of dollars
Total Cost Basis
Level 1
Level 2
Total
Total Cost Basis
Level 1(2)

Level 2
Total
Measured at fair value on a recurring basis:
2019
2018
2019
2018
2019
2018
2019
2018
2020 2019
2020 2019
2020
2019
2020 2019
Short-term investments(1)

$620

$578

$1

$5

$619

$573

$620

$578

$2,027

$1,308

$1,413

$398

$614

$910

$2,027

$1,308
Net derivative contracts








104

(67)
104

(67)








135

5

135

5
Available for sale investments


7



12







12
(1)Short-term investments are primarily comprised of money market funds and highly liquid, low risk investments less than 90 days.
The following table summarizes the valuation of our assets measured at fair value on a non-recurring basis as of June 30, 2018:
  Fair Value
Millions of dollars Level 3
Measured at fair value on a non-recurring basis: 2018
Assets:  
Goodwill (2)
 $315
Indefinite-lived intangible assets (3)
 384
Definite-lived intangible assets (4)
 
Total level 3 assets $699

(2) Goodwill with a carrying amount of $894 million was written down to a fair value of $315 million resulting in a goodwill impairment charge of $579 million during the second quarter of 2018.

(3) Indefinite-lived intangible assets with a carrying amount of approximately $492 million were written down to a fair value of $384 million resulting in an impairment charge of $108 million during the second quarter of 2018.

(4) A definite-lived intangible asset with a carrying amount of approximately $60 million was written down to a fair value of $0 million resulting in an impairment charge of $60 million during the second quarter of 2018.

Goodwill

We have 4 reporting units for which we assess for impairment. We use a discounted cash flow analysis to determine fair value and consistent projected financial information in our analysis of goodwill and intangible assets. The discounted cash flow analysis for the quantitative impairment assessment for the EMEA reporting unit during the second quarter of 2018 utilized a discount rate of 12%. Based on the quantitative assessment performed, the carrying value of the EMEA reporting unit exceeded its fair value resulting in a goodwill impairment charge of $579 million during the second quarter of 2018.

Other Intangible Assets

The relief-from-royalty method for the quantitative impairment assessment for other intangible assets in the EMEA reporting unit during the second quarter of 2018 utilized discount rates ranging from 11.5% - 16% and royalty rates ranging from 1.5% - 3.5%. Based on the quantitative impairment assessment performed, the carrying value of certain other intangible assets, primarily the Indesit and Hotpoint* brands, exceeded their fair value, resulting in an impairment charge of $168 million during the second quarter of 2018.

See Note 17 to the Consolidated Condensed Financial Statements for additional information.




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


24


Short-term investments are primarily comprised of money market funds and highly liquid, low risk investments with initial maturities less than 90 days.
(2)
Increase in level 1 investments reflect invested proceeds from the credit facility borrowings.

South Africa Business Disposal

During the second quarter of 2019, we entered into an agreement to sell our South Africa business. At the time of the agreement we classified this disposal group as held for sale and recorded it at fair value because it was lower than the carrying amount. Fair value was estimated based on the cash purchase price (Level 2 input) and we recorded an impairment charge of $35 million for the write-down of the assets to the fair value of $5 million. During the third quarter of 2019, we completed the sale of our South Africa business and adjusted the loss on disposal based on the carrying amount at the closing date. The adjustment was not material to the Consolidated Condensed Financial StatementsStatements.

See Note 1615 to the Consolidated Condensed Financial Statements for additional information.

Naples Manufacturing Plant Restructuring Action

During the third quarter of 2019, we entered into a preliminary purchase agreement with a third-party purchaser for the reconversion of our Naples, Italy manufacturing plant. We recorded an impairment charge of $25 million for the write-down of certain assets to their fair value of $0. Fair value was based on a feasibility study considering future use internally and marketability externally (Level 2 input). These assets were fully impaired because they were determined to have no alternative use or salvage value and insufficient cash flows to support recoverability of the carrying amount.

See Note 13 to the Consolidated Condensed Financial Statements for additional information.

Other Fair Value Measurements
The fair value of long-term debt (including current maturities) was $4.97$5.58 billion and $4.17$5.00 billion at SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively, and was estimated using discounted cash flow analysis based on incremental borrowing rates for similar types of borrowing arrangements (Level 2 input).


2524


(12)(11)    STOCKHOLDERS' EQUITY
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
Interests
Balances, December 31, 2019 $4,118
 $7,870
 $(2,618) $(2,169) $112
 $923
Comprehensive income            
Net earnings 147
 152
 
 
 
 (5)
Other comprehensive income (95) 
 (97) 
 
 2
Comprehensive income 52
 152
 (97) 
 
 (3)
Stock issued (repurchased) (115) 
 
 (115) 
 
Dividends declared (75) (75) 
 
 
 
Balances, March 31, 2020 3,980
 7,947
 (2,715) (2,284) 112
 920
Comprehensive income            
Net earnings 25
 35
 
 
 
 (10)
Other comprehensive income (16) 
 (16) 
 
 
Comprehensive income 9
 35
 (16) 
 
 (10)
Stock issued (repurchased) 19
 
 
 19
 
 
Dividends declared (83) (80) 
 
 
 (3)
Balances, June 30, 2020 3,925
 7,902
 (2,731) (2,265) 112
 907
    Whirlpool Stockholders' Equity  
  Total 
Retained
Earnings
 
Accumulated Other
Comprehensive Income (Loss)
 
Treasury Stock/
Additional Paid-
in-Capital
 
Common
Stock
 
Non-
Controlling
Interests
Balances, December 31, 2018 $3,205
 $6,933
 $(2,695) $(2,059) $112
 $914
Comprehensive income            
Net earnings 474
 471
 
 
 
 3
Other comprehensive income 93
 
 93
 
 
 
Comprehensive income 567
 471
 93
 
 
 3
Adjustment to beginning retained earnings (1)
 61
 61
 
 
 
 
Stock issued (repurchased) (40) 
 
 (40) 
 
Dividends declared (74) (74) 
 
 
 
Balances, March 31, 2019 $3,719
 $7,391
 $(2,602) $(2,099) $112
 $917
Comprehensive income            
Net earnings 72
 67
 
 
 
 5
Other comprehensive income (56) 
 (55) 
 
 (1)
Comprehensive income 16
 67
 (55) 
 
 4
Stock issued (repurchased) 13
 
 
 13
 
 
Dividends declared (81) (78) 
 
 
 (3)
Balances, June 30, 2019 3,667
 7,380
 (2,657) (2,086) 112
 918
    Whirlpool Stockholders' Equity  
  Total 
Retained
Earnings
 
Accumulated Other
Comprehensive Income (Loss)
 
Treasury Stock/
Additional Paid-
in-Capital
 
Common
Stock
 
Non-
Controlling
Interests
Balances, December 31, 2018 $3,205
 $6,933
 $(2,695) $(2,059) $112
 $914
Comprehensive income            
Net earnings 474
 471
 
 
 
 3
Other comprehensive income 93
 
 93
 
 
 
Comprehensive income 567
 471
 93
 
 
 3
Adjustment to beginning retained earnings (1)
 61
 61
 
 
 
 
Stock issued (repurchased) (40) 
 
 (40) 
 
Dividends declared (74) (74) 
 
 
 
Balances, March 31, 2019 3,719
 7,391
 (2,602) (2,099) 112
 917
Comprehensive income            
Net earnings 72
 67
 
 
 
 5
Other comprehensive income (56) 
 (55) 
 
 (1)
Comprehensive income 16
 67
 (55) 
 
 4
Stock issued (repurchased) 13
 
 
 13
 
 
Dividends declared (81) (78) 
 
 
 (3)
Balances, June 30, 2019 3,667
 7,380
 (2,657) (2,086) 112
 918
Comprehensive income            
Net earnings 364
 358
 
 
 
 6
Other comprehensive income 55
 
 54
 
 
 1
Comprehensive income 419
 358
 54
 
 
 7
Stock issued (repurchased) (54) 
 
 (54) 
 
Dividends declared (83) (79) 
 
 
 (4)
Balances, September 30, 2019 $3,949
 $7,659
 $(2,603) $(2,140) $112
 $921

(1) Increase to beginning retained earnings is due to the adoption of ASU 2016-02 [increase of approximately $61 million (net of tax)]. For additional information regarding the adoption of this accounting standard, see Notes 1 and 3 to the Consolidated Condensed Financial Statements.
(1)
Increase to beginning retained earnings is due to the adoption of ASU 2016-02 [increase of approximately $61 million (net of tax)].


26


    Whirlpool Stockholders' Equity  
  Total 
Retained
Earnings
 
Accumulated Other
Comprehensive Income (Loss)
 
Treasury Stock/
Additional Paid-
in-Capital
 
Common
Stock
 
Non-
Controlling
Interests
Balances, December 31, 2017 $5,128
 $7,352
 $(2,331) $(935) $112
 $930
Comprehensive income            
Net earnings 94
 94
 
 
 
 
Other comprehensive income 5
 
 4
 
 
 1
Comprehensive income 99
 94
 4
 
 
 1
Adjustment to beginning retained earnings (2)
 72
 72
 
 
 
 
Adjustment to beginning accumulated other comprehensive loss (17) 
 (17) 
 
 
Stock issued (repurchased) 16
 
 
 16
 
 
Dividends declared (78) (78) 
 
 
 
Balances, March 31, 2018 5,220
 7,440
 (2,344) (919) 112
 931
Comprehensive income            
Net earnings (639) (657) 
 
 
 18
Other comprehensive income (163) 
 (162) 
 
 (1)
Comprehensive income (802) (657) (162) 
 
 17
Stock issued (repurchased) (990) 
 
 (990) 
 
Dividends declared (84) (82) 
 
 
 (2)
Balances, June 30, 2018 3,344
 6,701
 (2,506) (1,909) 112
 946
Comprehensive income            
Net earnings 216
 210







6
Other comprehensive income (86) 

(84)




(2)
Comprehensive income 130
 210
 (84) 
 
 4
Stock issued (repurchased) (90) 



(90)



Dividends declared (76) (74)






(2)
Balances, September 30, 2018 $3,308
 $6,837
 $(2,590) $(1,999) $112
 $948

(2) Increase to beginning retained earnings is due to the following accounting standard adoptions: ASU 2014-09 [increase of approximately $0.4 million], ASU 2016-01 [increase of approximately $17 million] and ASU 2016-16 [increase of approximately $56 million].


2725


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,
  2019 2018
Millions of dollars Pre-taxTax EffectNet Pre-taxTax EffectNet
Currency translation adjustments (3)
 $35
$(15)$20
 $(82)$4
$(78)
Cash flow hedges 32
(8)24
 (44)11
(33)
Pension and other postretirement benefits plans 17
(6)11
 32
(7)25
Other comprehensive income (loss) 84
(29)55
 (94)8
(86)
Less: Other comprehensive income (loss) available to noncontrolling interests 1

1
 (2)
(2)
Other comprehensive income (loss) available to Whirlpool $83
$(29)$54
 $(92)$8
$(84)
  Three Months Ended June 30,
  2020 2019
Millions of dollars Pre-taxTax EffectNet Pre-taxTax EffectNet
Currency translation adjustments (2)
 $(61)$7
$(54) $(54)5
$(49)
Cash flow hedges 7
(3)4
 (21)5
(16)
Pension and other postretirement benefits plans 46
(12)34
 11
(2)9
Other comprehensive income (loss) (8)(8)(16) (64)8
(56)
Less: Other comprehensive income (loss) available to noncontrolling interests 


 (1)
(1)
Other comprehensive income (loss) available to Whirlpool $(8)$(8)$(16) $(63)$8
$(55)
         
  Six Months Ended June 30,
  2020
2019
Millions of dollars Pre-taxTax EffectNet Pre-taxTax EffectNet
Currency translation adjustments(2)
 $(233)$(17)$(250) $38
$6
$44
Cash flow hedges 118
(26)92
 (35)10
(25)
Pension and other postretirement benefits plans 62
(15)47
 22
(4)18
Other comprehensive income (loss) (53)(58)(111) 25
12
37
Less: Other comprehensive income (loss) available to noncontrolling interests 2

2
 (1)
(1)
Other comprehensive income (loss) available to Whirlpool $(55)$(58)$(113) $26
$12
$38

(2)
Currency translation adjustments includes net investment hedges.
         
  Nine Months Ended September 30,
  2019
2018
Millions of dollars Pre-taxTax EffectNet Pre-taxTax EffectNet
Currency translation adjustments(3)
 $73
$(9)$64
 $(271)$3
$(268)
Cash flow hedges (3)2
(1) (47)11
(36)
Pension and other postretirement benefits plans 39
(10)29
 82
(22)60
Other comprehensive income (loss) 109
(17)92
 (236)(8)(244)
Less: Other comprehensive income (loss) available to noncontrolling interests 


 (2)
(2)
Other comprehensive income (loss) available to Whirlpool $109
$(17)$92
 $(234)$(8)$(242)
`(3) 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 ninesix months ended SeptemberJune 30, 2019:2020:
 Three Months Ended Nine Months Ended  Three Months Ended Six Months Ended 
Millions of dollars (Gain) Loss Reclassified (Gain) Loss Reclassified Classification in Earnings (Gain) Loss Reclassified (Gain) Loss Reclassified Classification in Earnings
Pension and postretirement benefits, pre-tax 21
 43
 Interest and sundry (income) expense 13
 29
 Interest and sundry (income) expense



2826


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, Three Months Ended June 30, Six Months Ended June 30,
Millions of dollars and shares 2019
2018 2019 2018 2020
2019 2020 2019
Numerator for basic and diluted earnings per share - Net earnings (loss) available to Whirlpool $358
 $210
 $896
 $(353) $35
 $67
 $187
 $538
Denominator for basic earnings per share - weighted-average shares 63.6
 64.5
 63.8
 68.2
 62.4
 63.8
 62.6
 63.9
Effect of dilutive securities - share-based compensation 0.6
 0.8
 0.5
 
 0.3
 0.5
 0.4
 0.5
Denominator for diluted earnings per share - adjusted weighted-average shares 64.2
 65.3
 64.3
 68.2
 62.7
 64.3
 63.0
 64.4
Anti-dilutive stock options/awards excluded from earnings per share 1.3
 1.7
 1.5
 1.9
 2.3
 1.5
 2.1
 1.5

Share Repurchase Program
On July 25, 2017, our Board of Directors authorized a share repurchase program of up to $2 billion. During the ninesix months ended SeptemberJune 30, 2019,2020, we repurchased 718,421902,000 shares under this share repurchase program at an aggregate price of approximately $100 million.121 million, all of which were repurchased in the first quarter of 2020. At SeptemberJune 30, 20192020, there were approximately $700531 million in remaining funds authorized under this program.
Share repurchases are made from time to time on the open market as conditions warrant. Given the current level of uncertainty surrounding the COVID-19 pandemic, we have decided to temporarily suspend our share repurchase program to protect liquidity in the current environment. The program does not obligate us to repurchase any of our shares and it has no expiration date.
(13)(12)    RESTRUCTURING CHARGES
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:plans.
In 2015, weOn June 26, 2020, the Company committed to a restructuringworkforce reduction plan to integrate our Italian legacy operations with those of Indesit. The industrial restructuring plan which was approved by the relevant labor unions and signed by the Italian government in 2015, provided for the closure or repurposing of certain manufacturing facilities and headcount reductions at other facilities. In addition, the restructuring plan provided for headcount reductions in the salaried employee workforce. TheseUnited States, as part of the Company’s continued cost reduction efforts. The workforce reduction plan includes a voluntary retirement program and involuntary severance actions are completewhich were effective as of September 30, 2019.the end of the second quarter of 2020.  
In 2018, we announced
The Company expects the actions in EMEA to reduce fixed costs by $50 million. The initiatives primarily include headcount reductions throughout the EMEA region. Additionally, we exited domestic sales operations in Turkey. We expect these actions will be substantially complete in 2019.2020. As such, the Company estimates that it will incur a total of September 30, 2019, approximately $21$95 million remainsin employee termination costs, and expects substantially all of the costs to be expensed.

result in cash expenditures in 2020. Additionally, the Company has committed to other global fixed cost actions which did not have material impact in the second quarter of 2020.  
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. FinalizationIn 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 transaction is subjectplant. Our preliminary agreement to satisfaction of certain conditions precedent, including consultationsell the plant to a third-party purchaser terminated in accordance with its terms in March 2020. We intend to cease production in the governmentplant and unions.

exit the facility in 2020 as previously disclosed.
In connection with this action, we have incurred approximately $25$43 million in asset impairment costs, and approximately $4$12 million in other associated costs duringand $6 million in employee-related costs through June 30, 2020. As of June 30, 2020, we continue to expect estimated total costs of $135 million and cash expenditures of $87 million. We estimate that the nine months ended September 30, 2019. We anticipate that we will incurremaining costs of approximately $19$74 million, including approximately $46 million in employee-related costs and approximately $79$28 million in other associated costs, will be substantially incurred in connection with this action. We estimate2020. The Company also believes that $98 millionsubstantially all of the estimated $127$87 million total costs will result in future cash expenditures. We estimate that approximately $122 million of the $127 million total costs will be incurred in 2019 and that approximately $73 million of the estimated $98 million total cash expenditures will occur in 2019.2020. We expect these actions to be completedsubstantially complete in 2020.




2927


In 2018, we announced actions in EMEA to reduce fixed costs by $50 million. The initiatives primarily include headcount reductions throughout the EMEA region. Additionally, we exited domestic sales operations in Turkey. These actions were substantially complete as of March 31, 2020.
The following table summarizes thecontains a subset of our restructuring actions above for the ninesix months ended SeptemberJune 30, 20192020 and the total costs to date for each plan:
Millions of dollars2019Total
Indesit$9
$237
EMEA fixed cost actions$45
$59
Naples$29
$29
Millions of dollars2020Total
North America Fixed Cost Actions$88
$88
EMEA Fixed Cost Actions7
84
EMEA Naples Facility Closure7
61
Other Global Fixed Cost Actions7
7

The following table summarizes the changes to our restructuring liability during the ninesix months ended SeptemberJune 30, 2019:
2020:
Millions of dollarsDecember 31, 2018Charges to EarningsCash PaidNon-Cash and OtherSeptember 30, 2019December 31, 2019Charges to EarningsCash PaidNon-Cash and OtherJune 30, 2020
Employee termination costs$84
$66
$(101)$
$49
$57
$106
$(34)$
$129
Asset impairment costs
56
(7)(41)8
8



8
Facility exit costs(9)15
(19)
(13)
Other exit costs21
5
(4)(3)19
12
17
(14)(1)14
Total$96
$142
$(131)$(44)$63
$77
$123
$(48)$(1)$151

The following table summarizes the restructuring charges by operating segment for the period presented:
Nine Months EndedSix Months Ended
Millions of dollarsSeptember 30, 2019June 30, 2020
North America$
$70
EMEA132
22
Latin America7
5
Asia3
7
Corporate / Other
19
Total$142
$123





3028


(14)(13)    INCOME TAXES
Income tax expense was $31318 million and $311$89 million for the three and ninesix months ended SeptemberJune 30, 2019,2020, respectively, compared to income tax expense (benefit) of $7$130 million and $52$(2) million in the same periodsperiod of 2018.2019. For the three months ended SeptemberJune 30, 2019,2020, the increasedecrease in effective tax rateexpense from the prior period is due primarily to the impact of the sale of Embraco, prior period adjustmentsa decrease in valuation allowances, lower earnings and related tax expense, and impact of tax law changes in enacted tax rates.the prior year. For the ninesix months ended SeptemberJune 30, 2019,2020, the increase in effective tax rateexpense from the prior period is due to tax expense onvaluation allowance releases in the sale of Embraco, prior period, adjustments , non-deductible impairments and government payments, partially offset by valuation allowance releases. Totalhigher level of earnings and related tax expense related to the sale of Embraco was $150 million and $161 million for the three and nine months ended September 30, 2019, respectively, of which approximately $107 million was calculated based on the US statutory tax rate.expense.
For additional information on prior period adjustments, see Note 1 to the Consolidated Condensed Financial Statements.
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,
Three Months Ended June 30,
Six Months Ended June 30,
Millions of dollars
2019
2018
2019
2018
2020
2019
2020 2019
Earnings (loss) before income taxes
$677

$223

$1,221

$(277)
Earnings before income taxes
$43

$202

$261

$544

Income tax expense computed at United States statutory tax rate
142

47

256

(58) 9
 42
 55
 114
Valuation allowances
1

4

(195)
43
 5
 39
 6
 (196)
U.S. transition tax and prior period adjustments 56
 78
 56
 78
Audits and settlements 7
 
 (6) 
 5
 (13) 17
 (13)
U.S. foreign income items, net of credits
8

(108)
19

(146) (2) 4
 1
 11
Changes in enacted tax rates 41
 (54) 66
 (54) 
 25
 
 25
Non deductible impairments 
 
 
 138
Non deductible government payments 
 
 
 37
Sale of Embraco 43
 
 54
 
Other
15

40

61

14
 1
 33
 10
 57
Income tax expense computed at effective worldwide tax rates
$313

$7

$311

$52
Income tax expense (benefit) computed at effective worldwide tax rates
$18

$130

$89

$(2)

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.necessary.
Valuation Allowances
We routinely review the future realization of deferred tax assets based on projected future reversal of taxable temporary differences, available tax planning strategies and projected future taxable income. We have reduced the valuation allowance to reflect the estimated amount of certain deferred tax assets associated with net operating losses and other deferred tax assets we believe are now more-likely-than-not to be realized.  During the first quarter of 2019, upon completion of ourwe completed a $700 million bond offering we usedfor which the proceeds were used to refinance and recapitalize various entities in the EMEA region. Based upon our existing transfer pricing policies, these actions are expectedprojected to provide sufficient future taxable income to realize the deferred tax assets. In addition, theseThese actions injected additional internal capital into certain EMEA entities to meet local country capitalization requirements, and weas well as repaid all outstanding borrowings under the Whirlpool EMEA Finance Term Loan, in advance of the recently completed Embraco divestiture. Accordingly,Loan. As a result, we reduced the valuation allowance by $235 million during the first quarter of 2019.
Other Income Tax Matters
During its examination of Whirlpool’s 2009 U.S. federal income tax return, the second quarter of 2019, we increased our total valuation allowanceIRS asserted that income earned by $39 million relateda 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 intends to appeal the US Tax Court decision to the exitUnited States Sixth Circuit Court of our Turkey domestic sales operationsAppeals. The Company believes that it will be successful upon appeal and salehas not recorded any impact of our South Africa business and tax planning strategies that were deemed to no longer be prudent.the US Tax Court’s decision in its consolidated financial statements.


3129


(15)(14)    SEGMENT INFORMATION
Our reportable segments are based upon geographical region and are defined as North America, EMEA, Latin America and Asia. These regions also represent our operating segments. Each segment manufactures home appliances and related components, but serves strategically different marketplaces. The chief operating decision maker evaluates performance based on each segment's earnings (loss) before interest and taxes (EBIT), which we define as operating profit less interest and sundry (income) expense and excluding restructuring costs, asset impairment charges and certain other items that management believes are not indicative of the region's ongoing performance, if any. Total assets by segment are those assets directly associated with the respective operating activities. The "Other/Eliminations" column primarily includes corporate expenses, assets and eliminations, as well as 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 except compressor sales out of Latin America through June 30, 2019, which were included in Other/Eliminations.


3230


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


Three Months Ended September 30,
Three Months Ended June 30,

OPERATING SEGMENTS
OPERATING SEGMENTS

Millions of dollars

North
America

EMEA
Latin
America

Asia
Other/
Eliminations
Total
Whirlpool


North
America

EMEA
Latin
America

Asia
Other / EliminationsTotal
Whirlpool
Net sales



















2020
$2,501

$836

$434

$271

$
$4,042
2019
$3,010

$1,090

$632

$358

$1
$5,091

2,858
 1,032
 888
 430
 (22)5,186
2018
2,994

1,134

878

339

(19)5,326
Intersegment sales










         
2020
$47
 $18
 $264
 $95
 $(424)$
2019
70

20

331

87

(508)

45
 22
 342
 87
 (496)
2018
66

19

371

100

(556)
Depreciation and amortization

















         
2020
$43
 $43
 $15
 $16
 $16
$133
2019
$45

$46

$17

$17

$16
$141

55
 58
 13
 17
 17
160
2018
46

44

29

17

16
152
EBIT










         
2020
$316
 $(66) $11
 $(18) $(151)$92
2019
387

(4)
29

9

301
722

353
 (16) 56
 15
 (154)254
2018
360

(39)
61

13

(120)275
Total assets

















         
September 30, 2019
$8,004

$9,345

$4,062

$2,524

$(5,529)$18,406
December 31, 2018
7,161

7,299

4,745

2,636

(3,494)18,347
June 30, 2020
$7,318
 $10,407
 $3,643
 $2,316
 $(5,008)$18,676
December 31, 2019
7,791
 9,450
 4,226
 2,581
 (5,167)18,881
Capital expenditures










         
2020
$25
 $18
 $12
 $9
 $9
$73
2019
35

24

23

17

10
109

43
 17
 21
 19
 12
112
2018
46

36

24

16

14
136
                    


Nine Months Ended September 30,
Six Months Ended June 30,

OPERATING SEGMENTS
OPERATING SEGMENTS

Millions of dollars

North
America

EMEA
Latin
America

Asia
Other/
Eliminations
Total
Whirlpool


North America
EMEA
Latin America
Asia
Other / EliminationsTotal Whirlpool
Net sales



















2020
$5,041
 $1,715
 $1,052
 $559
 $
$8,367
2019
$8,403

$3,126

$2,395

$1,159

$(46)$15,037

5,393
 2,036
 1,763
 801
 (47)9,946
2018
8,292

3,298

2,628

1,215

(56)15,377
Intersegment sales










         
2020
$120
 $38
 $550
 $158
 $(866)$
2019
181

63

1,010

258

(1,512)

111
 43
 679
 171
 (1,004)
2018
203

83

998

259

(1,543)
Depreciation and amortization

















         

2020
$90
 $81
 $31
 $33
 $33
$268
2019
$149

$147

$48

$51

$48
$443

104
 101
 31
 34
 32
302
2018
142

158

93

51

47
491
EBIT










         
2020
$619
 $(81) $42
 $(34) $(193)$353
2019
1,052

(41)
130

31

197
1,369

665
 (37) 101
 22
 (104)647
2018
979

(91)
151

75

(1,250)(136)
Total assets

















         

September 30, 2019
$8,004

$9,345

$4,062

$2,524

$(5,529)$18,406
December 31, 2018
7,161

7,299

4,745

2,636

(3,494)18,347
June 30, 2020
$7,318
 $10,407
 $3,643
 $2,316
 $(5,008)$18,676
December 31, 2019
7,791
 9,450
 4,226
 2,581
 (5,167)18,881
Capital expenditures










         
2020
$53
 $32
 $26
 $23
 $21
$155
2019
113

51

68

46

28
306

78
 27
 45
 29
 18
197
2018
110

76

55

43

46
330






33


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


31


 Three Months Ended September 30, Nine Months Ended September 30,
in millions20192018 20192018
Items not allocated to segments:     
Restructuring costs$(56)$(28) $(142)$(216)
Brazil indirect tax credit

 180

Product warranty and liability expense(119)
 (131)
(Gain) loss on sale and disposal of businesses516

 437

French antitrust settlement

 
(114)
Impairment of goodwill and intangibles

 
(747)
Trade customer insolvency
(29) 
(29)
Corporate expenses and other(40)(63) (147)(144)
Total other/eliminations$301
$(120) $197
$(1,250)

 Three Months Ended June 30, Six Months Ended June 30,
in millions20202019 20202019
Items not allocated to segments:     
Restructuring costs$(118)$(60) $(123)$(86)
Divestiture related transition costs
(11) 
(17)
Brazil indirect tax credit
53
 
180
Legacy product warranty and liability expense
(12) 
(12)
Loss on disposal of businesses
(79) 
(79)
Corporate expenses and other(33)(45) (70)(90)
Total other/eliminations$(151)$(154) $(193)$(104)
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, Three Months Ended June 30, Six Months Ended June 30,
in millions 20192018 20192018 20202019 20202019
Operating profit $693
$299
 $1,147
$(30) $77
$191
 $337
$454
Interest and sundry (income) expense (29)24
 (222)106
 (15)(63) (16)(193)
Total EBIT $722
$275
 $1,369
$(136) $92
$254
 $353
$647
Interest expense 45
52
 148
141
 49
52
 92
103
Income tax expense 313
7
 311
52
 18
130
 89
(2)
Net earnings (loss) $364
$216
 $910
$(329) $25
$72
 $172
$546
Less: Net earnings available to noncontrolling interests 6
6
 14
24
 (10)5
 (15)8
Net earnings (loss) available to Whirlpool $358
$210
 $896
$(353) $35
$67
 $187
$538

(16)(15)    DIVESTITURES AND HELD FOR SALE
Embraco Sale Transaction

On April 23, 2018, our Board of Directors approved the sale of Embraco and we subsequently entered into an agreement to sell the compressor business for a cash purchase price of $1.08 billion, subject to customary adjustments including for indebtedness, cash and working capital at closing.

On July 1, 2019, we completed the sale of Embraco and received cash proceeds of $1.1 billion inclusive of anticipated cash on hand at the time of closing. With the proceeds from this transaction, we repaid the outstanding term loan amount of approximately $1 billion as required under the April 23, 2018 Term Loan Agreement with Citibank, N.A., as Administrative Agent.
 
In connection with the sale, we recorded a pre-tax gain, net of transaction and other costs, of $511 million ($350 million net of taxes) during the three and ninetwelve months ended September 30,December 31, 2019. The gain calculation is subject to change based on finalization of the amounts for working capital and other customary post-closing adjustments.
Embraco was reported within our Latin America reportable segment and met the criteria for held for sale accounting through the closing date. The operations of Embraco did not meet the criteria to be presented as discontinued operations. The assets and liabilities of Embraco were de-consolidated as of the closing date and there are no remaining carrying amounts in the Consolidated Condensed Balance Sheets as of September 30, 2019.




34



The carrying amounts of the major classes of Embraco's assets and liabilities at September 30, 2019 and December 31, 2018 include the following:

Millions of dollars
September 30, 2019
December 31, 2018
Accounts receivable, net of allowance of $0 and $8, respectively
 198
Inventories
 165
Prepaid and other current assets
 42
Property, net of accumulated depreciation of $0 and $616, respectively
 364
Right of use assets
 
Other noncurrent assets
 49
Total assets$
 $818
    
Accounts payable$
 $361
Accrued expenses
 27
Accrued advertising and promotion
 12
Other current liabilities
 55
Lease liabilities
 
Other noncurrent liabilities
 34
Total liabilities$
 $489

The following table summarizes Embraco's earnings before income taxes for the periods presented:
 Three Months Ended September 30, Nine Months Ended September 30,
Millions of dollars2019 2018 2019 2018
Earnings before income taxes$
 $21
 $47
 $37

2019.
South Africa Business Disposal

On June 28, 2019, we entered into an agreement to sell our South Africa operations for a cash purchase price of $5 million, subject to customary adjustments at closing.



32


On September 5, 2019, we completed the sale of our South Africa operations. In connection with the sale, we finalized the loss on disposal of $63 million which is recorded in the nine monthsyear ended September 30,December 31, 2019. The loss includes a charge of $29 million for the write-down of the assets of the disposal group to fair value and $34 million of cumulative foreign currency translation adjustments included in the carrying amount of the disposal group to calculate the impairment.

The South Africa business was reported within our EMEA reportable segment and met the criteria for held for sale accounting through the closing date. The operations of South Africa did not meet the criteria to be presented as discontinued operations.
For additional information seeSee Note 1110 to the Consolidated Condensed Financial Statements.Statements for additional information.
Divestiture of Turkey Domestic Sales Operations
For the ninesix months ended SeptemberJune 30, 2019, we incurred approximately $11 million of divestiture related costs, primarily inventory liquidation costs, related to the exit from our domestic sales operations in Turkey.
For additional information, see Note 1312 to the Consolidated Condensed Financial Statements.






35


(17) GOODWILL AND OTHER INTANGIBLES

Goodwill

In connection with the preparation of our Consolidated Condensed Financial Statements for three months ended June 30, 2018, we identified indicators of goodwill impairment for our EMEA reporting unit based on our qualitative assessment, which required us to complete an interim quantitative impairment assessment. The primary indicator of impairment for our EMEA reporting unit was the segment's continuing negative financial performance in 2018 that did not improve as anticipated, primarily driven by significant volume loss. The actual operating results for the three months ended June 30, 2018 were significantly lower than forecasted resulting in weak business performance. While the Indesit integration activities were substantially complete, as of the impairment date, the operating and macro-environment in the EMEA region continued to be very challenging and had not improved as anticipated. While our commercial transformation and supply chain initiatives were progressing, as of the impairment determination date, progress on market share recovery was slower than previously anticipated and the business had been impacted by raw material inflation and currency headwinds.

In performing our quantitative assessment of goodwill during the second quarter of 2018, we estimated the reporting unit's fair value under an income approach using a discounted cash flow model. The income approach used the reporting unit's projections of estimated operating results and cash flows that were discounted using a market participant discount rate based on the weighted-average cost of capital. The main assumptions supporting the cash flow projections included revenue growth, EBIT margins and the discount rate. The financial projections reflect management's best estimate of economic and market conditions over the projected period including forecasted revenue growth, EBIT margins, tax rate, capital expenditures, depreciation and amortization, changes in working capital requirements and the terminal growth rate.

Based on our interim quantitative impairment assessment as of June 30, 2018, the carrying value of the EMEA reporting unit exceeded its fair value by $579 million and we recorded a goodwill impairment charge in this amount in 2018.

Other Intangible Assets

In connection with the preparation of our Consolidated Condensed Financial Statements for three months ended June 30, 2018, we identified indicators of impairment associated with other intangible assets in our EMEA reporting unit based on our qualitative assessment, which required us to complete an interim quantitative impairment assessment. The primary indicator of impairment was the continuing decline in revenue from weaker volumes through the six months ended June 30, 2018 that did not improve as anticipated. The actual operating results for the three months ended June 30, 2018 were significantly lower than forecasted.

In performing our quantitative assessment of other intangible assets, primarily brands, we estimate the fair value using the relief-from-royalty method which requires assumptions related to projected revenues from our long-range plans; assumed royalty rates that could be payable if we did not own the brand; and a market participant discount rate based on a weighted-average cost of capital.

Based on our interim quantitative impairment assessment as of June 30, 2018, the carrying value of certain other intangible assets, including Indesit and Hotpoint*, exceeded their fair value, and we recorded an impairment charge of $168 million in 2018.

The estimated undiscounted cash flows for all other long-lived assets, excluding goodwill and indefinite-life intangibles, exceeded their carrying value as of June 30, 2018.

See Note 11 to the Consolidated Condensed Financial Statements for additional information on the fair value measurement and disclosure related to the goodwill and other intangibles impairment.






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



36


The estimates of future cash flows used in determining the fair value of goodwill and intangible assets involve significant management judgment and are based upon assumptions about expected future operating performance, economic conditions, market conditions and cost of capital. Inherent in estimating the future cash flows are uncertainties beyond our control, such as changes in capital markets. The actual cash flows could differ materially from management's estimates due to changes in business conditions, operating performance and economic conditions.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ABOUT WHIRLPOOL
Whirlpool Corporation ("Whirlpool"), the world'sworld’s leading major homekitchen and laundry appliance company, was incorporated in 1955 under the laws of Delaware and was founded in 1911. Whirlpool manufactures products in 1413 countries and markets products in nearly every country around the world. We have received worldwide recognition for accomplishments in a variety of business and social efforts, including leadership, diversity, innovative product design, business ethics, social responsibility and community involvement. We conduct our business through four operating segments, which we define based on geography. Whirlpool's operating segments consist of North America, Europe, Middle East and Africa ("EMEA"), Latin America and Asia. Whirlpool had approximately $21$20 billion in annual sales and 92,00077,000 employees in 2018.2019. The world's leading major homekitchen and laundry appliance company claim is based on most recently available publicly reported annual product sales, parts, and support revenues among leading appliance manufacturers.for 2019.   
OVERVIEW

Whirlpool had strong third-quartersecond-quarter GAAP net earnings available to Whirlpool of $358$35 million (net earnings margin of 7.0%0.9%), or $5.57$0.55 per share, compared to GAAP net earnings available to Whirlpool of $210$67 million (net earnings margin of 3.9%1.3%), or $3.22$1.04 per share, in the same prior-year period. On
Whirlpool delivered a resilient global performance with ongoing EBIT (non-GAAP) margin of 5.2%, compared to 7.0% in the same prior-year period, despite the significant impact of COVID-19 on global demand. The reduction in GAAP basis, net earnings margin was favorably impactedand ongoing EBIT margin were driven by a gain oncontinued COVID-19 disruptions, unfavorable product price/mix, the saledivestiture of the Embraco compressor business of approximately $511 million and previously-announced global cost-based pricing benefits, partially offset by product warranty and liability expense of $119 million.

Whirlpool delivered a strong global performance with ongoing (non-GAAP) EBIT margin of 7.2%, driven by strong price/mix results in North American and significant margin improvement in EMEA resulting from execution of strategic actions to restore profitability.unfavorable foreign currency. These results were partially offset by trade inventory timingthe favorable impacts of cost reduction initiatives.
As Whirlpool continues to assess the ongoing impact of COVID-19 on business results, we remain firmly committed to taking aggressive actions to address the health and soft industry demand in certain markets.

In addition, we completed the salesafety of our Embracoemployees and negative effects from demand disruptions and production impacts, including, but not limited to the following:
Executing business unitcontinuity actions focused on our employee health and paid downsafety, such as travel bans, remote work policies, line distancing in our outstanding term loan, making significant progress towardsfactories and enhanced cleaning and hygiene in our long-term Gross Debtfacilities, among other measures.
Proactively taking actions to EBITDA goalmitigate volume deleverage, including rapidly implementing cost reduction actions to reduce our cost footprint to provide additional operational flexibility during the crisis.
Implementing rapid liquidity preservation actions, reduction of 2.0.supply flows into our manufacturing facilities, disciplined inventory management, and capital expenditure reductions.

Our third-quarter results demonstrate continued progress towards delivering our long term goalsTaking appropriate actions to provide incremental financial flexibility during the crisis and our full-yearin these volatile financial commitments of margin expansion and improved free cash conversion.










markets.


3733



We believe that these aggressive cost reduction and liquidity preservation actions serve to position Whirlpool appropriately and provide additional operating and financial flexibility to successfully navigate this uncertain environment.
RESULTS OF OPERATIONS
The following table summarizes the consolidated results of operations for the periods presented:
 Three Months Ended September 30, Nine Months Ended September 30,
Consolidated - Millions of dollars, except per share data2019 2018 Better/(Worse) 2019 2018 Better/(Worse)
Units (in thousands)17,093
 17,658
 (3.2)% 48,334
 49,071
 (1.5)%
Net sales$5,091
 $5,326
 (4.4) $15,037
 $15,377
 (2.2)
Gross margin741
 895
 (17.2) 2,485
 2,587
 (3.9)
Selling, general and administrative491
 550
 11.0 1,580
 1,596
 1.0
Restructuring costs56
 28
 nm 142
 216
 34.3
Impairment of goodwill and other intangibles
 
  
 747
 nm
(Gain) loss on sale and disposal of businesses(516) 
 nm (437) 
 nm
Interest and sundry (income) expense(29) 24
 nm (222) 106
 nm
Interest expense45
 52
 14.6 148
 141
 (4.7)
Income tax expense313
 7
 nm 311
 52
 nm
Net earnings (loss) available to Whirlpool358
 210
 70.5% 896
 (353) nm
Diluted net earnings available to Whirlpool per share$5.57
 $3.22
 73.2% $13.93
 $(5.18) nm
 Three Months Ended June 30, Six Months Ended June 30,
Consolidated - Millions of dollars, except per share data2020
2019 Better/(Worse) 2020 2019 Better/(Worse)
Net sales$4,042
 $5,186
 (22.1)% $8,367
 $9,946
 (15.9)%
Gross margin631
 932
 (32.4) 1,331
 1,744
 (23.7)
Selling, general and administrative421
 584
 28.0 841
 1,089
 22.8
Restructuring costs118
 60
 98.4 123
 86
 (43.9)
Interest and sundry (income) expense(15) (63) (75.9) (16) (193) (91.5)
Interest expense49
 52
 5.3 92
 103
 11.9
Income tax expense (benefit)18
 130
 86.3 89
 (2) nm
Net earnings available to Whirlpool$35
 $67
 (48.2)% $187
 $538
 (65.2)%
Diluted net earnings available to Whirlpool per share$0.55
 $1.04
 (46.9)% $2.97
 $8.35
 (64.5)%
nm = not meaningful
Consolidated net sales decreased 4.4%22.1% and 2.2%15.9% for the three and ninesix months ended SeptemberJune 30, 2019,2020, respectively, compared to the same periods in 2018.2019. The decrease for the three and six months ended was primarily driven by thevolume decrease, unfavorable impacts of unit volume declines, foreign currency andimpact, the divestiture of the Embraco compressor business.and unfavorable product price/mix. The decrease for the nine months endedvolume decline was primarily driven by the unfavorable impactsnegative demand and production / supply disruption effect of unit volume declines, foreign currency and the divestiture of the Embraco compressor business, partially offset by the favorable impact of product price/mix. ExcludingCOVID-19. Organic net sales, or net sales excluding the impact of foreign currency consolidated net salesand Embraco, decreased 3.5%13.8% and increased 0.2%7.4% for the three and ninesix months ended SeptemberJune 30, 2019,2020, respectively, compared to the same periods in 2018.2019.
For additional information regarding non-GAAP financial measures including organic net sales and net sales excluding the impact of foreign currency, see the Non-GAAP Financial Measures section of this Management's Discussion and Analysis.
The consolidated gross margin percentage for the three months and ninesix months ended SeptemberJune 30, 20192020 decreased to 14.5%15.6% and 16.5% from 16.8% and 16.8% for15.9%, respectively, compared to the same periods in 2018, respectively,2019, which reflects the unfavorable impacts from unitof volume declines, raw material inflation,decrease, product price/mix, lower cost productivity driven primarily by lost fixed cost leverage and foreign currency, and estimated product warranty expense related to washers produced in EMEA, partially offset by the favorable impact of product price/mix.raw material deflation.
Our reportable operating segments are based upon geographical region and are defined as North America, EMEA, Latin America and Asia. These regions also represent our reportable segments. The chief operating decision maker evaluates performance based on each segment's earnings (loss) before interest and taxes (EBIT), which we define as operating profit less interest and sundry (income) expense and excluding restructuring costs, asset impairment charges and certain other items that management believes are not indicative of the region's ongoing performance, if any. For additional information, see Note 1514 to the Consolidated Condensed Financial Statements.
The following is a discussion of results for each of our operating segments.


38


North America

Following are Each of our operating segments has been significantly impacted by COVID-19 in the resultsareas of manufacturing operations such as a decrease in production levels resulting in production level below normal capacity. Excess capacity costs of approximately $30 million for the North America region:
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second quarter 2020 have been realized across our operating segments. Additionally, operating segments have been impacted by disruptions in supply chains, distribution channels, and demand, among other COVID-19 related impacts.




2019 compared to 2018

Units sold34


NORTH AMERICA
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Net Sales
Net sales decreased 6.9%12.5% and 5.1%6.5% for the three and ninesix months ended SeptemberJune 30, 2019,2020, respectively, compared to the same periods in 2018.









2019 compared to 2018
Net sales increased 0.5% and 1.3% for the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018. The increase for the three and nine months ended September 30, 2019 was primarily driven by the favorable impact from product price/mix, partially offset by lower unit volumes. Excluding the impact from foreign currency, net sales increased 0.6% and 1.6% for the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018.







2019 compared to 2018
EBIT margin was 12.8% and 12.5% for the three and nine months ended September 30, 2019, respectively, compared to 12.0% and 11.8% for the same periods in 2018. EBIT increased for the three and nine months ended September 30, 2019 compared to the same periods in 2018 primarily due to the favorable impact of product price/mix, partially offset by cost inflation (raw materials, tariffs and freight) and lower unit volumes.



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EMEA

Following are the results for the EMEA region:
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2019 compared to 2018
Units sold decreased 0.6% and increased1.9% for the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018.







2019 compared to 2018
Net sales decreased 3.8% and 5.2% for the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018.2019. The decrease for the three and six months ended SeptemberJune 30, 20192020 was primarily driven by unfavorable impacts from foreign currencylower volumes and unit volume decline, partially offset byunfavorable product price/mix. The decrease for the nine months ended September 30, 2019 was primarily driven by unfavorable impacts from foreign currency and product price/mix, partially offset by unit volume growth. Excluding the impact from foreign currency, net sales decreased 0.5%12.3% and increased 0.1%6.4% for the three and ninesix months ended SeptemberJune 30, 2020, respectively, compared to the same period in 2019.

EBIT
EBIT decreased for the three and six months ended June 30, 2020 compared to the same period in 2019 primarily due to the unfavorable impact of lower volumes and product price/mix, partially offset by cost productivity and raw material deflation. EBIT margin was 12.6% and 12.3% for the three and six months ended June 30, 2020, respectively, compared to 12.4% and 12.3% for the same periods in 2019.
EMEA
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Net Sales

Net sales decreased 19.0% and 15.8% for the three and six months ended June 30, 2020, respectively, compared to the same periods in 2018.2019. The decrease for the three and six months ended June 30, 2020 was driven by lower volumes and foreign currency, partially offset by favorable product price/mix. Excluding the impact from foreign currency, net sales decreased 17% and 13.7% for the three and six months ended June 30, 2020, respectively, compared to the same periods in 2019.

EBIT

EBIT decreased for the three and six months ended June 30, 2020 compared to the same periods in 2019 primarily due to the unfavorable impact of lower volumes. EBIT margin was (7.9)% and (4.7)% for the three and six months ended June 30, 2020, respectively, compared to (1.6)% and (1.8)% for the same periods in 2019.







2019 compared to 201835


EBIT margin was (0.4)%LATIN AMERICA
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Net Sales
Net sales decreased 51.1% and (1.3)%40.3% for the three and ninesix months ended SeptemberJune 30, 2019, respectively, compared to (3.4)% and (2.7)% for the same periods in 2018. EBIT increased for the three months ended September 30, 2019 compared to the same periods in 2018 primarily due to the favorable impacts of restructuring benefits. EBIT increased for the nine months ended September 30, 2019 primarily due to the favorable impacts of unit volume growth and restructuring benefits.



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Latin America

Following are the results for the Latin America region:
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2019 compared to 2018
Units sold decreased 8.2% and 0.7% for the three and nine months ended September 30, 2019,2020, respectively, compared to the same periods in 2018.







2019 compared to 2018
Net sales decreased 27.9% and 8.9% for the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018.2019. The decrease for the three and ninesix months ended SeptemberJune 30, 20192020 was primarily driven by the divestiture of the Embraco compressor business, lower volumes, and the unfavorable impact of foreign currency. Excluding the impact from foreign currency and Embraco, net sales decreased 4.1% and increased 9.6% for the three and six months ended June 30, 2020, respectively, compared to the same periods in 2019.

EBIT
EBIT decreased for the three and six months ended June 30, 2020 compared to the same periods in 2019 primarily due to the divestiture of the Embraco compressor business, lower volumes and the unfavorable impact of foreign currency, partially offset by cost productivity. EBIT margin was 2.5% and 4.0% for the three and six months ended June 30, 2020, respectively, compared to 6.3% and 5.7% for the same periods in 2019.
ASIA
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Net Sales
Net sales decreased 37.1% and 30.2% for the three and six months ended June 30, 2020, respectively, compared to the same periods in 2019. The decrease for the three and six months ended June 30, 2020 was primarily driven by lower volumes and the unfavorable impact of foreign currency. Excluding the impact from foreign currency, net sales decreased 27.4%33.7% and 3.8%27.5% for the three and ninesix months ended SeptemberJune 30, 2019, respectively,2020, compared to the same periods in 2018.2019.











2019 compared to 2018EBIT
EBIT margin was 4.6% and 5.4%decreased for the three and ninesix months ended SeptemberJune 30, 2019, respectively, compared to 7.0% and 5.7% for the same periods in 2018. The decrease in EBIT for the three and nine months ended September 30, 2019 was primarily due to the unfavorable impact of foreign currency and the divestiture of the Embraco compressor business, partially offset by the favorable impact of product price/mix in the home appliance business. Prior period results for the nine months ended were negatively impacted by a Brazil truck drivers' strike.


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Asia

Following are the results for the Asia region:
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2019 compared to 2018
Units sold increased 11.6% and 0.6% for the three and nine months ended September 30, 2019, respectively,2020 compared to the same periods in 2018.







2019 comparedprimarily due to 2018
Net sales increased 5.7% and decreased 4.6% for the three and nine months ended September 30, 2019, respectively, compared to the same periods in 2018. The increase for the three months ended September 30, 2019 was primarily driven by the favorable impacts of unit volume growth in India, partially offset by the unfavorable impact of product price/mix and foreign currency. The decrease for the nine months ended September 30, 2019 was primarily driven by unfavorable impacts from foreign currencylower volumes and product price/mix, partially offset by unit volume growth in India. Excluding the impact from foreign currency, net sales increased 7.1%cost productivity. EBIT margin was (6.7)% and decreased 0.6%(6.1)% for the three and ninesix months ended SeptemberJune 30, 2019,2020, respectively, compared to the same periods in 2018.






2019 compared to 2018
EBIT margin was 2.4%3.6% and 2.7% for the three and nine months ended September 30, 2019, respectively, compared to 3.8% and 6.2%2.8% for the same periods in 2018. The unfavorable impacts of product price/mix and brand investments in China were partially offset by the favorable impacts of unit volume growth and cost productivity in India. Prior period results for the nine months ended were positively impacted by Chinese government incentives.
2019.


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Selling, General and Administrative
The following table summarizes selling, general and administrative expenses as a percentage of net sales by region for the periods presented:
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
Millions of dollars 2019 
As a %
of Net Sales
2018 
As a %
of Net Sales
2019 
As a %
of Net Sales
2018 
As a %
of Net Sales
 2020 
As a %
of Net Sales
 2019 
As a %
of Net Sales
 2020 
As a %
of Net Sales
 2019 
As a %
of Net Sales
North America $214 7.1% $211 7.1% $617 7.3% $578 7.0% $170
 6.8% $227
 7.9% $336
 6.7% $403
 7.5%
EMEA 119 10.9% 140 12.4% 369 11.8% 422 12.8% 105
 12.6
 126
 12.2
 201
 11.7
 250
 12.3
Latin America 61 9.7% 95 10.8% 229 9.6% 265 10.1% 46
 10.5
 90
 10.1
 107
 10.2
 168
 9.5
Asia 57 15.9% 54 16.0% 193 16.6% 181 14.9% 52
 19.2
 75
 17.5
 110
 19.7
 136
 17.0
Corporate/other 40  50  172  150  48
 
 66
 
 87
 
 132
 
Consolidated $491 9.6% $550 10.3% $1,580 10.5% $1,596 10.4% $421
 10.4% $584
 11.3% $841
 10.1% $1,089
 11.0%
Consolidated selling, general and administrative expenses for the three and six months ended SeptemberJune 30, 20192020 decreased compared to the same periodperiods in 20182019 primarily due to ongoing restructuring activitiesthe impact of cost reduction actions and the divestiture of the Embraco compressor business. Consolidated selling, general and administrative expenses for the nine months ended September 30, 2019 is comparable.
Restructuring
We incurred restructuring charges of $56$118 million and $142$123 million for the three and ninesix months ended SeptemberJune 30, 2019,2020, respectively, compared to $28$60 million and $216$86 million for the same periods in 2018.2019. For the full year 2019,2020, we expect to incur approximately $200 million oftotal restructuring charges as we reduce fixed costs primarilyof $260 million to $280 million, which includes the Company's original guidance of $100 million, the U.S. restructuring actions of $95 million and anticipated additional restructuring actions in the EMEA region.2020. 
For additional information, see Note 1312 to the Consolidated Condensed Financial Statements.
Impairment of Goodwill and Other Intangibles
We recorded an impairment charge of $747 million related to goodwill ($579 million) and other intangibles ($168 million) for the nine months ended September 30, 2018 related to the EMEA reporting unit.
For additional information, see Note 11 and Note 17 to the Consolidated Condensed Financial Statements.
(Gain) Loss on Sale and Disposal of Businesses
We recorded a pre-tax gainloss of $511$79 million on the sale of the Embraco compressor business for the three and ninesix months ended September 30, 2019.
We incurred a loss of $74 million for the nine months ended SeptemberJune 30, 2019 related to charges on the sale of the South Africa business ($6368 million) and costs associated with the exit of the Turkey domestic sales operations ($11 million).

For additional information, see Note 1615 to the Consolidated Condensed Financial Statements.
Interest and Sundry (Income) Expense
Interest and sundry (income) expenseincome decreased for the three and ninesix months ended SeptemberJune 30, 2019 increased2020 compared to the same periods in 2018.2019. The increasedecrease in interest and sundry (income) expenseincome for the three and six months ended SeptemberJune 30, 20192020 was primarily due to foreign currency and the resultsprior year impact of a legal settlement. The increase in interest and sundry (income) expense for the nine months ended September 30, 2019 was primarily due to Brazil indirect tax creditscredit recorded of $53 million and $180 million, which reflectsrespectively. These amounts reflect $54 million and $196 million of indirect tax credits, net of related fees. The comparable period in the prior year includes charges related
For additional information, see Note 7 to the preliminary FCA settlementConsolidated Condensed Financial Statements.
Pension and Other Postretirement Benefit Plans
During the quarter, the Company announced changes to a postretirement medical benefit program for certain groups of $111active employees. The total annualized net earnings impact of these plan amendments is approximately $22 million. The impact for the second quarter is not material to the Consolidated Condensed Financial Statements at June 30, 2020.
Subsequently, on July 15, 2020, the Company announced additional changes to a postretirement medical benefit program for certain groups of retirees. The total annualized net earnings impact of these plan amendments is approximately $35 million. Due to the announcement timing of these subsequent plan amendments, we have not recognized any amounts relating to these changes as of June 30, 2020.


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For additional information, see Note 8 and Note 10 to the Consolidated Condensed Financial Statements.


43


Interest Expense
Interest expense for the three and ninesix months ended SeptemberJune 30, 2019 was comparable2020 decreased compared to the same periods in 2018.2019 primarily due to lower average short-term debt balances.
Income Taxes
Income tax expense (benefit) was $313$18 million and $311$89 million for the three and ninesix months ended SeptemberJune 30, 20192020, respectively, compared to income tax expense (benefit) of $7$130 million and $52$(2) million in the same periods of 2018.2019. For the three months ended SeptemberJune 30, 2019,2020, the increasedecrease in effective tax rateexpense from the prior period is due primarily to the impact of the sale of Embraco, prior period adjustmentsa decrease in valuation allowances, lower earnings and related tax expense, and impact of tax law changes in enacted tax rates.the prior year. For the ninesix months ended SeptemberJune 30, 2019,2020, the increase in the effective tax rate from the prior period is due to tax expense onvaluation allowance releases in the sale of Embraco, prior period, adjustments , non-deductible impairments and government payments, partially offset by valuation allowance releases. Totalhigher level of earnings and related tax expense relatedexpense.
For additional information, see Note 13 to the saleConsolidated Condensed Financial Statements.
Other Information
Goodwill and Indefinite-Lived Intangible Assets

Our Critical Accounting Policies and Estimates for goodwill and other indefinite-life intangibles are disclosed in Note 1 to the Consolidated Financial Statements and in Management's Discussion and Analysis of Embraco was $150 million and $161 millionour annual report on Form 10-K for the threefiscal year ended December 31, 2019.

We continue to monitor the significant global economic uncertainty as a result of COVID-19 to assess the outlook for demand for our products and nine months ended September 30, 2019, respectively,the impact on our business and our overall financial performance. Our EMEA reporting unit and our Indesit, Hotpoint* and Maytag trademarks continue to be at risk and none of which approximately $107 million was calculated based on the US statutory tax rate.our other reporting units or indefinite-lived intangible assets are presently at risk for future impairment.
For additional information, see Note 1 and Note 14 to the Consolidated Condensed Financial Statements.
FINANCIAL CONDITION AND LIQUIDITY
Background
Our objective is to finance our business through operating cash flow and the appropriate mix of long-term and short-term debt. By diversifying the maturity structure, we avoid concentrations of debt, reducing liquidity risk. We have varying needs for short-term working capital financing as a result of the nature of our business. We regularly review our capital structure and liquidity priorities, which include funding the business through capital and engineering spending to support innovation and productivity initiatives, funding our pension plan and term debt liabilities, providing return to shareholders, and funding potential acquisitions.
Our short-term potential uses of liquidity include funding our business operations, ongoing capital spending, restructuring activities, payments of short and long-term debt and returns to shareholders. We alsocurrently have $546$298 million of long-term debt maturing in the next twelve months, and are currently evaluating our options in connection with this maturing debt, which may include repayment through refinancing, free cash flow generation, or cash on hand.
At September 30, 2019, we have $941 million of notes payable which consist of short-term borrowings payable to banks and commercial paper, which are generally used to fund working capital requirements. For additional information, see Note 7 to the Consolidated Condensed Financial Statements.months.
We monitor the credit ratings and market indicators of credit risk of our lending, depository, derivative counterparty banks, and customers regularly, and take certain actions to manage credit risk. We diversify our deposits and investments in short-term cash equivalents to limit the concentration of exposure by counterparty.
At September 30, 2019,
COVID-19 pandemic

The COVID-19 pandemic has resulted in significant uncertainty in the macroeconomic environment and disruptions in global financial markets. We believe we hadhave a strong financial position and the liquidity required to withstand economic uncertainty during this volatile period in consideration of the following:
Solid investment grade credit rating
*Whirlpool ownership of the Hotpoint brand in EMEA and Asia Pacific regions is not affiliated with the Hotpoint brand sold in the Americas.


38


No bond maturities for the remainder of 2020; $300 million due in June 2021
Ample buffers in our financial covenants to withstand additional debt or reduction to equity
$2.5 billion of cash orand cash equivalents greater than 1%at June 30, 2020
$2.5 billion of remaining availability on our consolidated assetscommitted credit facilities
Completed $500 million 30-year senior notes offering in ChinaMay 2020
Focused cost takeout including significant global restructuring actions
Strong working capital management

Cash and India, which represented 2.2% and 1.0%, respectively. In addition, we did not have any third-party accounts receivable greater than 1% of our consolidated assets in any single country outside of the United States. We continue to monitor general financial instability and uncertainty globally.cash equivalents
The Company had cash and cash equivalents of approximately $1.0$2.5 billion at SeptemberJune 30, 2019,2020, of which substantially allthe majority was held by subsidiaries in foreign countries.countries with the remainder held in the United States. For each of its foreign subsidiaries, the Company makes an assertion regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the United States. The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operational activities and expected future foreign investments. Our intent is to permanently reinvest these funds outside of the United States and our current plans do not demonstrate a need to repatriate the cash to fund our U.S. operations. However, if these funds were repatriated, we would be required to accrue and pay applicable United States taxes (if any) and withholding taxes payable to various countries. It is not practicalpracticable to estimate the amount of the deferred tax liability associated with the repatriation of cash due to the complexity of its hypothetical calculation.
At June 30, 2020, we had cash or cash equivalents greater than 1% of our consolidated assets in the United States, China and Brazil which represented 7.7%, 1.8% and 1.1%, respectively. In addition, we did not have any third-party accounts receivable greater than 1% of our consolidated assets in any single country outside of the United States. We continue to monitor general financial instability and uncertainty globally.
Revolving credit facility and other committed credit facilities
The Company maintains a $3.5 billion revolving credit facility. On March 13, 2020, we initiated a borrowing of approximately $2.2 billion under the revolving credit facility, for which a portion of the proceeds from the borrowing were used to fund commercial paper repayment. We repaid $500 million of this revolving credit facility borrowing with the proceeds from our May 2020 Notes offering. We repaid an additional $500 million of this revolving credit facility borrowing by drawing on the full amount of our 364-Day Facility.
We were in compliance with both our debt to capitalization ratio and interest coverage ratio under the revolving credit facility as of June 30, 2020. We are closely monitoring our ability to meet these covenants in future periods and expect to continue to be in compliance.

At June 30, 2020, we had aggregate borrowing capacity of approximately $2.5 billion on our committed credit facilities, consisting of $2.3 billion under the Amended Long-Term Facility and  approximately $200 million under our committed credit facilities in Brazil and India.
Notes payable
Notes payable consists of short-term borrowings payable to banks and commercial paper, which are generally used to fund working capital requirements. At June 30, 2020, we have $1.7 billion of notes payable under the revolving credit facilities which is expected to be repaid in the next twelve months. For additional information, see Note 6 to the Consolidated Condensed Financial Statements.
Trade customers
We continue to review customer conditions globally. In light of the COVID-19 pandemic, there is a heightened risk of trade customer financial restructuring or insolvency situations and increases in our accounts receivable balances with these trade customers. While there was not a material effect from these events during the three months ended June 30, 2020, nor do we have immediate visibility into those situations materializing in the future, we continue to monitor these situations and take appropriate risk mitigation steps in light of the current environment.


39


At SeptemberJune 30, 2019,2020, we had 276272 million Brazilian reais (approximately $66 million)$50 million at June 30, 2020) in short and long-term receivables due to us from Maquina de Vendas S.A. In 2018, as part of their extrajudicial recovery plan, we agreed to receive payment of our outstanding receivable, plus interest, over


44


eight years under a tiered payment schedule. At SeptemberJune 30, 2019,2020, we have 134127 million Brazilian reais (approximately $32 million)$23 million at June 30, 2020) of insurance against this credit risk through policies purchased from high-quality underwriters. After consideration of insurance and the allowance for expected credit losses, we do not expect this matter to have a material impact on financial results in future periods.
In the past, when faced with a potential volume reduction from any one particular segment of our trade distribution network, we generally have been able to offset such declines through increased sales throughout our broad distribution network. 
For additional information on guarantees, see Note 87 to the Consolidated Condensed Financial Statements.
Share Repurchase Program
For additional information about our share repurchase program, see Note 11 to the Consolidated Condensed Financial Statements.
Sources and Uses of Cash
The following table summarizes the net increase (decrease) in cash, cash equivalents and restricted cash for the periods presented:
  Six Months Ended June 30,
Millions of dollars 2020 2019
Cash provided by (used in):    
Operating activities $(745) $(821)
Investing activities (128) (195)
Financing activities 1,605
 678
Effect of exchange rate changes (138) 9
Net change in cash, cash equivalents and restricted cash $594
 $(329)
Cash Flows from Operating Activities
Cash used in operating activities during the six months ended June 30, 2020 decreased compared to the same period in 2019, which primarily reflects the impact of changes in working capital, including sales volume and credit management activities, reduced seasonal inventory build due to lower volume and supply constraints, and the divestiture of the Embraco compressor business as well as reduced promotional activity and focused cost control in response to COVID-19.
The timing of cash flows from operations varies significantly throughout the year primarily due to changes in production levels, sales patterns, promotional programs, funding requirements, credit management, as well as receivable and payment terms. Depending on the timing of cash flows, the location of cash balances, as well as the liquidity requirements of each country, external sources of funding are used to support working capital requirements.
Cash Flows from Investing Activities
Cash used in investing activities during the six months ended June 30, 2020 decreased compared to the same period in 2019, which primarily reflects lower capital expenditures year over year due to capital reduction actions during the COVID-19 disruption.
Cash Flows from Financing Activities
Cash provided by financing activities during the six months ended June 30, 2020 increased compared to the same period in 2019, which primarily reflects the following:
Proceeds from borrowings under our revolving credit facility of $2.2 billion offset by lower commercial paper borrowings (increase of approximately $1.1 billion);


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Repayments of long-term debt includes the repayment of the €500 million (approximately $565 million) senior notes in March 2020 and both the repayment of $250 million in senior notes and the €600 million (approximately $673 million at repayment) Whirlpool EMEA Finance Term Loan in the prior period (decrease of approximately $370 million);
Proceeds from borrowings of long-term debt includes the €500 million (approximately $540 million as of February 2020) senior notes offering in February 2020, the $500 million senior notes offering in May 2020 and the $700 million senior notes offering in the prior period (decrease of approximately $150 million) ; and
Higher stock repurchases under our share repurchase program (increase of approximately $70 million), all of which repurchases occurred in the first quarter of 2020.
Dividends paid in financing activities during the six months ended June 30, 2020 was comparable to the same period in 2019.
Financing Arrangements
The Company had total committed credit facilities of approximately $4.2 billion at June 30, 2020. The facilities are geographically diverse and reflect the Company's global operations. The Company believes these facilities are sufficient to support its global operations and, together with other liquidity tools, to navigate through the macroeconomic uncertainty related to the COVID-19 pandemic. We had $900 million and €700 million (approximately $786 million as of June 30, 2020) outstanding under the committed credit facilities at June 30, 2020. We had no borrowings outstanding under the committed credit facilities at December 31, 2019.
For additional information about our financing arrangements, see Note 6 to the Consolidated Condensed Financial Statements.
Embraco Sale Transaction

On April 24, 2018, we and certain of our subsidiaries entered into a purchase agreement with Nidec Corporation, a leading manufacturer of electric motors incorporated under the laws of Japan, to sell our Embraco business unit (the "Transaction").

On June 26, 2019, Whirlpool and Nidec received the European Commission's final approval of the Transaction, and the parties closed the Transaction on July 1, 2019. At closing, pursuant to the purchase agreement and a subsequent agreement memorializing the purchase price adjustment, the Company received $1.1 billion inclusive of anticipated cash on hand at the time of closing, with final purchase price amounts subject to working capital and other customary post-closing adjustments. Whirlpool has agreed to retain certain liabilities relating to tax, environmental, labor and products following closing of the Transaction.

On August 9, 2019, the Company repaid $1.0 billion pursuant to the Company's April 23, 2018 Term Loan Agreement by and among the Company, Citibank, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A. as Syndication Agent, and certain other financial institutions, representing full repayment of amounts borrowed under the term loan. As previously disclosed, the Company agreed to repay this outstanding term loan amount with the net cash proceeds received from the sale of Embraco.
For additional information on the Transaction, see Note 16 to the Consolidated Condensed Financial Statements.
Share Repurchase Program
For additional information about our share repurchase program, see Note 12 to the Consolidated Condensed Financial Statements.
Sources and Uses of Cash
The following table summarizes the net increase (decrease) in cash, cash equivalents and restricted cash for the periods presented:
  Nine Months Ended September 30,
Millions of dollars 2019 2018
Cash provided by (used in):    
Operating activities $(566) $(615)
Investing activities 723
 (272)
Financing activities (641) 750
Effect of exchange rate changes (55) (74)
Net change in cash, cash equivalents and restricted cash $(539) $(211)
Cash Flows from Operating Activities
Cash used in operating activities during the nine months ended September 30, 2019 decreased compared to the same period in 2018, which primarily reflects the impact of the FCA settlement and payment, $350 million of discretionary pension funding in the prior year and the impact of changes in working capital, including seasonal production timing, inventory reduction efforts in the fourth quarter of 2018, shifts in trade customer mix, improved credit management activities and the divestiture of the Embraco compressor business.


45


The timing of cash flows from operations varies significantly throughout the year primarily due to changes in production levels, sales patterns, promotional programs, funding requirements, credit management, as well as receivable and payment terms. Depending on the timing of cash flows, the location of cash balances, as well as the liquidity requirements of each country, external sources of funding are used to support working capital requirements.
Cash Flows from Investing Activities
Cash provided by investing activities during the nine months ended September 30, 2019 increased compared to the same period in 2018, which primarily reflects cash proceeds related to the sale of Embraco.
Cash Flows from Financing Activities
Cash used in financing activities during the nine months ended September 30, 2019 increased compared to the same period in 2018, which primarily reflects higher repayments of long-term debt (increase of $565 million), lower proceeds from borrowings of short-term debt (decrease of approximately $1.8 billion) and lower stock repurchases under our share repurchase program primarily due to the 2018 modified Dutch auction tender offer (decrease of approximately $1.0 billion).
Dividends paid in financing activities during the nine months ended September 30, 2019 was comparable to the same period in 2018.
Financing Arrangements
The Company had total committed credit facilities of approximately $3.8 billion at September 30, 2019. The facilities are geographically diverse and reflect the Company's global operations. The Company believes these facilities are sufficient to support its global operations. We had no borrowings outstanding under the committed credit facilities at September 30, 2019 or December 31, 2018.
For additional information about our financing arrangements, see Note 7 to the Consolidated Condensed Financial Statements.
Dividends
In April 2019,2020, our Board of Directors approveddeclared a 4.3% increase in our quarterly dividend of $1.20 per share on our common stock to $1.20 per share from $1.15 per share.stock.
Off-Balance Sheet Arrangements
In the ordinary course of business, we enter into agreements with financial institutions to issue bank guarantees, letters of credit, and surety bonds. These agreements are primarily associated with unresolved tax matters in Brazil, as is customary under local regulations, and other governmental obligations and debt agreements. At SeptemberJune 30, 2019,2020, we had approximately $342$278 million outstanding under these agreements.
For additional information about our off-balance sheet arrangements, see Notes 76 and 87 to the Consolidated Condensed Financial Statements.


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NON-GAAP FINANCIAL MEASURES
We supplement the reporting of our financial information determined under U.S. generally accepted accounting principles (GAAP) with certain non-GAAP financial measures, some of which we refer to as "ongoing" measures, including:
Earnings before interest and taxes (EBIT)
EBIT margin
Ongoing EBIT
Ongoing EBIT margin
Sales excluding foreign currency
Organic net sales (net sales excluding foreign currency and Embraco)
Free cash flow


46


Non-GAAP measures exclude items that may not be indicative of, or are unrelated to, results from our ongoing operations and provide a better baseline for analyzing trends in our underlying businesses. EBIT margin is calculated by dividing EBIT by net sales. Ongoing EBIT margin is calculated by dividing ongoing EBIT by net sales. Sales excluding foreign currency is calculated by translating the current period net sales, in functional currency, to U.S. dollars using the prior-year period's exchange rate compared to the prior-year period net sales. Management believes that sales excluding foreign currency provides stockholders with a clearer basis to assess our results over time, excluding the impact of exchange rate fluctuations. Organic net sales is calculated by excluding prior period net sales from our divested Embraco business and foreign currency. Management believes that organic net sales provides stockholders with a clearer basis to assess our results over time, excluding the revenue impact from our divested compressor business and exchange rate fluctuations. We also disclose segment EBIT, which we define as operating profit less interest and sundry (income) expense and excluding restructuring costs, asset impairment charges and certain other items that management believes are not indicative of the region's ongoing performance, if any, as the financial metric used by the Company's Chief Operating Decision Maker to evaluate performance and allocate resources in accordance with ASC 280, Segment Reporting.
We believe that these non-GAAP measures provide meaningful information to assist investors and stockholders in understanding our financial results and assessing our prospects for future performance, and reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP financial measures, provide a more complete understanding of our business. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These non-GAAP financial measures should not be considered in isolation or as a substitute for reported net sales, net earnings available to Whirlpool, net earnings as a percentage of net sales and cash provided by (used in) operating activities, the most directly comparable GAAP financial measures. We strongly encourage investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
Please refer to a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures below.
Ongoing Earnings Before Interest & Taxes (EBIT) Reconciliation:
in millions

Three Months Ended Nine Months Ended
20192018 20192018
Net earnings (loss) available to Whirlpool (1)
$358
$210
 $896
$(353)
Net earnings available to noncontrolling interests6
6
 14
24
Income tax expense313
7
 311
52
Interest expense45
52
 148
141
Earnings (loss) before interest & taxes$722
$275
 $1,369
$(136)
Restructuring expense56
28
 142
216
Trade customer insolvency
29
 
29
Divestiture related transition costs(17)
 

Brazil indirect tax credit

 (180)
(Gain) loss on sale and disposal of businesses(516)
 (437)
Product warranty and liability expense119

 131

French antitrust settlement

 
114
Impairment of goodwill and other intangibles

 
747
Ongoing EBIT$364
$332
 $1,025
$970

(1) Net earnings margin is approximately 7.0% and 3.9% for the three months ended September 30, 2019 and September 30, 2018, respectively, and is calculated by dividing net earnings (loss) available to Whirlpool by consolidated net sales for the three months ended September 30, 2019 and September 30, 2018 of $5,091 and $5,326, respectively.
Total Whirlpool Organic Net Sales Reconciliation:
in millions

Three Months Ended June 30, 
20202019Change
Net sales$4,042
$5,186
(22.1)%
Less: Embraco net sales
(323) 
Add-Back: currency149

 
Organic net sales$4,191
$4,863
(13.8)%


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Free Cash Flow (FCF) Reconciliation:
in millions
Nine Months Ended
20192018
Cash used in operating activities (2)
$(566)$(615)
Capital expenditures(306)(330)
Proceeds from sale of assets and business (3)
1,034
27
Change in restricted cash (4)
33
44
Repayment of term loan(1,000)
Free cash flow$(805)$(874)
   
Cash provided by (used in) investing activities$723
$(272)
Cash provided by (used in) financing activities$(641)$750
Latin America Organic Net Sales Reconciliation:
in millions

Three Months Ended June 30, 
20202019Change
Net sales$434
$888
(51.1)%
Less: Embraco net sales
(323) 
Add-Back: currency108

 
Organic net sales$542
$565
(4.1)%
(2) Cash used in operating activities for the nine months ended September 30, 2019 includes $136 million of cash taxes paid for the sale of the Embraco compressor business.

Total Whirlpool Organic Net Sales Reconciliation:
in millions

Six Months Ended June 30, 
20202019Change
Net sales$8,367
$9,946
(15.9)%
Less: Embraco net sales
(635) 
Add-Back: currency256

 
Organic net sales$8,623
$9,311
(7.4)%
(3) Proceeds from sale of assets and business for the nine months ended September 30, 2019 includes $1,011 million of net cash proceeds received to date for the sale of the Embraco compressor business.

Latin America Organic Net Sales Reconciliation:
in millions

Six Months Ended June 30, 
20202019Change
Net sales$1,052
$1,763
(40.3)%
Less: Embraco net sales
(635) 
Add-Back: currency184

 
Organic net sales$1,236
$1,128
9.6 %
(4) For additional information regarding restricted cash, see Note 4 to the Consolidated Condensed Financial Statements.
Ongoing Earnings Before Interest & Taxes (EBIT) Reconciliation:
in millions

Three Months Ended Six Months Ended
20202019 20202019
Net earnings available to Whirlpool (1)
$35
$67
 $187
$538
Net earnings (loss) available to noncontrolling interests(10)5
 (15)8
Income tax expense (benefit)18
130
 89
(2)
Interest expense49
52
 92
103
Earnings before interest & taxes$92
$254
 $353
$647
Restructuring expense118
60
 123
86
Divestiture related transition costs
11
 
17
Brazil indirect tax credit
(53) 
(180)
Loss on disposal of businesses
79
 
79
Legacy product warranty and liability expense
12
 
12
Ongoing EBIT(2)
$210
$363
 $476
$661
(1)
Net earnings margin is approximately 0.9% and 2.2% for the three and six months endedJune 30, 2020 , respectively, compared to 1.3% and 5.4% in the same prior year periods. Net earnings margin is calculated by dividing net earnings (loss) available to Whirlpool by consolidated net sales for the three and six months endedJune 30, 2020 and June 30, 2019, respectively.
(2)
Ongoing EBIT margin is approximately 5.2% and 5.7% for the three and six months endedJune 30, 2020, respectively, compared to 7.0% and 6.6% in the same prior year periods. Ongoing EBIT margin is calculated by dividing Ongoing EBIT by consolidated net sales for the three and six months endedJune 30, 2020 and June 30, 2019, respectively.


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Free Cash Flow (FCF) Reconciliation:
in millions
Six Months Ended
20202019
Cash used in operating activities$(745)$(821)
Capital expenditures(155)(197)
Proceeds from sale of assets and business27
5
Change in restricted cash (1)

16
Free cash flow$(873)$(997)
   
Cash used in investing activities$(128)$(195)
Cash provided by financing activities1,605
678
(1)
For additional information regarding restricted cash, see Note 3 to the Consolidated Condensed Financial Statements.

FORWARD-LOOKING PERSPECTIVE
Earnings per diluted share presented below areOn March 24, 2020, Whirlpool withdrew its previously announced 2020 guidance for net of tax, while each adjustment is presented on a pre-tax basis. Our anticipated full-yearsales, GAAP tax rate of approximately 25% includes the impact of the gain on sale of Embraco.The aggregate income tax impact of the taxable components of each adjustment is presented in the income tax impact line item at our anticipated 2019 full-year adjusted tax rate between 15% and 20%. We currently estimateongoing (non-GAAP) earnings per diluted share, andongoing EBIT margin, regional industry demand for 2019 to be within the following ranges:
 2019
 Current Outlook
Estimated earnings per diluted share, for the year ending December 31, 2019$16.80$17.55
Including:   
Restructuring expense$(3.11)
Brazil indirect tax credit2.79
(Gain) loss on sale and disposal of businesses6.79
Product warranty and liability expense(2.03)
Income tax impact(0.77)
Normalized tax adjustment(1.62)
  
 Industry demand 
North America(2)%—%
EMEA(1)%1%
Latin America3%4%
Asia1%2%
For the full-year 2019, we continue to expect to generate cash from operating activities of approximately $1.4 billion and free cash flow of approximately $800 million, including restructuring cash outlays of up to $200 million and capital expenditures of approximately $625 million.
The table below reconciles projected 2019outlook, cash provided by operating activities determined in accordance with GAAP toand free cash flow a non-GAAP measure. Management believes that free cash flow provides stockholders with a relevant measure of liquidity and a useful basis for assessing Whirlpool's abilitydue to fund its activities and obligations. There are limitations to using non-GAAP financial measures, includinguncertainty around the difficulty associated with comparing companies that use similarly named non-GAAP measures whose calculations may differ from our calculations. We define free cash flow as cash provided by operating activities less capital expenditures and including proceeds from the sale of assets/businesses, and changes in restricted cash. The 2019 free cash flow outlook includes the net proceeds and the term loan repayment related to the salebusiness impact of the Embraco businessCOVID-19 pandemic.
The Company expects COVID-19 driven demand disruptions and production impacts to continue to negatively affect results throughout 2020. We have taken aggressive cost reduction and cash protection actions to mitigate this impact as previously described in the Overview. However, the ultimate impact to our financial condition and results of approximately $1 billion.The change in restricted cash relates to the private placement funds paid by Whirlpool to acquire majority controloperations depends on a number of Whirlpool China (formerly Hefei Sanyo) in 2014 and factors which are used to fund capital and technical resources to enhance Whirlpool China's research and development and working capital,inherently unpredictable that could have a material adverse effect as required by the terms of the Hefei Sanyo acquisition completeddescribed in October 2014. For additional information regarding non-GAAP financial measures, see the Non-GAAP Financial Measures section of this Management's Discussion and Analysis.
2019
Millions of dollarsCurrent Outlook
Cash provided by operating activities (1)
~$1,425
Capital expenditures, proceeds from sale of assets/businesses and changes in restricted cash375
Repayment of term loan(1,000)
Free cash flow~$800
(1)Financial guidance on a GAAP basis for cash provided by (used in) financing activities and cash provided by (used in) investing activities has not been provided because in order to prepare any such estimate or projection, the company would need to rely on market factors and certain other conditions and assumptions that are outside of its control.


49


The projections above are based on many estimates and are inherently subject to change based on future decisions made by management and the Board of Directors of Whirlpool, and significant economic, competitive and other uncertainties and contingencies.Part II, Item 1A. Risk Factors.
OTHER MATTERS
For additional information regarding certain of our loss contingencies/litigation, see Note 87 to the Consolidated Condensed 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 has been named as a defendant in a product liability suit related to this matter, which suit is currently pending in Pennsylvania federal court. As these matters are ongoing, we cannot speculate on their eventual outcomes or potential impact on our financial statements; accordingly, we have not recorded any significant charges in 20182019 or the nine months ended September 30, 2019.2020. Additional claims may be filed related to this incident.
Antidumping and Safeguard Petitions
As previously reported, Whirlpool filed petitions in 2011 and 2015 alleging that Samsung, LG and Electrolux violated U.S. and international trade laws by dumping washers into the U.S. Those petitions resulted in orders imposing antidumping duties on certain washers imported from South Korea, Mexico, and China, and countervailing duties on certain washers from South Korea. These orders could be subject to administrative reviews and possible appeals. In March 2019, the order covering certain washers from Mexico was extended for an additional five years, while the order covering certain washers from South Korea was revoked.
Whirlpool also filed a safeguard petition in May 2017 to address our concerns that Samsung and LG are evading U.S. trade laws by moving production from countries covered by antidumping orders. A safeguard remedy went into effect in February 2018, implementing tariffs on finished washers and certain covered parts for three years. During the secondthird year of the remedy, beginning February 7, 2019,2020, the remedy imposes an 18%a 16% tariff on the first 1.2 million large residential washing machines imported into the United States ("under tariff") and a 45%40% tariff on such imports in excess of 1.2 million, and also imposes a 45%40% tariff on washer tub, drum, and cabinet imports in excess of 70,00090,000 units. TheIn January 2020, the President modified the safeguard order to allocate the 1.2 million under tariff rates on washers and covered parts will decline slightlyby quarter during the third year of the remedy. The safeguard remedy interim review was completed by the International Trade Commission during 2019.(300,000 washing machines per quarter), beginning in February 2020. The President maintains discretion


44


to modify the remedy. We cannot speculate on the modification's impact, which will depend on Samsung and LG's U.S. production capabilities and import plans.
U.S. Tariffs and Global Economy
The current domestic and international political environment, including existing and potential changes to U.S. policies related to global trade and tariffs, have resulted in uncertainty surrounding the future state of the global economy. The impact of previously-announced U.S. tariffs was a component of increased raw material costs during the quarter ended September 30, 2019.2019 and 2020. We expect these and other tariffs to impact material and freight costs in future quarters, which could require us to modify our current business practices and could have a material adverse effect on our financial statements in any particular reporting period.
Brexit
In 2016, the UK held a referendum, the outcome of which was an expressed public desire to exit the European Union (“Brexit”), which has resulted in greater uncertainty related to the free movement of goods, services, people and capital between the UK and the EU. On January 31, 2020, the UK officially exited the European Union and entered into a transition period to negotiate the final terms of Brexit. Many potential future impacts of Brexit remain unclear and could adversely impact certain areas of our business, including, but not limited to, an increase in duties and delays in the delivery of products, and adverse impacts to our suppliers and financing institutions. In order to mitigate the risks associated with Brexit, we are preparing for potential adverse impacts by collaborating across Company functions and working with external partners to develop and revise the necessary contingency plans.



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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to our exposures to market risk since December 31, 2018.2019.
ITEM 4.CONTROLS AND PROCEDURES
(a)Evaluation of disclosure controls and procedures
Prior to filing this report, we completed an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of SeptemberJune 30, 2019.2020. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of SeptemberJune 30, 2019.2020.
(b)Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting that occurred during the most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION


ITEM 1.LEGAL PROCEEDINGS
Information with respect to legal proceedings can be found under the heading "Commitments and Contingencies" in Note 87 to the Consolidated Condensed Financial Statements contained in Part I, Item 1 of this report.
ITEM 1A.RISK FACTORS
There have been no material changes in our risk factors from those disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2019, other than as updated in our subsequent quarterly reports on Form 10–Q, including set forth below.
Our financial condition and results of operations have been and are expected to continue to be adversely affected by the ongoing COVID-19 outbreak.

We are closely monitoring the impact of the global COVID-19 pandemic on all aspects of our operations and regions, including the effect on our consumers, employees, trade customers, suppliers and distribution channels. The pandemic has created significant business disruption and economic uncertainty which has adversely impacted our manufacturing operations, supply chain, distribution channels and demand for our products.There remains significant uncertainty regarding the severity and duration of the pandemic and its impact on our business, including the severity of a “second wave” or other additional periods of increases or spikes in the number of COVID-19 cases in areas in which we operate. The adverse impact of the pandemic is expected to continue and may materially affect our financial statements in future periods.

The impacts of the pandemic include, but are not limited to, the following:
Production shutdowns and slowdowns, in individual or collective groups of factories in impacted countries, which have and could in the future result in increased costs and decreased efficiency, and which have and could impact our ability to respond to rapid changes in demand;
Lack of availability of component materials in our supply chain and an increase in raw material and component costs;
Recent and potential future reductions in trade customer sales volume, potential trade customer financial restructuring or insolvency, and increases in accounts receivable balances with our trade customer base;
Potential future impairment in value of our tangible or intangible assets could be recorded as a result of weaker economic conditions;
Significant disruption of global financial markets, which could have a negative impact on our ability to access capital in the future, and which has, together with operational impacts noted above, necessitated certain recent liquidity creation and preservation actions as a precautionary measure;
Fluctuations in forecasted earnings before tax and corresponding volatility in our effective tax rate;
Uncertainty with respect to the application of recently enacted economic stimulus legislation in the U.S. and abroad, including uncertainty regarding impacts to our current global tax positions and future tax planning;
Operational risk, including but not limited to cybersecurity risks, as a result of extended salaried workforce remote work arrangements, and operational delays as a result of recent and potential future salaried employee furlough and collective vacation actions in certain countries, and restrictions on employee travel;
Operational disruption if key employees terminate their employment or become ill, as well as diversion of our management team's attention from non-COVID-19 related matters;
Potential investigations, legal claims or litigation against us for actions we have taken or may take, or decisions we have made or may make, as a consequence of the pandemic; and


47



Potential delays in resolving pending legal matters as a result of court, administrative and other closures and delays in many of our regions.

Our existing insurance coverages may not respond to some of these impacts. In addition, we cannot predict the impact that COVID-19 will have on our trade customers, suppliers, consumers, and each of their financial conditions; however, any material effect on these parties could adversely impact us. The impact of COVID-19 may also exacerbate other risks discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019, any of which could have a material adverse effect on our financial statements.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On July 25, 2017, our Board of Directors authorized a share repurchase program of up to $2 billion. During the ninesix months ended SeptemberJune 30, 2019,2020, we repurchased 718,421902,000 shares under this share repurchase program at an aggregate price of approximately $100 million.121 million, all of which repurchases occurred in the first quarter of 2020. At SeptemberJune 30, 20192020, there were approximately $700531 million in remaining funds authorized under this program.
The following table summarizes repurchases of Whirlpool's common stock in the three months ended SeptemberJune 30, 2019:2020:
Period (Millions of dollars, except number and price per share)Total Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plans
July 1, 2019 through July 31, 201918,200
$148.29
18,200
$747
August 1, 2019 through August 31, 2019237,000
$137.05
237,000
$715
September 1, 2019 through September 30, 2019102,895
$143.96
102,895
$700
       Total358,095
$139.61
358,095
 
Period (Millions of dollars, except number and price per share)Total Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plans
April 1, 2020 through April 30, 2020
$

$531
May 1, 2020 through May 31, 2020


531
June 1, 2020 through June 30, 2020


531
     Total
$

 
Share repurchases are made from time to time on the open market as conditions warrant. Given the current level of uncertainty surrounding the COVID-19 pandemic, we have decided to temporarily suspend our share repurchase program to protect liquidity in the current environment. The program does not obligate us to repurchase any of our shares and it has no expiration date.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.OTHER INFORMATION
None.


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ITEM 6.EXHIBITS
Exhibit 10.14.1
  
Exhibit 10.210.1
  
Exhibit 31.1
  
Exhibit 31.2
  
Exhibit 32.1
  
Exhibit 101101.INSThe following financial statements fromXBRL Instance Document - the Company’s Quarterly Report on Form 10-Q forinstance document does not appear in the quarter ended September 30, 2019, formatted inInteractive Data File because its XBRL tags are embedded within the Inline XBRL: (i) Consolidated Condensed Statements of Comprehensive Income (Loss), (ii) Consolidated Condensed Balance Sheets; (iii) Consolidated Condensed Statements of Cash Flows, and (iv) Notes to Consolidated Condensed Financial Statements, tagged as blocks of text and including detailed tagsXBRL document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
  
Exhibit 104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


5349


SIGNATURES
Pursuant to the requirements 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)
 By: /s/ JAMES W. PETERS
 Name: James W. Peters
 Title: 
Executive Vice President
and Chief Financial Officer
 Date: OctoberJuly 23, 20192020



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