WHIRLPOOL CORP /DE/ 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA TABLE OF CONTENTS PAGE FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Statements of Income (Loss) 54 Consolidated Statements of Comprehensive Income (Loss) 55 Consolidated Balance Sheets 56 Consolidated Statements of Cash Flows 57 Consolidated Statements of Changes in Stockholders' Equity 58 PAGE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Significant Accounting Policies 59 2. Revenue Recognition 67 3. Leases 71 4. Cash, Cash Equivalents and Restricted Cash 72 5. Inventories 72 6. Goodwill and Other Intangibles 73 7. Financing Arrangements 74 8. Commitments and Contingencies 77 9. Pension and Other Postretirement Benefit Plans 81 10. Hedges and Derivative Financial Instruments 90 11. Fair Value Measurements 94 12. Stockholders' Equity 96 13. Share-Based Incentive Plans 97 14. Restructuring Charges 99 15. Income Taxes 100 16. Segment Information 104 17. Divestitures 106 Report of independent Registered Public Accounting Firm (PCAOB ID: 42 ) 122 53 WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (LOSS) Year Ended December 31, (Millions of dollars, except per share data) 2021 2020 2019 Net sales $ 21,985 $ 19,456 $ 20,419 Expenses Cost of products sold 17,576 15,614 16,908 Gross margin 4,409 3,842 3,511 Selling, general and administrative 2,081 1,877 2,142 Intangible amortization 47 62 69 Restructuring costs 38 288 188 Impairment of goodwill and other intangibles — 7 — (Gain) loss on sale and disposal of businesses ( 105 ) ( 7 ) ( 437 ) Operating profit 2,348 1,615 1,549 Other (income) expense Interest and sundry (income) expense ( 159 ) ( 21 ) ( 168 ) Interest expense 175 189 187 Earnings before income taxes 2,332 1,447 1,530 Income tax expense (benefit) 518 382 348 Equity method investment income (loss), net of tax ( 8 ) — — Net earnings 1,806 1,065 1,182 Less: Net earnings (loss) available to noncontrolling interests 23 ( 10 ) 14 Net earnings available to Whirlpool $ 1,783 $ 1,075 $ 1,168 Per share of common stock Basic net earnings available to Whirlpool $ 28.73 $ 17.15 $ 18.34 Diluted net earnings available to Whirlpool $ 28.36 $ 16.98 $ 18.19 Weighted-average shares outstanding (in millions) Basic 62.1 62.7 63.7 Diluted 62.9 63.3 64.2 The accompanying notes are an integral part of these Consolidated Financial Statements. 54 WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended December 31, (Millions of dollars) 2021 2020 2019 Net earnings (loss) $ 1,806 $ 1,065 $ 1,182 Other comprehensive income (loss), before tax: Foreign currency translation adjustments 364 ( 385 ) 54 Derivative instruments: Net gain (loss) arising during period 282 ( 43 ) 71 Less: reclassification adjustment for gain (loss) included in net earnings (loss) 255 ( 126 ) 88 Derivative instruments, net 27 83 ( 17 ) Defined benefit pension and postretirement plans: Prior service (cost) credit arising during period — 156 9 Net gain (loss) arising during period 56 ( 78 ) ( 6 ) Less: amortization of prior service credit (cost) and actuarial (loss) ( 48 ) ( 93 ) ( 49 ) Defined benefit pension and postretirement plans, net 104 171 52 Other comprehensive income (loss), before tax 495 ( 131 ) 89 Income tax benefit (expense) related to items of other comprehensive income (loss) ( 41 ) ( 60 ) ( 12 ) Other comprehensive income (loss), net of tax $ 454 $ ( 191 ) $ 77 Comprehensive income (loss) $ 2,260 $ 874 $ 1,259 Less: comprehensive income (loss), available to noncontrolling interests 23 ( 8 ) 14 Comprehensive income (loss) available to Whirlpool $ 2,237 $ 882 $ 1,245 The accompanying notes are an integral part of these Consolidated Financial Statements. 55 WHIRLPOOL CORPORATION CONSOLIDATED BALANCE SHEETS At December 31, (Millions of dollars) 2021 2020 Assets Current assets Cash and cash equivalents $ 3,044 $ 2,924 Accounts receivable, net of allowance of $ 98 and $ 132 , respectively 3,100 3,109 Inventories 2,717 2,301 Prepaid and other current assets 834 795 Total current assets 9,695 9,129 Property, net of accumulated depreciation of $ 6,619 and $ 6,780 , respectively 2,805 3,199 Right of use assets 946 989 Goodwill 2,485 2,496 Other intangibles, net of accumulated amortization of $ 522 and $ 673 , respectively 1,981 2,194 Deferred income taxes 1,920 2,189 Other noncurrent assets 453 240 Total assets $ 20,285 $ 20,436 Liabilities and stockholders' equity Current liabilities Accounts payable $ 5,413 $ 4,834 Accrued expenses 609 637 Accrued advertising and promotions 854 831 Employee compensation 576 648 Notes payable 10 12 Current maturities of long-term debt 298 298 Other current liabilities 750 1,070 Total current liabilities 8,510 8,330 Noncurrent liabilities Long-term debt 4,929 5,059 Pension benefits 378 516 Postretirement benefits 142 166 Lease liabilities 794 838 Other noncurrent liabilities 519 732 Total noncurrent liabilities 6,762 7,311 Stockholders' equity Common stock, $ 1 par value, 250 million shares authorized, 114 million and 113 million shares issued, respectively, and 59 million and 63 million shares outstanding, respectively 114 113 Additional paid-in capital 3,025 2,923 Retained earnings 10,170 8,725 Accumulated other comprehensive loss ( 2,357 ) ( 2,811 ) Treasury stock, 55 million and 50 million shares, respectively ( 6,106 ) ( 5,065 ) Total Whirlpool stockholders' equity 4,846 3,885 Noncontrolling interests 167 910 Total stockholders' equity 5,013 4,795 Total liabilities and stockholders' equity $ 20,285 $ 20,436 The accompanying notes are an integral part of these Consolidated Financial Statements. 56 WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (Millions of dollars) 2021 2020 2019 Operating activities Net earnings $ 1,806 $ 1,065 $ 1,182 Adjustments to reconcile net earnings to cash provided by (used in) operating activities: Depreciation and amortization 494 568 587 Impairment of goodwill and other intangibles — 7 — (Gain) loss on sale and disposal of businesses ( 105 ) ( 7 ) ( 437 ) (Gain) loss on previously held equity interest ( 42 ) — — Changes in assets and liabilities: Accounts receivable ( 232 ) ( 940 ) ( 87 ) Inventories ( 648 ) 249 ( 17 ) Accounts payable 949 341 140 Accrued advertising and promotions 70 ( 123 ) 118 Accrued expenses and current liabilities 125 ( 287 ) 22 Taxes deferred and payable, net 130 154 ( 122 ) Accrued pension and postretirement benefits ( 116 ) ( 30 ) ( 81 ) Employee compensation 16 303 106 Other ( 271 ) 200 ( 181 ) Cash provided by (used in) operating activities 2,176 1,500 1,230 Investing activities Capital expenditures ( 525 ) ( 410 ) ( 532 ) Proceeds from sale of assets and businesses 302 166 1,174 Acquisition of businesses, net of cash acquired ( 46 ) — — Cash held by divested businesses ( 393 ) — — Other 2 7 ( 6 ) Cash provided by (used in) investing activities ( 660 ) ( 237 ) 636 Financing activities Net proceeds from borrowings of long-term debt 300 1,033 700 Net proceeds (repayments) of long-term debt ( 300 ) ( 569 ) ( 949 ) Net proceeds (repayments) from short-term borrowings ( 1 ) ( 330 ) ( 723 ) Dividends paid ( 338 ) ( 311 ) ( 305 ) Repurchase of common stock ( 1,041 ) ( 121 ) ( 148 ) Common stock issued 76 44 8 Other ( 35 ) 1 ( 7 ) Cash provided by (used in) financing activities ( 1,339 ) ( 253 ) ( 1,424 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 67 ) ( 28 ) ( 28 ) Increase (decrease) in cash, cash equivalents and restricted cash 110 982 414 Cash, cash equivalents and restricted cash at beginning of year 2,934 1,952 1,538 Cash, cash equivalents and restricted cash at end of period $ 3,044 $ 2,934 $ 1,952 Supplemental disclosure of cash flow information Cash paid for interest $ 169 $ 193 $ 194 Cash paid for income taxes $ 388 $ 229 $ 469 The accompanying notes are an integral part of these Consolidated Financial Statements. 57 WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Year ended December 31, (Millions of dollars) 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 $ 3,313 $ 7,041 $ ( 2,695 ) $ ( 2,059 ) $ 112 $ 914 Comprehensive income Net earnings (loss) 1,182 1,168 — — — 14 Other comprehensive income (loss) 77 — 77 — — — Comprehensive income 1,259 1,168 77 — — 14 Adjustment to beginning retained earnings $ 61 $ 61 Stock issued (repurchased) ( 110 ) — — ( 110 ) — — Dividends declared ( 313 ) ( 308 ) — — — ( 5 ) Balances, December 31, 2019 4,210 7,962 ( 2,618 ) ( 2,169 ) 112 923 Comprehensive income Net earnings (loss) 1,065 1,075 — — — ( 10 ) Other comprehensive income (loss) ( 191 ) — ( 193 ) — — 2 Comprehensive income 874 1,075 ( 193 ) — — ( 8 ) Stock issued (repurchased) 28 — — 27 1 — Dividends declared ( 317 ) ( 312 ) — — — ( 5 ) Balances, December 31, 2020 4,795 8,725 ( 2,811 ) ( 2,142 ) 113 910 Comprehensive income Net earnings 1,806 1,783 — — — 23 Other comprehensive income (loss) 454 — 454 — — — Comprehensive income 2,260 1,783 454 — — 23 Stock issued (repurchased) ( 938 ) — — ( 939 ) 1 — Dividends declared ( 340 ) ( 338 ) — — — ( 2 ) Acquisitions and divestitures ( 764 ) — — — — ( 764 ) Balances, December 31, 2021 $ 5,013 $ 10,170 $ ( 2,357 ) $ ( 3,081 ) $ 114 $ 167 The accompanying notes are an integral part of these Consolidated Financial Statements. 58 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (1) SIGNIFICANT ACCOUNTING POLICIES General Information Whirlpool Corporation, a Delaware corporation, manufactures products in 10 countries and markets products in nearly every country around the world under brand names such as Whirlpool , KitchenAid , Maytag , Consul , Brastemp , Amana , Bauknecht , JennAir, Indesit, Yummly and Hotpoint *. We conduct our business through four operating segments, which we define based on geography. Whirlpool Corporation's operating and reportable segments consist of North America; Europe, Middle East and Africa ("EMEA"); Latin America and Asia. Principles of Consolidation The consolidated financial statements are prepared in conformity with GAAP, and include all majority-owned subsidiaries. All material intercompany transactions have been eliminated upon consolidation. 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. Our primary business purpose and involvement with VIEs is for product development and distribution. Risks and Uncertainties The Consolidated Financial Statements presented herein reflect estimates and assumptions made by management at December 31, 2021 and for the twelve months ended December 31, 2021. Such estimates and assumptions affect, among other things, the Company’s goodwill, long-lived asset and indefinite-lived intangible asset valuation; inventory valuation; 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 February 10, 2022, including those resulting from the impacts of COVID-19 pandemic or other macroeconomic factors, will be reflected in management’s estimates for future periods. Goodwill and indefinite-lived intangible assets We continue to monitor the significant global economic uncertainty to assess the outlook for demand for our products and the impact on our business and our overall financial performance. The Maytag trademark continues to be at risk at December 31, 2021. The goodwill in any of our reporting units or other indefinite-lived intangible assets are not presently at risk for future impairment. The potential impact of demand disruptions, production impacts or supply constraints along with a number of other factors could negatively effect revenues for the Maytag trademark, but we remain committed to the strategic actions necessary to realize the long-term forecasted profitability and recover from the supply constraints. A lack of recovery or further deterioration in market conditions, a sustained trend of weaker than expected financial performance in our Maytag trademark, among other factors, as a result of the COVID-19 pandemic, other macroeconomic factors or other unforeseen events could result in an impairment charge in future periods which could have a material adverse effect on our financial statements. * Whirlpool ownership of the Hotpoint brand in the EMEA and Asia Pacific regions is not affiliated with the Hotpoint brand sold in the Americas. 59 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Use of Estimates We are required to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes. The most significant assumptions are estimates in determining the fair value of goodwill and indefinite-lived intangible assets, legal contingencies, income taxes and pension and other postretirement benefits. Actual results could differ materially from those estimates. Revenue Recognition Revenue is recognized when performance obligations under the terms of a contract with our customers are satisfied, the sales price is determinable, and the risk and rewards of ownership are transferred. Generally the risk and rewards of ownership are transferred with the transfer of control of our products and services. For the majority of our sales, control is transferred to the customer as soon as products are shipped. For a portion of our sales, control is transferred to the customer upon receipt of products at the customer's location. Sales are net of allowances for product returns, which are based on historical return rates and certain promotions. See Note 2 to the Consolidated Financial Statements for additional information. Sales Incentives The cost of sales incentives is accrued at the date at which revenue is recognized by Whirlpool as a reduction of revenue. If new incentives are added after the product has been shipped, then they are accrued at that time, also as a reduction of revenue. These accrued promotions are recognized based on the expected value amount of incentives that will be ultimately claimed by trade customers or consumers. The expected value is the sum of probability-weighted amounts in a range of possible consideration amounts. If the amount of incentives cannot be reasonably estimated, an accrued promotion liability is recognized for the maximum potential amount. See Note 2 to the Consolidated Financial Statements for additional information. Accounts Receivable and Allowance for Expected Credit Losses We carry accounts receivable at sales value less an allowance for expected credit losses. We estimate our expected credit losses primarily by using an aging methodology and establish customer-specific reserves for higher risk trade customers. Our expected credit losses are evaluated and controlled within each geographic region considering the unique credit risk specific to the country, marketplace and economic environment. We take into account a combination of specific customer circumstances, credit conditions, market conditions, reasonable and supportable forecasts of future economic conditions and the history of write-offs and collections in developing the reserve. The adoption of the new credit loss standard did not have a material impact on the Consolidated Financial Statements. We evaluate items on an individual basis when determining accounts receivable write-offs. In general, our policy is to not charge interest on trade receivables after the invoice becomes past due. A receivable is considered past due if payment has not been received within agreed upon invoice terms. 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 Balance Sheets. These transfers do not require continuing involvement from the Company. Certain arrangements include servicing of transferred receivables by Whirlpool. Under these arrangements the Company received cash proceeds of $ 594 million during the twelve months ended December 31, 2020. The amount of cash proceeds received were immaterial for the twelve months ended December 31, 2021. Outstanding accounts receivable transferred under arrangements where the Company continues to service the transferred asset were $ 30 million as of December 31, 2020. These amounts were not material as of December 31, 2021. 60 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Freight and Warehousing Costs We classify freight and warehousing costs within cost of products sold in our Consolidated Statements of Income (Loss). Cash and Cash Equivalents All highly liquid debt instruments purchased with an initial maturity of three months or less are considered cash equivalents. Short-term investments are primarily comprised of money market funds and highly liquid, low risk investments with initial maturities less than 90 days. See Note 11 to the Consolidated Financial Statements for additional information. Fair Value Measurements We measure fair value 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 that market participants would use in pricing an asset or liability. 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. Certain investments are valued based on net asset value (NAV), which approximates fair value. Such basis is determined by referencing the respective fund's underlying assets. There are no unfunded commitments or other restrictions associated with these investments. We had Level 3 assets at December 31, 2021 and 2020 that included pension plan assets disclosed in Note 9 to the Consolidated Financial Statements. We had no Level 3 liabilities at December 31, 2021 and 2020, respectively. We measured fair value for money market funds, available for sale investments and held-to-maturity securities using quoted market prices in active markets for identical or comparable assets. We measured fair value for derivative contracts, all of which have counterparties with high credit ratings, based on model driven valuations using significant inputs derived from observable market data. We also measured fair value for disposal groups held for sale based on the expected proceeds received from the sale. For assets measured at net asset values, we have no unfunded commitments or significant restraints. We measured fair value (non-recurring) for goodwill and other intangibles using a discounted cash flow model and a relief-from-royalty method, respectively, with inputs based on both observable and unobservable market data. Inventories North America and EMEA reporting segments use the FIFO method of inventory valuation. Latin America and Asia inventories are stated at average cost. Costs include materials, labor and production overhead at normal production capacity. Costs do not exceed net realizable values. Property Property is stated at cost, net of accumulated depreciation. For production machinery and equipment, we record depreciation based on units produced, unless units produced drop below a minimum threshold at which point depreciation is recorded using the straight-line method, excluding property acquired from the Hefei Sanyo (subsequently "Whirlpool China") acquisition and certain property acquired from the Indesit acquisition in 2014. For certain production assets acquired from Indesit, we depreciate costs based on the straight-line method. Property, plant and equipment and related accumulated depreciation of divested businesses have been removed in 2021. For additional information, see Note 17 to the Consolidated Financial Statements. Depreciation expense for property, including accelerated depreciation classified as restructuring expense in our Consolidated Statements of Income (Loss), was $ 447 million, $ 506 million and $ 518 million in 2021, 2020 and 2019, respectively. 61 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The following table summarizes our property at December 31, 2021 and 2020: Millions of dollars 2021 2020 Estimated Useful Life Land $ 84 $ 92 n/a Buildings 1,249 1,517 10 to 50 years Machinery and equipment 8,091 8,370 3 to 20 years Accumulated depreciation ( 6,619 ) ( 6,780 ) Property plant and equipment, net (1) $ 2,805 $ 3,199 (1) Decrease of $ 379 million in property, plant and equipment, net, is due to the deconsolidation of Whirlpool China and divestment of Turkey manufacturing entity. For additional information, see Note 17 to the Consolidated Financial Statements. We classify gains and losses associated with asset dispositions in the same line item as the underlying depreciation of the disposed asset in the Consolidated Statements of Income (Loss). During the twelve months ended December 31, 2021, we disposed of buildings, machinery and equipment with a net book value of $ 17 million, compared to $ 25 million in prior year. The net gain on the other disposals were not material in 2021 or 2020. During the twelve months ended December 31, 2020, we also retired land and buildings related to a sale-leaseback transaction and machinery and equipment with a net book value of approximately $ 26 million that was no longer in use. During 2020, we recognized a gain of $ 113 million in cost of products sold ($ 74 million) and selling, general and administrative ($ 39 million) primarily related to the sale-leaseback transaction in the fourth quarter of 2020. We record impairment losses on long-lived assets, excluding goodwill and indefinite-lived intangibles, when events and circumstances indicate the assets may be impaired and the estimated undiscounted future cash flows generated by those assets are less than their carrying amounts. There were no significant impairments recorded during 2021, 2020 and 2019. Leases We determine if an arrangement contains a lease at contract inception and 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 Balance Sheets and we recognize lease expense for these leases on a straight-line basis over the lease term. We elect to not separate lease and non-lease components for all leases. 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. 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. Sale-leaseback transactions There were no material sale-lease back transactions in 2021. In the fourth quarter of 2020, the Company sold and leased back a group of non-core properties for net proceeds of approximately $ 139 million. The initial total annual rent for the properties is approximately $ 10 million per year over an initial 14 year lease term and is subject to annual rent increases. Under the terms of the lease agreement, the Company is responsible for all taxes, insurance and utilities and is required to adequately maintain the properties for the lease term. The Company has four sequential five-year renewal options. 62 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The transaction met the requirements for sale-leaseback accounting. Accordingly, the Company recorded the sale of the properties, which resulted in a gain of approximately $ 113 million ($ 89 million, net of tax) recorded in cost of products sold ($ 74 million) and selling, general and administrative expense ($ 39 million) in the Consolidated Statements of Income (Loss). The related land and buildings were removed from property, plant and equipment, net and the appropriate right-of-use asset and lease liabilities of approximately $ 128 million were recorded in the Consolidated Balance Sheets. In the fourth quarter of 2019, the Company sold and leased back a group of non-core properties for net proceeds of approximately $ 140 million. The initial total annual rent for the properties is approximately $ 10 million per year over an initial 12 year lease term and is subject to annual rent increases. Under the terms of the lease agreement, the Company is responsible for all taxes, insurance and utilities and is required to adequately maintain the properties for the lease term. The Company has five sequential five-year renewal options. The transaction met the requirements for sale-leaseback accounting. Accordingly, the Company recorded the sale of the properties, which resulted in a gain of approximately $ 111 million ($ 88 million, net of tax) recorded in cost of products sold ($ 95 million) and selling, general and administrative expense ($ 16 million) in the Consolidated Statements of Income (Loss). The related land and buildings were removed from property, plant and equipment, net and the appropriate right-of-use asset and lease liabilities of approximately $ 108 million were recorded in the Consolidated Balance Sheets. Goodwill and Other Intangibles We perform our annual impairment assessment for goodwill and indefinite-lived intangible assets as of October 1st and more frequently if indicators of impairment exist. We consider qualitative factors to assess if it is more likely than not that the fair value for goodwill or indefinite-lived intangible assets is below the carrying amount. We may also elect to bypass the qualitative assessment and perform a quantitative assessment. In conducting a qualitative assessment, the Company analyzes a variety of events or factors that may influence the fair value of the reporting unit or indefinite-lived intangible asset, including, but not limited to: macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, share price and other relevant factors. Goodwill We have four reporting units for which we assess for impairment which also represent our operating segments and are defined as North America, EMEA, Latin America and Asia. In performing a quantitative assessment of goodwill, we estimate each reporting unit's fair value using the best information available to us, including market information and discounted cash flow projections, also referred to as the income approach. The income approach uses the reporting unit's projections of estimated operating results and cash flows that are discounted using a market participant discount rate based on a weighted-average cost of capital. Additionally, we validate our estimates of fair value under the income approach by comparing the values to fair value estimates using a market approach. There was no impairment of goodwill in 2021, 2020 and 2019. See Note 6 and Note 11 to the Consolidated Financial Statements for additional information about goodwill. Intangible Assets We perform a quantitative assessment of other indefinite-lived intangible assets, which are primarily comprised of trademarks. We estimate the fair value of these intangible assets using the relief-from-royalty method, which primarily requires assumptions related to projected revenues from our long-range plan, assumed royalty rates that could be payable if we did not own the trademark, and a market participant discount rate based on a weighted-average cost of capital. Other definite-life intangible assets are amortized over their useful life and are assessed for impairment when impairment indicators are present. 63 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) There was no impairment on other intangibles in 2021. We recorded an immaterial impairment charge on other intangibles in 2020. There was no impairment on other intangibles in 2019. See Note 6 and Note 11 to the Consolidated Financial Statements for additional information about other intangibles. Supply Chain Financing Arrangements The Company has ongoing agreements globally with various third-parties to allow certain suppliers the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. We have no economic interest in the sale of these receivables and no direct financial relationship with the financial institutions concerning these services. Our obligations to suppliers, including amounts due and scheduled payment terms, are not impacted. All outstanding balances under these programs are recorded in accounts payable on our Consolidated Balance Sheets. At December 31, 2021 and 2020, approximately $ 1.4 billion and $ 1.2 billion, respectively, have been issued to participating financial institutions. A downgrade in our credit rating or changes in the financial markets could limit the financial institutions’ willingness to commit funds to, and participate in, the programs. We do not believe such risk would have a material impact on our working capital or cash flows. Due to the completed partial tender offer for Whirlpool China and subsequent deconsolidation of the subsidiary during the second quarter of 2021, we no longer have material supply chain financing arrangements in China. For additional information see Note 17 to the Consolidated Financial Statements. Derivative Financial Instruments We use derivative instruments designated as cash flow, fair value and net investment hedges to manage our exposure to the volatility in material costs, foreign currency and interest rates on certain debt instruments. Changes in the fair value of derivative assets or liabilities (i.e., gains or losses) are recognized depending upon the type of hedging relationship and whether a hedge has been designated. For those derivative instruments that qualify for hedge accounting, we designate the hedging instrument, based upon the exposure being hedged, as a cash flow hedge, fair value hedge, or a hedge of a net investment in a foreign operation. For a derivative instrument designated as a fair value hedge, the gain or loss on the derivative is recognized in earnings immediately with the offsetting gain or loss on the hedged item. For a derivative instrument designated as a cash flow hedge, the effective portion of the derivative's gain or loss is initially reported as a component of Other Comprehensive Income (Loss) and is subsequently recognized in earnings when the hedged exposure affects earnings. For a derivative instrument designated as a hedge of a net investment in a foreign operation, the effective portion of the derivative's gain or loss is reported in Other Comprehensive Income (Loss) as part of the cumulative translation adjustment. Changes in fair value of derivative instruments that do not qualify for hedge accounting are recognized immediately in current net earnings. See Note 10 to the Consolidated Financial Statements for additional information about hedges and derivative financial instruments. Foreign Currency Translation and Transactions Foreign currency denominated assets and liabilities are translated into United States dollars at exchange rates existing at the respective balance sheet dates. Translation adjustments resulting from fluctuations in exchange rates are recorded as a separate component of Accumulated Other Comprehensive Income (Loss). The results of operations of foreign subsidiaries are translated at the average exchange rates during the respective periods. Gains and losses resulting from foreign currency transactions are included in net earnings. Research and Development Costs Research and development costs are charged to expense and totaled $ 485 million, $ 455 million and $ 541 million in 2021, 2020 and 2019, respectively. 64 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Advertising Costs Advertising costs are charged to expense when the advertisement is first communicated and totaled $ 345 million, $ 273 million and $ 335 million in 2021, 2020 and 2019, respectively. Income Taxes and Indirect Tax Matters We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial statement and tax basis of assets and liabilities using enacted rates. The effect of a change in tax rates on deferred tax assets is recognized in income in the period of the enactment date. We recognize, primarily in other noncurrent liabilities, in the Consolidated Balance Sheets, the effects of uncertain income tax positions. Interest and penalties related to uncertain tax positions are reflected in income tax expense. We record liabilities, net of the amount, after determining it is more likely than not that the uncertain tax position will not be sustained upon examination based on its technical merits. We accrue for indirect tax contingencies when we determine that a loss is probable and the amount or range of loss is reasonably estimable. Provision is made for taxes on undistributed earnings of foreign subsidiaries and related companies to the extent that such earnings are not deemed to be permanently invested. See Note 15 to the Consolidated Financial Statements for additional information. Stock Based Compensation Stock based compensation expense is based on the grant date fair value and is expensed over the period during which an employee is required to provide service in exchange for the award (generally the vesting period). The Company's stock based compensation includes stock options, performance stock units, and restricted stock units, among other award types. The fair value of stock options are determined using the Black-Scholes option-pricing model, which incorporates assumptions regarding the risk-free interest rate, expected volatility, expected option life, expected forfeitures and dividend yield. Expected forfeitures are based on historical experience. Stock options are granted with an exercise price equal to the closing stock price on the date of grant. The fair value of restricted stock units and performance stock units is generally based on the closing market price of Whirlpool common stock on the grant date. Stock based compensation is recorded in selling, general and administrative expense on our Consolidated Statements of Income (Loss). See Note 13 to the Consolidated Financial Statements for additional information. Out-of-Period Adjustment During the third quarter of 2019, we recorded a net adjustment of $ 34 million related to prior years resulting from the one time transition tax deemed repatriation on earnings of certain foreign subsidiaries that were previously tax deferred and related impacts. This adjustment resulted in a decrease of net earnings available to Whirlpool of $ 34 million and a decrease of $ 0.53 in diluted earnings per share. The Company determined the impact was immaterial to prior periods and is not material to the Consolidated Statements of Income (Loss) for the year ended December 31, 2019. Equity Method Investments After May 6, 2021, Whirlpool holds an equity interest of approximately 20 % in Whirlpool China, an entity which was previously controlled by the Company. We account for the remaining interest under equity method accounting and Whirlpool China and its subsidiaries continue to supply the Company in the normal course of business. Whirlpool China was also granted a license to sell Whirlpool-branded products in China. Subsequent to the completion of the partial tender offer for Whirlpool China and deconsolidation of the entity in the second quarter of 2021, we made purchases from Whirlpool China of $ 290 million for the twelve months ended December 31, 2021. The outstanding amount due to Whirlpool China and its subsidiaries is $ 137 million as of December 31, 2021. The licensing revenue and outstanding 65 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) accounts receivable from Whirlpool China and its subsidiaries are not material for the periods presented. As of December 31, 2021, the carrying value of the equity interest in Whirlpool China is $ 206 million and is included in Other noncurrent assets in the Consolidated Balance Sheet. The Company’s share of the results of equity method investments and elimination of intra-entity results are included in the Equity method investment income (loss), net of tax in the Consolidated Income Statement and Other noncurrent assets in the Consolidated Balance Sheet. The impact of equity method investments is not ma terial for the periods presented. For additional information, see Note 17 to the Consolidated Financial Statements. Related Party Transaction In 2018, Whirlpool of India Limited ("Whirlpool India"), a majority-owned subsidiary of Whirlpool Corporation, acquired a 49 % equity interest in Elica PB India for $ 22 million. On September 27, 2021, Whirlpool India entered into a share purchase agreement to acquire an additional 38 % equity interest in Elica PB India for $ 57 million, which resulted in a controlling equity ownership of 87 %. Following the closing of the transaction on September 29, 2021, Elica PB India is consolidated in Whirlpool Corporation's financial statements and is reported within our Asia reportable segment. The transaction resulted in a gain of approximately $ 42 million on the Company’s previously held equity interest. This gain was recorded within Interest and sundry (income) expense during the third quarter of 2021. The Company has finalized the independent appraisal for the purpose of allocating the purchase price to the individual assets acquired and liabilities assumed in the acquisition during the fourth quarter of 2021. This resulted in adjustments to the carrying values of recorded assets and liabilities, and the determination of residual amounts allocated to goodwill. The final allocation of the purchase prices included in the current period balance sheet is based on the final determination of asset fair values. Goodwill of $ 100 million, which is not deductible for tax purposes, has been allocated to the Asia reportable segment. The allocation has been made on the basis that the anticipated synergies identified will primarily benefit this reportable segment. Elica PB India is a VIE for which the Company is the primary beneficiary. The carrying amount of customer relationships, which are included in Other intangible assets, net of accumulated amortization, amounts to $ 36 million. Other assets or liabilities of Elica PB India are not material to the Consolidated Financial Statements of the Company. Both Whirlpool India and the non-controlling interest shareholders retain an option for Whirlpool India to purchase the remaining equity interest in Elica PB India for fair value, which could be material to the financial statements of the Company, depending on the performance of the business. In the third quarter of 2019, we sold our 12.54 % ownership interest in Elica S.p.A. for a nominal amount. Adoption of New Accounting Standards On January 1, 2021 we adopted the following standards, which did not have a material impact on our Consolidated Financial Statements: Standard Effective Date 2019-12 Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes January 1, 2021 Accounting Pronouncements Issued But Not Yet Effective In March 2020, the FASB issued Update 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting". The amendments in Update 2020-04 are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The new guidance provides the following optional expedients: simplify 66 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) accounting analyses under current U.S. GAAP for contract modifications, simplify the assessment of hedge effectiveness, allow hedging relationships affected by reference rate reform to continue and allow a one-time election to sell or transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform. In January 2021, the FASB issued Update 2021-01, "Reference Rate Reform (Topic 848): Scope". The update provides additional optional guidance on the transition from LIBOR to include derivative instruments that use an interest rate for margining, discounting or contract price alignment. The standard will ease, if warranted, the requirements for accounting for the future effects of the rate reform. An entity may elect to apply the amendments prospectively through December 31, 2022. The standard is not expected to have a material impact on our Consolidated Financial Statements. The FASB has issued the following relevant standards, which are not expected to have a material impact on our Consolidated Financial Statements: Standard Effective Date 2021-10 Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance January 1, 2022 All other issued and not yet effective accounting standards are not relevant to the Company. (2) REVENUE RECOGNITION Revenue from Contracts with Customers In accordance with Topic 606, revenue is recognized when performance obligations under the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our products or services. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or providing services. Certain customers may receive cash and/or non-cash incentives, which are accounted for as variable consideration. To achieve the core principle, the Company applies the following five steps: 1. Identify the contract with a customer A contract with a customer exists when (i) the Company enters into an agreement with a customer that defines each party's rights regarding the products or services to be transferred and identifies the payment terms related to these products or services, (ii) both parties to the contract are committed to perform their respective obligations, (iii) the contract has commercial substance, and (iv) the Company determines that collection of substantially all consideration for products or services that are transferred is probable based on the customer's intent and ability to pay the promised consideration. The Company applies judgment in determining the customer's ability and intention to pay, which is based on a variety of factors including the customer's payment history or, in the case of a new customer, published credit and financial information pertaining to the customer. 2. Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the products or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the products or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised products or services, the Company must apply judgment to determine whether promised products or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, the promised products or services are accounted for as a combined performance obligation. The Company has elected to account for shipping and handling activities as a fulfillment cost as permitted by the standard. 67 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 3. Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products or services to the customer. To the extent the transaction price is variable, revenue is recognized at an amount equal to the consideration to which the Company expects to be entitled. This estimate includes customer sales incentives which are accounted for as a reduction to revenue and estimated primarily using the expected value method. Determining the transaction price requires significant judgment, which is discussed by revenue category in further detail below. In practice, we do not offer extended payment terms beyond one year to customers. As such, we do not adjust our consideration for financing arrangements. 4. Allocate the transaction price to performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless a portion of the variable consideration related to the contract is allocated entirely to a performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. 5. Recognize revenue when or as the Company satisfies a performance obligation The Company generally satisfies performance obligations at a point in time. Revenue is recognized based on the transaction price at the time the related performance obligation is satisfied by transferring a promised product or service to a customer. The impact to revenue related to prior period performance obligations is less than 1% of global consolidated revenues for the twelve months ended December 31, 2021 and 2020, respectively. Disaggregation of Revenue The following table presents our disaggregated revenues by revenue source. We sell products within all major product categories in each operating segment. For additional information on the disaggregated revenues by geographical regions, see Note 16 to the Consolidated Financial Statements. Twelve months ended Millions of dollars 2021 2020 Major product categories: Laundry $ 6,122 $ 5,675 Refrigeration 6,677 6,058 Cooking 5,639 4,782 Dishwashing 1,890 1,605 Total major product category net sales $ 20,327 $ 18,120 Spare parts and warranties 1,187 913 Other 470 423 Total net sales $ 21,985 $ 19,456 The impact to revenue related to prior period performance obligations is less than 1% of global consolidated revenues for the twelve months ended December 31, 2021. Major Product Category Sales Whirlpool Corporation manufactures and markets a full line of home appliances and related products and services. Our major product categories include the following: refrigeration, laundry, 68 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) cooking, and dishwashing. The refrigeration product category includes refrigerators, freezers, ice makers and refrigerator water filters. The laundry product category includes laundry appliances, commercial laundry products and related laundry accessories. The cooking category includes cooking appliances and other small domestic appliances. The dishwashing product category includes dishwasher appliances and related accessories. For product sales, we transfer control and recognize a sale when we ship the product from our manufacturing facility to our customer or when the customer receives the product based upon agreed shipping terms. Each unit sold is considered an independent, unbundled performance obligation. We do not have any additional performance obligations other than product sales that are material in the context of the contract. The amount of consideration we receive and revenue we recognize varies due to sales incentives and returns we offer to our customers. When we give our customers the right to return eligible products, we reduce revenue for our estimate of the expected returns which is primarily based on an analysis of historical experience. Spare Parts & Warranties Spare parts are primarily sold to parts distributors and retailers, with a small number of sales to end consumers. For spare part sales, we transfer control and recognize a sale when we ship the product to our customer or when the customer receives product based upon agreed shipping terms. Each unit sold is considered an independent, unbundled performance obligation. We do not have any additional performance obligations other than spare part sales that are material in the context of the contract. The amount of consideration we receive and revenue we recognize varies due to sales incentives and returns we offer to our customers. When we give our customers the right to return eligible products, we reduce revenue for our estimate of the expected returns which is primarily based on an analysis of historical experience. Warranties are classified as either assurance type or service type warranties. A warranty is considered an assurance type warranty if it provides the consumer with assurance that the product will function as intended. A warranty that goes above and beyond ensuring basic functionality is considered a service type warranty. The Company offers certain limited warranties that are assurance type warranties and extended service arrangements that are service type warranties. Assurance type warranties are not accounted for as separate performance obligations under the revenue model. If a service type warranty is sold with a product or separately, revenue is recognized over the life of the warranty. The Company evaluates warranty offerings in comparison to industry standards and market expectations to determine appropriate warranty classification. Industry standards and market expectations are determined by jurisdictional laws, competitor offerings and customer expectations. Market expectations and industry standards can vary based on product type and geography. The Company primarily offers assurance type warranties. Whirlpool sells certain extended service arrangements separately from the sale of products. Whirlpool acts as a sales agent under some of these arrangements whereby the Company receives a fee that is recognized as revenue upon the sale of the extended service arrangement. The Company is also the principal for certain extended service arrangements. Revenue related to these arrangements is recognized ratably over the contract term. Other Revenue Other revenue sources include subscription arrangements and licenses as described below. The Company has a water subscription business in our Latin America segment which provides the consumer with a water filtration system that is delivered to the consumer's home. Our water subscription contracts represent a performance obligation that is satisfied over time and revenue is recognized as the performance obligation is completed. The installation and maintenance of the water filtration system are not distinct services in the context of the contract (i.e. the customer views all activities associated with the arrangement as one singular value proposition). The contract term is generally less than one year for these arrangements and revenue is recognized based on the 69 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) monthly invoiced amount which directly corresponds to the value of our performance completed to date. We license our brands in arrangements that do not include other performance obligations. Whirlpool licensing provides a right of access to the Company's intellectual property throughout the license period. Whirlpool recognizes licensing revenue over the life of the license contract as the underlying sale or usage occurs. As a result, we recognize revenue for these contracts at the amount which directly corresponds to the value provided to the customer. Costs to Obtain or Fulfill a Contract We do not capitalize costs to obtain a contract because a nominal number of contracts have terms that extend beyond one year. The Company does not have a significant amount of capitalized costs related to fulfillment. Sales Tax and Indirect Taxes The Company is subject to certain indirect taxes in certain jurisdictions including but not limited to sales tax, value added tax, excise tax and other taxes we collect concurrent with revenue-producing activities that are excluded from the transaction price, and therefore, excluded from revenue. 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 adoption of the new credit loss standard as of January 1, 2020 did not have a material impact on the Consolidated Financial Statements. The following table summarizes our allowance for doubtful accounts by operating segment for the twelve months ended December 31, 2021. Millions of dollars December 31, 2020 Charged to Earnings Write-offs Foreign Currency Other (1) December 31, 2021 Accounts receivable allowance North America $ 7 $ 3 $ ( 3 ) $ — $ — $ 7 EMEA 67 — ( 16 ) ( 6 ) — 45 Latin America 44 3 ( 3 ) ( 1 ) — 43 Asia 14 — — — ( 11 ) 3 $ 132 $ 6 $ ( 22 ) $ ( 7 ) $ ( 11 ) $ 98 Financing receivable allowance Latin America $ 27 $ — $ — $ ( 2 ) $ — $ 25 Asia 21 — — — ( 21 ) — $ 48 $ — $ — $ ( 2 ) $ ( 21 ) $ 25 Consolidated $ 180 $ 6 $ ( 22 ) $ ( 9 ) $ ( 32 ) $ 123 (1) Accounts receivable and financing receivable allowance of Whirlpool China which were previously classified under accounts receivable and noncurrent assets, respectively, have been removed as part of the deconsolidation of Whirlpool China during the second quarter. For additional information, see Note 17 to the Consolidated Financial Statements. We recorded an immaterial amount of bad debt expense for the years ended December 31, 2021 and 2020, respectively. 70 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (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 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 $ 234 million and $ 236 million for the years ended December 31, 2021 and December 31, 2020, respectively. Non-cancelable operating lease commitments that had not yet commenced were $ 69 million and $ 49 million for the periods ended December 31, 2021 and December 31, 2020, respectively. These operating leases are expected to commence before the end of fiscal year 2023 with lease terms of up to 10 years. At December 31, 2021 and 2020, we have no material leases classified as financing leases. We have approximately $ 1.1 billion of non-cancellable operating lease commitments, excluding variable consideration at December 31, 2021 and $ 1.2 billion at December 31, 2020. The undiscounted annual future minimum lease payments are summarized by year in the table below: Maturity of Lease Liabilities Operating Leases (in millions) 2022 $ 212 2023 184 2024 156 2025 122 2026 108 Thereafter 359 Total lease payments $ 1,141 Less: interest 171 Present value of lease liabilities 970 The long-term portion of the lease liabilities included in the amounts above is $ 794 million as of December 31, 2021. The remainder of our lease liabilities are included in other current liabilities in the Consolidated Balance Sheets. At December 31, 2021 and December 31, 2020, the weighted average remaining lease term and weighted average discount rate for operating leases was 7 years and 5 % and 8 years and 4 %, respectively. During the year ended December 31, 2021 the cash paid for amounts included in the measurement of the liabilities and the operating cash flows was $ 233 million. The right of use assets obtained in exchange for new liabilities was $ 179 million partially offset by $ 40 million in terminations for the year ended December 31, 2021. During the year ended December 31, 2020 the cash paid for amounts included in the measurement of the liabilities and the operating cash flows was $ 234 million. The right of use assets obtained in exchange for new liabilities was $ 315 million partially offset by $ 68 million in terminations for the year ended December 31, 2020. 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. 71 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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, except for synthetic leases (see Synthetic lease arrangements). We rent or sublease certain real estate to third parties. Our sublease portfolio primarily consists of operating leases within our warehouses, resulting in a nominal amount of sublease income for the years ended December 31, 2021 and December 31, 2020. Synthetic lease arrangements We have a number of synthetic lease arrangements with financial institutions for non-core properties. The leases contain provisions for options to purchase, extend the original term for additional periods or return the property. As of December 31, 2021, these arrangements include residual value guarantees of up to approximately $ 264 million that could potentially come due in future periods. We do not believe it is probable that any material amounts will be owed under these guarantees. Therefore, no material amounts related to the residual value guarantees are included in the lease payments used to measure the right-of-use assets and lease liabilities. The residual value guarantee amounted to $ 220 million as of December 31, 2020. The majority of these leases are classified as operating leases. We have assessed the reasonable certainty of these provisions to determine the appropriate lease term. The leases were measured using our incremental borrowing rate and are included in our right of use assets and lease liabilities in the Consolidated Balance Sheets. Rental payments are calculated at the applicable reference rate plus a margin. The impact to the Consolidated Balance Sheets and Consolidated Statements of Income (Loss) are nominal. (4) CASH, CASH EQUIVALENTS AND RESTRICTED CASH The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported within our Consolidated Statements of Cash Flows: December 31, Millions of dollars 2021 2020 2019 Cash and cash equivalents as presented in our Consolidated Balance Sheets $ 3,044 $ 2,924 $ 1,952 Restricted cash included in prepaid and other current assets — 10 — Cash, cash equivalents and restricted cash as presented in our Consolidated Statements of Cash Flows $ 3,044 $ 2,934 $ 1,952 (5) INVENTORIES The following table summarizes our inventories at December 31, 2021 and 2020: Millions of dollars 2021 2020 Finished products $ 1,958 $ 1,635 Raw materials and work in process 759 666 Total inventories $ 2,717 $ 2,301 72 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (6) GOODWILL AND OTHER INTANGIBLES Goodwill The following table summarizes goodwill attributable to our reporting units for the periods presented: Millions of dollars North America EMEA Latin America Asia Total Whirlpool Ending balance December 31, 2019 $ 1,695 $ 302 $ 33 $ 410 $ 2,440 Currency translation adjustment — 27 1 28 56 Ending balance December 31, 2020 $ 1,695 $ 329 $ 34 $ 438 $ 2,496 Currency translation adjustment — ( 22 ) ( 1 ) 3 ( 20 ) Divestitures and acquisitions (1) — ( 11 ) — 20 9 Ending balance December 31, 2021 $ 1,695 $ 296 $ 33 $ 461 $ 2,485 (1) The net change in goodwill is due to the divestiture of Turkey manufacturing entity, deconsolidation of Whirlpool China and consolidation of Elica PB India. For additional information, see Notes 1 and 17 to the Consolidated Financial Statements. 2021 and 2020 annual impairment assessment We completed our annual impairment test for goodwill as of October 1, 2021 and 2020. The Company elected to bypass the qualitative assessment and perform a quantitative assessment to evaluate goodwill for all our reporting units. Based on the quantitative assessment we determined there was no impairment of goodwill. Other Intangible Assets The following table summarizes other intangible assets for the period presented: December 31, 2021 December 31, 2020 Millions of dollars Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Other intangible assets, finite lives: Customer relationships (1) $ 443 $ ( 334 ) $ 109 $ 647 $ ( 430 ) $ 217 Patents and other (2) 191 ( 188 ) 3 327 ( 241 ) 86 Total other intangible assets, finite lives $ 634 $ ( 522 ) $ 112 $ 974 $ ( 671 ) $ 303 Trademarks, indefinite lives (3) 1,869 — 1,869 1,893 ( 2 ) 1,891 Total other intangible assets (4) $ 2,503 $ ( 522 ) $ 1,981 $ 2,867 $ ( 673 ) $ 2,194 (1) Customer relationships have an estimated useful life of 5 to 19 years. (2) Patents and other intangibles have an estimated useful life of 3 to 43 years. (3) Includes impairment charge of $ 7 million at December 31, 2020. (4) Decrease of $ 184 million in net other intangible assets is due to the deconsolidation of Whirlpool China. For additional information, see Note 17 to the Consolidated Financial Statements. 2021 and 2020 a nnual impairment assessment We completed our annual impairment assessment for other intangible assets as of October 1, 2021. The Company elected to bypass the qualitative assessment and perform a quantitative assessment to evaluate certain indefinite-lived intangible assets. Based on the results of the quantitative assessment, we determined there was no impairment of intangible assets. We completed our annual impairment assessment for other intangible assets as of October 1, 2020. The Company elected to bypass the qualitative assessment and perform a quantitative assessment 73 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) to evaluate certain indefinite-life intangible assets. Based on the results of the quantitative assessment, we recorded an immaterial intangible impairment charge in the EMEA region. See Note 11 to the Consolidated Financial Statements for additional information. Amortization expense was $ 47 million , $ 62 million and $ 69 million for the years ended December 31, 2021, 2020 and 2019, respectively. The following table summarizes our future estimated amortization expense by year: Millions of dollars 2022 $ 27 2023 24 2024 22 2025 10 2026 3 (7) FINANCING ARRANGEMENTS Long-Term Debt The following table summarizes our long-term debt at December 31, 2021 and 2020: Millions of dollars 2021 2020 Senior Note - 4.85 %, maturing 2021 $ — $ 300 Senior Note - 4.70 %, maturing 2022 300 300 Senior Note - 3.70 %, maturing 2023 250 250 Senior Note - 4.00 %, maturing 2024 300 300 Senior Note - 3.70 %, maturing 2025 350 350 Senior Note - 1.25 %, maturing 2026 (1) 566 606 Senior Note - 1.10 %, maturing 2027 (1) 679 727 Senior Note - 0.50 %, maturing 2028 (1) 566 607 Senior Note - 4.75 %, maturing 2029 694 693 Senior Note - 2.40 %, maturing 2031 300 — Senior Note - 5.15 %, maturing 2043 249 249 Senior Note - 4.50 %, maturing 2046 497 497 Senior Note - 4.60 %, maturing 2050 493 493 Other, net ( 17 ) ( 15 ) $ 5,227 $ 5,357 Less current maturities 298 298 Total long-term debt $ 4,929 $ 5,059 (1) Euro denominated debt reflects impact of currency For outstanding notes issued by our wholly-owned subsidiaries the debt is fully and unconditionally guaranteed by the Company. 74 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The following table summarizes the contractual maturities of our long-term debt, including current maturities, at December 31, 2021: Millions of dollars 2022 $ 298 2023 247 2024 297 2025 347 2026 563 Thereafter 3,475 Long-term debt, including current maturities $ 5,227 Debt Offering On April 29, 2021, Whirlpool Corporation (the “Company”), completed its inaugural Sustainability Bond offering of $ 300 million in principal amount of 2.400 % Senior Notes due 2031 (the “2031 Notes”), in a public offering pursuant to a registration statement on Form S-3 (File No. 333-255372). The 2031 Notes were issued under an indenture (the “Indenture”), dated March 20, 2000, between the Company, as issuer, and U.S. Bank National Association (as successor to Citibank, N.A.), as trustee. The sale of the 2031 Notes was made pursuant to the terms of an Underwriting Agreement, dated April 26, 2021 (the “Underwriting Agreement”), among the Company, as issuer, and BNP Paribas Securities Corp., BofA Securities, Inc., J.P. Morgan Securities LLC, and Wells Fargo Securities, LLC, as representatives of the several underwriters in connection with the offering and sales of the 2031 Notes. The 2031 Notes contain covenants that limit the Company's ability to incur certain liens or enter into certain sale and lease-back transactions. In addition, if we experience a specific kind of change of control, we are required to make an offer to purchase all of the notes at a purchase price of 101 % of the principal amount thereof, plus accrued and unpaid interest. The Company used the net proceeds from the sale of the 2031 Notes to redeem $ 300 million aggregate principal amount of 4.850 % senior notes which was paid June 15, 2021. Consistent with the Company’s Sustainability Bond Framework, the Company intends to allocate an amount equal to the net proceeds from the sale of the 2031 Notes to fund one or more new or existing environmental and social Eligible Projects, as defined in the Company’s prospectus supplement dated April 26, 2021. On May 7, 2020, the Company completed its offering of $ 500 million in principal amount of 4.60 % Senior Notes due 2050 (the "2050 Notes"), in a public offering pursuant to a registration statement on Form S-3 (File No. 333-224381). The 2050 Notes were issued under the Indenture. The 2050 Notes contain covenants that limit the Company's ability to incur certain liens or enter into certain sale and lease-back transactions. In addition, if we experience a specific kind of change of control, we are required to make an offer to purchase all of the notes at a purchase price of 101 % of the principal amount thereof, plus accrued and unpaid interest. The Company used the net proceeds from the sale of the 2050 Notes to repay a portion of the outstanding borrowings under the Company’s revolving credit facility, as amended and restated, dated as of August 6, 2019, among the Company, certain other borrowers, the lenders referred to therein, JPMorgan Chase Bank, N.A. as administrative agent and Citibank, N.A., as syndication agent. On February 21, 2020, Whirlpool EMEA Finance S.à r.l., an indirect, wholly-owned finance subsidiary of Whirlpool Corporation, completed a bond offering consisting of € 500 million (approximately $ 540 million at closing) in principal amount of 0.50 % Senior Notes due in 2028 (the "2028 Notes") in a public offering pursuant to a registration statement on Form S-3 (File No. 333-224381). The 2028 Notes were issued under an indenture, dated February 21, 2020, among Whirlpool EMEA Finance S.à r.l, as issuer, the Company, as parent guarantor, and U.S. Bank National Association, as trustee. Whirlpool Corporation has fully and unconditionally guaranteed the Notes on a senior unsecured basis. The 2028 Notes contain covenants that limit Whirlpool Corporation's ability to incur certain liens or enter into certain sale and lease-back transactions. In addition, if we experience a specific kind of change of control, we are required to make an offer to purchase all of the 2028 Notes at a purchase price of 101 % of the principal amount thereof, plus accrued and unpaid interest. 75 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Credit Facilities On August 6, 2019, Whirlpool Corporation entered into a Fourth Amended and Restated Long-Term Credit Agreement (the "Amended Long-Term Facility", or "revolving credit facility") by and among the Company, certain other borrowers, the lenders referred to therein, JPMorgan Chase Bank, N.A. as Administrative Agent, and Citibank, N.A., as Syndication Agent. The Amended Long-Term Facility provides aggregate borrowing capacity of $ 3.5 billion. On December 7, 2021, Whirlpool Corporation entered into Amendment No. 1 to the Fourth Amended and Restated Long-Term Credit Agreement to address the cessation of EUR LIBOR and GBP LIBOR on December 31, 2021 by defining EURIBOR and SONIA as the replacement rates, respectively. The Amended Long-Term Facility has a maturity date of August 6, 2024, unless earlier terminated. The interest and fee rates payable with respect to the Amended Long-Term Facility based on our current debt rating are as follows: (1) the spread over Eurocurrency Rate is 1.125 %; (2) the spread over prime is 0.125 %; and (3) the unused commitment fee is 0.100 %. The Amended Long-Term Facility contains customary covenants and warranties including, among other things, a debt to capitalization ratio of less than or equal to 0.65 as of the last day of each fiscal quarter, and a rolling twelve month interest coverage ratio required to be greater than or equal to 3.0 for each fiscal quarter. In addition, the covenants limit our ability to (or to permit any subsidiaries to), subject to various exceptions and limitations: (i) merge with other companies; (ii) create liens on our property; (iii) incur debt at the subsidiary level. We are in compliance with both our debt to capitalization ratio and interest coverage ratio under the revolving credit facility as of December 31, 2021. On April 27, 2020, Whirlpool Corporation entered into a revolving 364 -Day Credit Agreement (the “ 364 -Day Facility”) by and among the Company, the lenders referred to therein, and Citibank, N.A. as Administrative Agent. The 364 -Day Facility provided aggregate borrowing capacity of $ 500 million, and expired on its termination date of April 26, 2021 w ith no outstanding borrowings. In addition to the committed $ 3.5 billion Amended Long-Term Facility, we have committed credit facilities in Brazil and India. These committed credit facilities provide borrowings up to approximately $ 193 million a t December 31, 2021 and $ 206 million at December 31, 2020, based on exchange rates then in effect, respectively. These committed credit facilities have maturities that run through 2023. We ha d no borro wings outstanding under the committed credit facilities at December 31, 2021 and 2020, respectively. Facility 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. The Company repaid an additional $ 500 million of this Amended Long-Term Facility borrowing by drawing on the full amount of the 364 -Day Facility. All facility borrowing were repaid as of December 31, 2 020 and no amounts were borrowed on t he facility during the twelve months ended December 31, 2021. Notes Payable Notes payable, which consist of short-term borrowings payable to banks or commercial paper, are generally used to fund working capital requirements. The fair value of our notes payable approximates the carrying amount due to the short maturity of these obligations. 76 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The following table summarizes the carrying value of notes payable at December 31, 2021 and 2020, respectively. Millions of dollars 2021 2020 Short-term borrowings to banks 10 12 Total notes payable $ 10 $ 12 (8) COMMITMENTS AND CONTINGENCIES OTHER MATTERS Embraco Antitrust Matters Beginning in February 2009, our former Embraco compressor business headquartered in Brazil ("Embraco") was notified of antitrust investigations of the global compressor industry by government authorities in various jurisdictions. Embraco resolved the government investigations and related claims in various jurisdictions and certain other claims remain pending. Whirlpool agreed to retain potential liabilities related to this matter following closing of the Embraco sale transaction. We continue to defend these actions. While it is currently not possible to reasonably estimate the aggregate amount of costs which we may incur in connection with these matters, such costs could have a material adverse effect on our financial statements in any particular reporting period. BEFIEX Credits and Other Brazil Tax Matters In previous years, our Brazilian operations earned tax credits under the Brazilian government's export incentive program (BEFIEX). These credits reduced Brazilian federal excise taxes on domestic sales. Our Brazilian operations have received tax assessments for income and social contribution taxes associated with certain monetized BEFIEX credits. We do not believe BEFIEX credits are subject to income or social contribution taxes. We believe these tax assessments are without merit and are vigorously defending our positions. We have not provided for income or social contribution taxes on these BEFIEX credits, and based on the opinions of tax and legal advisors, we have not accrued any amount related to these assessments at December 31, 2021. The total amount of outstanding tax assessments received for income and social contribution taxes relating to the BEFIEX credits, including interest and penalties, is approximately 2.0 billion Brazilian reais (approximately $ 362 million at December 31, 2021). Relying on existing Brazilian legal precedent, in 2003 and 2004, we recognized tax credits in an aggregate amount of $ 26 million, adjusted for currency, on the purchase of raw materials used in production ("IPI tax credits"). The Brazilian tax authority subsequently challenged the recording of IPI tax credits. No such credits have been recognized since 2004. In 2009, we entered into a Brazilian government program ("IPI Amnesty") which provided extended payment terms and reduced penalties and interest to encourage taxpayers to resolve this and certain other disputed tax credit amounts. As permitted by the program, we elected to settle certain debts through the use of other existing tax credits and recorded charges of approximately $ 34 million in 2009 associated with these matters. In July 2012, the Brazilian revenue authority notified us that a portion of our proposed settlement was rejected and we received tax assessments of 261 million Brazilian reais (approximately $ 47 million at December 31, 2021), reflecting interest and penalties to date. We believe these tax assessments are without merit and we are vigorously defending our position. The government's assessment in this case relies heavily on its arguments regarding taxability of BEFIEX credits for certain years, which we are disputing in one of the BEFIEX government assessment cases cited in the prior paragraph. Because the IPI Amnesty case is moving faster than the BEFIEX taxability case, we could be required to pay the IPI Amnesty assessment before obtaining a final decision in the BEFIEX taxability case. 77 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) We have received tax assessments from the Brazilian federal tax authorities relating to amounts allegedly due regarding unemployment/social security insurance taxes (PIS/COFINS) for tax credits recognized since 2007. These credits were recognized for inputs to certain manufacturing and other business processes. These assessments are being challenged at the administrative and judicial levels in Brazil. The total amount of outstanding tax assessments received for credits recognized for PIS/COFINS inputs is approximately 308 million Brazilian reais (approximately $ 55 million at December 31, 2021). We believe these tax assessments are without merit and are vigorously defending our positions. Based on the opinion of our tax and legal advisors, we have no t accrued any amount related to these assessments. In addition to the BEFIEX, IPI tax credit and PIS/COFINS inputs matters noted above, other assessments issued by the Brazilian tax authorities related to indirect and income tax matters, and other matters, are at various stages of review in numerous administrative and judicial proceedings. The amounts related to these assessments will continue to be increased by monetary adjustments at the Selic rate, which is the benchmark rate set by the Brazilian Central Bank. In accordance with our accounting policies, we routinely assess these matters and, when necessary, record our best estimate of a loss. We believe these tax assessments are without merit and are vigorously defending our positions. Litigation is inherently unpredictable and the conclusion of these matters may take many years to ultimately resolve. We may experience additional delays in resolving these matters as a result of COVID-19-related administrative and judicial system temporary delays and closures in Brazil. Amounts at issue in potential future litigation could increase as a result of interest and penalties in future periods. Accordingly, it is possible that an unfavorable outcome in these proceedings could have a material adverse effect on our financial statements in any particular reporting period. ICMS Credits We also filed legal actions in Brazil to recover certain social integration and social contribution taxes paid over gross sales including ICMS receipts, which is a form of Value Added Tax in Brazil. During 2017, we sold the rights to certain portions of this litigation to a third party for 90 million Brazilian reais (approximately $ 27 million at December 31, 2017). In the first quarter of 2019, we received a favorable decision in the largest of these ICMS legal actions. This decision is final and not subject to appeals. Based on the opinion of our tax and legal advisors, we recognized a gain of approximately $ 84 million, after related taxes and fees and based on exchange rates then in effect, during the first quarter of 2019 in connection with this decision. This amount reflects approximately $ 142 million in indirect tax credits ("credits") that we are entitled to monetize in future periods, offset by approximately $ 58 million in taxes and fees, which have been paid. In the second quarter of 2019, we received favorable final, non-appealable decisions in two smaller ICMS legal actions. Based on the opinion of our tax and legal advisors, we recognized a gain of approximately $ 35 million, after related taxes and fees and based on exchange rates then in effect, during the second quarter of 2019 in connection with this decision. This amount reflects approximately $ 54 million in credits that we are entitled to monetize in future periods, offset by approximately $ 19 million in taxes and fees, which have been paid. The ICMS credits and related fees were recorded in interest and sundry (income) expense in our Consolidated Statements of Comprehensive Income (Loss). The Brazilian tax authorities sought clarification before the Brazilian Supreme Court (in a leading case involving another taxpayer) of certain matters, including the amount of these credits (i.e., the gross rate or net credit amount), and other matters that could have affected the rights of Brazilian taxpayers regarding these credits. In May 2021, the Supreme Court ruled that the gross rate, which is the rate Whirlpool applied, is the appropriate rate, and that taxpayers that filed legal actions prior to the Supreme Court's original decision in 2017, such as Whirlpool, were entitled to credits for amounts paid prior to the original decision. The Supreme Court's ruling is final, and a formal written opinion has been issued. This favorable ruling affirms the position we have taken with respect to the credits at issue in our ICMS legal actions noted above, and our actions in recognizing and monetizing these credits. 78 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Competition Investigation In 2013, the French Competition Authority ("FCA") commenced an investigation of appliance manufacturers and retailers in France, including Whirlpool and Indesit. The FCA investigation was split into two parts, and in December 2018, we finalized a settlement with the FCA on the first part of the investigation. The second part of the FCA investigation, which is expected to focus primarily on manufacturer interactions with retailers, is ongoing. The Company is cooperating with this investigation. Although it is currently not possible to assess the impact, if any, that matters related to the FCA investigation may have on our financial statements, matters related to the FCA investigation could have a material adverse effect on our financial statements in any particular reporting period. Trade Customer Insolvency The Company was a former indirect minority shareholder of Alno AG, a longstanding trade customer that filed for insolvency protection in Germany. In 2020, we paid a settlement of € 52.75 million (approximately $ 59 million at the time of payment) to resolve any potential claims the insolvency trustee might have against the Company. We are also defending third-party claims related to Alno's insolvency that we believe are without merit, and believe the ultimate resolution of these claims will not have a material adverse effect on our financial statements. Grenfell Tower On June 23, 2017, London's Metropolitan Police Service released a statement that it had identified a Hotpoint –branded refrigerator as the initial source of the Grenfell Tower fire in West London. U.K. authorities are conducting investigations, including regarding the cause and spread of the fire. The model in question was manufactured by Indesit Company between 2006 and 2009, prior to Whirlpool's acquisition of Indesit in 2014. We are fully cooperating with the investigating authorities. Whirlpool was named as a defendant in a product liability suit in Pennsylvania federal court related to this matter. The federal court dismissed the case with prejudice in September 2020. The dismissal is being appealed. In December 2020, lawsuits related to Grenfell Tower were filed in the U.K. against approximately 20 defendants, including Whirlpool Corporation and certain Whirlpool subsidiaries. Given the preliminary stage of the proceedings, we cannot speculate on their eventual outcomes or potential impact on our financial statements; accordingly, we have not recorded any significant charges as of December 31, 2021. Additional claims may be filed related to this incident. Other Litigation See Note 15 for information on certain U.S. income tax litigation. In addition, we are currently defending against two lawsuits that have been certified for treatment as class actions in U.S. federal court, relating to two top-load washing machine models. In December 2019, the court in one of these lawsuits entered summary judgment in Whirlpool's favor. That ruling remains subject to appeal, and the other lawsuit is ongoing. We believe the lawsuits are without merit and are vigorously defending them. Given the preliminary stage of the proceedings, we cannot reasonably estimate a range of loss, if any, at this time. The resolution of these matters could have a material adverse effect on our financial statements in any particular reporting period. We are currently vigorously defending a number of other lawsuits related to the manufacture and sale of our products which include class action allegations, and may become involved in similar actions. These lawsuits allege claims which include negligence, breach of contract, breach of warranty, product liability and safety claims, false advertising, fraud, and violation of federal and state regulations, including consumer protection laws. In general, we do not have insurance coverage for class action lawsuits. We are also involved in various other legal actions arising in the normal course of business, for which insurance coverage may or may not be available depending on the nature of the action. We dispute the merits of these suits and actions, and intend to vigorously defend them. Management believes, based upon its current knowledge, after taking into consideration legal counsel's evaluation of such suits and actions, and after taking into account current litigation accruals, that the outcome of these matters currently pending against Whirlpool 79 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) should not have a material adverse effect, if any, on our financial statements. We may experience additional delays in resolving these and other pending litigation matters as a result of COVID-19-related temporary court and administrative body closures and postponements. Product Warranty and Legacy Product Corrective Action Reserves Product warranty reserves are included in other current and other noncurrent liabilities in our Consolidated Balance Sheets. The following table summarizes the changes in total product warranty reserves for the periods presented: Product Warranty Millions of dollars 2021 2020 Balance at January 1 $ 273 $ 383 Issuances/accruals during the period 307 226 Settlements made during the period/other (1) ( 294 ) ( 336 ) Balance at December 31 $ 286 $ 273 Current portion $ 194 $ 184 Non-current portion 92 89 Total $ 286 $ 273 (1) Includes updated reserve assumptions noted below. In the normal course of business, we engage in investigations of potential quality and safety issues. As part of our ongoing effort to deliver quality products to consumers, we are currently investigating certain potential quality and safety issues globally. As necessary, we undertake to effect repair or replacement of appliances in the event that an investigation leads to the conclusion that such action is warranted. As part of this process, we investigated incident reports associated with a particular component in certain Indesit-designed horizontal axis washers produced in EMEA. In January 2020, we commenced a product recall in the U.K. and Ireland for these EMEA-produced washers, for which the recall is ongoing. In the third quarter of 2019, we accrued approximately $ 105 million in estimated product warranty expense related to this matter. During the fourth quarter of 2020, the Company released an accrual of approximately $ 30 million related to this campaign. During the fourth quarter of 2021, the Company further released an accrual of approximately $ 9 million. These adjustments were made based on the latest available data including take rate assumptions and unit population. These estimates are based on several assumptions which are inherently unpredictable and which we may need to materially revise in the future. For the year ended December 31, 2021, settlements of approximately $ 5 million have been incurred. The total settlements since the beginning of this campaign are approximately $ 61 million. In 2020, we recorded a benefit of $ 14 million related to a vendor recovery for this corrective action. The amount of vendor recovery was immaterial in 2021. For the year ended December 31, 2019, we incurred approximately $ 26 million of additional product warranty expense related to our previously disclosed legacy Indesit dryer corrective action campaign in the U.K. For the year ended December 31, 2021 and for the year ended December 31, 2020, additional product warranty expenses related to this campaign were immaterial. We continue to voluntarily cooperate with the U.K. regulator with respect to the washer and dryer actions. 80 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Guarantees We have guarantee arrangements in a Brazilian subsidiary. For certain creditworthy customers, the subsidiary guarantees customer lines of credit at commercial banks to support purchases following its normal credit policies. If a customer were to default on its line of credit with the bank, our subsidiary would be required to assume the line of credit and satisfy the obligation with the bank. At December 31, 2021 and December 31, 2020, the guaranteed amounts totaled 1,183 million Brazilian reais (approximately $ 212 million at December 31, 2021) and 297 million Brazilian reais (approximately $ 57 million at December 31, 2020), respectively. The fair value of these guarantees were nominal at December 31, 2021 and December 31, 2020. Our subsidiary insures against a significant portion of this credit risk for these guarantees, under normal operating conditions, through policies purchased from high-quality underwriters. We provide guarantees of indebtedness and lines of credit for various consolidated subsidiaries. The maximum contractual amount of indebtedness and lines of credit available under these lines for consolidated subsidiaries totaled approximately $ 3.3 billion at December 31, 2021 and $ 3.5 billion at December 31, 2020. Our total short-term outstanding bank indebtedness under guarantees was nominal at both December 31, 2021 and 2020. Purchase Obligations Our expected cash outflows resulting from non-cancellable purchase obligations are summarized by year in the table below : Millions of dollars 2022 $ 206 2023 92 2024 61 2025 35 2026 15 Thereafter 30 Total purchase obligations $ 439 (9) PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS We have funded and unfunded defined benefit pension plans that cover certain employees in North America, Europe, Asia and Brazil. The United States plans comprise the majority of our obligation. All but one of these plans are frozen for all participants. The primary formula for United States salaried employees covered under the qualified defined benefit plan and the unfunded, nonqualifed Retirement Benefits Restoration Plan was based on years of service and final average salary, while the primary formula for United States hourly employees covered under the defined benefit plans was based on specific dollar amounts for each year of service. There were multiple formulas for employees covered under the qualified and nonqualified defined benefit plans that were sponsored by Maytag, including a cash balance formula. We have foreign pension plans that accrue benefits. The plans generally provide benefit payments using a formula that is based upon employee compensation and length of service. In addition, we sponsor an unfunded Supplemental Executive Retirement Plan that remains open to new participants and additional benefit accruals. This plan is nonqualified and provides certain key employees additional defined pension benefits that supplement those provided by the Company's other retirement plans. A defined contribution plan is provided to all United States employees and is not classified within the net periodic benefit cost. The Company provides annual match and automatic company contributions, in cash or Company stock, of up to 7 % of employees' eligible pay. Our contributions during 2021, 2020 and 2019 were $ 91 million, $ 83 million and $ 84 million, respectively. $ 48 million 81 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) of our Company matching contributions to our defined contribution plan during 2020 were made in Company stock from May 2020 to December 2020. We provide postretirement health care benefits for eligible retired employees in the United States, Canada and Brazil. For our United States plan, which comprises the majority of our obligation, eligible retirees include those who were full-time employees with 10 years of service who attained age 55 while in service with us and those union retirees who met the eligibility requirements of their collective bargaining agreements. In general, the postretirement health and welfare benefit plans include cost-sharing provisions that limit our exposure for recent and future retirees and are contributory, with participants' contributions adjusted annually. In the United States, benefits for certain retiree populations follow a defined contribution model that allocates certain monthly or annual amounts to a retiree's account under the plan. During the third quarter of 2020, the Company announced changes to a postretirement medical benefit program for certain groups of retirees. These plan amendments were effective January 1, 2021 and reduced reimbursement amounts available under certain postretirement medical benefit programs and eliminated these benefits effective January 1, 2024 for these same retiree groups. During the second quarter of 2020, the Company announced changes to a postretirement medical benefit program for certain groups of active employees. These plan amendments were effective July 1, 2020 and reduced medical benefits for these pre-Medicare eligible and Medicare-eligible active employees who 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 $ 156 million with a corresponding adjustment of $ 118 million in other comprehensive income, net of $ 39 million in deferred taxes for the nine months ended September 30, 2020. This amount is being amortized as a reduction of future net periodic cost over approximately 3.4 years, which represents the future remaining service period of eligible active employees. The interim plan remeasurement associated with these amendments resulted in an actuarial loss of $ 12 million recorded in the Other Comprehensive Income (Loss). For additional information, see Note 12 to the Consolidated Financial Statements. The postretirement medical benefit programs are unfunded. We reserve the right to modify these benefits in the future. 82 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Defined Benefit - Pensions and Other Postretirement Benefit Plans Obligations and Funded Status at End of Year United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits Millions of dollars 2021 2020 2021 2020 2021 2020 Funded status Fair value of plan assets $ 2,904 $ 3,103 $ 665 $ 632 $ — $ — Benefit obligations 2,968 3,237 924 1,029 166 191 Funded status $ ( 64 ) $ ( 134 ) $ ( 259 ) $ ( 397 ) $ ( 166 ) $ ( 191 ) Amounts recognized in the consolidated balance sheets Noncurrent asset $ 56 $ 37 $ 20 $ 14 $ — $ — Current liability ( 9 ) ( 18 ) ( 12 ) ( 12 ) ( 24 ) ( 25 ) Noncurrent liability ( 111 ) ( 153 ) ( 267 ) ( 399 ) ( 142 ) ( 166 ) Amount recognized $ ( 64 ) $ ( 134 ) $ ( 259 ) $ ( 397 ) $ ( 166 ) $ ( 191 ) Amounts recognized in accumulated other comprehensive loss (pre-tax) Net actuarial loss $ 1,180 $ 1,227 $ 184 $ 279 $ 14 $ 23 Prior service (credit) cost 1 1 3 3 ( 93 ) ( 140 ) Amount recognized $ 1,181 $ 1,228 $ 187 $ 282 $ ( 79 ) $ ( 117 ) Change in Benefit Obligation United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits Millions of dollars 2021 2020 2021 2020 2021 2020 Benefit obligation, beginning of year $ 3,237 $ 3,141 $ 1,029 $ 941 $ 191 $ 355 Service cost 3 3 5 6 — 4 Interest cost 77 94 14 17 5 8 Plan participants' contributions — — 1 1 — — Actuarial (gain) loss ( 99 ) 282 ( 45 ) 96 ( 8 ) 9 Benefits paid ( 234 ) ( 186 ) ( 29 ) ( 33 ) ( 21 ) ( 24 ) Plan amendments — — — — — ( 156 ) Transfer of liabilities — — ( 23 ) — — — Other adjustments — — — — — — Special termination benefit — — — — — — Settlements / curtailment (gain) ( 16 ) ( 97 ) ( 18 ) ( 37 ) — — Foreign currency exchange rates — — ( 10 ) 38 ( 1 ) ( 5 ) Reclassification of obligation to held for sale — — — — — — Benefit obligation, end of year $ 2,968 $ 3,237 $ 924 $ 1,029 $ 166 $ 191 Accumulated benefit obligation, end of year $ 2,955 $ 3,222 $ 891 $ 987 N/A N/A The actuarial (gain) loss for all pension and other postretirement benefit plans in 2021 and 2020 was primarily related to a change in the discount rate used to measure the benefit obligation of those plans. 83 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Change in Plan Assets United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits Millions of dollars 2021 2020 2021 2020 2021 2020 Fair value of plan assets, beginning of year $ 3,103 $ 2,934 $ 632 $ 593 $ — $ — Actual return on plan assets 31 447 56 58 — — Employer contribution 20 5 30 29 21 24 Plan participants' contributions — — 1 1 — — Benefits paid ( 234 ) ( 186 ) ( 29 ) ( 33 ) ( 21 ) ( 24 ) Transfer of plan assets — — — — — — Other adjustments — — — — — — Settlements ( 16 ) ( 97 ) ( 17 ) ( 37 ) — — Foreign currency exchange rates — — ( 8 ) 21 — — Reclassification of plan assets to held for sale — — — — — — Fair value of plan assets, end of year $ 2,904 $ 3,103 $ 665 $ 632 $ — $ — Components of Net Periodic Benefit Cost United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits Millions of dollars 2021 2020 2019 2021 2020 2019 2021 2020 2019 Service cost $ 3 $ 3 $ 2 $ 5 $ 6 $ 6 $ — $ 4 $ 6 Interest cost 77 94 123 14 17 23 5 8 16 Expected return on plan assets ( 158 ) ( 165 ) $ ( 177 ) ( 34 ) ( 30 ) ( 29 ) — — — Amortization: Actuarial loss 69 62 $ 47 19 12 8 — — 1 Prior service cost (credit) — — ( 2 ) — — — ( 46 ) ( 28 ) ( 16 ) Special termination benefit — — $ — — — — — — — Curtailment (gain) / loss — — — — — — — ( 3 ) — Settlement loss 5 39 9 2 11 2 — — — Net periodic benefit cost $ ( 4 ) $ 33 $ 2 $ 6 $ 16 $ 10 $ ( 41 ) $ ( 19 ) $ 7 The following table summarizes the net periodic cost recognized in operating profit and interest and sundry (income) expense for the years ending December 31, 2021, 2020 and 2019: United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits Millions of dollars 2021 2020 2019 2021 2020 2019 2021 2020 2019 Operating profit (loss) $ 3 $ 3 $ 2 $ 5 $ 6 $ 6 $ — $ 4 $ 6 Interest and sundry (income) expense ( 7 ) 30 — 1 10 4 ( 41 ) ( 23 ) 1 Net periodic benefit cost $ ( 4 ) $ 33 $ 2 $ 6 $ 16 $ 10 $ ( 41 ) $ ( 19 ) $ 7 84 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) (Pre-Tax) in 2021 Millions of dollars United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits Current year actuarial loss / (gain) $ 27 $ ( 74 ) $ ( 9 ) Actuarial (loss) recognized during the year ( 74 ) ( 21 ) — Current year prior service cost (credit) — — — Prior service credit (cost) recognized during the year — — 47 Total recognized in other comprehensive income (loss) (pre-tax) $ ( 47 ) $ ( 95 ) $ 38 Total recognized in net periodic benefit costs and other comprehensive income (loss) (pre-tax) $ ( 51 ) $ ( 89 ) $ ( 3 ) We amortize actuarial losses and prior service costs (credits) over a period of up to 21 years and 13 years, respectively. Assumptions Weighted-Average Assumptions used to Determine Benefit Obligation at End of Year United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits 2021 2020 2021 2020 2021 2020 Discount rate 2.85 % 2.50 % 1.89 % 1.55 % 3.41 % 2.98 % Rate of compensation increase 4.50 % 4.50 % 3.59 % 3.47 % N/A N/A Interest crediting rate for cash balance plans 1.60 % 1.25 % 2.36 % 1.99 % N/A N/A Weighted-Average Assumptions used to Determine Net Periodic Cost United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits 2021 2020 2019 2021 2020 2019 2021 2020 2019 Discount rate 2.50 % 3.13 % 4.30 % 1.55 % 2.04 % 2.90 % 3.66 % 3.35 % 4.80 % Expected long-term rate of return on plan assets 6.00 % 6.25 % 6.50 % 5.48 % 5.39 % 5.56 % N/A N/A N/A Rate of compensation increase 4.50 % 4.50 % 4.50 % 3.47 % 3.10 % 3.29 % N/A N/A N/A Interest crediting rate for cash balance plans 1.25 % 2.05 % 3.05 % 1.99 % 1.80 % 2.19 % N/A N/A N/A Health care cost trend rate Initial rate N/A N/A N/A N/A N/A N/A 6.00 % 6.25 % 6.50 % Ultimate rate N/A N/A N/A N/A N/A N/A 5.00 % 5.00 % 5.00 % Year that ultimate rate will be reached N/A N/A N/A N/A N/A N/A 2025 2025 2025 85 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Discount Rate For our United States pension and postretirement benefit plans, the discount rate was selected using a hypothetical portfolio of high quality bonds outstanding at December 31 that would provide the necessary cash flows to match our projected benefit payments. For our foreign pension and postretirement benefit plans, the discount rate was primarily selected using high quality bond yields for the respective country or region covered by the plan. Expected Return on Plan Assets In the United States, the expected return on plan assets is developed considering asset mix, historical asset class data and long-term expectations. The resulting weighted-average return was rounded to the nearest quarter of one percent and applied to the fair value of plan assets at December 31, 2021. For foreign pension plans, the expected rate of return on plan assets was primarily determined by observing historical returns in the local fixed income and equity markets and computing the weighted average returns with the weights being the asset allocation of each plan. Cash Flows Funding Policy Our funding policy is to contribute to our qualified United States pension plans amounts sufficient to meet the minimum funding requirement as defined by employee benefit and tax laws, plus additional amounts which we may determine to be appropriate. In certain countries other than the United States, the funding of pension plans is not common practice. Contributions to our United States pension plans may be made in the form of cash or, in the case of our defined contribution plan in our discretion, company stock. We pay for retiree medical benefits as they are incurred. There have been no contributions to the pension trust for our U.S. defined benefit plans during the twelve months ended December 31, 2021 and 2020. Expected Employer Contributions to Funded Plans Millions of dollars United States Pension Benefits Foreign Pension Benefits 2022 $ — $ 19 Expected Benefit Payments Millions of dollars United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits 2022 $ 291 $ 36 $ 24 2023 235 36 24 2024 231 36 12 2025 220 40 10 2026 215 38 9 2027-2031 $ 950 $ 209 $ 41 Plan Assets Our overall investment strategy is to achieve an appropriate mix of investments for long-term growth and for near-term benefit payments with a wide diversification of asset types, fund strategies, and investment fund managers. The target allocation for our plans is approximately 20 % in growth assets and 80 % in immunizing fixed income securities, with exceptions for foreign pension plans. The fixed income securities duration is intended to match that of our United States pension liabilities. 86 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Plan assets are reported at fair value based on an exit price, representing the amount that would be received to sell an asset in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset. 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. Certain investments are valued based on net asset value (NAV), which approximates fair value. Such basis is determined by referencing the respective fund's underlying assets. There are no unfunded commitments or other restrictions associated with these investments. We manage the process and approve the results of a third-party pricing service to value the majority of our securities and to determine the appropriate level in the fair value hierarchy. 87 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The fair values of our pension plan assets at December 31, 2021 and 2020, by asset category were as follows: December 31, Quoted prices (Level 1) Other significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Net Asset Value Total Millions of dollars 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Cash and cash equivalents $ — $ — $ 162 $ 281 $ — $ — $ — $ — $ 162 $ 281 Government and government agency securities (1) U.S. securities — — 264 182 — — — — 264 182 International securities — — 92 99 — — — — 92 99 Corporate bonds and notes (1) U.S. companies — — 1,585 1,691 — — — — 1,585 1,691 International companies — — 286 279 — — — — 286 279 Equity securities (2) U.S. companies — — — — — — — — — — International companies 36 47 — — — — — — 36 47 Mutual funds (3) — — 103 108 — — — — 103 108 Investments at net asset value U.S. equity securities (4) — — — — — — 308 448 308 448 International equity securities (4) — — — — — — 177 180 177 180 Short-term investment fund (4) — — — — — — 43 24 43 24 International debt securities (5) — — — — — — 178 208 178 208 International equity securities (5) — — — — — — 62 53 62 53 Real estate (6) — — — — — — 55 13 55 13 Limited partnerships (7) U.S. private equity investments — — — — 26 38 — — 26 38 Diversified fund of funds — — — — 3 3 — — 3 3 Emerging growth — — — — 3 3 — — 3 3 All other investments — — 29 48 — — 157 30 186 78 $ 36 $ 47 $ 2,521 $ 2,688 $ 32 $ 44 $ 980 $ 956 $ 3,569 $ 3,735 (1) Valued using pricing vendors who use proprietary models to estimate the price a dealer would pay to buy a security using significant observable inputs, such as interest rates, yield curves, and credit risk. (2) Valued using the closing stock price on a national securities exchange, which reflects the last reported sales price on the last business day of the year. (3) Valued using the net asset value (NAV) of the fund, which is based on the fair value of underlying securities. The fund primarily invests in a diversified portfolio of equity securities, fixed income debt securities and real estate issued by non-U.S. companies. 88 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (4) Common and collective trust funds valued using the NAV of the fund, which is based on the fair value of underlying securities. (5) Fund of funds valued using the NAV of the fund, which is based on the fair value of underlying securities. International debt securities includes corporate bonds and notes and government and government agency securities. (6) Valued using the NAV of the fund, which is based on the fair value of underlying assets. (7) Valued at estimated fair value based on the proportionate share of the limited partnership's fair value, as determined by the general partner. Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Millions of dollars Limited Partnerships Balance, December 31, 2020 $ 44 Realized gain / (loss) (net) 13 Unrealized gain / (loss) (net) 2 Purchases — Settlements ( 27 ) Balance, December 31, 2021 $ 32 Additional Information The projected benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets at December 31, 2021 and 2020 were as follows: United States Pension Benefits Foreign Pension Benefits Millions of dollars 2021 2020 2021 2020 Projected benefit obligation $ 2,507 $ 2,718 $ 851 $ 951 Fair value of plan assets $ 2,386 $ 2,547 $ 578 $ 546 The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of plan assets at December 31, 2021 and 2020 were as follows: United States Pension Benefits Foreign Pension Benefits Millions of dollars 2021 2020 2021 2020 Projected benefit obligation $ 2,507 $ 2,718 $ 851 $ 951 Accumulated benefit obligation 2,494 2,703 831 921 Fair value of plan assets $ 2,386 $ 2,547 $ 578 $ 546 89 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (10) 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. If the designated cash flow hedges are highly effective, the gains and losses are recorded in other comprehensive income (loss) and subsequently reclassified to earnings to offset the impact of the hedged items when they occur. In the event it becomes probable the forecasted transaction to which a cash flow hedge relates will not occur, the derivative would be terminated and the amount in accumulated other comprehensive income (loss) would be recognized in earnings. The fair value of the hedge asset or liability is present in either other current assets/liabilities or other noncurrent assets/liabilities on the Consolidated Balance Sheets and in other within cash provided by (used in) operating activities in the Consolidated Statements of Cash Flows. Using derivative instruments means assuming counterparty credit risk. Counterparty credit risk relates to the loss we could incur if a counterparty were to default on a derivative contract. We generally deal with investment grade counterparties and monitor the overall credit risk and exposure to individual counterparties. We do not anticipate nonperformance by any counterparties. The amount of counterparty credit exposure is limited to the unrealized gains, if any, on such derivative contracts. We do not require nor do we post collateral on such contracts. Hedging Strategy In the normal course of business, we manage risks relating to our ongoing business operations including those arising from changes in commodity prices, foreign exchange rates and interest rates. Fluctuations in these rates and prices can affect our operating results and financial condition. We use a variety of strategies, including the use of derivative instruments, to manage these risks. We do not enter into derivative financial instruments for trading or speculative purposes. Commodity Price Risk We enter into commodity derivative contracts on various commodities to manage the price risk associated with forecasted purchases 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 and Interest Rate Risk We incur expenses associated with the procurement and production of products in a limited number of countries, while we sell in the local currencies of a large number of countries. Our primary foreign currency exchange exposures result from cross-currency sales of products. As a result, we enter into foreign exchange contracts to hedge certain firm commitments and forecasted transactions to acquire products and services that are denominated in foreign currencies. We enter into certain undesignated non-functional currency asset and liability hedges that relate primarily to short-term payables, receivables, intercompany loans and dividends. When we hedge a foreign currency denominated payable or receivable with a derivative, the effect of changes in the foreign exchange rates are reflected currently in interest and sundry (income) expense for both the payable/receivable and the derivative. Therefore, as a result of the economic hedge, we do not elect hedge accounting. We also enter into hedges to mitigate currency risk primarily related to forecasted foreign currency denominated expenditures, intercompany financing agreements and royalty agreements and designate them as cash flow hedges. Gains and losses on derivatives designated as cash flow hedges, to the extent they are included in the assessment of effectiveness, are recorded in other comprehensive income (loss) and subsequently reclassified to earnings to offset the impact of the hedged items when they occur. We may enter into cross-currency interest rate swaps to manage our exposure relating to cross-currency debt. Outstanding notional amounts of cross-currency interest rate swap agreements were $ 1,275 million at December 31, 2021 and 2020, respectively. 90 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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 may enter into swap rate lock agreements to effectively reduce our exposure to interest rate risk by locking in interest rates on probable long-term debt issuances. Outstanding notional amounts of interest rate swap agreements were $ 300 million at December 31, 2021 and 2020, respectively. Net Investment Hedging The following table summarizes our foreign currency denominated debt and foreign exchange forwards/options designated as net investment hedges at December 31, 2021 and 2020: Notional (local) Notional (USD) Current Maturity Instrument 2021 2020 2021 2020 Foreign exchange forwards/options MXN 7,200 MXN 7,200 $ 352 $ 362 August 2022 For instruments that are designated and qualify as a net investment hedge, the effective portion of the instruments' gain or loss is reported as a component of other comprehensive income (loss) and recorded in accumulated other comprehensive loss. The gain or loss will be subsequently reclassified into net earnings when the hedged net investment is either sold or substantially liquidated. The remaining change in fair value of the hedge instruments represents the ineffective portion, which is immediately recognized in interest and sundry (income) expense on our Consolidated Statements of Income. As of December 31, 2021, there was no ineffectiveness on hedges designated as net investment hedges. 91 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The following table summarizes our outstanding derivative contracts and their effects on our Consolidated Balance Sheets at December 31, 2021 and 2020: Fair Value of Type of Hedge Notional Amount Hedge Assets Hedge Liabilities Maximum Term (Months) Millions of dollars 2021 2020 2021 2020 2021 2020 2021 2020 Derivatives accounted for as hedges (1) Commodity swaps/options $ 297 $ 215 $ 40 $ 39 $ 13 $ 4 (CF) 21 30 Foreign exchange forwards/options 2,872 3,028 91 58 64 110 (CF/NI) 122 134 Cross-currency swaps 1,275 1,275 31 23 7 86 (CF) 86 98 Interest rate derivatives 300 300 — — 14 28 (CF) 41 53 Total derivatives accounted for as hedges $ 162 $ 120 $ 98 $ 228 Derivatives not accounted for as hedges Commodity swaps/options $ 2 $ 1 $ — $ — $ — $ — N/A 14 0 Foreign exchange forwards/options (2) 2,240 4,161 20 25 18 96 N/A 12 12 Total derivatives not accounted for as hedges $ 20 $ 25 $ 18 $ 96 Total derivatives $ 182 $ 145 $ 116 $ 324 Current $ 170 $ 103 $ 93 $ 152 Noncurrent 12 42 23 172 Total derivatives $ 182 $ 145 $ 116 $ 324 (1) Derivatives accounted for as hedges are considered either cash flow (CF) or net investment (NI) hedges. (2) Foreign exchange forwards/options have decreased due to repayment of intercompany loans. 92 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The following tables summarize the effects of derivative instruments on our Consolidated Statements of Income (Loss) and Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021 and 2020: Gain (Loss) Recognized in OCI (Effective Portion) (3) Millions of dollars 2021 2020 Cash flow hedges Commodity swaps/options $ 66 $ 22 Foreign exchange forwards/options 92 9 Cross-currency swaps 110 ( 40 ) Interest rate derivatives 14 ( 34 ) Net investment hedges Foreign currency 1 1 $ 283 $ ( 42 ) Location of Gain (Loss) Reclassified from OCI into Earnings (Effective Portion) Gain (Loss) Reclassified from OCI into Earnings (Effective Portion) (4) Cash Flow Hedges - Millions of dollars 2021 2020 Commodity swaps/options (3) Cost of products sold $ 68 $ ( 20 ) Foreign exchange forwards/options Net sales 2 7 Foreign exchange forwards/options Cost of products sold ( 3 ) 30 Foreign exchange forwards/options Interest and sundry (income) expense 71 ( 54 ) Cross-currency swaps (5) Interest and sundry (income) expense 117 ( 89 ) $ 255 $ ( 126 ) Location of Gain (Loss) Recognized on Derivatives not Accounted for as Hedges Gain (Loss) Recognized on Derivatives not Accounted for as Hedges (3) Derivatives not Accounted for as Hedges - Millions of dollars 2021 2020 Foreign exchange forwards/options Interest and sundry (income) expense $ 74 $ ( 1 ) (3) Change in gain (loss) recognized in OCI (effective portion) is primarily driven by increases in commodity prices and fluctuations in currency and interest rates. The tax impact of the cash flow hedges was $( 14 ) million and $( 16 ) million in 2021 and 2020, respectively. The tax impact of the net investment hedges was $( 1 ) million and $ 1 million in 2021 and 2020, respectively. (4) Change in gain (loss) reclassified from OCI into earnings (effective portion) was primarily driven by fluctuations in currency and commodity prices and interest rates compared to prior year. (5) Change in cross-currency swaps is primarily driven by the currency change in the Euro year-over-year. For cash flow hedges, the amount of ineffectiveness recognized in interest and sundry (income) expense was nominal during 2021 and 2020. There were no hedges designated as fair value in 2021 and 2020. The net amount of unrealized gain or loss on derivative instruments included in accumulated other comprehensive income (loss) related to contracts maturing and expected to be realized during the next twelve months is a gain of approximately $ 46 million at December 31, 2021. 93 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (11) 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. The non-recurring fair values represent only those assets whose carrying values were adjusted to fair value during the reporting period. See Note 6 to the Consolidated Financial Statements for additional information on the goodwill and other intangibles. Assets and liabilities measured at fair value on a recurring basis at December 31, 2021 and 2020 are as follows: Total Cost Basis Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Total Fair Value Millions of dollars 2021 2020 2021 2020 2021 2020 2021 2020 Short-term investments (1) $ 1,905 $ 2,164 $ 1,697 $ 1,603 $ 208 $ 561 $ 1,905 $ 2,164 Net derivative contracts — — — — 66 ( 179 ) 66 ( 179 ) (1) Short-term investments are primarily comprised of money market funds and highly liquid, low risk investments with initial maturities less than 90 days. The following table summarizes the valuation of our assets measured at fair value on a non-recurring basis as of December 31, 2020, which is the balance sheet date at the end of the period in which the impairment charge was recorded. No impairment charge was recorded as of December 31, 2021. Fair Value Millions of dollars Level 3 Measured at fair value on a non-recurring basis: 2020 Assets: Indefinite-lived intangible assets (2) 158 Total level 3 assets $ 158 (2) Indefinite-lived intangible assets with a carrying amount of approximately $ 165 million were written down to a fair value of $ 158 million resulting in an impairment charge of $ 7 million in 2020. Other Intangible Assets The relief-from-royalty method for the quantitative impairment assessment for other intangible assets in the EMEA reporting unit during the fourth quarter of 2020 utilized discount rates ranging from 14.75 % - 15 % and royalty rates ranging from 1.5 % - 3.5 %. Based on the quantitative impairment assessment performed, the carrying value of other intangible assets of Hotpoint* brand, exceeded its fair value, resulting in an impairment charge of € 6 million ($ 7 million) in 2020. See Note 6 to the Consolidated 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. 94 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Elica PB India Acquisition As of September 30, 2021, the Company consolidated Elica PB India. As a result, the previously held equity interest of 49 % was remeasured at a fair value of $ 74 million (Level 2 input) on the acquisition date, resulting in an implied fair value of approximately $ 150 million. For additional information, see Note 1 to the Consolidated Financial Statements. Whirlpool China Equity Method Investment During the second quarter of 2021, the partial tender offer for Whirlpool China was completed and the entity was deconsolidated. Subsequent to the share transfer, which was completed on May 6, 2021, the Company holds an equity interest of approximately 20 % in Whirlpool China. The fair value of the retained investment in Whirlpool China at the date of deconsolidation was calculated based on the Whirlpool China stock price (Level 1 input), the portion of interest retained and the shares outstanding, resulting in a fair value of $ 214 million. For additional information see Note 17 to the Consolidated Financial Statements. Turkey Subsidiary Divestment During the second quarter of 2021, we entered into a share transfer agreement to sell our Turkish subsidiary and the sale was completed on June 30, 2021. Fair value was calculated based on the cash purchase price, subject to customary adjustments at closing (Level 2 input), and we recorded a loss on sale and disposal of businesses of $ 40 million for the write-down of the assets to the fair value of $ 111 million. An immaterial adjustment to the loss on sale and disposal of business was recorded in the third quarter of 2021. For additional information see Note 17 to the Consolidated Financial Statements. South Africa Business Disposal Durin g 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 Financial Statements. See Note 17 to the Consolidated Financial Statements for additional information. Naples Manufacturing Plant Restructuring Action In the fourth quarter of 2020, we ceased production and exited our Naples, Italy manufacturing plant. In connection with these restructuring actions, we recorded an impairment charge of $ 43 million for the write-down of certain assets to their fair value of $ 0 in 2019. 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 14 to the Consolidated Financial Statements for additional information. Other Fair Value Measurements The fair value of long-term debt (including current maturities) was $ 5.76 billion and $ 6.13 billion at December 31, 2021 and 2020, respectively, and was estimated using a discounted cash flow analysis based on incremental borrowing rates for similar types of borrowing arrangements (Level 2 input). 95 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (12) STOCKHOLDERS' EQUITY Comprehensive Income (Loss) Comprehensive income (loss) primarily includes (1) our reported net earnings (loss), (2) foreign currency translation, including net investment hedges, (3) changes in the effective portion of our open derivative contracts designated as cash flow hedges, (4) changes in our unrecognized pension and other postretirement benefits and (5) changes in fair value of our available for sale marketable securities (prior to the adoption of ASU 2016-01 in 2018). The following table shows the components of accumulated other comprehensive income (loss) available to Whirlpool at December 31, 2019, 2020, and 2021, and the activity for the years then ended: Millions of dollars Foreign Currency Derivative Instruments Pension and Postretirement Liability Total December 31, 2018 $ ( 1,588 ) $ ( 33 ) $ ( 1,074 ) ( 2,695 ) Unrealized gain (loss) 54 ( 17 ) — 37 Unrealized actuarial gain(loss) and prior service credit (cost) — — 52 52 Tax effect 2 4 ( 18 ) ( 12 ) Other comprehensive income (loss), net of tax 56 ( 13 ) 34 77 Less: Other comprehensive loss available to noncontrolling interests — — — — Other comprehensive income (loss) available to Whirlpool 56 ( 13 ) 34 77 December 31, 2019 $ ( 1,532 ) $ ( 46 ) $ ( 1,040 ) $ ( 2,618 ) Unrealized gain (loss) ( 385 ) 83 — ( 302 ) Unrealized actuarial gain (loss) and prior service credit (cost) — — 171 171 Tax effect 1 ( 16 ) ( 45 ) ( 60 ) Other comprehensive income (loss), net of tax ( 384 ) 67 126 ( 191 ) Less: Other comprehensive loss available to noncontrolling interests 2 — — 2 Other comprehensive income (loss) available to Whirlpool ( 386 ) 67 126 ( 193 ) December 31, 2020 $ ( 1,918 ) $ 21 $ ( 914 ) $ ( 2,811 ) Unrealized gain (loss) 364 27 — 391 Unrealized actuarial gain (loss) and prior service credit (cost) — — 104 104 Tax effect ( 1 ) ( 14 ) ( 26 ) ( 41 ) Other comprehensive income (loss), net of tax 363 13 78 454 Less: Other comprehensive loss available to noncontrolling interests — — — — Other comprehensive income (loss) available to Whirlpool 363 13 78 454 December 31, 2021 $ ( 1,555 ) $ 34 $ ( 836 ) $ ( 2,357 ) 96 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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 were calculated as follows: Millions of dollars and shares 2021 2020 2019 Numerator for basic and diluted earnings per share – net earnings (loss) available to Whirlpool $ 1,783 $ 1,075 $ 1,168 Denominator for basic earnings per share – weighted-average shares 62.1 62.7 63.7 Effect of dilutive securities – stock-based compensation 0.8 0.6 0.5 Denominator for diluted earnings per share – adjusted weighted-average shares 62.9 63.3 64.2 Anti-dilutive stock options/awards excluded from earnings per share 0.1 1.3 1.3 Dividends Dividends per share paid to shareholders were $ 5.45 , $ 4.85 and $ 4.75 during 2021, 2020 and 2019, respectively. Share Repurchase Program On April 19, 2021, our Board of Directors authorized a share repurchase program of up to $ 2 billion, which has no expiration date. For the year ended December 31, 2021, we repurchased approximately 4.8 million shares at an aggregate purchase price of approximately $ 1 billion under this program. At December 31, 2021, there were approximately $ 1.5 billion in remaining funds authorized under this program. Share repurchases are made from time to time on the open market as conditions warrant. The program does not obligate us to repurchase any of our shares and it has no expiration date. (13) SHARE-BASED INCENTIVE PLANS We sponsor several share-based employee incentive plans. Share-based compensation expense for grants awarded under these plans was $ 82 million , $ 67 million and $ 50 million in 2021, 2020, and 2019, respectively. Related income tax benefits recognized in earnings were $ 10 million , $ 9 million and $ 6 million in 2021, 2020, and 2019, respectively. At December 31, 2021, unrecognized compensation cost related to non-vested stock option and stock unit awards totale d $ 89 million. The cost of these non-vested awards is expected to be recognized over a weighted-average remaining vesting period of 28 months. Share-Based Employee Incentive Plans On April 17, 2018, our stockholders approved the 2018 Omnibus Stock and Incentive Plan ("2018 OSIP"). This plan was adopted by our Board of Directors on February 20, 2018 and provides for the issuance of stock options, performance stock units, and restricted stock units, among other award types. No new awards may be granted under the 2018 OSIP after the tenth anniversary of the date that the stockholders approved the plan. However, the term and exercise of awards granted before then may extend beyond that date. At December 31, 2021, approximatel y 2.4 million s hares remain available for issuance under the 2018 OSIP. Stock Options Eligible employees may receive stock options as a portion of their total compensation. Such options generally become exercisable over a 3-year period in substantially equal increments, expire 10 years from the date of grant and are subject to forfeiture upon termination of employment, other than by death, Disability, Retirement, or with the consent of the Committee (as defined in the award 97 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) agreement). We use the Black-Scholes option-pricing model to measure the fair value of stock options granted to employees. Granted options have exercise prices equal to the market price of Whirlpool common stock on the grant date. The principal assumptions used in valuing options include: (1) risk-free interest rate - an estimate based on the yield of United States zero coupon securities with a maturity equal to the expected life of the option; (2) expected volatility - an estimate based on the historical volatility of Whirlpool common stock for a period equal to the expected life of the option; and (3) expected option life - an estimate based on historical experience. Stock options are expensed on a straight-line basis, net of estimated forfeitures. Based on the results of the model, the weighted-average grant date fair value of stock options granted for 2021, 2020, and 2019 wer e $ 52.44 , $ 29.53 and $ 27.89 , respectively, using the following assumptions: Weighted Average Black-Scholes Assumptions 2021 2020 2019 Risk-free interest rate 0.5 % 1.4 % 2.5 % Expected volatility 37.7 % 29.3 % 28.5 % Expected dividend yield 2.5 % 3.2 % 3.4 % Expected option life, in years 5 5 5 Stock Option Activity The following table summarizes stock option activity during 2021: In thousands, except per share data Number of Options Weighted- Average Exercise Price Outstanding at January 1 2,268 $ 144.54 Granted 165 199.93 Exercised ( 1,548 ) 133.77 Canceled or expired ( 41 ) 186.88 Outstanding at December 31 844 $ 173.08 Exercisable at December 31 448 $ 176.20 The total intrinsic value of stock options exercised was $ 121 million , $ 13 million and $ 4 million for 2021, 2020, and 2019, respectively. The related tax benefits wer e $ 23 million, $ 3 million and $ 1 million for 2021, 2020, and 2019, respectively. Cash received from the exercise of stock options was $ 77 million , $ 44 million, and $ 8 million for 2021, 2020, and 2019, respectively. The table below summarizes additional information related to stock options outstanding at December 31, 2021: Options in thousands / dollars in millions, except per-share data Outstanding Net of Expected Forfeitures Options Exercisable Number of options 837 448 Weighted-average exercise price per share $ 173.01 $ 176.20 Aggregate intrinsic value $ 52 $ 26 Weighted-average remaining contractual term, in years 6 4 Stock Units Eligible employees may receive restricted stock units or performance stock units as a portion of their total compensation. Restricted stock units are typically granted to selected management employees on an annual basis and vest over three years . Periodically, restricted stock units may be granted to selected employees based on special recognition or retention circumstances and generally vest from three years to seven years . Previously granted awards accrue dividend equivalents on outstanding units (in the 98 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) form of additional stock units) based on dividends declared on Whirlpool common stock. These awards convert to unrestricted common stock at the conclusion of the vesting period. Performance stock units are granted to management employees on an annual basis and generally vest at the end of a three year performance period, converting to unrestricted common stock at the conclusion of the vesting period. The final award may equal 0 % to 200 % of the target grant, based on Whirlpool performance results relative to pre-established goals. We measure compensation cost for stock units based on the closing market price of Whirlpool common stock at the grant date, with adjustments for performance stock units to reflect the final award granted. The weighted average grant date fair values of awards granted during 2021, 2020, and 2019 were $ 191.64 , $ 141.38 and $ 127.26 , respectively. The total fair value of stock units vested during 2021, 2020, and 2019 was $ 43 million , $ 37 million and $ 28 million, respectively. The following table summarizes stock unit activity during 2021: Stock units in thousands, except per-share data Number of Stock Units Weighted- Average Grant Date Fair Value Non-vested, at January 1 1,003 $ 139.62 Granted 381 191.64 Canceled ( 113 ) 147.05 Vested and transferred to unrestricted ( 249 ) 148.22 Non-vested, at December 31 1,022 $ 155.92 Non-employee Director Equity Awards In 2021, each non-employee director received an annual grant of unrestricted Whirlpool common stock, with the number of shares issued to the director determined by dividing $ 150,000 by the closing price of Whirlpool common stock on the date of the annual meeting of our stockholders. (14) 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: On June 26, 2020, the Company committed to a workforce reduction plan in the United States, as part of the Company's continued cost reduction efforts. The workforce reduction plan included a voluntary retirement program and involuntary severance actions which were effective as of the end of the second quarter of 2020. These actions were substantially completed in 2020 and the Company incurred $ 102 million in employee termination costs related to these actions. The remaining cash settlement of $ 13 million will occur throughout 2022 and 2023. During the third quarter of 2020, the Company committed to additional workforce reductions outside of the United States, as part of the Company's previously announced continued cost reduction efforts. The company has incurred $ 97 million of the approximate $ 148 million total costs through 2021 and the remaining expense will primarily occur in 2022. Cash settlement of $ 84 million has been paid to date with the remaining cash settlement expected to be paid over the duration of 2022 and 2023. On May 31, 2019, we announced our intention to reconvert our Naples, Italy manufacturing plant and potentially sell the plant to a third party. On September 16, 2019, we entered into a preliminary agreement to sell the plant to a third-party purchaser and to support costs associated with the transition. In October 2019, we announced that, based on further discussions with unions and the Italian government, we will continue production at the Naples manufacturing plant in the near-term and resume negotiations with unions and the Italian government related to our exit of the plant. Our preliminary agreement to sell the plant to a third-party purchaser terminated in accordance with its 99 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) terms in March 2020. We ceased production in the plant and exited the facility in 2020 as previously disclosed and commenced the collective dismissal procedure in 2021. In the fourth quarter of 2021, the Company obtained a favorable court decision in litigation commenced by the unions which confirmed the validity of the collective dismissal procedure. The Company subsequently reached an agreement with the unions for the withdrawal of the litigation, completed the collective dismissal process, and reached individual settlements with all impacted personnel. In connection with this action, we have incurred approximately $ 143 million total costs comprised of $ 43 million in asset impairment costs, $ 27 million in other associated costs and $ 73 million in employee-related costs through December 31, 2021. Cash settlement of $ 69 million has been paid in 2021 with a nominal amount still to be paid in 2022. The following tables summarize the changes to our restructuring liability for the years ended December 31, 2021 and 2020: Millions of dollars 12/31/2020 Charges to Earnings Cash Paid Non-Cash and Other 12/31/2021 Employee termination costs $ 145 $ 30 $ ( 122 ) $ — $ 53 Asset impairment costs 8 1 — ( 1 ) 8 Facility exit costs — 2 ( 2 ) — — Other exit costs 20 5 ( 22 ) ( 7 ) ( 4 ) Total $ 173 $ 38 $ ( 146 ) $ ( 8 ) $ 57 Millions of dollars 12/31/2019 Charge to Earnings Cash Paid Non-cash and Other 12/31/2020 Employee termination costs $ 57 $ 253 $ ( 165 ) $ — $ 145 Asset impairment costs 8 1 — ( 1 ) 8 Facility exit costs — 4 ( 4 ) — — Other exit costs 12 30 ( 27 ) 5 20 Total $ 77 $ 288 $ ( 196 ) $ 4 $ 173 The following table summarizes 2021 and 2020 restructuring charges by operating segment: Millions of dollars 2021 Charges 2020 Charges North America $ — $ 81 EMEA 38 154 Latin America — 20 Asia — 10 Corporate / Other — 23 Total $ 38 $ 288 (15) INCOME TAXES Income tax expense was $ 518 million, $ 382 million, and $ 348 million in 2021, 2020 and 2019, respectively. The increase in tax expense in 2021 compared to 2020 is primarily due to higher earnings and related tax expense, audits and settlements, partially offset by legal entity restructuring tax benefits. Included in Settlements and changes in unrecognized tax benefits in the table below is $ 98 million of net tax expense and interest related to an unfavorable ruling discussed in Other Income Tax Matters. The increase in tax expense in 2020 compared to 2019 is primarily due to changes in valuation allowance, legal entity restructuring tax benefits, and earnings dispersion related to the sale of Embraco. As part of ongoing efforts to reduce costs and simplify the Company's legal entity structure, the Company has completed a statutory legal entity restructuring within our EMEA business. The completion of the restructuring created a tax-deductible loss which was recognized in the fourth quarter of 2019, and resulted in a $ 147 million tax benefit. 100 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The following table summarizes the difference between an income tax benefit at the United States statutory rate of 21% in 2021, 2020, and 2019, respectively, and the income tax expense at effective worldwide tax rates for the respective periods: Millions of dollars 2021 2020 2019 Earnings (loss) before income taxes United States $ 1,287 $ 1,020 $ 652 Foreign 1,045 427 878 Earnings (loss) before income taxes $ 2,332 $ 1,447 $ 1,530 Income tax (benefit) expense computed at United States statutory rate $ 490 $ 304 $ 321 U.S. government tax incentives ( 19 ) ( 17 ) ( 21 ) Foreign government tax incentives ( 23 ) ( 20 ) ( 13 ) Foreign tax rate differential 66 30 70 U.S. foreign tax credits ( 29 ) ( 25 ) ( 86 ) Valuation allowances 1 15 ( 150 ) State and local taxes, net of federal tax benefit 57 40 41 Foreign withholding taxes 19 8 54 U.S. tax on foreign dividends and subpart F income 9 34 67 Settlements and changes in unrecognized tax benefits 113 53 113 U.S. Transition Tax — — 26 Changes in enacted tax rates ( 14 ) ( 6 ) 42 Divestiture tax impact ( 35 ) — 58 Legal entity restructuring tax impact ( 98 ) ( 82 ) ( 147 ) Other items, net ( 19 ) 48 ( 27 ) Income tax computed at effective worldwide tax rates $ 518 $ 382 $ 348 Current and Deferred Tax Provision The following table summarizes our income tax (benefit) provision for 2021, 2020 and 2019: 2021 2020 2019 Millions of dollars Current Deferred Current Deferred Current Deferred United States $ 132 $ 251 $ 90 $ 81 $ 203 $ 69 Foreign 184 ( 126 ) 182 ( 24 ) 432 ( 406 ) State and local 80 ( 3 ) 42 11 42 8 $ 396 $ 122 $ 314 $ 68 $ 677 $ ( 329 ) Total income tax expense $ 518 $ 382 $ 348 United States Tax on Foreign Dividends We have historically reinvested all unremitted earnings of the majority of our foreign subsidiaries and affiliates, and therefore have not recognized any U.S. deferred tax liability on those earnings. The Company had cash and cash equivalents of approximately $ 3.0 billion at December 31, 2021, of which approximately half was held by subsidiaries in foreign countries. Our intent is to permanently reinvest substantially all of 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, they would likely not be subject to United States federal income tax under the previously taxed income or the dividend exemption rules. We would likely be required to accrue and pay United States state and local taxes and withholding taxes payable to various countries. It is not practicable to estimate the tax impact of the reversal of the outside basis difference, or the repatriation of cash due to the complexity of its hypothetical calculation. 101 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Valuation Allowances At December 31, 2021, we had net operating loss carryforwards of $ 5.8 billion, $ 306 million of which were U.S. state net operating loss carryforwards, compared to $ 5.9 billion and $ 512 million at December 31, 2020, respectively. Of the total net operating loss carryforwards at December 31, 2021, $ 3.6 billion do not expire, with substantially all of the remaining carryforwards expiring in various years through 2038. At December 31, 2021, we had $ 386 million of United States general business credit carryforwards available to offset future payments of federal income taxes, expiring between 2031 and 2041. 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 recorded a valuation allowance to reflect the net estimated amount of certain deferred tax assets associated with net operating loss and other deferred tax assets we believe will be realized. Our recorded valuation allowance of $ 195 million at December 31, 2021 consists of $ 131 million of net operating loss carryforward deferred tax assets and $ 64 million of other deferred tax assets. Our recorded valuation allowance was $ 214 million at December 31, 2020 and consisted of $ 126 million of net operating loss carryforward deferred tax assets and $ 88 million of other deferred tax assets. The increase in our valuation allowance includes $ 1 million recognized in net earnings, with the remaining change related to reclassification within our net deferred tax asset. During 2019, the Company used proceeds from a bond offering to recapitalize various entities in EMEA which resulted in a reduction in the valuation allowance. In addition, the Company has established tax planning strategies and transfer pricing policies to provide sufficient future taxable income to realize these deferred tax assets. We believe that it is more likely than not that we will realize the benefit of existing deferred tax assets, net of valuation allowances mentioned above. 102 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Deferred Tax Liabilities and Assets Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes. The following table summarizes the significant components of our deferred tax liabilities and assets at December 31, 2021 and 2020: Millions of dollars 2021 2020 Deferred tax liabilities Intangibles $ 404 $ 461 Property, net 181 196 Right of use assets 245 265 Inventory Reserves 41 116 Other 207 252 Total deferred tax liabilities $ 1,078 $ 1,290 Deferred tax assets U.S. general business credit carryforwards, including Energy Tax Credits $ 386 $ 680 Lease liabilities 255 275 Pensions 70 114 Loss carryforwards 1,347 1,336 Postretirement obligations 41 49 Foreign tax credit carryforwards 33 25 Research and development capitalization 130 121 Employee payroll and benefits 104 118 Accrued expenses 80 96 Product warranty accrual 54 76 Receivable and inventory allowances 61 112 Other 597 646 Total deferred tax assets 3,158 3,648 Valuation allowances for deferred tax assets ( 195 ) ( 214 ) Deferred tax assets, net of valuation allowances 2,963 3,434 Net deferred tax assets $ 1,885 $ 2,144 103 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Unrecognized Tax Benefits The following table represents a reconciliation of the beginning and ending amount of unrecognized tax benefits that if recognized would impact the effective tax rate, excluding federal benefits of state and local tax positions, and interest and penalties: Millions of dollars 2021 2020 2019 Balance, January 1 $ 427 $ 394 $ 278 Additions for tax positions of the current year 17 17 20 Additions for tax positions of prior years 179 21 138 Reductions for tax positions of prior years ( 34 ) ( 2 ) ( 26 ) Settlements during the period ( 7 ) — ( 4 ) Lapses of applicable statute of limitation ( 2 ) ( 3 ) ( 12 ) Balance, December 31 $ 580 $ 427 $ 394 Interest and penalties associated with unrecognized tax benefits resulted in a net expense of $ 14 million at December 31, 2021, a net expense of $ 10 million and net benefit of $( 4 ) million in 2020 and 2019, respectively. We have accrued a total of $ 66 million, $ 52 million and $ 42 million at December 31, 2021, 2020 and 2019, respectively. It is reasonably possible that certain unrecognized tax benefits of $ 74 million could be settled with various related jurisdictions during the next 12 months. We are in various stages of tax disputes (including audits, appeals and litigation) with certain governmental tax authorities. We establish liabilities for the difference between tax return provisions and the benefits recognized in our financial statements. Such amounts represent a reasonable provision for taxes ultimately expected to be paid, and may need to be adjusted over time as more information becomes known. We are no longer subject to any significant tax disputes (including audits, appeals and litigation) for the years before 2009 relating to US Federal income taxes and for the years before 2003 relating to any state, local or foreign income taxes. Other Income Tax Matters As previously disclosed, during its examination of Whirlpool’s 2009 U.S. federal income tax return, the IRS asserted that income earned by a Luxembourg subsidiary via its Mexican branch should be recognized as income on its 2009 U.S. federal income tax return. The Company believed the proposed assessment was without merit and contested the matter in United States Tax Court (US Tax Court). Both Whirlpool and the IRS moved for partial summary judgment on this issue. On May 5, 2020, the US Tax Court granted the IRS’s motion for partial summary judgment and denied Whirlpool’s. The Company appealed the US Tax Court decision to the United States Court of Appeals for the Sixth Circuit, and, on December 6, 2021, a three-judge panel, in a divided decision, affirmed the U.S. Tax Court decision (the “Ruling”). On January 20, 2022, the Company filed a petition for rehearing with the Sixth Circuit. The Company recorded a reserve of $ 98 million in the fourth quarter of 2021, which represents the expected increase in the Company’s net income tax expense, plus interest, for 2009 through 2019, which represents all of the Company’s tax years that were affected by the Ruling. (16) SEGMENT INFORMATION Our reportable segments are based upon geographic 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 upon 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 104 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) operating activities. The "Other/Eliminations" column primarily includes corporate expenses, assets and eliminations, as well as restructuring costs, asset impairments 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 are included in Other/Eliminations. Sales to Lowe's, a North American retailer, represented approximately 13 % of our consolidated net sales in 2021, 2020 and 2019, respectively. Lowe's represented approximately 21 % and 14 % of our consolidated accounts receivable as of December 31, 2021 and 2020, respectively. The United States individually comprised at least 10% of consolidated net sales in 2021, 2020 and 2019 in the amounts of $ 11.5 billion, $ 10.3 billion and $ 10.7 billion, respectively. The following table summarizes the countries that represent at least 10% of consolidated long-lived assets for the years ended December 31, 2021 and 2020. Long-lived assets includes property, plant and equipment and right-of-use assets at December 31, 2021 and 2020. Millions of dollars United States Italy Mexico Poland All Other Countries Total 2021 Long-lived assets $ 1,758 $ 473 $ 408 $ 389 $ 723 $ 3,751 2020 Long-lived assets $ 1,790 $ 526 $ 403 $ 428 $ 1,040 $ 4,187 OPERATING SEGMENTS Millions of dollars North America EMEA Latin America Asia Other/ Eliminations Total Whirlpool Net sales 2021 $ 12,491 $ 5,088 $ 3,167 $ 1,239 $ — $ 21,985 2020 11,210 4,389 2,592 1,265 — 19,456 2019 11,477 4,296 3,177 1,515 ( 46 ) 20,419 Intersegment sales 2021 $ 312 $ 102 $ 1,277 $ 252 $ ( 1,943 ) $ — 2020 249 93 1,227 379 ( 1,948 ) — 2019 238 83 1,321 334 ( 1,976 ) — Depreciation and amortization 2021 $ 175 $ 168 $ 63 $ 26 $ 62 $ 494 2020 193 177 62 70 66 568 2019 195 187 65 67 73 587 EBIT 2021 $ 2,220 $ 100 $ 265 $ 66 $ ( 152 ) $ 2,499 2020 1,758 2 219 ( 7 ) ( 336 ) 1,636 2019 1,440 ( 30 ) 172 33 102 1,717 Total assets 2021 $ 7,980 $ 10,210 $ 4,716 $ 1,565 $ ( 4,186 ) $ 20,285 2020 7,597 11,296 4,244 2,573 ( 5,274 ) 20,436 2019 7,883 9,450 4,226 2,581 ( 5,167 ) 18,973 Capital expenditures 2021 $ 169 $ 152 $ 133 $ 30 $ 41 $ 525 2020 137 116 64 50 43 410 2019 179 124 97 80 52 532 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The following table summarizes the reconciling items in the Other/Eliminations column for total EBIT for the periods presented: Twelve Months Ended December 31, in millions 2021 2020 2019 Items not allocated to segments: Restructuring costs $ ( 38 ) $ ( 288 ) $ ( 188 ) Gain (loss) on previously held equity interest 42 — — Gain (loss) on sale and disposal of businesses 107 7 437 Product warranty and liability income (expense) 9 30 ( 131 ) Corrective action recovery — 14 — Sale-leaseback, real estate and receivable adjustment — 113 86 Trade customer insolvency claim settlement — — ( 59 ) Brazil indirect tax credit — — 180 Corporate expenses and other ( 272 ) ( 212 ) ( 223 ) Total other/eliminations $ ( 152 ) $ ( 336 ) $ 102 A reconciliation of our segment information for total EBIT to the corresponding amounts in the Consolidated Statements of Income (Loss) is shown in the table below for the periods presented: Twelve Months Ended December 31, in millions 2021 2020 2019 Operating profit $ 2,348 $ 1,615 $ 1,549 Interest and sundry (income) expense $ ( 159 ) $ ( 21 ) $ ( 168 ) Equity method investment income (loss), net of tax ( 8 ) — — Total EBIT $ 2,499 $ 1,636 $ 1,717 Interest expense 175 189 187 Income tax expense 518 382 348 Net earnings (loss) $ 1,806 $ 1,065 $ 1,182 Less: Net earnings (loss) available to noncontrolling interests 23 ( 10 ) 14 Net earnings (loss) available to Whirlpool $ 1,783 $ 1,075 $ 1,168 (17) DIVESTITURES Whirlpool China Partial Tender Offer On August 25, 2020, Guangdong Galanz Household Appliances Manufacturing Co., Ltd. (“Galanz”) announced its intention to pursue a tender offer for majority control of Whirlpool China Co. Ltd. (“Whirlpool China”), a majority-owned subsidiary of the Company with shares listed on the Shanghai Stock Exchange. In its announcement, Galanz noted that it expected to offer RMB 5.23 per share (approximately $ 0.76 per share as of August 25, 2020) to obtain no less than 51 % and no more than 61 % of Whirlpool China’s outstanding shares. This share price offer was equal to the daily weighted average trading price for Whirlpool China stock over the 30 trading days prior to the announcement. In the first quarter of 2021, our Board of Directors approved the sale of Whirlpool China, which was reported within our Asia reportable segment and met the criteria for held for sale accounting during the first quarter of 2021. The operations of Whirlpool China did not meet the criteria to be presented as discontinued operations. On May 6, 2021, the tender offer was completed and the share transfer was executed for a consideration of RMB 1.25 billion (approximately $ 193 million on the date of completion). Subsequent to the share transfer, the Company holds an equity interest of approximately 20 % in Whirlpool China. 106 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) In connection with the sale, we recorded a gain, net of transaction and other costs, of $ 284 million during the second quarter of 2021. The gain on sale is equal to the difference between the total transaction amount and carrying value of Whirlpool China, which includes $ 74 million of cumulative foreign currency translation adjustments and $ 80 million of goodwill allocated to the disposal group. The total transaction amount includes $ 193 million of consideration received from the sale of Whirlpool China shares, $ 214 million for the fair value of the interest retained and the $ 783 million carrying value of the equity interest in Whirlpool China. The fair value of the interest retained was based on the ownership amount and the stock price of Whirlpool China as of the closing date of the transaction and we account for the remaining equity interest under the equity method accounting as of June 30, 2021. Earnings before income taxes prior to the share transfer of Whirlpool China were not material to the Company for the period presented. The following table presents the carrying amounts of the major classes of Whirlpool China’s assets and liabilities as of December 30, 2021 and December 31, 2020. Millions of dollars December 31, 2021 2020 Cash and cash equivalents $ — $ 324 Accounts receivable, net of allowance of $ 0 and $ 11 , respectively — 85 Inventories — 98 Prepaid and other current assets — 93 Property, net of accumulated depreciation of $ 0 and $ 189 , respectively — 309 Other noncurrent assets (1) — 283 Total assets $ — $ 1,192 Accounts payable $ — $ 216 Accrued expenses — 53 Other current liabilities — 254 Other noncurrent liabilities — 7 Total liabilities $ — $ 530 (1) Other non current assets include allocated goodwill of $ 80 million. Turkey Subsidiary Divestiture On May 17, 2021, we entered into a share transfer agreement with Arçelik A.Ş. ("Arçelik") to sell our Turkish subsidiary for a cash purchase price of € 78 million (approximately $ 93 million on June 30, 2021), subject to customary adjustments at closing. On June 30, 2021, we completed the sale of the Turkish subsidiary. In connection with the sale, we recorded a loss on disposal of $ 164 million in the second quarter of 2021. The loss includes a charge of $ 40 million for the write-down of the assets of the disposal group to fair value and allocated goodwill, and $ 124 million of cumulative foreign currency translation adjustments included in the carrying amount of the disposal group. During the third quarter of 2021, amounts for working capital and other customary post-closing adjustments were finalized and an additional $ 13 million loss related to the sale of business was recorded. The Turkish subsidiary, whose primary asset was a manufacturing plant, was reported within our EMEA reportable segment. The operations of Turkey did not meet the criteria to be presented as discontinued operations. Earnings before income taxes for Turkey were not material for the periods presented. For additional information see Note 11 to the Consolidated Financial Statements. 107 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Embraco Divestiture 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 twelve months ended December 31, 2019. An immaterial adjustment related to finalization of the purchase price and related gain calculation was recorded in 2020. 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 Balance Sheets at December 31, 2019. The following table summarizes Embraco's earnings before income taxes for the twelve months ended December 31, 2021, 2020 and 2019: Millions of dollars 2021 2020 2019 Earnings before income taxes $ — $ — $ 47 South Africa Divestiture 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. 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 year ended 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. See Note 11 to the Consolidated Financial Statements for additional information. Turkey Domestic Sales Operations Divestiture For the year ended December 31, 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. See Note 14 to the Consolidated Financial Statements for additional information. 108 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.