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) 58 Consolidated Statements of Comprehensive Income (Loss) 59 Consolidated Balance Sheets 60 Consolidated Statements of Cash Flows 61 Consolidated Statements of Changes in Stockholders' Equity 62 PAGE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 Significant Accounting Policies 63 2 Revenue Recognition 72 3 Leases 76 4 Inventories 77 5 Goodwill and Other Intangibles 78 6 Financing Arrangements 81 7 Commitments and Contingencies 83 8 Pension and Other Postretirement Benefit Plans 87 9 Hedges and Derivative Financial Instruments 95 10 Fair Value Measurements 99 11 Stockholders' Equity 102 12 Share-Based Incentive Plans 103 13 Income Taxes 105 14 Segment Information 110 15 Acquisitions and Divestitures 113 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 133 57 WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (LOSS) Year Ended December 31, (Millions of dollars, except per share data) 2023 2022 2021 Net sales $ 19,455 $ 19,724 $ 21,985 Expenses Cost of products sold 16,285 16,651 17,576 Gross margin 3,170 3,073 4,409 Selling, general and administrative 1,993 1,820 2,081 Intangible amortization 40 35 47 Restructuring costs 16 21 38 Impairment of goodwill and other intangibles — 384 — Loss (gain) on sale and disposal of businesses 106 1,869 ( 105 ) Operating profit (loss) 1,015 ( 1,056 ) 2,348 Other (income) expense Interest and sundry (income) expense 71 ( 19 ) ( 159 ) Interest expense 351 190 175 Earnings (loss) before income taxes 593 ( 1,227 ) 2,332 Income tax expense (benefit) 77 265 518 Equity method investment income (loss), net of tax ( 28 ) ( 19 ) ( 8 ) Net earnings (loss) 488 ( 1,511 ) 1,806 Less: Net earnings (loss) available to noncontrolling interests 7 8 23 Net earnings (loss) available to Whirlpool $ 481 $ ( 1,519 ) $ 1,783 Per share of common stock Basic net earnings (loss) available to Whirlpool $ 8.76 $ ( 27.18 ) $ 28.73 Diluted net earnings available to Whirlpool $ 8.72 $ ( 27.18 ) $ 28.36 Weighted-average shares outstanding (in millions) Basic 55.0 55.9 62.1 Diluted 55.2 55.9 62.9 The accompanying notes are an integral part of these Consolidated Financial Statements. 58 WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended December 31, (Millions of dollars) 2023 2022 2021 Net earnings (loss) $ 488 $ ( 1,511 ) $ 1,806 Other comprehensive income (loss), before tax: Foreign currency translation adjustments 22 280 364 Derivative instruments: Net (loss) gain arising during period ( 100 ) 119 282 Less: reclassification adjustment for gain (loss) included in net earnings (loss) ( 36 ) 93 255 Derivative instruments, net ( 64 ) 26 27 Defined benefit pension and postretirement plans: Prior service (cost) credit arising during period ( 1 ) 5 — Net gain (loss) arising during period ( 99 ) ( 54 ) 56 Less: amortization of prior service credit (cost) and actuarial (loss) ( 1 ) ( 22 ) ( 48 ) Defined benefit pension and postretirement plans, net ( 99 ) ( 27 ) 104 Other comprehensive income (loss), before tax ( 141 ) 279 495 Income tax benefit (expense) related to items of other comprehensive income (loss) 53 ( 12 ) ( 41 ) Other comprehensive income (loss), net of tax $ ( 88 ) $ 267 $ 454 Comprehensive income (loss) $ 400 $ ( 1,244 ) $ 2,260 Less: comprehensive income (loss), available to noncontrolling interests 7 8 23 Comprehensive income (loss) available to Whirlpool $ 393 $ ( 1,252 ) $ 2,237 The accompanying notes are an integral part of these Consolidated Financial Statements. 59 WHIRLPOOL CORPORATION CONSOLIDATED BALANCE SHEETS At December 31, (Millions of dollars) 2023 2022 Assets Current assets Cash and cash equivalents $ 1,570 $ 1,958 Accounts receivable, net of allowance of $ 47 and $ 49 , respectively 1,529 1,555 Inventories 2,247 2,089 Prepaid and other current assets 717 653 Assets held for sale 144 139 Total current assets 6,207 6,394 Property, net of accumulated depreciation of $ 5,259 and $ 4,808 , respectively 2,234 2,102 Right of use assets 721 691 Goodwill 3,330 3,314 Other intangibles, net of accumulated amortization of $ 440 and $ 400 , respectively 3,124 3,164 Deferred income taxes 1,317 1,063 Other noncurrent assets 379 396 Total assets $ 17,312 $ 17,124 Liabilities and stockholders' equity Current liabilities Accounts payable $ 3,598 $ 3,376 Accrued expenses 491 481 Accrued advertising and promotions 603 623 Employee compensation 238 159 Notes payable 17 4 Current maturities of long-term debt 800 248 Other current liabilities 614 550 Liabilities held for sale 587 490 Total current liabilities 6,948 5,931 Noncurrent liabilities Long-term debt 6,414 7,363 Pension benefits 147 184 Postretirement benefits 107 96 Lease liabilities 612 584 Other noncurrent liabilities 547 460 Total noncurrent liabilities 7,827 8,687 Stockholders' equity Common stock, $ 1 par value, 250 million shares authorized, 114 million and 114 million shares issued, respectively, and 55 million and 54 million shares outstanding, respectively 114 114 Additional paid-in capital 3,078 3,061 Retained earnings 8,358 8,261 Accumulated other comprehensive loss ( 2,178 ) ( 2,090 ) Treasury stock, 60 million and 60 million shares, respectively ( 7,010 ) ( 7,010 ) Total Whirlpool stockholders' equity 2,362 2,336 Noncontrolling interests 175 170 Total stockholders' equity 2,537 2,506 Total liabilities and stockholders' equity $ 17,312 $ 17,124 The accompanying notes are an integral part of these Consolidated Financial Statements. 60 WHIRLPOOL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (Millions of dollars) 2023 2022 2021 Operating activities Net earnings (loss) $ 488 $ ( 1,511 ) $ 1,806 Adjustments to reconcile net earnings to cash provided by (used in) operating activities: Depreciation and amortization 361 475 494 Impairment of goodwill and other intangibles — 384 — Loss (gain) on sale and disposal of businesses 106 1,869 ( 105 ) (Gain) loss on previously held equity interest — — ( 42 ) Changes in assets and liabilities: Accounts receivable 159 854 ( 232 ) Inventories ( 123 ) ( 49 ) ( 648 ) Accounts payable 1 ( 612 ) 949 Accrued advertising and promotions ( 37 ) ( 51 ) 70 Accrued expenses and current liabilities 122 113 125 Taxes deferred and payable, net ( 97 ) 18 130 Accrued pension and postretirement benefits ( 59 ) ( 105 ) ( 116 ) Employee compensation 103 ( 288 ) 16 Other ( 109 ) 293 ( 271 ) Cash provided by (used in) operating activities 915 1,390 2,176 Investing activities Capital expenditures ( 549 ) ( 570 ) ( 525 ) Proceeds from sale of assets and businesses 10 77 302 Acquisition of businesses, net of cash acquired ( 14 ) ( 3,000 ) ( 46 ) Cash held by divested businesses — ( 75 ) ( 393 ) Other — — 2 Cash provided by (used in) investing activities ( 553 ) ( 3,568 ) ( 660 ) Financing activities Net proceeds from borrowings of long-term debt 304 2,800 300 Net proceeds (repayments) of long-term debt ( 750 ) ( 300 ) ( 300 ) Net proceeds (repayments) from short-term borrowings 34 ( 4 ) ( 1 ) Dividends paid ( 384 ) ( 390 ) ( 338 ) Repurchase of common stock — ( 903 ) ( 1,041 ) Common stock issued 4 3 76 Other — — ( 35 ) Cash provided by (used in) financing activities ( 792 ) 1,206 ( 1,339 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 45 ( 20 ) ( 67 ) Less: change in cash classified as held for sale ( 3 ) ( 94 ) — Increase (decrease) in cash, cash equivalents and restricted cash ( 388 ) ( 1,086 ) 110 Cash, cash equivalents and restricted cash at beginning of year 1,958 3,044 2,934 Cash, cash equivalents and restricted cash at end of period $ 1,570 $ 1,958 $ 3,044 Supplemental disclosure of cash flow information Cash paid for interest $ 370 $ 161 $ 169 Cash paid for income taxes $ 175 $ 247 $ 388 The accompanying notes are an integral part of these Consolidated Financial Statements. 61 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, 2020 $ 4,795 $ 8,725 $ ( 2,811 ) $ ( 2,142 ) $ 113 $ 910 Comprehensive income Net earnings (loss) 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 Comprehensive income Net earnings (loss) ( 1,511 ) ( 1,519 ) — — — 8 Other comprehensive income (loss) 267 — 267 — — — Comprehensive income ( 1,244 ) ( 1,519 ) 267 — — 8 Stock issued (repurchased) ( 868 ) — — ( 868 ) — — Dividends declared ( 395 ) ( 390 ) — — — ( 5 ) Acquisitions and Divestitures — — — — — — Balances, December 31, 2022 2,506 8,261 ( 2,090 ) ( 3,949 ) 114 170 Comprehensive income Net earnings 488 481 — — — 7 Other comprehensive income (loss) ( 88 ) — ( 88 ) — — — Comprehensive income 400 481 ( 88 ) — — 7 Stock issued (repurchased) 17 — — 17 — — Dividends declared ( 386 ) ( 384 ) — — — ( 2 ) Acquisitions and divestitures — — — — — — Balances, December 31, 2023 $ 2,537 $ 8,358 $ ( 2,178 ) $ ( 3,932 ) $ 114 $ 175 The accompanying notes are an integral part of these Consolidated Financial Statements. 62 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, InSinkErator, 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. Beginning January 1, 2024, we are conducting our business through five operating segments, which consist of Major Domestic Appliances (“MDA”) North America; MDA Europe, MDA Latin America; MDA Asia; and Small Domestic Appliances (“SDA”) Global. On January 16, 2023, Whirlpool entered into a contribution agreement with Arçelik A.Ş (“Arcelik”) in alignment with Whirlpool’s portfolio transformation. Under the terms of the agreement, Whirlpool will contribute its European major domestic appliance business, and Arcelik will contribute its European major domestic appliance, consumer electronics, air conditioning, and small domestic appliance businesses into the newly formed entity of which Whirlpool will own 25 % and Arcelik 75 %, subject to an adjustment mechanism based on certain financial matters. Separately, Whirlpool agreed in principle to the sale of Whirlpool’s Middle East and Africa business to Arcelik. These transactions impact businesses that are collectively referred to as the European major domestic appliance business which was classified as held for sale in the fourth quarter of 2022. Whirlpool will retain ownership of its EMEA KitchenAid small domestic appliance business. The transactions are expected to close by April 2024 and include nine Whirlpool production sites located in Italy, Poland, Slovakia, and the UK, as well as Arçelik’s two production facilities in Romania. For additional information, see Note 15 to the Consolidated Financial Statements. The MDA Europe business will be deconsolidated upon the completion of the European contribution agreement transaction with Arcelik, and it does not qualify for reporting as discontinued operations. 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 D uring the first quarter of 2022, Russia commenced a military invasion of Ukraine, and the ensuing conflict has created disruption in the EMEA region and around the world. While we continued experiencing some of this disruption during the quarter, the duration and severity of the effects on our business and the global economy are inherently unpredictable. We continue to closely monitor the ongoing conflict which could materially impact our financial results in the future. We have some sales and distribution operations in Ukraine, however, the revenues and net assets are not material to our EMEA operating segment and consolidated results. *Whirlpool ownership of the Hotpoint brand in the EMEA and Asia Pacific regions is not affiliated with the Hotpoint brand sold in the Americas. 63 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) On June 27, 2022, our subsidiary Whirlpool EMEA SpA entered into a share purchase agreement with Arcelik to sell our Russian business to Arcelik for contingent consideration. The sale of the Russian business was completed on August 31, 2022. For additional information, see Note 15 to the Consolidated Financial Statements. Furthermore, macroeconomic volatility, as well as ongoing international conflicts, continues to impact countries across the world, and the duration and severity of the effects are currently unknown. The Consolidated Financial Statements presented herein reflect estimates and assumptions made by management at December 31, 2023 and for the twelve months ended December 31, 2023. These estimates and assumptions affect, among other things, the Company’s goodwill, long-lived asset and indefinite-lived intangible asset valuation; inventory valuation; assessment of the annual effective tax rate; valuation of deferred income taxes and income tax contingencies; and the allowance for expected credit losses and bad debt. Events and changes in circumstances arising after February 14, 2024, including those resulting from the impacts of macroeconomic volatility, as well as the ongoing international conflicts, 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. Our Maytag and InSinkErator trademarks are at risk at December 31, 2023. 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 and InSinkErator trademarks, but we remain committed to the strategic actions necessary to realize the long-term forecasted revenues and profitability of these trademarks. A lack of recovery or further deterioration in market conditions, a sustained trend of weaker than expected financial performance for our Maytag and InSinkErator trademarks, among other factors, as a result of 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. Income taxes Under U.S. GAAP, the Company calculates its quarterly tax provision based on an estimated effective tax rate for the year and then adjusts this amount by certain discrete items each quarter. Potential changing and volatile macroeconomic conditions could cause fluctuations in forecasted earnings before income taxes. As such, the Company's effective tax rate could be subject to volatility as forecasted earnings before income taxes are impacted by events which cannot be predicted. In addition, potential future economic deterioration brought on by the pandemic, ongoing conflicts in Ukraine, Israel and the Red Sea, and related sanctions or other factors, such as potential sales of businesses and new tax legislation may negatively impact the realizability and/or valuation of certain deferred tax assets. 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, assets held for sale, legal contingencies, income taxes and pension and other postretirement benefits. Actual results could differ materially from those estimates. 64 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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. 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. 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. Outstanding accounts receivable transferred under arrangements where the Company continues to service the transferred asset was $ 227 million and $ 80 million as of December 31, 2023 and December 31, 2022, respectively. The amount of cash proceeds received under these arrangements was $ 379 million and $ 80 million for the twelve months ended December 31, 2023 and December 31, 2022, respectively. Freight and Warehousing Costs We classify freight and warehousing costs within cost of products sold in our Consolidated Statements of Income (Loss). 65 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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 10 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, 2023 and 2022 that included pension plan assets disclosed in Note 8 to the Consolidated Financial Statements. We had no Level 3 liabilities at December 31, 2023 and 2022, 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. For certain acquired production assets, we depreciate costs based on the straight-line method. Property, plant and equipment associated with our European major domestic appliance business with a net book value of $ 952 million and $ 822 million at December 31, 2023 and December 31, 2022, respectively, has been classified as assets held for sale. Property, plant and equipment with a net book value of $ 141 million associated with our Russian business was removed as part of the deconsolidation of the Russian operations in the third quarter of 2022. For additional information, see Notes 10 and 15 to the Consolidated Financial Statements. Property, plant and equipment and related accumulated depreciation of all divested businesses have been removed. For additional information, see Note 15 to the Consolidated Financial Statements. 66 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Depreciation expense for property, including accelerated depreciation classified as restructuring expense in our Consolidated Statements of Income (Loss), was $ 321 million, $ 440 million and $ 447 million in 2023, 2022 and 2021, respectively. Depreciation of our European major domestic appliance business has been suspended from December 2022 onwards due to the disposal group being classified as held for sale and measured at fair value less cost to sell. The following table summarizes our property at December 31, 2023 and 2022: Millions of dollars 2023 2022 Estimated Useful Life Land $ 29 $ 32 n/a Buildings 893 862 10 to 50 years Machinery and equipment 6,571 6,016 3 to 20 years Accumulated depreciation ( 5,259 ) ( 4,808 ) Property plant and equipment, net $ 2,234 $ 2,102 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, 2023, we disposed of buildings, machinery and equipment with a net book value of $ 16 million, compared to $ 25 million in prior year. The net loss on the disposals is immaterial for the twelve months ended December 31, 2023. The net gain on the disposals was $ 54 million for the same period of 2022 and was primarily driven by a sale-leaseback transaction. 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. Excluding assets held for sale, there were no significant impairments recorded during 2023, 2022 and 2021, respectively. For additional information, see Notes 10 and 15 to the Consolidated Financial Statements. Capitalization of Internal Use Software Costs We capitalize certain computer software development costs associated with qualifying application development stage activities or the acquisition of computer software for internal use. Capitalization is determined based on specific criteria, including whether the software is in the development stage and meets defined criteria for capitalization. Capitalized software costs are recognized as part of property, plant, and equipment and are depreciated on a straight-line basis over the estimated useful lives of the software, generally not exceeding five years . As of December 31, 2023 and December 31, 2022, capitalized software costs, net of accumulated depreciation, amounted to $ 135 million and $ 136 million, respectively. These amounts are included in the Machinery and Equipment category in the Property section of the Consolidated Balance Sheets. The depreciation expense recorded for these assets was $ 34 million, $ 39 million, and $ 47 million for the twelve months ended 2023, 2022, and 2021, respectively. There were no significant impairments recorded during 2023, 2022 and 2021, respectively. 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. 67 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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. 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; Europe, Middle East and Africa; Latin America and Asia. The goodwill in any of our reporting units are not presently at risk for future impairment and a qualitative annual impairment assessment was performed in 2023. We evaluate goodwill using a qualitative assessment to determine whether it is more likely than not that the fair value of any reporting unit is less than its carrying amount, including goodwill. When the qualitative assessment is not utilized and a quantitative test is performed, 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. The goodwill impairment test compares a reporting unit’s fair value to its carrying amount. If the fair value of the reporting unit exceeds its carrying amount, no impairment loss is measured. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, then a goodwill impairment loss is measured at the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. For additional information, see Notes 5 and 10 to the Consolidated Financial Statements. 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. For additional information, see Notes 5 and 10 to the Consolidated Financial Statements. 68 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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, 2023, approximately $ 1.2 billion have been issued to participating financial institutions of which $ 383 million of the balance issued is related to our European major domestic appliance business which has been classified as held for sale starting from the fourth quarter of 2022. For additional information see Note 15 to the Consolidated Financial Statements. At December 31, 2022, approximately $ 1.1 billion have been issued to participating financial institutions, of which $ 368 million was related to our European major domestic appliance business. 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. 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 9 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 $ 473 million, $ 465 million and $ 485 million in 2023, 2022 and 2021, respectively. Advertising Costs Advertising costs are charged to expense when the advertisement is first communicated and totaled $ 392 million, $ 329 million and $ 345 million in 2023, 2022 and 2021, respectively. 69 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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 13 to the Consolidated Financial Statements for additional information. Share-based Incentive Plans Share-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 Share-based incentive plans include 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. Share-based compensation is recorded in selling, general and administrative expense on our Consolidated Statements of Income (Loss). See Note 12 to the Consolidated Financial Statements for additional information. Acquisitions We include the results of operations of the businesses in which we acquire a controlling financial interest in our Consolidated Financial Statements beginning as of the acquisition date. On the acquisition date, we recognize, separate from goodwill, the assets acquired, including separately identifiable intangible assets, and the liabilities assumed based on the preliminary purchase price allocation. The excess of the consideration transferred over the fair values assigned to the net identifiable assets and liabilities of the acquired business is recognized as goodwill. Transaction costs are recognized separately from the acquisition and are expensed as incurred. We may adjust preliminary amounts recognized at the acquisition date to their subsequently determined acquisition-date fair values during the measurement period which is twelve months from acquisition date. For additional information, see Note 15 to the Consolidated Financial Statements. Equity Method Investments Whirlpool holds an equity interest of 20 % in Whirlpool (China) Co., Ltd. (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. The following tables summarize balances and transactions with Whirlpool China and its subsidiaries during the periods presented. 70 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Millions of dollars December 31, 2023 December 31, 2022 Other noncurrent assets Carrying value of equity interest $ 187 $ 201 Accounts payable Outstanding amounts due $ 91 $ 75 Changes in the carrying value of the equity interest are driven by earnings (loss) of the investee, the receipt of dividends, and the effect of foreign exchange. Twelve Months Ended December 31, Millions of dollars 2023 2022 Purchases from Whirlpool China $ 303 $ 376 The licensing revenue and outstanding accounts receivable from Whirlpool China and its subsidiaries are not material for the periods presented. 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 Statements of Income (Loss) and Other noncurrent assets in the Consolidated Balance Sheets. The market value of our 20 % investment in Whirlpool China, based on the quoted market price, is $ 191 million as of December 31, 2023. Management has concluded that there are currently no indicators for an other-than-temporary impairment. For additional information, see Note 15 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. Goodwill of $ 100 million, which is not deductible for tax purposes, arose from this transaction and is 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 $ 29 million as of December 31, 2023. 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. Adoption of New Accounting Standards We adopted the following standards for the year ended December 31, 2023 which did not have a material impact on our Consolidated Financial Statements: Standard Effective Date 2022-04 Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations January 1, 2023 71 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Accounting Pronouncements Issued But Not Yet Effective In November 2023, the FASB issued Update 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". This Update applies to all public entities that are required to report segment information in accordance with Topic 280. The amendments in this Update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this Update do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The standard should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this new standard. In December 2023, the FASB issued Update 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". This Update applies to all entities that are subject to Topic 740. The amendments in this Update improve income tax disclosures primarily related to the rate reconciliation and income taxes paid information as well as the effectiveness of certain other income tax disclosures. The new standard is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The standard should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the impact of adopting this new standard. 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 72 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Company has elected to account for shipping and handling activities as a fulfillment cost as permitted by the standard. 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, 2023, 2022 and 2021, 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 14 to the Consolidated Financial Statements. Twelve months ended Millions of dollars 2023 2022 2021 Major product categories: Laundry $ 5,333 $ 5,133 $ 6,122 Refrigeration 5,794 6,248 6,677 Cooking 4,721 5,056 5,639 Dishwashing 1,729 1,822 1,890 Total major product category net sales $ 17,577 $ 18,259 $ 20,327 Spare parts and warranties 953 923 1,187 Other 925 542 470 Total net sales $ 19,455 $ 19,724 $ 21,985 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, cooking, and dishwashing. The refrigeration product category includes refrigerators, freezers, ice makers and refrigerator water filters. The laundry product category includes laundry appliances, 73 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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 standard 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 a majority of these arrangements whereby the Company receives a fee that is recognized as revenue upon the sale of the extended service arrangement. Other Revenue Other revenue sources include primarily the revenues from the InSinkErator business, acquired in the fourth quarter of 2022, subscription arrangements and licenses as described below. InSinkErator revenues consist primarily of food waste disposers and instant hot water dispensers. 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, in a similar manner as our major product category sales. The Company has a water filtration subscription business, operating under our Brastemp brand, in our Latin America segment which provides the consumers and businesses with a water filtration system that is installed in the consumer's or business's location. Our Brastemp water filtration 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 monthly invoiced amount which directly corresponds to the value of our performance completed to date. On January 16, 2024, the Company entered into a share purchase agreement with a third-party 74 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) buyer to sell the Company's Brastemp water filtration subscription business in the Latin America region. The completion of the transaction is contingent upon regulatory approvals and customary closing conditions, and is anticipated to occur in 2024. For additional information, see Note 15 to the Consolidated Financial Statements. 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 following table summarizes our allowance for doubtful accounts by operating segment for the twelve months ended December 31, 2023. Millions of dollars December 31, 2022 Charged to Earnings Write-offs Foreign Currency Other (1) December 31, 2023 Accounts receivable allowance North America $ 6 $ — $ ( 1 ) $ — $ — $ 5 EMEA 2 ( 3 ) ( 3 ) 1 4 1 Latin America 38 4 ( 8 ) 4 — 38 Asia 3 — — — — 3 $ 49 $ 1 $ ( 12 ) $ 5 $ 4 $ 47 Financing receivable allowance Latin America $ 27 $ — $ — $ 2 $ — $ 29 Consolidated $ 76 $ 1 $ ( 12 ) $ 7 $ 4 $ 76 (1) Starting from the fourth quarter of 2022, accounts receivable allowance of our European major domestic appliance business is transferred to assets held for sale. For additional information, see Note 15 to the Consolidated Financial Statements. We recorded an immaterial amount of bad debt expense for the years ended December 31, 2023, 2022 and 2021, respectively. 75 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 approximatel y $ 235 million, $ 218 million and $ 234 million for the years ended December 31, 2023, 2022 and 2021, respectively. At December 31, 2023 and 2022, we have no material leases classified as financing leases. We have approximately $ 929 million of non-cancellable operating lease commitments, excluding variable consideration at December 31, 2023 and $ 889 million at December 31, 2022. The undiscounted annual future minimum lease payments are summarized by year in the table below and excludes lease payments related to our European major domestic appliance business classified as held for sale. Maturity of Lease Liabilities Operating Leases (in millions) 2024 $ 191 2025 152 2026 138 2027 117 2028 87 Thereafter 244 Total lease payments $ 929 Less: interest 156 Present value of lease liabilities $ 772 The long-term portion of the lease liabilities included in the amounts above is $ 612 million as of December 31, 2023. The remainder of our lease liabilities are included in other current liabilities in the Consolidated Balance Sheets. At December 31, 2023 and December 31, 2022, the weighted average remaining lease term and weighted average discount rate for operating leases was 7 years and 5 %, respectively. During the year ended December 31, 2023 the cash paid for amounts included in the measurement of the liabilities and the operating cash flows was $ 236 million . The right of use assets obtained in exchange for new liabilities was $ 157 million for the year ended December 31, 2023. During the year ended December 31, 2022 the cash paid for amounts included in the measurement of the liabilities and the operating cash flows was $ 219 million . The right of use assets obtained in exchange for new liabilities was $ 79 million for the year ended December 31, 2022. As the Company's lease agreements normally do not provide an implicit interest rate, we apply the Company's incremental borrowing rate based on the information available at commencement date in determining the present value of future lease payments. Relevant information used in determining the Company's incremental borrowing rate includes the duration of the lease, location of the lease, and the Company's credit risk relative to risk-free market rates. Many of our leases include renewal options that can extend the lease term. The execution of those renewal options is at our sole discretion and reflected in the lease term when they are reasonably certain to be exercised. Certain leases also include options to purchase the underlying asset at fair market value. If leased assets have leasehold improvements, typically the depreciable life of those leasehold improvements 76 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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 parti es. 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, 2023, 2022 and 2021, respectively. Sale-leaseback transactions There were no material sale-leaseback transactions in 2023. In the first quarter of 2022, the Company sold and leased back a group of non-core properties for net proceeds of approximately $ 52 million. The initial total annual rent for the properties is approximately $ 2 million per year over an initial 15 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 two sequential 5-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 $ 44 million ($ 36 million, net of tax) recorded in selling, general and administrative expense in the Consolidated Statements of Comprehensive Income (Loss) for the twelve months ended December 31, 2022. 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 $ 32 million were recorded in the Consolidated Balance Sheets at the time of the transaction in the first quarter of 2022. There were no material sale-leaseback transactions in 2021. 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, 2023, these arrangements include residual value guarantees of up to approximately $ 378 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 $ 334 million as of December 31, 2022. 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) is nominal. (4) INVENTORIES The following table summarizes our inventories at December 31, 2023 and 2022: Millions of dollars 2023 2022 Finished products $ 1,732 $ 1,580 Raw materials and work in process 515 509 Total inventories $ 2,247 $ 2,089 77 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (5) 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, 2021 $ 1,695 $ 296 $ 33 $ 461 $ 2,485 Currency translation adjustment ( 3 ) ( 18 ) — ( 9 ) ( 30 ) Divestitures and acquisitions (1) 1,137 — — — 1,137 Impairment (2) $ — $ ( 278 ) $ — $ — $ ( 278 ) Ending balance December 31, 2022 $ 2,829 $ — $ 33 $ 452 $ 3,314 Currency translation adjustment 1 — — ( 1 ) — Divestitures and acquisitions (1) 16 — — — 16 Impairment $ — $ — $ — $ — $ — Ending balance December 31, 2023 $ 2,846 $ — $ 33 $ 451 $ 3,330 (1) Increase in goodwill is related to the purchase of InSinkErator business in 2022 and related measurement period adjustment in 2023. For additional information, see Note 15 to the Consolidated Financial Statements. (2) Full impairment of EMEA goodwill recorded in the second quarter of 2022. For additional information, See Note 10 to the Consolidated Financial Statements. A nnual impairment assessment We completed our annual test for goodwill as of October 1, 2023 and October 1, 2022. The Company performed a qualitative assessment for all our reporting units and determined no impairment was indicated. Interim impairment assessment In connection with the preparation of our Consolidated Condensed Financial Statements for three months ended June 30, 2022, we identified indicators of goodwill impairment for our EMEA reporting unit, which required us to complete an interim impairment assessment. The primary indicators of impairment were the adverse impacts from the continuation of the Russia and Ukraine conflict, including the impact on demand, the divestiture of our Russian operations and other ongoing adverse macroeconomic impacts such as raw material inflation, supply chain disruption and unfavorable demand. As a result of these factors, the operating results for the three-months ended June 30, 2022 were significantly lower than expected and our expectations of attaining our long term plans for the region were delayed. In performing our quantitative assessment of goodwill, we estimated the reporting unit's fair value under an income approach using a discounted cash flow model. The income approach used the reporting unit's projections of estimated operating results and cash flows that were discounted using a market participant discount rate based on the weighted-average cost of capital. The main assumptions supporting the cash flow projections include revenue growth, EBIT margins and the discount rate. The financial projections reflect management's best estimate of economic and market conditions over the projected period including forecasted revenue growth, EBIT margins, tax rate, capital expenditures, depreciation and amortization, changes in working capital requirements and the terminal growth rate. Based on our interim quantitative impairment assessment as of June 30, 2022, the carrying value of the EMEA reporting unit exceeded its fair value and we recorded a goodwill impairment charge for the full amount of the goodwill's carrying value of $ 278 million during the second quarter of 2022. For additional information, see Note 10 to the Consolidated Financial Statements. 78 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Other Intangible Assets The following table summarizes other intangible assets for the period presented: December 31, 2023 December 31, 2022 Millions of dollars Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Other intangible assets, finite lives: Customer relationships (1) $ 669 $ ( 326 ) $ 343 $ 668 $ ( 287 ) $ 381 Patents and other (2) 115 ( 114 ) 1 116 ( 113 ) 3 Total other intangible assets, finite lives $ 784 $ ( 440 ) $ 344 $ 784 $ ( 400 ) $ 384 Trademarks, indefinite lives (3)(4) 2,780 — 2,780 2,780 — 2,780 Total other intangible assets $ 3,564 $ ( 440 ) $ 3,124 $ 3,564 $ ( 400 ) $ 3,164 (1) Customer relationships have an estimated useful life of 5 to 19 years. Includes $ 327 million of customer relationships, net of accumulated amortization, acquired as part of InSinkErator acquisition in 2022. (2) Patents and other intangibles have an estimated useful life of 3 to 43 years. (3) Trademarks valued at $ 1.3 billion were acquired as part of the InSinkErator acquisition in 2022. For additional information, see Notes 10 and 15 to the Consolidated Financial Statements. (4) Includes InSinkErator, Maytag and JennAir trademarks with carrying values of $ 1.3 billion, $ 1.0 billion and $ 304 million, respectively. A nnual impairment assessment We completed our annual impairment assessment for other intangible assets as of October 1, 2023. The Company elected to bypass the qualitative assessment and perform a quantitative assessment to evaluate certain indefinite-life intangible assets. Based on the results of the quantitative annual assessment, we determined there were no impairments of the carrying values of intangible assets. In the fourth quarter of 2022, and in connection with the classification of our European major domestic appliance business to held for sale, we recorded a loss of $ 1,521 million for the write-down of the disposal group to its estimated fair value of $ 139 million. The loss from the transaction includes the remaining carrying values of Hotpoint* and Indesit trademarks for $ 92 million and $ 133 million, respectively, and write-down of other intangible assets of $ 54 million. See Note 10 and 15 to the Consolidated Financial Statements for additional information. We completed our annual impairment assessment for other intangible assets as of October 1, 2022. 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, other than the amounts recorded during the second quarter of 2022. See Note 10 to the Consolidated Financial Statements for additional information. Amortization expense was $ 40 million, $ 35 million and $ 47 million for the years ended December 31, 2023, 2022 and 2021, respectively. *Whirlpool ownership of the Hotpoint brand in the EMEA and Asia Pacific regions is not affiliated with the Hotpoint brand sold in the Americas. 79 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The following table summarizes our future estimated amortization expense by year. Amortization expense related to intangible assets transferred to held for sale of our European major appliance business are excluded from the table below. Millions of dollars 2024 27 2025 24 2026 24 2027 24 2028 24 Interim impairment assessment Similarly to the review of EMEA reporting unit, and in connection with the preparation of our Consolidated Condensed Financial Statements for three months ended June 30, 2022, we identified indicators of impairment associated with other intangible assets in our EMEA reporting unit, which required us to complete an interim impairment assessment. The primary indicators of impairment were the same as those identified for EMEA reporting unit and resulted in the actual revenues for the three-months ended June 30, 2022 being significantly lower than forecasted for Indesit and Hotpoint * trademarks. In performing our quantitative assessment of other intangible assets, primarily trademarks, we estimate the fair value using the relief-from-royalty method which requires assumptions related to projected revenues from our long-range plans; assumed royalty rates that could be payable if we did not own the trademark; and a discount rate using a market-based weighted-average cost of capital. Based on our interim quantitative impairment assessment as of June 30, 2022, the carrying value of certain other intangible assets, including Indesit and Hotpoint *, exceeded their fair value, and we recorded an impairment charge of $ 106 million during the second quarter of 2022. See Note 10 to the Consolidated Financial Statements for additional information. The estimates of future cash flows used in determining the fair value of goodwill and intangible assets involve significant management judgment and are based upon assumptions about expected future operating performance, economic conditions, market conditions and cost of capital. Inherent in estimating the future cash flows are uncertainties beyond our control, such as changes in capital markets. The actual cash flows could differ materially from management's estimates due to changes in business conditions, operating performance and economic conditions. *Whirlpool ownership of the Hotpoint brand in the EMEA and Asia Pacific regions is not affiliated with the Hotpoint brand sold in the Americas. 80 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (6) FINANCING ARRANGEMENTS Long-Term Debt The following table summarizes our long-term debt at December 31, 2023 and 2022: Millions of dollars 2023 2022 Senior Note - 3.70 %, maturing 2023 $ — $ 250 Senior Note - 4.00 %, maturing 2024 300 300 Term Loan - SOFR + 85 bps, maturing 2024 500 1,000 Term Loan - SOFR + 110 bps, maturing 2025 1,500 1,500 Senior Note - 3.70 %, maturing 2025 350 350 Senior Note - 1.25 %, maturing 2026 (1) 549 532 Senior Note - 1.10 %, maturing 2027 (1) 659 638 Senior Note - 0.50 %, maturing 2028 (1) 550 533 Senior Note - 4.75 %, maturing 2029 695 695 Senior Note - 2.40 %, maturing 2031 300 300 Senior Note - 4.70 %, maturing 2032 298 297 Senior Note - 5.50 %, maturing 2033 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 ( 26 ) ( 23 ) $ 7,214 $ 7,611 Less current maturities 800 248 Total long-term debt $ 6,414 $ 7,363 (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. The following table summarizes the contractual maturities of our long-term debt, including current maturities, at December 31, 2023: Millions of dollars 2024 800 2025 1,850 2026 549 2027 659 2028 550 Thereafter 2,806 Long-term debt, including current maturities $ 7,214 Debt Offering On February 22, 2023, the Company completed its offering of $ 300 million aggregate principal amount of 5.5 % Senior Notes due 2033 (the “2033 Notes”), in a public offering pursuant to a registration statement on Form S-3 (File No. 333-255372). The 2033 Notes were issued under an indenture (the “Indenture”), dated March 20, 2000, between the Company, as issuer, and U.S. Bank Trust Company, National Association (as successor to U.S. Bank, National Association and Citibank, N.A.), as trustee. The sale of the 2033 Notes was made pursuant to the terms of an Underwriting Agreement, dated February 14, 2023, with BNP Paribas Securities Corp., ING Financial Markets LLC, Mizuho Securities USA LLC, SMBC Nikko Securities America, Inc. and SG Americas Securities, LLC, as representatives of the several underwriters in connection with the offering and sales of the 2033 Notes. The 2033 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 81 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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 2033 Notes to repay $ 250 million aggregate principal amount of 3.7 % Notes which were paid on March 1, 2023, and for general corporate purposes. On May 4, 2022, the Company completed its offering of $ 300 million in principal amount of 4.7 % Senior Notes due 2032 (the “2032 Notes”), in a public offering pursuant to a registration statement on Form S-3 (File No. 333-255372). The 2032 Notes were issued under the Indenture. The sale of the 2032 Notes was made pursuant to the terms of an Underwriting Agreement, dated May 2, 2022, among the Company, as issuer, and BNP Paribas Securities Corp., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, Mizuho Securities USA LLC and Wells Fargo Securities, LLC, as representatives of the several underwriters in connection with the offering and sales of the 2032 Notes. The 2032 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 2032 Notes to repay $ 300 million aggregate principal amount of 4.7 % Notes which were paid on June 1, 2022. Term Loan Agreement On September 23, 2022, the Company entered into a Term Loan Agreement by and among the Company, Sumitomo Mitsui Banking Corporation (“SMBC”), as Administrative Agent and Syndication Agent and as lender, and certain other financial institutions as lenders. SMBC, BNP Paribas, ING Bank N.V., Dublin Branch, Mizuho Bank, Ltd., and Societe Generale acted as Joint Lead Arrangers and Syndication Agents; The Bank of Nova Scotia and Bank of China, Chicago Branch acted as Documentation Agents; and SMBC acted as Sole Bookrunner for the Term Loan Agreement. The Term Loan Agreement provides for an aggregate lender commitment of $ 2.5 billion. The Company utilized proceeds from the term loan facility on a delayed draw basis to fund a majority of the $ 3.0 billion purchase price consideration for the Company’s acquisition from Emerson Corporation (“Emerson”) of Emerson’s InSinkErator business, as set forth in the Asset and Stock Purchase Agreement between Whirlpool and Emerson dated as of August 7, 2022 (the “Acquisition Agreement”). The term loan facility is divided into two tranches: a $ 1 billion tranche with a maturity date of April 30, 2024 and a $ 1.5 billion tranche with a maturity date of October 31, 2025. The interest and fee rates payable with respect to the term loan facility based on the Company's current debt rating are as follows: (1) the spread over secured overnight financing rate ("SOFR") for the 18-month tranche is 0.75 %; (2) the spread over SOFR for the 3-year tranche is 1.00 %; (3) the spread over prime for both tranches is zero ; and (4) the ticking fee for both tranches is 0.10 %, as of the date hereof. The Term Loan Agreement contains customary covenants and warranties including, among other things, a rolling twelve month interest coverage ratio required to be greater than or equal to 3.0 to 1.0 for each fiscal quarter. In addition, the covenants limit the Company's ability to (or to permit any subsidiaries to), subject to various exceptions and limitations: (i) merge with other companies; (ii) create liens on its property; and (iii) incur debt at the subsidiary level. We were in compliance with our interest coverage ratio under the term loan agreement as of December 31, 2023. The outstanding amount for this term loan agreement at December 31, 2023 was $ 2 billion of which approximately $ 500 million is classified in current liabilities on the Consolidated Balance Sheet. Credit Facilities On May 3, 2022, the Company entered into a Fifth Amended and Restated Long-Term Credit Agreement (the “Amended Long-Term 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. BNP Paribas, Mizuho Bank, Ltd. and Wells Fargo Bank, National Association acted as Documentation Agents. JPMorgan Chase Bank, N.A., BNP Paribas Securities Corp., Citibank, N.A., Mizuho Bank, Ltd. and Wells Fargo Securities, LLC acted as Joint Lead Arrangers 82 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) and Joint Bookrunners for the Amended Long-Term Facility. Consistent with the Company’s prior credit agreement, the Amended Long-Term Facility provides an aggregate borrowing capacity of $ 3.5 billion. The facility has a maturity date of May 3, 2027, unless earlier terminated. The interest rate payable with respect to the Amended Long-Term Facility reflect a decrease of 0.125 % in the interest rate margin from the Company’s prior credit facility, and is based on the Company’s current debt rating, Term SOFR + 1.00 % interest rate margin per annum (with a 0.10 % SOFR spread adjustment) or the Alternate Base Rate + 0.00 % per annum, at the Company’s election. The Amended Long-Term Facility contains customary covenants and warranties, such as, among other things, a rolling four quarter interest coverage ratio required to be greater than or equal to 3.0 as of the end of each fiscal quarter. The Amended Long-Term Facility also includes limitations on the Company’s ability to (or to permit any subsidiaries to), subject to various exceptions and limitations: (i) merge with other companies; (ii) create liens on its property; and (iii) incur debt at the subsidiary level. We were in compliance with our interest coverage ratio under the Amended Long-Term Facility as of December 31, 2023. In addition to the committed $ 3.5 billion Amended Long-Term Facility and the committed $ 2.5 billion term loan, we have committed credit facilities in Brazil and India. These committed credit facilities provide borrowings up to approximately $ 218 million a t December 31, 2023 and $ 204 million at December 31, 2022, based on exchange rates then in effect, respectively. These committed credit facilities have maturities that run through 2025. We had $ 2.0 billion and $ 2.5 billion drawn on the committed credit facilities at December 31, 2023 and December 31, 2022, respectively. Notes Payable Notes payable, which consist of short-term borrowings payable to banks or commercial paper, are generally used to fund working capital requirements. The fair value of our notes payable approximates the carrying amount due to the short maturity of these obligations. The following table summarizes the carrying value of notes payable at December 31, 2023 and 2022: Millions of dollars 2023 2022 Short-term borrowings due to banks $ 17 $ 4 Total notes payable $ 17 $ 4 (7) COMMITMENTS AND CONTINGENCIES OTHER MATTERS 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 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, 2023. 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 2.3 billion Brazilian reais (approximately $ 470 million at December 31, 2023). 83 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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 285 million Brazilian reais (approximately $ 59 million at December 31, 2023), 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. We have received tax assessments from the Brazilian federal tax authorities relating to amounts allegedly due regarding 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 334 million Brazilian reais (approximately $ 69 million at December 31, 2023). 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. 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. Legacy EMEA Legal Matters 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 focused primarily on manufacturer interactions with retailers, is ongoing. The Company has agreed to a preliminary settlement range with the FCA and recorded a charge of approximately $ 69 million in the first half of 2023. The Company expects the settlement amount to be finalized in the first half of 2024, and to make payment to the FCA in 2024. 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. 84 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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 have also resolved certain claims brought by a third party related to Alno's insolvency through a settlement which includes a full release of any and all claims by that third party, and accrued an immaterial incremental amount during the second quarter related to this resolution. 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 and the dismissal was affirmed on appeal in July 2022. Plaintiffs filed a petition with the U.S. Supreme Court in January 2023, which was subsequently denied. 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. In the fourth quarter of 2022, we accrued an immaterial amount related to these claims in our financial statements. Additional claims may be filed related to this incident. Latin America Tax Review In the first quarter of 2023, we accrued an immaterial amount in our Consolidated Condensed Financial Statements related to prior-period Value Added Tax (VAT) remittances in our Latin America region. We resolved certain aspects of this matter in the second quarter of 2023 and the overall financial statement impact of such resolution was immaterial. We continue to review tax matters within the region for any potential additional impacts, if any; certain matters could have a material adverse effect on our financial statements in any particular reporting period. Other Litigation See Note 13 for information on certain U.S. income tax litigation. In addition, we successfully defended against two lawsuits that were 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, and that judgment was affirmed on appeal in late 2023. The second lawsuit, which was stayed pending resolution of the first lawsuit, has also been dismissed. We are currently vigorously defending a number of other lawsuits related to the manufacture and sale of our products which include class action allegations, and may become involved in similar actions. These lawsuits allege claims which include negligence, breach of contract, breach of warranty, product liability and safety claims, false advertising, fraud, and violation of federal and state regulations, including consumer protection laws. In general, we do not have insurance coverage for class action lawsuits. We are also involved in various other legal actions arising in the normal course of business, for which insurance coverage may or may not be available depending on the nature of the action. We dispute the merits of these suits and actions, and intend to vigorously defend them. Management believes, based upon its current knowledge, after taking into consideration legal counsel's evaluation of such suits and actions, and after taking into account current litigation accruals, that the outcome of these matters currently pending against Whirlpool should not have a material adverse effect, if any, on our financial statements. 85 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Product Warranty 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 2023 2022 Balance at January (1) $ 190 $ 286 Issuances/accruals during the period 311 267 Settlements made during the period/other ( 303 ) ( 304 ) Liabilities classified to held for sale (1) 8 ( 59 ) Balance at December 31 $ 206 $ 190 Current portion $ 136 $ 131 Non-current portion 70 59 Total $ 206 $ 190 (1) Starting from the fourth quarter of 2022, product warranty reserve, and subsequent movements of the reserve, of our European major domestic appliance business has been transferred to liabilities held for sale. 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. 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, 2023 and December 31, 2022, the guaranteed amounts totaled 1,321 million Brazilian reais (approximately $ 273 million at December 31, 2023) and 1,122 million Brazilian reais (approximately $ 215 million at December 31, 2022), respectively. The fair value of these guarantees were nominal at December 31, 2023 and December 31, 2022. 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 $ 3.0 billion at December 31, 2023 and $ 2.9 billion at December 31, 2022. Our total short-term outstanding bank indebtedness under guarantees (excluding those related to the European major domestic appliance business) was $ 17 million at December 31, 2023, and was nominal at December 31, 2022. 86 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Purchase Obligations Our expected cash outflows resulting from non-cancellable purchase obligations are summarized by year in the table below. Non-cancellable purchase obligations related to the European major domestic appliance business are excluded from the table below from April 2024 onwards, when the European transaction is expected to be completed. Millions of dollars 2024 $ 257 2025 119 2026 49 2027 20 2028 18 Thereafter 44 Total purchase obligations $ 507 (8) 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 2023, 2022 and 2021 were $ 87 million, $ 90 million and $ 91 million, respectively. 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. Starting from the fourth quarter of 2022, pension assets and liabilities related to the European major domestic appliance business have been classified as held for sale. The postretirement medical benefit programs are unfunded. We reserve the right to modify these benefits in the future. 87 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 2023 2022 2023 2022 2023 2022 Funded status Fair value of plan assets $ 1,980 $ 2,072 $ 29 $ 30 $ — $ — Benefit obligations 2,098 2,211 65 60 123 121 Funded status $ ( 118 ) $ ( 139 ) $ ( 36 ) $ ( 30 ) $ ( 123 ) $ ( 121 ) Amounts recognized in the consolidated balance sheets Noncurrent asset $ — $ 21 $ 6 $ 7 $ — $ — Current liability ( 8 ) ( 9 ) ( 5 ) ( 4 ) ( 16 ) ( 25 ) Noncurrent liability ( 110 ) ( 151 ) ( 37 ) ( 33 ) ( 107 ) ( 96 ) Amount recognized $ ( 118 ) $ ( 139 ) $ ( 36 ) $ ( 30 ) $ ( 123 ) $ ( 121 ) Amounts recognized in accumulated other comprehensive loss (pre-tax) Net actuarial loss $ 1,239 $ 1,266 $ 206 $ 111 $ ( 2 ) $ ( 15 ) Prior service (credit) cost 1 1 2 3 ( 9 ) ( 52 ) Amount recognized $ 1,240 $ 1,267 $ 208 $ 114 $ ( 11 ) $ ( 67 ) Change in Benefit Obligation United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits Millions of dollars 2023 2022 2023 2022 2023 2022 Benefit obligation, beginning of year $ 2,211 $ 2,968 $ 60 $ 924 $ 121 $ 166 Service cost 2 3 3 4 — — Interest cost 115 82 26 15 7 5 Plan participants' contributions — — — — — — Actuarial (gain) loss 44 ( 606 ) 53 ( 262 ) 11 ( 28 ) Benefits paid ( 274 ) ( 230 ) ( 30 ) ( 28 ) ( 19 ) ( 18 ) Plan amendments — — ( 1 ) — 2 ( 5 ) Other adjustments — — — 11 — — Settlements / curtailment (gain) — ( 6 ) ( 6 ) ( 7 ) — — Foreign currency exchange rates — — 29 ( 82 ) 1 1 Reclassification of obligation to held for sale (1) — — ( 69 ) ( 515 ) — — Benefit obligation, end of year $ 2,098 $ 2,211 $ 65 $ 60 $ 123 $ 121 Accumulated benefit obligation, end of year $ 2,090 $ 2,205 $ 58 $ 52 N/A N/A (1) Starting from the fourth quarter of 2022, benefit obligations of our European major domestic appliance business is transferred to assets held for sale. For additional information, see Note 15 to the Consolidated Financial Statements. The actuarial (gain) loss for all pension and other postretirement benefit plans in 2023 and 2022 was primarily related to a change in the discount rate used to measure the benefit obligation of those plans. 88 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Change in Plan Assets United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits Millions of dollars 2023 2022 2023 2022 2023 2022 Fair value of plan assets, beginning of year $ 2,072 $ 2,904 $ 30 $ 665 $ — $ — Actual return on plan assets 175 ( 605 ) 1 ( 181 ) — — Employer contribution 7 9 3 30 19 18 Plan participants' contributions — — — — — — Benefits paid ( 274 ) ( 230 ) ( 4 ) ( 28 ) ( 19 ) ( 18 ) Transfer of plan assets — — — — — — Other adjustments — — ( 1 ) — — — Settlements — ( 6 ) — ( 7 ) — — Foreign currency exchange rates — — — ( 70 ) — — Reclassification of plan assets to held for sale (1) — — — ( 379 ) — — Fair value of plan assets, end of year $ 1,980 $ 2,072 $ 29 $ 30 $ — $ — (1) Starting from the fourth quarter of 2022, fair value of plan assets of our European major domestic appliance business is transferred to assets held for sale. For additional information, see Note 15 to the Consolidated Financial Statements. Components of Net Periodic Benefit Cost United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits Millions of dollars 2023 2022 2021 2023 2022 2021 2023 2022 2021 Service cost $ 2 $ 3 $ 3 $ 3 $ 4 $ 5 $ — $ — $ — Interest cost 115 82 77 26 15 14 7 5 5 Expected return on plan assets ( 140 ) ( 144 ) ( 158 ) ( 22 ) ( 31 ) ( 34 ) — — — Amortization: Actuarial loss 37 57 69 5 9 19 ( 1 ) — — Prior service cost (credit) — — — — — — ( 41 ) ( 46 ) ( 46 ) Curtailment (gain) / loss — — — — ( 1 ) — — — — Settlement loss — 1 5 1 2 2 — — — Net periodic benefit cost (income) $ 14 $ ( 1 ) $ ( 4 ) $ 13 $ ( 2 ) $ 6 $ ( 35 ) $ ( 41 ) $ ( 41 ) The following table summarizes the net periodic cost recognized in operating profit and interest and sundry (income) expense for the years ended December 31, 2023, 2022 and 2021: United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits Millions of dollars 2023 2022 2021 2023 2022 2021 2023 2022 2021 Operating (profit) loss $ 2 $ 3 $ 3 $ 3 $ 4 $ 5 $ — $ — $ — Interest and sundry (income) expense 12 ( 4 ) ( 7 ) 10 ( 6 ) 1 ( 35 ) ( 41 ) ( 41 ) Net periodic benefit cost (income) $ 14 $ ( 1 ) $ ( 4 ) $ 13 $ ( 2 ) $ 6 $ ( 35 ) $ ( 41 ) $ ( 41 ) 89 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) (Pre-Tax) in 2023 Millions of dollars United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits Current year actuarial loss / (gain) $ 10 $ 78 $ 11 Actuarial (loss) recognized during the year ( 37 ) ( 6 ) 1 Current year prior service cost (credit) — ( 1 ) 2 Prior service credit (cost) recognized during the year — — 41 Total recognized in other comprehensive income (loss) (pre-tax) $ ( 27 ) $ 71 $ 55 Total recognized in net periodic benefit costs and other comprehensive income (loss) (pre-tax) $ ( 13 ) $ 84 $ 20 We amortize actuarial losses and prior service costs (credits) over a period of up to 16 years and 10 years, respectively. Assumptions Weighted-Average Assumptions used to Determine Benefit Obligation at End of Year United States Pension Benefits Foreign Pension Benefits (1) Other Postretirement Benefits 2023 2022 2023 2022 2023 2022 Discount rate 5.15 % 5.55 % 4.44 % 4.72 % 5.72 % 6.05 % Rate of compensation increase 4.50 % 4.50 % 3.58 % 3.52 % N/A N/A Interest crediting rate for cash balance plans 3.90 % 4.30 % 2.81 % 2.85 % N/A N/A (1) Weighted-average assumptions include assumptions related to pension plans classified as held for sale. Weighted-Average Assumptions used to Determine Net Periodic Cost United States Pension Benefits Foreign Pension Benefits (1) Other Postretirement Benefits 2023 2022 2021 2023 2022 2021 2023 2022 2021 Discount rate 5.55 % 2.85 % 2.50 % 4.72 % 1.89 % 1.55 % 6.36 % 4.27 % 3.66 % Expected long-term rate of return on plan assets 6.00 % 5.50 % 6.00 % 5.33 % 5.23 % 5.48 % N/A N/A N/A Rate of compensation increase 4.50 % 4.50 % 4.50 % 3.52 % 3.59 % 3.47 % N/A N/A N/A Interest crediting rate for cash balance plans 4.30 % 1.60 % 1.25 % 2.85 % 2.36 % 1.99 % 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 5.50 % 5.75 % 6.00 % 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 (1) Weighted-average assumptions include assumptions related to pension plans classified as held for sale. 90 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, 2023. 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, 2023 and 2022. Expected Employer Contributions to Funded Plans Millions of dollars United States Pension Benefits Foreign Pension Benefits 2024 $ — $ 19 Expected Benefit Payments Expected benefit payments related to the European major domestic appliance business classified as held for sale are excluded from the table below. The transaction is expected to close by April 2024 and the payments related to the first quarter of 2024 are not material. Millions of dollars United States Pension Benefits Foreign Pension Benefits Other Postretirement Benefits 2024 $ 245 $ 6 $ 16 2025 206 9 13 2026 201 6 12 2027 196 9 10 2028 186 6 10 2029-2033 $ 800 $ 30 $ 43 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 % 91 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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. 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. 92 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The fair values of our pension plan assets at December 31, 2023 and 2022, 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 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Cash and cash equivalents $ — $ — $ 178 $ 159 $ — $ — $ — $ — $ 178 $ 159 Government and government agency securities (1) U.S. securities — — 75 82 — — — — 75 82 International securities — — 39 42 — — — — 39 42 Corporate bonds and notes (1) U.S. companies — — 1,094 1,194 — — — — 1,094 1,194 International companies — — 154 187 — — — — 154 187 Equity securities (2) U.S. companies — — — — — — — — — — International companies 8 11 — — — — — — 8 11 Mutual funds (3) — — 71 73 — — — — 71 73 Investments at net asset value U.S. equity securities (4) — — — — — — 227 166 227 166 International equity securities (4) — — — — — — 119 123 119 123 Short-term investment fund (4) — — — — — — — — — — International debt securities (5) — — — — — — — — — — International equity securities (5) — — — — — — — — — — Real estate (6) — — — — — — — — — — Limited partnerships (7) U.S. private equity investments — — — — 15 17 — — 15 17 Diversified fund of funds — — — — — 1 — — — 1 Emerging growth — — — — 2 2 — — 2 2 All other investments — — 27 45 — — — — 27 45 $ 8 $ 11 $ 1,638 $ 1,782 $ 17 $ 20 $ 346 $ 289 $ 2,009 $ 2,102 (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. 93 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, 2022 $ 20 Realized gain / (loss) (net) — Unrealized gain / (loss) (net) ( 2 ) Purchases ( 1 ) Settlements ( 1 ) Balance, December 31, 2023 $ 16 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, 2023 and 2022 were as follows: United States Pension Benefits Foreign Pension Benefits Millions of dollars 2023 2022 2023 2022 Projected benefit obligation $ 2,098 $ 1,866 $ 42 $ 37 Fair value of plan assets $ 1,980 $ 1,706 $ 1 $ ( 1 ) 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, 2023 and 2022 were as follows: United States Pension Benefits Foreign Pension Benefits Millions of dollars 2023 2022 2023 2022 Projected benefit obligation $ 2,098 $ 1,866 $ 42 $ 37 Accumulated benefit obligation 2,090 1,860 39 34 Fair value of plan assets $ 1,980 $ 1,706 $ 1 $ ( 1 ) 94 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (9) HEDGES AND DERIVATIVE FINANCIAL INSTRUMENTS Derivative instruments are accounted for at fair value based on market rates. Derivatives where we elect hedge accounting are designated as either cash flow, fair value or net investment hedges. Derivatives that are not accounted for based on hedge accounting are marked to market through earnings. 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 $ 618 million and $ 618 million at December 31, 2023 and 2022, respectively. 95 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. There were no outstanding notional amounts of interest rate swap agreements at December 31, 2023 and December 31, 2022. Net Investment Hedging 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. During the fourth quarter of 2022, Whirlpool substantially liquidated its foreign currency denominated investment in Mexico. As a result, losses of approximately $ 53 million recorded in Accumulated other comprehensive loss were reclassified into Interest and sundry (income) expense in the Consolidated Financial Statements in 2022. As of December 31, 2023, there were no outstanding hedges designated as net investment hedges. 96 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, 2023 and 2022. Hedge assets and liabilities of our European major domestic appliance business have been classified as held for sale and are excluded from the table below. Fair Value of Type of Hedge Notional Amount Hedge Assets Hedge Liabilities Maximum Term (Months) Millions of dollars 2023 2022 2023 2022 2023 2022 2023 2022 Derivatives accounted for as hedges (1) Commodity swaps/options $ 193 $ 170 $ 4 $ 7 $ 9 $ 17 (CF) 24 24 Foreign exchange forwards/options 952 998 1 24 31 20 (CF/NI) 15 15 Cross-currency swaps 618 618 5 5 79 42 (CF) 62 74 Interest rate derivatives — — — — — — (CF) 0 0 Total derivatives accounted for as hedges $ 10 $ 36 $ 119 $ 79 Derivatives not accounted for as hedges Commodity swaps/options $ — $ 1 $ — $ — $ — $ — N/A 0 0 Foreign exchange forwards/options (2) 1,569 439 13 5 9 6 N/A 10 5 Total derivatives not accounted for as hedges $ 13 $ 5 $ 9 $ 6 Total derivatives $ 23 $ 41 $ 128 $ 85 Current $ 22 $ 40 $ 46 $ 41 Noncurrent 1 1 82 44 Total derivatives $ 23 $ 41 $ 128 $ 85 (1) Derivatives accounted for as hedges are considered either cash flow (CF) or net investment (NI) hedges. (2) Foreign exchange forwards/options have increased due to intercompany loan movements related to the anticipated contribution of our European major domestic appliance business. 97 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, 2023 and 2022: Gain (Loss) Recognized in OCI (Effective Portion) (3) Millions of dollars 2023 2022 Cash flow hedges Commodity swaps/options $ ( 13 ) $ ( 3 ) Foreign exchange forwards/options ( 69 ) 113 Cross-currency swaps ( 18 ) ( 47 ) Interest rate derivatives — 56 Net investment hedges Foreign currency — ( 26 ) $ ( 100 ) $ 93 Location of Gain (Loss) Reclassified from OCI into Earnings (Effective Portion) Gain (Loss) Reclassified from OCI into Earnings (Effective Portion) (3),(4),(5) Cash Flow Hedges - Millions of dollars 2023 2022 Commodity swaps/options (3) Cost of products sold $ ( 15 ) $ 39 Foreign exchange forwards/options Net sales ( 2 ) — Foreign exchange forwards/options Cost of products sold ( 46 ) ( 26 ) Foreign exchange forwards/options Interest and sundry (income) expense 24 130 Cross-currency swaps (5) Interest and sundry (income) expense 3 ( 50 ) $ ( 36 ) $ 93 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 2023 2022 Foreign exchange forwards/options Interest and sundry (income) expense $ ( 35 ) $ ( 24 ) (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 $ 17 million and $( 2 ) million in 2023 and 2022, respectively. The tax impact of the net investment hedges was $ 0 million and $ 6 million in 2023 and 2022, 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 2023 and 2022. There were no hedges designated as fair value in 2023 and 2022. 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 $ 40 million at December 31, 2023. 98 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (10) FAIR VALUE MEASUREMENTS Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions market participants would use in pricing an asset or liability. Assets and liabilities measured at fair value are based on a market valuation approach using prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. As a basis for considering such assumptions, a three-tiered fair value hierarchy is established, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets that are observable, either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets and liabilities measured at fair value on a recurring basis at December 31, 2023 and 2022 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 2023 2022 2023 2022 2023 2022 2023 2022 Short-term investments (1) $ 1,126 $ 1,209 $ 867 $ 934 $ 259 $ 275 $ 1,126 $ 1,209 Net derivative contracts — — — — ( 105 ) ( 44 ) ( 105 ) ( 44 ) (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 non-recurring fair values represent only those assets whose carrying values were adjusted to fair value during the reporting period. There were no goodwill or intangible asset impairment charges recorded in 2023. See Note 5 to the Consolidated Financial Statements for additional information. Goodwill We have three reporting units for which we assess for impairment. We use a discounted cash flow analysis to determine fair value (Level 3 input) and consistent projected financial information in our analysis of goodwill and intangible assets. During the second quarter of 2022, the discounted cash flow analysis for the quantitative impairment assessment for the EMEA reporting unit utilized a discount rate of 15 %. Based on the quantitative assessment performed as of May 31, 2022, the carrying value of the EMEA reporting unit exceeded its fair value resulting in a goodwill impairment loss for the full carrying amount of $ 278 million during the second quarter of 2022 and for the twelve months ended December 31, 2022. Other Intangible Assets The relief-from-royalty method for the quantitative impairment assessment for other intangible assets in the EMEA reporting unit during the second quarter of 2022 utilized discount rates of 19 % and royalty rates ranging from 1.5 % - 3.5 %. Based on the quantitative assessment performed as of May 31, 2022, the carrying value of the Indesit and Hotpoint * trademarks exceeded their fair value (Level 3 input), resulting in an impairment charge of $ 106 million during the second quarter of 2022. Indefinite-lived intangible assets of Indesit and Hotpoint* with carrying amounts of approximately $ 201 million and $ 137 million were written down to fair values (Level 3 input) of $ 131 million and $ 101 million, resulting in impairment charges of $ 70 million and $ 36 million, respectively. 99 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) During the fourth quarter of 2022, the remaining carrying amounts of Indesit and Hotpoint* trademarks were included in the net assets of the European major domestic appliance disposal group which was classified as held for sale. European Major Domestic Appliance Business Held for Sale On January 16, 2023, the Company entered into a contribution agreement with Arçelik A.Ş (“Arcelik”). Under the terms of the agreement, Whirlpool will contribute its European major domestic appliance business, and Arcelik will contribute its European major domestic appliance, consumer electronics, air conditioning, and small domestic appliance businesses into the newly formed entity of which Whirlpool will own approximately 25 % and Arcelik 75 %. On December 20, 2022, the Company's board authorized the transaction with Arcelik and the European major domestic appliance business was classified as held for sale during the fourth quarter of 2022. The disposal group was measured at fair value less cost to sell. We used a discounted cash flow analysis and multiple market data points in our analysis to determine fair value (Level 3 input) of the 25 % interest retained, resulting in an estimated fair value of $ 139 million. The discounted cash flow analysis utilized a discount rate of 16.5 % at December 31, 2022. Due to the impact of foreign currency, the estimated fair value is $ 144 million at December 31, 2023. In the fourth quarter of 2023, we reviewed the updated assumptions subsequent to the held for sale date and no material changes have occurred. We recorded a loss of $ 106 million related to the planned divestiture of our European major domestic appliance business for the twelve months ended December 31, 2023, inclusive of a gain of $ 180 million in the fourth quarter of 2023. See Note 15 to the Consolidated Financial Statements for additional information. InSinkErator Acquisition On October 31, 2022, we completed the acquisition of the InSinkErator business pursuant to the terms of the purchase agreement with Emerson. The acquisition has been accounted for as a business combination under the acquisition method of accounting. This requires allocation of the purchase price to the estimated fair values of the identifiable assets acquired and liabilities assumed, including goodwill and other intangible assets. The Company has finalized third-party valuations for the purchase price allocation and the measurement period for any further purchase accounting adjustment has elapsed. The estimated value of property, plant and equipment included adjustments totaling $ 36 million to increase the net book value to the fair value estimate of $ 173 million. The fair value of property, plant and equipment was determined using both a cost and market approach. The model used primarily included Level 2 and 3 inputs. This estimate was based on other comparable acquisitions and historical experience, and preliminary expectations as to the duration of time we expect to realize benefits from those assets. The estimated value of inventory included adjustments totaling $ 10 million to step-up inventory to an estimated fair value of $ 93 million. The fair value of inventory was estimated using the comparative sales method. The model used primarily included Level 2 and 3 inputs. To estimate the fair value of inventory, we considered the components of InSinkErator’s inventory, as well as estimates of selling prices and selling and distribution costs that were based on InSinkErator’s historical experience. *Whirlpool ownership of the Hotpoint brand in the EMEA and Asia Pacific regions is not affiliated with the Hotpoint brand sold in the Americas. 100 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The estimated fair values of identifiable intangible assets acquired were prepared using an income valuation approach, which requires a forecast of expected future revenues, future cash flows and discount rates (Level 3 inputs), either through the use of the relief-from-royalty method, the multi-period excess earnings method or the with and without method. Purchase accounting adjustments during the period were not material. The measurement period for any additional purchase accounting adjustments has concluded, as one year has elapsed from the acquisition date. See Note 15 to the Consolidated Financial Statements for additional information. Russia Sale Transaction During the second quarter of 2022, we entered into an agreement to sell our Russia business. We classified this disposal group as held for sale with a fair value of zero . Fair value, which is less than the carrying amount of the Russia business, was estimated based on purchase price which includes contingent consideration based on future business and other conditions (Level 2 input). We recorded an impairment charge of $ 333 million for the write-down of the net assets to their fair value. See Note 15 to the Consolidated Financial Statements for additional information. 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 15 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 15 to the Consolidated Financial Statements. Other Fair Value Measurements The fair value of long-term debt (including current maturities) was $ 6.9 billion and $ 7.0 billion at December 31, 2023 and 2022, respectively, and was estimated using a discounted cash flow analysis based on incremental borrowing rates for similar types of borrowing arrangements (Level 2 input). 101 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (11) 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, and (4) changes in our unrecognized pension and other postretirement benefits. The following table shows the components of accumulated other comprehensive income (loss) available to Whirlpool at December 31, 2021, 2022, and 2023, and the activity for the years then ended: Millions of dollars Foreign Currency Derivative Instruments Pension and Postretirement Liability Total 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 ) Unrealized gain (loss) 280 26 — 306 Unrealized actuarial gain (loss) and prior service credit (cost) — — ( 27 ) ( 27 ) Tax effect — ( 2 ) ( 10 ) ( 12 ) Other comprehensive income (loss), net of tax 280 24 ( 37 ) 267 Less: Other comprehensive loss available to noncontrolling interests — — — — Other comprehensive income (loss) available to Whirlpool 280 24 ( 37 ) 267 December 31, 2022 $ ( 1,275 ) $ 58 $ ( 873 ) $ ( 2,090 ) Unrealized gain (loss) 22 ( 64 ) — ( 42 ) Unrealized actuarial gain (loss) and prior service credit (cost) — — ( 99 ) ( 99 ) Tax effect — 17 36 53 Other comprehensive income (loss), net of tax 22 ( 47 ) ( 63 ) ( 88 ) Less: Other comprehensive loss available to noncontrolling interests — — — — Other comprehensive income (loss) available to Whirlpool 22 ( 47 ) ( 63 ) ( 88 ) December 31, 2023 $ ( 1,253 ) $ 11 $ ( 936 ) $ ( 2,178 ) 102 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 2023 2022 2021 Numerator for basic and diluted earnings per share – net earnings (loss) available to Whirlpool $ 481 $ ( 1,519 ) $ 1,783 Denominator for basic earnings per share – weighted-average shares 55.0 55.9 62.1 Effect of dilutive securities – stock-based compensation 0.2 — 0.8 Denominator for diluted earnings per share – adjusted weighted-average shares 55.2 55.9 62.9 Anti-dilutive stock options/awards excluded from earnings per share 1.2 0.6 0.1 Dividends Dividends per share paid to shareholders were $ 7.00 , $ 7.00 and $ 5.45 during 2023, 2022 and 2021, 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. On February 14, 2022, the Board of Directors authorized an additional $ 2 billion in share repurchases under the Company's ongoing share repurchase program. During the twelve months ended December 31, 2023, we did not repurchase any shares under the share repurchase programs. At December 31, 2023, there were approximately $ 2.6 billion in remaining funds authorized under these programs. 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. (12) SHARE-BASED INCENTIVE PLANS We sponsor several share-based employee incentive plans. Share-based compensation expense for grants awarded under these plans was $ 33 million , $ 58 million and $ 82 million in 2023, 2022, and 2021, respectively. Related income tax benefits recognized in earnings were $ 7 million, $ 10 million and $ 10 million in 2023, 2022, and 2021, respectively. At December 31, 2023, unrecognized compensation cost related to non-vested stock option and stock unit awards totaled $ 62 million. The cost of these non-vested awards is expected to be recognized over a weighted-average remaining vesting period of 27 months. Share-Based Employee Incentive Plans On April 18, 2023, our stockholders approved the 2023 Omnibus Stock and Incentive Plan ("2023 OSIP"). This plan was adopted by our Board of Directors on February 20, 2023 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 2023 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, 2023, approximately 3.6 million shares remain available for issuance under the 2018 and 2023 OSIP. 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 provided 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 following the approval of the 2023 OSIP 103 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) by our stockholders, but the 2018 OSIP will continue to govern awards granted under the 2018 OSIP prior to the effectiveness of the 2023 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 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 2023, 2022, and 2021 wer e $ 37.55 , $ 53.16 and $ 52.44 , respectively, using the following assumptions: Weighted Average Black-Scholes Assumptions 2023 2022 2021 Risk-free interest rate 4.0 % 1.9 % 0.5 % Expected volatility 39.8 % 37.4 % 37.7 % Expected dividend yield 5.0 % 2.9 % 2.5 % Expected option life, in years 5 5 5 Stock Option Activity The following table summarizes stock option activity during 2023: In thousands, except per share data Number of Options Weighted- Average Exercise Price Outstanding at January 1 983 $ 178.57 Granted 212 145.00 Exercised ( 25 ) 131.72 Canceled or expired ( 219 ) 193.10 Outstanding at December 31 951 $ 169.01 Exercisable at December 31 620 $ 170.93 The total intrinsic value of stock options exercised was $ 0.3 million , $ 2.0 million and $ 121.0 million for 2023, 2022, and 2021, respectively. The related tax benefits wer e $ 0.1 million , $ 0.3 million and $ 23.0 million for 2023, 2022, and 2021, respectively. Cash received from the exercise of stock options was $ 3 million , $ 4 million, and $ 77 million for 2023, 2022, and 2021, respectively. The table below summarizes additional information related to stock options outstanding at December 31, 2023: Options in thousands / dollars in millions, except per-share data Outstanding Net of Expected Forfeitures Options Exercisable Number of options 946 620 Weighted-average exercise price per share $ 169.08 $ 170.93 Aggregate intrinsic value $ — $ — Weighted-average remaining contractual term, in years 6 5 104 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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 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 2023, 2022, and 2021 we re $ 125.44 , $ 158.27 and $ 191.64 , respectively. The total fair value of stock units vested during 2023, 2022, and 2021 was $ 76 million, $ 67 million and $ 43 million, respectively. The following table summarizes stock unit activity during 2023: Stock units in thousands, except per-share data Number of Stock Units Weighted- Average Grant Date Fair Value Non-vested, at January 1 1,163 $ 161.51 Granted 433 125.44 Canceled ( 165 ) 165.76 Vested and transferred to unrestricted ( 379 ) 144.99 Non-vested, at December 31 1,052 $ 150.19 Non-employee Director Equity Awards In 2023, 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. (13) INCOME TAXES Income tax expense was $ 77 million, $ 265 million, and $ 518 million in 2023, 2022 and 2021, respectively. The decrease in tax expense in 2023 compared to 2022 includes legal entity restructuring tax benefits, related to simplifying our legal entity structure to reduce administrative costs associated with the prior structure. The completion of the restructuring created a tax-deductible loss which was recognized in the fourth quarter of 2023, and resulted in a $ 172 million net tax benefit, partially offset by increases in valuation allowances. The decrease in tax expense in 2022 compared to 2021 is primarily due to lower earnings, partially offset by the impact of non-deductible charges, including loss on sale and disposal as well as goodwill impairment, and increases in valuation allowances. 105 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The following table summarizes the difference between an income tax benefit and tax expense at the United States statutory rate of 21% in 2023, 2022, and 2021, respectively, and the income tax expense at effective worldwide tax rates for the respective periods: Millions of dollars 2023 2022 2021 Earnings (loss) before income taxes United States $ 9 $ ( 158 ) $ 1,287 Foreign 584 ( 1,069 ) 1,045 Earnings (loss) before income taxes $ 593 $ ( 1,227 ) $ 2,332 Income tax (benefit) expense computed at United States statutory rate $ 125 $ ( 258 ) $ 490 U.S. government tax incentives ( 20 ) ( 19 ) ( 19 ) Foreign government tax incentives ( 30 ) ( 23 ) ( 23 ) Foreign tax rate differential 41 ( 3 ) 66 U.S. foreign tax credits ( 43 ) 11 ( 29 ) Valuation allowances 78 222 1 State and local taxes, net of federal tax benefit ( 43 ) ( 21 ) 57 Foreign withholding taxes 13 52 19 U.S. tax on foreign dividends and subpart F income 36 22 9 Settlements and changes in unrecognized tax benefits 43 3 100 Changes in enacted tax rates 1 ( 2 ) ( 14 ) Nondeductible loss on sale and disposal of businesses 5 421 — Nondeductible fines and penalties 18 — — Nondeductible goodwill impairments — 59 — Legal Entity Debt Restructuring — ( 159 ) — Divestiture tax impact — — ( 35 ) Legal entity restructuring tax impact ( 172 ) — ( 98 ) Other items, net 25 ( 40 ) ( 6 ) Income tax computed at effective worldwide tax rates $ 77 $ 265 $ 518 Current and Deferred Tax Provision The following table summarizes our income tax (benefit) provision for 2023, 2022 and 2021: 2023 2022 2021 Millions of dollars Current Deferred Current Deferred Current Deferred United States $ ( 27 ) $ ( 212 ) $ ( 40 ) $ 65 $ 132 $ 251 Foreign 197 155 180 85 184 ( 126 ) State and local ( 3 ) ( 33 ) ( 9 ) ( 16 ) 80 ( 3 ) $ 167 $ ( 90 ) $ 131 $ 134 $ 396 $ 122 Total income tax expense $ 77 $ 265 $ 518 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 $ 1.6 billion at December 31, 2023, of which approximately $ 1.1 billion 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 106 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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. Valuation Allowances At December 31, 2023, we had net operating loss carryforwards of $ 5.4 billion, $ 1.2 billion of which were U.S. state net operating loss carryforwards, compared to $ 5.8 billion and $ 578 million at December 31, 2022, respectively. The increase in U.S. state net operating loss carryforwards was primarily driven by the legal entity restructuring actions in 2023. Of the total net operating loss carryforwards at December 31, 2023, $ 3.3 billion do not expire, with substantially all of the remaining carryforwards expiring in various years through 2043. At December 31, 2023, we had $ 365 million of United States general business credit carryforwards available to offset future payments of federal income taxes, expiring between 2031 and 2043. 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 $ 490 million at December 31, 2023 consists of $ 393 million of net operating loss carryforward deferred tax assets and $ 97 million of other deferred tax assets. Our recorded valuation allowance was $ 412 million at December 31, 2022 and consisted of $ 334 million of net operating loss carryforward deferred tax assets and $ 78 million of other deferred tax assets. The increase in our valuation allowance was primarily driven by the European major domestic appliance business transaction and includes $ 78 million recognized in net earnings. Net operating loss carryforwards of $ 2.1 billion relates to the European major domestic appliance business as of December 31, 2023. Net deferred tax assets of $ 512 million, including $ 106 million of valuation allowances, associated with the disposal group has been transferred to assets held for sale in the fourth quarter of 2023. For additional information, see Notes 10 and 15 to the Consolidated Financial Statements. 107 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, 2023 and 2022: Millions of dollars 2023 2022 Deferred tax liabilities Intangibles $ 429 $ 329 Property, net 224 185 Right of use assets 190 220 Inventory Reserves ( 3 ) 20 Other 238 168 Total deferred tax liabilities $ 1,078 $ 922 Deferred tax assets U.S. general business credit carryforwards, including Energy Tax Credits $ 365 $ 421 Corporate Alternative Minimum Tax credits 28 — Lease liabilities 200 231 Pensions 64 40 Loss carryforwards 1,388 1,300 Postretirement obligations 29 30 Foreign tax credit carryforwards 94 9 Research and development capitalization 315 194 Employee payroll and benefits 48 46 Accrued expenses 52 52 Product warranty accrual 49 48 Receivable and inventory allowances 67 61 Other 676 552 Total deferred tax assets 3,375 2,984 Valuation allowances for deferred tax assets ( 490 ) ( 412 ) Deferred tax assets, net of valuation allowances 2,885 2,572 Reclassification of net deferred tax assets to held for sale ( 515 ) ( 602 ) Net deferred tax assets $ 1,292 $ 1,048 108 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted into law. Among other changes to the Internal Revenue Code of 1986, as amended (the “Code”), the IRA imposes a 15% corporate alternative minimum tax on certain corporations (the “CAMT”). To the extent a corporation is subject to the CAMT in a prior taxable year and in a later taxable year is subject to the regular corporate tax, such corporation may apply the prior amounts paid under the CAMT against its regular tax liability to the extent such credits do not reduce the regular tax liability below the CAMT applicable in such taxable year. We have recognized a $ 28 million CAMT liability and related deferred tax asset carryforward as of December 31, 2023. 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 2023 2022 2021 Balance, January 1 $ 589 $ 580 $ 427 Additions for tax positions of the current year 13 24 17 Additions for tax positions of prior years 22 32 179 Reductions for tax positions of prior years ( 56 ) ( 45 ) ( 34 ) Settlements during the period (1) ( 188 ) ( 1 ) ( 7 ) Lapses of applicable statute of limitation — ( 1 ) ( 2 ) Balance, December 31 $ 380 $ 589 $ 580 (1) During the fourth quarter of 2023, the Company resolved a number of disputed tax positions with the U.S. and other tax authorities. The Company had previously recorded reserves for the risk associated with these tax positions, and the settlement of these matters resulted in a reduction in the Company's unrecognized tax benefits, which is shown in the table above. Interest and penalties associated with unrecognized tax benefits resulted in a net benefit of $ 12 million, net expense of $ 24 million and $ 14 million in December 31, 2023, 2022 and 2021, respectively. We have accrued a total of $ 78 million, $ 90 million and $ 66 million at December 31, 2023, 2022 and 2021, respectively. It is reasonably possible that certain unrecognized tax benefits of $ 30 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 2010 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 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. 109 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The Company appealed the US Tax Court decision to the United States Court of Appeals for the Sixth Circuit, and, on December 6, 2021, the three-judge panel, in a divided decision, affirmed the U.S. Tax Court decision (the "Ruling"). 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. On January 20, 2022, the Company filed a petition for rehearing with the Sixth Circuit, which was denied on March 2, 2022. On June 30, 2022, the Company filed a petition for certiorari with the U.S. Supreme Court, which was denied on November 21, 2022. The Company considers this tax dispute settled and no adjustments to the reserve have been recognized. (14) 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, who is the Company's Chairman and Chief Executive Officer, 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 operating activities. The "Other/Eliminations" column primarily includes corporate expenses, assets and eliminations, as well as restructuring costs, asset impairment charges and certain other items that management believes are not indicative of the region's ongoing performance, if any. Intersegment sales are eliminated within each region. Sales to Lowe's, a North American retailer, represented approximately 13 %, 14 %, and 13 % of our consolidated net sales in 2023, 2022 and 2021, respectively. Lowe's represented approximately 38 % and 37 % of our consolidated accounts receivable as of December 31, 2023 and 2022, respectively. The United States individually comprised at least 10% of consolidated net sales in 2023, 2022 and 2021 in the amounts of $ 10.5 billion, $ 10.5 billion and $ 11.5 billion, respectively. The following table summarizes the countries that represent at least 10% of consolidated long-lived assets for the years ended December 31, 2023 and 2022. Long-lived assets includes property, plant and equipment and right-of-use assets at December 31, 2023 and 2022. Millions of dollars United States Mexico All Other Countries Total 2023 Long-lived assets $ 1,829 $ 429 $ 698 $ 2,956 Millions of dollars United States Mexico All Other Countries Total 2022 Long-lived assets $ 1,742 $ 389 $ 662 $ 2,793 110 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) OPERATING SEGMENTS Millions of dollars North America EMEA Latin America Asia Other/ Eliminations Total Whirlpool Net sales 2023 $ 11,428 $ 3,601 $ 3,408 $ 1,018 $ — $ 19,455 2022 11,474 4,023 3,127 1,100 — 19,724 2021 12,491 5,088 3,167 1,239 — 21,985 Intersegment sales 2023 $ 210 $ 81 $ 1,530 $ 43 $ ( 1,864 ) $ — 2022 261 85 1,494 42 ( 1,882 ) — 2021 312 102 1,277 252 ( 1,943 ) — Depreciation and amortization 2023 $ 212 $ 4 $ 66 $ 21 $ 58 $ 361 2022 198 134 65 20 58 475 2021 175 168 63 26 62 494 EBIT 2023 $ 1,104 $ 56 $ 204 $ 27 $ ( 475 ) $ 916 2022 1,319 ( 58 ) 200 54 ( 2,571 ) ( 1,056 ) 2021 2,220 100 265 66 ( 152 ) 2,499 Total assets 2023 $ 11,061 $ 916 $ 4,861 $ 1,531 $ ( 1,057 ) $ 17,312 2022 10,913 5,240 4,343 1,516 ( 4,888 ) 17,124 2021 7,980 10,210 4,716 1,565 ( 4,186 ) 20,285 Capital expenditures 2023 $ 227 $ 107 $ 134 $ 9 $ 72 $ 549 2022 238 132 121 27 52 570 2021 169 152 133 30 41 525 111 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Assets of $ 3.3 billion and $ 3.4 billion associated with our European major domestic appliance business has been classified as assets held for sale and recorded at fair value less costs to sell at December 31, 2023 and December 31, 2022, respectively. Temporary fluctuations in regional assets have occurred due to intercompany activity required by the expected contribution of the European major domestic appliance business. These changes are eliminated at the total entity level. Assets of $ 3.0 billion were acquired in connection with the InSinkErator acquisition which increased the total assets of North America operating segment during the fourth quarter of 2022. For additional information, see Notes 10 and 15 to the Consolidated Financial Statements. 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 2023 2022 2021 Items not allocated to segments: Restructuring costs $ ( 16 ) $ ( 21 ) $ ( 38 ) Gain (loss) on previously held equity interest — — 42 Gain (loss) on sale and disposal of businesses ( 106 ) ( 1,869 ) 107 Impairment of goodwill, intangibles and other assets — ( 396 ) — Product warranty and liability income (expense) — — 9 Legacy EMEA legal matters ( 94 ) — — Corporate expenses and other ( 259 ) ( 285 ) ( 272 ) Total other/eliminations $ ( 475 ) $ ( 2,571 ) $ ( 152 ) 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 2023 2022 2021 Operating profit $ 1,015 $ ( 1,056 ) $ 2,348 Interest and sundry (income) expense 71 ( 19 ) ( 159 ) Equity method investment income (loss), net of tax ( 28 ) ( 19 ) ( 8 ) Total EBIT $ 916 $ ( 1,056 ) $ 2,499 Interest expense 351 190 175 Income tax expense 77 265 518 Net earnings (loss) $ 488 $ ( 1,511 ) $ 1,806 Less: Net earnings (loss) available to noncontrolling interests 7 8 23 Net earnings (loss) available to Whirlpool $ 481 $ ( 1,519 ) $ 1,783 Subsequent Events Effective January 1, 2024, we reorganized our operating segment structure to better represent the revised structure within our portfolio transformation, including a greater focus on our strong value-creating small domestic appliance business. The Company implemented this change to align with the Company's new operating structure, consistent with how the Company’s Chief Operating Decision Maker evaluates performance and allocates resources in accordance with ASC 280, Segment Reporting . Going forward the Company will conduct its business through five operating segments, which consist of MDA North America; MDA Europe, MDA Latin America; MDA Asia; and SDA Global. As of and for the year ended December 31, 2023, this reorganization has not yet been reflected within our financial statements. The MDA Europe business will be deconsolidated upon the completion of the European contribution agreement transaction with Arcelik, and it does not qualify for reporting as discontinued operations. For additional information see Note 15 to the Consolidated Financial Statements. 112 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (15) ACQUISITIONS AND DIVESTITURES European Major Domestic Appliance Business Held for Sale On January 16, 2023, Whirlpool entered into a contribution agreement with Arçelik B.V. (“Arcelik”) to carve out and contribute our major domestic appliance European business operations into a newly formed European appliance company which constitutes a combination of Arcelik’s and Whirlpool's European businesses. Whirlpool will own approximately 25 % and Arcelik will own approximately 75 % of the European appliance company. The sale includes the Company's major domestic appliance business in EMEA, including nine production sites. On June 22, 2023, Whirlpool entered into a share purchase agreement with Arcelik for the sale of our Middle East and North Africa ("MENA") business. The sale was previously agreed upon in principle and announced on January 17, 2023, as part of the outcome of Whirlpool’s strategic review of the EMEA business. The financial impact of the MENA transaction has been included in the loss on sale and disposal of businesses related to the European major domestic appliance business transaction as discussed further below. Our European major domestic appliance business, including the MENA business, is reported within our EMEA reportable segment and met the criteria for held for sale accounting during the fourth quarter of 2022. The operations of the European disposal group did not meet the criteria to be presented as discontinued operations. The Europe transaction is subject to certain closing conditions, including regulatory approvals from the European Commission, Germany, Austria and China, which have been received, and the UK which remains. On February 8, 2024, the U.K. Competition and Markets Authority (“CMA”) provisionally cleared the Transaction. The CMA is expected to issue its final decision by March 26, 2024. We are working diligently with all parties to close the transactions as soon as possible, and expect the transactions to be completed by April 2024. Upon closing, the transaction will result in the deconsolidation of the European major appliances business. In connection with the sale, we recorded a loss on disposal of $ 1.5 billion in the fourth quarter of 2022. The loss included a write-down of the net assets of $ 1.2 billion of the disposal group to a fair value of $ 139 million and also includes $ 393 million of cumulative currency translation adjustments, $ 98 million release of other comprehensive loss on pension and $ 18 million of other transaction related costs. No goodwill is included in the disposal group. We recorded a loss of $ 106 million related to the planned divestiture of our European major domestic appliance business for the twelve months ended December 31, 2023, inclusive of a gain of $ 180 million in the fourth quarter of 2023. These adjustments are primarily due to fair value fluctuations driven by seasonality of net working capital, partially offset by transaction costs. In the fourth quarter of 2022, we incurred a loss of $ 1.5 billion resulting in an aggregate loss on disposal of $ 1.6 billion for the transaction. This adjustment is recorded in the loss on sale and disposal of businesses and reflects transaction costs and ongoing reassessment of the fair value less costs to sell of the disposal group which will continue to be evaluated each reporting period until completion of the transaction. Both Whirlpool and the post-closing controlling interest shareholder will retain an option for Arcelik to purchase the remaining equity interest in a newly formed European appliance company for fair value, which could be material to the financial statements of the Company, depending on the performance of the business. The following table presents the carrying amounts of the major classes of the disposal group's assets and liabilities as of December 31, 2023 and 2022, respectively. 113 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) December 31, Millions of dollars 2023 2022 Carrying amounts of major classes of assets Current Assets Cash and cash equivalents $ 97 $ 94 Accounts receivable, net of allowance of $ 28 and $ 32 , respectively 578 667 Inventories 589 650 Prepaid and other current assets 94 145 Total current assets 1,358 1,556 Property, net of accumulated depreciation of $ 1,442 and $ 1,648 , respectively 952 822 Right of use assets 162 163 Other intangibles, net of accumulated amortization of $ 149 and $ 141 , respectively 286 279 Deferred income taxes 574 610 Other noncurrent assets 13 17 Total noncurrent assets 1,987 1,891 Total assets $ 3,345 $ 3,447 Carrying amounts of major classes of liabilities Current liabilities Accounts payable $ 1,266 $ 1,394 Accrued expenses 218 152 Accrued advertising and promotions 171 172 Employee compensation 120 107 Notes payable 4 3 Other current liabilities 97 125 Total current liabilities 1,876 1,953 Noncurrent liabilities Long-term debt — 2 Pension benefits 168 122 Lease liabilities 132 131 Other noncurrent liabilities 87 88 Total noncurrent liabilities 387 343 Total liabilities $ 2,263 $ 2,296 Total net assets of the disposal group classified as held for sale $ 1,082 $ 1,151 Assets held for sale Fair value of interest retained $ 144 $ 139 Liabilities held for sale Cumulative currency translation adjustment and Other comprehensive income on pension $ 587 $ 490 114 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The following table summarizes European major appliances business' earnings (loss) available to Whirlpool before income taxes for the twelve months ended December 31, 2023, 2022 and 2021, respectively: Twelve Months Ended December 31, in millions 2023 2022 2021 Earnings (loss) before income taxes $ 28 $( 106 ) $( 46 ) Earnings (loss) before income taxes excludes intercompany other income and expense which eliminates at Total Whirlpool level. Additionally, the EMEA operating segment includes other businesses which are not classified as held for sale. InSinkErator Acquisition On August 7, 2022, the Company entered into an Asset and Stock Purchase Agreement (the “Purchase Agreement”) with Emerson Electric Co. (“Emerson”) to purchase Emerson’s InSinkErator business, a manufacturer of food waste disposers and instant hot water dispensers for home and commercial use, for a purchase price of $ 3 billion in cash, subject to customary adjustments. On October 31, 2022, we completed the acquisition of the InSinkErator business pursuant to the terms of the Purchase Agreement. We used the net proceeds from a $ 2.5 billion borrowing under our delayed draw term loan facility and $ 500 million of cash on hand to fund the acquisition. See Note 6 to the Consolidated Financial Statements for additional information about the term loan facility. Purchase Price Allocation The acquisition has been accounted for as a business combination under the acquisition method of accounting. This requires allocation of the purchase price to the estimated fair values of the identifiable assets acquired and liabilities assumed, including goodwill and other intangible assets. The Company has finalized third-party valuations for the purchase price allocation and the measurement period for any further purchase accounting adjustment has elapsed. The following table presents the final allocation of purchase price related to the InSinkErator acquisition, as of December 31, 2023. Purchase accounting adjustments recorded in 2023 were not material. (in millions) Amount Cash and cash equivalents $ 7 Receivables, net 74 Inventories 93 Other current assets 1 Property, plant and equipment, net 173 Goodwill 1,153 Other intangible assets 1,630 Other assets 10 Accounts payable 49 Accrued expenses 26 Other current liabilities 34 Deferred income taxes 1 Other long-term liabilities 10 Total Purchase Consideration $ 3,021 115 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) The estimated useful lives of the intangible assets acquired are based on our historical experience and expectations as to the duration of time we expect to realize benefits from those assets. The estimated fair value of the identifiable intangible assets acquired, their useful life and the related valuation methodology are as follows: Millions of dollars Preliminary Fair Value Estimated Useful Life Valuation Methodology Preliminary fair value of intangible assets acquired: Trademarks $ 1,300 Indefinite Relief-from-royalty Customer relationships 330 16 years Multi-period excess earnings / with and without method Intangible assets acquired $ 1,630 For additional information see Note 10 to the Consolidated Financial Statements. The majority of the intangible asset valuation relates to the InSinkErator brand, which is an indefinite lived intangible. The Company’s assessment as to trademarks having an indefinite life was based on a number of factors, including the competitive environment, market share, brand reputation for quality and performance and product life cycles. The customer relationship intangibles of InSinkErator were mainly allocated to its traditional trade distributors, which have an estimated useful life of up to 16 years based on low historical and projected customer attrition rates among its retailers. The finite-lived intangible assets will be amortized using a straight-line method. Goodwill of $ 1.1 billion which is not deductible for tax purposes, arose from this transaction and is allocated to the North America reportable segment, and consists of expected future economic benefits arising from expected future product sales, value creation opportunities, operating efficiencies and other synergies that might result from the acquisition. The allocation has been made on the basis that the anticipated synergies identified will primarily benefit this reportable segment. During the year ended December 31, 2022, we incurred transaction and other costs in connection with the acquisition of approximately $ 44 million which are included in Selling, general and administrative expense in our Consolidated Statements of Income (Loss). Pro Forma Financial Information The following table provides pro forma results of Whirlpool's operations for the years ended December 31, 2022 and 2021, as if InSinkErator had been acquired as of January 1, 2021. The pro forma results are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the dates indicated or that may result in the future. Year ended December 31, Millions of dollars 2022 2021 Net Sales $ 20,246 $ 22,565 Net earnings available to Whirlpool $ ( 1,493 ) $ 1,716 These pro forma amounts have been calculated applying the company’s accounting policies and making certain adjustments, which primarily include: (i) depreciation adjustments relating to fair value step-ups to property, plant and equipment; (ii) amortization adjustments relating to fair value estimates of acquired intangible assets; (iii) incremental interest expense associated with the $ 2.5 billion term loan borrowing to fund the acquisition and amortization of related debt issuance costs; and (iv) transaction and debt financing related costs of approximately $ 44 million recorded in selling, general and administrative expense. Pro forma results do not include any anticipated cost savings or other effects of the integration of the acquisition. 116 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) Latin America planned sale of Brastemp water filtration subscription business On January 16, 2024, the Company entered into a share purchase agreement with a third-party buyer to sell the Company's Brastemp -branded water filtration subscription business in the Latin America region. The completion of the transaction is contingent upon regulatory approvals and other customary closing conditions, and is anticipated to occur in 2024. The disposal group met the criteria of held for sale at December 31, 2023. The carrying amounts of the disposal group's assets and liabilities as of December 31, 2023, and 2022, respectively, are immaterial. The disposal group's earnings (loss) available to Whirlpool before income taxes for the twelve months ended December 31, 2023, 2022, and 2021, respectively, are also immaterial. Russia Sale Transaction On June 27, 2022, Whirlpool EMEA SpA, a subsidiary of the Company, entered into a share purchase agreement to sell the Company’s Russia business to Arçelik A.Ş. (“Arcelik”), subject to customary conditions at closing. The sale included the entirety of the Company’s operations in Russia, including the Company’s manufacturing facility in Lipetsk, Russia, and the sales organization in Moscow, Russia, as well as sales operations in Kazakhstan and other select CIS countries. On August 31, 2022, we completed the sale to Arcelik. The consideration includes contingent consideration based on future business and other conditions of the Russian operations. We will recognize the benefit of the contingent consideration when received due to the uncertainty in the Russian marketplace. Additionally, the contingent consideration is subject to a cap based on the agreed net asset value of the Russia business of € 261 million at closing (approximately $ 262 million at August 31, 2022). In connection with the sale, we recorded a loss on disposal of $ 346 million in the second quarter of 2022. The loss includes a charge of $ 333 million for the write-down of the net assets of the disposal group to fair value and $ 13 million of cumulative currency translation adjustments. On the closing date of August 31, 2022, we recorded an immaterial adjustment to the final loss amount, resulting in a total loss of $ 348 million for the nine months ended September 30, 2022. Earnings before income taxes for Russia were not material for the periods presented. For additional information see Note 10 to the Consolidated Financial Statements. Whirlpool China Divestment On August 25, 2020, Guangdong Galanz Household Appliances Manufacturing Co., Ltd. (“Galanz”) announced its intention to pursue a tender offer for majority control of Whirlpool China Co. Ltd. (“Whirlpool China”), a majority-owned subsidiary of the Company with shares listed on the Shanghai Stock Exchange. In its announcement, Galanz noted that it expected to offer RMB 5.23 per share (approximately $ 0.76 per share as of August 25, 2020) to obtain no less than 51 % and no more than 61 % of Whirlpool China’s outstanding shares. This share price offer was equal to the daily weighted average trading price for Whirlpool China stock over the 30 trading days prior to the announcement. In the first quarter of 2021, our Board of Directors approved the sale of Whirlpool China, which was reported within our Asia reportable segment and met the criteria for held for sale accounting during the first quarter of 2021. The operations of Whirlpool China did not meet the criteria to be presented as discontinued operations. On May 6, 2021, the tender offer was completed and the share transfer was executed for a consideration of RMB 1.25 billion (approximately $ 193 million on the date of completion). Subsequent to the share transfer, the Company holds an equity interest of 20 % in Whirlpool China. In connection with the sale, we recorded a gain, net of transaction and other costs, of $ 284 million during the second quarter of 2021. The gain on sale is equal to the difference between the total transaction amount and carrying value of Whirlpool China, which includes $ 74 million of cumulative foreign currency translation adjustments and $ 80 million of goodwill allocated to the disposal group. 117 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) 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 minority interest under the equity method of 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 periods presented. Turkey Subsidiary Divestment On May 17, 2021, we entered into a share transfer agreement with Arcelik to sell our Turkish subsidiary for a cash purchase price of € 78 million (approximately $ 93 million as of 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 as of June 30, 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. See Note 10 to the Consolidated Financial Statements for additional information. 118 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.