Company Quick10K Filing
Whirlpool
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 64 $9,165
10-Q 2019-10-23 Quarter: 2019-09-30
10-Q 2019-07-23 Quarter: 2019-06-30
10-Q 2019-04-23 Quarter: 2019-03-31
10-K 2019-02-12 Annual: 2018-12-31
10-Q 2018-10-25 Quarter: 2018-09-30
10-Q 2018-07-24 Quarter: 2018-06-30
10-Q 2018-04-24 Quarter: 2018-03-31
10-K 2018-02-13 Annual: 2017-12-31
10-Q 2017-10-24 Quarter: 2017-09-30
10-Q 2017-07-27 Quarter: 2017-06-30
10-Q 2017-04-25 Quarter: 2017-03-31
10-K 2017-02-13 Annual: 2016-12-31
10-Q 2016-10-25 Quarter: 2016-09-30
10-Q 2016-07-22 Quarter: 2016-06-30
10-Q 2016-04-26 Quarter: 2016-03-31
10-K 2016-02-16 Annual: 2015-12-31
10-Q 2015-10-23 Quarter: 2015-09-30
10-Q 2015-07-22 Quarter: 2015-06-30
10-Q 2015-04-28 Quarter: 2015-03-31
10-K 2015-02-26 Annual: 2014-12-31
10-Q 2014-10-28 Quarter: 2014-09-30
10-Q 2014-07-23 Quarter: 2014-06-30
10-Q 2014-04-25 Quarter: 2014-03-31
10-K 2014-02-18 Annual: 2013-12-31
10-Q 2013-10-22 Quarter: 2013-09-30
10-Q 2013-07-19 Quarter: 2013-06-30
10-Q 2013-04-24 Quarter: 2013-03-31
10-K 2013-02-19 Annual: 2012-12-31
10-Q 2012-10-23 Quarter: 2012-09-30
10-Q 2012-07-24 Quarter: 2012-06-30
10-Q 2012-04-26 Quarter: 2012-03-31
10-K 2012-02-22 Annual: 2011-12-31
10-Q 2011-04-27 Quarter: 2011-03-31
10-Q 2010-10-27 Quarter: 2010-09-30
10-Q 2010-07-20 Quarter: 2010-06-30
8-K 2019-09-16 Officers
8-K 2019-08-06 Enter Agreement, Off-BS Arrangement, Other Events
8-K 2019-07-22 Earnings, Exhibits
8-K 2019-06-26 Other Events
8-K 2019-05-31 Exit Costs
8-K 2019-04-22 Earnings, Exhibits
8-K 2019-04-15 Shareholder Vote, Other Events
8-K 2019-04-12 Other Events
8-K 2019-03-27 Other Events
8-K 2019-03-08 Other Events
8-K 2019-02-20 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-02-15 Other Events
8-K 2019-01-28 Earnings, Exhibits
8-K 2018-12-17 Officers, Regulation FD, Exhibits
8-K 2018-10-24 Earnings, Exhibits
8-K 2018-10-15 Earnings, Other Events
8-K 2018-07-25 Officers
8-K 2018-07-23 Earnings, Exhibits
8-K 2018-06-05 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-04-26 Suspend Trading, Exhibits
8-K 2018-04-24 Enter Agreement, Other Events, Exhibits
8-K 2018-04-23 Earnings, Exhibits
8-K 2018-04-16 Officers, Shareholder Vote, Other Events, Exhibits
8-K 2018-01-24 Earnings, Regulation FD, Exhibits
8-K 2018-01-23 Regulation FD, Exhibits
8-K 2018-01-22 Other Events
8-K 2018-01-19 Regulation FD
8-K 2018-01-04 Exit Costs
8-K 2018-01-03 Regulation FD
WHR 2019-09-30
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 exb101-9302019.htm
EX-10.2 exb102-9302019.htm
EX-31.1 exb311-9302019.htm
EX-31.2 exb312-9302019.htm
EX-32.1 exb321-9302019.htm

Whirlpool Earnings 2019-09-30

WHR 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
WHR 9,165 19,855 16,188 20,932 3,589 932 1,837 12,684 17% 6.9 5%
AOS 7,770 3,176 1,450 3,080 1,244 422 614 7,847 40% 12.8 13%
IRBT 2,596 801 221 1,147 559 87 138 2,463 49% 17.9 11%
KN 1,632 1,586 359 845 329 80 192 1,750 39% 9.1 5%
SONO 1,311 644 355 1,240 519 23 27 1,013 42% 37.2 4%
UEIC 576 578 317 731 152 -16 22 526 21% 23.9 -3%
NC 350 399 127 152 42 43 70 259 27% 3.7 11%
ARLO 292 415 212 395 46 -127 -116 195 12% -1.7 -31%
LRAD 91 42 7 33 15 0 2 80 46% 45.4 1%
MSN 21 42 4 8 0 -3 -2 13 0% -5.8 -6%

Document
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 ________________________________________________________
FORM 10-Q
  ________________________________________________________
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-3932
whirlpoolcorplogoa20.jpg
WHIRLPOOL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
38-1490038
(State of Incorporation)
 
(I.R.S. Employer Identification No.)
 
 
 
 
2000 North M-63
 
 
Benton Harbor,
Michigan
 
49022-2692
(Address of principal executive offices)
 
(Zip Code)
Registrant's telephone number, including area code (269923-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading symbol(s)
 
Name of each exchange on which registered
Common stock, par value $1.00 per share
 
WHR
 
Chicago Stock Exchange
and
New York Stock Exchange
0.625% Senior Notes due 2020
 
WHR 20
 
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No       
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
Number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
Class of common stock
 
Shares outstanding at October 18, 2019
Common stock, par value $1 per share
 
63,199,776




WHIRLPOOL CORPORATION

QUARTERLY REPORT ON FORM 10-Q
Three and Nine Months Ended September 30, 2019
TABLE OF CONTENTS
 
 
 
PAGE
 
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 
 
 



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




2


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



3


PART I. FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS

TABLE OF CONTENTS
 
PAGE
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 

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



4



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

 
Three Months Ended
 
Nine Months Ended
 
2019
 
2018
 
2019
 
2018
Net sales
$
5,091

 
$
5,326

 
$
15,037

 
$
15,377

Expenses
 
 
 
 
 
 
 
Cost of products sold
4,350

 
4,431

 
12,552

 
12,790

Gross margin
741

 
895

 
2,485

 
2,587

Selling, general and administrative
491

 
550

 
1,580

 
1,596

Intangible amortization
17

 
18

 
53

 
58

Restructuring costs
56

 
28

 
142

 
216

Impairment of goodwill and other intangibles

 

 

 
747

(Gain) loss on sale and disposal of businesses
(516
)
 

 
(437
)
 

Operating profit (loss)
693

 
299

 
1,147

 
(30
)
Other (income) expense
 
 
 
 

 

Interest and sundry (income) expense
(29
)
 
24

 
(222
)
 
106

Interest expense
45

 
52

 
148

 
141

Earnings (loss) before income taxes
677

 
223

 
1,221

 
(277
)
Income tax expense
313

 
7

 
311

 
52

Net earnings (loss)
364

 
216

 
910

 
(329
)
Less: Net earnings available to noncontrolling interests
6

 
6

 
14

 
24

Net earnings (loss) available to Whirlpool
$
358

 
$
210

 
$
896

 
$
(353
)
Per share of common stock
 
 
 
 
 
 
 
Basic net earnings (loss) available to Whirlpool
$
5.62

 
$
3.25

 
$
14.04

 
$
(5.18
)
Diluted net earnings (loss) available to Whirlpool
$
5.57

 
$
3.22

 
$
13.93

 
$
(5.18
)
Dividends declared
$
1.20

 
$
1.15

 
$
3.55

 
$
3.40

Weighted-average shares outstanding (in millions)
 
 
 
 
 
 
 
Basic
63.6

 
64.5

 
63.8

 
68.2

Diluted
64.2

 
65.3

 
64.3

 
68.2

 
 
 
 
 
 
 
 
Comprehensive income (loss)
$
419

 
$
130

 
$
1,002

 
$
(573
)

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


5


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

September 30, 2019

December 31, 2018
Assets



Current assets



Cash and cash equivalents
$
993


$
1,498

Accounts receivable, net of allowance of $127 and $136, respectively
2,588


2,210

Inventories
2,883


2,533

Prepaid and other current assets
911


839

Assets held for sale

 
818

Total current assets
7,375


7,898

Property, net of accumulated depreciation of $6,331 and $6,190, respectively
3,203


3,414

Right of use assets
746

 

Goodwill
2,420


2,451

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


2,296

Deferred income taxes
2,031


1,989

Other noncurrent assets
414


299

Total assets
$
18,406


$
18,347

Liabilities and stockholders' equity



Current liabilities



Accounts payable
$
4,229


$
4,487

Accrued expenses
626


690

Accrued advertising and promotions
755


827

Employee compensation
430


393

Notes payable
941


1,034

Current maturities of long-term debt
546


947

Other current liabilities
973


811

Liabilities held for sale

 
489

Total current liabilities
8,500


9,678

Noncurrent liabilities



Long-term debt
4,105


4,046

Pension benefits
530


637

Postretirement benefits
310


318

Lease liabilities
617

 

Other noncurrent liabilities
395


463

Total noncurrent liabilities
5,957


5,464

Stockholders' equity



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


112

Additional paid-in capital
2,786


2,768

Retained earnings
7,659


6,933

Accumulated other comprehensive loss
(2,603
)

(2,695
)
Treasury stock, 49 million and 48 million shares, respectively
(4,926
)

(4,827
)
Total Whirlpool stockholders' equity
3,028


2,291

Noncontrolling interests
921


914

Total stockholders' equity
3,949


3,205

Total liabilities and stockholders' equity
$
18,406


$
18,347


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


6


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

Nine Months Ended

2019

2018
Operating activities



Net earnings (loss)
$
910


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



Depreciation and amortization
443


491

Impairment of goodwill and other intangibles

 
747

(Gain) loss on sale and disposal of businesses
(437
)
 

Changes in assets and liabilities:



Accounts receivable
(517
)

(585
)
Inventories
(525
)

(271
)
Accounts payable
(110
)

(122
)
Accrued advertising and promotions
(62
)

(95
)
Accrued expenses and current liabilities
29


196

Taxes deferred and payable, net
(59
)

(105
)
Accrued pension and postretirement benefits
(72
)

(433
)
Employee compensation
77


35

Other
(243
)

(144
)
Cash used in operating activities
(566
)

(615
)
Investing activities



Capital expenditures
(306
)

(330
)
Proceeds from sale of assets and business
1,034


27

Proceeds from held-to-maturity securities

 
60

Investment in related businesses


(25
)
Other
(5
)

(4
)
Cash provided by (used in) investing activities
723


(272
)
Financing activities



Net proceeds from borrowings of long-term debt
699


703

Repayments of long-term debt
(946
)

(381
)
Net proceeds (repayments) from short-term borrowings
(63
)

1,761

Dividends paid
(229
)

(232
)
Repurchase of common stock
(100
)

(1,102
)
Common stock issued
5


7

Other
(7
)

(6
)
Cash provided by (used in) financing activities
(641
)

750

Effect of exchange rate changes on cash, cash equivalents and restricted cash
(55
)

(74
)
Decrease in cash, cash equivalents and restricted cash
(539
)

(211
)
Cash, cash equivalents and restricted cash at beginning of period
1,538


1,293

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


$
1,082


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


7


NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
(1)    BASIS OF PRESENTATION
General Information
The accompanying unaudited Consolidated Condensed Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information or footnotes required by GAAP for complete financial statements. As a result, this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Form 10-K for the year ended December 31, 2018.
Management believes that the accompanying Consolidated Condensed Financial Statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods.
We are required to make estimates and assumptions that affect the amounts reported in the Consolidated Condensed Financial Statements and accompanying Notes. Actual results could differ materially from those estimates.
Certain prior year amounts in the Consolidated Condensed Financial Statements have been reclassified to conform with current year presentation.
We have eliminated all material intercompany transactions in our Consolidated Condensed Financial Statements. We do not consolidate the financial statements of any company in which we have an ownership interest of 50% or less, unless that company is deemed to be a variable interest entity ("VIE") of which we are the primary beneficiary. VIEs are consolidated when the company is the primary beneficiary of these entities and has the ability to directly impact the activities of these entities.
Out-of-Period Adjustments
During the third quarter of 2019, we recorded a net adjustment of $34 million related to prior years resulting from the one time transition tax deemed repatriation on earnings of certain foreign subsidiaries that were previously tax deferred and related impacts. This adjustment resulted in a decrease of net earnings available to Whirlpool of $34 million and a decrease of $0.53 in diluted earnings per share for the three and nine months ended 2019. The Company determined the impact was not material to the prior years' financial statements and is not expected to be material to the Consolidated Statement of Comprehensive Income (Loss) for the year ending December 31, 2019.
In addition, during the third quarter of 2019 we recorded an adjustment of $22 million related to the first quarter of 2019 resulting from other foreign subsidiary income items and corresponding tax credit impacts. This adjustment resulted in a decrease of $22 million in net earnings available to Whirlpool and a decrease of $0.34 in diluted earnings per share for the three months ended September 30, 2019. The Consolidated Condensed Statement of Comprehensive Income (Loss) for the nine months ended September 30, 2019 is not impacted by this adjustment.
Adoption of New Accounting Standards
On January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." The adoption of this standard did not have a material impact on our Consolidated Condensed Financial Statements, however we have expanded our use of hedge accounting to hedge contractually specified components in commodity contracts designated as cash flow hedges. For additional information on the required disclosures related to the impact of adopting this standard, see Note 10 to the Consolidated Condensed Financial Statements.

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

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


8



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

Upon adoption, we recognized the cumulative effect of initially applying this new standard resulting in the addition of approximately $858 million of right of use assets, of which $46 million were classified as held for sale, as well as the corresponding short-term and long-term lease liabilities. Additionally, the Company has sold and leased back a group of properties in our Latin American region and, upon adoption, the Company recorded a cumulative adjustment to retained earnings of approximately $82 million related to deferred gains associated with these transactions.
For additional information on the required disclosures related to the impact of adopting this standard, see Note 3 to the Consolidated Condensed Financial Statements.
For additional information on held for sale assets, see Note 16 to the Consolidated Condensed Financial Statements.
We adopted the following standard, none of which have a material impact on our Consolidated Condensed Financial Statements:
Standard
 
Effective Date
2019-07
Codification Updates to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Final Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10441, Investment Company Reporting Modernization, and Miscellaneous Updates
July 1, 2019


All other newly issued and effective accounting standards during 2019 were not relevant or material to the Company.
Accounting Pronouncements Issued But Not Yet Effective
In November 2018, the FASB issued ASU 2018-18, "Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606." The new standard clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer for a good or service that is a distinct unit of account. The amendments also preclude entities from presenting consideration from transactions with a collaborator that is not a customer together with revenue recognized from contracts with customers. The new standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted in any interim period for entities that have adopted ASC 606. The standard should be applied retrospectively to the period when ASC 606 was initially adopted. The Company is currently evaluating the impact of adopting this guidance.
The FASB has issued the following relevant standards, which are not expected to have a material impact on our Consolidated Condensed Financial Statements:
Standard
 
Effective Date
2016-13
Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
January 1, 2020
2018-13
Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement
January 1, 2020
2018-14
Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans
January 1, 2021
2018-15
Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred In a Cloud Computing Arrangement That Is a Service Contract
January 1, 2020
2018-17
Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities
January 1, 2020

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


9




(2)    REVENUE RECOGNITION

Disaggregation of Revenue

The following table presents our disaggregated revenues by revenue source. We sell products within all product categories in each operating segment. For additional information on the disaggregated revenues by geographic regions, see Note 15 to the Consolidated Condensed Financial Statements.

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

 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
Millions of dollars
 
2019
 
2018
 
2019
 
2018
Major product categories:
 
 
 
 
 
 
 
 
Laundry
 
$
1,576

 
$
1,580

 
$
4,531

 
$
4,605

Refrigeration
 
1,673

 
1,577

 
4,694

 
4,474

Cooking
 
1,183

 
1,204

 
3,289

 
3,342

Dishwashing
 
414

 
421

 
1,169

 
1,229

Total major product category net sales
 
$
4,846

 
$
4,782

 
$
13,683

 
$
13,650

Compressors
 

 
266

 
557

 
847

Spare parts and warranties
 
227

 
246

 
749

 
768

Other
 
18

 
32

 
48

 
112

Total net sales
 
$
5,091

 
$
5,326

 
$
15,037

 
$
15,377



The impact to revenue related to prior period performance obligations was not material for the three and nine months ended September 30, 2019.

Bad Debt Expense

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

Leases

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

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

At September 30, 2019, we have no leases classified as financing leases and we have approximately $885 million of non-cancelable operating lease commitments, excluding variable consideration. The undiscounted annual future minimum lease payments are summarized by year in the table below:


10



Maturity of Lease Liabilities
Operating Leases
(in millions)
2019
$
45

2020
166

2021
139

2022
119

2023
107

After 2023
309

Total lease payments
$
885

Less: interest
123

Present value of lease liabilities
$
762


The long-term portion of the lease liabilities included in the amounts above is $617 million. The remainder of our lease liabilities are included in other current liabilities in the Consolidated Condensed Balance Sheets.

At September 30, 2019, the weighted average remaining lease term and weighted average discount rate for operating leases was 7 years and 5%, respectively.

During the nine months ended September 30, 2019 the cash paid for amounts included in the measurement of the liabilities and the operating cash flows was $147 million. The right of use assets obtained in exchange for new liabilities was $39 million in the nine months ended.

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

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

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

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

We rent or sublease certain real estate to third parties. Our sublease portfolio primarily consists of operating leases within our warehouses, resulting in a nominal amount of sublease income in 2019.
(4)    CASH, CASH EQUIVALENTS AND RESTRICTED CASH
The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported within our Consolidated Condensed Statements of Cash Flows:
 
September 30,
Millions of dollars
2019
 
2018
Cash and cash equivalents as presented in our Consolidated Condensed Balance Sheets
$
993

 
$
1,032

Restricted cash included in prepaid and other current assets (1)
6

 
45

Restricted cash included in other noncurrent assets (1)

 
5

Cash, cash equivalents and restricted cash as presented in our Consolidated Condensed Statements of Cash Flows
$
999

 
$
1,082

(1)Change in restricted cash reflects realization of foreign currency translation adjustments of $1 million and $3 million, respectively, for the nine months ended September 30, 2019 and 2018 compared to the prior fiscal year end.


11



 
December 31,
Millions of dollars
2018
 
2017
Cash and cash equivalents as presented in our Consolidated Balance Sheets
$
1,498

 
$
1,196

Restricted cash included in prepaid and other current assets
40

 
48

Restricted cash included in other noncurrent assets

 
49

Cash, cash equivalents and restricted cash as presented in our Consolidated Statements of Cash Flows
$
1,538

 
$
1,293



Restricted cash can only be used to fund capital expenditures and technical resources to enhance Whirlpool China's research and development and working capital, as required by the terms of the Whirlpool China (formerly Hefei Sanyo) acquisition completed in October 2014. 
(5)    INVENTORIES
The following table summarizes our inventory at September 30, 2019 and December 31, 2018:
Millions of dollars

September 30, 2019

December 31, 2018
Finished products

$
2,414


$
2,076

Raw materials and work in process

627


617



3,041


2,693

Less: excess of FIFO cost over LIFO cost

(158
)

(160
)
Total inventories

$
2,883


$
2,533


LIFO inventories represented 44% and 41% of total inventories at September 30, 2019 and December 31, 2018, respectively.
(6)    PROPERTY, PLANT & EQUIPMENT
The following table summarizes our property, plant and equipment at September 30, 2019 and December 31, 2018:
Millions of dollars

September 30, 2019

December 31, 2018
Land

$
98


$
102

Buildings

1,585


1,593

Machinery and equipment

7,851


7,909

Accumulated depreciation

(6,331
)

(6,190
)
Property, plant and equipment, net

$
3,203


$
3,414


During the nine months ended September 30, 2019, we disposed of buildings, machinery and equipment no longer in use with a net book value of $57 million, primarily related to the Naples asset impairment charges.
For additional information, see Note 13 to the Consolidated Condensed Financial Statements.
(7)    FINANCING ARRANGEMENTS
Debt Offering
On February 26, 2019, Whirlpool Corporation completed a bond offering consisting of $700 million in principal amount of 4.75% Senior Notes due in 2029. The notes contain covenants that limit Whirlpool Corporation's ability to incur certain liens or enter into certain sale and lease-back transactions. In addition, if we experience a specific kind of change of control, we are required to make an offer to purchase all of the notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest. The notes are registered under the Securities Act of 1933, as amended, pursuant to our Registration Statement on Form S-3 (File No.333-224381) previously filed with the Securities and Exchange Commission. 


12



Debt Repayment
On August 9, 2019, we repaid $1.0 billion pursuant to our April 23, 2018 Term Loan Agreement with Citibank, N.A., as Administrative Agent, and certain other financial institutions, representing full repayment of amounts borrowed under the term loan. As previously disclosed, we agreed to repay this term loan amount with the net cash proceeds received from the sale of our Embraco business unit to Nidec Corporation, which closed on July 1, 2019.
On February 27, 2019, we repaid 600 million (approximately $673 million) pursuant to our June 5, 2018 Term Loan Agreement with Wells Fargo Bank, National Association, as Administrative Agent, and certain other financial institutions (the "Whirlpool EMEA Finance Term Loan"), representing full repayment of amounts borrowed under the Whirlpool EMEA Finance Term Loan. On March 1, 2019, $250 million of 2.40% senior notes matured and were repaid. On April 26, 2018, $363 million of 4.50% senior notes matured and were repaid.
Credit Facilities
On August 6, 2019, Whirlpool Corporation entered into a Fourth 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. The Amended Long-Term Facility provides aggregate borrowing capacity of $3.5 billion, an increase of $500 million from the Company's prior amended and restated credit agreement. The Amended Long-Term Facility has a maturity date of August 6, 2024, unless earlier terminated, and amends and restates in its entirety our previously existing Third Amended and Restated Long-Term Credit Agreement, dated May 17, 2016, as amended.
The interest and fee rates payable with respect to the Amended Long-Term Facility based on our current debt rating are as follows: (1) the spread over EURIBOR is 1.125%; (2) the spread over prime is 0.125%; and (3) the ticking fee is 0.100%. The Amended Long-Term Facility contains customary covenants and warranties including, among other things, a debt to capitalization ratio of less than or equal to 0.65 to 1.00 as of the last day of each fiscal quarter, and a rolling twelve month interest coverage ratio required to be greater than or equal to 3.0 to 1.0 for each fiscal quarter. In addition, the covenants limit our ability to (or to permit any subsidiaries to), subject to various exceptions and limitations: (i) merge with other companies; (ii) create liens on our property; (iii) incur debt at the subsidiary level.
In addition to the committed $3.5 billion Amended Long-Term Facility, we have committed credit facilities in Brazil. The committed credit facilities in Brazil provide borrowings up to 1.0 billion Brazilian reais (approximately $240 million at September 30, 2019 and $258 million at December 31, 2018), maturing through 2022. On August 5, 2019 we terminated a 250 million European revolving credit facility that we entered into in July 2015. The termination of this facility did not have a material impact on our Consolidated Condensed Financial Statements.
We had no borrowings outstanding under the committed credit facilities at September 30, 2019 or December 31, 2018.
Notes Payable
Notes payable, which consist of short-term borrowings payable to banks or commercial paper, are generally used to fund working capital requirements. The fair value of our notes payable approximates the carrying amount due to the short maturity of these obligations. As previously disclosed, during the third quarter of 2019 we repaid the $1 billion term loan.
The following table summarizes the carrying value of notes payable at September 30, 2019 and December 31, 2018:
Millions of dollars
 
September 30, 2019
 
December 31, 2018
Commercial paper
 
$
711

 
$

Short-term borrowings due to banks
 
230

 
1,034

Total notes payable
 
$
941

 
$
1,034


Transfers and Servicing of Financial Assets
In an effort to manage economic and geographic trade customer risk, from time to time, the Company will transfer, primarily without recourse, accounts receivable balances of certain customers to financial institutions resulting in a nominal impact recorded in interest and sundry (income) expense. These transactions are accounted for as sales of the receivables resulting in the receivables being de-recognized from the Consolidated Condensed Balance Sheets.


13



These transfers primarily do not require continuing involvement from the Company, however certain arrangements include servicing of transferred receivables by Whirlpool. Outstanding accounts receivable transferred under arrangements where the Company continues to service the transferred asset were $203 million and $161 million as of September 30, 2019 and December 31, 2018, respectively.
(8)    COMMITMENTS AND CONTINGENCIES
Embraco Antitrust Matters
Beginning in February 2009, the Embraco compressor business headquartered in Brazil ("Embraco") was notified of antitrust investigations of the global compressor industry by government authorities in various jurisdictions. Embraco has resolved government investigations and related claims in various jurisdictions and certain other claims remain pending.
Whirlpool has agreed to retain potential liabilities related to this matter following closing of the Embraco sale transaction. We continue to defend these actions. While it is currently not possible to reasonably estimate the aggregate amount of costs which we may incur in connection with these matters, such costs could have a material adverse effect on our financial statements in any particular reporting period.
BEFIEX Credits and Other Brazil Tax Matters
In previous years, our Brazilian operations earned tax credits under the Brazilian government's export incentive program (BEFIEX). These credits reduced Brazilian federal excise taxes on domestic sales. Prior to the adoption of Topic 606, the excise taxes in our Brazilian operations were reflected in revenue. In accordance with Topic 606, we made a policy election to exclude non-income taxes from the transaction price. As a result, these credits were reflected in interest and sundry (income) expense as they were monetized in 2017 and 2018.
In December 2013, the Brazilian government reinstituted the monetary adjustment index applicable to BEFIEX credits that existed prior to July 2009, when the Brazilian government required companies to apply a different monetary adjustment index to BEFIEX credits. Whether use of the reinstituted index should be given retroactive effect for the July 2009 to December 2013 period has been subject to review by the Brazilian courts. In the third quarter of 2017, the Brazilian Supreme Court ruled that the reinstituted index should be given retroactive effect for the July 2009 to December 2013 period, which ruling was subsequently affirmed by the Brazilian Supreme Court, but remains subject to further proceedings. Based on this ruling, we were entitled to recognize $72 million in additional credits, which were recognized in prior periods. As of September 30, 2019, no BEFIEX credits remain to be monetized.
Our Brazilian operations have received tax assessments for income and social contribution taxes associated with certain monetized BEFIEX credits. We do not believe BEFIEX credits are subject to income or social contribution taxes. We believe these tax assessments are without merit and are vigorously defending our positions. We have not provided for income or social contribution taxes on these BEFIEX credits, and based on the opinions of tax and legal advisors, we have not accrued any amount related to these assessments as of September 30, 2019. The total amount of outstanding tax assessments received for income and social contribution taxes relating to the BEFIEX credits, including interest and penalties, is approximately 1.9 billion Brazilian reais (approximately $465 million as of September 30, 2019).
Relying on existing Brazilian legal precedent, in 2003 and 2004, we recognized tax credits in an aggregate amount of $26 million, adjusted for currency, on the purchase of raw materials used in production ("IPI tax credits"). The Brazilian tax authority subsequently challenged the recording of IPI tax credits. No such credits have been recognized since 2004. In 2009, we entered into a Brazilian government program ("IPI Amnesty") which provided extended payment terms and reduced penalties and interest to encourage tax payers to resolve this and certain other disputed tax credit amounts. As permitted by the program, we elected to settle certain debts through the use of other existing tax credits and recorded charges of approximately $34 million in 2009 associated with these matters. In July 2012, the Brazilian revenue authority notified us that a portion of our proposed settlement was rejected and we received tax assessments of 253 million Brazilian reais (approximately $61 million as of September 30, 2019), reflecting interest and penalties to date. We believe these tax assessments are without merit and we are vigorously defending our position. The government's assessment in this case relies heavily on its arguments regarding taxability of BEFIEX credits for certain years, which we are disputing in one of the BEFIEX government assessment cases cited in the prior paragraph. Because the IPI Amnesty case is moving faster than the BEFIEX taxability case, we could be required to pay the IPI Amnesty assessment before obtaining a final decision in the BEFIEX taxability case.


14


In 2001, Brazil adopted a law making the profits of controlled foreign corporations of Brazilian entities subject to income and social contribution tax regardless of whether the profits were repatriated ("CFC Tax"). Our Brazilian subsidiary, along with other corporations, challenged tax assessments on foreign profits on constitutionality and other grounds. In April 2013, the Brazilian Supreme Court ruled on one of our cases, finding that the law is constitutional, but remanded the case to a lower court for consideration of other arguments raised in our appeal, including the existence of tax treaties with jurisdictions in which controlled foreign corporations are domiciled. As of September 30, 2019, our potential exposure for income and social contribution taxes relating to profits of controlled foreign corporations, including interest and penalties and net of expected foreign tax credits, is approximately 114 million Brazilian reais (approximately $27 million as of September 30, 2019). We believe these tax assessments are without merit and are vigorously defending our positions. Based on the opinion of our tax and legal advisors, we have not accrued any amount related to these assessments as of September 30, 2019.
In addition to the IPI tax credit and CFC Tax matters noted above, other assessments issued to us by the Brazilian tax authorities related to non-income 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.
ICMS Credits
We also filed legal actions in Brazil to recover certain social integration and social contribution taxes paid over gross sales including ICMS receipts, which is a form of Value Added Tax in Brazil. During 2017, we sold the rights to certain portions of this litigation to a third party for 90 million Brazilian reais (approximately $27 million at December 31, 2017). In the first quarter of 2019, we received a favorable decision in the largest of these ICMS legal actions. This decision is final and not subject to appeals. Based on the opinion of our tax and legal advisors, we recognized a gain of approximately $84 million, after related taxes and fees, during the first quarter in connection with this decision. This amount reflects approximately $142 million in indirect tax credits ("credits") that we are entitled to monetize in future periods, offset by approximately $43 million in taxes, which have been paid, and $15 million in fees that we anticipate will be fully paid in 2019.

In the second quarter of 2019, we received favorable final, non-appealable decisions in two smaller ICMS legal actions. Based on the opinion of our tax and legal advisors, we recognized a gain of approximately $35 million, after related taxes and fees, during the second quarter in connection with this decision. This amount reflects approximately $54 million in credits that we are entitled to monetize in future periods, offset by approximately $18 million in taxes, which have been paid, and $1 million in fees that we anticipate will be paid in 2019.
The ICMS credits and related fees are recorded in interest and sundry (income) expense in our Consolidated Condensed Statements of Comprehensive Income (Loss). The Brazilian tax authorities have sought clarification before the Brazilian Supreme Court (in a leading case involving another taxpayer) of certain matters, including the amount of these credits (i.e., the gross rate or net credit amount), and certain other matters that could affect the rights of Brazilian taxpayers regarding these credits, and a hearing is scheduled for December 2019. If the Brazilian tax authorities challenge our rights to these credits, we may become subject to new litigation related to credits already monetized and/or disallowance of further credit monetization. Based on the opinions of our tax and legal advisors, we have not accrued any amounts related to potential future litigation regarding these credits.
The Company has similar cases with other Brazilian subsidiaries related to approximately $15 million in potential ICMS credits for which we have yet to receive a ruling. There is substantial uncertainty about both the amount and timing of any recovery, and as such, no amounts have been recognized.
Competition Investigation
In 2013, the French Competition Authority ("FCA") commenced an investigation of appliance manufacturers and retailers in France. The investigation includes a number of manufacturers, including the Whirlpool and Indesit operations in France.



15


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

The second part of the FCA investigation, which is expected to focus primarily on manufacturer interactions with retailers, is ongoing. The Company is cooperating with this investigation. Although it is currently not possible to assess the impact, if any, this matter may have on our financial statements, the resolution of the second part of the FCA investigation could have a material adverse effect on our financial statements in any particular reporting period.
Trade Customer Insolvency

In 2017, Alno AG and certain affiliated companies filed for insolvency protection in Germany. Bauknecht Hausgeräte GmbH, a subsidiary of the Company, was a long-standing supplier to Alno and certain of its affiliated companies. The Company was also a former indirect minority shareholder of Alno. In August 2018, the insolvency trustee asserted 174.5 million in clawback and related claims against Bauknecht. We are reviewing the claims made by the insolvency trustee. Based on our preliminary understanding of the facts and the applicable law, we expect to vigorously defend against the claims. Although it is currently not possible to assess the impact this matter may have on our Consolidated Condensed Financial Statements, the resolution of this matter could have a material adverse effect on our financial statements in any particular reporting period.

Other Litigation
We are currently defending against two lawsuits that have been certified for class action treatment in U.S. federal court, relating to two top-load washing machine models. We believe the lawsuits are without merit and are vigorously defending them. Given the preliminary stage of the proceedings, we cannot reasonably estimate a range of loss, if any, at this time. The resolution of this matter could have a material adverse effect on our financial statements in any particular reporting period.
We are currently vigorously defending a number of other lawsuits related to the manufacture and sale of our products which include class action allegations, and may become involved in similar actions. These lawsuits allege claims which include negligence, breach of contract, breach of warranty, product liability and safety claims, false advertising, fraud, and violation of federal and state regulations, including consumer protection laws. In general, we do not have insurance coverage for class action lawsuits. We are also involved in various other legal actions arising in the normal course of business, for which insurance coverage may or may not be available depending on the nature of the action. We dispute the merits of these suits and actions, and intend to vigorously defend them. Management believes, based upon its current knowledge, after taking into consideration legal counsel's evaluation of such suits and actions, and after taking into account current litigation accruals, that the outcome of these matters currently pending against Whirlpool should not have a material adverse effect, if any, on our financial statements.


16


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


Product Warranty
Millions of dollars

2019

2018
Balance at January 1

$
268


$
277

Issuances/accruals during the period

329


218

Settlements made during the period/other

(208
)

(216
)
Balance at September 30

$
389


$
279

 
 
 
 
 
Current portion

$
262


$
204

Non-current portion

127


75

Total

$
389


$
279



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

As part of this process, we investigated incident reports associated with a particular component in certain Indesit-designed horizontal axis washers produced in EMEA. Whirlpool is discussing the issue with the appropriate regulatory authorities, and is assessing corrective action. In the third quarter of 2019, we accrued approximately $105 million in estimated product warranty expense related to this matter. This estimate is based on several assumptions which are inherently unpredictable and which we may need to materially revise in the future.

For the three and nine months ended September 2019, we incurred approximately $14 million and $26 million, respectively, of additional product warranty expense related to our previously disclosed legacy Indesit dryer corrective action campaign in the UK. We continue to cooperate with the UK regulator, which continues to review the overall effectiveness of the modification program.

Guarantees

We have guarantee arrangements in a Brazilian subsidiary. For certain credit worthy customers, the subsidiary guarantees customer lines of credit at commercial banks to support purchases following its normal credit policies. If a customer were to default on its line of credit with the bank, our subsidiary would be required to assume the line of credit and satisfy the obligation with the bank. At September 30, 2019 and December 31, 2018, the guaranteed amounts totaled $116 million and $146 million, respectively. The fair value of these guarantees were nominal at September 30, 2019 and December 31, 2018. 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 credit facilities available under these lines for consolidated subsidiaries totaled $2.7 billion and $3.5 billion at September 30, 2019 and December 31, 2018, respectively. Our total short-term outstanding bank indebtedness under guarantees was $19 million at September 30, 2019 and $21 million at December 31, 2018.


17


(9)    PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
The following table summarizes the components of net periodic pension cost and the cost of other postretirement benefits for the periods presented:


Three Months Ended September 30,


United States
Pension Benefits

Foreign
Pension Benefits

Other Postretirement
Benefits
Millions of dollars

2019

2018

2019

2018

2019

2018
Service cost