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Basis of Presentation | 3 Months Ended
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Mar. 31, 2021
Accounting Policies [Abstract] |
Basis of Presentation | BASIS OF PRESENTATION General Information The accompanying unaudited Consolidated Condensed Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information or footnotes required by U.S. GAAP for complete financial statements. As a result, this Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Form 10-K for the year ended December 31, 2020. Management believes that the accompanying Consolidated Condensed Financial Statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. We are required to make estimates and assumptions that affect the amounts reported in the Consolidated Condensed Financial Statements and accompanying Notes. Actual results could differ materially from those estimates. Certain prior year amounts in the Consolidated Condensed Financial Statements have been reclassified to conform with current year presentation. We have eliminated all material intercompany transactions in our Consolidated Condensed Financial Statements. We do not consolidate the financial statements of any company in which we have an ownership interest of 50% or less, unless that company is deemed to be a variable interest entity ("VIE") of which we are the primary beneficiary. VIEs are consolidated when the company is the primary beneficiary of these entities and has the ability to directly impact the activities of these entities. Risks and Uncertainties COVID-19 continues to spread throughout the United States and other countries across the world, and the duration and severity of the effects are currently unknown. The pandemic has impacted the Company and could materially impact our financial results in the future. The Consolidated Condensed Financial Statements presented herein reflect estimates and assumptions made by management at March 31, 2021. Such estimates and assumptions affect, among other things, the Company’s goodwill, long-lived asset and indefinite-lived intangible asset valuation; inventory valuation; 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 April 22, 2021, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods. Goodwill and indefinite-lived intangible assets Our Critical Accounting Policies and Estimates for goodwill and other indefinite-lived intangibles are disclosed in Note 1 to the Consolidated Financial Statements and in Management's Discussion and Analysis of our annual report on Form 10-K for the fiscal year ended December 31, 2020. We continue to monitor the significant global economic uncertainty as a result of COVID-19 to assess the outlook for demand for our products and the impact on our business and our overall financial performance. The goodwill in our EMEA reporting unit and our Indesit, Hotpoint*, Maytag and JennAir trademarks continue to be at risk at March 31, 2021. The goodwill in our other reporting units or indefinite-lived intangible assets are not presently at risk for future impairment. *Whirlpool ownership of the Hotpoint brand in EMEA and Asia Pacific regions is not affiliated with the Hotpoint brand sold in the Americas. The potential impact of COVID-19 related demand disruptions, production impacts and supply constraint impacts on our operating results for the EMEA reporting unit in the short-term is uncertain, but we remain committed to the strategic actions necessary to realize the long-term forecasted EBIT margins and expect that the macroeconomic environment will recover in the medium to long-term. The potential negative demand effect on revenues for the Indesit, Hotpoint*, Maytag and JennAir trademarks is also uncertain given the volatile environment, but we expect that demand and production levels will continue to recover. As a result of our analysis, and in consideration of the totality of events and circumstances, there were no triggering events of impairment identified during the first quarter of 2021. A lack of recovery or further deterioration in market conditions, a sustained trend of weaker than expected financial performance in EMEA or for our Indesit, Hotpoint*, Maytag or JennAir trademarks or a lack of recovery or a decline in the Company’s market capitalization, among other factors, as a result of the COVID-19 pandemic or other unforeseen events could result in an impairment charge in future periods which could have a material adverse effect on our financial statements. Income taxes Under U.S. GAAP, the Company calculates its quarterly tax provision based on an estimated effective tax rate for the year and then adjusts this amount by certain discrete items each quarter. The changing and volatile macro-economic conditions connected with the COVID-19 pandemic may cause fluctuations in forecasted earnings before income taxes. As such, the Company's effective tax rate could be subject to volatility as forecasted earnings before income taxes are impacted by events which cannot be predicted. In addition, continued economic deterioration brought on by the pandemic may negatively impact the realizability of certain deferred tax assets. Other Accounting Matters Synthetic lease arrangements We have a number of synthetic lease arrangements with financial institutions for non-core properties. The leases contain provisions for options to purchase, extend the original term for additional periods or return the property. At March 31, 2021 and December 31, 2020, these arrangements include residual value guarantees of up to $220 million, respectively, that could potentially come due in future periods. We do not believe it is probable that any amounts will be owed under these guarantees. Therefore, no amounts related to the residual value guarantees are included in the lease payments used to measure the right-of-use assets and lease liabilities. The majority of these leases are classified as operating leases. We have assessed the reasonable certainty of these provisions to determine the appropriate lease term. The leases were measured using our incremental borrowing rate and are included in our right of use assets and lease liabilities in the Consolidated Condensed Balance Sheets. Rental payments are calculated at the applicable LIBOR rate plus a margin. The impact to the Consolidated Condensed Balance Sheets and Consolidated Condensed Statements of Income (Loss) are nominal. Supply Chain Financing Arrangements The Company has ongoing agreements globally with various third-parties to allow certain suppliers the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. Additionally, in China, as a common practice, we pay suppliers with banker's acceptance drafts. Banker's acceptance drafts allow suppliers to sell their receivables to financial institutions at the sole discretion of both the supplier and the financial institution. We have no economic interest in the sale of these receivables and no direct financial relationship with the financial institutions concerning these services. Our obligations to suppliers, including amounts due and scheduled payment terms, are not impacted. All outstanding balances under these programs are recorded in accounts payable on our Consolidated Condensed Balance Sheets. At March 31, 2021 and December 31, 2020, approximately $1.1 billion and $1.2 billion, respectively, have been issued to participating financial institutions. *Whirlpool ownership of the Hotpoint brand in EMEA and Asia Pacific regions is not affiliated with the Hotpoint brand sold in the Americas. 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. Inventories Effective January 1, 2021, the Company changed its accounting principle for inventory valuation for inventories located in the U.S. from a last-in, first-out ("LIFO") basis to a first-in, first-out ("FIFO") basis. As of March 31, 2021 and December 31, 2020, inventories accounted for under the LIFO method would have represented approximately 41% and 41% of the Company’s total inventories respectively. We believe this change in accounting principle is preferable as it: (i) is consistent with how we internally manage our business; (ii) results in a more consistent method to value our inventory across regions; (iii) provides better comparability with our peers; and (iv) the FIFO method better reflects our current cost of inventory. All prior periods presented in the Consolidated Condensed Financial Statements have been retrospectively adjusted to apply the effects of the change in accounting principle from the LIFO method to FIFO method of accounting for U.S. inventories. As of December 31, 2020, the cumulative effect of the change increased inventories by $114 million, partially offset by $28 million in deferred income taxes resulting in an impact to retained earnings of approximately $86 million. There was no impact on total cash provided by (used in) operating activities for the periods presented as a result of this change. The impact of the change in accounting principle to net earnings is immaterial for the period ended March 31, 2021. As a result of the change in accounting principle, both North America and EMEA reporting segments use the FIFO method of inventory valuation. Latin America and Asia value their inventories at average cost. Costs include materials, labor and production overhead at normal production capacity. Costs do not exceed net realizable values. See Note 4 to the Consolidated Condensed Financial Statements for additional information about inventories. The following tables reflect the effect of the change in accounting principle on our current period Consolidated Condensed Financial Statements (in millions except for per share amounts):
Consolidated condensed statement of comprehensive income (loss) for the quarter ended March 31, 2021: |  | As Computed under LIFO |  | Effect of Change |  | As Reported under FIFO
Cost of products sold |  | $ | 4,213 |  |  | $ | (3) |  |  | $ | 4,210 |
Gross margin |  | $ | 1,145 |  |  | $ | 3 |  |  | $ | 1,148 |
Operating profit |  | $ | 615 |  |  | $ | 3 |  |  | $ | 618 |
Earnings before income taxes |  | $ | 596 |  |  | $ | 3 |  |  | $ | 599 |
Income tax expense (benefit) |  | $ | 158 |  |  | $ | 1 |  |  | $ | 159 |
Net earnings |  | $ | 438 |  |  | $ | 2 |  |  | $ | 440 |
Net earnings available to Whirlpool |  | $ | 431 |  |  | $ | 2 |  |  | $ | 433 |
Basic net earnings available to Whirlpool |  | $ | 6.84 |  |  | $ | 0.03 |  |  | $ | 6.87 |
Diluted net earnings available to Whirlpool |  | $ | 6.78 |  |  | $ | 0.03 |  |  | $ | 6.81 |
Comprehensive income |  | $ | 562 |  |  | $ | 2 |  |  | $ | 564 |
Consolidated condensed balance sheet as at March 31, 2021: |  | As Computed under LIFO |  | Effect of Change |  | As Reported under FIFO
Inventories |  | $ | 2,353 |  |  | $ | 117 |  |  | $ | 2,470 |
Total current assets |  | $ | 9,721 |  |  | $ | 117 |  |  | $ | 9,838 |
Deferred income taxes |  | $ | 2,082 |  |  | $ | (29) |  |  | $ | 2,053 |
Total assets |  | $ | 20,250 |  |  | $ | 88 |  |  | $ | 20,338 |
Retained earnings |  | $ | 8,991 |  |  | $ | 88 |  |  | $ | 9,079 |
Total Whirlpool stockholders' equity |  | $ | 4,134 |  |  | $ | 88 |  |  | $ | 4,222 |
Total stockholders' equity |  | $ | 5,051 |  |  | $ | 88 |  |  | $ | 5,139 |
Total liabilities and stockholders' equity |  | $ | 20,250 |  |  | $ | 88 |  |  | $ | 20,338 |
Consolidated condensed statement of cash flows for the quarter ended March 31, 2021: |  | As Computed under LIFO |  | Effect of Change |  | As Reported under FIFO
Net earnings |  | $ | 438 |  |  | $ | 2 |  |  | $ | 440 |
Inventories |  | $ | (329) |  |  | $ | (3) |  |  | $ | (332) |
Taxes deferred and payable, net |  | $ | 109 |  |  | $ | 1 |  |  | $ | 110 |
Stockholders' equity for the quarter ended March 31, 2021 |  | As Computed under LIFO |  | Effect of Change |  | As Reported under FIFO
Net earnings |  | $ | 438 |  |  | $ | 2 |  |  | $ | 440 |
Comprehensive income |  | $ | 562 |  |  | $ | 2 |  |  | $ | 564 |
Total stockholders' equity |  | $ | 5,051 |  |  | $ | 88 |  |  | $ | 5,139 |
Segment information |  | As Computed under LIFO |  | Effect of Change |  | As Reported under FIFO
North America EBIT |  |  |  |  |  |
Three Months Ended March 31, 2021 |  | $ | 604 |  |  | $ | 3 |  |  | $ | 607 |
North America Total Assets |  |  |  |  |  |
As of March 31, 2021 |  | $ | 7,748 |  |  | $ | 88 |  |  | $ | 7,836 |
Total Whirlpool Operating Profit |  |  |  |  |  |
Three Months Ended March 31, 2021 |  | $ | 615 |  |  | $ | 3 |  |  | $ | 618 |
Total Whirlpool EBIT |  |  |  |  |  |
Three Months Ended March 31, 2021 |  | $ | 641 |  |  | $ | 3 |  |  | $ | 644 |
Total Whirlpool Total Assets |  |  |  |  |  |
As of March 31, 2021 |  | $ | 20,250 |  |  | $ | 88 |  |  | $ | 20,338 |
As a result of the retrospective application of the change in accounting principle, certain line items in our Consolidated Condensed Financial Statements and related notes were adjusted as follows:
Consolidated condensed statement of comprehensive income (loss) for the quarter ended March 31, 2020: |  | As Originally Reported |  | Effect of Change |  | As Adjusted
Cost of products sold |  | $ | 3,625 |  |  | $ | (3) |  |  | $ | 3,622 |
Gross margin |  | $ | 700 |  |  | $ | 3 |  |  | $ | 703 |
Operating profit |  | $ | 260 |  |  | $ | 3 |  |  | $ | 263 |
Earnings before income taxes |  | $ | 219 |  |  | $ | 3 |  |  | $ | 222 |
Income tax expense (benefit) |  | $ | 72 |  |  | $ | 1 |  |  | $ | 73 |
Net earnings |  | $ | 147 |  |  | $ | 2 |  |  | $ | 149 |
Net earnings available to Whirlpool |  | $ | 152 |  |  | $ | 2 |  |  | $ | 154 |
Basic net earnings available to Whirlpool |  | $ | 2.42 |  |  | $ | 0.04 |  |  | $ | 2.46 |
Diluted net earnings available to Whirlpool |  | $ | 2.41 |  |  | $ | 0.04 |  |  | $ | 2.45 |
Comprehensive income |  | $ | 52 |  |  | $ | 2 |  |  | $ | 54 |
Consolidated condensed balance sheet as at December 31, 2020: |  | As Originally Reported |  | Effect of Change |  | As Adjusted
Inventories |  | $ | 2,187 |  |  | $ | 114 |  |  | $ | 2,301 |
Total current assets |  | $ | 9,015 |  |  | $ | 114 |  |  | $ | 9,129 |
Deferred income taxes |  | $ | 2,217 |  |  | $ | (28) |  |  | $ | 2,189 |
Total assets |  | $ | 20,350 |  |  | $ | 86 |  |  | $ | 20,436 |
Retained earnings |  | $ | 8,639 |  |  | $ | 86 |  |  | $ | 8,725 |
Total Whirlpool stockholders' equity |  | $ | 3,799 |  |  | $ | 86 |  |  | $ | 3,885 |
Total stockholders' equity |  | $ | 4,709 |  |  | $ | 86 |  |  | $ | 4,795 |
Total liabilities and stockholders' equity |  | $ | 20,350 |  |  | $ | 86 |  |  | $ | 20,436 |
Consolidated condensed statement of cash flows for the quarter ended March 31, 2020: |  | As Originally Reported |  | Effect of Change |  | As Adjusted
Net earnings |  | $ | 147 |  |  | $ | 2 |  |  | $ | 149 |
Inventories |  | $ | (203) |  |  | $ | (3) |  |  | $ | (206) |
Taxes deferred and payable, net |  | $ | 40 |  |  | $ | 1 |  |  | $ | 41 |
Stockholders' equity for the quarter ended March 31, 2020: |  | As Originally Reported |  | Effect of Change |  | As Adjusted
Net earnings (loss) |  | $ | 147 |  |  | $ | 2 |  |  | $ | 149 |
Comprehensive income (loss) |  | $ | 52 |  |  | $ | 2 |  |  | $ | 54 |
Total stockholders' equity |  | $ | 3,980 |  |  | $ | 94 |  |  | $ | 4,074 |
Segment information: |  | As Originally Reported |  | Effect of Change |  | As Adjusted
North America EBIT |  |  |  |  |  |
Three Months Ended March 31, 2020 |  | $ | 303 |  |  | $ | 3 |  |  | $ | 306 |
North America Total Assets |  |  |  |  |  |
As of December 31, 2020 |  | $ | 7,511 |  |  | $ | 86 |  |  | $ | 7,597 |
Total Whirlpool Operating Profit |  |  |  |  |  |
Three Months Ended March 31, 2020 |  | $ | 260 |  |  | $ | 3 |  |  | $ | 263 |
Total Whirlpool EBIT |  |  |  |  |  |
Three Months Ended March 31, 2020 |  | $ | 261 |  |  | $ | 3 |  |  | $ | 264 |
Total Whirlpool Total Assets |  |  |  |  |  |
As of December 31, 2020 |  | $ | 20,350 |  |  | $ | 86 |  |  | $ | 20,436 |
Adoption of New Accounting Standards We adopted the following standard, which did not have a material impact on our Consolidated Condensed Financial Statements:
Standard |  | Effective Date
2019-12 | Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes | January 1, 2021
All other newly issued and effective accounting standards during 2021 were not relevant to the Company. Accounting Pronouncements Issued But Not Yet Effective In March 2020, the FASB issued Update 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting". The amendments in Update 2020-04 are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The new guidance provides the following optional expedients: simplify accounting analyses under current U.S. GAAP for contract modifications, simplify the assessment of hedge effectiveness, allow hedging relationships affected by reference rate reform to continue and allow a one-time election to sell or transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform. In January 2021, the FASB issued Update 2021-01, "Reference Rate Reform (Topic 848): Scope". The update provides additional optional guidance on the transition from LIBOR to include derivative instruments that use an interest rate for margining, discounting or contract price alignment. The standard will ease, if warranted, the requirements for accounting for the future effects of the rate reform. An entity may elect to apply the amendments prospectively through December 31, 2022. We continue to monitor the impact the discontinuance of LIBOR or another reference rate will have on our contracts, hedging relationships and other transactions. All other issued and not yet effective accounting standards are not relevant to the Company.

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- Definition The entire disclosure for the basis of presentation and significant accounting policies concepts. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). Accounting policies describe all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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