Accounts Receivable Factoring and Securitization

9 Months Ended

Jun. 30, 2019

Accounts Receivable Factoring And Securitization [Abstract]

Accounts Receivable Factoring and Securitization

The company has a U.S. accounts receivable securitization facility with PNC Bank and participates in various accounts receivable factoring programs, primarily with Nordea Bank for trade receivables from AB Volvo, as follows:



	Current Expiration	Total Facility Size as of 6/30/19				Utilized as of 6/30/19				Utilized as of 9/30/18
		EUR		USD		EUR		USD		EUR		USD
On-balance sheet arrangement
Committed U.S. accounts receivable securitization ⁽¹⁾	December 2021	N/A		$	110	N/A		$	3	N/A		$	57
Total on-balance sheet arrangement:⁽¹⁾		N/A		$	110	N/A		$	3	N/A		$	57
Off-balance sheet arrangements
Committed Swedish factoring facility ⁽²⁾⁽³⁾	March 2020	€	155	$	176	€	140	$	160	€	136	$	158
Committed U.S. factoring facility ⁽²⁾	February 2023	N/A		75		N/A		70		45		53
Uncommitted U.K. factoring facility	February 2022	25		28		10		11		8		9
Uncommitted Italy factoring facility	June 2022	30		34		30		34		24		28
Other uncommitted factoring facilities ⁽⁴⁾	None	N/A		N/A		18		19		11		12
Total off-balance sheet arrangements		€	210	$	313	€	198	$	294	€	224	$	260

⁽¹⁾Availability subject to adequate eligible accounts receivable available for sale. The utilized amount includes $3 million and $11 million of letters of credit as of June 30, 2019 and September 30, 2018, respectively.

⁽²⁾Actual amounts may exceed the bank's commitment at the bank's discretion.

⁽³⁾ The facility is backed by a 364-day liquidity commitment from Nordea Bank which extends through January 10, 2020.

⁽⁴⁾ There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches at its discretion.

On-balance sheet arrangement

U.S. Securitization Facility: The company's U.S. accounts receivables securitization facility with PNC Bank is subject to a maximum permitted priority debt-to-EBITDA ratio as of the last day of each fiscal quarter under the facility of 2.25 to 1.00. Under this program, the company has the ability to sell an undivided percentage ownership interest in substantially all of its trade receivables (excluding the receivables due from AB Volvo and subsidiaries eligible for sale under the U.S. accounts receivable factoring facility) of certain U.S. subsidiaries to ArvinMeritor Receivables Corporation ("ARC"), a wholly-owned, special purpose subsidiary. ARC funds these purchases with borrowings from participating lenders under a loan agreement. This program also includes a letter of credit facility pursuant to which ARC may request the issuance of letters of credit issued for the company’s U.S. subsidiaries (originators) or their designees, which when issued will constitute a utilization of the facility for the amount of letters of credit issued. Amounts outstanding under this agreement are collateralized by eligible receivables purchased by ARC and are reported as short-term debt in the Condensed Consolidated Balance Sheet. This securitization program contains a cross default to the company's revolving credit facility. At certain times during any given month, the company may sell eligible accounts receivable under this program to fund intra-month working capital needs. In such months, the company would then typically utilize the cash received from customers throughout the month to repay the borrowings under the program. Accordingly, during any given month, the company may borrow under this program amounts exceeding the amounts shown as outstanding at fiscal quarter ends.

Off-balance sheet arrangements

Total costs associated with all of the off-balance sheet arrangements described above were $2 million and $1 million for the three months ended June 30, 2019 and 2018, respectively. Total costs associated with all of the off-balance sheet arrangements described above were $5 million and $3 million in the nine months ended June 30, 2019 and 2018, respectively, and are included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.