ACCOUNTS RECEIVABLE FACTORING AND SECURITIZATION

12 Months Ended

Sep. 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 (in millions):



	Current Expiration	Total Facility Size as of 9/30/19				Utilized as of 9/30/19				Utilized as of 9/30/18
		EUR		USD		EUR		USD		EUR		USD
On-balance sheet arrangement:
Committed U.S. accounts receivable securitization ⁽¹⁾	December 2022	N/A		$	115	N/A		$	13	N/A		$	57
Total on-balance sheet arrangement:⁽¹⁾		N/A		$	115	N/A		$	13	N/A		$	57
Off-balance sheet arrangements:
Committed Swedish factoring facility ⁽²⁾⁽³⁾	March 2020	€	155	$	169	€	109	$	119	€	136	$	158
Committed U.S. factoring facility ⁽²⁾	February 2023	N/A		75		N/A		58		45		53
Uncommitted U.K. factoring facility	February 2022	25		27		6		6		8		9
Uncommitted Italy factoring facility	June 2022	30		33		21		23		24		28
Other uncommitted factoring facilities ⁽⁴⁾	None	N/A		N/A		18		20		11		12
Total off-balance sheet arrangements		€	210	€	304	€	154	$	226	€	224	$	260

⁽¹⁾Availability subject to adequate eligible accounts receivable available for sale. The utilized amount includes $4 million and $11 million of letters of credit as of September 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 factoring agreement, but the counterparty approves the purchase of receivable tranches at its discretion.

On-balance sheet arrangement

U.S. Securitization Facility: As of September 30, 2018, the U.S. accounts receivables securitization facility with PNC bank had a facility size of $100 million. On September 16, 2019, the company entered into an amendment that increased the size of the facility to $115 million and extended its expiration date to December 2022. The maximum permitted priority debt-to-EBITDA ratio as of the last day of each fiscal quarter under the facility is 2.25 to 1.00. This program is provided by PNC Bank, National Association, as Administrator and Purchaser, and the other Purchasers and Purchaser Agents party to the agreement from time to time (participating lenders). 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 Consolidated Balance Sheet. As of September 30, 2019, $9 million was outstanding under this program, and $4 million was outstanding under related letters of credit. As of September 30, 2018, $46 million was outstanding under this program, and $11 million was outstanding under related letters of credit. This securitization program contains a cross-default to the 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 in amounts exceeding the amounts shown as outstanding at fiscal year ends.

Off-balance sheet arrangements

Total costs associated with all of the off-balance sheet arrangements described above were $6 million in fiscal year 2019 and $5 million in both fiscal years 2018 and 2017, and are included in selling, general and administrative expenses in the Consolidated Statement of Operations.