ACCOUNTS RECEIVABLE SECURITIZATION

6 Months Ended

Jun. 30, 2020

NOTE 9. ACCOUNTS RECEIVABLE SECURITIZATION

In December 2019, we entered into an agreement whereby we will regularly sell certain receivables on a revolving basis to third-party financial institutions (the “Purchasers”) up to an aggregate purchase limit of $100 million (the “Receivables Purchase Agreement" or “RPA”). Transfers under the RPA meet the requirements to be accounted for as sales in accordance with the Transfers and Servicing topic of FASB Accounting Standards Codification. We receive a discounted purchase price for each receivable sold under the RPA and will continue to service and administer the subject receivables. The weighted-average discount rate paid on accounts receivable sold was 1.70% for the six months ended June 30, 2020.

Amounts recognized in connection with the RPA were as follows (in millions):



	Six Months Ended June 30,
	2020		2019
Accounts receivable sold and derecognized	$	373	$	—
Cash proceeds received⁽¹⁾	$	372	$	—

	June 30, 2020		December 31, 2019
Pledged receivables ⁽²⁾	$	121	$	142


(1)	Represents proceeds from collections reinvested in revolving-period transfers, net of discount. This amount was included in Net cash provided by operating activities on our consolidated statement of cash flows.


(2)	Secures our obligations under the RPA and provides a guarantee for the prompt payment, not collection, of all payment obligations relating to the sold receivables.

We are not required to offer to sell any receivables and the Purchasers are not committed to purchase any receivable offered. The RPA has a scheduled termination date of December 5, 2020. Additionally, we may terminate the RPA at any time upon 30 days’ prior written notice. The agreement governing the RPA contains certain covenants and termination events. An occurrence of an event of default or the occurrence of a termination event could lead to the termination of the RPA. As of June 30, 2020, we were in compliance with the covenants, and no termination events had occurred. As of June 30, 2020, $100 million, the maximum amount available under the RPA, was fully utilized.