ACCOUNTS RECEIVABLE SECURITIZATION

12 Months Ended

Dec. 31, 2020

NOTE 10. ACCOUNTS RECEIVABLE SECURITIZATION

In December 2020, we amended our existing agreement whereby we regularly sell certain receivables on a revolving basis to third-party financial institutions (the “Purchasers”) from $100 million up to an increased aggregate purchase limit of $120 million. 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 1.28% for the year ended December 31, 2020.

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


	For the Year Ended December 31,
	2020		2019
Accounts receivable sold and derecognized	$	789	$	224
Cash proceeds received (1)	$	788	$	223
Loss on accounts receivable sold (2)	$	—	$	2

	December 31,
	2020		2019
Pledged receivables (3)	$	128	$	142

(1)Of this amount, $99 million, represented the initial transfer upon commencement of the RPA, which is net of transaction fees and the structuring discount for the year ended December 31, 2019. Furthermore, the additional $20 million, net of transaction fees and the structuring discount, represented incremental transfer upon commencement of the amended RPA for the year ended December 31, 2020. The remainder represented proceeds from collections reinvested in revolving-period transfers. This amount was included in Net cash provided by operating activities on our consolidated statement of cash flows.

(2)Recorded in Other operating expense, net on our consolidated statements of operations. Amount included initial transaction costs of $1 million and a guarantee expense of less than $1 million related to the pledged receivables for the year ended December 31, 2019.

(3)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 3, 2021 or such later date as agreed in writing with the Purchasers. 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 December 31, 2020, we were in compliance with the covenants and no termination events had occurred. As of December 31, 2020, the maximum amount available under the RPA was utilized.