Accounts Receivable (Notes)

3 Months Ended

Mar. 31, 2020

Accounts and Nontrade Receivable [Text Block]

Accounts Receivable and Note Receivable

Accounts receivable are stated at net realizable value which represents the face value of the receivable less an allowance for expected credit losses. The allowance for expected credit losses is maintained for expected lifetime losses resulting from the inability or unwillingness of customers to make required payments.

The Company’s expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. When required, the Company adjusts the loss-rate methodology to account for current conditions and reasonable and supportable expectations of future economic and market conditions. The Company generally assesses future economic conditions for a period which corresponds with the contractual life of its accounts receivables. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default.

Prior to the adoption of the new methodology, the Company established an allowance for doubtful accounts based upon a specific-identification method as well as historical collection experience, as appropriate.

Accounts receivable consist of the following:



(In thousands)	March 31 2020			December 31 2019
Trade accounts receivable	$	333,725		$	323,502
Less: Allowance for expected credit losses and doubtful accounts	(13,015		)	(13,512		)
Trade accounts receivable, net	$	320,710		$	309,990
Other receivables (a)	$	18,685		$	21,265


(a)	Other receivables include employee receivables, insurance receivable, tax claims and other miscellaneous items not included in Trade accounts receivable, net.

The change in the provision for expected credit losses and doubtful accounts related to trade accounts receivable was as follows:



	Three Months Ended
	March 31
(In thousands)	2020		2019
Increase (decrease) in provision for expected credit losses and doubtful accounts related to trade accounts receivable	$	219	$	(10	)

At March 31, 2020 approximately $3.7 million of the Company's accounts receivable balance was past due by twelve months or more, primarily in the Clean Earth Segment, of which the majority of the balance was represented by a single customer from whom payment is expected within the next twelve months, while the rest were either fully or nearly fully reserved, although collection is still ultimately expected.

In January 2020 the Company sold IKG for $85 million including cash and a note receivable, subject to post-closing adjustments. The note receivable from the buyer has a face value of $40 million bearing interest at 2.50%, that is paid in kind and matures on January 31, 2027. Any unpaid principal, along with any accrued but unpaid interest is payable at maturity. Prepayment is required in case of a change in control or a percentage of excess cash flow, as defined in the note receivable agreement. Because there are no scheduled payments under the terms of the note receivable, the balance is not classified as current as of March 31, 2020 and is included in the caption Other assets on the Condensed Consolidated Balance Sheet. The initial fair value of the note receivable was $34.3 million which was calculated using an average of various discounted cash flow scenarios based on anticipated timing of repayments (Level 3) and was a non-cash transaction. The note receivable is subsequently measured as amortized costs. Key inputs into the valuation model include: projected timing and amount of cash flows, pro forma debt rating, option-adjusted spread and U.S. Treasury spot rate. At March 31, 2020 the amortized cost of the note receivable was $34.6 million, compared with a fair value of $31.0 million.



(In thousands)	March 31 2020		December 31 2019
Note receivable	$	34,569	$	—