Accounts Receivable (Notes)

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

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 receivable. 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 expected credit loss allowance methodology on January 1, 2020, 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)	September 30 2020		December 31 2019
Trade accounts receivable	$	409,928	$	323,502
Less: Allowance for expected credit losses and doubtful accounts (a) (b)	(8,934)		(13,512)
Trade accounts receivable, net	$	400,994	$	309,990
Other receivables (c)	$	38,325	$	21,265

(a)    The decrease in the allowance for expected credit losses and doubtful accounts is the final write-off of previously fully-reserved balances in the Harsco Environmental Segment.

(b) Upon the acquisition of ESOL, trade accounts receivable totaling $136.2 million were recorded at a fair value of $123.2 million as of the acquisition date, due primarily to expected credit losses as of the acquisition date of $13.0 million which were netted against the gross receivable balance as of the acquisition date.

(c)     Other receivables include employee receivables, insurance receivable, tax claims and refunds 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				Nine Months Ended
	September 30				September 30
(In thousands)	2020		2019		2020		2019
Provision for expected credit losses and doubtful accounts related to trade accounts receivable	$	861	$	1,116	$	1,098	$	6,539

At September 30, 2020 approximately $5.6 million of the Company's trade accounts receivable were past due by twelve months or more. Approximately $1.1 million of this amount is reserved, and collection of the remaining balance is still ultimately expected.

In January 2020 the Company sold IKG for $85.0 million including cash and a note receivable, subject to post-closing adjustments. The note receivable from the buyer has a face value of $40.0 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 September 30, 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 at amortized cost. 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 September 30, 2020 the amortized cost of the note receivable was $35.4 million, compared with a fair value of $35.6 million.

(In thousands)	September 30 2020		December 31 2019
Note receivable	$	35,389	$	—