Transfers of Financial Assets

12 Months Ended

Dec. 31, 2018

Transfers And Servicing [Abstract]

Transfers of Financial Assets

7. Transfers of Financial Assets

In the fourth quarter of 2016, we executed receivables purchase arrangements with unrelated third parties to liquidate portions of our trade accounts receivable balance.  The receivables relate to products sold to customers and are short-term in nature.  The factorings were treated as sales of our accounts receivable.  Proceeds from the transfers reflect either the face value of the accounts receivable or the face value less factoring fees.  

In the U.S. and Japan, our programs are executed on a revolving basis with a maximum funding limit as of December 31, 2018 of $400 million combined.  We act as the collection agent on behalf of the third party, but have no significant retained interests or servicing liabilities related to the accounts receivable sold.  In order to mitigate credit risk, we purchased credit insurance for the factored accounts receivable.  As a result, our risk of loss is limited to the factored accounts receivable not covered by the insurance.  Additionally, we have provided guarantees for the factored accounts receivable.  The maximum exposures to loss associated with these arrangements were $33.0 million and $22.9 million as of December 31, 2018 and 2017, respectively.

In Europe, we sell to a third party and have no continuing involvement or significant risk with the factored accounts receivable.

For the years ended December 31, 2018, 2017 and 2016, we sold receivables having an aggregate face value of $2,706.4 million, $1,456.9 million and $103.1 million to third parties in exchange for cash proceeds of $2,704.9 million, $1,455.6 million and $103.1 million, respectively.  Expenses recognized on these sales during the years ended December 31, 2018, 2017 and 2016 were not significant.  For the years ended December 31, 2018 and 2017, under the U.S. and Japan programs, we collected $2,273.5million and $1,031.2 million, respectively, from our customers and remitted that amount to the third party, and we effectively repurchased $208.9 million and $96.3 million, respectively, of previously sold accounts receivable from the third party due to the programs’ revolving nature.  In the year ended December 31, 2016, we did not collect any amounts from our customers or repurchase any accounts receivable from the third party as we executed the program at the end of the year.  At December 31, 2018 and 2017, we had collected $66.8 million and $103.5 million, respectively, that were unremitted to the third party.  We estimate the incremental operating cash inflows related to all of our programs were approximately $33 million, $174 million and $103 million for the years ended December 31, 2018, 2017 and 2016, respectively.

At December 31, 2018 and 2017, the outstanding principal amount of receivables that has been derecognized under the U.S. and Japan revolving arrangements combined amounted to $365.9 million and $261.2 million, respectively.