Supplemental Financial Information

6 Months Ended

Mar. 31, 2020

Supplemental Financial Information [Abstract]

Supplemental Financial Information

SUPPLEMENTAL FINANCIAL INFORMATION

Cash, cash equivalents and restricted cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the totals shown within the Condensed Consolidated Statements of Cash Flows:

(In millions)	March 31 2020		September 30 2019		March 31 2019
Cash and cash equivalents	$	774	$	159	$	114
Restricted cash (a)	1		—		11
Total cash, cash equivalents and restricted cash	$	775	$	159	$	125

(a) Included in Prepaid expenses and other current assets within the Condensed Consolidated Balance Sheets.

Accounts receivable

The following table summarizes Valvoline’s accounts receivable in the Condensed Consolidated Balance Sheets:

(In millions)	March 31 2020		September 30 2019
Trade	$	342	$	392
Other	16		15
Accounts receivable, gross	358		407
Allowance for doubtful accounts	(6)		(6)
Total accounts receivable, net	$	352	$	401

During the six month periods ended March 31, 2020 and 2019, Valvoline sold accounts receivable to a financial institution of $59 million and $63 million, respectively.

Franchisee loan receivables

Valvoline’s financing receivables primarily consist of low-interest term loans extended to franchisees to provide financial assistance as a response to the evolving COVID-19 pandemic. Financing receivables are recorded at amortized cost, net of any allowance for credit losses. These financing receivables bear interest at variable rates consistent with those in Valvoline's Senior Credit Agreement, and accordingly, their carrying amounts approximate fair value. Valvoline monitors the financial condition of its franchisees and will record provisions for estimated credit losses on the loans when the Company believes a loss is probable. As of March 31, 2020, there was no allowance for credit losses recorded. The balances of term loans to franchisees due within one year are included in Accounts receivable, net while amounts due beyond one year are included in Other noncurrent assets in the Condensed Consolidated Balance Sheet. Amounts included in Other noncurrent assets totaled $15 million as of March 31, 2020. There were no loan receivables from franchisees outstanding as of September 30, 2019.

Inventories

Inventories are primarily carried at the lower of cost or net realizable value using the weighted average cost method. In addition, certain lubricants are valued at the lower of cost or market using the last-in, first-out ("LIFO") method.

The following table summarizes Valvoline’s inventories in the Condensed Consolidated Balance Sheets:

(In millions)	March 31 2020		September 30 2019
Finished products	$	211	$	203
Raw materials, supplies and work in process	34		32
Reserve for LIFO cost valuation	(36)		(41)
Total inventories, net	$	209	$	194

Revenue recognition

The following table disaggregates the Company’s sales by timing of revenue recognized:

	Three months ended				Six months ended
	March 31				March 31
(In millions)	2020		2019		2020		2019
Sales at a point in time	$	569	$	581	$	1,165	$	1,128
Franchised revenues transferred over time	9		10		20		20
Total consolidated sales	$	578	$	591	$	1,185	$	1,148