Accounts Receivable and Note Receivable

9 Months Ended

Sep. 30, 2022

Accounts receivable consist of the following:


	September 30, 2022		December 31 2021 (a)
Trade accounts receivable	$	278,876	$	389,535
Less: Allowance for expected credit losses	(8,986)		(11,654)

Trade accounts receivable, net	$	269,890	$	377,881

Other receivables (b)	$	26,307	$	33,059

(a) The December 31, 2021 amounts for trade accounts receivable and allowance for expected credit losses have been revised from the presentation in the Company's 2021 10-K. This revision did not impact trade accounts receivable, net.

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

The provision for expected credit losses related to trade accounts receivable was as follows:


	Three Months Ended				Nine Months Ended
	September 30				September 30
(In thousands)	2022		2021		2022		2021
Provision for expected credit losses related to trade accounts receivable	$	(340)	$	(146)	$	(283)	$	582

At September 30, 2022, $7.4 million of the Company's trade accounts receivable were past due by twelve months or more, with $3.2 million of this amount reserved. Collection of the remaining balance is still ultimately expected.

Accounts Receivable Securitization Facility

On June 24, 2022, the Company and its wholly-owned bankruptcy-remote special purpose entity ("SPE") entered into a trade receivables securitization facility (“AR Facility”) with PNC Bank, National Association ("PNC") to accelerate cash flows from trade accounts receivable. The AR Facility has a three-year term.

Under the AR Facility, the Company and its subsidiaries continuously sell their trade receivables as they are originated to the SPE. The Company controls and therefore consolidates the SPE in its condensed consolidated financial statements. The SPE transfers ownership and control of qualifying receivables to PNC up to a maximum purchase commitment of $150.0 million. The Company and related subsidiaries have no continuing involvement in the transferred accounts receivable, other than collection and administrative responsibilities, and, once sold, are no longer available to satisfy creditors of the Company or the related subsidiaries. The Company accounts for receivables sold from the SPE to PNC as a sale of financial assets and derecognizes the trade receivables from the Company's Condensed Consolidated Balance Sheets.

The total outstanding balance of trade receivables that have been sold and derecognized by the SPE is $145.0 million as of September 30, 2022. The SPE owned $86.5 million of trade receivables as of September 30, 2022. These amounts are included in the caption Trade accounts receivable, net, on the Condensed Consolidated Balance Sheets.

The fees incurred for the AR Facility are included in Facility fees and debt-related income (expense) on the Condensed Consolidated Statements of Operations. See Note 9, Debt and Credit Agreements, for additional details. The Company capitalized fees of $1.8 million related to the securitization facility, which are being amortized over the term of the agreement.

Upon execution of the AR Facility during the second quarter of 2022, the Company received proceeds of $120.0 million. In the third quarter of 2022, the Company sold an additional $25.0 million of receivables to PNC, and has received a total of $145.0 million in proceeds as of September 30, 2022, which is included in cash from operating activities in the Condensed Consolidated Statement of Cash Flows.

Factoring Arrangements

The Company maintains factoring arrangements with a financial institution to sell certain accounts receivable that are also accounted for as a sale of financial assets. At September 30, 2022 and December 31, 2021, the net amounts sold under the arrangements were $15.7 million and $12.9 million, respectively, under program capacities totaling $28.8 million and $16.5 million, respectively.

Note Receivable

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, 2022 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. During the second quarter of 2022, the Company received a payment of $8.6 million related to excess cash flow.


(In thousands)	September 30 2022		December 31 2021
Note receivable, at amortized cost	$	23,556	$	31,025
Note receivable, fair value	23,300		32,300