Sales Of Receivables

3 Months Ended

Mar. 31, 2023

NOTE 8. SALES OF RECEIVABLES

We have agreements with various third-party financial institutions pertaining to the sales of certain types of our accounts receivable. The most significant of these programs consists of receivables arising from equipment installment plans, which are sold for cash and a deferred purchase price. Under this program, we transfer receivables to purchasers in exchange for cash and additional consideration upon settlement of the receivables. Under the terms of our agreement for this program, we continue to service the transferred receivables on behalf of the financial institutions.

The following table sets forth a summary of cash proceeds received, net of remittances paid, from sales of receivables during the three months ended March 31, 2023 and 2022 that are included in cash flows from operating activities:


	Three months ended
	March 31,
		2023		2022
Net cash received from equipment installment receivables1		$	10	$	1,026
Net cash (paid) received from other programs		(114)		288
Total net cash impact to cash flows from operating activities		$	(104)	$	1,314
1Net cash from initial sales of $2,529 and $3,316 during the three months ended March 31, 2023 and 2022, respectively.

The sales of receivables did not have a material impact on our consolidated statements of income or to “Total Assets” reported on our consolidated balance sheets. We reflect cash receipts on sold receivables as cash flows from operations in our consolidated statements of cash flows. Cash receipts on the deferred purchase price are classified as cash flows from investing activities, when applicable.

The following table sets forth a summary of the equipment installment receivables and accounts being serviced:


	March 31, 2023		December 31, 2022


Gross receivables:	$	4,109		$	4,165
Balance sheet classification
Accounts receivable
Notes receivable	1,387			1,789
Trade receivables	610			522
Other Assets
Noncurrent notes and trade receivables	2,112			1,854

Outstanding portfolio of receivables derecognized from our consolidated balance sheets	$	11,221		$	11,030
Cash proceeds received, net of remittances1	8,529			8,519
1Represents amounts to which financial institutions remain entitled, excluding the deferred purchase price.

We offer our customers the option to purchase certain wireless devices in installments over a specified period of time and, in many cases, once certain conditions are met, they may be eligible to trade in the original equipment for a new device and have the remaining unpaid balance paid or settled.

We maintain a program under which we transfer a portion of these receivables through our bankruptcy-remote subsidiary in exchange for cash and additional consideration upon settlement of the receivables, referred to as the deferred purchase price. In the event a customer trades in a device prior to the end of the installment contract period, we agree to make a payment to the financial institutions equal to any outstanding remaining installment receivable balance. Accordingly, we record a guarantee obligation for this estimated amount at the time the receivables are transferred.

The following table sets forth a summary of equipment installment receivables sold under this program during the three months ended March 31, 2023 and 2022:


	Three months ended
	March 31,
		2023		2022
Gross receivables sold1		$	2,560	$	3,601
Net receivables sold2		2,438		3,478
Cash proceeds received		2,529		3,316
Deferred purchase price recorded		—		245
Guarantee obligation recorded		206		152
1Receivables net of promotion credits.
2Receivables net of allowance, imputed interest and equipment trade-in right guarantees.

The deferred purchase price and guarantee obligation are initially recorded at estimated fair value and subsequently adjusted for changes in present value of expected cash flows. The estimation of their fair values is based on remaining installment payments expected to be collected and the expected timing and value of device trade-ins. The estimated value of the device trade-ins considers prices offered to us by independent third parties and contemplate changes in value after the launch of a device model. The fair value measurements used for the deferred purchase price and the guarantee obligation are considered Level 3 under the Fair Value Measurement and Disclosure framework (see Note 7).

The following table presents the previously transferred equipment installment receivables, which we repurchased in exchange for the associated deferred purchase price during the three months ended March 31, 2023 and 2022:


	Three months ended
	March 31,
		2023		2022
Fair value of repurchased receivables		$	541	$	905
Carrying value of deferred purchase price		542		902
Gain (loss) on repurchases1		$	(1)	$	3
1These gains (losses) are included in “Selling, general and administrative” expense in the consolidated statements of income.

At March 31, 2023 and December 31, 2022, our deferred purchase price receivable was $2,451 and $2,318, respectively, of which $1,395 and $1,278 are included in “Prepaid and other current assets” on our consolidated balance sheets, with the remainder in “Other Assets.” The guarantee obligation at March 31, 2023 and December 31, 2022 was $399 and $419, respectively, of which $55 and $73 are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets, with the remainder in “Other noncurrent liabilities.” Our maximum exposure to loss as a result of selling these equipment installment receivables is limited to the total amount of our deferred purchase price and guarantee obligation.