Trade Accounts Receivable Securitization and Sale Programs

The Company regularly sells designated pools of trade accounts receivable under two asset-backed securitization programs and nine uncommitted trade accounts receivable sale programs (collectively referred to herein as the “programs”). The Company continues servicing the receivables sold and in exchange receives a servicing fee under each of the programs. Servicing fees related to each of the programs recognized during the fiscal years ended August 31, 2018, 2017 and 2016 were not material. The Company does not record a servicing asset or liability on the Consolidated Balance Sheets as the Company estimates that the fee it receives to service these receivables approximates the fair market compensation to provide the servicing activities.

Transfers of the receivables under the programs are accounted for as sales and, accordingly, net receivables sold under the programs are excluded from accounts receivable on the Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Consolidated Statements of Cash Flows.

Asset-Backed Securitization Programs

The Company continuously sells designated pools of trade accounts receivable, at a discount, under its North American asset-backed securitization program and its foreign asset-backed securitization program (collectively referred to herein as the “asset-backed securitization programs”) to special purpose entities, which in turn sell 100% of the receivables to: (i) conduits administered by unaffiliated financial institutions for the North American asset-backed securitization program and (ii) to an unaffiliated financial institution and a conduit administered by an unaffiliated financial institution for the foreign asset-backed securitization program. Any portion of the purchase price for the receivables not paid in cash upon the sale occurring is recorded as a deferred purchase price receivable, which is paid from available cash as payments on the underlying receivables are collected.

The special purpose entity in the North American asset-backed securitization program is a wholly-owned subsidiary of the Company. The special purpose entity in the foreign asset-backed securitization program is a separate bankruptcy-remote entity whose assets would be first available to satisfy the creditor claims of the unaffiliated financial institution. The Company is deemed the primary beneficiary of this special purpose entity as the Company has both the power to direct the activities of the entity that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive the benefits that could potentially be significant to the entity from the transfer of the trade accounts receivable into the special purpose entity. Accordingly, the special purpose entities associated with these asset-backed securitization programs are included in the Company’s Consolidated Financial Statements.

Following is a summary of the asset-backed securitization programs and key terms:



	Maximum Amount of Net Cash Proceeds (in millions)⁽¹⁾		Expiration Date
North American	$	200.0	October 20, 2020	⁽²⁾
Foreign	$	400.0	September 30, 2021	⁽³⁾


⁽¹⁾	Maximum amount available at any one time.


⁽²⁾	On October 9, 2018, the North American asset-backed securitization program was terminated and the Company repurchased the outstanding receivables.

⁽³⁾

On September 21, 2018, the foreign asset-backed securitization program terms were amended and the program was extended to September 30, 2021. Under the terms of the amended agreement, the Company continuously sells designated pools of trade accounts receivable to a special purpose entity, which in turn sells a portion of the receivables to an unaffiliated financial institution and a conduit administered by an unaffiliated financial institution. In connection with this amendment, there is no longer a deferred purchase price receivable for the foreign asset-backed securitization program.

In connection with the asset-backed securitization programs, the Company recognized the following (in millions):



	Fiscal Year Ended August 31,
	2018		2017		2016
Eligible trade accounts receivable sold	$	8,386	$	8,878	$	7,870
Cash proceeds received⁽¹⁾	$	7,838	$	8,300	$	7,336
Pre-tax losses on sale of receivables⁽²⁾	$	15	$	9	$	5
Deferred purchase price receivables as of August 31⁽³⁾	$	533	$	569	$	527


⁽¹⁾	Of this amount, $0.0 million, $0.1 million and $8.4 million, respectively, represented new transfers during fiscal years 2018, 2017 and 2016, respectively. The remainder represented proceeds from collections reinvested in revolving-period transfers.


⁽²⁾	Recorded to other expense within the Consolidated Statements of Operations.

⁽³⁾

Recorded initially at fair value as prepaid expenses and other current assets on the Consolidated Balance Sheets and are valued using unobservable inputs (Level 3 inputs), primarily discounted cash flows, and due to their credit quality and short-term maturity, the fair values approximated book values. The unobservable inputs consist of estimated credit losses and estimated discount rates, which both have an immaterial impact on the fair value calculations.

The asset-backed securitization programs require compliance with several covenants. The North American asset-backed securitization program covenants include compliance with the interest coverage ratio and debt to EBITDA ratio of the five-year unsecured credit facility amended as of November 8, 2017 (“the 2017 Credit Facility”). The foreign asset-backed securitization program covenants include limitations on certain corporate actions such as mergers and consolidations. As of August 31, 2018 and 2017, the Company was in compliance with all covenants under the asset-backed securitization programs.

Trade Accounts Receivable Sale Programs

Following is a summary of the nine trade accounts receivable sale programs with unaffiliated financial institutions where the Company may elect to sell receivables and the unaffiliated financial institution may elect to purchase, at a discount, on an ongoing basis:



Program	Maximum Amount (in millions)⁽¹⁾			Type of Facility	Expiration Date
A	$	875.0		Uncommitted	August 31, 2022	⁽²⁾⁽³⁾
B	$	150.0		Uncommitted	November 30, 2018	⁽⁴⁾
C	800.0		CNY	Uncommitted	February 13, 2019
D	$	100.0		Uncommitted	May 4, 2023	⁽⁵⁾
E	$	50.0		Uncommitted	August 25, 2019
F	$	150.0		Uncommitted	January 25, 2019	⁽⁶⁾
G	$	50.0		Uncommitted	February 23, 2023	⁽³⁾
H	$	100.0		Uncommitted	August 10, 2019	⁽⁷⁾
I	$	100.0		Uncommitted	July 21, 2019	⁽⁸⁾


⁽¹⁾	Maximum amount available at any one time.


⁽²⁾	The maximum amount under the program will reduce to $650.0 million on February 1, 2019.


⁽³⁾	Any party may elect to terminate the agreement upon 15 days prior notice.


⁽⁴⁾	The program will automatically extend for one year at each expiration date unless either party provides 10 days notice of termination.


⁽⁵⁾	Any party may elect to terminate the agreement upon 30 days prior notice.


⁽⁶⁾	The program will be automatically extended through January 25, 2023 unless either party provides 30 days notice of termination.


⁽⁷⁾	The program will be automatically extended through August 10, 2023 unless either party provides 30 days notice of termination.


⁽⁸⁾	The program will be automatically extended through August 21, 2023 unless either party provides 30 days notice of termination.

In connection with the trade accounts receivable sale programs, the Company recognized the following for the fiscal years ended August 31 (in millions):



	2018		2017		2016
Trade accounts receivable sold	$	5,480	$	2,968	$	3,651
Cash proceeds received	$	5,463	$	2,962	$	3,647
Loss on sales⁽¹⁾	$	17	$	6	$	4


⁽¹⁾	The resulting losses on the sales of trade accounts receivable during fiscal years 2018, 2017 and 2016 were recorded to other expense within the Consolidated Statements of Operations.