Tecumseh Products 2014 Annual Report Download - page 29

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We have various borrowing arrangements at our foreign subsidiaries to support working capital needs and government
sponsored borrowings which provide advantageous lending rates. (See Note 8 “Debt”, of the Notes to Consolidated Financial
Statements in Item 8 of this report for additional information.)
For the for the years ended December 31, 2014 and 2013 our average outstanding debt balance was $57.7 million and $55.2
million, respectively. The weighted average interest rate was 9.0% and 8.1% for the years ended December 31, 2014 and 2013,
respectively.
As of December 31, 2014, our cash and cash equivalents on hand was $42.7 million. Our borrowings under current credit
facilities, including capital lease obligations, totaled $49.2 million at December 31, 2014, with an uncommitted additional
borrowing capacity of $24.0 million. Included in our debt balance at December 31, 2014 are capital lease obligations of $1.1
million. For a more detailed discussion of our credit facilities, refer to Note 8, “Debt”, of the Notes to Consolidated Financial
Statements in Item 8 of this report.
In the U.S., only a small portion of our cash balances are insured by the Federal Deposit Insurance Corporation ("FDIC"). All
cash that we hold in the U.S. is held at two major financial institutions. Any cash we hold in the U.S. that is not utilized for
day-to-day working capital requirements is primarily invested in secure, institutional money market funds, which are strictly
regulated by the U.S. Securities and Exchange Commission and operate under tight requirements for the liquidity,
creditworthiness, and diversification of their assets.
Cash inflows related to taxes
We expect to receive refunds of outstanding refundable non-income taxes. The actual amounts received as expressed in U.S.
Dollars will vary depending on the exchange rate at the time of receipt or future reporting date. Based on applicable foreign
currency exchange rates at December 31, 2014, we expect to recover approximately $19.8 million of the $27.7 million
outstanding refundable taxes in the next twelve months, primarily related to the short-term portion of the outstanding
refundable taxes of $15.1 million in Brazil and $3.5 million in India. The tax authorities will not commit to an actual date of
payment and the timing of receipt may be different than planned if the tax authorities change their pattern of payment or past
practices.
Accounts Receivable Sales
Our Brazilian and European subsidiaries periodically factor their accounts receivable with financial institutions for seasonal
and other working capital needs. Such receivables are factored both with limited and without recourse to us and are excluded
from accounts receivable in our Consolidated Balance Sheets. The amount of factored receivables, including both with limited
and without recourse amounts, was $25.1 million and $42.7 million at December 31, 2014 and 2013, respectively. The amount
of factored receivables sold with limited recourse through our Brazilian location, which results in a contingent liability to us,
was $3.7 million and $12.1 million as of December 31, 2014 and 2013, respectively. The amount of factored receivables sold
without recourse at our Brazilian and European subsidiaries, which is recorded as a sale of the related receivables, was $21.4
million and $30.6 million as of December 31, 2014 and 2013 respectively. In addition to the credit facilities described
above, our Brazilian subsidiary also has an additional $21.6 million uncommitted, discretionary factoring credit facility with
respect to its local (without recourse) and foreign (with recourse) accounts receivable, subject to the availability of its accounts
receivable balances eligible for sale under the facility. We use these factoring facilities, when available, for seasonal and other
working capital needs.
In 2013 our European subsidiary entered into into a three-year factoring agreement with GE Factofrance, which became
available in October 2013. The maximum aggregate amount of the financed eligible receivables is EUR 40.0 million, which
may be increased by up to EUR 10.0 million. subject to increased sales and GE Credit Committee's prior approval and signing
an amendment, as set forth in the agreement. The factoring facility is a limited recourse facility which provides non-recourse
(amounts covered by insurance policy) and with-recourse financing (subject to GE's prior review and acceptance). At
December 31, 2014, $5.3 million as available for sale of additional receivables under this facility. We were in compliance with
all of the covenants, terms and conditions under this facility as of December 31, 2014.
Our Indian subsidiary has the ability to collect receivables that are backed by letters of credit sooner than the receivables would
otherwise be paid by the customer. Furthermore, some of our large customers offer a non-recourse factoring program relating
to their receivables only, under which we can collect these receivables at a discount sooner than they would otherwise be paid
by the customer. We consider these programs similar to the factoring programs in Brazil and Europe as it relates to our
liquidity. We collected a total of $4.0 million and $6.0 million that would otherwise have been outstanding as receivables under
these programs at December 31, 2014 and December 31, 2013, respectively.