Naturally, the first company I look at isn't publicly traded. Land O'Lakes is a cooperative, with widely-held shares, but whose 10-Q states that it's not publicly traded and it ain't gonna be. You want to hold shares? Become a farmer.
Naturally, they're also an example of the right way to securitize receivables. They maintain a $200 million credit line, secured at a floating LIBOR+87.5 basis points. Their receivables are 50% above that at $300 million in the last period, They list it under outstanding debt, and currently have no balance. Eagle Materials (EXP) used much the same mechanism, although they closed out their facility in 2006.
Why is this the right way? Well, receivables are an asset, so in theory, there's nothing the matter with selling them. But when you become dependent on getting that cash early, so much so that you're willing to pay interest to get it, you put yourself doubly at risk during a downturn. You won't have as many receivables to collect, and you'll probably have to pay a higher rate to get them. And remember, this is operating cash flow, boys.
By turning it into a line of credit, it's apparent ahead of time when you're dipping into it, and it's going to show up as a financing cash flow.
Now, I need to find guys doing it the wrong way.