Long-term purchase commitment, penalty exposure

[Table of Contents](#ib75a44f638b042a5a7472d3f3be80b22_7)We have arrangements with certain suppliers that require us to purchase minimum volumes or be subject to monetary penalties. At September 30, 2022, if we were to stop purchasing from each of these suppliers, the aggregate amount of the penalty would be approximately $138 million. These arrangements enable us to secure supplies of critical components and IT services. We do not currently anticipate paying any penalties under these contracts.We enter into physical forward contracts with suppliers of platinum and palladium to purchase certain volumes of the commodities at contractually stated prices for various periods, which generally fall within two years. At September 30, 2022, the total commitments under these contracts were $42 million. These arrangements enable us to guarantee the prices of these commodities, which otherwise are subject to market volatility.We have guarantees with certain customers that require us to satisfactorily honor contractual or regulatory obligations, or compensate for monetary losses related to nonperformance. These performance bonds and other performance-related guarantees were $118 million at September 30, 2022.Indemnifications Periodically, we enter into various contractual arrangements where we agree to indemnify a third-party against certain types of losses. Common types of indemnities include:•product liability and license, patent or trademark indemnifications;•asset sale agreements where we agree to indemnify the purchaser against future environmental exposures related to the asset sold; and •any contractual agreement where we agree to indemnify the counterparty for losses suffered as a result of a misrepresentation in the contract.We regularly evaluate the probability of having to incur costs associated with these indemnities and accrue for expected losses that are probable. Because the indemnifications are not related to specified known liabilities and due to their uncertain nature, we are unable to estimate the maximum amount of the potential loss associated with these indemnifications.Accounts Receivable Factoring We assumed an accounts receivable factoring program from the acquisition of Meritor for trade receivables as follows:

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|  |  | Current Expiration |  | Total Facility Size at September 30, 2022 |  | Utilized at September 30, 2022 |
| In millions |  |  | EUR |  | USD |  | EUR |  | USD |
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| Off-balance sheet arrangements |  |  |  |  |  |  |  |  |  |  |
| Committed Swedish factoring facility(1)(2) |  | March 2024 |  | € | 155  |  |  | $ | 151  |  |  | € | 144  |  |  | $ | 139  |  |
| Committed U.S. factoring facility(1) |  | February 2023 |  | N/A |  | 75  |  |  | —  |  |  | 76  |  |
| Uncommitted U.K. factoring facility(3) |  | February 2025 |  | 25  |  |  | 24  |  |  | 2  |  |  | 2  |  |
| Uncommitted Italy factoring facility |  | June 2025 |  | 30  |  |  | 29  |  |  | 11  |  |  | 11  |  |
| Other uncommitted factoring facilities(4) |  | None |  | N/A |  | N/A |  | 7  |  |  | 7  |  |
| Total off-balance sheet arrangements |  |  |  | € | 210  |  |  | $ | 279  |  |  | € | 164  |  |  | $ | 235  |  |
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| (1) Actual amounts may exceed the bank's commitment at the bank's discretion. |
| (2) The factoring program is supported by a 364-day committed credit facility through June 22, 2023. |
| (3) The U.K. factoring facility enables the factoring of British pound and Euro denominated accounts receivable. |
| (4) There is no explicit facility size under the agreement, but the counterparty approves the purchase of receivable tranches as its discretion. |
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We received $108 million of proceeds from receivables sold, and costs associated with all of the off-balance sheet arrangements described above were $1 million since the August 3, 2022, acquisition date. 22
