Sale of Receivables

12 Months Ended

Feb. 03, 2023

Sale of Receivables:

The Company has a Master Accounts Receivable Purchase Agreement (MARPA Facility) with MUFG Bank, Ltd. (the Purchaser) for the sale of up to a maximum amount of $300 million of certain designated eligible receivables with the U.S. government. Effective March 31, 2022, the Company amended the MARPA Facility to transition the purchase discount rate defined within the facility agreement from using LIBOR to Term SOFR. The amendment did not have a material impact on the Company's financial statements. The receivables sold under the MARPA Facility are without recourse for any U.S. government credit risk. The MARPA Facility automatically renews each year unless one of the parties gives prior notice to terminate.

The receivable transfers under the MARPA Facility have been recognized as sales, as the receivables had been legally isolated from the Company, the financial institution had a right to pledge or exchange the assets received and we do not maintain effective control over the transferred receivables. The fair value of the sold receivables approximated their book value due to their short-term nature.

The Company does not retain an ongoing financial interest in the transferred receivables other than cash collection and administrative services. The Company estimated that its servicing fee was at fair value and therefore has not recognized a servicing asset or liability as of February 3, 2023 and January 28, 2022. Proceeds from the sale of receivables are reflected as cash flows from operating activities on the consolidated statements of cash flows.

During fiscal 2023, 2022 and 2021, the Company incurred purchase discount fees of $8 million, $2 million and $2 million, respectively, which are presented in other (income) expense, net on the consolidated statements of income.

MARPA Facility activity consisted of the following:


	Year Ended
	February 3, 2023		January 28, 2022
	(in millions)
Beginning balance	$	200	$	185
Sale of receivables	3,729		3,224
Cash collections	(3,679)		(3,209)
Outstanding balance sold to Purchaser(1)	250		200
Cash collected, not remitted to Purchaser(2)	(30)		(23)
Remaining sold receivables	$	220	$	177

(1) For fiscal 2023 and 2022, the Company recorded a net increase to cash flows from operating activities of $50 million and $15 million, respectively, from sold receivables.

(2) Primarily represents the cash collected on behalf of but not yet remitted to the Purchaser as of February 3, 2023 and January 28, 2022. This balance is included in accounts payable on the consolidated balance sheets.