Accounts Receivable Sales Agreement

3 Months Ended

Mar. 31, 2025

Under our accounts receivable sales agreement (the "A/R Sales Agreement"), we continuously sell designated pools of receivables as they are originated by us and certain U.S. subsidiaries to a separate bankruptcy-remote special purpose entity (“SPE”). The A/R Sales Agreement has a one year term expiring in January 2026.

We continue to be involved with the receivables transferred by the SPE to the unaffiliated financial institutions by providing collection services. As cash is collected on sold receivables, the SPE continuously transfers ownership and control of new qualifying receivables to the unaffiliated financial institutions so that the total principal amount outstanding of receivables sold is approximately $1.0 billion at any point in time (which is the maximum amount allowed under the A/R Sales Agreement).

The total principal amount outstanding of receivables sold is approximately $1.0 billion and $1.0 billion as of March 31, 2025 and December 31, 2024, respectively. The amount of receivables pledged as collateral as of March 31, 2025 and December 31, 2024 is approximately $1.5 billion and $1.3 billion, respectively.

The following table summarizes the activity and amounts outstanding under the A/R Sales Agreement as of:


	Three Months Ended March 31,
(in thousands)	2025		2024
Receivables sold to the financial institutions and derecognized	$	2,103,265	$	2,170,043
Cash collected on sold receivables	$	2,103,255	$	2,170,044

Continuous cash activity related to the A/R Sales Agreement is reflected in net cash provided by (used in) operating activities in the Condensed Consolidated Statements of Cash Flows. The SPE incurs fees due to the unaffiliated financial institutions related to the accounts receivable sales transactions. Those fees, which totaled $13 million and $15 million for the three months ended March 31, 2025 and 2024, respectively, are recorded within other non-operating expense (income) in the Condensed Consolidated Statements of Income. The SPE has a recourse obligation to repurchase from the unaffiliated financial institutions any previously sold receivables that are not collected due to the occurrence of certain events, including credit quality deterioration and customer sales returns. The reserve recognized for this recourse obligation as of March 31, 2025 and December 31, 2024 is not material. The servicing liability related to our collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.