Accounts Receivable

3 Months Ended

Dec. 02, 2023

Accounts receivables at December 2, 2023 and September 2, 2023 consisted of the following:


	December 2, 2023		September 2, 2023
Accounts receivable	$	434,551	$	458,168
Less: allowance for credit losses	20,271		22,747
Accounts receivable, net	$	414,280	$	435,421

In fiscal year 2023, the Company entered into a Receivables Purchase Agreement (the “RPA”), by and among MSC A/R Holding Co., LLC, a wholly owned subsidiary of the Company (the “Receivables Subsidiary”), as seller, the Company, as master servicer, certain purchasers from time to time party thereto (collectively, the “Purchasers”), and Wells Fargo Bank, National Association, as administrative agent. Under the RPA, the Receivables Subsidiary may sell receivables to the Purchasers in amounts up to $300,000. During the second quarter of fiscal year 2023, the amount sold to the Purchasers was $300,000 which was derecognized from the Condensed Consolidated Balance Sheet as of that date. The RPA matures on December 19, 2025 and is subject to customary termination events related to transactions of this type.

The Company continues to be involved with the receivables sold to the Purchasers by providing collection services. As cash is collected on sold receivables, the Receivables Subsidiary continuously sells new qualifying receivables to the Purchasers so that the total principal amount outstanding of receivables sold is approximately $300,000. The total principal amount outstanding of receivables sold was approximately $300,000 as of December 2, 2023 and September 2, 2023. The amount of receivables pledged as collateral as of December 2, 2023 and September 2, 2023 was $337,126 and $352,385, respectively.

The following table summarizes the activity and amounts outstanding under the RPA for the thirteen-week periods ended December 2, 2023 and December 3, 2022:


	Thirteen Weeks Ended
	December 2, 2023		December 3, 2022
Receivables sold under the RPA	$	312,980	$	—
Cash collected on sold receivables under the RPA	$	312,980	$	—

The receivables sold incurred fees due to the Purchasers of $4,611 and $0 during the thirteen-week periods ended December 2, 2023 and December 3, 2022, respectively, which were recorded within Other expense, net in the Condensed Consolidated Statements of Income. The financial covenants under the RPA are substantially the same as those under the Credit Facilities, the Private Placement Debt and the Shelf Facility Agreements (each, as defined below). See Note 7, “Debt” for more information about these financial covenants.