Related Party Transactions

3 Months Ended

Jun. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

Note 5. Related Party Transactions

As part of the assets and liabilities acquired as a result of the AVID acquisition, the Company assumed a capital lease obligation for the AVID facility located in Toano, VA. The facility, which includes a 185,000 square foot manufacturing and warehouse building and approximately 12 acres of land, is owned by Micpar Realty, LLC (“Micpar”). AVID’s founder, former CEO and principal shareholder, is a part owner of Micpar and subsequent to the acquisition of AVID, he was appointed to the Company’s board of directors.

The gross and net book value of the capital lease is as follows:

	June 30, 2012			March 31, 2012
Capital lease, gross	$	11,409		$	11,409
Less: Accumulated amortization		(1,126	)		(972	)
Capital lease, net	$	10,283		$	10,437

The Company recorded amortization expense associated with the capital lease of $154, of which $119 is included in our cost of goods sold and the remaining $35 is recorded in our selling, general and administrative expenses for the three months ended June 30, 2012 and 2011, respectively.

As of June 30, 2012, the capital lease requires monthly payments of $124 with increases of 2% per annum. The lease contains provisions for an option to buy after three and five years and expires in March 2029. The effective rate on the capital lease obligation is 9.9%.

The following is a schedule by years of the future minimum lease payments under the capital lease as of June 30, 2012:

Fiscal Year	Capital Lease Payments
2013	$	1,496
2014		1,526
2015		1,556
2016		1,588
2017		1,619
Thereafter		21,631
Total minimum lease payments		29,416
Less: Amounts representing interest		15,662
Present value of minimum lease payments		13,754
Less: Current portion of capital lease obligation		142
Long-term portion of capital lease obligation	$	13,612

Another member of the Company’s board of directors is currently a minority shareholder of Custom Healthcare, an assembler and packager of Class 1 medical products. Custom Healthcare is a supplier to our AVID facility located in Toano, Virginia for small kits and trays. Custom Healthcare is also a customer of the Company and purchases sterile instruments from our facility located in Arden, North Carolina. During the three months ended June 30, 2012, Custom Healthcare sold approximately $436 in small kits and trays to the Company and purchased approximately $263 in sterile instruments from the Company.