Receivables

12 Months Ended

Jun. 30, 2011

Receivables

Receivables

NOTE 7.  RECEIVABLES

Accounts receivable, net, includes the Company's trade receivables, which are recorded based upon the amount the Company expects to receive from its clients, net of an allowance for doubtful accounts.  The Company's receivables also include notes receivable for the financing of the sale of computer systems, primarily from auto, truck, motorcycle, marine, recreational vehicle and heavy equipment dealers.  Notes receivable are recorded based upon the amount the Company expects to receive from its clients, net of an allowance for doubtful accounts and unearned income.  The allowance for doubtful accounts is the Company's best estimate of probable credit losses related to trade receivables and notes receivable based upon the aging of the receivables, historical collection data, internal assessments of credit quality and the economic conditions in the automobile industry, as well as in the economy as a whole.  The Company charges off uncollectable amounts against the reserve in the period in which it determines they are uncollectable.  Unearned income on notes receivable is amortized using the effective interest method.

The Company's receivables, whose carrying value approximates fair value, are as follows:

	June 30, 2011		June 30, 2010
	Current	Long-term	Current	Long-term
Trade receivables	$       1,333.2	$                  -	$       1,076.3	$                  -
Notes receivable	90.5	146.4	110.3	155.0
Less:
Allowance for doubtful accounts - trade receivables	(44.8)	-	(39.6)	-
Allowance for doubtful accounts - notes receivable	(5.7)	(9.4)	(9.4)	(16.1)
Unearned income-notes receivable	(8.4)	(8.3)	(9.9)	(9.5)
Total	$       1,364.8	$            128.7	$       1,127.7	$             129.4

Long-term receivables at June 30, 2011 mature as follows:
2013	67.5
2014	45.4
2015	24.5
2016	9.0
2017	-
	146.4

The Company determines the allowance for doubtful accounts related to notes receivable based upon a specific reserve for known collection issues, as well as a non-specific reserve based upon aging, both of which are based upon history of such losses and current economic conditions. Based upon our methodology, the notes receivable balances with specific and non-specific reserves and the specific and non-specific reserves associated with those balances are as follows:

	June 30, 2011
	Notes Receivable		Reserve
	Current	Long-term	Current	Long-term
Specific Reserve	$              0.6	$              0.9	$              0.6	$              0.9
Non-specific Reserve	89.9	145.5	5.1	8.5
Total	$            90.5	$          146.4	$              5.7	$              9.4

	June 30, 2010
	Notes Receivable		Reserve
	Current	Long-term	Current	Long-term
Specific Reserve	$              3.8	$              6.6	$              3.8	$              6.6
Non-specific Reserve	106.5	148.4	5.6	9.5
Total	$          110.3	$          155.0	$              9.4	$            16.1

The rollforward of the allowance for doubtful accounts related to notes receivable is as follows:

	Current	Long-term
Balance at June 30, 2010	$                          9.4	$               16.1
Incremental provision	1.8	3.0
Recoveries	(3.7)	(6.8)
Chargeoffs	(1.8)	(2.9)
Balance at June 30, 2011	$                          5.7	9.4

As of June 30, 2011 and June 30, 2010, the allowance for doubtful accounts as a percentage of notes receivable is approximately 6% and 10%, respectively. 

Notes receivable aged over 30 days past due are considered delinquent.  Notes receivable aged over 60 days past due and notes receivable with known collection issues are placed on non-accrual status. Interest revenue is not recognized on notes receivable while on non-accrual status. Cash payments received on non-accrual receivables is applied towards principal. When notes receivable on non-accrual status are again less than 60 days past due, recognition of interest revenue for notes receivable is resumed.  At June 30, 2011, the Company had $2.2 million in notes receivable on non-accrual status, including $0.1 million of notes receivable aged over 60 days past due.

On an ongoing basis, the Company evaluates the credit quality of its financing receivables, utilizing aging of receivables, collection experience and charge-offs.  In addition, the Company evaluates economic conditions in the auto industry and specific dealership matters, such as bankruptcy.  As events related to a specific client dictate, the credit quality of a client is reevaluated.

The aging of the notes receivable past due at June 30, 2011 is as follows:

	Over 30 days to 60 days	Over 60 days
Notes Receivables	$                           1.2	$                  0.1

At June 30, 2011, approximately 99% of notes receivable are current.  During the twelve month ended June 30, 2011, the charge-offs as a percentage of notes receivable were 1.9%.