Deferred Income from Distribution

9 Months Ended

Nov. 30, 2011

Deferred Income from Distribution [Abstract]

Deferred Income from Distribution

10. Deferred Income from Distribution

Certain of the Company's products are sold to electronic component distributors under agreements providing for price protection and rights to return unsold merchandise. Accordingly, recognition of revenue and associated gross profit on shipments to a majority of the Company's distributors is deferred until the distributors resell the products. At the time of shipment to distributors, the Company records a trade receivable for the selling price, relieves inventory for the carrying value of goods shipped, and records the gross margin as deferred income from distribution on the consolidated balance sheets. This deferred income represents the gross margin on the initial sale to the distributor; however, the amount of gross margin recognized in future consolidated statements of operations will typically be less than the originally recorded deferred income as a result of price allowances. Price allowances offered to distributors are recognized as reductions in product sales when incurred, which is generally at the time the distributor resells the product. Shipments made by the Company's Japanese subsidiary to distributors in Japan are made under agreements that permit limited stock return and no price protection privileges. Revenue for shipments to distributors in Japan is recognized as title passes to such distributors upon delivery.

Deferred income on shipments to distributors consists of the following (in thousands):

	November 30, 2011			February 28, 2011
Deferred revenue	$	26,550		$	26,609
Deferred cost of goods sold		(4,825	)		(4,904	)
Provisions for sales returns		676			757
Advances to distributors for price allowances		(5,723	)		(6,295	)
	$	16,678		$	16,167