Transfers and Servicing

3 Months Ended

Dec. 31, 2011

Transfers and Servicing

Transfers and Servicing of Financial Assets [Text Block]

16.  SALE OF RECEIVABLES

The Company sells trade receivables to unaffiliated financial institutions under two accounts receivable securitization programs.  Under the first program, the Company continuously sells a designated pool of trade receivables to a special purpose entity, which in turn sells 100% of the receivables to an unaffiliated financial institution.  This program allows the Company to receive a cash payment and a deferred purchase price receivable for sold receivables.  Following the sale and transfer of the receivables to the special purpose entity, the receivables are isolated from the Company and its affiliates, and upon the sale and transfer of the receivables from the special purpose entity to the unaffiliated financial institutions effective control of the receivables is passed to the unaffiliated financial institution, which has all rights, including the right to pledge or sell the receivables.  The investment limit with this financial institution is $125,000 and requires a minimum level of deferred purchase price to be retained by the Company in connection with the sales.  The Company continues to service, administer and collect the receivables on behalf of the special purpose entity and receives a servicing fee of .5% of serviced receivables per annum.  As the Company estimates the fee it receives in return for its obligation to service these receivables is at fair value, no servicing assets or liabilities are recognized.  Servicing fees recognized during the three months and nine months ended December 31, 2011 and 2010 were not material and are recorded as a reduction of Selling, Administrative and General Expenses within the Condensed Consolidated Statements of Operations.

The agreement for the second securitization program was executed on September 28, 2011 between the Company and an unaffiliated financial institution.  This program also allows the Company to receive a cash payment and a deferred purchase price receivable for sold receivables.  This is an uncommitted program, whereby the Company offers receivables for sale to the unaffiliated financial institution, which are then subject to acceptance by the unaffiliated financial institution.  Following the sale and transfer of the receivables to the unaffiliated financial institution, the receivables are isolated from the Company and its affiliates, and effective control of the receivables is passed to the unaffiliated financial institution, which has all rights, including the right to pledge or sell the receivables.  The investment limit with this financial institution is $35,000.  The Company receives no servicing fee from the unaffiliated financial institution and as a result, has established a servicing liability based upon unobservable inputs, primarily discounted cash flow.  This liability is recorded in Accrued Expenses and Other Liabilities in the Condensed Consolidated Balance Sheets.

Under both programs, all of the receivables sold to the unaffiliated financial institutions for cash are removed from the Condensed Consolidated Balance Sheet and the net cash proceeds received by the Company are included as cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows.  A portion of the purchase price for the receivables is paid by the unaffiliated financial institutions in cash and the balance is a deferred purchase price receivable, which is paid as payments on the receivables are collected from account debtors.  The deferred purchase price receivable represents a continuing involvement and a beneficial interest in the transferred financial assets and is recognized at fair value as part of the sale transaction.  The deferred purchase price receivables are included in accounts receivable in the Condensed Consolidated Balance Sheets and are valued using unobservable inputs (i.e., level three inputs), primarily discounted cash flow.

The difference between the carrying amount of the receivables sold under these programs and the sum of the cash and fair value of the other assets received at the time of transfer is recognized as a loss on sale of the related receivables and recorded in Other Income in the Condensed Consolidated Statements of Operations.

The following table summarizes the Company’s accounts receivable securitization information as of the dates shown:

	December 31,		March 31,
	2011	2010	2011
Receivables outstanding in facility:
As of December 31	$ 136,196	$   72,642	$ 53,156
Beneficial interest as of December 31	$   34,405	$   23,350	$ 15,797
Servicing liability as of December 31	$          28	$            -	$           -
Impact on beneficial interest resulting from changes in discount rate:
10%	$          66	$          33	$        25
20%	$        133	$          65	$        51
Criteria to determine beneficial interest as of December 31:
Weighted average life in days	63 to 90	71	67
Discount rate (inclusive of 0.5% servicing fee)	2.54% to 3.78%	2.48%	2.46%
Unused balance fee	0 to 0.40%	0.40%	0.40%
Cash proceeds for the nine months ended December 31:
Cash purchase price	$ 461,237	$ 335,065
Deferred purchase price	217,522	163,097
Service fees	399	399
Total	$ 679,158	$ 498,561
Loss on sale of receivables
Three months ended December 31	$        967	$        715
Nine months ended December 31	$     3,225	$     1,662