10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from____ to ____ .

Commission file number: 001-34167

ePlus inc.

(Exact name of registrant as specified in its charter)

Delaware	54-1817218
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

15395 Dulles Technology Drive, Herndon, Virginia 20171-3413

(Address, including zip code, of principal executive offices)

 Registrant’s telephone number, including area code: (703) 984-8400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	PLUS	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒   No ☐

 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐  No ☒

The number of shares of common stock outstanding as of August 5, 2019 was 13,506,047.

TABLE OF CONTENTS

ePlus inc. AND SUBSIDIARIES

Part I. Financial Information:
Item 1.	Financial Statements
	Unaudited Consolidated Balance Sheets as of June 30, 2019 and March 31, 2019		5
	Unaudited Consolidated Statements of Operations for the Three Months Ended June 30, 2019 and 2018		6
	Unaudited Consolidated Statements of Comprehensive Income for the Three Months Ended June 30, 2019 and 2018		7
	Unaudited Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2019 and 2018		8
	Unaudited Consolidated Statements of Stockholders’ Equity for the Three Months Ended June 30, 2019 and 2018		10
	Notes to Unaudited Consolidated Financial Statements		11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		40
Item 4.	Controls and Procedures		41
Part II. Other Information:
Item 1.		Legal Proceedings	41
Item 1A.		Risk Factors	41
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.		Defaults Upon Senior Securities	42
Item 4.		Mine Safety Disclosures	42
Item 5.		Other Information	42
Item 6.		Exhibits	43
Signatures & Certifications			44

2

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or “Exchange Act,” and are made in reliance upon the protections provided by such acts for forward-looking statements. Such statements are not based on historical fact; but are based upon numerous assumptions about future conditions that may not occur. Forward-looking statements are generally identifiable by use of forward-looking words such as “may,” “should,” “would,” “intend,” “estimate,” “will,” “potential,” “possible,” “could,” “believe,” “expect,” “intend,” “plan,” “anticipate,” “project,” and similar expressions. Readers are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf. Forward-looking statements are made based upon information that is currently available or management’s current expectations and beliefs concerning future developments and their potential effects upon us, speak only as of the date hereof, and are subject to certain risks and uncertainties. We do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that subsequently occur, or of which we hereafter become aware. Actual events, transactions and results may materially differ from the anticipated events, transactions or results described in such statements. Our ability to consummate such transactions and achieve such events or results is subject to certain risks and uncertainties. Such risks and uncertainties include, but are not limited to, the matters set forth below:

• national and international political instability fostering uncertainty and volatility in the global economy including exposure to fluctuation in foreign currency rates, interest rates, and downward pressure on prices;

• domestic and international economic regulations uncertainty (e.g., tariffs, North American Free Trade Agreement, and Trans-Pacific Partnership).

• significant adverse changes in, reductions in, or loss of our largest volume customer or one or more of our large volume customers, or vendors;

• exposure to changes in, interpretations of, or enforcement trends in legislation and regulatory matters;

• the creditworthiness of our customers and our ability to reserve adequately for credit losses;

• reduction of vendor incentives provided to us;

• managing a diverse product set of solutions in highly competitive markets with a number of key vendors;

• increasing the total number of customers using integrated solutions by up-selling within our customer base and gaining new customers;

• adapting to meet changes in markets and competitive developments;

• maintaining and increasing advanced professional services by recruiting and retaining highly skilled, competent personnel, and vendor certifications;

• increasing the total number of customers who use our managed services and professional services and continuing to enhance our managed services offerings to remain competitive in the marketplace;

• performing professional and managed services competently;

• maintaining our proprietary software and updating our technology infrastructure to remain competitive in the marketplace;

• reliance on third-parties to perform some of our service obligations to our customers;

• changes in the Information Technology (“IT”) industry and/or rapid changes in product offerings, including the proliferation of the cloud, infrastructure as a service (“IaaS”), and software as a service (“SaaS”);

• our dependency on continued innovations in hardware, software, and services offerings by our vendors and our ability to partner with them;

• future growth rates in our core businesses;

• failure to comply with public sector contracts, or applicable laws or regulations;

• changes to or loss of members of our senior management team and/or failure to successfully implement succession plans;

• our dependence on key personnel to maintain certain customer relationships, and our ability to hire, train, and retain sufficient qualified personnel;

• our ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration, and other key strategies;

• a possible decrease in the capital spending budgets of our customers or a decrease in purchases from us;

• our contracts may not be adequate to protect us, and we are subject to audit in which we may not pass, and our professional and liability insurance policies coverage may be insufficient to cover a claim;

• disruptions or a security breach in our or our vendors’ IT systems and data and audio communication networks;

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• our ability to secure our own and our customers’ electronic and other confidential information, and remain secure during a cyber-security attack;

• our ability to raise capital, maintain or increase as needed our lines of credit with vendors or floor planning facility, obtain debt for our financing transactions, or the effect of those changes on our common stock or its holders;

• our ability to realize our investment in leased equipment;

• our ability to successfully perform due diligence and integrate acquired businesses;

• the possibility of goodwill impairment charges in the future;

• our ability to protect our intellectual property rights and successfully defend any challenges to the validity of our patents or allegations that we are infringing upon any third-party patents, and the costs associated with those actions, and, when appropriate, license required technology; and

• significant changes in accounting standards including changes to the financial reporting of leases, which could impact the demand for our leasing services, or misclassification of products and services we sell resulting in the misapplication of revenue recognition policies or inaccurate costs and completion dates for our services, which could affect our estimates.

We cannot be certain that our business strategy will be successful or that we will successfully address these and other challenges, risks, and uncertainties. For a further list and description of various risks, relevant factors, and uncertainties that could cause future results or events to differ materially from those expressed or implied in our forward-looking statements, see Item 1A, “Risk Factors” and Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections contained elsewhere in this report, as well as other reports that we file with the Securities and Exchange Commission (“SEC”).

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	June 30, 2019			March 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	35,604		$	79,816
Accounts receivable—trade, net		366,163			299,899
Accounts receivable—other, net		41,949			41,328
Inventories		58,205			50,493
Financing receivables—net, current		98,419			63,767
Deferred costs		17,665			17,301
Other current assets		8,227			7,499
Total current assets		626,232			560,103
Financing receivables and operating leases—net		71,097			59,032
Property, equipment and other assets		30,211			17,328
Goodwill		110,754			110,807
Other intangible assets—net		36,519			38,928
TOTAL ASSETS	$	874,813		$	786,198
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accounts payable	$	108,954		$	86,801
Accounts payable—floor plan		136,013			116,083
Salaries and commissions payable		20,298			21,286
Deferred revenue		48,613			47,251
Recourse notes payable—current		-			28
Non-recourse notes payable—current		64,583			38,117
Other current liabilities		28,959			19,285
Total current liabilities		407,420			328,851
Non-recourse notes payable—long term		8,362			10,502
Deferred tax liability—net		4,925			4,915
Other liabilities		25,463			17,677
TOTAL LIABILITIES		446,170			361,945
COMMITMENTS AND CONTINGENCIES  (Note 10)
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 per share par value; 2,000 shares authorized; none outstanding		-			-
Common stock, $0.01 per share par value; 25,000 shares authorized; 13,509 outstanding at June 30, 2019 and 13,611 outstanding at March 31, 2019		144			143
Additional paid-in capital		139,162			137,243
Treasury stock, at cost, 880 shares at June 30, 2019 and 693 shares at March 31, 2019		(67,454	)		(53,999	)
Retained earnings		357,325			341,137
Accumulated other comprehensive income—foreign currency translation adjustment		(534	)		(271	)
Total Stockholders' Equity		428,643			424,253
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	874,813		$	786,198

See Notes to Unaudited Consolidated Financial Statements.

5

ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	Three Months Ended June 30,
	2019			2018
Net sales
Product	$	335,601		$	322,817
Services		45,771			33,715
Total		381,372			356,532
Cost of sales
Product		260,063			255,812
Services		28,670			20,017
Total		288,733			275,829
Gross profit		92,639			80,703
Selling, general, and administrative		65,787			56,966
Depreciation and amortization		3,463			2,790
Interest and financing costs		628			476
Operating expenses		69,878			60,232
Operating income		22,761			20,471
Other income (expense)		(45	)		97
Earnings before tax		22,716			20,568
Provision for income taxes		6,528			5,295
Net earnings	$	16,188		$	15,273
Net earnings per common share—basic	$	1.21		$	1.14
Net earnings per common share—diluted	$	1.20		$	1.12
Weighted average common shares outstanding—basic		13,356			13,434
Weighted average common shares outstanding—diluted		13,457			13,597

See Notes to Unaudited Consolidated Financial Statements.

6

ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended June 30,
	2019			2018
NET EARNINGS	$	16,188		$	15,273
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Foreign currency translation adjustments		(263	)		(657	)
Other comprehensive income (loss)		(263	)		(657	)
TOTAL COMPREHENSIVE INCOME	$	15,925		$	14,616

See Notes to Unaudited Consolidated Financial Statements.

7

ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

	Three Months Ended June 30,
	2019			2018
Cash Flows From Operating Activities:
Net earnings	$	16,188		$	15,273
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization		4,964			4,500
Reserve for credit losses, inventory obsolescence, and sales returns		351			192
Share-based compensation expense		1,919			1,693
Deferred taxes		(3	)		-
Payments from lessees directly to lenders—operating leases		(22	)		(32	)
Gain on disposal of property, equipment, and leased equipment		(203	)		(294	)
Gain on sale of financing receivables		-			(1,354	)
Other		-			4
Changes in:
Accounts receivable		(69,281	)		(60,140	)
Inventories-net		(7,774	)		(12,440	)
Financing receivables—net		(58,198	)		3,749
Deferred costs, other intangible assets, and other assets		(14,379	)		5,491
Accounts payable-trade		21,089			10,102
Salaries and commissions payable, deferred revenue, and other liabilities		17,955			(15,776	)
Net cash used in operating activities	$	(87,394	)	$	(49,032	)
Cash Flows From Investing Activities:
Proceeds from sale of property, equipment, and leased equipment	$	292		$	1,034
Purchases of property, equipment, and operating lease equipment		(1,518	)		(1,630	)
Purchases of assets to be leased or financed		-			(7,195	)
Issuance of financing receivables		-			(49,355	)
Repayments of financing receivables		-			15,555
Proceeds from sale of financing receivables		-			9,776
Net cash used in investing activities	$	(1,226	)	$	(31,815	)

8

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

	Three Months Ended June 30,
	2019			2018
Cash Flows From Financing Activities:
Borrowings of non-recourse and recourse notes payable	$	41,394		$	18,802
Repayments of non-recourse and recourse notes payable		(3,414	)		(5,903	)
Repurchase of common stock		(13,318	)		(9,830	)
Repayments of financing of acquisitions		(265	)		(500	)
Net borrowings (repayments) on floor plan facility		19,930			17,468
Net cash provided by financing activities		44,327			20,037
Effect of exchange rate changes on cash		81			92
Net Decrease in Cash and Cash Equivalents		(44,212	)		(60,718	)
Cash and Cash Equivalents, Beginning of Period		79,816			118,198
Cash and Cash Equivalents, End of Period	$	35,604		$	57,480
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	595		$	473
Cash paid for income taxes	$	5,616		$	5,545
Cash paid for amounts included in the measurement of lease liabilities	$	1,081		$	-
Schedule of Non-Cash Investing and Financing Activities:
Proceeds from sale of property, equipment, and leased equipment	$	-		$	164
Purchases of property, equipment, and operating lease equipment	$	(1,947	)	$	(675	)
Purchases of assets to be leased or financed	$	-		$	592
Issuance of financing receivables	$	-		$	(19,709	)
Proceeds from sale of financing receivables	$	-		$	23,823
Borrowing of non-recourse and recourse notes payable	$	30,046		$	9,606
Repayments of non-recourse and recourse notes payable	$	(22	)	$	(32	)
Vesting of share-based compensation	$	7,774		$	11,345
Repurchase of common stock	$	(137	)	$	-
New operating lease assets obtained in exchange for lease obligations	$	1,291		$	-

9

ePlus inc. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

	Three Months Ended June 30, 2019
	Common Stock					Additional Paid-In		Treasury			Retained		Accumulated Other Comprehensive
	Shares			Par Value		Capital		Stock			Earnings		Income			Total
Balance, March 31, 2019		13,611		$	143	$	137,243	$	(53,999	)	$	341,137	$	(271	)	$	424,253
Issuance of restricted stock awards		86			1		-		-			-		-			1
Share-based compensation		-			-		1,919		-			-		-			1,919
Repurchase of common stock		(188	)		-		-		(13,455	)		-		-			(13,455	)
Net earnings		-			-		-		-			16,188		-			16,188
Foreign currency translation adjustment		-			-		-		-			-		(263	)		(263	)
Balance, June 30, 2019		13,509		$	144	$	139,162	$	(67,454	)	$	357,325	$	(534	)	$	428,643

	Three Months Ended June 30, 2018
Balance, March 31, 2018		13,761		$	142	$	130,000	$	(36,016	)	$	277,945	$	532		$	372,603
Issuance of restricted stock awards		70			1		-		-			-		-			1
Share-based compensation		-			-		1,693		-			-		-			1,693
Repurchase of common stock		(108	)		-		-		(9,059	)		-		-			(9,059	)
Dividends declared		-			-		-		-			-		-			-
Net earnings		-			-		-		-			15,273		-			15,273
Foreign currency translation adjustment		-			-		-		-			-		(657	)		(657	)
Balance, June 30, 2018		13,723		$	143	$	131,693	$	(45,075	)	$	293,218	$	(125	)	$	379,854

See Notes to Unaudited Consolidated Financial Statements.

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ePlus inc. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS — Our company was founded in 1990 and is a Delaware corporation. ePlus inc. is sometimes referred to in this Quarterly Report on Form 10-Q as "we," "our," "us," "ourselves," or "ePlus." ePlus inc. is a holding company that through its subsidiaries provides IT solutions that enable organizations to optimize their IT environment and supply chain processes. We also provide consulting, staffing, professional and managed services and complete lifecycle management services, including flexible financing solutions. We focus on state and local governments, middle market and large enterprises in North America and the United Kingdom (“UK”).

BASIS OF PRESENTATION — The unaudited condensed consolidated financial statements include the accounts of ePlus inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accounts of businesses acquired are included in the unaudited condensed consolidated financial statements from the dates of acquisition.

INTERIM FINANCIAL STATEMENTS — The unaudited condensed consolidated financial statements for the three months ended June 30, 2019 and 2018 were prepared by us, without audit, and include all normal and recurring adjustments that, in the opinion of management, are necessary for a fair presentation of our financial position, results of operations, changes in comprehensive income, and cash flows for such periods. Operating results for the three months ended June 30, 2019 and 2018 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending March 31, 2020 or any other future period. These unaudited condensed consolidated financial statements do not include all disclosures required by the accounting principles generally accepted in the United States (“US GAAP”) for annual financial statements. Our audited consolidated financial statements are contained in our annual report on Form 10-K for the year ended March 31, 2019 (“2019 Annual Report”), which should be read in conjunction with these interim condensed consolidated financial statements.

USE OF ESTIMATES — The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values, vendor consideration, lease classification, goodwill and intangible assets, reserves for credit losses, inventory obsolescence, and the recognition and measurement of income tax assets and other provisions and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.

CONCENTRATIONS OF RISK — A substantial portion of our sales are products from Cisco Systems, which were 40% of our technology segment’s net sales for both the three months ended June 30, 2019 and 2018.

SIGNIFICANT ACCOUNTING POLICIES — The significant accounting policies used in preparing these Consolidated Financial Statements were applied on a basis consistent with those reflected in our Consolidated Financial Statements for the year ended March 31, 2019, except for changes from the adoption of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), as amended (“ASU 2016-02”). This update establishes Codification Topic 842, Leases (“Codification Topic 842”) within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“Codification”). The updates to our accounting policies from adopting ASU 2016-02 are provided below.

FINANCING REVENUE — We account for leases to customers in accordance with Codification Topic 842. We utilize a portfolio approach by grouping many similar assets being leased to one customer together.

We classify our leases as either sales-type leases or operating leases. We classify leases as sales-type leases if any one of five criteria are met, each of which indicate that the lease transfers control of the underlying asset to the lessee. We classify our other leases as operating leases.

For sales-type leases, upon lease commencement, we recognize the present value of the lease payments and the residual asset discounted using the rate implicit in the lease. When we are financing equipment provided by another dealer, we typically do not have any selling profit or loss arising from the lease. When we are the dealer of the equipment being leased, we typically recognize revenue in the amount of the lease receivable and cost of sales in the amount of the carrying value of the underlying asset minus the unguaranteed residual asset. After the commencement date, we recognize interest income as part of net sales using the effective interest method.

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For operating leases, we recognize the underlying asset as an operating lease asset. We depreciate the asset on a straight-line basis to its estimated residual value over its estimated useful life. We recognized the lease payments over the lease term on a straight-line basis as part of net sales.

In all our leases, we recognize variable lease payments, primarily reimbursement for property taxes associated with the leased asset, as part of net sales in the period in which the changes in facts and circumstances on which the variable lease payments are based occur. We exclude from revenues and expenses any sales taxes reimbursed by the lessee.

We also finance third-party software and third-party services for our customers, which we classify as notes-receivable. We recognize interest income on our notes-receivable using the effective interest method.

We account for transfers of our financial assets, including our lease receivables and notes receivable, under Codification Topic 860 Transfers and Servicing (“Codification Topic 860”). When a transfer meets all the requirements for sale accounting, we derecognize the financial asset and record a net gain or loss that is included in net sales.

LESSEE ACCOUNTING — We lease office space over initial terms typically between 3 and 6 years. At the lease commencement date, we recognize operating lease liabilities based on the present value of the future minimum lease payments. In determining the present value of future minimum lease payments, we use our incremental borrowing rate based on the information available at the commencement date. When the future minimum payments encompass non-lease components, we account for the lease and non-lease components as a single lease component. We elected not to recognize right-of-use assets and lease liabilities for leases with an initial term of 12 months or less. We recognize lease expense on a straight-line basis over the lease term beginning on the commencement date.

2. RECENT ACCOUNTING PRONOUNCEMENTS

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS —We adopted ASU 2016-02 in our quarter ended June 30, 2019 using a transition option that allows entities to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under this transition option, we do not update the financial information and disclosures for comparative periods.

Additionally, we elected a package of practical expedients to not reassess whether any expired or existing contracts are or contain leases, not reassess the lease classification for any expired or existing leases, and not reassess initial direct costs for any existing leases. As a result of our adoption, we recorded an initial impact to our consolidated balance sheets of establishing right-of-use assets of $12.7 million and lease liabilities of $12.3 million and a reduction in prepaid assets of $0.4 million at the beginning of our quarter ending June 30, 2019.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED —In June 2016, the FASB issued ASU 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update replace the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This update requires adoption under a modified retrospective approach and will become effective for us in the quarter ending June 30, 2020. We are currently evaluating the impact of this update on our financial statements.

3. REVENUES

Contract balances

Accounts receivable – trade represents amounts due from contracts with customers. We had $18.9 million and $16.2 million of receivables from contracts with customers included within financing receivables as of June 30, 2019 and March 31, 2019, respectively. The following table provides the balance of contract liabilities from contracts with customers (in thousands):

Contract liabilities	June 30, 2019		March 31, 2019
Current (included in deferred revenue)	$	47,549	$	46,356
Non-current (included in other liabilities)	$	13,317	$	13,593

Revenue recognized from the beginning contract liability balance was $15.8 million and $12.8 million for the three months ended June 30, 2019 and 2018, respectively.

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Performance obligations

The following table includes revenue expected to be recognized in the future related to performance obligations, primarily non-cancelable contracts for ePlus managed services, that are unsatisfied or partially unsatisfied at the end of the reporting period, in thousands. The table does not include the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts where we recognize revenue at the amount that we have the right to invoice for services performed.

Remainder of Year ending March 31, 2020	$	19,327
Year ending March 31, 2021		11,640
Year ending March 31, 2022		4,438
Year ending March 31, 2023		1,134
Year ending March 31, 2024		18
Year ending March 31, 2025 and thereafter		400
Total remaining performance obligations	$	36,957

4. FINANCING RECEIVABLES AND OPERATING LEASES

Our financing receivables and operating leases consist primarily of leases of IT and communication equipment and notes receivable from financing customer purchases of third-party software, maintenance, and services. Our leases often include elections for the lessee to purchase the underlying asset at the end of the lease term. Occasionally, our leases provide the lessee at bargain purchase option. We classify leases as either sales-type or operating leases in accordance with Codification Topic 842.

The following table provides the profit recognized for sales-type leases at their commencement date for the three months ended June 30, 2019 (in thousands):

	Three months ended June 30, 2019
Net sales	$	4,854
Cost of sales		3,950
Gross Profit	$	904

The following table provides interest income in aggregate on our sales-type leases and lease income on our operating leases for the three months ended June 30, 2019 (in thousands):

	Three months ended June 30, 2019
Interest Income on sales-type leases	$	2,095
Lease income on operating leases		5,359

FINANCING RECEIVABLES—NET

Our financing receivables-net consist of the following (in thousands):

June 30, 2019	Notes Receivables			Lease-Related Receivables			Total Financing Receivables
Minimum payments	$	63,074		$	85,396		$	148,470
Estimated unguaranteed residual value (1)		-			18,768			18,768
Initial direct costs, net of amortization (2)		319			374			693
Unearned income		-			(10,867	)		(10,867	)
Reserve for credit losses (3)		(520	)		(512	)		(1,032	)
Total, net	$	62,873		$	93,159		$	156,032
Reported as:
Current	$	48,383		$	50,036		$	98,419
Long-term		14,490			43,123			57,613
Total, net	$	62,873		$	93,159		$	156,032

(1) Includes estimated unguaranteed residual values of $12,326 thousand for sales type leases, which have been sold and accounted for as sales.

(2) Initial direct costs are shown net of amortization of $306 thousand.

(3) For details on reserve for credit losses, refer to Note 7, “Reserves for Credit Losses.”

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March 31, 2019	Notes Receivables			Lease-Related Receivables			Total Financing Receivables
Minimum payments	$	40,563		$	64,201		$	104,764
Estimated unguaranteed residual value (1)		-			14,639			14,639
Initial direct costs, net of amortization (2)		377			332			709
Unearned income		-			(7,671	)		(7,671	)
Reserve for credit losses (3)		(505	)		(530	)		(1,035	)
Total, net	$	40,435		$	70,971		$	111,406
Reported as:
Current	$	30,852		$	32,914		$	63,766
Long-term		9,583			38,057			47,640
Total, net	$	40,435		$	70,971		$	111,406

(1) Includes $8,996 thousand for the estimated residual values of sales type leases and direct financing leases for which we sold the financing assets.

(2) Initial direct costs are shown net of amortization of $275 thousand.

(3) For details on reserve for credit losses, refer to Note 7, “Reserves for Credit Losses.”

Future scheduled minimum lease payments for investments in sales-type leases as of June 30, 2019 are as follows (in thousands):

Remainder of Year ending March 31, 2020	$	49,243
Year ending March 31, 2021		20,723
Year ending March 31, 2022		11,211
Year ending March 31, 2023		3,510
Year ending March 31, 2024 and thereafter		709
Total	$	85,396

OPERATING LEASES—NET

Operating leases—net represents leases that do not qualify as sales-type leases. The components of the operating leases—net are as follows (in thousands):

	June 30, 2019			March 31, 2019
Cost of equipment under operating leases	$	24,162		$	21,532
Accumulated depreciation		(10,678	)		(10,139	)
Investment in operating lease equipment—net (1)	$	13,484		$	11,393

(1) These totals include estimated unguaranteed residual values of $3,104 thousand and $2,906 thousand as of June 30, 2019 and March 31, 2019, respectively.

Future scheduled minimum lease rental payments as of June 30, 2019 are as follows (in thousands):

Remainder of Year ending March 31, 2020	$	3,794
Year ending March 31, 2021		3,760
Year ending March 31, 2022		2,498
Year ending March 31, 2023		1,451
Year ending March 31, 2024 and thereafter		443
Total	$	11,946

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TRANSFERS OF FINANCIAL ASSETS

We enter into arrangements to transfer the contractual payments due under financing receivables and operating lease agreements, which are accounted for as sales or secured borrowings in accordance with Codification Topic 860.

For transfers accounted for as a secured borrowing, the corresponding investments serve as collateral for non-recourse notes payable. As of June 30, 2019, and March 31, 2019, we had financing receivables of $75.6 million and $50.2 million, respectively, and operating leases of $7.1 million and $7.8 million, respectively, which were collateral for non-recourse notes payable. See Note 9, "Notes Payable and Credit Facility."

For transfers accounted for as sales, we derecognize the carrying value of the asset transferred plus any liability and recognize a net gain or loss on the sale, which are presented within net sales in the consolidated statement of operations. During the three months ended June 30, 2019 and 2018, we recognized net gains of $3.3 million and $1.3 million, respectively, and total proceeds from these sales were $69.9 million and $46.9 million, respectively.

When we retain servicing obligations in transfers accounted for as sales, we allocate a portion of the proceeds to deferred revenues, which is recognized as we perform the services.  As of both June 30, 2019 and March 31, 2019, we had deferred revenue of $0.4 million for servicing obligations.

In a limited number of transfers accounted for as sales, we indemnified the assignee in the event that the lessee elected to early terminate the lease.  As of June 30, 2019, our maximum potential future payments related to such guarantees is $0.4 million.  We believe the likelihood of making any such payments to be remote.

5. LESSEE ACCOUNTING

We lease office space for periods up to 6 years. We recognize our right-of-use assets as part of property, equipment and other assets. We recognize the current and long-term portions of our lease liability as part of other current liabilities and other liabilities, respectively. We recognized rent expense of $1.6 million as part of selling, general, and administrative expenses during the three months ended June 30, 2019.

Supplemental information about the remaining lease terms and discount rates applied as of June 30, 2019:

Lease term and Discount Rate	June 30, 2019
Weighted average remaining lease term (months)		36
Weighted average discount rate		4.1	%

Future lease payments under our operating leases as of June 30, 2019 (in thousands):

	June 30, 2019
Remainder of year ending March 31, 2020	$	3,637
Year ending March 31, 2021		4,471
Year ending March 31, 2022		3,029
Year ending March 31, 2023		2,064
Year ending March 31, 2024		293
Thereafter		-
Total lease payments	$	13,494
Less: Interest		(816	)
Present value of lease liabilities	$	12,678

As of June 30, 2019, we committed to two additional office leases that have not yet commenced with a total commitment of $1.5 million.

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6.  GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL

The following table summarizes the changes in the carrying amount of goodwill for the three months ended June 30, 2019 (in thousands):

	Three months ended June 30, 2019
	Goodwill			Accumulated Impairment Loss			Net Carrying Amount
Beginning balance	$	119,480		$	(8,673	)	$	110,807
Foreign currency translations		(53	)		-			(53	)
Ending balance	$	119,427		$	(8,673	)	$	110,754

Goodwill represents the premium paid over the fair value of the net tangible and intangible assets that are individually identified and separately recognized in business combinations. All of our goodwill as of June 30, 2019  is related to our technology reportable segment, which we also determined to be one reporting unit.

We test goodwill for impairment on an annual basis, as of the first day of our third fiscal quarter, and between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying value.

OTHER INTANGIBLE ASSETS

Our other intangible assets consist of the following at June 30, 2019 and March 31, 2019 (in thousands):

	Three months ended June 30, 2019							March 31, 2019
	Gross Carrying Amount		Accumulated Amortization / Impairment Loss			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization / Impairment Loss			Net Carrying Amount
Customer relationships & other intangibles	$	57,343	$	(26,012	)	$	31,331	$	57,407	$	(23,865	)	$	33,542
Capitalized software development		10,285		(5,097	)		5,188		10,188		(4,802	)		5,386
Total	$	67,628	$	(31,109	)	$	36,519	$	67,595	$	(28,667	)	$	38,928

Customer relationships and other intangibles are generally amortized between 5 to 10 years. Capitalized software development is generally amortized over 5 years.

Total amortization expense for other intangible assets was $2.5 million and $1.8 million for the three months ended June 30, 2019 and 2018, respectively.

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7.  RESERVES FOR CREDIT LOSSES

Activity in our reserves for credit losses for the three months ended June 30, 2019 and 2018 were as follows (in thousands):

	Accounts Receivable			Notes Receivable			Lease- Related Receivables			Total
Balance April 1, 2019	$	1,579		$	505		$	530		$	2,614
Provision for credit losses		281			16			(16	)		281
Write-offs and other		(3	)		(1	)		(2	)		(6	)
Balance June 30, 2019	$	1,857		$	520		$	512		$	2,889

	Accounts Receivable			Notes Receivable		Lease- Related Receivables		Total
Balance April 1, 2018	$	1,538		$	486	$	640	$	2,664
Provision for credit losses		123			-		56		179
Write-offs and other		(1	)		-		-		(1	)
Balance June 30, 2018	$	1,660		$	486	$	696	$	2,842

Our reserves for credit losses and minimum payments associated with our notes receivables and lease-related receivables disaggregated based on of our impairment method were as follows (in thousands):

	June 30, 2019				March 31, 2019
	Notes Receivable		Lease- Related Receivables		Notes Receivable		Lease- Related Receivables
Reserves for credit losses:
Ending balance: collectively evaluated for impairment	$	458	$	512	$	443	$	530
Ending balance: individually evaluated for impairment		62		-		62		-
Ending balance	$	520	$	512	$	505	$	530
Minimum payments:
Ending balance: collectively evaluated for impairment	$	62,985	$	85,396	$	40,501	$	64,201
Ending balance: individually evaluated for impairment		89		-		62		-
Ending balance	$	63,074	$	85,396	$	40,563	$	64,201

We place receivables on non-accrual status when events, such as a customer’s declaring bankruptcy, occur that indicate a receivable will not be collectable. We charge off uncollectable financing receivables when we stop pursuing collection.

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The age of the recorded minimum lease payments and net credit exposure associated with our investment in direct financing and sales-type leases that are past due disaggregated based on our internally assigned credit quality rating (“CQR”) were as follows as of June 30, 2019 and March 31, 2019 (in thousands):

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Unbilled Minimum Lease Payments		Total Minimum Lease Payments		Unearned Income			Non- Recourse Notes Payable			Net Credit Exposure
June 30, 2019
High CQR	$	275	$	205	$	528	$	1,008	$	239	$	38,379	$	39,626	$	(4,362	)	$	(13,800	)	$	21,464
Average CQR		32		11		29		72		252		45,446		45,770		(3,698	)		(25,970	)		16,102
Low CQR		-		-		-		-		-		-		-		-			-			-
Total	$	307	$	216	$	557	$	1,080	$	491	$	83,825	$	85,396	$	(8,060	)	$	(39,770	)	$	37,566
March 31, 2019
High CQR	$	325	$	41	$	10	$	376	$	543	$	29,503	$	30,422	$	(2,799	)	$	(11,044	)	$	16,579
Average CQR		22		54		15		91		125		33,563		33,779		(2,508	)		(20,848	)		10,423
Low CQR		-		-		-		-		-		-		-		-			-			-
Total	$	347	$	95	$	25	$	467	$	668	$	63,066	$	64,201	$	(5,307	)	$	(31,892	)	$	27,002

The age of the recorded notes receivable balance disaggregated based on our internally assigned CQR were as follows as of June 30, 2019 and March 31, 2019 (in thousands):

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Unbilled Notes Receivable		Total Notes Receivable		Non- Recourse Notes Payable			Net Credit Exposure
June 30, 2019
High CQR	$	-	$	23	$	106	$	129	$	7,361	$	48,240	$	55,730	$	(29,962	)	$	25,768
Average CQR		27		27		-		54		487		6,714		7,255		(49	)		7,206
Low CQR		-		-		89		89		-		-		89		-			89
Total	$	27	$	50	$	195	$	272	$	7,848	$	54,954	$	63,074	$	(30,011	)	$	33,063
March 31, 2019
High CQR	$	990	$	40	$	30	$	1,060	$	3,813	$	28,113	$	32,986	$	(18,245	)	$	14,741
Average CQR		105		34		7		146		137		7,232		7,515		(1,507	)		6,008
Low CQR		-		-		62		62		-		-		62		-			62
Total	$	1,095	$	74	$	99	$	1,268	$	3,950	$	35,345	$	40,563	$	(19,752	)	$	20,811

We estimate losses on our net credit exposure to be between 0% - 5% for customers with the highest CQR, as these customers are investment grade or the equivalent of investment grade. We estimate losses on our net credit exposure to be between 2% - 15% for customers with average CQR, and between 15% - 100% for customers with low CQR, which includes customers in bankruptcy.

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8.  PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES

Our property, equipment, other assets and liabilities consist of the following (in thousands):

	June 30, 2019		March 31, 2019
Other current assets:
Deposits & funds held in escrow	$	366	$	438
Prepaid assets		7,402		6,425
Other		459		636
Total other current assets	$	8,227	$	7,499
Property, equipment and other assets
Property and equipment, net	$	6,821	$	7,314
Deferred costs - non-current		9,505		8,856
Right-of-use assets		12,550		-
Other		1,335		1,158
Total other assets - long term	$	30,211	$	17,328
Other current liabilities:
Accrued expenses	$	8,832	$	7,813
Accrued income taxes payable		217		181
Contingent consideration - current		5,332		5,162
Short-term lease liability		4,811		-
Other		9,767		6,129
Total other current liabilities	$	28,959	$	19,285
Other liabilities:
Deferred revenue	$	13,502	$	13,789
Contingent consideration - long-term		4,011		3,780
Long-term lease liability		7,867		-
Other		83		108
Total other liabilities - long term	$	25,463	$	17,677

In the above table, deposits and funds held in escrow relate to financial assets that were sold to third-party banks. In conjunction with those sales, a portion of the proceeds was placed in escrow and will be released to us upon payment of outstanding invoices related to the underlying financing arrangements that were sold.

9.  NOTES PAYABLE AND CREDIT FACILITY

Non-recourse and recourse obligations consist of the following (in thousands):

	June 30, 2019		March 31, 2019
Recourse notes payable with interest rates of 4.00% at March 31, 2019.
Current	$	-	$	28
Non-recourse notes payable secured by financing receivables and investments in operating leases with interest rates ranging from 3.34% to 8.45% as of June 30, 2019 and 3.23% to 8.45% as of March 31, 2019.
Current	$	64,583	$	38,117
Long-term		8,362		10,502
Total non-recourse notes payable	$	72,945	$	48,619

Principal and interest payments on non-recourse notes payable are generally due monthly in amounts that are approximately equal to the total payments due from the customer under the leases or notes receivable that collateralize the notes payable. The weighted average interest rate for our non-recourse notes payable was 4.25% and 4.68%, as of June 30, 2019 and March 31, 2019, respectively. The weighted average interest rate for our recourse notes payable was 4.00% as of March 31, 2019. Under recourse financing, if a customer defaults, the lender has recourse to the customer, the assets serving as collateral, and us. Under non-recourse financing, if a customer defaults, the lender generally only has recourse against the customer and the assets serving as collateral, but not us.

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Our technology segment, through our subsidiary ePlus Technology, inc., finances its operations with funds generated from operations, and with a credit facility with Wells Fargo Commercial Distribution Finance, LLC or (“WFCDF”). This facility provides short-term capital for our technology segment. There are two components of the WFCDF credit facility: (1) a floor plan component, and (2) an accounts receivable component. Under the floor plan component, we had outstanding balances of $136.0 million and $116.1million as of June 30, 2019 and March 31, 2019, respectively. Under the accounts receivable component, we had no outstanding balances as of June 30, 2019 and March 31, 2019.

As of June 30, 2019, the facility had an aggregate limit of $250 million for the two components, and the accounts receivable component had a sub-limit of $50 million, which bears interest assessed at a rate of the One Month  LIBOR plus two and one-half percent. We have an election beginning July 1 in each year to temporarily increase the aggregate limit of the two components to $325.0 million ending the earlier of 90 days following the election or October 31 of that same year. On July 31, 2019, we elected to temporarily increase the aggregate limit to $325.0 million.

The credit facility has full recourse to ePlus Technology, inc. and certain subsidiaries and is secured by a blanket lien against all its assets, such as receivables and inventory. Availability under the facility may be limited by the asset value of equipment we purchase or accounts receivable and may be further limited by certain covenants and terms and conditions of the facility. These covenants include but are not limited to a minimum excess availability of the facility and a minimum earnings before interest, taxes, depreciation and amortization (“EBITDA”) of ePlus Technology, inc. and certain subsidiaries. We were in compliance with these covenants as of June 30, 2019. In addition, the facility restricts the ability of ePlus Technology, inc. and certain subsidiaries to transfer funds to its affiliates in the form of dividends, loans, or advances with certain exceptions for dividends to ePlus inc. The facility also requires that financial statements of ePlus Technology, inc. and certain subsidiaries. be provided within 45 days at the end of each quarter and 90 days of each fiscal year end, and that other operational reports be provided on a regular basis. Either party may terminate the credit facility with 90 days’ advance written notice. We are not, and do not believe that we are reasonably likely to be, in breach of the WFCDF credit facility. In addition, we do not believe that the covenants of the WFCDF credit facility materially limit our ability to undertake financing. In this regard, the covenants apply only to our subsidiary, ePlus Technology, inc. and certain subsidiaries. This credit facility is secured by the assets of only ePlus Technology, inc. and certain subsidiaries. and the guaranty as described below.

The WFCDF facility requires a guaranty of $10.5 million by ePlus inc. The guaranty requires ePlus inc. to deliver its annual audited financial statements by certain dates. We have delivered the annual audited financial statements for the year ended March 31, 2019, as required. The loss of the WFCDF credit facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity for our technology segment, and as an operational function of our accounts payable process.

Fair Value

As of June 30, 2019, and March 31, 2019, the fair value of our long-term recourse and non-recourse notes payable approximated their carrying value.

10.  COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, we may be subject to legal proceedings that arise in the ordinary course of business. In the opinion of management, there was not at least a reasonable possibility that the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims. However, the outcome of legal proceedings and claims brought against us is subject to significant uncertainty. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected.

11.  EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net earnings available to common shareholders by the basic weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is calculated by dividing net earnings available to common shareholders by the basic weighted average number of shares of common stock outstanding plus common stock equivalents during each period.

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The following table provides a reconciliation of the numerators and denominators used to calculate basic and diluted net income per common share as disclosed on our unaudited consolidated statements of operations for the three months ended June 30, 2019 and 2018, respectively (in thousands, except per share data).

	Three Months Ended June 30,
	2019		2018
Net earnings attributable to common shareholders - basic and diluted	$	16,188	$	15,273
Basic and diluted common shares outstanding:
Weighted average common shares outstanding — basic		13,356		13,434
Effect of dilutive shares		101		163
Weighted average shares common outstanding — diluted		13,457		13,597
Earnings per common share - basic	$	1.21	$	1.14
Earnings per common share - diluted	$	1.20	$	1.12

12.  STOCKHOLDERS’ EQUITY

Share Repurchase Plan

On April 26, 2018, our board of directors authorized the repurchase up to 500,000 shares of our outstanding common stock over a 12-month period beginning on May 28, 2018 through May 27, 2019. The plan authorized purchases to be made from time to time in the open market, or in privately negotiated transactions, subject to availability. Any repurchased shares will have the status of treasury shares and may be used, when needed, for general corporate purposes.

On May 24, 2019, our board of directors authorized the repurchase up to 500,000 shares of our outstanding common stock over a 12-month period beginning on May 28, 2019 through May 27, 2020. The plan authorized purchases to be made from time to time in the open market, or in privately negotiated transactions, subject to availability. Any repurchased shares will have the status of treasury shares and may be used, when needed, for general corporate purposes.

During the three months ended June 30, 2019, we purchased 148,790 shares of our outstanding common stock at a value of $10.7 million under the share repurchase plan; we also purchased 38,811 shares of common stock at a value of $2.8 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock.

During the three months ended June 30, 2018, we purchased 70,445 shares of our outstanding common stock at a value of $5.5 million under the share repurchase plan; we also purchased 37,086 shares of common stock at a value of $3.6 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock.

13.  SHARE-BASED COMPENSATION

Share-Based Plans

As of June 30, 2019, we had share-based awards outstanding under the following plans: (1) the 2017 Non-Employee Director Long-Term Incentive Plan (“2017 Director LTIP”), and (2) the 2012 Employee Long-Term Incentive Plan ("2012 Employee LTIP"). These share-based plans define fair market value as the previous trading day's closing price when the grant date falls on a date the stock was not traded.

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Restricted Stock Activity

For the three months ended June 30, 2019, we granted 454 restricted shares under the 2017 Director LTIP, and 85,132 restricted shares under the 2012 Employee LTIP. For the three months ended June 30, 2018, we granted 841 restricted shares under the 2017 Director LTIP, and 69,847 restricted shares under the 2012 Employee LTIP. A summary of the restricted shares is as follows:

	Number of Shares			Weighted Average Grant- date Fair Value
Nonvested April 1, 2019		224,000		$	67.70
Granted		85,586		$	72.50
Vested		(107,238	)	$	60.92
Forfeited		(67	)	$	79.70
Nonvested June 30, 2019		202,281		$	73.32

Upon each vesting period of the restricted stock awards, employees are subject to minimum tax withholding obligations. Under the 2012 Employee LTIP, we may purchase a sufficient number of shares due to the participant to satisfy their minimum tax withholding on employee stock awards. For the three months ended June 30, 2019, the Company had withheld 38,811 shares of common stock at a value of $2.8 million, which was included in treasury stock.

Compensation Expense

We recognize compensation cost for awards of restricted stock with graded vesting on a straight-line basis over the requisite service period. There are no additional conditions for vesting other than service conditions. During the three months ended June 30, 2019 and 2018, we recognized $1.9 million and $1.7 million of total share-based compensation expense, respectively. Unrecognized compensation expense related to non-vested restricted stock was $13.6 million as of June 30, 2019, which will be fully recognized over the next 36 months.

We also provide our employees with a contributory 401(k) profit sharing plan, to which we may contribute from time to time at our sole discretion. Employer contributions to the plan are fully vested at all times. For the three months ended June 30, 2019 and 2018, our estimated contribution expense for the plan was $0.7 million and $0.5 million, respectively.

14.  INCOME TAXES

We account for our tax positions in accordance with Codification Topic 740, Income Taxes. Under the guidance, we evaluate uncertain tax positions based on the two-step approach. The first step is to evaluate each uncertain tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in an audit, including resolution of related appeals or litigation processes, if any. For tax positions that are not likely to be sustained upon audit, the second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50 percent likely of being realized upon ultimate settlement.

Our total gross unrecognized tax benefits recorded for uncertain income tax, and interest and penalties thereon, were negligible as of June 30, 2019 and June 30, 2018. We had no additions or reductions to our gross unrecognized tax benefits during the three months ended June 30, 2019. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.

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15.  FAIR VALUE OF FINANCIAL INSTRUMENTS

We account for the fair values of our assets and liabilities in accordance with Codification Topic 820, Fair Value Measurement and Disclosure. The following table summarizes the fair value hierarchy of our financial instruments as of June 30, 2019 and March 31, 2019 (in thousands):

			Fair Value Measurement Using
	Recorded Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2019
Assets:
Money market funds	$	114	$	114	$	-	$	-
Liabilities:
Contingent consideration	$	9,343	$	-	$	-	$	9,343
March 31, 2019
Assets:
Money market funds	$	50	$	50	$	-	$	-
Liabilities:
Contingent consideration	$	8,942	$	-	$	-	$	8,942

For both the three months ended June 30, 2019, and 2018, we recorded adjustments that increased the fair value of our liability for contingent consideration by $0.4 million. There were no payments made to satisfy the current obligations of the contingent consideration arrangements for both the three months ended June 30, 2019, and 2018.

16.  BUSINESS COMBINATIONS

SLAIT Consulting, LLC

On January 18, 2019, our subsidiary, ePlus Technology, inc., acquired 100% of the stock of SLAIT Consulting, LLC. SLAIT is an IT consulting and solutions provider with a focus on security advisory and managed services, managed help desk, specialized IT, staffing, and data center solutions. SLAIT is headquartered in Virginia Beach, Virginia and has locations in Richmond, Virginia, and Charlotte, North Carolina. SLAIT provides consultative services in governance, risk management and compliance; bespoke help desk and managed services solutions; and has relationships with fast-growing emerging vendors and related sales and engineering capabilities.

Our sum of consideration transferred is $50.0 million consisting of $50.7 million paid in cash at closing, less $1.0 million cash acquired, and plus a working capital adjustment of $0.3 million that we paid in May 2019. Our preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed is presented below (in thousands):

	Acquisition Date Amount
Accounts receivable	$	10,208
Other assets		1,050
Identified intangible assets		18,190
Accounts payable and other current liabilities		(8,669	)
Performance obligation		(5,110	)
Total identifiable net assets		15,669
Goodwill		34,352
Total purchase consideration	$	50,021

As of our filing date the initial accounting for the business combination is incomplete in respect to measuring certain assets acquired and liabilities assumed.

The identified intangible assets of $18.2 million consist of customer relationships with an estimated useful life of 10 years. The fair value of acquired receivables equals the gross contractual amounts receivable. We expect to collect all acquired receivables.

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We recognized goodwill related to this transaction of $34.4million, which was assigned to our technology reporting unit. The goodwill recognized in the acquisition is attributable to the acquired assembled workforce and expected synergies, none of which qualify for recognition as a separate intangible asset. The total amount of goodwill is expected to be deductible for tax purposes. The amount of revenues and earnings of the acquiree since the acquisition date are not material. Likewise, the impact to the revenue and earnings of the combined entity for the reporting period ending March 31, 2019 as though the acquisition date had been April 1, 2018, is not material.

17.  SEGMENT REPORTING

Our operations are conducted through two operating segments that are also both reportable segments. Our technology segment includes sales of IT products, third-party software, third-party maintenance, advanced professional and managed services, and our proprietary software to commercial enterprises, state and local governments, and government contractors. Our financing segment consists of the financing of IT equipment, software, and related services to commercial enterprises, state and local governments, and government contractors. We measure the performance of the segments based on operating income.

Our reportable segment information was as follows (in thousands):

	Three Months Ended
	June 30, 2019							June 30, 2018
	Technology		Financing		Total			Technology		Financing		Total
Sales
Product	$	322,764	$	12,837	$	335,601		$	313,149	$	9,668	$	322,817
Service		45,771		-		45,771			33,715		-		33,715
Net sales	$	368,535	$	12,837	$	381,372		$	346,864	$	9,668	$	356,532
Cost of Sales
Product		258,054		2,009		260,063			254,064		1,748		255,812
Service		28,670		-		28,670			20,017		-		20,017
Total cost of sales		286,724		2,009		288,733			274,081		1,748		275,829
Gross Profit		81,811		10,828		92,639			72,783		7,920		80,703
Selling, general, and administrative		62,667		3,120		65,787			54,454		2,512		56,966
Depreciation and amortization		3,407		56		3,463			2,789		1		2,790
Interest and financing costs		-		628		628			-		476		476
Operating expenses		66,074		3,804		69,878			57,243		2,989		60,232
Operating income		15,737		7,024		22,761			15,540		4,931		20,471
Other income (expense)						(45	)						97
Earnings before tax					$	22,716						$	20,568
Net Sales
Contracts with customers	$	363,681	$	789	$	364,470		$	341,459	$	596	$	342,055
Financing and other		4,854		12,048		16,902			5,405		9,072		14,477
Net Sales	$	368,535	$	12,837	$	381,372			346,864	$	9,668	$	356,532
Selected Financial Data - Statement of Cash Flow
Depreciation and amortization	$	1,339	$	3,625	$	4,964		$	3,015	$	1,485	$	4,500
Purchases of property, equipment and operating lease equipment	$	1,249	$	269	$	1,518		$	1,180	$	450	$	1,630
Selected Financial Data - Balance Sheet
Total assets	$	658,692	$	216,121	$	874,813		$	557,864	$	202,535	$	760,399

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Technology Segment Disaggregation of Revenue

We analyze net sales for our technology segment by customer end market and by vendor, as opposed to discrete product and service categories, which are summarized below (in thousands):

	Three Months Ended June 30,
	2019			2018
Customer end market:
Technology	$	76,180		$	82,817
Telecom, Media & Entertainment		62,466			46,868
Financial Services		48,241			45,225
SLED		71,190			68,205
Healthcare		56,109			46,450
All others		54,349			57,299
Net sales		368,535			346,864
Financing and other		(4,854	)		(5,405	)
Revenue from contracts with customers	$	363,681		$	341,459

	Three Months Ended June 30,
	2019			2018
Vendor
Cisco Systems	$	146,181		$	139,577
NetApp		13,427			15,020
HP Inc. & HPE		23,113			20,355
Dell / EMC		13,781			12,503
Arista Networks		20,950			19,844
Juniper Networks		7,054			10,431
All others		144,029			129,134
Net sales		368,535			346,864
Financing and other		(4,854	)		(5,405	)
Revenue from contracts with customers	$	363,681		$	341,459

Financing Segment Disaggregation of Revenue

We analyze our revenues within our financing segment based on the nature of the arrangement, and our revenues from contracts with customers consist of proceeds from the sale of off-lease equipment.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion is intended to further the reader’s understanding of our consolidated financial condition and results of operations. It should be read in conjunction with the financial statements included in this quarterly report on Form 10-Q and our 2019 Annual Report. These historical financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described in Part I, Item 1A, “Risk Factors,” in our 2019 Annual Report., and in Part II, Item 1A. “Risk Factors” in this Report.

EXECUTIVE OVERVIEW

Business Description

We are a leading solutions provider that delivers actionable outcomes for organizations by using IT and consulting solutions to drive business agility and innovation. Leveraging our engineering talent, we assess, plan, deliver, and secure solutions comprised of leading technologies and consumption models aligned with our customers’ needs. Our expertise and experience enable ePlus to craft optimized solutions that take advantage of the cost, scale and efficiency of private, public and hybrid cloud in an evolving market. We also provide consulting, staffing, professional, managed, IT staff augmentation, and complete lifecycle management services including flexible financing and solutions in the areas of security, cloud, networking, data center, collaboration and emerging technologies. We have been in the business of selling, leasing, financing, and managing IT and other assets for more than 29 years.

Our primary focus is to deliver integrated solutions that address our customers’ business needs, leveraging the appropriate technologies, both on-premise and in the cloud. Our approach is to lead with advisory consulting to understand our customers’ needs, design, deploy and manage solutions aligned to their objectives. Underpinning the broader areas of Cloud, Security, Networking, Data Center and Collaboration are specific skills in orchestration and automation, application modernization, DevOps, data management, data visualization, analytics, network modernization, edge compute and other advanced and emerging technologies. These solutions are comprised of class leading technologies from partners such as Amazon Web Services, Arista Networks, Check Point, Cisco Systems, Citrix, Commvault, Dell EMC, F5 Networks, Gigamon, HPE, Juniper Networks, Lenovo, Microsoft, NetApp, Nutanix, NVIDIA, Oracle, Palo Alto Networks, Pure Storage, Rubrik, Splunk, and VMware, among many others. We possess top-level engineering certifications with a broad range of leading IT vendors that enable us to offer multi-vendor IT solutions that are optimized for each of our customers’ specific requirements. Our hosted, proprietary software solutions are focused on giving our customers more control over their IT supply chain, by automating and optimizing the procurement and management of their owned, leased, and consumption-based assets.

Our scale and financial resources have enabled us to continue investing in engineering and technology resources to stay current with emerging technology trends. Our expertise in core and emerging technologies, buttressed by our robust portfolio of consulting, professional, and managed services has enabled ePlus to remain a trusted advisor for our customers. In addition, we offer a wide range of consumption options including leasing and financing for technology and other capital assets. We believe our lifecycle approach offering of integrated solutions, services, financing, and our proprietary supply chain software, are unique in the industry. This broad portfolio enables us to deliver a unique customer experience that spans the continuum from fast delivery of competitively priced products, services, subsequent management and upkeep, through to end-of-life disposal services. This approach permits ePlus to deploy ever-more-sophisticated solutions enabling our customers’ business outcomes.

Our go-to-market strategy focuses primarily on diverse end-markets for middle market to large enterprises. For the trailing twelve-month period ended June 30, 2019, the percentage of revenue by customer end market within our technology segment includes technology industry 21%, state and local government and educational institutions (“SLED”) 17%, financial services 15%, healthcare 15%, and telecommunications, media and entertainment 14%. The majority of our sales were generated within the United States (“US”); however, we have the ability to support our customers nationally and internationally, including physical locations in the United Kingdom (“UK”) and India. Our technology segment accounts for 97% of our net sales, and 69% of our operating income, while our financing segment accounts for 3% of our net sales, and 31% of our operating income for the three months ended June 30, 2019.

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Key Business Metrics

Our management monitors a number of financial and non-financial measures and ratios on a regular basis to track the progress of our business. We believe that the most important of these measures and ratios include net sales, gross margin, operating income margin, net earnings, net earnings per common share, adjusted EBITDA, adjusted EBITDA margin, adjusted gross billings, and non-GAAP net earnings per share. We use a variety of operating and other information to evaluate the operating performance of our business, develop financial forecasts, make strategic decisions, and prepare and approve annual budgets.

These key indicators include financial information that is prepared in accordance with US GAAP and presented in our unaudited condensed consolidated financial statements as well as non-GAAP performance measurement tools. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are not normally included in the most directly comparable measure calculated and presented in accordance with US GAAP. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

Our key business metrics are as follows (dollars in thousands):

	Three months ended June 30,
Consolidated	2019			2018
Net sales	$	381,372		$	356,532
Gross profit	$	92,639		$	80,703
Gross margin		24.3	%		22.6	%
Operating income margin		6.0	%		5.7	%
Net earnings	$	16,188		$	15,273
Net earnings margin		4.2	%		4.3	%
Net earnings per common share - diluted	$	1.20		$	1.12
Non-GAAP: Net earnings (1)	$	19,459		$	17,432
Non-GAAP: Net earnings per common share - diluted (1)	$	1.44		$	1.28
Adjusted EBITDA (2)	$	28,567		$	25,370
Adjusted EBITDA margin		7.5	%		7.1	%
Purchases of property and equipment used internally	$	1,249		$	1,180
Purchases of equipment under operating leases		269			450
Total capital expenditures	$	1,518		$	1,630
Technology Segment
Net sales	$	368,535		$	346,864
Adjusted gross billings (3)	$	548,363		$	482,301
Gross profit	$	81,811		$	72,783
Gross margin		22.2	%		21.0	%
Operating income	$	15,737		$	15,540
Adjusted EBITDA (2)	$	21,419		$	20,341
Financing Segment
Net sales	$	12,837		$	9,668
Gross profit	$	10,828		$	7,920
Operating Income	$	7,024		$	4,931
Adjusted EBITDA (2)	$	7,148		$	5,029

(1) Non-GAAP net earnings and non-GAAP net earnings per common share – diluted is based on net earnings calculated in accordance with GAAP, adjusted to exclude other income (expense), share based compensation, and acquisition and integration expenses, and the related tax effects.

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We use non-GAAP net earnings per common share as a supplemental measure of our performance to gain insight into our operating performance. We believe that the exclusion of other income (expense), share-based compensation, and acquisition-related amortization expense in calculating non-GAAP net earnings per common share provides management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that non-GAAP net earnings per common share provide useful information to investors and others to understand and evaluate our operating results. However, our use of non-GAAP information as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under GAAP. In addition, other companies, including companies in our industry, might calculate similar non-GAAP net earnings and non-GAAP net earnings per common share or similarly titled measures differently, which may reduce their usefulness as comparative measures.

	Three months ended June 30,
	2019		2018
GAAP: Earnings before tax	$	22,716	$	20,568
Share based compensation		1,942		1,693
Acquisition and integration expense		401		416
Acquisition related amortization expense		2,187		1,764
Other (income) expense		45		(97	)
Non-GAAP: Earnings before provision for income taxes		27,291		24,344
GAAP: Provision for income taxes		6,528		5,295
Share based compensation		559		483
Acquisition and integration expense		115		119
Acquisition related amortization expense		607		474
Other (income) expense		13		(28	)
Tax benefit on restricted stock		10		569
Non-GAAP: Provision for income taxes		7,832		6,912
Non-GAAP: Net earnings	$	19,459	$	17,432
GAAP: Net earnings per common share - diluted	$	1.20		1.12
Non-GAAP: Net earnings per common share - diluted		1.44		1.28

	Three Months Ended June 30,
	2019		2018
GAAP: Net earnings per common share - diluted	$	1.20	$	1.12
Share based compensation		0.10		0.09
Acquisition and integration expense		0.02		0.02
Acquisition related amortization expense		0.12		0.10
Other (income) expense		-		(0.01	)
Tax benefit on restricted stock		-		(0.04	)
Total non-GAAP adjustments - net of tax	$	0.24	$	0.16
Non-GAAP: Net earnings per common share - diluted	$	1.44	$	1.28

(2) We define adjusted EBITDA as net earnings calculated in accordance with GAAP, adjusted for the following: interest expense, depreciation and amortization, share based compensation, acquisition and integration expenses, provision for income taxes, and other income (expense). Segment adjusted EBITDA is defined as operating income calculated in accordance with GAAP, adjusted for interest expense, share based compensation, acquisition and integration expenses, and depreciation and amortization. We consider the interest on notes payable from our financing segment and depreciation expense presented within cost of sales, which includes depreciation on assets financed as operating leases, to be operating expenses. As such, they are not included in the amounts added back to net earnings in the adjusted EBITDA calculation. We provide below a reconciliation of adjusted EBITDA to net earnings, which is the most directly comparable financial measure to this non-GAAP financial measure. Adjusted EBITDA margin is our calculation of adjusted EBITDA divided by net sales.

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We use adjusted EBITDA as a supplemental measure of our performance to gain insight into our operating performance. We believe that the exclusion of other income in calculating adjusted EBITDA and adjusted EBITDA margin provides management and investors a useful measure for period-to-period comparisons of our business and operating results by excluding items that management believes are not reflective of our underlying operating performance. Accordingly, we believe that adjusted EBITDA and adjusted EBITDA margin provide useful information to investors and others to understand and evaluate our operating results. However, our use of adjusted EBITDA and adjusted EBITDA margin as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under GAAP. In addition, other companies, including companies in our industry, might calculate adjusted EBITDA and adjusted EBITDA margin or similarly titled measures differently, which may reduce their usefulness as a comparative measure.

	Three Months Ended June 30,
Consolidated	2019		2018
Net earnings	$	16,188	$	15,273
Provision for income taxes		6,528		5,295
Share based compensation		1,942		1,693
Acquisition and integration expense		401		416
Depreciation and amortization		3,463		2,790
Other (income) expense		45		(97	)
Adjusted EBITDA	$	28,567	$	25,370
Technology Segment
Operating income	$	15,737	$	15,540
Depreciation and amortization		3,407		2,789
Share based compensation		1,874		1,596
Acquisition and integration expense		401		416
Adjusted EBITDA	$	21,419	$	20,341
Financing Segment
Operating income	$	7,024	$	4,931
Depreciation and amortization		56		1
Share based compensation		68		97
Adjusted EBITDA	$	7,148	$	5,029

(3) We define adjusted gross billings as our technology segment net sales calculated in accordance with US GAAP, adjusted to exclude the costs incurred related to sales of third-party maintenance, software assurance and subscription/SaaS licenses, and services. We have provided below a reconciliation of adjusted gross billings to technology segment net sales, which is the most directly comparable financial measure to this non-GAAP financial measure. The presentation of adjusted gross billings has been updated to align with net sales for our technology segment.

We use adjusted gross billings as a supplemental measure of our performance to gain insight into the volume of business generated by our technology segment, and to analyze the changes to our accounts receivable and accounts payable. Our use of adjusted gross billings as an analytical tool has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate adjusted gross billings or a similarly titled measure differently, which may reduce its usefulness as a comparative measure.

	Three Months Ended June 30,
	2019		2018
Technology segment net sales	$	368,535	$	346,864
Costs incurred related to sales of third-party maintenance, software assurance and subscription/Saas licenses, and services		179,828	$	135,437
Adjusted gross billings	$	548,363	$	482,301

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Consolidated Results of Operations

During the three months ended June 30, 2019, net sales increased 7.0%, or $24.8 million, to $381.4 million, compared to the same period in the prior fiscal year. Product sales for the three months ended June 30, 2019 increased 4.0% to $335.6 million, or an increase of $12.8 million from $322.8 million in the prior year. Services sales during the three months ended June 30, 2019 increased 35.8% to $45.8 million, or an increase of $12.1 million over prior year services sales of $33.7 million. The increase in net sales was due to the acquisition of SLAIT Consulting, LLC in January 2019, as well as organic growth. The greatest increase in demand for products was from our customers in the telecom, media and entertainment, SLED, and healthcare industries; we experienced a small increase in demand from technology and financial services but had a reduction in demand from all other categories of customers, during the three months ended June 30, 2019 compared to the prior year.

Adjusted gross billings increased 13.7%, or $66.1 million, to $548.4 million for the three months ended June 30, 2019 from $482.3 million for the same period in the prior fiscal year. The increase in adjusted gross billings was due, in part, to the SLAIT acquisition, as well as higher demand from our current customers. This increase was offset by a shift in mix to third-party maintenance, software assurance, subscriptions/SaaS licenses, and services where we recognize revenue on a net basis. As a result, net sales increased by a smaller percentage than adjusted gross billings.

Consolidated gross profit for the three months ended June 30, 2019, rose 14.8% to $92.6 million, compared with $80.7 million for the three months ended June 30, 2018. Consolidated gross margins were 24.3% for the three months ended June 30, 2019, which is an increase of 170 basis points compared to 22.6% for the same period in the prior fiscal year. The increase in margins for the three-month period was due to a shift in product mix, as we sold a higher proportion of third-party maintenance, software assurance and subscription/SaaS licenses, and services. Also contributing to the gross margin improvement was higher product margins, expanded gross profit and margins of our financing segment, and increased service revenues.

Our operating expenses for the three months ended June 30, 2019, increased 16.0% to $69.9 million, as compared to $60.2 million for the prior year period. The majority of this increase reflects increase in selling, general, and administrative expense of 15.5% or $8.8 million, due, in part to increases in variable compensation,  software license and maintenance, as well as the operating expenses associated with the acquisition of SLAIT.  As of June 30, 2019, we had 1,538 employees, an increase of 289, or 23.1%, from 1,249 last year. The increase includes 246 current employees are related to the acquisition of SLAIT, including the employees performing our staffing services. Depreciation and amortization expense increased $0.7 million, due to the SLAIT acquisition, and interest and financing costs increased $0.2 million, due to an increase in the average balance of non-recourse notes payable outstanding during the three months ended June 30, 2019, as compared to the prior year.

As a result, operating income increased $2.3 million, or 11.2%, to $22.8 million and operating margin increased by 30 basis points to 6.0%, as compared to the three months ended June 30, 2018.

Consolidated net earnings for the three months ended June 30, 2019 were $16.2 million, an increase of 6.0%, or $0.9 million, over the prior year’s results, due to the increase in revenues and gross profit, partially offset by increased operating expenses. Our effective tax rate for the current quarter was 28.7%, compared with 25.7% in the prior year quarter.

Adjusted EBITDA increased $3.2 million, or 12.6%, to $28.6 million and adjusted EBITDA margin increased 40 basis points to 7.5% for the three months ended June 30, 2019, as compared to the prior year period of 7.1%.

Diluted earnings per share increased 7.1%, or $0.08, to $1.20 per share for the three months ended June 30, 2019, as compared to $1.12 per share for the three months ended June 30, 2018. Non-GAAP diluted earnings per share increased 12.5% to $1.44 for the three months ended June 30, 2019, as compared to $1.28 for the three months ended June 30, 2018.

Cash and cash equivalents decreased $44.2 million or 55.4% to $35.6 million at June 30, 2019, as compared to $79.8 million as of March 31, 2019. The decrease is primarily the result of share repurchases, investments in our financing portfolio, working capital required for the growth in our technology segment, and an increase in our cash conversion cycle, partially offset by cash flows from operations. Our cash on hand, funds generated from operations, amounts available under our credit facility and the possible monetization of our investment portfolio have provided sufficient liquidity for our business.

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Segment Overview

Our operations are conducted through two segments: technology and financing.

Technology Segment

The technology segment sells IT equipment and software and related services primarily to corporate customers, state and local governments, and higher education institutions on a nationwide basis, with geographic concentrations relating to our physical locations. The technology segment also provides Internet-based business-to-business supply chain management solutions for IT products.

Our technology segment derives revenue from the sales of new equipment and service engagements. Included in net sales are revenues derived from performing advanced IT professional and managed services that may be sold together with and integral to third-party products and software. Our service engagements are generally governed by statements of work and are primarily fixed price (with allowance for changes); however, some service agreements are based on time and materials.

Customers who purchase IT equipment and services from us may have customer master agreements, or CMAs, with our company, which stipulate the terms and conditions of the relationship. Some CMAs contain pricing arrangements, and most contain mutual voluntary termination clauses. Our other customers place orders using purchase orders without a CMA in place or with other documentation customary for the business. Often, our work with state and local governments is based on public bids and our written bid responses.

We endeavor to minimize our cost of sales through incentive programs provided by vendors and distributors. The programs for which we qualify are generally set by our reseller authorization level with the vendor. The authorization level we achieve and maintain governs the types of products we can resell as well as such items as pricing received, funds provided for the marketing of these products and other special promotions. These authorization levels are achieved by us through purchase volume, certifications held by sales executives or engineers and/or contractual commitments by us. The authorization levels are costly to maintain and these programs continually change; therefore, there is no guarantee of future reductions of costs provided by these vendor consideration programs.

Financing Segment

Our financing segment offers financing solutions to corporations, governmental entities, and educational institutions nationwide, as well as internationally in the UK, Canada, Iceland, and Spain. The financing segment derives revenue from leasing IT and medical equipment and the disposition of that equipment at the end of the lease. The financing segment also derives revenues from the financing of third-party software licenses, software assurance, maintenance and other services.

Financing revenue generally falls into the following three categories:

• Portfolio income: Interest income from financing receivables and rents due under operating leases;

• Transactional gains: Net gains or losses on the sale of financial assets; and

• Post-contract earnings: Month-to-month rents; early termination, prepayment, make-whole, or buyout fees; and net gains on the sale of off-lease (used) equipment.

Our financing segment sells the equipment underlying a lease to the lessee or a third-party other than the lessee. These sales occur at the end of the lease term and revenues from the sales of such equipment are recognized at the date of sale. We also recognize revenue from events that occur after the initial sale of a financial asset and remarketing fees from certain residual value investments.

Fluctuations in Revenues

Our results of operations are susceptible to fluctuations for a number of reasons, including, without limitation, customer demand for our products and services, supplier costs, changes in vendor incentive programs, interest rate fluctuations, general economic conditions, and differences between estimated residual values and actual amounts realized related to the equipment we lease. Operating results could also fluctuate as a result of a sale prior to the expiration of the lease term to the lessee or to a third-party or from post-term events.

We expect to continue to expand by opening new sales locations and hiring additional staff for specific targeted market areas in the near future whenever we can find both experienced personnel and desirable geographic areas. These investments may reduce our results from operations in the short term.

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CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with US GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, or different assumptions were made, it is possible that alternative accounting policies would have been applied, resulting in a change in financial results. On an ongoing basis, we reevaluate our estimates, including those related to revenue recognition, residual values, vendor incentives, lease classification, goodwill and intangibles, and reserves for credit losses and income taxes specifically relating to uncertain tax positions. We base estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. For all such estimates, we caution that future events rarely develop exactly as forecasted, and therefore, these estimates may require adjustment.

Our critical accounting estimates have not changed from those reported in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2019 Annual Report.

SEGMENT RESULTS OF OPERATIONS

The three months ended June 30, 2019, compared to the three months ended June 30, 2018

Technology Segment

The results of operations for our technology segment for the three months ended June 30, 2019 and 2018 were as follows (dollars in thousands):

	Three Months Ended June 30,
	2019		2018		Change
Net sales
Product	$	322,764	$	313,149	$	9,615	3.1	%
Services		45,771		33,715		12,056	35.8	%
Total		368,535		346,864		21,671	6.2	%
Cost of sales
Product		258,054		254,064		3,990	1.6	%
Services		28,670		20,017		8,653	43.2	%
Total		286,724		274,081		12,643	4.6	%
Gross profit		81,811		72,783		9,028	12.4	%
Selling, general, and administrative		62,667		54,454		8,213	15.1	%
Depreciation and amortization		3,407		2,789		618	22.2	%
Operating expenses		66,074		57,243		8,831	15.4	%
Operating income	$	15,737	$	15,540	$	197	1.3	%
Adjusted gross billings	$	548,363	$	482,301	$	66,062	13.7	%
Adjusted EBITDA	$	21,419	$	20,341	$	1,078	5.3	%

Net sales: Net sales for the three months ended June 30, 2019, were $368.5 million compared to $346.9 million during the three months ended June 30, 2018, an increase of 6.2% or $21.7 million, due to increases from our healthcare, telecom, media and entertainment industries, and all the other categories of customers, which was partially offset by a decrease in demand from technology, and financial services customers. Product sales increased 3.1% due to higher demand from our customers. Services revenues increased 35.8%, or $12.1 million due to an increase in staffing and professional and managed services some of which was from the SLAIT acquisition.

Adjusted gross billings for the three months ended June 30, 2019 increased to $548.4 million, or 13.7%, from $482.3 million in the prior year. The increase in adjusted gross billings was due, in part, to the SLAIT acquisition as well as higher demand from our current customers. This increase was offset by a shift in mix to third-party maintenance, software assurance, subscriptions/SaaS licenses, and services where we recognize revenue on a net basis. As a result, net sales for the three months ended June 30, 2019 increased at a lower percentage than adjusted gross billings

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We rely on our vendors to fulfill a large majority of shipments to our customers. As of June 30, 2019, we had open orders of $210.6 million and deferred revenue of $60.9 million. As of June 30, 2018, we had open orders of $168.7 million and deferred revenues of $59.9 million.

We analyze net sales by customer end market and by vendor, as opposed to discrete product and service categories. The percentage of net sales by industry and vendor are summarized below:

	Twelve Months Ended June 30,
	2019			2018			Change
Revenue by customer end market:
Technology		21	%		24	%		(3	%)
SLED		17	%		17	%		0	%
Financial Services		15	%		15	%		0	%
Healthcare		15	%		14	%		1	%
Telecom, Media & Entertainment		14	%		14	%		0	%
All others		18	%		16	%		2	%
Total		100	%		100	%

	Twelve Months Ended June 30,
	2019			2018			Change
Revenue by vendor:
Cisco Systems		42	%		41	%		1	%
NetApp		4	%		4	%		0	%
HP Inc. & HPE		6	%		6	%		0	%
Dell/EMC		5	%		4	%		1	%
Juniper Networks		3	%		3	%		0	%
Arista Networks		4	%		4	%		0	%
All others		36	%		38	%		(2	%)
Total		100	%		100	%

Our revenues by customer end market have remained consistent over the year with over 80% of our revenues generated from customers within the five end markets identified above. During the trailing twelve-month period ended June 30, 2019, we had an increase in the percentage total revenues from customers in the health care and the all other customer category, which was partially offset by a decrease in the percentage of total revenues in the technology customer market. These changes were driven by changes in customer buying cycles and specific IT related initiatives, rather than the acquisition or loss of a customer or set of customers.

The majority of our revenues by vendor are derived from Cisco Systems and Hewlett Packard companies, which, combined a fairly constant percentage of 48% and 47% of total revenues for the twelve-month periods ending June 30, 2019 and 2018, respectively. None of the vendors included within the “other” category exceeded 5% of total revenues.

Cost of sales: The 4.6% increase in cost of sales was due to the increase in service and product sales, partially offset by an improvement in gross margin on product sales, due to a shift in product mix, as we sold a higher proportion of third-party software assurance, maintenance and services, which are recognized on a net basis. Our gross margin increased 100 basis points to 22.2% for the three months ended June 30, 2019, compared to 21.2% in the same period in the prior year due to an increase in our services revenues and a shift in product mix, as we sold a higher proportion of third-party software assurance, maintenance and services for which the revenues are presented on a net basis. Vendor incentives earned as a percentage of sales decreased 40 basis points for the three months ended June 30, 2019, resulting in a negative impact on gross margin, as compared to same period in the prior year.

There are ongoing changes to the incentive programs offered to us by our vendors. Accordingly, if we are unable to maintain the level of vendor incentives we are currently receiving, gross margin may decrease.

Selling, general, and administrative: Selling, general, and administrative expenses of $62.7 million for the three months ended June 30, 2019, increased by $8.2 million, or 15.1% from $54.5 million the prior year. Salaries and benefits increased $6.2 million, or 13.6% to $51.5 million, compared to $45.3 million during the prior year due to increased employment levels with approximately 29.4% of this increase due to higher variable compensation related to the increase in gross profit. Our technology segment had 1,505 employees as of June 30, 2019, an increase of 299, or 24.8%, from 1,206 at June 30, 2018. This increase includes 246 of our current employees are related to the SLAIT acquisition, including the employees performing our staffing services. General and administrative expenses  increased $2.0 million, or 22.5%, to $11.2 million during the three months ended June 30, 2019, compared to $9.1 million the prior year, due to higher software licenses and maintenance, office rent, travel expense, and other general expenses.

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Depreciation and amortization: Depreciation and amortization increased $0.6 million, or 22.2%, to $3.4 million during the three months ended June 30, 2019 as compared to $2.8 million in the prior year, due to the acquisition of SLAIT in January 2019.

Segment operating income: As a result of the foregoing, operating income was $15.7 million, an increase of $0.2 million, or 1.3%, for the three months ended June 30, 2019 as compared to $15.5 million in the prior year period. For the three months ended June 30, 2019, adjusted EBITDA was $21.4 million, an increase of $1.1 million, or 5.3%, compared to $20.3 million in the prior year period.

Financing Segment

The results of operations for our financing segment for the three months ended June 30, 2019 and 2018 were as follows (dollars in thousands):

	Three Months Ended June 30,
	2019		2018		Change
Net product sales		12,837		9,668		3,169	32.8	%
Cost of product sales		2,009		1,748		261	14.9	%
Gross profit		10,828		7,920		2,908	36.7	%
Selling, general, and administrative		3,120		2,512		608	24.2	%
Depreciation and amortization		56		1		55	5500.0	%
Interest and financing costs		628		476		152	31.9	%
Operating expenses		3,804		2,989		815	27.3	%
Operating income	$	7,024	$	4,931	$	2,093	42.4	%
Adjusted EBITDA	$	7,148	$	5,029	$	2,119	42.1	%

Net sales: Net sales increased by $3.2 million, or 32.8%, to $12.8 million for the three months ended June 30, 2019, as compared to prior year results due to higher transactional gains, post contract earnings, and portfolio earnings, which partially were offset by lower other financing revenues. During the quarters ended June 30, 2019 and 2018, we recognized net gains on sales of financial assets of $3.3 million and $1.3 million, respectively, and the fair value of assets received from these sales were $69.9 million and $46.9 million, respectively.

At June 30, 2019, we had $169.5 million in financing receivables and operating leases, compared to $140.7 million as of June 30, 2018, an increase of $28.8 million, or 20.5%.

Cost of sales: Cost of sales increased $0.3 million for the three months ended June 30, 2019, which consists of depreciation expense from operating leases. Gross profit increased by 36.7% to $10.8 million, for the three months ended June 30, 2019 as compared to the prior year.

Selling, general and administrative: For the three months ended June 30, 2019, selling, general, and administrative expenses increased by $0.6 million or 24.2%, which was due primarily to an increase variable compensation due to higher gross profit.

Interest and financing costs increased by 31.9% to $0.6 million for the three months ended June 30, 2019, compared to the prior year, due to an increase in the average total notes payable outstanding over the three months ended June 30, 2018. Total notes payable were $72.9 million as of June 30, 2019, an increase of $18.3 million, or 33.6%, as compared to $54.6 million as of June 30, 2018. Our weighted average interest rate for non-recourse notes payable was 4.25% and 4.31%, as of June 30, 2019 and 2018, respectively.

Segment operating income: As a result of the foregoing, operating income and adjusted EBITDA both increased $2.1 million or 42.4% and 42.1%, to $7.0 million and $7.1 million, respectively, for the three months ended June 30, 2019, over the prior year period.

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Consolidated

Other income: Other income (expense) decreased by $0.1 million due to reduction in interest income during the three months ended June 30, 2019, compared to the prior year period.

Income taxes: Our provision for income tax expense was $6.5 million for the three months ended June 30, 2019, as compared to $5.3 million for the same period in the prior year. Our effective income tax rates for the three months ended June 30, 2019 and 2018 were 28.7% and 25.7%, respectively. The change in our effective income tax rate was primarily due to a benefit received in the prior year for stock which vested during the quarter.

Net earnings: The foregoing resulted in net earnings of $16.2 million for the three months ended June 30, 2019, an increase of 6.0%, as compared to $15.3 million during the three months ended June 30, 2018.

Basic and fully diluted earnings per common share were $1.21 and $1.20, for the three months ended June 30, 2019, an increase of 6.1% and 7.1% as compared to $1.14 and $1.12, respectively, for the three months ended June 30, 2018.

Weighted average common shares outstanding used in the calculation of basic and diluted earnings per common share for the three months ended June 30, 2019 was 13.4 million and 13.5 million, respectively. Weighted average common shares outstanding used in the calculation of the basic and diluted earnings per common share for the three months ended June 30, 2018 was 13.4 million and 13.6 million, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity Overview

Our primary sources of liquidity have historically been cash and cash equivalents, internally generated funds from operations, and borrowings, both non-recourse and recourse. We have used those funds to meet our capital requirements, which have historically consisted primarily of working capital for operational needs, capital expenditures, purchases of equipment for lease, payments of principal and interest on indebtedness outstanding, acquisitions, and the repurchase of shares of our common stock.

ePlus Technology, inc. and certain subsidiaries, part of our technology segment, finance their operations with funds generated from operations, and with a credit facility with WFCDF. This facility provides short-term capital for our technology segment. There are two components of the WFCDF credit facility: (1) a floor plan component, and (2) an accounts receivable component.

As of June 30, 2019, the facility had an aggregate limit of $250 million for the two components, and the accounts receivable component had a sub-limit of $50 million, which bears interest assessed at a rate of the One Month LIBOR plus two- and one-half percent. We have an election beginning July 1 in each year to temporarily increase the aggregate limit of the two components to $325.0 million ending the earlier of 90 days following the election or October 31 of that same year.

After a customer places a purchase order with us and we have completed our credit review, we place an order for the equipment with one of our vendors. Generally, most purchase orders from us to our vendors are first financed under the floor plan component and reflected in “accounts payable—floor plan” in our consolidated balance sheets. Payments on the floor plan component are due on three specified dates each month, generally 30-60 days from the invoice date. On the due date of the invoices financed by the floor plan component, the invoices are paid by the accounts receivable component of the credit facility. The balance of the accounts receivable component is then reduced by payments from our available cash. The outstanding balance under the accounts receivable component is recorded as recourse notes payable on our consolidated balance sheets. There was no outstanding balance at June 30, 2019 or June 30, 2018, while the maximum credit limit was $50.0 million and $30.0 million, respectively. The borrowings and repayments under the floor plan component are reflected as “net borrowings (repayments) on floor plan facility” in the cash flows from financing activities section of our consolidated statements of cash flows.

Most customer payments in our technology segment are remitted to our lockboxes. Once payments are cleared, the monies in the lockbox accounts are automatically transferred to our operating account on a daily basis. On the due dates of the floor plan component, we make cash payments to WFCDF. These payments from the accounts receivable component to the floor plan component and repayments from our cash are reflected as “net borrowings on floor plan facility” in the cash flows from financing activities section of our consolidated statements of cash flows. We engage in this payment structure to minimize our interest expense and bank fees in connection with financing the operations of our technology segment.

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We believe that cash on hand and funds generated from operations, together with available credit under our credit facility, will be sufficient to finance our working capital, capital expenditures, and other requirements for at least the next twelve calendar months.

Our ability to continue to fund our planned growth, both internally and externally, is dependent upon our ability to generate sufficient cash flow from operations or to obtain additional funds through equity or debt financing, or from other sources of financing, as may be required. While at this time we do not anticipate requiring any additional sources of financing to fund operations, if demand for IT products declines, or if our supply of products is delayed or interrupted, our cash flows from operations may be substantially affected.

Cash Flows

The following table summarizes our sources and uses of cash over the periods indicated (in thousands):

	Three Months Ended June 30,
	2019			2018
Net cash used in operating activities	$	(87,394	)	$	(49,032	)
Net cash used in investing activities		(1,226	)		(31,815	)
Net cash provided by financing activities		44,327			20,037
Effect of exchange rate changes on cash		81			92
Net Decrease in Cash and Cash Equivalents	$	(44,212	)	$	(60,718	)

Cash flows from operating activities. We used $87.4 million in from operating activities during the three months ended June 30, 2019, compared to $49.0 million for the three months ended June 30, 2018. See below for a breakdown of operating cash flows by segment (in thousands):

	Three Months Ended June 30,
	2019			2018
Technology segment	$	(42,072	)	$	(42,497	)
Financing segment		(45,322	)		(6,535	)
Net cash used in operating activities	$	(87,394	)	$	(49,032	)

Technology Segment: In the three months ended June 30, 2019, our technology segment used $42.1 million from operating activities due to changes in working capital exceeding cash generated from earnings. Partially offsetting the cash used in operations were changes in the accounts payable - floor plan balance of $19.9 million. The accounts payable – floor plan is a facility used to manage working capital needs and we are required to present changes in this balance as financing activity in our consolidated statement of cash flows.

In the three months ended June 30, 2018, our technology segment used $42.5 million from operating activities due to changes in working capital exceeding cash generated from earnings. Partially offsetting the cash used in operations were changes in the accounts payable - floor plan balance of $17.5 million.

To manage our working capital, we monitor our cash conversion cycle for our Technology segment, which is defined as days sales outstanding (“DSO”) in accounts receivable plus days of supply in inventory (“DIO”) minus days of purchases outstanding in accounts payable (“DPO”). The following table presents the components of the cash conversion cycle for our Technology segment:

	As of June 30,
	2019			2018			2017
(DSO) Days sales outstanding (1)		53			53			48
(DIO) Days inventory outstanding (2)		11			10			19
(DPO) Days payable outstanding (3)		(40	)		(41	)		(42	)
Cash conversion cycle		24			22			25

(1) Represents the rolling three-month average of the balance of trade accounts receivable-trade, net for our technology segment at the end of the period divided by adjusted gross billings for the same three-month period.

(2) Represents the rolling three-month average of the balance of inventory, net for our technology segment at the end of the period divided by cost of adjusted gross billings for the same three-month period.

(3) Represents the rolling three-month average of the combined balance of accounts payable-trade and accounts payable-floor plan for our technology segment at the end of the period divided by cost of adjusted gross billings for the same three-month period.

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Our cash conversion cycle increased to 24 days at June 30, 2019, compared to 22 days at June 30, 2018, resulting from a 1 day increase in DIO and a 1 day decrease in DPO. Our DIO as of June 30, 2019, was primarily impacted by an increase in average inventory balances of 19.4%, or $9.1 million, while adjusted gross cost of goods sold for the same period increased 13.9%. The remaining change in our cash conversion cycle is due to DPO timing of payments.

Financing Segment: In the three months ended June 30, 2019, our financing segment used $45.3 million from operating activities, primarily due to changes in financing receivables- net of $58.2 million.  In the three months ended June 30, 2018, our financing segment used $6.5 million from operating activities, primarily due to changes in working capital. In this period, which we elected not to update using the transition option available when we adopted ASC 842, changes in financing receivables not sourced through us are reflected in cash flows from investing activities. With the adoption of ASC 842, for periods beginning after April 1, 2019, we recognize the change in financing receivables, including the issuance of financing receivables offset by repayments of financing receivables and the proceeds from the transfer of financing receivables when we account for the transfer as a sale, as part of operating activities.

Cash flows related to investing activities. In the three months ended June 30, 2019, we used $1.2 million from investing activities, consisting of $1.5 million for purchases of property, equipment and operating lease equipment offset by $0.3 million of proceeds from the sale of property, equipment, and operating lease equipment.

In the three months ended June 30, 2018, we used $31.8 million from investing activities, including $1.6 million for purchases of property, equipment and operating lease equipment. In this period, which we elected not to update using the transition option available when we adopted ASC 842, cash used in investing activities also included net cash outflows related to financing receivables of $31.2 million, consisting of the issuance of financing receivables of $49.4 million, purchases of assets to be leased or financed of $7.2 million, and was partially offset by cash proceeds from the repayment of financing receivables of $15.6 million, and the sale of financing receivables of $9.8 million.

Cash flows from financing activities. In the three months ended June 30, 2019, cash provided by financing activities was $44.3 million consisting of net borrowings of non-recourse and recourse notes payable of $38.0 million, net borrowings on floor plan facility of $19.9 million, and offset by $13.3 million in repurchase of common stock and $0.3 million paid to sellers of SLAIT as part of a working capital adjustment.

In the three months ended June 30, 2018, cash provided by financing activities was $20.0 million consisting of net borrowings of non-recourse and recourse notes payable of $12.9 million, and net borrowing on floor plan facility of $17.5 million, and partially offset by cash used for the repurchase of common stock of $9.8 million, and repayment of financing of acquisitions of $0.5 million.

Our borrowing of non-recourse and recourse notes payable primarily arises from our financing segment when we transfer contractual payments due to us under lease and financing agreements to third-party financial institutions. When the transfers do not meet the requirements for a sale, the proceeds paid to us represent borrowings of non-recourse and recourse notes payable.

Non-Cash Activities

We assign contractual payments due to us under lease and financing agreements to third-party financial institutions. As a condition to the assignment agreement, certain financial institutions may request that the customer remit their contractual payments to a trust, rather than to us, and the trust pays the financial institution. Alternatively, the customer will make payments to us, and we will remit the payment to the financial institution. The economic impact to us under either structure is similar, in that the assigned contractual payments are paid by the customer and remitted to the lender. However, when our customer makes payments to through a trust, such payments represent non-cash transactions.

In addition, in certain assignment agreements, we may direct the third-party financial institution to pay some of the proceeds from the assignment of directly to the vendor or vendors that have supplied the assets being leased and or financed. In these situations, the portion of the proceeds paid directly to our vendors are non-cash transactions.

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Liquidity and Capital Resources

We may utilize non-recourse notes payable to finance approximately 80% to 100% of the purchase price of the assets being leased or financed by our customers. Any balance of the purchase price remaining after non-recourse funding and any upfront payments received from the customer (our equity investment in the equipment) must generally be financed by cash flows from our operations, the sale of the equipment leased to third-parties, or other internal means. Although we expect that the credit quality of our financing arrangements and our residual return history will continue to allow us to obtain such financing, such financing may not be available on acceptable terms, or at all.

The financing necessary to support our lease and financing activities has been provided by our cash and non-recourse borrowings. We monitor our exposure closely. We are able to obtain financing through our traditional lending sources using primarily non-recourse borrowings from third-party banks and finance companies. Non-recourse financings are loans whose repayment is the responsibility of a specific customer, although we may make representations and warranties to the lender regarding the specific contract or have ongoing loan servicing obligations. Under a non-recourse loan, we borrow from a lender an amount based on the present value of the contractually committed payments at a fixed rate of interest, and the lender secures a lien on the financed assets. When the lender is fully repaid, the lien is released, and all further proceeds are ours. We are not liable for the repayment of non-recourse loans unless we breach our representations and warranties in the loan agreements. The lender assumes the credit risk, and the lender’s only recourse, upon default, is against the customer and the specific equipment.

At June 30, 2019, our non-recourse notes payable increased 50.0% to $72.9 million, as compared to $48.6 million at March 31, 2019. There were no recourse notes payable as of June 30, 2019, compared to $28 thousand as of March 31, 2019.

Whenever desirable, we arrange for equity investment financing, which includes selling lease payments, including the residual portions, to third-parties and financing the equity investment on a non-recourse basis. We generally retain customer control and operational services and have minimal residual risk. We usually reserve the right to share in remarketing proceeds of the equipment on a subordinated basis after the investor has received an agreed-to return on its investment.

Credit Facility — Technology

Our subsidiary, ePlus Technology, inc., and certain subsidiaries. has a financing facility from WFCDF to finance its working capital requirements for inventories and accounts receivable. There are two components of this facility: (1) a floor plan component; and (2) an accounts receivable component. This facility has full recourse to ePlus Technology, inc. and certain subsidiaries. and is secured by a blanket lien against all its assets, such as chattel paper, receivables and inventory. As of June 30, 2019, the facility had an aggregate limit of the two components of $250.0 million with an accounts receivable sub-limit of $30.0 million.

On July 27, 2017, we executed an amendment to the WFCDF credit facility that temporarily increased the aggregate limit of the two components from $250.0 million to $325.0 million from the date of the agreement through October 31, 2017 and provides us an election beginning July 1 in each subsequent year to similarly temporarily increase the aggregate limit of the two components to $325.0 million ending the earlier of 90 days following the date of election and October 31 of that same year. On July 31, 2019, we elected to temporarily increase the aggregate limit to $325.0 million.

Availability under the facility may be limited by the asset value of equipment we purchase or accounts receivable and may be further limited by certain covenants and terms and conditions of the facility. These covenants include but are not limited to a minimum excess availability of the facility and ePlus Technology, inc.’s minimum earnings before interest, taxes, depreciation and amortization. We were in compliance with these covenants as of June 30, 2019. Interest on the facility is assessed at a rate of the One Month LIBOR plus two- and one-half percent if the payments are not made on the three specified dates each month. The facility also requires that financial statements of ePlus Technology, inc. and certain subsidiaries. be provided within 45 days of the end of each quarter and 90 days of each fiscal year end and other operational reports be provided on a regular basis. Either party may terminate the credit facility with 90 days advance written notice.

We are not, and do not believe that we are reasonably likely to be, in breach of the WFCDF credit facility. In addition, we do not believe that the covenants of the WFCDF credit facility materially limit our ability to undertake financing. In this regard, the covenants apply only to our subsidiary, ePlus Technology, inc. and certain subsidiaries. This credit facility is secured by the assets of only ePlus Technology, inc. and certain subsidiaries. and the guaranty as described below.

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The WFCDF credit facility requires a guaranty of $10.5 million by ePlus inc. The guaranty requires ePlus inc. to deliver its annual audited financial statements by a certain date. We have delivered the annual audited financial statements for the year ended March 31, 2019, as required. The loss of the WFCDF credit facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity for our technology segment and as an operational function of our accounts payable process.

Floor Plan Component

Purchases by ePlus Technology, inc. and certain subsidiaries. including computer technology products, software, maintenance and services are in part financed through a floor plan component in which interest expense for the first thirty to sixty days, in general, is not charged. The floor plan liabilities are recorded as accounts payable—floor plan on our consolidated balance sheets, as they are normally repaid within the fifteen to sixty-day time frame and represent assigned accounts payable originally generated with the manufacturer/distributor. In some cases, we are able to pay invoices early and receive a discount, but if the fifteen to sixty-day obligation is not paid timely, interest is then assessed at stated contractual rates.

The respective floor plan component credit limits and actual outstanding balance payables for the dates indicated were as follows (in thousands):

Maximum Credit Limit at June 30, 2019	Balance as of June 30, 2019	Maximum Credit Limit at March 31, 2019	Balance as of March 31, 2019
$250,000	$136,013	$250,000	$116,083

Accounts Receivable Component

ePlus Technology, inc. and certain subsidiaries. has an accounts receivable component included within the WFCDF credit facility, which has a revolving line of credit. On the due date of the invoices financed by the floor plan component, the invoices are paid by the accounts receivable component of the credit facility. The balance of the accounts receivable component is then reduced by payments from our available cash. The outstanding balance under the accounts receivable component is recorded as recourse notes payable on our consolidated balance sheets. There was no balance outstanding for the accounts receivable component at June 30, 2019, or March 31, 2019, while the maximum credit limit was $50.0 million for both periods.

Performance Guarantees

In the normal course of business, we may provide certain customers with performance guarantees, which are generally backed by surety bonds. In general, we would only be liable for the amount of these guarantees in the event of default in the performance of our obligations. We are in compliance with the performance obligations under all service contracts for which there is a performance guarantee, and we believe that any liability incurred in connection with these guarantees would not have a material adverse effect on our consolidated statements of operations.

Off-Balance Sheet Arrangements

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K, or other contractually narrow or limited purposes. As of June 30, 2019, we were not involved in any unconsolidated special purpose entity transactions.

Adequacy of Capital Resources

The continued implementation of our business strategy will require a significant investment in both resources and managerial focus. In addition, we may selectively acquire other companies that have attractive customer relationships and skilled sales and/or engineering forces. We may also open offices in new geographic areas, which may require a significant investment of cash. We may also acquire technology companies to expand and enhance the platform of bundled solutions to provide additional functionality and value-added services. We may continue to use our internally generated funds to finance investments in leased assets or investments in notes receivables due from our customers. These actions may result in increased working capital needs as the business expands. As a result, we may require additional financing to fund our strategy, implementation, potential future acquisitions, and working capital needs, which may include additional debt and equity financing.

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Inflation

For the periods presented herein, inflation has been relatively low, and we believe that inflation has not had a material effect on our results of operations.

Potential Fluctuations in Quarterly Operating Results

Our future quarterly operating results and the market price of our common stock may fluctuate. In the event our revenues or earnings for any quarter are less than the level expected by securities analysts or the market in general, such shortfall could have an immediate and significant adverse impact on the market price of our common stock. Any such adverse impact could be greater if any such shortfall occurs near the time of any material decrease in any widely followed stock index or in the market price of the stock of one or more public equipment leasing and financing companies, IT resellers, software competitors, or our major customers or vendors.

Our quarterly results of operations are susceptible to fluctuations for a number of reasons, including, but not limited to currency fluctuations, reduction in IT spending, any reduction of expected residual values related to the equipment under our leases, the timing and mix of specific transactions, the reduction of manufacturer incentive programs, and other factors. Quarterly operating results could also fluctuate as a result of our sale of equipment in our lease portfolio to a lessee or third-party at the expiration of a lease term or prior to such expiration, and the transfer of financial assets. Sales of equipment and transfers of financial assets may have the effect of increasing revenues and net income during the quarter in which the sale occurs and reducing revenues and net income otherwise expected in subsequent quarters. See Part I, Item 1A, “Risk Factors,” in our 2019 Annual Report.

We believe that comparisons of quarterly results of our operations are not necessarily meaningful and that results for one quarter should not be relied upon as an indication of future performance.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

A substantial portion of our liabilities are non-recourse, fixed-interest-rate instruments, which were aligned with the customer financing rate creating an interest rate spread that is our profit. Should we not fund these transactions with debt at inception and interest rates rise above our interest rate with our customer, we may not be able to fund the transaction without reduced profit or a loss, thus inhibiting our ability to generate proceeds from the transaction. We utilize our lines of credit and other financing facilities that are subject to fluctuations in short-term interest rates. These instruments, which are generally denominated in US dollars, were entered into for other than trading purposes and, with the exception of amounts drawn under the WFCDF facility, bear interest at a fixed rate. Because the interest rate on these instruments is fixed, changes in interest rates will not directly impact our cash flows. Borrowings under the WFCDF facility bear interest at a market-based variable rate. As of June 30, 2019, the aggregate fair value of our recourse and non-recourse borrowings approximated their carrying value.

We have transactions in foreign currencies, primarily in British Pounds, Euros, and Indian Rupees. There is a potential for exposure to fluctuations in foreign currency rates resulting primarily from the translation exposure associated with the preparation of our consolidated financial statements. In addition, we have foreign currency exposure when transactions are not denominated in our subsidiary’s functional currency. To date, our foreign operations are insignificant in relation to total consolidated operations, and we believe that potential fluctuations in currency exchange rates will not have a material effect on our financial position.

The UK referendum to leave the European Union (“Brexit”) could impact revenue items, cost items, tax, immigration, trade, goodwill impairments and liquidity, among others. The most obvious immediate impact is the effect of foreign exchange fluctuations on revenue and cost items. We evaluate Brexit-related developments on a regular basis to determine if such developments are anticipated to have a material impact on the Company’s results on operations and financial position.

We have determined that our foreign currency exposure for our UK operations is insignificant in relation to total consolidated operations and we believe those potential fluctuations in currency exchange rates and other Brexit-related economic and operational risks will not have a material effect on our results of operations and financial position.

We have assets in the UK, Canada, Iceland, and Spain. As a lessor, we have entered into lease contracts and non-recourse, fixed-interest-rate financing denominated in British Pounds, Canadian Dollars, Icelandic Krona, and Euros. To date, our foreign operations have been insignificant, and we believe that potential fluctuations in currency exchange rates will not have a material effect on our financial position.

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Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures, or “disclosure controls,” as defined in the Exchange Act Rule 13a-15(e). Disclosure controls are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this quarterly report, is recorded, processed, summarized and reported within the periods specified in the SEC’s rules and forms. Disclosure controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls include some, but not all, components of our internal control over financial reporting. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2019.

Changes in Internal Control Over Financial Reporting.

There have not been any changes in our internal control over financial reporting during the quarter ended June 30, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our management, including our CEO and CFO, do not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system cannot provide absolute assurance due to its inherent limitations; it is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. A control system also can be circumvented by collusion or improper management override. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of such limitations, disclosure controls and internal control over financial reporting cannot prevent or detect all misstatements, whether unintentional errors or fraud. However, these inherent limitations are known features of the financial reporting process; therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any legal proceedings with loss contingencies that are expected to be material. From time to time, we may be a plaintiff or a defendant in legal actions arising from our normal business activities, none of which has had a material effect on our business, results of operations or financial condition. Legal proceedings which may arise in the ordinary course of business include preference payment claims asserted in customer bankruptcy proceedings; tax audits; claims of alleged infringement of patents, trademarks, copyrights and other intellectual property rights; claims of alleged non-compliance with contract provisions; employment-related claims; claims by competitors, vendors or customers; claims related to alleged violations of laws and regulations; and claims relating to alleged security or privacy breaches. We attempt to ameliorate the effect of potential litigation through insurance coverage and contractual protections such as rights to indemnifications and limitations of liability. We do not expect that the outcome in any of these matters, individually or collectively, will have a material adverse effect on our financial condition or results of operations, however, litigation is inherently unpredictable. Therefore, judgments could be rendered or settlements entered that could adversely affect our results of operations or cash flows in a particular period. We provide for costs related to contingencies when a loss is probable, and the amount is reasonably determinable.

Item 1A. Risk Factors

There has not been any material change in the risk factors previously disclosed in Part I, Item 1A of our 2019 Annual Report.

41

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information regarding our purchases of ePlus inc. common stock during the three months ended June 30, 2019.

Period	Total number of shares purchased (1)		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
April 1, 2019 through April 30, 2019		-	$	-		-		385,419	(2	)
May 1, 2019 through May 27, 2019		2,301	$	83.38		1,300		0	(3	)
May 28, 2019 through May 31, 2019		68,207	$	72.32		68,207		431,793	(4	)
June 1, 2019 through June 30, 2019		117,093	$	71.15		79,283		352,510	(5	)

(1) Any shares acquired were in open-market purchases, except for 38,811 shares, out of which 1,001 were repurchased in May 2019 and 37,810 in June 2019 to satisfy tax withholding obligations that arose due to the vesting of shares of restricted stock.

(2) The share purchase authorization in place for the month ended April 30, 2019 had purchase limitations on the number of shares of up to 500,000 shares. As of April 30, 2019, the remaining authorized shares to be purchased were 385,419.

(3) As of May 27, 2019, the authorization under the then existing share repurchase plan expired.

(4) On May 24, 2019, the board of directors authorized the company to repurchase up to 500,000 shares of our outstanding common stock commencing on May 28, 2019 and continuing to May 27, 2020. As of May 31, 2019, the remaining authorized shares to be purchased were 431,793.

(5) The share purchase authorization in place for the month ended June 30, 2019 had purchase limitations on the number of shares of up to 500,000 shares. As of June 30, 2019, the remaining authorized shares to be purchased were 352,510.

The timing and expiration date of the current stock repurchase authorizations are included in Note 12, “Stockholders’ Equity” to our unaudited condensed consolidated financial statements included elsewhere in this report.

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

42

Item 6. Exhibits

3.1	ePlus inc. Amended and Restated Certificate of Incorporation as amended September 15, 2008 (Incorporated herein by reference as Exhibit 3.1 to our Current Report on Form 8-K filed on September 19, 2008)
3.2	Amended and Restated Bylaws of ePlus inc., as amended February 15, 2018 (Incorporated herein by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on February 20, 2018)
10.1	Amendment No. 7, dated January 15, 2019, to Amended and Restated Agreement for Wholesale Financing between ePlus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC (Incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on January 18, 2019).
10.2	Amendment No. 7, dated January 15, 2019, to Amended and Restated Business Financing Agreement between ePlus Technology, inc. and Wells Fargo Commercial Distribution Finance, LLC (Incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on January 18, 2019).
31.1	Certification of the Chief Executive Officer of ePlus inc. pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a).
31.2	Certification of the Chief Financial Officer of ePlus inc. pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a).
32	Certification of the Chief Executive Officer and Chief Financial Officer of ePlus inc. pursuant to 18 U.S.C. § 1350.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

43

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ePlus inc.
Date:  August 7, 2019	/s/ MARK P. MARRON
	By: Mark P. Marron,
	Chief Executive Officer and President
	(Principal Executive Officer)
Date:  August 7, 2019	/s/ ELAINE D. MARION
	By: Elaine D. Marion
	Chief Financial Officer
	(Principal Financial Officer)

44

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Mark P. Marron, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ePlus inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 7, 2019

/s/ MARK P. MARRON

Mark P. Marron

Chief Executive Officer and President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Elaine D. Marion, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ePlus inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 7, 2019

/s/ ELAINE D. MARION

Elaine D. Marion

Chief Financial Officer

(Principal Financial Officer)

EX-32

Exhibit 32

CERTIFICATION

PURSUANT TO 18 USC. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ePlus inc. on Form 10-Q for the three months ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify, pursuant to 18 USC. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the undersigned's best knowledge and belief:

a) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of ePlus inc.

Date:  August 7, 2019

/s/ MARK P. MARRON

Mark P. Marron, Chief Executive Officer

and President

(Principal Executive Officer)

/s/ ELAINE D. MARION

Elaine D. Marion, Chief Financial Officer

(Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to ePlus and will be retained by us and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Jun. 30, 2019	Aug. 05, 2019
Cover [Abstract]
Entity Registrant Name	EPLUS INC
Entity Central Index Key	0001022408
Current Fiscal Year End Date	--03-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		13,506,047
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-34167
Entity Tax Identification Number	54-1817218
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	15395 Dulles Technology Drive
Entity Address, City or Town	Herndon
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	20171-3413
City Area Code	703
Local Phone Number	984-8400
Title of 12(b) Security	Common Stock, $.01 par value
Trading Symbol	PLUS
Security Exchange Name	NASDAQ

XML

UNAUDITED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2019	Mar. 31, 2019
Current assets:
Cash and cash equivalents	$ 35,604	$ 79,816
Accounts receivable-trade, net	366,163	299,899
Accounts receivable-other, net	41,949	41,328
Inventories	58,205	50,493
Financing receivables-net, current	98,419	63,767
Deferred costs	17,665	17,301
Other current assets	8,227	7,499
Total current assets	626,232	560,103
Financing receivables and operating leases-net	71,097	59,032
Property, equipment and other assets	30,211	17,328
Goodwill	110,754	110,807
Other intangible assets-net	36,519	38,928
TOTAL ASSETS	874,813	786,198
Current liabilities:
Accounts payable	108,954	86,801
Accounts payable-floor plan	136,013	116,083
Salaries and commissions payable	20,298	21,286
Deferred revenue	48,613	47,251
Recourse notes payable-current	0	28
Non-recourse notes payable-current	64,583	38,117
Other current liabilities	28,959	19,285
Total current liabilities	407,420	328,851
Non-recourse notes payable-long term	8,362	10,502
Deferred tax liability-net	4,925	4,915
Other liabilities	25,463	17,677
TOTAL LIABILITIES	446,170	361,945
STOCKHOLDERS' EQUITY
Preferred stock, $.01 per share par value; 2,000 shares authorized; none outstanding	0	0
Common stock, $.01 per share par value; 25,000 shares authorized;13,509 outstanding at June 30, 2019 and 13,611 outstanding at March 31, 2019	144	143
Additional paid-in capital	139,162	137,243
Treasury stock, at cost, 880 shares at June 30, 2019 and 693 shares at March 31, 2019	(67,454)	(53,999)
Retained earnings	357,325	341,137
Accumulated other comprehensive income-foreign currency translation adjustment	(534)	(271)
Total Stockholders' Equity	428,643	424,253
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 874,813	$ 786,198

XML

UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2019	Mar. 31, 2019
STOCKHOLDERS' EQUITY
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,000	2,000
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	25,000	25,000
Common stock, shares outstanding (in shares)	13,509	13,611
Treasury stock, shares (in shares)	880	693

XML

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Net sales
Total	$ 381,372	$ 356,532
Cost of sales
Total	288,733	275,829
Gross profit	92,639	80,703
Selling, general, and administrative	65,787	56,966
Depreciation and amortization	3,463	2,790
Interest and financing costs	628	476
Operating expenses	69,878	60,232
Operating income	22,761	20,471
Other income (expense)	(45)	97
Earnings before tax	22,716	20,568
Provision for income taxes	6,528	5,295
Net earnings	$ 16,188	$ 15,273
Net earnings per common share-basic (in dollars per share)	$ 1.21	$ 1.14
Net earnings per common share-diluted (in dollars per share)	$ 1.20	$ 1.12
Weighted average common shares outstanding-basic (in shares)	13,356	13,434
Weighted average common shares outstanding-diluted (in shares)	13,457	13,597
Product [Member]
Net sales
Total	$ 335,601	$ 322,817
Cost of sales
Total	260,063	255,812
Services [Member]
Net sales
Total	45,771	33,715
Cost of sales
Total	$ 28,670	$ 20,017

XML

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
NET EARNINGS	$ 16,188	$ 15,273
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Foreign currency translation adjustments	(263)	(657)
Other comprehensive income (loss)	(263)	(657)
TOTAL COMPREHENSIVE INCOME	$ 15,925	$ 14,616

XML

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash Flows From Operating Activities:
Net earnings	$ 16,188	$ 15,273
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization	4,964	4,500
Reserve for credit losses, inventory obsolescence, and sales returns	351	192
Share-based compensation expense	1,919	1,693
Deferred taxes	(3)	0
Payments from lessees directly to lenders-operating leases	(22)	(32)
Gain on disposal of property, equipment, and leased equipment	(203)	(294)
Gain on sale of financing receivables	0	(1,354)
Other	0	4
Changes in:
Accounts receivable	(69,281)	(60,140)
Inventories-net	(7,774)	(12,440)
Financing receivables-net	(58,198)	3,749
Deferred costs, other intangible assets, and other assets	(14,379)	5,491
Accounts payable-trade	21,089	10,102
Salaries and commissions payable, deferred revenue, and other liabilities	17,955	(15,776)
Net cash used in operating activities	(87,394)	(49,032)
Cash Flows From Investing Activities:
Proceeds from sale of property, equipment and leased equipment	292	1,034
Purchases of property, equipment, and operating lease equipment	(1,518)	(1,630)
Purchases of assets to be leased or financed	0	(7,195)
Issuance of financing receivables	0	(49,355)
Repayments of financing receivables	0	15,555
Proceeds from sale of financing receivables	0	9,776
Net cash used in investing activities	(1,226)	(31,815)
Cash Flows From Financing Activities:
Borrowings of non-recourse and recourse notes payable	41,394	18,802
Repayments of non-recourse and recourse notes payable	(3,414)	(5,903)
Repurchase of common stock	(13,318)	(9,830)
Repayments of financing of acquisitions	(265)	(500)
Net borrowings (repayments) on floor plan facility	19,930	17,468
Net cash provided by financing activities	44,327	20,037
Effect of exchange rate changes on cash	81	92
Net Decrease in Cash and Cash Equivalents	(44,212)	(60,718)
Cash and Cash Equivalents, Beginning of Period	79,816	118,198
Cash and Cash Equivalents, End of Period	35,604	57,480
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	595	473
Cash paid for income taxes	5,616	5,545
Cash paid for amounts included in the measurement of lease liabilities	1,081	0
Schedule of Non-Cash Investing and Financing Activities:
Proceeds from sale of property, equipment, and leased equipment	0	164
Purchases of property, equipment, and operating lease equipment	(1,947)	(675)
Purchases of assets to be leased or financed	0	592
Issuance of financing receivables	0	(19,709)
Proceeds from sale of financing receivables	0	23,823
Borrowing of non-recourse and recourse notes payable	30,046	9,606
Repayments of non-recourse and recourse notes payable	(22)	(32)
Vesting of share-based compensation	7,774	11,345
Repurchase of common stock	(137)	0
New operating lease assets obtained in exchange for lease obligations	$ 1,291	$ 0

XML

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Total
Balance at Mar. 31, 2018	$ 142	$ 130,000	$ (36,016)	$ 277,945	$ 532	$ 372,603
Balance (in shares) at Mar. 31, 2018	13,761
Issuance of restricted stock awards	$ 1	0	0	0	0	1
Issuance of restricted stock awards (in shares)	70
Share-based compensation	$ 0	1,693	0	0	0	1,693
Repurchase of common stock	0	0	$ (9,059)	0	0	(9,059)
Repurchase of common stock (in shares)			(108)
Dividends declared	0	0	$ 0	0	0	0
Net earnings	0	0	0	15,273	0	15,273
Foreign currency translation adjustment	0	0	0	0	(657)	(657)
Balance at Jun. 30, 2018	$ 143	131,693	(45,075)	293,218	(125)	379,854
Balance (in shares) at Jun. 30, 2018	13,723
Balance at Mar. 31, 2019	$ 143	137,243	(53,999)	341,137	(271)	$ 424,253
Balance (in shares) at Mar. 31, 2019	13,611					13,611
Issuance of restricted stock awards	$ 1	0	0	0	0	$ 1
Issuance of restricted stock awards (in shares)	86
Share-based compensation	$ 0	1,919	0	0	0	1,919
Repurchase of common stock	0	0	$ (13,455)	0	0	(13,455)
Repurchase of common stock (in shares)			(188)
Net earnings	0	0	$ 0	16,188	0	16,188
Foreign currency translation adjustment	0	0	0	0	(263)	(263)
Balance at Jun. 30, 2019	$ 144	$ 139,162	$ (67,454)	$ 357,325	$ (534)	$ 428,643
Balance (in shares) at Jun. 30, 2019	13,509					13,509

XML

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Jun. 30, 2019

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS — Our company was founded in 1990 and is a Delaware corporation. ePlus inc. is sometimes referred to in this Quarterly Report on Form 10-Q as "we," "our," "us," "ourselves," or "ePlus." ePlus inc. is a holding company that through its subsidiaries provides IT solutions that enable organizations to optimize their IT environment and supply chain processes. We also provide consulting, staffing, professional and managed services and complete lifecycle management services, including flexible financing solutions. We focus on state and local governments, middle market and large enterprises in North America and the United Kingdom (“UK”).

BASIS OF PRESENTATION — The unaudited condensed consolidated financial statements include the accounts of ePlus inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accounts of businesses acquired are included in the unaudited condensed consolidated financial statements from the dates of acquisition.

INTERIM FINANCIAL STATEMENTS — The unaudited condensed consolidated financial statements for the three months ended June 30, 2019 and 2018 were prepared by us, without audit, and include all normal and recurring adjustments that, in the opinion of management, are necessary for a fair presentation of our financial position, results of operations, changes in comprehensive income, and cash flows for such periods. Operating results for the three months ended June 30, 2019 and 2018 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending March 31, 2020 or any other future period. These unaudited condensed consolidated financial statements do not include all disclosures required by the accounting principles generally accepted in the United States (“US GAAP”) for annual financial statements. Our audited consolidated financial statements are contained in our annual report on Form 10-K for the year ended March 31, 2019 (“2019 Annual Report”), which should be read in conjunction with these interim condensed consolidated financial statements.

USE OF ESTIMATES — The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values, vendor consideration, lease classification, goodwill and intangible assets, reserves for credit losses, inventory obsolescence, and the recognition and measurement of income tax assets and other provisions and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.

CONCENTRATIONS OF RISK — A substantial portion of our sales are products from Cisco Systems, which were 40% of our technology segment’s net sales for both the three months ended June 30, 2019 and 2018.

SIGNIFICANT ACCOUNTING POLICIES — The significant accounting policies used in preparing these Consolidated Financial Statements were applied on a basis consistent with those reflected in our Consolidated Financial Statements for the year ended March 31, 2019, except for changes from the adoption of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), as amended (“ASU 2016-02”). This update establishes Codification Topic 842, Leases (“Codification Topic 842”) within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“Codification”). The updates to our accounting policies from adopting ASU 2016-02 are provided below.

FINANCING REVENUE — We account for leases to customers in accordance with Codification Topic 842. We utilize a portfolio approach by grouping many similar assets being leased to one customer together.

We classify our leases as either sales-type leases or operating leases. We classify leases as sales-type leases if any one of five criteria are met, each of which indicate that the lease transfers control of the underlying asset to the lessee. We classify our other leases as operating leases.

For sales-type leases, upon lease commencement, we recognize the present value of the lease payments and the residual asset discounted using the rate implicit in the lease. When we are financing equipment provided by another dealer, we typically do not have any selling profit or loss arising from the lease. When we are the dealer of the equipment being leased, we typically recognize revenue in the amount of the lease receivable and cost of sales in the amount of the carrying value of the underlying asset minus the unguaranteed residual asset. After the commencement date, we recognize interest income as part of net sales using the effective interest method.

For operating leases, we recognize the underlying asset as an operating lease asset. We depreciate the asset on a straight-line basis to its estimated residual value over its estimated useful life. We recognized the lease payments over the lease term on a straight-line basis as part of net sales.

In all our leases, we recognize variable lease payments, primarily reimbursement for property taxes associated with the leased asset, as part of net sales in the period in which the changes in facts and circumstances on which the variable lease payments are based occur. We exclude from revenues and expenses any sales taxes reimbursed by the lessee.

We also finance third-party software and third-party services for our customers, which we classify as notes-receivable. We recognize interest income on our notes-receivable using the effective interest method.

We account for transfers of our financial assets, including our lease receivables and notes receivable, under Codification Topic 860 Transfers and Servicing (“Codification Topic 860”). When a transfer meets all the requirements for sale accounting, we derecognize the financial asset and record a net gain or loss that is included in net sales.

LESSEE ACCOUNTING — We lease office space over initial terms typically between 3 and 6 years. At the lease commencement date, we recognize operating lease liabilities based on the present value of the future minimum lease payments. In determining the present value of future minimum lease payments, we use our incremental borrowing rate based on the information available at the commencement date. When the future minimum payments encompass non-lease components, we account for the lease and non-lease components as a single lease component. We elected not to recognize right-of-use assets and lease liabilities for leases with an initial term of 12 months or less. We recognize lease expense on a straight-line basis over the lease term beginning on the commencement date.

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RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Jun. 30, 2019

RECENT ACCOUNTING PRONOUNCEMENTS [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

2. RECENT ACCOUNTING PRONOUNCEMENTS

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS —We adopted ASU 2016-02 in our quarter ended June 30, 2019 using a transition option that allows entities to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under this transition option, we do not update the financial information and disclosures for comparative periods.

Additionally, we elected a package of practical expedients to not reassess whether any expired or existing contracts are or contain leases, not reassess the lease classification for any expired or existing leases, and not reassess initial direct costs for any existing leases. As a result of our adoption, we recorded an initial impact to our consolidated balance sheets of establishing right-of-use assets of $12.7 million and lease liabilities of $12.3 million and a reduction in prepaid assets of $0.4 million at the beginning of our quarter ending June 30, 2019.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED —In June 2016, the FASB issued ASU 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update replace the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This update requires adoption under a modified retrospective approach and will become effective for us in the quarter ending June 30, 2020. We are currently evaluating the impact of this update on our financial statements.

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REVENUES

3 Months Ended

Jun. 30, 2019

REVENUES [Abstract]

REVENUES

3. REVENUES

Contract balances

Accounts receivable – trade represents amounts due from contracts with customers. We had $18.9 million and $16.2 million of receivables from contracts with customers included within financing receivables as of June 30, 2019 and March 31, 2019, respectively. The following table provides the balance of contract liabilities from contracts with customers (in thousands):

Contract liabilities	June 30, 2019		March 31, 2019
Current (included in deferred revenue)	$	47,549	$	46,356
Non-current (included in other liabilities)	$	13,317	$	13,593

Revenue recognized from the beginning contract liability balance was $15.8 million and $12.8 million for the three months ended June 30, 2019 and 2018, respectively.

Performance obligations

The following table includes revenue expected to be recognized in the future related to performance obligations, primarily non-cancelable contracts for ePlus managed services, that are unsatisfied or partially unsatisfied at the end of the reporting period, in thousands. The table does not include the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts where we recognize revenue at the amount that we have the right to invoice for services performed.

Remainder of Year ending March 31, 2020	$	19,327
Year ending March 31, 2021		11,640
Year ending March 31, 2022		4,438
Year ending March 31, 2023		1,134
Year ending March 31, 2024		18
Year ending March 31, 2025 and thereafter		400
Total remaining performance obligations	$	36,957

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FINANCING RECEIVABLES AND OPERATING LEASES

3 Months Ended

Jun. 30, 2019

FINANCING RECEIVABLES AND OPERATING LEASES [Abstract]

FINANCING RECEIVABLES AND OPERATING LEASES

4. FINANCING RECEIVABLES AND OPERATING LEASES

Our financing receivables and operating leases consist primarily of leases of IT and communication equipment and notes receivable from financing customer purchases of third-party software, maintenance, and services. Our leases often include elections for the lessee to purchase the underlying asset at the end of the lease term. Occasionally, our leases provide the lessee at bargain purchase option. We classify leases as either sales-type or operating leases in accordance with Codification Topic 842.

The following table provides the profit recognized for sales-type leases at their commencement date for the three months ended June 30, 2019 (in thousands):

	Three months ended June 30, 2019
Net sales	$	4,854
Cost of sales		3,950
Gross Profit	$	904

The following table provides interest income in aggregate on our sales-type leases and lease income on our operating leases for the three months ended June 30, 2019 (in thousands):

	Three months ended June 30, 2019
Interest Income on sales-type leases	$	2,095
Lease income on operating leases		5,359

FINANCING RECEIVABLES—NET

Our financing receivables-net consist of the following (in thousands):

June 30, 2019	Notes Receivables			Lease-Related Receivables			Total Financing Receivables
Minimum payments	$	63,074		$	85,396		$	148,470
Estimated unguaranteed residual value (1)		-			18,768			18,768
Initial direct costs, net of amortization (2)		319			374			693
Unearned income		-			(10,867	)		(10,867	)
Reserve for credit losses (3)		(520	)		(512	)		(1,032	)
Total, net	$	62,873		$	93,159		$	156,032
Reported as:
Current	$	48,383		$	50,036		$	98,419
Long-term		14,490			43,123			57,613
Total, net	$	62,873		$	93,159		$	156,032

(1) Includes estimated unguaranteed residual values of $12,326 thousand for sales type leases, which have been sold and accounted for as sales.

(2) Initial direct costs are shown net of amortization of $306 thousand.

(3) For details on reserve for credit losses, refer to Note 7, “Reserves for Credit Losses.”

March 31, 2019	Notes Receivables			Lease-Related Receivables			Total Financing Receivables
Minimum payments	$	40,563		$	64,201		$	104,764
Estimated unguaranteed residual value (1)		-			14,639			14,639
Initial direct costs, net of amortization (2)		377			332			709
Unearned income		-			(7,671	)		(7,671	)
Reserve for credit losses (3)		(505	)		(530	)		(1,035	)
Total, net	$	40,435		$	70,971		$	111,406
Reported as:
Current	$	30,852		$	32,914		$	63,766
Long-term		9,583			38,057			47,640
Total, net	$	40,435		$	70,971		$	111,406

(1) Includes $8,996 thousand for the estimated residual values of sales type leases and direct financing leases for which we sold the financing assets.

(2) Initial direct costs are shown net of amortization of $275 thousand.

(3) For details on reserve for credit losses, refer to Note 7, “Reserves for Credit Losses.”

Future scheduled minimum lease payments for investments in sales-type leases as of June 30, 2019 are as follows (in thousands):

Remainder of Year ending March 31, 2020	$	49,243
Year ending March 31, 2021		20,723
Year ending March 31, 2022		11,211
Year ending March 31, 2023		3,510
Year ending March 31, 2024 and thereafter		709
Total	$	85,396

OPERATING LEASES—NET

Operating leases—net represents leases that do not qualify as sales-type leases. The components of the operating leases—net are as follows (in thousands):

	June 30, 2019			March 31, 2019
Cost of equipment under operating leases	$	24,162		$	21,532
Accumulated depreciation		(10,678	)		(10,139	)
Investment in operating lease equipment—net (1)	$	13,484		$	11,393

(1) These totals include estimated unguaranteed residual values of $3,104 thousand and $2,906 thousand as of June 30, 2019 and March 31, 2019, respectively.

Future scheduled minimum lease rental payments as of June 30, 2019 are as follows (in thousands):

Remainder of Year ending March 31, 2020	$	3,794
Year ending March 31, 2021		3,760
Year ending March 31, 2022		2,498
Year ending March 31, 2023		1,451
Year ending March 31, 2024 and thereafter		443
Total	$	11,946

TRANSFERS OF FINANCIAL ASSETS

We enter into arrangements to transfer the contractual payments due under financing receivables and operating lease agreements, which are accounted for as sales or secured borrowings in accordance with Codification Topic 860.

For transfers accounted for as a secured borrowing, the corresponding investments serve as collateral for non-recourse notes payable. As of June 30, 2019, and March 31, 2019, we had financing receivables of $75.6 million and $50.2 million, respectively, and operating leases of $7.1 million and $7.8 million, respectively, which were collateral for non-recourse notes payable. See Note 9, "Notes Payable and Credit Facility."

For transfers accounted for as sales, we derecognize the carrying value of the asset transferred plus any liability and recognize a net gain or loss on the sale, which are presented within net sales in the consolidated statement of operations. During the three months ended June 30, 2019 and 2018, we recognized net gains of $3.3 million and $1.3 million, respectively, and total proceeds from these sales were $69.9 million and $46.9 million, respectively.

When we retain servicing obligations in transfers accounted for as sales, we allocate a portion of the proceeds to deferred revenues, which is recognized as we perform the services.  As of both June 30, 2019 and March 31, 2019, we had deferred revenue of $0.4 million for servicing obligations.

In a limited number of transfers accounted for as sales, we indemnified the assignee in the event that the lessee elected to early terminate the lease.  As of June 30, 2019, our maximum potential future payments related to such guarantees is $0.4 million.  We believe the likelihood of making any such payments to be remote.

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LESSEE ACCOUNTING

3 Months Ended

Jun. 30, 2019

LESSEE ACCOUNTING [Abstract]

LESSEE ACCOUNTING

5. LESSEE ACCOUNTING

We lease office space for periods up to 6 years. We recognize our right-of-use assets as part of property, equipment and other assets. We recognize the current and long-term portions of our lease liability as part of other current liabilities and other liabilities, respectively. We recognized rent expense of $1.6 million as part of selling, general, and administrative expenses during the three months ended June 30, 2019.

Supplemental information about the remaining lease terms and discount rates applied as of June 30, 2019:

Lease term and Discount Rate	June 30, 2019
Weighted average remaining lease term (months)		36
Weighted average discount rate		4.1	%

Future lease payments under our operating leases as of June 30, 2019 (in thousands):

	June 30, 2019
Remainder of year ending March 31, 2020	$	3,637
Year ending March 31, 2021		4,471
Year ending March 31, 2022		3,029
Year ending March 31, 2023		2,064
Year ending March 31, 2024		293
Thereafter		-
Total lease payments	$	13,494
Less: Interest		(816	)
Present value of lease liabilities	$	12,678

As of June 30, 2019, we committed to two additional office leases that have not yet commenced with a total commitment of $1.5 million.

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GOODWILL AND OTHER INTANGIBLE ASSETS

3 Months Ended

Jun. 30, 2019

GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

6.  GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL

The following table summarizes the changes in the carrying amount of goodwill for the three months ended June 30, 2019 (in thousands):

	Three months ended June 30, 2019
	Goodwill			Accumulated Impairment Loss			Net Carrying Amount
Beginning balance	$	119,480		$	(8,673	)	$	110,807
Foreign currency translations		(53	)		-			(53	)
Ending balance	$	119,427		$	(8,673	)	$	110,754

Goodwill represents the premium paid over the fair value of the net tangible and intangible assets that are individually identified and separately recognized in business combinations. All of our goodwill as of June 30, 2019  is related to our technology reportable segment, which we also determined to be one reporting unit.

We test goodwill for impairment on an annual basis, as of the first day of our third fiscal quarter, and between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying value.

OTHER INTANGIBLE ASSETS

Our other intangible assets consist of the following at June 30, 2019 and March 31, 2019 (in thousands):

	Three months ended June 30, 2019							March 31, 2019
	Gross Carrying Amount		Accumulated Amortization / Impairment Loss			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization / Impairment Loss			Net Carrying Amount
Customer relationships & other intangibles	$	57,343	$	(26,012	)	$	31,331	$	57,407	$	(23,865	)	$	33,542
Capitalized software development		10,285		(5,097	)		5,188		10,188		(4,802	)		5,386
Total	$	67,628	$	(31,109	)	$	36,519	$	67,595	$	(28,667	)	$	38,928

Customer relationships and other intangibles are generally amortized between 5 to 10 years. Capitalized software development is generally amortized over 5 years.

Total amortization expense for other intangible assets was $2.5 million and $1.8 million for the three months ended June 30, 2019 and 2018, respectively.

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RESERVES FOR CREDIT LOSSES

3 Months Ended

Jun. 30, 2019

RESERVES FOR CREDIT LOSSES [Abstract]

RESERVES FOR CREDIT LOSSES

7.  RESERVES FOR CREDIT LOSSES

Activity in our reserves for credit losses for the three months ended June 30, 2019 and 2018 were as follows (in thousands):

	Accounts Receivable			Notes Receivable			Lease- Related Receivables			Total
Balance April 1, 2019	$	1,579		$	505		$	530		$	2,614
Provision for credit losses		281			16			(16	)		281
Write-offs and other		(3	)		(1	)		(2	)		(6	)
Balance June 30, 2019	$	1,857		$	520		$	512		$	2,889

	Accounts Receivable			Notes Receivable		Lease- Related Receivables		Total
Balance April 1, 2018	$	1,538		$	486	$	640	$	2,664
Provision for credit losses		123			-		56		179
Write-offs and other		(1	)		-		-		(1	)
Balance June 30, 2018	$	1,660		$	486	$	696	$	2,842

Our reserves for credit losses and minimum payments associated with our notes receivables and lease-related receivables disaggregated based on of our impairment method were as follows (in thousands):

	June 30, 2019				March 31, 2019
	Notes Receivable		Lease- Related Receivables		Notes Receivable		Lease- Related Receivables
Reserves for credit losses:
Ending balance: collectively evaluated for impairment	$	458	$	512	$	443	$	530
Ending balance: individually evaluated for impairment		62		-		62		-
Ending balance	$	520	$	512	$	505	$	530
Minimum payments:
Ending balance: collectively evaluated for impairment	$	62,985	$	85,396	$	40,501	$	64,201
Ending balance: individually evaluated for impairment		89		-		62		-
Ending balance	$	63,074	$	85,396	$	40,563	$	64,201

We place receivables on non-accrual status when events, such as a customer’s declaring bankruptcy, occur that indicate a receivable will not be collectable. We charge off uncollectable financing receivables when we stop pursuing collection.

The age of the recorded minimum lease payments and net credit exposure associated with our investment in direct financing and sales-type leases that are past due disaggregated based on our internally assigned credit quality rating (“CQR”) were as follows as of June 30, 2019 and March 31, 2019 (in thousands):

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Unbilled Minimum Lease Payments		Total Minimum Lease Payments		Unearned Income			Non- Recourse Notes Payable			Net Credit Exposure
June 30, 2019
High CQR	$	275	$	205	$	528	$	1,008	$	239	$	38,379	$	39,626	$	(4,362	)	$	(13,800	)	$	21,464
Average CQR		32		11		29		72		252		45,446		45,770		(3,698	)		(25,970	)		16,102
Low CQR		-		-		-		-		-		-		-		-			-			-
Total	$	307	$	216	$	557	$	1,080	$	491	$	83,825	$	85,396	$	(8,060	)	$	(39,770	)	$	37,566
March 31, 2019
High CQR	$	325	$	41	$	10	$	376	$	543	$	29,503	$	30,422	$	(2,799	)	$	(11,044	)	$	16,579
Average CQR		22		54		15		91		125		33,563		33,779		(2,508	)		(20,848	)		10,423
Low CQR		-		-		-		-		-		-		-		-			-			-
Total	$	347	$	95	$	25	$	467	$	668	$	63,066	$	64,201	$	(5,307	)	$	(31,892	)	$	27,002

The age of the recorded notes receivable balance disaggregated based on our internally assigned CQR were as follows as of June 30, 2019 and March 31, 2019 (in thousands):

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Unbilled Notes Receivable		Total Notes Receivable		Non- Recourse Notes Payable			Net Credit Exposure
June 30, 2019
High CQR	$	-	$	23	$	106	$	129	$	7,361	$	48,240	$	55,730	$	(29,962	)	$	25,768
Average CQR		27		27		-		54		487		6,714		7,255		(49	)		7,206
Low CQR		-		-		89		89		-		-		89		-			89
Total	$	27	$	50	$	195	$	272	$	7,848	$	54,954	$	63,074	$	(30,011	)	$	33,063
March 31, 2019
High CQR	$	990	$	40	$	30	$	1,060	$	3,813	$	28,113	$	32,986	$	(18,245	)	$	14,741
Average CQR		105		34		7		146		137		7,232		7,515		(1,507	)		6,008
Low CQR		-		-		62		62		-		-		62		-			62
Total	$	1,095	$	74	$	99	$	1,268	$	3,950	$	35,345	$	40,563	$	(19,752	)	$	20,811

We estimate losses on our net credit exposure to be between 0% - 5% for customers with the highest CQR, as these customers are investment grade or the equivalent of investment grade. We estimate losses on our net credit exposure to be between 2% - 15% for customers with average CQR, and between 15% - 100% for customers with low CQR, which includes customers in bankruptcy.

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PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES

3 Months Ended

Jun. 30, 2019

PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES [Abstract]

PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES

8.  PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES

Our property, equipment, other assets and liabilities consist of the following (in thousands):

	June 30, 2019		March 31, 2019
Other current assets:
Deposits & funds held in escrow	$	366	$	438
Prepaid assets		7,402		6,425
Other		459		636
Total other current assets	$	8,227	$	7,499
Property, equipment and other assets
Property and equipment, net	$	6,821	$	7,314
Deferred costs - non-current		9,505		8,856
Right-of-use assets		12,550		-
Other		1,335		1,158
Total other assets - long term	$	30,211	$	17,328
Other current liabilities:
Accrued expenses	$	8,832	$	7,813
Accrued income taxes payable		217		181
Contingent consideration - current		5,332		5,162
Short-term lease liability		4,811		-
Other		9,767		6,129
Total other current liabilities	$	28,959	$	19,285
Other liabilities:
Deferred revenue	$	13,502	$	13,789
Contingent consideration - long-term		4,011		3,780
Long-term lease liability		7,867		-
Other		83		108
Total other liabilities - long term	$	25,463	$	17,677

In the above table, deposits and funds held in escrow relate to financial assets that were sold to third-party banks. In conjunction with those sales, a portion of the proceeds was placed in escrow and will be released to us upon payment of outstanding invoices related to the underlying financing arrangements that were sold.

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NOTES PAYABLE AND CREDIT FACILITY

3 Months Ended

Jun. 30, 2019

NOTES PAYABLE AND CREDIT FACILITY [Abstract]

NOTES PAYABLE AND CREDIT FACILITY

9.  NOTES PAYABLE AND CREDIT FACILITY

Non-recourse and recourse obligations consist of the following (in thousands):

	June 30, 2019		March 31, 2019
Recourse notes payable with interest rates of 4.00% at March 31, 2019.
Current	$	-	$	28
Non-recourse notes payable secured by financing receivables and investments in operating leases with interest rates ranging from 3.34% to 8.45% as of June 30, 2019 and 3.23% to 8.45% as of March 31, 2019.
Current	$	64,583	$	38,117
Long-term		8,362		10,502
Total non-recourse notes payable	$	72,945	$	48,619

Principal and interest payments on non-recourse notes payable are generally due monthly in amounts that are approximately equal to the total payments due from the customer under the leases or notes receivable that collateralize the notes payable. The weighted average interest rate for our non-recourse notes payable was 4.25% and 4.68%, as of June 30, 2019 and March 31, 2019, respectively. The weighted average interest rate for our recourse notes payable was 4.00% as of March 31, 2019. Under recourse financing, if a customer defaults, the lender has recourse to the customer, the assets serving as collateral, and us. Under non-recourse financing, if a customer defaults, the lender generally only has recourse against the customer and the assets serving as collateral, but not us.

Our technology segment, through our subsidiary ePlus Technology, inc., finances its operations with funds generated from operations, and with a credit facility with Wells Fargo Commercial Distribution Finance, LLC or (“WFCDF”). This facility provides short-term capital for our technology segment. There are two components of the WFCDF credit facility: (1) a floor plan component, and (2) an accounts receivable component. Under the floor plan component, we had outstanding balances of $136.0 million and $116.1million as of June 30, 2019 and March 31, 2019, respectively. Under the accounts receivable component, we had no outstanding balances as of June 30, 2019 and March 31, 2019.

As of June 30, 2019, the facility had an aggregate limit of $250 million for the two components, and the accounts receivable component had a sub-limit of $50 million, which bears interest assessed at a rate of the One Month  LIBOR plus two and one-half percent. We have an election beginning July 1 in each year to temporarily increase the aggregate limit of the two components to $325.0 million ending the earlier of 90 days following the election or October 31 of that same year. On July 31, 2019, we elected to temporarily increase the aggregate limit to $325.0 million.

The credit facility has full recourse to ePlus Technology, inc. and certain subsidiaries and is secured by a blanket lien against all its assets, such as receivables and inventory. Availability under the facility may be limited by the asset value of equipment we purchase or accounts receivable and may be further limited by certain covenants and terms and conditions of the facility. These covenants include but are not limited to a minimum excess availability of the facility and a minimum earnings before interest, taxes, depreciation and amortization (“EBITDA”) of ePlus Technology, inc. and certain subsidiaries. We were in compliance with these covenants as of June 30, 2019. In addition, the facility restricts the ability of ePlus Technology, inc. and certain subsidiaries to transfer funds to its affiliates in the form of dividends, loans, or advances with certain exceptions for dividends to ePlus inc. The facility also requires that financial statements of ePlus Technology, inc. and certain subsidiaries. be provided within 45 days at the end of each quarter and 90 days of each fiscal year end, and that other operational reports be provided on a regular basis. Either party may terminate the credit facility with 90 days’ advance written notice. We are not, and do not believe that we are reasonably likely to be, in breach of the WFCDF credit facility. In addition, we do not believe that the covenants of the WFCDF credit facility materially limit our ability to undertake financing. In this regard, the covenants apply only to our subsidiary, ePlus Technology, inc. and certain subsidiaries. This credit facility is secured by the assets of only ePlus Technology, inc. and certain subsidiaries. and the guaranty as described below.

The WFCDF facility requires a guaranty of $10.5 million by ePlus inc. The guaranty requires ePlus inc. to deliver its annual audited financial statements by certain dates. We have delivered the annual audited financial statements for the year ended March 31, 2019, as required. The loss of the WFCDF credit facility could have a material adverse effect on our future results as we currently rely on this facility and its components for daily working capital and liquidity for our technology segment, and as an operational function of our accounts payable process.

Fair Value

As of June 30, 2019, and March 31, 2019, the fair value of our long-term recourse and non-recourse notes payable approximated their carrying value.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Jun. 30, 2019

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

10.  COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, we may be subject to legal proceedings that arise in the ordinary course of business. In the opinion of management, there was not at least a reasonable possibility that the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims. However, the outcome of legal proceedings and claims brought against us is subject to significant uncertainty. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected.

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EARNINGS PER SHARE

3 Months Ended

Jun. 30, 2019

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

11.  EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net earnings available to common shareholders by the basic weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is calculated by dividing net earnings available to common shareholders by the basic weighted average number of shares of common stock outstanding plus common stock equivalents during each period.

	Three Months Ended June 30,
	2019		2018
Net earnings attributable to common shareholders - basic and diluted	$	16,188	$	15,273
Basic and diluted common shares outstanding:
Weighted average common shares outstanding — basic		13,356		13,434
Effect of dilutive shares		101		163
Weighted average shares common outstanding — diluted		13,457		13,597
Earnings per common share - basic	$	1.21	$	1.14
Earnings per common share - diluted	$	1.20	$	1.12

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STOCKHOLDERS' EQUITY

3 Months Ended

Jun. 30, 2019

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

12.  STOCKHOLDERS’ EQUITY

Share Repurchase Plan

On April 26, 2018, our board of directors authorized the repurchase up to 500,000 shares of our outstanding common stock over a 12-month period beginning on May 28, 2018 through May 27, 2019. The plan authorized purchases to be made from time to time in the open market, or in privately negotiated transactions, subject to availability. Any repurchased shares will have the status of treasury shares and may be used, when needed, for general corporate purposes.

On May 24, 2019, our board of directors authorized the repurchase up to 500,000 shares of our outstanding common stock over a 12-month period beginning on May 28, 2019 through May 27, 2020. The plan authorized purchases to be made from time to time in the open market, or in privately negotiated transactions, subject to availability. Any repurchased shares will have the status of treasury shares and may be used, when needed, for general corporate purposes.

During the three months ended June 30, 2019, we purchased 148,790 shares of our outstanding common stock at a value of $10.7 million under the share repurchase plan; we also purchased 38,811 shares of common stock at a value of $2.8 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock.

During the three months ended June 30, 2018, we purchased 70,445 shares of our outstanding common stock at a value of $5.5 million under the share repurchase plan; we also purchased 37,086 shares of common stock at a value of $3.6 million to satisfy tax withholding obligations relating to the vesting of employees’ restricted stock.

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SHARE-BASED COMPENSATION

3 Months Ended

Jun. 30, 2019

SHARE-BASED COMPENSATION [Abstract]

SHARE-BASED COMPENSATION

13.  SHARE-BASED COMPENSATION

Share-Based Plans

As of June 30, 2019, we had share-based awards outstanding under the following plans: (1) the 2017 Non-Employee Director Long-Term Incentive Plan (“2017 Director LTIP”), and (2) the 2012 Employee Long-Term Incentive Plan ("2012 Employee LTIP"). These share-based plans define fair market value as the previous trading day's closing price when the grant date falls on a date the stock was not traded.

Restricted Stock Activity

For the three months ended June 30, 2019, we granted 454 restricted shares under the 2017 Director LTIP, and 85,132 restricted shares under the 2012 Employee LTIP. For the three months ended June 30, 2018, we granted 841 restricted shares under the 2017 Director LTIP, and 69,847 restricted shares under the 2012 Employee LTIP. A summary of the restricted shares is as follows:

	Number of Shares			Weighted Average Grant- date Fair Value
Nonvested April 1, 2019		224,000		$	67.70
Granted		85,586		$	72.50
Vested		(107,238	)	$	60.92
Forfeited		(67	)	$	79.70
Nonvested June 30, 2019		202,281		$	73.32

Upon each vesting period of the restricted stock awards, employees are subject to minimum tax withholding obligations. Under the 2012 Employee LTIP, we may purchase a sufficient number of shares due to the participant to satisfy their minimum tax withholding on employee stock awards. For the three months ended June 30, 2019, the Company had withheld 38,811 shares of common stock at a value of $2.8 million, which was included in treasury stock.

Compensation Expense

We recognize compensation cost for awards of restricted stock with graded vesting on a straight-line basis over the requisite service period. There are no additional conditions for vesting other than service conditions. During the three months ended June 30, 2019 and 2018, we recognized $1.9 million and $1.7 million of total share-based compensation expense, respectively. Unrecognized compensation expense related to non-vested restricted stock was $13.6 million as of June 30, 2019, which will be fully recognized over the next 36 months.

We also provide our employees with a contributory 401(k) profit sharing plan, to which we may contribute from time to time at our sole discretion. Employer contributions to the plan are fully vested at all times. For the three months ended June 30, 2019 and 2018, our estimated contribution expense for the plan was $0.7 million and $0.5 million, respectively.

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INCOME TAXES

3 Months Ended

Jun. 30, 2019

INCOME TAXES [Abstract]

INCOME TAXES

14.  INCOME TAXES

We account for our tax positions in accordance with Codification Topic 740, Income Taxes. Under the guidance, we evaluate uncertain tax positions based on the two-step approach. The first step is to evaluate each uncertain tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in an audit, including resolution of related appeals or litigation processes, if any. For tax positions that are not likely to be sustained upon audit, the second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50 percent likely of being realized upon ultimate settlement.

Our total gross unrecognized tax benefits recorded for uncertain income tax, and interest and penalties thereon, were negligible as of June 30, 2019 and June 30, 2018. We had no additions or reductions to our gross unrecognized tax benefits during the three months ended June 30, 2019. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Jun. 30, 2019

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

15.  FAIR VALUE OF FINANCIAL INSTRUMENTS

We account for the fair values of our assets and liabilities in accordance with Codification Topic 820, Fair Value Measurement and Disclosure. The following table summarizes the fair value hierarchy of our financial instruments as of June 30, 2019 and March 31, 2019 (in thousands):

			Fair Value Measurement Using
	Recorded Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2019
Assets:
Money market funds	$	114	$	114	$	-	$	-
Liabilities:
Contingent consideration	$	9,343	$	-	$	-	$	9,343
March 31, 2019
Assets:
Money market funds	$	50	$	50	$	-	$	-
Liabilities:
Contingent consideration	$	8,942	$	-	$	-	$	8,942

For both the three months ended June 30, 2019, and 2018, we recorded adjustments that increased the fair value of our liability for contingent consideration by $0.4 million. There were no payments made to satisfy the current obligations of the contingent consideration arrangements for both the three months ended June 30, 2019, and 2018.

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BUSINESS COMBINATIONS

3 Months Ended

Jun. 30, 2019

BUSINESS COMBINATIONS [Abstract]

BUSINESS COMBINATIONS

16.  BUSINESS COMBINATIONS

SLAIT Consulting, LLC

On January 18, 2019, our subsidiary, ePlus Technology, inc., acquired 100% of the stock of SLAIT Consulting, LLC. SLAIT is an IT consulting and solutions provider with a focus on security advisory and managed services, managed help desk, specialized IT, staffing, and data center solutions. SLAIT is headquartered in Virginia Beach, Virginia and has locations in Richmond, Virginia, and Charlotte, North Carolina. SLAIT provides consultative services in governance, risk management and compliance; bespoke help desk and managed services solutions; and has relationships with fast-growing emerging vendors and related sales and engineering capabilities.

Our sum of consideration transferred is $50.0 million consisting of $50.7 million paid in cash at closing, less $1.0 million cash acquired, and plus a working capital adjustment of $0.3 million that we paid in May 2019. Our preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed is presented below (in thousands):

	Acquisition Date Amount
Accounts receivable	$	10,208
Other assets		1,050
Identified intangible assets		18,190
Accounts payable and other current liabilities		(8,669	)
Performance obligation		(5,110	)
Total identifiable net assets		15,669
Goodwill		34,352
Total purchase consideration	$	50,021

As of our filing date the initial accounting for the business combination is incomplete in respect to measuring certain assets acquired and liabilities assumed.

The identified intangible assets of $18.2 million consist of customer relationships with an estimated useful life of 10 years. The fair value of acquired receivables equals the gross contractual amounts receivable. We expect to collect all acquired receivables.

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SEGMENT REPORTING

3 Months Ended

Jun. 30, 2019

SEGMENT REPORTING [Abstract]

SEGMENT REPORTING

17.  SEGMENT REPORTING

Our operations are conducted through two operating segments that are also both reportable segments. Our technology segment includes sales of IT products, third-party software, third-party maintenance, advanced professional and managed services, and our proprietary software to commercial enterprises, state and local governments, and government contractors. Our financing segment consists of the financing of IT equipment, software, and related services to commercial enterprises, state and local governments, and government contractors. We measure the performance of the segments based on operating income.

Our reportable segment information was as follows (in thousands):

	Three Months Ended
	June 30, 2019							June 30, 2018
	Technology		Financing		Total			Technology		Financing		Total
Sales
Product	$	322,764	$	12,837	$	335,601		$	313,149	$	9,668	$	322,817
Service		45,771		-		45,771			33,715		-		33,715
Net sales	$	368,535	$	12,837	$	381,372		$	346,864	$	9,668	$	356,532
Cost of Sales
Product		258,054		2,009		260,063			254,064		1,748		255,812
Service		28,670		-		28,670			20,017		-		20,017
Total cost of sales		286,724		2,009		288,733			274,081		1,748		275,829
Gross Profit		81,811		10,828		92,639			72,783		7,920		80,703
Selling, general, and administrative		62,667		3,120		65,787			54,454		2,512		56,966
Depreciation and amortization		3,407		56		3,463			2,789		1		2,790
Interest and financing costs		-		628		628			-		476		476
Operating expenses		66,074		3,804		69,878			57,243		2,989		60,232
Operating income		15,737		7,024		22,761			15,540		4,931		20,471
Other income (expense)						(45	)						97
Earnings before tax					$	22,716						$	20,568
Net Sales
Contracts with customers	$	363,681	$	789	$	364,470		$	341,459	$	596	$	342,055
Financing and other		4,854		12,048		16,902			5,405		9,072		14,477
Net Sales	$	368,535	$	12,837	$	381,372			346,864	$	9,668	$	356,532
Selected Financial Data - Statement of Cash Flow
Depreciation and amortization	$	1,339	$	3,625	$	4,964		$	3,015	$	1,485	$	4,500
Purchases of property, equipment and operating lease equipment	$	1,249	$	269	$	1,518		$	1,180	$	450	$	1,630
Selected Financial Data - Balance Sheet
Total assets	$	658,692	$	216,121	$	874,813		$	557,864	$	202,535	$	760,399

Technology Segment Disaggregation of Revenue

We analyze net sales for our technology segment by customer end market and by vendor, as opposed to discrete product and service categories, which are summarized below (in thousands):

	Three Months Ended June 30,
	2019			2018
Customer end market:
Technology	$	76,180		$	82,817
Telecom, Media & Entertainment		62,466			46,868
Financial Services		48,241			45,225
SLED		71,190			68,205
Healthcare		56,109			46,450
All others		54,349			57,299
Net sales		368,535			346,864
Financing and other		(4,854	)		(5,405	)
Revenue from contracts with customers	$	363,681		$	341,459

	Three Months Ended June 30,
	2019			2018
Vendor
Cisco Systems	$	146,181		$	139,577
NetApp		13,427			15,020
HP Inc. & HPE		23,113			20,355
Dell / EMC		13,781			12,503
Arista Networks		20,950			19,844
Juniper Networks		7,054			10,431
All others		144,029			129,134
Net sales		368,535			346,864
Financing and other		(4,854	)		(5,405	)
Revenue from contracts with customers	$	363,681		$	341,459

Financing Segment Disaggregation of Revenue

We analyze our revenues within our financing segment based on the nature of the arrangement, and our revenues from contracts with customers consist of proceeds from the sale of off-lease equipment.

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Jun. 30, 2019

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION — The unaudited condensed consolidated financial statements include the accounts of ePlus inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accounts of businesses acquired are included in the unaudited condensed consolidated financial statements from the dates of acquisition.

INTERIM FINANCIAL STATEMENTS

INTERIM FINANCIAL STATEMENTS — The unaudited condensed consolidated financial statements for the three months ended June 30, 2019 and 2018 were prepared by us, without audit, and include all normal and recurring adjustments that, in the opinion of management, are necessary for a fair presentation of our financial position, results of operations, changes in comprehensive income, and cash flows for such periods. Operating results for the three months ended June 30, 2019 and 2018 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending March 31, 2020 or any other future period. These unaudited condensed consolidated financial statements do not include all disclosures required by the accounting principles generally accepted in the United States (“US GAAP”) for annual financial statements. Our audited consolidated financial statements are contained in our annual report on Form 10-K for the year ended March 31, 2019 (“2019 Annual Report”), which should be read in conjunction with these interim condensed consolidated financial statements.

USE OF ESTIMATES

USE OF ESTIMATES — The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Estimates are used when accounting for items and matters including, but not limited to, revenue recognition, residual values, vendor consideration, lease classification, goodwill and intangible assets, reserves for credit losses, inventory obsolescence, and the recognition and measurement of income tax assets and other provisions and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.

CONCENTRATIONS OF RISK

CONCENTRATIONS OF RISK — A substantial portion of our sales are products from Cisco Systems, which were 40% of our technology segment’s net sales for both the three months ended June 30, 2019 and 2018.

FINANCING REVENUE

FINANCING REVENUE — We account for leases to customers in accordance with Codification Topic 842. We utilize a portfolio approach by grouping many similar assets being leased to one customer together.

We classify our leases as either sales-type leases or operating leases. We classify leases as sales-type leases if any one of five criteria are met, each of which indicate that the lease transfers control of the underlying asset to the lessee. We classify our other leases as operating leases.

For sales-type leases, upon lease commencement, we recognize the present value of the lease payments and the residual asset discounted using the rate implicit in the lease. When we are financing equipment provided by another dealer, we typically do not have any selling profit or loss arising from the lease. When we are the dealer of the equipment being leased, we typically recognize revenue in the amount of the lease receivable and cost of sales in the amount of the carrying value of the underlying asset minus the unguaranteed residual asset. After the commencement date, we recognize interest income as part of net sales using the effective interest method.

For operating leases, we recognize the underlying asset as an operating lease asset. We depreciate the asset on a straight-line basis to its estimated residual value over its estimated useful life. We recognized the lease payments over the lease term on a straight-line basis as part of net sales.

In all our leases, we recognize variable lease payments, primarily reimbursement for property taxes associated with the leased asset, as part of net sales in the period in which the changes in facts and circumstances on which the variable lease payments are based occur. We exclude from revenues and expenses any sales taxes reimbursed by the lessee.

We also finance third-party software and third-party services for our customers, which we classify as notes-receivable. We recognize interest income on our notes-receivable using the effective interest method.

We account for transfers of our financial assets, including our lease receivables and notes receivable, under Codification Topic 860 Transfers and Servicing (“Codification Topic 860”). When a transfer meets all the requirements for sale accounting, we derecognize the financial asset and record a net gain or loss that is included in net sales.

LESSEE ACCOUNTING

LESSEE ACCOUNTING — We lease office space over initial terms typically between 3 and 6 years. At the lease commencement date, we recognize operating lease liabilities based on the present value of the future minimum lease payments. In determining the present value of future minimum lease payments, we use our incremental borrowing rate based on the information available at the commencement date. When the future minimum payments encompass non-lease components, we account for the lease and non-lease components as a single lease component. We elected not to recognize right-of-use assets and lease liabilities for leases with an initial term of 12 months or less. We recognize lease expense on a straight-line basis over the lease term beginning on the commencement date.

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RECENT ACCOUNTING PRONOUNCEMENTS (Policies)

3 Months Ended

Jun. 30, 2019

RECENT ACCOUNTING PRONOUNCEMENTS [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS —We adopted ASU 2016-02 in our quarter ended June 30, 2019 using a transition option that allows entities to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Under this transition option, we do not update the financial information and disclosures for comparative periods.

Additionally, we elected a package of practical expedients to not reassess whether any expired or existing contracts are or contain leases, not reassess the lease classification for any expired or existing leases, and not reassess initial direct costs for any existing leases. As a result of our adoption, we recorded an initial impact to our consolidated balance sheets of establishing right-of-use assets of $12.7 million and lease liabilities of $12.3 million and a reduction in prepaid assets of $0.4 million at the beginning of our quarter ending June 30, 2019.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED —In June 2016, the FASB issued ASU 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this update replace the incurred loss impairment methodology in current US GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This update requires adoption under a modified retrospective approach and will become effective for us in the quarter ending June 30, 2020. We are currently evaluating the impact of this update on our financial statements.

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REVENUES (Tables)

3 Months Ended

Jun. 30, 2019

REVENUES [Abstract]

Balance of Receivables, Contract Assets, and Contract Liabilities

The following table provides the balance of contract liabilities from contracts with customers (in thousands):

Contract liabilities	June 30, 2019		March 31, 2019
Current (included in deferred revenue)	$	47,549	$	46,356
Non-current (included in other liabilities)	$	13,317	$	13,593

Remaining Performance Obligations

The following table includes revenue expected to be recognized in the future related to performance obligations, primarily non-cancelable contracts for ePlus managed services, that are unsatisfied or partially unsatisfied at the end of the reporting period, in thousands. The table does not include the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts where we recognize revenue at the amount that we have the right to invoice for services performed.

Remainder of Year ending March 31, 2020	$	19,327
Year ending March 31, 2021		11,640
Year ending March 31, 2022		4,438
Year ending March 31, 2023		1,134
Year ending March 31, 2024		18
Year ending March 31, 2025 and thereafter		400
Total remaining performance obligations	$	36,957

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FINANCING RECEIVABLES AND OPERATING LEASES (Tables)

3 Months Ended

Jun. 30, 2019

FINANCING RECEIVABLES AND OPERATING LEASES [Abstract]

Sales-type Leases

The following table provides the profit recognized for sales-type leases at their commencement date for the three months ended June 30, 2019 (in thousands):

	Three months ended June 30, 2019
Net sales	$	4,854
Cost of sales		3,950
Gross Profit	$	904

The following table provides interest income in aggregate on our sales-type leases and lease income on our operating leases for the three months ended June 30, 2019 (in thousands):

	Three months ended June 30, 2019
Interest Income on sales-type leases	$	2,095
Lease income on operating leases		5,359

Notes Receivable Net and Investments in Leases

Our financing receivables-net consist of the following (in thousands):

June 30, 2019	Notes Receivables			Lease-Related Receivables			Total Financing Receivables
Minimum payments	$	63,074		$	85,396		$	148,470
Estimated unguaranteed residual value (1)		-			18,768			18,768
Initial direct costs, net of amortization (2)		319			374			693
Unearned income		-			(10,867	)		(10,867	)
Reserve for credit losses (3)		(520	)		(512	)		(1,032	)
Total, net	$	62,873		$	93,159		$	156,032
Reported as:
Current	$	48,383		$	50,036		$	98,419
Long-term		14,490			43,123			57,613
Total, net	$	62,873		$	93,159		$	156,032

(1) Includes estimated unguaranteed residual values of $12,326 thousand for sales type leases, which have been sold and accounted for as sales.

(2) Initial direct costs are shown net of amortization of $306 thousand.

(3) For details on reserve for credit losses, refer to Note 7, “Reserves for Credit Losses.”

March 31, 2019	Notes Receivables			Lease-Related Receivables			Total Financing Receivables
Minimum payments	$	40,563		$	64,201		$	104,764
Estimated unguaranteed residual value (1)		-			14,639			14,639
Initial direct costs, net of amortization (2)		377			332			709
Unearned income		-			(7,671	)		(7,671	)
Reserve for credit losses (3)		(505	)		(530	)		(1,035	)
Total, net	$	40,435		$	70,971		$	111,406
Reported as:
Current	$	30,852		$	32,914		$	63,766
Long-term		9,583			38,057			47,640
Total, net	$	40,435		$	70,971		$	111,406

(1) Includes $8,996 thousand for the estimated residual values of sales type leases and direct financing leases for which we sold the financing assets.

(2) Initial direct costs are shown net of amortization of $275 thousand.

(3) For details on reserve for credit losses, refer to Note 7, “Reserves for Credit Losses.”

Future Scheduled Minimum Lease Payments

Future scheduled minimum lease payments for investments in sales-type leases as of June 30, 2019 are as follows (in thousands):

Remainder of Year ending March 31, 2020	$	49,243
Year ending March 31, 2021		20,723
Year ending March 31, 2022		11,211
Year ending March 31, 2023		3,510
Year ending March 31, 2024 and thereafter		709
Total	$	85,396

Investment in Operating Lease Equipment - Net

Operating leases—net represents leases that do not qualify as sales-type leases. The components of the operating leases—net are as follows (in thousands):

	June 30, 2019			March 31, 2019
Cost of equipment under operating leases	$	24,162		$	21,532
Accumulated depreciation		(10,678	)		(10,139	)
Investment in operating lease equipment—net (1)	$	13,484		$	11,393

(1) These totals include estimated unguaranteed residual values of $3,104 thousand and $2,906 thousand as of June 30, 2019 and March 31, 2019, respectively.

Future Minimum Rental Payments for Operating Leases

Future scheduled minimum lease rental payments as of June 30, 2019 are as follows (in thousands):

Remainder of Year ending March 31, 2020	$	3,794
Year ending March 31, 2021		3,760
Year ending March 31, 2022		2,498
Year ending March 31, 2023		1,451
Year ending March 31, 2024 and thereafter		443
Total	$	11,946

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LESSEE ACCOUNTING (Tables)

3 Months Ended

Jun. 30, 2019

LESSEE ACCOUNTING [Abstract]

Supplemental Information of Remaining Lease Terms and Discount Rates

Supplemental information about the remaining lease terms and discount rates applied as of June 30, 2019:

Lease term and Discount Rate	June 30, 2019
Weighted average remaining lease term (months)		36
Weighted average discount rate		4.1	%

Future Lease Payments Under Operating Leases

Future lease payments under our operating leases as of June 30, 2019 (in thousands):

	June 30, 2019
Remainder of year ending March 31, 2020	$	3,637
Year ending March 31, 2021		4,471
Year ending March 31, 2022		3,029
Year ending March 31, 2023		2,064
Year ending March 31, 2024		293
Thereafter		-
Total lease payments	$	13,494
Less: Interest		(816	)
Present value of lease liabilities	$	12,678

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

3 Months Ended

Jun. 30, 2019

GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

Changes in Goodwill

The following table summarizes the changes in the carrying amount of goodwill for the three months ended June 30, 2019 (in thousands):

	Three months ended June 30, 2019
	Goodwill			Accumulated Impairment Loss			Net Carrying Amount
Beginning balance	$	119,480		$	(8,673	)	$	110,807
Foreign currency translations		(53	)		-			(53	)
Ending balance	$	119,427		$	(8,673	)	$	110,754

Other Intangible Assets

Our other intangible assets consist of the following at June 30, 2019 and March 31, 2019 (in thousands):

	Three months ended June 30, 2019							March 31, 2019
	Gross Carrying Amount		Accumulated Amortization / Impairment Loss			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization / Impairment Loss			Net Carrying Amount
Customer relationships & other intangibles	$	57,343	$	(26,012	)	$	31,331	$	57,407	$	(23,865	)	$	33,542
Capitalized software development		10,285		(5,097	)		5,188		10,188		(4,802	)		5,386
Total	$	67,628	$	(31,109	)	$	36,519	$	67,595	$	(28,667	)	$	38,928

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RESERVES FOR CREDIT LOSSES (Tables)

3 Months Ended

Jun. 30, 2019

RESERVES FOR CREDIT LOSSES [Abstract]

Activity in Reserves for Credit Losses

Activity in our reserves for credit losses for the three months ended June 30, 2019 and 2018 were as follows (in thousands):

	Accounts Receivable			Notes Receivable			Lease- Related Receivables			Total
Balance April 1, 2019	$	1,579		$	505		$	530		$	2,614
Provision for credit losses		281			16			(16	)		281
Write-offs and other		(3	)		(1	)		(2	)		(6	)
Balance June 30, 2019	$	1,857		$	520		$	512		$	2,889

	Accounts Receivable			Notes Receivable		Lease- Related Receivables		Total
Balance April 1, 2018	$	1,538		$	486	$	640	$	2,664
Provision for credit losses		123			-		56		179
Write-offs and other		(1	)		-		-		(1	)
Balance June 30, 2018	$	1,660		$	486	$	696	$	2,842

Reserve for Credit Losses and Minimum Lease Payments Associated with Notes Receivable and Investment in Direct Financing and Sales-type Lease Balances Disaggregated Based on Our Impairment Method

Our reserves for credit losses and minimum payments associated with our notes receivables and lease-related receivables disaggregated based on of our impairment method were as follows (in thousands):

	June 30, 2019				March 31, 2019
	Notes Receivable		Lease- Related Receivables		Notes Receivable		Lease- Related Receivables
Reserves for credit losses:
Ending balance: collectively evaluated for impairment	$	458	$	512	$	443	$	530
Ending balance: individually evaluated for impairment		62		-		62		-
Ending balance	$	520	$	512	$	505	$	530
Minimum payments:
Ending balance: collectively evaluated for impairment	$	62,985	$	85,396	$	40,501	$	64,201
Ending balance: individually evaluated for impairment		89		-		62		-
Ending balance	$	63,074	$	85,396	$	40,563	$	64,201

Balance Disaggregated Based on Internally Assigned CQR

The age of the recorded minimum lease payments and net credit exposure associated with our investment in direct financing and sales-type leases that are past due disaggregated based on our internally assigned credit quality rating (“CQR”) were as follows as of June 30, 2019 and March 31, 2019 (in thousands):

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Unbilled Minimum Lease Payments		Total Minimum Lease Payments		Unearned Income			Non- Recourse Notes Payable			Net Credit Exposure
June 30, 2019
High CQR	$	275	$	205	$	528	$	1,008	$	239	$	38,379	$	39,626	$	(4,362	)	$	(13,800	)	$	21,464
Average CQR		32		11		29		72		252		45,446		45,770		(3,698	)		(25,970	)		16,102
Low CQR		-		-		-		-		-		-		-		-			-			-
Total	$	307	$	216	$	557	$	1,080	$	491	$	83,825	$	85,396	$	(8,060	)	$	(39,770	)	$	37,566
March 31, 2019
High CQR	$	325	$	41	$	10	$	376	$	543	$	29,503	$	30,422	$	(2,799	)	$	(11,044	)	$	16,579
Average CQR		22		54		15		91		125		33,563		33,779		(2,508	)		(20,848	)		10,423
Low CQR		-		-		-		-		-		-		-		-			-			-
Total	$	347	$	95	$	25	$	467	$	668	$	63,066	$	64,201	$	(5,307	)	$	(31,892	)	$	27,002

Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR

The age of the recorded notes receivable balance disaggregated based on our internally assigned CQR were as follows as of June 30, 2019 and March 31, 2019 (in thousands):

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Unbilled Notes Receivable		Total Notes Receivable		Non- Recourse Notes Payable			Net Credit Exposure
June 30, 2019
High CQR	$	-	$	23	$	106	$	129	$	7,361	$	48,240	$	55,730	$	(29,962	)	$	25,768
Average CQR		27		27		-		54		487		6,714		7,255		(49	)		7,206
Low CQR		-		-		89		89		-		-		89		-			89
Total	$	27	$	50	$	195	$	272	$	7,848	$	54,954	$	63,074	$	(30,011	)	$	33,063
March 31, 2019
High CQR	$	990	$	40	$	30	$	1,060	$	3,813	$	28,113	$	32,986	$	(18,245	)	$	14,741
Average CQR		105		34		7		146		137		7,232		7,515		(1,507	)		6,008
Low CQR		-		-		62		62		-		-		62		-			62
Total	$	1,095	$	74	$	99	$	1,268	$	3,950	$	35,345	$	40,563	$	(19,752	)	$	20,811

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PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES (Tables)

3 Months Ended

Jun. 30, 2019

PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES [Abstract]

Property, Equipment, Other Assets and Liabilities

Our property, equipment, other assets and liabilities consist of the following (in thousands):

	June 30, 2019		March 31, 2019
Other current assets:
Deposits & funds held in escrow	$	366	$	438
Prepaid assets		7,402		6,425
Other		459		636
Total other current assets	$	8,227	$	7,499
Property, equipment and other assets
Property and equipment, net	$	6,821	$	7,314
Deferred costs - non-current		9,505		8,856
Right-of-use assets		12,550		-
Other		1,335		1,158
Total other assets - long term	$	30,211	$	17,328
Other current liabilities:
Accrued expenses	$	8,832	$	7,813
Accrued income taxes payable		217		181
Contingent consideration - current		5,332		5,162
Short-term lease liability		4,811		-
Other		9,767		6,129
Total other current liabilities	$	28,959	$	19,285
Other liabilities:
Deferred revenue	$	13,502	$	13,789
Contingent consideration - long-term		4,011		3,780
Long-term lease liability		7,867		-
Other		83		108
Total other liabilities - long term	$	25,463	$	17,677

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NOTES PAYABLE AND CREDIT FACILITY (Tables)

3 Months Ended

Jun. 30, 2019

NOTES PAYABLE AND CREDIT FACILITY [Abstract]

Non-recourse and Recourse Obligations

Non-recourse and recourse obligations consist of the following (in thousands):

	June 30, 2019		March 31, 2019
Recourse notes payable with interest rates of 4.00% at March 31, 2019.
Current	$	-	$	28
Non-recourse notes payable secured by financing receivables and investments in operating leases with interest rates ranging from 3.34% to 8.45% as of June 30, 2019 and 3.23% to 8.45% as of March 31, 2019.
Current	$	64,583	$	38,117
Long-term		8,362		10,502
Total non-recourse notes payable	$	72,945	$	48,619

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EARNINGS PER SHARE (Tables)

3 Months Ended

Jun. 30, 2019

EARNINGS PER SHARE [Abstract]

Reconciliation of Numerators and Denominators Used to Calculate Basic and Diluted Earnings per Common Share

The following table provides a reconciliation of the numerators and denominators used to calculate basic and diluted net income per common share as disclosed on our unaudited consolidated statements of operations for the three months ended June 30, 2019 and 2018, respectively (in thousands, except per share data).

	Three Months Ended June 30,
	2019		2018
Net earnings attributable to common shareholders - basic and diluted	$	16,188	$	15,273
Basic and diluted common shares outstanding:
Weighted average common shares outstanding — basic		13,356		13,434
Effect of dilutive shares		101		163
Weighted average shares common outstanding — diluted		13,457		13,597
Earnings per common share - basic	$	1.21	$	1.14
Earnings per common share - diluted	$	1.20	$	1.12

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SHARE-BASED COMPENSATION (Tables)

3 Months Ended

Jun. 30, 2019

SHARE-BASED COMPENSATION [Abstract]

Summary of Non-vested Restricted Shares

For the three months ended June 30, 2019, we granted 454 restricted shares under the 2017 Director LTIP, and 85,132 restricted shares under the 2012 Employee LTIP. For the three months ended June 30, 2018, we granted 841 restricted shares under the 2017 Director LTIP, and 69,847 restricted shares under the 2012 Employee LTIP. A summary of the restricted shares is as follows:

	Number of Shares			Weighted Average Grant- date Fair Value
Nonvested April 1, 2019		224,000		$	67.70
Granted		85,586		$	72.50
Vested		(107,238	)	$	60.92
Forfeited		(67	)	$	79.70
Nonvested June 30, 2019		202,281		$	73.32

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Jun. 30, 2019

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

Fair Value Hierarchy of Financial Instruments

We account for the fair values of our assets and liabilities in accordance with Codification Topic 820, Fair Value Measurement and Disclosure. The following table summarizes the fair value hierarchy of our financial instruments as of June 30, 2019 and March 31, 2019 (in thousands):

			Fair Value Measurement Using
	Recorded Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2019
Assets:
Money market funds	$	114	$	114	$	-	$	-
Liabilities:
Contingent consideration	$	9,343	$	-	$	-	$	9,343
March 31, 2019
Assets:
Money market funds	$	50	$	50	$	-	$	-
Liabilities:
Contingent consideration	$	8,942	$	-	$	-	$	8,942

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BUSINESS COMBINATIONS (Tables)

3 Months Ended

Jun. 30, 2019

SLAIT Consulting, LLC [Member]

Business Acquisition [Line Items]

Allocation of Purchase Price Consideration to Assets Acquired and Liabilities Assumed

Our sum of consideration transferred is $50.0 million consisting of $50.7 million paid in cash at closing, less $1.0 million cash acquired, and plus a working capital adjustment of $0.3 million that we paid in May 2019. Our preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed is presented below (in thousands):

	Acquisition Date Amount
Accounts receivable	$	10,208
Other assets		1,050
Identified intangible assets		18,190
Accounts payable and other current liabilities		(8,669	)
Performance obligation		(5,110	)
Total identifiable net assets		15,669
Goodwill		34,352
Total purchase consideration	$	50,021

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SEGMENT REPORTING (Tables)

3 Months Ended

Jun. 30, 2019

SEGMENT REPORTING [Abstract]

Segment Reporting Information, by Reportable Segment

Our reportable segment information was as follows (in thousands):

	Three Months Ended
	June 30, 2019							June 30, 2018
	Technology		Financing		Total			Technology		Financing		Total
Sales
Product	$	322,764	$	12,837	$	335,601		$	313,149	$	9,668	$	322,817
Service		45,771		-		45,771			33,715		-		33,715
Net sales	$	368,535	$	12,837	$	381,372		$	346,864	$	9,668	$	356,532
Cost of Sales
Product		258,054		2,009		260,063			254,064		1,748		255,812
Service		28,670		-		28,670			20,017		-		20,017
Total cost of sales		286,724		2,009		288,733			274,081		1,748		275,829
Gross Profit		81,811		10,828		92,639			72,783		7,920		80,703
Selling, general, and administrative		62,667		3,120		65,787			54,454		2,512		56,966
Depreciation and amortization		3,407		56		3,463			2,789		1		2,790
Interest and financing costs		-		628		628			-		476		476
Operating expenses		66,074		3,804		69,878			57,243		2,989		60,232
Operating income		15,737		7,024		22,761			15,540		4,931		20,471
Other income (expense)						(45	)						97
Earnings before tax					$	22,716						$	20,568
Net Sales
Contracts with customers	$	363,681	$	789	$	364,470		$	341,459	$	596	$	342,055
Financing and other		4,854		12,048		16,902			5,405		9,072		14,477
Net Sales	$	368,535	$	12,837	$	381,372			346,864	$	9,668	$	356,532
Selected Financial Data - Statement of Cash Flow
Depreciation and amortization	$	1,339	$	3,625	$	4,964		$	3,015	$	1,485	$	4,500
Purchases of property, equipment and operating lease equipment	$	1,249	$	269	$	1,518		$	1,180	$	450	$	1,630
Selected Financial Data - Balance Sheet
Total assets	$	658,692	$	216,121	$	874,813		$	557,864	$	202,535	$	760,399

Technology Segment Disaggregation of Revenue

We analyze net sales for our technology segment by customer end market and by vendor, as opposed to discrete product and service categories, which are summarized below (in thousands):

	Three Months Ended June 30,
	2019			2018
Customer end market:
Technology	$	76,180		$	82,817
Telecom, Media & Entertainment		62,466			46,868
Financial Services		48,241			45,225
SLED		71,190			68,205
Healthcare		56,109			46,450
All others		54,349			57,299
Net sales		368,535			346,864
Financing and other		(4,854	)		(5,405	)
Revenue from contracts with customers	$	363,681		$	341,459

	Three Months Ended June 30,
	2019			2018
Vendor
Cisco Systems	$	146,181		$	139,577
NetApp		13,427			15,020
HP Inc. & HPE		23,113			20,355
Dell / EMC		13,781			12,503
Arista Networks		20,950			19,844
Juniper Networks		7,054			10,431
All others		144,029			129,134
Net sales		368,535			346,864
Financing and other		(4,854	)		(5,405	)
Revenue from contracts with customers	$	363,681		$	341,459

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Minimum [Member]
Lessee Accounting [Abstract]
Operating lease term	3 years
Maximum [Member]
Lessee Accounting [Abstract]
Operating lease term	6 years
Net Sales [Member] | Cisco Systems [Member] | Technology Segment [Member]
Concentration of risk [Abstract]
Percentage of concentration risk	40.00%	40.00%

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RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Mar. 31, 2019
Revenue, Initial Application Period Cumulative Effect Transition [Abstract]
Right-of-use assets	$ 12,550	$ 0
Lease liabilities	12,678
Prepaid assets	7,402	$ 6,425
ASU 2016-02 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Abstract]
Right-of-use assets	12,700
Lease liabilities	12,300
Prepaid assets	$ (400)

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REVENUES (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2019
Contract with Customer, Asset and Liability [Abstract]
Accounts receivable - trade	$ 18,900		$ 16,200
Current (included in deferred revenue)	47,549		46,356
Non-current (included in other liabilities)	13,317		$ 13,593
Revenue recognized from the beginning contract liability	15,800	$ 12,800
Revenue, Performance Obligation Satisfied over Time [Abstract]
Remaining performance obligation	36,957
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01
Revenue, Performance Obligation Satisfied over Time [Abstract]
Remaining performance obligation	$ 19,327
Expected timing of satisfaction, period	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-01
Revenue, Performance Obligation Satisfied over Time [Abstract]
Remaining performance obligation	$ 11,640
Expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-01
Revenue, Performance Obligation Satisfied over Time [Abstract]
Remaining performance obligation	$ 4,438
Expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01
Revenue, Performance Obligation Satisfied over Time [Abstract]
Remaining performance obligation	$ 1,134
Expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Revenue, Performance Obligation Satisfied over Time [Abstract]
Remaining performance obligation	$ 18
Expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-04-01
Revenue, Performance Obligation Satisfied over Time [Abstract]
Remaining performance obligation	$ 400
Expected timing of satisfaction, period	1 year

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FINANCING RECEIVABLES AND OPERATING LEASES (Details) - USD ($) $ in Thousands		3 Months Ended
		Jun. 30, 2019		Jun. 30, 2018	Mar. 31, 2019		Mar. 31, 2018
Profit Recognized for Sales-type Leases [Abstract]
Net sales		$ 4,854
Cost of sales		3,950
Gross Profit		904
Interest Income on Sales-type Leases [Abstract]
Interest Income on sales-type leases		2,095
Lease income on operating leases		5,359
Financing Receivables [Abstract]
Reserve for credit losses		(2,889)		$ (2,842)	$ (2,614)		$ (2,664)
Reported as [Abstract]
Current		98,419			63,767
Future scheduled minimum lease payments [Abstract]
Remainder of Year ending March 31, 2020		49,243
Year ending March 31, 2021		20,723
Year ending March 31, 2022		11,211
Year ending March 31, 2023		3,510
Year ending March 31, 2024 and thereafter		709
Total		85,396
Estimated unguaranteed residual values for direct financing lease		12,326			8,996
Accumulated amortization of initial direct cost		306			275
Investment in operating lease equipment - net [Abstract]
Cost of equipment under operating leases		24,162			21,532
Accumulated depreciation		(10,678)			(10,139)
Investment in operating lease equipment - net	[1]	13,484			11,393
Unguaranteed residual value of operating lease equipment net		3,104			2,906
Future scheduled minimum lease rental payments [Abstract]
Remainder of Year ending March 31, 2020		3,794
Year ending March 31, 2021		3,760
Year ending March 31, 2022		2,498
Year ending March 31, 2023		1,451
Year ending March 31, 2024 and thereafter		443
Total		11,946
Collateral for non-recourse notes payable - Finance receivables		75,600			50,200
Collateral for non-recourse notes payable - Operating leases		7,100			7,800
Gain on sale of financing receivables		3,300		1,300
Proceeds from sale of financing receivables		69,900		46,900
Contract liabilities - servicing of financial assets		400			400
Maximum potential future payments related guarantees		400
Notes Receivables [Member]
Financing Receivables [Abstract]
Minimum payments		63,074			40,563
Estimated unguaranteed residual value		0	[2]		0	[3]
Initial direct costs, net of amortization		319	[4]		377	[5]
Unearned income		0			0
Reserve for credit losses		(520)	[6]	(486)	(505)	[6]	(486)
Total, net		62,873			40,435
Reported as [Abstract]
Current		48,383			30,852
Long-term		14,490			9,583
Total, net		62,873			40,435
Lease-Related Receivables [Member]
Financing Receivables [Abstract]
Minimum payments		85,396			64,201
Estimated unguaranteed residual value		18,768	[2]		14,639	[3]
Initial direct costs, net of amortization		374	[4]		332	[5]
Unearned income		(10,867)			(7,671)
Reserve for credit losses		(512)	[6]	$ (696)	(530)	[6]	$ (640)
Total, net		93,159			70,971
Reported as [Abstract]
Current		50,036			32,914
Long-term		43,123			38,057
Total, net		93,159			70,971
Financing Receivables [Member]
Financing Receivables [Abstract]
Minimum payments		148,470			104,764
Estimated unguaranteed residual value		18,768	[2]		14,639	[3]
Initial direct costs, net of amortization		693	[4]		709	[5]
Unearned income		(10,867)			(7,671)
Reserve for credit losses	[6]	(1,032)			(1,035)
Total, net		156,032			111,406
Reported as [Abstract]
Current		98,419			63,766
Long-term		57,613			47,640
Total, net		$ 156,032			$ 111,406

[1] These totals include estimated unguaranteed residual values of $3,104 thousand and $2,906 thousand as of June 30, 2019 and March 31, 2019, respectively.

[2] Includes estimated unguaranteed residual values of $12,326 thousand for sales type leases, which have been sold and accounted for as sales.

[3] Includes $8,996 thousand for the estimated residual values of sales type leases and direct financing leases for which we sold the financing assets.

[4] Initial direct costs are shown net of amortization of $306 thousand.

[5] Initial direct costs are shown net of amortization of $275 thousand.

[6] For details on reserve for credit losses, refer to Note 7, “Reserves for Credit Losses.”

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LESSEE ACCOUNTING (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2019 USD ($) Office
Lessee, Operating Lease [Abstract]
Rent expense	$ 1,600
Lease Term and Discount Rate [Abstract]
Weighted average remaining lease term (months)	36 months
Weighted average discount rate	4.10%
Future Lease Payments under Operating Leases [Abstract]
Remainder of year ending March 31, 2020	$ 3,637
Year ending March 31, 2021	4,471
Year ending March 31, 2022	3,029
Year ending March 31, 2023	2,064
Year ending March 31, 2024	293
Thereafter	0
Total lease payments	13,494
Less: Interest	(816)
Present value of lease liabilities	$ 12,678
Maximum [Member]
Lessee, Operating Lease [Abstract]
Operating lease term	6 years
Additional Office Space [Member]
Future Lease Payments under Operating Leases [Abstract]
Number of additional office leases | Office	2
Total lease commitment	$ 1,500

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GOODWILL AND OTHER INTANGIBLE ASSETS, Goodwill (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2019 USD ($) Unit
GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]
Number of reporting units | Unit	1
Goodwill [Roll Forward]
Goodwill, Beginning Balance	$ 119,480
Goodwill, Impairment Loss, Beginning Balance	(8,673)
Goodwill, Net Carrying Amount, Beginning Balance	110,807
Foreign currency translations	(53)
Goodwill, Ending Balance	119,427
Goodwill, Impairment Loss, Ending Balance	(8,673)
Goodwill, Net Carrying Amount, Ending Balance	$ 110,754

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GOODWILL AND OTHER INTANGIBLE ASSETS, Other Intangible assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2019
Other Intangible Assets [Abstract]
Intangibles assets, Gross carrying amount	$ 67,628		$ 67,595
Intangibles Assets, Accumulated amortization / Impairment Loss	(31,109)		(28,667)
Intangible assets, Net Carrying Amount	36,519		38,928
Total amortization expense for other intangible assets	2,500	$ 1,800
Customer Relationships and Other Intangibles [Member]
Other Intangible Assets [Abstract]
Intangibles assets, Gross carrying amount	57,343		57,407
Intangibles Assets, Accumulated amortization / Impairment Loss	(26,012)		(23,865)
Intangible assets, Net Carrying Amount	$ 31,331		33,542
Customer Relationships and Other Intangibles [Member] | Minimum [Member]
Other Intangible Assets [Abstract]
Estimated useful life	5 years
Customer Relationships and Other Intangibles [Member] | Maximum [Member]
Other Intangible Assets [Abstract]
Estimated useful life	10 years
Capitalized Software Development [Member]
Other Intangible Assets [Abstract]
Intangibles assets, Gross carrying amount	$ 10,285		10,188
Intangibles Assets, Accumulated amortization / Impairment Loss	(5,097)		(4,802)
Intangible assets, Net Carrying Amount	$ 5,188		$ 5,386
Estimated useful life	5 years

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RESERVES FOR CREDIT LOSSES, Activity (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019		Jun. 30, 2018
Activity in reserves for credit losses [Roll Forward]
Balance	$ 2,614		$ 2,664
Provision for credit losses	281		179
Write-offs and other	(6)		(1)
Balance	2,889		2,842
Accounts Receivable [Member]
Activity in reserves for credit losses [Roll Forward]
Balance	1,579		1,538
Provision for credit losses	281		123
Write-offs and other	(3)		(1)
Balance	1,857		1,660
Notes Receivable [Member]
Activity in reserves for credit losses [Roll Forward]
Balance	505	[1]	486
Provision for credit losses	16		0
Write-offs and other	(1)		0
Balance	520	[1]	486
Lease-Related Receivables [Member]
Activity in reserves for credit losses [Roll Forward]
Balance	530	[1]	640
Provision for credit losses	(16)		56
Write-offs and other	(2)		0
Balance	$ 512	[1]	$ 696

[1] For details on reserve for credit losses, refer to Note 7, “Reserves for Credit Losses.”

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RESERVES FOR CREDIT LOSSES, Disaggregated Based on Impairment (Details) - USD ($) $ in Thousands	Jun. 30, 2019		Mar. 31, 2019		Jun. 30, 2018	Mar. 31, 2018
Reserve for credit losses [Abstract]
Ending balance	$ 2,889		$ 2,614		$ 2,842	$ 2,664
Accounts Receivable [Member]
Reserve for credit losses [Abstract]
Ending balance	1,857		1,579		1,660	1,538
Notes Receivable [Member]
Reserve for credit losses [Abstract]
Ending balance: collectively evaluated for impairment	458		443
Ending balance: individually evaluated for impairment	62		62
Ending balance	520	[1]	505	[1]	486	486
Minimum payments [Abstract]
Ending balance: collectively evaluated for impairment	62,985		40,501
Ending balance: individually evaluated for impairment	89		62
Ending balance	63,074		40,563
Lease-Related Receivables [Member]
Reserve for credit losses [Abstract]
Ending balance: collectively evaluated for impairment	512		530
Ending balance: individually evaluated for impairment	0		0
Ending balance	512	[1]	530	[1]	$ 696	$ 640
Minimum payments [Abstract]
Ending balance: collectively evaluated for impairment	85,396		64,201
Ending balance: individually evaluated for impairment	0		0
Ending balance	$ 85,396		$ 64,201

[1] For details on reserve for credit losses, refer to Note 7, “Reserves for Credit Losses.”

XML

RESERVES FOR CREDIT LOSSES, CQR (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Mar. 31, 2019
Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	$ 1,080	$ 467
Current	491	668
Unbilled minimum lease payments	83,825	63,066
Total minimum lease payments	85,396	64,201
Unearned income	(8,060)	(5,307)
Non-recourse notes payable	(39,770)	(31,892)
Net credit exposure	37,566	27,002
Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	272	1,268
Current	7,848	3,950
Unbilled minimum lease payments	54,954	35,345
Total minimum lease payments	63,074	40,563
Non-recourse notes payable	(30,011)	(19,752)
Net credit exposure	$ 33,063	20,811
High CQR [Member] | Minimum [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Losses on net credit exposure	0.00%
High CQR [Member] | Maximum [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Losses on net credit exposure	5.00%
High CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	$ 1,008	376
Current	239	543
Unbilled minimum lease payments	38,379	29,503
Total minimum lease payments	39,626	30,422
Unearned income	(4,362)	(2,799)
Non-recourse notes payable	(13,800)	(11,044)
Net credit exposure	21,464	16,579
High CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	129	1,060
Current	7,361	3,813
Unbilled minimum lease payments	48,240	28,113
Total minimum lease payments	55,730	32,986
Non-recourse notes payable	(29,962)	(18,245)
Net credit exposure	$ 25,768	14,741
Average CQR [Member] | Minimum [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Losses on net credit exposure	2.00%
Average CQR [Member] | Maximum [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Losses on net credit exposure	15.00%
Average CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	$ 72	91
Current	252	125
Unbilled minimum lease payments	45,446	33,563
Total minimum lease payments	45,770	33,779
Unearned income	(3,698)	(2,508)
Non-recourse notes payable	(25,970)	(20,848)
Net credit exposure	16,102	10,423
Average CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	54	146
Current	487	137
Unbilled minimum lease payments	6,714	7,232
Total minimum lease payments	7,255	7,515
Non-recourse notes payable	(49)	(1,507)
Net credit exposure	$ 7,206	6,008
Low CQR [Member] | Minimum [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Losses on net credit exposure	15.00%
Low CQR [Member] | Maximum [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Losses on net credit exposure	100.00%
Low CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	$ 0	0
Current	0	0
Unbilled minimum lease payments	0	0
Total minimum lease payments	0	0
Unearned income	0	0
Non-recourse notes payable	0	0
Net credit exposure	0	0
Low CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	89	62
Current	0	0
Unbilled minimum lease payments	0	0
Total minimum lease payments	89	62
Non-recourse notes payable	0	0
Net credit exposure	89	62
31 to 60 Days Past Due [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	307	347
31 to 60 Days Past Due [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	27	1,095
31 to 60 Days Past Due [Member] | High CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	275	325
31 to 60 Days Past Due [Member] | High CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	0	990
31 to 60 Days Past Due [Member] | Average CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	32	22
31 to 60 Days Past Due [Member] | Average CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	27	105
31 to 60 Days Past Due [Member] | Low CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	0	0
31 to 60 Days Past Due [Member] | Low CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	0	0
61 to 90 Days Past Due [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	216	95
61 to 90 Days Past Due [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	50	74
61 to 90 Days Past Due [Member] | High CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	205	41
61 to 90 Days Past Due [Member] | High CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	23	40
61 to 90 Days Past Due [Member] | Average CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	11	54
61 to 90 Days Past Due [Member] | Average CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	27	34
61 to 90 Days Past Due [Member] | Low CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	0	0
61 to 90 Days Past Due [Member] | Low CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	0	0
Greater than 90 Days Past Due [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	557	25
Greater than 90 Days Past Due [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	195	99
Greater than 90 Days Past Due [Member] | High CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	528	10
Greater than 90 Days Past Due [Member] | High CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	106	30
Greater than 90 Days Past Due [Member] | Average CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	29	15
Greater than 90 Days Past Due [Member] | Average CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	0	7
Greater than 90 Days Past Due [Member] | Low CQR [Member] | Investment in Direct Financing and Sales-type Leases that are Past Due [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	0	0
Greater than 90 Days Past Due [Member] | Low CQR [Member] | Notes Receivable [Member]
Age of the Recorded Notes Receivable Balance Disaggregated Based on Internally Assigned CQR [Abstract]
Total past due	$ 89	$ 62

XML

PROPERTY, EQUIPMENT, OTHER ASSETS AND LIABILITIES (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Mar. 31, 2019
Other current assets [Abstract]
Deposits & funds held in escrow	$ 366	$ 438
Prepaid assets	7,402	6,425
Other	459	636
Total other current assets	8,227	7,499
Property, equipment and other assets [Abstract]
Property and equipment, net	6,821	7,314
Deferred costs - non-current	9,505	8,856
Right-of-use assets	12,550	0
Other	1,335	1,158
Total other assets - long term	30,211	17,328
Other current liabilities [Abstract]
Accrued expenses	8,832	7,813
Accrued income taxes payable	217	181
Contingent consideration - current	5,332	5,162
Short-term lease liability	4,811	0
Other	9,767	6,129
Total other current liabilities	28,959	19,285
Other liabilities [Abstract]
Deferred revenue	13,502	13,789
Contingent consideration long-term	4,011	3,780
Long-term lease liability	7,867	0
Other	83	108
Total other liabilities - long term	$ 25,463	$ 17,677

XML

NOTES PAYABLE AND CREDIT FACILITY (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2019 USD ($) Component	Jul. 31, 2019 USD ($)	Mar. 31, 2019 USD ($)
Recourse Notes Payable [Abstract]
Current	$ 0		$ 28
Non-recourse Notes Payable Secured by Financing Receivables and Investment in Operating Leases [Abstract]
Current	64,583		38,117
Long-term	8,362		10,502
Guarantor obligations for credit facility, maximum	400
Recourse Note Payable [Member]
Recourse Notes Payable [Abstract]
Current	0		$ 28
Non-recourse Notes Payable Secured by Financing Receivables and Investment in Operating Leases [Abstract]
Interest rates of notes			4.00%
Weighted average interest rate of notes			4.00%
Non-Recourse Note Payable [Member]
Non-recourse Notes Payable Secured by Financing Receivables and Investment in Operating Leases [Abstract]
Current	64,583		$ 38,117
Long-term	8,362		10,502
Total non-recourse notes payable	$ 72,945		$ 48,619
Weighted average interest rate of notes	4.25%		4.68%
Non-Recourse Note Payable [Member] | Minimum [Member]
Non-recourse Notes Payable Secured by Financing Receivables and Investment in Operating Leases [Abstract]
Interest rates of notes	3.34%		3.23%
Non-Recourse Note Payable [Member] | Maximum [Member]
Non-recourse Notes Payable Secured by Financing Receivables and Investment in Operating Leases [Abstract]
Interest rates of notes	8.45%		8.45%
WFCDF [Member]
Non-recourse Notes Payable Secured by Financing Receivables and Investment in Operating Leases [Abstract]
Number of components under credit facility | Component	2
Maximum borrowing capacity under credit facility	$ 250,000
Period of notice required to terminate credit facility at quarter end	45 days
Period of notice required to terminate credit facility at year end	90 days
Guarantor obligations for credit facility, maximum	$ 10,500
WFCDF [Member] | Subsequent Event [Member]
Non-recourse Notes Payable Secured by Financing Receivables and Investment in Operating Leases [Abstract]
Maximum borrowing capacity under credit facility		$ 325,000
WFCDF [Member] | Floor Plan Component [Member]
Non-recourse Notes Payable Secured by Financing Receivables and Investment in Operating Leases [Abstract]
Amount outstanding under credit facility	136,000		$ 116,100
WFCDF [Member] | Account Receivable Component [Member]
Non-recourse Notes Payable Secured by Financing Receivables and Investment in Operating Leases [Abstract]
Amount outstanding under credit facility	0		$ 0
Maximum borrowing capacity under credit facility	$ 50,000
WFCDF [Member] | Account Receivable Component [Member] | LIBOR [Member]
Non-recourse Notes Payable Secured by Financing Receivables and Investment in Operating Leases [Abstract]
Debt instrument term of variable rate	1 month
Basis spread on reference rate	2.50%

XML

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share, Basic and Diluted [Abstract]
Net earnings attributable to common shareholders - basic and diluted	$ 16,188	$ 15,273
Basic and diluted common shares outstanding [Abstract]
Weighted average common shares outstanding - basic (in shares)	13,356	13,434
Effect of dilutive shares (in shares)	101	163
Weighted average shares common outstanding - diluted (in shares)	13,457	13,597
Earnings per common share - basic (in dollars per share)	$ 1.21	$ 1.14
Earnings per common share - diluted (in dollars per share)	$ 1.20	$ 1.12

XML

STOCKHOLDERS' EQUITY (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Apr. 26, 2018
STOCKHOLDERS' EQUITY [Abstract]
Authorized number of shares under stock repurchase program (in shares)	500,000		500,000
Common stock repurchased during the period (in shares)	148,790	70,445
Common stock repurchased during the period	$ 10.7	$ 5.5
Shares repurchased to satisfy tax withholding obligation (in shares)	38,811	37,086
Value of shares repurchased to satisfy tax withholding obligation	$ 2.8	$ 3.6

XML

SHARE-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Additional Disclosures [Abstract]
Vested share-based awards withheld to satisfy income tax obligations (in shares)	38,811	37,086
Vested share-based awards withheld to satisfy income tax obligations	$ 2,800	$ 3,600
Compensation Expense [Abstract]
Share-based compensation expense	1,919	1,693
401(k) Profit Sharing Plan [Abstract]
Contribution to profit sharing plan	$ 700	$ 500
Restricted Stock [Member]
Number of Shares [Roll Forward]
Nonvested at beginning of period (in shares)	224,000
Granted (in shares)	85,586
Vested (in shares)	(107,238)
Forfeited (in shares)	(67)
Nonvested at end of period (in shares)	202,281
Weighted Average Grant-date Fair Value [Roll Forward]
Nonvested at beginning of period (in dollars per share)	$ 67.70
Granted (in dollars per share)	72.50
Vested (in dollars per share)	60.92
Forfeited (in dollars per share)	79.70
Nonvested at end of period (in dollars per share)	$ 73.32
Compensation Expense [Abstract]
Unrecognized compensation expense	$ 13,600
Unrecognized compensation expense, period for recognition	36 months
2017 Director LTIP [Member] | Restricted Stock [Member]
Number of Shares [Roll Forward]
Granted (in shares)	454	841
2012 Employee LTIP [Member] | Restricted Stock [Member]
Number of Shares [Roll Forward]
Granted (in shares)	85,132	69,847
Additional Disclosures [Abstract]
Vested share-based awards withheld to satisfy income tax obligations (in shares)	38,811
Vested share-based awards withheld to satisfy income tax obligations	$ 2,800

XML

INCOME TAXES (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2019 USD ($)
INCOME TAXES [Abstract]
Additions or reductions to gross unrecognized tax benefits	$ 0

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2019
Assets [Abstract]
Money market funds	$ 114		$ 50
Liabilities [Abstract]
Contingent consideration	9,343		8,942
Adjustment to fair value of contingent consideration	400	$ 400
Payments of contingent consideration	0	$ 0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets [Abstract]
Money market funds	114		50
Liabilities [Abstract]
Contingent consideration	0		0
Significant Other Observable Inputs (Level 2) [Member]
Assets [Abstract]
Money market funds	0		0
Liabilities [Abstract]
Contingent consideration	0		0
Significant Unobservable Inputs (Level 3) [Member]
Assets [Abstract]
Money market funds	0		0
Liabilities [Abstract]
Contingent consideration	$ 9,343		$ 8,942

XML

BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands		3 Months Ended
	Jan. 18, 2019	Jun. 30, 2019	Mar. 31, 2019
Allocation of Purchase Price Consideration to Assets Acquired and Liabilities Assumed [Abstract]
Goodwill		$ 110,754	$ 110,807
SLAIT Consulting, LLC [Member]
Business Combination [Abstract]
Percentage of stock acquired	100.00%
Cash portion of the acquisition	$ 50,700
Cash acquired from acquisition	1,000
Liability from working capital adjustment	300
Allocation of Purchase Price Consideration to Assets Acquired and Liabilities Assumed [Abstract]
Accounts receivable	10,208
Other assets	1,050
Identified intangible assets	18,190
Accounts payable and other current liabilities	(8,669)
Performance obligation	(5,110)
Total identifiable net assets	15,669
Goodwill	34,352
Total purchase consideration	$ 50,021
SLAIT Consulting, LLC [Member] | Customer Relationships [Member]
Allocation of Purchase Price Consideration to Assets Acquired and Liabilities Assumed [Abstract]
Estimated useful lives		10 years

XML

SEGMENT REPORTING, Reportable Segment Information (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2019 USD ($) Segment	Jun. 30, 2018 USD ($)	Mar. 31, 2019 USD ($)
SEGMENT REPORTING [Abstract]
Number of business segments | Segment	2
Reportable Segment Information [Abstract]
Net sales	$ 381,372	$ 356,532
Cost of Sales [Abstract]
Cost of sales	288,733	275,829
Gross profit	92,639	80,703
Selling, general, and administrative	65,787	56,966
Depreciation and amortization	3,463	2,790
Interest and financing costs	628	476
Operating expenses	69,878	60,232
Operating income	22,761	20,471
Other income (expense)	(45)	97
Earnings before tax	22,716	20,568
Net Sales [Abstract]
Contracts with customers	363,681	341,459
Financing and other	4,854	5,405
Net sales	381,372	356,532
Selected Financial Data - Statement of Cash Flow [Abstract]
Depreciation and amortization	4,964	4,500
Purchases of property, equipment and operating lease equipment	1,518	1,630
Selected Financial Data - Balance Sheet [Abstract]
Total assets	874,813	760,399	$ 786,198
Product [Member]
Reportable Segment Information [Abstract]
Net sales	335,601	322,817
Cost of Sales [Abstract]
Cost of sales	260,063	255,812
Net Sales [Abstract]
Net sales	335,601	322,817
Service [Member]
Reportable Segment Information [Abstract]
Net sales	45,771	33,715
Cost of Sales [Abstract]
Cost of sales	28,670	20,017
Net Sales [Abstract]
Net sales	45,771	33,715
Technology Segment [Member]
Reportable Segment Information [Abstract]
Net sales	368,535	346,864
Net Sales [Abstract]
Contracts with customers	363,681	341,459
Financing and other	4,854	5,405
Net sales	368,535	346,864
Operating Segments [Member]
Reportable Segment Information [Abstract]
Net sales	381,372	356,532
Net Sales [Abstract]
Contracts with customers	364,470	342,055
Financing and other	16,902	14,477
Net sales	381,372	356,532
Operating Segments [Member] | Technology Segment [Member]
Reportable Segment Information [Abstract]
Net sales	368,535	346,864
Cost of Sales [Abstract]
Cost of sales	286,724	274,081
Gross profit	81,811	72,783
Selling, general, and administrative	62,667	54,454
Depreciation and amortization	3,407	2,789
Interest and financing costs	0	0
Operating expenses	66,074	57,243
Operating income	15,737	15,540
Net Sales [Abstract]
Contracts with customers	363,681	341,459
Financing and other	4,854	5,405
Net sales	368,535	346,864
Selected Financial Data - Statement of Cash Flow [Abstract]
Depreciation and amortization	1,339	3,015
Purchases of property, equipment and operating lease equipment	1,249	1,180
Selected Financial Data - Balance Sheet [Abstract]
Total assets	658,692	557,864
Operating Segments [Member] | Technology Segment [Member] | Product [Member]
Reportable Segment Information [Abstract]
Net sales	322,764	313,149
Cost of Sales [Abstract]
Cost of sales	258,054	254,064
Net Sales [Abstract]
Net sales	322,764	313,149
Operating Segments [Member] | Technology Segment [Member] | Service [Member]
Reportable Segment Information [Abstract]
Net sales	45,771	33,715
Cost of Sales [Abstract]
Cost of sales	28,670	20,017
Net Sales [Abstract]
Net sales	45,771	33,715
Operating Segments [Member] | Financing Segment [Member]
Reportable Segment Information [Abstract]
Net sales	12,837	9,668
Cost of Sales [Abstract]
Cost of sales	2,009	1,748
Gross profit	10,828	7,920
Selling, general, and administrative	3,120	2,512
Depreciation and amortization	56	1
Interest and financing costs	628	476
Operating expenses	3,804	2,989
Operating income	7,024	4,931
Net Sales [Abstract]
Contracts with customers	789	596
Financing and other	12,048	9,072
Net sales	12,837	9,668
Selected Financial Data - Statement of Cash Flow [Abstract]
Depreciation and amortization	3,625	1,485
Purchases of property, equipment and operating lease equipment	269	450
Selected Financial Data - Balance Sheet [Abstract]
Total assets	216,121	202,535
Operating Segments [Member] | Financing Segment [Member] | Product [Member]
Reportable Segment Information [Abstract]
Net sales	12,837	9,668
Cost of Sales [Abstract]
Cost of sales	2,009	1,748
Net Sales [Abstract]
Net sales	12,837	9,668
Operating Segments [Member] | Financing Segment [Member] | Service [Member]
Reportable Segment Information [Abstract]
Net sales	0	0
Cost of Sales [Abstract]
Cost of sales	0	0
Net Sales [Abstract]
Net sales	$ 0	$ 0

XML

SEGMENT REPORTING, Technology Segment Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Abstract]
Net sales	$ 381,372	$ 356,532
Financing and other	(4,854)	(5,405)
Revenue from contracts with customers	363,681	341,459
Technology Segment [Member]
Disaggregation of Revenue [Abstract]
Net sales	368,535	346,864
Financing and other	(4,854)	(5,405)
Revenue from contracts with customers	363,681	341,459
Technology Segment [Member] | Technology [Member]
Disaggregation of Revenue [Abstract]
Net sales	76,180	82,817
Technology Segment [Member] | Telecom, Media & Entertainment [Member]
Disaggregation of Revenue [Abstract]
Net sales	62,466	46,868
Technology Segment [Member] | Financial Services [Member]
Disaggregation of Revenue [Abstract]
Net sales	48,241	45,225
Technology Segment [Member] | SLED [Member]
Disaggregation of Revenue [Abstract]
Net sales	71,190	68,205
Technology Segment [Member] | Health Care [Member]
Disaggregation of Revenue [Abstract]
Net sales	56,109	46,450
Technology Segment [Member] | All others [Member]
Disaggregation of Revenue [Abstract]
Net sales	54,349	57,299
Technology Segment [Member] | Cisco Systems [Member]
Disaggregation of Revenue [Abstract]
Net sales	146,181	139,577
Technology Segment [Member] | NetApp [Member]
Disaggregation of Revenue [Abstract]
Net sales	13,427	15,020
Technology Segment [Member] | HP Inc. & HPE [Member]
Disaggregation of Revenue [Abstract]
Net sales	23,113	20,355
Technology Segment [Member] | Dell / EMC [Member]
Disaggregation of Revenue [Abstract]
Net sales	13,781	12,503
Technology Segment [Member] | Arista Networks [Member]
Disaggregation of Revenue [Abstract]
Net sales	20,950	19,844
Technology Segment [Member] | Juniper Networks [Member]
Disaggregation of Revenue [Abstract]
Net sales	7,054	10,431
Technology Segment [Member] | All others [Member]
Disaggregation of Revenue [Abstract]
Net sales	$ 144,029	$ 129,134