Accounts Receivable

3 Months Ended

Sep. 30, 2018

Accounts Receivable

Accounts Receivable

Note 5.  Accounts Receivable

Accounts receivable consisted of the following components at September 30, 2018 and June 30, 2018:

(In thousands)	September 30, 2018		June 30, 2018
Gross accounts receivable	$	434,940	$	503,175
Less Chargebacks reserve		(125,576)		(153,034)
Less Rebates reserve		(34,136)		(33,102)
Less Returns reserve		(44,361)		(43,059)
Less Other deductions		(24,300)		(20,021)
Less Allowance for doubtful accounts		(1,217)		(1,308)
Accounts receivable, net	$	205,350	$	252,651

For the three months ended September 30, 2018, the Company recorded a provision for chargebacks, rebates (including rebates presented as rebates payable), returns and other deductions of $277.9 million, $64.7 million, $7.3  million and $13.9 million, respectively.  For the three months ended September 30, 2017, the Company recorded a provision for chargebacks, rebates (including rebates presented as rebates payable), returns and other deductions of $254.7 million, $78.5 million, $10.4 million and $12.4 million, respectively.

The following table identifies the activity and ending balances of each major category of revenue-related reserve for the three months ended September 30, 2018 and 2017:

Reserve Category
(In thousands)	Chargebacks		Rebates		Returns		Other		Total
Balance at June 30, 2018	$	153,034	$	82,502	$	43,059	$	20,021	$	298,616
Adjustment related to adoption of ASC 606		—		—		—		3,536		3,536
Current period provision		277,949		64,749		7,347		13,889		363,934
Credits issued during the period		(305,407)		(76,626)		(6,045)		(13,146)		(401,224)
Balance at September 30, 2018	$	125,576	$	70,625	$	44,361	$	24,300	$	264,862

Reserve Category
(In thousands)	Chargebacks		Rebates		Returns		Other		Total
Balance at June 30, 2017	$	79,537	$	87,616	$	42,135	$	11,096	$	220,384
Current period provision		254,689		78,455		10,437		12,364		355,945
Credits issued during the period		(254,952)		(73,422)		(7,151)		(9,403)		(344,928)
Balance at September 30, 2017	$	79,274	$	92,649	$	45,421	$	14,057	$	231,401

For the three months ending September 30, 2018 and 2017, as a percentage of gross sales the provision for chargebacks was 54.0% and 50.2%, the provision for rebates was 12.6% and 15.5%, the provision for returns was 1.4% and 2.1% and the provision for other adjustments was 2.7% and 2.4%, respectively.

On July 1, 2018, the Company adopted ASC 606 which resulted in a $3.2 million pre-tax adjustment to opening retained earnings and accounts receivable, of which $3.5 million related to “failure-to-supply” reserves offset by $0.3 million related to the timing of recognition of certain contract manufacturing arrangements.

The decrease in total reserves, primarily within the chargebacks and rebates categories, from June 30, 2018 to September 30, 2018 was mainly attributable to decreased net sales in the first quarter of Fiscal 2019 as compared to the fourth quarter of Fiscal 2018.  The activity in the “Other” category for the three months ended September 30, 2018 and 2017 includes, shelf-stock, shipping and other sales adjustments including prompt payment discounts and “failure-to-supply” adjustments.  Historically, we have not recorded any material amounts in the current period related to reversals or additions of prior period reserves.  If the Company were to record a material reversal or addition of any prior period reserve amount, it would be separately disclosed.