2. SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP" or "GAAP") for interim financial information and in accordance with the requirements of Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements, and should be read in conjunction with the Company's audited consolidated financial statements as of and for the fiscal year ended March 31, 2011 contained in the Company's Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended December 31, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2012.

The first quarter for fiscal 2012 and fiscal 2011 ended on July 1, 2011 and July 2, 2010, respectively. The second fiscal quarter for the current year ended on September 30, 2011 and the second fiscal quarter of the prior year ended on October 1, 2010. The Company's third fiscal quarter ends on December 31, and the fourth fiscal quarter and year ends on March 31 of each year.

Cash and Cash Equivalents

Cash and cash equivalents consisted of the following:


		As of		As of
		December 31, 2011		March 31, 2011
		(In thousands)
Cash and bank balances	$	1,161,894	$	1,372,711
Money market funds and time deposits		383,871		375,760
	$	1,545,765	$	1,748,471

Inventories

The components of inventories, net of applicable lower of cost or market write-downs, were as follows:


		As of		As of
		December 31, 2011		March 31, 2011
		(In thousands)
Raw materials	$	2,163,079	$	2,271,944
Work-in-progress		626,132		579,047
Finished goods		805,128		699,295
	$	3,594,339	$	3,550,286

Other Current Assets

Other current assets includes approximately $750.3 million and $460.0 million as of December 31, 2011 and March 31, 2011, respectively, for the deferred purchase price receivable from our Global and North American Asset-Backed Securitization programs (see Note 10).

Property and Equipment

Depreciation expense associated with property and equipment was approximately $106.2 million and $314.0 million for the three-month and nine-month periods ended December 31, 2011, respectively and $104.8 million and $296.1 million for the three-month and nine-month periods ended December 31, 2010, respectively.

Goodwill and Other Intangibles

The following table summarizes the activity in the Company's goodwill account during the nine-month period ended December 31, 2011:


		Amount
		(In thousands)
Balance, beginning of the year	$	93,207
Acquisitions (1)		8,607
Purchase accounting adjustments (2)		592
Foreign currency translation adjustments		(1,113	)
Balance, end of the quarter	$	101,293

__________

(1)

The amount is attributable to certain acquisitions that were not individually, nor in the aggregate, significant to the Company. The aggregate consideration paid for these acquisitions was approximately $93.7 million, net of cash acquired.

(2)

The amount is attributable to purchase accounting adjustments for historical acquisitions that were not significant to the Company individually or in the aggregate. The adjustments are based on management's estimates from review of the valuation of assets and liabilities completed in a period subsequent to the respective acquisition. The effects of the adjustments, had they been made at time of acquisition, would not have had a significant impact on the balance sheet, statement of operations, or statement of cash flows for the periods subsequent to that date.

The components of acquired intangible assets are as follows:


		As of December 31, 2011							As of March 31, 2011
		Gross					Net		Gross					Net
		Carrying		Accumulated		Carrying			Carrying		Accumulated			Carrying
		Amount		Amortization		Amount			Amount		Amortization			Amount
				(In thousands)							(In thousands)
Intangible assets:
Customer-related intangibles	$	305,103	$	(242,111	)	$	62,992	$	378,412	$	(283,732	)	$	94,680
Licenses and other intangibles		32,697		(12,370	)		20,327		44,915		(19,719	)		25,196
Total	$	337,800	$	(254,481	)	$	83,319	$	423,327	$	(303,451	)	$	119,876

The gross carrying amounts of intangible assets are removed when the recorded amounts have been fully amortized, which is the primary reason for the periodic decrease in the gross carrying amount of intangibles and accumulated amortization. Total intangible amortization expense was $13.9 million and $41.8 million during the three-month and nine-month periods ended December 31, 2011, respectively and was $16.6 million and $56.0 million during the three-month and nine-month periods ended December 31, 2010, respectively. The estimated future annual amortization expense for acquired intangible assets is as follows:


Fiscal Year Ending March 31,			Amount
			(In thousands)
2012	(1)	$	9,266
2013			31,414
2014			21,150
2015			11,139
2016			5,805
Thereafter			4,545
Total amortization expense		$	83,319

______________
(1) Represents estimated amortization for the three-month period ending March 31, 2012.

Recent Accounting Pronouncements

In December 2011, the FASB issued guidance which requires an entity to disclose information about offsetting and related arrangements to enable financial statement users to evaluate the effect or potential effect of netting arrangements, including rights of setoff associated with the entity's recognized financial assets and liabilities, on the entity's financial position. The new disclosures will enable financial statement users to compare balance sheets prepared under U.S. GAAP and International Financial Reporting Standards (IFRS), which are subject to different offsetting models. The disclosures will be limited to financial instruments (and derivatives) subject to enforceable master netting arrangements or similar agreements. Similar agreements include derivative clearing agreements, global master repurchase agreements, and global master securities lending agreements. Financial instruments and transactions that will be subject to the disclosure requirements may include derivatives, repurchase and reverse repurchase agreements, and securities lending and borrowing arrangements. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The guidance is effective for the Company beginning in fiscal 2014. The Company is currently evaluating the potential impact, if any, of the adoption of this guidance on its consolidated financial statements.

In September 2011, the FASB revised guidance for testing goodwill for impairment. Under the revised guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before calculating the fair value of a reporting unit in step one of the goodwill impairment test. If entities determine, on the basis of qualitative factors, that the fair value of a reporting unit is more likely than not less than the carrying amount, the two-step impairment test would be required. Otherwise, further testing would not be needed. The guidance is effective for the Company beginning in the first quarter of fiscal 2013. Early adoption is permitted.

In June 2011, the FASB issued a new accounting standard which revises the manner in which entities present comprehensive income in their financial statements. The new guidance removes the presentation options in ASC 220 and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. For the Company, this new guidance is effective as of April 1, 2012.

In May 2011, the FASB amended fair value measurement and disclosure guidance to achieve convergence with IFRS. The amended guidance modifies the measurement of fair value, clarifies verbiage, and changes disclosure or other requirements in US GAAP and IFRS. The guidance is effective for the Company as of January 1, 2012.

In October 2009, the FASB issued amendments to the accounting and disclosure requirements for revenue recognition. These amendments modify the criteria for recognizing revenue in multiple element arrangements. The Company adopted the provisions of this guidance prospectively to new or materially modified arrangements beginning April 1, 2011. The adoption of this new guidance did not have a material impact on the Company's consolidated financial position and results of operations.