Accounts Receivable - Net

9 Months Ended

Dec. 31, 2016

Accounts Receivable - Net [Abstract]

Accounts Receivable - Net

4. Accounts Receivable — Net

Included in accounts receivable — net are significant offset accounts related to customer allowances earned, customer payment discrepancies, returned goods authorizations (“RGA”) issued for in-transit unit returns, estimated future credits to be provided for Used Cores returned by the customers and potential bad debts. Due to the forward looking nature and the different aging periods of certain estimated offset accounts, the offset accounts may not, at any point in time, directly relate to the balances in the accounts receivable-trade account.

Accounts receivable — net is comprised of the following:

	December 31, 2016			March 31, 2016
Accounts receivable — trade	$	71,428,000		$	62,206,000
Allowance for bad debts		(4,137,000	)		(4,284,000	)
Customer allowances earned		(9,274,000	)		(12,029,000	)
Customer payment discrepancies		(1,173,000	)		(703,000	)
Customer returns RGA issued		(10,645,000	)		(6,561,000	)
Customer core returns accruals		(23,532,000	)		(30,081,000	)
Less: total accounts receivable offset accounts		(48,761,000	)		(53,658,000	)
Total accounts receivable — net	$	22,667,000		$	8,548,000

Customer Finished Goods Returns Accrual

The Company allows its customers to return goods that their customers have returned to them, whether or not the returned item is defective (“warranty returns”). The Company accrues an estimate of its exposure to warranty returns based on a historical analysis of the level of this type of return as a percentage of total unit sales. Amounts charged to expense for these warranty returns are considered in arriving at the Company’s net sales. At December 31, 2016 and March 31, 2016, the Company’s total warranty return accrual was $11,865,000 and $10,845,000, respectively, of which $6,444,000 and $4,612,000, respectively, was included in the customer returns RGA issued balance in the above table for expected credits to be issued against accounts receivable and $5,421,000 and $6,233,000, respectively, was included in the customer finished goods returns accrual in the consolidated balance sheets for estimated future warranty returns.

Under customer agreements and general industry practice, customers are allowed stock adjustments if the inventory of certain product lines exceeds the inventory necessary to support sales to end-user consumers (“stock adjustment returns”). Customers have various contractual rights for stock adjustment returns which are typically less than 5% of units sold. In some instances, the Company allows a higher level of returns in connection with significant restocking orders. Stock adjustment returns do not occur at any specific time during the year.

As is standard in the industry, the Company only accepts returns from on-going customers. If a customer ceases doing business, the Company has no further obligation to accept additional product returns from that customer. Similarly, the Company accepts product returns and grants appropriate credits to new customers from the inception of the customer relationship. Based on information about stock levels, sell through information and return rate estimates for a particular customer obtained during the three months ended December 31, 2016, the Company updated its estimate for anticipated stock adjustment returns. This adjustment resulted in an increase in net sales and cost of goods sold for the unit value related to this inventory of $9,261,000 and $5,195,000, respectively, during the three months ended December 31, 2016. The impact on operating income from this change in estimate was $4,066,000 for the three and nine months ended December 31, 2016. The impact on net income was $2,551,000, which represents an increase in basic net income per share of $0.14 and diluted net income per share of $0.13 for both the three and nine months ended December 31, 2016.

The following summarizes the changes in the Company’s warranty return accrual:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2016			2015			2016			2015
Balance at beginning of period	$	13,707,000		$	10,204,000		$	10,845,000		$	10,904,000
Charged to expense/additions		22,930,000			18,463,000			73,803,000			58,276,000
Amounts processed		(24,772,000	)		(20,307,000	)		(72,783,000	)		(60,820,000	)
Balance at end of period	$	11,865,000		$	8,360,000		$	11,865,000		$	8,360,000