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Interest Rate Swap Agreements
 12 Months Ended
Mar. 31, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Interest Rate Swap Agreements

6. Interest Rate Swap Agreements

As of March 31, 2012 and March 31, 2011, the Company did not have any outstanding interest rate swap agreements (see footnote 13 for subsequent event related to the Company entering into a interest rate swap agreement). The swap agreements, in effect, converted a portion of the floating rate debt to a fixed rate, more closely matching the interest rate characteristics of finance receivables. The following table summarizes the activity in the Company’s notional amounts of interest rate swap agreements for fiscal years ended March 31:

20112010

Notional amounts at beginning of year

$50,000,000$80,000,000

New contracts

— —

Matured contracts

(50,000,000) (30,000,000)

Notional amounts at end of year

$— $50,000,000

These interest rate swaps were previously designated as cash flow hedges. Based on credit market events that transpired in October 2008, the Company made an economic decision to elect the prime rate pricing option available under the Line for the month of October 2008. As a result, the critical terms of the interest rate swaps and hedged interest payments were no longer identical, and the Company undesignated its interest rate swaps as cash flow hedges. Consequently, beginning in October 2008 changes in the fair value of interest rate swaps (unrealized gains and losses) were recorded in earnings. Unrealized losses previously recorded in accumulated other comprehensive loss were reclassified into earnings as interest payments on the Line affect earnings over the remaining term of the respective swap agreements. The Company did not use interest rate swaps for speculative purposes and they were only intended for use as economic hedges.

The locations and amounts of gains (losses) recognized in income are detailed as follows for the fiscal years ended March 31:

20112010

Periodic change in fair value of interest rate swaps

$783,678$1,971,082

Losses reclassified from accumulated other comprehensive loss

(288,542) (936,213)

495,1361,034,869

Periodic settlement differentials included in interest expense

(801,048) (2,485,232)

Loss recognized in income

$(305,912) $(1,450,363)

Before maturing, interest rate swap agreements were recorded at fair value, which was approximately $784,000 as of March 31, 2010. Changes in the fair value of interest rate swaps were recorded in the change in fair value of interest rate swaps line item of the consolidated statements of income.

Accumulated other comprehensive loss as of March 31, 2010 of approximately $178,000, represents the after-tax effect of the derivative losses prior to October 2008 when the swaps were designated and qualifying as cash flow hedges. As of March 31, 2012 and 2011, no remaining accumulated other comprehensive loss exists to be reclassified and affect net earnings.

Net realized gains and losses from the swap agreements were recorded in the interest expense line item of the consolidated statement of income.


The following table summarizes the average variable rates received and average fixed rates paid under the swap agreements as of March 31:

20122011

Average variable rate received

0.00% 0.29%

Average fixed rate paid

0.00% 3.80%