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Sales-Type Leases

3 Months Ended

Aug. 31, 2012

Note 9: Sales-Type Leases

We have certain customer leases providing bargain purchase options, which are accounted for as sales-type leases. Interest income is recognized over the life of the lease using the effective interest method.

The initial acceptance of customer finance arrangements is based on an in-depth review of each customer’s credit profile, including review of third party credit reports, customer financial statements and bank verifications. We monitor the credit quality of our sales-type lease portfolio based on payment activity that drives the finance lease receivable aging. This credit quality is assessed on a monthly basis. Our historical losses on finance lease receivables are insignificant, and therefore we do not have a specific allowance for credit losses.

The minimum lease payments receivable and the net investment included in other assets for such leases were as follows:


	August 31, 2012			May 31, 2012
Gross minimum lease payments receivable	$	11,343		$	12,284
Less – unearned interest		(542	)		(603	)

Net investment in sales-type lease receivables	$	10,801		$	11,681

The following table provides estimated future minimum lease payments receivable related to sales-type leases:


Year ending May 31,
2013 (remaining)	$	5,619
2014		3,966
2015		1,473
2016 2017		170 115

	$	11,343

- Definition

The entire disclosure for lessor's leasing arrangements, which includes direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease.

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