Finance Assets

3 Months Ended

Jun. 30, 2011

Notes To Condensed Consolidated Financial Statements [Abstract]

13. Finance Assets

Finance Receivables

Finance receivables are comprised of sales-type lease receivables and unsecured revolving loan receivables. Sales-type leases are generally due in monthly, quarterly or semi-annual installments over periods ranging from three to five years. Loan receivables arise primarily from financing services offered to our customers for postage and related supplies. Loan receivables are generally due each month; however, customers may rollover outstanding balances. The components of finance receivables at June 30, 2011 and December 31, 2010 are shown in the tables below. Finance receivables of our Canadian operations were previously included in the International segment. In line with changes made in our segment presentation (see Note 14), Canadian finance receivables are now included with U.S. finance receivables in the North America segment. Prior year disclosures have been reclassified to conform to the current year presentation.


	June 30, 2011
	North America		International		Total
Sales-type lease receivables
Gross finance receivables	$	1,829,573	$	488,594	$	2,318,167
Unguaranteed residual values		205,157		21,777		226,934
Unearned income		(372,308)		(111,613)		(483,921)
Allowance for credit losses		(27,608)		(13,424)		(41,032)
Net investment in sales-type lease receivables		1,634,814		385,334		2,020,148

Loan receivables
Loan receivables		417,771		43,393		461,164
Allowance for credit losses		(24,381)		(2,495)		(26,876)
Net investment in loan receivables		393,390		40,898		434,288

Net investment in finance receivables	$	2,028,204	$	426,232	$	2,454,436

	December 31, 2010
	North America		International		Total
Sales-type lease receivables
Gross finance receivables	$	1,940,833	$	474,895	$	2,415,728
Unguaranteed residual values		235,392		20,333		255,725
Unearned income		(415,891)		(107,592)		(523,483)
Allowance for credit losses		(27,792)		(13,318)		(41,110)
Net investment in sales-type lease receivables		1,732,542		374,318		2,106,860

Loan Receivables
Loan receivables		453,362		34,193		487,555
Allowance for credit losses		(26,208)		(2,112)		(28,320)
Net investment in loan receivables		427,154		32,081		459,235

Net investment in finance receivables	$	2,159,696	$	406,399	$	2,566,095

Activity in the allowance for credit losses for the six months ended June 30, 2011 is as follows:

	Allowance for Credit Losses
	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total

Balance January 1, 2011	$	27,792	$	13,318	$	26,208	$	2,112	$	69,430
Amounts charged to expense		6,497		5,097		5,703		1,248		18,545
Accounts written off		(6,681)		(4,991)		(7,530)		(865)		(20,067)
Balance June 30, 2011	$	27,608	$	13,424	$	24,381	$	2,495	$	67,908

The aging of finance receivables at June 30, 2011 and December 31, 2010 is as follows:

	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total
June 30, 2011
< 31 days past due	$	1,731,328	$	455,880	$	396,980	$	41,440	$	2,625,628
> 30 days and < 61 days		42,783		11,892		11,991		1,081		67,747
> 60 days and < 91 days		24,479		5,482		3,635		357		33,953
> 90 days and < 121 days		9,203		4,709		2,047		247		16,206
> 120 days		21,780		10,631		3,118		268		35,797
TOTAL	$	1,829,573	$	488,594	$	417,771	$	43,393	$	2,779,331

Past due amounts > 90 days
Still accruing interest	$	9,203	$	4,709	$	-	$	-	$	13,912
Not accruing interest		21,780		10,631		5,165		515		38,091
TOTAL	$	30,983	$	15,340	$	5,165	$	515	$	52,003

December 31, 2010
< 31 days past due	$	1,831,655	$	447,459	$	430,042	$	32,389	$	2,741,545
> 30 days and < 61 days		45,234		10,018		12,081		1,149		68,482
> 60 days and < 91 days		29,380		4,743		4,711		325		39,159
> 90 days and < 121 days		8,654		3,985		2,712		192		15,543
> 120 days		25,910		8,690		3,816		138		38,554
TOTAL	$	1,940,833	$	474,895	$	453,362	$	34,193	$	2,903,283

Past due amounts > 90 days
Still accruing interest	$	8,654	$	3,985	$	-	$	-	$	12,639
Not accruing interest		25,910		8,690		6,528		330		41,458
TOTAL	$	34,564	$	12,675	$	6,528	$	330	$	54,097

Credit Quality

We use credit scores as one of many data elements in making the decision to grant credit at inception, setting credit lines at inception, managing credit lines through the life of the customer, and to assist in collections strategy.

We use a third party to score the majority of the North American portfolio on a quarterly basis using a commercial credit score. Accounts may not receive a score because of data issues related to SIC information, customer identification mismatches between the various data sources and other reasons. We do not currently score the portfolios outside of North America because the cost to do so is prohibitive, it is a fragmented process and there is no single credit score model that covers all countries. However, credit policies are similar to those in North America.

The table below shows the North American portfolio at June 30, 2011 and December 31, 2010 by relative risk class (low, medium and high) based on the relative scores of the accounts within each class. A fourth class is shown for accounts that are not scored. The degree of risk, as defined by the third party, refers to the relative risk that an account in the next 12 month period may become delinquent. Absence of a score is not indicative of the credit quality of the account.

Low risk accounts are companies with very good credit risk
Medium risk accounts are companies with average to good credit risk
High risk accounts are companies with poor credit risk, are delinquent or are at risk of becoming delinquent

Although the relative score of accounts within each class is used as a factor for determining the establishment of a customer credit limit, it is not indicative of our actual history of losses due to the business essential nature of our products and services.

The aging schedule included above, showing approximately 1.9% of the portfolio as greater than 90 days past due, and the roll-forward schedule of the allowance for credit losses, showing the actual losses for the six months ended June 30, 2011 are more representative of the potential loss performance of our portfolio than relative risk based on scores, as defined by the third party.

		June 30, 2011		December 31, 2010
Sales-type lease receivables
	Risk Level
	Low	$	1,165,660	$	1,191,682
	Medium		496,408		512,419
	High		60,538		60,755
	Not Scored		106,967		175,977
	Total	$	1,829,573	$	1,940,833

Loan receivables
	Risk Level
	Low	$	248,149	$	274,156
	Medium		152,001		155,615
	High		15,806		21,768
	Not Scored		1,815		1,823
	Total	$	417,771	$	453,362

Leveraged Leases

Our investment in leveraged lease assets consists of the following:

	June 30,		December 31,
	2011		2010
Rental receivables	$	1,838,183	$	1,802,107
Unguaranteed residual values		14,587		14,141
Principal and interest on non-recourse loans		(1,396,219)		(1,373,651)
Unearned income		(194,499)		(191,591)
Investment in leveraged leases		262,052		251,006
Less: deferred taxes related to leveraged leases		(201,291)		(192,128)
Net investment in leveraged leases	$	60,761	$	58,878

The components of income from leveraged leases for the three and six months ended June 30, 2011 and 2010 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Pre-tax leveraged lease income	$	1,558	$	1,360	$	3,094	$	2,735
Income tax effect		(81)		(72)		(163)		(147)
Income from leveraged leases	$	1,477	$	1,288	$	2,931	$	2,588