Investment in Leasing Operations:

6 Months Ended

Jul. 01, 2017

Investment in Leasing Operations:

Investment in Leasing Operations:

5.  Investment in Leasing Operations:

Investment in leasing operations consists of the following:

	July 1, 2017		December 31, 2016
Direct financing and sales-type leases:
Minimum lease payments receivable	$	39,559,600	$	37,839,800
Estimated residual value of equipment		4,598,100		4,754,200
Unearned lease income net of initial direct costs deferred		(5,858,500)		(5,844,500)
Security deposits		(4,422,400)		(4,424,400)
Equipment installed on leases not yet commenced		7,526,200		9,961,600
Total investment in direct financing and sales-type leases		41,403,000		42,286,700
Allowance for credit losses		(893,300)		(896,000)
Net investment in direct financing and sales-type leases		40,509,700		41,390,700
Operating leases:
Operating lease assets		1,284,300		800,700
Less accumulated depreciation and amortization		(802,200)		(775,900)
Net investment in operating leases		482,100		24,800
Total net investment in leasing operations	$	40,991,800	$	41,415,500

As of July 1, 2017, the $41.0 million total net investment in leases consists of $16.5 million classified as current and
$24.5 million classified as long-term.  As of December 31, 2016, the $41.4 million total net investment in leases consists of $17.0 million classified as current and $24.4 million classified as long-term.

As of July 1, 2017, leased assets with two customers approximated 22% and 12%, respectively, of the Company’s total assets.

As of July 1, 2017, the Company had no future minimum lease payments receivable for operating leases. Future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred, is as follows for the remainder of fiscal 2017 and the full fiscal years thereafter as of July 1, 2017:

	Direct Financing and Sales-Type Leases
	Minimum Lease		Income
Fiscal Year	Payments Receivable		Amortization
2017	$	12,321,100	$	2,512,600
2018		16,840,100		2,655,100
2019		9,315,400		669,800
2020		1,059,000		19,300
2021		12,800		1,200
Thereafter		11,200		500
	$	39,559,600	$	5,858,500

The activity in the allowance for credit losses for leasing operations during the first six months of 2017 and 2016, respectively, is as follows:

	July 1, 2017		June 25, 2016
Balance at beginning of period	$	896,000	$	859,100
Provisions charged to expense		(12,900)		(22,300)
Recoveries		10,200		9,600
Deductions for amounts written-off		—		(29,300)
Balance at end of period	$	893,300	$	817,100

The Company’s investment in direct financing and sales-type leases (“Investment In Leases”) and allowance for credit losses by loss evaluation methodology are as follows:

	July 1, 2017				December 31, 2016
	Investment		Allowance for		Investment		Allowance for
	In Leases		Credit Losses		In Leases		Credit Losses
Collectively evaluated for loss potential	$	41,403,000	$	893,300	$	42,286,700	$	896,000
Individually evaluated for loss potential		—		—		—		—
Total	$	41,403,000	$	893,300	$	42,286,700	$	896,000

The Company’s key credit quality indicator for its investment in direct financing and sales-type leases is the status of the lease, defined as accruing or non-accrual. Leases that are accruing income are considered to have a lower risk of loss. Non-accrual leases are those that the Company believes have a higher risk of loss.  The following table sets forth information regarding the Company’s accruing and non-accrual leases.  Delinquent balances are determined based on the contractual terms of the lease.

	July 1, 2017
	0-60 Days		61-90 Days		Over 90 Days
	Delinquent		Delinquent		Delinquent and
	and Accruing		and Accruing		Accruing		Non-Accrual		Total
Middle-Market	$	40,300,300	$	—	$	—	$	—	$	40,300,300
Small-Ticket		1,102,700		—		—		—		1,102,700
Total Investment in Leases	$	41,403,000	$	—	$	—	$	—	$	41,403,000

	December 31, 2016
	0-60 Days		61-90 Days		Over 90 Days
	Delinquent		Delinquent		Delinquent and
	and Accruing		and Accruing		Accruing		Non-Accrual		Total
Middle-Market	$	41,299,600	$	—	$	—	$	—	$	41,299,600
Small-Ticket		987,100		—		—		—		987,100
Total Investment in Leases	$	42,286,700	$	—	$	—	$	—	$	42,286,700