(11)	SALE/LEASBACK ARRANGEMENTS

Fiscal 2015 Sale/Leasebacks

During fiscal 2015, the company sold six vessels to unrelated third parties, and simultaneously entered into bareboat charter agreements with the purchasers. Under the sale/leaseback agreements the company has the right to re-acquire the vessel for a fixed percentage of the original sales price at a defined date during the lease, deliver the vessel to the owners at the end of the lease term, purchase the vessel at its then fair market value at the end of the lease term or extend the leases for 24 months at mutually agreeable lease rates.

The company is accounting for these transactions as sale/leasebacks with operating lease treatment and will record the payments as vessel operating lease expense on a straight-line basis over the lease term. The deferred gains will be amortized to gain on asset dispositions, net ratably over the respective lease term. Any deferred gain balance remaining upon the repurchase of the vessels would reduce the vessels’ stated cost if the company elects to exercise the purchase options.

The following table provides the number of vessels, total proceeds, carrying values at the time of sale, deferred gains recognized, lease expirations, and contractual purchase option timing for the vessels sold and leased back by the company during fiscal 2015:

Fiscal 2015 Quarter	Number of Vessels		Total Proceeds		Carrying Value at time of Sale		Deferred Gain at time of Sale		Lease Term in Years		Purchase Option Percentage		Purchase Option at at end of:
First		1	$	13,400	$	4,002	$	9,398		7		61%	6^th Year
Second		1		19,350		8,214		11,136		8.5		47%	8^th Year
Third		3		78,200		33,233		44,967	8 – 9			60%	7^th or 8^th Year
Fourth		1		13,000		5,115		7,885	7			50%	6^th Year
		6	$	123,950	$	50,564	$	73,386

Fiscal 2014 Sale/Leasebacks

During fiscal 2014, the company sold ten vessels to unrelated third parties, and simultaneously entered into bareboat charter agreements with the purchasers. Under the sale/leaseback agreements the company has the right to re-acquire the vessel for a fixed percentage of the original sales price at a defined date during the lease, deliver the vessel to the owners at the end of the lease term, purchase the vessel at its then fair market value at the end of the lease term or extend the leases for 24 months at mutually agreeable lease rates.

Fiscal 2014 Quarter	Number of Vessels		Total Proceeds		Carrying Value at time of Sale		Deferred Gain at time of Sale		Lease Term in Years		Purchase Option Percentage		Purchase Option at at end of:
Second		2	$	65,550	$	34,325	$	31,225		7		55%	6^th Year
Third		4		141,900		105,649		36,251	7 – 9		54 - 68%		6^th or 8^th Year
Fourth		4		63,305		32,845		30,460	7 – 10		53 - 59%		6^th or 9^th Year
		10	$	270,755	$	172,819	$	97,936

Fiscal 2010 Sale/Leaseback

In June and July 2009, the company sold six vessels to unrelated third-party companies, and simultaneously entered into bareboat charter agreements for the vessels with the purchasers.

The sale/leaseback transactions resulted in proceeds to the company of approximately $101.8 million and a deferred gain of $39.6 million. The aggregate carrying value of the six vessels was $62.2 million at the dates of sale. The company accounted for the transactions as sale/leaseback transactions with operating lease treatment and expenses lease payments over the five year charter hire operating lease terms.

During the fourth quarter of fiscal 2014, the company elected to repurchase all six vessels from their respective lessors for an aggregate price of $78.8 million. Three of these were subsequently sold and leased back in March 2014. Two additional vessels were sold and leased back in April 2014 and March 2015, respectively. The carrying value of these purchased vessels has been reduced by the previously unrecognized deferred gain of $39.6 million. Refer to “Fiscal 2014 Sale/Leasebacks” above.

Fiscal 2006 Sale/Leaseback

In March 2006, the company entered into agreements to sell five of its vessels that were under construction at the time to an unrelated third party, for $76.5 million and simultaneously entered into bareboat charter agreements with the same unrelated third party upon the vessels’ delivery to the market. Construction on these five vessels was completed at various times between March 2006 and March 2008, at which time the company sold the respective vessels and simultaneously entered into bareboat charter agreements.

The company accounted for all five transactions as sale/leaseback transactions with operating lease treatment. Accordingly, the company did not record the assets on its books and the company is expensing periodic lease payments. The operating lease for all five charter hire agreements were for eight year terms.

In September 2012, the company elected to repurchase one of its leased vessels from the lessor for $8.8 million. During October 2012, the company repurchased a second leased vessel, for $8.4 million. In March 2014, the company repurchased a third and fourth leased vessel for a total cost of $22.8 million. In November 2014, the company repurchased a fifth leased vessel for a total cost of $11.2 million. Three of these vessels were sold and leased back in fiscal 2015.

Future Minimum Lease Payments

As of March 31, 2016, the future minimum lease payments for the vessels under the operating lease terms are as follows:

Fiscal year ending (In thousands)	Fiscal 2015 Sale/Leaseback		Fiscal 2014 Sale/Leaseback		Total
2017	$	9,485		20,879		30,364
2018		9,604		23,486		33,090
2019		10,234		24,800		35,034
2020		11,497		25,519		37,016
2021		11,594		19,979		31,573
Thereafter		19,273		20,063		39,336
Total future lease payments	$	71,687		134,726		206,413