FINANCING INVESTMENTS

6 Months Ended

Sep. 30, 2013

FINANCING INVESTMENTS [Abstract]

FINANCING INVESTMENTS

2.  FINANCING INVESTMENTS

Our investments in leases, leased equipment and notes receivables consist of assets that we financed for our customers, which we manage as a portfolio of financing investments. Our leases to our customers are accounted for as investments in direct financing, sales-type or operating leases in accordance with Codification Topic, Leases. We also finance third-party software and services for our customers, which are classified as notes receivables. Our notes receivables are interest bearing and are often due over a period of time that corresponds with the terms of the leased products. Our financing investments consist of the following (in thousands):

	September 30,		March 31,
	2013
Notes receivable	$	49,110	$	31,893
Investment in direct financing and sales-type leases—net		66,229		66,243
Investment in operating lease equipment—net		25,192		24,467
	$	140,531	$	122,603

NOTES RECEIVABLE—NET

Our notes receivable balance as of September 30, 2013 and March 31, 2013 consists of the following (in thousands):

	September 30,			March 31,
	2013
Notes receivable	$	52,233		$	35,030
Less:  Reserve for credit losses		(3,123	)		(3,137	)
Notes receivable—net	$	49,110		$	31,893

INVESTMENT IN DIRECT FINANCING AND SALES-TYPE LEASES—NET

Our investment in direct financing and sales-type leases—net consists of the following (in thousands):

	September 30,			March 31,
	2013
Minimum lease payments	$	63,529		$	64,614
Estimated unguaranteed residual value (1)		7,796			7,557
Initial direct costs, net of amortization (2)		658			684
Less:  Unearned lease income		(4,856	)		(5,767	)
Less:  Reserve for credit losses (3)		(898	)		(845	)
Investment in direct financing and sales-type leases—net	$	66,229		$	66,243

(1) Includes estimated unguaranteed residual values of $3,647 thousand and $3,361 thousand as of September 30, 2013 and March 31, 2013, respectively, for direct financing leases which have been sold and accounted for as sales under Codification Topic, Transfers and Servicing.

(2) Initial direct costs are shown net of amortization of $509 thousand and $479 thousand as of September 30, 2013 and March 31, 2013, respectively.

(3) For details on reserve for credit losses, refer to Note 4, “Reserves for Credit Losses.”

INVESTMENT IN OPERATING LEASE EQUIPMENT—NET

Investment in operating lease equipment—net primarily represents leases that do not qualify as direct financing leases. The components of the investment in operating lease equipment—net are as follows (in thousands):

	September 30,			March 31,
	2013
Cost of equipment under operating leases	$	45,971		$	46,106
Less:  Accumulated depreciation and amortization		(20,779	)		(21,639	)
Investment in operating lease equipment—net (1)	$	25,192		$	24,467

(1) Includes estimated unguaranteed residual values of $7,009 thousand and $7,763 thousand as of September 30, 2013 and March 31, 2013, respectively, for operating leases.

TRANSFERS OF FINANCIAL ASSETS

We enter into arrangements to transfer the contractual payments due under financing investments, which are accounted for as sales or secured borrowings in accordance with Codification Topic, Transfers and Servicing. For transfers accounted for as a secured borrowing, the corresponding investments serve as collateral for non-recourse notes payable. See Note 6, “Notes Payable and Credit Facility.”

For transfers accounted for as sales, we derecognize the carrying value of the asset transferred and recognize a net gain or loss on the sale, which is presented within financing revenues in the unaudited condensed consolidated statement of operations. During the three months ended September 30, 2013 and 2012, we recognized net gains of $1.2 million and $0.5 million, respectively. Total proceeds from these sales were $34.9 million and $12.6 million for the three months ended September 30, 2013 and 2012, respectively. For the six months ended September 30, 2013 and 2012, we recognized net gains of $5.6 million and $1.7 million, respectively, and total proceeds from these sales were $122.4 million and $42.0 million, respectively.

During the quarter ended June 30, 2013, we transferred the payments due under a note receivable to third-party lenders which were accounted for as a sale. Upon subsequent review, we identified certain forms of continuing involvement, which was completed in July 2013. Accordingly, the assignment should have been accounted for as a secured borrowing as of June 30, 2013 and subsequently met the sale criteria in July 2013. We concluded that the impact on our quarterly results for the quarter ended June 30, 2013 was not material.