3. FINANCING RECEIVABLES AND OPERATING LEASES

FINANCING RECEIVABLES—NET

Our financing receivables, net consist of the following (in thousands):

March 31, 2017	Notes Receivables			Lease-Related Receivables			Total Financing Receivables
Minimum payments	$	48,524		$	57,872		$	106,396
Estimated unguaranteed residual value (1)		-			18,273			18,273
Initial direct costs, net of amortization (2)		279			341			620
Unearned income		-			(5,913	)		(5,913	)
Reserve for credit losses (3)		(3,434	)		(679	)		(4,113	)
Total, net	$	45,369		$	69,894		$	115,263
Reported as:
Current	$	23,780		$	27,876		$	51,656
Long-term		21,589			42,018			63,607
Total, net	$	45,369		$	69,894		$	115,263

(1)

Includes estimated unguaranteed residual values of $12,677 thousand for direct financing leases, which have been accounted for as sales under Codification Topic Transfers and Servicing.

(2)

Initial direct costs are shown net of amortization of $510 thousand.

(3)

For details on reserve for credit losses, refer to Note 5, “Reserves for Credit Losses.”

March 31, 2016	Notes Receivables			Lease-Related Receivables			Total Financing Receivables
Minimum payments	$	44,442		$	66,303		$	110,745
Estimated unguaranteed residual value (1)		-			12,693			12,693
Initial direct costs, net of amortization (2)		312			475			787
Unearned income		-			(5,543	)		(5,543	)
Reserve for credit losses (3)		(3,381	)		(685	)		(4,066	)
Total, net	$	41,373		$	73,243		$	114,616
Reported as:
Current	$	24,962		$	31,486		$	56,448
Long-term		16,411			41,757			58,168
Total, net	$	41,373		$	73,243		$	114,616

(1)

Includes estimated unguaranteed residual values of $6,722 thousand for direct financing leases which have been accounted for as sales under Codification Topic Transfers and Servicing.

(2)

Initial direct costs are shown net of amortization of $612 thousand.

(3)

For details on reserve for credit losses, refer to Note 5, “Reserves for Credit Losses.”

Future scheduled minimum lease payments for investments in direct financing and sales-type leases as of March 31, 2017 are as follows (in thousands):

Year ending March 31, 2018	$	30,590
2019		17,172
2020		7,228
2021		2,364
2022 and thereafter		518
Total	$	57,872

OPERATING LEASES—NET

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

	March 31, 2017			March 31, 2016
Cost of equipment under operating leases	$	16,725		$	36,635
Accumulated depreciation		(8,449	)		(18,897	)
Investment in operating lease equipment—net (1)	$	8,276		$	17,738

(1)	Amounts include estimated unguaranteed residual values of $1,117 thousand and $3,417 thousand as of March 31, 2017 and 2016, respectively.

Future scheduled minimum lease rental payments as of March 31, 2017 are as follows (in thousands):

Year ending March 31, 2018	$	2,652
2019		1,492
2020		115
2021		3
2022 and thereafter		-
Total	$	4,262

TRANSFERS OF FINANCIAL ASSETS

We enter into arrangements to transfer the contractual payments due under financing receivables and operating lease agreements, 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. As of March 31, 2017 and 2016 we had financing receivables of $33.1 million and $36.1 million, respectively, and operating leases of $6.6 million and $13.9 million, respectively that were collateral for non-recourse notes payable. See Note 7, "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 are presented within net sales in the consolidated statement of operations. For the years ended March 31, 2017, 2016, and 2015, we recognized net gains of $8.1 million, $7.4 million, and $5.9 million, respectively, and total proceeds from these sales were $339.4 million, $223.3 million, and $181.3 million, respectively. For certain assignments of financial assets, we retain a servicing obligation. For assignments accounted for as sales, we allocate a portion of the proceeds to deferred revenues, which is recognized as we perform the services. As of March 31, 2017 and 2016, we had deferred revenue of $0.5 million and $0.3 million, respectively, for servicing obligations.

For certain assignments of financial assets, we retain a servicing obligation. For assignments accounted for as sales, we allocate a portion of the proceeds to deferred revenues, which is recognized as we perform the services. In a limited number of such sales, we indemnified the assignee in the event that the lessee elects to early terminate the lease. As of March 31, 2017, our maximum potential future payments related to such guarantees is $1.2 million. We believe the possibility of making any payments to be remote.