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ACCOUNTS AND NOTES RECEIVABLE AND ALLOWANCES FOR DOUBTFUL ACCOUNTS
 12 Months Ended
Jun. 30, 2014
ACCOUNTS AND NOTES RECEIVABLE AND ALLOWANCES FOR DOUBTFUL ACCOUNTS  
ACCOUNTS AND NOTES RECEIVABLE AND ALLOWANCES FOR DOUBTFUL ACCOUNTS

4.     ACCOUNTS AND NOTES RECEIVABLE AND ALLOWANCES FOR DOUBTFUL ACCOUNTS

The Company has one portfolio segment, the gaming industry customer, and four classes of receivables including its trade receivables with a contract term less than one year, trade receivables with a contract term greater than one year, sales-type leasing arrangements, and notes receivable, which are related to development financing loans. Trade receivables with contract terms greater than one year relate to the sale of gaming equipment and systems transactions, and are generally collateralized by the related equipment sold, although the value of such equipment, if repossessed, may be less than the receivable balance outstanding. Sales-type leasing arrangements relate to gaming equipment and include options to purchase the gaming equipment at the end of the lease term at established prices. Customers with sales-type leasing arrangements typically have a long-standing credit history with the Company.

On November 25, 2013, the Company completed the Acquisition (see Note 2 to the consolidated financial statements, Business Combination). As of June 30, 2014, there were $60.8 million in net current receivables and $7.7 million in net long-term accounts receivable related to SHFL.

The Company's accounts and notes receivable were as follows:

 
   Accounts and Notes Receivable
as of June 30, 2014		   Accounts and Notes Receivable
as of June 30, 2013		  
 
   Ending
Balance		   Ending Balance
Individually
Evaluated for
Impairment		   Ending Balance
Collectively
Evaluated for
Impairment		   Ending
Balance		   Ending Balance
Individually
Evaluated for
Impairment		   Ending Balance
Collectively
Evaluated for
Impairment		  
 
   (in 000s)
  

Contract term less than one year:

                                      

Trade and other receivables, current

   $ 224,580   $ 8,963   $ 215,617   $ 170,598   $ 1,589   $ 169,009  

Contract term greater than one year:

                                      

Trade receivables, current

     90,663     72,685     17,978     82,600     63,193     19,407  

Trade receivables, noncurrent

     26,688     9,469     17,219     40,178     17,961     22,217  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

     117,351     82,154     35,197     122,778     81,154     41,624  

Lease receivables, current

    
7,965		    
7,965		    
—		    
6,701		    
6,701		    
—		  

Lease receivables, noncurrent

     12,403     12,403     —     9,928     9,928     —  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

     20,368     20,368     —     16,629     16,629     —  

Notes receivable, current

    
5,717		    
5,717		    
—		    
3,411		    
3,411		    
—		  

Notes receivable, noncurrent

     12,167     12,167     —     17,114     17,114     —  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

     17,884     17,884     —     20,525     20,525     —  

Total current

    
328,925		    
95,330		    
233,595		    
263,310		    
74,894		    
188,416		  

Total noncurrent

     51,258     34,039     17,219     67,220     45,003     22,217  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 380,183   $ 129,369   $ 250,814   $ 330,530   $ 119,897   $ 210,633  
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                           

The activity related to the allowance for doubtful accounts for the year ended June 30, 2014 is summarized below:

 
   Allowance for Doubtful Accounts  
 
   Beginning
Balance
as of
June 30, 2013		   Charge-
offs		   Recoveries   Provision   Ending
Balance
as of
June 30,
2014		   Ending
Balance
Individually
Evaluated for
Impairment		   Ending
Balance
Collectively
Evaluated for
Impairment		  
 
   (in 000s)
  

Contract term less than one year:

                                            

Trade and other receivables, current

   $ (4,505 ) $ 570   $ 91   $ (1,127 ) $ (4,971 ) $ (2,815 ) $ (2,156 )

Contract term greater than one year:

                                            

Trade receivables, current

     (10,308 )   74     1,597     (1,198 )   (9,835 )   (7,955 )   (1,880 )

Trade receivables, noncurrent

     (1,764 )   597     1,732     (1,494 )   (929 )   —     (929 )
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

     (12,072 )   671     3,329     (2,692 )   (10,764 )   (7,955 )   (2,809 )

Lease receivables, current

     —     —     —     —     —     —     —  

Lease receivables, noncurrent

     —     —     —     —     —     —     —  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

     —     —     —     —     —     —     —  

Notes receivable, current

     —     —     —     —     —     —     —  

Notes receivable, noncurrent

     —     —     —     —     —     —     —  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

     —     —     —     —     —     —     —  

Total current

    
(14,813
)		  
644		    
1,688		    
(2,325
)		  
(14,806
)		  
(10,770
)		  
(4,036
)

Total noncurrent

     (1,764 )   597     1,732     (1,494 )   (929 )   —     (929 )
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ (16,577 ) $ 1,241   $ 3,420   $ (3,819 ) $ (15,735 ) $ (10,770 ) $ (4,965 )
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                               

The activity related to the allowance for doubtful accounts for the year ended June 30, 2013 is summarized below:

 
   Allowance for Doubtful Accounts  
 
   Beginning
Balance
as of
June 30, 2012		   Charge-
offs		   Recoveries   Provision   Ending
Balance
as of
June 30,
2013		   Ending
Balance
Individually
Evaluated for
Impairment		   Ending
Balance
Collectively
Evaluated for
Impairment		  
 
   (in 000s)
  

Contract term less than one year:

                                            

Trade and other receivables, current

   $ (6,138 ) $ 1,449   $ —   $ 184   $ (4,505 ) $ (1,445 ) $ (3,060 )

Contract term greater than one year:

                                            

Trade receivables, current

     (7,935 )   3,973     822     (7,168 )   (10,308 )   (8,101 )   (2,207 )

Trade receivables, noncurrent

     (1,279 )   2,598     —     (3,083 )   (1,764 )   —     (1,764 )
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

     (9,214 )   6,571     822     (10,251 )   (12,072 )   (8,101 )   (3,971 )

Lease receivables, current

     —     —     —     —     —     —     —  

Lease receivables, noncurrent

     —     —     —     —     —     —     —  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

     —     —     —     —     —     —     —  

Notes receivable, current

     —     —     —     —     —     —     —  

Notes receivable, noncurrent

     (1,750 )   2,856     —     (1,106 )   —     —     —  
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

     (1,750 )   2,856     —     (1,106 )   —     —     —  

Total current

    
(14,073
)		  
5,422		    
822		    
(6,984
)		  
(14,813
)		  
(9,546
)		  
(5,267
)

Total noncurrent

     (3,029 )   5,454     —     (4,189 )   (1,764 )   —     (1,764 )
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ (17,102 ) $ 10,876   $ 822   $ (11,173 ) $ (16,577 ) $ (9,546 ) $ (7,031 )
                               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                               

Gaming is a highly regulated industry requiring customers to obtain a gaming operator's license and verify with the applicable regulatory agency that they have the financial resources to operate a gaming establishment. Many of the Company's customers, including new casinos that have opened in recent years, are owned by existing multi-property customers that have established a favorable payment history with the Company. Customer accounts typically include a mix of trade receivables balances with terms for periods of 30 to 120 days and financing receivables resulting from extended payment terms.

The Company monitors the credit quality of its accounts receivable by reviewing an aging of customer invoices. Invoices are considered past due if a scheduled payment is not received within agreed upon terms. The Company's notes receivable are reviewed quarterly, at a minimum, for impairment. The Company also reviews a variety of other relevant qualitative information such as collection experience, economic conditions and specific customer financial conditions to evaluate credit risk in recording the allowance for doubtful accounts or as an indicator of an impaired loan.

The Company accrues interest, if applicable, on its accounts and notes receivables pursuant to the terms of the agreement. Interest is not accrued on past due accounts and notes receivable, or individual amounts that the Company has determined and specifically identified as not collectible.

The following summarizes the aging of past due receivables, excluding trade accounts receivable with a contract term less than one year, as of June 30, 2014:

 
   1 to 90
Days
Past Due		   91 to 180
Days
Past Due		   181 + Days
Past Due		   Total
Past Due		   Current   Total
Receivable		   Recorded
Investment in
Receivables
on Nonaccrual
Status		   Recorded
Investment
90 Days and
Accruing		  
 
   (in 000s)
  

Trade receivables

   $ 7,862   $ 2,178   $ 8,102   $ 18,142   $ 99,209   $ 117,351   $ 18,142   $ —  

Lease receivables

     —     —     —     —     20,368     20,368     —     —  

Notes receivable

     —     —     —     —     17,884     17,884     —     —  
                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 7,862   $ 2,178   $ 8,102   $ 18,142   $ 137,461   $ 155,603   $ 18,142   $ —  
                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                                   

The following summarizes the aging of past due receivables, excluding trade accounts receivable with a contract term less than one year, as of June 30, 2013:

 
   1 to 90
Days
Past Due		   91 to 180
Days
Past Due		   181 + Days
Past Due		   Total
Past Due		   Current   Total
Receivable		   Recorded
Investment in
Receivables
on Nonaccrual
Status		   Recorded
Investment
90 Days and
Accruing		  
 
   (in 000s)
  

Trade receivables

   $ 9,636   $ 2,851   $ 6,869   $ 19,356   $ 103,422   $ 122,778   $ 19,356   $ —  

Lease receivables

     —     —     —     —     16,629     16,629     —     —  

Notes receivable

     —     —     —     —     20,525     20,525     —     —  
                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 9,636   $ 2,851   $ 6,869   $ 19,356   $ 140,576   $ 159,932   $ 19,356   $ —  
                                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                                   

The aging of customer invoices and note balances are based on contractually agreed upon payment terms, which in certain rare circumstances have been modified from the original financing terms. The modification of original financing terms are infrequent and generally do not represent a concession as they result only in a delay of payment that is typically insignificant to total trade, lease and notes receivable balances.

The Company has provided development financing to certain customers in the form of notes receivable. There were no significant modifications of notes receivable during the periods presented.

Impairment is recognized when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of a note arrangement. There were no recorded investments in impaired loans as of June 30, 2014 and 2013.

The fair value of accounts and notes receivable, net, is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers, with similar credit ratings and remaining maturities. As of June 30, 2014 and 2013, the fair value of the accounts and notes receivable, net, approximated the carrying value.