Sales-Type Leases

6 Months Ended

Nov. 30, 2013

Note 7: Sales-Type Leases

We have certain customer leases providing bargain purchase options, which are accounted for as sales-type leases. Interest income is recognized over the life of the lease using the effective interest method.

The initial acceptance of customer finance arrangements is based on an in-depth review of each customer’s credit profile, including review of third party credit reports, customer financial statements and bank verifications. We monitor the credit quality of our sales-type lease portfolio based on payment activity that drives the finance lease receivable aging. This credit quality is assessed on a monthly basis. Our historical losses on finance lease receivables are insignificant, and therefore we do not have a specific allowance for credit losses.

The minimum lease payments receivable and the net investment included in other assets for such leases were as follows:


	November 30, 2013			May 31, 2013
Gross minimum lease payments receivable	$	9,417		$	9,862
Less – unearned interest		(383	)		(425	)

Net investment in sales-type lease receivables	$	9,034		$	9,437

The following table provides estimated future minimum lease payments receivable related to sales-type leases:


Year ending May 31,
2014 (remaining)	$	3,751
2015		4,511
2016		970
2017		184
2018		1

	$	9,417