Note 2: Allowance for Credit Losses

As of January 25, 2014, we had gross notes receivable of $4.5 million outstanding from five customers, with a corresponding allowance for credit losses of $0.2 million. We have collateral from these customers in the form of inventory and/or real estate to support the net carrying value of these notes. We do not accrue interest income on these notes receivable, but we record interest income when it is received. During the nine months ended January 25, 2014, $2.7 million of our notes receivable and a corresponding $1.9 million of allowance for credit losses were written off, primarily related to our acquisition of the assets of two independent La-Z-Boy Furniture Galleries® dealers during the period. Of the $4.5 million in notes receivable as of January 25, 2014, $0.6 million is expected to be repaid in the next twelve months, and was categorized as receivables in our consolidated balance sheet. The remainder of the notes receivable and the entire allowance for credit losses were categorized as other long-term assets.

The following is an analysis of the allowance for credit losses related to our notes receivable as of and for the quarter and nine months ended January 25, 2014, and January 26, 2013:

	Third Quarter Ended					Nine Months Ended
(Unaudited, amounts in thousands)	1/25/14		1/26/13			1/25/14			1/26/13
Beginning balance	$	158	$	1,481		$	1,986		$	1,537
Recoveries		—		(17	)		—			(73	)
Write-offs		—		—			(1,888	)		—
Provision for credit losses		—		—			60			—
Ending balance	$	158	$	1,464		$	158		$	1,464