Assets received in satisfaction of loan receivables are initially recorded at fair value when received and are subsequently periodically evaluated for impairment. These assets are classified on the consolidated balance sheets as foreclosed assets. At May 31, 2014, all foreclosed assets were held by DRP and CAH, which are wholly-owned subsidiaries of CFC.

The activity for foreclosed assets is summarized below as of and for the year ended May 31, 2014.



	2014
(Dollars in thousands)	CAH			DRP			Total
Balance as of May 31, 2013	$	248,049		$	13,423		$	261,472
Results of operations	(11,853		)	(1,641		)	(13,494		)
Other comprehensive loss	(2,310		)	—			(2,310		)
Net cash investments (proceeds)	5,233			(5,250		)	(17		)
Balance as of May 31, 2014	$	239,119		$	6,532		$	245,651

On October 6, 2010, CFC, through its wholly owned subsidiary CAH, obtained control of 100% of the equity interests of Innovative Communication Corporation's (“ICC”) USVI operating entities and on March 1, 2011, CAH obtained control of 100% of the equity interests of ICC’s British Virgin Island and St. Maarten operating entities. The transaction, completed in two phases, resulted from the transfer of ICC’s assets in bankruptcy.

The transfer of ICC’s operating entities to CAH was accounted for using the purchase method of accounting and resulted in the establishment of goodwill on the balance sheet of CAH.

The USVI, British Virgin Island and St. Maarten entities transferred to CFC include the following:


•	a regulated incumbent local exchange carrier offering local telephone and data services to business and residential customers in the USVI;


•	an Internet service provider offering broadband services to residential and business customers in the USVI;


•	a long-distance service provider offering interstate and international voice and data services for both business and residential markets in the USVI;


•	a wireless telephone service provider in the USVI; and


•	providers of cable television services in St. Thomas, St. John and St. Croix, USVI, the British Virgin Islands and St. Maarten.

As a result of our impairment assessment of our investments in foreclosed assets, we recorded an impairment charge of $1 million in the fourth quarter of fiscal year 2014, related to our investment in CAH. The impairment charge, which is included as a component of results of operations of foreclosed assets in our consolidated statements of operations, was attributable to the write-down of the value of certain trade names associated with CAH entities. Results of operations of foreclosed assets are excluded in determining our compliance with debt covenants under our existing indentures and credit facility agreements.

As of May 31, 2014, CAH had total assets of $295 million, which consisted primarily of property, plant and equipment and goodwill and other intangible assets. As of May 31, 2014, CAH reported total liabilities of $236 million, which included $180 million in loans and interest payable to CFC that is eliminated in consolidation.

During the year, our investment in the DRP foreclosed assets decreased primarily due to net cash proceeds received of $5 million from the sale of raw land and developed lots and bond reimbursements received.