(11)	SALE/LEASBACK ARRANGEMENTS

Please refer to Note (2) of Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form
10-K for additional information regarding the negotiations with its Lenders and Noteholders, Restructuring Support Agreement and Reorganization and Chapter 11 Proceedings for further discussion of the effect of these proceedings on the company’s sale/leaseback obligations.

Fiscal 2015 Sale/Leasebacks

During fiscal 2015, the company sold six vessels to unrelated third parties, and simultaneously entered into bareboat charter agreements with the purchasers. Under the sale/leaseback agreements the company has the right to re-acquire the vessel for a fixed percentage of the original sales price at a defined date during the lease, deliver the vessel to the owners at the end of the lease term, purchase the vessel at its then fair market value at the end of the lease term or extend the leases for 24 months at mutually agreeable lease rates.

The company is accounting for these transactions as sale/leasebacks with operating lease treatment and will record the payments as vessel operating lease expense on a straight-line basis over the lease term. The deferred gains will be amortized to gain on asset dispositions, net ratably over the respective lease term. Any deferred gain balance remaining upon the repurchase of the vessels would reduce the vessels’ stated cost if the company elects to exercise the purchase options.

The following table provides the number of vessels, total proceeds, carrying values at the time of sale, deferred gains recognized, lease expirations, and contractual purchase option timing for the vessels sold and leased back by the company during fiscal 2015:

Fiscal 2015 Quarter	Number of Vessels		Total Proceeds		Carrying Value at time of Sale		Deferred Gain at time of Sale		Lease Term in Years		Purchase Option Percentage		Purchase Option at at end of:
First		1	$	13,400	$	4,002	$	9,398		7		61%	6^th Year
Second		1		19,350		8,214		11,136		8.5		47%	8^th Year
Third		3		78,200		33,233		44,967	8 – 9			60%	7^th or 8^th Year
Fourth		1		13,000		5,115		7,885	7			50%	6^th Year
		6	$	123,950	$	50,564	$	73,386

Fiscal 2014 Sale/Leasebacks

During fiscal 2014, the company sold ten vessels to unrelated third parties, and simultaneously entered into bareboat charter agreements with the purchasers. Under the sale/leaseback agreements the company has the right to re-acquire the vessel for a fixed percentage of the original sales price at a defined date during the lease, deliver the vessel to the owners at the end of the lease term, purchase the vessel at its then fair market value at the end of the lease term or extend the leases for 24 months at mutually agreeable lease rates.

Fiscal 2014 Quarter	Number of Vessels		Total Proceeds		Carrying Value at time of Sale		Deferred Gain at time of Sale		Lease Term in Years		Purchase Option Percentage		Purchase Option at at end of:
Second		2	$	65,550	$	34,325	$	31,225		7		55%	6^th Year
Third		4		141,900		105,649		36,251	7 – 9		54 - 68%		6^th or 8^th Year
Fourth		4		63,305		32,845		30,460	7 – 10		53 - 59%		6^th or 9^th Year
		10	$	270,755	$	172,819	$	97,936

Future Minimum Lease Payments

As of March 31, 2017, the future minimum lease payments for the vessels under the operating lease terms are as follows:

Fiscal year ending (In thousands)	Fiscal 2015 Sale/Leaseback		Fiscal 2014 Sale/Leaseback		Total
2018	$	9,604		23,486		33,090
2019		10,234		24,800		35,034
2020		11,497		25,519		37,016
2021		11,594		19,979		31,573
2022		10,283		7,932		18,215
Thereafter		8,990		12,131		21,121
Total future lease payments	$	62,202		113,847		176,049