Investment in Leasing Operations:

3 Months Ended

Mar. 29, 2014

5. Investment in Leasing Operations:

Investment in leasing operations consists of the following:

	March 29, 2014			December 28, 2013
Direct financing and sales-type leases:
Minimum lease payments receivable	$	38,245,300		$	35,450,900
Estimated residual value of equipment	3,953,400			4,348,800
Unearned lease income net of initial direct costs deferred	(6,700,400		)	(4,963,400		)
Security deposits	(3,276,300		)	(3,325,600		)
Equipment installed on leases not yet commenced	8,570,300			6,718,000
Total investment in direct financing and sales-type leases	40,792,300			38,228,700
Allowance for credit losses	(870,600		)	(822,700		)
Net investment in direct financing and sales-type leases	39,921,700			37,406,000

Operating leases:

Operating lease assets	375,200			1,353,500
Less accumulated depreciation and amortization	(280,300		)	(1,218,200		)
Net investment in operating leases	94,900			135,300

Total net investment in leasing operations	$	40,016,600		$	37,541,300

As of March 29, 2014, the $40.0 million total net investment in leases consists of $17.2 million classified as current and $22.8 million classified as long-term. As of December 28, 2013, the $37.5 million total net investment in leases consists of $17.2 million classified as current and $20.3 million classified as long-term.

As of March 29, 2014, no customer had leased assets totaling more than 10% of the Company’s total assets.

Future minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs deferred, is as follows for the remainder of fiscal 2014 and the full fiscal years thereafter as of March 29, 2014:

	Direct Financing and Sales-Type Leases				Operating Leases
	Minimum Lease Payments Receivable		Income Amortization		Minimum Lease Payments Receivable
2014	$	17,918,600	$	4,101,800	$	204,800
2015	15,189,200		2,200,900		76,800
2016	4,953,500		396,500		—
2017	184,000		1,200		—
2018	—		—		—
Thereafter	—		—		—
	$	38,245,300	$	6,700,400	$	281,600

The activity in the allowance for credit losses for leasing operations during the first three months of 2014 and 2013, respectively, is as follows:

	March 29, 2014		March 30, 2013
Balance at beginning of period	$	822,700	$	775,800
Provisions charged to expense	38,900		13,800
Recoveries	9,000		21,300
Deductions for amounts written-off	—		(10,900		)
Balance at end of period	$	870,600	$	800,000

The Company’s investment in direct financing and sales-type leases (“Investment In Leases”) and allowance for credit losses by loss evaluation methodology are as follows:

	March 29, 2014				December 28, 2013
	Investment In Leases		Allowance for Credit Losses		Investment In Leases		Allowance for Credit Losses
Collectively evaluated for loss potential	$	40,792,300	$	870,600	$	38,228,700	$	822,700
Individually evaluated for loss potential	—		—		—		—
Total	$	40,792,300	$	870,600	$	38,228,700	$	822,700

The Company’s key credit quality indicator for its investment in direct financing and sales-type leases is the status of the lease, defined as accruing or non-accruing. Leases that are accruing income are considered to have a lower risk of loss. Non-accrual leases are those that the Company believes have a higher risk of loss. The following table sets forth information regarding the Company’s accruing and non-accrual leases. Delinquent balances are determined based on the contractual terms of the lease.

	March 29, 2014
	0-60 Days Delinquent and Accruing		61-90 Days Delinquent and Accruing		Over 90 Days Delinquent and Accruing		Non-Accrual		Total
Middle-Market	$	39,281,800	$	—	$	—	$	322,300	$	39,604,100
Small-Ticket	1,188,200		—		—		—		1,188,200
Total Investment in Leases	$	40,470,000	$	—	$	—	$	322,300	$	40,792,300

	December 28, 2013
	0-60 Days Delinquent and Accruing		61-90 Days Delinquent and Accruing		Over 90 Days Delinquent and Accruing		Non-Accrual		Total
Middle-Market	$	36,716,100	$	—	$	—	$	416,400	$	37,132,500
Small-Ticket	1,096,200		—		—		—		1,096,200
Total Investment in Leases	$	37,812,300	$	—	$	—	$	416,400	$	38,228,700

- Definition

The entire disclosure for lessor entity's leasing arrangements for operating, capital and leveraged leases.

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