Investment in Leasing Operations:

6 Months Ended

Jun. 25, 2016

5.Investment in Leasing Operations:

Investment in leasing operations consists of the following:

	June 25, 2016			December 26, 2015
Direct financing and sales-type leases:
Minimum lease payments receivable	$	34,906,500		$	37,181,600
Estimated residual value of equipment	4,417,700			4,511,000
Unearned lease income net of initial direct costs deferred	(5,033,200		)	(4,999,700		)
Security deposits	(3,850,400		)	(3,640,500		)
Equipment installed on leases not yet commenced	7,167,500			6,754,200

Total investment in direct financing and sales-type leases	37,608,100			39,806,600
Allowance for credit losses	(817,100		)	(859,100		)

Net investment in direct financing and sales-type leases	36,791,000			38,947,500
Operating leases:
Operating lease assets	1,147,300			1,083,300
Less accumulated depreciation and amortization	(974,100		)	(1,043,300		)

Net investment in operating leases	173,200			40,000

Total net investment in leasing operations	$	36,964,200		$	38,987,500

As of June 25, 2016, the $37.0 million total net investment in leases consists of $16.5 million classified as current and $20.5 million classified as long-term. As of December 26, 2015, the $39.0 million total net investment in leases consists of $17.7 million classified as current and $21.3 million classified as long-term.

As of June 25, 2016, leased assets with three customers approximated 21%, 13% and 10%, respectively, 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 2016 and the full fiscal years thereafter as of June 25, 2016:

	Direct Financing and Sales-Type Leases				Operating Leases
	Minimum Lease Payments Receivable		Income Amortization		Minimum Lease Payments Receivable
2016	$	12,004,400	$	2,240,000	$	41,300
2017	16,095,000		2,304,900		18,000
2018	6,167,600		473,300		—
2019	611,400		12,000		—
2020	8,400		1,500		—
Thereafter	19,700		1,500		—

	$	34,906,500	$	5,033,200	$	59,300

The activity in the allowance for credit losses for leasing operations during the first six months of 2016 and 2015, respectively, is as follows:

	June 25, 2016			June 27, 2015
Balance at beginning of period	$	859,100		$	386,000
Provisions charged to expense	(22,300		)	(162,200		)
Recoveries	9,600			630,300
Deductions for amounts written-off	(29,300		)	(9,300		)

Balance at end of period	$	817,100		$	844,800

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:

	June 25, 2016				December 26, 2015
	Investment In Leases		Allowance for Credit Losses		Investment In Leases		Allowance for Credit Losses
Collectively evaluated for loss potential	$	37,608,100	$	817,100	$	39,806,600	$	859,100
Individually evaluated for loss potential	—		—		—		—

Total	$	37,608,100	$	817,100	$	39,806,600	$	859,100

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-accrual. 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.

	June 25, 2016
	0-60 Days Delinquent and Accruing		61-90 Days Delinquent and Accruing		Over 90 Days Delinquent and Accruing		Non-Accrual		Total
Middle-Market	$	36,403,700	$	—	$	—	$	—	$	36,403,700
Small-Ticket	1,204,400		—		—		—		1,204,400

Total Investment in Leases	$	37,608,100	$	—	$	—	$	—	$	37,608,100

	December 26, 2015
	0-60 Days Delinquent and Accruing		61-90 Days Delinquent and Accruing		Over 90 Days Delinquent and Accruing		Non-Accrual		Total
Middle-Market	$	38,616,600	$	—	$	—	$	—	$	38,616,600
Small-Ticket	1,185,800		4,200		—		—		1,190,000

Total Investment in Leases	$	39,802,400	$	4,200	$	—	$	—	$	39,806,600

- Definition

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

+ References + Details