Note 2: Allowance for Credit Losses

As of July 28, 2012, we had gross notes receivable of $9.6 million outstanding from 12 customers, with a corresponding allowance for credit losses of $1.5 million. We have collateral from these customers in the form of inventory 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. Of the $9.6 million in notes receivable as of July 28, 2012, $1.4 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 three months ended July 28, 2012, and July 30, 2011:

	Quarter Ended
(Unaudited, amounts in thousands)	7/28/12			7/30/11
Beginning balance	$	1,537		$	2,067
Recoveries		(18	)		—
Provision for credit losses, net		—			268
Currency effect		—			(26	)
Ending balance	$	1,519		$	2,309