Note 2: Allowance for Credit Losses

As of July 27, 2013, we had gross notes receivable of $7.6 million outstanding from eight customers, with a corresponding allowance for credit losses of $1.7 million. We have collateral from these customers in the form of inventory and/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 $7.6 million in notes receivable as of July 27, 2013, $1.0 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 27, 2013, and July 28, 2012:

	Quarter Ended
(Unaudited, amounts in thousands)	7/27/13			7/28/12
Beginning balance	$	1,986		$	1,537
Recoveries		—			(18	)
Write-offs		(320	)		—
Provision for credit losses		60			—
Ending balance	$	1,726		$	1,519