FINANCING RECEIVABLES AND OPERATING LEASES
 12 Months Ended
Mar. 31, 2021
FINANCING RECEIVABLES AND OPERATING LEASES [Abstract]  
FINANCING RECEIVABLES AND OPERATING LEASES
4.
FINANCING RECEIVABLES AND OPERATING LEASES

Our financing receivables and operating leases consist primarily of leases of IT and communication equipment and notes receivable from financing customer purchases of third-party software, maintenance, and services. Our leases often include elections for the lessee to purchase the underlying asset at the end of the lease term. Occasionally, our leases provide the lessee a bargain purchase option.

The following table provides the profit recognized for sales-type leases at their commencement date, including modifications that are recognized on a net basis, for the years ended March 31, 2021, and 2020 (in thousands):

  
Year Ended March 31,
  
   
2021
    
2020
  
Net sales
  
$
27,196
    
$
15,631
  
Cost of sales
    
17,855
      
13,039
  
Gross profit
  
$
9,341
    
$
2,592
  

The following table provides interest income in aggregate on our sales-type leases and lease income on our operating leases for the years ended March 31, 2021, and 2020 (in thousands):

  
Year Ended March 31,
  
   
2021
    
2020
  
Interest income on sales-type leases
  
$
7,602
    
$
6,623
  
Lease income on operating leases
  
$
15,864
    
$
18,534
  

FINANCING RECEIVABLES—NET

The following tables provide a disaggregation of our financing receivables - net (in thousands):

March 31, 2021
  
Notes
Receivable
    
Lease
Receivables
    
Financing
Receivables
  
Gross receivables
  
$
112,641
    
$
68,393
    
$
181,034
  
Unguaranteed residual value (1)
    
-
      
14,876
      
14,876
  
Initial direct costs, net of amortization
    
425
      
-
      
425
  
Unearned income
    
-
      
(8,393
)
    
(8,393
)
Allowance for credit losses (2)
    
(1,212
)
    
(1,171
)
    
(2,383
)
Total, net
  
$
111,854
    
$
73,705
    
$
185,559
  
Reported as:
                        
Current
  
$
73,175
    
$
33,097
    
$
106,272
  
Long-term
    
38,679
      
40,608
      
79,287
  
Total, net
  
$
111,854
    
$
73,705
    
$
185,559
  

(1)
Includes unguaranteed residual values of $9,453 thousand that we retained after selling the related lease receivable.
(2)
Refer to Note 7, “Allowance for Credit Losses” for details.


March 31, 2020
  
Notes
Receivable
    
Lease
Receivables
    
Financing
Receivables
  
Minimum payments
  
$
55,417
    
$
69,492
    
$
124,909
  
Estimated unguaranteed residual value (1)
    
-
      
21,862
      
21,862
  
Initial direct costs, net of amortization
    
212
      
247
      
459
  
Unearned income
    
-
      
(11,612
)
    
(11,612
)
Allowance for credit losses (2)
    
(798
)
    
(610
)
    
(1,408
)
Total, net
  
$
54,831
    
$
79,379
    
$
134,210
  
Reported as:
                        
Current
  
$
31,181
    
$
38,988
    
$
70,169
  
Long-term
    
23,650
      
40,391
      
64,041
  
Total, net
  
$
54,831
    
$
79,379
    
$
134,210
  

(1)
Includes unguaranteed residual values of $14,972 thousand for sales type leases, which have been sold and accounted for as sales.
(2)
Refer to Note 7, “Allowance for Credit Losses” for details.

The following table provides the future scheduled minimum lease payments for investments in sales-type leases as of March 31, 2021 (in thousands):

Year ending March 31, 2022
  
$
36,900
  
2023
    
16,358
  
2024
    
9,628
  
2025
    
3,356
  
2026 and thereafter
    
2,151
  
Total
  
$
68,393
  

OPERATING LEASES—NET

Operating leases—net represents leases that do not qualify as sales-type leases. The components of the operating leases—net are as follows (in thousands):

  
March 31, 2021
    
March 31, 2020
  
Cost of equipment under operating leases
  
$
18,748
    
$
21,276
  
Accumulated depreciation
    
(7,870
)
    
(11,159
)
Investment in operating lease equipment—net (1)
  
$
10,878
    
$
10,117
  

(1)
Amounts include estimated unguaranteed residual values of $2.5 million and $3.1 million as of March 31, 2021, and 2020, respectively.

The following table provides the future scheduled minimum lease rental payments for operating leases as of March 31, 2021 (in thousands):

Year ending March 31, 2022
  
$
4,744
  
2023
    
3,756
  
2024
    
1,034
  
2025
    
37
  
Total
  
$
9,571
  

TRANSFERS OF FINANCIAL ASSETS

We enter into arrangements to transfer the contractual payments due under financing receivables and operating lease agreements, which are accounted for as secured borrowings.

For transfers accounted for as a secured borrowing, the corresponding investments serve as collateral for non-recourse notes payable. As of March 31, 2021, and March 31, 2020, we had financing receivables of $60.5 million and $34.6 million, respectively, and operating leases of $3.3 million and $6.7 million, respectively which were collateral for non-recourse notes payable. See Note 9, “Notes Payable and Credit Facility.”

For transfers accounted for as sales, we derecognize the carrying value of the asset transferred plus any liability and recognize a net gain or loss on the sale, which are presented within net sales in the consolidated statement of operations. For the years ended March 31, 2021, 2020, and 2019, we recognized net gains of $14.5 million, $21.8 million, and $9.1 million, respectively, and total proceeds from these sales were $364.0 million, $593.7 million, and $276.1 million, respectively.

When we retain servicing obligations in transfers accounted for as sales, we allocate a portion of the proceeds to deferred revenues, which is recognized as we perform the services. As of both March 31, 2021, and March 31, 2020, we had deferred revenue of $0.4 million for servicing obligations.

In a limited number of transfers accounted for as sales, we indemnified the assignee in the event that the lessee elects to early terminate the lease. As of March 31, 2021, our total potential liability that could result from these indemnities is immaterial.