Verizon Wireless 2007 Annual Report Download - page 57

Notes to Consolidated Financial Statements continued
55
Accumulated deferred taxes arising from leveraged leases, which are
included in Deferred Income Taxes, amounted to $2,307 million at
December 31, 2007 and $2,674 million at December 31, 2006.
The following table is a summary of the components of income from
leveraged leases:
(dollars in millions)
Years Ended December 31, 2007 2006 2005
Pretax lease income $ 78 $ 96 $ 119
Income tax expense/(benet) 30 57 (25)
Investment tax credits 44 4
The future minimum lease payments to be received from noncancelable
leases, net of nonrecourse loan payments related to leveraged and direct
financing leases for the periods shown at December 31, 2007, are as fol-
lows:
(dollars in millions)
Years
Capital
Leases
Operating
Leases
2008 $ 127 $ 29
2009 215 23
2010 136 16
2011 110 10
2012 110 9
Thereafter 2,392 16
Total $ 3,090 $ 103
As Lessee
We lease certain facilities and equipment for use in our operations under
both capital and operating leases. Total rent expense from continuing
operations under operating leases amounted to $1,712 million in 2007,
$1,608 million in 2006 and $1,458 million in 2005.
Amortization of capital leases is included in depreciation and amortiza-
tion expense in the consolidated statements of income. Capital lease
amounts included in plant, property and equipment are as follows:
(dollars in millions)
At December 31, 2007 2006
Capital leases $ 329 $ 359
Accumulated amortization (153) (160)
Total $ 176 $ 199
The aggregate minimum rental commitments under noncancelable
leases for the periods shown at December 31, 2007, are as follows:
(dollars in millions)
Years
Capital
Leases
Operating
Leases
2008 $ 75 $ 1,489
2009 63 1,276
2010 59 1,016
2011 55 756
2012 38 497
Thereafter 132 1,967
Total minimum rental commitments 422 $ 7,001
Less interest and executory costs (110)
Present value of minimum lease payments 312
Less current installments (46)
Long-term obligation at December 31, 2007 $ 266
As of December 31, 2007, the total minimum sublease rentals to be
received in the future under noncancelable operating and capital sub-
leases were $50 million and $22 million, respectively.
NOTE 10
LEASING ARRANGEMENTS
As Lessor
We are the lessor in leveraged and direct financing lease agreements for commercial aircraft and power generating facilities, which comprise the
majority of the portfolio along with telecommunications equipment, real estate property, and other equipment. These leases have remaining terms
up to 48 years as of December 31, 2007. Minimum lease payments receivable represent unpaid rentals, less principal and interest on third-party nonre-
course debt relating to leveraged lease transactions. Since we have no general liability for this debt, which holds a senior security interest in the leased
equipment and rentals, the related principal and interest have been offset against the minimum lease payments receivable in accordance with GAAP.
All recourse debt is reflected in our consolidated balance sheets. See Note 3 for information on lease impairment charges.
Finance lease receivables, which are included in Prepaid Expenses and Other and Other Assets in our consolidated balance sheets are comprised of
the following:
(dollars in millions)
At December 31, 2007 2006
Leveraged
Leases
Direct
Finance
Leases Total
Leveraged
Leases
Direct
Finance
Leases Total
Minimum lease payments receivable $ 2,959 $ 131 $ 3,090 $ 3,311 $ 128 $ 3,439
Estimated residual value 1,434 16 1,450 1,637 18 1,655
Unamortized initial direct costs – 1 1 –––
Unearned income (1,483) (25) (1,508) (1,895) (22) (1,917)
$ 2,910 $ 123 3,033 $ 3,053 $ 124 3,177
Allowance for doubtful accounts (168) (175)
Finance lease receivables, net $ 2,865 $ 3,002
Current $ 36 $ 40
Noncurrent $ 2,829 $ 2,962