Verizon Wireless 2008 Annual Report Download - page 56

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Accumulated deferred taxes arising from leveraged leases, which are
included in Deferred Income Taxes, amounted to $2,218 million at
December 31, 2008 and $2,307 million at December 31, 2007.
The following table is a summary of the components of income from
leveraged leases:
(dollars in millions)
Years Ended December 31, 2008 2007 2006
Pretax lease income $ 74 $ 78 $ 96
Income tax expense 30 30 57
Investment tax credits 44 4
The future minimum lease payments to be received from noncancelable
leases, net of nonrecourse loan payments related to leveraged leases,
along with payments relating to direct financing leases for the periods
shown at December 31, 2008, are as follows:
(dollars in millions)
Years
Capital
Leases
Operating
Leases
2009 $ 240 $ 26
2010 148 19
2011 114 14
2012 124 7
2013 124 5
Thereafter 2,117 12
Total $ 2,867 $ 83
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 $1,835 million in 2008,
$1,712 million in 2007 and $1,608 million in 2006.
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, 2008 2007
Capital leases $ 298 $ 329
Accumulated amortization (97) (153)
Total $ 201 $ 176
The aggregate minimum rental commitments under noncancelable
leases for the periods shown at December 31, 2008, are as follows:
(dollars in millions)
Years
Capital
Leases
Operating
Leases
2009 $ 90 $ 1,620
2010 81 1,339
2011 76 1,039
2012 56 770
2013 51 539
Thereafter 126 1,995
Total minimum rental commitments 480 $ 7,302
Less interest and executory costs (90)
Present value of minimum lease payments 390
Less current installments (63)
Long-term obligation at December 31, 2008 $ 327
As of December 31, 2008, the total minimum sublease rentals to be
received in the future under noncancelable operating subleases was
approximately $57 million.
NOTE 9
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 42 years as of December 31, 2008. Minimum lease payments receivable represent unpaid rentals, less principal and interest on third-party
nonrecourse 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.
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, 2008 2007
Leveraged
Leases
Direct
Finance
Leases Total
Leveraged
Leases
Direct
Finance
Leases Total
Minimum lease payments receivable $ 2,734 $ 133 $ 2,867 $ 2,834 $ 131 $ 2,965
Estimated residual value 1,501 12 1,513 1,559 16 1,575
Unamortized initial direct costs – 1 1 – 1 1
Unearned income (1,400) (24) (1,424) (1,483) (25) (1,508)
$ 2,835 $ 122 2,957 $ 2,910 $ 123 3,033
Allowance for doubtful accounts (159) (168)
Finance lease receivables, net $ 2,798 $ 2,865
Current $ 46 $ 36
Noncurrent $ 2,752 $ 2,829
Notes to Consolidated Financial Statements continued