Verizon Wireless 2009 Annual Report Download - page 58

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Accumulated deferred taxes arising from leveraged leases, which are
included in Deferred income taxes, amounted to $2,081 million at
December 31, 2009 and $2,218 million at December 31, 2008.
The following table is a summary of the components of income from
leveraged leases:
(dollars in millions)
Years Ended December 31, 2009 2008 2007
Pretax lease income $ 83 $ 74 $ 78
Income tax expense 34 30 30
Investment tax credits 4 4 4
The future minimum lease payments to be received from noncancelable
capital leases (direct financing and leveraged leases), net of nonrecourse
loan payments related to leveraged leases, along with payments relating
to operating leases for the periods shown at December 31, 2009, are as
follows:
(dollars in millions)
Years
Capital
Leases
Operating
Leases
2010 $ 228 $ 117
2011 169 96
2012 135 70
2013 136 41
2014 124 20
Thereafter 1,878 47
Total $ 2,670 $ 391
As Lessee
We lease certain facilities and equipment for use in our operations under
both capital and operating leases. Total rent expense under operating
leases amounted to $2,518 million, $2,201 million and $2,051 million in
2009, 2008 and 2007, respectively.
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, 2009 2008
Capital leases $ 357 $ 298
Less accumulated amortization 126 97
Total $ 231 $ 201
The aggregate minimum rental commitments under noncancelable
leases for the periods shown at December 31, 2009, are as follows:
(dollars in millions)
Years
Capital
Leases
Operating
Leases
2010 $ 102 $ 1,971
2011 92 1,706
2012 73 1,422
2013 68 1,154
2014 53 938
Thereafter 106 5,135
Total minimum rental commitments 494 $ 12,326
Less interest and executory costs 97
Present value of minimum lease payments 397
Less current installments 79
Long-term obligation at December 31, 2009 $ 318
As of December 31, 2009, the total minimum sublease rentals to be
received in the future under noncancelable operating subleases was
approximately $44 million.
NOTE 8
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 41 years as of December 31, 2009. In addition, we lease space on certain of our cell towers to other wireless carriers. 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, 2009 2008
Leveraged
Leases
Direct
Finance
Leases Total
Leveraged
Leases
Direct
Finance
Leases Total
Minimum lease payments receivable $ 2,504 $ 166 $ 2,670 $ 2,734 $ 133 $ 2,867
Estimated residual value 1,410 12 1,422 1,501 12 1,513
Unearned income (1,251) (19) (1,270) (1,400) (23) (1,423)
Total $ 2,663 $ 159 $ 2,822 $ 2,835 $ 122 $ 2,957
Allowance for doubtful accounts (158) (159)
Finance lease receivables, net $ 2,664 $ 2,798
Current $ 72 $ 46
Noncurrent 2,592 2,752
$ 2,664 $ 2,798
Notes to Consolidated Financial Statements continued