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| note 11 |
| LEASING ARRANGEMENTS |
As Lessor
We are the lessor in leveraged and direct financing
lease agreements under which commercial aircraft and
power generating facilities, which comprise the majority
of the portfolio, along with industrial equipment, real
estate property, telecommunications and other equipment
are leased for remaining terms of less than 1 year to
51 years as of December 31, 2004. 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. See Note 5 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: |
|
| At
December 31, |
|
|
|
|
|
|
|
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
2003 |
|
|
 |
|
| |
Leveraged |
Finance |
|
Leveraged |
Finance |
|
|
|
| |
Leases |
Leases |
Total |
Leases |
Leases |
Total |
|
|
|
|
| Minimum
lease payments receivable |
$ |
4,133 |
|
|
$ |
173 |
|
|
$ |
4,306 |
|
|
$ |
4,381 |
|
|
$ |
254 |
|
|
$ |
4,635 |
|
|
| Estimated
residual value |
|
2,319 |
|
|
|
15 |
|
|
|
2,334 |
|
|
|
2,432 |
|
|
|
31 |
|
|
|
2,463 |
|
|
| Unearned
income |
|
(2,631 |
) |
|
|
(19 |
) |
|
|
(2,650 |
) |
|
|
(2,782 |
) |
|
|
(56 |
) |
|
|
(2,838 |
) |
|
|
| |
$ |
3,821 |
|
|
$ |
169 |
|
|
|
3,990 |
|
|
$ |
4,031 |
|
|
$ |
229 |
|
|
|
4,260 |
|
|
|
| Allowance
for doubtful accounts |
|
|
|
|
|
|
|
|
|
(326 |
) |
|
|
|
|
|
|
|
|
|
|
(423 |
) |
|
|
| Finance
lease receivables, net |
|
|
|
|
|
|
|
|
$ |
3,664 |
|
|
|
|
|
|
|
|
|
|
$ |
3,837 |
|
|
|
|
|
| Noncurrent |
|
|
|
|
|
|
|
|
$ |
3,621 |
|
|
|
|
|
|
|
|
|
|
$ |
3,786 |
|
|
|
Accumulated
deferred taxes arising from leveraged leases,
which are included in Deferred Income Taxes, amounted
to $3,226 million at December 31, 2004 and $3,297
million at December 31, 2003.
The following table is a summary of the components
of income from leveraged leases: |
|
| Years
Ended December 31, |
|
2004 |
|
|
|
2003 |
|
|
|
2002 |
|
|
|
|
| Pretax
lease income |
$ |
63 |
|
|
$ |
108 |
|
|
$ |
110 |
|
|
| Income
tax expense/(benefit) |
|
(52 |
) |
|
|
11 |
|
|
|
17 |
|
|
| Investment
tax credits |
|
3 |
|
|
|
3 |
|
|
|
3 |
|
|
|
| The
future minimum lease payments to be received from
noncancelable leases, net of nonrecourse loan payments
related to leveraged and direct financing leases
in excess of debt service requirements, for the
periods shown at December 31, 2004, are as follows: |
|
| |
|
Capital |
|
|
Operating |
|
|
| Years |
|
Leases |
|
|
|
Leases |
|
|
|
|
| 2005 |
$ |
131 |
|
|
$ |
17 |
|
|
| 2006 |
|
102 |
|
|
|
14 |
|
|
| 2007 |
|
115 |
|
|
|
8 |
|
|
| 2008 |
|
149 |
|
|
|
7 |
|
|
| 2009 |
|
208 |
|
|
|
5 |
|
|
| Thereafter |
|
3,601 |
|
|
|
12 |
|
|
|
| Total |
$ |
4,306 |
|
|
$ |
63 |
|
|
 |
|
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 $1,347 million
in 2004, $1,334 million in 2003 and $1,255 million
in 2002.
Capital lease amounts included in plant, property
and equipment are as follows: |
|
| Years |
|
2004 |
|
|
|
2003 |
|
|
|
|
| Capital
leases |
$ |
596 |
|
|
$ |
558 |
|
|
| Accumulated
amortization |
|
(412 |
) |
|
|
(354 |
) |
|
|
| Total |
$ |
184 |
|
|
$ |
204 |
|
|
|
|
|
|
The aggregate minimum rental commitments under noncancelable
leases for the periods shown at December 31, 2004, are
as follows: |
|
| |
|
Capital |
|
|
Operating |
|
|
| Years |
|
Leases |
|
|
|
Leases |
|
|
|
|
| 2005 |
$ |
42 |
|
|
$ |
978 |
|
|
| 2006 |
|
33 |
|
|
|
1,020 |
|
|
| 2007 |
|
25 |
|
|
|
654 |
|
|
| 2008 |
|
19 |
|
|
|
524 |
|
|
| 2009 |
|
11 |
|
|
|
5 |
|
|
| Thereafter |
|
71 |
|
|
|
1,194 |
|
|
|
| Total
minimum rental commitments |
|
201 |
|
|
$ |
4,748 |
|
|
|
| Less
interest and executory costs |
|
(63 |
) |
|
|
|
|
|
|
| Present
value of minimum lease payments |
|
138 |
|
|
|
|
|
|
| Less
current installments |
|
(26 |
) |
|
|
|
|
|
|
| Long-term
obligation at December 31, 2004 |
$ |
112 |
|
|
|
|
|
|
|
|
| As
of December 31, 2004, the total minimum sublease rentals
to be received in the future under noncancelable operating
and capital subleases were $2 million and $38 million,
respectively. |
|
|
|
|
