 |
| note 10 |
| 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 50 years as of December 31, 2005. 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 4 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, |
|
|
|
|
|
|
|
|
|
2005 |
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
|
 |
|
| |
Leveraged |
Finance |
|
Leveraged |
Finance |
|
|
|
| |
Leases |
Leases |
Total |
Leases |
Leases |
Total |
|
|
|
|
| Minimum
lease payments receivable |
$ |
3,847 |
|
|
$ |
123
|
|
|
$ |
3,970 |
|
|
$ |
4,133 |
|
|
$ |
173 |
|
|
$ |
4,306 |
|
|
| Estimated
residual value |
|
1,937
|
|
|
|
9 |
|
|
|
1,946 |
|
|
|
2,319 |
|
|
|
15 |
|
|
|
2,334 |
|
|
| Unearned
income |
|
(2,260 |
) |
|
|
(11 |
) |
|
|
(2,271 |
) |
|
|
(2,631 |
) |
|
|
(19 |
) |
|
|
(2,650 |
) |
|
|
| |
$ |
3,524
|
|
|
$ |
121 |
|
|
|
3,645 |
|
|
$ |
3,821 |
|
|
$ |
169 |
|
|
|
3,990 |
|
|
|
| Allowance
for doubtful accounts |
|
|
|
|
|
|
|
|
|
(375 |
) |
|
|
|
|
|
|
|
|
|
|
(326 |
) |
|
|
| Finance
lease receivables, net |
|
|
|
|
|
|
|
|
$ |
3,270 |
|
|
|
|
|
|
|
|
|
|
$ |
3,664 |
|
|
|
|
|
| Noncurrent |
|
|
|
|
|
|
|
|
$ |
3,240 |
|
|
|
|
|
|
|
|
|
|
$ |
3,621 |
|
|
|
Accumulated
deferred taxes arising from leveraged leases, which
are included in Deferred Income Taxes, amounted to $3,049
million at December 31, 2005 and $3,226 million at December
31, 2004.
The following table is a summary of the components
of income from leveraged leases: |
|
| Years
Ended December 31, |
|
2005 |
|
|
|
2004 |
|
|
|
2003 |
|
|
|
|
| Pretax
lease income |
$ |
119 |
|
|
$ |
63 |
|
|
$ |
108 |
|
|
| Income
tax expense/(benefit) |
|
(25 |
) |
|
|
(52 |
) |
|
|
11 |
|
|
| Investment
tax credits |
|
4 |
|
|
|
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, 2005,
are as follows: |
|
| |
|
Capital |
|
|
Operating |
|
|
| Years |
|
Leases |
|
|
|
Leases |
|
|
|
|
| 2006 |
$ |
103 |
|
|
$ |
22 |
|
|
| 2007 |
|
122 |
|
|
|
7 |
|
|
| 2008 |
|
128
|
|
|
|
4 |
|
|
| 2009 |
|
187 |
|
|
|
6 |
|
|
| 2010 |
|
161 |
|
|
|
2 |
|
|
| Thereafter |
|
3,269 |
|
|
|
– |
|
|
|
| Total |
$ |
3,970 |
|
|
$ |
41 |
|
|
 |
|
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 $1,532 million in 2005,
$1,347 million in 2004 and $1,334 million in 2003.
Capital lease amounts included in plant, property and
equipment are as follows: |
|
| At
December 31, |
|
2005 |
|
|
|
2004 |
|
|
|
|
| Capital
leases |
$ |
313 |
|
|
$ |
596 |
|
|
| Accumulated
amortization |
|
(137 |
) |
|
|
(412 |
) |
|
|
| Total |
$ |
176 |
|
|
$ |
184 |
|
|
|
|
|
| The
aggregate minimum rental commitments under noncancelable leases
for the periods shown at December 31, 2005, are as follows: |
|
| |
|
Capital |
|
|
Operating |
|
|
| Years |
|
Leases |
|
|
|
Leases |
|
|
|
|
| 2006 |
$ |
37 |
|
|
$ |
1,184 |
|
|
| 2007 |
|
28 |
|
|
|
791 |
|
|
| 2008 |
|
21 |
|
|
|
652 |
|
|
| 2009 |
|
13 |
|
|
|
504 |
|
|
| 2010 |
|
12 |
|
|
|
316 |
|
|
| Thereafter |
|
55 |
|
|
|
1,050 |
|
|
|
| Total
minimum rental commitments |
|
166 |
|
|
$ |
4,497 |
|
|
|
| Less
interest and executory costs |
|
(54 |
) |
|
|
|
|
|
|
| Present
value of minimum lease payments |
|
112 |
|
|
|
|
|
|
| Less
current installments |
|
(17 |
) |
|
|
|
|
|
|
| Long-term
obligation at December 31, 2005 |
$ |
95 |
|
|
|
|
|
|
|
|
| As
of December 31, 2005, the total minimum sublease rentals to
be received in the future under noncancelable operating and
capital subleases were $46 million and $1 million, respectively. |
|
