Note 13. Leases

FY 2007 Financial Report
Bureau of Resource Management
November 2007
Report

The Department is committed to over 13,000 leases, which cover office and functional properties, and residential units at diplomatic missions overseas. The majority of these leases are short-term operating leases. In most cases, management expects that the leases will be renewed or replaced by other leases. Personnel from other US Government agencies occupy some of the leased facilities (both residential and non-residential). These agencies reimburse the Department for the use of the properties. Reimbursements are received for approximately $68.1m of the lease costs.

Capital Leases

The Department has various long-term leases (more than 10 years) for overseas real property that meet the criteria as a capital lease in accordance with SFFAS No. 6, Accounting for Property, Plant, and Equipment. Assets that meet the definition of a capital lease and their related lease liability are initially recorded at the present value of the future minimum lease payments or fair market value, whichever is less. In general, capital asses are depreciated over the estimated remaining life of the asset, and the related liability is amortized over the term of the lease, which can result in a different value in the asset versus the liability.

The following is a summary of Net Assets under Capital Leases and Future Minimum Lease payments as of September 30, 2007 (Dollars in Thousands).

Net Assets Under Capital Leases
As of September 30, 2007 and 2006
(Dollars in Thousands)
Net Assets Under Capital Leases: 2007 2006
Land and Buildings $ 77,194  $ 76,503 
Accumulated Depreciation  (31,195)
single underline
 (29,704)
single underline
Net Assets under Capital Leases $ 45,999 
double underline
$ 46,799 
double underline

Future Minimum Lease Payments:

Future Minimum Lease Payments
As of September 30, 2007 and 2006
(Dollars in Thousands)
  2007 2006
Fiscal Year Lease Payments Fiscal Year Lease Payments
  2008 $  3,685  2007 $  3,636 
  2009    4,065  2008    3,685 
  2010    3,738  2009    4,065 
  2011   4,218 2010   3,738
  2012    3,842  2011    4,218 
  2013 and thereafter  143,584 
single underline
2012 and thereafter  147,426 
single underline
Total Minimum Lease Payments   $163,132    $166,768 
Less: Amount Representing Interest   (102,748)
single underline
  (107,302)
single underline
Obligations under Capital Leases   $ 60,384 
double underline
  $ 59,466 
double underline

 

Operating Leases

The Department leases real property in overseas locations under operating leases. These leases expire in various years. Minimum future rental payments under operating leases have remaining terms in excess of one year as of September 30, 2007 for each of the next 5 years and in aggregate are as follows (Dollars in Thousands).

Operating Leases
(Dollars in Thousands)
Year Ended September 30 Operating Lease Amounts
2008 $  591,314
2009    448,839
2010    273,010
2011    170,809
2012     82,421
2013 and thereafter    184,118
single underline
Total Minimum Future Lease Payments $1,750,511
double underline

 


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