Note 15. Leases

FY 2003 Performance and Accountability Report
Bureau of Resource Management
December 2003
Report

The Department is committed to over 9,000 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 U.S. 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 $40.0 million 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 assets 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.

Following is a summary of Net Assets Under Capital Leases and future minimum lease payments as of September 30 (Dollars in Thousands).


Net Assets Under Capital Leases
at September 30, 2003 and 2002
(Dollars in Thousands)
Net Assets Under Capital Leases: 2003 2002

Land and Buildings

$117,542  $120,940 

Accumulated Depreciation

 (46,985)
single underline
 (43,819)
single underline

Net Assets under Capital Leases

$ 70,557 
double underline
$ 77,121 
double underline

 

Future Minimum Lease Payments
at September 30, 2003 and 2002
(Dollars in Thousands)
  2003 2002
  Fiscal Year Lease Payments Fiscal Year Lease Payments
  2004 $   6,982  2003 $   8,467 
  2005     6,982  2004     6,899 
  2006     6,344  2005     6,899 
  2007     6,344  2006     6,609 
  2008     6,314  2007     6,609 
  2009 and thereafter   491,594 
single underline
2008 and thereafter   467,166 
single underline
Total Minimum Lease Payments   $ 524,560    $ 502,649 
Less: Amount Representing Interest    (438,575)
single underline
   (410,639)
single underline
Obligations under Capital Leases   $  85,985 
double underline
  $  92,010 
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 having remaining terms in excess of one year as of September 30, 2003 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
2004 $329,107
2005 231,716
2006 147,749
2007 83,006
2008 56,635
2009 and thereafter 83,360
single underline
Total Minimum Future Lease Payments $931,573
double underline