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National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
1509-1694994 34
7. Leasing Arrangements
Amtrak leases equipment, primarily passenger cars and locomotives, and related maintenance
infrastructure under capital leasing arrangements. Amtrak has entered into various lease
transactions in which the lease structure contains variable interest entities (VIEs). These VIEs
were created solely for the purpose of doing lease transactions and have no other activities, assets
or liabilities outside of the lease transactions. In some of the arrangements, Amtrak has the
option to purchase some or all of the assets at a fixed price, thereby creating variable interests for
Amtrak in the VIEs.
Amtrak maintains and operates the assets based on contractual obligations within the lease
arrangements, which set specific guidelines consistent with industry standards. As such, Amtrak
has no control over activities that could materially impact the fair value of the leased assets.
Amtrak does not hold the power to direct the activities of the VIEs and, therefore, does not
control the ongoing activities that have a significant impact on the economic performance of the
VIEs. Additionally, Amtrak does not have the obligation to absorb losses, or the right to receive
benefits of the VIEs.
As of September 30, 2014 and 2013, the gross amount of assets recorded under capital leases
was $1.4 billion and $1.6 billion, respectively, with accumulated amortization of $0.7 billion and
$0.8 billion, respectively.
Amtrak is subject to various covenants and restrictions under its leasing arrangements. Amtrak
has given guarantees or entered into reimbursement agreements in connection with certain of
these lease transactions. A default by Amtrak or acceleration of Amtrak’ s indebtedness may
result in cross-default to other Amtrak indebtedness, and may have a material adverse effect on
the Company (see Note 6).
RRIF Loan
In FY2014, 21 of the 70 planned new electric locomotives were delivered to the Amtrak
Equipment Trust 2011 (Trust) for the RRIF Loan and leased to Amtrak. The Trust maintains title
to the locomotives and administers the RRIF Loan.
The delivery of each locomotive creates a capital lease for accounting purposes between the
Company and the Trust. As of September 30, 2014, $149.7 million of the amount due under the
RRIF Loan was attributable to locomotives leased under the Trust and is recorded, net of
unamortized discounts applied to the capital lease obligation of $6.3 million, as a capital lease
obligation. See additional disclosure regarding the RRIF Loan in Note 6.