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48 | 2007 Annual Report United States Postal Service
Notes to the Financial Statements
Note 7 – Leases and other commitments
Capital
At September 30, 2007 our future minimum lease payments for all
noncancelable leases are as follows.
Lease Obligations Operating Capital
(Dollars in millions)
2008 $ 760 $ 102
2009 746 100
2010 704 97
2011 643 95
2012 576 97
After 2012 4,987 587
Total Lease Obligations $ 8,416 $ 1,078
Less: Interest 416
Total Capital Lease Obligations $ 662
Less: Short-term portion of capital lease obligations 44
Long-term Portion of Capital Lease Obligations $ 618
Most of these leases contain renewal options for periods ranging from 3
to 20 years. Certain noncancelable real estate leases give us the option to
purchase the facilities at prices specified in the leases.
Capital leases included in buildings were $931 million in 2007 and $891
million in 2006. Total accumulated amortization is $404 million in 2007
and $350 million in 2006. Amortization expense for assets recorded under
capital leases is recorded as depreciation expense, which is included in
other operating expenses in the statements of operations.
Our total rental expense for the years ended September 30 is summarized
as follows.
Rental Expense 2007 2006 2005
(Dollars in millions)
Non-cancelable real estate leases
including related taxes $ 927 $ 953 $ 892
Facilities leased from GSA
subject to 120-day cancellation 46 49 42
Equipment and other short-term
rentals 261 192 209
Total Rental Expense $ 1,234 $ 1,194 $ 1,143
At September 30, 2007, we estimate our financial commitment for
approved capital projects in progress (resources on order) to be $2,694
million, detailed in the following table.
Capital Resources on Order 2007
(Dollars in millions)
Mail Processing Equipment $ 1,565
Building Improvements 513
Postal Support Equipment 338
Construction and Building Purchase 200
Vehicles 40
Retail Equipment 38
Total Capital Resources on Order $ 2,694
Expense Commitments
In the normal operations of our business we enter into commitments for
expense contracts. The contracts run for periods from one to ten years.
Although these contracts contain clauses for termination by the Postal
Service, we normally would have early termination costs.
Expense commitments are classified as miscellaneous, inventory, and
research and development. Our miscellaneous expense commitments
include contracts for supplies, services, communications, repairs, research,
printing and advertising. Our inventory contracts are for vehicle repair parts
and mechanized equipment spare parts. These are summarized in the
following table.
Expense Resources on Order 2007
(Dollars in millions)
Miscellaneous Contracts $ 5,231
Inventory Contracts 76
Research and Development Contracts 48
Total Expense Resources on Order $ 5,355