STUDENT TRANSPORTATION INC 5.25 PCT DEBS T.STB.DB.A

RE:RE:RE:RE:RE:RE:STB's value is largely off books

[Capharnaum]

goldsternp wrote:
25% of the fleet are leased.

The leases are operating leases, not capital leases so  the lease payments are expensed but they can't take any depreciation because they haven't capitalized the buses. When the leases are bought out, the buses can be depreciated on the buyout price, not the market value. Maybe the difference between buyout price and market value can go to Goodwill and therefore also to equity but not to capital value and thus no depreciation.

Bottom line is that the fancy sheltering you suggest doesn't exisit with the leased buses.

I haven't ran depreciation numbers, but the only reason it would make sense to lease busses would be if the lease cost is greater than the depreciation. That would mean more expenses per year which can then be reversed when they acquire the busses cheaper. They also don't have to support the capital for leased busses in the meantime (which means less distributions to be paid, which aren't tax deductibles).