Note 19. Occupancy Expense and Information Systems and Communications Expense

Occupancy expense and information systems and communications expense include expense for depreciation of buildings, leasehold improvements, computers, equipment and furniture and fixtures. Total depreciation expense for the years ended December 31, 2011, 2010 and 2009 was $368 million, $373 million and $380 million, respectively.

We lease 1,025,000 square feet at One Lincoln Street, our headquarters building located in Boston, Massachusetts, and a related 366,000-square-foot underground parking garage, under 20-year, non-cancelable capital leases expiring in September 2023. A portion of the lease payments is offset by subleases for 153,390 square feet of the building. In addition, we lease approximately 362,000 square feet at 20 Churchill Place, an office building located in the U.K., under a 20-year capital lease expiring in December 2028, with the option to cancel the lease after the first 15 years. As of December 31, 2011 and 2010, an aggregate net book value of $565 million and $606 million, respectively, related to the above-described capital leases was recorded in premises and equipment, with the related liability recorded in long-term debt in our consolidated statement of condition. Capital lease asset amortization is recorded in occupancy expense in our consolidated statement of income over the respective lease term. Lease payments are recorded as a reduction of the liability, with a portion recorded as imputed interest expense. For the years ended December 31, 2011, 2010 and 2009, interest expense related to these capital lease obligations, reflected in net interest revenue, was $43 million, $44 million and $47 million, respectively. As of December 31, 2011 and 2010, accumulated amortization of capital lease assets was $273 million and $230 million, respectively.

We have entered into non-cancelable operating leases for premises and equipment. Nearly all of these leases include renewal options. Costs related to operating leases for office space are recorded in occupancy expense. Costs related to operating leases for computers and equipment are recorded in information systems and communications expense.

Total rental expense, net of sublease revenue, amounted to $232 million, $241 million and $230 million for the years ended December 31, 2011, 2010 and 2009, respectively. Total rental expense was reduced by sublease revenue of $12 million for the years ended December 31, 2011 and 2010 and $17 million for the year ended December 31, 2009.

The following table presents a summary of future minimum lease payments under non-cancelable capital and operating leases as of December 31, 2011. Aggregate future minimum rental commitments have been reduced by aggregate sublease rental commitments of $32 million for capital leases and $19 million for operating leases.


(In millions)	Capital Leases			Operating Leases		Total
2012	$	68		$	237	$	305
2013		68			207		275
2014		68			182		250
2015		67			132		199
2016		71			96		167
Thereafter		647			275		922

Total minimum lease payments		989		$	1,129	$	2,118

Less amount representing interest payments		(327	)

Present value of minimum lease payments	$	662