Leasing (and equipment leasing) obligations do appear on the balance sheet, part as short term and part as long term, in 10Q they even detail year by year for about 5 years and then the total thereafter. What is, IMO, less than Kosher, is when the leasing is from an "affiliate". The deal is typically that the Chairman, or a family member or trust, borrows from the company the "down payment" (either pre or post construction) for the facility and mortgage it (to a "friendly bank"). The company then repays the mortgage (and some "fair profits"????) as lease payments to the Chairman, and after 5 to 10 years, the Chairman owns the property clean and clear, has repaid the debt to the company (or the company went broke, like GX) and of course continues and collect the lease payments. It is all "legal' and structured as "arm length" transactions, but you and I would not be able to walk into a Qwest, or a GX and propose a partnership to which they will loan us the "down payment" and then lease from us those facilities.... In my book, that is the moral equivalence to thievery. The fact that it is fully reported does not make it less so. The fact that that partnership has no funds "at risk", is probably illegal, but I am sure lawyers find ways around that as well.
Hey, I have even seen management doing floorless with their own companies (stealing it slowly from the stock holders), and for what, they loan the company an outrageous salary that they pay themselves and the loan is a floorless convert one (TSIG and the old CAFE are examples of that). That is crookery as well.
Zeev |
