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Technology Stocks : General Lithography
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To: TI2, TechInvestorToo who wrote (1005)5/27/1998 11:03:00 PM
From: Crossy   of 1305
 
OK,
if they do a leasing, then they can "time" the leasing payments with contractual payments due when revenue comes in, not before. An option agreement with up-front payment makes this even better. Don't know if leasing always has to be on-balance but I don't think so. So they can "model" their depreciation and synchronize payments with cashflow. The upfront payment they would do with cash - everything would be asset-neutral <g>. When the thing starts to get in full-production (i.e. revenue comes in -> top line effect) they would exercise the payment option. I don't know whether this is possible but if it were that would be the way I would be structuring the deal. Problem here is the linear-depreciation artefact which is totally unrelated to the usage pattern. However I'm not accustomed to FASB rules and the like so this might not work in US accounting context. Anyway it looks good to me..

regards
CROSSY
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