| ▲ | harry8 11 hours ago | ||||||||||||||||
>Well technically they don’t own the debt Channelling the 1980s for off-balance sheet financing 101. From an economic perspective there is zero difference between borrowing to buy an asset and entering into a non-cancellable long term (equivalent to its economic life) lease for the asset. The first option causes an asset and a liability on the balance sheet, affecting debt ratios that appear in financing contracts and so on. The second does not appear on the balance sheet. You pay every month, like it or not. You call it interest or you call it a lease payment. You need it off balance sheet for reasons, investment bankers will structure that to make it happen for a fee. Technically, from an economic perspective, it's debt. | |||||||||||||||||
| ▲ | throwup238 11 hours ago | parent | next [-] | ||||||||||||||||
> Technically, from an economic perspective, it's debt. Isn’t the important difference that it doesn’t trigger bankruptcy on default? Economically it might not be that different but it has some significance legally because the courts have some fast tracks that trigger bankruptcies (IANAL but that’s my layman’s understanding). If they “default” in this case it will lead to lawsuits that they will almost certainly lose but in the mean time they kick the can down the road hoping to recover on general economic headwinds like lower interest rates. IMO the risks are obviously correlated here but I’m betting short term incentives drove this mess. | |||||||||||||||||
| |||||||||||||||||
| ▲ | blitzar 8 hours ago | parent | prev | next [-] | ||||||||||||||||
tbh this is only novel for the tech companies because they have never really had these types of product lines or unit cost structures before. a sass and brick and motor retailer scale very differently. | |||||||||||||||||
| ▲ | vasco 11 hours ago | parent | prev [-] | ||||||||||||||||
This is not true at all, leases appear on balance sheets. It's not the 80s anymore See Apple's FY2025 10-K, the leases are in page 42 under "Lease-Related Assets and Liabilities", which shows: Operating leases - Other current liabilities: $1,579 million - Other non-current liabilities: $10,911 million Finance leases - Other current liabilities: $538 million - Other non-current liabilities: $692 million Total lease liabilities: $13,720 million https://s2.q4cdn.com/470004039/files/doc_financials/2025/ar/... | |||||||||||||||||
| |||||||||||||||||