X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

In 1993, Cisco Systems Inc. reported net income of $172 million on revenues of $649 million. At the time, it employed about 1,000 workers, but foresaw its headcount ballooning as the company embarked on a string of acquisitions that would create the telecom behemoth it is today. To accommodate that growth, Cisco began an office-space expansion that year and financed it with synthetic leases in order to preserve cash and leverage for its upcoming M&A. Destined to become all the rage in the 1990s, synthetic leases are off-balance sheet financial tools that unload debt to special-purpose entities, or SPEs. Their purpose: to allow high-growth, but cash poor or below investment grade concerns to get the use of sizable amounts of relatively inexpensive capital without hurting their debt to equity ratios.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2019 ALM Media Properties, LLC. All Rights Reserved.