Input/Output, Inc.

Client Situation

Input Output, Inc.’s newly elected chief financial officer had worked with Studley in a former financial position with another publicly traded company. Studley was asked to facilitate the restructuring of a capital lease that no longer met the client’s needs. After assembling a strategic plan, Input Output, Inc. retained Studley for the analysis of its 280,556-square-foot corporate campus lease restructure in Stafford, Texas.

Consideration and Analysis

The initial assignment involved identifying Input Output’s ability to reduce the balance sheet of a capital lease with more than nine years remaining to term. Input Output had entered into a 12-year sale-leaseback arrangement at a time when the company was in a precarious financial position under the previous management team. The resulting lease structure amounted to a high rental and a failed sale-leaseback with a capital lease treatment based on generally accepted accounting principles.

Result

Studley worked with Input Output, Inc.’s Chief Financial Officer Mike Kirksey and his accounting team to structure a "landlord swap" resulting in an operating lease with moderate cash and income statement savings. The new operating lease eliminated more than 17 million dollars from Input/Output's balance sheet.