Tuesday, June 13, 2006
Headlines--- Classified Ad---Syndicator ######## surrounding the article denotes it is a “press release”
---------------------------------------------------------------- Classified Ad---Syndicator
Silver Decoy Winery, Hightstown , NJ * Syndicator Overland Park , KS For a full listing of all “job wanted” ads, please go to: To place a free “job wanted” ad, please go to: *http://www.silverdecoywinery.com/ ---------------------------------------------------------------- FASB Launches Review of Accounting for Leases AccountingWEB.com - The Financial Accounting Standards Board (FASB) has begun reviewing its guidance on one of the most complex areas of off-balance sheet reporting, accounting for leases, Chairman Robert Herz told Forbes. The Securities and Exchange Commission (SEC) had requested that FASB review off-balance sheet arrangements, special purpose entities and related issues in a staff report issued in June 2005. The most prominent topics for review were pension disclosure and accounting for leases. Having issued its Exposure Draft to Improve Accounting of Pensions and other Postretirement Benefits, FASB is now considering moving lease obligations from the current footnote disclosure to the balance sheet. But the sheer number of rules and regulations that relate to leases – hundreds, according to Business Week – offers experts plenty of opportunities to keep disclosure off the books and presents FASB with an enormous challenge. Companies are currently required to record future lease obligations in a footnote, but actual rent payments are deducted in quarterly income statements. Approximately 10 percent of leases are already disclosed on the balance sheet as liabilities because the company can purchase the equipment at the end of the lease, and therefore the lease is treated as a loan, or because lease payments add up to 90 percent of the value of the leased property. Robert Herz says, according to Business Week, that “cookie-cutter templates” have been created to design leases so that they don't add up to more than 89 percent of the value of the property. And to add to the complexity, the AP says, if the contract describes a more temporary rental-type arrangement, it can be treated as an operating lease and recorded in the footnote. Leasing footnotes do not reveal the interest portion of future payments and require the analyst or investor to make assumptions about the number of years over which the debt needs to be paid, the AP says, as well as the interest rate the company will be paying. David Zion, an analyst from Credit Suisse told the AP that many professionals interpret the footnotes by multiplying a company's annual rental costs by eight. Thomas J. Linsmeier, recently named a member of the FASB, said that the current rule for accounting for leases needed to be changed because it sets such specific criteria. “It is a poster child for bright-line tests,” he said, according to the New York Times. The SEC requested the review it said in a press release because “the current accounting for leases takes an “all or nothing” approach to recognizing leases on the balance sheet. This results in a clustering of lease arrangements such that their terms approach, but do not cross, “the bright lines” in the accounting guidance that would require a liability to be recognized. As a consequence, arrangements with similar economic outcomes are accounted for very differently.” Finding a way to define a lease for accounting purposes presents additional problems. Some accountants argue that since the lessor does not own the property and cannot sell it, the property should not be viewed as an asset, Business Week says. Others say that the promise to pay a rent is equal to any other liability. Of 200 companies reviewed by SEC staffers in 2005, 77 percent had off-balance-sheet operating leases, totaling about $1.25 trillion, the Wall Street Journal reported. Among the companies with the biggest lease obligations are Walgreen Co. with $15.2 billion, CVS Corp with $11.1 billion and Fedex Corp. with $10.5 billion, the AP reports. Walgreens owns less that one-fifth of its store locations and leases the rest. Fedex leases airplanes, land and facilities. Robert Herz, in an editorial response in Forbes to Harvey Pitt, former SEC chairman, acknowledged that FASB's current projects, including the review of lease accounting, could generate controversy. But he says that the complexity and volume of standards impedes transparency, and that the FASB is working jointly with the IASB to develop more principles based standards. “Complexity has impeded the overall usefulness of financial statements and added to the costs of preparing and auditing financial statements – particularly for small and private enterprises – and it is also viewed as a contributory factor to the unacceptably high number of restatements,” Herz writes in Forbes. Herz does not expect the new rules to be completed before 2008 or 2009, Business Week says. ----------------------------------------------------------------
“Hot Leasing talk” in Baltimore by Allan Levine, Chief Operating Officer
The Eastern Association of Equipment Lessor's Baltimore-Washington chapter event was a “rockin” affair Thursday, June 8th. The regional gathering took place at Obrycki's crab house in downtown Baltimore . There were well over 100 registered leasing professionals eating those hot spicy Baltimore steamed crabs. When the guests were not eating, most had drink in hand and were doing their best lease networking. Nancy Pistorio, EAEL President, welcomed everyone and spoke a few minutes about EAEL's recent resurgence, popularity, and upcoming events. Co-Hosts were Dennis Horner of The Equipment Leasing Company, Bruce Winter of FSG Leasing, and Nancy Pistorio of Madison Capital. Some people seen were ELA incoming President, Valerie Hayes of Brandywine Capital; Ed Cipro, US Bank; Bob Polack, Butler Leasing; Carl Anderson, M & T Bank; Katherine Norendahl, Bank of the West; Donna Wesemann, Susquehanna Patriot Commercial Leasing; Mike Bennie, Marlin Leasing; Anthony Fantauzzi, All Points Capital and many other industry leaders. Consensus chatter about the economic environment as it pertains to leasing was, “if you don't know we are in good times, take the blinders off”. Also, one could hear chatter about the rising interest rate environment and customers need to understand that ridiculously low rates are not around any longer. Leasing is looking better than ever.
Allan Levine, Bill Cowden, Lisa Randle, Lynn Logan
Alison Pryor, Nancy Pistorio, Lisa Randle, Lynn Logan
Lisa Randle, Nancy Pistorio, Allan Levine, Lynn Logan ---------------------------------------------------------------- Classified Ads---Help Wanted Account Executive
Jr. Analyst
Operations Manager
VP-Manager of Equipment Lease Division
---------------------------------------------------------------- Bulletin Board Complaint
The role of Leasing News is to see if a complaint can be resolved between the parties. When it cannot, the next step is to consider if it is a legitimate complaint for the Leasing News bulletin board. Leasing News does not state who is right or who is wrong, but tries to present both sides fairly and leaves the matter for each reader to decide the merits of the complaint. This one is from Phasset USA Inc. dba Alpha Granite, Austin , Texas . He sent in a 35 page fax including a cover letter. After reading it was sent by fax for a response. From Richard Baccaro: "I have reviewed the customer's complaint, and I am satisfied that AEF did exactly as we approved in writing. "AEF closes approximately 400 transactions per year, and has not had a customer compliant to date since our inception; which is something that we are very proud of. We take our credibility in the marketplace seriously and believe this complaint to be more of a semantics issue rather than a leasing issue. The Lessee submitted an application for credit in the amount of $189,500 on or about 1/19/05 "A. On 2/21/05 AEF's Proposal dated 2/18/05 was accepted by the Lessee; with a finance amount of $170,550 (IRR of 12.85% including advance payment) "B. On 2/25/05, our funding partner MFR rejected the proposed finance amount of $170,550 and asked for a larger down payment. "C. On 2/28/05 AEF faxed a lease Approval with the new terms and conditions including a larger down payment reducing, in effect the financed amount to $151,600. (IRR of 11.69% on the new amount, at lower interest rate, including advance payment) "D. On 3/1/05 the Lessee accepted the Approval "E. The lease commenced on or about June 2005 with MFR, as approved." Sincerely, Richard A. Baccaro The complaint from Denis Phocas, CEO, Phasset USA Inc dba Alpha Granite, Pflugerville, Texas concerns the third proposal, dated February 28, 2005, not the first proposal, and what transpired during the course from the first proposal to the third proposal, and the making of the contract with Machinery Finance Resources, Farmington, CT.; specifically $7,400. AEF Proposal #1 called for a 62 month lease at $3,700 plus sales tax with two payments in advance. There is a sentence in it that also states, "All money paid to American Equipment Finance is non-refundable." http://leasingnews.org/PDF/AEF1.pdf "AEF's policy is to refund 100% of a customer's deposit when we fail to secure financing for a client. We have never, and will never keep monies when we cannot provide financing….unlike many companies in the industry. However; we do not refund or re-negotiate terms once all parties agree to move forward, and the transaction is funded as approved which is the case with Alpha Granite." Richard A. Baccaro Proposal #2 is a fax from Steve Shavazian at AEF stating "CNC Lease Approval." Part of the fax states: "This is a much better approval than originally proposed and benefits you in the long run. "a. The bank lowered your monthly payments $500 per month saving you approximately $30,000.00 over the 60 month period (a great savings.) "b. The bank does require an additional 10% equity into the deal. A total down payment to Brembana of $37,900 (20) of which you have already paid $18,950." http://leasingnews.org/PDF/AEF2.pdf At this point, Denis Phocas states he thought AEF was the leasing company who made the decision, but was going through their "bank." It is after the third proposal he discovers or realizes that AEF is not the provider of the funds, but a broker on the transaction. The Alpha Granite complaint centers around the third proposal they were asked to sign: "Rentals: The lessee will make 62 payments as follows: 1 @$7400 (Already paid) http://leasingnews.org/PDF/AEF3.pdf "On February 28, 2005 I signed a Lease Approval indicating that I agreed and accepted the terms. "Thereafter we were told to deal with MFG (Machinery Finance Resources) who sent a complete lease to us to sign. Please note that we were never told at any time that we were being referred to another leasing company. It was always referred to as 'Our Bank' and therefore we always thought that we were dealing with American Equipment Finance. He states that he was leasing to conserve cash and putting more money down was not his first choice, and he never was told the $7400 was a commission for AEF. There are e-mails and other correspondence to the parties from Denis Phocas, with several responses, as he attempts to find out where the $7400 was applied. http://leasingnews.org/PDF/AEF4.pdf One dated March 24, 2006 from Steve Shabazian at AEF, "Denis the $7400 advance rentals were applied toward the financing in a present value of money calculation to lower your monthly payments, and buy down the rate along with reduced equipment cost. "The 60 monthly payments of $3207.00 are what were remaining on the 62 month term after applying the 2 advances of $7500." http://leasingnews.org/PDF/AEF5.pdf Len Baccaro of AEF e-mail on May 12, 2006: "Denis, we have repeatedly told you that this money was our 'fee' for doing this financing. We have a signed document from you showing that you agreed to pay us this. I have no idea why you keep asking the same question over and over again. Do you have the document?" http://leasingnews.org/PDF/AEF6.pdf In requesting a copy of the document from American Equipment Financing, they replied: “There was one proposal dated 2/16. Then we sent an approval on 2/28 which altered the terms of what was previously proposed. The approval that the Lessee agreed to and executed was how the deal was funded. “ Here are the rest of the documents, other correspondence, plus a copy of the lease itself sent by fax to American Equipment Finance (this is a large download, please have patience): http://leasingnews.org/PDF/AEF_complaint.pdf Leasing News asked each party for a statement. Mr. Bacarro's was at the beginning. This is from Mr. Phacos: “The first lease proposal clearly stated that a down payment of 10% ($18, 950.00) and 2 monthly rentals @ $3700.00 totaling $ 7900.00 to be paid in advance. The lease consisted of 62 monthly payments and stated that there would be 60 payments remaining. Please note Dionissios Phocas signed this but American Equipment Finance (AEF) did not. “There is no mention of any application toward financing in a present value…………… or a ‘fee”………………. in the first agreement. Please note the following comments made below by two different people in the same company referring to the same finance deal. “Steve Shebazian states in writing: "'Denis the $7400 advance rentals were applied toward the financing in a present value of money calculation to lower your monthly payments, and buy down the rate along with reduced equipment cost.' “Len Baccaro states in writing: "'Denis, we have repeatedly told you that this money was our 'fee' for doing this financing. We have a signed document from you showing that you agreed to pay us this. “'There is no agreement that indicates that we agreed to pay a fee for doing the finance!' “After discussions with Steve Shabazian ,it was bought to my attention that it was not possible to finance the machine with a 10% down payment and that 20% was required. He went ahead and quoted me this comment. “‘The bank lowered your monthly payments $500 per month saving you approximately $30,000.00 over the 60 month period (a great savings.)' “It is quite obvious that by applying more equity to the deal (i.e $18,950.00) the monthly payments will automatically lower. By telling me that I am going to save $30 000.00 is by no means factual, this in fact is misleading and inaccurate. “The second lease approval that includes the additional 10% deposit breaks down the rentals as follows: “'The lease will make 63 monthly payments as follows: “Please note that the first 2 payments of $ 3700.00 are not equal to the 60 payments of $ 3207.00. If we are going to define the number of payments that need to be made, we need to make the payments equal or at least we need to define them clearly and consistently throughout the deal. If you look at the whole process from start to finish there is a total lack on consistency. “Finally if we take into consideration the Lease Contract from Machinery Finance Resource we see that this contract has no relation to the lease proposal presented to me from AEF. “Firstly this has a 61 month lease @ $ 3207.00 per month with a $ 1.00 buy out. As I have said before we were instructed by MFR to pay the first installment of $3207.00 in advance and then we had 60 payments left to honor the lease. “I have been repeatedly asking AEF where has $ 7400.00 been applied as this was the first 2 payments of the first lease proposal pertaining to a down payment of 10%. “Machinery Finance Resource has clearly stated that they have not received the $ 7400.00 and clearly state that they are not aware of any monies paid to AEF for this piece of equipment and are not aware of any documentation other than their contract. The contract we have with MFR is a fully comprehensive contract that consists of 61 payments only and not 63. We are not making monthly payments to AEF yet we have signed a Lease Proposal with AEF. Who are we dealing with AEF or MFR? “If AEF was unable to finance our equipment why did they just not tell us that and refer us to MFR. Furthermore if they want to charge us a fee to do this they should have presented this to us in the first place.” ---------------------------------------------------------------- Top Stories--June 5-June 9
Here are the top ten stories most "opened" by readers last week. (1) US Bancorp gets Class Action Suit (2) Texas Judge Socks it to IFC Credit (3) Marlin wows GE's Lynne Wilson as Sr.VP/CFO (4) Brett Butler at Butler Capital (5) Double Tax on Discounting Leases in California (6) Ira's Last Day at ICB/Sovereign Leasing (7) FASB looking to expense leasing costs (8) “Sonny” Monosson Tells All---New Book (9) Sales Makes it Happen - by T. Winders, CLP (10) Lahti 's Second Son Joins the Firm
---------------------------------------------------------------- Why I Became a CLP
This is the eleventh article in a series about the Certified Lease Professional program, explaining why individuals decided to become a CLP, the process, and their reaction to the knowledge and other benefits gained. I entered the Leasing Industry in the fall of 1986 when I joined a company that many of us remember as Copelco Leasing Company. I started out on the very bottom rung of the corporate ladder and was afforded many opportunities to learn various aspects of leasing from operations to sales support, pricing, and treasury functions, (just to name a few). After 10 years with Copelco, I joined American Business Leasing (ABL) as a Regional Broker Sales Representative. It was during this time that my sales manager and mentor, Kathy McGurk encouraged me to take the CLP test. Now I am not the type person who enjoys written tests, but I was seeing a number of my broker customers studying and taking the test to become certified through the UAEL's CLP Program. My decision to do the same was simple. If it was important enough for my current and hopefully future customers to become certified, how could I not participate and provide my customers evidence that I was as committed to and had the necessary knowledge of Leasing and abided by the Code of Ethics that this certification represents as they are. While I felt I was well grounded in my knowledge of most of the areas covered by the test, I was given the option to attend the extended study class prior to taking the test. This class was being sponsored by and held at the Advanta Leasing Offices in Voorhees , NJ . Our instructor was Johnnie Johnson. To this day, I am amazed that we were able to cover as much material as we did in just a couple of days. Our group consisted of a variety of levels of experience and expertise in leasing. The day of the test was brutal to say the least but waiting for the results of the test was worse. Finally our results were out and I had passed! Since that day, I have proudly used my CLP designation. Over the past few years I have worked with several other leasing companies, eventually going back to the roots of my training and experience to work on the operations-documentation side of leasing. Some of the companies that I have worked for were not familiar with the CLP program. I have proudly explained the meaning, qualifying process and significance of the program. I feel that in most cases, having this certification has been beneficial to me in the hiring process as it gave my prospective employers a sense of confidence that I had evidence of having the industry knowledge backing up my resume. I have been a CLP since April, 1999 and have never regretted taking the time to make this commitment. Recent years have seen many changes to the names of the players - mergers, acquisitions and unfortunately far too many closings. If you're fortunate enough to be in love with this industry as I am, I can only say, keep up the spirit and hold to the code of ethics whether you're a CLP or not. If you're not, you owe it to yourself to accept the CLP challenge and make the commitment to yourself and to the Industry. rrester@hitachicapitalamerica.com
--------------------------------------------------------------- Bob Fisher Promoted to Executive Vice President
KINGWOOD, TEXAS , – Main Street Bank, Kingwood, Texas , announced the promotion of Bob Fisher, CLP, to Executive Vice President of the Equipment Leasing Division. Fisher will have responsibility for all the operational aspects of the lease finance division including credit, lease documentation, funding, syndications and the call center. Additionally, he will continue to manage the wholesale originations and the sales offices.
Ex-U.S. Marine Bob Fisher Fisher, a nationally recognized leader in the equipment finance industry, has a 25-year background in credit, sales and management in the equipment financing industry. Beginning his career with the CIT Group/Sales Financing Inc, he has held various sales, credit and management positions throughout his career. Fisher has been active in numerous professional organizations, including UAEL, EAEL, ELA and NAELB, and served as UAEL President in 2002. Fisher was graduated from Trenton State College, Trenton , New Jersey . Tom Depping, Chairman of Main Street Bank stated: “We are very pleased to have Bob on our team as Main Street continues to develop a strong and dynamic, customer oriented equipment leasing group.” Fisher said: “It is a pleasure to be part of Main Street Bank and its dynamic leasing team. I look forward to continuing working in my newly expanded role to bring innovative financial solutions to our customers.” Main Street Bank maintains retail-banking offices in the Houston , Texas market and is a national leader in commercial equipment lease financing. Fisher can be contacted at rfisher@msnbank.com (Mr. Fisher began his career with The CIT Group/Sales Financing Inc. holding various sales, credit and management positions throughout his 20 plus year tenure. He was with New Era in Illinois , who became Datronics, and when they went out of business due to some improprieties of their president, started Fisher-Anderson in Des Moines , Iowa . (When Marcap ended funding and then took of the portfolio, he started Firerock Financial, then moved to Houston , Texas , and joined the management team of Douglas-Guardian. He missed the excitement of “putting deals together,” which his good friend Bruce Lurie understood, and joined Main Street to help put the small -------------------------------------------------------------
News Briefs---- Lehman Brothers 2Q profit up 48 percent Market shrugs off HEL weaknesses, with promise of a nearly $20 billion week Home prices too high in 71 cities Chart: Bank of NY buys TD Banknorth bond business Bank merger spurs scramble for talent Microsoft finds 60% infection rate in PCs Ken Thomson, media baron, Canada 's richest man, dies at 82 ---------------------------------------------------------------
You May have Missed--- Bankers Offer a Plethora of Business Loan Opportunities ----------------------------------------------------------------
“Gimme that Wine” Parker slams Medoc for 'pride, provincial jealousies and greed' Wine Prices by vintage US/International Wine Events Winery Atlas Leasing News Wine & Spirits Page ----------------------------------------------------------------
Today's Top Event in History 1933-In an effort to get the economy going again, the Federal Savings and Loan Association was authorized with the passage of the Home Owners Loan Act. The purpose of the legislation was to provide a convenient place for investment and to lend money on first mortgages. The first association was the First Federal Savings and Loan Association of Miami, Florida, which was charted on August 8, 1933. ----------------------------------------------------------------
This Day in American History 1774- Rhode Island becomes 1st colony to prohibit importation of slaves. The Rhode Island General Assembly in Newport, RI, passed this legislation, banning slave importation: “ No Negro or mulatto shall be brought in to this colony, and in case any slave shall be brought in , he or she shall be, and are hereby, rendered immediately free, so far as respects personal freedom, and the enjoyment of private property, in the same manner as the native Indians.” NBA Finals Championship This Date 1989 Detroit Pistons --------------------------------------------------------------
Baseball Poem The Expert Shirtless, loudly Makes perfect sense. Written by Dan Zamudio -------------------------------------------------------------- SuDoku The object is to insert the numbers in the boxes to satisfy only one condition: each row, column and 3x3 box must contain the digits 1 through 9 exactly once. What could be simpler? |
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Ten Top Stories each week chosen by readers (click here) |
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Top Stories chosen by editor Kit Menkin (chronological order) |
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