Leasing News is a web site that posts information, news, and
Wednesday, March 23, 2016
Today's Equipment Leasing Headlines
Attention Attorneys! New Accounting Rules
Broker/Funder/Industry Lists | Features (writer's columns)
You May have Missed---
######## surrounding the article denotes it is a “press release”
and was not written by Leasing News nor information verified, but from the source noted. When an article is signed by the writer, it is considered a “by line.” It reflects the opinion and research of the writer.
Email Leasing News to a colleague and recommend they subscribe.
New Accounting Rules
Will This Translate to a Bigger Market for Operating Leases?
Accounting Standards Update No. 2016-02 “Leases (Subtopic 842).
You may have noticed the addition of Accounting Standards Update No. 2016-02 “Leases (Subtopic 842)” addressing new accounting standards for leases.
Generally, lessees will be required to recognize most of their operating and finance leases as assets and liabilities on their balance sheets. For lessees with significant amounts of leases, the financial statement implications will be huge. Lawyers for the lessees must understand these consequences.
The Accounting Standard represents years of frustration in that current accounting rules relegate lease treatment to financial statement footnotes. Thus, the accounting standards will cause the lessee to present a clearer picture of its financial condition by including them on the balance sheet. Leased equipment will be measured at lease liability amounts, adjusted for lease prepayments, lease incentives received and lessee’s initial direct costs, while lease liabilities will equal the present value of lease payments.
This new standard (adopted on February 25, 2016) does not take effect until December 15, 2018. However, the lessee can take steps in anticipation of the change:
• Identify All Leases. This seems simple, but leases in large companies are often difficult to figure out and may be embedded in other agreements or service contracts. The lessee’s lawyers should be involved in the identification and compilation process.
• Be Prepared for Creditor or Investor Blowback. Certain GAAP financial ratios may be impacted by this new standard. The lessees should provide disclosure explaining the GAAP change and might want to consider preparing duplicate financials without the GAAP treatment and disclose both to creditors and investors.
• Be Mindful of Regulation FD. Regulation FD provides that when a company discloses material nonpublic information to entities (creditors, investors, or stock analysts), the company must make public disclosure of that information, thus promoting the full and fair disclosure.
• Review Financial Covenants in Loan Documents. Because of the GAAP changes, the new rule may trip default provisions or limit the lessee’s ability to borrow going forward. If that is the case, the lessee should approach the creditor now, as opposed to after the loan is in default. Of course, lessees should review future credit agreements to make sure that a future agreement will not cause a default when the GAAP rules are implemented.
While you are in the process of identifying the inventory of leases, take a peak at your end-of-term options with particular focus on your obligation to notify the lessor about your intent. Calendar the notification dates into the future so that when the notification obligation deadline arrives, you can respond and avoid the evergreen that most leases contain. Be sure to send the notification by email AND by certified mail to assure that the lessor does not "lose" it, say they never received it, and evergreen you anyway.
The bottom line to Update No. 2016-02 is that it will probably negatively impact most lessees, and will be cumbersome for larger lessees to administratively handle. Now is the time to figure out the blowback. This may make operating leases more desirable.
Tom McCurnin is a partner at Barton, Klugman & Oetting
Previous Tom McCurnin Articles:
Companies who notify lessee in advance of lease expiration
As Tom McCurnin suggests above, notifying the intent regarding the
Regardless if the company is not on the list, here are companies who do not use language to confuse, perhaps to deceive, with the result an automatic continuation for an additional twelve months of payments. They do not invoke the twelve months on a $1.00 purchase option or an Equipment Finance Agreement.
In its editorial of June 30, 2011, Leasing News recommends that the equipment lessor send a certified letter with return receipt; however, at this time, the acceptance of the word of the president of the company will be accepted until proven otherwise.
Leasing Industry Help Wanted
Please see our Job Wanted section for possible new employees.
Letters?!?!---We get Email!
“I was pleased to see Alan Mogol on your list of twenty-five most influential attorneys, and he clearly deserves that honor. While I’m not clear on how attorneys are designated for this list, I did find it disappointing that all but 2 of the attorneys on the list are male (in other words, 92%). Alan is certainly deserving, but so are numerous women attorneys.
“It seems to be a continuing challenge for women in the leasing profession to gain due recognition. I hope you will assist in increasing that recognition of its women lawyers in the future.”
(Could not agree with you more.
(I do see more women attorneys in the advertising of firms, but can’t explain why more women attorneys were not nominated in the leasing and finance profession.
(I would like to add, I visited your bio, and if someone had nominated you, you would have certainly made the list. I am sorry we reached the 25 without you. I am also sure there are other women attorneys who would have qualified. Editor).
"Whatever happened to George Ferguson?"
(The vendor used by Sheldon Player, Equipment Acquisition Resources. He lost his business, his house, and is reportedly living on social security. A plea hearing is to take place April 7, 2015 before Honorable Harry D. Leinenweber, Northern District of Illinois. Editor)
"Kudos to Leasing News for recognizing and saluting an icon of the leasing industry, Bob Teichman. I met Bob sometime back in the late 1970s and some of the things you did not include (I presume due to a lack of space) is that Bob is very easy and eager to engage; he enjoys sharing his knowledge, which is vast; he is a raconteur and punster of high quality; and he cares, which is key in a friend. Although I’ve been outside the leasing industry, just peeking in and making a few placements for almost the last 20 years, Bob is one of the people that I truly appreciate the opportunity to still connect with from time to time. I am proud to have called Bob a friend.
"Great career, Bob,"
“The Millerbis family wishes to thank all those who have expressed their sympathies and condolences since
Ben’s passing on February 12th. A private ceremony celebrating Ben’s life was held by the family.”
I hope this email finds you well.
This morning, one of Axis Capital’s customers brought to my attention your article entitled “Problems Continue at Axis Capital”, authored by you. After reading the article in your newsletter, I have several issues with the material and the tone that was printed regarding Axis, that indicate some major misperceptions about our company. I’d like to correct the record with you now and offer you an opportunity to learn more about us.
First, the headline of your article is inaccurate. You state that “Problems Continue at Axis Capital”. This is an odd and surprising conclusion to make, since Axis is coming off a record year in origination volume, net income and headcount. We are currently in the planning stages of constructing a new campus in Grand Island with a goal of becoming an ”employer of choice” in the central Nebraska region. Our momentum continues in 2016 as we have organized a very strong management team to lead the organization to a $1BB company. Our initiatives include diversifying our funding sources, expanding our sales teams and strategic acquisitions.
Secondly, the performance of our securitization is well within the expected losses and delinquency of our ABS compliance. Both metrics are also very close to current industry performance: The Thompson Reuters/Paynet Small Business Delinquency Index reports 31-90 day delinquency in December of 1.20% (Axis’s is only slightly above at 1.9% in its securitization). The same study reports defaults in the period of 1.60% whereas Axis default rate in the period was 1.178%. You had compared the cumulative loss in December to that of June, which could be misleading to the reader. As I am sure you are aware, losses accumulate throughout the year and, at year end, the portfolio is evaluated for any further write downs according to accounting rules. Axis Capital takes a conservative approach to portfolio management and is constantly evaluating the performance of its obligors, industry and economic conditions/forecasts and asset values.
Third, when you published your January article regarding the management changes at Axis, Jacklynn Manning, Director of Marketing, had reached out to you to introduce herself to you as Axis’s media contact. I spoke to Jacklynn this morning and she has heard nothing from you in advance of this article and neither has anyone else in a leadership position at Axis or the parent company. You state: "At this point, no one appears to want to go on the record” and "It appears there is more to the story, but not for publication at this time.” Who did you attempt to contact at Axis? Going forward, I request that you contact Ms. Manning regarding any and all media releases, articles and company statements.
Finally, Kit, I have no issue in anyone reporting the news, accurate data or the right of free speech. However, the tone and slant of your article appears to me to be mean-spirited, with an intent to damage the reputation of a fine organization. It is certainly unfair to our hard working employees, independent originators, vendors, investors, lenders and other important partners. Axis enjoys a very positive reputation in the industry and the future is very bright for all concerned. I would kindly ask that, prior to publishing editorial information relating to Axis, you first contact the company for a written statement.
Axis is positioning itself well for long-term expansion and success in the industry, and we hope there will be future opportunities for us to discuss with you the full range of activities and efforts we are pursuing. We’re proud of our company and think you’ll have reason to be impressed as well when you learn more about it. If you have availability next week, I invite you to participate in a phone call where we can provide you more background and help you understand our story better.
Please feel free to contact me or Jacklynn directly should you choose to discuss further.
(I received the Axis Capital Press Release, which was published in the next edition. I never received a telephone call or email from Ms. Manning, but did receive the Axis Capital Press Release, which was published in the next edition:
Academy for Lease & Finance Professionals
Reid Raykovich, CLFP, Executive Director of the Certified Leasing and Finance Professional Foundation, states the San Francisco Academy for Lease & Finance Professionals has almost sold out!
There are just a few seats left - register today for the best prep class that the industry offers for the CLFP exam.
San Francisco Area
The cost to attend the class is $600 and the cost of the exam is $695. When purchased together, the total is discounted to $1250. Current CLFPs are offered a discounted price of $395 and class attendance satisfies the Recertification requirement.
For information on the San Francisco Area Academy, click here:
The ALFP is a three-day event designed to fully prepare an individual to sit for the CLFP exam assuming the attendee has already self-studied. During the first two days, all of the required sections of the CLFP exam are covered in-depth and on the third day, the exam is offered, but not mandatory.
Students are strongly advised to have read and studied The Certified Lease & Finance Professionals' Handbook prior to attending the class in order to ensure success.
CLFP also has a mentor program. For questions or to register, please contact: reid@CLFPfoundation.org or (206) 535-6281
Lender Finance: How Does the Capital Stack
The latest study from the Equipment Leasing and Finance Foundation dives into the dynamics of the lender finance market place. Researched by The Alta Group, the study determines whether bank appetite to be both a lender and participant in the leasing business has changed since the 2008 crisis. The study also reviews the implications on the equipment finance industry.
The Alta Group researchers were Director George L. Lehnertz, and Director Patricia M. Voorhees.
“Lender finance has been the lifeblood of independent lessors for decades,” Gerard said. “When traditional bank lenders pulled back in the aftermath of the financial crisis, they created an opportunity for other capital providers to support the equipment leasing industry. What that means for independent lessors is that more lenders are attracted to the industry than ever before. The study provides a blueprint for independents wanting to access this capital source.”
It includes different types of lenders or participants, such as traditional banks to newer entrants such as FinTech venture capital, private equity, and to a lesser extent, insurance firms. The emergence of lender finance is the result of the financial recession and banks’ dampened appetite for lending.
Available for free for donors of the Foundation. $300 otherwise:
Why the 4-Inch iPhone SE Could Prove a Hit
by Felix Richter, Statista.com
Apple’s CEO Tim Cook took the stage to announce a couple of additions to his company’s product line-up. Perhaps the most notable device presented during the event was the iPhone SE. While underwhelming at first glance, the iPhone SE looks almost identical to the almost three-year old iPhone 5s, it may turn out to be just the right product at the right time.
First of all there’s the price: The iPhone SE starts at $399 for the 16 GB version, making it Apple’s most affordable iPhone to date. Even the iPhone 5c, which came equipped with inferior hardware from the start, was priced at $549 for the 16 GB version. At this price point, the iPhone SE could prove particularly popular in emerging markets such as India, which Tim Cook named as one of the company’s key growth markets.
Perhaps even more importantly though, the new iPhone fills a gap in Apple’s smartphone line-up that was becoming larger and larger the older the iPhone 5s grew: Despite the undisputed popularity of large-screen smartphones, there are still many people who prefer smartphones that fit inside a pocket and can be easily operated with one hand. As data by mobile analytics firm Mixpanel shows, almost a third of iPhone users still use one of the smaller models. Until yesterday, these people had no option but to cling to their aging iPhones or buy a new one equipped with 2013 hardware (at a very 2016 price). The iPhone SE, which is basically an iPhone 6s in a smaller package, gives these people what they want at a very attractive price.
##### Press Release ############################
$202 Million in Ascentium Capital’s ABS Notes
KINGWOOD, TX, – Ascentium Capital, a national commercial lender providing comprehensive finance solutions, announced that DBRS upgraded and affirmed certain small-ticket equipment lease backed securities issued from Ascentium Equipment Receivables 2015-1 LLC.
As a direct lender, Ascentium Capital LLC specializes in providing a broad range of business financing, leasing and working capital loans. The company’s offering benefits equipment manufacturers and distributors as well as direct to businesses nationwide. Ascentium Capital is backed by the strength of leading investment firms Vulcan Capital and LKCM Capital Group, LLC. For more information, please visit AscentiumCapital.com.
Full Ascentium Equipment Receivables 2015-1 LLC Report:
### Press Release ############################
'Depressed' Dog Stars at Wall
PHILADELPHIA (KTVU) - An image of a melancholy rescue dog, who spent hours hunched over and facing a kennel wall has gone viral, and ultimately helped raise hundreds of dollars to help find him a home.
March, a Pit Bull mix fell into a deep depression, after hopes of leaving his kennel were dashed, according to the ACCT Philly shelter.
Animal care officials there tell KTVU Fox 2 a volunteer began the process of transporting the dog to a rescue facility, only to turn around and return him to ACCT because of a miscommunication.
When shelter officials put March back in this kennel, the dog immediately exhibited signs of depression: He placed himself facing a gray wall and stayed that way for a while.
March is described as being typically a "really sweet, happy, friendly" dog, that loves to snuggle, according to ACCT spokeswoman Ame Dorminy.
An animal control officer brought the stray in after he was found on a back porch of an alley. He adjusted well to the shelter when he first arrived in early March.
But after his return to the kennel, he seemed sad and depressed and then caught a cold which added to his lethargy, according to officials.
Dorminy says in recent weeks, the dog has started bouncing back to his usual self.
On Monday ACCT shelter said it was getting ready to have March sent to a no-kill rescue facility, where officials hope he will be rescued and adopted into a new home.
A fund has been set up by people who want to help March get placed in a home. At last check almost $1,000 was raised.
ACCT Philly is contracted by the city of Philadelphia for animal control services. Because of its high animal intake, it is not a "no-kill" facility.
Dorminy says she hopes March's story and the funds raised will help rescue animals be placed in loving homes.
Adopt a Pet
Leasing News Classified Ads
(Leasing News provides this ad as a trade for investigative
ELFA Reports February was $6.1 Billion, up 2% from January
Goldman Sachs probed in alleged rigging of Treasury market
Lending Club rediscovers its peer-to-peer roots
LendingClub: Tough Road Ahead
Ex-bank officer pleads guilty to looting more than $1M
2016 Private Capital Markets Report
Worst commutes in nation slideshow
SparkPeople--Live Healthier and Longer
Exercising with Your Dog
Chop block outlawed as NFL makes rule changes
49ers in rent dispute with Santa Clara
Marshawn Lynch is too busy to officially retire from the Seahawks
Andrew S. Grove, Intel Chief Who Spurred Semiconductor Revolution, Dies at 79
Silicon Valley Watcher on Andrew Grove Passing
The Judgment of Paris at 40: California wines evolution
Warren Winiarski Looking Back at the Judgement of Paris
Post-Mortem on a Disastrous 2015 Grape Harvest
Wine Country’s unsung hero: Chuy Ordaz
Free Mobile Wine Program
Wine Prices by vintage
US/International Wine Events
Leasing News Wine & Spirits Page
This Day in American History
1775 - Patrick Henry spoke for arming the Virginia militia at St. Johns Church, Richmond, Virginia. He was addressing the second Virginia convention, and delivered his immortal speech against arbitrary British rule: “I know not what course others may take, but as for me, give me liberty or give me death.” Ironically, history has made this the best known, but from a contemporary journal, his most famous remark at the time, the one most repeated, occurred when he uttered: “Caesar had his Brutus; Charles the first his Cromwell; and George the Third may profit by their example.” He was then interrupted and accused of treason, where he responded, “If this is treason, make the most of it.” The speech caused a sensation, being bolder than any speech given that year.
NCAA Basketball Champions:
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?
How to play:
Refresh for current date:
See USA map, click to specific area, no commercials
Real Time Traffic Information
You can save up to 20 different routes and check them out with one click,
Alerts and Flags
Ten Top Stories each week opened the most by readers
- Problems Continue at Axis Capital, Grand Island, Nebraska