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Wednesday, March 10, 2004

TODAY'S EQUIPMENT LEASING HEADLINES

"The Government's 'Abuse' of U.S. Leveraged Leasing" "Bank of America, FleetBoston Merger OK'd" "US Airways, a 'Survivor,' Once Again Struggles to Survive" "Optimistic View of 2004 Farm Equipment Sales" "CIT Group Sees Completing Changes to Tax Acctg Sys by 3Q" "Am Ex Business Finance to Provide IT Financing for SAP Small and Midsize Business Customers" "Electro Rent Corporation Acquires QuickShip Disaster Recovery From CIT" "ELA National Funding Exhibition—40+ Funding Sources in ONE PLACE, Ready to do Business!" "Register Online Now for the ELA Large Ticket Conference! " "Survey of Industry Activity questionnaires are available!"

TODAY'S EQUIPMENT LEASING NEWS

"The Government's 'Abuse' of U.S. Leveraged Leasing" BNA Daily Tax Report (03/10/04)No. 46, P. J-1 ; Riskas, Dean Thomas In this opinion piece, Dean Thomas Riskas, a partner with Trinity Advisors Inc., argues that the federal government's proposal to ban or restrict leveraged leasing deals is either misinformed or politically motivated and should be halted in favor of a greater compromise between government and industry officials. The Treasury Department and Senate have said certain deals between local governments and leasing companies are abusive tax shelters for the lessor that reduce federal revenue. However, Riskas asserts, lessors do not avoid paying federal taxes, but rather defer payments through depreciation deductions that have been authorized by the Tax Code as part of the government's effort to encourage capital investment. Over the lease term, the lessor does pay substantial taxes on its profits, but with a reduced corporate tax rate that allows the company to invest some of its profits in activities like job creation and equipment purchasing that have long-term economic benefits for the nation as a whole. In addition to these benefits, industry data also shows that, contrary to what the Treasury is reporting, the benefits received by the lessee in the disputed leasing deals usually outweigh any losses to federal revenue. Riskas notes that accounting and reporting requirements specified by the industry and the Internal Revenue Service are already in place to ensure that regulators are aware of a lessor's activities regarding leveraged leases. Rather than banning these transactions altogether, the Senate and Treasury should engage the industry in discussions about the deals to determine if and how legislative changes should be made. (Link to Source/Publication)

"Bank of America, FleetBoston Merger OK'd" Associated Press (03/09/04) ; Gordon, Marcy Having cleared the last regulatory hurdle, Bank of America and FleetBoston Financial must now seek shareholders' approval for their $47 billion merger. Following approval by the Justice Department and the Federal Trade Commission, the Federal Reserve's board of governors voted 6-0 to approve the merger of the two banking companies to create what will be the nation's third-largest bank, with $1 trillion in assets. Although the merger has been criticized by some consumer advocates who say it will endanger small local banks and lead to more predatory lending, in the merger review the Fed said the new bank, which will be called Bank of America Corp., would not threaten competition. Bank of America says the merger will give consumers more choice of ATMs, branches, and banking products, and to reassure customers, the bank has said it will invest $750 billion in community lending and investment over the next 10 years. (Link to Source/Publication)

"US Airways, a 'Survivor,' Once Again Struggles to Survive" Wall Street Journal (03/10/04) P. C1 ; Carey, Susan Less than a year after emerging from bankruptcy protection, US Airways appears to be in financial crisis again. The carrier owes its undoing to several factors, including miscalculations about the airline industry's ability to rebound from 9/11 and the expected failure of larger competitors to match or outperform the cost savings US Airways amassed in bankruptcy. US Airways has also seen its market share take a hit from the expansion of discount airlines. These and other factors have helped fuel speculation that US Airways will soon seek bankruptcy protection from its creditors. This assumption is based on the fact that US Airways is in danger of violating terms of its $1 billion, government-backed loan; the carrier has already tapped Morgan Stanley to help it liquidate its assets if circumstances dictate. US Airways is also perilously close to losing regional-jet financing from General Electric (GE). The future of the airline now hinges on the success of negotiations with the federal board that supplied $900 million of guarantees to back the $1 billion bankruptcy-exit loan. Terms of the loan agreement need to be restructured in order for US Airways to remain in compliance with the financing contract. US Airways has also asked GECAS about scaling back its order for regional jets to alleviate its cash-flow burden and lower GE's exposure to the airline. (Link to Source/Publication)

"Optimistic View of 2004 Farm Equipment Sales" Aberdeen American News (03/09/04) P. 53 The strengthening U.S. agricultural economy paints a brighter picture for farm equipment dealers in 2004, with sales closing strong last year and an ongoing demand for new equipment, according to Iowa-Nebraska Equipment Dealers Association executive vice president Andy Goodman. He says that higher prices for agricultural commodities are spurring more demand for equipment, and the prices are due to a low world farm commodity supply and higher export demand. Changes in tax laws to permit faster depreciation of equipment prompted some end-of-year purchases, with sales of smaller tractors remaining strong. Goodman says that dealers are working on finding good financing programs for their customers, and AgDirect relationship officer Dan Takle says that low interest rates helped sales last year. Takle adds that producers should examine purchase and lease arrangements, given the tax implications, and notes that the used equipment market should be good this year, with AgDirect willing to put together leases on major-brand used tractors. Leasing can be a better alternative than purchasing, Takle says. Leases require lower payments than financing, they allow tax deductions in some circumstances, and they require no capital investment. (Link to Source/Publication)

"CIT Group Sees Completing Changes to Tax Acctg Sys by 3Q" Dow Jones Newswire (03/09/04) ; Enrich, David CIT Group Inc. has announced that the second or third quarter of 2004 should see the completion of its tax-accounting system overhaul and the fixing of a deficiency related to CIT's calculation of deferred tax assets and liabilities. CIT's annual report states that it has built processes to prepare a tax basis balance sheet, and is still working on quality control, proof, and reconciliation processes. The company says it may have to reclassify some of its deferred tax assets and liabilities, but has not said whether this will affect its financial results. The report apparently ties the deficiency to Tyco International's acquisition of CIT in 2001. (Link to Source/Publication)

NEWS FROM ELA

"Am Ex Business Finance to Provide IT Financing for SAP Small and Midsize Business Customers" NEWTOWN SQUARE, Pa. Mar. 9, 2004 SAP America, Inc., a subsidiary of SAP AG (NYSE: SAP), today announced an important extension of its partnership with American Express, designed to make it easier than ever for small and midsize businesses to have access to the world's leading software solutions. Under the agreement, American Express Business Finance Corporation will provide business leasing solutions to SAP® Business One and mySAP? All-in-One customers in the United States using its Internet-based product called ExpressFinancing. For more on this story, go to http://www.elaonline.com/news/MembersOnly/news_report.cfm?id=4922 "Electro Rent Corporation Acquires QuickShip Disaster Recovery From CIT" VAN NUYS, Calif.--(BUSINESS WIRE)--March 10, 2004--Electro Rent Corporation (Nasdaq:ELRC) today announced its entry into the business continuity/disaster recovery market with its acquisition from a unit of CIT (NYSE:CIT) of the contracts that comprise the unit's quick-ship services business. Terms of the transaction were not disclosed. For more on this story, go to http://www.elaonline.com/news/MembersOnly/news_report.cfm?id=4924 "ELA National Funding Exhibition—40+ Funding Sources in ONE PLACE, Ready to do Business!" “Surf’s Up” 2004 ELA National Funding Exhibition April 21-22 Fairmont Hotel, Chicago The tide of your business is rising. In order to ride it, you need capital from a variety of sources. The ELA National Funding Exhibition has those sources—more than 40 of them—in one place, at one time! The Funding Exhibition is the most efficient and effective way to meet and do business with funders looking to invest in leasing. Check out these Funding Sources: ACC Capital Corporation All Points Capital Corp. Bank of the West Cherry Creek Capital Partners, LLC CIT Technology Financing Cobra Capital, LLC Comerica Leasing Corporation Commonwealth Capital Corp. The Debt Exchange Emigrant Business Credit Corporation Equilease Financial Services, Inc. Excel Bank, N. A. Fifth Third Leasing First Eagle National Bank Fuyo General Leasing (USA) Inc. GE Commercial Finance GE Commercial Finance-Vendor Financial Services ICX Corporation IFC Credit Corp. Information Leasing Corp. Lakeland Bank LaSalle National Leasing LFC Capital Marcap Corporation MB Financial Bank, NA ORIX Financial Services, Inc. Pentech Financial Services, Inc. People’s Capital and Leasing Popular Leasing USA Pullman Bank & Trust Company RBS Lombard, Inc. Rockwell Financial Group, Inc. SBC Capital Services Silver Mark Capital (div of Sterling Bank) SunTrust Leasing Corporation TCF Leasing, Inc. Tokyo Leasing (U.S.A.) Inc. U.S. Bancorp Equipment Finance Inc. US Bancorp Manifest Funding Services Wells Fargo Equipment Finance, Inc. Wells Fargo Foothill, Inc. If you haven’t registered, you can do it TODAY, and schedule appointments with these Funding Sources in advance online at the ELA web site http://www.elaonline.com/events/2004/FundExHome.cfm Simply follow the instructions. It’s the Fastest and Easiest way to get the best appointments with Funding Source Exhibitors. Don’t Wait! Appointments are filling up fast! "Register Online Now for the ELA Large Ticket Conference! " ELA members can now register online for the annual Large Ticket Conference, scheduled for April 25-27 at the St. Regis Monarch Beach Resort & Spa in Dana Point, California. The ELA Large Ticket Conference has become the premier event for large ticket equipment lessors. The high quality sessions and the extensive networking opportunities help attendees become better positioned to prepare for the future. 2004 Program highlights include: find out how your peers are preparing for a changing large ticket landscape; a great line up of speakers, including former co-host of CNN's MoneyLine News Hour and an astute political analyst; impacts of evolving tax, legal and accounting changes on large ticket lessors; emerging marketing opportunities and much more! To make your hotel reservations, please call 949-234-3200 prior to the cut-off date of March 23, 2004 in order to receive the conference rate of $350 single/double occupancy. Let the clerk know you will be attending the ELA Large Ticket Conference to obtain this special rate. For planning purposes, the Conference begins with a 6:00 pm opening reception on Sunday, April 25 and ends with a reception on Tuesday evening, April 27. If you are planning to play golf on Sunday morning, you will need to be at the hotel a little earlier. For complete conference details, please go to: http://www.elaonline.com/events/2004/largeticket/index.cfm "Survey of Industry Activity questionnaires are available!" It’s out! The 2004 ELA Survey of Industry Activity (SIA) questionnaires have been e-mailed! If you did not receive your Survey questionnaire, please go to http://www.elaonline.com/IndustryData/AnnRpts.cfm#SIA to download your copy. Are you on the fence about participating? Being a part of the SIA is easier than ever. Now, the questionnaire is available in Excel spreadsheet format. In addition, we can e-mail you a 2001 version of the Survey of Industry Activity Report to see the types of metrics available—all at the touch of a button. In return for your participation in this year’s 2004 ELA Survey of Industry Activity, you will receive a FREE copy of the results and FREE access to the Interactive Survey of Industry Activity, which allows you to perform customized benchmarking based on selected criteria. Also, participants receive a customized Individual Company Data Sheet that displays their company’s data and provides rankings vs. their peer group and respondents overall. Contact Bill Choi at 703/516-8380 or BChoi@elamail.com if you have any questions.