Transcript Slide 1

Equipment Lease & Asset Management
Program
Agenda
 Who is First American ?
 The concept of leasing
 The agreement with CCCS
 Getting started
Who is First
American?
 First American is ranked in the top
2% out of 4,200+ leasing firms in
USA
 Currently one of only 17
independents on 2007 Top 100 list
 70% of FAEF business comes from
repeat customers
INC Magazine ∙ 2001
#3 Fastest Growing Private Company
Ranked #3 on the Inc. 500 list of the
fastest growing private companies in the
United States.
INC Magazine ∙ 2002
#104 Fastest Growing Private Company
Ranked #104 on the Inc. 500 list of the
fastest growing private companies in the
United States.
Monitor 100 ∙ 2004 - 2007
#17 Independent Leasing Company
 85% of FAEF revenues are from IT
equipment.
 96% of our customers expressed
overall satisfaction with FAEF
(audited results)
 300 education clients
Out of more than 4,200 leasing firms,
First American’s financial stability and
consistency placed it among the 100
largest leasing firms in the nation.
Equipment Leasing & Finance Association
In October 2007, First American’s
CEO, William H. Verhelle, was
elected to the Chairmanship of
the ELFA, the industry’s premier
trade organization.
Our Customers Come First
The Basics and Benefits of Leasing your
Equipment
Why Lease?
What is an Equipment Lease?
A contract in which one party
(“Lessor”) conveys the use of an
asset to another party (“Lessee”) for a
specific period of time at a
predetermined rate.
Industry Numbers
 There are over 4,200 leasing companies in the U.S.
 The equipment leasing industry is a $220 Billion industry
 The Equipment Leasing and Finance Association has found that
80% of American organizations lease some or all of their equipment
Types of Equipment & Services that can Be
Leased
 Computer hardware and
software
 LAN/WAN hardware and
software
 Network security systems
 Student notebook programs
 Data storage systems
 Telecommunications
equipment
 Video and broadcasting
equipment
 Office, dorm or library
furniture
 Medical and laboratory
equipment
 Document imaging and
archival systems
 Dining hall equipment
 Videoconferencing systems
 Construction services
 Point-of-sale systems
 Consulting and
 Athletic, stadium, and fitness
equipment
implementation services
 Prepaid technical support
Possible Ways to Acquire Equipment
 Pay cash
 Utilize traditional bank financing
 Utilize leasing
Possible Ways to Acquire Equipment
Features
Types of Financing
Cash
Reduces cost of acquisition to less than 100% of the cost of the equipment
Maximizes cash flow (a financing tool with the lowest possible pmt.)
Fixed rental rate for the term
No fees

Simplified account treatment
100% of the payment gets accounted for as an operating expense
Comfortable and convenient
Sometimes less than 100% financing (i.e. down pmt. requirement)
Requires partner guarantees, cross-collateral securitization (i.e. “blanket liens”), and financial covenants
Most assets have a 5-year depreciable life despite having a shorter useful life (P&L “hit”)
No interest expense

Possible Ways to Acquire Equipment
Features
Types of Financing
Cash
Bank
Reduces cost of acquisition to less than 100% of the cost of the equipment
Maximizes cash flow (a financing tool with the lowest possible pmt.)
Fixed rental rate for the term
No fees

Simplified account treatment
100% of the payment gets accounted for as an operating expense
Comfortable and convenient

Sometimes less than 100% financing (i.e. down pmt. requirement)

Requires partner guarantees, cross-collateral securitization (i.e. “blanket liens”), and financial covenants

Most assets have a 5-year depreciable life despite having a shorter useful life (P&L “hit”)

No interest expense

Possible Ways to Acquire Equipment
Features
Types of Financing
Cash
Bank
Leasing
Reduces cost of acquisition to less than 100% of the cost of the equipment

Maximizes cash flow (a financing tool with the lowest possible pmt.)

Fixed rental rate for the term

No fees


Simplified account treatment

100% of the payment gets accounted for as an operating expense

Comfortable and convenient

Sometimes less than 100% financing (i.e. down pmt. requirement)

Requires partner guarantees, cross-collateral securitization (i.e. “blanket liens”), and financial covenants

Most assets have a 5-year depreciable life despite having a shorter useful life (P&L “hit”)

No interest expense


Additional Benefits of Leasing
 Spreads operating expense evenly over the useful life of the asset
 Provides an additional source of capital
 Avoids cross-collateral securitization (i.e. “blanket liens”), and
financial covenants
 Usually won’t affect debt covenants
 Simplified documentation
Equipment Leasing – Technology Advantages
 A structured, systematic way to refresh technology
 Reduces maintenance
 Reduces the burden and cost of equipment disposal
 Online asset management
 Lessor administration of equipment procurement
 A lease can finance maintenance and other service contracts
Two Basic Types of Leases
1.
2.
True Lease
•
aka: Fair Market Value Lease, Tax Lease, Operating Lease
•
Allows for technology refresh
•
Pay for the use of the equipment during its useful life
Capital Lease
•
aka: $1.00 Buyout Lease, Conditional Sale, Finance Lease
•
Predictable cost of ownership
•
For assets with a longer useful life
Benefits to Member Schools
 Our Business Model
 No Fees Lease
 Enhanced Services through CCCS Collaboration
 Complementary CustomerConnect™ Services
 Complementary Liberty Value Recovery™ Services
 Consolidated volume purchasing
Our Business Model
 First American administers your lease from beginning to end
 Consultative approach
 Unbiased with respect to equipment selections
 Master Lease approach
 Single Point of Administrative Contact to interact with all customers:
Eric DeHart
Commercial Account Officer
Gary Stom
Transaction Manager
Greg Campbell
Marketing Manager
No Fees Lease
Enhanced Services through CCCS Collaboration
 Access to volume discounted and creative financing products
 Pre-Negotiated Master Lease
 Consistent Project Manager for all schools
 Trusted source of lease-financing services
 Customized process and lease-financing structures
CustomerConnect™
 Provides confidential online asset management reporting
 Track your leases and leased equipment 24 x 7
 Conveniently export reports into other file formats (.doc, .xls, .pdf )
CustomerConnect™
CustomerConnect™
Assets are listed by location and by equipment type to the serial number level.
Additional information includes term, payment, billing, structure and termination
date. This information can be exported to Excel or .pdf for additional review.
Liberty Value Recovery™ Program
Credit Requirements for a Lease
1.
Three years of year-end financial statements
2.
A current interim financial statement
3.
Any available bank and/or trade references
4.
Agreed-upon proposal
5.
Deposit check
Basic Steps of a Lease
1.
The customer selects equipment and orders the equipment
through its preferred equipment supplier(s)
2.
Upon delivery of equipment, the Lessor sends the final
lease documentation, including a “Delivery Order and
Acceptance Certificate”
3.
Upon return of the signed lease documents, payment is
sent to the customer’s equipment supplier(s) and payments
commence from Lessee.
4.
At the end of a true lease, Lessee can continue to lease the
equipment for short-term periods, purchase the equipment
for its fair market value, or return the equipment
Commencement Types, Lease Deposits & Fees
 Lease Commencement Types:
 monthly
 quarterly
 Lease Deposit:
 Lease proposal specifies how the deposit will be applied
 Lease documentation is consistent on this issue
 Fees:
 None
Tax Indemnification, Notice Requirements & Renewal Periods
 Tax Indemnification:
 Tax law change will not impact lease rate
 Notice Requirement:
 Lease will require notice 90 days prior to the end of term
 Renewal Periods:
 3 month renewal
T&C’s – End of Term Options
 Customizable
 Maximize flexibility
 Additional features available
 3 basic options at the end of the term of a true lease:
1.
2.
3.
Buy
Extend
Return
T&C’s – Customized End of Term Options

Short-term Renewal Periods

Selective Return

Staggered Return

Like-kind Equipment Return (Serial Number Substitution)

Technology Exchange Option

Equipment Return Location/Requirements

Determination of Fair Market Value
Additional Services Offered
 Managing and coordinating vendor progress payments
 Customized billing/invoicing to meet specific client needs
 Pack-and-ship logistical services to simply a client’s equipment
return
 Data cleansing services to ensure the security of confidential client
data
 Online asset management to facilitate simplified lease/asset
management
Types of Equipment & Services that can Be Leased
 Computer hardware and
software
 LAN/WAN hardware and
software
 Network security systems
 Student notebook programs
 Data storage systems
 Telecommunications
equipment
 Video and broadcasting
equipment
 Office, dorm or library
furniture
 Medical and laboratory
equipment
 Document imaging and
archival systems
 Dining hall equipment
 Videoconferencing systems
 Construction services
 Point-of-sale systems
 Consulting and
 Athletic, stadium, and fitness
equipment
implementation services
 Prepaid technical support
Case Studies
 Conway, AR
 Apple and Gateway PCs
 36 month technology refresh
 Nashville, TN
 Lynchburg, VA
 Cisco networking equipment
 Library and dorm room furniture
 Highly customized end-of-term
 Sale-lease-back
 Step-up annual payments
 Capital lease
Getting Started
 Consulting on technology projects
 Customized leasing proposals to fit
your needs
 A great financing solution for your
school’s consideration