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