equipment lease & asset management program. agenda who is first american ? the concept of...
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Equipment Lease & Asset Management Equipment Lease & Asset Management ProgramProgram
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AgendaAgenda
Who is First American ?
The concept of leasing
The agreement with CCCS
Getting started
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Who is First Who is First American?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
85% of FAEF revenues are from IT equipment.
96% of our customers expressed overall satisfaction with FAEF (audited results)
300 education clients
INC Magazine ∙ 2001INC 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 ∙ 2002INC 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 - 2007Monitor 100 ∙ 2004 - 2007#17 Independent Leasing Company
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.
In October 2007, First American’s CEO, William H. Verhelle, was elected to the Chairmanship of the ELFA, the industry’s premier trade organization.
Equipment Leasing & Finance AssociationEquipment Leasing & Finance Association
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Our Customers Our Customers Come FirstCome First
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The Basics and Benefits The Basics and Benefits of Leasing your of Leasing your
EquipmentEquipment
Why Lease?Why Lease?
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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.
What is an Equipment What is an Equipment Lease?Lease?
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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
Industry Industry NumbersNumbers
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Computer hardware and software LAN/WAN hardware and software Network security systems Student notebook programs Data storage systems Telecommunications equipment Videoconferencing systems Point-of-sale systems Athletic, stadium, and fitness
equipment
Video and broadcasting equipment Office, dorm or library furniture Medical and laboratory equipment Document imaging and archival
systems Dining hall equipment Construction services Consulting and implementation
services Prepaid technical support
Types of Equipment & Types of Equipment & Services that can Be Services that can Be
LeasedLeased
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Pay cash
Utilize traditional bank financing
Utilize leasing
Possible Ways to Possible Ways to Acquire EquipmentAcquire Equipment
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Possible Ways to Possible Ways to Acquire EquipmentAcquire Equipment
Features Types of Financing
CashReduces 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
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Possible Ways to Possible Ways to Acquire EquipmentAcquire Equipment
Features Types of Financing
Cash BankReduces 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
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Possible Ways to Possible Ways to Acquire EquipmentAcquire Equipment
Features Types of Financing
Cash Bank LeasingReduces 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
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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
Additional Additional Benefits of Benefits of
LeasingLeasing
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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
Equipment Leasing – Equipment Leasing – Technology AdvantagesTechnology Advantages
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1. 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
2. Capital Lease• aka: $1.00 Buyout Lease, Conditional Sale, Finance Lease
• Predictable cost of ownership
• For assets with a longer useful life
Two Basic Types Two Basic Types of Leasesof Leases
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Our Business Model
No Fees Lease
Enhanced Services through CCCS Collaboration
Complementary CustomerConnect™ Services
Complementary Liberty Value Recovery™ Services
Consolidated volume purchasing
Benefits to Member Benefits to Member SchoolsSchools
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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:
Gary Stom
Transaction Manager
Our Business Our Business ModelModel
Eric DeHart
Commercial Account Officer
Greg Campbell
Marketing Manager
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No Fees No Fees LeaseLease
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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
Enhanced Services through Enhanced Services through CCCS CollaborationCCCS Collaboration
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CustomerCCustomerConnect™onnect™
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 )
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CustomerCCustomerConnect™onnect™
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CustomerCCustomerConnect™onnect™
Assets are listed by location and by equipment type to the serial number level. Assets are listed by location and by equipment type to the serial number level. Additional information includes term, payment, billing, structure and termination Additional information includes term, payment, billing, structure and termination date. This information can be exported to Excel or .pdf for additional review.date. This information can be exported to Excel or .pdf for additional review.
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Liberty Value Liberty Value Recovery™ ProgramRecovery™ Program
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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
Credit Credit Requirements for a Requirements for a
LeaseLease
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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
Basic Steps of a Basic Steps of a LeaseLease
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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
Commencement Types, Commencement Types, Lease Deposits & FeesLease Deposits & Fees
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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
Tax Indemnification, Notice Tax Indemnification, Notice Requirements & Renewal PeriodsRequirements & Renewal Periods
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Customizable Maximize flexibility Additional features available 3 basic options at the end of the term of a true lease:
1. Buy2. Extend3. Return
T&C’s – End of T&C’s – End of Term OptionsTerm Options
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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
T&C’s – Customized End of T&C’s – Customized End of Term OptionsTerm Options
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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
Additional Services Additional Services OfferedOffered
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Computer hardware and software LAN/WAN hardware and software Network security systems Student notebook programs Data storage systems Telecommunications equipment Videoconferencing systems Point-of-sale systems Athletic, stadium, and fitness
equipment
Video and broadcasting equipment Office, dorm or library furniture Medical and laboratory equipment Document imaging and archival
systems Dining hall equipment Construction services Consulting and implementation
services Prepaid technical support
Types of Equipment & Types of Equipment & Services that can Be LeasedServices that can Be Leased
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Case Case StudiesStudies
Conway, AR Apple and Gateway PCs
36 month technology refresh
Nashville, TN Cisco networking equipment Highly customized end-of-term
Step-up annual payments
Lynchburg, VA Library and dorm room furniture
Sale-lease-back Capital lease
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Getting Getting StartedStarted
Consulting on technology projects
Customized leasing proposals to fit your needs
A great financing solution for your school’s consideration