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. Kit Menkin’s Leasing News www.leasingnews.org Friday, April 5, 2002 Accurate, fair and unbiased news for the equipment Leasing Industry Headlines---- Good-Bye,
Troy Molitor---Sorry to See You Go Leasing News---Classified/Up-Dated Brian Bjella to Fill Troy
Molitor’s Shoes Sunrise
Int. Leasing Terminates Special Purpose Corp. Interpool Secures $500 Million Facility Moody's: Slow Recovery for Commercial
Finance Only 160 Attendees Registered to
Date for Las Vegas Conf. Streamlined Tax Project May Meeting Timeline
of recent events involving U.S. accounting giant Andersen to Lay Off 7,000 in Sale to Deloitte ### Denotes Press Release ----------------------------------------------------------------------------------------------- Monday, 11am, California Daylight Savings Time, www.leasingnews.org/newsmaker.htm “Meet the Leasing News Maker” The formation of the first Leasing Co-Op Live Forum---Ask any question you would like. David Stearns, CEO of American Leasing Alliance MainStreet's Richard Selby, who will serve as interim CEO during the cooperative Here are “Frequently Asked Questions” (open to 100% in PDF) http://www.leasingnews.org/PDFFiles/OWL_FAQ.pdf If you are a broker, a super broker, a banker, an attorney, an association executive, you might want to join the “live chat forum” to learn more. You might hear a question you had not thought of, or a response, you did not consider. ========================================================== Good-by,
Troy---Sorry to See You Go He
follows Don Polfiet...Chris Canavati. Good men, that Manifest did
miss. #####
################################################## USBANCROP. Manifest Funding Services To
All Our Valued Customers, It
is with regret and great anticipation that we announce the following
changes to the Manifest Funding Services management team. Troy
Molitor has resigned his position as General Manager to pursue a career
in the securities industry. Those who know Troy
well are certainly aware of his passion and interest in this
field Troy, Kim and their two children will be relocating to St. Cloud,
MN where he will open a securities office. Troy
has been a leader of both Manifest and the leasing industry over the
past 13 years. In Manifest he held the positions of Regional
Sales Manager, Executive Director of Sales and most recently General
Manager. Within the industry, Troy has been active in
all the associations and he currently sits on the UAEL Board of Directors. Troy will remain active with Manifest over the next
couple of months aiding in the management transition. He will also
he attending the NAELB Annual Conference in Orlando later this month. ( What about Las Vegas? and Chicago?
editor) Brian
Bjella has accepted the position of General Manager of Manifest Funding
Services. For the past four years Brian has helped lead
the sales efforts of Manifest as the Executive Director of Sales in
the eastern half of the United States. Prior to that, Brian was instrumental
in the start-up of’ Stellar Financial Services (currently U.S.
Bancorp Portfolio Services) serving as General Manager of that company
from 1994 to early 1998. Brian
has also been active in the industry associations and currently serves
as the Executive Vice President of’ EARL, Brian brings a diversity
of both operations and sales experience to his new position. A
top priority for Manifest Funding Services will be selecting the replacement
for Brian as Executive Director of Sales in the East. Since
the acquisition of Manifest Funding Services by U.S. Bancorp in September
2000, the company has grown at a rate of 18% annually. In 2001, it was one of the top performing business
units within US Bancorp Equipment Finance Group posting the highest
ROA amongst the units in that division Our
success is primarily a result of the strung relationships we have
developed with our customers throughout the United States. We remain
committed to the independent broker/lessor marketplace and as always
are Focused on Your Success. Thank
you for your continued support, Troy Molitor Brian Bjella Brad Peterson Tom Landmark General Manager Director of Sales Director of Sales Director of Operations ######### #################################### A
perfect segue into the Leasing News Classified ads found
at: http://65.209.205.32/LeasingNews/JobPosting.htm Job
Wanted---free to all those seeking employment Accounting:
Edison, NJ Accounting
and Financial Analysis Manager with extensive skills in Financial
and SEC Reporting, General Ledger Analysis, Budgeting, Forecasting
and Expense Control. Very successful in staff supervision. Email:scoscarelli@earthlink.net
Asset
Management: Nashville, TN Experienced
Asset Manager with construction/ telecom focus. Managed portfolio
of repo & EOL transactions for large leasing companies. 10 years
experience including sales & credit/ collections focus. Email:jambam2000@home.com Asset
Management: Silicon Valley, CA Experienced
Asset Manager with SMT/PCB equipment focus. Managed/sold large ticket
mid- term and EOL transactions with global contract manufacturer and
OEM accounts. Email:boklund9@earthlink.net Collector:
Oceanside, CA Collections
supervisor, experienced with commercial leasing. motivated, good work
ethic, enthusiastic. call (760)941-9209 Email:mantinarelli@yahoo.com Contract
Administrator: San Diego, CA work-at-home
position to perform processing & documentation. 5+ years small
ticket arena, used to handling a 25-30 deal workload. You do the sales,
I'll do the rest. Email:jmccorman@hotmail.com Credit:
Mill Valley, CA Senior
corporate officer with financial services credit background. M and
A, fund raising and workout expertise. Email:nywb@aol.com Credit:
Hayward, CA. Versatile/
creative senior financial executive w/ extensive experience in varied
areas of the commercial lending environment. Strong written/ oral
skills with a results-oriented team-player attitude. Email: daveschultz9@aol.com Finance:
Atlanta, GA Twenty
five plus years experience in middle market lease/ asset based/cash
flow transactions. Heavy banking and credit background, with particular
expertise in structure and negotiation. Email:brown235@bellsouth.net Funding:
Northern, NJ Coordinate
all aspects of financing for leased equipment, prepare necessary documentation
for discounting with banks. Handle renewals of and amendments to lease
schedules. Email:istaub@unicapitalcorp.com Legal:
Chatsworth, CA Managing
attorney for general corporate and financial services law including:
leasing, acquisitions, service agreements, commercial loans, securitizations,
workouts and litigation. Email:SandiDQ@msn.com Operations:
Phoenix, AZ 15
years of increasingly responsible positions as a financial-marketing
manager in commercial leasing, credit, and collections. Extensive
experience in leasing and accounts receivable portfolio management.
Email:williamdoughty@hotmail.com Sales:
Boston, MA Boston,
MA (big Patriots' fan) Senior Sales person, 15 years experience, strong
vendor program background, middle market concentration Email:smillard27@juno.com Sales:
Minneapolis/St. Paul, MN 6+
years experience in small & large ticket leasing. Current customer
database. Seeking a position that will utilize my prospecting, structuring
and presentation skills. Email:golfadm@yahoo.com Sales:
Silicon Valley, CA VP
level Business Development and Sales Manager, well connected in Silicon
Valley. Experienced in major vendor programs on a global basis.Email:
Tadadzn@ix.netcom.com Sales:
Oklahoma City, OK 20
years sales and marketing experience. Aggressive but relationship
selling technique, proven success record, want to work out of home
office, will travel if necessary Email:jammoon@earthlink.net Sales:
Mission Viejo, CA Account
Sales Executive with 10 years of leasing experience looking for company
to bring existing customer base. Email:makelly21@hotmail.com Sales:
Phila, PA Proven
Aggressive Winner w/strong prospecting skills,vendor program exp.
both captive/non- captive,territory mgmt on all levels,remote office
for many years,very adaptable. Email:jppa100@cs.com Sales:
Louisville, KY I
have been in leasing/financing of construction, machine tool, and
mfg equipment for 20+ years. Traveled KY, IN, OH and TN. Email:kyle90@msn.com Sales
Manager: New York, NY I
have over 25 years owning an independent leasing company that specialized
in truck leasing. Tow trucks, Limos, ambulances, tractors, etc.. Email:rfleisher@rsrcapital.com Sales
Manager: Hartford, CT Director
of Equipment Lease Division with credit/collateral evaluation, marketing
& operations experience. Simultaneously coordinated efforts to
develop new vendor business. Email:pkumiega@peoplepc.com Sales
Manager: Atlanta, GA 15
years experience in Small Ticket Vendor Leasing. Managed sales team
for eight years in Copiers, Telecom, IT, Construction, Auto Aftermarket,
etc. Email:jim_acee@hotmail.com Senior
Management: Hicksville, NY Senior
equipment leasing and banking executive with credit, collections,
marketing and operations experience. Background includes development
of new business,risk management and budgeting. Email:FrdA4@aol.com Senior
Management: Irvine, CA Senior
Manager at Enterprise Leasing Software Company. 10 yrs programming,
15 yrs system/ network, and 15 yrs management experience. Working
Experience with 12 Leasing companies. Email:sw_leasing@hotmail.com Syndicator:
Wilmington, NC Ten
years experience/contacts placing debt & equity for middle market
end-users for transactions $75K - $10MM. Can relocate or telecommute.
Email:ccrllc@yahoo.com Help
Wanted ( you must be a member of a leasing association
to advertise) http://65.209.205.32/LeasingNews/JobPostingsWanted.htm Thirty-three
openings, from administrative to credit to operations to
sales and sales manager Outsourcing---Services
available to the leasing industry http://65.209.205.32/LeasingNews/JobPostingsOutsourcing.htm Thirteen Attorneys http://65.209.205.32/LeasingNews/JobPostingsAttorney.htm Three Recruiters---Eight (
These firms belong to leasing associations and specialize in
the leasing industry ) http://65.209.205.32/LeasingNews/Recruiters.htm Other
Internet Posting Locations http://65.209.205.32/LeasingNews/Classified.htm Please
send to a colleague, as we would like to build our readership. To
those who say we only print “gossip,” every one of our predictions has
been accurate. They deny it,
then two weeks later, you get a press release,
carefully written to present only one side of reality. Our readers tell the truth. You get it here first. The
truth. Our information comes from employees, ex-employees, president
of companies ( all sizes), collectors, sales manager, brokers, super
brokers, and recruiters. Leasing
News is the only internet forum for all recruiters who specialize
in the leasing industry. ###### ############################## Brian
Bjella Promoted to SVP, General Manager of U.S. Bancorp Manifest Funding
Services MARSHALL,
MN -— U.S. Bancorp Manifest Funding Services announced today
that Brian Bjella has been promoted to SVP and General Manager of
the Marshall, Minnesota based funding source. Bjella
is a nine year veteran of the leasing business. He started his career as a Regional Sales
Manager, responsible for managing broker/lessor relationships in the
Northwest. In 1994, Brian was promoted to General Manager
of Stellar Financial Services, an industry leader in providing turnkey
lease servicing solutions. Most recently, Brian has served as VP,
Executive Director of Sales for the eastern half of the country. Brian’s
promotion comes on the heals
of Troy Molitor’s decision to pursue a career in the securities
business. “It’s been a wonderful ride with this
organization over the past 13 years. I’m proud of what we’ve
been able to accomplish and will certainly miss all the great people
at Manifest. I have always had a strong desire to pursue a career
in the securities business and felt that now was the right time to
do so. We have a great leader, in Brian, that will take Manifest to
new heights.” - (See him in Las Vegas, Orlando, Chicago, ----and Baltimore?) #### ######################################################## Sunrise International Leasing Corporation Terminates Special Purpose Corporation
GOLDEN VALLEY, Minn., -- Sunrise International Leasing Corporation (SILC), a wholly owned subsidiary of privately held King Capital Corp, today announced that it has terminated its special purpose corporation. This $200 million off-balance-sheet credit facility was established to finance the purchase of equipment that SILC leases to end-users. The company has decided to pay down the outstanding debt using both internally generated funds and currently existing bank lines. In the interest of conservatism, the company has always included the debt of this special service corporation on its balance sheet, despite its off-balance-sheet nature. SILC took this action to avoid any misunderstanding regarding its debt obligations and because of the diminished need for the credit facility. The company also reaffirmed that it expects to pay off all existing debt by the third quarter of 2002, barring any major purchases of additional equipment. About Sunrise International Leasing Corp SILC's business consists primarily of the development of market-oriented vendor programs emphasizing the formulation of customized lease and rental programs for vendors of high technology and other equipment. The lease options offered by the company generally focus on short-term, fair-market-value lease terms. SILC also is a competitive reseller of high-quality used equipment. About King Capital Corp King Capital Corp, established in 1975 and based in Golden Valley, Minn., offers a wide range of leasing options to manufacturers, distributors and resellers through its primary subsidiary, SILC as well as high-availability software through H.A. Technical Solutions, LLC. ### ########################################## ############# Interpool,
Inc. Secures $500 Million Facility
Martin
Tuchman, Chairman and Chief Executive Officer of Interpool commented:
"this financing once again shows Interpool's ability to access
funding based upon the strength of our long-term lease portfolio.
As we continue to grow our business, we are very pleased to be able
to successfully fund our expansion using a financing mechanism based
on secured lending, backed by a predictable stream of cash flow from
long-term leased assets. To obtain this level of investment grade
rating is a tribute to our ability to lease standard equipment which
avoids obsolescence that does not ever become obsolete, on a long-term
basis. This important attribute, combined with the long-term nature
of our commitments from our railroad and shipping customers assures
continued predicable cash flow and helps explain the steady earnings
and dividend payments we are able to produce." ABOUT
INTERPOOL, INC. Interpool,
originally founded in 1968, is one of the world's leading suppliers
of equipment and services to the transportation industry. It is the
largest lessor of intermodal container chassis in the world and a
world-leading lessor of cargo containers used in international trade.
Interpool operates from over 90 locations throughout the world. #### ################################################## ----------------------- Moody's: Slow Recovery for Commercial Finance Moody's
Investors Service, New York, has released its Commercial Finance Industry
Outlook for 2002. In it Moody's says "The environment for commercial
finance continues to be difficult," due to the continued U.S.
economic slump and "unforgiving" capital markets. Over
the course of 2002, however, things should improve for leasing and
finance companies. "As the nascent economic recovery in the U.S.
takes hold," the Outlook says, "commercial finance companies
should regain some strength in their portfolios and profits, thus
quelling some capital markets concerns about the industry." The
report notes that ratings for most commercial finance companies are
stable and likely to remain so. The
Outlook also cites other challenges the industry must overcome, including
"pressure on net interest margins due to wider credit spreads
and rising interest rates, and continued asset-quality stress due
to the post-recession lag effect for borrower credit improvement."
Again, economic recovery should greatly ease these pressures. In
all, Moody's believes the recession will have been positive for finance
companies that remain, with fewer competitors leading to higher margins
and better underwriting. ------------------------ From:
Robert Krause <Robert.Krause@sterlingbancorp.com> Thanks
for telling your readers that Sterling Bank Leasing
is an active small ticket funding source. We were inundated with
both phone calls and e-mails. If
you are going to be at the ELA Funding Exhibit in Chicago please drop
into our booth so we can thank you in person.
Bob
Krause (Sorry,
will not be there, but I am sure many of our readers will be there.
Editor ) -------------------------------------------------------------------------------------------------- Only 160 Attendees Registered to Date Eastern Association of Equipment Leasing and United Association of Equipment Leasing Joint Las Vegas Conference May 2-5 Signed registration at this date is 160, according to three informed sources. Joe Woodley jwoodley@uael.org Last year, on this date, we had 68 people signed up for the Spring educational Conference. Give us a few more weeks to get a better tally. Thank you. Joe From: Bob Rodi drlease@leasenow.com I do not feel embarrassed for the UAEL on this conference. If the numbers are as reported then the UAEL members are supporting the conference in pretty normal numbers for a Spring conference 175 to 225 is a good number on a good year. The most we ever had for Spring was the Palm Springs conference where we had 295 when I was conference chair. It is incumbent upon their conference chair and the EAEL board to incant their membership to attend, given that the UAEL agreed to a generous revenue split based on representations of vigorous participation by EAEL membership" ---- Invitation Previous members of companies who belonged to the Eastern Association of Equipment Lessors or the United Association of Equipment Leasing are invited to attend the Joint EAEL/UAEL Las Vegas Conference from May 2 to May 4,2002 at the "First Timer Rate" of $425. We have found there to be numerous individuals who have been active in the industry with either EAEL or UAEL who are no longer employed or affiliated with a member firm. Anyone falling in this category over the past few years of tough times will be given a one time opportunity to stay involved at a First Timers rate for the upcoming conference.
Please contact:: Joanie Dalton - Chief Operating Officer UAEL - United Association of Equipment Leasing 520 Third Street, #201 Oakland, CA 94607 (510) 444-9235 x27 * Fax (510) 444-1346 joanie@uael.org * www.uael.org ------------------------ --------------------------------------------------------------------------------------------------------------- Streamlined Tax Project May Meeting From: Dennis BrownDBROWN@ELAMAIL.COM The May meeting of the Delegates to Implementing States will be held at the Westin Oklahoma City Hotel in Oklahoma City, Oklahoma on Friday and Saturday, May 17-18, 2002. The meeting begins with lunch on Friday, May 17 and concludes by 4:00 pm on Saturday, May 18. The Streamlined Sales Tax Project expects to take off the month of May. This is a meeting of Implementing States only -- Not the Streamlined Sales Tax Project This Implementing States Meeting is open to Public and Private Sectors The agenda for the meeting will consist of continued work on elements of an interstate sales tax agreement with an emphasis on various governance issues as well as further uniform definitions. There will be a registration fee of $150 for the meeting. The fee will cover lunch on Friday and Saturday, breakfast on Saturday and breaks on both Friday and Saturday. You may register online at <http://www.taxexchange.org/meet/0502sales.taf> A block of rooms has been set-aside at the Westin for Thursday - Saturday nights. The rate is $89 single and $119 double plus tax. You should make your reservations directly with the hotel by calling 800/285-2780 or 405/235-2780. The cutoff date for making reservations is April 23, 2002. Make sure to ask for the FTA Sales Tax Simplification room block. The hotel is located at One North Broadway in downtown Oklahoma City. The hotel is 10 miles (approximately 15 minutes) from Will Rogers World Airport. Airport Express is available outside the center doors of the baggage claim area. No reservations are necessary; vans leave the airport every 8 minutes. To the Westin Oklahoma City, the cost is $10 for the first passenger, $2 for additional passengers of the same party. Vans accommodate up to seven passengers. If you have questions about the agenda of the meeting, contact Graham Williams, National Conference of State Legislatures at Graham.Williams@NCSL.org or telephone him at 202/624-5400. You can also contact the co-chairs of Implementing States, Rep. Matt Kisber rep.matt.kisber@legislature.state.tn.us or Bruce Johnson rbjohnson@taxadmin.org If you have questions about logistics, please contact Harley Duncan at the Federation of Tax Administrators harley.duncan@taxadmin.org or telephone him at 202/624-5890. Timeline of recent events involving U.S. accounting giant By Associated Press A chronology of recent events involving the Arthur Andersen accounting firm: Oct. 22 Enron Corp., one of Andersen's biggest clients, discloses Securities and Exchange Commission inquiry into possible conflict of interest related to company's dealings with partnerships. Nov. 8 Enron revises financial statements for previous five years to account for $586 million in losses. Dec. 2 Enron files for Chapter 11 bankruptcy protection. Dec. 13 CEO Joseph Berardino of Andersen Worldwide, which includes U.S. arm Arthur Andersen LLP, defends Andersen's work for the company to Congress but acknowledges that financial accounting practices must change. Jan. 10, 2002 Andersen discloses in Washington that its employees destroyed ''significant'' number of Enron-related documents. Jan. 15 Andersen fires chief Enron auditor David Duncan. Jan. 17 Enron fires Andersen as auditor. Jan. 28 Berardino insists the firm can survive without a merger and isn't pursuing one. Feb. 4 Andersen hires former Federal Reserve chairman Paul Volcker to chair an independent oversight board with power to make reforms at Andersen. March 14 Andersen indicted by federal grand jury for alleged obstruction of justice for destroying Enron documents. March 22 Volcker urges Andersen's top management to step aside so he can install and head an independent board to try to save company. March 26 Berardino resigns amid fast-growing exodus of clients, overseas partners. April 2 Andersen concedes defeat in effort to merge its non-U.S. operations with those of KPMG after its lucrative Spanish affiliate becomes the latest to bolt to another rival on its own. April 4 Andersen initiates breakup of its U.S. operations, announcing agreement for ''significant'' number of its tax partners and professional to join rival Deloitte & Touche. Aldo Cardoso, chairman of Andersen Worldwide board of partners, named acting CEO succeeding Berardino. Andersen to Lay Off 7,000 in Sale to Deloitte By JONATHAN D. GLATER New York Times Desperately trying to reshape itself, Arthur Andersen is preparing to shed as many as 7,000 employees through layoffs and thousands more through a deal announced yesterday with the rival accounting firm Deloitte & Touche. Deloitte would acquire the bulk of Andersen's tax business, which employs several thousand people, including about 600 partners. The terms of the transaction were not disclosed. The sale, which Andersen said could be completed by the end of the month, is a bitter victory for the firm. It is struggling to rid itself of business lines unrelated to its audit practice without passing on liability for its role in the collapse of the Enron Corporation (news/quote), whose false financial statements it approved. The speediness of the announcement is a sign of the pressure on Andersen to save itself as it battles a criminal indictment, Enron shareholder lawsuits and client flight. "This transaction is fully consistent with our commitment to move quickly on the Andersen reforms initiated by Mr. Volcker," said Larry Gorrell, Andersen's managing partner, referring to the overhaul proposed by Paul A. Volcker, the former Federal Reserve chairman, who leads an oversight board. "While our firm will retain appropriate tax expertise in a manner consistent with these reforms, Deloitte will provide a significant number of our people with continuing career opportunities, and our clients with continued quality service," Mr. Gorrell said in a statement. The announcement came after Andersen held its second videoconference call with all its partners in a week. Senior partners said they and their colleagues were in what one of them called a "community of pain." As early as today, one partner who had taken part in the call said yesterday, Andersen could announce the layoffs of as many as 7,000 employees, or up to 25 percent of its 28,000 employees in the United States and Canada. Layoffs would probably affect lower-level staff members first, rather than the firm's 1,750 partners, said another person on the call. A shake-up of Andersen's management is also imminent, said a person involved in the overhaul. A partner responsible for restructuring was named last week, but the firm plans to appoint other partners to take responsibility for other issues confronting it, like the lawsuits. During the telephone conference, managers covered the firm's finances, explaining that with its clients switching auditors and its overseas affiliates bolting, Andersen is running low on cash even as its legal bills mount. The lack of cash will make settling the Enron shareholder lawsuits and another lawsuit in Arizona even more complicated. The sale of the tax business to Deloitte will bring in some needed money. But the biggest obstacle to Andersen's survival remains the criminal charge filed by the Justice Department. Despite reports of conversations between the firm and the prosecutors, both sides say there has been little progress. Mr. Volcker has not talked to the Justice Department and has not been authorized to speak on Andersen's behalf, people close to him say. Having failed to sell its foreign operations as a group, Andersen Worldwide, the network of accounting partnerships including Arthur Andersen in the United States, resigned itself yesterday to a more piecemeal approach. Andersen Worldwide announced yesterday that Aldo Cardoso would serve as its interim chief executive. Mr. Cardoso, who will simultaneously continue to serve as chairman of Andersen Worldwide's board of partners, will succeed Joseph Berardino, who announced last week that he would step down. Mr. Cardoso will focus on directing "an orderly process by which the individual member firms of Andersen Worldwide can pursue transactions that provide the best opportunities for their partners, employees and clients," according to a statement by the firm. Over the last few weeks, Andersen Worldwide's partnerships in other countries have been rushing to distance themselves from their United States affiliate, severing their ties to the worldwide network and announcing plans to join other big accounting firms. But at a meeting of managing partners of Andersen Worldwide member firms yesterday in London, several agreed to try to pursue deals in regional groups rather than partnership by partnership, said one person close to the discussions at the meeting. "Some may go to E.& Y., some may go to PWC," this person said, referring to Ernst & Young and PricewaterhouseCoopers, two other Big Five accounting firms. "They're going to work through the network." Those partnerships that have already cut their own deals are unlikely to undo them now to participate in a group transaction, even though many firms have signed only nonbinding agreements, he said. "There's a sense that it's probably too late for that." The deal between Andersen and Deloitte remains subject to careful review of financial and legal problems that Deloitte does not want to inherit, according to a statement by Deloitte yesterday. "The two firms continue to work through the issues," Deloitte said. So far, every attempt to nail down the sale or merger of any of Andersen's businesses in the United States has foundered on the issue of liability arising from the firm's Enron audits. One lawyer who would speak only if he was not identified, because he represents a company involved in the Enron debacle, said that Deloitte would be liable to Enron shareholders only if Deloitte could be seen as a successor to Andersen's business. "That strikes me as fairly unlikely if it's just the tax practice, because it's not substantially all the business," he said. But Deloitte still runs the risk of having to battle class-action lawyers eager to find a pocket that remained deep after Enron's collapse, he said, and litigation would be time-consuming, expensive and distracting. There is also a risk that anyone suing Andersen may try to file claims against individual Andersen partners who leave, on the theory that those partners would be violating a clause in the firm's partnership contract that prohibits them from competing against Andersen, and thereby depriving the firm of revenue. An Andersen spokesman declined to comment on this clause. Last year, out of Andersen's $4.5 billion in annual revenue, as much as $1.3 billion came from providing tax advice, Arthur W. Bowman, editor of Bowman's Accounting Report, an industry newsletter in Atlanta, estimated. (Because Andersen is a private partnership, the firm is not required to provide much detail on its financial results.) A combination of the tax practices at Deloitte and Andersen would create a formidable competitor with about $2.2 billion in revenue, making it the largest tax business among the Big Five firms, Mr. Bowman said. PricewaterhouseCoopers currently has the largest tax practice, with $1.6 billion in revenue, he said. The acquisition is probably a coup for Deloitte, depending on the price, he said. "My sense is that Andersen's tax practice was well respected," he said. "I also believe this was a buyer's market." The two firms' tax businesses would complement each other because Andersen has special expertise in the energy, transportation and hospitality industries, Mr. Bowman said. Deloitte is strong in the banking and finance industries, he said. As for Andersen, if it survives, the firm that would emerge after the layoffs and the split-off of several businesses proposed by Mr. Volcker would be much smaller and less diversified than the Andersen of just a few months ago. Without the consulting and finance businesses, which account for about two-thirds of Andersen's roughly 1,750 partners, the new Andersen would retain just a fraction of its current 28,000 employees — perhaps fewer than 10,000 people. The new firm would be testing a model for the industry because it would be focused almost exclusively on corporate audits, said David E. Greene, chairman of accounting graduate programs at the Kelley School of Business at Indiana University. "The new Andersen strategy would be that they are the best alone, that they would have some kind of competitive advantage," because they would not face any potential conflicts of interest from other business lines, Professor Greene said. Such a strategy can succeed if Andersen can differentiate itself, he said. Revenue would be sharply lower at the new firm because more than half of Andersen's income is from the consulting, finance and tax and business advisory work. Many clients have gone elsewhere for audit services over the last three months, shrinking Andersen's revenues further. According to Auditor-Trak, a database maintained by Strafford Publications in Atlanta, as of yesterday 111 public companies had dumped Andersen as their auditor this year and the firm had resigned from 13 more. www.leasingnews.org |