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Kit Menkin’s Leasing
News www.leasingnews.org Wednesday, August 14, 2002 Accurate, fair and unbiased news for the equipment Leasing
Industry ( posted daily at www.leasingnews.org
and sent by e-mail by subscription with the Day in American History signature .) ---------------------------------------------------------------------------------------------- Headlines--- Poll
suggests consumer confidence at lowest level since 1996 HPSC
Reports Strong 2nd Q 2002 Results Net Income Increases 292% Growth1
Funding Inquiry--Landlinemag.com Equipment
Leasing Association Accountants Conference Sept 9-11 Hawaii
Calling---This is Bette Kerhoulas Speaking "We
need to fight together," Paul
Menzel, CLP Federal
and State Income Tax Issues, Too Heat
records fall in western Oregon CIT
Small Business Lending Surpasses $2 Billion In SBA Loans HP
Formally Announces HP Financial Services Wine
consumption grows in U.S. in 2001 French
on road to mapping wine DNA Scientists
map genetic code of wine-AP Wineries
Cheer Appellation's Failure ePlus
1st Q Revenues Increase 35% to $72 Million Merrill
Lynch Takes Steps to Help Build Public Confidence in American Business Former
Detroit mayor to become first black leader of lawyers' group Sad
fact, but it's time Davis ran into sunset ### Denotes Press Release Reuters By Christopher Kaufman SINGAPORE (Reuters) - U.S. speculators dumped dollars for
yen and Asian stock markets slipped on Wednesday after the Federal Reserve
left interest rates unchanged at 40-year lows and warned of weak conditions
in the world's biggest economy. The dollar softened against major currencies after the Fed
said America's economic risks had shifted toward weakness, fanning speculation
of a return to recession. "People are worried about a double-dip recession and
now they think the Fed is a little worried as well," said currency
strategist Meg Browne at HSBC . Traders said the Fed's statement did leave the door open
for further cuts, and some investors said the sell off would be brief. Dealers said U.S. speculators were selling the dollar during
lunch hour, when trade tends to be thin. At 0440 GMT, it was quoted at
117.00 yen more than a full yen down from 118.72 yen in late U.S. trade
on Tuesday. The euro was also gaining ground against dollar, climbing
to 98.81 cents, compared with 98.30 cents in late U.S. trade on Tuesday. The U.S. central bank's Federal Open Market Committee voted
unanimously to leave its trend-setting federal funds rate at 1.75 percent,
but said weak stock markets and corporate scandals were taking a toll. "The decision was as expected but the reaction in the
stock market was bigger than we had thought," said Junya Tanase,
global markets officer at JP Morgan Chase.. Poll suggests consumer confidence at lowest level since 1996 By Associated Press Consumer confidence has slipped to its lowest level since
1996 in the ABC News- Money Magazine consumer index, a 15-year-old tracking
poll. The index, based on Americans' ratings of the economy, their
personal finances and the buying climate, was released Tuesday the same
day that President Bush convened his economic forum in Waco, Texas, to
discuss the current health of the economy. Consumer confidence in this survey was highest in January
2000 and lowest in February 1992. Other findings: A third, or 32 percent, rated the economy this month as excellent
or good. Fewer than four in 10, 38 percent, said now is a good time
to buy things. Those most likely to have a gloomy view of the economy were
women, Democrats, blacks and those with low incomes. The consumer tracking poll is based on interviews with about
1,000 adults each month and has an error margin of plus or minus 3 percentage
points. ------------------------------------------------------------------------------------------------------ ############## ############################################## HPSC Reports Strong
Second Quarter 2002 Results Net Income Increases 292% BOSTON--HPSC,
Inc. (AMEX: HDR) reports a 292%
increase in net income for the second quarter ended June 30, 2002, with
net income of $1.05 million, compared to $268,000 in the same quarter
last year. In line with preliminary results announced last week, earnings
per share on a diluted basis were $0.24 in the second quarter of 2002
versus $0.06 in the prior year period. Basic earnings per share were $0.26
in the second quarter of 2002 compared to $0.07 in the same quarter last
year. Net revenues for the second quarter of 2002 were $13.8 million,
a 2% decrease from $14.1 million reported in the second quarter of 2001,
primarily reflecting lower levels of asset sales activity and lower weighted-average
implicit interest rates on financing contracts. Net operating expenses
for the second quarter of 2002 were $12.1 million, an 11% improvement
from the $13.6 million recorded in the same period last year. Said John W. Everets,
Chairman and Chief Executive Officer, "We are very pleased that the
past quarter's results were so solid, building on those of the first quarter
this year, with exceptionally strong net earnings as well as a strong
volume of financings. Our financing margins continue to be attractive,
despite the decline in interest rates. We continue to focus on our strategy
of gaining market share and providing high quality service to our customers." On June 17, 2002,
the company reported that it had discovered than an employee of its asset-based
lending subsidiary, American Commercial Finance Corporation (ACFC), had
perpetrated a defalcation by which approximately $5 million had been diverted
from the company over the last five years. The company has completed its
formal investigation into this matter. As a result, the company has restated
its financial statements for the periods affected beginning in 1996 through
the first quarter of 2002. A copy of the restated annual report on Form
10-K/A for 2001 is available on the company's website under investor relations
(www.hpsc.com), or can be obtained via the SEC's EDGAR system, or by calling
the company at 617-720-7202. Shortly after
the close of the second quarter, the company closed on new revolving credit
facilities with Foothill Capital Corporation, a subsidiary of Wells Fargo
Bank, as the managing agent for a bank group. The variable-rate lines
of credit provide the company and its subsidiary, ACFC, with committed
facilities of up to $70 million to warehouse the company's new lease and
loan financing contracts and to provide financing support for portions
of the company's asset-based lending services provided through ACFC. The
company has also entered into a new financing arrangement with ING Capital
LLC pursuant to which ING will provide the company up to $20 million of
financing collateralized by the company's interest in its existing Bravo
facility. In the second
quarter of 2002, the volume of the company's new financing contract originations,
excluding ACFC, rose to $74.2 million, a 17% increase over volume of $63.6
million produced in the second quarter of 2001. For the first six months
of 2002, the volume of the company's new originations, excluding ACFC,
increased 10% to $135.0 million from $123.1 million for the comparable
period in 2001. For the six months ended June 30, 2002, ACFC originated
$2.7 million in new lines of credit compared to $9.9 million for the same
period last year. The company's total gross portfolio of owned and managed
lease contracts and notes receivable grew to $858 million at the end of
the second quarter of 2002, a 6% increase from a gross portfolio of $806
million at the end of 2001. Unearned income increased 8% to $113 million
at the end of the second quarter of 2002, from $105 million at the end
of last year. For the first
six months of 2002, net income was $1.9 million, a 117% increase over
the $863,000 reported for the first half of 2001. Earnings per share on
a diluted basis for the first half of 2002 were $0.44, compared to $0.20
for the same period last year. Basic earnings per share were $0.47 for
the first half of 2002, compared to $0.22 for the first half of 2001.
Net revenues for the first half of 2002 were $26.3 million, a 3% decline
from net revenues of $27.2 million reported in the same period last year,
reflecting lower interest rates received on the company's portfolio and
decreased asset sales. Net operating expenses for the first six months
of 2002 were $23.2 million, a 10% reduction from the $25.8 million reported
for the same period last year. HPSC will host
a conference call and webcast to discuss these results on Wednesday, August
14, 2002, at 4 pm EDT. The call can be accessed by calling 1-800-310-6649,
confirmation code 652791, or on the Internet at www.hpsc.com, and following
instructions to the link there. A replay of the call will be available
until Wednesday, August 21, 2002 at midnight and can be accessed either
via the company's website or by calling 1-888-203-1112, confirmation code
652791. About HPSC HPSC Inc. (AMEX:
HDR) is a leading non-bank financial services company providing leasing
and financing opportunities to the medical and dental professions in all
50 states. Through its asset-backed lending subsidiary, American Commercial
Finance Corporation (ACFC), the Company provides asset-based lines of
credit to manufacturing and distribution companies throughout the eastern
United States. For more information, please visit the company's website
at www.hpsc.com. This release contains
forward-looking statements within the meaning of Section 27A of the Securities
Act. Such statement are subject to a number of risks and uncertainties,
including but not limited to the following: the Company's dependence on
funding sources and restrictive covenants in funding documents; payment
restrictions and default risks in asset securitization transactions to
which the Company is a party; customer credit risks; competition for customers
and for capital funding at favorable rates relative to the capital costs
of the Company's competitors; changes in healthcare payment policies;
interest rate risk; the risk that the Company may not be able to realize
the residual value of financed equipment at the end of its lease term;
risks associated with the sale of certain receivable pools by the Company;
dependence on sales representatives and the current management team; and
fluctuations in quarterly operating results. The Company's filings with
the Securities and Exchange Commission, including its Annual Report on
Form 10-K for the year ended December 31, 2001, contain additional information
concerning such risk factors. Actual results in the future could differ
materially from those described in the forward looking statements as a
result of certain risk factors, including those set forth above, and the
risk factors described in the Annual Report. HPSC cautions the reader,
however, that such list of risk factors may not be exhaustive. HPSC undertakes
no obligation to release publicly the result of any revisions to these
forward looking statements that may be made to reflect any future events
or circumstances. Operating Performance: (in thousands, except per share and share amounts) Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2002 2001 2002 2001
(Unaudited)(Unaudited)(Unaudited)(Unaudited) Revenues Earned income $ 12,789 $ 12,416
$ 25,002 $
24,447 Gains on sales of
leases and notes 3,839 4,218 5,907 6,862 Provision for losses
(2,806) (2,553)
(4,586) (4,060) Net revenues 13,822 14,081
26,323 27,249 Selling, general and administrative 5,566
6,246 10,524 11,432 Loss from employee defalcation 157 345 448 753 Interest, net 6,347 7,036
12,215 13,591 Income before income taxes 1,752 454 3,136 1,473 Provision for income taxes 702 186 1,262 610 Net income
$ 1,050 $ 268
$ 1,874 $ 863 BASIC NET INCOME PER SHARE $ 0.26 $ 0.07 $
0.47 $ 0.22 Shares used to compute basic net income
per share 4,064,324 3,962,100
4,030,106 3,957,199 DILUTED NET INCOME PER SHARE $ 0.24 $ 0.06
$ 0.44 $ 0.20 Shares used to compute diluted net income
per share 4,356,733 4,354,278
4,274,475 4,288,031 Selected Financial Data June 30, Dec. 31, 2002 2001 (Unaudited)(Unaudited) Cash and cash equivalents $ 1,510
$ 1,211 Restricted cash- Securitization servicing 27,353 28,786 Unearned income 112,841 104,741 Net investment in leases and notes 443,142 396,996 Senior notes and notes payable to banks 381,145 336,806 Senior subordinated notes 19,985 19,985 Stockholders' equity 38,031 36,781 --30--ma/bos* CONTACT: HPSC
Inc. John
Everets, 617/720-3600 ________________________________________________________________________________________ 1616 East Fourth Street Suite 110 Santa Ana, CA. 92701 Email: info@growth1.com Phone: (714) 835-6961 Fax: (714) 835-7532 www.growth1.com http://www.growth1.com/Large_Projects/large_projects.html Leasing News is seeking any experience a reader may have
had regarding this company. If
you have any information or had dealings with this company, please let
us know. Also, if you have any
background information on Roxanna Munoz and/or Dane Moore? We are seeking information and have no opinion on these individuals
or this company. Growth 1 Funding Corp. was written about in Landline Magazine
regarding allegedly not funding trailer-truck leases, and at one time
were working with Kendra Bernal of the Funding Tree. It appears they are
now offering to finance large projects $40 million and larger. Kit, Here are the two stories I wrote that include information
about Growth 1. The first one is what got me started on these finance companies,
and the second is my follow-up story. I’ll be out of the office for
the next couple days, so I’ll talk to you Friday. Later, Rene Easy money? by Rene Tankersley, feature editor (Owner- Operator
Independent Drivers Association) They are a new breed of loan sharks and they are helping
themselves to thousands of dollars from owner-operators seeking easy money
through alternative financing or special lease programs. In reality,
these advance-fee finance companies are the ones getting the easy
money. *OOIDA Business Services department recently received complaints
f rom owner-operators who reportedly lost money to Growth 1
Funding Corporation in Santa Ana, CA, for promised equipment leasing and
financing services. On the surface, Growth 1 looks legitimate with its
professional-looking web site, but the Better Business Bureau (BBB) of
the Southland in Colton, CA, rates Growth 1 as having an “unsatisfactory
business performance record.” *The BBB report on the company further states: “Complaints
contain a pattern of allegations that the company made promises of obtaining
financing with specific terms. When the company failed to obtain the financing
at rates originally quoted or provide promised terms, customers requested
refunds of the deposit amounts. The company responded by generally denying
requests, referring to the terms and conditions of the commitment fee,
or that a portion of the deposit amount was kept due to expenses incurred
by the company attempting to obtain the financing.” *OOIDA members Johnnie Banner, Lawrence McCafferty and Steven
Long all reported similar experiences with Growth 1. *An unsuspecting equipment dealer in Tampa, FL, referred
Banner, of Auburndale, FL, to Growth 1 in July 2001 to obtain financing
for a 2000 Kenworth W-900L (total cost $85,547.99) to be purchased from
the dealer. Per written instructions by Growth 1, Banner signed a preliminary
lease agreement for the promised financing and paid documentation fees
and two lease payments totaling $5,510.77. After wire transferring the
money from Banner’s checking account, Growth 1 did not provide the promised
financing. Banner, his attorney and the equipment dealer
have all contacted Growth 1 several times by phone and letters trying
to get a refund for Banner. All they received was empty promises of “we
will look into it.” *On Nov. 5, Roxanna Munoz, senior underwriter for Growth
1, told Land Line the company owes Banner a refund. *”I did find out that definitely this customer is owed a
refund, there is no argument on that,” Munoz said. “Unfortunately, right
now we’re just not allowed to cut out any checks at this moment due to
a freeze that has been put in our company with our account due to an internal
bank auditing that’s going on. We’re just looking at about another couple
of days from now, it could be any day now that I have word that we have
clearance and we can go ahead and start the accounting department back
up to go ahead and do what they’ve got to do. I have your information
here as to give you a concrete date of when Mr. Johnnie Banner should
be getting his check.” *McCafferty of Fernley, NV, says he’s heard this and several
other promises from Munoz regarding the $1,653.73 he gave the company
in June for an equipment lease that never materialized. His introduction
to Growth 1 also came through a nearby unsuspecting truck dealer. Long, of Palm Bay, FL, had a similar experience in July when
he tried to purchase a drop trailer from a Kansas City, MO, equipment
dealer, who referred him to Growth 1. Like the others, he signed a preliminary
lease agreement and paid $200 in documentation fees and two lease payments
of $610 each, totaling $1,420. As with Banner and McCafferty, the lease
went nowhere. Growth 1 has refunded $1,000 to Long, who still believes
the company owes him $420 plus the other related expenses. Growth 1 isn’t
the only finance company causing problems for OOIDA members. Two other
California companies - Funder Direct and Commercial Money Center Inc.
- have been the subjects of complaints by OOIDA members Lonnie Byers of
Ozark, AR, and Darren Purrier of Las Vegas. Byers gave Funder Direct out
of San Diego, $1,353.32 in May to lease a trailer that never was delivered. Darren Purrier purchased a new truck through a dealer on
Commercial Money Center’s lease program. Because he knew he had credit
problems, Purrier says he expected the high payments and a higher interest
rate, but not 48.672 percent interest. Because the interest rate was never
stated in the lease agreement, Purrier did not realize how much interest
he was paying until his accountant reviewed his records at tax time. He’s
talked to a couple of people about refinancing the truck at a lower interest
rate, but the lease agreement requires any early pay-off to include all
the interest for the entire lease. Funder Direct and Commercial Money Center have something
in common. Although Funder Direct is using an address in San Diego, the
California Secretary of State’s corporation filings list the company address
as 221 West Crest in Escondido, CA, the same address used by Commercial
Money Center. WEB SPECIAL: Easy money? The sequel Since the first report on Commercial Money Center Inc., Growth
1 Funding Corp. and other advance fee loan companies (Dec/Jan, Land Line),
three OOIDA members - Johnnie L. Banner, Steven D. Long Sr. and Lonnie
Byers - received refunds from Growth 1 and Funder Direct. However, more
small-business truckers have reported losing thousands to this new breed
of loan sharks who promised equipment financing, took their money and
gave them nothing but excuses. OOIDA member Lawrence E. McCafferty of Fernley, NV, is still
waiting for his $2,573 refund from Growth 1 for a failed truck financing
deal. OOIDA member Maxie McIntosh of Perris, CA, also paid $2,573 to Growth
1 on April 3, 2001, but the finance company never came through with the
funding. Roxanna Munoz, senior underwriter for Growth 1, has agreed to
look into refunds for McIntosh and McCafferty. Based in San Diego, CA,
Growth 1 is owned by Dane Moore, but most owner-operators report dealing
with Munoz. At least five owner-operators reported problems with Commercial
Money Center, headquartered in Las Vegas with an office in Escondido,
CA. Burrell L. Lee Jr., OOIDA member from Radcliff, KY, gave CMC $5,194.53
in advanced payments plus $220 for processing fees and $175 for a Quicktrak
inspection on May 8, 2001, to finance a truck. For his money, he received
no financing, no equipment and no refund. The same rings true for owner-operator Dane Stieben, of Colby,
KS, who paid $5,840 to CMC; Phil and Victoria Stone, of Nortonville, KY,
paid $4,520.56 to finance a trailer with CMC; and Galloway Transport,
of Grandville, GA, who reported to the Federal Trade Commission it paid
$2,000 to CMC for financing. Senitteau Norton of Boulderick Farms and Norton Refrigeration
financed three trucks through CMC, and then some refrigerated trailers
in October 2000. To finance the trailers, Norton paid $4,787.26 in advanced
payments plus a $220 processing fee and $175 for a Quiktrak inspection. Soon after she picked
up the trailers and had them licensed, the dealership repossessed them
because CMC never paid for the equipment. Since the financing fell through
on the trailers, she asked CMC to apply the trailer down payment toward
her truck payments, but CMC refused. With no trailers to go with their
trucks, Norton’s company could not earn enough money to pay for the trucks
and eventually lost them, too. These owner-operators may have lost up to $5,000 each to
CMC, but OOIDA members Darren Purrier of Las Vegas, Henry Brown of Phoenix,
AZ, and Patricia Breeden of Stafford, VA, are paying CMC’s 48-50 percent
interest rates. Purrier says when he confronted CMC about the high interest
rates, he was told the rates were completely legal because it was a lease,
not a loan. Purrier says recent major repair work has made it difficult
to keep up with the lease payments. When the Purriers tried to get a deferment,
a CMC representative told them they must miss the payment before CMC would
send them deferment paperwork. However, the rep didn’t tell the Purriers
about the more than $300 in fees they were charged for the deferment. Brown says the truck he received is not the one described
on his paperwork and he still can’t get a legal title for the truck. Munoz says CMC is out of business. Attempts to confirm this
information were met with a full voice mailbox at CMC’s California office
and a know-nothing receptionist at the Las Vegas headquarters, where company
execs were unavailable for comment. The receptionist deferred all questions
to a Mr. Gwarder (correct spelling
not given), who was in a deposition April 4.
However, a representative at U.S. Bancorp, who now services CMC’s
lease contracts, did say the California office is closed, but the Las
Vegas office currently is open. Although CMC and Growth 1 received the most complaints from
owner-operators, a few other companies each received one complaint. Of
those, Commercial Leasing of Louisiana, an agent of Florida-based company
International Corporate Finance Ltd., took the most money from one individual.
Marti Wright of South Star Transport in El Paso, TX, paid Commercial Leasing
more than $20,000 to finance three new trucks, which were repossessed
about a month after delivery because the finance company never paid the
dealer. Telephone numbers for Commercial Leasing are
disconnected. All complaints were forwarded to the Federal Trade Commission;
the appropriate state’s attorney general and a private attorney for review.
Some owner-operators have sought help from district attorneys in the counties
where these companies operate. If you have experienced similar problems, make an official
report to the FTC at 1-877-382-4357 and the attorney general in your state
and the state where the company is located. Your attorney general’s office
should be listed in the government pages of your local telephone directory. When a consumer calls these agencies, they usually will send
the consumer a complaint form. It is very important to follow through
with the complaint by filling out the necessary forms and returning them
to the appropriate agencies along with copies (not originals) of all relevant
documents. As with any business transaction, keep copies of all contracts,
invoices, receipts and correspondence, including any complaint forms filed
with various agencies. --Rene Tankersley, feature editor (As for Commercial Money Center, the company is going through
the bankruptcy proceedings. The bond insurance companies have their sets
of attorneys. Their fees range from $350 to $450 an hour, not including
legal assistants and aides, so whatever cash is generated will go to employees
with claims, government taxes and fees, then the attorneys. All the officers are back in the leasing business
under different names and entities. They claim they are innocent of any wrong doing or knowledge to any improprieties. Leasing News hopes to have an up-date regarding the Funding
Tree. Kendra Bernal has resigned as president and awaits her trial for
allegedly violating parole. ) http://www.utdallas.edu/police/wavs/DragnetSetting.WAV http://www.utdallas.edu/police/wavs/DragnetTheme.WAV --------------------------------------------------------------------- Equipment Leasing Association Accountants Conference Sept
9-11 For over 20 years, ELA’s Lease Accountants Conference has
provided companies like yours with the most up-to-date information on
lease accounting standards. In
the past year, the accounting profession has been thrown into the limelight
due to reports of non-compliance with these standards. If there was ever a year to attend the ELA Lease Accountants
Conference, THIS IS THE
YEAR! It is imperative that a
representative from your company attend this significant event, scheduled
September 9-11, 2002 at the Renaissance Mayflower Hotel, Washington, D.C. For complete details and to register, or to download a PDF
file of the conference brochure, go to:
http://www.elaonline.com/events/2002/leaseaccts/ Program highlights include: o Keynote addresses by SEC Deputy Chief Accountant Jackson
Day and FASB member, Michael Crooch:
What accountants must do now to accurately report the financial
condition of their companies. o The latest thinking and ELA’s analysis and position on
the Consolidation of SPE’s Exposure Draft: What will happen to Off Balance
Sheet Financing? o A discussion of the latest FASB deliberations on Guarantor’s
Accounting and Disclosure Requirements: What will this mean for Residual Value Guarantees? For complete details and to register, or to download a PDF
file of the conference brochure, go to:
http://www.elaonline.com/events/2002/leaseaccts/,
or email Janet Fianko at jfianko@elamail.com
for the brochure to be mailed to you. Look forward to seeing you at this important conference! Michael Fleming, President Equipment Leasing Association --------------------------------------------------------------------------- Hawaii Calling---This is Bette Kerhoulas Speaking http://www.utdallas.edu/police/wavs/DragnetJob.WAV Bette Kerhoulas, incoming president of the United Association
of Equipment Leasing Association, called from the main island in Hawaii.
She is on vacation from Pacifica-Capital, and promised her husband not to bring
a lap top, but she calls in every day. It seems even though Leasing News said she was on vacation,
she and her staff received many telephone calls. No, she says, they don’t need to borrow any money. They have cash to pay any fines or penalties,
plus they do not believe the Franchise Tax Board is correct. It does appear that document fees for mortgage loans are
taxed by the Franchise Tax Board. At least,
she says that is what they claim. The mortgage companies do not charge the borrower for the sales tax, but they pay
it. It appears if the charge is with the other cost, it is part
of the sale. If it is separate,
meaning a separate letter, then it may be considered “labor” and not taxable. Certain states already charge sales tax on passing title,
it appears, such as Texas. The key is the wording on the master document, but it now
appears the California Franchise Tax Board will be auditing all leasing companies
in California during the next two years to see if they are compiling, and if not,
they owe the sales tax plus ten percent interest per year for the last three
years. From Hawaii, she says she does not know if the UAEL Sales
Tax meeting will discuss this, or whether the representatives will have all
the definitive answers, but at Leasing New’s request, she is going to have a Mai
Tai. http://haleokala.com/bobblez.mid --------------------------------------------------------------------------------
Santa Barbara Bank and Trust’s discounting agreement does
not pass title. Another consideration
and argument that should be made to the Franchise Tax Board is that title
can only be passed if the underlying transaction is a true lease. Otherwise the lessor never has title. Regardless of what the document says, lessors
should examine the substance of the transaction as well. All the lessors that are arguing with the Franchise Tax Board
should ban together and hire a good attorney who has experience in this
area. I would suggest Carey Boyden
in Sacramento. This is an industry
challenge that we need to fight together. It is another example of the impact of our State’s poor management
and the need for revenue at all costs that are threatening the small business
person. Paul J. Menzel, CLP Senior Vice President / General Manager Leasing Division SANTA BARBARA BANK & TRUST P.O. Box 60607 Santa Barbara, CA 93160-0607 1 South Los Carneros Road Goleta, CA 93117 Dir Ph# (805)560-1650 Email PaulM@sbbt.com --------------------------------------------------------------------------------------- Federal and State Income Tax Issues, Too The question of just selling rents or providing title has
federal income tax issues as well. If a leasing company sells the payment
stream on a non recourse basis and retains title then you have to look
to see if the transaction is a tax lease. The lessor retainsMACRS depreciation but must report as income
the full discounted rent from the funding source because the non-recourse
means there is no liability to return it so it becomes earned at once.
Some believe that by not taking depreciation they have no quarrel with
the IRS when in fact the question is “how much income to report”. As the owner you
report rent income not the fee you earned. If you hold title on a true
lease and sell the stream, on a non recourse basis, your income is the
discounted rent amount received and it is only off set with the first
years MACRS depreciation. That is why many lessors sell the title and
obtain a remarketing agreement to obtain residual or purchase option rights.. This California sales tax question now puts an additional
problem to sell or not to sell the title .. Terry Winders CLP ----------- This is not the first time the State Board of Equalization
is visiting this issue. I worked for a leasing company in the 70’s and early
80’s who got “trapped by their logic. Because I was a partner in a general partnership, they levied
a number of partners personal bank accounts to get their money. It took
4 years to get that money back because a suit was brought.( not by us)
( Enterprise Leasing I think) and it was determined that just having the
word sale in the documents between you and your lender did not constitute
a sale. It was the “intent of the document and not the form” that was
binding and relevant. The only upside of the whole nightmare was that while the
state board had our money, they were charging and paying about 5% more
than banks. When it was finally resolved, our “enforced savings accounts”
had all grown nicely. I’m getting really sick of governmental agencies waking up
every morning with the thought “ Who can I get money from now?” Doris Tamboryn J.G. Capital Corp. --- I’m not sure why everyone is surprised about the State of
Ca’s position on collecting tax on discounted leases. This has always been the rule (as far back as I can remember). There were several
UAEL sessions on the topic.
When they need more taxes, they enforce stronger.
Wasn’t there a 90 day rule (discounting took place within 90 days)
that saved a lot of lessors in the past?
Someone may be able to look into the specifics to help out Bette. Hope this helps. Jim Swander Jim Swander <jimswander@sprintmail.com> -------------------------------------------------------------------------------------- Heat records fall in western Oregon The Associated Press PORTLAND, Ore. (AP) -- Records were accumulating faster than
beads of sweat Tuesday as at least 10 Oregon cities had afternoon temperatures
of more than 100 degrees. More than a dozen cities in the western part of the state
set records, including Portland, which declared an "orange"
air pollution warning because of high ozone levels. The air quality warnings mean that state officials expect
high temperatures and low-level winds, which mix with auto exhaust and
other pollutants to create high levels of smog. In Medford, smoke from forest fires mixed with the state's
worst heat -- 108 degrees -- to create breathing woes. "To add insult to injury, we're probably looking at
some high ozone numbers here as well," said John Becker, an Oregon
Department of Environmental Quality air quality expert in Medford. "Right
now, the best advice is, if you've got smoke around you, try to take it
easy." Particle pollution, such as that from fires or diesel engines,
is even more dangerous to health than ozone pollution, said Michael Heumann,
an environmental epidemiologist for the Oregon Public Health Service.
That's because particles carry chemicals on their surface and lodge in
the lungs, he said, instead of being breathed out like other pollutants. While wildfire smoke continued to cause problems in a few
cities, such as Brookings, wind helped keep Klamath Falls, Eugene and
other cities relatively free of smoke or ozone pollution. Roseburg reached 107 degrees, the second hottest spot in
the state, while Corvallis and Troutdale both hit 106, beating records
that have stood since the drought-plagued summer of 1977. Coastal cities were also hit hard by the heat wave. Astoria
logged a 95- degree day, 9 degrees higher than the previous record. Tillamook
also hit 95, beating its high by 11 degrees. Newport sweltered in 99-degree
heat, blasting past its old record of 83 degrees, set Aug. 13, 1942. But Florence was the hottest coastal spot, hitting 104 degrees.
To the east, Eugene recorded the same temperature, and Salem also hit
104, edging out a 103-degree record for Aug. 13 that the capital set in
1920. Gorge winds didn't save The Dalles, which hit 102. In Portland, the official high temperature as measured at
Portland International Airport was 102 degrees, topping a 96-degree record
set in 1992. ( How hot was it? Jim
Merrilees did not hit the golf balls after work. ) -------------------------------------------------------------------------------------------------- #### ################################################## CIT Small Business Lending Surpasses $2 Billion In SBA Loans Celebrates 10 Years Of Serving The Small Business Community LIVINGSTON, NJ - CIT Small Business Lending Corporation (SBL),
the nation's number one Small Business Administration lender and a unit
of CIT Group, Inc. (NYSE: CIT), today announced it has surpassed the $2
billion mark in total owned and managed SBA Loans made to small businesses
nationwide since 1992. "Growing the business unit from a start-up lender to
the nation's number one SBA loan provider for two years in a row is a
special accomplishment that we feel very proud of," said John Canning,
president of SBL. "Reaching $2 billion in managed assets in our 10th
year of operation, especially in such a challenging economic environment,
is a testament to the great entrepreneurial spirit that drives the U.S.
economy. SBL's focus is on serving the needs of all small business owners,"
added Canning. CIT Small Business Lending has a network of approximately
70 field sales offices throughout the U.S., and since its inception has
provided loans to over 7,500 entrepreneurs, helping them realize their
dreams of starting, acquiring or growing their businesses. Loans range
from $50,000 to $3 million, with the average loan size approximately $500,000. "We are also proud to have overseen more than $1 billion
in total project costs through our Construction Lending Department since
its inception in 1997," said Canning. "This demonstrates our
commitment to helping small businesses meet a variety of financing needs,
including building their business from the ground-up." About CIT Small Business Lending Corporation CIT Small Business Lending Corporation offers Small Business
Administration (SBA) loans to finance business acquisitions, owner-occupied
real estate purchases and franchise start-ups though a network of field
representatives. The nation's
#1 SBA lender, CIT Small Business Lending has been designated a "Preferred
Lender" by the SBA and can provide quick credit decisions and loan
closings. The company's website and online SBA loan application are located
at www.smallbizlending.com. ########## ################################################ HP Formally Announces HP Financial Services HP announced today ) HP Financial Services, the company's
new leasing and financial services subsidiary. HP Financial Services is
designed to enhance HP's worldwide sales efforts by delivering a broad
range of financial services and asset management capabilities that can
positively impact HP's customer and partner relationships and shareowner
value. HP Financial Services operates as a wholly owned subsidiary
of HP, and HP intends to include its performance as one of five segments
in HP's quarterly financial segment reporting. HP Financial Services represents
approximately 4 percent of HP's total revenue. Ten percent of total HP
sales are leased transactions. The merger of HP and Compaq has brought together more than
1,500 IT financing professionals -- managing nearly $10 billion in assets
in more than 50 countries -- to form one globally consistent team focused
on making the process of acquiring, managing and retiring IT solutions
simpler. HP Financial Services is the second largest captive IT leasing
company in the world and operates in more countries than any other leasing
company in its segment. "HP Financial Services brings to the new HP a centralized
business model for the financial services we offer our customers as part
of a total HP solution. We are confident our subsidiary will help fuel
company growth and increase shareowner value," said Peter Blackmore,
executive vice president, HP Enterprise Systems Group. "The new HP
is ready to execute for current and future customers, and HP Financial
Services is ready to meet their financial asset management needs throughout
the technology life cycle." HP Financial Services is headed by former Compaq Financial
Services president and chief executive officer Irv Rothman and has headquarters
in Murray Hill, N.J. Regional headquarters are in Dublin, Ireland, and
Sydney, Australia. Rothman brings 29 years of financial and leasing experience
to the company. "The combination of HP Technology Finance and Compaq
Financial Services has brought together two great organizations to create
a global leader in IT financing -- better equipped than ever before to
provide customers with globally consistent offerings and ready to take
our place among the best-performing financial services companies in the
world," said Rothman. "Customers are looking for solutions that
fully integrate products and services -- including financial services.
Our new organization helps sharpen HP's competitive edge by delivering
the broadest range of global IT financial services available." Rothman will be supported by a team of 11 senior executives
including: Tom Adams, Finance; Ed Andrews, Global Structured Finance;
Gerri Gold, Corporate Development; Ann Henry, Corporate Resources; Keith
Kendall, North America; Cynthia Klustner, Integration Management; Dan
McCarthy, Legal; Matt Minetola, Information Technology; Constantin Salameh,
Europe, Middle East and Africa; Cintia Silverstre, Latin America; and
John Sutherland, Asia Pacific. Current customers from HP and Compaq will
continue to receive the same level of service and quality they have come
to expect from their account teams. ############# ################################################# Wine consumption grows in U.S. in 2001 Despite a slow economy and slow travel and hospitality industry,
U.S. wine consumption is growing, a new handbook showed. The 2002 edition of the Adams Wine Handbook showed that U.S.
wine consumption rose to 233.7 million 9-liter cases in 2001, up about
0.8 percent frm last year. In the last seven years, annual compound growth
was 3.6 percent Table wine, the largest category with a nearly 90 percent
market share, was the cause behind the increase, the handbook showed,
and was the only category to grow last year. Imported wine grew 6.4 percent
last year, while total domestic wine dropped 0.6 percent. "Consumer demand for quality varietal wines from around
the globe, coupled with reports linking moderate wine consumption to good
health, has helped fuel the wine boom of the past eight years," said
Robert Keane, co-publisher of the Adams Beverage Group, publisher of the
handbook. Other factors attributed to the increase in wine consumption
is attractive prices of imports, better educated consumers and more variety. ------------------------------------------------------------------------------- |