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Kit Menkin’s Leasing News www.leasingnews.org Monday, January 28, 2002 ______________________________________________________________________ Headlines---Heller
Financial Gets the Axe Commercial Money Center Return of Advance Rental
Payments How Many Leasing Associations Do You
Belong To? Textron Finalizes $5 Million Asset
Purchase Program With TWG Capital Velos Capital to Resell Artera Turbo Prime Finance Down rated by Fitch FNF Capital Lease
Downgraded by Fitch Economists
Now Predict No Fed Rate Cut/Rate Increase in Near Future? SPECIAL---- State
Governments Endorse New Leasing and Software Definitions by Dennis Brown for Equipment Leasing News
Association ELT News Also Complete New Orleans Report------ Tomorrow:---What
Leasing News Will Not Divulge ### denotes press release _______________________________________________________________________ Heller Financial Gets the Axe First came the auto responders: “I am no longer with the company as of January 24, 2001. “If this message is of a personal message, feel free to forward it to my personal e-mail address; ericpevans@yahoo.com “Also, feel free to contact me at 949-633-5501. “Please refer any business issues to inside support at 800-527-4904. “I apologize for any inconvenience. “Thank you, “-Eric “Eric P. Evans formerly of Heller Financial, Inc., a GE Capital Company.” Next came e-mail back from “Heller” readers. Followed by inquiries and then information, such as: I heard there were meetings yesterday at the Heller/GE office in Troy, MI. My understanding is that the people at the first meeting were being kept on. Those at the second meeting were be kept on for 60-days. Those at the last meeting were told to pack up their stuff and hit the road. So about two thirds of the staff will be gone by the 60-day mark. Also heard that the fallout is also being felt at a Cedar Rapids, Iowa facility. Don't print my email in the newsletter please. I'm sure you'll know people much more involved in this than I. I just thought I'd give you a heads up. Love the news letter, keep it up. ( Name with Held ) Wednesday afternoon was the first of a series of meetings that ran into Thursday with the entire staff which was probably about 225. The Wednesday people were told that they needed to leave immediately. On Thursday the first meeting was held with group that was told that they were going to be retained for 60 days. The subsequent meetings that were held involved terminating employees. All employees are technically on the GE payroll for another 60 days (in the event that they are applying for employment, refinancing a mortgage, etc) and the severance checks will be mailed shortly. By the looks of it about 2/3 of the staff is gone and the terminations were targeted at higher salaried employees. Sales reps, even those top performers were not spared. I even heard a rumor that the similar GE facility in Iowa experienced the same events. What this boils down to is that there are many employees out in the local market that generally have long tenures with a company that valued training and do not have unrealistic salary expectations. A windfall for any local lessor or bank that is looking to add staff. ( name with held ) No one should be surprised by whatever GE does! Watch out for the next series of acquisitions, Comdisco, Tyco(?), etc., etc. Steve Geller Steve is right. GE has very aggressive volume requirements and in today's market acquisition is the only way to meet those requirements. It is also not unusual for GE to consolidate overlapping functions. If you check their history GE tends to move units to eliminate layers of management reducing cost structure. Jack Welch's business practices remain although he has left.
Rob Yohe Robert G. Yohe - Consultant Specializing in lease portfolio placements "Helping Friends find Funding from Friends" 16016 Overbrook Lane Stilwell, KS 66085 (913) 851-8372 24 hr. fax (240) 536-4594 Office fax (913) 851-7877 Cell Phone (913) 579-5191 The same kind of thing happened at Colonial Pacific in Portland. The executives are now gone as is most of the staff. The Cedar Rapids location is closed and moved it to Troy ,Michigan. They are also laying off much of the staff in Moberly. There is a huge restructuring plan being conducted by non-leasing personnel and bad debt is of greater concern than ever before. GE wants to tighten everything up a la Jack Welch. ( Name With Held ) __________________________________________________________________ Commercial Money Center Return of Advance Rental Payments Kit, all transactions that were in funding, that did not have a partial prefund, had their advance rentals returned to the lessee between 1/10/02 and 1/18/02. The checks were returned by certified mail. Any and all inquiries should call, Charles Webb, customer service, 800-856-0907 ext:131 Bill Hanson ____________________________________________________________ How Many Leasing Associations Do You Belong To? Four We belong to ELA, UAEL, EAEL and NAELB. Most people who belong to more than one are really only active in one association. As a funder, we need a forum to contact all possible lessor/broker customers, so we do stay active at least in attendance in all of these. Randy Schiell -- UAEL, EAEL, NAELB, ELA Best way to support the industry and our customer's future success. Brian Bjella brian.bjella@themanifestgroup.com --- I belong to the four major associations. I find that there is little overlap among the associations as far as aims, core membership, benefits and other focuses. I need to belong to the four to stay in contact with the different constituencies of each association. This is one of the benefits I promote for a broker/lessor to utilize my services. Steve Geller sgeller@leasingsolutionsllc.com --- I belong to ELA, EAEL, UAEL and NAELB. I formerly belonged to National Vehicle Association, and I was a member of Computer Dealer and Lessors Association when it was active. I find active participation in leasing associations to be important for service providers. Attending association conventions enables me to keep current on new developments in the leasing industry. Association meetings give me an opportunity to interact with many potential buyers, sellers and funders of leasing businesses, providing valuable contacts for my M&A advisory business. Also, leasing associations have provided me good opportunities to explain (and promote) my business by being a speaker at meetings and by writing articles for association publications. I believe leasing association membership and active participation in those associations are very important for any service provider that depends on the leasing industry for most of their business. When I became a lessor in 1972, my education in leasing was largely through attendance at ELA educational meetings and conventions. I strongly recommend that every leasing company should be a member of at least one association, and they should take advantage of the educational opportunities the associations offer to all levels of employees. Bruce Kropschot Kropschot Financial Services 116 Estuary Drive Vero Beach, FL 32963 (561) 234-4544 ( addendum ) National Vehicle Lessors Assn. We sold a number of auto leasing companies when that business was attractive; it is now dominated by the manufacturer captives and a few major companies. Just last week, ELA and NVLA announced a cooperative effort whereby members of one assn. could attend any event sponsored by the other at member rates. Computer Dealers and Lessors Assn. resulted from a merger of a computer leasing assn. and a computer dealers assn. It was a very active organization with headquarters in Washington in the 1980s and early 1990s until many of the independent computer lessors were either acquired or went out of business. Kropschot Financial Services arranged the sale of over 10 CDLA members. CDLA went out of business and the larger members joined ELA and the smaller members, many of whom were dealers and not lessors, formed a smaller organization (whose name I don't remember) of computer and telecommunications specialists headed by Joe Marion in Delray Beach, FL. -- Three—may go to Four Bank of the West currently belongs to UAEL, EAEL, NAELB and we are in the process of joining ELA. Being a funding source, we feel that belonging to numerous associations helps to give us more exposure. As I travel to the various conferences it is apparent that many funders feel the same way and are members of numerous associations. Steve Crane Three ELA, NAELB, UAEL Kit Menkin --- Wildwood is a member of NAELB, UAEL, EAEL, and KMAC ( Kit Menkin admiration club). Bob Baker Baker@wildwoodfinancial.com ____ Three—May go to Two I am a member of Naelb,EAEL,UAEL. I believe it is important to belong to all the associations because it makes you very visible and you hear what’s going on all the time. The only association I am considering not joining this year is the EAEL. It has got very small and for some reason I do not get the benefit I have got in past years. Phil Dushey global@globaleasing.com Two—may go to Three I am currently a member of UAEL and EAEL. I was a member of ELA, which is an excellent organization, for 7 years. I found that my return on investment was diminishing however. I will probably join NAELB next year depending upon their conference schedule. I have no desire to return to Orlando so soon. Rob Yohe --- Well, UAEL hasn't gotten back to me yet, but we really weren't active. We are NAELB and ELA members. I think that these two fit together very nicely - great technical support and networking opportunities. My focus is very business-oriented and not social; NAELB and ELA seem to me to be the most business-to-business organizations, although I have great respect for all the others and hope everyone joins at least one. Barry Marks Bsmblik@aol.com --- I belong to UAEL and NAELB. Bob Teichman, CLP Teichman Financial Training 3030 Bridgeway, Suite 213 Sausalito, CA 94965 Tel: 415-331-6445 Fax: 415-331-6451 e-mail: BoTei@aol.com "Providing education and training to the equipment leasing and financing industry." ----
LPI Financial is a member of two associations: UAEL and NAELB.
I belong to the ELA and the EAEL as well. The ELA has introduced me to some larger players than those who normally participate in UAEL activities, and the EAEL has helped broaden my geographical presence. Ken Law Offices of Kenneth C. Greene 938 B Street San Rafael, CA 94901 Tel: 415 721 7900 Fax: 415 256 9922 E-mail: KGreene100@aol.com --- We belong to UAEL and ELA. We did not renew with NAELB, no particular reason we just decided not to rejoin. We have considered for a long time not renewing with UAEL. The events seem to be more social than value oriented. The social aspect is good, however there also needs to be some value as the investment is about $3-5,000 per year depending on how many events you attend and where they are located. I do not believe there is any benefit unless you are active, but it is not all about networking which UAEL seems to be heavy on. ELA provides incredible information. I believe membership is essential if you are in this industry. Their events are also packed with value and it is a very professional organization. Once again activity is important in this association also. Andrew Thorn ---- I belong to UAEL and NAELB. I believe that you can't know enough people in the industry you are making your living in. The sharing of information that goes on in workshops and the hallways of an association conference is priceless. Ginny Young --- We belong to UAEL. I have been associated with this organization for over twenty years and have participated in it's leadership through the Board of Directors, Committee chair, SIG chair and various workshops and presentations. I take great pride in my association activities and in the knowledge that I have contributed, in some small way, to the success of the organization. I believe that participation has not only increased my industry knowledge but has also helped me forge strong and long lasting alliances within the leasing community and specifically the lending segment. I'm quite comfortable within UAEL and although the organization is less than it once was and certainly less than it could be, I believe the leasing industry is far better off because of UAEL. I will continue to support it as long as I am able. I am also greatly encouraged by and appreciative of some of the leasing industry veterans that have recently agreed to assist in the refocusing UAEL. We also belong to NAELB. I have been a member of NAELB for less than two years. I joined because I see it as a very fresh approach to providing real value to a specific segment of our industry. The member participation and enthusiasm is extraordinary and very encouraging. It certainly is more of a 'grass roots' organization and less formal than most other leasing organizations. It is full of energy and I like the fact that many members seem genuinely interested in sharing with and helping others. Very unusual for such a competitive environment. I'm learning new stuff all the time or maybe it's old stuff that I've simply forgotten. Rick Wilbur Managing Partner Media Capital Associates, LLC 480-941-8558 ext. 104 480-941-4588 - Fax --- Keystone Equipment Leasing, Inc. has been a member of the Eastern Association of Equipment Lessors for about fifteen years. The networking that the EAEL has provided me has been an important part of our success. The Fall Expo is always the most valuable day of the year. A few years ago we added the National Association of Equipment Lease Brokers. NAELB has become quite valuable. The ListServe contributions of people such as Marks, Bonnano, Egan, and Teichman have been worth a hundred times the associations dues. Barry Reitman KEYSTONE EQUIPMENT LEASING, INC. baldguy@keystoneleasing.com Downtown Cosmopolitan Blooming Grove, New York ---- One At this time I belong only to UAEL. We were also members of EAEL for a long time but we dropped that membership quite some time ago. Unlike Steve, from the standpoint of the lessor/broker, I saw a lot of overlap. I never saw any value in be longing to the NAELB. I am considering joining the ELA this year however. The size of our company, our growth, and the opportunities that present themselves in the market place may dictate that joining the ELA is a prudent move. I agree with Andrew that you have to be involved. Not to long ago I sat down and added up my investment in the UAEL over the past 15 years. This exercise included the cost of dues, conferences and the best estimate I could come up with of the time involved in being and officer. My number was approximately $125,000.00. While this sounds like a lot of money, when I look back at the income my companies have produced over that same period the investment in the association was about 2.5% of my income. I don't think enough people evaluate involvement in the associations this way. If they did they would realize the value of joining. Bob Rodi President LeaseNOW, Inc. drlease@leasenow.com www.leasenow.com 1-800-321-LEAS (5327)x 101 ___ We were a member of WAEL and later UAEL and NAELB. We also considered joining ELA. Our history goes back a long way with WAEL, we may have joined the first year it was in existence. As you know Dumac Leasing was acquired by Exchange Bank in 1994. This event changed our market focus. As a broker we enjoyed the National WAEL meetings and more often regional meetings held in Sausalito. It gave us an opportunity to meet our peers in a friendly, non-combative setting. Two events caused us to reconsider our membership in UAEL. First, brokering become less important to our business and second, WAEL and UAEL merged to become a national organization. It seems our company and UAEL are moving down separate paths. We work only with brokers in Northern, CA and depend upon direct contact to secure their business. We have found this approach to be fairly successful, though we are constantly trying to improve. This method of marketing makes attendance to a National Association Meeting less meaningful than it would be should we use that meeting to greet our clients (brokers). We surveyed brokers and found overwhelmingly they are members of NAELB. For that reason alone we felt we should join NAELB. We have attended ELA meetings and find them to be very interesting. Let me wrap this up by saying this is not a closed subject - we may have a desire to join another organization in the future. However, we will look for the real benefits it offers our company. Kit, thanks for doing this. Archie Julian --- We are members of NAELB. I have attended one conference in Texas about 3 years ago, but primarily signed up for the Airborne Express rate, and Equifax benefits. Unfortunately, Airborne was not familiar with NAELB and Equifax charged us the new business rate regardless of our association membership. Based on those occurrences we have not felt our money was well spent. As for the NAELB being a source for new Funders...I am not so sure that is accurate any more. We work primarily with Republic, Pioneer, and Pawnee. We certainly are interested in finding a source for structured and slightly odd but legitimate transactions however, after looking at the lists of Funders attending recent conferences, it certainly does not appear that they are attending. Simply more of "the same" funders. More than likely we will continue our membership and hope that NAELB will attract some creative Funding sources. Until then, we will happily continue with our very picky, but honest sources. Thanks for all of your efforts and hard work on this news letter. Thor M. Christianson Commercial Lease Solutions www.MrLease.com 800.261.5986 ____ I belong to NAELB it is the only Association that looks out for the Broker. Ower association is not influenced by Large givers who can take charge of the association. The dues are reasonable and the Conferences are streamlined no frills with lots of educational and networking opportunities. I would probably support ELA if it were not so costly to be a member. John Winchester jwinchester@comcolease.com _________________________________________________________________ If you would like to participate in the survey, let us know how many leasing associatioins you belong to. Adding a comment about why is up to you---We are just trying to understand the belief many belong to more than one association. ----------------------------------------------------------------------------------------- ##### ################################################# State Governments Endorse New Leasing and Software Definitions by Dennis Brown for Equipment Leasing News Association ELT News ( complete report of Streamline Sales Tax Project New Orleans meeting at the end of Leasing News ) State revenue officials meeting as the Streamlined Sales Tax Project (SSTP or Project) voted to approve a new definition of leasing. Initial reactions to clarifying sale-leasebacks were promising. Deliberations on a uniform definition of Tangible Personal Property” (TPP) will be carried over to future sessions but some software definitions within the TPP section were adopted. The lease definition will move to consideration by Delegates to the new Implementing States after completion of an issue paper to accompany it. If accepted by the Delegates, it would become a component of model legislation to be released as early as this summer. To receive periodic email updates on these developments contact dbrown@elamail.com with your name and company in the request. The lease/rental definition is as follows: DEFINITION OF LEASE OR RENTAL To be inserted in Agreement, Section 312. Definitions. LEASE or RENTAL Lease or rental means any transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration. A lease or rental may include future options to purchase or extend. 1) Lease or rental does not include: a.) A transfer of possession or control of property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments; b.) A transfer of possession or control of property under an agreement that requires the transfer of title upon completion of the required payments and payment of an option price that does not exceed the greater of $100 or 1% of the total required payments; or c.) The provision of tangible personal property along with an operator for a fixed or indeterminate period of time. 2) Lease or rental does include: Agreements covering motor vehicles and trailers where the amount of consideration may be increased or decreased by reference to the amount realized upon sale or disposition of the property as defined in 26 USC 7701(h)(1). 3) Characterization of Transaction for Other Purposes: The definition provided in this section shall be used for the purposes of this chapter regardless if a transaction is characterized as a lease or rental under generally accepted accounting principles, the Internal Revenue Code, the [state commercial code], or other provisions of federal, state or local law. The definition of lease in this section shall neither impact any existing sale-leaseback exemption or exclusion that a state may have nor preclude a state from adopting a sale- leaseback exemption or exclusion after the effective date of this Agreement. Sale-Leaseback Definition: Also during discussions in New Orleans, industry representatives recommended drafting a uniform “sale-leaseback” definition for the interstate Agreement that will become model legislation sent to state legislatures. This would be an optional definition a state may elect to adopt. There is a lack of uniformity among states defining sale-leasebacks and a uniform definition would modify provisions that currently exist in states by regulation or statute. As a corollary, some states have double taxation resulting from tax on the purchase and subsequent lease while others only tax the transaction once. Writing the optional definition as an exclusion was suggested by industry to alleviate double taxation. Initial reactions from state revenue officials were encouraging but the issue will carry over to future sessions. Computer Software: Katherine Breaks reports in E-TaxNews Flash from KPMG that SSTP approved uniform definitions for “computer software,” “prewritten software,” and “delivered electronically.” Breaks relates that the definitions are: “Computer software” means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task. “Prewritten software” means computer software, including pre-written upgrades, which is not designed and developed by the author or other creator to the specifications of a specific purchaser. The combining of two or more pre-written computer software programs or pre-written portions thereof does not cause the combination to be other than pre-written computer software. Pre-written software includes software designed and developed by the author or other creator to the specifications of a specific purchaser when it is sold to a person other than such purchaser. Where a person modifies or enhances computer software of which such person is not the author or creator, such person shall be deemed to be the author or creator only of such person's modifications or enhancements. Pre-written software or a pre-written portion thereof that is modified or enhanced to any degree, where such modification or enhancement is designed and developed to the specifications of a specific purchaser, remains pre-written software; provided, however, that where there is a reasonable, separately stated charge or an invoice or other statement of the price given to the purchaser for such modification or enhancement, such modification or enhancement shall not constitute pre-written computer software. “Delivered electronically” means delivered from the seller to the purchaser by means other than tangible storage media. Delivered electronically also includes the delivery by use of a tangible storage media where the tangible storage media is not physically transferred to the purchaser. Custom Software: E-TaxNews Flash also reported Project representatives and industry participants discussed the proposed definition for “prewritten software.” During that discussion, an industry participant observed that the proposed definition provides that modifications to software or “customized” software would be included in the definition of “prewritten software” unless the amount charged the customer for modification or customization was separately stated. SSTP representatives concurred with this interpretation. Dennis Brown ELA Phone Number: 703-516-8368 E-mail: dbrown@elamail.com ELT-News is the Daily News of the Equipment Leasing Association Today sponsored by PowerLease http://www.myrrdin-inc.com/ ### ####################### ############################## Textron Financial's Finance Company Services Finalizes $5 Million Asset Purchase Program With TWG Capital, Inc.
COLUMBUS, Ohio--A division of Textron Financial Corporation, Finance Company Services ("FCS") has closed and begun funding under a $5 million asset purchase program with TWG Capital, Inc. FCS is a specialized financial service company focused on meeting the needs of the middle market, independent lending community. Based in Indianapolis, Indiana, TWG is an early stage specialty finance company serving the needs of insurance agents, primarily those selling long-term care ("LTC") policies. TWG accelerates agent cash flows by purchasing future renewal commission streams owed to agents from insurance carriers, valuing these streams through the use of sophisticated actuarial models. This "discounting" of the future expected commission streams provides working capital for growth, can fund acquisitions or even allow agents to retire early. The agreement with FCS will provide TWG additional financial firepower to enhance its ability to deliver its unique service to its clients. "TWG has created financial solutions to accelerate agents' income streams and FCS provides the raw material that enables TWG to do just that," said Jim Wallace, TWG President. "As the TWG Capital concept grows in popularity, so does our need for capital availability. Getting money out the door to agents is our business and FCS is helping us achieve that mission." "TWG is a pioneer in the business of helping insurance agents and agencies monetize future expected cash flows," said Mark D. Quinlan, president of FCS. "We are pleased to partner with such an innovative organization." About TWG Capital, Inc. TWG is a financial service company dedicated exclusively to the needs of insurance producers. With 15 years of experience and originations in excess of $75 million, TWG is a resource to new, growing and well-established insurance producers nationwide. More information is available at www.twg-capital.com. About Textron Financial Corporation Textron Financial is a diversified commercial finance company with $9.1 billion in managed receivables and twenty-two years of record earnings. Its market-aligned businesses provide lending and leasing to small and middle market companies, as well as financial services that include asset management, syndications, portfolio servicing, and insurance brokerage. Textron Financial also provides specialty finance for the franchise, golf and timeshare industries. Additional information about the company is available at http://www.tfc.textron.com/. Finance Company Services (http://www.financecompanyservices.com/),a division of Textron Financial, is devoted exclusively to companies whose raw material is money. Finance Company Services is headquartered in Columbus, Ohio. Textron Financial Corporation is a subsidiary of Textron Inc. (NYSE:TXT), a $13 billion global, multi-industry company with market-leading businesses in Aircraft, Automotive, Industrial Products, Fastening Systems and Finance. Textron has a workforce of over 68,000 employees and major manufacturing facilities in 30 countries. Textron is among Fortune magazine's "Global Most Admired Companies" and Industry Week magazine's "Best Managed Companies." Additional information is available at http://www.textron.com/. CONTACT: Textron Financial Corporation Hillary T. Jeffers, 614/229-7979 hjeffers@tfc.textron.com ### ############################## ####################### ###################### ################### ###################### Velos Capital -- Leading Lessor of Information Technology Equipment to Fortune 1000 Companies -- to Resell Artera Turbo ( press release headline—not Leasing News. ed )
WESTPORT, Conn--Velos Capital, a leading provider of leased computer and communications equipment, will resell Artera Turbo(TM) subscription service for high speed Internet access from Artera Group Inc., a wholly-owned subsidiary of NCT Group, Inc. (OTCBB: NCTI). Velos will make the service available to its Fortune 1000 customers. Artera Turbo is a new Internet access technology that improves the effective performance of communication lines. Via a proprietary series of optimization strategies, Artera Turbo increases efficiencies in the movement and storage of electronic data. Artera Group has six patents pending on these performance enhancement techniques. With Artera Turbo, traditional dial-up connections perform at broadband-like speeds of up to 8 times the normal speed of dial-up lines. The performance of faster connections such as cable, DSL, ISDN and TI is greatly improved as well. "Artera Turbo subscribers benefit from significant performance enhancements, and our customer base constantly expresses their need for just these types of enhancements that lead to improved productivity," said James Cross, Vice President, Velos Capital. "Not only will Artera Turbo greatly increase user Internet speeds and productivity, it will provide significant savings in our customers' remote sites' telecom and networking infrastructure budgets." "Velos will introduce Artera Turbo to important Fortune 1000 companies with whom they have established vendor relationships," said Michael J. Parrella, chairman and CEO of the NCT Group, Inc. "We believe that Velos will be a key distributor and we look forward to working with them." About Velos Capital Velos Capital is a profitability improvement partner well known for tackling complex IT challenges and delivering balance sheet relief. Velos Capital works closely with their clients to structure capital equipment finance and leasing solutions from procurement through disposition. Velos Capital works with Fortune 1000 companies in the United States, Canada, Mexico and Europe. For more information refer to www.veloscapital.com. About Artera Group, Inc. Artera Group provides small and medium enterprises (SMEs), as well as remote workers and branch locations of large corporations, with a comprehensive range of highly reliable and scalable global Internet access and networking services including backbone connection services, high-speed broadband access, virtual private networks, web hosting and design, server collocation, e-commerce, Voice Over Internet Protocol and other enhanced services. For more information refer to www.arteragroup.com. About NCT Group, Inc. NCT Group, Inc. is a publicly traded, high-tech company with operating subsidiaries in media and communications. NCTI's strong technology base of using sound and signal waves to electronically reduce noise, improve signal-to-noise ratio and enhance sound quality, drives leading edge technological innovations. NCTI's media subsidiary, Distributed Media Corporation International (DMCI), delivers its unique place-based Sight & Sound(TM) microbroadcasting systems to out of home venues, offering advertisers exciting targeting opportunities. NCTI's communications subsidiaries include Midcore Software, maker of award-winning MidPoint Internet connectivity software; Pro Tech (OTCBB: PCTU), delivering headsets and proprietary technology to call centers; and Artera Group, a provider of high-speed networking to small and medium businesses. The Company's emerging technology incubation strategy nurtures ongoing development of NCTI technologies and complementary technologies from outside developers, with a specific concentration on Internet Protocol (IP) applications. For more information refer to www.nctgroupinc.com. Cautionary Statement Regarding Forward-Looking Statements Certain information contained in this press release comprise forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 (the "Act"), which became law in December 1995. In order to obtain the benefits of the "safe harbor" provisions of the Act for any such forward-looking statements, NCTI wishes to caution investors and prospective investors about significant factors, which among others, have in some cases affected NCTI's actual results and are in the future likely to affect NCTI's actual results and cause them to differ materially from those expressed in any such forward-looking statements. Investors and prospective investors should read this press release in conjunction with NCTI's recent filings with the Securities and Exchange Commission available online in the EDGAR database at http://www.sec.gov. CONTACT: NCT Group, Inc., Westport Joanna Lipper 203/226-4447 ext. 3506 203/226-3123 (fax) jlipper@nctgroupinc.com ############# ############################################ Prime Finance Downrated by Fitch CHICAGO-- --Fitch downgrades the following classes of securities: Prime Finance Corporation 1999-A-1 Prime Finance Corporation 1999-A-2 --Class A notes are downgraded to 'BBB' from 'A'; --Class B notes are downgraded to 'CCC' from 'BB'; Both classes remain on Rating Watch Negative. In addition, all classes of Prime Finance Corp. 1995-A, Prime Finance Corp. 1996- A, Prime Finance Corp. 1997-B, Prime Finance Corp. 1998-A-1 and 1998-A-2 remain on Rating Watch Negative. These rating actions are the result of adverse collateral performance and deterioration outside of the Fitch original base case expectations. As mentioned in previous press releases (see Fitch press releases dated Sept. 15, 2000, Nov. 17, 2000, and June 22, 2001), Fitch did not receive servicing reports for four consecutive months during the transfer of servicing to US Bancorp Portfolio Services. Upon receipt of the first servicing report since the completion of the transfer, Fitch was disturbed to note serious collateral deficiencies resulting in a dramatic loss of credit enhancement. Despite efforts to resolve collateral shortfalls, losses persist and overall performance continues to decline. Fitch will continue to closely monitor these notes and may take additional rating action in the case of further deterioration. ( courtesy ELAonline.com ) ######################### #################################### Fitch Downgrades FNF Capital Lease Securitizations NEW YORK-- --Fitch downgrades and places on Rating Watch Negative the following classes of securities: GF Funding Corp. VIII, Series 1999 --Class D notes are downgraded to 'BBB-' from 'BBB'; --Class E notes are downgraded to 'CCC' from 'BB'. Both the class D and class E notes are placed on Rating Watch Negative. FNF Funding X, LLC --Class D notes rated 'BBB+' are placed on Rating Watch Negative; --Class E notes rated 'BBB' are placed on Rating Watch Negative. These rating actions are the result of adverse collateral performance and deterioration outside the Fitch original base case expectations. After 28 months of performance for GF VIII and eight months of performance for FNF X, cumulative net losses as a percentage of the original contract pool balances are 6.12% and 2.69%, respectively. In addition, 91-plus day delinquencies are 3.56% for GF VIII and 1.44% for FNF X. These higher-than-expected loss and delinquency rates contribute to the accelerated pace of performance erosion in both securitizations. The underlying pool backing both the GF VIII and FNF X notes, consists primarily of secured lease and loan contracts used to finance the acquisition of equipment by end-users, and purchases of restaurant franchises. As of October 2001, FNF Capital ceased origination of such contracts, and has since closed its headquarters in Golden, Colorado. Servicing has been transferred to Santa Barbara, California, where collections will continue until all outstanding contracts are settled. Fitch will continue to closely monitor these notes and may take additional rating action in the case of further deterioration. ( courtesy of ELAonline.com ) ################### ########################################### --------------------------------------------------------------------------------------------------- Economists Now Predict No Fed Rate Cut/Rate Increase in Near Future? By Al Yoon, Bloomberg Twenty-two out of the 24 economists at Wall Street's biggest bond dealers expect the Federal Reserve to leave interest rates unchanged when policy makers meet next week. A week ago, just three said so. Merrill Lynch's Bruce Steinberg, J.P. Morgan Chase's James Glassman and 17 other economists who anticipated a quarter point cut in rates switched their forecast after Fed Chairman Alan Greenspan signalled the economy may soon rebound. The Fed chairman said "pretty much point blank we've seen enough signs of stability," said Robert DiClemente, an economist at Salomon Smith Barney, who was among the economists who changed their minds at the primary dealers, firms that trade directly with the Fed. A decision to leave overnight rates at 1.75 percent would be the first time since December 2000 the Fed didn't cut its target at a policy meeting. The Fed lowered the rate 11 times last year to a 40-year low to help pull the economy out of recession. Greenspan's testimony to Congress sparked the change in consensus. He said falling business inventories may produce a "significant" boost to income and spending, quickening the economy's rebound. A pickup in growth makes more rate reductions unnecessary, economists concluded. The Fed chairman's comments contrasted with remarks that Greenspan made in a speech on Jan. 11 in which he said the economy faced "significant risks." Economists pointed to that comment as evidence the Fed would likely make additional rate reductions. Some traders placed bets last week that the Fed wouldn't lower rates at its meeting that begins Jan. 29. By switching forecasts, the economists are catching up with the traders. Federal fund futures, the interest rate-futures market's closest gauge to rate expectations, are showing an 8 percent chance that rates will be cut, down from 40 percent last week. The expectation that the Fed will stop lowering rates has prompted investors to drive up yields during the last two weeks. The yield on the benchmark 10-year Treasury note has risen 23 basis points to 5.07 percent over the past seven sessions. That yield is 13 basis points below a six-month high. A basis point equals 0.01 percentage point. Some economists said Greenspan may have changed his outlook because of signs in the last two weeks that the economy is recovering. Initial filings for jobless claims fell last week to the lowest level in half a year while a consumer sentiment gauge rose to its highest level in a year and a factory report showed manufacturing may emerge soon from an 18-month contraction. Unless Greenspan has "been misinterpreted again," there'll be no change in rates, said John Ryding, chief market economist at Bear Stearns & Co. "You can't rule out further cuts this year, but once they stop, it'll be hard to start again." Many economists say once policy makers stop cutting, their next move will be to raise rates. Henry Willmore of Barclay's Capital and Banc of America Securities' Peter Kretzmer forecast the Fed will begin raising the overnight rate in the second quarter of the year to prevent the recovery from fueling an inflation surge. --------------------------------------------------------------------------------------------------- Streamlined Sales Tax Meeting Report from Dennis Brown, Equipment Leasing Association Meeting in New Orleans on Thursday, January 24, the Streamlined Sales Tax Project (SSTP or Project) voted to approve the new definition of leasing but deliberations on a uniform definition of Tangible Personal Property" (TPP) to include software and/or digital products will be covered over to future sessions. The lease definition will move to consideration by Delegates to the new Implementing States after completion of an issue paper to accompany it. If accepted by the Delegates, it would become a component of model legislation to be released as early as this summer. The definition is as follows: DEFINITION OF LEASE OR RENTAL To be inserted in Agreement, Section 312. Definitions. LEASE or RENTAL Lease or rental means any transfer of possession or control of tangible personal property for a fixed or indeterminate term for consideration. A lease or rental may include future options to purchase or extend. 1) Lease or rental does not include: a.) A transfer of possession or control of property under a security agreement or deferred payment plan that requires the transfer of title upon completion of the required payments; b.) A transfer of possession or control of property under an agreement that requires the transfer of title upon completion of the required payments and payment of an option price that does not exceed the greater of $100 or 1% of the total required payments; or c.) The provision of tangible personal property along with an operator for a fixed or indeterminate period of time. 2) Lease or rental does include: Agreements covering motor vehicles and trailers where the amount of consideration may be increased or decreased by reference to the amount realized upon sale or disposition of the property as defined in 26 USC 7701(h)(1). 3) Characterization of Transaction for Other Purposes: The definition provided in this section shall be used for the purposes of this chapter regardless if a transaction is characterized as a lease or rental under generally accepted accounting principles, the Internal Revenue Code, the [state commercial code], or other provisions of federal, state or local law. The definition of lease in this section shall neither impact any existing sale-leaseback exemption or exclusion that a state may have nor preclude a state from adopting a sale-leaseback exemption or exclusion after the effective date of this Agreement. Sale-Leaseback Definition: Also during discussions in New Orleans, industry representatives recommended drafting a uniform "sale-leaseback" definition for the interstate Agreement that will become model legislation sent to state legislatures. This would be an optional definition a state may elect to adopt. There is a lack of uniformity among states defining sale-leasebacks and a uniform definition would modify provisions that currently exist in states by regulation or statute. As a corollary, some states have double taxation resulting from tax on the purchase and subsequent lease while others only tax the transaction once. Writing the optional definition as an exclusion was suggested by industry to alleviate double taxation. Initial reactions from state revenue officials were encouraging but the issue will carry over to future sessions. Computer Software: Katherine Breaks reports in E-TaxNews Flash from KPMG that SSTP approved uniform definitions for "computer software," "prewritten software," and "delivered electronically." Breaks relates that the definitions are: "Computer software" means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task. "Prewritten software" means computer software, including pre-written upgrades, which is not designed and developed by the author or other creator to the specifications of a specific purchaser. The combining of two or more pre-written computer software programs or pre-written portions thereof does not cause the combination to be other than pre-written computer software. Pre-written software includes software designed and developed by the author or other creator to the specifications of a specific purchaser when it is sold to a person other than such purchaser. Where a person modifies or enhances computer software of which such person is not the author or creator, such person shall be deemed to be the author or creator only of such person's modifications or enhancements. Pre-written software or a pre-written portion thereof that is modified or enhanced to any degree, where such modification or enhancement is designed and developed to the specifications of a specific purchaser, remains pre-written software; provided, however, that where there is a reasonable, separately stated charge or an invoice or other statement of the price given to the purchaser for such modification or enhancement, such modification or enhancement shall not constitute pre-written computer software. "Delivered electronically" means delivered from the seller to the purchaser by means other than tangible storage media. Delivered electronically also includes the delivery by use of a tangible storage media where the tangible storage media is not physically transferred to the purchaser. Custom Software: E-TaxNews Flash also reported Project representatives and industry participants discussed the proposed definition for "prewritten software." During that discussion, an industry participant observed that the proposed definition provides that modifications to software or "customized" software would be included in the definition of "prewritten software" unless the amount charged the customer for modification or customization was separately stated. SSTP representatives concurred with this interpretation. Dennis Brown www.leasingnews.org
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