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July 12, 2001 GE Reports Highest-Ever Quarterly Earnings-up 15% Amembal Capital Corporation (ACC) Announces Record Earnings The Monitor Isn't Talking---Nor Are We about Industry Forum Until UAEL, NAELB, ELA, CLP Foundation..... Middle Market Leasing--- Dale Kluga and Dexter Tong Dechert Expands Finance Practice Cute and Cuddly Barry Reitman http://www.yozons.com/pub/
"FREE ATTENDEE REGISTRATION TO THE HOTTEST EVENT IN EQUIPMENT LEASING INDUSTRY" that's what it says-/see for yourself
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GE Reports Highest-Ever Quarterly Earnings; Earnings Per Share Up 15% to $.39 - Earnings Up 15% to $3.9 Billion
FAIRFIELD, Conn
GE's second-quarter earnings of $3.897 billion were the highest for any quarter in the Company's history, Chairman John F. Welch reported today.
"GE's long-cycle businesses continue to achieve record results and grew operating profit 30%. GE Capital Services had a strong quarter with earnings up 16%. Our short-cycle businesses, continuing to feel the impact of the U.S. economic slowdown, reported operating profit down 11% for the quarter. As previously announced, we expect earnings per share for the year to be greater than $1.45," Mr. Welch said.
Specific highlights include: --
Second-quarter earnings per share increased 15% to $.39, up from last year's $.34, and earnings increased 15% to $3.897 billion. Both were records for the quarter.
-- Revenues for the second quarter were $32.0 billion, down 3% from last year's record $32.9 billion. As expected in this economy, long-cycle industrial revenues increased 22%, short-cycle revenues were down 6% and GE Capital Services (GECS) normalized revenues increased 5% (while GECS reported revenues were down 13%).
-- Cash generated from GE's operating activities during the first half was a record $7.8 billion, up 32% from last year's $5.9 billion. As part of the $22 billion share repurchase program, GE purchased $634 million of its stock during the second quarter to reach $19.1 billion
-- 986 million shares
-- purchased since December 1994.
-- GE's second-quarter operating margin was 20.6% of sales, up from last year's record 20.4%. The second-quarter margin growth reflects the increasing benefits from GE's focus on services, Six Sigma quality and digitization initiatives. Services grew 12% in the quarter, and digitization efforts are on track to save $1.6 billion of cost through digitization.
-- GE Capital Services' second-quarter earnings rose to $1.476 billion, 16% over last year's $1.277 billion. These record results reflect the globalization and diversity of GECS' businesses, with strong double-digit increases in its Consumer Services and Equipment Management segments. Revenues for GECS declined 13% largely reflecting results in business units engaged in anticipated contractions, principally IT Solutions, Wards and the planned transition of restructured insurance policies from Japanese acquisitions. GECS revenues, excluding these items, increased 5%.
"In addition to delivering record second-quarter results, GE's businesses made aggressive moves to position themselves for strong future growth," Mr. Welch said. Although we are disappointed about the European Commission's July 3 decision on the Honeywell merger, these second quarter results show the continued vitality of GE's diverse group of global businesses.
Highlights of recent activities include:
GE Aircraft Engines (GEAE) won more than $2 billion of firm equipment orders in the second quarter. Significant events included the launch with Air France of the GP7200 engine on the new Airbus A380-800, which, including options and spare engines, is valued at $900 million. The growth in regional jets continued with significant orders at Air Wisconsin Airlines, Deutsche Structure Finance and Northwest Airlines with a combined value, including options, approaching $2 billion. GE Engine Services added approximately $2.9 billion of multi-year service agreements, including agreements with Federal Express valued at $1.5 billion and Southwest Airlines valued at $1 billion. GE Engine Services launched the CFM56-3 core upgrade with Southwest Airlines, a deal valued at $300 million. GEAE was awarded a U.S. Navy contract valued at $400 million for F414 engines to power the F/A-18E Super Hornet and a 10-year hardware upgrade contract valued at $600 million for J85-5 engines to power the U.S. Air Force fleet of "Talon" supersonic jet trainers.
GE Medical Systems (GEMS) introduced the GE Discovery LS, which combines CT and positron emission tomography (PET), to help doctors better detect and treat cancer. Orders for PET imaging systems were up 27% over second quarter 2000. Digital x-ray system orders were up 122%, led by strong momentum for the GE Senographe 2000D mammography system and GE Innova 2000 digital cardiac x-ray system. Orders for GE CT systems grew 39%. As hospitals continue to digitize their clinical departments, orders for information technology systems increased 35%. Regional growth also contributed to GEMS' overall success, led by 60% orders growth in China.
GE Power Systems (GEPS) orders totaled $5.3 billion in the quarter. Shipments of heavy-duty gas turbines increased 55% in the quarter to 90 units. Fifty-six aero-derivative units were shipped in the second quarter, a 167% increase over the second quarter 2000. In response to short-term demand for additional power in the U.S. market, GEPS dispatched 22 TM2500 mobile power generation units. GEPS added $2 billion in new service agreements in the quarter, driving total commitments for these multi-year agreements to $19.6 billion. GEPS announced the acquisitions of AC Compressor Group, expanding its product offerings for U.S. oil and gas customers, and IMV, a European-based manufacturer of uninterruptible power supplies. GEPS also purchased the remaining shares of GE Harris Energy Management Systems joint venture to increase its focus on transmission and distribution automation.
GE Transportation Systems won a 20-year full-service agreement with Union Pacific on up to 1,500 locomotives.
NBC, in a very difficult advertising environment, won the May 2001 Sweeps for adults 18 to 49 by the largest margin any network has posted in any sweeps over the past two years. NBC has won this key demographic in each of the last five sweeps and 23 of the past 26 sweeps over the last six-and-a-half years. NBC also finished the season ranked first in adults 18 to 49 on Wednesday, Thursday and Friday and has made dramatic progress on Monday nights since the debut of Weakest Link. NBC's summer performance was the strongest in years with the launch of Fear Factor and Spy TV - the highest rated series on television this summer.
GE Capital Services positioned its businesses for future growth through acquisitions and core growth. Global Consumer Finance (GCF) acquired $2.3 billion of net earning assets from igroup Limited, a UK market leader in secured debt consolidation and refinancing loans. GCF also established a joint venture in Thailand with British supermarket group Tesco Plc to issue and manage Tesco Lotus private label credit cards. Commercial Equipment Finance and Vendor Financial Services reached an agreement to purchase assets of $2.3 billion in two Mellon Leasing Corporation businesses. European Equipment Finance purchased the assets of CIT's UK-based office equipment leasing business. GE Financial Assurance reached an agreement to acquire National Mutual, a provider of wealth protection products based in the UK. Structured Finance Group provided $388 million senior secured financing to NTL Incorporated.
Mr. Welch concluded: "The record results for the second quarter once again demonstrate the ability of GE's diverse mix of leading global businesses to deliver earnings growth, high margins and strong cash generation during a challenging economic period. I will retire from GE at the September 7th GE board meeting, more confident than ever that Jeff Immelt and his team will lead the Company to even greater achievements in the future. The strength of our long-cycle businesses combined with our ongoing initiatives--globalization, Six Sigma, services and digitization--position GE to deliver another year of record performance in 2001."
GE, with 2000 revenues of $130 billion, is a diversified technology, services and manufacturing company with a commitment to achieving customer success. GE operates in more than 100 countries and employs 313,000 people worldwide. For more information, visit the company's Web site at http://www.ge.com.
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Until UAEL, NAELB, ELA, CLP Foundation.....
I read the e-mail from Bob Rodi, CLP today relative to the unethical practices and behavior of some of this industries participants. As I have written before, and has been discussed in Leasingnews numerous times before by many other people, this industry has recently been plagued by scum.
There are a lot of people that have learned this business, and instead of using that knowledge and experience to provide service and earn a respectable living, they have used the unregulated nature of our business to cheat and defraud clients, employees, lenders and anyone else that will mean more income to them. I used to be very proud to be in this business, I am not so sure any more. It is hard to compete against competition that has no concept of fair play and ethics.
I agree with Bob that something has to be done and if we do not come up with a way to drive the scum from our industry, the government will. I still maintain that the way to control these things is through strong group action. That means that until UAEL, NAELB, ELA, CLP foundation, etc. step up and take some semblance of responsibility and control for regulating ethical behavior of participants in this industry, their only contribution will be education (big deal) and this mess will continue.
I have read all of the great rhetoric from these organizations over the past year about their standards and how they are doing their best to maintain compliance, but they have failed miserably. Until they take responsibility for their members and insist on strict standards of ethical behavior, they have let us all down.
When strict, measurable standards are enforced, then it will have tremendous value to be a member of one or more of these organizations. Until then, there is no way for lenders, lessees or vendors to determine the difference between my company and the scum. And until then, the actions of the scum will have a reflection on my company by industry association.
Make sure that you print my name. I love the phone calls. Thank you
W. Russell Runnalls, CLP Markay Financial Corporation (818)998-6125 (818)998-6127 (fax) www.markay.com russ@markay.com ~~~~~~
I agree with Bob Rodi that the unethical folks leave a black mark on our industry, but I must stress the importance of being self-policed. While Bob made no mention of turning to the "government" for help, (more laws) I would like to remind those looking for a quick fix that nothing scares me more than government intervention. Just imagine taking direction from the bureaucrats who know nothing about our industry but create "standards and policies" to protect us from ourselves. Observe the chaos recently created by the FTC on personal back ground checks. That is a drop in the bucket compared to what you will have to deal with in the future.
If you thrive on government regulation, get in the banking business. The bottom line is that there are crooks in every industry, (even those that are highly regulated) and they usually pay the price in the end.
Like Bob said, it is important that we all take an aggressive stance on ethical business practices. Its our future.
Carl Fernyak MT Business Leasing cfernyak@mtbustech.com
Monitor Daily Forum-No One's Talking Several readers have asked us why they have not been able to connect to the Monitor Daily Industry Forum. One answer may be a message sent in which was fraudulent, as messages are not screened. Listserve is more a "chat room," whereas a bulletin has legal liabilities. The party who the message was aired, the party who allegedly sent it, and the party who admitted to sending it were in touch with Leasing News. It was fraudulent. So far, the Monitor is not talking about the incident. Nor will we. ------------------------------------------------------------------------------------------------------------ Leasing News Association Meeting List Up-to-Date except for: http://www.leasingnews.org/meetings.htm ARIZONA FUNDERS APPRECIATION EVENT Arizona
Diamondbacks VS. San Francisco Giants (Limited Space on a First-Come/First-Served Basis - This is a Sellout Every Year - Register TODAY!) Get ready to mix business with pleasure! The Arizona Regional Event is headed to the Bank One Ballpark for an evening of baseball, networking and refreshments. Join industry peers in an exclusive Skybox. Networking in a summer fun manner! The opportunity that you have been waiting for is on Thursday, July 26. Funders are ready to share! Find out what's hot! New Programs...New Funds...New Concepts! Space is limited and on a first come basis. The fun begins at 5:35 p.m. with the opening of the Skybox and continues with the first pitch at 7:05 p.m. Register today! For more information, please contact: Alan Jensen, CLP, Lease2Loan at (602) 788-4422 or Irv Ellis, CLP, LeaesCor, Inc. at (602) 395-0463. Registration must be received by July 21, 2001 to avoid a $10.00 late fee. No refunds given on cancellations, however, substitutes are welcomed! Please photocopy this form for additional registrations. Please tear off this bottom portion; fill out completely and mail or fax with payment to: 520 Third Street, Suite 201 Oakland, CA 94607 Tel (510) 444-9235 fax (510) 444-1346 www.uael.org Member
$40.00 Sign me up for the AZ Region Baseball Game on Thursday, July 26th! Name:
Joanie
Dalton - Managing Director Middle Market Leasing Two Chicago LaSalle Street CPA's ,Dale Kluga and Dexter Tong, recently started Cobra Capital, a funder based in Oak Brook. Dale Kluga was the founder of Great American LeasingCompany (GALCO), plus was involved with LaSalle Bank's leasing operation; Dexter Tong served as treasurer of ABN AMRO, Inc. Today they are focusing on what they believe is an underserved and viable national middle market. Cobra would grow by taking on the middle market. "I believe it was this investment banking 'attitude' and the misguided belief of "only the biggest will survive", that caused a lot of these failures, " Kluga explains. "Even my banker and my leasing associates thought I was nuts when I started GALCO in 1996.The concept was based on the traditional deal by deal judgmental underwriting, modest growth and private permanent funding." Their opinion was that a leasing business was not worth pursuing unless you could ramp it up and take it public in 2 years and those public companies would put me out of business because of their low cost of capital. "Not until years later during the leasing company implosions did my banker finally call me up and concede that he was glad I never pursued the fast growth "ipo" credit scoring model. "Kluga says. " It turns out that private portfolio investors were much more reliable than the securitization markets." "The Long Term Capital hedge fund explosion and its effect on the securitization market was something none of the investment bankers ever thought could happen. "It was no mystery to all the industry gurus that taking an independent leasing company public was a bad idea, " he says. " Most of the successful public leasing companies have been supported by deep pocket parent companies who can downstream/pledge capital and allow a public lessor the luxury of building the business from a short term, quarterly perspective. No question that many of the public independent failures were mis-managed, but if their business models were so valid, their respective board of directors (or secured creditors) could have replaced the management and put in more qualified people to turn things around. "Back then, and even more today, I believe a truly independent lessor is entrepreneurial in nature and is not built to make decisions for the short term. Our chemistry is very contraire, anti-bureaucratic and is built for the long term to target niches not served well by the banks and larger leasing/finance companies. Those niches require time to develop, something a public model cannot survive. "I am a little surprised I have not heard a lot more about all the small ticket abuse that went on especially with the bigger private lessors and public lessors who built their business models around a combination of ipo or "hot" VC money, complete reliance upon securitization as their permanent funding tool and the investment banking "highly praised" and frequently manipulated, credit scoring models. "I lost interest in the small ticket business, that is why we are targeting the lower end of the middle market. "As I firmly believe our economy is a function of slightly modified but repeating cycles, I am almost certain that small ticket leasing will be popular sometime in the future. I also believe that there will be a resurgence in middle market leasing as the economy recovers and consolidations ease up, and the big lessors wake up. I just hope it doesn't happen until after we have a firm grip on this niche!"
Dale Kluga Cute and Cuddly Barry Reitman http://www.yozons.com/pub/ 1. "Why the Plug?" was your headline, not my question. I do not dispute your right to plug or not. However Mr. Kommer's e-mail sucked me in with a headline - "Does the new FTC opinion letter change anything?" - and two and one-half paragraphs of "news" before ending in a pitch for his commercial service. 2. His less-than-straight-forward presentation made me question whether the service is meritorious; i.e., were you merely printing a submitted e-mail, or do you have knowledge of him? 3. None of the national funding sources with whom I work is yet willing to accept electronic signatures for this (or any other) purpose. Do you know of any funding sources that do? 4. I did not dispute the need for a signed authorization to pull a bureau. Your "no matter what anyone else says" seems to imply that I did. 5 I'm sorry you thought I might compose and send a virus. By the way, my e-mail signature is not a plug, but rather an informal scrawl of my first name, together with company name and phone number. (I have revised it - see below - to take advantage of your offer.) 6. I cut and paste each day's Leasing News into WordPerfect. I wrote the macro printed below to strip out the extra line breaks and formatting codes, reduce the font size, reduce the page margins, and format into two columns. This reduces your typical ten to fourteen pages down to two or three so I can have my Leasing News with me throughout the day - even when you are not being your usual cute and cuddly self. Barry
Reitman ( Ironically, the first story we wrote about http://www.yozons.com/pub/ was June 12 http://www.leasingnews.org/archives/June01/6-12-01.htm along with Barry's Zero Interest American Express - Deceptive Sales Practices?????? letter. This FTC ruling is a controversy. The attorneys don't even agree. Even Barry Marks, Esq. has recently stated What FTC said last year was: Getting a PG from a business owner, officer, etc. is NOT a permissible use of a consumer (read to mean individual person's) credit report even if it is used in connection with a business transaction. Therefore, the lessor must obtain consent. What the FTC now says is: Getting a credit report on a guarantor or the sole proprietor of an unincorporated business (and, we assume, a partner in a general partnership) IS a permissible purpose and does NOT require consent. You must obtain consent if the individual is not a guarantor or is not personally liable for the lease/loan. For example, if you have a limited partner in a limited partnership, a member of a limited liability company or a shareholder WHO IS NOT A GUARANTOR, you can't pull a report without consent. Now think about it a minute - why do you need a credit report on a company president who isn't signing a guaranty for a corporate lessee and therefore isn't liable on the debt? It's the loose, snoopy, sort-of-makes-us-feel-better stuff FTC's saying is a no-no. So, the rule: If the guy is legally responsible for payment, pull the report. If not, and you want it for whatever reason, get consent first. Incidentally, folks, this is essentially the same rule as ECOA/Reg B has for spouse guarantees - if wife's or hubby's credit is part of your collateral package, she/he can sign a PG. If not, don't go there. Barry
Marks ( Personally, I believe the service bureau's require that you must have permission, signed, to run a credit report. We have recently received new forms from Experian, for instance, requiring this, and making us "guarantee" we are following their parameters. For years, we have followed the Consumer Credit Act and federal codes, whether they apply to leasing or not, as I believe they are excellent guidelines and make a lot of common sense. As past president of the San Francisco Bay Area International Consumer Credit Association, among others, I have subscribed to the fact the government is never satisfied and it will one day affect your business. There also is the common sense approach: If you are going to run credit on someone, first get their signed permission to do so. If they won't sign a form, then you don't have "control" of the process. editor ) ### ########### ########################### Amembal Capital Corporation (ACC) Announces Record Earnings ACC is pleased to announce its second consecutive record year in financial performance for its fiscal year ending 3/31/01. Sales grew 35.29% and profitability after tax growth was 25.27%. Despite growing concerns in the industry, ACC management remains positive that the company will continue its growth and generate additional revenues with the introduction of new programs and services to our customers. Loni L. Lowder, President and CEO, stated that the company's new initiatives in small ticket (Vista Lease program) and agricultural leasing will continue to provide value-added products for our clients. Also, our Summit Club @ ACC program has been well received by brokers looking for a strong partner that is able to enhance brokers' capabilities and provide additional incentive income to participants. The program offers discounting, profit sharing and volume benefits among other member benefits. ACC is a diversified equipment finance company, located in Salt Lake City, Utah, that specializes in the structuring, origination, servicing and syndication of a broad array of lease products to middle and lower-middle markets in the United States. For company information and programs overview, please contact Angela Schmitz at (801) 530-7771 or email aschmitz@amembalcapital.com. #### ############ ################# ##################### If you wish to receive our educational quarterly newsletters via email, you can sign on directly on our website www.amembalcapital.com or you can send an email with the request to aschmitz@amembalcapital.com ------------------------------------------------------------------------------------------------------- The Financial Resource Conference From the Ritz-Carlton Hotel - An Exclusive Equipment Leasing Event For Senior Level Financial Executives ____________________________________________ FREE ATTENDEE REGISTRATION TO THE HOTTEST EVENT IN EQUIPMENT LEASING INDUSTRY ____________________________________________ In a few days the FRC expects to sell out all remaining $575 Attendee Registrations. If you are unable to secure a confirmed Attendee Registration prior to the FRC closing registration, you may still be able to attend. Historically, the FRC sets aside a limited number of complementary Attendee Registrations for VIPs. This year, complementary VIP registrations are being awarded to individuals registering to win a Complementary Attendee Registration. For Details - http://www.lessors.com ____________________________________________ ########### #################### ############################ DECHERT EXPANDS FINANCE PRACTICE WITH FOUR NEW PARTNERS (New York, NY, In a move that significantly bolsters its finance practice, Dechert today announced that four partners have joined the firm's finance and real estate team resident in the firm's Boston office. The new partners - Lew Burleigh, Ross Pascal, Cindy Williams and Bruce Hickey - bring strong and diverse experience in real estate finance, equipment leasing, securitization and international investments to the firm. The group previously practiced with Day, Berry & Howard LLP. "We are delighted to have Lew, Ross, Cindy and Bruce joining us," said Barton J. Winokur, chairman at Dechert. "Their tremendous experience will certainly add even greater depth to our already robust and rapidly growing national and international capital markets, real estate and finance practice." The new partners have a national reputation in structured finance and securitization and are particularly well known in the area of lease financing. "This is a truly exciting move both for us and for our clients," Burleigh said. "Dechert's national and international capabilities will allow us to offer a new level of service to our clients both in the U.S. and abroad." Pascal added that "with more than 100 lawyers on our new practice team - both here and abroad - and a top-tier capital markets reputation, Dechert provides us with the platform that will allow us to continue to grow our practice." The group's experience encompasses a wide range of transactions, including ABS, CMBS, CDO, synthetic lease and credit tenant lease financings, aircraft and other large-ticket equipment leasing and international joint ventures. The clients of the group include investment banks, major banks, REITs, insurance companies, leasing and capital markets companies and other institutional investors. With more than 700 lawyers located in 12 cities in Europe and the United States, Dechert offers a full range of legal services to business, government and individual clients across the globe. Visit Dechert on the web at www.dechert.com. courtesy elaonline.com www.leasingnews.org
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