Leasing News

November 14, 2001

Headlines---

T- Bill Rates fall to 43-year low
57 Banks Surveyed! SAY

    Tightened Standards for Business Loans
        Treasury Expands Mid-Quarter Depreciation Relief
            ePLUS Spin for Potential Investors
                Internet usage reaches record level in October
            US Bancorp Vendor Spiffs
        Multi-Tax Telephone Conference
    D&T Names CapitalStream "Super": 4 Years in a Row
Survey SHOWS! Payday lenders charging 910 percent a year

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Funding Tree, California

Leasing News is working on a story regarding leases getting funded, and is asking readers for their experience with this company.

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T-Bill Rates fall to 43-year low

By Associated Press,

WASHINGTON (AP) Interest rates on short-term Treasury bills fell in Tuesday's auction to the lowest levels in 43 years.

The Treasury Department auctioned $16 billion in three-month bills at a discount rate of 1.815 percent. Another $16 billion in six-month bills was auctioned at a discount rate of 1.820 percent.

The three-month rate was down from 1.975 percent last week and was the lowest since three-month bills averaged 1.524 percent on Aug. 11, 1958. The six-month rate was down from 1.920 percent last week and was the lowest in the 43 years that this bill has been auctioned.

Treasury began auctions of six-month bills in December 1958. The three-month bill has been auctioned since December 1929.

The new discount rates understate the actual return to investors 1.850 percent for three-month bills with a $10,000 bill selling for $9,954.10 and 1.862 percent for a six-month bill selling for $9,908.00.

In a separate report, the Federal Reserve said Tuesday that the average yield for one-year constant maturity Treasury bills, the most popular index for making changes in adjustable rate mortgages, fell to 1.99 percent last week from 2.11 percent the previous week.

57 Banks Say They Have Tightened Standards for Business Loans

by Martin Crutsinger, Associated Press

WASHINGTON - Many banks, faced with a weakening economy, tightened lending standards for businesses and consumers over the past three months, the Federal Reserve reported Tuesday.

In its latest survey of bank loan officers, the central bank found that the number of banks tightening standards for making business loans had increased notably over the past three months after having edged down in the two previous surveys.

Of the 57 large U.S.-owned banks surveyed in October, 51 percent reported tightening standards for loans to large and mid-size companies, those with annual sales of $50 million or more. That compared to 40 percent of banks reporting higher loan standards in an August survey.

Lending standards for smaller businesses had also been tightened. The survey found that 40 percent of the banks reported tightening lending standards for small businesses, all those with sales below $50 million annually, compared to 32 percent who said they had tightened lending standards in the August survey.

For consumers, 20 percent of domestic banks reported they had increased their standards for approving credit card applications, only slightly higher than the August survey. However, banks' standards for approving residential mortgage applications were largely unchanged from the August survey.

The U.S. economy, which had been sluggish for a year, took a considerable jolt from the Sept. 11 terrorist attacks, with many economists now believing the country has entered its first recession in more than a decade.

It is customary for banks to tighten loan standards as the economy weakens and the prospects of loan defaults increase. However, the National Association of Manufacturers complained earlier this month that banks were overdoing the restrictions.

NAM President Jerry Jasinowski said that surveys of NAM members showed that restrictive lending by banks was becoming a serious problem. He urged the Federal Reserve and other banking regulators to provide guidance against tightening standards to an extent that they would choke off the flow of money businesses need to expand their operations.

Such a development, known as a credit crunch, could act as a drag on the economy at the very time the Federal Reserve has aggressively cut interest rates to their lowest levels in four decades in an effort to boost borrowing by businesses and consumers.

Richard Yamarone, chief economist at Argus Research in New York, said that banks always become more cautious during economic downturns.

"What the banks are doing is very understandable given the rising number of bankruptcies and deteriorating credit quality," he said. "But further credit tightening would not bode well for a quick recovery or the restoration of corporate profitability."

Of the domestic banks surveyed, 63 percent cited a "more uncertain economic outlook" as a major reason they had decided to tighten their loan standards.

The Fed found that most domestic banks and a substantial number of foreign-owned banks surveyed reported that they had downgraded the status of between 1 percent and 10 percent of their business loans. A bank downgrades loans when the prospects for repayment grow uncertain.

The survey found that loans to airlines and companies in the hospitality businesses were a major component of the rising level of bad debt.

Treasury Expands Mid-Quarter Depreciation Relief

For lessors, or companies who have exceeded their $24,000 2001 year write off, additional depreciation benefits have been granted for this year.

Treasury/IRS has released Notice 2001-74 expanding the class of taxpayers eligible for mid-quarter depreciation relief in 2001 .

The Notice expands the relief originally provided under Notice 2001-70 by providing relief to taxpayers if September 11, 2001 falls within either their third or fourth quarter. (Notice 2001-70 only allowed taxpayers to elect out of the mid-quarter convention if property was placed in service during the third quarter of the 2001 taxable year and the third quarter included September 11, 2001.)

According to the IRS, both types of taxpayers may now elect to apply the half-year convention to all property placed in service during the calendar year which includes September 11, 2001. Notice 2001-74 also clarifies the mechanism for making the election.

The original Notice (2001-70) required the election to be made on Form 4562, Depreciation and Amortization. In Notice 2001-74, the IRS said taxpayers who file Form 2106, Employee Business Expenses, can also make the election by writing "Election Pursuant to 2001-70" across the top of that form. Notice 2001-74 is expected to be published in Internal Revenue Bulletin 2001-49 on December 3rd. In the interim taxpayers may rely on the guidance under both Notices.

( courtesy of ELAonline ) ___________________________________________________________________________

ePLUS Spin for Potential Investors

>>>sales of leased equipment decreased 100% to $0 from $6.3 million, and lease revenues increased 21% to $12.0 million from $9.9 million the same period the prior fiscal year. The Company's total leased assets were $190 million as of September 30, 2001, as compared to $231 million as of September 30, 2000."

>>>>Technology Business Unit

As a result of general economic conditions, especially during the weeks after September 11, 2001, customers have delayed or reduced purchases and the Company's sales of equipment decreased 48% to $30.7 million, as compared to $58.5 million the same period the prior fiscal year.

The cost of equipment sales decreased 49% to $25.9 million from $50.7 million. The gross margin of equipment sold increased substantially to 15.7% from 13.3% the same period the prior fiscal year. Total revenues for the quarter declined 39% to $47.1 million from $77.8 million the same period the prior fiscal year, due to continued de-emphasis on sales of leased equipment and lower sales of equipment due to reductions in customer spending.

>>>>Net Earnings

Basic and fully diluted earnings per common share were $0.22 and $0.22 for the three months ended September 30, 2001, as compared to $0.21 and $0.19, respectively, for the same period the prior fiscal year. Net earnings increased 9% to $2.2 million from $2.0 the same period the prior fiscal year. For the six months ending September 30, 2001, net earnings decreased 4% to $4.3 million from $4.5 million the same period the prior fiscal year.

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EPS Increase 22%; ePlusSuite Revenues Increase 35% And Shareholder Equity Surpasses $100 Million Company Expands Government Financing Unit

ePlus inc. (Nasdaq:PLUS), a leading provider of business solutions and services, announced financial results for its second quarter ending September 30, 2001. Fully diluted earnings per share for the quarter was $0.22, exceeding consensus analyst estimates of $0.18 by 22%.

For the three months ended September 30, 2001, ePlus earned $2.2 million, a 9% increase over the $2.0 earned the same period the prior fiscal year, and fully diluted earnings per share increased 11% to $0.22 from $0.19. At quarter's end, the company had total stockholders equity of $100.1 million and cash of $33.3 million.

"ePlus continues to put profitability first" commented Phillip G. Norton, chairman, president and CEO of ePlus. "By focusing on the bottom line in each of our business units, we are better positioned for growth today than at any point in time since the company's inception. We have a compelling outsourced business process solution that continues to grow and capture customers. There is less competition in most of our business segments, making it easier to hire top-notch salesman and expand into new vertical and geographic markets."

The Company also announced that it is expanding its federal, state, and local governmental financing unit headed by Bruce M. Bowen, president of ePlus Government, Inc. Mr. Bowen stated, "As a result of the September tragedy, governments at every level have an urgent need to acquire critical public safety, information technology, and other equipment. We view this change in the market as a significant opportunity for ePlus. With government budgets strained by shrinking tax revenues and rapidly increasing capital expenditures, our financing programs allow them to meet critical needs immediately and not defer purchases."

Highlights for the Quarter

-- Opened regional sales offices in two new markets, Florida and New York, and hired an additional 8 new salesmen.

-- Announced a Stock Repurchase Program to purchase up to 750,000 shares of common stock during the next 12 months.

-- Established a new vertical financing unit in the healthcare equipment market that originated over $15 million of new financing transactions during the quarter.

-- ePlus Solutions was awarded several new wins and upgrades for customers such as Santa Clara, Michigan State University, Fresno County, Hibernia Bank, City of San Diego; the first release of the UNIX version of Procure+ v 6.5 to Emory University.

-- Affordable Care is using ePlus MarketBuilder technology to create a customized vertical market for dental supplies and equipment to enable more than 70 offices nationwide to purchase, approve and requisition orders.

-- Acquired SourceOne Computer Corporation on October 4, a technology sales and services company located in Silicon Valley, the company's first west coast acquisition, and began marketing e-commerce solutions and products to Source One's customer base.

-- Awarded several new Content+ customers, including the replacement of a competitor at a customer who is creating a new vertical marketplace for the HVAC industry

Financing Business Unit

In the financing business unit, the Company continued to de-emphasize sales of leased equipment revenues in favor of retaining leases on its balance sheet and outsourcing the financial risk of each transaction with non-recourse debt. By doing so, upfront revenues are reduced and converted into recurring lease revenues. As a result, in the quarter ending September 30, 2001, sales of leased equipment decreased 100% to $0 from $6.3 million, and lease revenues increased 21% to $12.0 million from $9.9 million the same period the prior fiscal year. The Company's total leased assets were $190 million as of September 30, 2001, as compared to $231 million as of September 30, 2000.

Technology Business Unit

E-commerce Business Unit

The e-commerce business now includes all revenues and costs attributable to ePlus Systems, Inc. and ePlus Content Services, inc. plus ePlusSuite revenues and associated expenses as in prior quarters.

In the company's e-commerce segment, ePlusSuite revenues increased 35% to $2.1 million for the quarter as compared to $1.6 million for the same quarter in the prior fiscal year. Net e-commerce revenues in the e-commerce segment decreased 18% from $3.1 million to $2.5 million, reflecting a decrease in sales of equipment in the segment.

Costs and Expenses

The Company significantly reduced the number of retained technology consultants for the quarter, and as a result Professional and Other Fees decreased 68% to $400 thousand from $1.2 million the same period the prior fiscal year. Salaries and benefits increased 3% to $7.9 million from $7.7 million the same period the prior fiscal year as a result of an increase in the number of new employees at ePlus Solutions and ePlus Content companies, offset by reduced commissions resulting from the 48% decline in equipment sales. General and Administrative expenses increased 20% to $3.6 million from $3.0 million the same period the prior fiscal year, as a result of new office locations for new salespersons and the additional locations of ePlus Content and ePlus Solutions.

Net Earnings

Conference Call Scheduled for Wednesday, November 14th at 11:00 A.M. T

he Company will host a conference call at 11 a.m. on Wednesday, November 14, 2001. To listen, please call 973/633-1010 or toll-free 800/683-1535. Ask to be connected to the ePlus conference call or use passcode 2894151. A live Webcast and replay will be available at the following links:

Windows media: http://orion.inet-images.com/servlet/ estreamgetevent?id=690&folder=webstream

Live Real Player: http://orion.inet-images.com/servlet/ estreamgetevent?id=689&folder=webstream

A telephone replay of the conference call will be available by calling 877/519-4471 or 973/341-3080, and entering the passcode 2894151 beginning at about 2:00 P.M. on November 14th through November 22nd. A web archive will be available at the following links:

Windows media: http://orion.inet-images.com/servlet/ estreamgetevent?id=692&folder=webstream

Live Real Player: http://orion.inet-images.com/servlet/ estreamgetevent?id=691&folder=webstream

The financial results presented herein are unaudited. Investors are encouraged to review the company's Form 10-Q to be filed on November 14, 2001, and to review other SEC filings including the company's audited financial statements contained in Form 10-K.

About ePlus

A leading provider of Web-based e-procurement, asset management, financing, leasing, sourcing, and eContent technology and services, ePlus delivers comprehensive and high-value business solutions. The ePlusSuite of products and services, including Procure+, Manage+, Finance+, Service+, Content+, and ePlusMarket, helps businesses dynamically streamline, improve and gain management control. ePlus solutions integrate and automate each aspect of the supply chain process: from requisition to approval, fulfillment, financing and asset management, delivering the highest return on investment.

ePlus(TM), ePlusSuite(TM), Procure+(TM) , Manage+(TM) , Service+(TM), B14ZR(TM), OneSource(TM), OneReq(TM), CLG(TM) and MarketBuilder(TM) are trademarks of ePlus inc. Finance+SM is a registered service mark of ePlus inc. Content+ (TM) is a trademark applied for.

Founded in 1990, the company is headquartered in Herndon, VA and has more than 30 locations in the US. For more information, visit our website at www.eplus.com, call 800/827-5711 or email to info@eplus.com.

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Bancorp Vendor Spiffs

A sell rate of .0239 equates to a rate of around 16.5%; if one backs out the 5% spiff to the vendor, the vendor's "buy-rate" is .02276, or just over 14%. With prime in the low fives, these are hardly "low rates". Moreover, "name withheld" (pardon my audible sigh) did not explain the details of the vendor agreement, which apparently is a requirement to participate in US Bancorp's program. In addition to representations and warrants, there could be some provisions for best efforts remarketing, limited or full recourse, special terms to US Bancorp for invoice payment, and so on, all of which provide value and are intrinsic components to the pricing, program, and relationship. We just don't know.

I have no current relationship with US Bancorp, but in my career I have had a relationship with their recent acquiree, Manifest, in the past. Manifest had always relentlessly maintained an honorable reputation for not intermingling the data bases between their own third party funding group and that of their sister operations which deal in direct vendor production. I have not heard any word that this direction has changed in any way.

If the NAELB is seeking to demand their funding source members how they conduct their own vendor driven business, it might be easier, and far more pro-active, for its broker members to entreat its funding sources to develop ways brokers and funding sources may partner together in a manner similar to vendor relationships, perhaps creating exclusive programs rooted in the mutual trust, respect and privilege that membership in such a service organization provides.

Thanks for lending me the soap box, Kit.

Jim Fleming
National Business Credit
(800) 811-8371
nationalbusinesscredit@yahoo.com

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I was really surprised to see the copy of the letter from US Bancorp offering spiffs of up to 5% to a vendor. The practice itself doesn't surprise me, as I know that the big vendor direct leasing companies have been engaging in this practice since about the time when dirt was invented.

I am surprised to see them engaging in that type of practice in this market. While I know credit is tight and money can be hard to find, the true facts are that "The List" demonstrates that no fewer than 124 equipment leasing companies have either bitten the dust or been victims of consolidation, BK, or other unspeakable fates.

This means a lot less competition, pull backs and re-grouping going on all over the industry.

There is still plenty of business out there and a common response on a vendor call is "Your call is very timely, we are in the process of re-evaluating the finance options we present to our customers, could you come in and tell us what you have to offer?".

I have honestly not had one vendor in recent months broach the question of spiffs. When they do I have an interesting way of handling it.

In our LeaseNOW 2000 POS software I have developed a commission screen. As part of the training we show the vendor how to add up to 5%. We tell the vendor that we are providing them with the lowest and most competitive rates we can give them, however if they want to add an additional 5% on their customers' payment we will pay it as a referral fee when the transaction funds.

We also tell them that if they get into a competitive situation with another vendor leasing company that any added points must come off the top before we will re-work any rates to help win a transaction. The good vendors, when faced with the prospect of blatantly adding points to the transaction themselves, understand that they are doing a gross disservice to their customer.

Others have been trained by "weak sister" leasing reps who can't sell anything but price, and those individuals, like the whores they are, will always see the relationship on a deal by deal basis.

I recently had one vendor who actually said (this is a true quote), "If I add the points in your software, isn't my customer paying extra?"

I hate to admit it, but this vendor exploded the myth for me that there is no such thing as a stupid question!! I actually thought, for a minute that the guy was kidding. I realized, however, that he actually thought that if someone else added the points in for him, that his customer would not be "paying" extra.

Come on US Bancorp. Aren't you embarrassed to being paying points in this market. Maybe not, because I also had one of my sales people tell me today that US Bancorp would do a four year old company for a $75K app only, corp. only, software only deal.

If they keep that kind of stuff up, how long will it be before they make "The List"?

Bob Rodi
President,
LeaseNOW, Inc
www.leasenow.com
drlease@leasenow.com _____________________________________________________________________

Multi-Tax Telephone Conference

The adroit staff at Committee On State Taxation (COST) informed me of a conference call posting on the meetings section of the Streamlined Sales Tax Project web site www.streamlinedsalestax.org. At 3 PM Eastern Time on November 19, the Streamlined Sales Tax Project will hold a teleconference to consider issue papers currently under review by the Project and determine if some or all should be forwarded to the Governing States for consideration. Public and private sector individuals wishing to participate in the conference call must RSVP their intent to Ellen Marshall at ellen_marshall@hotmail.com no later than Friday, November 16.

An anticipated sequence of events in the future would be the Streamlined Sales Tax Project working on revisions to the Streamlined Sales and Use Tax Agreement while the NCSL Task Force continues to keep tabs on the process. Amendments to the interstate agreement will subsequently be passed to Governing States for review and issuance as model legislation. That scenario was transposed when the Governing States meeting was scheduled November 28 -29 in Salt Lake City, one week prior to the Project meeting in Denver on December 3-4. This conference call enables Project officials to approve issue papers in time for submission to the inaugural Governing States meeting.

Issue papers to be discussed during the teleconference will be posted to the Project's website on November 14, 2001.

Agenda for the Teleconference

I. Welcome and Introductions - C. Collins & D. Hardt

II. Review of Issue Papers Under Consideration - Participating States

III. Recommendation that Papers be Forwarded to Governing States - Participating States

IV. Public Comment Period

V. Other Business C. Collins & D. Hardt VI. Motion to Adjourn

Dial-In Instructions

Date: Monday, November 19, 2001

Time: 3:00 PM EST

Dial-In: 703-736-7227

Access Code: 5668897

Dennis Brown
DBROWN@ELAMAIL.COM ______________________________________________________________________

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CapitalStream Ranked Among Fastest-Growing Technology Companies in Washington State For Fourth Straight Year by Deloitte & Touche Technology Fast 50

According to Deloitte & Touche's Fast 50 ranking, CapitalStream's outstanding revenue growth earns Seattle-based company top honors

Seattle, WA- - CapitalStream (www.CapitalStream.com), a Seattle-based provider of commercial finance automation technology for banks, financial institutions and manufacturers, today announced it has been ranked the 39th fastest growing technology company in Washington state by the Deloitte & Touche Fast 50 Program. CapitalStream has earned placement on Deloitte & Touche's Fast 50 list for the past four years.

Deloitte & Touche's 2001 Fast 50 ranks the 50 fastest-growing technology companies in the state of Washington. This ranking was based on five-year percentage revenue growth from 1996-2000. In order to qualify for an award, companies must have been in business for at least five years and must have had operating revenues of at least $50,000 in 1996 and $1,000,000 in 2000; must be public or private companies headquartered in Washington State; and function as a "technology company." Technology companies are defined as businesses that produce technology, manufacture a technology product, or devote a high percentage of effort to research and development of technology.

"We're very proud to have again earned this significant ranking in a list that notes some of Washington's leading private companies for their growth and success," said Stephen Campbell, CapitalStream's president and CEO. "Our own success comes from the fact that CapitalStream remains consistently committed to providing the financial services and leasing industries with innovative technology solutions to conduct business more efficiently and more effectively."

About Deloitte & Touche

Deloitte & Touche, one of the nation's leading professional services firms, provides assurance and advisory, tax, and management consulting services through 30,000 people in more than 100 U.S. cities. The firm is dedicated to exceeding the expectations of its clients and its people. Known as an employer of choice for its innovative human resources programs, Deloitte & Touche has been recognized as one of the "100 Best Companies to Work for in America" by Fortune magazine for three consecutive years. Deloitte & Touche is part of Deloitte Touche Tohmatsu, one of the world's leading professional services firms, with more than 90,000 people in over 130 countries.

For more information on Deloitte & Touche, visit www.us.deloitte.com. For more information on the Deloitte & Touche Technology Fast 500 or Technology Fast 50 programs, visit www.fast500.com.

About CapitalStream

Seattle-based CapitalStream automates and streamlines commercial finance processes for banks, finance companies, and manufacturers. CapitalStream - FinanceCenterÔ, a patent pending technology, reduces processing time, lowers costs, and enables companies to cost effectively take advantage of new business opportunities by automating manual processes for leases, loans, lines of credit, and credit cards. CapitalStream, an established industry leader for more than five years with deep knowledge about the inner workings of the financing world, has helped hundreds of financial organizations increase their competitiveness, customer service and profitability.

For additional information about CapitalStream visit its web site at www.CapitalStream.com.

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Payday lenders charging fees equal to as much as 910 percent a year, survey shows