S & P Forecasts by Industry

Boosted largely by much stronger economic trends in emerging markets, and moderate gains in the U.S. economy, many parts of the Industrials sector started to recover in 2010, according to analysts at Standard & Poor's Equity Research.

"Operating results were also greatly assisted by aggressive streamlining programs implemented by companies over the course of the severe economic downturn that started in late 2007," said Michael Jaffe, Industrials Group Head at S&P Equity Research. "We expect these trends to continue in 2011, for the most part."

The projections by S&P's Industrials equity analysts for 2011 are as follows:

1. We expect increased global industrial activity to drive higher shipping demand at Logistics companies, with the most robust performances likely in air and ocean freight. We also see this improved demand allowing rate increases to be more fully absorbed than they have been in recent years. We believe that FedEx (NYSE: FDX 93 *****) is well positioned to benefit from these expected trends.

2. We see a favorable demand outlook causing airlines to become more aggressive in increasing capacity. We believe that will drive significant production increases at Boeing (NYSE: BA 69 ****) and Airbus, but are concerned that too many seats might become available. We view AMR Corp. (NYSE: AMR 8 ***) as an airline that could be hurt considerably if excess capacity were to occur.

3. We do not expect any other major U.S. airline mergers, since we believe there are few remaining suitable partners.

4. We expect aftermarket growth (about 5% to 7%) to return in commercial aerospace markets in 2011, following essentially flat results in 2010, as we see more profitable airlines beginning to spend more freely on maintenance, repair and overhaul. A company that we see greatly benefiting from any upturn in aftermarket spending is Precision Castparts (NYSE: PCP 143 *****).

5. We forecast ongoing rises in capacity utilization across the trucking industry, as volumes have started to increase modestly, and a number of financially weak carriers (mostly small private carriers) have shut down. With the North American Class 8 heavy truck fleet at its oldest average age (6.7 years) in the 31 years of data available through ACT Research, an independent commercial vehicle research organization, we expect the recent upturn in truck sales (off of a very low base) to strengthen further in 2011. We believe that engine maker Cummins (NYSE: CMI 110 *****) will be greatly boosted by this expected rebound in heavy trucks markets.

6. We think Industrials companies will further expand their footprints in emerging markets. We think the most aggressive expansion will take place in areas such as Construction Equipment, Industrial Machinery, and Engineering & Construction, which will likely continue to be boosted by infrastructure development and improvement in emerging markets, and the industrialization of economies. One company that has been putting significant focus on its emerging market footprint is Caterpillar (NYSE: CAT 94 ****).

7. We expect business to revive further at Human Resources and Employment Services companies. Although we believe that the level of new hires will remain modest in coming periods in U.S. markets, we still think that relatively stripped down businesses will need to add to their staffs as demand for products and services starts to improve somewhat. With businesses likely to maintain cautious operating stances, we think they will continue to focus on hiring temporary workers, an area dominated by placement companies. We also think that labor trends in emerging markets will remain much stronger than those in Western economies. We think that Kelly Services (NNM: KELYA 20 *****) will be boosted by its concentration on non-professional temporary placements, and its presence in foreign markets.

8. We believe that Agricultural Equipment companies will continue to post sales and profit gains, as the big rise seen in crop prices in the summer of 2010 should cause farmers to lift their business spending. In line with this forecast, we believe that Deere (NYSE: DE 84 ****) will experience solid demand for its farm equipment. However, we also believe that investors should keep in mind that part of the rise in crop prices was transient in nature, as droughts and fires in Russia led to lower than expected global wheat and corn supplies.

9. Following a dearth of acquisitions in 2009 and a pickup in 2010, we believe that Industrial Machinery companies will increase the pace of acquisitions in 2011. We think that a rising stock market and greater availability of debt financing will make funds more readily available to fund the potential takeovers. We also note that a number of companies, such as Illinois Tool Works and Dover Corp have indicated that the pipeline of potential deals has been increasing.

10. We expect trends to soften in Defense markets, as the President's current review of Afghanistan may lead to a July 2011 start date for troop withdrawal, and the U.S. continues to withdraw troops from Iraq. In addition, a five-year, $100 billion Pentagon overhead cost reduction, mandated by Secretary of Defense Gates, seems unlikely to be reinvested in weapons programs (as originally intended), in our view. We think L-3 Communications Holdings (NYSE: LLL 74 ***), whose products are being used in current war efforts, will be limited by these expected changes in U.S. military activities.

Tuesday, January 11, 2011

Source Monitor Daily

http://www.monitordaily.com/app_enews/news.asp?news_ID=27182

Finding "Real" Value

With the economy up in the air and the unknown looming upon the leasing industry, we have seen many leasing companies, brokers and funding sources rise and fall throughout the past few years. Most originators, who have found success over the last few years and more specifically over the past year, have gravitated to a specific niche or limited their efforts to a few industries. Vendors and end-users want to conduct business with financial partners who understand their specific industries, their specific challenges, and are able to speak their language. Brokers who try to be all things to all potential customers become experts in nothing and spend more time chasing miss-matched transactions than they spend funding transactions which are properly aligned with their capabilities. Originators who are focused are able to provide greater value to their stakeholders and are able to increase their personal incomes more quickly. There are no better or worse industries to focus one’s energies, the important factors are to choose an industry which you have an interest in, which you can develop funding capabilities and an industry which you have a passion to penetrate on multiple levels.
“Real” value is derived from knowledge and an originator’s ability to transform knowledge into quantified results. Every broker’s primary function is to prospect and to deliver superior services to his/her stakeholders. Superior service cannot be delivered unless the originator has knowledge which is otherwise in limited supply. Therefore, it must be an ongoing process to improve your knowledge in relationship to every aspect of the leasing/financing process. Some of the greatest attractions for entrepreneurs to enter our industry are the dynamics, the flexibility, and the creativity of our business. Along with these factors comes the responsibility of originators to embrace change; to be pro-active in innovating and providing new solutions to new challenges. The strongest brokers embrace a higher level of knowledge; they no longer chase transactions with the lowest common denominators, but are able to attract stronger vendors, stronger funders and stronger credit clients because of their ability to add “real” value to every transaction.
The future is bright for the best brokers and originators. The market craves expertise, knowledge and value-added services. Funders, vendors and end-users need our services now more than ever. Success will not be delivered to those originators who are not pro-active. However, for those originators who are willing to deliver superior service and are willing to aggressively pursue new relationships by providing “real” value, 2011 will provide an abundance of new opportunities.

Mazuma Capital  is committed to our client's success.  Our unique capabilities and innovative product offerings provide solutions accelerating financial growth.  Servicing rising companies, established companies, brokers and vendors, Mazuma continues to secure its position as the middle-market industry leader.

Source: World Leasing News

Welcome to the 'New Normal': Modest Investment in Capital Equipment

Banks and borrowers will continue to move tentatively in 2011 before investing big dollars in new machinery, says NEFA's Peretore.

Manufacturers might be getting ready to invest in new equipment, but several signs point to only modest growth in 2011, as questions of financing and confidence moving forward set the stage for a tentative recovery in capital investment.

Just as the market is ripe for first-time home buyers, an overabundance of supply and a dearth of demand have created ripe opportunities for companies to invest in new industrial machinery. But according to Frank Peretore, an attorney who focuses on equipment leasing, and who sits on the board of directors for the National Equipment Finance Association, companies might be stabilizing and the banking industry is returning to health, but that still doesn’t mean large-scale investments are taking place.

What do the tax cut extensions mean for business owners?

Tax Cut Extension- How It Applies To Equipment Leasing
In December 2010 President Obama signed into law a tax bill extending cuts for all Americans. The benefits range from tax cuts for millionaires and the middle class to longer-term help for the unemployed.
Business will benefit from the 100% expensing provision. For investments placed in service after Sept. 8, 2010, and through Dec.31, 2011, the bill provides for 100% bonus depreciation.
Operators will be able to depreciate 100% of equipment purchased in 2011. The bill also extends increases in the maximum amount and phase-out threshold under section 179, the association added. Under current law, a taxpayer with a sufficiently small amount of annual investment may elect to deduct the cost of certain property placed in service for the year, rather than depreciate those costs over time.
Expensing - One-year 100 percent depreciation. For 2012 Section 179 at $125,000 and $500,000 phase out – alas not continuing the much more beneficial $500,000 and $2,000,000 phase out which is still good for 2010.  According to Joint Tax the provision in general extends the expensing to qualified property placed in service after September 8, 2010 and before January 1, 2012.
 Boost to Section 179 Depreciation
Rather than depreciating business property over several years, Section 179 now allows a taxpayer to expense the entire cost of certain property in the year of purchase. The new law allows a Section 179 deduction for up to $500,000 in 2010 and 2011 for qualified property. If the total purchase of all acquired property exceeds $2 million, there is a dollar-for-dollar decrease in the allowable deduction.
Qualified property includes tangible personal property (such as equipment and furniture) and software that must be used more than 50% in a trade or business. Prior to this new act, real property (buildings and structural components, air and heating units) did not qualify for this special treatment. Now the definition of qualifying property expands to include ‘qualified real property,’ and limits the Section 179 deduction on this type of property to $250,000.
Qualified real property includes the following:
• Qualified leasehold improvements
These are improvements to interior parts of non-residential real property placed in service more than three years after the date the building was first placed in service. This does not include improvements to the exterior, elevators or escalators, common areas, or internal structural framework.
• Qualified restaurant property
A building or improvement to a building if more than 50% of the building’s square footage is devoted to preparation of and seating for on-premises consumption of prepared meals.
• Qualified retail improvement property
Improvements to non-residential real property if such space is open to the general public and used in the retail business of selling to the general public that meets the other definition of qualified leasehold improvements.
The Section 179 deduction is allowed to the extent of taxable income, with the remainder carried forward to the next year. Be careful, however, because Section 179 carry-forwards on qualified real property are not allowed beyond 2011.
 Extension of ‘Bonus’ Depreciation
The bill also extends through 2010 the 50% first-year bonus depreciation that had expired. The allowance is 50% of the depreciable basis of qualified property for assets purchased and placed in service for 2010. To qualify, the property must be a new (not used) asset that has a depreciable tax life of 20 years or less, software, water-utility property, or qualified leasehold-improvement property.
Land improvements also qualify as eligible property and include items such as sidewalks, roads, fences, bridges, and landscaping. There are no purchase or income limitations as described in the Section 179 deduction, and many large businesses can benefit from taking this extended provision to offset taxable income.
 New Reporting Requirements
The law provides for $12 billion of tax relief and builds in some revenue raisers to help foot that bill. One revenue booster requires informational reporting (typically 1099-MISC) on rental-property expense payments of $600 or more for individuals who receive rental income. There are exceptions to reporting requirements, such as for individuals who can show that the requirements create a hardship, individuals who receive rental income of a minimal amount, for members of the military who rent their principal residences temporarily. Further guidance on these exceptions should come out by the end of the year.
 What This Means for Your Business
For many, 2010 may be a year when cash flow does not match taxable income, and businesses are striving to maintain their capital in the business instead of paying taxes. If qualified-asset purchases are less than $2 million, a Section 179 deduction can be taken to reduce taxable income.
 In addition, if there are new land improvements or qualified asset purchases over $2 million, taxable income can be offset by taking the bonus 50% depreciation. Businesses can also elect to exclude real property from qualified Section 179 property if the regular $2 million cap is close to being reached. Whichever method is used, there are several strategies that may be implemented to defer taxation. In deferring taxation, property owners have additional cash available to grow their business.
 SBJA and Section 179 Deduction (Adjustments)
A qualifying taxpayer can choose to treat the cost of certain property as an expense and deduct it in the year the property is placed in service instead of depreciating it over several years. This property is frequently referred to as section 179 property.
 The Small Business Jobs Act (SBJA) of 2010 increases the IRC section 179 limitations on expensing of depreciable business assets and expands the definition of qualified property to include certain real property for the 2010 and 2011 tax years. Under SBJA, qualifying businesses can now expense up to $500,000 of section 179 property for tax years beginning in 2010 and 2011.
 Without SBJA, the expensing limit for section 179 property would have been $250,000 for 2010 and $25,000 for 2011. The $500,000 amount provided under the new law is reduced, but not below zero, if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $2,000,000.
 The definition of qualified section 179 property will include qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property for tax years beginning in 2010 and 2011.
 Increased Bonus Depreciation for 2011
The bonus depreciation amount for business assets purchased in 2011 has increased to 100%. This means you can fully depreciate the cost of any business asset purchased next year. The bonus depreciation amount for business assets purchased in 2010 is 50%.
 For additional information on how the tax cut extensions apply to your business consult a licensed CPA or attorney.
For addtional information on equipment lease financing contact the experts at Mazuma Capital 801.816.0800
 Source:
IRS.gov
http://www.irs.gov/formspubs/article/0,,id=177054,00.html
Smart Money, Tax Blogs

Broker Services Program

Broker Services Program

Broker Services Program

Mazuma Capital’s exclusive broker services program is available to brokers seeking funding for $100K- $10MM for qualified middle-market clients.  Through private label financing solutions or as a trun key service provider brokers may access this program to reduce turn-around time and streamline processes. Our broker programs are tailored to meet the needs of your customers; allowing you to continue focusing on your relationships, services, sales, financial and business objectives.

Benefits for you

• Extend the range of services offered to your customers
• Increase sales
• Process may be controlled by you, or through Mazuma- your choice
•  No Risks
• Increase customer loyalty and establish new relationships
• Additional services provided at end of lease

 Benefits for your customers

• 100% Financing
•  Conservation of capital
• Flexible terms
• Easy to budget payments
• Potential accounting and tax advantages
• Preserve existing credit
•  Ability to bundle transactions
• Keep up with the latest technology, models and upgrades
• Built in service and warranty offerings without additional costs

To structure your unique Private Label Financing Program or Turnkey Service Provider Program please complete our Broker Application.
If you have addtional questions please see our Broker Services Program Brochure, or contact us at 801-816-0800 / email us at  partners@mazumacapital.com.
 Mazuma Capital is a proud memeber of the NAELB, and follows the ELFA Code of Fair Business Practices.

How to determine the best approach to financing equipment

If your company is looking to expand, upgrade or just keep operations running smoothly, having the right equipment financing solution can affect your overall financial position. Financing is available for all sizes of equipment acquisitions, from technology upgrades to heavy equipment such as mining equipment or yellow iron. When seeking out an equipment financing source, it’s important for businesses to be prepared.

What are the first things to consider when financing equipment?
Look at your company’s capital position to determine what the right financing option is. Future cash flow should also be a consideration, as financing may affect the cash flow of the company both in terms of the productivity the equipment may provide and the required payments. It is also a good idea to consult with your company’s accountant to help determine the best option available for the business.
Before acquiring equipment, evaluate the value that the equipment is likely to bring your business. Business leaders then need to decide what financing product makes the most sense for the company, whether it is to lease the equipment, obtain a loan or use cash to purchase. Each option has its benefits.
A lease, for example, typically has little to no out-of-pocket expense up front, whereas a loan may require a down payment or equity injection into the equipment. Business leaders should also consider what impact a lease or loan will have on the company’s balance sheet. Some leases are off-balance-sheet financing, so the lease payment shows as an expense on the income statement rather than a liability on the balance sheet. If leased, the asset is not carried on the balance sheet either. This can be helpful for a company that has to comply with leverage or debt covenants because these ratios remain unaffected with a lease. Leases can also provide a company with more flexibility regarding the equipment. Some lease structures can include options to return the equipment at the end of the lease, upgrade the equipment, purchase the equipment, or renegotiate the lease. This can allow a company to keep up to date with changes in technology and may provide a competitive advantage in the market.

Can multiple pieces of equipment be financed?
Many business owners want the convenience of a single transaction covering multiple items instead of having separate transactions for various pieces of equipment. Equipment can be combined into a single transaction based on the equipment types, reasonable usefulness, or life. For example, if two pieces of equipment are being acquired, one with a useful period of 10 years and the other a useful period of five years, financing may be structured for seven years to combine the equipment and provide the convenience of one note to the borrower.

When should companies apply for equipment financing?
You should begin to explore financing options as soon as you think that you may need to acquire any new or used equipment. For a company that is expecting to grow and is forecasting an equipment need at a later point and time, equipment lines of credit may be a smart option to have in place in order to provide flexibility to purchase the equipment more efficiently on your own schedule.

Are there special interest rates or payment plans available for equipment financing?
In some cases, a company may obtain financing with no payment due for a period of time, designed to allow the company to get the new equipment up and running and producing revenue before a payment is due. Other seasonal businesses may opt for structured, or skip, payments, which allow the company to match payments to the seasonality of its business and can improve cash flow.

Do certain types of equipment financing offer tax advantages?
When a company purchases equipment, it may be able to take depreciation deductions over a period of time, which lowers its taxable income. Many companies over the last several years have also been able to take advantage of government stimulus programs that allow for accelerated depreciation of equipment or an increase in the Section 179 expense allowance. The interest payments of an equipment loan, and the entire lease payment for some lease structures, are also expensed on the income statement, which can lower taxable income. Before making a purchase, talk to your accountant or tax adviser to learn how specific tax incentives can work for your business.

 
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