Section 179 Decoded

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income.

The purpose behind Section 179 - to motivate the American economy (and your business) to move in a positive direction. For most businesses (adding total equipment, software, and vehicles totaling less than $139,000 in 2012), the entire cost can be written-off on the 2012 tax return.

The total amount written off ($139,000 in 2012), and limits to the total amount of the equipment purchased ($560,000 in 2012). The deduction begins to phase out dollar-for-dollar after $560,000 is spent.

All businesses that purchase, finance, and/or lease less than $560,000 in new or used business equipment during tax year 2012 should qualify for the Section 179 Deduction. If a business is unprofitable in 2012, and has no taxable income to use the deduction, that business can elect to use 50% Bonus Depreciation and carry-forward to a year when the business is profitable.

The most important difference is both new and used equipment qualify for the Section 179 Deduction. Bonus Depreciation covers new equipment only. 

The equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction. Simply multiply the cost of the equipment, vehicle(s), and/or software by the percentage of business-use to arrive at the monetary amount eligible for Section 179.

2012 Deduction Limit = $139,000 For new and used equipment, as well as off-the-shelf software.

2012 Limit on equipment purchases = $560,000 This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced.

Bonus Depreciation = 50% This is taken after the $560k limit in capital equipment purchases is reached.   Bonus Depreciation is available for new equipment only. Bonus Depreciation can also be taken by businesses that will have net operating losses in 2012.

Contact us for a bid on your capital purchase before year end.   Don’t miss out on Section 179 deductions and Bonus Depreciation 801 816 0800

Emerging Leader- Equipment Lease Finance

Jared Belnap, President, Mazuma Capital

By Abigail Sutton, Editor

During his tenure in the leasing industry Jared Belnap has personally closed over $150 million in lease transactions and has garnered extensive experience in credit, syndication, sales, legal, documentation, and executive management. Belnap helped create Mazuma. First, as a co-founder and private investor, then, serving as vice president of sales/corporate secretary through December 2007 and in his current position, as president since January 2008. His performance and experience have been invaluable in the formation and implementation of Mazuma’s infrastructure, website development, marketing, documentation, sales and sales management, formation of key strategic relationships and other important functions within Mazuma’s framework. Belnap is an introspective leader who achieves success through calculated risk, for this and more we chose him as February’s Emerging Leader.

Teri Gerson, President & CEO of Executive Solutions for Leasing and Finance, Inc. had this to say about Belnap’s skill and leadership, “Jared Belnap has impressed me with his commitment to analyzing before pulling the trigger.  This saves tremendous back pedaling, both with market entrees, employee hires, and sales force structure. He is thoughtful, honest, and fair in all of his dealings, and always takes a broad view without sacrificing practicality and reality relative to his company.”

Where did you see the need for Mazuma Capital? 
I was working for a Lessor that had a great model, but I felt there were a few challenges with its execution and a top-heavy management structure.  I thought that with a few minor tweaks to the model, an A+ team and the right partners and resources, we could really build something great.  When the timing seemed right, we took the plunge.  By design, we wanted to start small and not “piggy-back” off an existing bank or finance company.  In the beginning, there were only four of us and we grew it from there. We really worked hard in those first few months to build a solid foundation for the company. We knew we were on to something great and we knew it would grow.  We wanted the policies, procedures, product, people and model to be built around larger volumes in the future and we built up to that.

When you were working in the automotive industry did you ever imagine being where you are now, as co-founder and President of a middle-ticket lender with $150M in closed transactions? How would you describe the growth and evolution of your career?

Well, Mazuma has actually funded almost $200M to date, but who’s counting? Coming from the automotive industry, I can honestly say that I never imagined I’d be in equipment leasing today.  I can say with relative certainty, that even from a very early age, I wanted to own my own business and be in charge of my own destiny.   I’ve always had an entrepreneurial spirit, and when I found the right opportunity, I took it.

I would describe the growth of my career as an adventure!  It’s all about the journey… I’ve tried to learn from everyone I can to incorporate the best knowledge, experience, and attributes of those I’ve brushed up against over the years.  I’ve tried to implement them into our business in meaningful ways.  I’ve learned quite a bit of “what not to do” in many situations, which sometimes has turned out to be more important than knowing “what to do” in many circumstances.

Your company slogan seems to be “building relationships by delivering on commitments.” What does this mean to you?  

We’re very customer centric here, especially in the last few years, where competition has become fierce. It’s easy to tell a customer what they want to hear to win a deal, or take it off the street. It’s much harder to address the concerns, if there are any, head-on and lay out a realistic picture for challenging situations.  We’d rather lose a deal than attempt to meet unrealistic demands or expectations.  This statement to me means “straight forward talk and straight forward results.”  When we issue a proposal, we want to deliver on that exact product in a timely and painless way for everyone involved.  We are attempting to build a solid reputation one customer at a time by delivering and exceeding customer expectations.

What has brought your success thus far, in the middle-market leasing arena? 
In a nutshell, it is our people, our product, and our process.  We constantly look for additional sources and partners that can expand and enhance our product offerings.  This allows us to stay competitive and take calculated risks that others sometimes can’t or won’t.  We’ve taken great steps to build an executive team and create a corporate culture that knows how to execute our model efficiently and consistently.  We habitually look for ways to improve and we are always attempting to streamline our process to avoid costly delays or mistakes.

Explain your flat management structure. What else makes you a unique lender in the market? What are your strengths in the marketplace? 
No one in our company is more than three tiers removed from our Committee.  We aren’t the biggest ship in the sea, but being smaller, we’re nimble and efficient.  Decisions don’t wait a week for a committee meeting, if it’s important, it get’s addressed. We have the ability to implement change quickly and become proactive rather than reactive, whether that is changes within the industry and verticals or legislation.

I think we’re unique in that we have a proven model and we stick to it.  When the spigot of funding turned off in late 2008, we went into some of the best times for our company.  We lent money when no one else would and we’re still doing that today! I think that risk is something you can never get away from, but if it’s calculated, it’s manageable and predictable.  We continue to invest equity into lease deals and carry residual risk on some equipment that many of our competitors just can’t get comfortable with.  This coupled with our ability to understand complex credits and situations has allowed us to thrive.

How do you utilize the web and social media for your business?
We’ve taken off with this concept.  Using the web and social media allows us to start conversations with people and uncover needs that otherwise would not have surfaced. We have secured several transactions though our efforts, and social media has given us the opportunity to extend our reach and influence.  We have several blogs and actively contribute articles and ideas to the marketplace through various social media sources.  The cost for us in generating a lead is enormous, and thru SEO and social media sites like Stumble Upon, Digg, Twitter, Facebook, LinkedIn and other online campaigns we’re starting to see a steady flow of business coming directly to us.  We really feel that social media is here to stay and will play a big part in our branding, growth and longevity.

What is your biggest market challenge and how does Mazuma tackle it? 

Our biggest challenge has always been finding the right funding partners who understand our business model and clientele.  That said, much has changed for us here and we’re much more diversified in funding partners than we used to be.  We will continue our efforts to form strategic, long lasting partnerships with funders, vendors, and partners.

What makes a good leader? How would you explain your leadership style?

A good leader is someone who leads by example, from the trenches, not from the tent.  I’m not afraid to get my elbows dirty on an issue or circumstance that might seem insignificant.  I think my management style is all about being a good influence and example to those I work with.  I’m also a strategist and a visionary, and there are always other solutions to difficult problems and unique ways to implement them.  I try my best to encourage and motivate our staff to look for alternatives; stay focused, and see all issues and problems through to satisfaction.

Who do you look up to professionally in or out of the industry and why? Do you/did you have any mentors? Do you have any words of wisdom to those starting out in the leasing industry?

I have a friend and mentor who’s been very successful in the leasing industry.  He’s retired now, but I lean on him for difficult decisions or special help when I can.  He’s built, run, and sold a multi-million dollar enterprise and I respect his intuition and perspective.  He’s a great man of high moral and ethical character, which helps guide me through tough decisions to do the right thing.  We are currently looking to add him to our Board, which we know will be a fantastic move!

This is a difficult and challenging time for anyone to start a new venture in the leasing industry, from the proposed accounting changes and adoption of IASB standards, tightened credit perimeters, to the overall macro-economic conditions, to name a few… That said, if you can form a niche’ that fills a bona fide need, there’s power and genius in taking that first step.  If you find a good team, a great model, and can execute efficiently, I’d say go for it!

Care to share any of your professional or personal goals for 2012?

Sure! On the business front, we hope to complete a software optimization platform to further streamline our business by year-end. This will include electronic signature and on-line asset and process management for our customers.  We also are expecting to deepen our Vendor Program department and have set $10M as a goal for funded transactions through this leg of our business.  We are off to an incredible start this month, it looks like we should come in somewhere around $8M and hope to secure around $65M in new Lease Originations by FYE 2012.

On a personal note, I’ve always tried to challenge myself to improve my physical, mental, and spiritually minded objectives.  So, I took the plunge this year and signed up for an Ironman Triathlon.  Crazy, I know, but it is something that’s been on my tick list.  I’ve run several marathons and have completed many century rides on the bike but swimming is something new.  If I can survive the swim, I just may finish!

To view earlier Emerging Leader features visit: http://www.worldleasingnews.com/category/emerging-leaders/ or to recommend a lessor as an Emerging Leader e-mail abigailsutton@worldleasingnews.com.

Mazuma Capital Adds EVP/General Counsel

DRAPER, UT, March 13, 2012 -- Mazuma Capital is pleased to announce the hiring of Todd K. Jenson as EVP/General Counsel.  “The hiring of in-house General Counsel is a consequence of growth, new ventures and upcoming strategic partnerships,” said Jared Belnap, CEO and President of Mazuma Capital. "We are excited about adding Todd to our executive team and look forward to leveraging his experience, and leadership in expanding our footprint in the middle-market leasing segment.”

 “I am excited to join Mazuma Capital.  They are a talented group, and consequently, Mazuma is growing quickly in their core segment.” said Todd Karl. Jenson, newly appointed EVP/General Counsel of Mazuma Capital.

About Todd Karl Jenson

Todd received his Master of Business Administration from the University of Utah, David Eccles School of Business in 2002.  Todd attended Willamette University College of Law in December 2004, and completed his final  year of law school at Brigham Young University (BYU), J. Reuben Clark Law School. The majority of his legal career has been spent between his former employer Republic Bank Inc. as in-house Corporate Legal Counsel, in private practice at two small and mid-size law firms, and at the Office of the Utah Attorney General.  Todd’s expertise at Republic Bank, Inc. focused on commercial litigation, collections, secured lending, bankruptcy, creditors’ rights, and the Uniform Commercial Code.  During his tenure at the Office of the Utah Attorney General Todd represented the Utah Labor Commission in State and Federal Courts handling legal matters in the areas of OSHA, wage claims, discrimination and fair housing.  In private practice, Todd worked in the areas of commercial litigation, insurance defense, personal injury, property law, probate, and municipal law.

About Mazuma: Mazuma Capital is committed to our client’s success. Our unique capabilities and innovative product offerings provide solutions accelerating financial growth. Servicing both rising companies and established businesses, Mazuma continues to secure its position as the middle-market industry leader. We build long-term relationships by delivering on our commitments. Mazuma co-authored the Utah Best Practices Alliance. Mazuma Capital subscribes to the ELFA Code of Fair Business Practices and NAELB code of ethics.

Media Contact:

Julie Fuchs

801-816-0800 Ext. X291

jfuchs@mazumacapital.com

# # #

Fed Tells U.S. Banks to Test Capital For Recession Scenario

The Federal Reserve ordered the 19 largest U.S. banks to test their capital levels against a scenario of renewed recession with unemployment rising above 11 percent, said two people with knowledge of the review.
The banks stress-tested the performance of their loans, securities, earnings, and capital against at least three possible economic outcomes as part of a broader capital-planning exercise. The banks, including some seeking to increase dividends cut during the financial crisis, submitted their plans last month. The Fed will finish its review in March.
“They’re essentially saying, ‘Before you start returning capital to shareholders, let’s make sure banks’ capital bases are strong enough to withstand a double-dip scenario,’ ” said Jonathan Hatcher, a credit strategist specializing in banks at New York-based Jefferies Group Inc. Regulators don’t want to see banks “come crawling back for help

Dodd-Frank Act

The Fed also wants banks to consider how the Dodd-Frank Act overhauling financial oversight might affect earnings, and how they will meet stricter international capital guidelines, according to the November notice. Banks will also have to consider how many faulty mortgages investors may ask them to take back into their portfolios. Standard & Poor’s Corp. estimates mortgage buybacks could cost the industry as much as $60 billion.
The Fed’s adverse economic scenario included a 1.5 percent decline in gross domestic product from the fourth quarter of last year through the end of 2011, said the people, who declined to be named because the Fed hasn’t made the details of the review public. The scenario assumed growth resumes, with output rising 4 percent over the fourth-quarter 2010 level by the end of 2013. Unemployment would peak at more than 11 percent by the first quarter of 2012 and drop back to 9.5 percent by the end of 2013.
Federal Reserve spokeswoman Barbara Hagenbaugh declined to comment on the specifics of the Fed’s parameters.

Growth Outlook

While Fed policy makers want banks to be prepared for a slump, they aren’t predicting one. In January, members of the Federal Open Market Committee forecast growth of 3.4 percent or more annually over the next three years, with the jobless rate falling to 6.8 percent to 7.2 percent in the fourth quarter of 2013. Unemployment averaged 9.6 percent in the final three months of 2010.
As part of the most recent capital exam, regulators have made one of the largest data requests in Fed history, outside of normal regulatory reporting, asking banks for information about their securities, loans and other holdings. This will give the Fed the ability to check and even challenge the assumptions banks make about their portfolios.

Financial-Risk Unit

The tests are being overseen by a new financial-risk unit assembled by Chairman Ben S. Bernanke and Tarullo. Known as the Large Institution Supervision Coordinating Committee, or LISCC, the unit draws on the Fed’s deep bench of economists, quantitative researchers, regulatory experts and forecasters and looks at risks across the financial system. The LISCC last year helped Bernanke respond to an emerging liquidity.

100 Fed Staff

The dividend increases, if they happen, will be one of the most carefully screened payouts in U.S. regulatory history, with more than 100 Fed staff working on the capital analysis of the banks.
Congress is also watching. The Fed should be cautious about allowing banks to reduce their capital through dividends or stock repurchases, House Democrats, including Representative Brad Miller of North Carolina, said in a Feb. 15 letter to Bernanke.
“We applaud your undertaking new stress tests on the banks,” the lawmakers said. “It appears doubtful, however, that the stress tests alone can resolve the uncertainty facing those banks to justify reducing their capital.”
The Fed’s involvement in decisions normally reserved for boards shows how far the Dodd-Frank Act has pushed regulators into corporate governance.
“It is an uneasy balance between regulating an institution and running it,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics in Washington, a research firm whose clients include the nations’ biggest banks. The Fed is moving “far more assertively” on bank oversight, she said.

2009 Stress Tests

As with the 2009 stress tests conducted by the Fed during the crisis, one of the goals is to assure that bank capital can support new loans to creditworthy borrowers. Loans and leases of banks in the U.S. contracted at a 10.3 percent annual rate in 2009, a 6.2 percent rate in 2010, and at a 2.6 percent rate in January.
The Fed’s unprecedented exam of the 19 largest lenders in May 2009 concluded that 10 U.S. banks needed to raise an additional $74.6 billion in capital.
Banks were “destroying” value when they repurchased billions of dollars of stock in the years leading up to 2008, only to issue shares later at lower prices after they needed capital amid the crisis, said Jefferies Group’s Hatcher, a former bank examiner for the Federal Deposit Insurance Corp.
“Whether it is liquidity, capital or earnings, banks are on a much better footing than they were a couple of years ago,” said R. Scott Siefers, managing director at Sandler O’Neill & Partners LP in New York, a brokerage and research firm specializing in financial companies. “Still, you can pick your caveat. We are only in the early stages of an earnings recovery on the lending side and the legislative and regulatory framework is still in flux.”
Read entire article at Bloomberg.com

Cash Hoards are Shrinking at S&P 500 for the First Time since '09 as Obama Continues to Woo CEOs

According to Bloomberg Corporate America is putting its cash hoard back to work.
In the first decline since mid-2009, Standard & Poor’s 500 companies reduced cash and short-term investments to $2.4 trillion from a record $2.46 trillion, according to data Bloomberg compiled from their most recent quarterly reports. Capital spending increased $22.3 billion, the biggest quarter- to-quarter jump since the end of 2004, to $142.8 billion, the highest level in two years.
Budgets are rising for new plants, distribution centers and stores from S&P bellwethers Cisco Systems Inc., General Electric Co. and Coca-Cola Co. While some of the money is being spent abroad, company officials say they are opening the purse strings at home now too. A rebound in economic demand, President Barack Obama’s efforts this year to court business leaders, and Republican gains in Congress have helped build confidence to invest and start adding jobs, executives and investors said.
U.S. companies’ accumulated record cash last year after they slashed spending shut factories and fired workers in 2008 and 2009 to cope with the worst recession since the 1930s.
The dearth of investment took a toll on jobs, with the unemployment rate averaging 9.6 percent in 2010. An increase in spending this year may help lower the rate to 9.2 percent, the average estimate of 87 economists in a Bloomberg poll.

Political Climate

Companies held their cash partly on concern that health- care mandates and increased financial regulation would add costs to their bottom line.  Business confidence has improved and is contributing to some increased risk appetite. The economy last year grew 2.9 percent after shrinking 2.6 percent in 2009.

Profit, Not Presidents

Obama backed a compromise to extend tax breaks that were set to expire in December and a measure to accelerate equipment depreciation. He has countered executives’ criticism with a call to lower corporate taxes, freeze federal spending and review “outdated and unnecessary” regulations. In return, at a Feb. 7 speech to the U.S. Chamber of Commerce, he asked companies to invest and create more jobs at home.

 ‘Good for the Economy’

The Bloomberg data examined the most recent quarterly figures reported by S&P 500 companies, regardless of the specific calendar period. About 75 percent have reported so far in the current cycle, and final totals may change. The S&P 500 increased 12.8 percent in 2010, compared with 11 percent for the Dow Jones Industrial Average.

http://www.bloomberg.com/news/print/2011-02-16/cash-hoards-shrink-at-s-p-500-for-first-time-since-09-as-obama-woos-ceos.html

Understanding Equipment Lease and Finance

Anyone who runs a business should understand how equipment financing can be as beneficial as it is. Here are a few things to see when getting equipment financing to work. These should be reviewed because they show just how effective financing can be for any type of business that needs to get its items sooner without having to pay for everything right up front.
The first part about equipment financing is that it works to ensure that a line of credit is available for a business. This is where a business can easily pay off a certain piece of equipment over a period of time. This can be done while the new equipment is used to create more profits for a business to work with.
Also, the money that is used will be covered in full in a plan. This means that all costs for building and delivering the equipment to a place will be covered. This can work to make it so anyone can get a good profit off of something that it needs for its operations.
Also, the payments in equipment financing will stay the same over time. This may be used to keep a business from suffering from the dangers of inflation. Inflation can make some equipment items higher over time. Using equipment financing will help to protect the business from losing money as the value of something goes up. This is all thanks to how the equipment will be of the same price.
Also, many of the equipment financing payments that a business makes can be tax deductible. This may be used to ensure that the business can save on tax payments. A big point of this involves how these payments might involve interest in some cases.
Of course, the best benefit of this plan involves how it will get a business to receive what it needs sooner. A business will get something quickly without having to wait too long to get it to work. It will be able to get something out to a business as quickly as possible, thus making it easier for the business to get profits off of the equipment that it needs. This may be beneficial for the bottom line of the business and even the customers who want to get this out of it. This is all thanks to equipment financing.
These are all good reasons why equipment financing is such a good thing to get into. This type of financing can be used to get any business to receive the money that it needs for different kinds of items that it needs in order for it to be more profitable and successful. Capital lease financing provides many flexible options that can meet business and financial goals.  Be sure to watch for this when getting any type of business to become more successful and able to operate properly.

Filtered Finance Feb. Newsletter

http://archive.constantcontact.com/fs011/1103755398157/archive/1104451321630.html

Contact us directly for a bid on your next capital project 801-816-0800 or visit us 24/7 at mazumacapital.com

Experience the Mazuma Capital difference

Lease Accounting Board Takes Stock of Responses

In two meetings over recent weeks, the accounting standard setters have started to consider how to finalize the new leasing standard. The Boards, (International Accounting Standards Board (IASB) and the US Financial  Accounting Standards Board (FASB), received reports from their staffs on the pattern of response to the exposure draft (ED) in the recent consultation, and subsequent meetings with stakeholders. 

For additional information Visit http://mazumacapital.com

Combined carloads and intermodal traffic up for more than a year

Freight carloads increased 8% in January compared with the same month last year, and intermodal traffic increased 7.4% from the year-ago level. "This growth marks the 13th straight month that combined carloads and intermodal traffic have increased year over year, showing the continued gradual upward trend in rail traffic," the Association of American Railroads said ProgressiveRailroading.com (2/9) For additional information Visit http://mazumacapital.com

U.S. manufacturers see emerging market boost

(Reuters) - Strong demand from big emerging markets, particularly China and India, is boosting U.S. manufacturers' prospects for 2011, a pair of top executives said on Tuesday.

But not everyone in the sector regards the recovery from the worst recession the world has seen in living memory as a sure thing.
"We feel very good about the economy," said Greg Hayes, chief financial officer at United Technologies Corp (UTX.N). "There's good news, but we're not out of the woods yet ... It's going to be a gradual, slow, uneven recovery."
Read Entire Article - http://reuters.com/

Credit Markets: The Default Deluge

This year will see a record volume of default in corporate debt, in line with expectations, as the U.S. continues to be the epicenter of economic and credit-market weakness

From Standard & Poor's RatingsDirect

http://www.businessweek.com/investor/content/sep2009/pi20090921_877700.htm

Following the end of the summer, the final stretch of 2009 offers a good opportunity to take stock of the events that roiled the economy this year and assess the tone of the financial markets for the rest of the year.
Buoyed by an encouraging stream of positive economic data, sentiment in the financial markets has been relatively upbeat. Much of the recovery has stemmed from the monetary and fiscal stimulus the government pumped into the financial system in copious amounts to revitalize critical pipelines of money and credit.
However, this year will see a record volume of default in corporate debt, in line with expectations. In the first eight months of 2009 a total of 216 corporate issuers defaulted (both nonfinancials and financials), affecting rated debt worth $523 billion. If this pace continues, the global default tally will reach 324 in 2009, the highest annual total in 28 years—since the inception of our data series on defaults. The volume of debt affected by these defaults also soared to a record high.
Other key takeaways from the year thus far:
• The U.S. is the epicenter of economic and credit-market weakness. At the beginning of the year our 12-month forward baseline prediction for the U.S. speculative-grade default rate was 13.9% by yearend, with an upper bound of 18.5% and a lower bound of 10.0%. The default rate hit 10.4% in the 12 months ended in August 2009, giving us reason to believe it is headed toward our predicted range by the end of the year. Corporate default incidence (by count) within the population or rated companies has been highest in the U.S., which blazed ahead with 158 defaults in 2009 (through Sept. 16). Of the remainder, the EU recorded 15, the other developed markets (mainly Canada) 12, and the emerging markets 31.
• Consumer discretionary sectors lead the global default count, though industrials and housing-related sectors also are reporting numerous casualties. Companies in leisure/media are in the lead globally (mainly because of the U.S.), with 53 defaults in 2009 (through Aug. 31). Next in line is the aerospace/auto/capital goods/metals category (35 defaults), followed by forest products and building materials (26 defaults), and consumer/service (24 defaults). When factoring in only speculative-grade ratings, homebuilders and forest products led with a global default rate of 18% for the trailing 12 months ended in August.
• Defaults continue to emerge from the lowest rungs of the ratings ladder. This is true not only in a single year but also on a cumulative basis. More than four-fifths (86%, or 187 entities) of this year's defaults year-to-date emerged from the speculative-grade domain, with an initial rating of BB+ or lower.
• Companies with an original rating of B face maximum default risk exposure. Among this year's defaulters, entities with an initial rating in the B rating category (which includes B+, B, and B-) accounted for the largest number of defaults, at 122. Next in line were entities with an initial rating in the BB rating category, with 54. Companies with a first rating of CCC+ or lower accounted for 11 of this year's total default count.
• An avalanche of low-rated rating originations during the credit boom indicates that considerable default risk still resides in the pipeline. For example, a total of 1,340 new speculative-grade ratings were originated globally from 2006 through the first half of 2009, of which only 100 have defaulted. This indicates a survival rate of 92.5%, which is expected to erode over time as more casualties occur and more issuers age. It is difficult to pinpoint the exact timing for such casualties because forbearance measures can delay the day of reckoning, particularly as financing conditions ease.
• The flow of distressed-debt exchanges has accelerated substantially and likely will reach an all-time high in 2009. Plummeting liquidity and deteriorating fundamentals set in motion a flurry of corporate distressed exchanges. In part, the increase reflected a pragmatic reaction to the shortage of financing options in the throes of the financial crisis. Of this year's 216 defaults, 81 were defined as distressed exchanges, by far the single leading default trigger across both developed and emerging markets. With $71.0 billion in rated debt, Ford Motor (F) was the largest issuer (by par volume) so far in 2009 to implement a distressed exchange. CIT Group (CIT), with $42.1 billion, came in second.
• By contrast, formal bankruptcy filings have been lower. The liquidity crunch created several bottlenecks for exit financing options and hastened the use of alternative pragmatic strategies, including prepackaged bankruptcies, distressed exchanges, and standstill agreements. Only 54 formal bankruptcies have been recorded globally this year, of which 48 were in the U.S., affecting rated debt worth $150.5 billion. With $53 billion in rated debt, General Motors was by far this year's biggest bankruptcy, followed by Charter Communications, with $22.5 billion.
•Troubled leveraged buyouts (LBOs) from prior years remain a fertile source of defaults this year. The actual volume of LBOs has dropped precipitously, totaling only $21.9 billion in the U.S. in the first half of 2009, compared with a peak of $433.7 billion in full-year 2007, according to Standard & Poor's Leveraged Commentary & Data. Moreover, in contrast with 2006, new deals in the U.S. are increasingly being funded with higher equity contributions and smaller shares of senior debt. Nevertheless, prior-year deals continue to emerge as casualties. In Europe, for example, 42 of 48 defaults recorded in the first half of 2009 were LBO-related.

Consider Leasing for Heavy Equipment

In need of new equipment, but not ready to use all your capital to purchase it? 
Leasing is a GREAT solution.  Why you ask?

Not only does leasing help you conserve your cash, it also ensures that you don't wind up paying for equipment that becomes obsolete or unsuited for your needs. And think about this: if you need the equipment only for a short time or special project, leasing saves you the hassle of having to be both a buyer and, then later, a seller. 

Mazuma Capital will work on crafting a lease to help minimize your federal income tax liability, maximize your accounting objectives and customize cash-flow solutions to your budget.  Our Associate Structuring Group has expertise in all these areas and will help guide you to the best structure for your situation.

From technology and medical equipment to renewable energies, leasing is a great option. There's no limit to the type of equipment available for leasing. Even a one-person operation can lease equipment. Unlike loans, leases do not require a down payment. You're required to pay for the use of the equipment during the lease term. You may also be responsible for routine maintenance and other costs as well. When the lease expires, the equipment goes back to the leasing company, you can opt to purchase however you choose to complete your obligation.

Lease payments are considered an expense that you deduct from your business income, just like any other expense.

Flexibility is another leasing feature. If customers or the competition demand that you always have the latest technology, a short-term lease can help you get what you need and keep your cash in other uses. Another plus is that most leasing companies offer lease-to-own plans if you determine that purchasing the equipment is in the best interests of your business.

The Equipment Leasing and Financing Association, a trade group of leasing companies and financial services companies, has a special section that explains the basics of leasing at its website, elfaonline.org. You'll also find guidance on leasing options and benefits, loan/lease differences, leasing terminology.

Mazuma Capital is a national direct lender, financing $100K-$10MM transactions. 
Mazuma Capital offers amazing vendor services and broker programs as well. 
Contact Mazuma at info@mazumacapital.com 801-816-0800.

• Tax oriented leases “true or guideline” leases
• Non-tax oriented leases
• Loan, conditional sales contracts, balloon, and other purchase option structures
• Operating leases
• Lease facilities
• Sale & lease back options
• Step up/step down leases
• Seasonal leases
• Differed payment options
• Bundled lease products
• Non-tax operating leases, and other tax/GAAP products

Employment & Capital Spending Outlooks Strengthen

January 2011 survey conducted by the National Association for Business Economics (NABE) confirms that the underpinnings of the U.S. economy continue to strengthen. The survey notes that U.S. companies' employment outlook improved to a 12-year high this quarter. On capital spending, 62% of respondents said they planned to boost capital spending, up from 48% last quarter.

Shawn DuBravac, chief economist of the Consumer Electronics Association said, "The number of firms expressing positive hiring plans is at a level not seen in over a decade - a sign of improving labor-market dynamics. Supporting these hiring plans, industry demand continues to move higher, and profit margins are expanding." DuBracac added, "Firms are increasing their plans for future capital spending. A majority of respondents anticipate no increase or decrease in investment spending or employment in response to new tax policies, suggesting business decisions are being driven by the fundamentals of an improving economy."

Survey highlights included the following:

·  Expectations for economic growth have improved significantly. Over the last quarter, NABE panelists have become more optimistic. A majority (62%) assumes real GDP growth of 2% to 3% in 2011, and one in five panelists is building business plans based on an outlook of 3% to 4% economic growth.

·  Employment continues to improve, with 34% of firms reporting larger workforces compared to only 13% a year ago. The share of firms cutting jobs shrank, from an average of 13% over the past three quarters to 6% currently. The current NRI is the highest level it has been since 1998. The hiring outlook for the next six months also looks more robust - 42% of respondents indicated their firms will be increasing employment, up from 39% last quarter and 29% in January 2010. The employment outlook NRI hit a 12-year high.

·  The share of firms increasing their capital spending from the previous quarter rose slightly from the prior survey to 38%, while only 6% of panelists reported cutbacks in their firms. Expectations for future capital spending improved significantly, with 62% of respondents reporting higher planned expenditures, up from 48% last quarter.

·  As for the expected impacts of the proposed 2011 tax package, more than half (53%) of the panelists, especially those from the goods-producing sector, anticipate a favorable impact on their firm's sales. In contrast, a majority of the respondents (60%) said they do not anticipate any increase or decrease in investment spending or employment in response to new tax policies.

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

BANKS IN NEED OF REFORM-

Economists are concerned that recent reform will not be enough to prevent the need for more bailouts.  In recent months, regulators around the world have taken steps to ensure that banks will be able to weather tough times. New international rules will require big global banks to hold more equity to protect their depositors and other creditors. In the U.S., lawmakers have adopted measures intended to mitigate risk at big banks and keep close tabs on potential threats throughout the financial system.

Over the past few days, though, economists here offered many reasons why the recent banking reforms fall short. Among their concerns: The new capital requirements aren't tough or simple enough, there is too much uncertainty about how governments will deal with distress at the biggest lenders. It seems that there has been little done to prevent the kind of crisis that could occur if trouble broke out at many smaller institutions, such as hedge funds.

Recent history suggests that a capital requirement of 7% won't be enough to fend off bailouts. Many banks that required government support during the latest crisis, including the Citigroup and Royal Bank of Scotland, whom both had capital levels exceeding 7% just before trouble hit in the third quarter of 2007.

Another issue is banks' excessive reliance on short-term borrowing to finance their activities. Tougher rules could push more financial activity away from banks into other areas that don't face the same regulations. The so-called shadow banking sector, which includes everything from hedge funds to derivative markets, already plays a larger role in credit markets than traditional banking.

New financial rules in the U.S. provide regulators with more power to oversee the shadow banking sector, and shed light on it by creating incentives to shift more derivatives trades into places where they can be monitored. But regulators have yet to work out exactly how they will identify dangerous situations in which many players have become exposed to similar risks.

*The capital equipment leasing sector offers attractive alternatives for those seeking finance options.  With tax incentives still available and many options to fit the financial goals of customers, leasing is something that is worth looking into for businesses of all sizes.  The economy has not been kind to businesses over the past few years.  There are many once profitable companies who are finding it harder and harder to secure financing, and banks can't look at the external factors that have left a mark on businesses. When seeking financing for new/used equipment many businesses look to Mazuma Capital.  A lease originator, Mazuma Capital is a funding source that works for businesses, promotes growth and profitability.

2011 Looking Bright for U.S. Company Growth and Purchases

Companies are looking to expand and that means new equipment purchases in the near future.  This outlook is bright coming off of two tough years in the equipment leasing industry.  Slow growth combined with economic uncertainty was not a good combination for the leasing industry.  There seems to be a bright light at the end of this tunnel. Forecasts seem promising and the tax benefits for companies to buy are enticing.

Investment by U.S. companies in equipment and software in the third quarter was up 15% from a year earlier to $1.08 trillion, nearly matching prerecession levels, government data show.

Corporations received more incentives to invest Dec. 17, when President Obama signed into law a tax compromise reached by Congress that, among other things, lets companies deduct from taxable income 100% of certain types of investments in 2011.

It seems that big U.S. companies have cleaned up their balance sheets and, appear to be flush with cash.  These U.S. companies are open to using the cash in 2011 on factories, stores and even hiring. Companies worked hard the last few years and especially in 2010 to preserve cash, and are slowly coming around to spending it.  According to Bloomberg Business U.S. companies are turning around and starting to feel comfortable with the economic outlook.

The maker of specialty glass and ceramics is investing $300 million to expand its research and development center near its headquarters in Corning, N.Y., adding about 100 researchers and Ph.D.s. It also is spending $800 million on a liquid-crystal display factory in China and building more LCD capacity in Taiwan.

Engine maker Cummins Inc., meantime, plans to add about 2,500 U.S. jobs in 2011, many requiring engineering or other technical skills. In 2010, Cummins raised its U.S. employment by only 185 people. The company has about 14,800 U.S. employees.

At the end of the third quarter, cash held by 419 nonfinancial companies in the Standard & Poor's 500 list was up 49% from three years ago—before the start of the recession—while total debt was up a more modest 14%, according to an analysis by The Wall Street Journal.

The good news: The improvement in just the past year was even more pronounced: cash was up 10.6% from the 2009 level, while debt grew 2%.

Profits are higher, too, after companies slashed their work forces and closed less-efficient operations. Total U.S. corporate profits in 2010's third quarter rose 26% from a year earlier to $1.64 trillion, the highest in four years, according to government data.

With this stronger foundation, coupled with new confidence about the global economy, corporations are looking to expand.  Continued growth in the mining and energy businesses around the world is expected to fuel a wide range of U.S. companies. IT spending seems to be on everyone’s mind and will head up the priority spending list this new year.

Source:

Standard & Poors Capital IQ

Bloomberg Business

Wall Street Journal

Companies Brace for Powerful Impact of Lease Accounting Changes

Proposed new accounting standards have been drafted in order to push lease liabilities back onto corporate balance sheets. Such a change would represent a major shift for companies that have typically favored the off-balance-sheet treatment of operating leases, and it could have a significant impact on corporate decisions to lease or purchase real estate in the future.

The proposed guidelines are a joint initiative by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board to create a uniform global standard and greater corporate transparency in lease accounting procedures. The most recent draft would establish one method of accounting that requires firms to recognize all lease liabilities and assets on their corporate financial statements.

Another key component is that companies would be required to record the lease value or rent commitment over the entire lease term, including renewal options. Although the intent is to stop off-balance-sheet activity, the changes would add significant weight to corporate balance sheets.

For example, a firm that pays $1 million per year in rent for its corporate headquarters would quickly see its liability multiply depending on whether it has a five-year or 15-year lease. Companies would appear more highly leveraged, which could affect factors such as corporate credit and existing debt covenants.

Although FASB cites data that values leasing activity at $640 billion in 2008, other industry sources estimate that current volume as high as $1.3 trillion in operating leases for U.S. firms alone. Once the guidelines go into effect, which many in the industry believe will occur in 2013, both new and existing leases would be immediately affected.

One fear is that the new accounting practices could deter companies from signing long-term leases, or encourage firms to own rather than lease facilities. Both of those factors could be a detriment to the sale-leaseback and net-lease finance niche where leases typically extend 15 years and beyond.

Sale-leaseback transactions have accounted for $24.8 billion, or slightly more than 50%, of the $46.6 billion in single-tenant sales globally over the past 12 months from June 2009 through June 30, 2010, according to Bloomberg Business.

Major Incentives for Equipment Purchases in Year-End Tax Bill

Companies have something to cheer about when it comes to their upcoming large equipment purchases.  The new tax-law that went into effect this week includes 100% expensing for qualified capital investments, including investments in plants and equipment, for 2011 and a 50% deduction for 2012. This is great news as companies remain uncertain when it comes to the economic growth for business.
 
Mazuma Capital supports the ELFA in their crusades for the use of capital formation tax incentives.  The focus remains on the need to invest in plants and equipment as a key component of economic growth and competitiveness. The provision allowing the full deduction – without monetary limitations – of qualified capital investments through 2011 and the 50% bonus depreciation level for 2012 is a major win for economic growth.
 
We hope to see growth in manufacturing and in many industries whom have felt the pinch of the current economy.  Agriculture, construction, manufacturing and transportation outlooks seem positive as growth is reported.  We will all be routing for the best as we continue full steam ahead into 2011.

Mazuma Capital Announce Exclusive Broker Services Program

Draper, Utah December 16, 2010–Mazuma Capital announces a new extension of services to include an exclusive broker program.  The offering is part of Mazuma’s Strategic Development Program and provides innovative turnkey solutions for brokers and their clients. 
The broker program has been formed in conjunction with Mazuma Capital’s new affiliation with the NAELB (National Association of Equipment Leasing Brokers).  The exclusive broker program is available to brokers whom seek funding from $100K to $10MM for qualified middle-market clients.  Through a private label solution or as a turn key service provider brokers may access this program to reduce turn-around time and streamline processes.
Mazuma Capital possesses financial backing that provides strength to fund transactions internally, allowing Mazuma to carry residual risk, fund projects over extended installation periods, and other capabilities that most of Mazuma’s competitors can’t match. By bringing together these unparalleled resources coupled with a unique approach to the market place, Mazuma Capital can deliver the quality, timing, strategy and strength that top brokers are seeking.
“We know and understand the competitive landscape of equipment leasing right now.  With the migration of the main stream banks, money centers and independent leasing companies to better credit markets, these sources continue to tighten as they stretch to find ways to reduce static loss, take less risk and strengthen their respective portfolios. This has made the “A” credit markets extremely competitive and left a gaping hole in the “B” credit markets.  Mazuma Capital, staying true to its niche`, has successfully funded more than $100MM in “B” credits since the start of the downturn.  This is due to our strategic partners who remain flush with capital and our own internal capital and expertise in being able to structure and carry equity risk on transactions that have merit.   As relationship continue to win deals, it is important for Mazuma to be an advocate for these companies, and the brokers that represent them.  By following best practices and delivering on our commitments we have created an amazing broker program that provides flexible lease options to meet the needs of brokers and their clients”, said Jared Belnap, Mazuma Capital CEO and President. “It is Mazuma’s goal to help promote these best practices and incorporate them into each leasing transaction and relationship we enter into”, said Belnap.
About Mazuma: Mazuma Capital is committed to our client’s and partner’s success. Our unique capabilities and innovative product offerings provide solutions accelerating financial growth. Servicing both rising companies and established businesses, Mazuma continues to secure its position as the middle-market industry leader. We build long-term relationships by delivering on our commitments. Mazuma co-authored the Utah Best Practices Alliance and subscribes to the ELFA Code of Fair Business Practices, and the NAELB Ethical Conduct Code.

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Media Contact – jfuchs@mazumacapital.com 801-816-0800 X291