According to ELT Magazine there is considerable improvement in the industry overall from last year. According to a recent study done by the ELFA the industry is returning to prerecession levels and a greater volume of equipment is expected to be leased in 2011. So what industries are leading the comeback? Here they are ranked from highest-rated to lowest-rated.
Medical
Oil/gas/energy
Machine tools
Truck/Trailers
Hi-Tech/Computers
Aircraft
Rail
Container
Construction
Telecom
Marine/Intercoastal
Automobiles
Plastic
FF&E
Printing
Medical Equipment has been leader of the pack when it comes to growth the last 6 years. With the rising demand it is expected to be a 57 Billion dollar industry by 2017. The medical industry's preference for leased equipment is fueled by the "baby-boomer" generation. There are some challenges facing health care growth including the "reform" proposals, various potential reimbursement cuts, rules and other things aimed at the industry. All of these factors make used equipment more and more attractive.
Oil/Gas/Energy markets are improving, due impart to optimism and opportunities for "clean energy" technology and equipment. There is also a drilling boom in natural gas and oil that has given solid increased value to drilling rigs.
Machine Tools are up thanks to the turnaround in the domestic and international manufacturing sectors. This market has seen an 85% growth, which is linked to the financing of smaller ticket sizes and one-off deals. The secondary market demand for machine tools has also played a part in the growth of this sector.
Trucks/Trailers experienced the greatest overall improvement from last year. Both new and used trailers increased as the freight tonnage index steadily improves month over month.
Hi-Tech/Computers showed a small decline, but demand continues to grow. The industry has low margins and demand for upgrades that were put off the past few years will begin to catch up and add to growth.
Aircraft has shown some growth in the commercial structure and the private sector demand is on the rise, particularly the business jet segment. We will keep our eyes on this industry and measure the effects of the rising price of fuel and effects it will generate.
Rail is still soft, but the demand for over 300,000+ rail cars is creating some buzz. This market should see a steady and consistent turnaround.
Containers seem to be experiencing tremendous growth as production volume has increased by 10 times over. Conditions for growth are strong and will remain so for the future.
Construction seems to be in a constant battle with the market. The segment is still soft, although many resellers are experiencing shortage in used equipment. New equipment is still slow and has seen a decline over the past two years. The opportunity to buy low and sell high presents itself for the future.
Telecom equipment is turning the corner as demand expands. With the increase of broadband capacity related to video and data transfer the industry is ramping up. Long term evolution to accommodate 4G mobile phones will keep growth steady.
Marine/Intercoastal saw declines due mainly in part to supply and demand issues. The container shipping segment is rapidly outpacing with deliveries of new container ships.
For more information on industry outlooks visit http://www.elfaonline.org/ For specific data on leasing options contact Mazuma Capital 801-816-0800 http://www.mazumacapital.com/
Equipment Lease Financing News. Building sound business relationships by delivering on our commitments. Mazumacapital.com (801) 816 0800
Wednesday, May 11, 2011
Tuesday, May 10, 2011
U.S. Banks Fight Proposed Accounting Standards through IASB and FASB
U.S. derivatives accounting at odds with foreign rules
* Some bank balance sheets could nearly double
* Changes on FASB's board cloud proposal's future
Wall Street's biggest banks are urging rule-makers to scrap a derivative accounting proposal that could inflate their balance sheets by trillions of dollars.
The draft rules, unveiled by the Financial Accounting Standards Board in January, would force banks to report their full exposure for most derivatives on their balance sheets, instead of net amounts.
In a worst-case scenario, S&P 500 companies might have to bring nearly $7 trillion in derivatives onto their balance sheets if no netting is allowed, according to a report by Credit Suisse.
About 97 percent of that would come from five big banks: Bank of America Corp (BAC.N), JP Morgan Chase & Co (JPM.N), Citigroup Inc (C.N), Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N), according to the report. Derivatives are a big source of revenue for banks.
The proposed rules are meant to harmonize U.S. accounting standards with their international counterparts. But with new board members at FASB, the future of the proposal is uncertain.
In letters to FASB, banks complained that the change would exaggerate risks. In practice, banks typically have legal agreements in place that allow them to net, or offset their derivative positions against one another, so they are not exposed to losses on gross amounts, banks said.
"The flawed offsetting model in the exposure draft will either obscure or create nonexistent risks which will ultimately mislead financial statement users," Robert Traficanti, deputy controller at Citigroup, wrote last week.
The accounting proposal could also make it hard to net derivatives traded on clearinghouses, banks complained. One requirement for netting is that derivatives be settled simultaneously; but on a clearinghouse, derivatives are often settled in batches throughout the day.
"There is certainly concern right now about how those rules are written, and justly because there are significant implications," said Lisa Filomia-Atkas, a partner at Ernst & Young.
U.S., INTERNATIONAL RULES AT ODDS
Derivatives have come under scrutiny by regulators worldwide since the global financial crisis. Many investors complain that banks' exposures are opaque, making it difficult to determine exactly how safe a lender is.
Accounting treatment for derivatives differs sharply, with netting allowed for most derivatives in the United States but not under International Financial Reporting Standards.
Leaders of the top 20 world economies have been pushing rule-makers to iron out accounting differences.
The proposed rewrite, a joint effort of FASB and the International Accounting Standards Board, would restrict netting to limited circumstances.
"It certainly will be very onerous to meet all the netting requirements in the proposal," said Olu Sonola, director of credit policy at Fitch Ratings. "In its current form, the bar is very high."
The American Bankers Association, a lobbying group, argued that banking analysts rarely use gross amounts to figure out a company's risks. Balance sheets should report the net information, with gross amounts in footnotes, it said.
Some accounting experts, however, said it is important to see the total derivative amount on the balance sheet.
"Netting just doesn't give you a fair representation of what the company's full asset and liability exposure is," said Charles Mulford, accounting professor at Georgia Institute of Technology.
Changes on FASB's board have clouded the future of the proposed rule, which passed by a 3-2 vote. Former FASB Chairman Robert Herz, who voted for it, has resigned and been replaced as chair by Leslie Seidman, who opposed it. The board also has three new members, "so anything could happen," Fitch's Sonola said.
* Some bank balance sheets could nearly double
* Changes on FASB's board cloud proposal's future
Wall Street's biggest banks are urging rule-makers to scrap a derivative accounting proposal that could inflate their balance sheets by trillions of dollars.
The draft rules, unveiled by the Financial Accounting Standards Board in January, would force banks to report their full exposure for most derivatives on their balance sheets, instead of net amounts.
In a worst-case scenario, S&P 500 companies might have to bring nearly $7 trillion in derivatives onto their balance sheets if no netting is allowed, according to a report by Credit Suisse.
About 97 percent of that would come from five big banks: Bank of America Corp (BAC.N), JP Morgan Chase & Co (JPM.N), Citigroup Inc (C.N), Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N), according to the report. Derivatives are a big source of revenue for banks.
The proposed rules are meant to harmonize U.S. accounting standards with their international counterparts. But with new board members at FASB, the future of the proposal is uncertain.
In letters to FASB, banks complained that the change would exaggerate risks. In practice, banks typically have legal agreements in place that allow them to net, or offset their derivative positions against one another, so they are not exposed to losses on gross amounts, banks said.
"The flawed offsetting model in the exposure draft will either obscure or create nonexistent risks which will ultimately mislead financial statement users," Robert Traficanti, deputy controller at Citigroup, wrote last week.
The accounting proposal could also make it hard to net derivatives traded on clearinghouses, banks complained. One requirement for netting is that derivatives be settled simultaneously; but on a clearinghouse, derivatives are often settled in batches throughout the day.
"There is certainly concern right now about how those rules are written, and justly because there are significant implications," said Lisa Filomia-Atkas, a partner at Ernst & Young.
U.S., INTERNATIONAL RULES AT ODDS
Derivatives have come under scrutiny by regulators worldwide since the global financial crisis. Many investors complain that banks' exposures are opaque, making it difficult to determine exactly how safe a lender is.
Accounting treatment for derivatives differs sharply, with netting allowed for most derivatives in the United States but not under International Financial Reporting Standards.
Leaders of the top 20 world economies have been pushing rule-makers to iron out accounting differences.
The proposed rewrite, a joint effort of FASB and the International Accounting Standards Board, would restrict netting to limited circumstances.
"It certainly will be very onerous to meet all the netting requirements in the proposal," said Olu Sonola, director of credit policy at Fitch Ratings. "In its current form, the bar is very high."
The American Bankers Association, a lobbying group, argued that banking analysts rarely use gross amounts to figure out a company's risks. Balance sheets should report the net information, with gross amounts in footnotes, it said.
Some accounting experts, however, said it is important to see the total derivative amount on the balance sheet.
"Netting just doesn't give you a fair representation of what the company's full asset and liability exposure is," said Charles Mulford, accounting professor at Georgia Institute of Technology.
Changes on FASB's board have clouded the future of the proposed rule, which passed by a 3-2 vote. Former FASB Chairman Robert Herz, who voted for it, has resigned and been replaced as chair by Leslie Seidman, who opposed it. The board also has three new members, "so anything could happen," Fitch's Sonola said.
Monday, May 9, 2011
FASB Chair Answers Push for Private-Company GAAP
Prompted by a proposal earlier this year by a blue-ribbon panel on the future of private-company accounting standards — a proposal that includes giving oversight of those standards to a brand-new board — the Financial Accounting Standards Board has heightened its focus on private-company issues, according to Leslie Seidman, the board's chairperson.
Seidman chose the prestigious Zicklin Center Financial Reporting Conference at Baruch College in New York on Thursday to respond to the challenge from the panel. Declaring that she hopes the responsibility for private-company financial reporting remains squarely in FASB's hands, she noted that the decision about how to respond to the panel's proposal is being deliberated by the Financial Accounting Foundation, FASB's parent organization. (Ironically, the FAF, along with the American Institute of Certified Public Accountants and the National Association of State Boards of Accountancy, established the panel.)
In January the panel recommended that the FAF "create a separate accounting standards board . . . with the ultimate standard-setting authority to determine and set exceptions and modifications in [generally accepted accounting principles] for private companies." Rather than proposing the creation of a separate version of GAAP for private companies, however, the panel recommended that accounting standards for nonpublic companies be based on existing U.S. GAAP "but with exceptions and modifications that would result in financial statements that provide relevant, decision-useful information that meets the needs of users of private company financial statements in a cost-effective manner."
Seidman acknowledged hearing concerns about the relevance of GAAP to private companies and complaints that current accounting standards are "overly complex for [private company] stakeholders." The FASB chair said she "strongly support[s]" the panel's short-term recommendations related to process changes, including considering a delay for private companies of the effective date of major new standards. In fact, Seidman noted, FASB has implemented or is in the process of implementing practically all of the short-term recommendations.
For instance, the panel recommended that FASB fill at least one of its then-open board positions "with individuals who have primarily private company background and experience." In a footnote, the panel acknowledged that FASB had done that and more. On January 14, the board named two board members: Daryl Buck, who spent 18 years as CFO of Reasor's Holding Co., a private company with $400 million in annual sales, and R. Harold Schroeder, who "has substantial experience as a user of financial statements, including financial statements of private companies," in the words of the panel's proposal.
Another of the recommendations was that the differences in GAAP for private companies be based on a framework, or set of decision criteria. Seidman noted that FASB's staff has begun developing such a "differential framework" in the form of a white paper on the unique needs of the users of private-company financial statements.
Noting that she "strongly hopes" FASB ends up being the governing body, Seidman said that any standard-setter must come to grips with the question of how much of GAAP should be altered to meet the needs of private-company stakeholders. If that doesn't happen, "any effort is doomed to fail because there will be an ongoing expectation gap," she warned.
In developing the framework, FASB's staff is looking primarily at potential differences in the disclosure needs of financial-statement users of public and private companies. "If you accept the premise that the investors in a private company have ready access to management," said Seidman, "maybe they don't need as much disclosure." The staff is also considering the unique needs of preparers of private-company financials and is mulling cost-benefit analyses in that context, according to Seidman.
Also speaking at the conference was James Kroeker, chief accountant of the Securities and Exchange Commission. "A number of areas of additional research, study, and outreach — particularly to investors — would be warranted prior to implementing any significant structural change" in financial reporting for private companies, he said.
Seidman chose the prestigious Zicklin Center Financial Reporting Conference at Baruch College in New York on Thursday to respond to the challenge from the panel. Declaring that she hopes the responsibility for private-company financial reporting remains squarely in FASB's hands, she noted that the decision about how to respond to the panel's proposal is being deliberated by the Financial Accounting Foundation, FASB's parent organization. (Ironically, the FAF, along with the American Institute of Certified Public Accountants and the National Association of State Boards of Accountancy, established the panel.)
In January the panel recommended that the FAF "create a separate accounting standards board . . . with the ultimate standard-setting authority to determine and set exceptions and modifications in [generally accepted accounting principles] for private companies." Rather than proposing the creation of a separate version of GAAP for private companies, however, the panel recommended that accounting standards for nonpublic companies be based on existing U.S. GAAP "but with exceptions and modifications that would result in financial statements that provide relevant, decision-useful information that meets the needs of users of private company financial statements in a cost-effective manner."
Seidman acknowledged hearing concerns about the relevance of GAAP to private companies and complaints that current accounting standards are "overly complex for [private company] stakeholders." The FASB chair said she "strongly support[s]" the panel's short-term recommendations related to process changes, including considering a delay for private companies of the effective date of major new standards. In fact, Seidman noted, FASB has implemented or is in the process of implementing practically all of the short-term recommendations.
For instance, the panel recommended that FASB fill at least one of its then-open board positions "with individuals who have primarily private company background and experience." In a footnote, the panel acknowledged that FASB had done that and more. On January 14, the board named two board members: Daryl Buck, who spent 18 years as CFO of Reasor's Holding Co., a private company with $400 million in annual sales, and R. Harold Schroeder, who "has substantial experience as a user of financial statements, including financial statements of private companies," in the words of the panel's proposal.
Another of the recommendations was that the differences in GAAP for private companies be based on a framework, or set of decision criteria. Seidman noted that FASB's staff has begun developing such a "differential framework" in the form of a white paper on the unique needs of the users of private-company financial statements.
Noting that she "strongly hopes" FASB ends up being the governing body, Seidman said that any standard-setter must come to grips with the question of how much of GAAP should be altered to meet the needs of private-company stakeholders. If that doesn't happen, "any effort is doomed to fail because there will be an ongoing expectation gap," she warned.
In developing the framework, FASB's staff is looking primarily at potential differences in the disclosure needs of financial-statement users of public and private companies. "If you accept the premise that the investors in a private company have ready access to management," said Seidman, "maybe they don't need as much disclosure." The staff is also considering the unique needs of preparers of private-company financials and is mulling cost-benefit analyses in that context, according to Seidman.
Also speaking at the conference was James Kroeker, chief accountant of the Securities and Exchange Commission. "A number of areas of additional research, study, and outreach — particularly to investors — would be warranted prior to implementing any significant structural change" in financial reporting for private companies, he said.
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