Most Recent Funding at Mazuma Capital

Section 179 for 2012

Section 179 limits for the year 2012 were increased by the 'Jobs Act of 2010' which allows businesses to write-off up to $139,000 of qualified capital expenditures subject to a dollar-for-dollar phase-out once these expenditures exceed $560,000 in the 2012 tax year.

Bonus Depreciation was also increased to 50% by the 'Tax Relief Act of 2010' which allows larger businesses that exceed the $560,000 cap to write-off 50% of qualified assets using first year Bonus Depreciation. Also, small businesses that are not profitable in 2012 can use 50% Bonus Depreciation (on new equipment only) and carry-forward the loss to future profitable years.

This should mean a substantial boost to your bottom line this year. But, to get the deduction for tax year 2012, you have to act this year, as once the clock strikes midnight on December 31, 2012; Section 179 can't increase your 2012 profits anymore.

Equipment Leasing is Gaining Popularity

U.S. companies are investing more in equipment than they were a year ago. The Equipment Leasing and Finance Association said its monthly index of business volume rose 21% to $5.1 billion last month compared with January 2011. The rise reflects moves by companies to replace computers, vehicles, construction equipment and other assets as the economy improves. It also reflects thawing credit markets, the association said.   

Source: WSJ.com, ELFAonline.org

Mazuma Capital Funds $12.5m Transaction For Thermal Coal Producer

DRAPER, UTAH, February 17, 2012 – Mazuma Capital, a leading national direct lender, today announced that it has funded over $12.5 million dollars for a U.S. high quality thermal coal producer.

The coal producer sought several funding sources that had expertise in funding newer companies. They had many challenges present in the transaction from the type of equipment, to the documentation aspect.  There were also several factors that affected the credit due to recent mergers.  Due to these challenges the financing was denied through several well-known banks and vendors. Mazuma Capital was ultimately the right financing source to help structure and fund the transaction.

A favorable structure was an important objective in order to provide cash flow, the appropriate tax, and accounting factors to meet the financial goals of the company. The structure also needed to provide the ability to expense the payments over time.  Mazuma Capital was able to secure an approval in a timely fashion while meeting the needs of the company; from the terms to the unique structure.

“This is a newer company that is still in the midst of a huge growth phase.  Therefore, this transaction produced several challenges in finding a suitable financing structure to meet the goals of the company.  The lack of history, recent buyouts, and mergers made this a more difficult credit.  Our team worked hard to develop a perfect balance with the right structure, and suitable terms for the company,” said Jared Belnap, President and CEO of Mazuma Capital.

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

U.S. Companies Keeping Business At Home

U.S. companies, facing slowing markets and rising costs around the world, are taking a new look at their home market.

With growth slowing in China and a slump gripping much of Europe, companies are adding capacity in the U.S., replacing aging equipment and even moving overseas production back from low-cost labor markets, a sign that corporate America could be poised to take a bigger role in the economic recovery.

Union Pacific expects to buy twice as many locomotives this year, spending upward of $400 million.

The pace of earnings growth at companies slowed in the fourth quarter, and there are signs that profitability is falling. That is prompting companies ranging from beverage maker Coca-Cola Co. to industrial supplier Emerson Electric Co. to disclose cost cuts. But after keeping a tight lid on costs for the past few years, many other companies are expanding capacity to meet rising demand.

United Rentals Inc., the world's largest equipment rental company, plans to increase its capital spending by about a third, to $1 billion, this year as more construction and industrial companies opt to rent rather than own equipment like elevated forklifts and backhoe loaders. Cummins Inc., which makes engines for trucks and heavy equipment, is boosting its capital spending to more than double the rate of two years ago.

"It is an environment that feels like it is building momentum," William Plummer, United Rentals' chief financial officer, said in an interview. "We are coming out of the depths of the recession and are starting to build momentum on the upside."

U.S. businesses increased their investments in December. According to the Commerce Department, new orders for nondefense capital goods excluding aircraft, a proxy for how much companies spend on equipment, climbed 2.9% from November. That ended two months of declines, suggesting businesses are becoming more confident. Compared with a year earlier, companies shipped 9% more.

There are signs that hiring may be picking up as companies expand facilities. Job growth in January was its highest level since April, with unemployment falling for the fifth consecutive month.

Source:  WSJ.com

Construction Industry Optimistic: Activity Expected to Improve in 2012

Highlights of the 2012 Construction Industry Forecast:

• The worst is behind us... The OQ of 114 is a strong indicator that the industry expects 2012 non-residential construction activity to improve from last year. The 2012 OQ exceeds the score of 109 recorded in 2005, near the height of the construction boom. After falling to an all-time low score of 42 in 2009, the OQ climbed to 66 in 2010 and 96 in 2011.
• …but overall numbers of contractors remains a concern. In spite of rising optimism over the last three years and strong optimism for 2012, industry executives remain cautious about the amount of available work to sustain the current number of non-residential construction contractors. About four in ten respondents (41.7%) said they expect fewer contractors in their markets by the end of the year. Only 10.4% expect the number of contractors in their area to increase in 2012.
• Equipment distributors are very optimistic. When asked about their forecast for new equipment sales, 73.3% said they expect to sell more in 2012 than in 2011, and zero respondents said they expect a decrease in new equipment sales. Optimism among construction equipment distributors was high with nearly six in ten distributors (58.1%) expecting an increase in local non-residential construction activity. Only 1.5% said they expect that activity to decrease in 2012.
• Contractors are optimistic, but not as much. While 18.3% of contractors said they expect to acquire more new equipment in 2012 than they acquired in 2011, 52.% said they would acquire the same amount and 29.2% said they expect to buy less new equipment in the coming year. 40.3% of contractors said they expect non-residential construction activity to increase in the coming year; 47.3% expect the same level; and 12.4% said they expect non-residential activity levels to decrease.

New Leasing Proposals Continue to Draw Heat

FASB and the IASB respond to criticism as they prepare a new exposure draft for lease accounting.

The lease accounting debate rages on as the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) pore over nearly 800 public comment letters that question proposed new leasing standards. Board officials hit the conference circuit last month to answer detractors, clarify the exposure drafts they released to the public in August 2010, and talk about adjustments they are making to the original proposals.

Among the topics continuing to grab plenty of attention is the “right-of-use” asset concept, which, if approved, would require companies to capitalize operating leases they could traditionally keep off their balance sheets, such as those for real estate and equipment. The boards are also modifying their treatment of lease-renewal options, short-term leases, and variable lease payments.

Under the original exposure draft, companies would have been required to include in their lease term (and record on the balance sheet) any renewal period they were likely to exercise. Under the new proposal, lessees would account for a renewal period only if they had “significant economic incentive to exercise” that option.
In a client advisory earlier this year, Ernst & Young said such an economic incentive might include renewal rates priced at a bargain, penalty payments for relocating, or significant installment costs expended. One possible scenario suggested by Bill Bosco, a member of the IASB working group (external subject-matter experts who provide input to the board): a company that invests millions of dollars to renovate a store may be required to account for the renewal period because it would be compelled to recover its costs by extending the lease. This adjustment to the lease term, Bosco says, pushes the standard closer to current generally accepted accounting principles.
The proposed adjustments also remove some of the complexity for companies that hold leases for less than one year; under the draft rules, those short-term leases would still be considered a rent expense and would not be placed on the balance sheet. The new exposure draft also allows companies to keep certain variable lease payments off their balance sheets.
While those moves may placate some of the criticism leveled at the new proposals, one of the most controversial, and central, aspects of the lease-accounting changes has not been modified: abandoning the use of a straight-line average rent expense over a contract’s term in favor of a system requiring companies to front-load their rent expense on the income statement by splitting it into an amortization expense and an interest expense.
This aspect of the standard, Bosco says, does not reflect the reality of most leases. “We’d rather that companies’ lease costs. . .be represented in their financial statements in a way that represents the economic effect of a lease transaction, which we think is a level, monthly lease cost,” he says.
Ultimately, the proposed standard leaves more to interpretation than current rules, says Mindy Berman, managing director at Jones Lang Lasalle, a real-estate services firm. “There are a lot of subjective evaluations and a lot of nuances that will definitely affect companies’ implementation,” she says. Berman believes finance will have to partner more closely with business units to sort through them all.
The IASB and FASB plan to release the revised exposure draft for further public comment at the beginning of 2012, and hope to have a final rule in place by the end of the year.