4. U.S. Equipment Leasing & Financing (2002 – 2009) $ Billions Sources: US Bureau of Economic Analysis, Equipment Leasing and Financing Association Seasoned, Systematic, Successful Equipment financing specialists
5. U.S. Equipment Leasing & Financing (2009) $14.26 T $916 B $518 B $264 B 56.5% 51.0% 6.4% (1.85% of GDP) Sources: US Bureau of Economic Analysis, Equipment Leasing and Financing Association Telecom equipment financing specialists Seasoned, Systematic, Successful
6. Who Leases? Corporations 85% of all U.S. companies lease equipment $518 Billion in 2009 volume Consumers 25% of new cars are leased $80 Billion in 2009 lease volume Government US Government: Leases $10 Billion to $20 Billion of vehicles and equipment annually Seasoned, Systematic, Successful Equipment financing specialists
11. Avoid capital budget constraintsSeasoned, Systematic, Successful Equipment financing specialists
12. Targeted Equipment Financing Transactions Size:$5M to $30M per transaction Structure:True lease* Term:3 to 5 years Credit: B- to BBB+** Equipment:Essential purpose hardware & software Value add:1) Understand the customer’s needs, objectives, and strategy 2) Structure transactions that do not meet bank lending parameters 3) Invest our own capital 4) Provide full service leasing infrastructure (origination, credit, documentation, servicing) * A true lease occurs when there is a transfer of the right to possession and use of equipment for a term in return for payments and/or other consideration. True leases may be structured as operating leases or capital leases. In bankruptcy, a true lease has certain benefits and protections vis-à-vis a loan. ** S&P, Moody’s, Fitch or Sentry equivalent rating; Sentry has a full credit and underwriting department that can rate any private or public company. Seasoned, Systematic, Successful Equipment financing specialists
13. Targeted Vendor Financing Engagements Vendors:Manufacturers (U.S. or foreign) of capital equipment and software Structure:Lease line facility The vendor provides targeted customers with a lease line facility that can be drawn down over a term typically from 6 to 12 months Size:$10M to $100M per customer Takedowns: Each takedown (funding) is structured as a true lease* Each lease has a term from 3 to 5 years based on the equipment and credit of the lessee Equipment: Hardware, software and services (total solution) Value add:Manufacturers are able to: 1) offer “one-stop shopping” 2) increase total solution sales 3) strengthen customer relationships Seasoned, Systematic, Successful Equipment financing specialists
15. What is an Equipment Lease? Legal Definition: Transfer of the right to possession and use of equipment for a term in return for payments and/or other consideration Practical Definition: An alternative to a loan to acquire [the use of] equipment Accounting Definition: FASB Statement No. 13 Capital Lease Operating Lease Seasoned, Systematic, Successful Equipment financing specialists
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17. Operating LeaseCapital/Finance Lease (structured as a loan) 1st Amendment Lease Purchase Equipment at FMV Purchase Equipment for $1.00 Purchase Equipment at Pre-agreed Amount or or Extend lease at Pre-agreed Amount Extend Lease at FRV or Return Equipment to Lessor Telecom equipment financing specialists Seasoned, Systematic, Successful
18. How Does an Equipment Lease Work? Equipment Manufacturer (Vendor) 2) Orders Equipment 6) Pays Purchase Price 3) Deliver and Install Equipment 7) Transfers title to Equipment Customer (Lessee) SENTRY (Lessor) 1) Lease Documents Signed 8) Invoices for lease payments (plus applicable sales/use/property taxes) 4) Certificate of Acceptance Signed by Customer 5) Disburse Loan Proceeds 11) Transfers sales/use/property taxes Sentry Lockbox Institutional Investors (Lenders) 9) Pays lease invoices 10) Wire transfers loan payment amounts Telecom equipment financing specialists Seasoned, Systematic, Successful
19. How Does an Operating Lease Work? Telecom equipment financing specialists Seasoned, Systematic, Successful
20. How Do Leases Compare to Bonds? Telecom equipment financing specialists Seasoned, Systematic, Successful
21. John Bonnemort, VP (801) 303-1137 jbonnemort@sentryfinancial.com Jeff Brimhall, EVP (801) 303-1103 jbrimhall@sentryfinancial.com Working together, prospering together Seasoned, Systematic, Successful Telecom equipment financing specialists
