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IBM Phils. Leasing Operations

IBM Phils. Leasing Operations. Karen V. Yusi VSB Manager (02) 995-2576 / 0919-9107376 yusi@ph.ibm.com. IBM WORLDWIDE GLOBAL FINANCING. Started in 1981 in the U.S. IBM Credit Corporation Operations in some 40 countries World's Largest IT Leasing Company

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IBM Phils. Leasing Operations

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  1. IBM Phils. Leasing Operations Karen V. Yusi VSB Manager (02) 995-2576 / 0919-9107376 yusi@ph.ibm.com

  2. IBM WORLDWIDE GLOBAL FINANCING • Started in 1981 in the U.S. • IBM Credit Corporation • Operations in some 40 countries • World's Largest IT Leasing Company • 2nd largest leasing company in the world • Started in the Philippines during the 1st Qtr of 1997

  3. TYPE OF LEASE OFFERINGS • FULL PAYOUT LEASE • RESIDUAL LEASE • PC FLEETLEASE

  4. IBM Lease Offerings • Full Payout Lease (even payments) • would like to own the equipment • wants fixed monthly payments throughout the lease term • End of the Lease (EOL): • Offer to purchase the equipment from IBM for a nominal sum. • Return the equipment to IBM Phils.

  5. Benefits of Leasing: 1) Free up cash - lower monthly payments. 2) simplifies budget allocations - fixed rate financing. 3) protect against inflation Full-Payout Lease Total Contract Price = to be determined Term = 36 months Type of lease = Capital Lease Mode of Payment = equal monthly payments Months 1 to 36: Monthly Base Payment = ? (VAT included) Interest Rate: ? At the end of the lease term, the customer has the option to: 1) Return all equipment to IBM 2) Offer to purchase at a nominal value. General Terms and Conditions: 1) Provision of lease to customer is subject to successful credit assessment 2) Final lease quotation will depend on the outcome of credit evaluation 3) Minimum of US$20,000.00 per lease contract. 4) All equipment under IBM's Leasing program is covered under IBM's insurance.

  6. Example: Full Payout Computation example (1) Fullpayout lease: 36 months IBM NetVista (15 units x P40,000/unit) : Peso 600,000 IBM xSeries server (1 unit x P120,000) : Peso 120,000 IBM ThinkPad (5 units x P70,000/ unit) : Peso 350,000 Total configuration : Peso 1,070,000 plus 10 % VAT : Peso 107,000 Total amount : Peso 1,117,000 Summary details: Total Amount Financed : Peso 1,117,000 Lease Term : 36 months (even payments, full payout lease) Monthly lease payment : Peso 41,612.00 Flat Interest Rate : 9.09%

  7. IBM Lease Offerings... • Residual Lease • off-balance sheet lease • wants to do away with costs of ownership, pay for usage on fixed term • wants lower monthly payments • EOL: • Return the equipment to IBM Phils. • Request to extend the lease. • Offer to buy the equipt. at fair market value

  8. Benefits of Leasing: 1) Free up cash - lower monthly payments. 2) simplifies budget allocations - fixed rate financing. 3) protect against inflation Residual Lease Total Contract Price = to be determined Term = 24 months Type of lease = Residual Lease Mode of Payment = equal monthly payments Months 1 to 24: Monthly Base Payment = to be determined (VAT included) At the end of the lease term, the customer has the option to: 1) Return all equipment to IBM 2) Offer to purchase the equipment at Fair Market Value. 3) Request to have the lease term extended. General Terms and Conditions: 1) Provision of lease to customer is subject to successful credit assessment 2) Final lease quotation will depend on the outcome of credit evaluation 3) Minimum of PhP 800,000.00 per lease contract.

  9. IBM Lease Offerings... • PC Fleetlease • Lowest cost option for employing current PC technology • Minimum of 50 units • Option to swap at a pre-determined flexpoint for newer PCs. • EOL: • Return the equipment to IBM Phils. • Request to extend the lease. • Offer to buy the equipment at fair market value

  10. Benefits of Leasing: 1) Technology Protection vs obsolescence 2) Ease of disposal of Obsolete machines 3) Cash flow/financial advantages PC Fleetlease Total Contract Price = to be determined Term = 36 months Type of lease = Operating lease Flexpoint = after 2nd year Months 1 to 24: Monthly Base Payment = ? (vat included) Interest Rate: ? At Flexpoint, customer can choose from: 1) Swap all equipment to new PCs (with no penalties and no obligation to pay for Year 3) under a new IBM Lease Agreement 2) Continue the lease till end of term paying a monthly base payment of P? After the 36th mo., customer has option to: 1) Return all equipment to IBM 2) Offer to purchase at Fair Market Value (at the end of lease) 3) Extend the lease for an even lower monthly lease payment based on Fair Market Value General Terms and Conditions: 1) Provision of lease to customer is subject to successful credit assessment 2) Final lease quotation will depend on the outcome of credit evaluation 3) Minimum of 50 units PCs required for each Fleetlease contract 4) New equipment acquired after Flexpoint must be placed under IBM lease 5) All PCs under Fleetlease are covered under IBM's insurance

  11. Example: PC Fleetlease PC Fleet Lease: 36 months IBM NetVista (15 units x P40,000/unit) : Peso 600,000 IBM xSeries server (1 unit x P120,000) : Peso 120,000 IBM ThinkPad (5 units x P70,000/ unit) : Peso 350,000 Total configuration : Peso 1,070,000 plus 10 % VAT : Peso 107,000 Total amount : Peso 1,117,000 Monthly lease payment tabulation: Monthly 01-24 : Peso 51,729.15 Monthly 25-36 : Peso 5,943.85

  12. Sample of the 3 Offers IBM Personal Computer PIII 733 MHZ, 64 MB, 10 GB Ethernet Card, 15" Monitor Windows 98 Suggested Price: PhP47,000.00

  13. Comparative Table of 3 Offers

  14. Others Competitive rate for Capital Equipment Full Payout Lease May requests for collaterals Interest Rate is adjusted yearly within the term of contract IBM Competitive rate for IT products Range of Offerings to suit diff. customer req'ts. No collaterals Interest rate is fixed within the contract term Lease vs Lease

  15. Summary • For you, leasing can: • free up your cash • lower monthly payments • simplify your budget allocations • fixed rate financing • protect you against inflation • fixed monthly payments throughout term • provide you flexible payment options • step down payments • step up payments

  16. Summary • protect you from technological obsolescence • off balance sheet lease • risk is with IBM • eliminates used equipment disposition

  17. IBM Leasing Guidelines • Product Mix: • Hardware, Software and Services • Content Mix: • 80% IBM 20% Non-IBM • no restriction on IBM mix • Pre-approval Requirements • Company Profile • Two years audited Financial Statements • CIBI Report

  18. IBM Leasing Guidelines Credit Requirements A. START UP Companies • a. bank guarantee or corporate guarantee or personal guarantee from all the directors of the co. or majority shareholder of the company • b. 30% deposit • c. PDCs • * Reduce the lease term to one or two years. B. Companies that suffered a net loss for a particular year but maintains a strong networth • a. PDC

  19. IBM Leasing Guidelines C. Companies that suffered a net loss for a particular year with a negative net worth. • a. bank guarantee or corporate guarantee or personal guarantee from all the directors of the co. or majority shareholder of the company • b. 30 % deposit • c. PDCs * Reduce the lease term to one or two years. D. Profitable operations for 5 - 10 years - PDCs or sometimes without any credit conditons

  20. Contacts Sunver Bastes - Leasing Specialist 995-2219 0918-9017927 bastessz@ph.ibm.com Karen Yusi - Channels Manager 995-2576 0918-9107376 yusi@ph.ibm.com

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