A. OPERATING LEASE Purchase Option: Fair Market Value

B. CAPITAL LEASE Purchase Option: $1.00 (or $101.00 in California)

C. TRAC LEASE Purchase Option: Predetermined TRAC payment

D. SALE/LEASEBACK Purchase Option: Fair Market Value

OPERATING LEASE (FASB Lease)
This is a lease meeting that satisfies the Financial Accounting Standards Board (FASB) requirements for an off-balance sheet transaction. Operating leases also are sometimes referred to as "true leases." FASB Rules require that the net present value of the rental payment stream does not exceed 90% of the capitalized cost of the equipment at the lessee’s internal rate of return or incremental borrowing rate.

Equity held by the lessor is required for this type of transaction. Not all leasing companies provide Operating Lease structures because of this. WAL has equity resources and can provide Operating
Lease structures.

These leases have a buyout clause at the end of the term.

Purchase the equipment for the fair market value determined at lease end;

Trade-in the equipment for an upgrade, or;

Return the equipment to a designated location for disposal and settlement

Why an Operating Lease?
True lease payments can be 100% tax-deductible – no depreciation or interest expense calculations are necessary. Leasing can provide favorable tax treatment and tax benefits. The IRS considers an operating lease to be a tax-deductible overhead expense, rather than a purchase. As such, lease payments are totally an income expense item. Companies may find this favorable tax treatment to reduce taxable income and may also move the business to an overall lower tax bracket. Each company is unique and should consult its own tax, financial and accounting advisor to determine the specific tax and accounting treatment of each individual leases, and whether it meets the company's needs.

Leasing equipment protects a company’s ability to upgrade to current technology through equipment-return provisions in a lease. The most frequent benefit mentioned by lessees is flexibility. By leasing equipment on shorter term operating leases, businesses are protected against changes in their business and against obsolete technology. IT managers, for example, know that whatever equipment is acquired today will be outdated for their needs in a very short period of time.

Leases preserve current operating lines of credit – reduces down payment necessary for
acquiring equipment. Leases can save a company from using their current credit line for either
the down payment on an equipment purchase or the actual purchase of the equipment. Normal start up costs for leases include only the first month’s rent and any doc fees. This amount is significantly less as an investment than the 20% down for a standard loan.

Operating leases reduce outstanding debt recorded on the balance sheet – better debt to equity ratio. Balance Sheet management often becomes the primary motivation to lease. Operating leases
are not considered long-term debt or liability, so better debt to equity ratios are reflected.

No blanket liens. Leasing is asset specific therefore no blanket liens are filed on your property.
A UCC will be filed only on the asset you are leasing.

CAPITAL LEASE
A capital lease is classified and accounted for by a lessee as a purchase and by the lessor as
a sale or financing, if it meets any one of the following criteria:

A. the lessor transfers ownership to the lessee at the end of the lease term;

B. the lease contains an option to purchase the asset at a bargain price (usually $1.00 or
in California $101.00);

C. the lease term is equal to 75 percent or more of the estimated economic life of the property (exceptions for used property leased toward the end of its useful life); or

A capital lease generally must be reflected on the company balance sheet as an asset and
corresponding liability. Generally, this applies to leases where the lessee acquires essentially
all of the economic benefits and risks of the leased property. In contrast with an Operating Lease, a Capital Lease is treated by the lessee as both the borrowing of funds and the acquisition of an asset to be depreciated; thus the lease is recorded on the lessee’s balance sheet as an asset
and corresponding liability (lease payable). Periodic lessee expenses consist of interest on the debt and depreciation of the asset.

Typically, $1.00 buy-out leases are considered capital leases and is very similar to a financing agreement, meaning that payments are similar to a bank loan. Usually, capital leases are not 100% tax deductible. The equipment is put on a depreciation schedule and written off over
a period of years.

Each company should consult its own tax, financial and accounting advisors to determine the specific tax and acounting treatment of each individual lease and whether it meets the company's needs.

Why a Capital Lease?

Low down payment
Down payment is 3% to 6% as opposed to 10% to 20% for a bank loan.

Lessee takes depreciation
In a capital lease, the lessee does not get the tax benefits, however, the lessee can depreciate
the equipment over the term.

Higher residual amounts = lower monthly payments = higher purchase options

Lower residual amounts = higher monthly payments = lower purchase options

TRAC leases have several options at the end of the term:

Purchase the vehicle for the residual value. The lessee receives an adjustment, or     cash rebate, if the actual residual value at the end of the term is lower than what was     chosen at the beginning of the lease. If it is higher, lessee will pay the difference. Trade-in the vehicle or equipment to cover the remaining amount due Return the vehicle to a designated location for disposal and settlement

Let us help you determine your best option and assist you with future leasing needs
for your business.

Why a TRAC Lease?
For eligible items of transportation equipment, WAL and the lessee are able to establish a
pre-determined end-of-term equipment value. A TRAC Lease is a True Lease with a Terminal Rental Adjustment Clause.

TRAC provisions can benefit the lessee in two ways. First, they allow the lessee to share in
the residual sales value of the vehicle. Second, because the lessee effectively guarantees the vehicle’s residual value, the rentals to be paid during the lease term may be lower than
otherwise available.

SALE / LEASEBACK
Equipment sale leaseback is the sale of an asset (business equipment) for cash. The equipment remains on the seller’s property with a contract to lease it back from the source purchasing it.
The seller retains ownership of the asset at the term end.

What Equipment Qualifies?
From office to warehouse, any equipment that is owned outright and is involved with the daily operation of the business should qualify for sale and leaseback financing. However, equipment age and industry restrictions may apply.

Why a Sale Leaseback?

Get up to 70% of the original purchase price on equipment you own.

The equipment stays on your property for your use.

You can write off 100% of the monthly payments.

No restrictions on how the money is used.

Take idle equity out of equipment and use it for working capital.

No other collateral . . . no personal assets and no other business assets.

Your lease payments do not interfere with your credit lines at the bank