A Mid-Year Update - On The Numbers
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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SECTION: On The Numbers

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A Mid-Year Update

Written By: GARRY BARTECKI

Article Date: 07-02-2007
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.


What you should know about the economy, LKEs and CFO training.

At last year's Executive Forum, Eli Lustgarten told the crowd the construction equipment industry was "mid-cycle." When I saw him recently, he reinforced that position. Some of the particulars may have changed, and I'm sure some of you believe you're in a recession, but on the whole, single digit sales and profit increases appear are the norm for our industry. On another front, I suspect most of you have read the horror stories related to funds held by qualified intermediaries (QI) for Like-Kind Exchange (LKE) transactions. Most of the horror stories concern real estate transactions in which large sums sit around for long periods of time making the funds subject to unintended uses.

AED members employing an LKE strategy typically do not - and should not - keep funds in a QI for any length of time. LKE funds should be used appropriately as soon as they hit the QI account, and if they need to stay in the account for an extended period of time, the dealer should investigate arrangements with the QI to require dealer approval to move funds. Trust documents can be used for this purpose.

In summary, dealers that move LKE funds through the QI should not have to be concerned. Leaving funds in the QI account without an approval process is not encouraged, especially if the QI is not a bank. If your LKE program requires you to accumulate substantial amounts for any length of time, call your attorney to see if the risk warrants the cost of a trust agreement.

In April, BDO Seidman sponsored the annual AED CFO Conference in Chicago (to be repeated on Sept. 25-26 in Dallas). Not only did the conference cover the latest tax and accounting issues, it also presented specialists in controlling insurance costs, dealer valuation, applying "lean," selling a dealership for the best price, financing alternatives, cutting selling costs, measuring the effectiveness of IT expenditures, how to make use of and control electronic banking, risk assessment and getting diversification credits to customers - all in 1½ days.

If you or your CFO have not attended this conference, you should seriously consider it. It will help you run your business. Check AED's Web site for more information.

AED is in the process of completing the 2007 Cost of Doing Business survey (which you may have by the time you receive this publication). This year, 156 members participated. We did, however, have to extend the survey deadline to May 31 so all 156 could respond.

AED also presented a financial "webinar" in May and as a result, received valuable input for future Web-based programs. One idea was producing "virtual" 20 group services for CEOs and CFOs who want to participate, with a goal of discussing results and other current topics on a monthly or semi-monthly basis.

Your thoughts about participating in such programs would be appreciated. Program content can be tailored for each group of participants. Call AED for more information.

As you know, money is cheap and dealer profits are still interesting enough to generate interest. If you need a partner, permanent financing, funds to buy out an existing partner, capital to expand or just want to get out, now is the time to investigate the possibilities. If we can be of help, please don't hesitate to call.



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Article Categories:  Financial