CFLA ANNUAL REPORT & LA FL. Advocating the Interests of the Canadian Asset-Based Financing & Leasing Industry

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1 CF AC & LA FL

2 Chairman s Report Riding out challenging times Well, it's been quite a year. I could begin this report to members with the same opening as last year: we have probably seen more economic turbulence in the last year than in the last decade. Many of us have been through a couple of economic downturns, we've experienced the challenges of working in an uncertain world where all of our basic business assumptions have been questioned. Again today, everyone is being stress-tested. But, as Fortune magazine Senior Editor at Large and Conference 2009 keynote speaker Geoff Colvin has recently written "even long recessions end and are followed by expansions, which eventually beget new recessions. The best managers never become so consumed by the present that they forget their place in the cycle smart managers are planning now for what they'll do when growth returns." Opportunities arise out of troubled times. Colvin also wrote that "some businesses - and some people - will emerge from this downturn stronger and more dominant than when it started. Others will weaken and fade. It all depends on critical choices they make right now." Critical choices, this is the focus of CFLA Conference how to understand and capitalize on our transformed world. As I reported to members last year, I believe that in tougher times, now more than ever, CFLA members need their Association: connecting with their peers, understanding what is impacting their business and how others are responding to the challenges. These are all invaluable benefits that only your Association can offer. Advocacy to governments and key publics, networking among members, timely circulation of business-relevant information, and industry professional education - this is the core of the CFLA mandate. In good times and in tough times, these are all invaluable benefits that only your Association can offer. CFLA continues to deliver real, bottom-line value to its members and their businesses. For example, the creation of the $12-billion Canadian Secured Credit Facility reflects the effectiveness of your Association in getting the industry's concerns to the highest levels of the federal government. CFLA also persuaded the Canadian Accounting Standards Board to retain current Canadian GAAP rules (and lease accounting advantages) for the vast majority of our customers; and with the harmonization of GST and PST in Ontario and British Columbia, CFLA has already intervened to assure that members will not lose ITCs on vehicles purchased for lease or resale. Another good example of delivering value is the unique Canadian Lease Education Online (CLEO for short). We are now well into the second cycle of this ten-part program, each session led by an experienced industry executive. To date, more than 150 employees of members have taken a CLEO course. We are now recording each session, so that they will soon all be available on-demand rather than on a single fixed date once a year. The surest measure of delivering value is continuing member support and I am pleased to report that member support remains very strong. With prudent guidance from the Association's Board of Directors over the years, the CFLA is in a good financial position, able to continue delivering that real value. In closing, I want to thank our members. Your support is vital. I also want to thank our many volunteers. There are over 150 talented people who serve on CFLA committees and working groups. From the most senior executives to industry newcomers, the contribution of so many members volunteering their time and ideas in support of their industry ensures that the Association makes a difference. Over this last year, your Association accomplished as much as it did with just four fulltime staff: President & CEO, David Powell, Sherry Xinhua Jia-Hatheway, Director of Finance & Administration, Vanessa Foran, Director of Policy, and Administrative Coordinator, Charlene Forde. On behalf of all members, I want to thank them for their hard work and support. As I step down as your Chairman, I am confident that CFLA will continue as the effective voice for the membership, a cornerstone of our industry. Thank you for your confidence and support. Fred Booth, Sr. Chairman 2

3 The President s Report Advocating your business interests... "The practice of lobbying to influence political decisions is a legitimate and necessary part of the democratic process. Individuals and organisations reasonably want to influence decisions that may affect them, those around them, and their environment. Government in turn needs access to the knowledge and views that lobbying can bring." 1 Associations like CFLA are increasingly important to the governing process in this country. With downsizing in the bureaucracy, public authorities have fewer resources to understand how the marketplace works. What we do, the data we bring, the real life experience we provide, is becoming essential to the legislative and policy process. Other interest groups and academics are active in bringing forward their views. CFLA is the only voice speaking out for the asset-based financing, equipment and vehicle leasing industry. It is now more important than ever that your association be present where and when the essential interests of the industry are being considered. Three issues this year illustrate this reality: the creation of the Canadian Secured Credit Facility, the development of Canadian GAAP for non-public companies, and the 2010 harmonization of PST and GST. CFLA activity on these issues is detailed in CFLA Advocacy Highlights, elsewhere in this Annual Report. Government industry funding support Last fall, the message was clear: the lack of liquidity in capital markets was choking members' capacity to extend credit to small businesses and consumers across Canada. CFLA initiated discussions with the federal government to attempt to restore liquidity 1 "Lobbying: Access and influence in Whitehall" Public Administration Select Committee, UK Parliament, January 5, 2009, page 5, paragraph 1 and stability to the financial system, while earning taxpayers, a profit at minimal risk. CFLA, with the help of many members, brought the issues and industry solutions to the government. The result: the January 2009 federal budget announced the creation of the Canadian Secured Credit Facility (CSCF), with an allocation of up to $12 billion to support "the financing of vehicles and equipment for consumers and businesses, large and small." CFLA and its members continued its dialogue with officials at the federal Department of Finance and the Business Development Bank (BDC). To assist the government in its understanding, in early March 2009, CFLA sponsored a day-long work session at the C.D. Howe Institute that brought together 130 people from the public sector, the CFLA membership, and outside experts. The discussions continued as a second round of funding under the CSCF took place late summer. While the CSCF program may not have met expectations, as limits became apparent as to what the government was willing or able to do, the door remains open to other suggestions. CFLA continues to meet with senior management from the BDC and the Export Development Corporation to explore what more can be accomplished within their rather broad respective mandates. In less than one year, the industry has come a long way in getting its concerns to the top of the public policy agenda. Lease accounting: existing lessee benefits preserved International Financial Reporting Standards (IFRS) are to replace current Canadian GAAP on January 1, 2011 for all public companies. At the same time, fundamental changes to lease accounting IFRS are being advanced by the International Accounting Standards Board and the U.S. Financial Accounting Standards Board to respond to the needs of global companies. The new direction, the so-called "right of use approach", differs substantially from today's standard which is based on an analysis of the "risks and rewards" inherent in the lease. Under the "right of use" model, a lessee would always recognize an asset - the right to use a leased asset, with a corresponding liability on its balance sheet. CFLA has long contended that "one-size accounting does not necessarily fit all". The goal of GAAP financial reporting is to meet the needs of external users. Most private enterprises have few significant external users of their financial statements. CFLA argued that companies should have the ability to prepare financial statements for 3

4 The President s Report users on a more simplified basis, where such presentation is acceptable to the enduser, such as CFLA members. After several years of dialogue and data sharing, CFLA was instrumental in convincing the Canadian Accounting Standards Board (AcSB) to develop a separate simplified "made in Canada" set of financial reporting standards for non-public companies (i.e. most customers of the industry). The bottom-line: for most customers, key accounting advantages for leasing under current Canadian GAAP will likely remain for the foreseeable future. This AcSB decision is unique in the industrialized world; other countries are either not interested or far behind. GST & PST harmonization - the Devil in the details Now that Ontario and British Columbia have announced the harmonization of their provincial sales taxes with the federal Goods & Services Tax (GST) on July 1, 2010, can the holdout provinces (Manitoba, Saskatchewan and PEI) be far behind? For all taxpayers, however, the challenge is in the details. While preliminary government declarations suggested that the basic operational rules for the harmonized sales tax will be substantially the same as for the existing GST, both Ontario and BC initially announced identical proposals that could seriously impact auto financing companies - the "temporary" disallowance of input tax credits ( ITCs) for the provincial portion of the combined tax on automobile purchases from July 2010 to June 30, Full ITCs would only be phased-in over the subsequent three years. Following the March 2009 Ontario budget announcement on harmonization, CFLA raised this matter with Finance officials who clearly did not understand the implications of such a proposal. Inundated by a broad range of demands for exemptions from every interest group in the province, the Ministry was reluctant to publicly make changes. After discussing it with the Minister, CFLA has been advised that the detailed harmonization proposals and transition rules expected in Fall 2009 will clarify that ITCs will be available for automobile financing companies in the usual GST manner for the combined sales tax. CFLA expects to obtain a similar clarification from BC in late summer Government needs the knowledge and views that only CFLA can bring. Thanks to many members for their involvement and support, CFLA will continue to be an effective advocate for the industry's interests. David Powell President & Chief Executive Officer 4

5 Association Profile The Canadian Finance & Leasing Association (CFLA) represents the asset-based financing, equipment, and vehicle leasing industry in Canada. After the traditional lenders (banks and credit unions), this industry is the largest provider of debt financing in the country with a portfolio of assets (owned and managed) estimated to be worth $108.3 billion as of December 31, 2008.* The Association's more than 225 members range from large multinationals to national and smaller regional domestic companies, crossing the financial services spectrum from manufacturers' finance companies and independent leasing companies, to banks, insurance companies, and suppliers to the industry. Asset-based Financing Market in Canada %ch New Business Total ($billions) % Commercial Equipment % Commercial Vehicles % Retail Vehicles % Assets ($billions) * % Commercial Equipment % Commercial Vehicles % Retail Vehicles % * The results of this year s survey of CFLA members led to some revisions to the market size estimates published last year. The CFLA member survey response rate for the 2009 survey was 65%, up considerably from the 36% response rate from the 2008 survey and comparable to the 69% response rate achieved in the 2007 survey. A review of activity reported in this year s survey for 2008 and 2007 led us to conclude that the market size estimates for 2007 based on the 2008 survey were too high ($4.6 billion for finance assets and $1.1 billion for new business) with most of the revision being attributed to the commercial and retail vehicle leasing segment of the market. 5

6 Canadian Market Overview Introduction The credit crisis and ensuing global recession have ushered in an era of significant contraction for the asset-based financing industry. In 2008, equipment lessors new business shrunk by 2% and vehicle lessors new business fell by 4% 1. The outlook for 2009 remains bleak but a modest recovery is still anticipated in The recession in the U.S. and Canada's other trading partners is leading to a substantial decline in both the demand and the price paid for our exports. Most lessors are not optimistic about activity in 2009 as public and private spending on machinery and equipment is expected to shrink 6.7% 2 and vehicle sales are expected to fall 21%. Prepared for CFLA by The Centre for Spatial Economics, this article provides a review of recent trends along with the outlook for and highlights of major directions in the leasing sector. Review of recent trends The Canadian economy grew 2.7% in 2007 slightly slower than the 3.1% rate in the previous year. The economy in 2007 was led by business investment in machinery and equipment, government spending, consumer spending and residential investment. Slow export growth coupled with rapid import growth led to a decline in net exports of nearly $25 billion and reduced Canada's economic growth by about 1.5%. This year's survey of industry activity reveals that equipment lessors experienced a second consecutive year of falling demand for financing in 2008 following the surge in activity that began in Public and private spending on capital equipment rose 0.3% or $0.4 billion in 2008 to $115.0 billion while 1 Based on preliminary estimates derived from a survey of member companies of the Canadian Finance and Leasing Association Private and Public Investment in Canada, Intentions, Catalogue no X, Statistics Canada, March This data excludes the public sector spending which is included in Statistics Canada's public and private investment intentions data. The C4SE's projection for 2009 is also based on more recent information than was available to the participants in Statistics Canada's intentions survey.available to the participants in Statistics Canada's intentions survey. equipment lessors new business fell 2% to an estimated $18.1 billion. Reduced spending on motor vehicles and parts led to the number of vehicles sold falling to 1.67 million units. Retail vehicle leasing new business fell 1% to $21.3 billion in 2008 while new business for commercial vehicles suffered, falling 15% in 2008 to $4.5 billion. Economic and capital investment outlook Looking forward, the Canadian economy is expected to shrink by 2.1% in 2009 and then to grow 1.6% in Exports, business investment and household spending are all expected to contract in Stimulus spending by governments is the only positive for the economy. Business investment in Canada is expected to fall 7% in 2009 but this pales in comparison to the 21% drop expected in the U.S. Inevitable delays in getting spending for "shovel ready" projects approved means that the bulk of government stimulus spending will occur in 2010 rather than Lower commodity prices and weak foreign demand have also led to the delay or cancellation of a number of natural resourcebased projects across the country. No province is expected to experience positive growth in New Brunswick and Nova Scotia are expected to fare the best at zero growth. Newfoundland and Labrador is expected to experience the largest decline followed by Ontario, Alberta, and British Columbia. All provinces are expected to experience positive growth in 2010 with Newfoundland and Labrador leading the country. Large reductions in natural resources investment and exports are responsible for the economic declines in Newfoundland and Labrador, British Columbia, Alberta, and Saskatchewan. Saskatchewan also has to contend with the likelihood of a poor harvest. Ontario's economy remains a victim of the decline of its manufacturing sector. 40% 30% e 20% g n a h 10% C l % a u 0% n A-10% -20% Waiting Out The Storm Canadian Leasing Market Determinants -30% Machinery & Equipment Investment (%ch, left) Motor Vehicle Unit Sales (%ch, left) Three Month T -bill Rate (right) The chart shows the C 4 SE's forecast for growth in business spending on new machinery and equipment 3 falling 7.0% in 2009 before recovering in The apparent difficulty in getting the infrastructure te a t R s re te In 6

7 Canadian Market Overview projects funded by government stimulus spending started, contributes to the lack of spending in 2009 and the anticipated surge next year. The Statistics Canada survey of public and private investment intentions for 2009 anticipates a fall in capital spending over Public and private spending on new machinery and equipment was expected to fall 6.7% or C$7.7 billion this year following the 0.3% increase in CFLA survey respondents were, however, significantly less optimistic about new business in 2009, anticipating a decline in new equipment leasing business of 18%. Statistics Canada's survey reported that significant declines in investment are expected for the mining and oil and gas extraction industry, accommodation and food services, and administration services. Manufacturing sector investment is expected to decline another 8.5% in 2009 with lower capital spending expected in 13 of the 20 industries that make up the sector. The largest declines are expected for wood products, petroleum and coal products, and transportation equipment. Public sector investment is expected to grow 10.5% in 2009, following a 22.3% increase in While all levels of government have increased spending, local government spending is responsible for much of the growth. This spending is also responsible for modest growth in the utilities, transit and ground passenger transportation sectors where the public sector is responsible for over two-thirds of investment spending. The decline in capital spending is expected to be largest in Alberta and British Columbia as a number of projects in the oil and gas extraction industry are postponed or cancelled. Ontario is affected by spending declines in manufacturing, finance and insurance, and administration services but will be partially offset by increases in public sector spending. Financial market developments The credit crisis precipitated a global recession. The simultaneous decline of the world's major economies has, in turn, placed further pressure on financial markets. Coordinated government intervention through stimulus spending, injections of capital into financial markets and the bailout of companies considered too big to fail has averted a potential worstcase 1930s style depression scenario. Credit spreads have narrowed from their peaks at the onset of the crisis but still remain high by historical standards as investors have significantly reduced their tolerance for risk. In an attempt to increase the flow of funds available to finance companies, in its January 2009 budget, the Government of Canada launched the Canadian Secured Credit Facility (CSCF) with an allocation of up to $12 billion, to purchase term asset-backed securities (ABS) backed by loans and leases on vehicles and equipment. Critics have argued that the program is too expensive and cumbersome and may not achieve its twin goals of providing finance companies with access to funds and promoting the resumption of a normal market for asset-backed commercial paper. The program has also been criticized as designed for only a small number of large companies with smaller leasing companies effectively unable to use it. Federal officials contend, however, that the CSCF was designed to respond to industry concerns voiced in late 2008 that they could not access capital at any price. Officials maintain that the government only intended the CSCF as a temporary backstop, allowing lessors to confidently originate new transactions knowing that federal financing was available if private sector funding was not. The government justifies the cost of funds as reflecting the market rate. Although no one took money by the mid-summer deadline for the first CSCF funding round, officials assert that the $12-billion on offer was oversubscribed at the rate determined in early spring. While the government could offer financing at a much lower rate given the government's cost of funds and still make a profit, officials were concerned about being trapped in the program over the long-term because private investors would be displaced, abandoning the market for a much longer period of time, uninterested in competing at lower than market rates. For the government, the CSCF is considered win-win. If lessors take up their allocation of federal funds, the industry will have been helped. If lessors do not take up their allocation, it is because the private sector has resumed funding and the government believes that the CSCF played a role in jumpstarting market interest in the industry. As for the general cost of funds, the Bank of Canada has reduced rates in line with the U.S. to ease the negative impacts of the credit crisis and to increase economic growth. Short and long-term interest rates have fallen sharply in 2009 as the Bank of Canada has acted to support economic growth by keeping rates near U.S. rates so as to limit an appreciation of the exchange rate. The 3-month Treasury bill rate is expected to remain at about 0.5 percent for the balance of 2009, and 2010 in line with U.S interest rates. The Canada-U.S. exchange rate continues to make headlines as rapidly shifting investor sentiment pushes up or down the US dollar against other currencies. The Canadian dollar is expected to 7

8 Canadian Market Overview depreciate from $US 0.96 in 2008 to average $US 0.88 in This outlook is consistent with lower commodity prices and weaker economic performance. Significant fluctuations in the value of the dollar, however, remain likely as global investors continue to assess the riskiness of their US dollar assets. Asset-based finance market in Canada The market size estimates generated based on the 2009 Survey of Industry Activity, indicate that the value of finance assets remained flat at $108.3 billion 4 while new business fell 3% to $43.9 billion in Despite the turmoil in the North American automotive industry, retail vehicle activity remained close to 2007 levels with both new business and finance assets falling 1%. Equipment and commercial vehicles new business fell 2% and 15% respectively in A 4% increase in commercial equipment finance assets offset the declines in retail and commercial vehicle finance assets in The current market estimates indicate that about 19.6% of new business equipment purchased in Canada is financed by the industry; down from 20.8% in This marks the third consecutive year of declines in this proportion. Vehicle leasing has remained relatively strong with financed motor vehicle assets representing approximately 52% of the market in Survey respondents expect continued weakness in 2009 with equipment lessors new business shrinking 18% and vehicle lessors collapsing by 33%. While the outlook for leasing this year is poor, activity should resume in 2010 provided there is sufficient access to credit. The Government of Canada's Canadian Secured Credit Facility is designed to provide finance companies with access to funds and promote the resumption of a normal market for asset-backed commercial paper. In the interim the industry will have undergone a significant restructuring with both major and minor players merging or exiting the industry. The following chart provides a summary of the evolution of the industry over the last decade. By 2007, the value of assets owned and managed by the industry had more than doubled from the $50 billion in 1997 reported by the federal (MacKay, 1998) Task Force on the Future of the Canadian Financial Services Sector. The value of finance assets in 2008 have, for the first time in a decade, stopped growing and are expected to decline in New business also stumbled in 2008 marking the first year of actual declines in a decade - although no growth was recorded in 2001 and and is expected to slump badly in Equipment & Vehicle Leasing Market in Canada ($ billions) Finance Assets (left axis) Leasing Volume (right axis) The Centre for Spatial Economics 4 The results of this year s survey of CFLA members led to some revisions to the market size estimates published last year. The CFLA member survey response rate for the 2009 survey was 65%, up considerably from the 36% response rate from the 2008 survey and comparable to the 69% response rate achieved in the 2007 survey. A review of activity reported in this year s survey for 2008 and 2007 led us to conclude that the market size estimates for 2007 based on the 2008 survey were too high ($4.6 billion for finance assets and $1.1 billion for new business) with most of the revision being attributed to the commercial and retail vehicle leasing segment of the market. 5 The reader is cautioned that the true market for leasing is larger than these estimates because marine, rail and other equipment that is financed offshore has not been included. These figures do, however, include an estimate from Ascend's CASE database of the value of fixed wing aircraft assets in Canada financed by foreign leasing companies. 8

9 Advocacy Highlights The Canadian Finance and Leasing Association's advocacy efforts produce bottom-line benefits for members. Here are some of the key areas where CFLA has made a difference in the past twelve months. The Economic Crisis CFLA initiates the creation of the Canadian Secured Credit Facility CFLA demonstrated to the federal government that a lack of liquidity in capital markets was choking members' capacity to extend credit to small businesses and consumers across Canada. The initial government response appeared in the January 2009 Budget: the Canadian Secured Credit Facility, with an allocation of up to $12 billion, to purchase term assetbacked securities (ABS) backed by loans and leases on vehicles and equipment. Working with the C.D. Howe Institute, CFLA sponsored a forum to provide members with an opportunity to voice their concerns and present possible directions to government representatives to support both the Credit Facility and other possible funding initiatives. The Credit Facility was launched in May 2009, with Large Enterprise and Small Enterprise Tranches. CFLA is continuing its discussions with the Department of Finance, the Business Development Bank of Canada and the Export Development Corporation to pursue additional support. Taxation Federal Advisory Panel accepts CFLA recommendation on thin-cap rules In November 2007, the federal Minister of Finance appointed the Advisory Panel on Canada's System of International Taxation, to make recommendations on an international tax policy framework for both foreign business investment in Canada and Canadian business investment abroad. One proposal under consideration was to extend the definition of "debt" to include loans to a Canadian subsidiary from a third party that are guaranteed or secured by a non-resident parent shareholder. That is, the amount of a Canadian subsidiary's debt provided by the foreign parent (or affiliate) + the amount of any debt provided by a third party lender but guaranteed by the foreign parent (or affiliate) would have to meet the 2:1 debt-equity ratio test. Failing which, no interest could be deducted on debt exceeding that ratio. In July 2008, CFLA submitted a detailed 30-page submission. Its recommendations against a proposal to change the thin capitalization rules in the Income Tax Act to include third-party and guaranteed debt in the debt-equity ratio were accepted by the Federal Advisory Panel and published in their final report to the Minister in December CFLA ensures ITCs remain for autos purchased for re-supply under Ontario & BC harmonized sales tax While preliminary government declarations suggest that the basic operational rules for the combined tax will be the substantially the same as for the existing GST, Ontario announced in March 2009 that large businesses (annual taxable sales in excess of $10 million) will be unable to claim input tax credits (ITCs) for the Ontario portion of the combined tax on "purchases of automobiles and other road vehicles weighing less than 3,000 kilograms; parts and certain services for vehicles and fuel for such vehicles" for the first five years (July 2010 through to June 30, 2015). During the subsequent three years, full ITCs would be phased in. The July 2009 BC harmonization announcement contained an identical proposal. This proposed approach appeared to contradict both current PST practice and basic GST principles. If adopted, this restriction would create an cascading tax (8% in Ontario; 7% in BC) that would affect the entire automotive financing industry. Governments clearly did not understand the implications of such a proposal. After CFLA discussed it with the Ontario Finance Minister, CFLA was advised that ITCs will be available for automobile financing companies in the usual GST manner for the full combined tax. CFLA has asked BC to clarify its position in the same direction. Accounting CFLA instrumental in establishing separate financial reporting standards for non-public companies Fundamental changes to lease accounting have been advanced by the International Accounting Standards Board and the U.S. Financial Accounting Standards Board to respond to the needs of global companies in establishing International Financial Reporting Standards. CFLA has been very involved with its sister associations in several countries in considering these changes and was instrumental in convincing the Canadian Accounting Standards Board (AcSB) to develop a separate "made in Canada" set of financial reporting standards for non-public companies. CFLA has long argued that "onesize accounting does not necessarily fit all". In response, the AcSB has been very much in the forefront of developing a separate GAAP for private enterprises; other countries are either not interested or far behind. In brief, for most of CFLA member's customers, key accounting advantages for leasing under Canadian GAAP will likely remain for the foreseeable future. 9

10 Advocacy Highlights Legal Issues CFLA convinces Saskatchewan not to require monthly national customer reports from members After several years of effort, the Saskatchewan government accepted CFLA's position that members doing business in that province are not provincially-regulated financial institutions. Members are therefore not required to file monthly reports cross-checking national customer lists against the list of names of individuals or entities designated under the federal regulations dealing with the suppression of terrorism. Member of the Year Award 2008/2009 Automotive Issues Alberta to extend statutory limits on vicarious liability to include both vehicle lessors and rentals companies CFLA successfully persuaded the Alberta government to extend its statutory limits on the vicarious liability of vehicle lessors to include vehicle rentals and to move forward with drafting regulations to bring vicarious liability protections into effect. CFLA succeeds in securing eight month extension on OMVDA Implementation Date CFLA was instrumental in securing an eight-month extension on the implementation date for the Ontario Motor Vehicle Dealers Act to allow members additional time to bring the necessary substantial changes to systems, procedures and training. CFLA ensures lessees responsible for compliance with Quebec winter tire legislation CFLA successfully convinced the Quebec government that lessees (not lessors) should be responsible for compliance under the province's winter tire legislation. The Member of the Year Award recognizes members who volunteer their time to support the Association and its goals. Through their generous efforts, CFLA is able to face the challenges confronting the entire asset-based financing and leasing industry. This year, instead of granting the honour to an individual, the award was given to all members of the CFLA Education & Program Committee. This Committee is responsible for overseeing CFLA's education initiatives and the National Conference. These members work tirelessly brainstorming ideas, themes, identifying relevant topics and knowledgeable speakers. From their hard work, all CFLA members benefit. Members of the Education and Program Committee include: Richard McAuliffe (Chair) Key Equipment Finance Canada Ltd. John Barraclough Maximum Financial Services Inc. Gary Batchelor Travelers Financial Corporation John Estey Stonebridge Financial Corporation Doug McKenzie BAL Global Finance Canada Corporation Alan Morgan RBC Equipment Finance Group Congratulations to this year's winners and a special thank you to all CFLA volunteers, without whom the Association could not achieve its goals. 10

11 Professional Development & Events Professional Development Seminars On January 21, 2009, more than 70 members attended the CFLA professional session: Auto Financing in Ontario - The New Rules, which focused on key changes to the Ontario Motor Vehicle Dealers Act and its regulations. Speakers included: Carl Compton, Executive Director and Registrar of the Ontario Motor Vehicle Industry Council, Jennifer Babe, Partner at Miller Thomson, LLP, and Don Wallace, National Vehicle Remarketing Manager at Chrysler Financial. On March 5, 2009, Loraine McIntosh, a Partner with Deloitte & Touche, LLP, and her colleague, David Dalziel, provided an updated version of their Mont-Tremblant conference session: The IFRS are coming! The IFRS are coming! More than 30 members attended this session on Canada's upcoming move (January 1, 2011) from Canadian GAAP to International Financial Reporting Standards and its impact on the leasing industry. Canadian Lease Education On-line In February 2009, CFLA launched the second series of sessions that make up the Canadian Lease Education On-line (CLEO) program, which include: Marketing & Sales and the Selling Process Lease Pricing Vendor Relationships & the Lease vs. Buy Decision Process The Credit Process Financial Statements Collections & Portfolio Management Lease Company Management & Sources of Financing for a Leasing Company Leasing Law & Lease Documentation Financial and Tax Accounting for Leases Insurance for Leasing Companies Since its inception, the program has been well received and to date, more than 150 students have taken a CLEO course. Feedback from participant evaluations indicate that over 80 per cent of respondents think CLEO sessions are an effective method of education, the session materials are a valuable reference tool, and CLEO instructors are knowledgeable about their course content and are effective presenters. Evaluations also revealed that more than 90 per cent of respondents would recommend a CLEO session to others. CFLA has now begun to tape all CLEO sessions in order to allow for the possibility of offering "on demand" webinars in the future. An "on demand" webinar program would allow students to take as many sessions as they want to in the time-frame that suits their needs. Any changes made to the Canadian Lease Education On-line program will be posted on the CFLA web site. CFLA Golf Tournament The CFLA golf tournament was well attended with more than 180 golfers hitting the greens of the Woodbridge Golf and Country Club on Monday, May 11, Tournament winners included Kathy Ward, Canadian Black Book and Ed Diaz, Leasebank Credit Corporation, for men's and women's gross score and Mark Delacretaz, STG Inc. and Cheryl Munce, Manheim Canada, for men's and women's net score. Congratulations to all the winners and a special thank-you to member volunteer Brian Stevens and CFLA's Charlene Forde for organizing this special event. National Conference Mont Tremblant This year's National Conference, held in Mont Tremblant, Quebec, yielded the highest attendance and sponsorship levels to date. Focusing on the theme: a Balancing Act: New Models for Changing Times, the conference opened with a plenary session, lead by business strategist Oren Harari, on how to compete during challenging times, followed by Paul Farley, Assistant Chief Economist with RBC Financial Group, who provided an overview of the current economy. Concurrent sessions covered a vast array of topics on human resources, marketing, and business strategies. Attendees also enjoyed a performance by Cirque de Soleil at the Chairman's Banquet and the closing motivational speech, given by Mike "Pinball" Clemons, on "Winning Against the Odds". 11

12 Committees Board of Directors Executive Committee Fred Booth Chairman Joseph Laleggia Past Chairman Jeffrey Hartley Vice Chairman Serge Masse Vice Chairman Eugene Basolini Secretary/Treasurer Tom Pundyk Ron Rubinoff Peter Andrew Ginter Baca Gerry Barg Jim Case David Chaiton Michael Collins Moe Danis Jim Halliday Rod Hamilton Peter Horan Richard Jeffery Daryl MacLellan Richard McAuliffe Doug McKenzie Larry Mlynowski Patrick Palerme David Sharpless Tom Simmons Benjamin Skuy Michael Stewart David Sudbury ARI Financial Services Inc.Kal Atwal Roynat Lease Finance Foss National Leasing FinTaxi, sec/lp MCAP Leasing Accounting Committee Ralph Selby Chair Michael Banks Michel Bouvier Tony Denning Teresa Hewer Loraine McIntosh Raja Singh Janet Trogdon National Leasing Lease-Win Automotive Group Inc. Auto Finance Working Group Richard Adams Peter Andrew Larry Baldesarra General Motors Acceptance Corporation of Canada, Limited financialinx Corporation OAC Leasing Travelers Financial Corporation Torkin Manes Cohen Arbus LLP DealerTrack Canada, Inc. PHH Arval Software Capital Corp. De Lage Landen Financial Services Canada Inc. Scotia Leasing CIT Financial Ltd. Key Equipment Finance Canada Ltd. BAL Global Finance Canada Corporation Equirex Leasing Corp. GE Canada Equipment Financing G.P. HKMB HUB International Jim Pattison Lease ADESA Canada KPMG LLP Honda Canada Finance Inc. Horne LLP Chartered Accountants GE Canada Equipment Financing G.P. Ford Credit Canada Ltd. BMW Group Financial Services Canada, a Division of BMW Canada Inc. Deloitte & Touche Chartered Accountants LLP Bodkin Leasing Corporation RBC Equipment Finance Group DCFS Canada Corp. General Motors Acceptance Corporation of Canada, Limited Toyota Credit Canada Inc. Charles Bilyeu Brian Chillman Miriam Christie Alan Cusworth George Ellinidis Pat Forgione James Higgins Patrick Lefebvre Michael Maloney Sal Massara Wende Rapson Paula Rietta James Rowland John Shapardanov Jeff Van Damme Jason Vanderheyden Paige Wadden Matthew Wilson Tom Wilson Education Richard McAuliffe Chair John Barraclough Gary Batchelor John Estey Doug McKenzie Alan Morgan Fleet Dennis Kuysten Chair Troy Campbell Laura Catalano Ted Davis Mark Emin Terry Green Jim Halliday Alex Johnston Robert Loucks Doug Moore Peter Opar Ron Rubinoff Stuart Sherman Mike Sieger Tom Simmons Benjamin Skuy John Surmak Ford Credit Canada Ltd. Chrysler Financial Services Canada Inc. General Motors of Canada Limited Ford Credit Canada Ltd. Toyota Credit Canada Inc. McMillan Nissan Canada Finance, a Division of Nissan Canada Inc. VW Credit Canada Inc. General Motors Acceptance Corporation of Canada, Limited Honda Canada Finance Inc. General Motors Acceptance Corporation of Canada, Limited Ford Credit Canada Limited Ford Credit Canada Ltd. BMW Group Financial Services Canada, a Division of BMW Canada Inc. Nissan Canada Association of International Automobile Manufacturers of Canada BMW Group Financial Services Canada, a Division of BMW Canada Inc. Canadian Vehicle Manufacturers' Association Nissan Canada Finance, a Division of Nissan Canada Inc. Key Equipment Finance Canada Ltd. Maxium Financial Services Inc. Travelers Financial Corporation Stonebridge Financial Corporation BAL Global Finance Canada Corporation RBC Equipment Finance Group TransportAction Lease Systems Inc. PHH Arval Nisco National Leasing DealerTrack Canada, Inc. Landmark Vehicle Leasing Hav-A-Kar Leasing Ltd. PHH Arval financialinx Corporation Addison Leasing Somerville National Leasing & Rentals Ltd. Jim Peplinski's Leasemaster Lease-Win Automotive Group Inc. Morrison Acceptance Corporation Nisco National Leasing Jim Pattison Lease ADESA Canada ARI Financial Services Inc. 12

13 Committees Legal Andy Ayotte Wilson Vukelich LLP Jennifer Babe Miller Thomson LLP Stephen Bowman Bennett Jones LLP Michael Burke Blake, Cassels & Graydon LLP David Chaiton Torkin Manes Cohen Arbus LLP Pierre Denis Lavery, de Billy S.E.N.C.R.L. Avocats William Hartley Edwards, Kenny & Bray LLP David Kierans Gowling Lafleur Henderson LLP/s.r.l. Francis Meagher Marchand Melançon Forget S.E.N.C.R.L., Avocats Robert Metcalfe McCarthy Tétrault LLP D. James Blake, Cassels & Graydon LLP Papadimitriou John Penhale Gowling Lafleur Henderson LLP/s.r.l. Jean-Yves Simard Lavery, de Billy S.E.N.C.R.L. Avocats Michael Templeton McMillan John Tobin Torys LLP Sheryl Watson ADESA Canada Steve Weisz Blake, Cassels & Graydon LLP Small Ticket Funders Janice Boulet National Leasing Mark Cannon Roynat Lease Finance Kim Carter De Lage Landen Financial Services Canada Inc. Greg Clark GE Vendor Financial Services Bruce Collingwood Northstar Leasing Corporation Carl Crechiolo MCAP Leasing Remo d'aloisio MCAP Leasing Ed Dias Leasebank Credit Corporation Martin Kibsey CoActiv Capital Partners Canada Inc. Jack Marandola CLE Canadian Leasing Enterprise - Crédit-Bail Clé Mike Mattina CIT Financial Ltd. P.J. McMahon Roynat Lease Finance Larry Mlynowski Equirex Leasing Corp. Marcelle Newstadt Enable Capital Corporation Gary Reynolds De Lage Landen Financial Services Canada Inc. James Schenk De Lage Landen Financial Services Canada Inc. Raja Singh Bodkin Leasing Corporation Brian Somer Equirex Leasing Corp. Lui Spizzirri Roynat Lease Finance Greg Van de Kraats CLE Canadian Leasing Enterprise - Crédit-Bail Clé Scott Webster GE Capital Solutions Canada Terry Wensley Concentra Financial Daniel Wittlin Enable Capital Corporation Tax Diane Sekula Chair Dalton Albrecht Norman Baxter Monica Biringer Stephen Bowman Michael Bussmann Jason Carson Jason Cooper David Daubaras Mark Elston Allan Gelkopf Sebastian Grassa Teresa Hewer James Higgins Tony Italiano Karen McDougall Owen J. Moher Kathleen Penny Sunil Purbhoo Gabrielle Richards Michael Stewart John Thomas John Tobin Janet Trogdon Heather van de Kraats Russ Watson Technology Owen J. Moher Steven Sadgrove Dan Schoenbauer Larry Shred Hugh Swandel CIT Financial Ltd. Miller Thomson LLP Ford Credit Canada Ltd. Osler, Hoskin & Harcourt LLP Bennett Jones LLP Gowling LaFleur Henderson LLP John Deere Credit - Canada PricewaterhouseCoopers LLP GE Capital Solutions De Lage Landen Financial Services Canada Inc. Blake, Cassels & Graydon LLP CIT Financial Ltd. BMW Group Financial Services Canada, a Division of BMW Canada Inc. Nissan Canada Finance, a Division of Nissan Canada Inc. KPMG LLP Bodkin Leasing Corporation Constellation Financing Systems Blake, Cassels & Graydon LLP GE Capital Solutions McCarthy Tétrault LLP KPMG LLP Foss National Leasing Torys LLP RBC Equipment Finance Group John Deere Credit - Canada GE Canada Equipment Financing G.P. Constellation Financing Systems Turnford Systems Inc. International Decision Systems Inc. Canadian Black Book Swandel and Associates CFLA Staff David Powell - President & CEO Vanessa Foran - Director, Policy Charlene Forde - Administrative Coordinator Sherry Jia-Hatheway, Director, Finance & Administration 13

14 Members Regular Members Ontario Inc. o/a D&D Leasing 7 Park Avenue Financial Aada Leasing a Division of Tony Graham Motors ( 1980 ) Ltd. Able Leasing (2001) Ltd. Accurate Leasing Ltd. ADD Capital Corp. Addison Leasing Admiralty Leasing Inc. Advant Leasing Limited Alter Moneta Corporation ARI Financial Services Inc. Asset Appraisal Services, Inc Aureus Financial Corp AutoOne Lease Inc BAL Global Finance Canada Corporation BALFOUR CAPITAL INC. Bank of Montreal Bank West Baylore Acceptance Corporation Blue Chip Leasing Corp. BMW Group Financial Services Canada, a Division of BMW Canada Inc. Bodkin Leasing Corporation CAG Vancouver Canadian Capital Leasing Inc. Capital Underwriters Corporation CapitalWest Finance & Leasing Corp. Capmor Financial Services Corp. Cardel Leasing Limited Cars4you.com Caterpillar Financial Services Ltd. Central Technology Services Corporation Checker Flag Leasing Inc. Chrysler Financial Service Canada Inc Cisco Systems Capital Canada Co. CIT Financial Ltd. CLE Canadian Leasing Enterprise - Crédit-Bail Clé CLI Leasing Corporation Clubb Finance Corporation CoActiv Capital Partners Canada Inc. Coast Capital Equipement Finance LTD Commercial Funding Group Inc. Concentra Financial, Corporate Banking, Leasing Services Corporation Financière Brome Inc/ Brome Financial Corporation Inc CSI Leasing Canada Ltd. DCFS Canada Corp. De Lage Landen Financial Services Canada Inc. Dell Financial Services (Canada) Direct Funding Corporation Don Valley North Automotive Inc. DSM Leasing Ltd. EASYLEASE CORP. Element Financial Corporation Enable Capital Corporation Equirex Leasing Corp. Essex Capital Leasing Corp. Execucor Financial Limited Financial Transport Inc. financialinx Corporation Finloc 2000 Inc. FinTaxi, sec/lp First Capital Leasing Ltd. First Class Drivers and Truck Rental Services Ltd. First Union Rail Corporation Ford Credit Canada Ltd. Foss National Leasing GE Canada Equipment Financing G. P GE Capital Solutions GE Fleet Service GE Rail Service Canada GE Vendor Financial Services General Motors Acceptance Corporation of Canada Globale FC Gold Key Pontiac Buick (1984) Ltd. Greybrook Credit Corporation Hav-A-Kar Leasing Ltd. Honda Canada Finance Inc. Howson Auto Leasing IndCom Leasing Inc. Industrial Credit Corporation Jim Pattison Lease Jim Peplinski's Leasemaster John Deere Credit - Canada Kamsel Leasing Inc. Key Equipment Finance Canada Ltd. Landmark Vehicle Leasing Lease Corp Capital Inc. Lease Link Canada Corp. LEASE PLUS FINANCIAL a Division of Lease Plus Services Inc Leasebank Capital Corporation Lease-Win Automotive Group Inc. Liftcapital Corporation Lionhart Capital Ltd. London Leasing, division of Canada Inc. MacAnders Capital Finance Corp. MapelLease Financial Services Ltd. Maxium Financial Services Inc. MCAP Leasing Mercado Capital Corporation Mertin Leasing Mintage Financial Corporation Money in Motion Morrison Acceptance Corporation National City Leasing National Leasing Nelson Investment Group Newport Leasing Limited Nisco National Leasing Nissan Canada Finance, a Division of Nissan Canada Inc. North York Chevrolet Corvette Northstar Leasing Corporation OAC Leasing O'Regan's National Leasing Pfaff Leasing PHH Arval Pitney Bowes Global Credit Services Polaris Leasing Ltd. Prime Capital Consulting and Forest Leasing Inc. Questor Financial Corporation RBC Equipment Finance Group Riordan Leasing Inc. Rothenberg Capital Leasing Inc. Roynat Lease Finance Scotia Leasing Scott Capital Group Inc. Sekurus Canada Inc. Shaw Lease & Truck Rentals SITE Finance Inc. SL Canada, GP a member of LBBW group Somerville National Leasing & Rentals Ltd. 14

15 Members Sovereign Leasing Corporation SPAR Leasing (Credit-Bail SPAR Inc.) Sumex Business Financing Summit Credit Corporation SUMMIT LEASING CORPORATION Textron Financial Canada Limited THE DRIVING FORCE INC. The Leasing Group Inc. Toyota Credit Canada Inc. TransportAction Lease Systems Inc. Transwest Financial Services Corp. Travelers Financial Corporation Tricor Lease & Finance Corporation VantageOne Capital Inc. VFC Inc. Vista Credit Corp Volvo Financial Services VW Credit Canada Inc. Waterpoint Financial Group Inc. Wells Fargo Equipment Finance Company Westana Leasing Corporation Westport Leasing Corporation Wheels, Inc. Williamson Leasing WS Leasing Ltd. Associate Members ADESA Canada Aird & Berlis LLP Asset Inc. Atticus Financial Group AutoVin Canada Corp Aylesworth LLP Bennett Jones LLP Blake, Cassels & Graydon LLP Blaney McMurtry LLP Bob Leighton & Associates Canadian Automotive Fleet Magazine Canadian Black Book (Wm. Ward Publishing Ltd.) Canadian Credit Protection Corporation Casitron Limited Cassels Brock & Blackwell LLP CIBC World Markets Inc. Classic Capital Inc. Constellation Financing Systems Corp. Corpfinance International Limited CustomFirst Software Inc. DataScan Field Services Davis LLP DealerTrack Canada, Inc. Deloitte & Touche Chartered Accountants LLP Ecologic Leasing Solutions Inc. Edwards, Kenny & Bray LLP Fraser Milner Casgrain LLP Fuller Landau LLP Gowling Lafleur Henderson LLP/s.r.l. Harrison Pensa HKMB HUB International Horne LLP Chartered Accountants KPMG LLP Lavery, de Billy S.E.N.C.R.L. Avocats Lease Administration Corporation Manheim Canada Marchand Melançon Forget S.E.N.C.R.L., Avocats McCarthy Tétrault LLP McLean & Kerr LLP McMillan Miller Thomson LLP Oracle Financing Division Osler, Hoskin & Harcourt LLP Patron West PayNet Canada a division of PayNet Inc. PDP Group Inc. PPSA Canada Inc. Premier Lease & Loan Services PricewaterhouseCoopers LLP Resolve Corporation Roderick H. McCloy Law Corp /Shapiro Hankinson & Knutson RSM Richter, LLP Ryzn Enterprise Systems Inc. Securcor Corporation Securefact Stonebridge Financial Corporation Sun Life Financial Swandel and Associates Technicost Inc. Telus Corporation Torkin Manes Cohen Arbus LLP Torys LLP Turnford Systems Inc. White Clarke North America Wilson Vukelich LLP Non-Resident Members CHP Consulting Dakota Financial Dominion Leasing Software LLC International Decision Systems Inc. Kropschot Financial Services, a member of The Alta Group. LeaseTeam, Inc. Odessa Technologies Inc. Summit-Northlake Canadian Leasing Corp. 15

16 CF AC & LA FL Canadian Finance & Leasing Association Association canadienne de financement et de location 15 Toronto Street, Suite 301, Toronto, Ontario M5C 2E3 Telephone: (416) Toll-free: 1(877) Fax: (416) Web site: 15, rue Toronto, bureau 301, Toronto (Ontario) M5C 2E3 Téléphone: (416) Sans-frais:1(877) Télécopieur: (416) c.élec: Site Web: