Leasing vs. Borrowing (Part 3)
company must look at its circumstances to decide whether to use bank debt, capital lease or operating lease
financing when making a large purchase. If your company has good income, a strong cash position, and comfortable
borrowing capacity, a bank loan would be a good choice. With a bank loan you will most likely need to make a down
payment, but you can use accelerated depreciation under the tax code to offset current earnings. Generally interest
rates for the bank loan will be lower and reduce the overall cost of the financing.
A company with less of an ability to make a down payment can benefit from the same acceleration of depreciation
through a capital lease, which allows capitalization of the lease on the balance sheet just as with a bank loan.
The imputed interest rate for the capital lease will most likely be higher and therefore cost the lessee more than
using bank financing. Additionally, the leasing company will normally be willing to finance the entire amount
without a down payment from the lessee. Since the lease is capitalized, the lease liability would be recorded as
long-term debt on the balance sheet and the company should review the transaction to make sure that it does not
run contrary to restrictive covenants on outstanding bank debt.
Lastly, an operating lease may be the right choice if the company does not have a strong cash position, available
borrowing capacity, or need to offset earnings through accelerated depreciation. An operating lease is not
capitalized, but rather the rental payments are recorded on the income statement as a rental expense throughout the
life of the lease. Also, an operating lease may be the right choice if the item leased has a risk of becoming
obsolete by the end of the lease. With a capital lease or bank debt, the company would end up owning the
obsolescence.—Jason A. Meyer, Managing Director,
HPC Puckett & Company.
Based in San Diego, Calif., HPC Puckett & Company specializes in mergers and acquisitions of wholesale optical laboratories. You can send comments or questions about this article or any other Dollars
& Sense articles to Jason A. Meyer at
Click here to read Leasing vs. Borrowing (Part 1)
Click here to read Leasing vs. Borrowing (Part 2)
EOA and Nikon Acquire U.S. Labs
Essilor of America (EOA)
acquired the assets of Custom Optical in Georgia ($2.5 million in revenue). EOA also acquired a majority stake in Gulf States,
a prescription laboratory based in Louisiana that generates $3 million in revenue, and a stake in Epic Labs in Minnesota ($3 million in revenue).
Nikon Optical U.S., a Nikon-Essilor subsidiary, acquired a majority interest in Colorado-based Pasch, which generates $3.9 million in revenue.
VSP Optics Group Acquires Capitol Optical Laboratory
VSP Optics Group,
as part of VSP Global, acquired Capitol Optical, a full-service optical laboratory located in Olympia, Wash.
Robertson Optical Introduces Cozē
Robertson Optical Laboratories is
introducing Cozē, its own brand of moderately priced, customized free-form progressive lenses. With Customized Optical Zone Enhancement
(Cozē) technology from Robertson Optical, these progressive lenses are up to 30 percent wider in all viewing zones than traditional
premium progressives, Robertson said.
Robertson produces Cozē lenses at its Loganville, Ga., facility using new, in-house digital surfacing technology. John Westbrooks, surfacing
manager of Robertson Optical Laboratories of Atlanta, is shown here producing a pair of the lenses.
Precision San Diego Launches Web Presence
San Diego has launched a website,
www.popsandiego.com. According to
Precision’s president, Mark Becker, the site is designed to attract consumer readers by offering information on eyecare products as well as
highlighting key San Diego attractions. Shoppers can then find eye care practitioners and optical shops listed by their area.
P.O.G Network Expands
Optical Group, (P.O.G.) recently secured a minority interest in CRX Laboratories located in Greenville, S.C. and Athens, Tenn. CRX
Laboratories specializes in industrial safety and government contract business.
Going Digital: Rite-Style Optical
In 2006, Rite-Style Optical became the first independent lab in the country to “go digital” when it integrated its Lab Management
System (LMS) with a Robotic High Production HSC Master and CCP Polishers it purchased from Schneider Optical Machines. Within a short period
of time, the lab found it necessary to invest in more digital equipment due to increased demand, according to general manager Mike
“The software systems we employ did not adversely change how we operate because of the advent of digital production,” Sutton recalled
recently. “What did change was the coordination necessary between Rite-Style, the lens manufacturers, the equipment manufacturers and the
LMS.” Sutton noted that the installation of a conveyance system was paramount to the efficiency of the robotic processing equipment.
Changes in inventory management became apparent only in the last year or so, Sutton said. “The amount of single vision blanks specific to free-form
processing has certainly displaced the amount of conventional progressives that are inventoried,” he observed. “So this has been a
priority to adequately monitor and adjust these inventories.”
Although the amount of labor needed to maintain the digital/robotic systems is considerably less than conventional processing,
Sutton said increased demand has allowed Rite-Style to maintain its production staff without any layoffs due to the new technology.
However, the qualifications that are necessary for employees have changed with the digital technology.
“Computer-savvy technicians with a mechanical background replaced machine operators who processed lenses,” Sutton
pointed out. “Maintenance and calibration is paramount to successful free-form digital production,” he added.
Pictured, L to R are Mike Sutton, George Lee and Ray Stavneak in the Rite-Style digital surfacing department.
Click here to
read more about Rite-Style Optical and other labs that are “going digital” in Vision Monday’s Special Report: Digital Immersion.
LabTalk Spotlight September 2010
Health Care Reform Means for Your Small Business, Part 1
By Phillip M Perry
The most comprehensive health insurance reform since Medicare is now the law of the land. The Patient Protection and Affordable Care Act
(PPACA) touches every aspect of health care in the United States.
How does the law affect you? Here’s one thing to get out of the way first, though: No employer will be required to provide health insurance.
However, some employers, as you will see, will pay penalties if they do not provide insurance and their employees decide to buy insurance from the
new state-wide insurance pools.
Here’s some good news: The PPACA contains some benefits geared specifically to the needs of small employers. Right out of the gate the bill
provides a tax break. Consider the following questions: Do you have 25 or fewer full time employees? Are their average annual wages less than
$50,000? And do you contribute more than 50 percent of your employee’s total premium costs?
If your answers to those three questions are “yeses,” then you may well receive some assistance with your premiums, thanks
to a tax credit of up to 35 percent of your contribution toward your employee’s health insurance, for this tax year through 2013.
To find out more on how health care reform may affect your business, log onto
and go to the Features section where you will find this complete article.
What is the best way to ensure your presentation message or main point in an argument is remembered?
Make your message the last thing your listener hears. Keep it short. Give it a rhythm. An excellent example of this principle appeared in an ad
in USA Today, 8/25:
A Message From America’s Egg Farmers
You’ve probably heard about the recent egg recall. As egg farmers, we’re concerned, and continue to work closely with the FDA and USDA to help
ensure the safest and highest quality eggs possible. The potentially affected eggs, which make up less than 1 percent of all US eggs, have been
removed from store shelves.
You may be wondering if eggs are safe to eat. Yes, they are. Thoroughly cooked eggs are thoroughly safe eggs, according to the Center for
Disease Control and the FDA. Eggs should be cooked until the whites and yolks are firm.
To find out more information on this recall and the safe handling of eggs, please vist eggsafety.org.
And, remember, thoroughly cooked means thoroughly safe.
“Eggs-amine” Your Communications
Whether in a formal presentation, giving an answer to a question, or in a conversation across the desk, make it easy for people to remember what
you said. Leave them with a short, snappy summary of your main point.
Remember, short messages last longer.
Execution is everything: Make What You Say, Pay!—Anne Miller
©2010, Anne Miller, author, “Metaphorically Selling”
Parasol Photochromic Lenses
Manufacturer: Augen Optics
Description: A combination of premium Augen High Definition lens design technology and advanced photochromic material.
Features: Made with 1.50 hard resin photochromic material, Augen Parasol lenses darken quickly outdoors, with a performance
comparable to leading photochromics, according to Augen. The lenses provide 100 percent UVA/UVB protection on both front and back lens surfaces.
The extra-dark tint rivals the light protection from sun lenses. Augen Parasol lenses fade more quickly to a barely noticeable tint indoors, the
Manufacturer: Bristol C&D
Description: Free-form progressive with backside aspheric surface
Features: Optical performance is enhanced by less distortion and sway and larger field of vision.
Availability: 9, 11, 13 and 16mm corridor lengths. Power range from -8.00 to +8.00D. Available from 1.499 to 1.74 in hard coat to
super-hydrophobic HMC coating plus polycarbonate, polarized, photochromic and Transitions. Four lens styles: Active, Standard, Cubicle and
DAC Kool Plus
Manufacturer: DAC Vision
Description: Advanced optical coolant
Features: Unique formula provides excellent lubrication and heat resistance, protecting today's high performance cutting tools.
Low-foaming, rapid settling formulation keeps lens surfaces clean and free of debris. Advanced rust inhibitors prevent build up and make tank
clean up easier. Works well in any system, especially smaller units where agitation is high.
HyperPro 1.74 Progressive
Description: Thin, lightweight progressive lens
Features: 1.74-index material; superior aspheric soft design provides easier transition from distance-intermediate-reading
areas, making it the logical choice for both first time wearers and current progressive patients. Offered in both regular and short corridor to
accommodate all frame styles.
Availability: 1.50, 2.50, 3.80, 4.80, 6.40, and 8.00 bases with adds from +0.75 to +3.50 in +0.25 steps.
SV Hard Resin HC/UC, SuperLite 1.74 UC
Manufacturer: Shamir Insight
Description: New materials for Shamir’s single vision lens line
Features: SuperLite materials have high light transmittance and allow for trouble free edging and drilling, while Shamir’s
Wrap lenses allow for higher prescription range in Base 4, 6, 7 and 8. Shamir’s Extra Thick lenses allow for a high minus prescription in
Base .5, 1 and 2.
Availability: Shamir Single Vision blanks are compatible with all Freeform designs, including Autograph II.
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