Focus of FASB 13 changes

The underlying reason for a new lease accounting model is an effort to curb “off-balance-sheet” financing.  With that said the FASB and IASB came together and selected a Right-of-Use (ROU) model to account for leases.  The crux of the ED proposed rules, is that leases are to be presented on the Balance Sheet of a company as both an Asset and a Liability.

Below is a summary of key components contained in the recent ED

Fact Sheet

Framework  - Timing

1. Release date – May 16, 2013.
2. Comment period – Ends September 13, 2013.
3. Period of time to be taken by the Boards to review the “Comments” unknown, but possibly and likely in to early 2014.
4. Date on which a company has to present its’ financial statements using the new rules, unknown, but we expect it to be January 1, 2017, but it could be earlier or later.
5. Reporting using the new rules would begin – January 2014 (if company financial statement required as of January 1, 2017). Companies could wait longer to put rules into effect but that would require a financial restatement.

Framework – Rules – What IS or IS NOT part of the Balance Sheet Asset/Liability Calculation

1. Short-term leases, twelve (12) months or less, are NOT to be included.
2. Renewal Options are NOT to be included unless they possess a significant financial incentive to be exercised.
3. Percent rent clauses in leases are NOT to be included, unless the clause can be viewed as “in-substance” fixed lease payments.
4. If observable and quantifiable then Real Estate Taxes, Insurance, and CAM are NOT to be included.
5. The discount rate to be used to calculate the current value of the asset/liability shall be either the landlord’s rate or the tenant’s marginal cost of capital.  The rate will be re-evaluated upon such things as the exercising of a renewal option.
6. Leases that include a CPI rent escalator will require ANNUAL re-evaluation.

Framework – Rules – Income Statement Calculation

1. Two (2) methodologies will be needed to present all lease types; one method for most non-real estate leases and another method for most real estate leases.  The key determinant for which method to apply to which asset class is whether a more-than-insignificant portion of the underlying asset is “consumed”.
2. The OLD straight-line method for calculating real estate leases will be dropped.
3. A NEW single lease expense (SLE) method for real estate leases will be adopted.  This method will have both an interest expense and an amortization expense.

Shameless Plug

Lucernex has been on top of the upcoming FASB changes from the very beginning with members of our staff staying abreast of every phase of the board actions. Lx Contracts, the Lease Administration and Rent Accounting Module of Lx Retail, was the FIRST product updated to meet the expected standards back in late 2010 with an update to our FASB financial engine and Lucernex continues to update the product with each release as the eventual rules become more and more clear.

Lucernex has been recognized as the leader in transitioning retailers from legacy lease administration systems to our market leading cloud based lease administration solution, Lx Contracts. Learn more about our Legacy Lease Administration Upgrade Program.

While Lucernex prefers to call what we deliver Store Lifecycle Management, The Gartner Group, whom coined the term IWMS and publish an annual survey of the IWMS industry, consider us an IWMS vendor.

As thoughtful and detailed as the annual Gartner analysis is, it does not attempt to distinguish between IWMS solutions for Corporate Real Estate and those for Retail Real Estate. For purposes of this blog, we will refer to IWMS for Corporate Real Estate as Traditional IWMS and compare it to Retail IWMS solutions.

The buyer, end user and central focus
While the distinction between Traditional IWMS and Retail IWMS may not seem that significant, they actually are designed for a different set of end-users with a very different focus. Traditional IWMS focus is largely on cost control and centralization of systems. Corporate IT is the typical buyer with a focus on serving the corporate facilities group and perhaps the corporate accounting group.

The focus of Retail IWMS is broader since retailer success is driven first by how quickly great locations can be identified, analyzed and secured. Then, once secured, the speed by which a retailer can get the store open directly drives new revenue weeks and hence new revenue. The decision maker for buying Retail IWMS is typically the Real Estate Department and the end-users are from that group, plus rent accounting and construction.

Retailers include speciality retailers, restaurants, hotels, grocery, convenience stores, retail healthcare (neighborhood clinics, PT centers, eye care centers, dental clinics, etc…), bank branches, finance/investment branches and any other tenant with multiple highly prototypical locations that generate revenue.

This is not to say cost control and centralization of systems is not important to retailers, but if a retailer does not do a great job of quickly finding and securing the best sites and opening stores, cost control matters little. Obviously as the store count rises, so does the significance of cost control, but the importance of market and site analysis never goes away even if a retailer is in a contraction mode.

Portfolio Types
One of the most obvious attributes of retail chains is their prototypical nature. Retailers, with few exceptions, implement stores, restaurant, hotels or other types of facilities that are highly prototypical in nature. This keeps their initial and long-term costs down, delivers a common look and feel for their customers and defines the retailers “brand”. Retail IWMS solutions, as a result, have to allow retailers to take full advantage of this prototypical nature whether it is in demographics profiles, design prototype management, construction project templates, capital project rollouts, lease term reuse, contract abstraction or the hundreds of other prototypical processes that drive retail success.

Corporate Real Estate is rarely prototypical in its site selection, construction or leasing activities. Why would a non-retailer care if all of their offices were laid out exactly the same with roughly the same square footage, same colors, same access, etc..? Office locations are not selected for how similar they are in look, feel and size to other offices; they are selected based on how much space is needed, where or what type and at a sustainable long-term cost.

While this difference in portfolio type (prototypical vs non-prototypical) may not seem all that significant, it has impact on every decision the IWMS vendor makes, every day, on what features should be built and how. Every design decision for a Retail IWMS vendor includes how to ensure the prototypical nature of retailers is fully taken advantage of. Traditional IWMS vendors labor to make the best investment in new features for their largely non-prototypical client base.

Functionality and Capabilities
Traditional IWMS solutions are primarily focused on facilities management, asset maintenance, space management and one-off project management. While all of these areas are somewhat important to retailers, market analysis, site selection, prototypical project management, lease administration, rent accounting and capital program management are far more important and are the focus of a Retail IWMS.

Retail IWMS solutions will lack depth in some areas that are critical to Corporate Real Estate while Traditional IWMS solutions will not focus resources on delivering deep functionality in areas that matter only to retail.

The table below attempts to summarize some of the major differences between the two types of IWMS solutions.

Shameless Plug

Lucernex is the only pure Retail IWMS vendor in the market having designed and purpose-built every line of code, since day one of our founding in 2000, for retailers. Lx Retail, offers a single platform, single database, single user interface solution that encompasses the entire store lifecycle and includes all IWMS functionality required for any size or type retailer.

To get the complete Newsletter, which includes the featured Gartner research note titled “Predicts 2013: New Trends Bring New Challenges for IT Asset Management and Procurement”, go to the Lucernex Knowledge Base.

What began as a convenient way to share photos and documents or access your email via the Internet, Cloud Computing, has evolved into the ability to deliver enterprise applications that until recently were locked behind firewalls and only available to users tethered to a corporate network. With the convergence of Cloud and Mobile technologies, rapid and dramatic changes are happening across the globe.

As smart phones and tablets gained in popularity, the use of Cloud technology integrated into these devices began driving disruptive change in many technology areas. For instance, senior executives have become so dependent upon their mobile devices, Bring Your Own Device (BYOD) strategies are quickly becoming common in corporate IT.² BYOD policies open the door for adoption of Cloud-delivered offerings since legacy software often cannot support mobile access from outside the organization.

“Gartner’s Nexus of Forces — mobile, cloud, information and social — is transforming the management of the second largest budget item in the enterprise (facilities life cycle costs) and IWMS will be the engine of that transformation.”¹

“By 2015, more than 75% of the Forbes Global 2000 companies will manage the No. 2 enterprise budget item (facilities) with integrated workplace management systems.”¹

Real Estate is a natural fit for cloud and mobile technologies, especially in the Retail industry where finding and securing the best site as quickly as possible is key to any retailer’s success. The act of finding, acquiring, building and managing stores is largely done by staff and partners in the field and the use of mobile devices and cloud-delivered solutions greatly enhances productivity and minimizes errors. These impacts are not just felt by the business users; corporate IT also needs to rethink how they select and support these new technologies.

There are many impacts of Cloud and Mobile technologies on the Retail industry; we will focus on the most critical areas including:

Business User Impacts
1. Quicker site selection
2. Faster store openings
3. Greater executive transparency / Higher confidence in hitting growth targets
4. New business process enabled by mobile in site selection, construction and facilities management

Corporate IT Impacts
5. Rewrite of software selection guidelines
6. Vendor implementation and support are as important as features

Shameless Plug

Lucernex is the only TRUE Cloud solution in the Retail IWMS market using a fully virtualized pure cloud environment that ensure near infinite scalability, the fastest possible performance no matter how many users are online and near 100% uptime. We are both SSAE 16 Type II and ISO 9001:2008 certified to ensure optimal security and customer support.

Lucernex began limited support of Tablets for our Lx Retail and Lx Contracts products in late 2010 and refined tablet use with a very large restaurant client using iPads across the entire lifecycle. In 2012 we launched Lx Retail Mobile extending our support of Tablets with a Tablet friendly interface and support for ALL areas of our system for iPads and Android Tablets. We also plan to support Microsoft 8 Tablets in 2013.

References
¹ Gartner Research Document. Predicts 2013: New Trends Bring New Challenges for IT Asset Management and Procurement. Schafer, R., Bona, A., Buchanan, S., Published: Nov 27, 2012.
² Clancy, H. “Undeniable link between BYOD and cloud adoption”. March 5, 2013. Retrieved from www.zdnet.com on May 7, 2013.

Dallas, TX (February 27, 2013) – Lucernex Technologies, the leading provider of cloud-based Store Lifecycle Management (SLM) , IWMS and Lease Administration solutions for Retailers, was presented with the Gold Stevie® Award in the Collaboration Solution, New Version category in The 7th Annual Stevie Awards for Sales & Customer Service. More than 1,150 entries from organizations of all sizes and in virtually every industry were submitted this year for consideration.

The Stevie Awards are the world’s premier business awards. The Sales & Customer Service Awards recognize the achievements of customer service, call/contact center professionals, sales and business development worldwide.

“This award is an honor for our Customer Support team. Over the past three years we have labored to implement processes to put a special focus on serving our clients, which has also led to ISO 9001 certification,” said Louise Mailloux-McBurnett, Vice President of Lucernex. “This includes investments in technology and training to ensure the best possible support for our clients”.

In 2011 Lucernex released a new Cloud-delivered version of Lx Retail, a complete store lifecycle management solution for retailers. To optimize renewals of annual subscriptions, Lucernex implemented a Quality Manual and key quality processes to focus on customer retention through excellent customer service.

“The success of Lucernex depends on annual renewals so nothing is more critical than happy customers”, said Joe Valeri, President and co-founder of Lucernex. “Our investment in becoming ISO 9001 certified for continuous quality improvement in our customer support functions has led to the great honor of a 2013 Stevie Award. We are very proud”.

Stevie Award winners were selected by more than 240 executives globally who participated in the judging process this year.

Details about The Stevie Awards for Sales and Customer Service and the lists of Stevie Award winners are available at www.StevieAwards.com.

About Lucernex
Founded in 2000, Lucernex Technologies provides retail real estate professionals with powerful cloud-based solutions to manage the store lifecycle. All Lucernex solutions were designed “by retailers for retailers” and can manage any size portfolio of leased and owned properties. Fortune 500 companies in the corporate real estate, hospitality and retail industries use Lucernex Technologies solutions every day to ensure compliance, mitigate risk and empower effective growth. As an innovative leader in retail real estate solutions, Lucernex continues to grow its customer base by applying its Web-based software expertise and real estate development insight to provide advanced tools and services for business. For more information, please visit www.lucernex.com.

“We selected Lucernex to help us organize and manage our rapid store growth and to manage our leases”, said Matt Stanton, VP Strategy and Development at Smashburger. “It was important for Smashburger to find a vendor that provided a complete real estate solution in one product and one platform”.

Lx Contracts is the market leading cloud-delivered lease administration and rent accounting solution for retailers. It will assist Smashburger in upcoming changes in the accounting requirements surrounding leases.

“We are very happy to have Smashburger as a client“, said Mike Nuzum, CEO of Lucernex. “Lx Retail was designed for companies like Smashburger that are growing fast to ensure they secure the best sites, get the best lease terms and get their stores open quickly.”

Lx Retail was purpose built by experts in retail, for retailers. It rapidly delivers a return on investment (ROI) and has the lowest long-term total cost of ownership (TCO) in the industry.

Implementation of Lx Retail began in January of 2013.

About Smashburger
Smashburger is America’s fastest growing, fast casual “better burger” restaurant with global appeal, offering a variety of handcrafted menu items, including regionally inspired burgers and sides, and a ‘create your own’ model that allow guests to customize their experience.
Smashburger also offers a wide assortment of chicken sandwiches, a selection of local beverages, craft beer and hand-spun Häagen-Dazs® shakes to provide a unique experience. Developed and owned by private equity firm Consumer Capital Partners (CCP), Smashburger operates and develops both corporate and multi-unit franchise territories across the globe with approximately 200 restaurants across 29 states in the United States, Canada, Kuwait, Saudi Arabia and Costa Rica. Smashburger recently topped Fast Casual’s 2012 Top Mover & Shakers list, and was named America’s Most Promising Company by Forbes Magazine in 2011. It is the recipient of the International Council of Shopping Centers 2011 Hot Retailer Award and was also named to the Inc. 500 List of America’s Fastest Growing Companies the past two years in a row. To learn more, visit www.smashburger.com.

About Lucernex
Founded in 2000, Lucernex Technologies provides retail real estate professionals with powerful cloud-based solutions to manage the store lifecycle. All Lucernex solutions were designed “by retailers for retailers” and can manage any size portfolio of leased and owned properties. Fortune 500 companies in the corporate real estate, hospitality and retail industries use Lucernex Technologies solutions every day to ensure compliance, mitigate risk and empower effective growth. As an innovative leader in retail real estate solutions, Lucernex continues to grow its customer base by applying its Web-based software expertise and real estate development insight to provide advanced tools and services for business. For more information, please visit www.lucernex.com.

“After we have completed this data conversion we will have successfully converted every major legacy lease administration system and integrated the conversion mapping into our toolkit”, said Ken Brown, EVP and CIO of Lucernex, “the Lx Data Convertor toolkit has proven successful in quickly and accurately converting any legacy system”.

The project includes a complete data conversion and replacement of their existing lease administration and rent accounting solution, RetaiLease, as well as multiple integrations into their back office financial systems.

“Lx Contracts was selected due to our proven ability to convert legacy systems quickly and accurately into a FASB 13 ready system”, stated Joe Valeri, Lucernex President and COO. “Our cloud-delivered SaaS solution was architected for quick delivery and lightning fast performance.”

Lx Contracts is the Lease Administration and Rent Accounting module of Lx Retail, the market leading store lifecycle management and retail IWMS solution delivered in the cloud. Lx Contracts can support any size portfolio of stores including currency, date and location support worldwide.

Implementation of the Lx Contract solution began in January of 2013.

About Lucernex
Founded in 2000, Lucernex Technologies provides retail real estate professionals with powerful cloud-based solutions to manage the store lifecycle. All Lucernex solutions were designed “by retailers for retailers” and can manage any size portfolio of leased and owned properties. Fortune 500 companies in the corporate real estate, hospitality and retail industries use Lucernex Technologies solutions every day to ensure compliance, mitigate risk and empower effective growth. As an innovative leader in retail real estate solutions, Lucernex continues to grow its customer base by applying its Web-based software expertise and real estate development insight to provide advanced tools and services for business. For more information, please visit www.lucernex.com

“We selected Lucernex due to their quality, high performance product and their industry reputation,” said Peter Altmann, Vice President of Property Management at Regal. “We did our research and found that Lucernex has a reputation for quickly delivering a quality product and quality customer service.”

Lx Contracts is being implemented using Lucernex’s RAPID methodology to enable go-live in under 3 months including a full data conversion of their legacy system and integrations into their internal financial systems.

“We are very happy to have Regal Entertainment Group as a client,” said Joe Valeri, President and COO of Lucernex. “Lucernex was perfectly positioned to provide Regal with a fast, accurate implementation of our market leading cloud solution.”

Lx Contract is the market leading cloud-delivered lease administration and rent accounting solution for retailers. It is one module of Lucernex’s complete Store Lifecycle Management solution, Lx Retail, which was purpose built by experts in retail, for retailers.

About Regal Entertainment Group
Regal Entertainment Group operates the largest and most geographically diverse theatre circuit in the United States, consisting of 6,899 screens in 544 locations in 38 states and the District of Columbia as of November 30, 2012. The Company operates theatres in 43 of the top 50 U.S. designated market areas. We believe that the size, reach and quality of the Company’s theatre circuit not only provide its patrons with a convenient and enjoyable movie-going experience, but is also an exceptional platform to realize economies of scale in theatre operations.

About Lucernex
Founded in 2000, Lucernex Technologies provides retail real estate professionals with powerful cloud-based solutions to manage the store lifecycle. All Lucernex solutions were designed “by retailers for retailers” and can manage any size portfolio of leased and owned properties. Fortune 500 companies in the corporate real estate, hospitality and retail industries use Lucernex Technologies solutions every day to ensure compliance, mitigate risk and empower effective growth. As an innovative leader in retail real estate solutions, Lucernex continues to grow its customer base by applying its Web-based software expertise and real estate development insight to provide advanced tools and services for business. For more information, please visit lucernex.com

For the original version on PRWeb visit: http://www.prweb.com/releases/prweb2013/1/prweb10344701.htm

SSAE 16, which supersedes the SAS 70 audit standard, was designated by the U.S. Securities and Exchange Commission (SEC) as an acceptable method for management to obtain assertions about service organization internal controls without conducting separate assessments. “As a provider of SaaS solutions delivered in the Cloud, SSAE 16 Type II compliance ensures all Lucernex products are safely and securely controlled. To our clients it means they can feel safe using our solutions to develop, build and manage their real estate portfolio”, said Joe Valeri, President and COO of Lucernex.

Lucernex also achieved ISO 9001:2008 certification in late 2012, for the second time, a certification focused on continuous quality improvement.

The SSAE Auditors’ Report details Lucernex’s controls and provides an independent assessment of operational standards to ensure they are effective for securing and maintaining all client environments. If you are interested in learning more about Lucernex’s SSAE 16 Type II compliant products, please call 972.403.7100 or email sales@lucernex.com.

About Lucernex
Founded in 2000, Lucernex Technologies provides retail real estate professionals with powerful cloud-based solutions to manage the store lifecycle. All Lucernex solutions were designed “by retailers for retailers” and can manage any size portfolio of leased and owned properties. Fortune 500 companies in the corporate real estate, hospitality and retail industries use Lucernex Technologies solutions every day to ensure compliance, mitigate risk and empower effective growth. As an innovative leader in retail real estate solutions, Lucernex continues to grow its customer base by applying its Web-based software expertise and real estate development insight to provide advanced tools and services for business. For more information, please visit www.lucernex.com.

This first of its kind solution delivers market and site strategy, geo-analytics, customer behavior modeling, capital planning, site selection, construction project management, lease administration, rent accounting, program management and facilities management – all in one cloud delivered solution.

“We are pleased to announce this partnership that will mutually benefit Lucernex and Tango clients by providing a cloud delivered store lifecycle solution with GIS, mapping and customer analytics from the recognized leader in retail analytics and modeling,” said Michael Nuzum, CEO of Lucernex Technologies. “This new alliance creates capabilities never before available to retailers and will revolutionize the store lifecycle management market”.

“Until now no provider has brought together analytics, GIS, and store development execution into a single solution, let alone one delivered as a cloud based software-as-a-service (SaaS) offering.”, said Jack Thompson, Chairman of Tango Analytics. “Uniting Lucernex’s market leading cloud-based SLM solution with the unparalleled GIS and predictive analytics capabilities of Tango Analytics will provide tremendous value to our customers. This new offering once again solidifies both companies as pioneers in the retail technology space.”

About Lucernex
Founded in 2000, Lucernex Technologies provides retail real estate professionals with powerful Cloud based solutions to manage the store lifecycle. All Lucernex solutions were designed “by retailers for retailers” and can manage any size portfolio of leased and owned properties. Fortune 500 companies in the corporate real estate, hospitality and retail industries have been utilizing Lucernex Technologies solutions every day to ensure compliance, mitigate risk and empower effective growth. As an innovative leader in retail real estate solutions, Lucernex continues to grow its customer base by applying its Web-based software expertise and real estate development insight to provide advanced tools and services for business. For more information, please visit www.lucernex.com./

About Tango Analytics
Tango Analytics provides cloud-based geospatial applications for customer and location analytics, offered as a Software as a Service. Our products allow customers to visualize existing store data, analyze customer behavior patterns, optimize markets, manage store development pipeline, and generate maps, demographics, sales forecast reports and site packages at the click of a button. In the past 18 months, over 35 brands have deployed the Tango Analytics solution, supporting customer and location analytics for over 30,000 locations worldwide. For more information, visit www.tangoanalytics.com.

To be awarded certification renewal, an audit of Lucernex’s Quality Management system was conducted in 2012 culminating in certification in December of 2012. A third party auditing firm, Quality Systems Registrars, Inc. (QSR), performed the ISO 9001 certification.

“Clients consistently see our commitment to customer service and continual improvement,” said Louise McBurnett, Vice President of Product Management and Professional Services of Lucernex Technologies. “Receiving the ISO 9001 renewal demonstrates our dedication to continually improve our service processes and our customer satisfaction”.

If you are interested in learning more about Lucernex’s ISO 9001:2008 certification or about Lucernex Quality Management System, please call 972.403.7100 or email sales@lucernex.com.

About Lucernex
Founded in 2000, Lucernex Technologies provides real estate professionals with powerful software tools to guide them through the real estate store life cycle. It is the only solution designed “by retailers for retailers” and can manage any size portfolio of leased and owned properties. Fortune 500 companies in the commercial real estate, hospitality, retail, construction and engineering industries have been utilizing Lucernex Technologies software solutions every day to ensure compliance, mitigate risk and empower effective growth. As an innovative leader in retail real estate solutions, Lucernex continues to grow its customer base by applying its Web-based software expertise and real estate development insight to provide advanced tools and services for business. For more information, please visit www.lucernex.com.