Machine Tool Leases Less Delinquent Than Credit Cards or Home Mortgages

In November 2006, the delinquency rate on machine tool leases was less than half the rate on credit cards or home mortgages. Shops are uniformly in good financial shape, according to Harry Moser, President of Agie Charmilles Corp.

Type of Debt      30 Day Delinquency Rate Machine Tool Leases      < 2% Credit Cards      4.6% Home Mortgages      2.6%

The GF AgieCharmilles Machining Business Activity Index increased to 66 in December from 60 in November. The Index is created by surveying machine tool users concerning their current business level versus three months earlier (September ‘06). Any reading above 50 indicates that business activity has improved. The Index was inaugurated in October 2004 and is the only known monthly index of business in the U.S. machining industries. Business activity was strongest in the Plastic Extrusion Dies sector and in the Central and West regions. A detailed breakdown of results by geographic region and application/sector is available at www.charmillesus.com/newsroom/bizindex.cfm.

In December, the 30 day delinquency rate on machine tool leases was less than 2% which is much lower than the 4.6% credit card or the 2.6% home mortgage delinquency rates. The AgieCharmilles/USBEF Machining Industry Financial Strength Index was 323, vs. 333 in November 2006, 345 in December 2005, and 55 in January 2002, the worst reading on record. Any reading above 100 indicates that US Bancorp Equipment Finance's (USBEF's) machine tool lease payment delinquencies (a good measure of machine tools users' liquidity and consistent profitability) are at a rate below the average rate of 1990 to 1999. As profitability rises, liquidity rises, delinquencies fall and the Index rises.

The approximately 126,000 U.S. companies that use machine tools have about 2 million machine tools and 750,000 to 1,000,000 directly related employees (toolmakers, machinists, operators, programmers, etc.). Almost all mid-size to large manufacturing companies use, and periodically purchase or lease, machine tools. Thus, these indices give timely insight into the condition of U.S. manufacturing. The Machining Business Activity Index is a coincident indicator of this key manufacturing sector. The Financial Strength lags business activity and leads capital investment.