Leveraging the Economic Stimulus Package Presented by IBM Global Financing and Agilysys, Inc' June 1

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Leveraging the Economic Stimulus
PackagePresented by IBM Global Financingand
Agilysys, Inc.June 17, 2008
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• IBM IGF do not, nor do they intend to, offer or
  provide tax or accounting advice to clients.
  Clients should consult with their own financial
  and legal advisors. Any tax or accounting
  treatment decisions made by or on behalf of the
  client are the sole responsibility of the client.

NOTE All financial examples are for illustration
only They do not constitute an offer to finance
for a particular customer
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2008 Economic Stimulus Bill

• Provides substantial tax advantages for
  businesses that acquire capital goods and put
  them into service in 2008
• Signed February 13th, 2008
• Similar to the 2004 ERTA (Economic Recovery Tax
  Act) amendment
• Taxable US clients may benefit from bonus
  depreciation
• Small Businesses receive additional tax benefit
  if they spend less than 1,050,000 in Capital
  Expenditures in 2008
• Accelerated, or bonus depreciation is a
  positive after-tax benefit on new equipment and
  software purchased in 2008
• 60 depreciation in first year on hardware rather
  than the usual 20 maximum (effectively an
  additional 40)
• An additional 50 first year depreciation on
  software
• By claiming additional or bonus depreciation
  in 2008, clients may reduce their taxable income,
  therefore reducing taxes to be paid in 2008
• Note that this reverses out in later years
  this is a tax timing benefit

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Accelerated Depreciation Benefits - Hardware
Accelerated Depreciation Does not impact
Accounting Books For Tax Purposes Only
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Accelerated Depreciation Benefits -Software
Accelerated Depreciation Does not impact
Accounting Books For Tax Purposes Only
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Agilysys and IGF can help you leverage ESP tax
benefits and facilitate key I/T projects

• Overcome budget or cash constraints in 2008 on
  both hardware and software acquisitions
• Accelerate planned technology refreshes while
  managing remaining book values
• Maximize on the Small Business Incentive by
  balancing capital expenditures with true leases
• Provide affordable true lease options where
  accelerated depreciation has limited or no value

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Overcome budget or cash constraints in 2008on
hardware acquisitions

• Financing options and deferrals to match budget
• Tax benefit may actually generate cash in 2008

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Accelerate Software Acquisitions and/or Timing on
Roll-out of Software

• Tax depreciation benefit combined with IGF
  financing option allows acquisition six months
  earlier with minimal or no impact to current
  period cash or to the Net Present Value of the
  total project cash streams

Assumes 1,000,000 purchase price, 36 month term,
IGF Low Rate Financing, Subject to credit
approval, Client tax rate 35, client IBR for
NPV analysis is 9
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Accelerate Hardware acquisition while managing
remaining book value on existing assets
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Maximize Small Business Incentive for 2008

• Additional tax write-off for clients spending
  less than 1,050,000 in Total Capital
  Expenditures in 2008
• 250,000 additional write-off in current year if
  lt800,000, on a sliding scale, write-off
  declines to 0 as total expenditure reaches
  1,050,000
• Provides even greater depreciation write-off in
  current year (up to 73)
• Clients can use IGF true leases on hardware to
  balance total capital and expense to maximize tax
  benefits available to small business

Does not qualify for added incentive
Qualifies for added incentive Maximizes up-front
write-off Minimizes use of cash
D
Cash 0K
IGF True Leases 600K
IGF SW Loan 600K Cash 200K
Cash 1,400K
Capital Purchases
Expense
Expense
Capital Purchases
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Accelerated Depreciation may have limited value

• Lower Depreciation / Higher Taxes in future years
• Alternative Minimum Tax (AMT) status may limit
  deductions
• Exempt from Federal Taxes
• Already generating Book Losses for tax purposes
• Prefer Fair Market Value leasing
• Financial, technological, asset management
  considerations

You can still find value in the ESP through IGF.
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IGF Economic Stimulus Advantage Offering

• I/T Hardware acquired on a true lease
  qualifies for IGF ESA offering (IBM and non-IBM
  hardware)
• IGF retains the rights to tax benefits on
  hardware
• Client receives lower rate or a free 3 month
  deferral
• Reduction to lease rate in 2Q08 is .35/1000
  financed
• Rate reduction is over entire lease term
• Offering expires 12/31/08

Example for illustrative purposes only, rate
reduction is 0.35/1K financed for 2Q/08 Lease
example represents FMV lease for 36 mths best
credit customer. Assumes Q2 installation. Actual
financing rates based on customers credit
rating, financing terms, offering type, equipment
type and options. Note that deferral results in
39 month total term. Other restrictions may
apply.
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Advantages of fair market value leasing
PV of lease payments

• FMV leasing reduces total cost of ownership
• Pay for portion of asset used (IGF takes
  residual value position)
• Transfers risk of obsolescence
• IGF also assumes cost and risk of disposal
• FMV leasing facilitates timely technology
  refresh, end of lease or mid-lease
• Increases flexibility
• Eliminates book loss issues

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Suggested Actions

• Understand the leverage in the Economic Stimulus
  Package
• Utilize the tax benefits of bonus depreciation to
  generate incremental cash in 2008 to fund
  additional I/T investment
• Analyze the benefits of accelerating I/T projects
  planned for 2009, use financing to achieve the
  maximum benefit
• Leverage fair market value leasing to reduce your
  total cost of ownership, address budget
  challenges, shift technology risk, and mitigate
  disposal obstacles
• Take advantage of IGFs ESA offering lower
  rates or free 3 month deferral - on true leases
  accepted by December 31, 2008
• Engage Agilysys Financial Solutions and IGF to
  help develop financial options to fund your
  information technology needs

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Financial Solution Resources

• Agilysys Financial Solutions
• John OBrien, Director of Financial Solutions
  john.obrien_at_agilysys.com, 732-692-1968
• Michelina Di Sibio, Financial Solution Manager
  Northeast michelina.disibio_at_agilysys.com,
  440-519-7680
• Bill Murray, Financial Solution Manager
  Southeast bill.murray_at_agilysys.com,
  888-833-2106 X5250
• Nick Tocci, Financial Solution Manager Central
  and West nicholas.tocci_at_agilysys.com,
  440-519-8414
• IBM Global Financing
• Financial consulting resources available by
  geography in partnership with Agilysys Financial
  Solutions Organization
• Graham Butler, Financial Client Executive for
  Agilysys grahambutler_at_us.ibm.com, 770-863-2312
• Jim Goldman, Financial Client Executive for
  Agilysys jg1_at_us.ibm.com, 513-826-1358