REPORT FOR A N A L Y T I C A L
CHEMISTS
Lease-Purchase of Analytical Instruments Lease a n d
lease-purchase plans, long used in other
fields,
adopted s l o w l y by analytical instrument manufacturers.
are being
Financing a n d
trade-ins are major problems
I EASING apparently is becoming an American way of life. One of the oldest leasing arrangements is telephone service. P r i v a t e individuals lease automobiles, furs, paintings, homes, and various other items; industry leases buildings and plants, truck fleets, construction equipment, major machinery items, computers, and office equipment ; and local, state, and federal governments lease post offices and other buildings, trucks and automobiles, and all types of equipment. I n m a n y cases the p a r t y leasing the equipment never buys it. Some city governments, for example, lease police cars. T h e lessor m a i n tains these vehicles and replaces them as needed. I n other cases—and it is this category with which this article is particularly concerned—the lease-purchase or deferred purchase plan is used. There are m a n y facets to this development, which involve legal and other problems.
Lease-purchase plans are not just for large companies; they m a y serve equally well for small companies or for a n individual professor who needs an expensive piece of analytical equipment for his research. Lease-purchase m a y make it possible for him to acquire equipment which he might otherwise never be able to get or could only purchase in the distant future. D u r i n g the p a s t two years, the editors have encountered examples of instrument companies initiating lease-purchase plans in a cautious, let's-feel-our-way-along manner. In other cases there were reports t h a t instrument companies were accepting older items in t r a d e and disposing of these. Much of this type of activity has been carried out on an informal, individual case basis. I t appears now, however, t h a t ever-increasing costs and complexity of analytical instrumentation have spurred some instrument manufacturers into setting up lease-
To get a composite view of the present status of tease purchase and lease' plans in the analytical instrumentation field, the editors sent questionnaires to 11 companies which were selected to give a representative cross-section as to size prtduit line, and geographical distribution -Responses were reeufved from dll 11 companies. They csr«» Baird-Atomic. Inc. Beckman Instruments, Inc. Coleman Instruments, Inc. General Electric Co. (X-Ray Dept.) The Emil Greiner Co. Jarrell-Ash Co.
Nuclear-Chicago Corp. Perkm-Elmer Corp. Philips Electronic Radie Coflp. of America 1 dactmric Products Ptriaienj; Variait Associates
purchase plans on a more formal basis. The editors requested each of the 11 companies named in the box (below) to outline major provisions of its lease and lease-purchase plans if it had them. Other information was also requested, such as policies concerning trade-ins, disposal of used equipment, direct vs. indirect financing, etc. Results appear below. Lease-Purchase Plans Becoming Widespread Nine of the 11 companies contacted have lease-purchase plans or are starting them. Coleman Instruments, Inc., and Nuclear-Chicago do not have such plans. Coleman, however, does rent equipment for short periods while the customer's instruments are being repaired. Nuclear-Chicago feels t h a t as equipment becomes more complex, and more expensive, a leasing program might become necessary. Its entrance into the industrial process instrumentation field m a y encourage Nuclear-Chicago to initiate a leasing program. W i t h the exception of General Electric's plan, which has been in effect for 11 years, the other seven companies have plans ranging from still-to-be-tested to five years. J a r rell-Ash and Philips Electronics have been in this activity for five y e a r s ; Baird-Atomic, three y e a r s ; R C A , two y e a r s ; and Emil Greiner and Perkin-Elmer, one year each. Varian Associates is just starting its leasing plan. In the past Varian has recommended leasing through commercial organizations. BeckVOL. 33, NO. 1 1 , OCTOBER 1961
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REPORT FOR ANALYTICAL CHEMISTS man Instruments. Inc., has used several approaches in the past and is at present developing a formal lease plan. Advantages and Disadvantages to Lessee There are advantages and disadvantages for both the lessor and lessee in lease or lease-purchase plans. The major disadvantage to a lease plan from the customer viewpoint is the cost. As with any purchase where there is deferred payment, the customer pays for this convenience. Whether or not this expense is offset by the advantages depends on the individual situation. Most large companies approve capital and operating budgets well in advance. Once approved, it may be difficult to modify the budget to provide for a substantial capital expenditure. Here the problem is not one of ability to pay but rather company budget policy. A department head, however, m a y be able to effect sufficient savings in his operating budget through acquisition of a new instrument to justify its purchase on a lease-purchase basis. University professors, or research groups with short-term government research contracts, may need an instrument for only a relatively short period of one to three years, after which they will have no further use for it. A lease here may be desirable. The no-down-payment provision of many leases plus the fact t h a t the customer can budget for fixed monthly payments is a major advantage for many customers. A customer can modernize or expand his operations to maintain a competitive position without waiting to accumulate the necessary capital to purchase and avoids borrowing against assets. He can then use his capital for other productive purposes. Leasing also allows the customer to purchase better or more expensive equipment than he might on an outright purchase basis. General Electric's Maxiservice, for example, is a lease (not leasepurchase) plan for x-ray equipment. Advantages cited for the user are t h a t he has up-to-date equipment with no responsibility 24 A
·
ANALYTICAL CHEMISTRY
for taxes, depreciation, or insurance. The lease also provides, a t no extra cost, maintenance, periodic inspection, replacement of parts, and labor. There are no "extras" with such a plan. G E will exchange or add equipment at the customer's request. The monthly fee is based on the type of equipment used. Emil Greiner and Philips Electronics point out t h a t from the user viewpoint, advantages are t h a t capital equipment can be obtained without expenditure of capital funds and t h a t costs of the straight lease are completely deductible (taxwise) over the lease period. This m a y be desirable, in t h a t the user m a y be able to undertake programs out of proportion to work that could be done on a budget with limited funds for capital investment. The disadvantage is t h a t it m a y be more expensive. One respondent noted t h a t there is a major difference taxwise between lease and lease-purchase agreements. He notes, for example, t h a t the Treasury D e p a r t m e n t construes some lease-purchase plans as deferred payment purchases and so refuses to allow monthly charges as deductible expenses. This does not apply to a straight lease plan nor to a plan which allows purchase at the expiration of the lease, so long as there is no option to buy during the lease period. Jarrell-Ash has found that most users prefer the lease-purchase to the straight lease. By eliminating fixed assets, the lessor improves his ratio of current assets to current liabilities, thus enhancing his bank and credit position. Ordinarily, financial statements do not list leases as liabilities. Leasing has a tax advantage in t h a t rentals paid under a lease are deductible expenses. In some states where capital equipment is taxed, the leased equipment is not a tax responsibility of the lessee. Leasing also facilitates expansion out of earnings before taxes. The customer can protect himself against rising prices a n d / o r rising interest rates by leasing. Leasing m a y facilitate bookkeeping in some cases by allowing costs of leasing to be applied to a particular project or contract. Leasing procedures are reason-
ably simple compared to the expense, time, and trouble t h a t may be involved in arranging financing to purchase the equipment outright. Leasing also eliminates the financial planning often required when a customer is pledging his credit. In some cases, the prospective customer m a y not have enough working capital to purchase equipment. In this event, without a lease, he could not get the equipment. Advantages and Disadvantages to Lessor The major advantage of leasing plans to an instrument manufacturer or distributor is an increase in his marketing possibilities. Many of the advantages to the customer cited above illustrate this point. Another advantage to the manufacturer is that leasing provides a continuing source of income to salesmen selling on a commission basis. Since leasing contracts provide for maintenance service and replacement parts, leasing permits the seller to even out his preventive maintenance load and reduce expensive emergency service calls. A major disadvantage to the manufacturer, if he finances the leases himself, is t h a t it ties up his capital. If he leases through an outside financing group, he injects a third party into his dealings with customers. In the analytical instrument field, where there is a close personal relationship with customer, this may present some problems. A less-recognized factor favoring use of outside leasing is the tax problem. Although the situation is not yet clear, it appears that more and more states, in efforts to increase tax revenues, are taxing companies which operate businesses in their states, whether or not they have a place of business there. Some tax experts feel t h a t an instrument company which leases an instrument to a customer may be construed taxwise as operating a business in the state in which the instrument is used. If this practice is adopted in general by the industrial states where instrument companies sell most of their products.
REPORT FOR ANALYTICAL CHEMISTS the problems facing the instrument manufacturer in complying with a great variety of state tax laws can be great. I t is for this reason t h a t Perkin-Elmer, for example, actually sells its leased equipment outright to the leasing organization, which is better equipped to handle such tax problems. Philips, having conducted leasing in m a n y states for several years, considers the individual state t a x requirements in establishing the leasing structure for t h a t state. Since General Electric does business in every state, it is already subject to whatever tax laws exist and so this tax aspect presents no major additional problem.
Capital Requirements Plague Instrument Manufacturers W h a t the instrument companies are doing with regard to financing leases is explained below. If the instrument manufacturer finances sales of equipment through lease or lease-purchase agreements, he m a y find t h a t he has a substantial amount of his capital tied up in such equipment. To obtain capital for other purposes, he m a y have to cut back on leases and thus not m a k e effective use of the increased sales made possible by leasing or he m a y have to borrow money. I t is possible, of course, for the manufacturer to "sell his p a p e r " to commercial leasing organizations. Some companies feel, however, t h a t their relationship with a customer is a personal one and so they hesitate to introduce a third p a r t y — namely, an outside financing group. One manufacturer, for example, stated t h a t lease or lease-purchase agreements allow repossession of the instrument in the event of default of payment. Where the ins t r u m e n t manufacturer knows his customer's problems, he can be more flexible in enforcing terms of the lease. A research worker, for example, m a y encounter red t a p e and delays in obtaining renewal of a government contract and thus be unable to meet his obligations on schedule. W h e n the lessor-lessee relationship is close, this problem can be resolved with a minimum of red tape.
In the event t h a t leased equipment sales become a major percentage of total sales, most instrument manufacturers feel t h a t the a d v a n tage of close customer-manufacturer relationships will probably be outweighed by the problems of h a v ing their capital tied up. This will mean more use of commercial leasing organizations. Coleman feels t h a t the small or average-sized company would have no choice but to refinance—that is, "sell the p a p e r " to an outside financing group. General Electric feels t h a t the manufacturer should do his own financing only if ( 1 ) he has the capital to do so a n d ( 2 ) the rate of return on capital used in leasing is higher t h a n from other uses of this money. R C A docs its own financing. The a d v a n t a g e here, it feels, is t h a t the customer prefers to do business with only one organization. Emil Greiner has a separate division (Trinock, Inc.) to handle its leases. T h e customer has contact only with Greiner or Trinock. Varian has recently settled on its plan. Varian will offer "tailorm a d e " leases to all of its customers through the U. S. Teasing Corp. Several of the companies contacted have already decided in favor of outside financing of leases. Jarrell-Ash favors outside financing to preserve its capital for expansion of manufacturing and research and development. P e r k i n - E l m e r also has arrangements for financing through an outside organization. Baird-Atomic "sells its p a p e r " to outside financing groups. Philips Electronic I n s t r u m e n t s has always done its own financing of leases, but recognizes t h a t under certain conditions use of an outside firm might prove to be a d v a n t a geous.
Price Range Lease-purchase is generally intended to m a k e possible the acquisition of expensive instruments without substantial initial outlay of capital. M o s t companies with lease or lease-purchase plans, therefore, h a v e a m i n i m u m figure. T h e minimum price of equipment
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VOL. 33, NO. 11, OCTOBER 1901
·
25 A
REPORT
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REAGENTS .
forexample^^r
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ANALYTICAL CHEMISTRY
subject to leasing ranges from $1000 to $6000, with $5000 as a median figure. Other factors t h a n cost price are important in this area. General Electric, for example, favors leasepurchase of items with high resale value and of a t y p e which is evolu tionary rather t h a n revolutionary. The instruments must also have a reasonably good m a r k e t as used items. Philips avoids leasing certain types of equipment such as high tension cables, evacuated devices such as x-ray tubes, or detectors.
For Highest Purity
REAGENTS . . for
example^^^P
Ammonium Compounds including : Ammonium Acetate, Crystal Ammonium Bicarbonate Ammonium Bisulfate, Crystal Ammonium Bisulfite,
R e t u r n of E q u i p m e n t
Concentrated Solution Ammonium Bromide, Granular
M a n y instrument companies t r y to avoid straight leasing programs, as they result in the manufacturer getting back used equipment, which he does not want. Under many lease-purchase plans, therefore, it is agreed t h a t the person leasing the equipment will retain it. T h e editors raised this question in discussions with in strument manufacturers because there are instances where a user will not need the equipment perma nently. A research worker, for ex ample, m a y get a 1-, 2-, or 3-year government research contract which requires special equipment which he will n o t need a t the end of the r e search contract. Unless his labora tory is already equipped to carry on the research project, or unless he can lease, outright purchase would be too expensive for the project in question. Most instrument manufacturers do n o t wish to get into short-term leasing. I t appears, therefore, t h a t unless straight leasing is available, those with relatively short-term programs would n o t be able to ob tain equipment on a lease basis. General Electric, under its M a x i service lease plan, arranges shortterm leases, particularly with gov ernment agencies which have to operate within currently available funds, a n d cannot resort to install ment buying. Short-term leases, however, generally have high rent als. G E policy provides for ex changing equipment. Emil Greiner does n o t t a k e back equipment; t h e lease here is t a n t a m o u n t to a sale.
Ammonium Carbonate, Lump Ammonium Chloride, Granular Ammonium Chromate, Powder Ammonium Citrate, Dibasic Ammonium Dichromate, Crystal Ammonium Fluoride, Crystal Ammonium Formate, Crystal Ammonium Hydroxide Ammonium Iodide Ammonium Molybdate, Crystal Ammonium Nitrate, Granular Ammonium Oxalate, Crystal Ammonium Persulfate, Crystal Ammonium Phosphate, Monobasic or Dibasic, Crystal Ammonium Sulfate, Fine Crystal or Crystal Ammonium Sulfide Solution, Light or Dark Ammonium Tartrate, Crystal Ammonium Thiocyanate, Crystal
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REAGENTS , for
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Potassium Compounds including: Potassium Acetate, Crystal Potassium Biphthalate, Crystal Potassium Bisulfate, Crystal Potassium Bisulfite, Meta, Crystal Potassium Borate, Tetra, Granular Potassium Carbonate, Anhydrous or Crystal Potassium Chloride, Crystal Potassium Chromate, Granular Potassium Cyanate, Crystal Potassium Cyanide, Granular Potassium Ferricyanide, Crystal Potassium Ferrocyanide, Crystal Potassium Fluoride, Anhydrous, Granular Potassium Fluoride, Crystal Potassium Hydroxide, Pellets or Sticks Potassium iodate, Crystalline Powder Potassium Iodide, Crystal or Granular Potassium Nitrate, Crystal Potassium Nitrite, Crystal or Sticks Potassium Oxalate, Crystal Potassium Periodate Potassium Permanganate, Crystal Potassium Persulfate Potassium Phosphate, Monobasic, Dibasic or Tribasic Potassium Pyrosulfate, Lump or Powder Potassium Tartrate, Crystal Potassium Sulfate, Crystal or Powder Potassium Sulfite Potassium Tartrate, Crystal Potassium Thiocyanate, Crystal Your Best S o u r c e is
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Jarrell-Ash, on the other hand, will take back equipment. In these cases, rental is s«t sufficiently high to cover interest and rehabilitation costs of the equipment. Used equipment is re-rented or sold on expiration of the lease. Perkin-Elmer's leasing organization will also take back equipment at the end of the lease period. Nuclear-Chicago points out that in the case of radioactivity measur ing equipment, technological devel opments lead to rapid obsolescence of equipment. Since there is no market for used equipment of this type, Nuclear-Chicago is not inter ested in any lease plan which pro vides for return of equipment. Philips' usual plan is a lease which provides for return of equip ment at the end of the lease period. This gives the user assurance that he can return the equipment if he does not need it or like it. How ever, experience indicates that shortly after leasing an item most users decide to keep it. They, therefore, convert the lease to a di rect purchase plan. To date, Philips has had only one or two leased units returned. Philips states further that leasing has not yet become a major factor in its operations. It feels that by offering both lease and rental plans, it gives its sales organization greater latitude in dealing with prospective customers. It has found out, however, that the me chanical details which must be worked out in setting up a lease often discourage the customer from entering into a lease. If the- cus tomer's laboratory staff has con vinced its management of the need for an instrument, there is a good possibility that the instrument will be purchased outright. In RCA's case, leasing terms are based on actual resale value, so they will take back leased items. RCA finds that many items are re turned as trade-ins on newer instru ments. Varian Associates' new leasing plan will provide for return of equipment. However, terms of their leases allow complete write off of the equipment within the 3year minimum lease period. If the demand arises for shorter
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REAGENTS , for
example^^^
Copper Compounds Including:
Cupric Acetate, Crystal Cupric Ammonium Chloride, Crystal Cupric Bromide, Crystal Cupric Carbonate, Basic Powder Cupric Chloride, Crystal Cupric Chloride, Anhydrous Cupric Nitrate, Crystal Cupric Oxide, Wire Form Cupric Oxide, Powder Cupric Potassium Chloride, Crystal Cupric Sulfate, Crystal Cupric Sulfate, Fine Crystal Cupric Sulfate, Anhydrous, Powder Cupric Sulfide, Powder Cuprous Chloride, Powder Cuprous Oxide, Red Powder Your Best Source
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VOL. 33, NO. 11, OCTOBER 1961
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REPORT FOR ANALYTICAL CHEMISTS
lease periods, Varian will probably meet this demand through use of a pool of used equipment. This plan will eliminate the need for complete write-off during the period of the short term lease. Varian feels t h a t its experience in this t y p e of m a r keting is too limited to establish a rigid policy; its concept is to t r y to satisfy any reasonable customer demand t h a t arises.
Terms of Contracts Vary Widely Since the survey by the editors covered a wide variety of instrument manufacturers, with greatly different types of equipment, it is not surprising t h a t terms in various leasing agreements should v a r y considerably. Coleman, for example, uses noncancellable lease contracts but gives the customer the right to purchase
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ANALYTICAL CHEMISTRY
with a large percentage return of invested rentals. I n the case of General Electric x-ray equipment, the leasing agreement spells out: (a) length of agreement; (b) fixed fee provision plus provision for extra fee for use of equipment beyond the normal 8hour work d a y ; (c) specific description of equipment and service to be provided; (d) responsibility for transportation, installation, and removal costs; (e) responsibility for insurance and personal property tax costs; and (/) "option to purchase" clause. While Emil Greiner follows standard leasing procedures, each lease takes into consideration the selling price of the instrument and the customer's needs. I t s plan, called the Trinock Plan, provides terms of one to five years, no down p a y m e n t or deposits, option to purchase at expiration of lease at 10% of the original m a r k e t value, and renewal of lease at expiration with a reduced rental based on the depreciated value of the instrument. Emil Greiner not only leases its own instruments but also those of other manufacturers. Various types of leases are used by Jarrell-Ash. Most are complicated. I n general, however, the duration of the lease and the rental charges are sufficient to cover installation and selling costs. Perkin-Elmer leasing is handled on an exclusive basis by the Horton E q u i p m e n t Leasing Division of Advance Industries, Inc. The leases are for 3-year terms. Since the life of instruments is much longer t h a n this period, the lease provides rental renewal and purchase options. This allows the expense of an instrument to be largely written off during the lease period and purchased later with a modest capital outlay. R a t e s for renewals of leases are nominal after expiration of the first lease term. Leases include accessories as well as the basic instruments and, where desired, can include local sales and use taxes. Freight charges are the responsibility of the customer. Typical terms for a 3-year P - E lease a r e : monthly rental of $32 per thousand dollars of face of lease, and no down payment. After
the lease has expired, the renewal rate is 5 % for the first y e a r ; 4 % for the second y e a r ; 3.5% for the third y e a r ; 3 % for the fourth y e a r ; and 2 % for the fifth year. Purchase option, if elected, is 10% of original cost of equipment. A specific example is a low cost infrared spectrophotometer which lists at $4500. T h e monthly rate is $32 X 4.5 = $144. Renewal rate for the first year after termination of the lease is $4500 X 5 % = $225. The cost to purchase after expiration of lease is $4500 X 10% = $450. Philips Electronics has a minimum leasing period of 30 months. Monthly payments are a given percentage of the list price and vary in accordance with the period of the lease. Philip's lease agreement is irrevocable. I t makes the lessee responsible for transportation costs for delivery and return and for return packing costs. T h e lessee also assumes responsibility for any liability arising from use of the equipment, as well as insurance costs (fire, theft, property damage, workmen's compensation, and, public liability). The lessee is also responsible for any taxes. Title to the equipment remains with Philips and, therefore, the lessor must keep the equipment free of any liens. In the event of default of terms of the lease, Philips m a y repossess the equipment at the expense of the lessee. RCA's plan calls for 5-year leases. I t provides for modification of the lease to allow addition of more equipment. I t includes renewal privileges a t substantially reduced rates. Service, freight, and installation supervision are provided by RCA. The R C A plan, ap_: plicable to purchases of $5000 or more, is used to obtain such equipment as electron microscopes and x-ray diffraction and spectroscopy equipment. Typical rates under a 5-year R C A lease are: $21 a month for each $1000 worth of equipment. If a purchase option is exercised during the lease period, the price is the initial sales price less 1.4% for each month's rental already paid. T h e lessee can reduce lease charges bv
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29
A
REPORT FOR ANALYTICAL CHEMISTS making some partial down payment. On expiration of the 5-year contract, the lessee m a y (1) purchase the instrument at 10% of the original sales price; (2) continue to lease a t a yearly cost of 7% of the original sales price: (3) return the equipment a t RCA's .expense; or (4) lease new equipment. A specific example is a lease for a basic x-ray diffraction unit with a list price of $16,000. The monthly
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ANALYTICAL CHEMISTRY
the cost would be $16,000 minus $5376 (1.4% per month for 24 mouths) = $10,624. In the case of an electron microscope listed a t $27,900, the monthly leasing cost for five years would be $585.90. Purchase a t expiration of lease would be $2790. Renewal of lease would be $1953 annually; and return of the equipment to R C A at the end of the five years would cost the customer nothing.
Trading In Used Equipment Some instrument manufacturers have approached leasing plans cautiously because they have not been equipped to handle used instruments which are returned at the expiration of a lease. Even without leases, manufacturers have faced the problem of trade-in equipment. A prospective customer, for example, might agree to buy a new instrument only if he could trade in an older model. This becomes even more complicated when the customer wishes to trade in an instrument made by a different manufacturer t h a n the one making the instrument he wishes to purchase. Most of these situations have been handled by the salesman and the home office on an individual basis. The analytical instrument industry is progressing rapidly and technological obsolescence is a factor. The market for used equipment is, therefore, somewhat limited for many types of instruments. One instrument company representative told the editors t h a t prior to initiating its formal leasing plan, it did trade in equipment usually in order to effect sale of new equipment. Each case, however, was handled on an individual basis. Once the used equipment was received, the problem of w h a t to do with it arose. The company solved the problem in p a r t by reconditioning some instruments and supplying salesmen with a list of such equipment. The salesmen sold this equipment to buyers who could not afford new equipment. I n other cases, they gave the equipment to colleges, universities, and the like. This can, however, lead to problems. In one case the college expected t h a t the manufacturer
detect and continually r e c o r d . . . +& would also provide free maintenance service and parts when needed. With the advent of leasing plans, most instrument manufacturers have established more definite policies. Some refuse to trade in any used equipment; others limit returns to leased items; still others will accept in tra'de almost any used instrument which is usable. General Electric and Jarrell-Ash will accept in t r a d e their own instruments as well as those of other manufacturers. Depending on the item, they will recondition and sell or recondition and lease as rebuilt equipment. Reconditioning and selling are preferred, however, since free servicing in such cases is limited to the w a r r a n t y periods. In the case of leased equipment, G E , for example, services the equipment indefinitely. G E feels t h a t its trade-in policy, particularly where it involves instruments made by other manufacturers, often creates a sale where there would have been none otherwise. E a c h sale broadens G E ' s market. Both G E and J a r rell-Ash state they can dispose of all used and reconditioned equipment, particularly if the trade-in allowance is reasonable. P e r k i n - E l m e r will t a k e older P - E items in trade. I t will either sell or lease such equipment or give the trade-ins to colleges or universities. These instruments are reconditioned in all cases. P - E rarely trades in items of other manufacturers. If it does, it generally gives these away or sells "as i s " to "sophisticated" customers. Even though handling used equipment is not profitable by itself, this trade-in policy, P - E feels, broadens the m a r k e t for new instruments. Philips does not ordinarily accept an older unit in trade but will help the owner to sell it. The t y p e of analytical instrumentation sold by Philips seldom comes into the used market, and when it does, there are m a n y prospective purchasers such as universities. Philips does not accept in t r a d e equipment manufactured by other companies. Philips sees no particular advantage in trading in used equipment. There are the disadvantages
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Circle No. 181 on Readers' Service Card
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31
A
REPORT
Pictured is a hypothetical complex ion with a negative charge of two, assembled from the latest Godfrey Models, which could be called "Iron (III) aquo bromo cyano fluoro thionophosphate."
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Circle No. 124 on Readers' Service Card 32 A
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ANALYTICAL CHEMISTRY
of completely reconditioning the in strument, extending a new instru ment warranty, and then having to sell a t less than the m a r k e t price of a new unit. Any design changes must be included in the warranty, which adds to the cost and decreases return in the investment. RCA and Baird-Atomic accept their own instruments in trade. With respect to instruments made by other companies, however, they handle these situations on an indi vidual basis. Baird-Atomic recon ditions and sells trade-in items. Varian has not established a firm policy regarding trade-ins. Gen erally it does not intend to accept trade-ins. If, however, the need for short-term leases develops, it may accept trade-ins to build up a pool of used instruments to meet this demand. Trade-in equipment could be re conditioned and, if not placed in a used instrument pool, could be sold at reduced rates to educational in stitutions. The final decision would be based on circumstances prevailing a t the time and would be governed in part by the nature of the instrument—that is, its porta bility and useful life. Varian can not visualize a situation where it would accept another manufac turer's instruments in trade. Varian feels t h a t trade-ins are good for the customer, as they re duce his outlay for new instruments and facilitate his disposal of old instruments. They arc good for universities and research groups who receive instruments at low prices. The manufacturer, how ever, has problems of warehousing, distribution, and inventory. These functions all detract from his major purpose in life—to develop the most advanced analytical instrumenta tion possible. Coleman, Emil Greiner, and N u clear-Chicago do not sell or lease used equipment, so they generally do not accept trade-ins. In rare instances where Emil Greiner does accept a trade-in, the trade-in value is so nominal that it is donated as a tax-deductible contribution to some school or institution. The obso lescence factor, Nuclear-Chicago feels, rules against its accepting trade-ins.
