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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C, 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 19, 1995
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FINOVA CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-7543 94-1278569
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
1850 NORTH CENTRAL AVENUE, PHOENIX, ARIZONA 85004-2209
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 602/207-6900
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Item 5. Other Events.
FINOVA Capital Corporation (formerly known as Greyhound Financial
Corporation) today announced revenues, net income and selected
financial data and ratios for the first quarter ended March 31, 1995
(unaudited).
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibit Title
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<S> <C>
28 Press Release of FINOVA Capital Corporation
dated April 19, 1995
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FINOVA CAPITAL CORPORATION
(Registrant)
Dated: April 19, 1995 By /s/ Bruno A. Marszowski
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Bruno A. Marszowski, Senior Vice President,
Chief Financial Officer Principal Financial
Officer/Authorized Officer
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EXHIBIT 28
Robert J. Fitzsimmons
For Immediate Release
602/ 207-5759
4/19/95
THESE ARE THE EARNINGS FOR FINOVA CAPITAL CORPORATION
THE PRINCIPAL SUBSIDIARY OF THE FINOVA GROUP INC.
WHOSE EARNINGS WERE RELEASED APRIL 18, 1995
FINOVA CAPITAL CORPORATION
ANNOUNCES FIRST QUARTER RESULTS
PHOENIX, Arizona, April 19, 1995 -- FINOVA Capital Corporation (formerly
known as Greyhound Financial Corporation) (the "Company") today reported net
income of $22.4 million for the first quarter of 1995 compared to $11.6 million
for the first quarter of 1994, a 93% increase in net income.
Sam Eichenfield, President, Chairman and Chief Executive Officer of
FINOVA Capital, said he was encouraged by the amount of new business added
during the first quarter and the build up of the backlog of new business to
just under $1 billion. During the first quarter, the Company generated $478
million of new loan and lease business (up 87% from 1994), as well as $381
million of factoring volume, almost double the 1994 level. This new business
activity plus $117 million of assets acquired during the quarter resulted in
net portfolio growth of $322 million or an annualized growth rate of 23%.
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Interest margins earned contributed significantly to the performance
for the quarter but, as a percent of average earning assets, declined from 5.9%
for the fourth quarter of 1994 to 5.7% for the first quarter of 1995. "This
slight decline in interest margins earned is not indicative of any trend, but
is relative more to the fact that growth of funds employed occurred late in the
quarter without the full benefit of related interest margins earned on assets
for the three month period," Mr. Eichenfield said. A substantial portion of
the growth in funds employed during the quarter occurred in March. As a
result, the interest margin for the first quarter of 1995 includes only a
fraction of the interest margin expected to be earned on the assets added
during the quarter. While strong, interest margins for the quarter were
expected to decline slightly from the 6% level reported for the full year 1994.
In addition to the timing of new business, the expected margin decline
resulted, in part, from the cost of interest rate hedging activities during the
first quarter of 1995. The Company helped protect its margins on floating-rate
transactions by hedging an additional $750 million of floating-rate debt to
lock in the spread between the Company's lending and borrowing rates. With
these agreements, the Company has protected its margins on $1.5 billion of
floating-rate transactions (or approximately 50% of its floating-rate
liabilities) during the respective hedge terms. Growth in interest margins
more than offset the higher provisions for possible credit losses and the
higher selling, administrative and other operating expenses ("operating
expenses") in the 1995 period.
The Company recorded a greater loss provision in 1995 due to the
increased size of the portfolio. Reserves and accrued liabilities for possible
credit losses at March 31, 1995 represented 2.0% of managed assets and 70.9% of
nonearning assets.
The higher operating expenses are primarily attributable to the
additions of TriCon Capital, acquired on April 30, 1994, and Ambassador
Factors, acquired on February 14, 1994, as well as to expenses incurred in
connection with the higher volume of new business added during the quarter.
The running rate of these expenses, measured as a percent of interest margins
earned, was 47.2% (for the combined entities) in 1995, an increase over 42.6%
in 1994. It should be noted that
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the ratio relative to operating expenses was also impacted by the fact that a
full quarter's spread was not reflected for the volume of business added during
the period.
Income taxes were higher in the first quarter of 1995 due to an
increase in income before income taxes and to a higher tax rate in effect during
the first quarter of 1995 (40.3% in 1995 vs. 37.8% in 1994).
FINOVA Capital Corporation is a Phoenix-based major domestic commercial
finance company providing secured financing and leasing products to small and
medium sized businesses from $500,000 to $35 million. FINOVA also offers
inventory and sales financing programs to manufacturers, distributors and
dealers nationwide.
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FINOVA CAPITAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES
SUMMARY OF CONSOLIDATED INCOME
(UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
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1995 1994
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<S> <C> <C>
Interest earned from financing transactions $174,757 $73,961
Interest expense 84,524 33,862
Depreciation 12,743 1,957
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Interest margins earned 77,490 38,142
Provision for possible credit losses 6,400 3,250
Gains on sale of assets 2,980 3
Selling, administrative and other operating expenses 36,575 16,241
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Income before income taxes 37,495 18,654
Income taxes 15,127 7,058
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Net Income $ 22,368 $11,596
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FINOVA CAPITAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA AND RATIOS (UNAUDITED) (1)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Year
or at Ended
March 31, or at
December
31,
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1995 1994 1994
FINANCIAL DATA: ---------- ----------- ----------
<S> <C> <C> <C>
Average funds employed (AFE) and
securitizations (2) $6,060,470 $3,059,227 $4,629,578
Ending funds employed (EFE) 5,989,461 3,271,882 5,667,644
Securitizations (2) 210,448 253,386
Average earning assets (3) 5,430,923 2,723,183 4,064,971
Reserve and accrued liabilities (4) for
possible credit losses 122,953 73,057 122,233
Nonaccruing assets 173,493 122,707 168,761
Total debt 4,847,273 2,510,590 4,573,354
Stockholders' equity 800,697 392,823 781,986
New business 477,791 254,701 1,799,331
Backlog (includes lines of credit) 955,656 486,242 764,326
Factoring volume 381,294 130,749 1,129,936
Write-offs 8,885 5,106 35,127
RATIOS:
Write-offs (annualized) as a % of AFE and
average securitizations (2) 0.6% 0.7% 0.8%
Nonaccruing assets as a % of EFE and
securitizations (2) 2.8% 3.8% 2.9%
Reserve and accrued liabilities (4) for possible
credit losses as a % of:
Ending funds employed and securitizations (2) 2.0% 2.2% 2.1%
Nonaccruing assets 70.9% 59.5% 72.4%
Interest margins earned (annualized) as a %
of average earning assets (3) 5.7% 5.6% 6.0%
Selling, administrative and other operating
expenses as a % of interest margins earned 47.2% 42.6% 46.1%
Total debt to equity 6.05 6.39 5.85
</TABLE>
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(1) Includes financial results from Ambassador and TriCon subsequent to their
acquisitions on February 14, 1994 and April 30, 1994, respectively.
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(2) Securitizations are assets sold under securitization agreements and
managed by the Company. Average contracts securitized were $232 million
and $183 million for March 31, 1995 and December 31, 1994, respectively.
(3) Average earning assets equal AFE less average deferred taxes on leveraged
leases ($227 million, $223 million and $225 million for March 31, 1995 and
1994 and December 31, 1994, respectively) and average nonaccruing assets
($171 million, $113 million and $157 million for March 31, 1995 and 1994
and December 31, 1994, respectively).
(4) Accrued liabilities of $13 million at March 31, 1995 and December 31, 1994
represent an allowance for estimated losses under certain recourse
provisions of securitizations.
