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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): October 17, 1996
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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 today announced revenues, net income and
selected financial data and ratios for the third quarter ended
September 30, 1996 (unaudited).
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
Exhibits Title
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28 Press Release of FINOVA Capital
Corporation dated October 17, 1996
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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: October 17, 1996 by /s/ Bruno A. Marszowski
---------------------------------------------
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
THESE ARE THE EARNINGS FOR FINOVA CAPITAL CORPORATION
THE PRINCIPAL SUBSIDIARY OF THE FINOVA GROUP INC.
WHOSE EARNINGS WERE RELEASED OCTOBER 16, 1996
FINOVA CAPITAL CORPORATION
ANNOUNCES RECORD QUARTER.
NET INCOME FOR THE THIRD QUARTER
INCREASED 18%
PHOENIX, Ariz., Oct. 17, 1996 -- FINOVA Capital Corporation today reported
record net income of $29.8 million for the third quarter of 1996 compared to
$25.2 million for the third quarter of 1995, an 18% increase in net income.
Net income for the first nine months of 1996 was $85.0 million compared
to $71.1 million for the first nine months of 1995, an increase of 19% in net
income.
Sam Eichenfield, chairman and chief executive officer of FINOVA, said,
"The Company's results reflect FINOVA's continuing success in achieving
profitable growth while maintaining credit discipline and operating efficiency."
Managed assets increased to $8.0 billion at September 30, 1996, representing an
18%, year over year, increase. This growth was driven by new business and
factoring volume of $1.49 billion and $4.22 billion for the third quarter and
first nine months of 1996, respectively, representing 23% and 39% increases over
the 1995 periods. Meanwhile, backlog at September 30, 1996 was at an all time
high of $1.44 billion, a 28% increase over 1995. Interest margins earned
improved to 6.0% for the third quarter and 5.9% for the first nine months of
1996, compared to 5.8% for both the third quarter and the first nine months of
1995.
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Eichenfield also noted, "the quality of FINOVA's portfolio is evident
in the continuing low level of account write-offs and nonearning assets."
Write-offs as an annualized percentage of average managed assets, which continue
to be within the Company's annual guidelines of 0.50% to 0.60%, were 0.56% for
the first nine months of 1996, compared to 0.49% for the first nine months of
1995. Nonaccruing assets were 2.2% of ending managed assets, compared to 2.5% at
September 30, 1995. Reserves for possible credit losses remained at 2.0% of
managed assets and increased to 91% of nonaccruing assets at September 30, 1996,
compared to 78% at the end of the third quarter of 1995.
Operating expenses for the third quarter of 1996 were higher than for
the comparable period in 1995, principally due to higher incentive compensation
accruals related to improved results and stock performance and the higher volume
of new business added during the year. However, operating expenses declined to
43.7% of interest margins earned for the third quarter of 1996 compared to 45.9%
one year ago and improved to 44.0% for the first nine months of 1996 from 46.0%
in 1995.
Income taxes were higher primarily due to the increase in pre-tax
income. The effective tax rate for the first nine months of 1996 was 37.8%,
slightly lower than the 1995 rate of 38.3%.
FINOVA Capital Corporation is a Phoenix-based major domestic commercial
finance company providing secured financing and leasing products from $500,000
to $35 million to mid-size businesses. FINOVA also offers inventory and sales
financing programs to manufacturers, distributors and dealers nationwide.
For more information about FINOVA Capital Corporation, visit the
company's Website at www.finova.com.
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FINOVA Capital Corporation
and Consolidated Subsidiaries
Summary of Consolidated Income
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------------- ------------------------------
1996 1995 1996 1995
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Interest earned from
financing transactions $ 197,998 $ 171,004 $ 569,091 $ 489,335
Operating lease income 23,356 21,283 71,371 62,402
Interest expense (101,858) (93,136) (298,158) (267,857)
Operating lease depreciation (15,247) (12,980) (47,150) (38,891)
---------- --------- ---------- ----------
Interest margins earned 104,249 86,171 295,154 244,989
Provision for possible
credit losses (14,050) (10,800) (38,800) (28,800)
Gains on sale of assets 2,714 4,646 10,253 11,699
Selling, administrative and
other operating expenses (45,598) (39,583) (129,992) (112,578)
---------- --------- ---------- ----------
Income before income
taxes 47,315 40,434 136,615 115,310
Income taxes (17,552) (15,284) (51,610) (44,163)
---------- --------- ---------- ----------
Net Income $ 29,763 $ 25,150 $ 85,005 $ 71,147
========== ========= ========== ==========
</TABLE>
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FINOVA Capital Corporation
Selected Consolidated Financial Data and Ratios (Unaudited) (1)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended
or at
As of September 30, Dec. 31,
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FINANCIAL POSITION: 1996 1995 1995
----------- ----------- -----------
<S> <C> <C> <C>
Ending funds employed (EFE) $7,635,276 $6,609,220 $ 6,819,057
Securitizations (2) 334,917 133,051 303,304
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Total managed assets 7,970,193 6,742,271 7,122,361
Reserve for possible credit losses 156,339 131,564 140,333
Nonaccruing assets 172,766 169,180 167,872
Nonaccruing assets as % of managed assets 2.2% 2.5% 2.4%
Reserve for possible credit losses as a % of:
Ending managed assets 2.0% 2.0% 2.0%
Nonaccruing assets 90.5% 77.8% 83.6%
Total debt $6,350,043 $5,403,323 $5,649,368
Stockholder's equity 922,451 836,415 855,579
Total debt to equity 6.88x 6.46x 6.60x
Backlog $1,441,663 $1,127,717 $1,070,573
</TABLE>
<TABLE>
<CAPTION>
For the Quarter Ended For the Nine Months Ended
September 30, September 30,
----------------------------- --------------------------
PERFORMANCE HIGHLIGHTS: 1996 1995 1996 1995
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Average managed assets $7,693,684 $6,480,053 $7,430,342 $6,243,118
Average earning assets (3) 6,935,008 5,934,645 6,686,355 5,655,656
New business 707,468 685,323 2,099,322 1,689,939
Factoring volume/floor planning 785,510 528,140 2,118,018 1,337,909
Write-offs 10,983 7,001 31,007 22,868
Write-offs (annualized) as a % of
average managed assets 0.6% 0.4% 0.6% 0.5%
Interest margins earned
(annualized) as a % of average
earning assets 6.0% 5.8% 5.9% 5.8%
Selling, administrative and other
operating expenses as a % of
interest margins earned 43.7% 45.9% 44.0% 46.0%
</TABLE>
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(1) Averages for the periods presented are based on month-end balances.
(2) Securitizations are assets sold under securitization agreements and
managed by the Company.
(3) Average earning assets equal average funds employed less (average
deferred taxes on leveraged leases and average nonaccruing assets).
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