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): July 16, 1997
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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 of Other Jurisdiction Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
1850 NORTH CENTRAL AVENUE, P.O. BOX 2209, 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 second
quarter ended June 30, 1997 (unaudited).
Item 7. Financial Statements and Exhibits:
(c) Exhibits:
Exhibits Title
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28 Press Release of FINOVA Capital Corporation
dated July 16, 1997
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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: July 16, 1997 by /s/ Samuel L. Eichenfield
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Samuel L. Eichenfield, Chief Executive Officer, President
and Chairman of the Board
Authorized Officer
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EXHIBIT 28
Robert J. Fitzsimmons Embargo until
602/ 207-5759 8:00 a.m. (E.D.T.)
THESE ARE THE EARNINGS FOR FINOVA CAPITAL CORPORATION
THE PRINCIPAL SUBSIDIARY OF THE FINOVA GROUP INC. WHOSE
EARNINGS WERE RELEASED JULY 15, 1997
FINOVA Capital Corporation
Announces 23% Increase in Net Income
and Record New Business For Second Quarter of 1997
PHOENIX, Ariz., July 16, 1997 -- FINOVA Capital Corporation today announced net
income of $34.7 million for the quarter ended June 30, 1997, a 23% increase over
$28.1 million of net income for the second quarter of 1996.
The company also reported all-time highs of $951 million in new loan
and lease originations and $862 million in fee-based volume generated during the
quarter, with only a modest decline in the backlog to $1.4 billion. As a result,
managed assets at the end of the quarter increased 16.5% year over year and grew
at an annualized rate of 18.3% during the quarter.
During the second quarter of 1997, the company's interest margins
earned as a percentage of average earning assets rose to 6.0% from 5.8% in the
second quarter of 1996. "The record new business volumes and increasing margins
earned in the second quarter underscore FINOVA's ability to grow the business
without sacrificing profitability," said FINOVA Chairman and CEO Sam
Eichenfield. "FINOVA continues to demonstrate the strength of its market
position and its ability to provide shareholders with increasing returns on
their investment in the company."
Loss provisions for the quarter were $18.3 million compared to $7.9
million in 1996 and exceeded write-offs by 58%.
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"In addition, the company's leasing portfolio continued to demonstrate
its ability to generate gains on sale of assets," said Eichenfield. Gains for
the second quarter of 1997 were $10.5 million, compared to $1.3 million in 1996.
For the first six months of 1997, total gains were $13.7 million compared to
$8.0 million during the same period a year ago. Included in gains for the second
quarter of 1997 was the sale of the company's investment in a leveraged lease
transaction.
"While experiencing strong growth, we have also continued our
commitment to quality and efficiency, as evidenced by continued strong portfolio
performance and productivity measures," continued Eichenfield. Nonaccruing
assets represented 2.0% of managed assets at June 30, 1997, compared to 2.2% at
June 30, 1996, and reserves as a percentage of nonaccruing assets increased to
96.3% from 87.9% a year ago. Selling, general and administrative expenses were
42.8% of interest margins earned in the second quarter of 1997, in line with
41.9% for the year ended December 31, 1996 and somewhat better than the 44.3%
reported for the first quarter of 1997.
Income taxes for the second quarter were higher in 1997 due to the
increase in pre-tax income. In comparison to the first quarter of 1997, the
effective tax rate for the period was lower as a result of certain tax credits.
FINOVA Capital Corporation is a Phoenix-based major domestic commercial
finance company providing a broad range of secured financing and leasing
products from $500,000 to $35 million to midsize business.
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 Six Months Ended
June 30, June 30,
----------------------------------- ------------------------------------
1997 1996 1997 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Interest earned from financing
transactions $ 199,541 $ 167,593 $ 390,653 $ 335,272
Operating lease income 28,946 25,042 54,911 48,015
Interest expense (101,883) (89,718) (199,055) (177,942)
Operating lease depreciation (17,610) (14,625) (34,059) (31,903)
---------------- ---------------- ---------------- ----------------
Interest margins earned 108,994 88,292 212,450 173,442
Provision for possible credit losses (18,300) (7,876) (26,300) (19,500)
Gains on sale of assets 10,468 1,315 13,701 8,045
Selling, administrative and other
operating expenses (46,612) (34,488) (92,490) (72,075)
---------------- ---------------- ---------------- ----------------
Income before income taxes 54,550 47,243 107,361 89,912
Income taxes (19,853) (18,391) (39,851) (34,304)
---------------- ---------------- ---------------- ----------------
Income from continuing operations 34,697 28,852 67,510 55,608
Loss from discontinued operations ---- (731) --- (366)
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Net Income $ 34,697 $ 28,121 $ 67,510 $ 55,242
================ ================ ================ ================
</TABLE>
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FINOVA Capital Corporation
Selected Consolidated Financial Data and Ratios (Unaudited) (1)
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of
As of June 30, December 31,
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FINANCIAL POSITION: 1997 1996 1996
--------------- --------------- ------------------
<S> <C> <C> <C>
Ending funds employed (EFE) (2) $ 7,826,196 $ 6,697,013 $ 7,298,759
Securitizations and participations sold (3) 394,025 359,868 364,546
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Total managed assets (2) 8,220,221 7,056,881 7,663,305
Reserve for possible credit losses (2) 159,747 136,917 148,693
Nonaccruing assets (2) 165,885 155,840 155,505
Nonaccruing assets as % of managed assets (4) 2.0% 2.2% 2.0%
Reserve for possible credit losses as a % of:
Ending managed assets (4) 2.0% 2.0% 2.0%
Nonaccruing assets 96.3% 87.9% 95.6%
Total debt $ 6,338,122 $ 5,970,459 $ 5,850,223
Stockholder's equity 1,122,162 898,830 1,069,043
Total debt to equity 5.65x 6.64x 5.47x
Backlog 1,440,831 1,213,286 1,477,239
</TABLE>
<TABLE>
<CAPTION>
For the Second Quarter Ended For the Six Months Ended
June 30, June 30,
-------------------------------- ---------------------------------
PERFORMANCE HIGHLIGHTS: 1997 1996 1997 1996
-------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Average managed assets (2) $ 8,023,255 $ 6,880,673 $ 7,881,895 $ 6,768,305
Average earning assets (5) (2) 7,235,636 6,144,342 7,099,386 6,082,728
New business (2) 951,236 584,941 1,562,870 1,234,347
Fee-based volume 862,442 638,415 1,677,673 1,332,508
Write-offs (2) 11,558 7,382 16,858 15,240
Write-offs (annualized) as a % of
average managed assets (4) 0.58% 0.43% 0.43% 0.45%
Interest margins earned
(annualized) as a % of average
earning assets 6.0% 5.8% 6.0% 5.7%
Selling, administrative and other
operating expenses as a % of
interest margins earned 42.8% 39.1% 43.5% 41.6%
</TABLE>
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(1) Averages for the periods presented are based on month-end balances.
(2) Excludes discontinued operations disposed of during 1996.
(3) Securitizations are assets sold under securitization agreements and managed
by the Company.
(4) Excludes participations sold in which the Company has transferred credit
risk.
(5) Average earning assets equal average funds employed less average deferred
taxes on leveraged leases and average nonaccruing assets.
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