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 22, 1998
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FINOVA CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-11011 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, 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 announced revenues, net income and selected
financial data and ratios for the first quarter ended March 31, 1998
(unaudited).
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
Exhibits Title
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28 Press Release of FINOVA Capital Corporation
dated April 22, 1998
1
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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 24, 1998 By /s/ Bruno A. Marszowski
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Bruno A. Marszowski, Senior Vice President,
Chief Financial Officer and Controller
Principal Financial Officer/Authorized Officer
2
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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 APRIL 21, 1998
The FINOVA Capital Corporation
Announces 22% Increase in Net Income
For First Quarter of 1998
PHOENIX, Ariz., Apr. 22, 1998 - FINOVA Capital Corporation today announced
record net income of $40.0 million for the quarter ended March 31, 1998,
compared to $32.8 million earned in the first quarter of 1997, a 22% increase in
net income
"FINOVA's results for the first quarter reflect both higher returns from
our funded portfolio and exceptional growth in our fee-based businesses,"
commented Sam Eichenfield, chairman and chief executive officer of FINOVA.
Volume-based fee income, including the contribution of FINOVA Realty Capital,
nearly tripled to $22.2 million in the first quarter of 1998 compared to $7.8
million a year ago (excluding FINOVA Realty Capital, volume-based income rose
65%).
Interest margins earned grew to $108.7 million for the first three months
of 1998 compared to $95.7 million in 1997, resulting from consistent yields and
16% growth in managed assets over the last twelve months.
During the three months ended March 31, 1998, the company recorded
provisions for credit losses totaling $9.5 million, resulting in reserves for
credit losses of 2.0% of ending managed assets (excluding participations) at
March 31, 1998, the same percentage as a year ago. Write-offs for the first
quarter totaled $13.9 million, including $9.2 million of previously identified
and specifically reserved accounts. "Nonearning assets increased modestly from
2.1% to 2.2% during the first quarter and remain well below the company's target
nonearnings level of 3% to 4%," noted Eichenfield.
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"With the addition of over 80 business development officers from the FINOVA
Realty Capital acquisition, we are not only excited about our potential in the
mortgage banking arena, but also about the cross-selling opportunities this new
network should bring us," continued Eichenfield. "We are still sorting out the
ultimate impact of these additional business development officers and their
support staff on our operating ratio; however, it was encouraging to see that
operating expenses for the first quarter of 1998 were 43.5% of interest margins
and fees earned, compared to 44.3% for the first three months of 1997."
FINOVA Capital Corporation is one of the nation's leading financial
services companies focused on providing a broad range of capital solutions
primarily to midsize business. FINOVA is headquartered in Phoenix with business
development offices throughout the U.S. and in London, U.K., and Toronto,
Canada.
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FINOVA Capital Corporation
and Consolidated Subsidiaries
Summary of Consolidated Income
(Unaudited)
(Dollars in Thousands)
Quarter Ended
March 31,
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1998 1997
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Interest earned from financing transactions $ 203,736 $ 183,328
Operating lease income 32,663 25,965
Interest expense (110,572) (97,172)
Operating lease depreciation (17,170) (16,449)
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Interest margins earned 108,657 95,672
Volume-based fee income 22,156 7,784
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130,813 103,456
Provision for credit losses (9,500) (8,000)
Gains on disposal of assets 1,223 3,233
Selling, administrative and other operating expenses (56,958) (45,878)
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Income before income taxes 65,578 52,811
Income taxes (25,555) (19,998)
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Net Income $ 40,023 $ 32,813
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FINOVA Capital Corporation
Selected Consolidated Financial Data and Ratios (Unaudited) (1)
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of
As of March 31, December 31,
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FINANCIAL POSITION: 1998 1997 1997
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<S> <C> <C> <C>
Ending funds employed (EFE) $ 8,667,889 $ 7,479,373 $ 8,399,456
Securitizations and participations sold (2) 464,550 380,994 457,967
------------ ------------ ------------
Total managed assets 9,132,439 7,860,367 8,857,423
Reserve for credit losses 175,967 152,545 177,088
Nonaccruing assets 195,267 158,255 187,356
Nonaccruing assets as % of managed assets (4) 2.2% 2.0% 2.1%
Reserve for credit losses as a % of:
Ending managed assets (4) 2.0% 2.0% 2.0%
Nonaccruing assets 90.1% 96.4% 94.5%
Total debt $ 7,115,327 $ 6,010,987 $ 6,764,581
Common shareowner's equity 1,292,135 1,093,677 1,260,068
Total debt to equity 5.51x 5.50x 5.37x
Backlog 1,842,545 1,544,051 1,601,218
</TABLE>
<TABLE>
<CAPTION>
For the Year
For the Quarter Ended Ended
March 31, December 31,
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PERFORMANCE HIGHLIGHTS: 1998 1997 1997
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<S> <C> <C> <C>
Average managed assets $ 8,901,429 $ 7,735,154 $ 8,153,076
Average earning assets (3) 8,001,665 6,957,488 7,356,845
New business 692,080 611,634 3,311,105
Fee-based volume 1,804,432 815,251 4,532,494
Write-offs 13,912 5,300 45,487
Write-offs (annualized) as a % of
average managed assets (4) 0.63% 0.28% 0.56%
Interest margins and fees (annualized) as
a % of average earning assets 6.5% 5.9% 6.2%
Interest margins earned
(annualized) as a % of average
earning assets (5) 5.4% 5.5% 5.6%
Selling, administrative and other
operating expenses as a % of
interest margins and fees earned 43.5% 44.3% 41.8%
</TABLE>
(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.
(4) Excludes participations sold in which the Company has transferred credit
risk.
(5) Restated to exclude volume-based fee income previously included in interest
margins earned.