FINOVA CAPITAL CORP
8-K, 2000-01-21
SHORT-TERM BUSINESS CREDIT INSTITUTIONS
Previous: GRAY COMMUNICATIONS SYSTEMS INC /GA/, SC 13G, 2000-01-21
Next: GYRODYNE COMPANY OF AMERICA INC, SC 13D/A, 2000-01-21



                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C, 20549

                                   ----------


                                    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): January 21, 2000



                           FINOVA CAPITAL CORPORATION.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)




         DELAWARE                    1-7543                      94-1278569
- ----------------------------      ------------               -------------------
(State or Other Jurisdiction      (Commission                 (I.R.S. Employer
       of Incorporation)          File Number)               Identification No.)



4800 NORTH SCOTTSDALE ROAD, SCOTTSDALE ARIZONA                    85251-7623
- ----------------------------------------------                    ----------
   (Address of principal executive offices)                       (Zip Code)



Registrant's telephone number, including area code: 480/636-4800
<PAGE>
ITEM 5. OTHER EVENTS.

     A.   On January 21, 2000, FINOVA Capital  Corporation  announced  revenues,
          net  income  and  selected  financial  data and  ratios for the fourth
          quarter and year ended December 31, 1999 (unaudited).

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

     (c) Exhibits:

         Exhibits                               Title
         --------                               -----

         99                Press Release,  issued by FINOVA Capital  Corporation
                           dated January 21, 2000.
<PAGE>
                                   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: January 21, 2000        By /s/ Bruno A. Marszowski
                                  -------------------------------
                                  Bruno A. Marszowski, Senior Vice President,
                                  Chief Financial Officer and Controller
                                  Principal Financial Officer/Authorized Officer

                                   EXHIBIT 99


CONTACT: Stuart Tashlik                           Embargo until January 21, 2000
         Senior V.P.-Planning & Communications    8:00 a.m. E.S.T.
         480/636-5355


              THESE ARE THE EARNINGS FOR FINOVA CAPITAL CORPORATION
               THE PRINCIPAL SUBSIDIARY OF THE FINOVA GROUP INC.,
                  WHOSE EARNINGS WERE RELEASED JANUARY 20, 2000

                           FINOVA CAPITAL CORPORATION
              ANNOUNCES 33% INCREASE AND RECORD NET INCOME FOR 1999


SCOTTSDALE,  ARIZ., JAN. 21, 2000 -- FINOVA Capital  Corporation today announced
record net income of $219.0  million for the year ended Dec. 31, 1999,  compared
to $164.1 million in 1998, a 33% increase.

1999 HIGHLIGHTS:

     +    Record net income up 33% from 1998

     +    Managed assets increased 29% to $13.6 billion

     +    Three acquisitions totaling $1.1 billion successfully closed

     +    New business originations reach $4.9 billion, a 22% increase over 1998

     +    Fee-based volume declines to $6.3 billion, a 13% reduction from 1998

     +    FINOVA and J.P. Morgan form "Preferred  Partner  Program" to originate
          and securitize commercial mortgage backed securities (CMBS loans)

                                       Fourth Quarter              Year
                                      ----------------       ----------------
                                       1999      1998         1999      1998
                                       ----      ----         ----      ----
     Net income (in millions)         $57.6     $39.2        $219.0    $164.1
     Operating margin                   5.7%      6.3%          5.8%      6.3%
     Efficiency ratio                  37.5%     36.4%         37.0%     38.3%

     Net  income  for the  fourth  quarter  of 1999 was a record  $57.6  million
compared to $39.2 million for the fourth quarter of 1998, a 47% increase.
<PAGE>
     Sam  Eichenfield,  FINOVA  Chairman and CEO,  said, "I am very pleased with
FINOVA's  performance in 1999. Our  accomplishments  included three acquisitions
that  rounded out certain  product  lines of the  company;  a Preferred  Partner
Program with J. P. Morgan to free our balance sheet of the CMBS product;  record
new business volume and portfolio  growth;  a significant  increase in earnings;
and,  recognition  for once again being one of the best  companies in America to
work."

     The company  culminated the year with a record $1.4 billion of new business
in the fourth quarter,  the sixth consecutive  quarter it exceeded $1 billion in
new lease and loan  business.  New  business for the year was $4.9  billion,  an
increase of $886  million  over the $4.0  billion  generated  in 1998.  This new
business,  combined  with acquired  assets of $1.1 billion,  resulted in managed
assets  growing by $3.0  billion to $13.6  billion at Dec.  31,  1999 from $10.6
billion at the end of 1998, a 29% increase.  Excluding acquired assets,  managed
assets  grew by $1.9  billion,  or 18%  during  1999.  FINOVA's  backlog  of new
business  increased to $2.0 billion at Dec. 31, 1999,  from $1.9 billion at Dec.
31, 1998,  but declined from $2.4 billion at the end of the third quarter due to
the changes made at FINOVA Realty Capital  wherein new CMBS deals will be funded
by our partner J.P. Morgan and not flow through FINOVA's backlog.

         Interest  margins  earned  improved  by $108  million  in  1999,  a 24%
increase  primarily  due to portfolio  growth.  As a percent of average  earning
assets, interest margins earned declined to 5.3% for both the fourth quarter and
full-year  1999 from 5.4% for the  comparable  1998  periods.  The  reduction is
attributable to an increase in FINOVA's cost of funds, resulting from efforts to
extend maturities on short-term  borrowings over year-end 1999, thereby avoiding
liquidity issues in connection with Y2K concerns,  and to higher cost fixed-rate
debt raised in November 1999.

     Volume-based  fees were down by $8.0 million in the fourth  quarter of 1999
when  compared  to the fourth  quarter of 1998  ($11.8  million in 1999 vs $19.8
million in 1998) and down by $27.6  million for the full year ($50.1  million in
1999 vs $77.7 million in 1998) due to lower fee-based volume in 1999 and returns
on that  volume  that  were  lower by 0.27%  (0.80%  in 1999 vs 1.07% in  1998).
Fee-based  volumes  were down $382  million in the  fourth  quarter of 1999 when
compared to 1998's fourth quarter  ($1.475  billion  compared to $1.857 billion)
and down by $942  million for the full year ($6.315  billion  compared to $7.257
billion) principally due to lower volume originated by FINOVA Realty Capital.
<PAGE>
     Portfolio  quality,  measured by nonaccruing assets as a percent of managed
assets,  was 2.2% at Dec. 31, 1999 up from 2.0% at Dec 31,  1998,  but down from
2.3% at Sept.  30, 1999.  Nonaccruing  assets at Dec. 31, 1999 were $295 million
compared to $205  million a year ago. Net  write-offs  for the full year in 1999
were  approximately  the same as in 1998 at $56.9  million but down slightly for
the fourth quarter ($17.3 million in 1999 compared to $19.8 million in 1998). As
a percent of average managed assets,  net write-offs in 1999 were 0.48% compared
to 0.60% in 1998.  Reserves for credit losses were 2.0% of ending managed assets
at the end of both 1998 and 1999.  Loss  provisions  were lower in 1999 for both
the fourth quarter ($24.8 million in 1999 compared to $37.7 million in 1998) and
the full year ($76.8  million in 1999 vs $82.2 million in 1998).  Changes in the
reserve and resulting loss provisions are impacted by net write-offs, changes in
the portfolio and acquisitions.

     Gains on  disposal of assets  were $22.0  million in the fourth  quarter of
1999, up from $12.5  million for the  comparable  1998 period,  and for the year
were $68.0  million in 1999  compared  to $27.9  million in 1998.  Gains in 1999
included $21 million from the sale of  residuals  coming off lease,  $35 million
from sale of investments and $12 million of CMBS gains.

     Operating efficiency, which is the ratio of operating expenses to operating
margin  and gains,  was 37.0% in 1999,  an  improvement  from the 38.3% in 1998.
Operating  expenses were $253.8  million in 1999, up from $216.7 million in 1998
primarily  due to higher  personnel  costs related to  acquisitions  in 1999 and
higher  sales  incentive  compensation  related to the  increased  new  business
levels.

     "In  summary,  FINOVA  enjoyed  another  fine  year  in  1999  and is  well
positioned for 2000 and the future," Eichenfield said.

     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 Scottsdale, Ariz. with
business  development  offices  throughout  the U.S.  and in London,  U.K.,  and
Toronto,  Canada.  FINOVA  was once  again  named  one of  FORTUNE'S  "Best  100
Companies To Work For In America."  For more  information,  visit the  company's
website at www.finova.com.

                                       ###
<PAGE>
                           FINOVA Capital Corporation
                          and Consolidated Subsidiaries
                         Summary of Consolidated Income
                                   (Unaudited)
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                  Quarter Ended           Twelve Months Ended
                                                   December 31,              December 31,
                                              ----------------------    ------------------------
                                                1999         1998           1999         1998
                                              ---------    ---------    -----------    ---------
<S>                                           <C>          <C>          <C>            <C>
Interest earned from financing transactions   $ 312,821    $ 247,467    $ 1,114,181    $ 891,571
Operating lease income                           28,213       28,095        114,462      116,202
Interest expense                               (172,380)    (131,268)      (592,858)    (478,177)
Operating lease depreciation                    (14,606)     (18,541)       (67,987)     (70,081)
                                              ---------    ---------    -----------    ---------
Interest margins earned                         154,048      125,753        567,798      459,515
Volume-based fees                                11,764       19,777         50,080       77,723
                                              ---------    ---------    -----------    ---------
Operating margin                                165,812      145,530        617,878      537,238
Provision for credit losses                     (24,750)     (37,700)       (76,800)     (82,200)
Gains on disposal of assets                      22,010       12,483         68,020       27,912
Operating expenses                              (70,416)     (57,521)      (253,754)    (216,653)
                                              ---------    ---------    -----------    ---------
Income before income taxes                       92,656       62,792        355,344      266,297
Income taxes                                    (35,092)     (23,620)      (136,318)    (102,174)
                                              ---------    ---------    -----------    ---------

Net Income                                    $  57,564    $  39,172    $   219,026    $ 164,123
                                              =========    =========    ===========    =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                           FINOVA Capital Corporation
         Selected Consolidated Financial Data and Ratios (Unaudited) (A)
                             (Dollars in Thousands)

                                                             As of December 31,
                                                  ----------------------------------------
FINANCIAL POSITION:                                  1999           1998          1997
                                                  -----------    -----------    ----------
<S>                                               <C>            <C>            <C>
 Ending funds employed                            $13,121,977    $10,020,221    $8,420,462
 Securitizations and participations sold (B)          483,397        537,596       457,967
                                                  -----------    -----------    ----------
   Total managed assets                            13,605,374     10,557,817     8,878,429
 Reserve for credit losses                            264,983        207,618       177,088
 Nonaccruing assets                                   295,123        205,233       187,356
 Nonaccruing assets as  % of managed assets (C)           2.2%           2.0%          2.1%
 Reserve for credit losses as a % of:
   Ending managed assets (C) (D)                         2.00%          2.03%         2.02%
   Nonaccruing assets                                    89.8%         101.2%         94.5%
 Total assets                                     $14,039,513    $10,494,503    $8,762,709
 Total debt                                        11,407,767      8,394,578     6,764,581
 Common shareowner's equity                         1,748,201      1,331,643     1,261,868
 Backlog                                            2,025,867      1,935,106     1,601,218
 Total debt to equity                                    6.5x           6.3x          5.4x
</TABLE>

<TABLE>
<CAPTION>
                                               For the Quarter Ended          For the Year Ended
                                                    December 31,                  December 31,
                                             --------------------------    -------------------------
PERFORMANCE HIGHLIGHTS:                         1999           1998           1999          1998
                                             -----------    -----------    -----------    ----------
<S>                                          <C>            <C>            <C>            <C>
 Average managed assets                      $12,874,560    $10,314,440    $11,845,460    $9,502,823
 Average earning assets (E)                   11,673,692      9,287,136     10,718,941     8,546,715
 New business                                  1,434,538      1,238,803      4,865,746     3,979,265
 Fee-based volume                              1,475,049      1,856,692      6,315,296     7,257,003
 Net write-offs                                   17,269         19,830         56,854        56,758
 Net write-offs (annualized) as a % of
  average managed assets (C)                        0.54%          0.78%          0.48%         0.60%
 Operating margin (annualized) as
  a % of average earning assets                      5.7%           6.3%           5.8%          6.3%
 Interest margins earned (annualized) as a
  % of average earning assets                        5.3%           5.4%           5.3%          5.4%
 Operating expenses as a % of
  operating margin plus gains                       37.5%          36.4%          37.0%         38.3%
</TABLE>

- ----------
(A)  Averages for the periods  presented are based on month-end  balances except
     for the weighting of acquisitions, which are based on days outstanding.

(B)  Securitizations are assets sold under securitization agreements and managed
     by the company.

(C)  Excludes  participations  sold in which the company has transferred  credit
     risk.

(D)  Excludes financing contracts held for sale.

(E)  Average  earning assets equal average funds employed less average  deferred
     taxes on leveraged leases and average nonaccruing assets.


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission