<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
--------------------------------------------------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-11011
--------------------------------------------------------------------------------
THE FINOVA GROUP INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 86-0695381
--------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1850 North Central Ave., P. O. Box 2209, Phoenix, AZ 85002-2209
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 602/207-6900
--------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, (or such shorter period that the Registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of August 1, 1995, 27,361,188 shares of Common Stock ($0.01 par value) were
outstanding.
<PAGE> 2
THE FINOVA GROUP INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I FINANCIAL INFORMATION.
Item 1. Financial Statements.
Condensed Consolidated Financial Information:
Condensed Consolidated Balance Sheet - June 30, 1995 and
December 31, 1994 1
Condensed Consolidated Income Statement - Quarter and Six
Months Ended June 30, 1995 and 1994 2
Condensed Consolidated Statement of Cash Flows - Quarter and
Six Months Ended June 30, 1995 and 1994 3
Notes to Interim Condensed Consolidated Financial Information 4 - 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 10
PART II OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE FINOVA GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS: 1995 1994
---------- ------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 24,945 $ 49,875
INVESTMENT IN FINANCING TRANSACTIONS:
Loans and other financing contracts, less unearned income of
$291,409 and $249,550, respectively 4,412,794 4,034,648
Direct financing leases 841,130 774,834
Operating leases 410,562 412,782
Leveraged leases 304,945 287,518
Factored receivables 189,963 157,862
---------- ----------
6,159,394 5,667,644
Less reserve for possible credit losses (115,431) (109,245)
---------- ----------
Investment in financing transactions - net 6,043,963 5,558,399
OTHER ASSETS AND DEFERRED CHARGES 257,488 226,057
---------- ----------
$6,326,396 $5,834,331
========== ==========
LIABILITIES:
Accounts payable and accrued expenses $ 297,566 $ 301,838
Senior debt 5,044,834 4,573,354
Deferred income taxes 189,791 188,887
---------- ----------
5,532,191 5,064,079
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value, 100,000,000 shares
authorized, 28,422,000 shares issued 284 284
Additional capital 688,416 688,042
Retained income 144,791 109,830
Cumulative translation adjustments (3,805) (4,726)
Common stock in treasury, 1,072,000 and 745,000 shares,
respectively (35,481) (23,178)
---------- ----------
794,205 770,252
---------- ----------
$6,326,396 $5,834,331
========== ===========
</TABLE>
See notes to interim consolidated financial information.
1
<PAGE> 4
THE FINOVA GROUP INC.
CONDENSED CONSOLIDATED INCOME STATEMENT
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
----------------------------- ----------------------------
1995 1994 1995 1994
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest and income
earned from financing
transactions $ 184,693 $ 121,891 $ 359,450 $ 195,852
Interest expense 90,197 53,648 174,721 86,781
Depreciation 13,168 8,324 25,911 10,281
------------ ----------- ----------- -----------
Interest margins earned 81,328 59,919 158,818 98,790
Provision for possible
credit losses 11,600 4,888 18,000 8,138
------------ ----------- ----------- -----------
Net interest margins
earned 69,728 55,031 140,818 90,652
Gains on sale of assets 4,073 4,500 7,053 4,503
------------ ----------- ----------- -----------
73,801 59,531 147,871 95,155
Selling, administrative
and other operating 36,420 29,314 72,995 46,617
expenses ------------ ----------- ----------- -----------
INCOME BEFORE
INCOME TAXES 37,381 30,217 74,876 48,538
Income taxes 13,752 12,912 28,879 19,844
------------ ----------- ----------- -----------
NET INCOME $ 23,629 $ 17,305 $ 45,997 $ 28,694
============ =========== =========== ===========
EARNINGS PER
DECLARED COMMON AND
EQUIVALENT
SHARE $ 0.85 $ 0.73 $ 1.65 $ 1.30
=========== =========== =========== ===========
DIVIDENDS PER
COMMON SHARE $ 0.20 $ 0.18 $ 0.40 $ 0.36
=========== =========== =========== ===========
AVERAGE
OUTSTANDING
COMMON AND
EQUIVALENT SHARES 27,876,000 23,744,000 27,885,000 22,080,000
=========== =========== =========== ===========
</TABLE>
See notes to interim consolidated financial information.
2
<PAGE> 5
THE FINOVA GROUP INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------
OPERATING ACTIVITIES: 1995 1994
--------- ---------
<S> <C> <C>
Net income $ 45,997 $ 28,694
Adjustments to reconcile net income to net cash provided (used)
by operating activities:
Provision for possible credit losses 18,000 8,138
Depreciation and amortization 33,332 13,455
Gains on securitizations and sale of assets (7,053) (4,503)
Deferred income taxes 904 11,940
Change in assets and liabilities, net of effects from subsidiaries
purchased (34,416) (65,918)
--------- ---------
Net cash provided (used) by operating activities 56,764 (8,194)
--------- ---------
INVESTING ACTIVITIES:
Proceeds from sale of assets 20,574 3,100
Proceeds from assets securitized 115,507
Principal collections on financing transactions 576,738 426,449
Expenditures for financing transactions (869,130) (611,146)
Net change in short-term financing transactions (135,486) (87,512)
Purchase of Ambassador Factors (246,285)
Purchase of TriCon (344,212)
Purchase of portfolios (127,045)
Other 1,290 672
--------- ---------
Net cash used by investing activities (533,059) (743,427)
--------- ---------
FINANCING ACTIVITIES:
Net borrowings under commercial paper 219,072 456,184
Long-term borrowings 650,000 827,550
Repayment of long-term borrowings (397,592) (743,443)
Issuance of common stock 226,568
Proceeds from exercise of stock options 3,041 1,754
Common stock purchased for treasury (14,048)
Dividends (11,037) (8,691)
Net change in due to factored clients 1,929 15,277
--------- ---------
Net cash provided by financing activities 451,365 775,199
--------- ---------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (24,930) 23,578
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 49,875 929
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 24,945 $ 24,507
========= =========
</TABLE>
See notes to interim consolidated financial information.
3
<PAGE> 6
THE FINOVA GROUP INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
NOTE A BASIS OF PREPARATION
The consolidated financial statements present the financial position,
results of operations and cash flows of The FINOVA Group Inc. (formerly known as
GFC Financial Corporation) and its subsidiaries (collectively, "FINOVA" or the
"Company"), including FINOVA Capital Corporation (formerly known as Greyhound
Financial Corporation) and its subsidiaries (collectively, "FINOVA Capital"),
including Ambassador Factors ("Ambassador") acquired on February 14, 1994 and
TriCon Capital ("TriCon") acquired on April 30, 1994. Both Ambassador and
TriCon were merged into FINOVA Capital in 1994. Recognizing the substantial
increase in the Company's size and scope of operations and its use of several
names in its operations, GFC Financial Corporation changed its name to The
FINOVA Group Inc., and changed its principal operating subsidiary's name from
Greyhound Financial Corporation to FINOVA Capital Corporation, both effective
February 1, 1995.
The interim consolidated financial information is unaudited. In the
opinion of management all adjustments, consisting only of normal recurring
accruals, necessary to present fairly the financial position as of June 30,
1995, the results of operations for the quarter and six months ended June 30,
1995 and 1994 and cash flows for the six months ended June 30, 1995 and 1994,
have been included. Interim results of operations are not necessarily
indicative of the results of operations for the full year.
NOTE B SIGNIFICANT ACCOUNTING POLICIES
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 114 "Accounting by Creditors for Impairment of a Loan"
("SFAS 114"), as amended by SFAS No. 118 "Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures" ("SFAS 118"), as of January 1,
1995. These statements require that impaired loans be measured based on the
present value of the expected cash flows discounted at the loan's effective
interest rate or the fair value of the collateral, if the loan is collateral
dependent. Under SFAS 114, a loan is considered impaired when, based on current
information and events, it is probable that a creditor will be unable to collect
all amounts due according to the contractual terms of the loan agreement. These
standards do not apply to leasing transactions or to large groups of smaller
balance homogeneous loans, such as the Company's former European Consumer
Finance Second Mortgage portfolio. Evaluation for loan impairment is performed
as a part of the portfolio management review process. When a loan is determined
to be impaired, a write-down is taken or an impairment reserve is established
based on the difference between the recorded balance of the loan ("carrying
amount") and the relevant measured value. The total carrying amount of impaired
loans was $81.4 million at June 30, 1995, $10.3 million of which were performing
and $71.1 million of which were nonaccruing. Income is recognized in the same
manner as it is on normal accruing loans. For the six months ended June 30,
1995, $0.4 million of income was recognized on the accruing impaired loans. Cash
collected on nonaccruing impaired loans is applied to the carrying amount of the
loans.
Under SFAS 114, in-substance foreclosed assets are accounted for as loans.
Accordingly, effective January 1, 1995, $12.6 million of performing and $25.3
million of nonaccruing in-substance foreclosed assets were reclassified from
repossessed assets to loans. The Company has elected to account for troubled
debt restructurings, as defined under SFAS No. 15, "Accounting by Debtors and
Creditors for Troubled Debt Restructurings" under SFAS 114.
Accounts are either written-down or written-off when the loss is
considered probable and determinable, after giving consideration to the
customer's financial condition and the value of the underlying collateral,
including any guarantees. Impaired loans were written-down by $7.7 million
during the period ended June 30, 1995. Reserve levels (including $12 million of
accrued liabilities applicable to securitizations) and total non-earnings were
not impacted by the adoption of SFAS 114 on January 1, 1995 and approximated
2.0% and 2.6%, respectively of ending funds employed and securitizations at June
30, 1995. Impairment reserves of $17.6 million were required for $43.9 million
of impaired loans, with no impairment reserve being required for the remaining
$37.5 million of impaired loans. The total reserve for possible credit losses
represents management's estimate of the amount necessary to cover potential
losses in the portfolio considering delinquencies, loss experience and
collateral.
NOTE C PORTFOLIO QUALITY
The following table presents a breakdown (by line of business) of the
Company's investment in financing transactions before the reserve for possible
credit losses at the dates indicated.
4
<PAGE> 7
INVESTMENT IN FINANCING TRANSACTIONS
BY LINE OF BUSINESS
JUNE 30, 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
Revenue Accruing Nonaccruing
------------------------------- ----------------------------
Repos-
sessed Repos- Leases Total
Original Impaired Assets Impaired sessed & Carrying
Rate (1) (2) (1) Assets Other Amount
------------------------------- ---------------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Corporate Finance $ 869,907 $ 4,383 $ $11,118 $ 335 $ $ 885,743
Commercial Real Estate Finance 646,002 2,268 42,993 6,628 20,958 990 719,839
Transportation Finance(3) 775,776 775,776
Resort Finance 708,012 10,842 6,346 24,523 749,723
Communications Finance 557,024 2,557 18,135 5,863 583,579
Medical Finance 451,571 1,266 452,837
Manufacturer and Dealer Services(4) 374,571 107 22,714 397,392
Commercial Equipment Finance 316,648 1,978 6,313 324,939
Franchise Finance 297,676 3,544 7,029 2,824 311,073
Rediscount Finance 252,353 252,353
Commercial Finance 196,946 11,592 208,538
Factoring Services 189,244 719 189,963
Government Finance 105,201 10 105,211
Inventory Finance 89,552 336 89,888
European Finance 66,799 6,994 7,367 81,160
Other 31,147 233 31,380
---------- ------- ------- ------- ------- ------- ----------
TOTAL(4) $5,928,429 $10,302 $56,392 $71,108 $51,679 $41,484 $6,159,394
========== ======= ======= ======= ======= ======= ==========
</TABLE>
------------------
(1) Total recorded carrying amount of impaired loans was $81.4 million at
June 30, 1995. Of the total impaired loans, $10.3 million were
performing and $71.1 million were nonaccruing. For the period ended June
30, 1995, $0.4 million of income was recognized on these loans. Under
SFAS 114, in-substance foreclosed assets should be accounted for as
loans. Accordingly, effective January 1, 1995, $12.6 million of
performing and $25.3 million of nonaccruing in-substance foreclosed
assets were reclassified from repossessed assets to loans.
(2) The Company earned income totaling $1.8 million on repossessed assets
during 1995, including $1.5 million in Commercial Real Estate Finance,
$0.1 million in Communications Finance and $0.2 million in Resort
Finance.
(3) Transportation Finance includes $83 million of new aircraft financing
business booked through the London office.
(4) Excludes $168 million of assets securitized which the Company manages.
------------------
5
<PAGE> 8
RESERVE AND ACCRUED LIABILITIES FOR POSSIBLE CREDIT LOSSES:
The reserve and accrued liabilities for possible credit losses of $127.7
million at June 30, 1995 represents 2.02% of the aggregate carrying amount of
the investment in financing transactions and securitized assets ("managed
assets") before deducting such reserve. Accrued liabilities of $12.3 million
represent an allowance for estimated losses under certain recourse provisions on
$168.1 million of assets securitized. Changes in the reserve for possible
credit losses were as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
1995 1994
-------- --------
(Dollars in Thousands)
<S> <C> <C>
Balance, beginning of period $109,245 $ 64,280
Provision for possible credit losses 18,000 8,138
Write-offs (15,867) (12,021)
Recoveries 1,289 668
Other 2,764 54,404
-------- --------
Balance, end of period $115,431 $115,469
======== ========
</TABLE>
The Company believes that collateral values significantly reduce its loss
exposure and that the reserve for possible credit losses is adequate.
The specific impairment reserve of $17.6 million at June 30, 1995 applies
to $43.9 million of the $81.4 million of impaired loans. The remaining $97.8
million of the reserve for possible credit losses is designated for general
purposes and represents management's estimate of the amount to cover potential
losses in the portfolio considering delinquencies, loss experience and
collateral. Additions to general and specific reserves are reflected in current
operations. Management may transfer reserves between the general and specific
reserves as considered necessary.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1995
TO THE SIX MONTHS ENDED JUNE 30, 1994
The following discussion relates to The FINOVA Group Inc. (formerly known
as GFC Financial Corporation) and its subsidiaries (collectively, "FINOVA" or
the "Company"), including FINOVA Capital Corporation (formerly known as
Greyhound Financial Corporation) and its subsidiaries (collectively, "FINOVA
Capital"), including Ambassador Factors ("Ambassador") acquired on February 14,
1994 and TriCon Capital ("TriCon") acquired on April 30, 1994. Both Ambassador
and TriCon were merged into FINOVA Capital in 1994. Recognizing the substantial
increase in the Company's size and scope of operations and its use of several
names in its operations, GFC Financial Corporation changed its name to The
FINOVA Group Inc., and changed its principal operating subsidiary's name from
Greyhound Financial Corporation to FINOVA Capital Corporation, both effective
February 1, 1995.
RESULTS OF OPERATIONS
Net income increased to $46.0 million ($1.65 per common share) during the
six months of 1995 from $28.7 million ($1.30 per common share) in the comparable
period of 1994, an increase of 60% in net income and a 27% increase in earnings
per share. In the 1995 period, the Company's average outstanding shares were
26% higher than in the 1994 period.
INTEREST MARGINS EARNED. Interest margins earned, which represent the
difference between interest and income earned from financing transactions and
interest expense and depreciation, increased to $158.8 million for 1995 from
$98.8 million for 1994. This increase was driven by portfolio growth, together
with the addition of TriCon and Ambassador in 1994. The primary source of the
portfolio growth was new business, which totaled $1,005 million for 1995
compared to $699 million for 1994 (an increase of 44%). Portfolio growth was
also helped by the acquisition of $117 million of consumer rediscount assets
from Transamerica Financial Corporation during
6
<PAGE> 9
the first quarter of 1995. Factoring volume also increased in 1995 to $810
million for the first six months, almost double the 1994 volume.
Interest margins earned, measured as a percent of average earning assets,
were 5.8% for the first six months of 1995 compared to 6.0% for the 1994 period.
This reduction in interest margins was expected in 1995 due to the cost of the
hedges that the Company entered into to lock in the spread between its lending
and borrowing rates on approximately 50% of its floating-rate debt ($1.5
billion) and to the diminishing ratio of the higher yielding businesses relative
to the total portfolio. Growth in interest margins more than offset the higher
provisions for possible credit losses and the higher selling, administrative and
other operating expenses in the 1995 period.
NON-INTEREST EXPENSE. Loss provisions, which increase the reserve for
possible credit losses ("reserve"), were greater by $9.9 million during 1995
compared to 1994. The greater loss provisions were consistent with the
requirements of a larger portfolio and the loss experience of the businesses
acquired. Management believes that reserve coverage (reserve and accrued
liabilities/nonaccruing assets) remains adequate at 77.8% of nonaccruing assets
and at 2.02% of funds employed and securitizations.
Selling, administrative and other operating expenses were higher in the
1995 period by $26.4 million but declined as a percent of interest margins
earned to 46.% from 47.2% for 1994. The higher operating expenses are primarily
attributable to the additions of TriCon and Ambassador, as well as to higher
marketing expenses incurred in connection with the higher volume of new business
added during the year, partially offset by lower problem account costs.
GAINS ON SALE OF ASSETS. Gains on sale of assets were $2.6 million higher
during the period ended June 30, 1995 compared to June 30, 1994 due to the
amount and type of assets sold. The 1994 period included a $4.0 million gain
from the securitization of assets.
INCOME TAXES. Income taxes for 1995 increased to $28.9 million from $19.8
million in 1994. Income taxes were higher in 1995 due to an increase in income
before income taxes, which more than offset a lower effective income tax rate
resulting from state income tax adjustments. Excluding the state income tax
adjustments, the incremental income tax rate for the Company is approximately
40%.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Funds employed increased by $0.5 billion to $6.2 billion at June 30, 1995
from $5.7 billion at December 31, 1994. This increase is attributable to new
business generated ($1 billion) and the portfolio acquisition of approximately
$117 million of rediscount loans, less principal collections of $597 million.
The reserve and accrued liabilities for possible credit losses at June 30,
1995 increased by $5.5 million when compared to December 31, 1994. The increase
in the reserve and accrued liabilities consisted of increases due to loss
provisions of $18 million which were applicable to portfolio growth and $2.4
million of reserves acquired with the rediscount portfolio, offset by write-offs
of $15.9 million.
Nonaccruing contracts and repossessed assets decreased to $164.3 million
at June 30, 1995 from $168.8 million at December 31, 1994. When measured as a
percent of funds employed and securitizations, nonearning assets declined to
2.6% at June 30, 1995 from 2.9% at December 31, 1994.
The Company had total debt of approximately $5.0 billion or 6.35 times its
equity base of $794 million at June 30, 1995. The Company also had deferred
income taxes of $190 million, generally used to reduce debt and, therefore, help
finance lending activities.
Growth in funds employed is generally financed by internally generated
cash flow and additional borrowings. During the first six months of 1995,
FINOVA Capital issued $650 million in new senior debt, which together with
general corporate funds and net commercial paper borrowings were used to finance
new business, redeem or retire $398 million of debt and acquire the rediscount
portfolio.
7
<PAGE> 10
RECENT DEVELOPMENTS AND BUSINESS OUTLOOK
Following the Spin-Off in 1992, the Company focused its resources and
capital on its domestic commercial finance activities. The Company embarked on
a program of selling or winding down those businesses included in the Spin-Off
that were not associated with the Company's charter domestic commercial finance
activities. The Company concentrated on redeploying the capital previously
invested in such businesses and raised additional capital to support internal
portfolio growth and to make selected acquisitions to complement the Company's
charter operations. This strategy has resulted in (i) the managed liquidation
and sale of the GEFG and Latin American loan portfolios, (ii) an increase
(excluding acquisitions) in FINOVA's domestic loan portfolio each year, (iii)
the acquisition of the asset based lending activity of U.S. Bancorp, (iv) the
sale of the discontinued mortgage insurance subsidiary, (v) the acquisition of
Ambassador and (vi) the acquisition of TriCon. More recently, on February 27,
1995, FINOVA Capital acquired substantially all of the rediscount portfolio of
the Lender Finance Division of Transamerica Business Credit Corporation, a
wholly owned subsidiary of Transamerica Corporation. The rediscount portfolio
is comprised of secured revolving credit facilities to independent consumer
finance companies. The principal amount of the loans purchased amounted to
approximately $117 million. The European Consumer Finance Second Mortgage
portfolio was sold in April 1995 to Beneficial Bank PLC. The sales price
included approximately $14 million cash at closing plus contingent payments of
$8 million predicated on cash collections, the total of which ($22 million)
approximated the Company's book value of those assets. These activities and the
Company's performance were implicitly recognized in FINOVA Capital's recent
increases in credit ratings of its senior debt by Standard & Poor's Rating Group
to BBB+ from BBB and Moody's Investors Service to Baa1 from Baa2.
NEW ACCOUNTING STANDARDS
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 114 "Accounting by Creditors for Impairment of a Loan"
("SFAS 114"), as amended by SFAS No. 118 "Accounting by Creditors for Impairment
of a Loan - Income Recognition and Disclosures" ("SFAS 118"), as of January 1,
1995. These statements require that impaired loans be measured based on the
present value of the expected cash flows discounted at the loan's effective
interest rate or the fair value of the collateral, if the loan is collateral
dependent. Under SFAS 114, a loan is considered impaired when, based on current
information and events, it is probable that a creditor will be unable to collect
all amounts due according to the contractual terms of the loan agreement. For
the impact and disclosures of these new standards, see Notes B and C to Interim
Condensed Consolidated Financial Information.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are filed herewith:
Exhibit No. Document
----------- --------
11 Computation of Earnings Per Share.
12 Computation of Ratio of Income to Combined
Fixed Charges and Preferred Stock
Dividends (interim period).
27 Financial Data Schedule.
(b) Reports on Form 8-K:
A Report on Form 8-K dated July 18, 1995 was filed by Registrant,
which reported under Items 5 and 7 the revenues, net income and
selected financial data and ratios for the second quarter ended June
30, 1995 (unaudited).
8
<PAGE> 11
THE FINOVA GROUP INC.
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.
THE FINOVA GROUP INC.
(Registrant)
Dated: August 4, 1995 By: /s/ Bruno A. Marszowski
-------------------------------------------
Bruno A. Marszowski, Senior Vice President,
Chief Financial Officer and Controller
Principal Accounting Officer/
Authorized Officer
9
<PAGE> 12
THE FINOVA GROUP INC.
COMMISSION FILE NUMBER 1-11011
EXHIBIT INDEX
JUNE 30, 1995 FORM 10-Q
No. Title
---- -------------------------------------------------------------------
(11) Computation of Earnings Per Share
(12) Computation of Income to Combined Fixed Charges and Preferred Stock
Dividends
(27) Financial Data Schedule
10
<PAGE> 1
EXHIBIT 11
THE FINOVA GROUP INC.
Computation of Earnings Per Share
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
------------------------------ ------------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income $ 23,629 $ 17,305 $ 45,997 $ 28,694
----------- ----------- ----------- -----------
Earnings available to
common shareholders $ 23,629 $ 17,305 $ 45,997 $ 28,694
=========== =========== =========== ===========
Average common shares
outstanding before
common equivalents 27,557,000 23,450,000 27,589,000 21,795,000
Common equivalent stock
options 319,000 294,000 296,000 285,000
----------- ----------- ----------- -----------
Average outstanding common
and equivalent shares 27,876,000 23,744,000 27,885,000 22,080,000
=========== =========== =========== ===========
Earnings per common
and equivalent share $ 0.85 $ 0.73 $ 1.65 $ 1.30
=========== =========== =========== ===========
</TABLE>
11
<PAGE> 1
EXHIBIT 12
THE FINOVA GROUP INC.
Computation of Ratio of Income to Combined Fixed Charges
and Preferred Stock Dividends
(Dollars in Thousands)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, December 31,
-------------------- --------------------------------
1995 1994 1994 1993 1992
-------------------- --------------------------------
<S> <C> <C> <C> <C> <C>
Net income before income
taxes $ 74,876 $ 48,538 $123,771 $ 66,422 $ 50,593
Add fixed charges:
Interest expense 174,721 86,781 222,200 123,853 136,107
One-third rentals 1,147 933 2,041 1,387 1,498
-------- -------- -------- -------- --------
Total fixed charges 175,868 87,714 224,241 125,240 137,605
-------- -------- -------- -------- --------
Net income as adjusted $250,744 $136,252 $348,012 $191,662 $188,198
-------- -------- -------- -------- --------
Ratio of income to fixed
charges 1.43 1.55 1.55 1.53 1.37
======== ======== ======== ======== ========
Preferred stock dividends
on a pre-tax basis $ 0 $ 0 $ 0 $ 2,139 $ 2,826
Total combined fixed
charges and preferred
stock dividends $175,868 $ 87,714 $224,241 $127,379 $140,431
-------- -------- -------- -------- --------
Ratio of income to
combined
fixed charges and preferred
stock dividends 1.43 1.55 1.55 1.50 1.34
======== ======== ======== ======== ========
</TABLE>
12
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0
0
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</TABLE>
