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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): July 18, 1995
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THE FINOVA GROUP INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 1-11011 86-0695381
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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
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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.
The FINOVA Group Inc. (formerly known as GFC Financial Corporation)
today announced revenues, net income and selected financial data and
ratios for the second quarter ended June 30, 1995 (unaudited).
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
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Exhibits Title
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<S> <C>
28 Press Release of The FINOVA Group Inc.
dated July 18, 1995
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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.
THE FINOVA GROUP INC.
(Registrant)
Dated: July 19, 1995 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
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EXHIBIT 28
Robert J. Fitzsimmons Embargo until
602/ 207-5759 8:00 a.m. (E.D.T.)
THE FINOVA GROUP INC.
ANNOUNCES 37% INCREASE IN SECOND QUARTER NET INCOME
PHOENIX, Ariz., July 18, 1995 -- The FINOVA Group Inc. (formerly known as GFC
Financial Corporation) (NYSE:FNV) today reported record results led by strong
new business volume and portfolio growth for the second quarter ended June 30,
1995.
Net income for the second quarter of 1995 was $23.6 million ($0.85 per
common share) up from $17.3 million ($0.73 per common share) for the comparable
period in 1994, an increase of 37% in net income and 16% in earnings per common
share. In the 1995 period, the company's average outstanding shares were 17%
higher than during the same period in 1994.
Sam Eichenfield, chairman and chief executive officer of FINOVA, said
he was pleased with the company's continued strong growth, the improved earnings
and the strengthened balance sheet during the second quarter of 1995. "We were
able to generate in excess of $1 billion of new revolving or term business and
$800 million of factored volume in the first six months of the year while
increasing our backlog and growing the portfolio at an annual rate slightly in
excess of 17%," Eichenfield said. "At the same time, our portfolio quality
continued to improve, with nonearning assets declining to $164 million or 2.6%
of ending funds employed and securitizations as of June 30, 1995." Eichenfield
also said that "interest margins earned are a healthy 5.8% and the G&A expense
ratio continues to improve, declining to 45% of interest margins earned."
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Interest margins earned, as a percent of average earning assets, were
5.8% for the 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.
The increase in the amount of interest margins earned more than offset
higher provisions for credit losses and higher selling, administrative and other
operating expenses ("G&A expenses"). Loss provisions, which increased by $6.7
million, were due primarily to the growth of the portfolio. The reserves,
including the accrued liabilities for possible credit losses applicable to the
securitized portfolio, were 2.0% of ending funds employed and securitizations
and 78% of nonaccruing assets. G&A expenses for the second quarter of 1995 were
higher than the comparable 1994 period, but declined as a percent of interest
margins earned to 44.8% for the second quarter of 1995 from 47.2% for the first
quarter of 1995 and 46.2% for 1994. Higher G&A expenses are primarily
attributable to the addition of TriCon Capital, acquired in April 1994, 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.
Income taxes were higher in the second quarter of 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 those
state income tax adjustments, the incremental income tax rate for the company is
approximately 40%.
The FINOVA Group Inc. is a Phoenix-based major domestic commercial
finance company providing secured financing and leasing products from $500,000
to $35 million to medium sized businesses. FINOVA also offers inventory and
sales financing programs to manufacturers, distributors and dealers nationwide.
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The FINOVA Group Inc.
and Consolidated Subsidiaries
Summary of Consolidated Income
(Unaudited)
(dollars in thousands, except per share data)
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Quarter Ended Six Months Ended
June 30, June 30,
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1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Interest 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
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Interest margins earned 81,328 59,919 158,818 98,790
Provision for possible
credit losses 11,600 4,888 18,000 8,138
Gains on sale of assets 4,073 4,500 7,053 4,503
Selling, administrative and
other operating expenses 36,420 29,314 72,995 46,617
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Income before income
taxes 37,381 30,217 74,876 48,538
Income taxes 13,752 12,912 28,879 19,844
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Net Income $ 23,629 $ 17,305 $ 45,997 $ 28,694
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Earnings per common
and equivalent share $ 0.85 $ 0.73 $ 1.65 $ 1.30
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Dividends declared 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
=========== =========== =========== ===========
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The FINOVA Group Inc.
Selected Consolidated Financial Data and Ratios (Unaudited) (1)
(dollars in thousands)
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<CAPTION>
Six Months Ended Year Ended
or at or at
June 30, December 31,
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FINANCIAL DATA: 1995 1994 1994
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<S> <C> <C> <C>
Average funds employed (AFE) and securitizations (2) $6,124,242 $3,760,512 $4,629,578
Ending funds employed (EFE) 6,159,394 5,113,805 5,667,644
Securitizations (2) 168,059 345,752 253,386
Average earning assets (3) 5,520,877 3,316,497 4,064,971
Reserve and accrued liabilities (4) for possible credit
losses 127,737 134,185 122,233
Nonaccruing assets 164,271 187,044 168,761
Total debt 5,044,834 3,963,222 4,573,354
Stockholders' equity 794,205 752,681 770,252
New business 1,004,616 698,658 1,799,331
Backlog (includes lines of credit) 1,003,263 670,401 764,326
Factored volume 809,769 367,604 1,129,936
Write-offs:
Quarter 6,982 6,915
Year-to-date 15,867 12,021 35,127
RATIOS:
Write-offs (annualized) as a % of AFE and average
securitizations (2) 0.5% 0.6% 0.8%
Nonaccruing assets as a % of EFE and securitizations (2) 2.6% 3.4% 2.9%
Reserve and accrued liabilities (4) for possible credit
losses as a % of:
Ending funds employed and securitizations (2) 2.0% 2.5% 2.1%
Nonaccruing assets 77.8% 71.7% 72.4%
Interest margins earned (annualized) as a % of average
earning assets 5.8% 6.0% 6.0%
Selling, administrative and other operating expenses as
a % of interest margins earned:
Quarter 44.8% 48.9%
Year-to-date 46.0% 47.2% 46.2%
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(1) Includes financial results from Ambassador Factors and TriCon Capital
subsequent to their acquisitions on February 14, 1994 and April 30, 1994,
respectively.
(2) Securitizations are assets sold under securitization agreements and
managed by the company. Average contracts securitized were $211 million
and $183 million for the periods ending June 30, 1995 and December 31,
1994, respectively.
(3) Average earning assets equal AFE less average deferred taxes on leveraged
leases ($226 million, $224 million and $225 million for the periods ending
June 30, 1995 and 1994 and December 31, 1994, respectively) and average
nonaccruing assets ($167 million, $144 million and $157 million for the
periods ending June 30, 1995 and 1994 and December 31, 1994,
respectively).
(4) Accrued liabilities of $12 million, $13 million and $13 million at June
30, 1995 and 1994 and December 31, 1994, respectively, represent an
allowance for estimated losses under certain recourse provisions of
securitizations.
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