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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 16, 1996
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, 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.
The FINOVA Group Inc. today announced revenues, net income and selected
financial data and ratios for the second quarter ended June 30, 1996
(unaudited).
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
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<CAPTION>
Exhibits Title
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<S> <C>
28 Press Release of The FINOVA Group Inc. dated
July 16, 1996
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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 16, 1996 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 19% INCREASE IN EARNINGS
FOR SECOND QUARTER OF 1996
PHOENIX, Ariz., July 16, 1996 -- The FINOVA Group Inc. (NYSE:FNV) today reported
net income of $28.1 million ($1.01 per common share) for the second quarter of
1996 compared to $23.6 million ($0.85 per common share) for the second quarter
of 1995, a 19% increase in net income and earnings per share.
Net income for the first six months of 1996 was $55.2 million ($1.98
per common share) compared to $46.0 million ($1.65 per common share) for the
first six months of 1995, an increase of 20% in net income and earnings per
share. Sam Eichenfield, chairman and chief executive officer of FINOVA, said,
"FINOVA's second quarter performance continues to exhibit our traditionally
strong performance characteristics. Managed assets grew at an annualized rate of
15.1%, up from the first quarter level of 11.1%, and were driven by new business
and factoring volume of $1.3 billion, a 37% increase over the second quarter of
1995; interest margins, stable at 5.82% in 1996, improved from the second
quarter of 1995; and portfolio quality was maintained, with non-earning assets
continuing at 2.3% of managed assets. Despite strong portfolio growth, FINOVA's
backlog grew 13%, to $1.213 billion, from the end of the first quarter."
Operating efficiencies also contributed to the improved performance with
selling, administrative and other operating expenses ("G & A expenses")
declining to 42.5% of interest margins earned, down from 44.8% for the second
quarter of 1995. G & A expenses for the second quarter of 1996 were $41.0
million compared to $36.4 million for the comparable 1995 quarter. The higher
expenses were primarily due to increased incentive accruals related to higher
new business volumes and improved results.
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Eichenfield went on to say, "the result of these operating improvements
was a further increase in FINOVA's annualized return on equity to 13.1% for the
quarter, up from the 12.0% return achieved in the second quarter of 1995,
demonstrating FINOVA's commitment to improving ROE."
Write-offs for the first half of 1996 were $20.0 million or .55%
(annualized) of average managed assets compared to $15.9 million or .52%
(annualized) for the same period in 1995. Reserves for possible credit losses at
June 30, 1996 remained at 2.0% of managed assets but increased to 85.0% of
nonaccruing assets from 77.8% at June 30, 1995.
Income taxes were higher primarily due to higher income before income
taxes and a higher effective tax rate when compared to the 1995 period. The tax
rate in 1995 was lower due to state tax adjustments recorded in the second
quarter of 1995.
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 mid-size businesses. FINOVA also offers inventory and sales
financing programs to manufacturers, distributors and dealers nationwide.
For more information about The FINOVA Group Inc., visit the company's
Website at www.finova.com.
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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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<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Interest earned from
financing transactions $ 185,510 $ 163,816 $ 371,093 $ 318,331
Operating lease income 25,042 20,877 48,015 41,119
Interest expense (99,244) (90,197) (196,300) (174,721)
Depreciation (14,625) (13,168) (31,903) (25,911)
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Interest margins earned 96,683 81,328 190,905 158,818
Provision for possible
credit losses (10,500) (11,600) (24,750) (18,000)
Gains on sale of assets 882 4,073 7,539 7,053
Selling, administrative and
other operating expenses (41,044) (36,420) (84,394) (72,995)
----------- ----------- ----------- -----------
Income before income
taxes 46,021 37,381 89,300 74,876
Income taxes (17,900) (13,752) (34,058) (28,879)
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Net Income $ 28,121 $ 23,629 $ 55,242 $ 45,997
=========== =========== =========== ===========
Earnings per common
and equivalent share $ 1.01 $ 0.85 $ 1.98 $ 1.65
=========== =========== =========== ===========
Dividends declared per
common share $ 0.22 $ 0.20 $ 0.44 $ 0.40
=========== =========== =========== ===========
Average outstanding
common and equivalent
shares 27,961,000 27,876,000 27,942,000 27,885,000
=========== =========== =========== ===========
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The FINOVA Group Inc.
Selected Consolidated Financial Data and Ratios (Unaudited) (1)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended
or at
As of June 30, Dec. 31,
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FINANCIAL POSITION: 1996 1995 1995
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<S> <C> <C> <C>
Ending funds employed (EFE) $7,241,892 $6,159,394 $6,819,057
Securitizations (2) 353,308 168,059 303,304
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Total managed assets 7,595,200 6,327,453 7,122,361
Reserve for possible credit losses 148,695 127,737 140,333
Nonaccruing assets 174,859 164,271 167,872
Nonaccruing assets as % of managed assets 2.3% 2.6% 2.4%
Reserve for possible credit losses as a % of:
Ending managed assets 2.0% 2.0% 2.0%
Nonaccruing assets 85.0% 77.8% 83.6%
Total debt $5,970,459 $5,044,834 $5,649,368
Stockholders' equity 871,653 794,205 825,184
Backlog 1,213,286 1,003,263 1,070,573
<CAPTION>
For the Quarter Ended For the Six Months Ended
June 30, June 30,
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PERFORMANCE HIGHLIGHTS: 1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Average managed assets $7,416,271 $6,263,682 $7,303,412 $6,124,242
Average earning assets (3) 6,645,786 5,679,032 6,564,620 5,520,877
New business 668,667 526,825 1,391,854 1,004,616
Factoring volume/floor planning 638,415 428,475 1,332,508 809,769
Write-offs 9,614 6,982 20,024 15,867
Write-offs (annualized) as a % of
average managed assets 0.52% 0.45% 0.55% 0.52%
Interest margins earned
(annualized) as a % of
average earning assets 5.8% 5.7% 5.8% 5.8%
Selling, administrative and other
operating expenses as a % of
interest margins earned 42.5% 44.8% 44.2% 46.0%
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(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).
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