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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): January 23, 1996
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THE FINOVA GROUP INC.
(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. (formerly known as GFC Financial Corporation) today
announced revenues, net income and selected financial data and ratios for
the fourth quarter ended December 31, 1996 (unaudited).
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
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Exhibits Title
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28 Press Release of The FINOVA Group Inc. dated
January 23, 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.
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(Registrant)
Dated: January 25, 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.S.T.)
THE FINOVA GROUP INC.
ANNOUNCES RECORD RESULTS FOR THE FOURTH QUARTER OF 1995
AND 31% INCREASE IN NET INCOME FOR THE YEAR
PHOENIX, Ariz., Jan. 23, 1996 -- The FINOVA Group Inc. (NYSE: FNV) today
reported a 31% increase in net income, record new business levels and a 20%
growth in managed assets for the year ended Dec. 31, 1995 to over $7.1 billion.
Net income for 1995 was $97.6 million ($3.51 per common share) compared
to $74.3 million ($2.94 per common share) for 1994, a 31% increase in net income
and a 19% increase in earnings per common share with 2.5 million additional
average shares outstanding in 1995.
For the fourth quarter of 1995 net income was $26.5 million ($0.95 per
common share) up from $23.4 million ($0.82 per common share) for the comparable
period in 1994, a 13% increase in net income and a 16% increase in earnings per
common share.
Sam Eichenfield, chairman and chief executive officer of FINOVA, said
that "1995 was an outstanding year for FINOVA with key performance factors
showing continuing significant improvement over the prior year." Leading the
performance was the record volume of new business added, which consisted of $2.6
billion of term loan and leasing business and $2.0 billion of factoring and
floor planning volume. This new business generated the 20% growth in managed
assets (funds employed and securitizations) and strong margins, which averaged
6.0% for the fourth quarter of 1995 and 5.8% for the year. Importantly, backlog
remained strong at approximately $1.1 billion and portfolio quality
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showed continued improvement with nonearnings declining to 2.4% of managed
assets at year-end 1995, down from 2.9% at Dec. 31, 1994. Eichenfield noted that
"managed assets grew at an annualized rate of 23% (third quarter to fourth
quarter) and since a substantial portion of the new business booked was toward
the end of the quarter, it did not contribute to the quarter's profitability.
The contribution from the new business, as well as the other positive trends,
should continue into 1996."
Eichenfield went on to say, "I am pleased to see that G&A expenses,
measured as a percentage of interest margins earned, declined to 45.6% in 1995
from 46.2% in 1994 and, more importantly, declined to 44.7% for the fourth
quarter of 1995."
The increases in the amount of interest margins earned, both for the
fourth quarter and the year 1995, combined with higher gains on sale of assets,
more than offset the significant increases in provisions for possible credit
losses and higher selling, administrative and other operating expenses ("G&A
expenses"). Loss provisions, which exceeded 1994 by $12.2 million for the fourth
quarter and $30.6 million for the year, were due primarily to portfolio growth.
Reserve coverage remained at 2.0% of ending funds employed and securitizations,
and improved to 83.6% of nonaccruing assets. G&A expenses for the fourth quarter
of 1995 were higher than the comparable 1994 period principally due to higher
incentive accruals related to improved results and the higher volume of new
business added during the year.
Income taxes were higher in 1995 due to an increase in income before
income taxes, partially offset by a lower effective income tax rate attributable
to the effects of certain tax credits.
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 Twelve Months Ended
December 31, December 31,
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1995 1994 1995 1994
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Interest earned from
financing transactions $ 210,118 $ 159,850 $ 761,855 $ 503,351
Interest expense 98,965 69,538 366,822 222,200
Depreciation 16,327 15,111 55,218 36,737
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Interest margins earned 94,826 75,201 339,815 244,414
Provision for possible
credit losses 18,500 6,317 47,300 16,670
Gains on sale of assets 8,027 3,373 19,726 9,045
Selling, administrative and
other operating expenses 42,423 34,148 155,001 113,018
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Income before income
taxes 41,930 38,109 157,240 123,771
Income taxes 15,448 14,747 59,611 49,458
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Net Income $ 26,482 $ 23,362 $ 97,629 $ 74,313
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Earnings per common
and equivalent share $ 0.95 $ 0.82 $ 3.51 $ 2.94
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Dividends declared per
common share $ 0.22 $ 0.20 $ 0.84 $ 0.74
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Average outstanding
common and equivalent
shares 27,811,000 28,341,000 27,832,000 25,307,000
=========== =========== =========== ===========
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The FINOVA Group Inc.
Selected Consolidated Financial Data and Ratios (Unaudited) (1)
(dollars in thousands)
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As of December 31,
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1995 1994
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FINANCIAL POSITION:
Ending funds employed (EFE) $ 6,819,057 $ 5,667,644
Securitizations (2) 303,304 253,386
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Total managed assets 7,122,361 5,921,030
Reserve for possible credit losses (3) 140,333 122,233
Nonaccruing assets 167,872 168,761
Nonaccruing assets as a % of EFE and securitizations 2.4% 2.9%
Reserve for possible credit losses as a % of:
Ending funds employed and securitizations 2.0% 2.1%
Nonaccruing assets 83.6% 72.4%
Total debt $ 5,649,368 $ 4,573,354
Stockholders' equity 825,184 770,252
Backlog 1,070,573 764,326
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For the Quarter Ended For the Year Ended
December 31, December 31,
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1995 1994 1995 1994
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PERFORMANCE HIGHLIGHTS:
Average funds employed (AFE) and
securitizations $6,882,219 $5,723,009 $6,401,368 $4,629,578
Average earning assets (4) 6,314,476 5,034,805 5,815,455 4,064,971
New business 881,054 678,404 2,570,993 1,799,331
Factored volume/floor planning 613,401 355,567 1,951,310 1,129,936
Write-offs 12,665 16,118 35,533 35,127
Write-offs (annualized) as a % of AFE and
average securitizations 0.7% 1.1% 0.6% 0.8%
Interest margins earned (annualized) as a %
of average earning assets 6.0% 6.0% 5.8% 6.0%
Selling, administrative and other operating
expenses as a % of interest margins earned 44.7% 45.4% 45.6% 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. 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) The reserve for possible credit losses includes $16 million and $13 million
at December 31, 1995 and 1994, respectively, of reserves applicable to
securitizations previously classified as accrued liabilities.
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(4) Average earning assets equal AFE less average deferred taxes on leveraged
leases and average nonaccruing assets.
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