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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): April 16, 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. today announced revenues, net income and selected
financial data and ratios for the first quarter ended March 31, 1996
(unaudited).
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
Exhibits Title
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28 Press Release of The FINOVA Group Inc. dated
April 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: April 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 21% INCREASE IN EARNINGS
FOR FIRST QUARTER OF 1996
PHOENIX, Ariz., Apr. 16, 1996 -- The FINOVA Group Inc. (NYSE: FNV) today
reported net income of $27.1 million ($0.97 per common share) for the first
quarter of 1996 compared to $22.4 million ($0.80 per common share) for the first
quarter of 1995, a 21% increase in net income and earnings per share.
Sam Eichenfield, chairman and chief executive officer of FINOVA, said he
was pleased with the company's first quarter performance which included stable
interest margins at the 5.8% level, improved portfolio quality, a record level
of new business for a first quarter and an increase in return on equity to 13%.
During the first quarter of 1996, FINOVA generated $1.4 billion in new business
and factoring volume, which included additions from substantially all the lines
of business and represented an increase of 65% over the first quarter of 1995.
This new business volume was achieved while maintaining the backlog of new
business at $1.1 billion (the level at Dec. 31, 1995) and resulted in managed
assets reaching a record level of $7.3 billion at March 31, 1996.
Eichenfield stated that "the growth rate for the quarter was an
annualized 11% and would have been higher except for an extraordinary amount of
prepayments which were due in part to initial public offerings by our borrowers
and, in some cases, included the early termination of lower-yielding assets."
Portfolio quality continued to improve during the quarter as nonaccruing
assets as a percentage of managed assets declined to 2.3% at the end of the
first quarter compared to 2.8% one year ago. Write-offs for the quarter were
$10.4 million or 0.58% (annualized) of average managed assets, while reserves
for possible credit losses at March 31, 1996 represented 2.0% of managed assets
and improved to 86.4% of nonaccruing assets (compared to 70.9% at March 31,
1995).
Selling, administrative and other operating expenses included increased
incentive accruals related to the higher volume of new business and continuing
improved performance and, as a percent of interest margins earned, were 46.0%
for the first quarter of 1996, down from 47.2% for the first quarter of 1995.
Income taxes were higher due to the increase in income before income
taxes, which more than offset the effects of a lower effective income tax rate
(37.3%) attributable to increased tax exempt municipal income and lower state
taxes.
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 midsize 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)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
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1996 1995
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<S> <C> <C>
Interest earned from financing transactions $ 208,556 $ 174,757
Interest expense (97,056) (84,524)
Depreciation (17,278) (12,743)
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Interest margins earned 94,222 77,490
Provision for possible credit losses (14,250) (6,400)
Gains on sale of assets 6,657 2,980
Selling, administrative and other operating
expenses (43,350) (36,575)
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expenses
Income before income taxes 43,279 37,495
Income taxes (16,158) (15,127)
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Net Income $ 27,121 $ 22,368
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Earnings per common and equivalent share $ 0.97 $ 0.80
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Dividends declared per common share $ 0.22 $ 0.20
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Average outstanding common and equivalent shares 27,923,000 27,894,000
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</TABLE>
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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 March 31 December 31,
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1996 1995 1995
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<S> <C> <C> <C>
FINANCIAL POSITION:
Ending funds employed (EFE) $6,944,914 $5,989,461 $6,819,057
Securitizations (2) 374,386 210,448 303,304
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Total managed assets 7,319,300 6,199,909 7,122,361
Reserve for possible credit losses 144,754 122,953 140,333
Nonaccruing assets 167,454 173,493 167,872
Nonaccruing assets as a % of managed assets 2.3% 2.8% 2.4%
Reserve for possible credit losses as a % of:
Ending managed assets 2.0% 2.0% 2.0%
Nonaccruing assets 86.4% 70.9% 83.6%
Total debt $5,736,159 $4,847,273 $5,649,368
Stockholders' equity 847,358 787,197 825,184
Backlog 1,078,232 955,656 1,070,573
For the Year
For The Quarter Ended Ended
March 31 December 31,
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1996 1995 1995
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PERFORMANCE HIGHLIGHTS:
Average funds employed (AFE) and
securitizations $7,194,525 $6,060,470 $6,401,368
Average earning assets (3) 6,478,515 5,430,923 5,815,455
New business 723,187 477,791 2,570,993
Factoring volume/floor planning 694,093 381,294 1,951,310
Write-offs 10,410 8,885 35,533
Write-offs (annualized) as a % of AFE and
average securitizations 0.58% 0.59% 0.56%
Interest margins earned (annualized) as a % of
average earning assets 5.8% 5.7% 5.8%
Selling, administrative and other operating
expenses as a % of interest margins earned 46.0% 47.2% 45.6%
</TABLE>
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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 AFE less average deferred taxes on leveraged
leases and average nonaccruing assets.
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