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 15, 1997
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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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<PAGE>
Item 5. Other Events.
The FINOVA Group Inc. today announced revenues, net income and selected
financial data and ratios for the third quarter ended March 31, 1997
(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 15, 1997
1
<PAGE>
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 15, 1997 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
2
Robert J. Fitzsimmons Embargo until
602/ 207-5759 8:00 a.m. (E.S.T.)
The FINOVA Group Inc.
Announces 18% Increase in Earnings From Continuing Operations
For First Quarter of 1997
Managed Assets Up 16%
Interest Margins Earned Increase 21%
PHOENIX, Ariz., April 15, 1997 -- The FINOVA Group Inc. (NYSE:FNV) today
reported income from continuing operations and net income of $31.7 million
($1.13 per common share) for the first quarter of 1997, compared to income from
continuing operations of $26.8 million ($0.96 per common share) in the first
quarter of 1996, an increase of 18% in both income and earnings per common share
from continuing operations.
"The company's earnings were driven by the 16% growth in managed assets
over the last 12 months and higher interest margins," said FINOVA Chairman and
CEO Sam Eichenfield. "FINOVA also managed to avoid some of the portfolio quality
issues that other lenders have experienced as evidenced by our continuing low
nonearning percentage of 2.0% of managed assets and our record reserve coverage
of 96% of nonearnings."
Interest margins earned when compared to the first quarter of 1996
increased 21% to $103.5 million from $85.2 million and as a percentage of
average earning assets increased to 5.9% from 5.7%. Interest margins earned for
the quarter reflected the growth in managed assets, including increased new
business and fee-based volume of $1.43 billion in the first quarter of 1997,
compared to $1.34 billion in 1996. "The increase in the interest margin
percentage to 5.9%, during a period of rising interest rates, demonstrates that
the company's margins generally are not affected by changes in interest rates,"
Eichenfield noted. "In addition to solid new business in the first quarter, the
company increased its backlog to a record $1.54 billion at the end of the
period."
<PAGE>
Selling, general and other operating expenses included increased costs
related to new business added, as well as incentive compensation tied to a
higher average stock price during the quarter. However, as a percentage of
interest margins earned, these expenses remained comparable to the prior year's
first quarter at 44.3% in 1997 compared to 44.1% in 1996.
Income taxes for the first quarter of 1997 were higher than in 1996
primarily due to the increase in pre-tax income and certain foreign tax effects.
The company paid $1.2 million of preferred securities dividends, net of
tax, on trust-originated preferred securities ("TOPrS") issued in December 1996.
The FINOVA Group Inc. is a Phoenix-based major domestic commercial
finance company providing a broad range of secured financing and leasing
products from $500,000 to $35 million to midsize business.
For more information about The FINOVA Group Inc., visit the company's
Website at www.finova.com.
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<PAGE>
The FINOVA Group Inc.
and Consolidated Subsidiaries
Summary of Consolidated Income
(Unaudited)
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
------------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Interest earned from financing transactions $ 191,112 $ 167,679
Operating lease income 25,965 22,973
Interest expense (97,172) (88,224)
Operating lease depreciation (16,449) (17,278)
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Interest margins earned 103,456 85,150
Provision for possible credit losses (8,000) (11,624)
Gains on sale of assets 3,233 6,730
Selling, administrative and other operating expenses (45,878) (37,587)
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Income before income taxes 52,811 42,669
Income taxes (19,998) (15,913)
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Income from continuing operations before preferred dividends 32,813 26,756
Preferred dividends, net of tax (1,155) ----
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Income from continuing operations 31,658 26,756
Income from discontinued operations ---- 365
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Net Income $ 31,658 $ 27,121
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Earnings from continuing operations per common and equivalent share $ 1.13 $ 0.96
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Earnings per common and equivalent share $ 1.13 $ 0.97
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Dividends declared per common share $ 0.24 $ 0.22
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Average outstanding common and equivalent shares 27,924,000 27,923,000
============= =============
</TABLE>
<PAGE>
The FINOVA Group Inc.
Selected Consolidated Financial Data and Ratios (Unaudited) (1)
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of
As of March 31 December 31
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FINANCIAL POSITION: 1997 1996 1996
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<S> <C> <C> <C>
Ending funds employed (EFE) (2) $ 7,479,373 $ 6,442,945 $ 7,298,759
Securitizations and participations sold (3) 380,994 342,663 364,546
----------------- ---------------- ----------------
Total managed assets (2) 7,860,367 6,785,608 7,663,305
Reserve for possible credit losses (2) 152,545 133,403 148,693
Nonaccruing assets (2) 158,255 145,132 155,505
Nonaccruing assets as % of managed assets (5) 2.0% 2.2% 2.0%
Reserve for possible credit losses as a % of:
Ending managed assets (5) 2.0% 2.0% 2.0%
Nonaccruing assets 96.4% 91.9% 95.6%
Total debt $ 6,010,987 $ 5,736,159 $ 5,850,223
Preferred securities 111,550 --- 111,550
Common stockholders' equity 925,588 847,358 929,591
Backlog 1,544,051 1,078,232 1,477,239
</TABLE>
<TABLE>
<CAPTION>
For the Year
For the Quarter Ended Ended
March 31, December 31,
------------------- -- ------------------ -------------------
PERFORMANCE HIGHLIGHTS: 1997 1996 1996
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<S> <C> <C> <C>
Average managed assets (2) $ 7,735,154 $ 6,660,262 $ 7,041,708
Average earning assets (4) (2) 6,957,488 6,016,735 6,324,545
New business (2) 611,634 649,406 2,740,353
Fee-based volume 815,251 694,093 2,937,311
Write-offs (2) 5,300 7,858 32,017
Write-offs (annualized) as a % of
average managed assets (5) 0.28% 0.47% 0.46%
Interest margins earned
(annualized) as a % of average
earning assets 5.9% 5.7% 5.8%
Selling, administrative and other
operating expenses as a % of
interest margins earned 44.3% 44.1% 41.9%
Return (annualized) on average common
equity 13.6% 12.8% 13.3%
</TABLE>
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(1) Averages for the periods presented are based on month-end balances.
(2) Excludes discontinued operations disposed of during 1996.
(3) Securitizations are assets sold under securitization agreements and
managed by the Company.
(4) Average earning assets equal average funds employed less average
deferred taxes on leveraged leases and average nonaccruing assets.
(5) Excludes participations sold in which the Company has transferred
credit risk.
