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 21, 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, 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 fourth quarter and year ended
December 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 January 21, 1997
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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: January 24, 1997 By /s/ Bruno A. Marszowski
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Bruno A. Marszowski,
Senior Vice President-Controller and
Chief Financial Officer
Principal Financial Officer/Authorized Officer
EXHIBIT 28
Robert J. Fitzsimmons Embargo until
602/ 207-5759 8:00 a.m. (E.S.T.)
The FINOVA Group Inc.
Announces Record Fourth Quarter and
24% Increase in Income from Continuing Operations For 1996
PHOENIX, Ariz., Jan. 21, 1997 -- The FINOVA Group Inc. (NYSE:FNV) today reported
a 24% increase in income from continuing operations (23% per common share) and
record new business for the year ended December 31, 1996.
Income from continuing operations for 1996 was $116.5 million ($4.16
per common share) compared to $93.8 million ($3.37 per common share) in 1995.
Net income for 1996 increased 20%, to $117.0 million from $97.6 million in 1995.
For the fourth quarter of 1996, income from continuing operations was
$30.4 million ($1.08 per common share) compared to $24.9 million ($0.90 per
common share) for the fourth quarter of 1995.
During the fourth quarter of 1996, as previously disclosed, the company
sold its Manufacturer & Dealer Services line of business. That business has been
treated as a discontinued operation; consequently, information discussed below
has been restated to reflect the company's continuing operations.
Sam Eichenfield, chairman and chief executive officer of FINOVA, said,
"the company's results reflect FINOVA's continuing success in achieving
profitable growth while maintaining credit discipline and operating efficiency."
Managed assets increased to $7.6 billion at December 31, 1996, representing a
16% year over year increase. This growth was driven by record new business and
fee-based volume of $5.68 billion for 1996, a 33% increase over 1995. In
addition, backlog at December 31, 1996 was at an all-time high of $1.5 billion,
a 38% increase over 1995.
--more--
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According to Eichenfield, "the results also indicate the company's
ability to consistently produce quality earnings, expand market share and
enhance shareholder value. The company's acquisition and divestiture activities
for the year demonstrate FINOVA's strategic focus on, and commitment to, chosen
middle-market niches where the company can successfully serve clients as their
lender of choice."
Meanwhile, 1996 write-offs as a percentage of average managed assets
continue to be below the company's target at 0.46%. Reserves for possible credit
losses remained at 2.0% of managed assets and increased to 95.6% of nonaccruing
assets at December 31, 1996, compared to 90.2% at the end of 1995.
Productivity improved as operating expenses as a percentage of interest
margins earned declined to 41.9% from 42.6%. The absolute increase was
principally due to higher incentive compensation accruals related to improved
results and stock performance and the higher volume of new business added during
the period.
In 1996, FINOVA increased its quarterly dividend by 9.1% to $0.24 per
common share.
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.
4
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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>
Quarter Ended Twelve Months Ended
December 31, December 31,
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1996 1995 1996 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Interest earned from
financing transactions $ 185,229 $ 171,181 $ 702,117 $ 617,425
Operating lease income 24,446 22,289 95,817 84,691
Interest expense (96,972) (90,747) (366,543) (337,814)
Operating lease depreciation (15,136) (16,327) (62,286) (55,218)
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Interest margins earned 97,567 86,396 369,105 309,084
Provision for possible
credit losses (10,587) (14,916) (41,751) (37,568)
Gains on sale of assets 4,507 5,894 12,949 10,889
Selling, administrative and
other operating expenses (43,837) (38,096) (154,481) (131,571)
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Income before income
taxes 47,650 39,278 185,822 150,834
Income taxes (17,254) (14,381) (69,329) (57,036)
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Income from continuing
operations 30,396 24,897 116,493 93,798
Income and gain from sale of
discontinued operations 1,599 1,585 507 3,831
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Net Income $ 31,995 $ 26,482 $ 117,000 $ 97,629
============= ============= ============= =============
Earnings from continuing
operations per common
and equivalent share $ 1.08 $ 0.90 $ 4.16 $ 3.37
============= ============= ============= =============
Earnings per common and
equivalent share $ 1.13 $ 0.95 $ 4.17 $ 3.51
============= ============= ============= =============
Dividends declared per
common share $ 0.24 $ 0.22 $ 0.92 $ 0.84
============= ============= ============= =============
Average outstanding
common and equivalent
shares 28,224,000 27,811,000 28,036,000 27,832,000
============= ============= ============= ==============
</TABLE>
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The FINOVA Group Inc.
Selected Consolidated Financial Data and Ratios (Unaudited) (1)
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of December 31,
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FINANCIAL POSITION: 1996 1995 1994
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<S> <C> <C> <C>
Ending funds employed (EFE)(4) $ 7,298,759 $ 6,348,079 $ 5,342,979
Securitizations(2) 300,000 200,000 ---
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Total managed assets(4) 7,598,759 6,548,079 5,342,979
Reserve for possible credit losses(4) 148,693 129,077 110,903
Nonaccruing assets(4)(5) 155,505 143,127 149,046
Nonaccruing assets as % of managed assets 2.0% 2.2% 2.8%
Reserve for possible credit losses as a % of:
Ending managed assets 2.0% 2.0% 2.1%
Nonaccruing assets 95.6% 90.2% 74.4%
Total debt $ 5,850,223 $ 5,649,368 $ 4,573,354
Preferred securities 115,000 --- ---
Common stockholders' equity 926,141 825,184 770,252
Backlog 1,477,239 1,070,573 764,326
</TABLE>
<TABLE>
<CAPTION>
For the Quarter Ended For the Year Ended
December 31, December 31,
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PERFORMANCE HIGHLIGHTS: 1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Average managed assets (4) $ 7,457,175 $ 6,315,953 $ 6,991,257 $ 5,833,576
Average earning assets (3) (4) 6,757,732 5,889,632 6,324,545 5,442,119
New business (4) 873,659 809,488 2,740,353 2,302,653
Fee-based volume 819,293 613,401 2,937,311 1,951,310
Write-offs (4) 7,999 9,149 32,017 25,631
Write-offs (annualized) as a % of
average managed assets 0.43% 0.58% 0.46% 0.44%
Interest margins earned
(annualized) as a % of average
earning assets 5.8% 5.9% 5.8% 5.7%
Selling, administrative and other
operating expenses as a % of
interest margins earned 44.9% 44.1% 41.9% 42.6%
Return (annualized) on average
equity 13.3% 12.2% 13.3% 11.8%
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</TABLE>
(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
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and average nonaccruing assets.
(4) Excludes discontinued operations disposed of during 1996.
(5) Nonaccruing assets at December 31, 1996 include nonaccruing assets
classified as discontinued operations.
