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): October 1, 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.
A. Notification was sent to The FINOVA Group Inc.'s shareholders of a
two-for-one stock split of the Company's Common Stock.
B. Notification was sent to holders of Preferred Securities of a
two-for-one stock split of The FINOVA Group Inc.'s Common Stock
and the resulting change in conversion price applicable to the
Convertible Trust Originated Preferred Securities of FINOVA
Finance Trust.
C. The FINOVA Group Inc. announced revenues, net income and selected
financial data and ratios for the third quarter ended September
30, 1997 (unaudited).
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
Exhibits Title
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28A Letter to The FINOVA Group Inc. Shareholders
dated October 1, 1997
28B Letter to Holders of Preferred Securities
dated October 1, 1997
28C Press Release of The FINOVA Group Inc. dated
October 14, 1997, as adjusted for the effects
of a two-for-one stock split effective
subsequent to the end of the quarter
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: October 17, 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
EXHIBIT 28A
SAMUEL L. EICHENFIELD
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER FINOVA
THE FINOVA GROUP INC.
1850 N. CENTRAL AVENUE
P. O. BOX 2209
PHOENIX, ARIZONA 85002-2209
October 1, 1997
Dear FINOVA Shareholder:
I am pleased to inform you that our Board of Directors has approved a
two-for-one stock split, as well as a more than 16% increase in the quarterly
cash dividend.
The stock split is in the form of a 100% stock dividend, which means
that you will receive one additional share of The FINOVA Group Inc. common stock
for each share that you own. The stock split is payable today to shareholders of
record at the close of business on September 1, 1997.
The quarterly cash dividend increased from $.24 to $.28 per share on
pre-split shares. The cash dividend is also payable today to holders of record
at the close of business on September 1, 1997. Your dividend check will be
mailed or deposited separately.
Do not destroy your common stock certificates and do not return them to
FINOVA. Existing certificates will continue to represent the same number of
shares as before and should be retained. If you are a record holder, we are
sending certificates for your new shares along with this letter. Your old
certificate(s) represent one half of your FINOVA holdings, and your new
certificate(s) represent your other half, assuming you hold only certificated
shares.
If you hold your FINOVA shares through a stock broker or some other
third party, we have sent the dividend and new share certificates to that party.
They should provide you with a statement of your new ownership in due course.
Contact that entity if you have any questions in the interim.
If you hold physical shares of FINOVA and are reinvesting your
dividends in the FINOVA Direct Stock Services Plan, you will receive a stock
certificate representing your new physical shares. The new shares to be held in
book entry form through the FINOVA Direct Stock Services Plan will be reflected
on your account statement, which will be mailed to you under separate cover.
All of us at FINOVA are gratified that we have been able to increase
our quarterly dividend each year since we became an independent public company
in 1992 and to split our shares. We believe that this split will help place the
price of our common stock in a trading range that will continue to be attractive
to a broad range of investors. We thank you for your continuing support of
FINOVA.
Sincerely,
/s/ S. Eichenfield
<PAGE>
THE FINOVA GROUP INC.
2-FOR-1 STOCK SPLIT
ADDITIONAL INFORMATION
Tax Implications:
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FINOVA has been advised by its tax counsel that under U.S. Federal
income tax law, the receipt of additional shares of The FINOVA Group Inc. common
stock will not result in taxable income. Any disposition of those shares,
however, may result in a taxable gain or loss. The tax basis for your new shares
will be determined by prorating the existing basis of your old shares equally
between the old and the new shares. Your new shares will be deemed to be held
for the same period as the old shares. Non-U.S. jurisdictions may impose income
taxes on the additional shares. We urge you to contact your personal tax
advisors regarding the tax consequences in your area. We also recommend that you
maintain a record of the acquisition date and cost basis of your old and new
shares. In that regard, you may find it helpful to retain a copy of this letter
with your stock certificates for future reference.
Shareholders' Rights Agreement:
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The stock split automatically results in certain adjustments to the
rights that are associated with each share of FINOVA common stock pursuant to
our previously adopted Shareholders' Rights Agreement. The adjustments assure
that the terms and conditions of the agreement, which is triggered only in the
case of a takeover-related event, will remain virtually identical in effect to
those afforded shareholders prior to the split. Each share of common stock
outstanding immediately after the stock split will continue to have a right
associated with it. Upon certain triggering events, each right will be entitled
to purchase 1/200 of a share of Junior Participating Preferred Stock at a price
of $67.50 per share, rather than 1/100 of a share of Junior Participating
Preferred Stock at a price of $135 per share, in effect prior to the split. For
more detailed information, please contact our Secretary at P. O. Box 2209,
Phoenix, Arizona 85002-2209.
Stock Certificates:
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Certificates are enclosed with this notice and should be mailed by
October 1, 1997 to shareholders of record on September 1, 1997. Any registered
shareholder who does not receive new shares by October 20, 1997 should contact
our transfer agent, Harris Trust at 888-445-6428. Retain your old certificates.
They continue to be valid, even if they contain our old corporate name, GFC
Financial Corporation. We changed that name to The FINOVA Group Inc. in January
1995, but your old certificates continue to be valid. Please do not send those
certificates in simply to update our corporate name. Doing so would
unnecessarily increase our corporate expenses.
Safeguarding Your Certificates
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Your stock certificates are valuable. We urge you to keep them in a
safe place, such as a safe deposit box. The replacement of a lost certificate is
inconvenient and may involve some expense to you and FINOVA. You may hold your
certificates through the FINOVA Direct Stock Services Plan, if desired. Contact
Harris Trust at 888-445-6428 for more information on that plan.
Changes of Address Do Not Affect Your Title:
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Your address of record was printed on your new stock certificate to
facilitate mailing. A change in address will not affect your ownership. If your
address has changed, or if it changes in the future, please do not return your
certificates for correction. Instead, simply notify our transfer agent, Harris
Trust, in writing, at P. O. Box A3480, Chicago, IL 60690-3480.
EXHIBIT 28B
SAMUEL L. EICHENFIELD
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER FINOVA
THE FINOVA GROUP INC.
1850 N. CENTRAL AVENUE
P. O. BOX 2209
PHOENIX, ARIZONA 85002-2209
October 1, 1997
Dear Holder of Preferred Securities:
We are pleased to inform you that the Board of Directors of The FINOVA
Group Inc. ("FINOVA") has approved a two-for-one stock split of FINOVA's Common
Stock. The stock split is in the form of a 100% stock dividend payable to
shareholders of record at the close of business on September 1, 1997.
As a result of the stock split, the conversion price applicable to the
Convertible Trust Originated Preferred Securities of FINOVA Finance Trust has
been adjusted from $78.28 per share of Common Stock to $39.14 per share of
Common Stock effective immediately after the record date referred to above.
This adjustment means that as of September 2, 1997, each Preferred
Security is convertible into shares of FINOVA's Common Stock at a conversion
rate of 1.2774 shares of Common Stock for each Preferred Security (equivalent to
the adjusted conversion price of $39.14 per share of Common Stock).
Sincerely,
/s/ S. Eichenfield
Samuel L Eichenfield
Chairman and
Chief Executive Officer
EXHIBIT 28C
Robert J. Fitzsimmons Embargo until
602/ 207-5759 8:00 a.m. (E.D.T.)
The FINOVA Group Inc.
Announces Record Net Income for the Third Quarter -
A 17% Increase
PHOENIX, Ariz., Oct. 14, 1997 - The FINOVA Group Inc. (NYSE: FNV) today reported
record net income of $34.9 million ($0.62 per common share, as adjusted for
stock split subsequent to the end of the period) for the third quarter of 1997
compared to $29.8 million ($0.53 per common share, as adjusted for stock split
subsequent to the end of the period) in 1996, an increase of 17%.
Net income for the first nine months of 1997 was $100.3 million ($1.79
per common share, as adjusted for stock split subsequent to the end of the
period) representing an 18% increase over net income of $85.0 million ($1.52 per
common share, as adjusted for stock split subsequent to the end of the period)
for the first nine months of 1996.
Sam Eichenfield, chairman and chief executive officer of FINOVA, said
he "was gratified with FINOVA's record performance thus far in 1997 and
especially pleased with the continued increase in return to the shareholders."
FINOVA's return on equity for the quarter and nine months of 1997 was 14.5% and
14.2%, respectively, a continuing improvement over the 13.8% and 13.3% reported
for the comparable 1996 periods.
"In the third quarter of 1997, interest margins earned as a percentage
of average earning assets were 6.1%, reflecting the contribution of the record
fee-based volume during the quarter," added Eichenfield. Fee-based volume for
the third quarter of 1997 was $994 million, an increase of 27% over 1996. New
business was $748 million in the third quarter of 1997 compared to $632 million
in 1996, and backlog at Sept. 30, 1997 was at a record $1.6 billion compared to
$1.4 billion one year ago.
"FINOVA continues to broaden its product lines by expanding its capital
markets initiative," continued Eichenfield. Adding to FINOVA's capital markets
activities will be Belgravia Capital Corporation, one of the largest and
fastest-growing commercial mortgage banking organizations in the U.S. which the
company acquired on Oct. 8, 1997.
<PAGE>
"Portfolio quality is still quite high as demonstrated by the
continuing low level of non-earning accounts, although higher write-offs were
experienced in the quarter," noted Eichenfield. Non-earning assets as a
percentage of managed assets were 2.1% at both Sept. 30, 1997 and Sept. 30,
1996, and FINOVA's reserve for possible credit losses was at an all-time high of
97% of non-earning assets.
FINOVA's reserve was bolstered by $22.0 million of loss provisions
during the third quarter of 1997, which exceeded write-offs by 53% and were
almost twice the $11.7 million provided in the comparable quarter of 1996. Gains
on sale of assets totaled $8.7 million for the third quarter of 1997; selling,
administrative and other operating expenses were 39.3% for both the third
quarter of 1997 and 1996 and were running at 42.0% for the first nine months of
1997.
The FINOVA Group Inc. is a Phoenix-based major commercial
finance company providing a broad range of financing and capital market products
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 Nine Months Ended
September 30, September 30,
------------ ------------ ------------ ------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest earned from financing transactions $ 207,103 $ 181,616 $ 597,756 $ 516,888
Operating lease income 30,253 23,356 85,164 71,371
Interest expense (105,592) (91,629) (304,647) (269,571)
Operating lease depreciation (17,727) (15,247) (51,786) (47,150)
------------ ------------ ------------ ------------
Interest margins earned 114,037 98,096 326,487 271,538
Provision for possible credit losses (22,000) (11,664) (48,300) (31,164)
Gains on sale of assets 8,706 397 22,407 8,442
Selling, administrative and other operating
expenses (44,773) (38,569) (137,263) (110,644)
------------ ------------ ------------ ------------
Income before income taxes 55,970 48,260 163,331 138,172
Income taxes (20,103) (17,771) (59,954) (52,075)
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Income from continuing operations before
preferred dividends 35,867 30,489 103,377 86,097
Preferred dividends, net of tax (946) -- (3,047) --
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Income from continuing operations 34,921 30,489 100,330 86,097
Loss from discontinued operations -- (726) -- (1,092)
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Net Income $ 34,921 $ 29,763 $ 100,330 $ 85,005
============ ============ ============ ============
Earnings from continuing operations per
common and equivalent share* $ 0.62 $ 0.54 $ 1.79 $ 1.54
============ ============ ============ ============
Earnings per common and equivalent
share* $ 0.62 $ 0.53 $ 1.79 $ 1.52
============ ============ ============ ============
Dividends declared per common share* $ 0.14 $ 0.12 $ 0.38 $ 0.34
============ ============ ============ ============
Average outstanding common and
equivalent shares* 56,064,000 56,062,000 55,908,000 55,942,000
============ ============ ============ ============
</TABLE>
*NOTE: Amounts have been adjusted to give effect to a two-for-one stock
split effective subsequent to September 30, 1997.
<PAGE>
The FINOVA Group Inc.
Selected Consolidated Financial Data and Ratios (Unaudited) (1)
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of
As of September 30, December 31
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FINANCIAL POSITION: 1997 1996 1996
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<S> <C> <C> <C>
Ending funds employed (EFE) (2) $8,075,600 $7,058,306 $7,298,759
Securitizations and participations sold (3) 373,737 336,964 364,546
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Total managed assets (2) 8,449,337 7,395,270 7,663,305
Reserve for possible credit losses (2) 167,754 144,293 148,693
Nonaccruing assets (2) 173,390 151,798 155,505
Nonaccruing assets as % of managed assets (4) 2.1% 2.1% 2.0%
Reserve for possible credit losses as a % of:
Ending managed assets (4) 2.0% 2.0% 2.0%
Nonaccruing assets 96.7% 95.1% 95.6%
Total debt $6,502,512 $6,350,043 $5,850,223
Preferred securities 111,550 -- 111,550
Common stockholders' equity 977,921 896,581 929,591
Backlog 1,601,334 1,441,663 1,477,239
For the Nine Months
For the Quarter Ended Ended
September 30, September 30,
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PERFORMANCE HIGHLIGHTS: 1997 1996 1997 1996
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Average managed assets (2) $8,234,743 $7,136,747 $7,989,202 $6,886,824
Average earning assets (5) (2) 7,456,595 6,393,240 7,208,380 6,184,909
New business (2) 747,852 632,347 2,310,722 1,866,694
Fee-based volume 994,235 785,510 2,671,908 2,118,018
Write-offs (2) 14,405 8,778 31,263 24,018
Write-offs (annualized) as a % of
average managed assets (4) 0.71% 0.50% 0.53% 0.47%
Interest margins earned
(annualized) as a % of average
earning assets 6.1% 6.1% 6.0% 5.9%
Selling, administrative and other
operating expenses as a % of
interest margins earned 39.3% 39.3% 42.0% 40.7%
Return (annualized) on average
common equity 14.5% 13.8% 14.2% 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) Excludes participations sold in which the Company has transferred credit
risk.
(5) Average earning assets equal average funds employed less average deferred
taxes on leveraged leases and average nonaccruing assets.
