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 21, 1998
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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.
A. The FINOVA Group Inc. announced revenues, net income and selected
financial data and ratios for the first quarter ended March 31,
1998 (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 21, 1998
1
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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 24, 1998 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
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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 23% Increase in Net Income
For First Quarter of 1998
PHOENIX, Ariz., Apr. 21, 1998 - The FINOVA Group Inc. (NYSE: FNV) today
announced record net income of $39.1 million ($0.66 per diluted share) for the
quarter ended March 31, 1998, compared to $31.7 million ($0.56 per diluted
share) earned in the first quarter of 1997, a 23% increase in net income and an
18% increase in earnings per share. The 1998 period includes 1.7 million
additional shares issued to purchase the business of FINOVA Realty Capital
(formerly operated by Belgravia Capital Corporation) in October 1997.
"FINOVA's results for the first quarter reflect both higher returns from
our funded portfolio and exceptional growth in our fee-based businesses,"
commented Sam Eichenfield, chairman and chief executive officer of FINOVA.
Volume-based fee income, including the contribution of FINOVA Realty Capital,
nearly tripled to $22.2 million in the first quarter of 1998 compared to $7.8
million a year ago (excluding FINOVA Realty Capital, volume-based income rose
65%).
Interest margins earned grew to $108.7 million for the first three months
of 1998 compared to $95.7 million in 1997, resulting from consistent yields and
16% growth in managed assets over the last twelve months.
During the three months ended March 31, 1998, the company recorded
provisions for credit losses totaling $9.5 million, resulting in reserves for
credit losses of 2.0% of ending managed assets (excluding participations) at
March 31, 1998, the same percentage as a year ago. Write-offs for the first
quarter totaled $13.9 million, including $9.2 million of previously identified
and specifically reserved accounts. "Nonearning
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assets increased modestly from 2.1% to 2.2% during the first quarter and remain
well below the company's target nonearnings level of 3% to 4%," noted
Eichenfield.
"With the addition of over 80 business development officers from the FINOVA
Realty Capital acquisition, we are not only excited about our potential in the
mortgage banking arena, but also about the cross-selling opportunities this new
network should bring us," continued Eichenfield. "We are still sorting out the
ultimate impact of these additional business development officers and their
support staff on our operating ratio; however, it was encouraging to see that
operating expenses for the first quarter of 1998 were 43.5% of interest margins
and fees earned, compared to 44.3% for the first three months of 1997."
The FINOVA Group Inc., through its principal operating subsidiary, FINOVA
Capital Corporation, is one of the nation's leading financial services companies
focused on providing a broad range of capital solutions primarily to midsize
business. FINOVA is headquartered in Phoenix with business development offices
throughout the U.S. and in London, U.K., and Toronto, Canada.
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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,
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1998 1997
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<S> <C> <C>
Interest earned from financing transactions $ 203,736 $ 183,328
Operating lease income 32,663 25,965
Interest expense (110,572) (97,172)
Operating lease depreciation (17,170) (16,449)
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Interest margins earned 108,657 95,672
Volume-based fee income 22,156 7,784
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130,813 103,456
Provision for credit losses (9,500) (8,000)
Gains on disposal of assets 1,223 3,233
Selling, administrative and other operating expenses (56,958) (45,878)
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Income before income taxes 65,578 52,811
Income taxes (25,555) (19,998)
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Income before preferred dividends 40,023 32,813
Preferred dividends, net of tax (946) (1,155)
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Net Income $ 39,077 $ 31,658
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Basic earnings per share $ 0.70 $ 0.59
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Basic average shares outstanding 56,138,000 53,962,000
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Diluted earnings per share $ 0.66 $ 0.56
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Average shares outstanding assuming dilution 61,079,000 58,615,000
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Dividends declared per common share $ 0.14 $ 0.12
============ ============
</TABLE>
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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: 1998 1997 1997
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<S> <C> <C> <C>
Ending funds employed (EFE) $ 8,667,889 $ 7,479,373 $ 8,399,456
Securitizations and participations sold (2) 464,550 380,994 457,967
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Total managed assets 9,132,439 7,860,367 8,857,423
Reserve for credit losses 175,967 152,545 177,088
Nonaccruing assets 195,267 158,255 187,356
Nonaccruing assets as % of managed assets (4) 2.2% 2.0% 2.1%
Reserve for credit losses as a % of:
Ending managed assets (4) 2.0% 2.0% 2.0%
Nonaccruing assets 90.1% 96.4% 94.5%
Total debt $ 7,115,327 $ 6,010,987 $ 6,764,581
Preferred securities 111,550 111,550 111,550
Common shareowners' equity 1,126,126 925,588 1,090,454
Backlog 1,842,545 1,544,051 1,601,218
</TABLE>
<TABLE>
<CAPTION>
For the Year
For the Quarter Ended Ended
March 31, December 31,
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PERFORMANCE HIGHLIGHTS: 1998 1997 1997
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<S> <C> <C> <C>
Average managed assets $ 8,901,429 $ 7,735,154 $ 8,153,076
Average earning assets (3) 8,001,665 6,957,488 7,356,845
New business 692,080 611,634 3,311,105
Fee-based volume 1,804,432 815,251 4,532,494
Write-offs 13,912 5,300 45,487
Write-offs (annualized) as a % of
average managed assets (4) 0.63% 0.28% 0.56%
Interest margins and fees (annualized) as
a % of average earning assets 6.5% 5.9% 6.2%
Interest margins earned
(annualized) as a % of average
earning assets (5) 5.4% 5.5% 5.6%
Selling, administrative and other
operating expenses as a % of
interest margins and fees earned 43.5% 44.3% 41.8%
Return (annualized) on average common
equity 14.1% 13.6% 14.3%
</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 average funds employed less average deferred
taxes on leveraged leases and average nonaccruing assets.
(4) Excludes participations sold in which the Company has transferred credit
risk.
(5) Restated to exclude volume-based fee income previously included in interest
margins earned.
