Exhibit 99
CONTACT: Stuart Tashlik
Senior V.P.
480-636-5355
THE FINOVA GROUP INC. ANNOUNCES THIRD QUARTER RESULTS
SCOTTSDALE, ARIZ., NOV. 14, 2000 - The FINOVA Group Inc. (NYSE:FNV) today
announced a net loss of $274.1 million ($4.49 per diluted share) for the quarter
ended Sept. 30, 2000, compared to net income of $54.9 million ($0.86 per diluted
share) for the third quarter of 1999. Of the loss, $203.1 million ($3.33 per
diluted share) was related to FINOVA's Commercial Services, Corporate Finance,
Business Credit, Growth Finance and Distribution & Channel Finance business
units, which are being accounted for as discontinued operations and $71 million
($1.16 per diluted share) relating to continuing operations.
For the nine months ended Sept. 30, 2000, the company reported a net loss
of $220.7 million ($3.62 per diluted share) compared to net income of $158.6
million ($2.52 per diluted share) for the first nine months of 1999. The
year-to-date results reflects a $253.0 million ($4.15 per diluted share) loss
from discontinued operations and income of $32.2 million ($0.53 per diluted
share) from continuing operations.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
------------------ ------------------
In Millions
Net of Tax 2000 1999 2000 1999
---------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Income (loss) from continuing operations $ (71.0) $ 54.9 $ 32.3 $ 159.5
Income (loss from discontinued operations 11.8 (38.1) (0.9)
Net loss on disposal of operations (214.9) (214.9)
------- ------- ------- -------
Net income (loss) $(274.1) $ 54.9 $(220.7) $ 158.6
======= ======= ======= =======
</TABLE>
<PAGE>
During the third quarter, FINOVA began to implement a new strategic
direction, focusing on core specialty niche businesses. On Aug. 28, 2000, the
company completed the sale of substantially all assets of its Commercial
Services division to GMAC Commercial Credit LLC, a wholly owned subsidiary of
General Motors Corporation, for approximately $235 million. In addition,
FINOVA's Corporate Finance (includes Business Credit and Growth Finance) and
Distribution & Channel Finance divisions have been offered for sale. The company
is also trimming operating expenses to reflect the dispositions of these
business units.
FINOVA President and Chief Executive Officer Matt Breyne said, "Divesting
these business units will strengthen our balance sheet, improve liquidity, and
assist in addressing $2.1 billion of principal payments due in May 2001 under
the company's credit facilities, of which $500 million can be extended over a
two year term-out if no defaults exist at that time. We continue to evaluate
FINOVA's entire product line to help assure that we move forward with the most
profitable, highest franchise value businesses."
CONTINUING OPERATIONS
FINOVA reported a loss from continuing operations of $71.0 million for the
third quarter of 2000 compared to income of $54.9 million in the third quarter
of 1999. The reduction was primarily due to higher loss provisions, losses
applicable to charge-offs of investments and assets held for sale, a significant
increase in the cost of funds and an increase in nonaccruing accounts.
Cost of funds increased due to credit rating reductions during 2000. The
impact is reflected in the $9.9 million decline in interest margins earned for
the quarter ($115.4 million in the third quarter of 2000 vs. $125.3 million in
the third quarter of 1999) despite portfolio growth of $669.7 million. The
reduction in credit ratings since Mar. 31, 2000 included:
Senior Debt Commercial Paper
----------------- ------------------
From To From To
---- ---- ---- ----
Moody's Baa B1 P-2 NP
S&P A- BB A-2 B
Fitch A B F-1 B
The impact of these downgrades and the company's decision to exercise
term-out options under its $4.7 billion of back-up bank facilities was an
increase in floating-rate borrowing costs. The all in spread over LIBOR was
approximately 1.27% higher than the comparable spreads in the third quarter of
1999 (all in spread of 1.48% in 2000 vs. 0.21% in 1999). As a result, interest
margins earned annualized as a percent of average earning assets declined to
4.8% in the third quarter of 2000 from 5.7% in the comparable 1999 period.
<PAGE>
Loss provisions increased to $111.2 million, up $97.7 million over the
comparable quarter of 1999, to bolster the reserve for credit losses. The
reserve was increased to 2.4% of ending managed assets (up from 1.7% at June 30,
2000), reflecting the increase in problem accounts. Nonaccruing assets increased
to $421.0 million at Sept. 30, 2000, up from $229.3 million at June 30, 2000.
The most significant increase during the quarter ($127.1 million) occurred in
FINOVA's Resort Finance division due primarily to $117.4 million related to
Sunterra Corporation, which was classified as accruing impaired at June 30,
2000, as well as $23.5 million to eight related project development entities
managed by a developer that has experienced a decline in earnings and a
significant reduction it its net worth. Other increases in nonaccruing assets
included $32.5 million in Healthcare Finance and $31.7 million in Communications
Finance. Nonaccruing assets as a percent of ending managed assets increased to
3.9% from 2.1% at June 30, 2000.
Accruing impaired assets increased to $246.9 million at Sept. 30, largely
due to an additional $148.2 million outstanding from the eight related Resort
Finance project development entities. Other increases included $37.8 million in
Franchise Finance and $10.4 million in Specialty Real Estate Finance. Net
write-offs of financing contracts were $30.8 million ($17.8 million in Mezzanine
Capital) in the third quarter of 2000 compared to $8.0 million in the 1999
period.
While nonaccruing and accruing impaired assets have increased, FINOVA
believes that significant collateral exists to secure the recent additions.
Losses on investments and disposal of assets totaled $90.0 million for the
quarter, consisting of a $109.0 million loss from the charge-off of investments,
repossessed assets and equipment held for sale or lease, partially offset by
gains of $19.0 million from sales of equity securities and residuals coming off
lease. The largest charge-off was a $54.8 million equity investment in the major
Resort Finance developer mentioned above. Transportation Finance also had
charge-offs of $17.9 million, principally related to assets held for sale or
lease. The gains during the third quarter of 2000 included $4.8 million from
FINOVA's remaining investment in Healtheon/WebMD.
Operating expenses were lower during the third quarter of 2000 when
compared to the 1999 quarter, ($29.5 million vs. $40.2 million) principally due
to the reversal of sales and management incentive accruals together with an
overall lower level of expenses resulting from the reduced activities of the
company. The efficiency ratio (operating expenses as a percent of operating
margins) was 25.5% in the third quarter of 2000, compared to 31.1% in the third
quarter of 1999.
<PAGE>
DISCONTINUED OPERATIONS
Results from discontinued operations for the quarter and first nine months
of 2000 included income from operations, net of tax of $11.8 million in the
third quarter and a loss of $38.1 million for the nine months of 2000. The net
loss for the nine-month period was due to write-offs taken during the first six
months of 2000, the largest of which was $70 million taken on a Distribution &
Channel Finance customer in the first quarter of 2000.
The loss on disposing of the discontinued operations was $214.9 million and
included the following:
<TABLE>
<CAPTION>
Distribution
Corporate & Channel Commercial
Finance Finance Services Total
------- ------- ------- -------
In Millions
<S> <C> <C> <C> <C>
NET LOSS ON DISPOSAL OF OPERATIONS,
NET OF TAX
Net realizable value markdowns $(130.4) $ (10.3) $ $(140.7)
Goodwill written off (33.1) (15.1) (16.7) (64.9)
Proceeds in excess of assets sold 17.6 17.6
Accrued expenses (17.5) (3.1) (6.3) (26.9)
------- ------- ------- -------
$(181.0) $ (28.5) $ (5.4) $(214.9)
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</TABLE>
LETTER AGREEMENT WITH LEUCADIA NATIONAL CORPORATION
On Nov. 10, 2000, FINOVA and Leucadia National Corporation signed a letter
agreement under which Leucadia would invest up to $350 million in FINOVA. The
agreement is subject to reaching a mutually satisfactory arrangement with
FINOVA's bank group and certain other customary conditions, including regulatory
approvals. FINOVA, Leucadia and Jay Alix & Associates are currently working
together to present a comprehensive plan to the bank group. The letter agreement
will be filed as an exhibit to FINOVA's Sept. 30, 2000 10-Q.
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 Scottsdale, Ariz. with business offices
throughout the U.S. and London, U.K., and Toronto, Canada. For more information,
visit the company's website at www.finova.com.
<PAGE>
THIS NEWS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS SUCH AS ESTIMATES OF GAINS
OR LOSSES, AS WELL AS OTHER PREDICTIONS OR FORECASTS. FINOVA ASSUMES NO
OBLIGATION TO UPDATE THOSE STATEMENTS TO REFLECT ACTUAL RESULTS, CHANGES IN
ASSUMPTIONS OR OTHER FACTORS. THE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED. THOSE FACTORS INCLUDE
FINOVA'S ABILITY TO ADDRESS ITS FINANCING REQUIREMENTS IN LIGHT OF ITS EXISTING
DEBT OBLIGATIONS AND MARKET CONDITIONS; PENDING AND POTENTIAL LITIGATION RELATED
TO CHARGES TO EARNINGS; THE RESULTS OF EFFORTS TO IMPLEMENT BUSINESS STRATEGY,
INCLUDING THE ABILITY TO SUCCESSFULLY CONCLUDE ITS EVALUATION OF STRATEGIC
ALTERNATIVES AND THE PENDING TRANSACTION WITH LEUCADIA; THE ABILITY TO ATTRACT
AND RETAIN KEY PERSONNEL AND CUSTOMERS; CONDITIONS THAT ADVERSELY IMPACT
FINOVA'S BORROWERS AND THEIR ABILITY TO MEET THEIR OBLIGATIONS TO FINOVA; ACTUAL
RESULTS IN CONNECTION WITH CONTINUING OR DISCONTINUED OPERATIONS AND THE
DISPOSITION OF ASSETS; THE ADEQUACY OF FINOVA'S LOAN LOSS RESERVES AND OTHER
RISKS DETAILED IN FINOVA'S SEC REPORTS, INCLUDING PAGE 15 OF FINOVA'S 10-K FOR
1999.
##
<PAGE>
The FINOVA Group Inc.
And Consolidated Subsidiaries
Summary of Consolidated Operations
(Unaudited)
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
Sept. 30, Sept. 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest earned from financing transactions $ 266,850 $ 233,037 $ 794,663 $ 641,016
Operating lease income 26,091 29,433 80,433 85,964
Interest expense (161,565) (117,738) (454,421) (330,680)
Operating lease depreciation (15,974) (19,396) (49,046) (53,267)
------------ ------------ ------------ ------------
Interest margins earned 115,402 125,336 371,629 343,033
Volume-based fees 3,723 1,336 8,751
------------ ------------ ------------ ------------
Operating margin 115,402 129,059 372,965 351,784
Provision for credit losses (111,237) (13,531) (141,347) (12,183)
(Losses) gains on investments and disposal of assets (90,042) 14,880 (55,549) 45,877
Operating expenses (29,466) (40,172) (122,228) (121,223)
------------ ------------ ------------ ------------
(Loss) income from continuing operations before
income taxes and preferred dividends (115,343) 90,236 53,841 264,255
Income tax benefit (expense) 45,278 (34,398) (18,757) (101,853)
------------ ------------ ------------ ------------
(Loss) income from continuing operations before
preferred dividends (70,065) 55,838 35,084 162,402
Preferred dividends, net of tax (946) (946) (2,837) (2,837)
------------ ------------ ------------ ------------
(Loss) income from continuing operations (71,011) 54,892 32,247 159,565
Discontinued operations, net of tax 11,803 14 (38,110) (940)
Net loss on disposal of operations, net of tax (214,853) (214,853)
------------ ------------ ------------ ------------
Net (loss) income $ (274,061) $ 54,906 $ (220,716) $ 158,625
============ ============ ============ ============
Basic (loss) earnings per share:
(Loss) income from continuing operations $ (1.16) $ 0.90 $ 0.53 $ 2.68
Discontinued operations (3.33) (4.15) (0.02)
------------ ------------ ------------ ------------
Net (loss) income (4.49) 0.90 (3.62) 2.66
------------ ------------ ------------ ------------
Adjusted weighted average shares outstanding 61,018,000 60,860,000 60,976,000 59,540,000
============ ============ ============ ============
Diluted (loss) earnings per share:
(Loss) income from continuing operations $ (1.16) $ 0.86 $ 0.53 $ 2.53
Discontinued operations (3.33) (4.15) (0.01)
------------ ------------ ------------ ------------
Net (loss) income (4.49) 0.86 (3.62) 2.52
------------ ------------ ------------ ------------
Adjusted weighted average shares outstanding 61,018,000 65,024,000 60,976,000 64,103,000
============ ============ ============ ============
Dividends declared per common share $ 0.18 $ 0.18 $ 0.54 $ 0.50
============ ============ ============ ============
</TABLE>
<PAGE>
The FINOVA Group Inc.
Selected Consolidated Continuing Operations Financial Data
and Ratios (Unaudited) (A)
(Dollars in Thousands)
<TABLE>
<CAPTION>
As of Sept. 30 As of Dec. 31
-------------------------- -------------
2000 1999 1999
----------- ----------- -----------
<S> <C> <C> <C>
FINANCIAL POSITION:
Ending funds employed $10,434,102 $ 9,764,377 $10,321,813
Securitizations (B) 393,831 123,681 121,322
----------- ----------- -----------
Total managed assets 10,827,933 9,888,058 10,443,135
Reserve for credit losses 257,702 166,742 178,266
Nonaccruing assets 421,007 169,390 174,993
Accruing impaired assets 246,889 92,664 108,764
Nonaccruing assets as a % of managed assets (C) 3.9% 1.7% 1.7%
Reserve for credit losses as a % of:
Ending managed assets (C) 2.4% 1.7% 1.7%
Nonaccruing assets 61.2% 98.4% 101.9%
Problem assets 38.6% 63.6% 62.8%
Total assets $13,356,734 $12,594,882 $13,889,889
Total debt 11,271,980 10,289,419 11,407,767
Preferred securities 111,550 111,550 111,550
Common shareowners' equity 1,430,631 1,591,699 1,663,381
Backlog 1,682,538 2,233,922 1,905,531
Common shares repurchased 1,815,000 1,833,241
Leverage (debt to common and preferred equity) 7.3x 6.0x 6.4x
For the Quarter Ended For the Nine Months Ended
Sept. 30, Sept. 30,
--------------------------- ---------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
PERFORMANCE HIGHLIGHTS:
Average managed assets $10,819,855 $ 9,517,230 $10,644,576 $ 9,054,845
Average earning assets (C) 9,667,845 8,871,143 9,705,134 8,450,478
New business 619,047 1,104,375 2,364,403 2,838,025
Fee-based volume 746,663 193,579 1,693,797
Net write-offs 30,793 7,952 62,008 14,830
Net write-offs (annualized as a % of
average managed assets) 1.14% 0.33% 0.78% 0.22%
Operating margin (annualized as
a % of average earning assets) 4.8% 5.8% 5.1% 5.6%
Interest margins earned (annualized as a
% of average earning assets) 4.8% 5.7% 5.1% 5.4%
Operating expenses as a % of
operating margin 25.5% 31.1% 32.8% 34.5%
Return (annualized on average common)
Equity (67.9)% 14.0% (17.8)% 14.6%
</TABLE>
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(A) Averages for the periods presented are based on month-end balances except
for the weighting of acquisitions, which are based on days outstanding.
(B) Securitizations are assets sold under securitization agreements and managed
by the Company.
(C) Average earning assets equal average funds employed less average deferred
taxes on leveraged leases and average nonaccruing assets.
