-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FrKKKDQdCc7xE7sE6Pr7mKwT9B9ScuhDdDaWyrIuqfkljCV5y7mVomlwtH+wes3d aF0EilDoq7ZS8twg20D8+w== 0000950147-98-000825.txt : 19981019 0000950147-98-000825.hdr.sgml : 19981019 ACCESSION NUMBER: 0000950147-98-000825 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981014 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981016 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FINOVA CAPITAL CORP CENTRAL INDEX KEY: 0000043960 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 941278569 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-07543 FILM NUMBER: 98726487 BUSINESS ADDRESS: STREET 1: 1850 N CENTRAL AVE STREET 2: PO BOX 2209 CITY: PHOENIX STATE: AZ ZIP: 85004-2209 BUSINESS PHONE: 6022074900 MAIL ADDRESS: STREET 1: 1850 N. CENTRAL AVENUE STREET 2: P.O. BOX 2209 CITY: PHOENIX STATE: AZ ZIP: 85002-2209 FORMER COMPANY: FORMER CONFORMED NAME: GREYHOUND FINANCIAL CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: GREYHOUND LEASING & FINANCIAL CORP DATE OF NAME CHANGE: 19870330 8-K 1 CURRENT REPORT DATED 10/14/98 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C, 20549 -------------------- 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 14, 1998 - -------------------------------------------------------------------------------- FINOVA CAPITAL CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 1-11011 94-1278569 - -------------------------------------------------------------------------------- (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 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 602/207-6900 ----------------------------- Item 5. Other Events. FINOVA Capital Corporation announced revenues, net income and selected financial data and ratios for the third quarter ended September 30, 1998 (unaudited). Item 7. Financial Statements and Exhibits. (c) Exhibits: Exhibits Title -------- ------------------------------------------------- 28 Press Release of FINOVA Capital Corporation dated October 14, 1998 1 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. FINOVA CAPITAL CORPORATION (Registrant) Dated: October 16, 1998 By /s/ Bruno A. Marszowski ------------------------------------------- Bruno A. Marszowski, Senior Vice President, Chief Financial Officer and Controller Principal Financial Officer/Authorized Officer 2 EX-28 2 PRESS RELEASE DATED 10/14/98 EXHIBIT 28 Meilee Smythe Embargo until Senior Vice President - Treasurer 8:00 a.m. (E.D.T.) 602/ 207-2664 THESE ARE THE EARNINGS FOR FINOVA CAPITAL CORPORATION THE PRINCIPAL SUBSIDIARY OF THE FINOVA GROUP, INC. WHOSE EARNINGS WERE RELEASED OCTOBER 13, 1998 FINOVA CAPITAL CORPORATION Announces 23% Increase in Third Quarter Net Income PHOENIX, ARIZ., OCT. 14, 1998 -- FINOVA CAPITAL CORPORATION, the principal subsidiary of the FINOVA Group, Inc., today reported net income of $44.1 million for the third quarter of 1998 compared to net income of $35.9 million in the third quarter of 1997, a 23% increase in net income. Net income for the first nine months of 1998 was $126.1 million compared to net income of $103.4 million for the first nine months of 1997, a 22% increase in net income. "During this turbulent period for many financial services companies, I am pleased with FINOVA's continued strong performance, which primarily was driven by the growth in interest margins coupled with our disciplined cost control," said FINOVA Chairman & CEO Sam Eichenfield. Eichenfield went on to say, "we generated record new business during the quarter that resulted in substantial portfolio growth, while maintaining high portfolio quality and ample reserve coverage." New business for the third quarter of 1998 was $2.9 billion, consisting of $1.3 billion new leases and loans and $1.6 billion of fee based volume, compared to total new business of $1.7 billion for the third quarter of 1997. For the first nine months of 1998, new business totaled $8.1 billion compared to $5.0 billion for the equivalent 1997 period. As a result, managed assets grew by 17% over the last twelve months to $9.9 billion at Sept. 30, 1998. This new business was added while maintaining the backlog at $2.2 billion, a level 37% higher than at Sept. 30, 1997. Annualized operating margins as a percentage of average earning assets were 6.4% and 6.5%, respectively for the third quarter and first nine months of 1998 compared to 6.1% and 6.0% for the respective 1997 periods. Operating margins grew by 20% in the third quarter of 1998 to $137.4 million and by 23% to $401.5 million for the nine months of 1998. "Portfolio quality, which is extremely important to us at FINOVA, continues to be maintained with nonaccruing assets running at 2% of managed assets," Eichenfield added. Net write-offs for the quarter and year-to-date periods of 1998 were $9.9 million and $36.9 million, respectively, compared to $13.9 million and $29.2 million for the equivalent three- and nine-month periods of 1997. Reserves for credit losses remained at 2% of managed assets and were 93.9% of nonaccruing assets at Sept. 30, 1998. Loss provisions to cover write-offs and the portfolio growth were $19 million in the third quarter of 1998 compared to $22 million for the comparable 1997 period. Net gains on sale of assets for the third quarter of 1998 totaled $13.4 million versus $8.7 million for the comparable 1997 period and included the traditional gains from the sale of residuals and other assets plus gains from the sale of loans via the Commercial Mortgage Backed Securities (CMBS) market. Total gains recorded more than offset losses of $12 million realized from the shorting of treasuries used to hedge the CMBS portfolio. "We have put into place committed programs to successfully place Realty Capital transactions, which we can elect to use, at our discretion, to help provide alternatives should turbulence continue in the traditional CMBS market place," Eichenfield said. Operating expenses for the quarter and first nine months of 1998 were $61.1 million and $175.8 million, respectively, compared to $44.8 million and $137.3 million for the equivalent 1997 periods. The 1998 periods included expenses related to FRC, acquired in the fourth quarter of 1997, which typically run higher than FINOVA's traditional commercial finance businesses. Operating expenses, as a percentage of operating margins were 44.5% and 43.8% for the third quarter and first nine months of 1998 compared to 39.3% and 42.0% for the comparable 1997 periods. Excluding the expenses related to FRC, FINOVA's operating expense ratio would have been 40.7% and 40.9% for the third quarter and nine months ended Sept. 30, 1998, respectively. "A significant portion of our new loan and lease business --45%-- was added in September, and therefore, did not result in any profit contribution," Eichenfield noted. Income taxes were higher in the 1998 periods, due to the increase in pre-tax income as well as to the realization of certain tax credits in the 1997 periods. 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. ### FINOVA Capital Corporation and Consolidated Subsidiaries Summary of Consolidated Income (Unaudited) (Dollars in Thousands)
Quarter Ended Nine Months Ended September 30, September 30, ----------------------- ----------------------- 1998 1997 1998 1997 --------- --------- --------- --------- Interest earned from financing transactions $ 232,835 $ 197,557 $ 654,770 $ 571,843 Operating lease income 24,019 30,253 88,107 85,164 Interest expense (122,235) (105,592) (347,794) (304,647) Operating lease depreciation (13,875) (17,727) (51,540) (51,786) --------- --------- --------- --------- Interest margins earned 120,744 104,491 343,543 300,574 Volume-based fee income 16,687 9,546 57,946 25,913 --------- --------- --------- --------- Operating margin 137,431 114,037 401,489 326,487 Provision for credit losses (19,000) (22,000) (44,500) (48,300) Gains on disposal of assets 13,438 8,706 24,243 22,407 Selling, administrative and other operating expenses (61,097) (44,773) (175,834) (137,263) --------- --------- --------- --------- Income before income taxes 70,772 55,970 205,398 163,331 Income taxes (26,694) (20,103) (79,317) (59,954) ========= ========= ========= ========= Net Income $ 44,078 $ 35,867 $ 126,081 $ 103,377 ========= ========= ========= =========
FINOVA Capital Corporation Selected Consolidated Financial Data and Ratios (Unaudited) (1) (Dollars in Thousands)
As of As of September 30 December 31 ------------------------- ----------- FINANCIAL POSITION: 1998 1997 1997 ---------- ---------- ---------- Ending funds employed (EFE) $9,392,529 $8,075,600 $8,399,456 Securitizations and participations sold (2) 516,019 373,737 457,967 ---------- ---------- ---------- Total managed assets 9,908,548 8,449,337 8,857,423 Reserve for credit losses 187,161 167,754 177,088 Nonaccruing assets 199,367 173,390 187,356 Nonaccruing assets as % of managed assets (4) 2.0% 2.1% 2.1% Reserve for credit losses as a % of: Ending managed assets (4)(5) 2.0% 2.0% 2.0% Nonaccruing assets 93.9% 96.7% 94.5% Total debt $7,891,283 $6,502,512 $6,764,581 Shareowner's equity 1,326,776 1,150,478 1,260,068 Backlog 2,189,168 1,601,334 1,601,218 Total debt to equity 5.95x 5.65x 5.37x For the Quarter Ended For the Nine Months Ended September 30, September 30, ------------------------- ------------------------- PERFORMANCE HIGHLIGHTS: 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Average managed assets $9,595,407 $8,234,743 $9,219,449 $7,989,202 Average earning assets (3) 8,628,830 7,456,595 8,285,807 7,208,380 New business 1,294,649 747,852 2,740,462 2,310,722 Fee-based volume 1,635,697 994,235 5,400,311 2,671,908 Net write-offs 9,943 13,941 36,930 29,165 Net write-offs (annualized) as a % of average managed assets (4) 0.42% 0.68% 0.54% 0.49% Operating margin (annualized) as a % of average earning assets 6.37% 6.12% 6.46% 6.04% Interest margins earned (annualized) as a % of average earning assets 5.60% 5.61% 5.53% 5.56% Selling, administrative and other operating expenses as a % of operating margin 44.46% 39.26% 43.80% 42.04%
- ---------- (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) Excludes financing contracts held for sale. -----END PRIVACY-ENHANCED MESSAGE-----