UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C.
20549
FORM 10-Q
Quarterly Report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of
1934
For the quarterly period ended September 30, 2002
Commission file number 1-11011
THE FINOVA GROUP INC.
(Exact name of registrant as specified in its charter)
| Delaware |
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86-0695381 |
| (State or other jurisdiction of incorporation or |
|
(I.R.S. employer identification no.) |
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| 4800 North Scottsdale Road Scottsdale, AZ |
|
85251-7623 |
| (Address of principal executive offices) |
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(Zip code) |
Registrant’s telephone number, including area code: 480-636-4800
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Yes |
x |
No |
o |
| Yes |
x |
No |
o |
THE FINOVA GROUP INC.
TABLE OF CONTENTS
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Page No. |
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| Item 1. |
1 | |
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1 | |
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2 | |
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3 | |
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4 | |
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Notes to Interim Condensed Consolidated Financial Statements |
5 |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15 |
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28 | |
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| Item 3. |
29 | |
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| Item 4. |
30 | |
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| Item 1. |
30 | |
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| Item 6. |
30 | |
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| 31 | ||
THE FINOVA GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
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Reorganized Company |
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September 30, 2002 |
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December 31, 2001 |
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(Unaudited) |
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(Audited) |
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| ASSETS |
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| Cash and cash equivalents |
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$ |
487,116 |
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$ |
1,027,241 |
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| Financing Assets: |
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| Loans and other financing contracts, net |
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3,223,672 |
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5,020,426 |
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| Direct financing leases |
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309,549 |
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354,958 |
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| Leveraged leases |
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177,825 |
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196,813 |
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| Total financing assets |
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3,711,046 |
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5,572,197 |
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| Less reserve for credit losses |
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(679,921 |
) |
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(1,019,878 |
) |
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| Net financing assets |
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3,031,125 |
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4,552,319 |
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| Other Financial Assets: |
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| Assets held for sale |
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210,221 |
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420,025 |
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| Operating leases |
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124,194 |
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190,925 |
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| Assets held for the production of income |
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83,621 |
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151,872 |
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| Investments |
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23,708 |
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116,745 |
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| Total other financial assets |
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441,744 |
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879,567 |
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| Total Financial Assets |
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3,472,869 |
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5,431,886 |
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| Other assets |
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23,803 |
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44,898 |
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$ |
3,983,788 |
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$ |
6,504,025 |
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| LIABILITIES AND SHAREOWNERS’ EQUITY |
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| Liabilities: |
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| Berkadia Loan |
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$ |
2,400,000 |
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$ |
4,900,000 |
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| Senior debt - (principal amount due of $3,152,301 and $3,250,478, respectively) |
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2,438,399 |
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2,489,082 |
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| Total debt |
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4,838,399 |
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7,389,082 |
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| Accounts payable and accrued expenses |
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206,370 |
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223,155 |
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| Deferred income taxes, net |
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16,607 |
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12,357 |
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| Total Liabilities |
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5,061,376 |
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7,624,594 |
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| Shareowners’ Equity: |
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| Common stock, $0.01 par value, 400,000,000 shares authorized and 125,873,000 shares issued |
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1,259 |
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1,259 |
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| Additional capital |
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52,997 |
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16,928 |
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| Accumulated deficit |
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(1,126,172 |
) |
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(1,142,300 |
) |
| Accumulated other comprehensive (loss) income |
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(5,136 |
) |
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4,080 |
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| Common stock in treasury, 3,832,000 shares |
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(536 |
) |
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(536 |
) |
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| Total Shareowners’ Equity |
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(1,077,588 |
) |
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(1,120,569 |
) |
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$ |
3,983,788 |
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$ |
6,504,025 |
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See notes to interim condensed consolidated financial statements.
1
THE FINOVA GROUP INC.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
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Reorganized Company |
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Predecessor |
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Reorganized Company |
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Predecessor Company |
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Three Months |
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One Month |
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| Revenues: |
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| Interest income |
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$ |
49,758 |
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$ |
37,238 |
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$ |
80,838 |
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$ |
193,181 |
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$ |
400,764 |
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| Rental income |
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9,604 |
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5,663 |
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11,741 |
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30,777 |
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52,067 |
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| Operating lease income |
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12,994 |
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5,279 |
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11,671 |
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36,153 |
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51,068 |
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| Fees and other income |
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10,384 |
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7,102 |
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13,084 |
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35,668 |
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70,461 |
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| Total Revenues |
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82,740 |
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55,282 |
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117,334 |
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295,779 |
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574,360 |
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| Gain from extinguishment of debt, net of |
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46,888 |
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46,888 |
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| Expenses: |
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| Interest expense |
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96,858 |
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47,734 |
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105,180 |
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312,930 |
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436,445 |
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| Operating lease and other depreciation |
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8,347 |
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8,435 |
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12,702 |
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29,116 |
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59,882 |
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| Provision for credit losses |
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(69,467 |
) |
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606,813 |
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6,023 |
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(223,485 |
) |
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230,772 |
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| Net loss on financial assets |
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33,159 |
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219,281 |
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66,430 |
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96,718 |
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320,934 |
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| Portfolio expenses |
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12,211 |
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|
858 |
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5,377 |
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33,766 |
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12,521 |
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| General and administrative expenses |
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24,299 |
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21,794 |
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33,734 |
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77,449 |
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121,553 |
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| Net reorganization expense |
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54,583 |
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46,527 |
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| Total Expenses |
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105,407 |
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904,915 |
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284,029 |
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326,494 |
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1,228,634 |
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| Income (loss) from continuing operations |
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24,221 |
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(849,633 |
) |
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(166,695 |
) |
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16,173 |
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(654,274 |
) |
| Income tax (expense) benefit |
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(41 |
) |
|
(414 |
) |
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4,812 |
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(45 |
) |
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2,765 |
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| Income (loss) from continuing operations |
|
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24,180 |
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(850,047 |
) |
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(161,883 |
) |
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16,128 |
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(651,509 |
) |
| Preferred dividends, net of tax |
|
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(110 |
) |
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3,074 |
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| Income (loss) from continuing operations |
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24,180 |
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(850,047 |
) |
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(161,773 |
) |
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16,128 |
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(654,583 |
) |
| Discontinued operations, net of tax expense |
|
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4,383 |
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2,980 |
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| Net loss on disposal of operations |
|
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|
|
|
|
|
|
|
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(17,997 |
) |
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| Income (loss) before extraordinary item |
|
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24,180 |
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(850,047 |
) |
|
(157,390 |
) |
|
16,128 |
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|
(669,600 |
) |
| Extraordinary item - gain on debt discharge |
|
|
|
|
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|
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|
28,750 |
|
|
|
|
|
28,750 |
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|
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| Net Income (Loss) |
|
$ |
24,180 |
|
$ |
(850,047 |
) |
$ |
(128,640 |
) |
$ |
16,128 |
|
$ |
(640,850 |
) |
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| Basic/diluted earnings (loss) per share: |
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