Press Release: FINOVA Capital Corporation
April 3, 2001
SCOTTSDALE, AZ -- FINOVA Capital Corporation (``FINOVA Capital''), the principal operating subsidiary of The FINOVA
Group Inc. (``FINOVA'') yesterday announced a net loss of $936.0 million for the year ended Dec. 31, 2000, compared
to net income of $219.0 million in 1999. The results included a net loss from continuing operations of $542.9 million
in 2000 compared to net income of $222.0 million in 1999, and a net loss from discontinued operations in 2000 of
$393.1 million compared to a net loss of $3.0 million in 1999.
For the quarter ended Dec. 31, 2000, FINOVA Capital announced a net loss of $718.2 million compared to net income
of $57.6 million in the fourth quarter of 1999. The net loss for the fourth quarter of 2000 from continuing operations
was $578.0 million compared to net income of $59.6 million in the fourth quarter of 1999, and the net loss from
discontinued operations for the fourth quarter of 2000 was $140.1 million compared to a net loss of $2.1 million
in the fourth quarter of 1999.
In 2000, FINOVA Capital experienced a significant deterioration in the credit quality of its portfolio caused in
part by a softening U.S. economy and certain industry specific economic weaknesses affecting many of its customers
in those industries. Additionally, with the loss of its investment grade credit ratings and limited access to capital,
FINOVA Capital's cost of funds increased significantly during the course of the year. The impact of these events
and current economic conditions resulted in increased levels of problem accounts and higher cost of funds (resulting
in lower interest margins), higher reserve requirements, higher write-offs, losses on investments and disposal
of assets, impairment of intangible assets, reduced tax benefits and the decision to exit certain businesses.
Other Matters
On Feb. 26, 2001, FINOVA and FINOVA Capital entered into a commitment with Berkshire Hathaway Inc., Leucadia National
Corporation and Berkadia, LLC, an entity jointly owned by Berkshire Hathaway and Leucadia pursuant to which Berkadia
would lend $6 billion on a senior secured basis to FINOVA Capital, to facilitate a Chapter 11 restructuring of
its outstanding debt. On Mar. 7, 2001, FINOVA, FINOVA Capital and seven of their subsidiaries filed for protection
under Chapter 11 of the United States Bankruptcy Code. On the first day of these proceedings, the bankruptcy court
granted various orders authorizing FINOVA Capital to continue operating in the ordinary course of business, including
funding commitments to its customers. As of the filing date, FINOVA Capital had over $1 billion of cash on hand.
Due to delays caused by the bankruptcy process and other events, FINOVA Capital has filed for an automatic 15-day
extension to file its annual report on Form 10-K with the Securities and Exchange Commission. FINOVA Capital expects
to file the 10-K on or before Apr. 16, 2001.
FINOVA Capital Corporation is a financial services company focused on providing a broad range of capital solutions
primarily to midsize business. FINOVA Capital is headquartered in Scottsdale, Ariz. with business offices throughout
the U.S. and in London, U.K., and Toronto, Canada. For more information, visit the company's website at www.finova.com.
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 reorganization proceedings and the pending transaction with
Berkadia, LLC; 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 Capital's SEC reports, including page 15 of FINOVA Capital's 10-K for 1999.
FINOVA Capital Corporation
And Consolidated Subsidiaries
Selected Financial Data
(Subject to Final Audit)
(Dollars in Thousands)
Quarter Ended Twelve Months Ended
Dec. 31, Dec. 31,
2000 1999 2000 1999
OPERATIONS:
Interest margins earned $81,936 $130,154 $453,565 $473,187
Provision for credit
losses (501,653) (10,207) (643,000) (22,390)
(Losses) gains on
investments and
disposal of assets (113,040) 22,009 (168,589) 67,886
Operating expenses (277,184) (47,474) (399,412) (168,697)
(Loss) income from
continuing operations (578,011) 59,621 (542,927) 222,023
Net (loss) income (718,156) 57,564 (936,035) 219,096
As of Dec. 31,
2000 1999
FINANCIAL POSITION:
Managed assets $10,537,875 $10,443,136
Nonaccruing assets 921,351 174,993
Reserve for credit losses 578,750 178,266
Net assets of discontinued operations 1,162,223 2,702,236
Total assets 12,023,884 13,879,109
Total debt 10,997,687 11,407,767
Shareowner's equity 743,763 1,748,201
SOURCE: FINOVA Capital Corporation