<PAGE>

================================================================================

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington D.C. 20594

                                   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, 2001

                         Commission File Number 1-11011

                             THE FINOVA GROUP INC.
             (Exact Name of Registrant as Specified in Its Charter)

                  Delaware                                   86-0695381
(State or Other Jurisdiction of Incorporation or          (I.R.S. Employer
                Organization)                           Identification No.)

       4800 North Scottsdale Road                            85251-7623
             Scottsdale, AZ                                  (Zip Code)
(Address of Principal Executive Offices)

        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 |_|

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court.

                                 Yes |X| No |_|

                     APPLICABLE ONLY TO CORPORATE ISSUERS:
As of November 14, 2001, approximately 122,041,000 shares of Common Stock ($0.01
                          par value) were outstanding.

================================================================================

<PAGE>


                             THE FINOVA GROUP INC.

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                Page No.
                                                                                                --------
<S>                                                                                             <C>
Introduction                                                                                           1

Part I   Financial Information                                                                         2

Item 1.    Financial Statements                                                                        2

           Condensed Consolidated Balance Sheets                                                       2

           Condensed Statements of Consolidated Operations                                             3

           Condensed Statements of Consolidated Cash Flows                                             4

           Condensed Consolidated Statements of Shareowners' Equity (Deficit)                          5

           Notes to Interim Condensed Consolidated Financial Statements                                6

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations      20

Item 3.    Quantitative and Qualitative Disclosure About Market Risk                                  26

Part II    Other Information                                                                          26

Item 1.    Legal Proceedings                                                                          26

Item 2.    Changes in Securities and Use of Proceeds                                                  26

Item 4.    Submission of Matters to a Vote of Security Holders                                        27

Item 6.    Exhibits and Reports on Form 8-K.                                                          28

Signatures                                                                                            30
</TABLE>

<PAGE>

INTRODUCTION

      On August 21, 2001, The FINOVA Group Inc. ("FINOVA" or the "Company") and
eight of its subsidiaries emerged from Chapter 11 bankruptcy protection.
Pursuant to FINOVA's Third Amended and Restated Joint Plan of Reorganization of
Debtors, as amended and supplemented (the "Plan"), Berkadia LLC ("Berkadia"), a
company jointly owned by Berkshire Hathaway Inc. and Leucadia National
Corporation, loaned FINOVA Capital Corporation ("FINOVA Capital") $5.6 billion.
The loan proceeds, together with cash on hand and the issuance of $3.25 billion
principal amount of 7.5% Senior Secured Notes maturing 2009 with Contingent
Interest due 2016 (the "New Senior Notes") were used to restructure the
Company's debt. In addition, FINOVA issued Berkadia common shares representing
50% of FINOVA shares outstanding after giving effect to the implementation of
the Plan.

      As more fully described in the Plan, the Company's current business
activities are limited to maximizing the value of its portfolio through the
orderly collection of its receivables and sales of assets. As required under its
credit agreement with Berkadia and the Indenture governing the New Senior Notes
(the "Indenture"), FINOVA is not engaged in any new customer lending activities
nor does it expect to engage in any of these activities for the foreseeable
future. All funds generated in excess of defined cash reserves from the
management of its portfolio are to be used to satisfy its creditors in the
manner and in the priorities as set forth in the Berkadia Loan (as defined
below) and the Indenture.

      Under the Plan, holders of allowed unsecured claims against FINOVA Capital
received a cash payment equal to 70% of the claims (excluding interest), a cash
payment equal to 100% of accrued and unpaid pre-petition and post-petition
interest and New Senior Notes equal to 30% of the claims (excluding interest).
Holders of FINOVA Finance Trust's Convertible Trust Originated Preferred
Securities were also paid in accordance with the Plan. Implementation of the
Plan resulted in a reduction in the principal amount of outstanding debt of
approximately $2.1 billion, from $11.0 billion to $8.9 billion.

      Upon emergence from bankruptcy, FINOVA adopted Fresh-Start Reporting as
required under accounting principles generally accepted in the United States
("GAAP"). Under Fresh-Start Reporting, the Company's assets and liabilities are
recorded at their fair values in a manner similar to the accounting provisions
applied for business combinations under purchase accounting. As a result, the
New Senior Notes were recorded at an initial discounted amount of $2.48 billion
($771.3 million discount), and the historical carrying amounts of FINOVA's
assets were reduced by $863.7 million. The discounted value of the New Senior
Notes will be accreted to the $3.25 billion face amount over time through
charges to interest expense. FINOVA remains obligated to pay the full face
amount of its debt. Similarly, the reductions to the historical carrying amounts
of the Company's recorded assets do not change its customers' obligation to
repay FINOVA in full.

      Fresh-Start Reporting results in a new reporting entity on the date of
emergence and as such, financial statements of the "new" Company as of August
31, 2001 will not be comparable to those of prior periods. In the financial
statements that follow, FINOVA's financial position and results of operations
for periods prior to its emergence from bankruptcy and Fresh-Start Reporting are
reflected under columns titled "Predecessor Company" and financial information
for periods after the effective date of the Plan are shown under columns titled
"Reorganized Company."

      The tragic events of September 11, 2001 caused an enormous loss of life
and property that significantly impacted the United States and world economies.
Three of FINOVA's operations, transportation, resort and specialty real estate,
are being directly affected. FINOVA's other businesses are affected by the
resulting residual effect of a declining economy. FINOVA has recorded an $851.1
million charge as an estimate of the financial impact of these events. The
Company performed extensive analyses to estimate the financial impact of this
event, which included detailed projections of cash flows the Company expects to
receive over time on an asset by asset basis, a review of industry trends and an
assessment of the current marketplace. While the Company used all available
information to prepare these analyses, its ultimate actual impact will be
affected by future economic conditions and unknown events, which are difficult
to predict with a great degree of accuracy. Accordingly, the Company's current
estimate of the impact of these events is likely to change in the future.

      Due primarily to the impact of the September 11, 2001 events, FINOVA's net
worth declined from a positive $17.6 million on emergence to a negative $835.8
million at September 30, 2001. The Company's negative net worth reflects its
obligation to New Senior Note holders at the discounted amount of $2.48 billion.
If the New Senior Notes were reflected at their principal amount of $3.25
billion and no other adjustments were made, its negative net worth would be
reduced further to $1.61 billion.


                                       1

<PAGE>


PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                             THE FINOVA GROUP INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                                Reorganized Company   Predecessor Company
                                                                   September 30,          December 31,
                                                                        2001                 2000
---------------------------------------------------------------------------------------------------------
<S>                                                                <C>                   <C>
ASSETS
Cash and cash equivalents                                          $  1,047,867          $    699,228
Financing Assets:
  Loans and other financing contracts                                 5,452,253             7,835,698
  Direct financing leases                                               410,174               557,471
  Leveraged leases                                                      217,552               803,581
---------------------------------------------------------------------------------------------------------
  Total financing assets                                              6,079,979             9,196,750
  Less reserve for credit losses                                       (863,510)             (578,750)
---------------------------------------------------------------------------------------------------------
  Net financing assets                                                5,216,469             8,618,000
---------------------------------------------------------------------------------------------------------
Other Financial Assets:
  Assets held for sale                                                  570,265               421,956
  Operating leases                                                      264,734               561,698
  Investments                                                           196,740               285,934
  Assets held for the production of income                              100,508               235,170
  Net assets of discontinued operations                                                     1,162,223
---------------------------------------------------------------------------------------------------------
  Total other financial assets                                        1,132,247             2,666,981
---------------------------------------------------------------------------------------------------------
Total Financial Assets                                                6,348,716            11,284,981
Other assets                                                             62,828                59,460
Goodwill, net of accumulated amortization                                                      45,417
---------------------------------------------------------------------------------------------------------
                                                                   $  7,459,411          $ 12,089,086
=========================================================================================================
LIABILITIES AND SHAREOWNERS' EQUITY (DEFICIT)
Liabilities:
Berkadia Loan                                                      $  5,600,000          $
Senior debt Reorganized Company (face amount of $3.25 billion)        2,479,140
Senior debt Predecessor Company                                                            10,997,687
---------------------------------------------------------------------------------------------------------
Total debt                                                            8,079,140            10,997,687
Accounts payable and accrued expenses                                   205,721               257,713
Deferred income taxes, net                                               10,391                49,202
---------------------------------------------------------------------------------------------------------
Total Liabilities                                                     8,295,252            11,304,602
---------------------------------------------------------------------------------------------------------

Convertible Preferred Securities                                                              111,550

Shareowners' Equity (Deficit):
Common stock, $0.01 par value, 400,000,000 shares authorized
  and 125,873,000 and 64,849,000 shares issued,  respectively             1,259                   648
Additional capital                                                       16,928             1,107,575
Retained deficit                                                       (850,047)             (283,435)
Accumulated other comprehensive (loss) income                            (3,445)               15,154
Common stock in treasury, 3,832,000 and 3,554,000 shares,
  respectively                                                             (536)             (167,008)
---------------------------------------------------------------------------------------------------------
Total Shareowners' Equity (Deficit)                                    (835,841)              672,934
---------------------------------------------------------------------------------------------------------
                                                                   $  7,459,411          $ 12,089,086
=========================================================================================================
</TABLE>

See notes to interim condensed consolidated financial statements.


                                       2

<PAGE>

                             THE FINOVA GROUP INC.
                CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
                 (Dollars in Thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                       Reorganized Company             Predecessor Company
                                                         One Month Ended      Two Months Ended    Three Months Ended
                                                        September 30, 2001     August 31, 2001    September 30, 2000
--------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                   <C>                  <C>
Revenues
Interest income                                           $      37,238         $     80,838         $    216,733
Rental income                                                     5,663               11,741               23,586
Operating lease income                                            5,279               11,671               26,091
Fees and other income                                             7,102               13,084               26,531
--------------------------------------------------------------------------------------------------------------------
  Total Revenues                                                 55,282              117,334              292,941
--------------------------------------------------------------------------------------------------------------------
Expenses
Interest expense                                                 47,734              105,180              161,565
Operating lease and other depreciation                            8,435               12,702               15,974
Provision for credit losses                                     606,813                6,023              111,237
Losses on financial assets                                      219,281               66,430               90,042
Operating expenses                                               22,652               39,111               29,466
Net reorganization expense                                                            54,583
--------------------------------------------------------------------------------------------------------------------
  Total Expenses                                                904,915              284,029              408,284
--------------------------------------------------------------------------------------------------------------------
(Loss) income from continuing operations before
  income taxes and preferred dividends                         (849,633)            (166,695)            (115,343)
Income tax (expense) benefit                                       (414)               4,812               45,278
--------------------------------------------------------------------------------------------------------------------
(Loss) income from continuing operations before
  preferred dividends                                          (850,047)            (161,883)             (70,065)
Preferred dividends, net of tax                                                         (110)                 946
--------------------------------------------------------------------------------------------------------------------
(Loss) income from continuing operations                       (850,047)            (161,773)             (71,011)
Discontinued operations, net of tax (1)                                                4,383               11,803
Net loss on disposal of operations, net of tax (1)                                                       (214,853)
--------------------------------------------------------------------------------------------------------------------
Loss before extraordinary item                                 (850,047)            (157,390)            (274,061)
Extraordinary item-gain on debt discharge                                             28,750
--------------------------------------------------------------------------------------------------------------------
NET LOSS                                                  $    (850,047)        $   (128,640)        $   (274,061)
====================================================================================================================
Basic/diluted (loss) earnings per share:
(Loss) income from continuing operations                  $       (6.97)        $      (2.28)        $      (1.16)
Discontinued operations                                                                 0.06                (3.33)
Extraordinary item                                                                      0.41
--------------------------------------------------------------------------------------------------------------------
Net loss per share                                        $       (6.97)        $      (1.81)        $      (4.49)
--------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding                         122,041,000           70,972,000           61,018,000
====================================================================================================================
<CAPTION>
---------------------------------------------------------------------------------------------
                                                                Predecessor Company
                                                       Eight Months Ended   Nine Months Ended
                                                        August 31, 2001    September 30, 2000
---------------------------------------------------------------------------------------------
<S>                                                      <C>                  <C>
Revenues
Interest income                                          $    400,764         $    630,329
Rental income                                                  52,067               73,475
Operating lease income                                         51,068               80,433
Fees and other income                                          70,461               92,195
---------------------------------------------------------------------------------------------
  Total Revenues                                              574,360              876,432
---------------------------------------------------------------------------------------------
Expenses
Interest expense                                              436,445              454,421
Operating lease and other depreciation                         59,882               49,046
Provision for credit losses                                   230,772              141,347
Losses on financial assets                                    320,934               55,549
Operating expenses                                            134,074              122,228
Net reorganization expense                                     46,527
---------------------------------------------------------------------------------------------
  Total Expenses                                            1,228,634              822,591
---------------------------------------------------------------------------------------------
(Loss) income from continuing operations before
  income taxes and preferred dividends                       (654,274)              53,841
Income tax (expense) benefit                                    2,765              (18,757)
---------------------------------------------------------------------------------------------
(Loss) income from continuing operations before
  preferred dividends                                        (651,509)              35,084
Preferred dividends, net of tax                                 3,074                2,837
---------------------------------------------------------------------------------------------
(Loss) income from continuing operations                     (654,583)              32,247
Discontinued operations, net of tax (1)                         2,980              (38,110)
Net loss on disposal of operations, net of tax (1)            (17,997)            (214,853)
---------------------------------------------------------------------------------------------
Loss before extraordinary item                               (669,600)            (220,716)
Extraordinary item-gain on debt discharge                      28,750
---------------------------------------------------------------------------------------------
NET LOSS                                                 $   (640,850)        $   (220,716)
=============================================================================================
Basic/diluted (loss) earnings per share:
(Loss) income from continuing operations                 $     (10.28)        $       0.53
Discontinued operations                                         (0.23)               (4.15)
Extraordinary item                                               0.45
---------------------------------------------------------------------------------------------
Net loss per share                                       $     (10.06)        $      (3.62)
---------------------------------------------------------------------------------------------
Weighted average shares outstanding                        63,677,000           60,976,000
=============================================================================================
</TABLE>

(1)   Discontinued operations is net of a tax expense of $201 for the two months
      ended August 31, 2001 and net of a tax expense of $8,313 for the three
      months ended September 30, 2000. Net loss on disposal of operations is net
      of a tax benefit of $140,570 for the three months ended September 30,
      2000. Discontinued operations is net of a tax expense of $1,359 for the
      eight months ended August 31, 2001 and net of a tax benefit of $24,880 for
      the nine months ended September 30, 2000. Net loss on disposal of
      operations is net of a tax benefit of $140,570 for the nine months ended
      September 30, 2000.

See notes to interim condensed consolidated financial statements.


                                       3

<PAGE>

                              THE FINOVA GROUP INC.
                 CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                               Reorganized Company                Predecessor Company
                                                                 One Month Ended       Eight Months Ended       Nine Months Ended
                                                               September 30, 2001       August 31, 2001        September 30, 2000
<S>                                                               <C>                     <C>                     <C>
---------------------------------------------------------------------------------------------------------------------------------
Net Cash (Used) Provided by Continuing Operating
  Activities                                                      $    (4,549)            $  (162,661)            $   157,707
---------------------------------------------------------------------------------------------------------------------------------
Investing Activities:
  Proceeds from disposal of leases and other owned assets                  53                  59,857                  69,898
  Proceeds from sales of investments                                    6,295                  60,781                  82,737
  Proceeds from sales of financial assets                                                     329,085                 110,712
  Collections on financial assets                                     171,196               1,911,044               1,726,194
  Expenditures for financial assets                                   (33,310)               (591,723)             (2,364,403)
  Recoveries of loans previously written-off                              357                   4,964                     916
---------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided (Used) by Investing Activities                      144,591               1,774,008                (373,946)
---------------------------------------------------------------------------------------------------------------------------------

Financing Activities:
  Net change in commercial paper and short-term borrowings                                                            903,542
  Proceeds from issuance of term notes                                                                                225,000
  Repayment of term notes                                                                                          (1,263,900)
  Borrowing under Berkadia credit agreement                                                 5,600,000
  Repayment of indebtedness subject to Chapter 11
    proceedings                                                                            (7,827,398)
  Proceeds from exercise of stock options                                                                               1,112
  Dividends                                                                                                           (33,084)
---------------------------------------------------------------------------------------------------------------------------------
Net Cash Used by Financing Activities                                                      (2,227,398)               (167,330)
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Discontinued Operations                                                  824,648                 991,376
---------------------------------------------------------------------------------------------------------------------------------

Increase in Cash and Cash Equivalents                                 140,042                 208,597                 607,807

Cash and Cash Equivalents, Beginning of Period                        907,825                 699,228                 100,344

---------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents,  End of Period                         $ 1,047,867             $   907,825             $   708,151
=================================================================================================================================
</TABLE>

See notes to interim condensed consolidated financial statements.


                                       4

<PAGE>

                             THE FINOVA GROUP INC.
       CONDENSED CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY (DEFICIT)
                             (Dollars in Thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                 Retained  Accumulated Other
                                        Common    Additional    (Deficit)    Comprehensive
                                        Stock      Capital        Income     (Loss)/Income
--------------------------------------------------------------------------------------------
<S>                                     <C>      <C>            <C>             <C>
Balance, January 1, 2000                $  648   $ 1,109,521    $ 689,466       $ 33,812
--------------------------------------------------------------------------------------------
Comprehensive loss:
  Net loss                                                       (939,817)

  Net change in unrealized holding
    gains (losses)
  Net change in foreign currency
    translation

  Other comprehensive loss                                                       (18,658)

Comprehensive loss

Net change in unamortized amount
  of restricted stock and other                          941
Dividends                                                         (33,084)
Shares used in connection with
  employee benefit plans                              (2,887)
--------------------------------------------------------------------------------------------
Balance, December 31, 2000                 648     1,107,575     (283,435)        15,154
--------------------------------------------------------------------------------------------
Comprehensive loss:
  Net loss before reorganization and
    fresh-start reporting                                        (597,085)

  Net change in unrealized holding
    gains (losses)
  Net change in foreign currency
    translation

  Other comprehensive loss                                                       (19,540)

Comprehensive loss

Net change in unamortized amount
  of restricted stock and other                       11,956
Shares cancelled from
  employee benefit plans
Effect of reorganization and fresh-
  start reporting                          611    (1,102,631)     880,520          4,386
--------------------------------------------------------------------------------------------
Balance, August 31, 2001                 1,259        16,900
--------------------------------------------------------------------------------------------
Comprehensive loss:
  Net loss                                                       (850,047)

  Net change in unrealized holding
    gains (losses)
  Net change in foreign currency
    translation

  Other comprehensive loss                                                        (3,445)

Comprehensive loss

Other                                                     28
--------------------------------------------------------------------------------------------
Balance, September 30, 2001             $1,259   $    16,928    $(850,047)      $ (3,445)
============================================================================================
<CAPTION>
                                          Common         Total
                                         Stock In     Shareowners'    Comprehensive
                                         Treasury   Equity (Deficit)      Loss
--------------------------------------------------------------------
<S>                                     <C>            <C>             <C>
Balance, January 1, 2000                $(170,066)     $1,663,381
--------------------------------------------------------------------
Comprehensive loss:
  Net loss                                               (939,817)     $(939,817)
                                                                       ---------
  Net change in unrealized holding
    gains (losses)                                                       (22,709)
  Net change in foreign currency
    translation                                                            4,051
                                                                       ---------
  Other comprehensive loss                                (18,658)       (18,658)
                                                                       ---------
Comprehensive loss                                                     $(958,475)
                                                                       =========
Net change in unamortized amount
  of restricted stock and other                               941
Dividends                                                 (33,084)
Shares used in connection with
  employee benefit plans                    3,058             171
--------------------------------------------------------------------
Balance, December 31, 2000               (167,008)        672,934
--------------------------------------------------------------------
Comprehensive loss:
  Net loss before reorganization and
    fresh-start reporting                                (597,085)     $(597,085)
                                                                       ---------
  Net change in unrealized holding
    gains (losses)                                                       (19,000)
  Net change in foreign currency
    translation                                                             (540)
                                                                       ---------
  Other comprehensive loss                                (19,540)       (19,540)
                                                                       ---------
Comprehensive loss                                                     $(616,625)
                                                                       =========
Net change in unamortized amount
  of restricted stock and other                            11,956
Shares cancelled from
  employee benefit plans                  (11,263)        (11,263)
Effect of reorganization and fresh-
  start reporting                         177,735         (39,379)
--------------------------------------------------------------------
Balance, August 31, 2001                     (536)         17,623
--------------------------------------------------------------------
Comprehensive loss:
  Net loss                                               (850,047)     $(850,047)
                                                                       ---------
  Net change in unrealized holding
    gains (losses)                                                        (1,231)
  Net change in foreign currency
    translation                                                           (2,214)
                                                                       ---------
  Other comprehensive loss                                 (3,445)        (3,445)
                                                                       ---------
Comprehensive loss                                                     $(853,492)
                                                                       =========
Other                                                          28
--------------------------------------------------------------------
Balance, September 30, 2001             $    (536)     $ (835,841)
====================================================================
</TABLE>

See notes to interim condensed consolidated financial statements.


                                       5

<PAGE>

                             THE FINOVA GROUP INC.
          NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001
            (Dollars in thousands in tables, except per share data)

NOTE A  ORGANIZATION AND BASIS OF PRESENTATION

      The interim condensed consolidated financial statements present the
financial position, results of operations and cash flows of The FINOVA Group
Inc. and its subsidiaries (collectively, "FINOVA" or the "Company"), including
FINOVA Capital Corporation and its subsidiaries (collectively, "FINOVA
Capital"). All significant intercompany balances have been eliminated in
consolidation.

      Upon emergence from bankruptcy on August 21, 2001, FINOVA implemented
"Fresh-Start Reporting" in accordance with the provisions of the American
Institute of Certified Public Accountants Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7").
As a result of Fresh-Start Reporting, the Condensed Consolidated Financial
Statements for the Reorganized Company as of September 30, 2001 and for the
periods subsequent to September 30, 2001 (the "Reorganized Company") will not be
comparable to those of the Company for periods prior to September 30, 2001 (the
"Predecessor Company"). For financial reporting purposes, the effective date of
the Plan is considered to be the close of business on August 31, 2001, although
the Company emerged from its reorganization proceedings on August 21, 2001. The
results of operations from August 21, 2001 through August 31, 2001 were not
significant.

      The financial statements for the Reorganized Company include the Condensed
Consolidated Balance Sheet as of September 30, 2001 and Condensed Consolidated
Statements of Operations, Cash Flows and Shareowners' Equity (Deficit) for the
one month period ended September 30, 2001. The results of operations for the
Predecessor Company should not be considered indicative of the performance of
the Reorganized Company. See Note B "Chapter 11 Reorganization and Fresh-Start
Reporting" for further details.

      The interim condensed consolidated financial information is unaudited. In
the opinion of management, all adjustments necessary to present fairly the
financial position as of September 30, 2001 and the results of operations and
cash flows presented herein have been included. Interim results of operations
are not necessarily indicative of results of operations for the full year. The
accompanying financial statements should be read in connection with the
Predecessor Company's consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K/A for the year ended
December 31, 2000, which describes significant business developments that
culminated in the March 2001 filing for protection pursuant to Chapter 11, Title
11, of the United States Code, in the United States Bankruptcy Court for the
District of Delaware.

Going Concern

      The condensed consolidated financial statements have been prepared in
accordance with GAAP. As of December 31, 2000, the independent public
accountants of the Company qualified their report on the Company's 2000
financial statements due to their doubt as to the ability of the Company to
continue as a going concern.

      Subsequent to emergence, the United States was victimized by the terrorist
attacks of September 11, 2001. As a result of these events and the related
downturn in economic activity, the Company expects to incur additional losses in
its portfolio, particularly with respect to its investments in the
transportation, resort and hotel industries. Those industries have experienced,
and are expected to continue experiencing, losses of revenues as a direct result
of the terrorist attacks. FINOVA's other business activities are not as directly
affected; however, the resulting downturn in the economy is expected to
adversely affect many of FINOVA's borrowers. The Company estimated the impact of
the terrorist attacks as of September 30, 2001, resulting in significant
impairment of its portfolio and a substantial negative net worth. While FINOVA
continues to pay its obligations as they become due, the ability of the Company
to continue as a going concern is dependent upon many factors, particularly the
ability of its borrowers to pay their obligations as they become due and the
Company's ability to realize the value of its portfolio of assets, including
aircraft. The accompanying condensed consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
assets or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.

NOTE B  CHAPTER 11 REORGANIZATION AND FRESH-START REPORTING

Chapter 11 Reorganization

      As more fully described in FINOVA's Form 10-K/A for the year ended
December 31, 2000, beginning late in the first quarter of 2000, a series of
events impeded FINOVA's access to lower cost capital in the public and private
markets. On March 7, 2001, FINOVA,


                                       6

<PAGE>

FINOVA Capital and seven of their subsidiaries (the "Debtors") filed for
protection pursuant to Chapter 11, Title 11, of the United States Code in the
United States Bankruptcy Court for the District of Delaware (the "Bankruptcy
Court"). On August 10, 2001, the Bankruptcy Court entered an order confirming
the Plan, pursuant to which the Debtors restructured their debt, effective
August 21, 2001 (the "Effective Date").

      The following is a brief overview of the provisions of the Plan. This
overview should be read in conjunction with the Plan, which is incorporated by
reference in FINOVA's Current Reports on Form 8-K, filed on June 22, 2001 and
August 10, 2001, Exhibits 2.A and 2.B, respectively.

      Pursuant to the Plan, Berkadia loaned $5.6 billion to FINOVA Capital on a
senior secured basis (the "Berkadia Loan"). The proceeds of the Berkadia Loan,
together with cash on hand and the issuance by FINOVA of approximately $3.25
billion aggregate principal amount of the New Senior Notes were used to
restructure the Company's debt. In addition, FINOVA issued Berkadia 61,020,581
shares of common stock, representing 50% of FINOVA shares outstanding after
giving effect to the implementation of the Plan.

      Under the Plan, holders of allowed unsecured claims against FINOVA Capital
received (i) a cash payment equal to 70% of the general unsecured claims against
FINOVA Capital (not including pre-petition or post-petition interest) (ii) a
cash payment equal to the amount of accrued and unpaid pre-petition and
post-petition interest on those general unsecured claims and (iii) New Senior
Notes having an aggregate principal amount equal to 30% of those general
unsecured claims (not including pre-petition and post-petition interest).
Holders of the 5 1/2% Convertible Trust Originated Preferred Securities (the
"TOPrS") issued by FINOVA Finance Trust received (i) a cash payment equal to
52.5% of the liquidation preference attributable to the TOPrS (not including
pre-petition and post-petition dividends), (ii) a cash payment equal to 75% of
accrued and unpaid pre-petition and post-petition dividends attributable to the
TOPrS and (iii) New Senior Notes having an aggregate principal amount equal to
22.5% of the liquidation preference attributable to the TOPrS (not including
pre-petition and post-petition dividends). FINOVA's subordinated debentures
related to the TOPrS have been cancelled and FINOVA Finance Trust has been
dissolved pursuant to the Plan. Upon implementation of the Plan, FINOVA
Capital's debt was no longer publicly held, and it ceased to be a public company
following the Effective Date.

      The Berkadia Loan bears interest payable monthly, at the Eurodollar Rate
(as defined in the Credit Agreement dated August 21, 2001 between FINOVA Capital
and Berkadia ("Credit Agreement")), plus 2.25%. Principal is payable out of
available cash (as defined in the Credit Agreement). All unpaid principal and
accrued interest is due at maturity on August 20, 2006. FINOVA and substantially
all of its direct and indirect subsidiaries (except those that are contractually
prohibited from acting as a guarantor) (the "Guarantors") have guaranteed FINOVA
Capital's repayment of the Berkadia Loan. The guarantees are secured by
substantially all of the Guarantors' assets.

      The New Senior Notes mature in November 2009 and bear interest, payable
semi-annually, to the extent that cash is available for that purpose in
accordance with the Indenture, at a fixed interest rate of 7.5% per annum.
FINOVA's obligations with respect to the payment of interest and principal under
the New Senior Notes are secured by a second-priority security interest in (i)
all of the capital stock of FINOVA Capital, (ii) promissory notes of FINOVA
Capital issued to FINOVA in the aggregate principal amount of the New Senior
Notes (the "Intercompany Notes"), and (iii) certain other property of FINOVA
that may be acquired from its subsidiaries in the future. The Intercompany Notes
are secured by a second-priority lien on the assets of FINOVA Capital pledged to
secure the Berkadia Loan. The holders of the New Senior Notes have no right to
enforce their security interests until the Berkadia Loan is paid in full.

      Permitted uses of cash are specified in the Indenture. Generally, the
Company is permitted to use its cash in the following order; first to fund its
operating expenses, including payment of taxes, funding customer commitments and
payment of interest on the Berkadia Loan; then to pay interest on the New Senior
Notes; then to make optional purchases of the New Senior Notes with the consent
of Berkadia and otherwise in accordance with the terms of the Indenture in an
aggregate amount not to exceed $1.5 billion while the Berkadia Loan is
outstanding, and thereafter in an amount not to exceed $150 million per year.
After repayment of the Berkadia Loan and the other items noted above,
ninety-five percent (95%) of the remaining available cash will be used to make
semi-annual prepayments of principal on the New Senior Notes and five percent
(5%) will be used for distributions to and/or repurchases of stock from FINOVA
shareowners. It should be noted that these distributions cannot be made to
shareowners so long as FINOVA has a retained deficit. Instead, these payments
will be held until legally permitted for that purpose under corporate law. These
restrictions also apply to the shareowner payments noted below.

      After payment in full of the outstanding principal of the New Senior Notes
and payments to FINOVA common shareowners in an aggregate amount equal to 5.263%
of the aggregate principal amount of the New Senior Notes, ninety-five percent
(95%) of any available cash will be used to pay contingent interest to holders
of New Senior Notes in an aggregate amount of up to $100 million (as such amount
may be reduced to reflect a decrease in the principal amount of New Senior Notes
outstanding as a result of repurchases by FINOVA) and five percent (5%) of such
remaining available cash will be used for distributions to and/or repurchases of
stock from


                                       7

<PAGE>

FINOVA shareowners. Contingent interest payments will terminate in 2016.
FINOVA's obligation to make the contingent interest payments are not secured.
Based on the Company's current financial condition, it is doubtful that there
will be funds available to make any contingent interest payments.

      Pursuant to the Plan, FINOVA's Board of Directors was reconstituted and is
comprised of four directors designated by Berkadia, two prior directors of
FINOVA and one director designated by the Official Committee of Creditors. The
Berkadia designated directors are Ian M. Cumming, Joseph S. Steinberg, Lawrence
S. Hershfield and R. Gregory Morgan; the continuing FINOVA directors are G.
Robert Durham and Kenneth R. Smith; and Thomas F. Boland was designated by the
Committee of Creditors.

      FINOVA's business is being operated under a 10-year Management Services
Agreement with Leucadia. Leucadia has designated its employees to act as
Chairman of the Board (Ian M. Cumming), President (Joseph S. Steinberg) and
Chief Executive Officer (Lawrence S. Hershfield).

Fresh-Start Reporting

      In accordance with the provisions of the American Institute of Certified
Public Accountant's Statement of Position 90-7 "Financial Reporting by Entities
in Reorganization Under the Bankruptcy Code," the Company adopted Fresh-Start
Reporting. The Company adopted Fresh-Start Reporting because, as a result of
implementation of the Plan, holders of the Company's existing common stock
immediately before filing and confirmation of the Plan retained less than 50% of
the common stock of the emerging entity and the Company's reorganization value
is less than its post-petition liabilities and allowed claims. Fresh-Start
Reporting resulted in material adjustments to the historical carrying amounts of
the Company's assets and liabilities. FINOVA's gross assets are recorded based
upon their reorganization value, which was primarily determined based upon the
present value of future cash flows, discounted at appropriate risk adjusted
market rates for similar loans and leases. Allocation of the adjustment to
individual assets was determined in a manner similar to the accounting
provisions applied for business combinations under purchase accounting. The New
Senior Notes were recorded based upon the trading price of the New Senior Notes
shortly after they were issued, which the Company believes reflected the present
values of amounts expected to be paid, discounted at appropriate risk adjusted
market rates. The resulting shareowners' equity value of $17.6 million was based
on the consideration of many factors and various valuation methods, including
the fair values of assets and liabilities, discounted cash flows, selected
publicly traded company market multiples and other applicable ratios and
valuation techniques believed by the Company and its financial advisors to be
representative of the Company's business and industry.

      The adjustment of assets and liabilities to fair values resulted in a
charge to earnings of $62.9 million during the two-month period ended August 31,
2001. This net charge to earnings was included in the reorganization expense
line on the Condensed Statement of Consolidated Operations.

      The effect of the Plan and the implementation of Fresh-Start Reporting on
the Company's balance sheet as of August 31, 2001 is as follows:


                                       8

<PAGE>

                             THE FINOVA GROUP INC.
                           FRESH START BALANCE SHEET
                                   (Unaudited)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                   Predecessor                                 Reorganized
                                                     Company       Reorganization Plan       Company (Before
                                                 August 31, 2001       Adjustments             Fresh Start)
------------------------------------------------------------------------------------------------------------
<S>                                               <C>             <C>                          <C>
ASSETS
Cash and cash equivalents                         $  3,623,751    $(2,715,926)(a)(b)(c)        $   907,825
Financing Assets:
  Loans and other financing contracts                6,371,233                                   6,371,233
  Direct financing leases                              458,892                                     458,892
  Leveraged leases                                     221,122                                     221,122
------------------------------------------------------------------------------------------------------------
  Total financing assets                             7,051,247                                   7,051,247
  Less reserve for credit losses                      (707,521)                                   (707,521)
------------------------------------------------------------------------------------------------------------
  Net financing assets                               6,343,726                                   6,343,726
------------------------------------------------------------------------------------------------------------
Other Financial Assets:
  Assets held for sale                                 330,185        342,554(c)                   672,739
  Operating leases                                     478,511                                     478,511
  Investments                                          286,017         (2,791)(a)(c)               283,226
  Assets held for the production of income             262,771                                     262,771
  Net assets of discontinued operations                322,558       (322,558)(c)
------------------------------------------------------------------------------------------------------------
  Total other financial assets                       1,680,042         17,205                    1,697,247
------------------------------------------------------------------------------------------------------------
Total Financial Assets                               8,023,768         17,205                    8,040,973
Other assets                                           156,923         17,475(a)(c)(d)             174,398
Goodwill, net of accumulated amortization               43,410                                      43,410
------------------------------------------------------------------------------------------------------------
                                                  $ 11,847,852    $(2,681,246)                 $ 9,166,606
============================================================================================================
LIABILITIES AND SHAREOWNERS' EQUITY
Liabilities:
Berkadia Loan                                     $               $ 5,600,000                  $ 5,600,000
Senior debt                                         10,993,901     (7,743,423)(a)(b)             3,250,478
------------------------------------------------------------------------------------------------------------
Total debt                                          10,993,901     (2,143,423)                   8,850,478
Accounts payable and accrued expenses                  651,344       (449,745)(a)(b)(c)(d)         201,599
Deferred income taxes, net                              34,055                                      34,055
------------------------------------------------------------------------------------------------------------
Total Liabilities                                   11,679,300     (2,593,168)                   9,086,132
Convertible Preferred Securities                       111,550       (111,550)(b)
Shareowners' Equity:
Common stock                                               648            611(e)                     1,259
Additional capital                                   1,119,531           (611)(e)                1,118,920
Retained deficit                                      (880,520)        26,327(a)(b)(d)            (854,193)
Accumulated other comprehensive loss                    (4,386)        (2,855)(c)                   (7,241)
Common stock in treasury                              (178,271)                                   (178,271)
------------------------------------------------------------------------------------------------------------
Total Shareowners' Equity                               57,002         23,472                       80,474
------------------------------------------------------------------------------------------------------------
                                                  $ 11,847,852    $(2,681,246)                 $ 9,166,606
============================================================================================================
<CAPTION>
--------------------------------------------------------------------------------------
                                                                         Reorganized
                                                    Fresh-Start            Company
                                                    Adjustments        August 31, 2001
--------------------------------------------------------------------------------------
<S>                                               <C>                    <C>
ASSETS
Cash and cash equivalents                         $                      $   907,825
Financing Assets:
  Loans and other financing contracts                (805,158)(f)          5,566,075
  Direct financing leases                             (47,029)(f)            411,863
  Leveraged leases                                     (4,200)(f)            216,922
--------------------------------------------------------------------------------------
  Total financing assets                             (856,387)(f)          6,194,860
  Less reserve for credit losses                      451,197(f)            (256,324)
--------------------------------------------------------------------------------------
  Net financing assets                               (405,190)             5,938,536
--------------------------------------------------------------------------------------
Other Financial Assets:
  Assets held for sale                                 (6,530)(f)            666,209
  Operating leases                                   (132,398)(f)            346,113
  Investments                                         (79,718)(f)            203,508
  Assets held for the production of income            (85,855)(f)            176,916
  Net assets of discontinued operations
--------------------------------------------------------------------------------------
  Total other financial assets                       (304,501)             1,392,746
--------------------------------------------------------------------------------------
Total Financial Assets                               (709,691)             7,331,282
Other assets                                         (110,549)(f)(g)          63,849
Goodwill, net of accumulated amortization             (43,410)(g)
--------------------------------------------------------------------------------------
                                                  $  (863,650)           $ 8,302,956
======================================================================================
LIABILITIES AND SHAREOWNERS' EQUITY
Liabilities:
Berkadia Loan                                     $                      $ 5,600,000
Senior debt                                          (771,339)(f)          2,479,139
--------------------------------------------------------------------------------------
Total debt                                           (771,339)             8,079,139
Accounts payable and accrued expenses                  (5,361)(f)            196,238
Deferred income taxes, net                            (24,099)(f)              9,956
--------------------------------------------------------------------------------------
Total Liabilities                                    (800,799)             8,285,333
Convertible Preferred Securities
Shareowners' Equity:
Common stock                                                                   1,259
Additional capital                                 (1,102,020)(f)             16,900
Retained deficit                                      854,193(f)
Accumulated other comprehensive loss                    7,241(g)
Common stock in treasury                              177,735(f)                (536)
--------------------------------------------------------------------------------------
Total Shareowners' Equity                             (62,851)                17,623
--------------------------------------------------------------------------------------
                                                  $  (863,650)           $ 8,302,956
======================================================================================
</TABLE>


                                       9

<PAGE>

Notes to Fresh-Start Balance Sheet:

a)    Reflects the receipt of proceeds from the $5.6 billion Berkadia Loan,
      which was used together with cash on hand and the issuance of $3.25
      billion of New Senior Notes to restructure the Company's existing senior
      indebtedness and repay all accrued and unpaid pre-petition and
      post-petition interest. The restructuring of senior indebtedness included
      offsetting amounts owed of $51.4 million, which represented FINOVA cash
      held by various institutions exercising their right of offset.

b)    Holders of the 5 1/2% Convertible Trust Originated Preferred Securities
      ("TOPrS") issued by FINOVA Finance Trust received (i) a cash payment equal
      to 52.5% of the liquidation preference attributable to TOPrS (ii) a cash
      payment equal to 75% of accrued and unpaid pre-petition and post-petition
      dividends attributable to TOPrS and (iii) New Senior Notes having an
      aggregate principal amount equal to 22.5% of the liquidation preference
      attributable to TOPrS. As a result, FINOVA recorded a gain on discharge of
      indebtedness of $28.75 million. FINOVA's subordinated debentures related
      to TOPrS have been cancelled and FINOVA Finance Trust has been dissolved
      pursuant to the Plan.

c)    Upon emergence from Chapter 11, the net assets of discontinued operations
      were reclassified into continuing operations. This decision reflects
      management's intention to manage the net assets previously classified as
      discontinued operations in the same manner as other assets of the Company.
      Additionally, all former segments of the Company have been dissolved and
      the Company is now managed as one operating unit, with an emphasis on
      orderly collection of its portfolio.

d)    In connection with the Plan, the Company has rejected a number of lease
      agreements for its office space. As a result, the obligations to make the
      lease payments reflected in the 2000 Form 10-K/A (see Note U to Notes to
      Consolidated Financial Statements included in the 2000 Form 10-K/A) will
      be reduced. Management is exploring alternative facilities for its
      operations and is in negotiation with some of its current landlords to
      determine whether acceptable concessions can be made for continued use of
      all or portions of the space at those facilities. FINOVA has written off
      $15.1 million in fixed assets and leasehold improvements related to
      offices that would be closed as a result of rejecting certain of the lease
      agreements. Additionally, FINOVA has accrued for potential lease damages
      associated with these rejected lease agreements.

e)    FINOVA issued Berkadia 61,020,581 shares of common stock, representing 50%
      of the shares of FINOVA common stock outstanding after giving effect to
      the implementation of the Plan, including the issuance of a small number
      of additional shares in settlement of a claim.

f)    Reflects the adjustments made to historical carrying amounts of assets,
      liabilities and shareowners' equity to record them at fair value. The
      adjustment to assets totaled $863.7 million, of which $365.4 million will
      accrete into income over the life of the transactions, assuming the
      individual borrowers continue to pay their obligations according to
      contractual terms. The borrower's obligation to make payments to the
      Company is not affected by this adjustment.

      The adjustment to reduce the carrying amount of the New Senior Notes by
      $771.3 million represents a discount on the principal amount based upon
      the fair value of that obligation. This discount will be amortized to
      interest expense over the life of the New Senior Notes. Although the
      Reorganized Company balance sheet reflects the New Senior Notes at $2.48
      billion, the Company's repayment obligation is the principal amount of
      $3.25 billion.

g)    In accordance with Fresh-Start Reporting guidelines, certain assets,
      including goodwill and deferred debt origination costs were reduced to
      zero. Additionally, all unrealized equity items including foreign currency
      translation and unrealized gains and losses were reduced to zero and
      recognized through operations.

Net Reorganization Expense

      Net reorganization expense is comprised of income and expenses related to
the reorganization that were recognized or incurred by FINOVA. The components of
net reorganization expense are as follows:


                                       10

<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                                     Predecessor Company
                                                             Two Months Ended   Eight Months Ended
                                                              August 31, 2001    August 31, 2001
--------------------------------------------------------------------------------------------------
<S>                                                              <C>                <C>
Fair value adjustments of assets and liabilities                 $ 62,851           $ 62,851

Interest income earned on unpaid interest and debt payments       (24,050)           (42,372)

Professional service fees & other                                  15,782             26,048
--------------------------------------------------------------------------------------------------
Net reorganization expense                                       $ 54,583           $ 46,527
==================================================================================================
</TABLE>

NOTE C  SIGNIFICANT ACCOUNTING POLICIES

Segment Reporting

      In connection with the Company's reorganization and emergence from
bankruptcy as a new reporting entity, the operating segments have been combined
to reflect the organizational changes within the Company. FINOVA is no longer
soliciting new business, and the portfolio is not managed by separate strategic
business units. Many of the former components of the previous segments have been
sold, dissolved or combined with other business units, so that comparisons with
prior periods are not meaningful. Management's strategic plan is to maximize the
value of its assets through an orderly administration and collection of the
portfolio. Accordingly, the performance of reportable business segments
presented in the Predecessor Company's financial statements no longer have any
meaning to the business of the Reorganized Company. Performance will be
monitored by the Company's overall ability to collect or dispose of assets at
reasonable market values.

Assets Held for the Production of Income

      Assets held for the production of income include off-lease and returned
assets previously the subject of financing transactions that are currently being
made available for new financing transactions. Assets held for the production of
income are carried at the lower of cost or market with adjustments, if any,
recorded in operations. Depreciation on these assets is recorded in operations
over their estimated remaining useful lives.

New Accounting Standards

      In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes new accounting and
reporting standards for derivative instruments. In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133," and in June 2000, the
FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities - An Amendment of FASB Statement No. 133." SFAS 133,
as amended, establishes accounting and reporting standards requiring that
derivative instruments, including certain derivative instruments embedded in
other contracts, be recorded in the statement of financial position as either an
asset or liability measured at its fair value. SFAS 133 requires that changes in
the derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met.

      FINOVA adopted the provisions of SFAS 133, as amended, on January 1, 2001,
which resulted in an immaterial impact on FINOVA's consolidated results of
operations and financial position.

      Subsequent to June 2001, the FASB issued SFAS No. 141, "Business
Combinations," No. 142, "Goodwill and Other Intangible Assets," No. 143,
"Accounting for Asset Retirement Obligations," and No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 141 and SFAS No. 142 have
no current impact on the Company. SFAS No. 143 establishes accounting standards
for recognition and measurement of a liability for an asset retirement
obligation and associated asset retirement costs. SFAS No. 144 supercedes SFAS
No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets To Be Disposed Of," and APB Opinion No. 30, "Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions," and
amends ARB No. 51, "Consolidated Financial Statements."

      In conjunction with the Company's reorganization and Fresh-Start Reporting
FINOVA adopted the provisions of SFAS Nos. 143 and 144, which resulted in an
immaterial impact on its consolidated results of operations and financial
position.


                                       11

<PAGE>

Reclassifications

      Certain reclassifications have been made to the Predecessor Company's
financial statements to conform with the Reorganized Company's 2001
presentation.

NOTE D  DEBT

      Total debt was as follows:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                       Reorganized Company      Predecessor Company as
                                                                     as of September 30, 2001    of December 31, 2000
----------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                       <C>
Berkadia Loan                                                               $5,600,000                $
Senior debt Reorganized Company (face amount of $3.25 billion)               2,479,140
Senior debt Predecessor Company:
  Commercial Paper                                                                                      4,690,990
  Senior Notes                                                                                          4,172,112
  Medium term notes                                                                                     2,128,772
  Nonrecourse installment notes                                                                             5,813
----------------------------------------------------------------------------------------------------------------------
Total Debt                                                                  $8,079,140                $10,997,687
======================================================================================================================
</TABLE>

      As a result of the Plan, which is discussed in more detail in Note B
"Chapter 11 Reorganization and Fresh-Start Reporting," all FINOVA outstanding
debt was restructured upon emergence. Pursuant to the Plan, Berkadia loaned $5.6
billion to FINOVA Capital on a senior secured basis, which was used together
with cash on hand and the issuance of $3.25 billion aggregate principal amount
of New Senior Notes to restructure the Company's pre-emergence indebtedness
(including TOPrS) and repay all accrued and unpaid pre-petition and
post-petition interest. The Berkadia Loan has a first priority lien on
substantially all of FINOVA's assets, including all of its subsidiaries, and the
holders of New Senior Notes have a second priority lien on those assets. The
holders of New Senior Notes may not enforce their security interest so long as
the Berkadia Loan remains outstanding.

      The terms of the Berkadia Credit Agreement permit the Company to retain a
reserve of cash and cash equivalents in an amount not to exceed the sum of (a)
125% of the projected operating expenses for the next fiscal quarter, (b)
unfunded customer commitments expected to be funded over the next two fiscal
quarters, (c) taxes payable during the next fiscal quarter, (d) interest, loan
fees and other amounts due on the Berkadia Loan during the next fiscal quarter
(e) an amount equal to all payments of principal, interest or fees relating to
other permitted indebtedness that will, by their terms, become due and payable
in cash during the next fiscal quarter, and (f) such other reserves as are
necessary in the Company's good faith judgment and as approved in advance by
Berkadia for the operations of the Company. Any amount in excess of the cash
reserve is required to be paid to Berkadia to reduce the principal amount of the
loan on a quarterly basis, except for the first payment date October 7, 2001. On
that date, the Company determined that the amount in excess of the cash reserve
totaled $700 million, and used it to reduce the balance of the Berkadia Loan to
$4.9 billion.

      The terms of the Berkadia Credit Agreement require the Company to maintain
at all times, a ratio of Collateral Value (as defined in the Credit Agreement)
to the loan balance of not less than 1.25 to 1. As of September 30, 2001, the
Company's Collateral Value totaled $7.56 billion, resulting in a ratio of 1.35
to 1.

      The Berkadia Loan matures on August 20, 2006 and bears interest, payable
monthly at the Eurodollar Rate, as defined in the Credit Agreement, plus 2.25%.
The average rate under the agreement for the one-month period ended September
30, 2001 was 5.84%. Principal is payable from available cash. All outstanding
principal and accrued and unpaid interest is payable at maturity.

      The New Senior Notes mature in November 2009 and bear interest, payable
semi-annually to the extent that cash is available for that purpose in
accordance with the Indenture, at a fixed interest rate of 7.5% per annum.
Principal payments are due prior to maturity only after the Berkadia Loan has
been paid in full, and is payable out of available cash after establishment of
cash reserves as defined in the Indenture. The Indenture has no financial
covenants, except for the requirement to use available cash in the priority set
forth in the Indenture. The New Senior Notes are reflected in the Company's
Condensed Consolidated Balance Sheet net of a $771.3 million discount, as a
result of Fresh-Start Reporting adjustments. The book value of the New Senior
Notes will be increased over time to the principal amount through the
amortization of the discount as interest expense. The Company's obligation is to
pay the full $3.25 billion principal amount of the New Senior Notes.


                                       12

<PAGE>

NOTE E  (LOSS) EARNINGS PER SHARE

      Basic earnings or losses per share exclude the effects of dilution and are
computed by dividing (loss) income available to common shareowners by the
weighted average amount of common stock outstanding for the period. As a result
of the Plan, all stock incentive plans were canceled and all outstanding stock
options, stock appreciation rights and restricted stock were canceled.
Additionally, TOPrS were restructured in the reorganization and ceased to exist.
For all periods presented, basic (loss) earnings per share equaled diluted
(loss) earnings per share, either as a result of the reorganization or the
options and preferred stock being antidilutive. Basic and diluted (loss)
earnings per share calculations are presented in the Condensed Statements of
Consolidated Operations and are detailed below:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                          Reorganized Company                       Predecessor Company
                                            One Month Ended     Two Months Ended     Three Months Ended
                                          September 30, 2001     August 31, 2001     September 30, 2000
-------------------------------------------------------------------------------------------------------
<S>                                          <C>                   <C>                 <C>
Basic (Loss) Earnings Per Share
  Computation:

(Loss) income from continuing operations     $    (850,047)        $  (161,773)        $    (71,011)
=======================================================================================================

Weighted average shares outstanding            122,041,000          70,972,000           61,304,000
Contingently issued shares                                                                 (286,000)
-------------------------------------------------------------------------------------------------------
Adjusted weighted average shares               122,041,000          70,972,000           61,018,000
=======================================================================================================

Basic/Diluted (Loss) Earnings Per Share:

(Loss) income from continuing operations     $       (6.97)        $     (2.28)        $      (1.16)
Discontinued operations                                                   0.06                (3.33)
Extraordinary items                                                       0.41
-------------------------------------------------------------------------------------------------------
  Net Loss                                   $       (6.97)        $     (1.81)        $      (4.49)
=======================================================================================================
<CAPTION>
---------------------------------------------------------------------------------
                                          Predecessor Company
                                          Eight Months Ended   Nine Months Ended
                                            August 31, 2001    September 30, 2000
---------------------------------------------------------------------------------
<S>                                          <C>                <C>
Basic (Loss) Earnings Per Share
  Computation:

(Loss) income from continuing operations     $  (654,583)       $     32,247
=================================================================================

Weighted average shares outstanding           63,677,000          61,262,000
Contingently issued shares                                          (286,000)
---------------------------------------------------------------------------------
Adjusted weighted average shares              63,677,000          60,976,000
=================================================================================

Basic/Diluted (Loss) Earnings Per Share:

(Loss) income from continuing operations     $    (10.28)       $       0.53
Discontinued operations                            (0.23)              (4.15)
Extraordinary items                                 0.45
---------------------------------------------------------------------------------
  Net Loss                                   $    (10.06)       $      (3.62)
=================================================================================
</TABLE>


                                       13

<PAGE>

NOTE F  PORTFOLIO QUALITY

      The following table presents a distribution of the Company's total
financial assets at September 30, 2001:

                             TOTAL FINANCIAL ASSETS
                               September 30, 2001
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                     Revenue       Revenue Accruing   Nonaccruing    Nonaccruing
                                 Accruing Assets       Impaired         Impaired    Leases & Other
--------------------------------------------------------------------------------------------------
<S>                                <C>                 <C>             <C>              <C>
Resort Finance                     $1,211,144          $ 59,994        $  196,525       $ 3,453
Transportation Finance (1)            417,250           241,134           346,101
Rediscount Finance                    548,670           184,137            69,025         2,200
Franchise Finance                     669,029            19,654            87,865         1,720
Specialty Real Estate Finance         594,558             4,020            52,350        19,986
Healthcare Finance                    392,881            54,139           157,062         2,930
Communications Finance                221,092                             159,320
Commercial Equipment Finance          287,483                              43,167         7,180
Corporate Finance                      84,508                             219,867         4,517
Mezzanine Capital                     106,738             2,946            30,482
Public Finance                        106,870                                 382
Investment Alliance                     8,548                               2,919
Other                                  24,310                                             4,088
--------------------------------------------------------------------------------------------------
Total Financial Assets             $4,673,081          $566,024        $1,365,065       $46,074
Less Reserve for Credit Losses
--------------------------------------------------------------------------------------------------
TOTAL (2)
==================================================================================================
<CAPTION>
---------------------------------------------------------------------
                                            Total Financial
                                 Other (3)       Assets           %
---------------------------------------------------------------------
<S>                              <C>           <C>              <C>
Resort Finance                   $  7,070      $1,478,186        20.5
Transportation Finance (1)        346,471       1,350,956        18.7
Rediscount Finance                                804,032        11.1
Franchise Finance                   5,162         783,430        10.9
Specialty Real Estate Finance       6,022         676,936         9.4
Healthcare Finance                 12,339         619,351         8.6
Communications Finance              1,861         382,273         5.3
Commercial Equipment Finance       14,536         352,366         4.9
Corporate Finance                   1,861         310,753         4.3
Mezzanine Capital                  15,700         155,866         2.2
Public Finance                                    107,252         1.5
Investment Alliance                81,698          93,165         1.3
Other                              69,262          97,660         1.3
---------------------------------------------------------------------
Total Financial Assets           $561,982      $7,212,226       100.0
Less Reserve for Credit Losses                   (863,510)
---------------------------------------------------------
TOTAL (2)                                      $6,348,716
=========================================================
</TABLE>

NOTES:

(1)   The total financial assets for transportation are shown net of a $403.3
      million fair market value adjustment recorded in conjunction with
      Fresh-Start Reporting and a $217.0 million write-down charged directly to
      owned assets as a result of the events of September 11, 2001.
      Additionally, as a result of the events of September 11, the Company
      established a $367.8 million reserve for credit losses. See below for a
      discussion of the impact of the September 11 events.
(2)   Excludes $257.8 million of assets sold that the Company manages, including
      $150.3 million in commercial equipment and $107.5 million in franchise.
(3)   Other includes operating leases, of which $205.0 million are generating
      revenue, investments and assets held for the production of income.

                                   ----------


                                       14

<PAGE>

Assets Held for Sale

      Assets held for sale are carried at the lower of cost or market with the
adjustment, if any, recorded in operations. During 2000, the Company designated
loans generated by its realty capital portfolio as being held for sale and
recorded a loss of $43.2 million to write-down the assets to their net estimated
sales price and recorded an additional loss of $5.1 million during the first
quarter of 2001. In July 2001, substantially all of the realty capital assets
were sold with no additional gain or loss.

      During the second quarter of 2001, the Company designated leveraged leases
in its transportation portfolio as being held for sale and recorded a loss of
$198.1 million to write-down the assets to their estimated net sales price. In
August 2001, prior to Fresh-Start Reporting, an additional charge of $74.0
million was recorded due to continued weakening in the airline industry. The
negative impact of the events of September 11, 2001 resulted in an additional
$67.6 million charge. The tax gain anticipated from potential sales of leveraged
leases is expected to be fully offset by the current year's tax loss and through
the utilization of net operating loss carryforwards ("NOLs").

      In connection with the reorganization of the Company, the remaining assets
of the corporate finance portfolio were designated as held for sale. The assets
were previously recorded as discontinued operations and were therefore recorded
at net realizable value.

      The following table presents the balances and changes in FINOVA's assets
held for sale:

                                                                         Total
--------------------------------------------------------------------------------
As of December 31, 2000 (net of $43.2 million mark-down)              $ 421,956
  Runoff  (amortization and prepayments), net of fundings               (41,516)
  Mark-down to estimated sales price                                     (5,147)
--------------------------------------------------------------------------------
As of March 31, 2001 (Predecessor Company)                              375,293
  Runoff (amortization and prepayments), net of fundings                (45,944)
  Assets reclassified to held for sale                                  559,717
  Mark-down to estimated sales price                                   (198,070)
--------------------------------------------------------------------------------
As of June 30, 2001 (Predecessor Company)                               690,996
  Sale of assets                                                       (303,299)
  Assets reclassified to held for sale                                  352,508
  Mark-down to estimated sales price                                    (73,996)
--------------------------------------------------------------------------------
As of August 31, 2001 (Reorganized Company)                             666,209
  Runoff (amortization and prepayments), net of fundings                (25,439)
  Mark-down to estimated sales price                                    (70,505)
--------------------------------------------------------------------------------
As of September 30, 2001 (Reorganized Company)                        $ 570,265
================================================================================

Reserve for Credit Losses

      The reserve for credit losses at September 30, 2001 represents 14.2% of
the Company's total financing assets. Changes in the reserve for credit losses
were as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
                                Reorganized Company            Predecessor Company
                                  One Month Ended    Eight Months Ended  Nine Months Ended
                                September 30, 2001     August 31, 2001   September 30, 2000
-------------------------------------------------------------------------------------------
<S>                                  <C>                  <C>                 <C>
Balance, beginning of period         $ 256,324            $ 578,750           $178,266
Provision for credit losses            606,813              230,772            141,347
Write-offs                                                 (558,052)           (62,930)
Recoveries                                 357                4,964                922
Other                                       16                 (110)                97
-------------------------------------------------------------------------------------------
Balance, end of period               $ 863,510            $ 256,324           $257,702
===========================================================================================
</TABLE>

      FASB 114 defines impaired loans as loans not expected to perform in
accordance with contractual terms and specifies the measurement of impairment on
the basis of present value of expected future cash flows discounted at the
loan's effective interest rate, or on a loan's observable market price. In
connection with Fresh-Start Reporting, the Company adjusted the carrying value
of its portfolio to fair value based on expected cash flows using current risk
adjusted interest rates.


                                       15

<PAGE>

      Impairment is now measured against the risk adjusted interest rates
utilized in Fresh-Start Reporting. Accordingly, impairment reserves are now
recorded when financing asset carrying values exceed the expected future cash
flows, discounted at the interest rate used for valuation in Fresh-Start
Reporting. In connection with Fresh-Start Reporting as of August 31, 2001,
existing impairment reserves of $451.2 million were charged off against impaired
balances. As a result of the events of September 11, 2001, additional impairment
reserves of $520.5 were established on the total impaired asset carrying amount
of $1.9 billion.

      An analysis of the reserve for credit losses is as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                       Predecessor Company                          Reorganized Company
                                               August 31, 2001 (Before
                               June 30, 2001    Fresh-Start Reporting)     August 31, 2001     September 30, 2001
-----------------------------------------------------------------------------------------------------------------
<S>                               <C>                  <C>                     <C>                  <C>
Reserves on impaired assets       $330,978             $451,197                $                    $520,500
Other reserves                     355,672              256,324                 256,324              343,010
-----------------------------------------------------------------------------------------------------------------
Reserves for credit losses        $686,650             $707,521                $256,324             $863,510
=================================================================================================================
</TABLE>

     Some of FINOVA's asset portfolios are concentrated within industries that
have been adversely affected by the September 11, 2001 terrorist attacks,
especially those operating in the transportation, resort and hotel industries.
FINOVA has developed estimates of the impact these attacks will have on its
portfolios, resulting in charges totaling $851.1 million to provide for
additional loss reserves of $634.1 million and to write-down various owned
assets by $217.0 million. These charges relate primarily to FINOVA's
transportation portfolio ($1.4 billion total assets before reserves at September
30, 2001), resort portfolio ($1.5 billion total assets before reserves at
September 30, 2001) and specialty real estate portfolio ($459.4 million total
assets before reserves at September 30, 2001, excluding real estate leveraged
leases), and include an additional reserve related to all other portfolios.

      Prior to September 11, 2001, the general economic downturn had caused
airlines and cargo carriers to ground or restrict the use of older, less
efficient aircraft. The events of September 11, 2001 accelerated this trend and
increased the glut of used aircraft, resulting in significantly reduced values.
The Company's transportation portfolio consists of predominantly used aircraft
and its ability to place returned aircraft with new carriers or liquidate
aircraft returned in lieu of payment, has diminished significantly. An
increasing number of FINOVA's customers are experiencing difficulties in making
payments and are either pursuing reductions in payment obligations or are
returning aircraft. As a result, FINOVA's inventory of returned aircraft
continues to grow. The Company has recorded charges totaling $584.8 million to
write-down off-lease aircraft held for the production of income and operating
leases by $217.0 million and to increase reserves by $367.8 million for inherent
losses expected to be realized in its transportation portfolio as a result of
these events.

      The charges to FINOVA's transportation portfolio were based on a detailed
analysis of each aircraft. The critical factors considered include the type of
carrier, age of the aircraft, number of aircraft by type in FINOVA's portfolio,
operating efficiency of each type and the overall industry capacity to absorb
these aircraft. The Company considered current trends and the financial
stability of its customer base to assess the likelihood of aircraft being
returned to FINOVA and the necessity to provide concessions in the form of
reduced payments to keep the aircraft operating.

      Based on the Company's assessment of its portfolio, customer base and the
industry, anticipated future cash flows were estimated on each aircraft. These
estimates took into account the likelihood of aircraft being returned,
anticipated concessions to customer payment obligations, timing of returning
off-lease aircraft back into service, costs to place parked aircraft back into
service and the potential necessity to scrap certain classes of aircraft.
Aircraft values were estimated on the basis of current market information, the
glut of aircraft currently in the marketplace and the continuing negative effect
resulting from the events of September 11, 2001.

      The estimated cash flows were discounted at risk adjusted interest rates
to measure impairment for owned aircraft in accordance with the provisions of
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
and for loans in accordance with SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan."

      FINOVA's resort portfolio is primarily in the destination timeshare resort
industry. Many timeshare resorts, especially those that require patrons to
travel by air, are being negatively impacted by the terrorist attacks. Projects
with unsold inventory are having difficulty maintaining sales levels that are
required to fund operations. The Company has some concerns regarding the ability
of its customers (the developers) to generate sufficient timeshare sales to
repay FINOVA. The Company has similar concerns for some of its hotels in its
specialty real estate portfolio, especially those that depend on air travel to
transport their revenue generating customers. As a result, the Company has
recorded a charge of $121 million to reserve for inherent losses expected in
these portfolios.


                                       16

<PAGE>

      The charge relating to FINOVA's resort and hotel portfolios was estimated
using current market information and assumed risk factors specific to those
portfolios. These factors include the financial ability of individual
borrowers/developers to withstand a prolonged reduction in revenues, the
geographic location of each resort/hotel and the development status of each
project. The portfolios were stratified by risk factors and assumed loss ratios
were determined based upon management's evaluation of all relevant conditions.

      In all other FINOVA portfolios, the Company expects an increase in the
level of problem accounts as a result of the events of September 11, 2001 and
the weakening of the general economy. Additional charges of $145.3 million have
been incurred to reserve for inherent losses expected in these portfolios.

      FINOVA's reserve for credit losses represents management's best estimate
of inherent losses in the remaining portfolio considering delinquencies, loss
experience, collateral and recent tragedies. Actual results could differ from
estimates and values and there can be no assurance that the reserves will be
sufficient to cover portfolio losses. Additions to the reserve are reflected in
current operations.

      Interest income is recognized on impaired assets through the accrual of
contractual rates due and through the amortization of discounts created in
Fresh-Start Reporting unless contractual payments of principal and interest are
90 days delinquent or, in management's opinion, full collection of recorded
amounts at contractual rates is not subject to reasonable estimation. In that
case, the impaired assets are placed on nonaccruing status and any subsequent
cash received is either recorded in income as received or used to reduce the
recorded investment in the related asset.

NOTE G  COMMITMENT & CONTINGENCIES

Legal Proceedings

      FINOVA is a party either as plaintiff or defendant to various actions,
proceedings and pending claims, including legal actions, some of which involve
claims for compensatory, punitive or other damages in significant amounts.
Litigation often results from FINOVA's attempts to enforce its lending
agreements against borrowers and other parties to those transactions. Litigation
is subject to many uncertainties. It is possible that some of the legal actions,
proceedings or claims could be decided against FINOVA. Other than the matters
described below, FINOVA believes that any resulting liability for their
litigation matters should not materially affect FINOVA's financial position,
results of operations or cash flows. One or more of the following matters could
have a material adverse impact on FINOVA's financial position, results of
operations or cash flow.

Securities Litigation

      Between March 29, 2000 and May 23, 2000, five shareowner lawsuits were
filed against FINOVA and Samuel Eichenfield, FINOVA's former chairman,
president, and chief executive officer; two of the lawsuits also named FINOVA
Capital as a defendant, and one named three other executive officers. All of the
lawsuits purport to be on behalf of the named plaintiffs (William K. Steiner,
Uri Borenstein, Jerry Krim, Mark Kassis, and the Louisiana School Employees
Retirement System), and others who purchased FINOVA common stock during the
class period of July 15, 1999, through either March 26, 2000, or May 7, 2000.
The suit brought by the Louisiana School Employees Retirement System also
purported to be on behalf of all those who purchased FINOVA Capital's 7.25%
Notes which, prior to the reorganization, would have been due November 8, 2004,
pursuant to the registration statement and prospectus supplement dated November
1, 1999.

      By order of the U.S. District Court for the District of Arizona dated
August 30, 2000, these five lawsuits were consolidated and captioned In re:
FINOVA Group Inc. Securities Litigation. The court also selected the Louisiana
School Employees Retirement System ("LSERS") as the lead plaintiff in the
consolidated cases. LSERS filed its Amended Consolidated Complaint on September
29, 2000, naming FINOVA, FINOVA Capital, Samuel Eichenfield, Matthew Breyne, and
Bruno Marszowski as defendants. The consolidated amended complaint generally
alleged that the defendants made materially misleading statements regarding
FINOVA's loss reserves, and otherwise violated the federal securities laws in an
effort to, among other reasons, bolster FINOVA's stock price. Among other
things, the complaint sought unspecified damages for losses incurred by
shareowners, plus interest, and other relief, and rescission with regard to the
notes purchased.

      Since consolidation of the original five shareowner lawsuits, other
related lawsuits have been initiated against the Company and current and former
officers and directors. Three shareowner lawsuits were filed in the United
States District Court for the Middle District of Tennessee, in which the named
plaintiffs (John Cartwright, Sirrom Partners and Sirrom G-1, and Caldwell
Travel) assert claims relating to the Company's acquisition in 1999 of Sirrom
Capital Corporation, and the exchange of shares of Sirrom stock for shares of
FINOVA


                                       17

<PAGE>

stock. The Cartwright complaint purports to be a class action lawsuit on behalf
of all Sirrom shareowners that exchanged their Sirrom stock for FINOVA stock as
a result of the acquisition. The defendants named are Sirrom Capital
Corporation, FINOVA Group, Samuel Eichenfield, John W. Teets, Constance Curran,
G. Robert Durham, James L. Johnson, Kenneth Smith, Shoshana Tancer and Bruno
Marszowski. The complaints allege that the defendants made materially misleading
statements regarding FINOVA's loss reserves, and otherwise violated the federal
securities laws in an effort to reduce the total consideration provided to
Sirrom shareowners at the time of the acquisition. The complaints seek
unspecified damages for losses incurred by shareowners, plus interest, and other
relief.

      Another lawsuit was filed on September 13, 2000, in the Circuit Court for
Davidson County, Tennessee, by Ronald Benkler against several former officers of
Sirrom Capital Corporation. In various agreements entered into in connection
with the Sirrom acquisition, FINOVA had agreed to indemnify the former officers
of Sirrom named as defendants. The complaint alleges that the Sirrom officers
breached various duties to Sirrom in connection with the acquisition of Sirrom
by the Company in 1999, and with the exchange of Sirrom stock for FINOVA stock
as a result of the acquisition. The plaintiffs agreed to a stay of discovery in
this case, pending the final determination of the motion to dismiss the
consolidated securities litigation.

      On January 4, 2001, the United States District Court for the Middle
District of Tennessee granted a motion brought by FINOVA and the other
defendants to transfer the Cartwright and Sirrom Partners cases to the United
States District Court for the District of Arizona. The plaintiff in Caldwell
Travel agreed to dismiss that case without prejudice. Pursuant to a Stipulation
and Order entered in March 2001, the Cartwright case was consolidated for all
purposes with the previous five cases in the FINOVA Group Securities Litigation,
and the Sirrom Partners case was consolidated for all pre-trial purposes.

      On May 4, 2001, the lead plaintiffs filed a Second Amended Consolidated
Complaint for all of the consolidated and transferred actions pending in the
United States District Court in Arizona. Among other things, the Second Amended
Consolidated Complaint expanded the original class period for the shareholder
class to all those who had purchased FINOVA Common Stock, and certain debt
securities, between January 14, 1999 and November 13, 2000. It also asserted
claims on behalf of a purported subclass of those who exchanged shares of Sirrom
stock for FINOVA stock in connection with the 1999 Sirrom acquisition.

      By agreement of the parties, the time for the defendants to answer or move
to dismiss the Second Amended Consolidated Complaint was extended to August 24,
2001. After extensive negotiations, the parties reached an agreement in
principle to resolve all of the various claims in the Consolidated Securities
Litigation, including the claims in the Tennessee actions that had been
transferred and consolidated in January, and the claims asserted in the
Tennessee state court action brought by Ronald Benkler. The Bankruptcy Court
gave preliminary approval to the agreement in principle on August 10, 2001. This
agreement in principle, however, still remains subject to several material
conditions, including the approval of the United States District Court in
Arizona.

      Finally, two shareowners' derivative lawsuits were filed against current
and former officers and directors of FINOVA Group, one in the United States
District Court for the District of Arizona, and one in the Court of Chancery for
Newcastle County, Delaware. Both complaints were filed on September 11, 2000,
and both purported to be brought by the named plaintiffs (William Kass and Cindy
Burkholter) derivatively on behalf of the Company against several current and
former officers and directors, alleging generally breaches of fiduciary and
other duties as directors. These actions sought unspecified money damages and
other relief. As with the consolidated securities litigation, the allegations
centered generally on claims that there were materially misleading statements
regarding FINOVA's loss reserves. The Plan, which was confirmed on August 10,
2001, provided that the Company may enforce any claims or causes of action
arising before or after the petition that the Company has against any entity or
person, that the Company may pursue or abandon such claims or causes of action
as it deems appropriate, and that no creditor or shareowner may pursue or
commence such litigation, whether direct or derivative, in regard to such claims
and causes of action. The Company thus views the shareowners' derivative actions
as superceded by the Plan.

Bankruptcy

      On March 7, 2001, FINOVA, FINOVA Capital and seven of their subsidiaries
filed voluntary petitions for protection from creditors pursuant to Chapter 11,
Title 11, United States Code, in the Bankruptcy Court. The other subsidiaries
were FINOVA (Canada) Capital Corporation, FINOVA Capital plc, FINOVA Loan
Administration Inc., FINOVA Mezzanine Capital Inc., FINOVA Portfolio Services,
Inc., FINOVA Technology Finance Inc., and FINOVA Trust Finance.

      FINOVA obtained orders from the Bankruptcy Court on the first day
permitting FINOVA to continue its operations in the ordinary course including
honoring its obligations to borrowers. The orders also permitted the Debtors to
pay certain pre- and post-petition expenses and claims, such as to employees
(other than executive officers, with exceptions), taxing authorities and foreign
trade vendors.


                                       18

<PAGE>

      The Plan was approved at a confirmation hearing on August 10, 2001 and
became final and non-appealable on August 21, 2001, at which time it became
effective upon consummation of the Berkadia Loan. See Note B for more
information regarding the Reorganization Proceedings.

      Certain post-confirmation proceedings continue in the Bankruptcy Court
relating to the proofs of claims filed by creditors or alleged creditors, as
well as administrative claims and claims for damages for rejected executory
contracts. Many of these claims relate to pre-petition litigation claims as
described in the first paragraph of Note G, and as such, it is possible that
some of the claims could be decided against FINOVA. FINOVA believes that any
resulting liability for those claims should not materially affect FINOVA's
financial position.


                                       19

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

      The following discussion relates to The FINOVA Group Inc. and its
subsidiaries (collectively "FINOVA" or the "Company"), including FINOVA Capital
Corporation and its subsidiaries ("FINOVA Capital"). The FINOVA Group Inc. is a
financial services holding company. Through its principal operating subsidiary,
FINOVA Capital, the Company has provided a broad range of financing and capital
markets products, primarily to mid-size businesses. FINOVA Capital has been in
operation since 1954.

Recent Developments

      On March 7, 2001, The FINOVA Group Inc., FINOVA Capital Corporation and
seven of their subsidiaries filed for protection pursuant to Chapter 11, Title
11, of the United States Code in the Bankruptcy Court to enable them to
restructure their debt (the "Reorganization Proceedings"). Historically, the
Company has relied upon borrowed funds together with internal cash flow to
finance its operations. Profit has largely been recorded from the spread between
the cost of borrowing and the rates paid by its customers, less operating costs.
The Company also generates revenues through loan servicing and related
activities and the sale of assets. Beginning late in the first quarter of 2000,
a series of events impeded FINOVA's access to lower cost capital in the public
and private markets. Those events have generally been described in The FINOVA
Group Inc. Form 10-K/A for the year ended December 31, 2000 (the "2000 10-K/A").

      On August 10, 2001, the U.S. Bankruptcy Court for the District of Delaware
entered an order confirming the Plan.

      On August 21, 2001, FINOVA emerged from the Reorganization Proceedings
upon effectiveness of its Plan. Pursuant to the Plan, Berkadia LLC ("Berkadia"),
jointly owned by Berkshire Hathaway Inc. ("Berkshire") and Leucadia National
Corporation ("Leucadia"), funded the $5.6 billion loan to FINOVA Capital on a
senior secured basis (the "Berkadia Loan"). The proceeds of the Berkadia Loan,
together with cash on hand and the issuance by FINOVA of approximately $3.25
billion aggregate principal amount of 7.5% Senior Secured Notes maturing 2009
with Contingent Interest due 2016 (the "New Senior Notes") were used to
restructure the Company's debt. In addition, FINOVA issued Berkadia 61,020,581
shares of common stock representing 50% of FINOVA's outstanding shares after
giving effect to the implementation of the Plan, including the issuance of a
small number of additional shares in settlement of a claim.

      As more fully described in the Plan, the Company's current business
activities are limited to maximizing the value of its portfolio through the
orderly collection of its receivables and sales of assets. As required under its
credit agreement with Berkadia Credit Agreement (the "Credit Agreement") and the
Indenture governing the New Senior Notes (the "Indenture"), it is not engaged in
any new customer lending activities nor does it expect to engage in any of these
activities for the foreseeable future. All funds generated in excess of defined
cash reserves from the management of its portfolio are to be used to satisfy its
creditors in the manner and in the priorities as set forth in the Credit
Agreement and the Indenture.

Financial Reporting

      As described in Note B of "Notes to Interim Condensed Consolidated
Financial Statements," upon emergence from bankruptcy, FINOVA implemented
Fresh-Start Reporting in accordance with the provisions of Statement of Position
90-7 "Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code" ("SOP 90-7"). As a result, the Condensed Consolidated Financial Statements
for the Reorganized Company as of September 30, 2001 will not be comparable to
those of the Company for periods prior to September 30, 2001. Furthermore, the
results of the interim periods for both the Predecessor Company and the
Reorganized Company are not necessarily indicative of full year results.

      Other changes to financial reporting are based on management's plans for
maximizing the value of its portfolio. They include the merging of discontinued
operations back into continuing operations and the elimination of segment
reporting. All former segments of the Company have been dissolved and the
Company is now being managed as one operating unit. As indicated previously,
FINOVA is no longer soliciting new business and is focused on the collection of
its portfolio. The Company is being organized to efficiently execute the orderly
collection of its portfolio contemplated in the Plan. The organizational changes
are also expected to result in a significant reduction of operating costs. In
conjunction with these changes, the Company has announced the retirement of its
Executive Vice President, General Counsel and Secretary and its Senior Vice
President - Chief Financial Officer. The Company's Senior Vice President -
Internal Audit will also be leaving the Company. Successors have been appointed
from within the Company.


                                       20

<PAGE>

Impact of the September 11, 2001 Terrorist Attacks

     The September 11 terrorist attacks resulted in a tremendous loss of life
and property and have significantly affected the U.S. and world economies. Some
of FINOVA's asset portfolios are concentrated within industries that have been
adversely affected by these events, especially those operating in the
transportation, resort and hotel industries. FINOVA has developed estimates of
the impact these attacks will have on its portfolios, resulting in charges of
$851.1 million to provide additional loss reserves of $634.1 million and to
write-down various owed assets by $217.0 million. These charges relate primarily
to FINOVA's transportation portfolio ($1.4 billion total assets before reserves
at September 30, 2001), resort portfolio ($1.5 billion total asset before
reserves at September 30, 2001) and specialty real estate portfolio ($459.4
million total assets before reserves at September 30, 2001, excluding real
estate leveraged leases), and include an additional reserve related to all other
portfolios.

      Prior to September 11, 2001, the general economic downturn had caused
airlines and cargo carriers to ground or restrict the use of older, less
efficient aircraft. The events of September 11, 2001 accelerated this trend and
increased the glut of used aircraft, resulting in significantly reduced values.
The Company's transportation portfolio consists of predominantly used aircraft
and its ability to place returned aircraft with new carriers or liquidate
returned aircraft in lieu of payment, has diminished significantly. An
increasing number of FINOVA's customers are experiencing difficulties in making
payments and are either pursuing reductions in payment obligations or are
returning aircraft. As a result, FINOVA's inventory of returned aircraft
continues to grow. The Company has recorded charges totaling $584.8 million to
write-down off-lease aircraft held for the production of income and operating
leases by $217.0 million and to increase reserves by $367.8 million for inherent
losses expected to be realized in its transportation portfolio as a result of
these events.

      The charges to FINOVA's transportation portfolio were based on a detailed
analysis of each aircraft. The critical factors considered include the type of
carrier, age of the aircraft, number of aircraft by type in FINOVA's portfolio,
operating efficiency of each type and the overall industry capacity to absorb
these aircraft. The Company considered current trends and the financial
stability of its customer base to assess the likelihood of aircraft being
returned to FINOVA and the necessity to provide concessions in the form of
reduced payments to keep the aircraft operating.

      Based on the Company's assessment of its portfolio, customer base and the
industry, anticipated future cash flows were estimated on each aircraft. These
estimates took into account the likelihood of aircraft being returned,
anticipated concessions to customer payment obligations, timing of returning
off-lease aircraft back into service, costs to place parked aircraft back into
service and the potential necessity to scrap certain classes of aircraft.
Aircraft values were estimated on the basis of current market information, the
glut of aircraft currently in the marketplace and the continuing negative effect
resulting from the events of September 11, 2001.

      The estimated cash flows were discounted at risk adjusted interest rates
to measure impairment for owned aircraft in accordance with the provisions of
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
and for loans in accordance with SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan."

      FINOVA's resort portfolio is primarily in the destination timeshare resort
industry. Many timeshare resorts, especially those that require patrons to
travel by air, are being negatively impacted by the terrorist attacks. Projects
with unsold inventory are having difficulty maintaining sales levels that are
required to fund operations. The Company has some concerns regarding the ability
of its customers (the developers) to generate sufficient timeshare sales to
repay FINOVA. The Company has similar concerns for some of its hotels in its
specialty real estate portfolio, especially those that depend on air travel to
transport their revenue generating customers. As a result, the Company has
recorded a charge of $121 million to reserve for inherent losses expected in
these portfolios.

      The charge relating to FINOVA's resort and hotel portfolios was estimated
using current market information and assumed risk factors specific to those
portfolios. These factors include the financial ability of individual
borrowers/developers to withstand a prolonged reduction in revenues, the
geographic location of each resort/hotel and the development status of each
project. The portfolios were stratified by risk factors and assumed loss ratios
were determined based upon management's evaluation of all relevant conditions.

      In all other FINOVA portfolios, the Company expects an increase in the
level of problem accounts as a result of the events of September 11, 2001 and
the weakening of the general economy. Additional reserves of $145.3 million have
been established for the inherent losses expected in these portfolios.


                                       21

<PAGE>

Results of Operation

One Month Ended September 30, 2001

      The Company reported a loss of $850.0 million for the one month ended
September 30, 2001. This was primarily due to $851.1 million of charges for the
estimated losses relating to the terrorist attacks on September 11, 2001. These
charges are reflected in the Condensed Consolidated Statement of Operations as
$217.0 million in losses on financial assets, representing the write-down of
owned assets and additional loss provisions of $634.1 million to reserve for
inherent losses expected to be realized as a result of these events. These
charges were partially offset by the reallocation of $27.3 million of loss
reserves previously established. Other factors contributing to the loss included
a slightly negative interest margin and a high level of operating expenses. The
negative interest margin was principally due to an increase in nonaccruing
assets ($1.4 billion at September 30, 2001) and to FINOVA's high cost of debt in
a relatively low interest rate environment. The Company is no longer matched
funded and because of the increase in nonaccruing assets, it has less earning
fixed-rate assets than its total fixed-rate debt obligations of $3.25 billion
represented by the 7.5% New Senior Notes. The higher level of nonaccruing assets
is the result of a continuing weakening economy and the events of September 11.
The negative spread is expected to continue due to the mismatch between income
accretion on assets and the discount amortization on liabilities resulting from
Fresh-Start Reporting. As required by Fresh-Start Reporting, FINOVA reduced its
assets by $863.7 million (of which $365.4 million will accrete into income) and
its liabilities by $800.8 million (which included $771.3 million of discounts
that will be amortized as additional interest expense).

      Operating expenses in September 2001 were $22.7 million and were
significantly higher than the $16.8 million average monthly expenses of the
Predecessor Company during the eight months ended August 31, 2001. The increase
was primarily due to severance accruals of $6.5 million, resulting from a
reorganization designed to improve the efficiency of collecting and disposing of
its assets and to litigation accruals. The reorganization is expected to result
in a significant reduction of operating expenses by early 2002.

Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30,
2000

      The results for the nine months of 2001 include one month of the
Reorganized Company (September 2001) and eight months of the Predecessor Company
ended August 31, 2001, as reported in the Condensed Statements of Consolidated
Operations.

     Net Loss. Net losses for the nine months of 2001 were $1.49 billion
compared to net losses of $220.7 million for the nine months of 2000. The major
reasons for the losses in 2001 are the weakening U.S. and world economies, the
economic impact of the terrorist attacks of September 11, 2001, and the costs of
the Reorganization Proceedings (from March 7, 2001 through August 21, 2001). The
decline in operating results is primarily due to $295.8 million of lower
interest margins, $696.2 million of increased loss provisions, higher losses on
financial assets of $484.7 million, net reorganization expenses of $46.5
million, higher operating expenses of $34.5 million and $145.7 million less
income tax benefits recorded in 2001. These negative variances were partially
offset by $238.0 million of lower losses from discontinued operations and $28.8
million of extraordinary gains in 2001.

     Interest Margins Earned. Interest margins earned (defined as total revenues
less interest expense and operating lease and other depreciation) are down
primarily due to higher nonaccruing assets (which increased to $1.4 billion at
September 30, 2001), higher costing funds and a lower level of financing assets.

      Provision for Credit Losses. Loss provisions were up by $696.2 million in
the nine months of 2001 due primarily to the deteriorating portfolio which has
been severely affected by the weakening economy and the terrorist attacks of
September 11, 2001. See the discussion of portfolio quality and reserve for
losses in Note F of "Notes to Interim Condensed Consolidated Financial
Statements."

      Losses on Financial Assets. The 2001 losses were greater than 2000 by
$484.7 million. These losses represent the write-down or write-off of owned
assets and were substantially all related to FINOVA's transportation portfolio.
This portfolio was adversely affected by problems in the airline industry and
reduced aircraft values caused by unusually high numbers of parked airplanes. As
discussed earlier, the terrorist attacks had the largest effect on FINOVA's
transportation portfolio and its aircraft values.

      Operating Expenses. Operating expenses were up by $34.5 million in the
nine months of 2001 due primarily to higher professional services (up by $30.1
million) which consisted of investment banking, legal and accounting fees,
principally related to the Company's pursuit of its strategic alternatives and
restructuring efforts prior to commencement of the Reorganization


                                       22

<PAGE>

Proceedings. As discussed earlier, the Company has reorganized its operations
which is expected to result in a significant reduction of operating expenses by
early 2002.

      Net Reorganization Expense. Net reorganization expense is comprised of
expenses and income that are directly associated with the bankruptcy process.
For the period March 7, 2001 through August 31, 2001, net reorganization expense
was $46.5 million and included fair value adjustments of assets and liabilities
related to Fresh-Start Reporting of $62.9 million, professional service and
other fees of $26.0 million, partially offset by $42.4 million of interest
income earned on cash retained for interest and debt payments that were deferred
during the bankruptcy period.

      Income Taxes. Income tax benefits in the nine months of 2001 were $992
thousand and related to FINOVA'S operations in the United Kingdom and Canada,
compared to income tax benefits of $146.7 million recorded in the nine months of
2000. Income tax benefits were offset by an increase in the valuation allowance
during 2001 due to the uncertainty of being able to utilize such benefits.

      Discontinued Operations. As discussed earlier, the businesses that were
previously classified as discontinued operations were merged into continuing
operations upon emergence from Reorganization Proceedings. The results for the
eight months of 2001, which covers the period until emergence reflected an
improvement of $238 million over the nine months of 2000. The 2000 period
included the initial valuation adjustment to the assets that were included in
discontinued operations and designated to be sold or liquidated, at their
estimated net realizable amounts.

      Extraordinary Item. The gain of $28.8 million reported in 2001 was due to
the forgiveness of debt in connection with the restructuring of FINOVA's 5 1/2%
Convertible Trust Originated Preferred Securities as discussed in Note B of
"Notes to the Interim Condensed Consolidated Financial Statements."

Financial Condition, Liquidity and Capital Resources

      Upon emergence from bankruptcy, FINOVA's internally generated funds of
$2.7 billion, the $5.6 billion Berkadia Loan and the issuance of $3.25 billion
New Senior Notes financed the restructuring of the Company's pre-emergence
indebtedness (including TOPrS) and repaid all accrued and unpaid pre-petition
and post-petition interest claims allowed through that date. The New Senior
Notes are reflected in the Company's Condensed Consolidated Balance Sheet net of
a discount of $771.3 million, as a result of Fresh-Start Reporting adjustments.
The book value of the New Senior Notes will be increased over time to the
principal amount, through the amortization of the discount as interest expense.
The Company's obligation is to pay the full $3.25 billion principal amount of
the New Senior Notes.

      The terms of the Berkadia Credit Agreement and the Indenture substantially
prohibit the Company from using available funds (after certain permitted uses)
for any purpose other than to satisfy its obligations to creditors. Under the
terms of the Credit Agreement, the Company is permitted to establish a cash
reserve in an amount not to exceed the sum of (a) 125% of the projected
operating expenses for the next fiscal quarter, (b) unfunded customer
commitments expected to be funded over the next two fiscal quarters, (c) taxes
payable during the next fiscal quarter, (d) interest, loan fees and other
amounts due on the Berkadia Loan during the next fiscal quarter, (e) an amount
equal to all payments of principal, interest or fees relating to other permitted
indebtedness (including the New Senior Notes) that will, by their terms, become
due and payable in cash during the next fiscal quarter, and (f) such other
reserves as are necessary in the Company's good faith judgment and as approved
in advance by Berkadia for the operations of the Company, which could include
repurchases of New Senior Notes in accordance with the terms of the Indenture.
Any amount in excess of the cash reserve is required to be paid to Berkadia to
reduce the principal amount of the loan on a quarterly basis, except for the
first payment date, October 7, 2001. On that date, the Company determined that
the amount in excess of the cash reserve totaled $700 million and used it to
reduce the balance of the Berkadia Loan to $4.9 billion.

      Cash reserves can only be invested in obligations issued or guaranteed by
the US government, high grade commercial paper and bank certificates of deposit
meeting specific criteria and limited other investments that must also meet
specific ratings criteria. Further, all of the Company's cash accounts are
subject to account control agreements for the benefit of Berkadia that
effectively give Berkadia a lien on such accounts. After the $700 million
payment to Berkadia on October 7, 2001, the amount of cash retained by the
Company was approximately $300 million.

      Immediately after the Company restructured its existing indebtedness and
emerged from Reorganization Proceedings, it had cash and cash equivalents of
approximately $907.8 million. From that date through September 30, 2001, net
funds generated were $140.0 million, principally as a result of collections on
financial assets less expenses. The Company's future business activities will be
focused on maximizing the value of its portfolio through collection or sale of
assets and funds generated by such efforts will be used for the benefit of
creditors. See Note B of "Notes to Interim Condensed Consolidated Financial
Statements" for further discussion.

      Historically, FINOVA entered into derivative transactions as part of its
interest rate risk management policy of match funding its assets and
liabilities. In 2001, substantially all of FINOVA's interest rate swaps were
terminated as a result of the


                                       23

<PAGE>

Reorganization Proceedings. Therefore, FINOVA's asset and liabilities are not
match funded going forward. Interest rate swaps with an estimated value of
approximately $63 million were settled and recognized as reorganization income
during 2001.

      Total financial assets declined to $6.35 billion at September 30, 2001,
down $4.94 billion from year-end 2000 financial assets of $11.28 billion. The
significant reductions are attributable to collections on financial assets for
the first nine months of 2001 ($2.91 billion), assets sold during the nine
months of 2001 ($456.1 million), fair market value adjustments applicable to its
financial assets ($709.7 million) in connection with adopting Fresh-Start
Reporting in August 2001 and to the charges resulting from the events of
September 11, 2001 ($851.1 million).

      Fresh-Start accounting adjustments resulted in a $62.9 million reduction
to shareowners' equity. The events of September 11, 2001 combined with operating
losses in September 2001, resulted in a further reduction in shareowners' equity
of $853.5 million. The Company's Shareowners' Deficit is $835.8 million at
September 30, 2001. The Company's negative net worth reflects its obligation to
New Senior Note holders at the discounted amount of $2.48 billion. If the New
Senior Notes were reflected at their principal amount of $3.25 billion and no
other adjustments are made, its negative net worth would grow to $1.61 billion.

      The reserve for credit losses increased to $863.5 million at September 30,
2001, representing 14.2% of financing assets. The reserve for credit losses as a
percent of nonaccruing assets was 61.2% at September 30, 2001 due to the
increase in the reserve for credit losses partially offset by an increase in
nonaccruing assets. Nonaccruing assets were $1.4 billion or 19.6% of total gross
financial assets at September 30, 2001. Revenue accruing impaired assets
increased to $566.0 million during the nine months ended September 30, 2001, or
7.8% of total gross financial assets.

New Accounting Standards

      In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes new accounting and
reporting standards for derivative instruments. In June 1999, the FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133," and in June 2000, the
FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and
Certain Hedging Activities - An Amendment of FASB Statement No. 133." SFAS 133,
as amended, establishes accounting and reporting standards requiring that
derivative instruments, including certain derivative instruments embedded in
other contracts, be recorded in the statement of financial position as either an
asset or liability measured at its fair value. SFAS 133 requires that changes in
the derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met.

      FINOVA adopted the provisions of SFAS 133, as amended, on January 1, 2001,
which resulted in an immaterial impact on FINOVA's consolidated results of
operations and financial position.

      Subsequent to June 2001, the FASB issued SFAS No. 141, "Business
Combinations," No. 142, "Goodwill and Other Intangible Assets," No. 143,
"Accounting for Asset Retirement Obligations," and No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS No. 141 and SFAS No. 142 have
no current impact on the Company. SFAS No. 143 establishes accounting standards
for recognition and measurement of a liability for an asset retirement
obligation and associated asset retirement costs. SFAS No. 144 supercedes SFAS
No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets To Be Disposed Of," and APB Opinion No. 30, "Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions," and
amends ARB No. 51, "Consolidated Financial Statements."

      In conjunction with the reorganization and Fresh-Start Reporting FINOVA
adopted the provisions of SFAS Nos. 143 and 144, which resulted in an immaterial
impact on the consolidated results of operations and financial position.

Special Note Regarding Forward-Looking Statements

      Certain statements in this report are "forward-looking," in that they do
not discuss historical fact, but instead note future expectations, projections,
intentions or other items. These forward-looking statements include assumptions,
estimates and valuations implicit in the financial statements and related notes
as well as matters in the sections of this report captioned "Item 2."
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Item 3. Quantitative and Qualitative Disclosure About Market
Risk." They are also made in documents incorporated in this report by reference,
or in which this report may be incorporated, such as a prospectus.


                                       24

<PAGE>

            Forward-looking statements are subject to known and unknown risks,
uncertainties and other factors that may cause FINOVA's actual results or
performance to differ materially from those contemplated by the forward-looking
statements. Many of those factors are noted in conjunction with the
forward-looking statements in the text. Other important factors that could cause
actual results to differ include:

      o     On September 11, 2001, the United States was the target of vicious
            terrorist attacks that resulted in a tremendous loss of life and
            property. These attacks caused the interruption of many business
            activities and overall disruption of the U.S. and world economies.
            Many of FINOVA's customers have been adversely affected by these
            events, especially in the airline, resort and hotel industries. The
            Company has attempted to assess the economic damages these events
            have had on its financial condition and future operations, and
            accordingly has recorded charges in September 2001 to write-down
            assets and add to reserves for possible credit losses. These damages
            are based on the Company's initial estimation of losses and may not
            be indicative of the total impact these events could have on its
            portfolio and operations.

      o     The results of FINOVA's efforts to implement its business strategy,
            including the efforts to maximize the value of the portfolio.
            Failure to fully implement its business strategy might result in
            adverse effects, including the ability to repay the Company's
            outstanding secured debt and other obligations, as well as having a
            materially adverse impact on its financial position and results of
            operations. The current focus on maximizing portfolio values and
            liquidity while minimizing or eliminating new business generation
            will likely cause financial results that differ materially from
            prior periods. Similarly, adoption of Fresh-Start Reporting upon
            emergence from bankruptcy has resulted in revaluation of certain
            assets and liabilities and other adjustments to the financial
            statements, so that prior results are not indicative of future
            expectations.

      o     The effect of economic conditions and the performance of FINOVA's
            borrowers. Economic conditions in general or in particular market
            segments could impact the ability of FINOVA's borrowers to operate
            or expand their businesses, which might result in decreased
            performance, affecting repayment of their obligations. The rate of
            borrower defaults or bankruptcies may increase. Economic conditions
            could adversely affect FINOVA's ability to realize gains from sales
            of assets and investments, and estimated residual values. Those
            items could be particularly sensitive to changing market conditions,
            such as the results following the events of September 11, 2001.
            Certain changes in fair market values must be reflected in FINOVA's
            reported financial results.

      o     The cost of FINOVA's capital. That cost has increased significantly
            as a result of the consummation of the Berkadia Loan and issuance of
            the New Senior Notes. The resulting higher interest costs will
            reduce net income. Failure to comply with its credit obligations
            could result in additional increased interest charges. Changes in
            interest rates may negatively impact interest margins due to lack of
            matched funding of the Company's assets and liabilities.

      o     Loss of employees. FINOVA must retain a sufficient number of
            employees with relevant knowledge and skills to continue to monitor
            and collect its portfolio. Failure to do so could result in
            additional losses. The curtailment of new business could adversely
            affect employee retention absent significant retention incentives.

      o     Changes in air worthiness directives. These changes could have a
            significant impact on airplane values, especially FINOVA's portfolio
            of airplanes that are of an older vintage.

      o     Changes in government regulations, tax rates and similar matters.
            For example, government regulations could significantly increase the
            cost of doing business or could eliminate certain tax advantages of
            some FINOVA financing products. The current financial condition of
            FINOVA also makes it difficult to record potential tax benefits that
            may never be recognized.

      o     Necessary technological changes, such as implementation of
            information management systems, may be more difficult, expensive or
            time consuming than anticipated.

      o     Potential liabilities associated with dispositions of assets or
            lines of business.

      o     Other risks detailed in FINOVA's other SEC reports or filings.

            FINOVA does not intend to update forward-looking information to
reflect actual results or changes in assumptions or other factors that could
affect those statements. FINOVA cannot predict the risk from reliance on
forward-looking statements in light of the many factors that could affect their
accuracy.


                                       25

<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      FINOVA uses various sensitivity analysis models to measure the exposure of
net income or loss to increases or decreases in interest rates. These models
measure the change in annual net income or loss if interest rates on
floating-rate assets, liabilities and derivative instruments increase or
decrease, assuming no prepayments. Based on models used, a 100 basis point or 1%
shift in interest rates would affect net income by less than 4.5%.

      Certain limitations are inherent in the models used for interest rate risk
measurements. Modeling changes require certain assumptions that may oversimplify
the manner in which actual yields and costs respond to changes in market
interest rates. For example, the models assume a more static composition of
FINOVA's interest sensitive assets, liabilities and derivative instruments than
would actually exist over the period being measured. The models also assume that
a particular change in interest rates is reflected uniformly across the yield
curve regardless of the maturity or repricing of specific assets and
liabilities. Although the sensitivity analysis models provide an indication of
FINOVA's interest rate risk exposure at a particular point in time, the models
are not intended to and do not provide a precise forecast of the effects of
changes in market interest rates on FINOVA's net income or loss and will likely
differ from actual results.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      See Part I, Item 1, Note G for a discussion of pending legal proceedings.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

      On emergence from the Reorganization Proceedings, FINOVA's existing shares
of common stock continued to remain outstanding. As contemplated by the Plan,
FINOVA issued 61,020,581 shares of common stock to Berkadia on the Effective
Date, representing 50% of FINOVA's equity outstanding after giving effect to the
common stock issued pursuant to the Plan. Accordingly, there were 122,041,162
shares outstanding on the Effective Date.

      Upon emergence, FINOVA adopted a new Certificate of Incorporation that
modified the rights of FINOVA's shareholders. The Certificate of Incorporation
was changed, among other ways, to prohibit FINOVA from issuing non-voting equity
securities. It also imposes certain restrictions on the transfer of FINOVA's
equity securities, applicable to persons who are or become (under applicable tax
rules) 5% shareholders of FINOVA, without the prior written approval of FINOVA's
board of directors. These transfer restrictions do not apply to Berkadia or its
affiliates. The Amended and Restated Certificate of Incorporation is filed as
Exhibit 3.A to FINOVA's Current Report on Form 8-K, filed on August 27, 2001 and
is incorporated by reference into this report.

      As noted above, FINOVA issued 61,020,581 million shares of common stock to
Berkadia in connection with the Plan, after giving effect to the issuance under
the Plan of 3,000 shares to a creditor in connection with the resolution of its
claim against FINOVA. Both issuances occurred on August 21, 2001, which was the
date FINOVA emerged from the Reorganization Proceedings. No underwriters were
used in connection with either transaction. The shares issued to Berkadia were
additional consideration for its loan to FINOVA of $5.6 billion. The settlement
with the creditor was in satisfaction of a greater claim, part of which was
settled in cash and the remainder through the securities noted above. The
issuance to Berkadia relied on the private offering exemption contained within
Section 4(2) of the Securities Act of 1933, as amended, and was a condition to
Berkadia making the loan to FINOVA, which was privately negotiated. The issuance
to the creditor was in reliance on the exemption from registration contained
under Section 1145 of the United States Bankruptcy Code and was also privately
negotiated. Both offerings of securities have been concluded.

      The Plan contemplates and authorizes the issuance of shares of (i)
FINOVA's common stock to satisfy any final judgment against FINOVA not covered
by insurance arising from certain existing class action litigation, and (ii) 6%
Perpetual Non-Cumulative Redeemable Preferred Stock of FINOVA to satisfy any
final judgment against FINOVA Capital not covered by insurance arising from
certain existing class action litigation against FINOVA Capital. See Note G of
"Notes to Interim Condensed Consolidated Financial Statements." If any FINOVA
common stock is issued in satisfaction of any such judgment, the Plan provides
that Berkadia would receive additional shares in the amount equal to the number
it would have received on the Effective Date, as such additional


                                       26

<PAGE>

FINOVA stock had been issued on the Effective Date. The terms of the preferred
stock are summarized in Exhibit 1.81 of FINOVA's Current Report on Form 8-K
filed on June 8, 2001 and are incorporated in this report by reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      FINOVA submitted its Plan to a vote of its creditors and equity interest
holders, including the stockholders. 28,124,335 common shares voted, which
constituted approximately 46% of the outstanding common stock. 27,915,402 shares
were voted in favor of the Plan (99.25%), and 208,933 shares were voted against
it (0.74%) The Plan included, among other things, approval of the proposed
transaction with Berkadia and the issuance of New Senior Notes.


                                       27

<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

Exhibits:

2.A   Third Amended and Restated Joint Plan of Reorganization of Debtors Under
      Chapter 11 of the Bankruptcy Code (incorporated by reference from FINOVA's
      Report on Form 8-K, filed on June 22, 2001, Exhibit 10.A).

2.B   Revised Technical Amendments to Third Amended and Restated Joint Plan of
      Reorganization (incorporated by reference from FINOVA's Current Report on
      Form 8-K, filed on August 27, 2001 (the "August 27 8-K"), Exhibit 2.B).

3.A   Amended and Restated Certificate of Incorporation of FINOVA (incorporated
      by reference from the August 27 8-K, Exhibit 3.A).

3.B   Amended and Restated Bylaws of FINOVA (incorporated by reference from the
      August 27 8-K, Exhibit 3.B).

10.A  Credit Agreement, dated as of August 21, 2001, by and between FINOVA
      Capital and Berkadia (incorporated by reference from the August 27 8-K,
      Exhibit 10.A).

10.B  Indenture, dated as of August 22, 2001, between FINOVA and The Bank of New
      York, as trustee (the "Indenture Trustee"), with respect to FINOVA's 7.5%
      Senior Secured Notes Maturing 2009 with Contingent Interest Due 2016,
      including the form of Senior Secured Note (incorporated by reference from
      the August 27 8-K, Exhibit 10.B).

10.C  Form of Intercompany Notes by FINOVA Capital payable to FINOVA
      (incorporated by reference from the August 27 8-K, Exhibit 10.C).

10.D  Collateral Trust Agreement, dated as of August 21, 2001, among FINOVA,
      FINOVA Capital, Berkadia, Wilmington Trust Company, as collateral trustee
      (the "Collateral Trustee"), the Indenture Trustee, and each grantor from
      time to time party thereto (incorporated by reference from the August 27
      8-K, Exhibit 10.D).

10.E  Guaranty, dated as of August 21, 2001, by FINOVA in favor of Berkadia
      (incorporated by reference from the August 27 8-K, Exhibit 10.E).

10.F  Guaranty, dated as of August 21, 2001, by certain subsidiaries of FINOVA
      Capital (the "Subsidiary Guarantors"), in favor of Berkadia (incorporated
      by reference from the August 27 8-K, Exhibit 10.F).

10.G  Pledge Agreement, dated as of August 21, 2001, by FINOVA, in favor of the
      Collateral Trustee (incorporated by reference from the August 27 8-K,
      Exhibit G).

10.H  Pledge and Security Agreement, dated as of August 21, 2001, by FINOVA
      Capital and the Subsidiary Guarantors, in favor of the Collateral Trustee
      (incorporated by reference from the August 27 8-K, Exhibit 10.H).

10.I  Registration Rights Agreement, dated as of August 21, 2001, between FINOVA
      and Berkadia (incorporated by reference from the August 27 8-K, Exhibit
      10.I).

10.J  Voting Agreement, dated as of August 21, 2001, among FINOVA, Berkadia,
      Berkshire Hathaway, Inc. and Leucadia National Corporation (incorporated
      by reference from the August 27 8-K, Exhibit 10.J).

12    Computation of Ratio of (Losses) Income to Fixed Charges (interim period).

99.A  Press Release of FINOVA dated August 21, 2001 (incorporated by reference
      from the August 27 8-K, Exhibit 99.A).

99.B  Order entered August 10, 2001 confirming the Third Amended and Restated
      Joint Plan of Reorganization, as amended and supplemented (incorporated by
      reference from the August 27 8-K, Exhibit 99.B).


                                       28

<PAGE>

Reports on Form 8-K:

      FINOVA filed the following reports on Form 8-K:

Date filed:       Purpose of Report:
----------        -----------------

August 27, 2001   Report on FINOVA's emergence from Chapter 11 reorganization
                  proceedings, changes in management of FINOVA, and to provide
                  copies of the Plan of Reorganization and principal documents
                  relating to the Berkadia Loan.

August 29, 2001   Report on the change in control of FINOVA resulting from the
                  issuance of shares to Berkadia pursuant to the Plan of
                  Reorganization.


                                       29

<PAGE>

                             THE FINOVA GROUP INC.

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: November 14, 2001                By:        /s/ Stuart A. Tashlik
                                            ------------------------------------
                                            Stuart A. Tashlik, Senior Vice
                                            President, Chief Financial Officer
                                            and Controller Principal Financial
                                            and Accounting Officer


                                       30

<PAGE>

                             THE FINOVA GROUP INC.
                         COMMISSION FILE NUMBER 1-11011
                                 EXHIBIT INDEX
                          SEPTEMBER 30, 2001 FORM 10-Q

Exhibit                               Document
-------                               --------

2.A       Third Amended and Restated Joint Plan of Reorganization of Debtors
          Under Chapter 11 of the Bankruptcy Code (incorporated by reference
          from FINOVA's Report on Form 8-K, filed on June 22, 2001, Exhibit
          10.A).

2.B       Revised Technical Amendments to Third Amended and Restated Joint Plan
          of Reorganization (incorporated by reference from FINOVA's Current
          Report on Form 8-K, filed on August 27, 2001 (the "August 27 8-K"),
          Exhibit 2.B).

3.A       Amended and Restated Certificate of Incorporation of FINOVA
          (incorporated by reference from the August 27 8-K, Exhibit 3.A).

3.B       Amended and Restated Bylaws of FINOVA (incorporated by reference from
          the August 27 8-K, Exhibit 3.B).

10.A      Credit Agreement, dated as of August 21, 2001, by and between FINOVA
          Capital and Berkadia (incorporated by reference from the August 27
          8-K, Exhibit 10.A).

10.B      Indenture, dated as of August 22, 2001, between FINOVA and The Bank of
          New York, as trustee (the "Indenture Trustee"), with respect to
          FINOVA's 7.5% Senior Secured Notes Maturing 2009 with Contingent
          Interest Due 2016, including the form of Senior Secured Note
          (incorporated by reference from the August 27 8-K, Exhibit 10.B).

10.C      Form of Intercompany Notes by FINOVA Capital payable to FINOVA
          (incorporated by reference from the August 27 8-K, Exhibit 10.C).

10.D      Collateral Trust Agreement, dated as of August 21, 2001, among FINOVA,
          FINOVA Capital, Berkadia, Wilmington Trust Company, as collateral
          trustee (the "Collateral Trustee"), the Indenture Trustee, and each
          grantor from time to time party thereto (incorporated by reference
          from the August 27 8-K, Exhibit 10.D).

10.E      Guaranty, dated as of August 21, 2001, by FINOVA in favor of Berkadia
          (incorporated by reference from the August 27 8-K, Exhibit 10.E).

10.F      Guaranty, dated as of August 21, 2001, by certain subsidiaries of
          FINOVA Capital (the "Subsidiary Guarantors"), in favor of Berkadia
          (incorporated by reference from the August 27 8-K, Exhibit 10.F).

10.G      Pledge Agreement, dated as of August 21, 2001, by FINOVA, in favor of
          the Collateral Trustee (incorporated by reference from the August 27
          8-K, Exhibit G).

10.H      Pledge and Security Agreement, dated as of August 21, 2001, by FINOVA
          Capital and the Subsidiary Guarantors, in favor of the Collateral
          Trustee (incorporated by reference from the August 27 8-K, Exhibit
          10.H).

10.I      Registration Rights Agreement, dated as of August 21, 2001, between
          FINOVA and Berkadia (incorporated by reference from the August 27 8-K,
          Exhibit 10.I).

10.J      Voting Agreement, dated as of August 21, 2001, among FINOVA, Berkadia,
          Berkshire Hathaway, Inc. and Leucadia National Corporation
          (incorporated by reference from the August 27 8-K, Exhibit 10.J).

12        Computation of Ratio of (Losses) Income to Fixed Charges (interim
          period).

99.A      Press Release of FINOVA dated August 21, 2001 (incorporated by
          reference from the August 27 8-K, Exhibit 99.A).

99.B      Order entered August 10, 2001 confirming the Third Amended and
          Restated Joint Plan of Reorganization, as amended and supplemented
          (incorporated by reference from the August 27 8-K, Exhibit 99.B).


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