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UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington D.C.
20549

FORM 10-Q

Quarterly Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of
1934

For the quarterly period ended September 30, 2002

Commission file number 1-11011

THE FINOVA GROUP INC.(Exact name of registrant as specified in its charter)

|Delaware                                                       |  | 86-0695381                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. employer identification no.)
|                                                               |  |                                     
|4800 North Scottsdale Road Scottsdale, AZ                      |  | 85251-7623                          
|(Address of principal executive offices)                       |  | (Zip code)                          

Registrants telephone number, including area code:
480-636-4800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months, (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

|Yes | x | No | o
|--- | - | -- | -

|Yes | x | No | o
|--- | - | -- | -

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THE FINOVA GROUP INC.

TABLE OF CONTENTS

|                               |                                                                                       | Page No.
|------------------------------ | ------------------------------------------------------------------------------------- | --------
|                               |                                                                                       |         
|PART I   FINANCIAL INFORMATION |                                                                                      
|                               |                                                                                      
|Item 1.                        | Financial Statements                                                                  | 1       
|                               | Condensed Consolidated Balance Sheets                                                 | 1       
|                               | Condensed Statements of Consolidated Operations                                       | 2       
|                               | Condensed Statements of Consolidated Cash Flows                                       | 3       
|                               | Condensed Statements of Consolidated Shareowners Equity                              | 4       
|                               | Notes to Interim Condensed Consolidated Financial Statements                          | 5       
|                               |                                                                                       |         
|Item 2.                        | Managements Discussion and Analysis of Financial Condition and Results of Operations | 15      
|                               | Special Note Regarding Forward-Looking Statements                                     | 28      
|                               |                                                                                       |         
|Item 3.                        | Quantitative and Qualitative Disclosure About Market Risk                             | 29      
|                               |                                                                                       |         
|Item 4.                        | Controls and Procedures                                                               | 30      
|                               |                                                                                       |         
|PART II   OTHER INFORMATION    |                                                                                      
|                               |                                                                                      
|Item 1.                        | Legal Proceedings                                                                     | 30      
|                               |                                                                                       |         
|Item 6.                        | Exhibits and Reports on Form 8-K                                                      | 30      
|                               |                                                                                       |         
|Signatures                     | 31                                                                                   





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PART I   
FINANCIAL INFORMATION

Item 1.     
Financial Statements

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

|                                                                                           |  | Reorganized Company |           
|------------------------------------------------------------------------------------------ |  | ------------------- | ----------
|                                                                                           |  |                     |           
|                                                                                           |  | September 30, 2002  |           
|                                                                                           |  | (Unaudited)         |           
|                                                                                           |  |                     |           
|                                                                                           |  |                     |           
|ASSETS                                                                                     |  |                     |           
|Cash and cash equivalents                                                                  |  | $                   | 487,116   
|Financing Assets:                                                                          |  |                     |           
|Loans and other financing contracts, net                                                   |  |                     | 3,223,672 
|Direct financing leases                                                                    |  |                     | 309,549   
|Leveraged leases                                                                           |  |                     | 177,825   
|                                                                                           |  |                     |           
|Total financing assets                                                                     |  |                     | 3,711,046 
|Less reserve for credit losses                                                             |  |                     | (679,921  
|                                                                                           |  |                     |           
|Net financing assets                                                                       |  |                     | 3,031,125 
|                                                                                           |  |                     |           
|Other Financial Assets:                                                                    |  |                     |           
|Assets held for sale                                                                       |  |                     | 210,221   
|Operating leases                                                                           |  |                     | 124,194   
|Assets held for the production of income                                                   |  |                     | 83,621    
|Investments                                                                                |  |                     | 23,708    
|                                                                                           |  |                     |           
|Total other financial assets                                                               |  |                     | 441,744   
|                                                                                           |  |                     |           
|Total Financial Assets                                                                     |  |                     | 3,472,869 
|Other assets                                                                               |  |                     | 23,803    
|                                                                                           |  |                     |           
|                                                                                           |  | $                   | 3,983,788 
|                                                                                           |  |                     |           
|LIABILITIES AND SHAREOWNERS EQUITY                                                        |  |                     |           
|Liabilities:                                                                               |  |                     |           
|Berkadia Loan                                                                              |  | $                   | 2,400,000 
|Senior debt - (principal amount due of $3,152,301 and $3,250,478, respectively)            |  |                     | 2,438,399 
|                                                                                           |  |                     |           
|Total debt                                                                                 |  |                     | 4,838,399 
|Accounts payable and accrued expenses                                                      |  |                     | 206,370   
|Deferred income taxes, net                                                                 |  |                     | 16,607    
|                                                                                           |  |                     |           
|Total Liabilities                                                                          |  |                     | 5,061,376 
|                                                                                           |  |                     |           
|Shareowners Equity:                                                                       |  |                     |           
|Common stock, $0.01 par value, 400,000,000 shares authorized and 125,873,000 shares issued |  |                     | 1,259     
|Additional capital                                                                         |  |                     | 52,997    
|Accumulated deficit                                                                        |  |                     | (1,126,172
|Accumulated other comprehensive (loss) income                                              |  |                     | (5,136    
|Common stock in treasury, 3,832,000 shares                                                 |  |                     | (536      
|                                                                                           |  |                     |           
|Total Shareowners Equity                                                                  |  |                     | (1,077,588
|                                                                                           |  |                     |           
|                                                                                           |  | $                   | 3,983,788 
|                                                                                           |  |                     |           

See notes to interim condensed consolidated financial statements.

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

|                                                                                               |  | Reorganized Company               |             | Predecessor Company Two Months Ended Aug. 31, 2001 |   | Reorganized Company Nine Months Ended Sept. 30, 2002 |   | Predecessor Company Eight Months Ended Aug. 31, 2001 |           
|---------------------------------------------------------------------------------------------- |  | --------------------------------- | ----------- | -------------------------------------------------- | - | ---------------------------------------------------- | - | ---------------------------------------------------- | ----------
|                                                                                               |  |                                   |             |                                                    |   |                                                     
|                                                                                               |  | Three Months Ended Sept. 30, 2002 |             | One Month Ended Sept. 30, 2001                     |   |                                                      |   |                                                     
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Revenues:                                                                                      |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Interest income                                                                                |  | $                                 | 49,758      |                                                    | $ | 37,238                                               |   | $                                                    | 80,838    
|Rental income                                                                                  |  |                                   | 9,604       |                                                    |   | 5,663                                                |   |                                                      | 11,741    
|Operating lease income                                                                         |  |                                   | 12,994      |                                                    |   | 5,279                                                |   |                                                      | 11,671    
|Fees and other income                                                                          |  |                                   | 10,384      |                                                    |   | 7,102                                                |   |                                                      | 13,084    
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Total Revenues                                                                                 |  |                                   | 82,740      |                                                    |   | 55,282                                               |   |                                                      | 117,334   
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Gain from extinguishment of debt, net of      Fresh-Start discount                             |  |                                   | 46,888      |                                                    |   |                                                      |   |                                                      |           
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Expenses:                                                                                      |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Interest expense                                                                               |  |                                   | 96,858      |                                                    |   | 47,734                                               |   |                                                      | 105,180   
|Operating lease and other depreciation                                                         |  |                                   | 8,347       |                                                    |   | 8,435                                                |   |                                                      | 12,702    
|Provision for credit losses                                                                    |  |                                   | (69,467     | )                                                  |   | 606,813                                              |   |                                                      | 6,023     
|Net loss on financial assets                                                                   |  |                                   | 33,159      |                                                    |   | 219,281                                              |   |                                                      | 66,430    
|Portfolio expenses                                                                             |  |                                   | 12,211      |                                                    |   | 858                                                  |   |                                                      | 5,377     
|General and administrative expenses                                                            |  |                                   | 24,299      |                                                    |   | 21,794                                               |   |                                                      | 33,734    
|Net reorganization expense                                                                     |  |                                   |             |                                                    |   |                                                      |   |                                                      | 54,583    
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Total Expenses                                                                                 |  |                                   | 105,407     |                                                    |   | 904,915                                              |   |                                                      | 284,029   
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Income (loss) from continuing operations      before income taxes and preferred      dividends |  |                                   | 24,221      |                                                    |   | (849,633                                             | ) |                                                      | (166,695  
|Income tax (expense) benefit                                                                   |  |                                   | (41         | )                                                  |   | (414                                                 | ) |                                                      | 4,812     
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Income (loss) from continuing operations      before preferred dividends                       |  |                                   | 24,180      |                                                    |   | (850,047                                             | ) |                                                      | (161,883  
|Preferred dividends, net of tax                                                                |  |                                   |             |                                                    |   |                                                      |   |                                                      | (110      
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Income (loss) from continuing operations                                                       |  |                                   | 24,180      |                                                    |   | (850,047                                             | ) |                                                      | (161,773  
|Discontinued operations, net of tax expense      of $201 and $1,359, respectively              |  |                                   |             |                                                    |   |                                                      |   |                                                      | 4,383     
|Net loss on disposal of operations                                                             |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Income (loss) before extraordinary item                                                        |  |                                   | 24,180      |                                                    |   | (850,047                                             | ) |                                                      | (157,390  
|Extraordinary item - gain on debt discharge                                                    |  |                                   |             |                                                    |   |                                                      |   |                                                      | 28,750    
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Net Income (Loss)                                                                              |  | $                                 | 24,180      |                                                    | $ | (850,047                                             | ) | $                                                    | (128,640  
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Basic/diluted earnings (loss) per share:                                                       |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Income (loss) from continuing operations                                                       |  | $                                 | 0.20        |                                                    | $ | (6.97                                                | ) | $                                                    | (2.28     
|Discontinued operations                                                                        |  |                                   |             |                                                    |   |                                                      |   |                                                      | 0.06      
|Extraordinary item                                                                             |  |                                   |             |                                                    |   |                                                      |   |                                                      | 0.41      
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Earnings (loss) per share                                                                      |  | $                                 | 0.20        |                                                    | $ | (6.97                                                | ) | $                                                    | (1.81     
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           
|Weighted average shares outstanding                                                            |  |                                   | 122,041,000 |                                                    |   | 122,041,000                                          |   |                                                      | 70,972,000
|                                                                                               |  |                                   |             |                                                    |   |                                                      |   |                                                      |           

See notes to interim condensed consolidated financial statements.

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

|                                                 |                                                                 |                                     |                                     |                     |   |          
|------------------------------------------------ | --------------------------------------------------------------- | ----------------------------------- | ----------------------------------- | ------------------- | - | ---------
|                                                 |                                                                 | Reorganized Company                 |                                     | Predecessor Company |  
|                                                 |                                                                 |                                     |                                     |                     |  
|Nine Months Ended September 30, 2002             |                                                                 | One Month Ended  September 30, 2001 | Eight Months Ended  August 31, 2001
|                                                 |                                                                 |                                     |                                     |                     |   |          
|Net Cash Used by Continuing Operating Activities |                                                                 | $                                   | (100,460                            | )                   | $ | (4,549   
|                                                 |                                                                 |                                     |                                     |                     |   |          
|Investing Activities:                            |                                                                 |                                     |                                     |                     |   |          
|                                                 | Proceeds from disposals of leases and other owned      assets   |                                     |                                     | 64,118              |   |          
|                                                 | Proceeds from sales of investments                              |                                     |                                     | 155,831             |   |          
|                                                 | Proceeds from sales of financial assets                         |                                     |                                     | 572,820             |   |          
|                                                 | Collections from financial assets                               |                                     |                                     | 2,109,173           |   |          
|                                                 | Expenditures for financial assets                               |                                     |                                     | (886,942            | ) |          
|                                                 | Recoveries of loans previously written off                      |                                     |                                     | 38,857              |   |          
|                                                 |                                                                 |                                     |                                     |                     |   |          
|Net Cash Provided by Investing Activities        |                                                                 |                                     | 2,053,857                           |                     |   | 144,591  
|                                                 |                                                                 |                                     |                                     |                     |   |          
|Financing Activities:                            |                                                                 |                                     |                                     |                     |   |          
|                                                 | Borrowings under Berkadia Credit Agreement                      |                                     |                                     |                     |   |          
|                                                 | Repayments of Berkadia Loan                                     |                                     |                                     | (2,500,000          | ) |          
|                                                 | Repayments of indebtness subject to chapter 11      proceedings |                                     |                                     |                     |   |          
|                                                 | Benefits realized from pre-confirmation NOLs                    |                                     |                                     | 36,029              |   |          
|                                                 | Repurchase of New Senior Notes                                  |                                     |                                     | (29,551             | ) |          
|                                                 |                                                                 |                                     |                                     |                     |   |          
|Net Cash Used by Financing Activities            |                                                                 |                                     | (2,493,522                          | )                   |   |          
|                                                 |                                                                 |                                     |                                     |                     |   |          
|Net Cash Provided by Discontinued Operations     |                                                                 |                                     |                                     |                     |   |          
|                                                 |                                                                 |                                     |                                     |                     |   |          
|(Decrease) Increase in Cash and Cash Equivalents |                                                                 |                                     | (540,125                            | )                   |   | 140,042  
|Cash and Cash Equivalents,  beginning of period  |                                                                 |                                     | 1,027,241                           |                     |   | 907,825  
|                                                 |                                                                 |                                     |                                     |                     |   |          
|Cash and Cash Equivalents,  end of period        |                                                                 | $                                   | 487,116                             |                     | $ | 1,047,867
|                                                 |                                                                 |                                     |                                     |                     |   |          

See notes to interim condensed consolidated financial statements.

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THE FINOVA GROUP INC.CONDENSED STATEMENTS OF CONSOLIDATED SHAREOWNERS EQUITY (Dollars in thousands) (Unaudited)

|                                                                         |                                                                    | Common Stock |       | Additional Capital |   | Accumulated Deficit |   | Accumulated Other Comprehensive Income (Loss) |            | Common Stock in Treasury |   | Total Shareowners Equity |        
|------------------------------------------------------------------------ | ------------------------------------------------------------------ | ------------ | ----- | ------------------ | - | ------------------- | - | --------------------------------------------- | ---------- | ------------------------ | - | ------------------------- | -------
|                                                                         |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|Balance, January 1, 2001(Predecessor)                                    |                                                                    | $            | 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)               |              |       |                    |   |                     |   |                                               |            |                          |   |                           | (19,000
|                                                                         | Net change in foreign      currency translation                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           | (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      (Reorganized)                              |                                                                    |              | 1,259 |                    |   | 16,900              |   |                                               |            |                          |   |                           |        
|                                                                         |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|Comprehensive loss:                                                      |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|                                                                         | Net loss                                                           |              |       |                    |   |                     |   |                                               |            | (1,142,300               | ) |                           |        
|                                                                         | Net change in unrealized      holding gains (losses)               |              |       |                    |   |                     |   |                                               |            |                          |   |                           | 6,999  
|                                                                         | Net change in foreign      currency translation                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           | (2,919 
|                                                                         |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|Comprehensive loss                                                       |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|                                                                         |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|Other                                                                    |                                                                    |              |       |                    |   | 28                  |   |                                               |            |                          |   |                           |        
|                                                                         |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|Balance, December 31, 2001    (Reorganized)                              |                                                                    |              | 1,259 |                    |   | 16,928              |   |                                               | (1,142,300 | )                        |   | 4,080                     |        
|                                                                         |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|Comprehensive income:                                                    |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|                                                                         | Net income                                                         |              |       |                    |   |                     |   |                                               |            | 16,128                   |   |                           |        
|                                                                         | Net change in unrealized      holding gains (losses)               |              |       |                    |   |                     |   |                                               |            |                          |   |                           | (12,056
|                                                                         | Net change in foreign      currency translation                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           | 2,840  
|                                                                         |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|Comprehensive income                                                     |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|                                                                         |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|Benefits realized from pre-     confirmation NOLs                        |                                                                    |              |       |                    |   | 36,029              |   |                                               |            |                          |   |                           |        
|Other                                                                    |                                                                    |              |       |                    |   | 40                  |   |                                               |            |                          |   |                           |        
|                                                                         |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|Balance, September 30,      2002 (Reorganized)                           |                                                                    | $            | 1,259 |                    | $ | 52,997              |   | $                                             | (1,126,172 | )                        | $ | (5,136                    | )      
|                                                                         |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        
|                                                                         |                                                                    |              |       |                    |   |                     |   |                                               |            |                          |   |                           |        

See notes to interim condensed consolidated financial statements.

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THE FINOVA GROUP INC.NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2002 (Dollars in thousands in tables, except per share data) (Unaudited)

A.Nature of Operations and Reorganization

The accompanying financial statements and notes thereto should be read in conjunction with
the consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2001.

The following discussion relates to The FINOVA
Group Inc., a financial services holding company, and its subsidiaries (collectively FINOVA or the Company), including FINOVA Capital Corporation and its subsidiaries (FINOVA Capital). FINOVA is a Delaware
corporation, incorporated in 1991. 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.  FINOVAs stock is traded over-the-counter under the symbol FNVG.

Since its emergence from bankruptcy in August 2001, the Companys business activities have
been limited to maximizing the value of its portfolio through the orderly collection of its receivables. These activities include continued collection of its portfolio pursuant to contractual terms and may include efforts to retain certain customer
relationships and restructure or terminate other relationships. FINOVA is no longer engaged in any new lending activities, except to honor previously existing customer commitments. Any cash generated from these activities in excess of cash reserves
permitted in the Companys debt agreements is used to pay down FINOVAs obligations to its creditors. Operations have been restructured to more efficiently manage these collection efforts. The Company has sold portions of asset portfolios
and will consider future sales if buyers can be found at acceptable prices.

To facilitate the orderly collection of its remaining asset portfolios, FINOVA has combined its former operating segments
into one operating unit. As a result of this combination, elimination of new business activities and reductions in its asset portfolios, FINOVA has significantly reduced its work force. As of September 30, 2002, the Company had 347 employees
compared to 497 and 1,098 at December 31, 2001 and 2000, respectively.

On March 7, 2001, FINOVA, 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) to enable them to restructure their debt. On August 10, 2001, the Bankruptcy Court entered an
order confirming FINOVAs Third Amended and Restated Joint Plan of Reorganization (the Plan), pursuant to which the Debtors restructured their debt, effective August 21, 2001 (the Effective Date).

Pursuant to the Plan, Berkadia LLC (Berkadia), an entity jointly owned by Berkshire Hathaway Inc. (Berkshire) and Leucadia National Corporation (Leucadia), 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 7.5% Senior Secured Notes
maturing in 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 shares
outstanding after giving effect to implementation of the Plan. Principal payments made to Berkadia since emergence have reduced the Berkadia Loan to $2.4 billion as of September 30, 2002 and $2.275 billion as of the filing of this report. The pace
of loan repayments depends on numerous factors, such as the rate of collections from borrowers and asset sales. There can be no assurance that the Berkadia Loan will continue to be repaid at this pace.

Upon emergence from bankruptcy, the Company adopted Fresh-Start Reporting, which together with changes in the Companys operations, have resulted in the consolidated financial statements for the periods subsequent to
August 31, 2001 (the Reorganized Company) not being comparable to those of the Company for periods prior to August 31, 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.

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Going Concern

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 repay their obligations to FINOVA and the Companys ability to realize the value of its
portfolio. Even if the Company is able to recover the book value of its assets, and there can be no assurance of the Companys ability to do so, it is unlikely the Company will be able to repay the New Senior Notes in their entirety at maturity
in November 2009. 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. The Companys independent public accountants qualified their report on the Companys 2000 and 2001 financial statements due to concerns about the Companys ability to continue as a
going concern.

B.     Significant Accounting Policies

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires FINOVA to use estimates and assumptions that affect reported amounts of assets and liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Those
estimates are subject to known and unknown risks, uncertainties and other factors that could materially impact the amounts reported and disclosed in the financial statements. Significant estimates include anticipated amounts and timing of future
cash flows used in the calculation of Fresh-Start Reporting adjustments, the reserve for credit losses and measurement of impairment. Other estimates include selection of appropriate discount rates used in net present value calculations,
determination of fair values of certain financial assets for which there is not an active market, residual assumptions for leasing transactions and the determination of appropriate valuation allowances against deferred tax assets. Actual results
could differ from those estimated.

Consolidation Policy for Interim Reporting

The interim condensed consolidated financial statements
present the financial position, results of operations and cash flows of FINOVA and its subsidiaries, including FINOVA Capital and its subsidiaries. The condensed consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States. All intercompany balances have been eliminated in consolidation.

The interim condensed consolidated financial information is unaudited. In the
opinion of management, all adjustments consisting of normal recurring items necessary to present fairly the financial position as of September 30, 2002 and the results of operations and cash flows presented herein have been included in the condensed
consolidated financial statements. Interim results are not necessarily indicative of results of operations for the full year.

Segment Reporting Policy

In connection with the Companys reorganization and emergence from bankruptcy as a new reporting entity, formerly reported operating segments have been combined into one operating unit. FINOVA is no longer soliciting new
business and its assets are not managed by separate strategic business units. Many components of the segments have been sold, dissolved or combined with other business units. Accordingly, the performance of reportable business segments presented in
the Predecessor Companys financial statements is no longer meaningful to the operation of the Reorganized Company.

Application of Critical Accounting Policies and Use of
Estimates

The following policies are considered by the Company to be among the most critical accounting policies and those that could most significantly impact the consolidated financial
statements. The application of these policies rely upon management discretion and the use of estimates.

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Carrying Amounts, Impairment and Use of Estimates

The carrying amounts and impairment reserves recorded on
FINOVAs financial statements reflect, in accordance with accounting policies described herein, the Companys estimates of asset value and its expectation of collecting less than the full contractual amounts owed by some of its customers.
The Company continues to pursue collection of contractual amounts in an effort to maximize the value of its asset portfolios.

Several of the Companys accounting policies pertain to the ongoing
determination of impairment reserves on financing assets and carrying amounts of other financial assets. These amounts rely, to a great extent, on the estimation and timing of future cash flows. Cash flow estimates assume that the Companys
asset portfolios are collected in an orderly fashion over time. These cash flows do not represent estimated recoverable amounts if FINOVA were to liquidate its asset portfolios over a short period of time. It is managements belief that a
short-term asset liquidation could have a material negative impact on the Companys ability to recover recorded asset amounts.

FINOVAs process of determining impairment reserves and
carrying amounts includes a periodic assessment of its portfolios on a transaction by transaction basis. Cash flow estimates are based on current facts and numerous assumptions concerning future general economic conditions, specific market segments,
the financial condition of the Companys customers and FINOVAs collateral. In addition, assumptions are sometimes necessary concerning the customers ability to obtain full refinancing of balloon obligations or residuals at maturity.
Commercial lenders have become more conservative regarding advance rates and interest margin requirements have increased. As a result, the Companys cash flow estimates assume FINOVA incurs refinancing discounts for certain
transactions.

Changes in the facts and assumptions have resulted in, and may in the future result in, significant positive or negative changes to estimated cash flows and therefore, impairment
reserves and carrying amounts.

Impairment of financing assets is recorded through the Companys reserve for credit losses, and accounting rules permit the reserve for credit losses to be
increased or decreased as facts and assumptions change. Impairment of owned assets is marked down directly against their carrying amount. Accounting rules permit further mark down if changes in facts and assumptions result in additional impairment;
however, these assets may not be marked up if subsequent facts and assumptions result in a projected increase in value. Recoveries of previous markdowns are recorded through operations when realized.

During the first nine months of 2002, the Companys detailed quarterly portfolio assessments identified significant additional impairment within its transportation portfolio, resulting in additional markdowns. Due to the
current state of the aircraft industry, which includes significant excess capacity for both new and used aircraft and lack of demand for certain classes and configurations of aircraft in the Companys portfolio, the Company reduced the useful
lives and anticipated scrap values of various aircraft and reduced its estimates regarding its ability to lease or sell certain returned aircraft.

FINOVA has a significant number of aircraft that are
off lease and anticipates that additional aircraft will be returned as leases expire or operators are unable or unwilling to continue making payments. The current market for most of these aircraft is inactive with little or no demand. In accordance
with the provisions of SFAS No. 144, FINOVA has recorded impairment losses on owned aircraft by calculating the present value of estimated cash flows. For many of these aircraft, scrap value was assumed, but for certain aircraft, the Company elected
(or anticipates electing upon return of the aircraft) to park and maintain the aircraft under the assumption that the aircraft will be re-leased or sold in the future despite the lack of demand for such aircraft today. While the current inactive
market makes it difficult to quantify, the Company believes that the recorded values determined under this methodology significantly exceed the values that the Company would realize if it were to liquidate the aircraft today.

SFAS No. 144 does not permit the Company to record impairment losses on owned assets by discounting estimated cash flows, when undiscounted estimated cash flows exceed the carrying amount of such assets. As a result, at
September 30, 2002, FINOVA was unable to record approximately $25 million of additional losses that would have been recorded had discounted cash flow calculations been permitted to measure impairment on these assets. If future changes in facts and
assumptions necessitate a reduction in estimated cash flows for these owned assets, the Company may be required to recognize additional losses.

The process of determining appropriate carrying
amounts for these aircraft is particularly difficult and subjective, as it requires the Company to estimate future demand, lease rates and scrap values for assets for which there is currently little or no demand. The Company re-assesses its
estimates and assumptions each quarter. In particular, the Company assesses market activity and the likelihood that certain aircraft types, which are forecast to go back on lease in the future, will in fact be re-leased, and may further

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reduce carrying amounts if it is determined that such re-leasing is unlikely to occur or that lower market values have been
established.

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 amortized cost with adjustments for impairment, if any, recorded in operations. The determination of impairment is often
dependent upon the estimation of anticipated future cash flows discounted at appropriate market rates to determine net present value. Depreciation of these assets is charged to operations over their estimated remaining useful lives.

Assets Held for Sale. Assets held for sale are comprised of assets previously classified as financing transactions and other financial assets that management does not have the intent and/or ability
to hold to maturity. Assets held for sale are revalued at least quarterly at the lower of cost or market, less anticipated selling expenses, with the adjustment, if any, recorded in current operations. The determination of market value is often
dependent upon the estimation of anticipated future cash flows discounted at appropriate market rates to determine net present value.

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), FINOVA implemented Fresh-Start
Reporting upon emergence from chapter 11. This resulted in a material net reduction to the historic carrying amounts of the Companys assets and liabilities to record them at their current fair values. The resulting carrying amounts were
dependent upon the use of estimates and many other factors and valuation methods, including estimating the present value of future cash flows discounted at appropriate risk adjusted market rates, traded market prices and other applicable ratios and
valuation techniques believed by the Company to be appropriate.

The fresh-start adjustments to revenue accruing loans and financing leases accrete into interest income utilizing the effective
interest method over the life of the transactions. If transactions are classified as nonaccruing, the Companys policy is to suspend income accretion.

The fresh-start adjustment to the New
Senior Notes amortizes to interest expense over the life of the debt utilizing the effective interest method, thereby eventually increasing the recorded amount of the debt to the full principal amount due. In the event that New Senior Notes are
repurchased and extinguished, as occurred in the third and fourth quarters of 2002, the unamortized fresh-start adjustment related to those notes is recorded as an offset to any gain recognized from extinguishment of the debt.

Impaired Loans. In accordance with SFAS No. 114, Accounting for Creditors for Impairment of a Loan (SFAS No. 114), a loan becomes impaired when it is probable that the Company will be
unable to collect all amounts due in accordance with the original contractual terms. Impairment reserves are recorded when the current carrying amount of a loan exceeds the greater of (a) its net present value, determined by discounting expected
cash flows from the borrower at the effective interest rate of the transaction or (b) net fair value of collateral. The risk adjusted interest rates utilized in Fresh-Start Reporting are now considered to be the contractual rates for purposes of
calculating net present value of cash flows in the determination of fair values and impairment. Accruing impaired loans are paying in accordance with a current modified loan agreement or are believed to have adequate collateral protection. The
process of measuring impairment requires judgment and estimation, and actual outcomes may differ from the estimated amounts.

Impairment of Owned Assets. In accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144), an owned asset is considered impaired if undiscounted future cash flows expected to be generated by the asset are less than the carrying amount of
the asset. SFAS No. 144 provides several acceptable methods for measuring the amount of the impairment. FINOVAs typical practice is to compare the carrying amount of the asset to the present value of the estimated future cash flows, using
discount rates determined by the Company to be appropriate. The process of measuring impairment requires judgment and estimation, and actual outcomes may differ from the estimated amounts.

Investments. The Companys investments include debt and equity securities and partnership interests. At acquisition, marketable debt and equity securities are designated as either (a) held to maturity, which are
carried at amortized cost adjusted for other than temporary impairment, if any, (b) trading, which are carried at estimated fair value, with unrealized gains and losses reflected in results of operations or (c) available for sale, which are carried
at estimated fair value using the specific identification method, with unrealized gains and losses reflected as a separate component of shareowners equity.

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Partnerships are accounted for using either the cost or equity method depending on the Companys level of ownership in the
partnership. Under the equity method, the Company recognizes its share of income or loss of the partnership in the period in which it is earned or incurred. Under the cost method, the Company recognizes income based on distributions
received.

The carrying values of equity securities and partnership interests are periodically reviewed for impairment, which if identified, is recorded as a charge to operations. The impairment
analysis for investments utilizes various valuation techniques involving the use of estimates and management judgment, and actual outcomes may differ from the estimates.

Net Assets of Discontinued
Operations. Upon emergence from chapter 11, the Company reclassified its net assets of discontinued operations to assets held for sale. This decision reflects managements intention to manage all assets of the Company as one operating unit.
These assets were reclassified at their estimated net realizable values.

During the third quarter of 2000, FINOVAs Board of Directors approved a plan to discontinue and offer for sale its
corporate finance, distribution & channel and commercial services businesses. As a result, the Company reported these divisions as discontinued operations in accordance with Accounting Principles Board Opinion (APB) 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. Accordingly, the revenues, costs and expenses, assets
and liabilities expected to be assumed by an acquiring entity, and cash flows of these discontinued operations were excluded from the respective captions in the consolidated balance sheet and statements of consolidated operations and cash flows
presented. The net assets of discontinued operations represented reasonable estimates of the net realizable values of those businesses. These estimates were based on market conditions, interest rates and other factors that could differ significantly
from actual results.

Nonaccruing Assets. Accounts are generally classified as nonaccruing when the earlier of the following events occur: (a) the borrower becomes 90 days past due
on the payment of principal or interest or (b) when, in the opinion of management, a full recovery of income and principal becomes doubtful. Due to a variety of factors, accounts may be classified as nonaccruing even though the borrower is current
on principal and interest payments.

Receivable Sales. In accordance with SFAS No. 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities, which was subsequently amended by SFAS No. 140, when the Company sells receivables, it may retain subordinated interests in the transferred receivables. These receivable transfers are accounted for as sales when legal and
effective control of the transferred receivables is surrendered. Carrying amount of the financial assets involved is allocated between the receivables sold and the retained interests based on their relative fair value at the date of transfer and is
used to determine gain or loss on sale. Active markets with quoted prices for retained interests generally do not exist. Therefore, the Company estimates fair value based on the present value of future estimated cash flows and other key assumptions,
such as net credit losses, prepayments and discount rates commensurate with the risks involved. In general, the servicing fees earned are approximately equal to the cost of servicing; therefore, no material servicing assets or liabilities have been
recognized in those transactions.

FINOVAs retained interests in transferred receivables are generally treated as assets available for sale, which are carried at estimated fair value using the
specific identification method with unrealized gains and losses being recorded as a component of accumulated other comprehensive income within the equity section of the balance sheet; however, in accordance with the Emerging Issues Task Force
(EITF) Issues No. 99-20 Reorganization of Interest Income and Impairment on Purchase and Retained Beneficial Interests in Securitized Financial Assets, if a decline in value is considered other than temporary, the valuation
adjustment is recorded through the statement of operations. These retained interests are carried on the balance sheet within investments.

During the periods in which FINOVA had assets classified as
discontinued operations, the retained interest in the transferred receivables that related to those operations were recorded within discontinued operations.

Reserve for Credit Losses. The
reserve for credit losses is established for estimated credit impairment on individual assets and inherent credit losses in the Companys loan and financing lease portfolios. This reserve is not established for owned assets, including assets on
operating leases and residuals, as these asset classes are subject to other accounting rules, which require a direct charge-off for impairment. The provision for credit losses is the charge or credit to operations resulting from an increase or
decrease to the reserve for credit losses to the level that management estimates to be adequate. Impairment reserves are created if the carrying amount of an asset exceeds its estimated recovery. Impairment reserves are measured by estimating the
present value of expected future cash flows (discounted at contractual rates), market value or the fair value of collateral. Reserves on assets

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that are not impaired are based on assumptions regarding general and industry specific economic conditions, overall portfolio
performance including loss experience, delinquencies and other inherent portfolio characteristics. Establishing reserves includes the use of significant estimates and assumptions regarding future customer performance, amount and timing of future
cash flows and collateral coverage. Accounts are either written off or written down and charged to the reserve when the actual loss is determinable, after giving consideration to the customers financial condition and the value of the
underlying collateral, including any guarantees. Recoveries of amounts previously written off as uncollectable increase the reserve for credit losses.

Residual Values.FINOVA has a significant
investment in residual values in its leasing portfolio. These residual values represent estimates of the value of leased assets at the end of contract terms and are initially recorded based upon appraisals or estimates. Residual values are
periodically reviewed to determine that recorded amounts are appropriate.

Revenue Recognition. For loans and other financing contracts, earned income is recognized over the life of the
contract, using the effective interest method.

Leases that are financed by nonrecourse borrowings and meet certain other criteria are classified as leveraged leases. For leveraged leases, aggregate
rental receivables are reduced by the related nonrecourse debt service obligation including interest (net rental receivables). The difference between (a) the net rental receivables and (b) the cost of the asset less estimated residual
value at the end of the lease term is recorded as unearned income. Earned income is recognized over the life of the lease at a constant rate of return on the positive net investment, which includes the effects of deferred income taxes.

For operating leases, earned income is recognized on a straight-line basis over the lease term and depreciation is taken on a straight-line basis over the estimated useful lives of the leased assets.

Origination fees, net of direct origination costs, are deferred and amortized over the life of the originated asset as an adjustment to yield. As a result of FINOVAs  elimination of new business
activities, no new origination fees are anticipated.

Original issue discounts are established when equity interests are received in connection with a funded loan and are based on the fair value of
the equity interest. The assigned value is amortized to income over the term of the loan as an adjustment to yield. As a result of FINOVAs elimination of new business activities, no significant new original issue discounts are
anticipated.

Fees received in connection with loan commitments, extensions, waivers and restructurings are recognized as income over the term of the loan as an adjustment to yield. Fees on
commitments that expire unused are recognized at expiration.

Income recognition is generally suspended for leases, loans and other financing contracts at the earlier of the date at which payments
become 90 days past due, or when, in the opinion of management, a full recovery of income and principal becomes doubtful and the account is determined to be impaired. Income recognition is resumed only when the lease, loan or other financing
contract becomes contractually current and performance resumption is demonstrated.

New Accounting Standards

In April 2002, the
Financial Accounting Standards Board (FASB) issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections, which the Company is required to implement in its
fiscal year beginning January 1, 2003. SFAS No. 145 addresses income statement classification of gains or losses from extinguishment of debt, differentiating between types of debt extinguishment and whether they meet the requirement for
classification as extraordinary items in 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.
During the third quarter of 2002, the Company adopted the provisions of SFAS No. 145 and recorded a net gain of $46.9 million on the repurchase of New Senior Notes. In accordance with SFAS No. 145 and APB Opinion No. 30, the transaction was recorded
as ordinary income because it was not considered unusual in nature and infrequent in occurrence.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or
Disposal Activities, which the Company is required to implement in its fiscal year beginning January 1, 2003. SFAS No. 146 addresses the accounting and reporting for restructuring and similar costs, and replaces previous accounting guidance,
principally Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). Under Issue 94-3, a
liability for exit costs such as employee termination benefits and office lease termination costs was recognized at the date of the companys commitment to an exit plan. SFAS No. 146 requires that

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the liability for these costs be recognized when the liability is incurred. SFAS No. 146 also establishes that the liability
should initially be measured and recorded at fair value. The Company does not expect the impact of SFAS No. 146 to be material to its financial position and results of operations and anticipates adoption during the fourth quarter of 2002.

C.     Total Financial Assets

Total financial assets represents the Companys portfolio of investment activities, primarily
consisting of secured financing to commercial and real estate enterprises principally under financing contracts (such as loans and other financing contracts, direct financing leases and leveraged leases). In addition to its financing contracts, the
Company has other financial assets including assets held for sale, owned assets (such as operating leases and assets held for the production of income) and investments (debt and equity securities and partnership interests). As of September 30, 2002
and December 31, 2001, the carrying amount of total financial assets (before reserve for credit losses) was $4.2 billion and $6.5 billion, respectively.

The following table details the composition of
the Companys total financial assets at September 30, 2002:

TOTAL FINANCIAL ASSETS SEPTEMBER 30, 2002 (Dollars in thousands)

|                              |  | Revenue Accruing Assets |           | Revenue Accruing Impaired |   | Nonaccruing Impaired |  | Nonaccruing Leases & Other |           | Other (1) |   | Total Financial Assets |  | % |        
|----------------------------- |  | ----------------------- | --------- | ------------------------- | - | -------------------- |  | -------------------------- | --------- | --------- | - | ---------------------- |  | - | -------
|                              |  |                         |           |                           |   |                      |  |                            |           |           |   |                        |  |   |        
|Resort                        |  | $                       | 948,940   |                           | $ | 122,359              |  | $                          | 151,696   |           | $ | 24,440                 |  | $ | 3,500  
|Transportation                |  |                         |           |                           |   | 277,820              |  |                            | 210,922   |           |   |                        |  |   | 185,749
|Specialty Real     Estate     |  |                         | 471,369   |                           |   | 22,331               |  |                            | 92,161    |           |   | 11,283                 |  |   | 15,089 
|Rediscount                    |  |                         | 125,582   |                           |   | 12,568               |  |                            | 335,853   |           |   | 12,621                 |  |   |        
|Healthcare                    |  |                         | 94,008    |                           |   |                      |  |                            | 218,183   |           |   | 8,539                  |  |   | 519    
|Commercial     Equipment      |  |                         | 165,507   |                           |   |                      |  |                            | 52,001    |           |   | 35,070                 |  |   | 11,344 
|Communications                |  |                         | 40,184    |                           |   | 4,788                |  |                            | 210,193   |           |   | 3,858                  |  |   | 387    
|Franchise                     |  |                         | 13,260    |                           |   | 7,272                |  |                            | 85,317    |           |   | 5,536                  |  |   | 5,012  
|Corporate     Finance         |  |                         | 27,978    |                           |   |                      |  |                            | 46,151    |           |   | 3,307                  |  |   |        
|Mezzanine     Capital         |  |                         | 30,529    |                           |   | 1,373                |  |                            | 25,053    |           |   | 1,281                  |  |   | 3,218  
|Other                         |  |                         | 18,223    |                           |   |                      |  |                            |           |           |   | 3,711                  |  |   | 6,705  
|                              |  |                         |           |                           |   |                      |  |                            |           |           |   |                        |  |   |        
|Total financial     assets    |  | $                       | 1,935,580 |                           | $ | 448,511              |  | $                          | 1,427,530 |           | $ | 109,646                |  | $ | 231,523
|Reserve for     credit losses |  |                         |           |                           |   |                      |  |                            |           |           |   |                        |  |   |        
|                              |  |                         |           |                           |   |                      |  |                            |           |           |   |                        |  |   |        
|Total (2)                     |  |                         |           |                           |   |                      |  |                            |           |           |   |                        |  |   |        
|                              |  |                         |           |                           |   |                      |  |                            |           |           |   |                        |  |   |        

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|Notes: |                                                                                                                                                 
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------
|(1)    | Other includes operating leases, investments, assets held for the production of income and certain assets held for sale.                        
|(2)    | Excludes $165.8 million of assets sold that the Company manages, including $73.0 million in commercial equipment and $92.8 million in franchise.
|       |                                                                                                                                                 

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D.     Reserve for Credit Losses

The following
table presents the balances and changes to the reserve for credit losses:

|                             |  | Nine Months Ended September 30, 2002 |           | One Month Ended September 30, 2001 |   | Eight Months Ended August 31, 2001 | 
|---------------------------- |  | ------------------------------------ | --------- | ---------------------------------- | - | ---------------------------------- | 
|                             |  |                                      |           |                                    |   |                                    | 
|Balance, beginning of period |  | $                                    | 1,019,878 |                                    | $ | 256,324                            | 
|Provision for credit losses  |  |                                      | (223,485  | )                                  |   | 606,813                            | 
|Write-offs                   |  |                                      | (155,645  | )                                  |   |                                    | 
|Recoveries                   |  |                                      | 38,857    |                                    |   | 357                                | 
|Other                        |  |                                      | 316       |                                    |   | 16                                 | 
|                             |  |                                      |           |                                    |   |                                    | 
|Balance, end of period       |  | $                                    | 679,921   |                                    | $ | 863,510                            | 
|                             |  |                                      |           |                                    |   |                                    | 

A summary of the reserve for credit losses by impaired and other assets is as follows:

|                            |  | September 30, 2002 |         | December 31, 2001 |  
|--------------------------- |  | ------------------ | ------- | ----------------- | -
|                            |  |                    |         |                   |  
|Reserves on impaired assets |  | $                  | 543,071 |                   | $
|Other reserves              |  |                    | 136,850 |                   |  
|                            |  |                    |         |                   |  
|Reserve for credit losses   |  | $                  | 679,921 |                   | $
|                            |  |                    |         |                   |  

The Companys reserve for credit losses represents FINOVAs estimate of inherent losses in
its portfolio. On a periodic basis, the Company performs detailed portfolio reviews to identify impaired assets, to measure the amount of such impairment and to estimate inherent losses on assets that are not impaired. SFAS No. 114 defines impaired
assets as those not expected to perform in accordance with contractual terms and specifies the measurement of impairment on the basis of net present value, determined by discounting expected cash flows at the effective interest rate of the
transaction or net fair value of collateral. Reserves on assets that are not impaired are based on assumptions regarding general and industry specific economic conditions, overall portfolio performance including loss experience, delinquencies and
other inherent portfolio characteristics.

FINOVAs reserve for credit losses decreased to $679.9 million at September 30, 2002 from $1.0 billion at December 31, 2001. At September 30, 2002, the
total carrying amount of impaired loans was $1.9 billion, of which $448.5 million were revenue accruing. The Company has established impairment reserves of $543.1 million related to $1.3 billion of nonaccruing and impaired loans. At December 31,
2001, the total carrying amount of impaired loans was $2.3 billion, of which $576.7 million was revenue accruing. The impairment reserves at December 31, 2001 totaled $636.7 million related to $1.7 billion of impaired loans.

Reserves on impaired assets decreased due to write-offs, a modest improvement in collection experience on certain assets previously reserved and differences between the Companys income recognition and the discount
rates used for SFAS No. 114 impairment reserve calculations on these accounts. In accordance with SFAS No. 114, impairment reserves are recorded if the carrying amount of a loan exceeds the net present value of expected cash flows, discounted at the
risk-adjusted rates used for Fresh-Start Reporting. Since the vast majority of the Companys impaired loans are classified as nonaccruing, all cash received is applied against the carrying amount of the loans. As a result, cash receipts reduce
the difference between carrying amount and the net present value of future cash flows, thus reducing required impairment reserves. Partially offsetting these reductions were new impairment reserves established for assets reclassified to impaired
status during the nine-month period and additional reserves recorded on existing impaired assets.

Other reserves pertaining to estimated inherent losses on unimpaired assets, decreased primarily as a
result of asset sales, significant portfolio runoff and the reclassification of previously unimpaired assets to impaired status.

The reserve for credit losses as a percent of financing assets was
18.3% at September 30, 2002 and December 31, 2001. The reserve for credit losses as a percent of nonaccruing assets decreased to 44.2% at September 30, 2002 from 55.3% at December 31, 2001. Reserves on impaired assets as a percent of nonaccruing and
impaired assets increased to 27.3% at September 30, 2002 from 26.3% at December 31, 2001. Accounts classified as nonaccruing were $1.5 billion or 37.0% of total financial assets

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(before reserves) at September 30, 2002 as compared to $1.8 billion or 28.6% at December 31, 2001. The portfolios with the
largest decline in nonaccruing assets during 2002 included resort ($116.8 million), franchise ($94.1 million), corporate finance ($86.8 million), transportation ($77.3 million) and healthcare ($29.4 million), partially offset by increases within
rediscount ($65.8 million) and commercial equipment ($30.9 million). The large decline within the resort portfolio was primarily attributed to the Company negotiating a slightly discounted prepayment of a nonaccruing account (approximately $100
million), while the decline in the transportation portfolio was almost entirely due to the writedown of aircraft values in conjunction with repossession. The reductions within the franchise, corporate finance and healthcare portfolios were due to
their continued liquidation (including asset sales) and runoff.

E.     Debt

The Companys total debt outstanding
was as follows:

|                  |                                    | September 30, 2002 |           | December 31, 2001 |  
|----------------- | ---------------------------------- | ------------------ | --------- | ----------------- | -
|                  |                                    |                    |           |                   |  
|Berkadia Loan     |                                    | $                  | 2,400,000 |                   | $
|Senior debt:      |                                    |                    |           |                   |  
|                  | Principal amount due at maturity   |                    |           | 3,152,301         |  
|                  | Discount for Fresh-Start Reporting |                    |           | (713,902          | )
|                  |                                    |                    |           |                   |  
|Total senior debt |                                    |                    | 2,438,399 |                   |  
|                  |                                    |                    |           |                   |  
|Total debt        |                                    | $                  | 4,838,399 |                   | $
|                  |                                    |                    |           |                   |  

Upon emergence from bankruptcy, all of FINOVAs outstanding indebtedness was restructured.
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 allowed accrued and unpaid pre-petition and post-petition interest.

The terms of the Credit Agreement dated August 21, 2001
between Berkadia and FINOVA Capital (the Credit Agreement) and the Indenture governing the New Senior Notes (the Indenture) 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 and the Indenture, the Company is permitted to establish a cash reserve in an amount not to exceed certain defined criteria. 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. Since June 30, 2002, the Company paid Berkadia $200 million on July 8, 2002 and $125 million on October 7, 2002. In addition to the mandatory
prepayments, the Company made, with Berkadias consent, a voluntary prepayment of $250 million on September 9, 2002. Principal payments made to Berkadia since emergence have reduced the Berkadia Loan to $2.4 billion as of September 30, 2002 and
$2.275 billion as of the filing of this report. The pace of loan repayments depends on numerous factors, such as the rate of collections from borrowers and asset sales. There can be no assurance that the Berkadia Loan will continue to be repaid at
this pace.

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%. Prior to maturity, mandatory
prepayments of principal are required to be made from available cash. All outstanding principal and accrued and unpaid interest is payable at maturity. FINOVA and substantially all of its direct and indirect subsidiaries (except those that are
contractually prohibited from acting as a guarantor) have guaranteed FINOVA Capitals repayment of the Berkadia Loan.

The terms of the Credit Agreement require the Company to maintain at all
times, a ratio of Collateral Value (as defined in the Credit Agreement) to the Berkadia Loan balance of not less than 1.25 to 1. As of September 30, 2002, the Companys Collateral Value was $4.0 billion and the Berkadia Loan balance was $2.4
billion, resulting in a ratio of 1.67 to 1.

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 are payable out of available cash after establishment of cash reserves as defined in
the Indenture.

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In August 2002, in accordance with the Berkadia Loan and the Indenture governing the New Senior Notes, the Companys Board
of Directors, with Berkadias consent, approved the use of up to $300 million of cash to repurchase New Senior Notes rather than make mandatory prepayments of the Berkadia Loan. In consideration for Berkadias consent, FINOVA and Berkadia
have agreed that they would share equally in the Net Interest Savings resulting from any repurchase. Net Interest Savings will be calculated as the difference between (a) the reduction in interest expense on the New Senior Notes
(resulting from the repurchase of such New Senior Notes) and (b) the increase in interest expense on the Berkadia Loan (resulting from the use of cash to repurchase New Senior Notes and to pay 50% of the Net Interest Savings to Berkadia rather than
make mandatory prepayments on the Berkadia Loan). On each date that interest is paid on the outstanding New Senior Notes (a Note Interest Payment Date), 50% of the Net Interest Savings accrued since the last Note Interest Payment Date
will be paid to Berkadia. The other 50% of the Net Interest Savings will be retained by FINOVA. Upon repayment in full of the Berkadia Loan, Berkadia will not have the right to receive any Net Interest Savings accruing after such repayment. Because
it is highly unlikely there will be sufficient funds to fully repay the New Senior Notes at maturity, the Company, if it elects to repurchase additional New Senior Notes, intends to do so only at substantial discounts to par and at prices reflective
of then current market levels. Although the repurchase has been authorized and repurchases have been made, as described below, there can be no assurance that the Company will purchase any additional New Senior Notes or that additional New Senior
Notes will become available at an acceptable price. The agreement between FINOVA and Berkadia was approved by the Special Committee of the FINOVA Board of Directors, which is comprised solely of directors unaffiliated with Berkadia,
Berkshire or Leucadia.

During the third quarter of 2002, the Company repurchased $98.9 million (face amount) of New Senior Notes at a price of 29.875% or $29.6 million, plus accrued interest. The
repurchase generated a net gain of $46.9 million ($69.4 million repurchase discount, partially offset by $22.5 million of unamortized Fresh-Start discount). The Company accrued Berkadias portion of the Net Interest Savings for the quarter
($0.2 million). On October 16, 2002, the Company repurchased an additional $86.1 million (face amount) of New Senior Notes at a price of 30.0% or $25.8 million, plus accrued interest. The net gain of $41.3 million ($60.2 million repurchase discount,
partially offset by $18.9 million of unamortized Fresh-Start discount) will be recognized during the fourth quarter of 2002.

Based on the Companys current financial condition, it is highly
unlikely that there will be funds available to fully repay the outstanding principal on the New Senior Notes at maturity. The Company has a negative net worth of $1.1 billion as of September 30, 2002 ($1.8 billion if the New Senior Notes are
considered at their principal amount due), the financial condition of many of its customers has weakened, impairing their ability to meet obligations to the Company, much of the Companys portfolio of owned assets is not income producing and
the Company is restricted from entering into new business activities or issuing new securities to generate substantial cash flow. For these reasons, the Company believes that investing in the Companys debt or equity securities involves a high
level of risk to the investor.

F.     Deferred Taxes

In March 2002, Congress enacted the Job Creation and Worker
Assistance Act of 2002 (Act). The Act includes provisions allowing corporations to carryback certain tax net operating losses (NOLs) for longer periods and with fewer limitations. The Company filed its 2001 corporate tax
return in June 2002 and made a special election available under Section 108 of the Internal Revenue Code of 1986 that resulted in the Company reducing its tax basis in depreciable property. As a result of this election and related filings, NOLs were
available for carryback, thereby entitling the Company to a refund of approximately $67 million. As a result of the special election and carryback of NOLs, the Company will not utilize any of its federal NOL carryforwards and credits to offset the
cancellation of debt income (COD) as contemplated in the Companys Form 10-K for December 31, 2001. After carryback of federal NOLs against prior year taxable income, December 31, 2001 federal NOLs of $554.4 million are available
for carryforward into 2002 through 2022. During the third quarter of 2002, the Company received $36 million of this refund, which was recorded in accordance with the provisions of SOP 90-7 as a direct addition to paid-in-capital. Although there can
be no assurance regarding the timing of the payment, the Company anticipates receiving the remainder of the refund during 2003.

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G.     Litigation and Claims

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 from its 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.

If any litigation matters result in a significant adverse judgment against the Company, which is not anticipated, it is unlikely that FINOVA would be able to satisfy that liability due to its financial condition. As previously
noted, due to the Companys financial condition, it does not expect that it can satisfy all its secured debt obligations at maturity. Attempts to collect on those judgments could lead to future reorganization proceedings of either a voluntary
or involuntary nature.

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 Finance Trust.

The Debtors Third Amended and Restated Joint Plan of Reorganization was confirmed by the
Bankruptcy Court and became effective on August 21, 2001, upon consummation of the Berkadia Loan. See Note B Significant Accounting Policies for more information regarding the Reorganization Proceedings.

Certain post-confirmation proceedings continue in the Bankruptcy Court relating to 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 and it is possible that some of the claims could be decided against FINOVA. Many of those claims are for amounts substantially in excess of amounts, if any, that FINOVA
believes it owes the creditor. FINOVA intends to vigorously defend against these claims.

Securities Litigation

All of the shareholder
and derivative lawsuits discussed in the Companys Annual Report on FINOVAs Form 10-K for the year ended December 31, 2001 and in other SEC filings have now been settled or dismissed and are no longer pending against the Company,
including the dismissal on September 13, 2002 of the Benkler vs. Miller and Sirrom Partners vs. FINOVA cases noted in FINOVAs prior SEC filings.

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

Managements Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with FINOVAs Form 10-K for the year ended December 31, 2001.

The following discussion relates to The FINOVA Group Inc., a financial services holding
company, and its subsidiaries (collectively FINOVA or the Company), including FINOVA Capital Corporation and its subsidiaries (FINOVA Capital). FINOVA is a Delaware corporation, incorporated in 1991. 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. FINOVAs stock is traded
over-the-counter under the symbol FNVG.

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Historically, FINOVA relied upon borrowed funds and internal cash flow to finance its operations. Profit has been typically
recorded from the spread between the cost of borrowing and rates or fees paid by its customers, less operating expenses. The Company also generates revenues through loan servicing activities and the sale of assets.

Beginning in the first quarter of 2000, a series of events impeded FINOVAs access to capital in the public and private markets. As the year progressed, the U.S. economy continued to weaken and FINOVAs portfolio
experienced higher levels of delinquencies. The impact of these events resulted in increased levels of problem accounts, higher cost of funds and inadequate access to capital. This deterioration in financial stability culminated in the
Companys chapter 11 reorganization.

On March 7, 2001, FINOVA, 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) to enable them to restructure their debt. On August 10, 2001, the Bankruptcy Court entered an order confirming FINOVAs
Third Amended and Restated Joint Plan of Reorganization (the Plan), pursuant to which the Debtors restructured their debt, effective August 21, 2001 (the Effective Date).

Pursuant to the Plan, Berkadia LLC (Berkadia), an entity jointly owned by Berkshire Hathaway Inc. (Berkshire) and Leucadia National Corporation (Leucadia), 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 7.5% Senior Secured Notes
maturing in 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 shares
outstanding after giving effect to implementation of the Plan.

In accordance with the provisions of the American Institute of Certified Public Accountants Statement of Position 90-7
Financial Reforms by Entities in Reorganization Under the Bankruptcy Code (SOP 90-7), the Company adopted Fresh-Start Reporting upon emergence from bankruptcy, which, together with changes in the Companys operations,
have resulted in the consolidated financial statements for the periods subsequent to August 31, 2001 (the Reorganized Company) not being comparable to those of the Company for periods prior to August 31, 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.

Recent Developments

In March 2002, Congress enacted the Job
Creation and Worker Assistance Act of 2002 (Act). The Act includes provisions allowing corporations to carryback certain tax net operating losses (NOLs) for longer periods and with fewer limitations. The Company filed its
2001 corporate tax return in June 2002 and made a special election available under Section 108 of the Internal Revenue Code of 1986 that resulted in the Company reducing its tax basis in depreciable property. As a result of this election and related
filings, NOLs were available for carryback, thereby entitling the Company to a refund of approximately $67 million. As a result of the special election and carryback of NOLs, the Company will not utilize any of its federal NOL carryforwards and
credits to offset the cancellation of debt income (COD) as contemplated in the Companys Form 10-K for December 31, 2001. After carryback of federal NOLs against prior year taxable income, December 31, 2001 federal NOLs of $554.4
million are available for carryforward into 2002 through 2022. During the third quarter of 2002, the Company received $36 million of this refund, which was recorded in accordance with the provisions of SOP 90-7 as a direct addition to
paid-in-capital. Although there can be no assurance regarding the timing of the payment, the Company anticipates receiving the remainder of the refund during 2003.

Pursuant to the terms of the Credit
Agreement dated August 21, 2001 between FINOVA Capital and Berkadia (the Credit Agreement), FINOVA Capital is required to make mandatory quarterly prepayments of principal in an amount equal to the excess cash flow as defined in the
Credit Agreement. Since June 30, 2002, the Company paid Berkadia $200 million on July 8, 2002 and $125 million on October 7, 2002. In addition to the mandatory prepayments, the Company made, with Berkadias consent, a voluntary prepayment of
$250 million on September 9, 2002. Principal payments made to Berkadia since emergence have reduced the Berkadia Loan to $2.4 billion as of September 30, 2002 and $2.275 billion as of the filing of this report. The pace of loan repayments depends on
numerous factors, such as the rate of collections from borrowers and asset sales. There can be no assurance that the Berkadia Loan will continue to be repaid at this pace.

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On July 26, 2002, the U.S. District Court granted final approval for a settlement in the consolidated class action securities suits filed against FINOVA and several other
defendants. FINOVA had funded its portion of the settlement amount in 2001 and is now released from further liability.

In August 2002, in accordance with the Berkadia Loan and the Indenture governing
the New Senior Notes, the Companys Board of Directors, with Berkadias consent, approved the use of up to $300 million of cash to repurchase New Senior Notes rather than make mandatory prepayments of the Berkadia Loan. In consideration
for Berkadias consent, FINOVA and Berkadia have agreed that they would share equally in the Net Interest Savings resulting from any repurchase. Net Interest Savings will be calculated as the difference between (a) the reduction in
interest expense on the New Senior Notes (resulting from the repurchase of such New Senior Notes) and (b) the increase in interest expense on the Berkadia Loan (resulting from the use of cash to repurchase New Senior Notes and to pay 50% of the Net
Interest Savings to Berkadia rather than make mandatory prepayments on the Berkadia Loan). On each date that interest is paid on the outstanding New Senior Notes (a Note Interest Payment Date), 50% of the Net Interest Savings accrued
since the last Note Interest Payment Date will be paid to Berkadia. The other 50% of the Net Interest Savings will be retained by FINOVA. Upon repayment in full of the Berkadia Loan, Berkadia will not have the right to receive any Net Interest
Savings accruing after such repayment. Because it is highly unlikely there will be sufficient funds to fully repay the New Senior Notes at maturity, the Company, if it elects to repurchase additional New Senior Notes, intends to do so only at
substantial discounts to par and at prices reflective of then current market levels. Although the repurchase has been authorized and repurchases have been made, as described below, there can be no assurance that the Company will purchase any
additional New Senior Notes or that additional New Senior Notes will become available at an acceptable price. The agreement between FINOVA and Berkadia was approved by the Special Committee of the FINOVA Board of Directors, which is
comprised solely of directors unaffiliated with Berkadia, Berkshire or Leucadia.

During the third quarter of 2002, the Company repurchased $98.9 million (face amount) of New Senior Notes at a price
of 29.875% or $29.6 million, plus accrued interest. The repurchase generated a net gain of $46.9 million ($69.4 million repurchase discount, partially offset by $22.5 million of unamortized Fresh-Start discount). The Company accrued Berkadias
portion of the Net Interest Savings for the quarter ($0.2 million). On October 16, 2002, the Company repurchased an additional $86.1 million (face amount) of New Senior Notes at a price of 30.0% or $25.8 million, plus accrued interest. The net gain
of $41.3 million ($60.2 million repurchase discount, partially offset by $18.9 million of unamortized Fresh-Start discount) will be recognized during the fourth quarter of 2002.

On September 10,
2002, FINOVA announced the election of Thomas E. Mara as a Director and Chief Executive Officer, effective September 9, 2002. Mr. Mara replaces Lawrence S. Hershfield, who resigned from those positions to pursue other opportunities.

Current Business Activities

Pursuant to the terms of the Credit Agreement 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. The Companys current business activities are limited to maximizing the value of its existing
portfolio. These activities include the continued collection of its portfolio, and may include efforts to retain certain customer relationships, restructure or terminate other relationships or sell certain assets if buyers can be found at acceptable
prices. Operations have been restructured to more efficiently manage these collection efforts. The Company will also continue to focus on negotiating appropriate rates and fee structures with its customers, or foreclose on its collateral for
borrowers who do not comply with their agreements. In some instances, the Company has taken and expects to continue to take ownership of or a controlling equity interest in certain of its customers businesses. FINOVA may operate these entities
until the assets are liquidated, which may take a number of years in some cases. FINOVA continues to fund existing customer commitments. All funds generated from the Companys portfolio in excess of defined cash reserves is to be used to
satisfy its creditors in the manner and priorities set forth in the Credit Agreement and the Indenture.

To facilitate the orderly collection of its remaining asset portfolios, FINOVA has combined its
former operating segments into one operating unit. As a result of this combination, elimination of new business activities and reductions in its asset portfolios, FINOVA has significantly reduced its work force. As of September 30, 2002, the Company
had 347 employees compared to 497 and 1,098 at December 31, 2001 and 2000, respectively.

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Application of Critical Accounting Policies and Use of Estimates

The Companys consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires FINOVA to use estimates
and assumptions that affect reported amounts of assets and liabilities, revenues and expenses and disclosure of contingent assets and liabilities. These estimates are subject to known and unknown risks, uncertainties and other factors that could
materially impact the amounts reported and disclosed in the financial statements. The Company believes the following to be among the most critical judgment areas in the application of its accounting policies. Additional accounting policies are
discussed in Note B of the Notes to Interim Condensed Consolidated Financial Statements.

Carrying Amounts, Impairment and Use of Estimates

The
carrying amounts and impairment reserves recorded on FINOVAs financial statements reflect, in accordance with accounting policies described herein, the Companys estimates of asset value and its expectation of collecting less than the
full contractual amounts owed by some of its customers. The Company continues to pursue collection of contractual amounts in an effort to maximize the value of its asset portfolios.

Several of the
Companys accounting policies pertain to the ongoing determination of impairment reserves on financing assets and carrying amounts of other financial assets. These amounts rely, to a great extent, on the estimation and timing of future cash
flows. Cash flow estimates assume that the Companys asset portfolios are collected in an orderly fashion over time. These cash flows do not represent estimated recoverable amounts if FINOVA were to liquidate its asset portfolios over a short
period of time. It is managements belief that a short-term asset liquidation could have a material negative impact on the Companys ability to recover recorded asset amounts.

FINOVAs
process of determining impairment reserves and carrying amounts includes a periodic assessment of its portfolios on a transaction by transaction basis. Cash flow estimates are based on current facts and numerous assumptions concerning future general
economic conditions, specific market segments, the financial condition of the Companys customers and FINOVAs collateral. In addition, assumptions are sometimes necessary concerning the customers ability to obtain full refinancing
of balloon obligations or residuals at maturity. Commercial lenders have become more conservative regarding advance rates and interest margin requirements have increased. As a result, the Companys cash flow estimates assume FINOVA incurs
refinancing discounts for certain transactions.

Changes in the facts and assumptions have resulted in, and may in the future result in, significant positive or negative changes to estimated cash
flows and therefore, impairment reserves and carrying amounts.

Impairment of financing assets is recorded through the Companys reserve for credit losses, and accounting rules permit the reserve
for credit losses to be increased or decreased as facts and assumptions change. Impairment of owned assets is marked down directly against their carrying amount. Accounting rules permit further mark down if changes in facts and assumptions result in
additional impairment; however, these assets may not be marked up if subsequent facts and assumptions result in a projected increase in value. Recoveries of previous markdowns are recorded through operations when realized.

During the first nine months of 2002, the Companys detailed quarterly portfolio assessments identified significant additional impairment within its transportation portfolio, resulting in additional markdowns. Due to the
current state of the aircraft industry, which includes significant excess capacity for both new and used aircraft and lack of demand for certain classes and configurations of aircraft in the Companys portfolio, the Company reduced the useful
lives and anticipated scrap values of various aircraft and reduced its estimates regarding its ability to lease or sell certain returned aircraft.

FINOVA has a significant number of aircraft that are
off lease and anticipates that additional aircraft will be returned as leases expire or operators are unable or unwilling to continue making payments. The current market for most of these aircraft is inactive with little or no demand. In accordance
with the provisions of SFAS No. 144, FINOVA has recorded impairment losses on owned aircraft by calculating the present value of estimated cash flows. For many of these aircraft, scrap value was assumed, but for certain aircraft, the Company elected
(or anticipates electing upon return of the aircraft) to park and maintain the aircraft under the assumption that the aircraft will be re-leased or sold in the future despite the lack of demand for such aircraft today. While the current inactive
market makes it difficult to quantify, the Company believes that the recorded values determined under this methodology significantly exceed the values that the Company would realize if it were to liquidate the aircraft today.

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SFAS No. 144 does not permit the Company to record impairment losses on owned assets by discounting estimated cash flows, when
undiscounted estimated cash flows exceed the carrying amount of such assets. As a result, at September 30, 2002, FINOVA was unable to record approximately $25 million of additional losses that would have been recorded had discounted cash flow
calculations been permitted to measure impairment on these assets. If future changes in facts and assumptions necessitate a reduction in estimated cash flows for these owned assets, the Company may be required to recognize additional
losses.

The process of determining appropriate carrying amounts for these aircraft is particularly difficult and subjective, as it requires the Company to estimate future demand, lease
rates and scrap values for assets for which there is currently little or no demand. The Company re-assesses its estimates and assumptions each quarter. In particular, the Company assesses market activity and the likelihood that certain aircraft
types, which are forecast to go back on lease in the future, will in fact be re-leased, and may further reduce carrying amounts if it is determined that such re-leasing is unlikely to occur or that lower market values have been
established.

Reserve for Credit Losses. The reserve for credit losses represents FINOVAs estimate of losses inherent in the portfolio and includes reserves on impaired assets and on
assets that are not impaired. Impairment reserves are created through the provision for credit losses if the carrying amount of an asset exceeds its estimated recovery, which is measured by estimating the present value of expected future cash flows
(discounted at contractual rates), market value, or the fair value of collateral. These methodologies include the use of significant estimates and assumptions regarding future customer performance, amount and timing of future cash flows and
collateral coverage. Reserves on assets that are not impaired are based upon assumptions including general economic conditions, overall portfolio performance including loss experiences, delinquencies and other inherent portfolio characteristics.
Actual results could differ from these estimates and there can be no assurance that existing reserves will approximate actual future losses. As of September 30, 2002, the reserve for credit losses totaled $679.9 million.

Owned Assets. Assets held for the production of income and operating leases are carried at amortized cost with impairment adjustments, if any, recorded as permanent markdowns through operations. An owned asset is
considered impaired if anticipated undiscounted cash flows are less than the carrying amount of the asset. Once the asset has been deemed impaired, the accounting rules allow for several acceptable methods for measuring the amount of the impairment.
FINOVAs typical method of measuring impairment is based on the comparison of the carrying amount of those assets to the present value of estimated future cash flows, using appropriate discount rates. These estimates include assumptions
regarding lessee performance, the amount and timing of future cash flows, selection of appropriate discount rates for net present value calculations and residual value assumptions for leases. If actual results differ from the estimates used to
determine impairment, additional markdowns may be necessary, impacting financial condition and results from operations. As of September 30, 2002, owned assets totaled $207.8 million, or 5.0% of total financial assets (before reserves).

Assets Held for Sale. Assets held for sale are comprised of assets previously classified as financing transactions and other financial assets that management does not have the intent and/or the ability
to hold to maturity. These assets are carried at the lower of cost or market less anticipated selling expenses, with adjustment to estimated market value, if any, recorded as a loss on financial assets. Market value is often determined by the
estimation of anticipated future cash flows discounted at market rates to determine net present value. Valuation of assets held for sale includes estimates regarding market conditions and ultimate sales prices. Actual sales prices could differ from
estimates, impacting results from operations. As of September 30, 2002, assets held for sale totaled $210.2 million, or 5.1% of total financial assets (before reserves).

Nonaccruing Assets.
Accounts are generally classified as nonaccruing and recognition of income is suspended when a borrower/lessee becomes 90 days past due on the payment of principal or interest, or earlier, if in the opinion of management, full recovery of
contractual income and principal becomes doubtful. The decision to classify accounts as nonaccruing on the basis of criteria other than delinquency, is based on certain assumptions and estimates including current and future general economic
conditions, industry specific economic conditions, borrower/lessee financial performance, the ability of borrowers/lessees to obtain full refinancing of balloons or residuals at maturity and FINOVAs ability or willingness to provide such
refinancing. Changes in assumptions or estimates could result in a material change in nonaccruing account classification and income recognition. As of September 30, 2002, $1.5 billion, or 37.0% of total financial assets (before reserves), was
classified as nonaccruing.

Fresh-Start Reporting.Upon emergence from the Reorganization Proceedings, the Company adopted Fresh-Start Reporting, which resulted in material adjustments to the
historical carrying amounts of the Companys assets and liabilities. The $863.7 million adjustment to assets was based on the present value of estimated future cash flows discounted at appropriate risk adjusted interest

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rates. Of this amount, $365.4 million was scheduled to amortize into income over the life of the underlying transactions. If the
underlying transactions are classified as nonaccruing or the Company forecloses on pledged collateral, amortization ceases. The New Senior Notes were initially recorded at $2.48 billion, reflecting their estimated fair value. The $771.3 million
discount is amortized as additional interest expense over the term of the notes and the liability recorded on the Reorganized Companys Consolidated Balance Sheet increases in an amount equal to such amortization. Although the recorded balance
will be net of the unamortized discount, the Companys repayment obligation is the principal amount, which was $3.15 billion at September 30, 2002. Based on the Companys current financial condition, it is highly unlikely that there will
be funds available to fully repay the principal amount of the New Senior Notes at maturity.

The adjustments relating to the adoption of Fresh-Start Reporting were based on estimates of anticipated
future cash flows, risk adjusted discount rates and the market value of the Companys debt securities shortly after emergence, which were based on market values in effect prior to September 11, 2001. Changes to estimated cash flows could impact
the reserve for credit losses or cause additional write downs of assets. Generally accepted accounting principles in the U.S. do not permit additional fair value adjustments to the New Senior Notes after the initial Fresh-Start Reporting date,
including those that would have resulted from the aftermath of September 11.

New Accounting Standards

In April 2002, the Financial Accounting
Standards Board (FASB) issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections, which the Company is required to implement in its fiscal year
beginning January 1, 2003. SFAS No. 145 addresses income statement classification of gains or losses from extinguishment of debt, differentiating between types of debt extinguishment and whether they meet the requirement for classification as
extraordinary items in 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. During the third
quarter of 2002, the Company adopted the provisions of SFAS No. 145 and recorded a net gain of $46.9 million on the repurchase of New Senior Notes. In accordance with SFAS No. 145 and APB Opinion No. 30, the transaction was recorded as ordinary
income because it was not considered unusual in nature and infrequent in occurrence.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities, which the Company is required to implement in its fiscal year beginning January 1, 2003. SFAS No. 146 addresses the accounting and reporting for restructuring and similar costs, and replaces previous accounting guidance,
principally Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). Under Issue 94-3, a
liability for exit costs such as employee termination benefits and office lease termination costs was recognized at the date of the companys commitment to an exit plan. SFAS No. 146 requires that the liability for these costs be recognized
when the liability is incurred. SFAS No. 146 also establishes that the liability should initially be measured and recorded at fair value. The Company does not expect the impact of SFAS No. 146 to be material to its financial position and results of
operations and anticipates adoption during the fourth quarter of 2002.

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Results of Operations

As a result of the application of Fresh-Start
Reporting guidelines and changes in the Companys operations, the condensed consolidated financial statements for the three and nine months ended September 30, 2002 are not comparable to those of the Company for the same periods in the prior
year; however, the following discussion of results for the three and nine months ended September 30, 2002 and 2001 may provide the reader with useful information regarding the current status of the Company.

|                                         |  | Three Months Ended September 30, |         | Nine Months Ended September 30, |  
|---------------------------------------- |  | -------------------------------- | ------- | ------------------------------- | -
|                                         |  |                                  |         |                                 |  
|                                         |  | 2002                             |         | 2001                            |  
|                                         |  |                                  |         |                                 |  
|Interest margins                         |  | $                                | (22,465 | )                               | $
|Gain from extinguishment of debt         |  |                                  | 46,888  |                                 |  
|Provision for credit losses              |  |                                  | 69,467  |                                 |  
|Net loss on financial assets             |  |                                  | (33,159 | )                               |  
|Portfolio expenses                       |  |                                  | (12,211 | )                               |  
|General and administrative      expenses |  |                                  | (24,299 | )                               |  
|Net reorganization expense               |  |                                  |         |                                 |  
|Income tax (expense) benefit             |  |                                  | (41     | )                               |  
|Preferred dividends                      |  |                                  |         |                                 |  
|Discontinued operations                  |  |                                  |         |                                 |  
|Extraordinary item                       |  |                                  |         |                                 |  
|                                         |  |                                  |         |                                 |  
|Net income (loss)                        |  | $                                | 24,180  |                                 | $
|                                         |  |                                  |         |                                 |  
|                                         |  |                                  |         |                                 |  

Nine Months Ended September 30, 2002 and 2001

Interest Margins. For the nine months ended September 30,
2002, interest margins (defined as total revenues less interest expense and operating lease and other depreciation) declined $123.4 million to a negative $46.3 million, primarily due to lower revenues resulting from a significantly lower level of
earning assets and higher borrowing costs relative to historic rates paid by the Company. Total financial assets (before reserves) declined to $4.2 billion at September 30, 2002 from $7.2 billion at September 30, 2001, while during the same period,
nonaccruing assets increased to $1.5 billion from $1.4 billion. The reduction in assets was due to the continued collection or disposition of the existing portfolio, valuation adjustments, the elimination of new business development activities and
reduced funding requirements on existing customer commitments. Absent significant asset sales, this declining asset trend is expected to continue at a slower pace as the level of problem accounts increase as a percentage of total remaining assets.
Nonaccruing assets as a percent of total financial assets (before reserves) increased to 37.0% at September 30, 2002 from 19.6% at September 30, 2001. The proportionate increase in nonaccruing assets is primarily the result of the weakened economy,
the events of September 11 and slower collection of nonaccruing assets relative to performing assets. Also contributing to the decline in interest margins is the fact that the Company is no longer match funded, and due to the significant level of
nonaccruing assets, it has a lower level of accruing fixed-rate assets than its $3.15 billion of fixed-rate debt obligations. That situation, coupled with historically low variable interest rates, has resulted in negative interest margins. FINOVA
expects these negative interest margins will continue and may worsen in the foreseeable future.

Gain from Extinguishment of Debt. During the third quarter of 2002, the Company repurchased
$98.9 million (face amount) of New Senior Notes at a price of 29.875% or $29.6 million, plus accrued interest. The repurchase generated a net gain of $46.9 million ($69.4 million repurchase discount, partially offset by $22.5 million of unamortized
Fresh-Start discount). On October 16, 2002, the Company repurchased an additional $86.1 million (face amount) of New Senior Notes at a price of 30.0% or $25.8 million, plus accrued interest. This repurchase generated a net gain of $41.3 million
($60.2 million repurchase discount, partially offset by $18.9 million of unamortized Fresh-Start discount), which will be recognized in the fourth quarter of 2002.

Provision for Credit Losses.
For the nine months ended September 30, 2002, the Company recorded a $223.5 million negative provision for credit losses to reduce its reserve for credit losses. The provision reversal was primarily related to significant portfolio runoff, better
than anticipated realization from asset sales and recoveries of amounts previously written off. In addition, the

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differences between discount rates used for SFAS No. 114 impairment reserve calculations and the Companys income
recognition result in periodic reserve reductions. In accordance with SFAS No. 114, impairment reserves are recorded if the carrying amount of a loan exceeds the net present value of expected cash flows, discounted at the risk-adjusted rates used
for Fresh-Start Reporting. Since the vast majority of the Companys impaired loans are classified as nonaccruing, all cash received is applied against the carrying amount of the loans. As a result, cash receipts reduce the difference between
carrying amount and the net present value of future cash flows.

The $837.6 million provision for credit losses in 2001 resulted from the deterioration of the Companys asset portfolios, which
had been negatively impacted by the weakening economy and the events of September 11.

The measurement of credit impairment and asset valuation is dependent upon the significant use of estimates and
management discretion when predicting expected cash flows. These estimates are subject to known and unknown risks, uncertainties and other factors that could materially impact the amounts reported and disclosed herein. See the Special Note
Regarding Forward-Looking Statements for a discussion of these and additional factors impacting the use of estimates.

Net Loss on Financial Assets. The Company realized a net loss on
financial assets of $96.7 million for the nine months ended September 30, 2002 compared to a net loss of $540.2 million in 2001. The $96.7 million net loss for the nine months ended September 30, 2002 included $117.6 million of gains offset by
$214.3 million of losses. Significant components of the loss consisted of a $127.1 million net markdown of owned assets within the transportation portfolio, a $19.1 million net markdown of retained interests and owned assets within the commercial
equipment portfolio and losses in several other portfolios primarily attributed to valuation adjustments and asset sales at discounts, partially offset by net gains of $41.0 million within the corporate finance portfolio. The corporate finance net
gain resulted from actual cash received on payoffs and asset sales exceeding the previously estimated realization on those assets. The net loss on the commercial equipment portfolio resulted from an increased level of defaults within the
securitization portfolio and impairment of owned assets. The net loss on the transportation portfolio resulted from the Companys determination and measurement of impairment on owned assets. The measurement of this impairment was primarily
based upon estimates of future cash flows expected to be realized through the operation or sale of its aircraft portfolio. Due to the current state of the aircraft industry, which includes significant excess capacity for both new and used aircraft
and lack of demand for certain classes and configurations of aircraft in the Companys portfolio, the Company reduced the useful lives and anticipated scrap values of various aircraft and reduced its estimate regarding its ability to lease or
sell certain returned aircraft. Most of the Companys aircraft are of older vintage with limited demand in the aircraft market. As a result, the Company lowered its previous estimates of future cash expected from its aircraft portfolio,
resulting in an increased level of impairment losses.

The $540.2 million loss for the nine months ended September 30, 2001 was due to the mark down of owned assets, primarily in the transportation
portfolio. This portfolio was adversely impacted by problems in the airline industry, which deteriorated further as a result of the terrorist attacks of September 11, 2001.

Portfolio Expenses.
Portfolio expenses include all costs relating to the maintenance and collection of both performing and non-performing financial transactions. The Company has experienced increased portfolio costs, primarily due to a higher number of problem accounts
and off-lease and repossessed assets.

For the nine months ended September 30, 2002, portfolio expenses totaled $33.8 million compared to $13.4 million for the same period in 2001. The increase was
primarily attributable to FINOVAs transportation portfolio, which had expenses of $17.0 million for the nine months ended September 30, 2002 compared to $3.7 million in 2001. This increase is directly related to the large number of aircraft
that remain off-lease and parked as a result of reduced demand and over capacity in the used aircraft market. This trend in expenses is expected to continue for the foreseeable future. The remainder of the increase was spread among several
portfolios and was primarily associated with an increased number of problem accounts, foreclosures and operation of repossessed assets.

General and Administrative Expenses. General and
administrative expenses decreased $65.9 million, to $77.4 million for the nine months ended September 30, 2002. The decrease was primarily due to the cost savings resulting from staffing reductions (347 employees at September 30, 2002 compared to
1,098 at December 31, 2000). Also contributing to the decrease were lower professional fees, which, in the prior year, included substantial investment banking, legal and accounting fees, principally related to the bankruptcy process. Partially
offsetting the decline in general and administrative expenses during 2002 was an increased level of settlements primarily related to the resolution of the Companys bankruptcy claims. The Company expects the dollar level of general and
administrative expenses to continue to decrease as portfolio and staffing levels decrease; however, general and administrative expenses as a percentage of assets or revenues will likely increase over time as a result of shrinking assets and
revenues.

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Net Reorganization Expense. Net reorganization expense for the nine months ended September 30, 2001 included
expenses and income directly associated with the bankruptcy process. No reorganization expense or income was incurred during the nine months ended September 30, 2002. For the nine months ended September 30, 2001, net reorganization expense was $46.5
million and included fair value adjustments of assets and liabilities related to Fresh-Start Reporting ($62.9 million) and professional service and other fees ($26.0 million), partially offset by interest income earned on cash retained for interest
and debt payments deferred during the bankruptcy period ($42.4 million).

Income Tax Expense. For the nine months ended September 30, 2002, the Company recorded $45 thousand of income tax
expense. Income tax expense related to pre-tax book income was almost entirely offset by a decrease in valuation allowances, which were previously established due to the Companys concern regarding its ability to utilize income tax benefits
generated from losses in prior periods. In 2001, the Company recorded an income tax benefit of $2.3 million related to losses generated from foreign operations (primarily the United Kingdom and Canada).

Discontinued Operations.Businesses that were previously classified as discontinued operations were reclassified to assets held for sale upon emergence from chapter 11. For the nine months ended September 30, 2001,
losses from discontinued operations consisted of additional net realizable markdowns of $18.0 million, partially offset by operating income of $3.0 million.

Extraordinary Items. The gain of
$28.8 million reported in 2001 was due to the forgiveness of debt in connection with the restructuring of FINOVAs 51⁄2% Convertible Trust Originated Preferred Securities.

Three Months
Ended September 30, 2002 and 2001

Interest Margins. For the three months ended September 30, 2002, interest margins declined $21.0 million to a negative $22.5 million, primarily due to
lower revenues resulting from a significantly lower level of earning assets. The reduction in assets was due to the continued collection or disposition of the existing portfolio, valuation adjustments, the elimination of new business development
activities and reduced funding requirements on existing customer commitments. Absent significant asset sales, this declining asset trend is expected to continue at a slower pace as the level of problem accounts increase as a percentage of total
remaining assets.

Gain from Extinguishment of Debt. During the third quarter of 2002, the Company repurchased $98.9 million (face amount) of New Senior Notes at a price of 29.875% or $29.6
million, plus accrued interest. The repurchase generated a net gain of $46.9 million ($69.4 million repurchase discount, partially offset by $22.5 million of unamortized Fresh-Start discount). On October 16, 2002, the Company repurchased an
additional $86.1 million (face amount) of New Senior Notes at a price of 30.0% or $25.8 million, plus accrued interest. This repurchase generated a net gain of $41.3 million ($60.2 million repurchase discount, partially offset by $18.9 million of
unamortized Fresh-Start discount), which will be recognized in the fourth quarter of 2002.

Provision for Credit Losses. For the three months ended September 30, 2002, the Company recorded a
$69.5 million negative provision for credit losses to reduce its reserve for credit losses. The provision reversal was primarily related to significant portfolio runoff, better than anticipated realization from asset sales and recoveries of amounts
previously written off. In addition, the differences between discount rates used for SFAS No. 114 impairment reserve calculations and the Companys income recognition result in periodic reserve reductions. In accordance with SFAS No. 114,
impairment reserves are recorded if the carrying amount of a loan exceeds the net present value of expected cash flows, discounted at the risk-adjusted rates used for Fresh-Start Reporting. Since the vast majority of the Companys impaired
loans are classified as nonaccruing, all cash received is applied against the carrying amount of the loans. As a result, cash receipts reduce the difference between carrying amount and the net present value of future cash flows.

The $612.8 million provision for credit losses in 2001 resulted from the deterioration of the Companys asset portfolios, which had been negatively impacted by the weakening economy and the events of September
11.

The measurement of credit impairment and asset valuation is dependent upon the significant use of estimates and management discretion when predicting expected cash flows. These estimates are
subject to known and unknown risks, uncertainties and other factors that could materially impact the amounts reported and disclosed herein. See the Special Note Regarding Forward-Looking Statements for a discussion of these and
additional factors impacting the use of estimates.

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Net Loss on Financial Assets. The Company realized a net loss on financial assets of $33.2 million for the three
months ended September 30, 2002 compared to a net loss of $285.7 million in 2001. The $33.2 million net loss for the three months ended September 30, 2002 consisted of a $42.3 million net markdown of assets within the transportation portfolio and
losses in several other portfolios primarily attributed to valuation adjustments and asset sales at discounts, partially offset by net gains of $14.9 million within the corporate finance portfolio. The corporate finance net gain resulted from actual
cash received on payoffs and asset sales exceeding previously estimated realization on those assets.

The $285.7 million loss for the three months ended September 30, 2001 was due to the mark down of
owned assets, primarily in the transportation portfolio. This portfolio was adversely impacted by problems in the airline industry, which deteriorated further as a result of the terrorist attacks of September 11, 2001.

Portfolio Expenses. Portfolio expenses include all costs relating to the maintenance and collection of both performing and non-performing financial transactions. The Company has experienced increased portfolio costs,
primarily due to a higher number of problem accounts and off-lease and repossessed assets.

For the three months ended September 30, 2002, portfolio expenses totaled $12.2 million compared to $6.2
million for the same period in 2001. The increase was primarily attributable to FINOVAs transportation portfolio, which had expenses of $6.2 million for the three months ended September 30, 2002 compared to $1.7 million in 2001. This increase
is directly related to the large number of aircraft that remain off-lease and parked as a result of reduced demand and over capacity in the used aircraft market. This trend in expenses is expected to continue for the foreseeable future. The
remainder of the increase was spread among several portfolios and was primarily associated with an increased number of problem accounts, foreclosures and operation of repossessed assets.

General
and Administrative Expenses. General and administrative expenses decreased $31.2 million, to $24.3 million for the three months ended September 30, 2002. The decrease was primarily due to the cost savings resulting from staffing reductions (347
employees at September 30, 2002 compared to 633 at September 30, 2001). Also contributing to the decrease were lower professional fees in the current year compared to the prior year, which included substantial investment banking, legal and
accounting fees, principally related to the bankruptcy process. Partially offsetting the decline in general and administrative expenses in 2002 was an increased level of settlements primarily related to the resolution of the Companys
bankruptcy claims. The Company expects the dollar level of general and administrative expenses to continue to decrease as the portfolio and staffing levels decrease; however, general and administrative expenses as a percentage of assets or revenues
will likely increase over time as a result of shrinking assets and revenues.

Net Reorganization Expense. Net reorganization expense for the three months ended September 30, 2001 included
expenses and income directly associated with the bankruptcy process. No reorganization expense or income was incurred during the three months ended September 30, 2002. For the three months ended September 30, 2001, net reorganization expense was
$54.6 million and included fair value adjustments of assets and liabilities related to Fresh-Start Reporting ($63.8 million) and professional service and other fees ($14.8 million), partially offset by interest income earned on cash retained for
interest and debt payments deferred during the bankruptcy period ($24.0 million).

Income Tax Expense. For the three months ended September 30, 2002, the Company recorded $41 thousand of
income tax expense. Income tax expense related to pre-tax book income was entirely offset by a decrease in valuation allowances, which were previously established due to the Companys concern regarding its ability to utilize income tax benefits
generated from losses in prior periods. In 2001, the Company recorded an income tax benefit of $4.4 million related to losses generated from foreign operations (primarily the United Kingdom and Canada).

Discontinued Operations.Businesses that were previously classified as discontinued operations were reclassified to assets held for sale upon emergence from chapter 11. For the three months ended September 30, 2001,
discontinued operations contributed operating income of $4.4 million.

Extraordinary Items. The gain of $28.8 million reported in 2001 was due to the forgiveness of debt in connection with the
restructuring of FINOVAs 51⁄2% Convertible Trust Originated Preferred Securities.

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Financial Condition, Liquidity and Capital Resources

On March 7, 2001, FINOVA, 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 to enable them to restructure their debt. 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.

Upon emergence from bankruptcy, the $5.6 billion Berkadia
Loan together with cash on hand 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 allowed accrued and unpaid pre-petition and post-petition
interest claims. The New Senior Notes are reflected in the Companys Condensed Consolidated Balance Sheet net of an unamortized discount of $713.9 million, resulting from the adoption of Fresh-Start Reporting. The book value of the New Senior
Notes is scheduled to increase to the $3.15 billion principal amount over time through amortization of the discount as interest expense. The Company remains obligated to pay the full $3.15 billion principal amount of the New Senior Notes.

The terms of the 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 certain defined criteria. 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. Since June 30, 2002, the Company paid Berkadia $200 million on July 8, 2002 and $125 million on October 7, 2002. In addition to the mandatory prepayments, the Company made, with Berkadias
consent, a voluntary prepayment of $250 million on September 9, 2002. Principal payments made to Berkadia since emergence have reduced the Berkadia Loan to $2.4 billion as of September 30, 2002 and $2.275 billion as of the filing of this report. The
pace of loan repayments depends on numerous factors, such as the rate of collections from borrowers and asset sales. There can be no assurance that the Berkadia Loan will continue to be repaid at this pace.

As a result of FINOVAs current financial condition and restrictions contained in the debt agreements that do not allow FINOVA to incur any meaningful amount of new debt, the estimation of cash reserves is critical to the
overall liquidity of the Company. Cash reserve estimations are subject to known and unknown risks, uncertainties and other factors that could materially impact the amounts determined. Failure to adequately estimate a cash reserve in one period could
result in insufficient liquidity to meet obligations in that or a subsequent period if actual cash requirements exceed the cash reserve estimates.

Based on the Companys current financial
condition, it is highly unlikely that there will be funds available to fully repay the outstanding principal on the New Senior Notes at maturity, the related 5% distribution to common shareowners, or to make any contingent interest payments,
discussed in Obligations and Commitments below. The Company has a negative net worth of $1.1 billion as of September 30, 2002 ($1.8 billion if the New Senior Notes are considered at their principal amount due), the financial condition of
many of its customers has weakened, impairing their ability to meet obligations to the Company, much of the Companys portfolio of owned assets is not income producing and the Company is restricted from entering into new business activities or
issuing new securities to generate substantial cash flow. For these reasons, the Company believes that investing in the Companys debt and equity securities involves a high level of risk to the investor.

In accordance with the terms of FINOVAs debt agreements, the Company may from time to time, with Berkadias consent, use cash (up to $1.5 billion in the aggregate while the Berkadia Loan is outstanding) to purchase
its 7.5% New Senior Notes through tender offers, open market purchases and/or privately negotiated transactions. In August 2002, in accordance with the Berkadia Loan and the Indenture governing the New Senior Notes, the Companys Board of
Directors, with Berkadias consent, approved the use of up to $300 million of cash to repurchase New Senior Notes rather than make mandatory prepayments of the Berkadia Loan. In consideration for Berkadias consent, FINOVA and Berkadia
have agreed that they would share equally in the Net Interest Savings resulting from any repurchase. Net Interest Savings will be calculated as the difference between (a) the reduction in interest expense on the New Senior Notes
(resulting from the repurchase of such New Senior Notes) and (b) the increase in interest expense on the Berkadia Loan (resulting from the use of cash to repurchase New Senior Notes and to pay 50% of the Net Interest Savings to Berkadia rather than
make mandatory prepayments on the Berkadia Loan). On each date that interest is paid on the outstanding New Senior Notes (a Note Interest Payment Date), 50% of the Net Interest Savings accrued since the last Note Interest Payment Date
will be paid to Berkadia. The other 50% of the Net Interest Savings will be retained by FINOVA. Upon repayment in full of the Berkadia Loan, Berkadia will not have the right to receive any Net Interest Savings accruing after such repayment. Because
it is highly unlikely there will be sufficient funds to fully repay the New Senior Notes at maturity, the Company, if it elects to repurchase additional New Senior Notes, intends to do so only at substantial discounts to par and at prices reflective
of

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then current market levels. Although the repurchase has been authorized and repurchases have been made, as described below, there
can be no assurance that the Company will purchase any additional New Senior Notes or that additional New Senior Notes will become available at an acceptable price. The agreement between FINOVA and Berkadia was approved by the Special
Committee of the FINOVA Board of Directors, which is comprised solely of directors unaffiliated with Berkadia, Berkshire or Leucadia.

During the third quarter of 2002, the Company repurchased
$98.9 million (face amount) of New Senior Notes at a price of 29.875% or $29.6 million, plus accrued interest. The repurchase generated a net gain of $46.9 million ($69.4 million repurchase discount, partially offset by $22.5 million of unamortized
Fresh-Start discount). The Company accrued Berkadias portion of the Net Interest Savings for the quarter ($0.2 million). On October 16, 2002, the Company repurchased an additional $86.1 million (face amount) of New Senior Notes at a price of
30.0% or $25.8 million, plus accrued interest. The net gain of $41.3 million ($60.2 million repurchase discount, partially offset by $18.9 million of unamortized Fresh-Start discount) will be recognized during the fourth quarter of 2002.

During the third quarter of 2002, the Company received a $36 million income tax refund, which was recorded in accordance with the provisions of SOP 90-7 as a direct addition to paid-in-capital. Although there
can be no assurance regarding the timing of the payment, the Company anticipates receiving an additional $31 million refund during 2003. This $67 million of refunds are the result of the Company making certain elections and filings that have enabled
it to carryback NOLs to prior periods.

Obligations and Commitments.The following is a listing of FINOVAs significant contractual obligations and contingent commitments at September 30,
2002. A detailed schedule of the timing of repayment has not been provided because the Companys most significant obligations are contractual as to amount but contingent regarding the timing of repayment. The listing is not intended to be all
encompassing and excludes normal recurring trade and other accounts payable obligations.

|Contractual and Contingent Obligations (Dollars in thousands)  |  | Contractual Obligations |           | Contingent Obligations |  
|-------------------------------------------------------------- |  | ----------------------- | --------- | ---------------------- | -
|                                                               |  |                         |           |                        |  
|Berkadia Loan                                                  |  | $                       | 2,400,000 |                        | $
|New Senior Notes                                               |  |                         | 3,152,301 |                        |  
|Contingent interest on New Senior Notes                        |  |                         |           |                        |  
|Unfunded customer commitments                                  |  |                         |           |                        |  
|Nonrecourse debt associated with the leveraged lease portfolio |  |                         | 995,038   |                        |  
|Operating leases                                               |  |                         | 26,689    |                        |  
|                                                               |  |                         |           |                        |  
|                                                               |  | $                       | 6,574,028 |                        | $
|                                                               |  |                         |           |                        |  

Principal repayment of the Berkadia Loan is contingent on available cash in excess of cash reserves.
Principal payments since emergence have reduced the Berkadia Loan to $2.4 billion as of September 30, 2002 and $2.275 billion as of the filing of this report. All unpaid principal and accrued interest are due at maturity on August 20,
2006.

Principal repayment of the New Senior Notes, other than repurchases approved by Berkadia and the Companys Board of Directors, cannot commence until the Berkadia Loan is paid in full and
is contingent on the availability of excess cash, as defined. Contingent interest cannot commence until the New Senior Notes are paid in full. Contingent interest was proportionately reduced to reflect the repurchase of New Senior Notes during the
quarter. As noted above, it is highly unlikely that there will be funds available to fully repay the outstanding principal on the New Senior Notes at maturity in November 2009 or any contingent interest through its expiration in 2016.

Unfunded customer commitments have declined from $1.14 billion at December 31, 2001 to $470.2 million at September 30, 2002 primarily due to the termination of outstanding committed lines of credit within the
corporate finance, rediscount and resort portfolios. Because of the primarily revolving nature of its commitments, the Company is unable to estimate with accuracy what portion of the commitments will be funded. Historically, in the aggregate, actual
funding has been significantly below the commitment amounts.

Nonrecourse debt associated with the leveraged lease portfolio represents principal amounts due to third party lenders under lease
agreements. Nonrecourse debt declined to $995.0 million during 2002 due to scheduled principal payments ($67.3 million) and the Companys decision to prepay $11.5 million of high cost debt associated with one leasing transaction following
expiration of prepayment penalties.

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Contractual operating lease obligations represent the total future minimum rental payments due under operating leases (primarily
leased office space) as of September 30, 2002. During the Reorganization Proceedings, the Company rejected certain of its operating leases (including its primary operating headquarters in Scottsdale) and was paying on a month-to-month basis while
implementing alternative arrangements. During 2002, the Company finalized negotiations on its Scottsdale headquarters, resulting in an increased contractual obligation as compared to that of December 31, 2001.

Collection of the Portfolio. The following table summarizes the rollforward activity for total financial assets, net of the reserve for credit losses at September 30, 2002.

|Total financial assets at December 31, 2001     |  | $ | 5,431,886  |  
|----------------------------------------------- |  | - | ---------- | -
|Cash activity:                                  |  |   |            |  
|Fundings under outstanding customer commitments |  |   | 886,942    |  
|Collections and proceeds from financial assets  |  |   | (2,861,553 | )
|                                                |  |   |            |  
|Net cash flows                                  |  |   | (1,974,611 | )
|                                                |  |   |            |  
|Non-cash activity:                              |  |   |            |  
|Reversal of provision for credit losses         |  |   | 223,485    |  
|Net charge-offs of financial assets             |  |   | (198,166   | )
|Other non-cash activity                         |  |   | (9,725     | )
|                                                |  |   |            |  
|Net non-cash activity                           |  |   | 15,594     |  
|                                                |  |   |            |  
|Total financial assets at September 30, 2002    |  | $ | 3,472,869  |  
|                                                |  |   |            |  

Total financial assets, net of the reserve for credit losses, declined to $3.5 billion at September
30, 2002, down $1.9 billion from $5.4 billion at December 31, 2001. During 2002, net cash flow from portfolio collections totaled $2.0 billion, while non-cash activity resulted in a $15.6 million increase in financial assets. Components of net cash
flow included $2.1 billion from collections on financial assets, $713.5 million from the sale of assets (excluding cash gains), offset by $886.9 million from fundings under outstanding customer commitments. Non-cash activity included the reversal of
$223.5 million of provision for credit losses, offset by a $198.2 million reduction related to markdowns of owned assets and $9.7 million of other non-cash activity, primarily operating lease depreciation offset by Fresh-Start accretion. While the
decline in total financial assets is expected to continue, it is not expected to continue at the same pace.

FINOVAs reserve for credit losses decreased to $679.9 million at September 30, 2002
from $1.0 billion at December 31, 2001. At September 30, 2002, the total carrying amount of impaired loans was $1.9 billion, of which $448.5 million were revenue accruing. The Company has established impairment reserves of $543.1 million related to
$1.3 billion of nonaccruing and impaired loans. At December 31, 2001, the total carrying amount of impaired loans was $2.3 billion, of which $576.7 million were revenue accruing. The impairment reserves at December 31, 2001 totaled $636.7 million
related to $1.7 billion of impaired loans.

Reserves on impaired assets decreased due to write-offs, a modest improvement in collection experience on certain assets previously reserved and differences
between the Companys income recognition and the discount rates used for SFAS No. 114 impairment reserve calculations on these accounts. In accordance with SFAS No. 114, impairment reserves are recorded if the carrying amount of a loan exceeds
the net present value of expected cash flows, discounted at the risk-adjusted rates used for Fresh-Start Reporting. Since the vast majority of the Companys impaired loans are classified as nonaccruing, all cash received is applied against the
carrying amount of the loans. As a result, cash receipts reduce the difference between carrying amount and the net present value of future cash flows, thus reducing required impairment reserves. Partially offsetting these reductions were new
impairment reserves established for assets reclassified to impaired status during the nine-month period and additional reserves recorded on existing impaired assets.

Other reserves pertaining to
estimated inherent losses on unimpaired assets, decreased primarily as a result of asset sales, significant portfolio runoff and the reclassification of previously unimpaired assets to impaired status.

The reserve for credit losses as a percent of financing assets was 18.3% at September 30, 2002 and December 31, 2001. The reserve for credit losses as a percent of nonaccruing assets decreased to 44.2% at September 30, 2002
from 55.3% at December 31, 2001. Reserves on impaired assets as a percent of nonaccruing and impaired assets increased slightly to 27.3% at September

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30, 2002 from 26.3% at December 31, 2001. Accounts classified as nonaccruing were $1.5 billion or 37.0% of total financial assets
(before reserves) at September 30, 2002 as compared to $1.8 billion or 28.6% at December 31, 2001. The portfolios with the largest decline in nonaccruing assets during 2002 included resort ($116.8 million), franchise ($94.1 million), corporate
finance ($86.8 million), transportation ($77.3 million) and healthcare ($29.4 million), partially offset by increases within rediscount ($65.8 million) and commercial equipment ($30.9 million). The large decline within the resort portfolio was
primarily attributed to the Company negotiating a slightly discounted prepayment of a nonaccruing account (approximately $100 million), while the decline in the transportation portfolio was almost entirely due to the writedown of aircraft values in
conjunction with repossession. The reductions within the franchise, corporate finance and healthcare portfolios were due to their continued liquidation (including asset sales) and runoff.

Accruing
impaired assets decreased during 2002 to $448.5 million at September 30, 2002 from $576.7 million at December 31, 2001. The decrease was attributable to a decline in the transportation portfolio of $172.9 million, resulting primarily from migration
of these accounts to off-lease status. There were also decreases within rediscount ($21.1 million), specialty real estate ($5.6 million) and commercial equipment ($7.8 million). Partially offsetting these decreases was an increase within the resort
portfolio of $80.0 million, caused primarily by the migration of one large exposure to nonaccruing impaired status following the extension and modification of payment terms.

The Company expects that
over time, its impaired assets will comprise an increasing percentage of its total portfolio, as the obligors under those contracts tend to be in poor financial condition, and will repay their obligations more slowly than performing
obligors.

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.

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 these factors are discussed in this report and include:

| | On September 11, the terrorist attacks on the United States resulted in 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 industry. The Company estimated the economic impact these events have had on its financial condition and will have on future operations, and accordingly,
recorded charges to write down assets and add to reserves for credit losses. These charges are based on the Companys estimation of inherent losses, and actual results may differ from the estimate.                                                                                                                                                                                                                                                                                                                                                                         
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | The extent to which FINOVA is successful in implementing its business strategy, including the efforts to maximize the value of its portfolio through orderly collection or sales of
assets. Portfolio decisions are based on estimates of asset value and actual results may differ from the estimated amounts. Failure to fully implement its business strategy might result in adverse effects, impair the Companys ability to repay
outstanding secured debt and other obligations, and have a materially adverse impact on its financial position and results of operations. The current focus on maximizing portfolio values and the absence of new business generation will cause future
financial results to 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.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | The effect of economic conditions and the performance of FINOVAs borrowers. Economic conditions in general or in particular market segments could impair the ability of
FINOVAs borrowers to operate or expand their businesses, which might result in decreased performance, adversely affecting their ability to repay their obligations. The rate of borrower                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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|  | defaults or bankruptcies may increase. Changing economic conditions could adversely affect FINOVAs ability to realize estimated cash flows. Certain changes in fair values of
assets must be reflected in FINOVAs reported financial results.                                                                                                                                                                                                                                                                                                            
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | The cost of FINOVAs capital. That cost has increased significantly since the first quarter of 2000 and will continue to negatively impact results. Failure to comply with its
credit obligations could result in additional increases in interest charges. In addition, changes in interest rate indices may negatively impact interest margins due to lack of matched funding of the Companys assets and liabilities.                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Loss of employees. FINOVA must retain a sufficient number of employees with relevant knowledge and skills to continue to monitor, collect and sell its portfolio. Failure to do so
could result in additional losses. Retention incentives may be necessary to retain that employee base.                                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Conditions affecting the Companys aircraft portfolio, including changes in Federal Aviation Administration directives and conditions affecting the demand for used aircraft and
the demand for aircraft spare parts. FINOVAs aircraft are often of older vintage and contain configurations of engines, avionics, fuel tanks and other components that may not be as high in demand as other available aircraft in that class.
Future demand for those aircraft may decrease further as newer or more desirable aircraft and components become available.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 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 Company has not recorded a benefit in its financial statements for its existing tax attributes and estimated future tax deductions since it does not expect to generate the future taxable
income needed to use those tax benefits. The Company may never be able to use those tax attributes.              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Necessary technological changes, such as implementation of information management systems, may be more difficult, expensive or time consuming to implement than
anticipated.                                                                                                                                                                                                                                                                                                                                                                               
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Potential liabilities associated with dispositions of assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | The accuracy of information relied upon by FINOVA, which includes information supplied by its borrowers or prepared by third parties, such as appraisers. Inaccuracies in that
information could lead to inaccuracies in the estimates.                                                                                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Other risks detailed in this and 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.

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/(loss) by less than $5 million. An increase in rates would have a negative impact, while a decrease in rates would have a positive impact in the near term. As the floating rate debt
balance declines, this relationship will change and an increase in rates will have a positive impact, while a decrease in rates will have a negative impact. Also, as the floating rate debt balance declines, the sensitivity to interest rate
fluctuations will increase.

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

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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.

Item 4.   
Controls and Procedures

|(a) | The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Companys filings under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Companys management,
including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Companys management, including the principal executive officer and the principal financial
officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Within 90 days prior to the filing date of this quarterly report on Form 10-Q, the Company has carried out an evaluation, under the supervision and with the participation of the
Companys management, including the Companys principal executive officer and the Companys principal financial officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures. Based
on such evaluation, the Companys principal executive officer and principal financial officer concluded that the Companys disclosure controls and procedures are effective.                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(b) | There have been no significant changes in the Companys internal controls or in other factors that could significantly affect the internal controls subsequent to the date of
their evaluation in connection with the preparation of this quarterly report on  Form 10-Q.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

PART II   
OTHER INFORMATION

Item 1.      
Legal Proceedings

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

Item 6.
     
Exhibits and Reports on Form 8-K

|a) | Exhibits            |                                                                                                        
|-- | ------------------- | -------------------------------------------------------------------------------------------------------
|   | 99.1                | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|   | 99.2                | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|   |                     |                                                                                                        
|b) | Reports on Form 8-K
|   | None.               |                                                                                                        
|   |                     |                                                                                                        

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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 13, 2002 | By: | /s/Stuart A. Tashlik                                                                                        
|       |                   |     |                                                                                                             
|       |                   |     | Stuart A. Tashlik, Senior Vice President, Chief Financial Officer Principal Financial and Accounting Officer

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CERTIFICATIONS

I, Thomas E. Mara, Chief Executive Officer
of The FINOVA Group Inc., certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of The FINOVA Group Inc.;                                                                                                                                                                                                                                                                                                             
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|4. | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   | a)                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   | b)                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   | c)                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent function):                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   | a)                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   | b)                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|6. | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

|                         |                                       
|------------------------ | --------------------------------------
|Date:  November 13, 2002 | /s/ Thomas E. Mara                    
|                         |                                       
|                         | Thomas E. Mara Chief Executive Officer
|                         |                                       

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CERTIFICATIONS

I, Stuart A. Tashlik, Chief Financial
Officer of The FINOVA Group Inc., certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of The FINOVA Group Inc.;                                                                                                                                                                                                                                                                                                             
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|4. | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   | a)                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   | b)                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   | c)                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|5. | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent function):                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   | a)                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|   | b)                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|6. | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



|                        |                                          
|----------------------- | -----------------------------------------
|                        |                                          
|Date: November 13, 2002 | /s/  Stuart A. Tashlik                   
|                        |                                          
|                        | Stuart A. Tashlik Chief Financial Officer

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EXHIBIT INDEX

|Exhibit Number |  | Description                                                                                            
|-------------- |  | -------------------------------------------------------------------------------------------------------
|               |  |                                                                                                        
|               |  |                                                                                                        
|99.1           |  | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|               |  |                                                                                                        
|99.2           |  | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|               |  |