<PAGE>

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

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


                                   FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the Quarterly Period Ended March 31, 2001

                        Commission File Number 1-11011

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


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

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

       Registrant's Telephone Number, Including Area Code: 480-636-4800


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

                                Yes X   No___
                                   ---

                     APPLICABLE ONLY TO CORPORATE ISSUERS:
As of May 11, 2001, approximately 61,154,000 shares of Common Stock ($0.01 par
value) were outstanding.

================================================================================
<PAGE>

                             THE FINOVA GROUP INC.

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                              Page No.
                                                                              --------
<S>                                                                           <C>
Part I      Financial Information                                                   1

  Item 1.   Financial Statements                                                    1

            Condensed Consolidated Balance Sheets                                   1
            Condensed Statements of Consolidated Operations                         2
            Condensed Statements of Consolidated Cash Flows                         3
            Notes to Interim Condensed Consolidated Financial Information           4

  Item 2.   Management's Discussion and Analysis of Financial Condition and
            Results of Operations                                                  13

  Item 3.   Quantitative and Qualitative Disclosure About Market Risk              19

Part II     Other Information                                                      20

  Item 1.   Legal Proceedings                                                      20

  Item 6.   Exhibits and Reports on Form 8-K                                       21

  Signatures                                                                       22
</TABLE>
<PAGE>

                        PART I    FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.
----------------------------


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

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                                                               March 31,             December 31,
                                                                                  2001                   2000
------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                    <C>
ASSETS
Cash and cash equivalents                                                     $  1,624,207            $    699,228
Investment in financing transactions:
 Loans and other financing contracts                                             7,357,965               7,835,698
 Leveraged leases                                                                  774,728                 803,581
 Operating leases                                                                  535,404                 561,698
 Direct financing leases                                                           519,748                 557,471
 Financing contracts held for sale                                                 375,293                 421,956
------------------------------------------------------------------------------------------------------------------
                                                                                 9,563,138              10,180,404
 Less reserve for credit losses                                                   (618,005)               (578,750)
------------------------------------------------------------------------------------------------------------------
Net investment in financing transactions                                         8,945,133               9,601,654
Investments                                                                        271,869                 285,934
Goodwill, net of accumulated amortization                                           44,637                  45,417
Other assets                                                                       469,146                 294,630
Net assets of discontinued operations                                              741,875               1,162,223
------------------------------------------------------------------------------------------------------------------
                                                                              $ 12,096,867            $ 12,089,086
==================================================================================================================

LIABILITIES AND SHAREOWNERS' EQUITY
Liabilities not subject to Chapter 11 proceedings:
 Accounts payable and accrued expenses                                        $     21,741            $
Liabilities subject to Chapter 11 proceedings at March 31, 2001:
 Secured:
  Fixed rate nonrecourse notes                                                       5,813                   5,813
Unsecured:
 Accounts payable and accrued expenses                                             153,090                 128,311
 Interest payable                                                                  198,067                 129,402
 Senior debt                                                                    10,987,327              10,991,874
 Deferred income taxes, net                                                         38,359                  49,202
------------------------------------------------------------------------------------------------------------------
                                                                                11,404,397              11,304,602
------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Company-obligated mandatory redeemable convertible preferred securities
 of subsidiary trust solely holding convertible debentures of FINOVA,
 net of expenses ("TOPrS")                                                         111,550                 111,550
Shareowners' equity:
 Common stock, $0.01 par value, 400,000,000 shares authorized,
 64,849,000 shares issued                                                              648                     648
 Additional capital                                                              1,113,064               1,107,575
 Retained (deficit) income                                                        (359,181)               (283,435)
 Accumulated other comprehensive (loss) income                                      (1,115)                 15,154
 Common stock in treasury, 3,693,000 and 3,597,000 shares, respectively           (172,496)               (167,008)
------------------------------------------------------------------------------------------------------------------
                                                                                   580,920                 672,934
------------------------------------------------------------------------------------------------------------------
                                                                              $ 12,096,867            $ 12,089,086
==================================================================================================================
</TABLE>

See notes to interim consolidated condensed financial statements.

                                       1
<PAGE>

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

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                                                            Three Months Ended
                                                                                                 March 31,
------------------------------------------------------------------------------------------------------------------------
                                                                                         2001                    2000
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                     <C>
Interest, fees and other income                                                    $      215,633          $     241,011
Financing lease income                                                                     20,336                 25,130
Operating lease income                                                                     23,407                 27,237
------------------------------------------------------------------------------------------------------------------------
Income earned from financing transactions                                                 259,376                293,378
Interest expense                                                                          172,550                141,815
Operating lease depreciation                                                               20,831                 15,838
------------------------------------------------------------------------------------------------------------------------
Interest margins earned                                                                    65,995                135,725
Volume-based fees                                                                                                  1,054
------------------------------------------------------------------------------------------------------------------------
Operating margin                                                                           65,995                136,779
Provision for credit losses                                                                61,750                 20,898
------------------------------------------------------------------------------------------------------------------------
Net interest margins earned                                                                 4,245                115,881
Gains on investments and disposal of assets                                                 6,651                 21,030
------------------------------------------------------------------------------------------------------------------------
                                                                                           10,896                136,911
Operating expenses                                                                         54,988                 56,825
Reorganization items                                                                        9,619
------------------------------------------------------------------------------------------------------------------------
(Loss) income from continuing operations before income taxes and preferred
 dividends                                                                                (53,711)                80,086
Income tax expense                                                                         (2,343)               (31,560)
------------------------------------------------------------------------------------------------------------------------
(Loss) income from continuing operations before preferred dividends                       (56,054)                48,526
Preferred dividends, net of tax                                                               946                    946
------------------------------------------------------------------------------------------------------------------------
(Loss) income from continuing operations                                                  (57,000)                47,580
Discontinued operations (net of tax expense of $685 and a net tax benefit of
 $24,790 for 2001 and 2000, respectively)                                                  (5,946)               (37,168)
Net loss on disposal of operations                                                        (12,800)
------------------------------------------------------------------------------------------------------------------------
Net (loss) income                                                                  $      (75,746)         $      10,412
========================================================================================================================

Basic (loss) earnings per share:
(Loss) income from continuing operations                                           $        (0.93)         $        0.78
(Loss) income from discontinued operations                                                  (0.31)                 (0.61)
------------------------------------------------------------------------------------------------------------------------
Net (loss) income per share                                                        $        (1.24)         $        0.17
========================================================================================================================
Adjusted weighted average shares outstanding                                           61,065,000             60,903,000
========================================================================================================================

Diluted (loss) earnings per share:
(Loss) income from continuing operations                                           $        (0.93)         $        0.77
(Loss) income from discontinued operations                                                  (0.31)                 (0.60)
------------------------------------------------------------------------------------------------------------------------
Net (loss) income per share                                                        $        (1.24)         $        0.17
========================================================================================================================
Adjusted weighted average shares outstanding                                           61,065,000             61,635,000
========================================================================================================================

Dividends per common share                                                         $                       $        0.18
========================================================================================================================
</TABLE>

See notes to interim consolidated condensed financial statements.

                                       2
<PAGE>

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

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                                                        Three Months Ended March 31,
                                                                                           2001                      2000
---------------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>                        <C>
NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES                                   $   18,275                 $  21,603
---------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:

 Proceeds from disposal of leases and other owned assets                                    5,720                     2,834
 Proceeds from sales of investments                                                        26,019                    31,400
 Proceeds from sales of commercial mortgage backed securities                                                       113,737
 Principal collections on financing transactions                                          781,127                   594,987
 Expenditures for investments and other income producing activities                       (21,683)                  (21,532)
 Expenditures for financing transactions                                                 (277,446)                 (913,991)
 Recoveries of loans previously written-off                                                   232                        73
---------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES                                          513,969                  (192,492)
===========================================================================================================================

FINANCING ACTIVITIES:

 Net change in commercial paper and short term borrowings                                  (8,867)                  675,329
 Proceeds from issuance of term notes                                                                               120,000
 Repayment of term notes                                                                                           (461,260)
 Proceeds from exercise of stock options                                                                                275
 Dividends                                                                                                          (11,016)
---------------------------------------------------------------------------------------------------------------------------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES                                           (8,867)                  323,328
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY DISCONTINUED OPERATIONS                                       401,602                  (214,088)
---------------------------------------------------------------------------------------------------------------------------

INCREASE IN CASH AND CASH EQUIVALENTS                                                     924,979                   (61,649)

CASH AND CASH EQUIVALENTS, beginning of period                                            699,228                   100,344

---------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of period                                               $1,624,207                 $  38,695
===========================================================================================================================
</TABLE>

See notes to interim consolidated condensed financial statements.

                                       3
<PAGE>

                             THE FINOVA GROUP INC.
         NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
            (Dollars in thousands in tables, except per share data)

NOTE A    ORGANIZATION AND BASIS OF PREPARATION

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

     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 March 31, 2001, and the
results of operations and cash flows for the quarter ended March 31, 2001 and
2000, have been included. Interim results of operations are not necessarily
indicative of the results of operations for the full year. The enclosed
financial statements should be read in connection with the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K/A for the year ended December 31, 2000, which describes significant
business developments chronology culminating in the March 2001 filing for
protection pursuant to Chapter 11, Title 11, of the United States Code, in the
United States Bankruptcy Court for the District of Delaware.

     Certain reclassifications have been made to reflect discontinued
operations. These reclassifications resulted from the Company's decision in the
third quarter of 2000 to sell or liquidate some of its more broad based
businesses and focus on its niche based businesses. The businesses discontinued
include Corporate Finance, Business Credit, Growth Finance (all of which are
included under the caption "Corporate Finance"), Distribution & Channel Finance
and Commercial Services. See Note F for more information on discontinued
operations.

Going Concern

     The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States. During the year
ended December 31, 2000, the Company experienced a significant deterioration in
the credit quality of its portfolio, the loss of its investment grade credit
ratings and the resulting loss of access to capital and increase in cost of
funds. The Company was not in compliance with its debt covenants as of December
31, 2000 and filed for protection from its creditors under Chapter 11 of the
United States Bankruptcy Code on March 7, 2001.

     These conditions and events raise substantial doubt about the Company's
ability to continue as a going concern. The ability of the Company to continue
as a going concern is dependent on many factors including the confirmation of a
plan of reorganization (the "Plan") and successful execution of management's
plans for the collection of its portfolio pursuant to contractual terms and
negotiation of appropriate rates and fee structures with its customers. The
accompanying condensed consolidated financial statements do not include any
adjustments relating to the recoverability and classification of asset amounts
or the amounts and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern.

Bankruptcy Accounting

     Entering a reorganization, although a significant event, does not
ordinarily affect or change the application of generally accepted accounting
principles ("GAAP") followed by a company. The accompanying financial statements
have been prepared assuming that FINOVA will continue as a going concern in
accordance with Statement of Position 90-7, "Financial Reporting by Entities in
Reorganization under the Bankruptcy Code" ("SOP 90-7"). As such, asset and
liability carrying amounts do not purport to represent realizable or settlement
values as contemplated by the Bankruptcy Code.

Liabilities Subject to Chapter 11 Proceedings

     Liabilities subject to Chapter 11 proceedings, including claims that become
known after the petition date, are reported at their expected allowed claim
amount in accordance with Statement of Financial Accounting Standards ("SFAS")
No. 5, "Accounting for Contingencies." To the extent that the amounts of claims
change as a result of actions in the bankruptcy case or other factors, the
recorded amount of liabilities subject to Chapter 11 proceedings will be
adjusted. The results of these adjustments are recorded as reorganization items.

Reorganization Items

                                       4
<PAGE>

Reorganization items are income and expenses that are realized or incurred by
FINOVA because it is in reorganization. For the three months ended March 31,
2001, reorganization items were a charge of $9.6 million. The components of
reorganization items are as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                                              Three Months Ended
                                                                                  March 31, 2001
------------------------------------------------------------------------------------------------
<S>                                                                          <C>
Unamortized gains on terminated and cash settled interest rate swaps           $        22,197
Interest income earned on unpaid interest and debt payments                                804
Unamortized debt origination costs                                                     (15,095)
Professional service fees                                                               (9,599)
Unamortized debt discounts                                                              (7,926)
----------------------------------------------------------------------------------------------
Total reorganization items                                                            $ (9,619)
----------------------------------------------------------------------------------------------
</TABLE>

     The financial statements of the Company are substantially the same as the
financial statements of the entities in bankruptcy.

NOTE B    SIGNIFICANT ACCOUNTING POLICIES

     The Company reports other comprehensive income (loss) in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." Total comprehensive (loss) income was $(92.0) million and
$0.1 million for the three months ended March 31, 2001 and 2000, respectively.
The primary component of comprehensive (loss) income other than net income was a
change in net unrealized gains on securities.

New Accounting Standards

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

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

NOTE C    SEGMENT REPORTING

     FINOVA's business is organized into three market groups, which are also its
reportable segments: Specialty Finance, Commercial Finance and Capital Markets.
Management has not yet determined whether its reportable segments will be
reorganized as a result of the decision to discontinue several lines of business
and pending reorganization proceedings. Management relies principally on total
revenue, income before allocations and managed assets in evaluating the business
performance of each reportable segment.

     Total net revenue is the sum of operating margin and (losses) gains on
investments and disposal of assets. Income before allocations is income before
income taxes, preferred dividends, corporate overhead expenses and the
unallocated portion of the provision for credit losses. Managed assets include
each segment's investment in financing transactions plus securitizations. The
Company expects that managed assets in all segments will decline significantly
over the next several years as available cash flow will be used principally for
debt service rather than the funding of new business.

                                       5
<PAGE>

        Information for FINOVA's reportable segments that are part of continuing
operations reconciles to FINOVA's consolidated totals as follows:

<TABLE>
<CAPTION>
     ---------------------------------------------------------------------------------------------------------------
                                                                                   Three Months Ended March 31,
                                                                                    2001                  2000
     ---------------------------------------------------------------------------------------------------------------
     <S>                                                                        <C>                     <C>
     Total net revenue:
      Specialty Finance                                                         $   67,956              $     99,063
      Commercial Finance                                                            11,653                    14,040
      Capital Markets                                                                9,667                    44,909
      Corporate and other                                                          (16,630)                     (203)
     ---------------------------------------------------------------------------------------------------------------
      Consolidated total                                                        $   72,646              $    157,809
     ---------------------------------------------------------------------------------------------------------------
     (Loss) income before income taxes, preferred dividends and allocations:
      Specialty Finance                                                         $   53,042              $     77,180
      Commercial Finance                                                             2,348                    10,922
      Capital Markets                                                               (6,983)                   21,727
      Corporate and other, overhead and unallocated provision for credit losses   (104,461)                  (61,303)
      --------------------------------------------------------------------------------------------------------------
     (Loss) income from continuing operations before preferred dividends        $  (56,054)             $     48,526
     ---------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                          As of March 31,
                                                                                2001                          2000
     ---------------------------------------------------------------------------------------------------------------
     <S>                                                                        <C>                     <C>
     Managed assets:
      Specialty Finance                                                         $7,941,139              $  8,483,819
      Commercial Finance                                                         1,185,247                 1,064,359
      Capital Markets                                                              720,699                   925,696
      Corporate and other                                                           37,615                    64,336
     ---------------------------------------------------------------------------------------------------------------
     Consolidated total                                                         $9,884,700              $ 10,538,210
     Less securitizations                                                          321,562                   118,686
     ---------------------------------------------------------------------------------------------------------------
     Investment in financing transactions                                       $9,563,138              $ 10,419,524
     ===============================================================================================================
</TABLE>

NOTE D    (LOSS) EARNINGS PER SHARE

Basic earnings or losses per share exclude the effects of dilution and are
computed by dividing income available to common shareowners by the weighted
average amount of common stock outstanding for the period. Diluted earnings or
losses per share reflect the potential dilution that could occur if options,
convertible preferred stock or other contracts to issue stock were exercised or
converted into common stock, at assumed rates of conversion. Basic and diluted
earnings per share calculations are presented for the three months ended March
31, 2001 and 2000 on the Condensed Statements of Consolidated Operations and are
detailed below:

                                       6
<PAGE>

<TABLE>
<CAPTION>
     ------------------------------------------------------------------------------------------------------
                                                                           Three Months Ended March 31,
                                                                               2001                    2000
     ------------------------------------------------------------------------------------------------------
     <S>                                                                 <C>                   <C>
     Basic (Loss) Earnings Per Share Computation:

     (Loss) income from continuing operations                           $   (57,000)           $     47,580
     ======================================================================================================

     Weighted average shares outstanding                                 61,204,000              61,197,000
     Contingently issued shares                                            (139,000)               (294,000)
     ------------------------------------------------------------------------------------------------------
     Adjusted weighted average shares                                    61,065,000              60,903,000
     ======================================================================================================

      Basic (loss) income from continuing operations per share           $    (0.93)           $       0.78
     ======================================================================================================

     Diluted (Loss) Earnings Per Share Computation:

     (Loss) income from continuing operations                           $   (57,000)            $    47,580
     Weighted average shares outstanding                                 61,204,000              61,197,000
     Contingently issued shares                                            (139,000)               (291,000)
     ------------------------------------------------------------------------------------------------------
     Incremental shares from assumed conversion of stock options                                    729,000
     ------------------------------------------------------------------------------------------------------
     Adjusted weighted average shares                                    61,065,000              61,635,000
     ======================================================================================================

     Diluted (loss) income from continuing operations per share         $     (0.93)            $      0.77
     ======================================================================================================
</TABLE>

NOTE E    PORTFOLIO QUALITY

     The following table presents a distribution (by line of business) of the
Company's investment in financing transactions before the reserve for credit
losses at March 31, 2001.

                                       7
<PAGE>

                     INVESTMENT IN FINANCING TRANSACTIONS
                              BY LINE OF BUSINESS
                                March 31, 2001
                            (Dollars in Thousands)

<TABLE>
<CAPTION>
                                          Revenue Accruing                       Nonaccruing
                                -------------------------------------  ---------------------------------
                                Performing at
                                 Contractual             Repossessed               Repossessed  Lease &     Total Carrying
                                    Terms      Impaired     Assets      Impaired     Assets      Other          Amount         %
                                -------------------------------------  ---------------------------------   ----------------------
<S>                             <C>            <C>         <C>            <C>        <C>            <C>       <C>            <C>
Specialty Finance Group
   Transportation Finance       $ 2,017,131   $           $            $  223,108   $          $           $  2,240,239       23.4
   Resort Finance                 1,381,883      157,042     12,685       136,971       5,025                 1,693,606       17.7
   Franchise Finance                824,567        8,503                   50,396       2,224         29        885,719        9.3
   Healthcare Finance               523,985       28,680      1,433       247,497                  5,895        807,490        8.4
   Specialty Real
    Estate Finance                  628,958        6,019     25,460        10,194       7,724                   678,355        7.1
   Communications Finance           517,276        4,285                  137,968                               659,529        6.9
   Commercial Equipment Finance     417,473        4,405                   62,838       5,959      3,956        494,631        5.2
   Public Finance                   154,891                                 5,117                               160,008        1.7
                                -----------   ----------  ---------    ----------   ---------  ---------   ------------     ------
                                  6,466,164      208,934     39,578       874,089      20,932      9,880      7,619,577       79.7
                                -----------   ----------  ---------    ----------   ---------  ---------   ------------     ------
Commercial Finance Group
   Rediscount Finance               986,093       63,493        449       131,900       3,312                 1,185,247       12.4
                                -----------   ----------  ---------    ----------   ---------  ---------   ------------     ------
                                    986,093       63,493        449       131,900       3,312                 1,185,247       12.4
                                -----------   ----------  ---------    ----------   ---------  ---------   ------------     ------
Capital Markets Group
   Realty Capital                   326,321       22,502                   24,488       1,982                   375,293        3.9
   Mezzanine Capital                199,838       13,125                   94,346                               307,309        3.2
   Investment Alliance               32,570                                 5,526                                38,096        0.4
                                -----------   ----------  ---------    ----------   ---------  ---------   ------------     ------
                                    558,729       35,627                  124,360       1,982                   720,698        7.5
                                -----------   ----------  ---------    ----------   ---------  ---------   ------------     ------

Other                                37,616                                                                      37,616        0.4
                                -----------   ----------  ---------    ----------   ---------  ---------   ------------     ------
Total Continuing Operations (1)   8,048,602      308,054     40,027     1,130,349      26,226      9,880      9,563,138      100.0
                                -----------   ----------  ---------    ----------   ---------  ---------   ------------     ======

Discontinued Operations             338,579                               423,426       5,496      4,257        771,758
                                -----------   ----------  ---------    ----------   ---------  ---------   ------------
TOTAL                           $ 8,387,181   $  308,054  $  40,027    $1,553,775   $  31,722  $  14,137   $ 10,334,896
                                ===========   ==========  =========    ==========   =========  =========   ============
</TABLE>

NOTES:
(1)  Excludes $321.6 million of assets sold which the Company manages, $209.6
     million in Commercial Equipment Finance and $112.0 million in Franchise
     Finance.

                         ____________________________

                                       8
<PAGE>

Reserve for Credit Losses

     The reserve for credit losses at March 31, 2001 represents 6.5% of the
Company's investment in financing transactions and securitized assets. Changes
in the reserve for credit losses were as follows:

<TABLE>
<CAPTION>
                               Three Months Ended March 31,
----------------------------------------------------------
                                     2001           2000
----------------------------------------------------------
<S>                                <C>             <C>
Balance, beginning of period       $578,750        $178,266
Provision for credit losses          61,750          20,898
Write-offs                          (22,661)        (13,866)
Recoveries                              232              71
Other                                   (66)            227
-----------------------------------------------------------
Balance, end of period             $618,005        $185,596
===========================================================
</TABLE>

     At March 31, 2001, the total carrying amount of impaired loans was $1.4
billion, of which $308.1 million were revenue accruing. A specific impairment
reserve for credit losses of $320 million has been established for $808.2
million of nonaccruing impaired loans. Additionally, $5.8 million was
established for other accounts. As a result, 53% of FINOVA's reserve for credit
losses was allocated to specific reserves. The remaining $292.2 million or 47%
of the reserve for credit losses is designated for general purposes and
represents management's best estimate of inherent losses in the remaining
portfolio considering delinquencies, loss experience and collateral. Actual
results could differ from estimates and values, and there can be no assurance
that the reserves will be sufficient to cover portfolio losses. Additions to the
general and specific reserves are reflected in current operations. Management
may transfer reserves between the general and specific reserves as considered
necessary.

     At March 31, 2001, discontinued operations included $433.2 million of
nonaccruing assets, of which $365.8 million were in Corporate Finance. Since the
assets of the discontinued operations have been written down to estimated net
realizable value, no reserves for credit losses are carried against those
assets. The balance of net realizable value write-downs was $332.6 million at
March 31, 2001.

NOTE F    DISCONTINUED OPERATIONS

     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 Finance and Commercial Services lines of business. As a result, the
Company has 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.

     At March 31, 2001, FINOVA had total net assets of discontinued operations
of $742 million, which includes the following:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                         Corporate       Distribution &         Commercial
                                                          Finance       Channel Finance          Services              Total
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                 <C>                 <C>                 <C>
Investment in financing transactions                      $  740,465           $  24,940           $   6,353          $  771,758
Investments                                                    8,266               9,000                                  17,266
Accounts payable and accrued expenses                        (41,691)             (3,479)             (1,805)            (46,975)
Due to clients                                                   156                (331)                                   (174)
--------------------------------------------------------------------------------------------------------------------------------
Net assets of discontinued operations                     $  707,196           $  30,130           $   4,548          $  741,875
================================================================================================================================
</TABLE>

     Loss from discontinued operations in the Consolidated Statement of
Operations for the quarter ended March 31, 2001 includes the following:

<TABLE>
<CAPTION>
                                            Corporate         Distribution &        Commercial
                                             Finance          Channel Finance        Services      Total
----------------------------------------------------------------------------------------------------------
<S>                                        <C>                <C>                   <C>            <C>
Discontinued operations, net of tax         $(3,766)               $(2,163)            $(17)       $(5,946)
==========================================================================================================
</TABLE>

                                       9
<PAGE>

     The cumulative net loss on disposal of assets is comprised of the following
adjustments from September 30, 2000:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                       Corporate    Distribution &   Commercial
                                                                        Finance    Channel Finance    Services       Total
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>          <C>               <C>          <C>
As of September 30, 2000 on a pre-tax basis:
 Net realizable value mark-downs                                       $(215,760)         $(17,000)   $           $ (232,760)
 Goodwill written off                                                    (54,729)          (24,940)     (27,669)    (107,338)
 Proceeds in excess of assets sold                                                                       29,172       29,172
 Accrued expenses                                                        (28,922)           (5,198)     (10,377)     (44,497)
 Income tax benefit                                                      118,417            18,643        3,510      140,570
----------------------------------------------------------------------------------------------------------------------------
Net loss on disposal of operations as of September 30, 2000             (180,994)          (28,495)      (5,364)    (214,853)
 Additional net realizable value mark-downs                             (112,543)             (893)      (1,315)    (114,751)
 Additional accrued expenses                                             (13,385)           (4,815)                  (18,200)
 Income tax benefit (expense)                                             12,800            (2,337)        (370)      10,093
----------------------------------------------------------------------------------------------------------------------------
Net loss on disposal of operations as of December 31, 2000              (294,122)          (36,540)      (7,049)    (337,711)
 Additional net realizable value mark-downs                                                (12,800)                  (12,800)
----------------------------------------------------------------------------------------------------------------------------
Net loss on disposal of operations as of March 31, 2001                $(294,122)         $(49,340)   $  (7,049)  $ (350,511)
============================================================================================================================
</TABLE>

     The additional losses in the first quarter of 2001 were primarily
attributable to a further deterioration in the Distribution & Channel Finance
portfolio.

NOTE G    SUBSEQUENT EVENT

     On May 2, 2001, FINOVA and eight of its subsidiaries, including FINOVA
Capital Corporation, filed a proposed Joint Plan of Reorganization and a
Disclosure Statement with the United States Bankruptcy Court for the District of
Delaware. The Plan contemplates implementation of a comprehensive restructuring
transaction with Berkadia LLC, a joint venture of Berkshire Hathaway Inc. and
Leucadia National Corporation, that was first announced on February 27, 2001.

     As more fully described in the Plan, Berkadia has committed to make a $6
billion loan to FINOVA Capital, subject to conditions. The loan proceeds,
together with cash on hand, will fund a cash disbursement to general unsecured
creditors of FINOVA Capital equal to 60% of their claims, an increase from the
approximately 54% cash payment originally proposed. In addition, FINOVA will
issue ten-year New Senior Notes equal to 40% of the general unsecured claims
against FINOVA Capital. The New Senior Notes will be secured by a second lien on
the stock of FINOVA Capital. Interest on the New Senior Notes will be payable
semi-annually out of available cash (calculated as provided in the Plan
documents), after payment of quarterly interest on the Berkadia loan. Principal
on the New Senior Notes will be paid out of available cash, after payment in
full of the Berkadia loan, except as described in the following sentence. While
the Berkadia loan is outstanding and not in default, a liquidity feature of the
Plan that was not included in the original proposal will require FINOVA to
commit $75 million of available cash quarterly (up to a maximum of $1.5 billion
in total) to repurchase New Senior Notes at a price not to exceed par plus
accrued interest (subject to availability of New Senior Notes at or below the
maximum price). After payment in full of the Berkadia loan, 95% of available
cash will be used to pay the New Senior Notes and 5% will be used for payments
to FINOVA stockholders. The New Senior Notes also provide for payment under
certain circumstances of up to $100 million in the aggregate of additional
interest to holders of the New Senior Notes. Holders of general unsecured claims
against FINOVA Capital will also receive a cash payment of post petition
interest upon the effective date of the Plan.

     Berkshire Hathaway owns approximately $1.4 billion of existing FINOVA
Capital bank and bond debt and therefore is expected to be a significant holder
of New Senior Notes. Berkshire Hathaway will participate in FINOVA's quarterly
repurchase of New Senior Notes pro rata to its interest in the New Senior Notes
at the weighted average price paid in each quarterly repurchase.

     All other terms of the Plan are substantially the same as previously
disclosed in FINOVA's February 28, 2001 filing on Form 8-K.

     The Bankruptcy Court has not approved the proposed Plan or the Disclosure
Statement. The solicitation process will not begin until the Bankruptcy Court
approves the Disclosure Statement and authorizes FINOVA to solicit the votes of
creditors and stockholders in connection with the Plan. Thereafter, FINOVA will
send the proposed Plan and Disclosure Statement to all creditors and
stockholders who are entitled to vote on the Plan.

                                      10
<PAGE>

NOTE H    COMMITMENT & CONTINGENCIES

Legal Proceedings

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

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

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

     Since consolidation of the original five shareowner lawsuits, other related
lawsuits have been initiated against the Company and current and former officers
and directors. Three shareowner lawsuits were filed in the United States
District Court for the Middle District of Tennessee, in which the named
plaintiffs (John Cartwright, Sirrom Partners and Sirrom G-1, and Caldwell
Travel) assert claims relating to the Company's acquisition in 1999 of Sirrom
Capital Corporation, and the exchange of shares of Sirrom stock for shares of
FINOVA stock. The Cartwright complaint purports to be a class action lawsuit on
behalf of all Sirrom shareowners that exchanged their Sirrom stock for FINOVA
stock as a result of the acquisition. The defendants named are Sirrom Capital
Corporation, Samuel Eichenfield, John W. Teets, Constance Curran, G. Robert
Durham, James L. Johnson, Kenneth Smith, Shoshana Tancer, Bruno Marszowski, and
FINOVA Group. The complaints allege that the defendants made materially
misleading statements regarding FINOVA's loss reserves, and otherwise violated
the federal securities laws in an effort to reduce the total consideration
provided to Sirrom shareowners at the time of the acquisition. The complaints
seek unspecified damages for losses incurred by shareowners, plus interest, and
other relief.

     On January 4, 2001, the United States District Court for the Middle
District of Tennessee granted a motion brought by FINOVA and the other
defendants to transfer the Cartwright and Sirrom Partners cases to the United
States District Court for the District of Arizona. The plaintiff in Caldwell
Travel agreed to dismiss that case without prejudice. Pursuant to a Stipulation
and Order entered in March 2001, the Cartwright case has been consolidated for
all purposes with the previous five cases in the FINOVA Group Securities
Litigation, and the Sirrom Partners case has been consolidated for all pre-trial
purposes. The lead plaintiffs are scheduled to file a Second Amended
Consolidated Complaint in May 2001, though the deadline may be extended.

     There have also been two shareowners' derivative lawsuits filed against
current and former officers and directors of FINOVA Group, one in the United
States District Court for the District of Arizona, and one in the Court of
Chancery for Newcastle County, Delaware. Both complaints were filed on September
11, 2000, and both purport to be brought by the named plaintiffs (William Kass
and Cindy Burkholter) derivatively on behalf of the Company against the officers
and directors, alleging generally breaches of fiduciary and other duties as
directors. These actions seek unspecified money damages and other relief. As
with the consolidated securities litigation, the allegations center generally on
claims that there were materially misleading statements regarding FINOVA's loss
reserves. In both of these actions, the plaintiffs have agreed to a stay of all
proceedings pending the final determination of the motion to dismiss in the
consolidated securities litigation.

                                      11
<PAGE>

     Finally, another shareowner's derivative lawsuit was filed on September 13,
2000, in the Circuit Court for Davidson County, Tennessee, by Ronald Benkler,
purportedly on behalf of Sirrom Capital Corporation, against several former
officers of Sirrom Capital Corporation. The complaint alleges that the Sirrom
officers breached various duties to Sirrom in connection with the acquisition of
Sirrom by the Company in 1999, and the exchange of Sirrom stock for FINOVA stock
as a result of the acquisition. The plaintiffs have agreed to a stay of
discovery in this case, pending the final determination of the motion to dismiss
the consolidated securities litigation.

     FINOVA believes the claims in all of these securities and derivative cases
are without merit. FINOVA and the other defendants intend to vigorously defend
against these claims.

     On March 6, 2001, one of FINOVA Capital's subsidiaries, FINOVA (Canada)
Capital Corporation, had an involuntary Petition for Receiving Order filed
against it in the Ontario, Canada, Superior Court of Justice in Bankruptcy. The
action was filed by the Bank of Nova Scotia, as agent for the lenders on a $150
million (Canadian) bank facility. That same day, the courts in Canada issued a
temporary injunction prohibiting transfers of assets out of the Canadian
subsidiary to its other affiliates. FINOVA has not received service of process
in those proceedings, but has agreed to refrain from transferring assets to its
affiliates without court order.

     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 United States Bankruptcy Court for the
District of Delaware. The other subsidiaries were FINOVA (Canada) Capital
Corporation, FINOVA Capital plc, FINOVA Loan Administration Inc., FINOVA
Mezzanine Capital Inc., FINOVA Portfolio Services, Inc., FINOVA Technology
Finance Inc., and FINOVA Trust Finance.

     FINOVA obtained orders from the bankruptcy court on the first day
permitting FINOVA to continue its operations in the ordinary course including
honoring its obligations to borrowers. The orders also permit the Filing
Entities to pay certain prepetition expenses and claims, such as to employees
(other than executive officers, with exceptions), taxing authorities and foreign
trade vendors. The cases will be jointly administered.

     On May 2, 2001, FINOVA and the other filing subsidiaries filed a proposed
Joint Plan of Reorganization and Disclosure Statement which are currently
pending before the Bankruptcy Court.

                                      12
<PAGE>

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

              COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2001
                   TO THE THREE MONTHS ENDED MARCH 31, 2000

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

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

Recent Developments and Business Outlook

     On May 2, 2001, FINOVA and its subsidiaries that filed for protection
pursuant to Chapter 11 filed a proposed Joint Plan of Reorganization and a
Disclosure Statement (the "Plan") with the United States Bankruptcy Court for
the District of Delaware. The Plan contemplates implementation of a
comprehensive restructuring transaction with Berkadia LLC, a joint venture of
Berkshire Hathaway Inc. and Leucadia National Corporation, that was first
announced on February 27, 2001.

     As more fully described in the Plan, Berkadia has committed to make a $6
billion loan to FINOVA Capital, subject to conditions. The loan proceeds,
together with cash on hand, will fund a cash disbursement to general unsecured
creditors of FINOVA Capital equal to 60% of their claims, an increase from the
approximately 54% cash payment originally proposed. In addition, FINOVA will
issue ten-year New Senior Notes equal to 40% of the general unsecured claims
against FINOVA Capital. The New Senior Notes will be secured by a second lien on
the stock of FINOVA Capital. Interest on the New Senior Notes will be payable
semi-annually out of available cash (calculated as provided in the Plan
documents), after payment of quarterly interest on the Berkadia loan. Principal
on the New Senior Notes will be paid out of available cash, after payment in
full of the Berkadia loan, except as described in the following sentence. While
the Berkadia loan is outstanding and not in default, a liquidity feature of the
Plan that was not included in the original proposal will require FINOVA to
commit $75 million of available cash quarterly (up to a maximum of $1.5 billion
in total) to repurchase New Senior Notes at a price not to exceed par plus
accrued interest (subject to availability of New Senior Notes at or below the
maximum price). After payment in full of the Berkadia loan, 95% of available
cash will be used to pay the New Senior Notes and 5% will be used for payments
to FINOVA stockholders. The New Senior Notes also provide for payment under
certain circumstances of up to $100 million in the aggregate of additional
interest to holders of the New Senior Notes. Holders of general unsecured claims
against FINOVA Capital will also receive a cash payment of post petition
interest upon the effective date of the Plan.

     Berkshire Hathaway owns approximately $1.4 billion of existing FINOVA
Capital bank and bond debt and therefore is expected to be a significant holder
of New Senior Notes. Berkshire Hathaway will participate in FINOVA's quarterly
repurchase of New Senior Notes pro rata to its interest in the New Senior Notes
at the weighted average price paid in each quarterly repurchase.

     All other terms of the Plan are substantially the same as previously
disclosed in FINOVA's February 28, 2001 filing on Form 8-K.

     The Bankruptcy Court has not approved the proposed Plan or the Disclosure
Statement. The solicitation process will not begin until the Bankruptcy Court
approves the Disclosure Statement and authorizes FINOVA to solicit the votes of
their creditors and stockholders in connection with the Plan. Thereafter, FINOVA
will send the proposed Plan and Disclosure Statement to all creditors and
stockholders who are entitled to vote on the Plan.

                                      13
<PAGE>

Results of Operations

     The results for the first quarter of 2001 reflected a continuation of
trends noted in the 2000 10-K/A. These results were adversely impacted by some
of the events of 2000 and a continued softening of the U.S. economy. The more
significant impacts were increases in delinquencies and nonaccruing assets,
higher cost of funds (resulting in lower interest margins earned), increased
operating costs and the inability to recognize tax benefits.

     For the first quarter of 2001, FINOVA reported a loss of $75.7 million or
$1.24 per diluted share compared to net income of $10.4 million or $0.17 per
diluted share in the first quarter of 2000. The results for the first quarter of
2001 included a net loss from continuing operations of $57.0 million or $0.93
per diluted share compared to net income of $47.6 million or $0.77 per diluted
share in the first quarter of 2000, and a net loss from discontinued operations
in the 2001 quarter of $18.7 million or $0.31 per diluted share compared to a
net loss of $37.2 million or $0.60 per diluted share in the first quarter of
2000. A discussion of the largest variances in the individual profit and loss
categories is as follows:

Continuing Operations

     Loss from Continuing Operations. The decline in results in the first
quarter of 2001 when compared to the same quarter in 2000 was primarily due to
the following:

  .  Higher loss provisions to bolster the reserve for credit losses.
  .  A higher level of nonaccruing assets.
  .  Lower gains on investments and disposal of assets.
  .  Increases in the Company's cost of funds.
  .  An increase in the level of nonaccruing assets due in part to the weakening
     economy.
  .  Higher expenses primarily related to the Reorganization Proceedings.
  .  The inability to recognize any federal and state income tax benefits in
     2001.

     Interest margins earned. Interest margins earned represents the difference
between (a) interest, fee, lease and other income earned from financing
transactions and (b) interest expense and depreciation on operating leases.
Interest margins earned in the first quarter of 2001 dropped by $69.7 million to
$66.0 million from $135.7 million in the first quarter of 2000 due to a higher
level of nonaccruing assets, a higher cost of funds and a reduction in the
managed assets. Interest margins earned as a percentage of average earning
assets declined to 3.1% in the first quarter of 2001 from 5.6% in the comparable
2000 quarter. The higher cost of funds was the result of the events of 2000,
primarily the various downgrades of FINOVA Capital's senior debt and the
elimination of its commercial paper program resulting in draw downs under its
back-up bank facilities. This caused the Company's cost of funds applicable to
$4.5 billion of bank debt to increase by 1.16% (over the comparable 2000 period)
up to March 7, 2001, the bankruptcy filing date.

     The portfolio (ending managed assets) declined to $9.88 billion at March
31, 2001 from $10.54 billion at March 31, 2000. The reduction was primarily due
to lower new business ($277.4 million in 2001 compared to $914.0 million in the
first quarter of 2000) and to portfolio runoff. The new business in the first
quarter of 2001 included the funding of approximately $176 million from
available lines of credit, $150 million of which was in the Resort Finance line
of business. As the Company indicated in the 2000 Form 10-K/A, it has
effectively eliminated new business development activities and for the
foreseeable future, intends to focus on managing and maximizing the value of its
existing portfolio. Those efforts will include the continued collection of its
portfolio pursuant to contractual terms and may include efforts to retain
certain customer relationships, restructure or terminate other relationships or
sell certain assets if buyers can be found at attractive prices. The Company
will continue to fund its backlog of commitments, which declined to $1.85
billion at March 31, 2001 from $1.97 billion at March 31, 2000. Historically,
the amount reported as committed backlog was FINOVA's estimate of expected draw
downs of the total commitments outstanding, especially the available lines of
credit. Assuming full utilization, the total amount of available lines of credit
at March 31, 2001 was $2.98 million, including discontinued operations. The
available backlog increased from the $2.7 billion at December 31, 2000,
primarily due to pay downs on lines of credit, resulting in increased
availability.

     Provision for credit losses. The provision for credit losses on continuing
operations was higher by $40.9 million in the first quarter of 2001 compared to
the first quarter of 2000 ($61.8 million vs. $20.9 million) due to increases in
problem accounts and higher net write-offs during the period ($22.4 million in
the first quarter of 2001 vs. $13.8 million in the first quarter of 2000). The
businesses with the highest level of net write-offs during the 2001 quarter were
Mezzanine Capital ($10.7 million), Rediscount Finance ($7.4 million) and
Healthcare Finance ($3.1 million). Net write-offs as a percent of managed assets
in the 2001 first quarter were 0.87% annualized compared to 0.53% for the first
quarter of 2000. A discussion of the increase in problem accounts is included
under "Financial Condition, Liquidity and Capital Resources."

                                      14
<PAGE>

     FINOVA monitors developments affecting loans and leases in portfolio,
taking into account each borrower's financial developments and prospects, the
estimated value of collateral, legal developments and other available
information. Based upon that information, FINOVA adjusts its loan loss reserves
and when considered appropriate, writes down the values of the loans. Depending
on developments, there is the possibility that the loan loss reserves and/or
write-downs will increase in the future.

     Gains on investments and disposal of assets. Gains for the first quarter of
2001 were $6.7 million compared to $21.0 million for the 2000 first quarter.
Gains in the 2001 quarter were generated by Commercial Equipment Finance ($15.2
million), Mezzanine Capital ($4.7 million) and Communications Finance ($3.2
million). The largest gain was from the sale of stock of Corvis Corp., which
generated a gain of $15.6 million. These gains were partially offset by losses
related to the reduction of investment in a sports franchise ($7.0 million),
losses on residuals in Transportation Finance ($5.1 million) and further write-
down of Realty Capital's assets held for sale to fair value ($5.1 million).


     Operating expenses. For the first quarter of 2001, operating expenses
declined slightly to $55.0 million from $56.8 million in the comparable 2000
quarter. The decrease was primarily due to the cost savings resulting from a
reduction in employees (768 at March 31, 2001, compared to 1,508 at March 31,
2000) and lower goodwill amortization ($394 thousand vs. $4.2 million),
partially offset by accruals and payments made in connection with employee
retention plans and higher professional fees relating to events since March
2000. The higher professional services included increased accounting, legal fees
and investment banking fees.

     Reorganization items. Reorganization items reflect income and expense items
that are directly associated with the reorganization, as compared to those from
the ongoing operations of the business, as required by generally accepted
accounting principles for entities in reorganization under the Bankruptcy Code.
For the first quarter of 2001, reorganization items included the charge-off of
debt origination costs ($15.1 million), professional services fees ($9.6
million), the full amortization of debt discounts ($7.9 million) partially
offset by gains from cash settled interest rate swap terminations ($22.2
million) and interest earned ($0.8 million) on the cash retained and invested as
a result of the moratorium on payment of interest and principal applicable to
FINOVA's outstanding debt.

     Income taxes. Income taxes were provided during the first quarter of 2001
in spite of losses before income taxes for the period, due to taxable income
being generated by foreign operations (primarily in the United Kingdom and
Canada). Income tax benefits were offset by an increase in the valuation
allowance during the 2001 quarter because of the uncertainty of being able to
utilize either state or federal net operating loss carryforwards. This also
applies to discontinued operations, which provided income taxes on income from
foreign operations while recording net pre-tax losses for the period. The
effective income tax rates in the first quarter of 2000 were 39.4% for
continuing operations and 40.0% for discontinued operations.

     Preferred dividends. Dividends, net of tax paid on $115 million of
outstanding Company-obligated mandatory redeemable convertible preferred
securities ("TOPrS"), were $946 thousand in both the first quarter of 2001 and
2000. Dividends were accrued but not paid in 2001 since during the first quarter
of 2001, in conjunction with the reorganization proceedings, the Company
suspended paying dividends on the TOPrs and interest on the underlying
convertible debentures.

Discontinued Operations

     During the third quarter of 2000, FINOVA's Board of Directors approved the
sale or liquidation of some of its more broad based businesses so the Company
could focus more on its niche-based businesses. The businesses included in
discontinued operations consist of Commercial Services (substantially sold
during the third quarter of 2000), Corporate Finance (which includes Business
Credit and Growth Finance) and Distribution & Channel Finance. During the first
quarter of 2001, $309 million of Corporate Finance assets were sold. Sales of
additional assets could occur for all or portions of the discontinued business
assets. To the extent assets are not sold, the Company intends to liquidate the
remaining assets in an orderly manner.

     Losses from discontinued operations in 2001 were $18.7 million (after-tax)
and primarily consisted of $12.8 million of charges to value the assets to be
sold or liquidated at estimated net realizable amounts, the effects of higher
nonaccruing assets and operating losses. Nonaccruing assets in discontinued
operations were $433.2 million at March 31, 2001, down $53 million from $486.2
million at December 31, 2000 and up by $293.6 million from $139.6 million at
March 31, 2000. Losses in the first quarter of 2000 were principally due to a
pre-tax charge to earnings to replenish loss reserves after a write-off of a
loan to a single customer in the Distribution & Channel Finance line of
business.

Financial Condition, Liquidity and Capital Resources

     The following primarily relates to continuing operations, except as noted.

                                      15
<PAGE>

     Managed assets were $9.88 billion at March 31, 2001 compared to $10.54
billion at December 31, 2000. Included in managed assets at March 31, 2001 were
$9.56 billion in funds employed and $321.6 million of securitized assets. The
decrease in managed assets was due to prepayments and asset sales accompanied by
normal portfolio amortization, partially offset by funded new business of $277.4
million for the three months ended March 31, 2001.

     The reserve for credit losses as it pertains to continuing operations
increased to $618 million at March 31, 2001 from $578.8 million at December 31,
2000. At March 31, 2001 and December 31, 2000, the reserve for credit losses was
6.5% and 5.7% of ending managed assets, respectively. The reserve for credit
losses as a percent of nonaccruing assets declined to 53% at March 31, 2001,
from 62.8% at December 31, 2000, due to the increase in nonaccruing assets.
Nonaccruing assets increased to $1.17 billion or 11.8% of ending managed assets
at March 31, 2001 from $921.4 million or 8.7% at the end of 2000. The largest
increases to nonaccruing assets during the three months of 2001 occurred in
Transportation Finance ($85.1 million), Commercial Equipment Finance ($53.8
million), Mezzanine Capital ($50.4 million), Communications Finance ($45.1
million) and Realty Capital ($10.6 million).

     The $85.1 million increase in nonaccruing assets in Transportation Finance
involved eight aircraft-secured transactions and one engine-secured transaction.
The single largest transaction ($28.2 million) moving to nonaccrual in the first
quarter was a 1988 B757 on lease to a scheduled carrier. The other moves to
nonaccrual involved two MD-82 aircraft ($21.0 million) on lease to a carrier in
bankruptcy at March 31, and subsequent to March 31, leased to the acquirer of
that carrier; three 727-200 aircraft ($18.8 million) on operating leases to a
scheduled carrier; another MD-82 aircraft ($12.0 million) formerly on lease to a
carrier in bankruptcy and sold subsequent to March 31; three DC-9-30 aircraft
($10.6 million) in process of being returned; two 727-200 aircraft ($9.6
million) out on operating leases. FINOVA wrote-off $550 thousand in the first
quarter and established $1.45 million of specific reserves on these new
nonaccruals.

     The $53.8 million increase in nonaccruing assets in Commercial Equipment
Finance was principally due to the addition of a $41.9 million loan to a
corporate aircraft charter operator who is experiencing cash flow problems. The
balance of the increase was due to the addition of five other accounts affected
by the slowing economy. Specific reserves of $2.0 million have been assigned
against the total new nonaccruing assets.

     The Mezzanine Capital portfolio has been negatively affected by the
weakening economy resulting in more restrictive policies by senior lenders
regarding subordinated debt. In addition, the lack of equity support from the
traditional equity sponsors of many mezzanine transactions has resulted in a
liquidity crisis for a number of our borrowers. The increase in nonaccruing
accounts at quarter-end can be largely attributed to the following: violations
of senior debt covenants on four transactions totaling $7.1 million leading to
payment blockage; three transactions totaling $13.7 million for which the equity
sponsors have indicated an unwillingness to provide additional support resulting
in a liquidity crisis for those borrowers; one transaction for $10.8 million on
which the senior lenders are in disagreement over the borrowing base components;
and the weakening economy has severely impacted the business plans of six
borrowers totaling $23.8 million, resulting in short to long-term liquidity
issues. Specific reserves of $30.4 million have been allocated to the $58.1
million of new nonaccruing assets.

     The $45.1 million increase in the Communications Finance nonaccruing assets
is represented by five accounts in six different market niches. The largest
increase comes from the internet sector, as two accounts totaling $19.8 million
moved into nonaccrual status. Also moving to nonaccruing was a $14.2 million
loan to a radio and TV station operator serving numerous markets. An $8.6
million loan to a paging operator was moved into the nonaccrual category in the
first quarter. Although interest payments were being made, the move was
appropriate in light of the significant softening in the paging industry and the
likelihood of a bankruptcy filing. One customer in the cable and security
monitoring industry went over 90 days delinquent in payments at the end of March
2001. For these new nonaccrual accounts, specific reserves of $13.8 million have
been established as of March 31, 2001.

     The increase in nonaccruing assets in Realty Capital of $10.6 million was
primarily attributable to one account for $7.8 million secured by five low-rise
office buildings in Orlando, Florida. The properties are experiencing
significant occupancy shortages and the transaction matures in the second
quarter. The Company designated the Realty Capital unit as being held for sale
in the fourth quarter of 2000 and took a charge to write-down its assets to
estimated fair value. A revaluation increased the markdown by $5.1 million in
the first quarter of 2001.

     Earning impaired assets increased during the three months ended March 31,
2001 to $308.1 million, or 3.1% of ending managed assets, from $235.8 million,
or 2.2% of ending managed assets at December 31, 2000. The largest additions to
earning impaired assets were in Rediscount Finance ($32.1 million), Healthcare
Finance ($28.7 million), Resort Finance ($17.0 million), Realty Capital ($22.5
million) and Mezzanine Capital ($13.1 million). The increase in Rediscount
Finance represents one account which operates as a consumer sales finance
company based in Florida. The account is considered impaired due to an out of

                                      16
<PAGE>

formula condition with the underlying collateral of automobile finance
contracts. The increase in Healthcare Finance is attributable to two accounts.
One is a participation in a bank facility to finance an operator of skilled
nursing and assisted living facilities in California, Texas, and Arizona. The
facility is secured by all the assets of the company. The other Healthcare
transaction is also a participation for an operator of assisted living
facilities. The transaction matured at the end of March with no established plan
for refinancing. The increase in Realty Capital is primarily attributable to one
account secured by a two-story R&D/Office complex in California. The account was
moved to earning impaired status as a result of losing one of its major tenants.
The increase in Resort Finance represents one golf-oriented resort in Florida.
Sales of timeshare intervals have lagged expectations which in turn has slowed
the repayment of FINOVA's acquisition facility. The increase in Mezzanine
Capital was primarily attributable to one account ($9.3 million) involved with
the paging industry. Although the account continues to pay in a timely manner,
the significant softening in the paging industry, along with the uncertainty
about the future direction of paging, warranted this classification.

     There can be no assurance that any of the potential transactions noted
above will be consummated on anticipated terms.

     The carrying amount of FINOVA's accounts that were 31-90 days delinquent in
payment at March 31, 2001 increased to 1.6% of managed assets, from 1.2% of
managed assets at the end of 2000. The increases in 31-90 day delinquent
accounts were in Transportation Finance ($46.8 million), Resort Finance ($22.6
million) and Franchise Finance ($9.9 million).

     FINOVA's internally generated funds and asset sales financed liquidity
during the three months ended March 31, 2001. On February 27, 2001, FINOVA
announced a moratorium on repayments of principal on its outstanding bank and
bond debt. On March 7, 2001, FINOVA filed for protection from its creditors as
noted above to enable it to restructure the timing of its debt repayments. The
Reorganization Proceedings seek to enable FINOVA to restructure the debt
maturities, among other items. No principal or interest payments will be made on
the debt until the Plan defining repayment terms has been approved by the court.

     In 2001, substantially all of FINOVA's interest rate swaps were terminated
as a result of the Reorganization Proceedings. Historically, FINOVA entered into
derivative transactions as part of its interest rate risk management policy of
match funding its assets and liabilities. Therefore, FINOVA's asset and
liabilities are not match funded going forward. At termination, the interest
rate swaps had an estimated value of approximately $70 million, of which $18.2
were cash settled amortized into income and included as a reorganization item
in first quarter's results. Pursuant to the Company's various agreements, the
institutions exercised their right to offset the amounts due to the Company,
relative to approximately $50 million of the cash termination value of the
swaps, against the amount due by the Company on the debt outstanding. No swap
termination gains have been recognized on these swaps since the amounts have not
been approved by the bankruptcy court.

     At March 31, 2001, FINOVA had $11.1 billion of debt outstanding, including
$111.6 million of TOPrS, representing 19.1 times the Company's common equity
base of $580.9 million. As a result of its moratorium on debt payments, its
subsequent filing of Bankruptcy under Chapter 11 and defaults under various
financial covenants under its bank agreements, FINOVA Capital is in default
under its debt agreements.

New Accounting Standards

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

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

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 matters in
the sections of this report captioned "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Quantitative and

                                      17
<PAGE>

Qualitative Disclosure About Market Risk." They are also made in documents
incorporated in this report by reference, or in which this report may be
incorporated, such as a prospectus.

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

 .    The results of FINOVA's efforts to implement its business strategy,
     including successful completion of the Reorganization Proceedings. Failure
     to fully implement its business strategy might result in adverse effects,
     including materially adverse impacts on its financial position and results
     of operations. The current focus on maximizing portfolio values and
     liquidity while minimizing or eliminating new business generation will
     likely result in financial results that differ materially from prior
     periods.

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

 .    The cost of FINOVA's capital. That cost has increased significantly as a
     result of the events of 2000 and will increase further if the Berkadia
     transaction is consummated. The impact of these developments will be a
     significant reduction in profit margins.

 .    Loss of employees. FINOVA must retain a sufficient number of employees to
     continue to monitor and collect its portfolio. Failure to do so could
     result in additional losses.

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

 .    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 of
     FINOVA's financing products. The current financial condition of FINOVA also
     makes it difficult to record potential tax benefits that may never be
     recognized.

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

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

 .    Changes in interest rates could adversely affect financial results.

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

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

                                      18
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
-----------------------------------------------------------------

     FINOVA's primary market risk has been exposure to the volatility of
interest rates. FINOVA sought to manage interest rate risk and preserve income
through a diversified borrowing base and a matched funding policy. A diversified
borrowing base consisted of short and long-term debt with a fixed or variable
rate. FINOVA's matched funding policy required that floating-rate assets be
financed with similar floating-rate liabilities and fixed-rate assets be
financed with similar fixed-rate liabilities. Under the matched funding policy,
the difference between floating-rate assets and floating-rate liabilities was
managed to not exceed 3% of total assets for any extended period.

     As a result of the developments described in the Company's 2000 10-K/A, the
Company cannot determine the nature of its borrowing base or achieve a matched
funding policy. In addition, substantially all of the Company's interest rate
swap agreements were terminated as a result of the bankruptcy filing. During the
pendancy of the bankruptcy, the interest rate which will be applied to the
Company's debt obligations is also uncertain.

     Since approximately 50% of the Company's assets earn at a floating-rate,
any decline in market rates could adversely affect the Company since it would
earn less on its assets while the nature of its financing costs is uncertain.
Alternatively, any increase in market rates would increase its return on
floating-rate assets; however, if its financing costs also become floating any
potential increases in asset returns could be offset by rising costs of capital.
Until a plan of reorganization is approved and its financing costs determined,
the Company does not expect to be able to mitigate its exposure to changes in
interest rates.

     Under the terms of Berkadia's commitment, the New Senior Notes will be
fixed-rate obligations, at the weighted average rate of the existing debt
(excluding default interest or penalties, if any). If LIBOR is above 6%, the
Berkadia Loan will be a floating-rate loan; if LIBOR is below 6%, the Berkadia
Loan will be fixed at 9%. If this transaction is consummated, a successful
strategy to mitigate the Company's exposure to changes in market interest rates
could be developed; however, no assurance can be given that the Company will be
able to implement any such strategy at an acceptable cost or will seek to do so.
In addition, no assurance can be given that the transaction will be consummated.

                                      19
<PAGE>

                           PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
-------------------------

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

                                      20
<PAGE>

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

     (a)  The following exhibits are filed herewith:

  Exhibit No.                                Document
  -----------  ----------------------------------------------------------------
     12        Computation of Ratio of (Losses) Income to Fixed Charges (interim
               period).

   4.0.1       Letter Agreement among Berkadia LLC, Berkshire Hathaway Inc.,
               Leucadia National Corporation, FINOVA and FINOVA Capital, dated
               May 2, 2001, including summaries of proposed terms and conditions
               for the $6 billion Senior Secured Credit Facility and the New
               Senior Notes.

     (b)  Report s on Form 8-K:

     A report on Form 8-K dated May 8, 2001 was filed by Registrant which
reported under Item 5 the filing by the Company and its subsidiaries in the
Bankruptcy Court of a proposed Joint Plan of Reorganization and Disclosure
Statement.

                                      21
<PAGE>

                             THE FINOVA GROUP INC.

SIGNATURES
----------

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                             THE FINOVA GROUP INC.

                                 (Registrant)

Dated: May 15, 2001      By:  /s/ Bruno A. Marszowski
                              ------------------------------------------------
                              Bruno A. Marszowski, Senior Vice President, Chief
                              Financial Officer and Controller Principal
                              Financial and Accounting Officer

                                      22
<PAGE>

                             THE FINOVA GROUP INC.
                        COMMISSION FILE NUMBER 1-11011
                                 EXHIBIT INDEX
                           MARCH 31, 2001 FORM 10-Q

Exhibit No.                             Document
----------     ----------------------------------------------------------------
     12        Computation of Ratio of (Losses) Income to Fixed Charges (interim
               period).

    4.0.1      Letter Agreement among Berkadia LLC, Berkshire Hathaway Inc.,
               Leucadia National Corporation, FINOVA and FINOVA Capital, dated
               May 2, 2001, including summaries of proposed terms and conditions
               for the $6 billion Senior Secured Credit Facility and the New
               Senior Notes.

                                      23