<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission file number 0-11618
HPSC, Inc.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2560004
- --------------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
60 STATE STREET, BOSTON, MASSACHUSETTS 02109
- ---------------------------------------- --------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 720-3600
--------------------------
NONE
- -------------------------------------------------------------------------------
(Former name, former address, and former fiscal year
if changed since last report)
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 and 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date: COMMON STOCK, PAR VALUE $.01
PER SHARE. SHARES OUTSTANDING AT MAY 1, 1997, 4,657,930.
<PAGE>
HPSC, INC.
INDEX
PART I -- FINANCIAL INFORMATION PAGE
Condensed Consolidated Balance Sheets as of March 31,
1997and December 31, 1996 ............................................. 3
Condensed Consolidated Statements of Income for each of
the Three Months Ended March 31, 1997 and March 31, 1996............... 4
Consolidated Statements of Cash Flows for each of the
Three Months Ended March 31, 1997 and March 31,1996.................... 5
Notes to Condensed Consolidated Financial Statements................... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................... 7-10
PART II -- OTHER INFORMATION
Signatures............................................................ 11
Exhibit Index......................................................... 11
2
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HPSC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1997 1996
--------- -----------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 2,288 $ 2,176
RESTRICTED CASH 7,987 6,769
INVESTMENT IN LEASES AND NOTES:
Lease contracts and notes receivable due in installments 164,630 160,049
Notes receivable 20,623 18,688
Estimated residual value of equipment at end of lease term 9,429 9,259
Less unearned income (35,932) (34,482)
Less allowance for losses (4,047) (4,082)
Less security deposits (4,863) (4,522)
Deferred origination costs 4,246 4,312
-------- --------
Net investment in leases and notes 154,086 149,222
-------- --------
OTHER ASSETS:
Other assets 4,666 3,847
Refundable income taxes 703 1,203
-------- --------
TOTAL ASSETS $169,730 $163,217
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
REVOLVING CREDIT BORROWINGS $ 25,500 $ 40,000
SENIOR NOTES 79,184 76,737
SENIOR SUBORDINATED NOTES 20,000 --
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 3,716 5,916
ACCRUED INTEREST 548 450
ESTIMATED RECOURSE LIABILITIES 730 480
INCOME TAXES:
Currently payable 338 300
Deferred 5,110 5,002
-------- --------
TOTAL LIABILITIES 135,126 128,885
-------- --------
STOCKHOLDERS' EQUITY:
PREFERRED STOCK, $1.00 par value;
authorized 5,000,000 shares; issued - None -- --
COMMON STOCK, $.01 par value; 15,000,000 shares authorized;
issued and outstanding 4,786,530 shares in 1997 and 1996 48 48
TREASURY STOCK (at cost) 128,600 shares in 1997 and 1996 (587) (587)
Additional paid-in capital 12,305 12,305
Retained earnings 25,562 25,351
-------- --------
37,328 37,117
Less: Deferred compensation (2,540) (2,590)
Notes receivable from officers and employees (184) (195)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 34,604 34,332
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $169,730 $163,217
-------- --------
-------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
HPSC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR EACH OF THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
(in thousands, except per share and share amounts)
(unaudited)
March 31, March 31,
1997 1996
-------- ---------
REVENUES:
Earned income on leases and notes $ 5,015 $ 3,773
Gain on sales of leases and notes 732 83
Provision for losses (187) (348)
-------- ---------
Net revenues 5,560 3,508
-------- ---------
OPERATING AND OTHER (INCOME) EXPENSES:
Selling, general and administrative 2,807 1,647
Interest expense 2,437 1,643
Interest income (92) (34)
-------- ---------
Net operating expenses 5,152 3,256
-------- ---------
INCOME BEFORE INCOME TAXES 408 252
-------- ---------
PROVISION FOR INCOME TAXES:
Federal, Foreign and State:
Current 89 650
Deferred 108 (550)
-------- ---------
TOTAL INCOME TAXES 197 100
-------- ---------
NET INCOME $ 211 $ 152
-------- ---------
-------- ---------
NET INCOME PER SHARE $ .05 $ .04
-------- ---------
-------- ---------
SHARES USED TO COMPUTE INCOME PER SHARE: 4,069,830 4,013,862
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
HPSC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
FOR EACH OF THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 211 $ 152
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 962 702
Deferred income taxes 108 (550)
Restricted stock compensation 50 ---
Gain on sale of receivables (732) (83)
Provision for losses on lease contracts and notes
receivable 187 348
Increase in accrued interest 98 24
(Decrease) in accounts payable and accrued liabilities (2,200) (948)
Increase in accrued income taxes 38 77
Decrease in refundable income taxes 500 628
Decrease in other assets 123 31
-------- --------
Cash (used in) provided by operating activities (655) 381
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Origination of lease contracts and notes receivable
due in installments (26,700) (18,226)
Portfolio receipts, net of amounts included in income 12,393 9,173
Proceeds from sales of lease contracts and notes
receivable due in installments 8,573 418
Net increase in notes receivable (1,923) (1,701)
Net increase in security deposits 341 207
Net decrease (increase) in other assets 130 (163)
Net (decrease) increase in loans to employees (9) 8
-------- --------
Cash (used in) investing activities (7,195) (10,284)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of senior notes (9,631) (6,176)
Proceeds from issuance of senior notes, net of debt
issue costs 12,059 3,127
Proceeds from issuance of senior subordinated notes,
net of debt issuance costs 18,824 ---
Net repayment of revolving credit borrowing (20,000) ---
Proceeds from revolving credit borrowings, net of debt
issuance costs 5,492 13,465
Increase in restricted cash 1,218 249
-------- --------
Cash provided by financing activities 7,962 10,665
-------- --------
Net increase in cash and cash equivalents 112 762
Cash and cash equivalents at beginning of period 2,176 861
-------- --------
Cash and cash equivalents at end of period $ 2,288 $ 1,623
-------- --------
-------- --------
- -----------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Interest paid $2,118 $ 1,536
Income taxes paid 68 40
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
HPSC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The information presented for the interim periods is unaudited, but
includes all adjustments (consisting only of normal recurring adjustments)
which, in the opinion of HPSC, Inc. (the "Company"), are necessary for a fair
presentation of the financial position, results of operations and cash flows
for the periods presented. The results for interim periods are not
necessarily indicative of results to be expected for the full fiscal year.
Certain 1996 account balances have been reclassed to conform with 1997
presentation.
2. The earnings per share computations assume the exercise of stock options
under the modified treasury stock method and include those shares allocated
to participant accounts in the Company's Employee Stock Ownership Plan and
those shares subject to time vesting under the Restricted Stock Award Plan.
3. On March 31, 1997, the Company had $7,987,000 in restricted cash, of
which $5,087,000 was reserved for debt service and $2,900,000 was reserved
for credit enhancement pursuant to the terms of agreements entered into by
the Company on December 27, 1993, with respect to the $70,000,000 HPSC
Funding Corp I securitization transaction.
4. In connection with the HPSC Bravo Funding Corp. ("Bravo") revolving
credit facility, the Company had $71,990,000 of its Senior Notes subject to
interest rate swap agreements. Under the structure of the facility, Bravo
incurs interest at various rates in the commercial paper market and enters
into interest rate swap agreements to assure fixed rate funding. At March
31, 1997, Bravo had sixteen separate swap contracts with the Bank of Boston
with a total notional value of $73,690,000.
5. In March 1997, the Company completed the issuance of $20,000,000 of
unsecured senior subordinated notes (the "Notes") due in 2007, which bear
interest at a fixed rate of 11%. The Notes pay interest semi-annually on
April 1 and October 1, with such payments beginning on October 1, 1997. The
Notes are redeemable at the option of the Company in whole or in part, other
than through the operation of a sinking fund after April 1, 2002 at
established redemption prices, plus accrued but unpaid interest to the date
of repurchase. Beginning July 1, 2002, the Company is required to redeem, on
January 1, April 1, July 1, and October 1 of each year, a portion of the
aggregate principal amount of the Notes at a redemption price equal to 100%
of such principal amount redeemed plus accrued but unpaid interest to
redemption date.
6. Statement of Financial Accounting Standards No. 128, "Earnings per
Share", effective for the Company for reporting periods ending after December
15, 1997, provides new standards for computing and presenting earnings per
share (EPS). It replaces primary EPS with basic EPS and requires dual
presentation of basic and diluted EPS. For the three months ended March 31,
1997, the pro forma basic EPS for the Company would be $0.06 per share, while
pro forma diluted EPS would be $0.05 per share.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Earned income from leases and notes for the three months ended March 31, 1997
was $5,015,000 (including approximately $860,000 from ACFC) as compared to
$3,773,000 (including approximately $438,000 from ACFC) for the three months
ended March 31, 1996. This increase of approximately 33% was due primarily
to the increase in net investment in leases and notes from the 1996 period to
1997 and slightly higher implicit earning rates in 1997. The increase in net
investment in leases and notes resulted, in part, from a higher level of
originations in the first quarter of 1997 of $26,300,000 compared to
$20,300,000 in the same period in 1996. Gains on sales of leases and notes
increased to $732,000 (net of $250,000 of estimated recourse liabilities) in
the first quarter of 1997 compared to $83,000 in the comparable 1996 period.
The increase was caused by a higher level of asset sales activity in the
current period.
Interest expense net of interest income on cash balances for the first
quarter of 1997 was $2,345,000 (47% of earned income) compared to $1,609,000
(43% of earned income) for the three months ended March 31, 1996, an increase
of 46%. The increase in net interest expense was due primarily to a 26%
increase in debt levels from the first quarter of 1996 to the first quarter
of 1997 which resulted primarily from borrowings to finance the Company's
financing contract originations. The increase as a percentage of earned
income was due to slightly higher interest rates on debt in the 1997 quarter
as compared to 1996.
Net financing margin (earned income less net interest expense) for the first
quarter of 1997 was $2,670,000 (53% of earned income) as compared to
$2,164,000 (57% of earned income) for the first quarter of 1996. The
increase in amount was due to higher earnings on a higher balance of earning
assets. The decline in percentage of earned income was due to higher debt
levels in the 1997 period as compared to the 1996 period.
The provision for losses for the first quarter of 1997 was $187,000 (4% of
earned income) compared to $348,000 (9% of earned income) in the comparable
period in 1996. The decrease was caused by a decline in net assets
(originations, less sales of assets) added in the 1997 quarter (approximately
$13,000,000) compared to net assets added in the comparable quarter in 1996
(approximately $19,000,000) and the Company's continuing evaluation of its
allowance for losses.
The allowance for losses at March 31, 1997 was $4,047,000 (2.6% of net
investment in leases and notes) as compared to $4,857,000 at March 31, 1996,
(3.8% of net investment) and $4,082,000 (2.7% of net investment) at December
31, 1996. Net charge-offs for the three months ended March 31, 1997 were
$250,000 as compared to $ 20,000 for the three months ended March 31, 1996.
Selling, general and administrative expenses for the three months ended March
31, 1997 were $2,807,000 (56% of earned income) as compared to $1,647,000
(44% of earned income) for the comparable period in 1996. This increase was
caused by increased staffing and support costs required by higher levels of
owned and managed assets and an acceleration of the recognition of
unamortized deferred costs associated with the projected termination of HPSC
Funding Corp I in the second quarter of 1997.
7
<PAGE>
The Company's income before income taxes for the quarter ended March 31, 1997
was $408,000 compared to $252,000 for the quarter ended March 31, 1996. The
provision for income taxes was $197,000 (48% of income before taxes) for the
three months ended March 31, 1997, compared to $100,000 (40% of income before
taxes) for the comparable 1996 period. The 1997 first quarter provision was
affected by approximately $70,000 in expenses related to the continuing
wind-down of the Company's Canadian operations that are not deductible in
computing the tax provision.
The Company's net income for the three months ended March 31, 1997 was
$211,000 ($.05 per share) compared to $152,000 ($.04 per share) for the three
months ended March 31, 1996. The increase in the 1997 quarter over the
comparable 1996 quarter was due to higher earned income on leases and notes,
higher gains on sales and a lower net provision for the losses, offset by
higher selling, general and administrative costs, higher net interest costs,
and a higher effective tax rate. At March 31, 1997, the Company had
approximately $54,000,000 of customer applications which had been approved
but had not yet resulted in a completed transaction, compared to $39,500,000
at March 31, 1996, and $47,500,000 at December 31, 1996. Not all approved
applications will result in completed financing transactions with the Company.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had $10,275,000 in cash, cash equivalents and
restricted cash as compared to $8,945,000 at December 31, 1996. As described
in Note 3 to the Company's condensed consolidated financial statements
included in this report on Form 10-Q, $7,987,000 was restricted pursuant to
financing agreements as of March 31, 1997, compared to $6,769,000 at December
31, 1996.
Cash used in operating activities was $655,000 for the three months ended
March 31, 1997 compared to cash provided by operating activities of $381,000
for the three months ended March 31, 1996. The significant components of
cash used in operating activities for the three months ended March 31, 1997,
as compared to the same quarter in 1996, were the decrease in accounts
payable and accrued liabilities of $2,200,000 as compared to $948,000 for the
same period of 1996, an increase in the gain on sale of receivables caused by
a higher level of sales activity in the first quarter of 1997 and a net
increase in deferred income taxes.
Cash used in investing activities was $7,195,000 for the three months ended
March 31, 1997 compared to $10,284,000 for the three months ended March 31,
1996. The significant components of cash used in investing activities for
the first quarter of 1997 compared to the same period in 1996 were an
increase in originations of lease contracts and notes receivable to
$26,700,000 from $18,226,000, offset by an increase in proceeds from sales of
lease contracts and notes receivable to $8,573,000 in the 1997 period from
$418,000 in the 1996 period and higher portfolio receipts of $12,393,000 in
the 1997 period as compared to $9,173,000 in the 1996 period.
Cash provided by financing activities for the three months ended March 31,
1997 was $7,962,000 compared to $10,665,000 for the three months ended March
31, 1996. The significant components of cash provided by financing activity
for the first quarter of 1997 as compared to 1996 were an increase in
proceeds from issuance of senior notes, net of debt issue costs, to
$12,059,000 from $3,127,000; proceeds from issuance of senior subordinated
notes in March 1997, net of debt issuance costs, of $18,824,000 in the 1997
period; an
8
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increase in repayment of senior notes to $9,631,000 from $6,176,000; net
repayment of revolving credit borrowings of $20,000,000 in the 1997 period;
and lower proceeds from revolving credit borrowings net of debt issuance
costs to $5,492,000 from $13,465,000.
On December 27, 1993, the Company raised $70,000,000 through an asset
securitization transaction in which its wholly-owned subsidiary, HPSC Funding
Corp I ("Funding I"), issued senior secured notes (the "Funding I Notes") at
a rate of 5.01%. The Funding I Notes are secured by a portion of the
Company's portfolio which it sold in part and contributed in part to Funding
I. Proceeds of this financing were used to retire $50,000,000 of 10.125%
senior notes due December 28, 1993, and $20,000,000 of 10% subordinated notes
due January 15, 1994. The Funding I Notes had an outstanding balance of
$5,020,000 at March 31, 1997. Under the terms of the Funding I
securitization, when the principal balance of the Funding I Notes equals the
balance of the restricted cash in the facility, Funding I must automatically
pay the Funding I Notes and terminate. This event will occur during the
second quarter of 1997, prior to the scheduled termination of Funding I. The
Company will incur a non-cash, non-operating charge against earnings
representing the early recognition of certain unamortized deferred
transaction origination costs. At December 31, 1996, these unamortized costs
were approximately $400,000 and the Company has recognized approximately
$175,000 in the first quarter of 1997, a proportionate share of the remaining
unamortized deferred origination costs. The balance of these costs,
approximately $175,000, will be recognized during the second quarter of 1997.
The Company's Second Amended and Restated Revolving Credit Agreement with the
First National Bank of Boston as Agent Bank, dated December 12, 1996 (the
"Revolver Agreement") increased the Company's availability under the Revolver
Agreement to $95,000,000. Under the Revolver Agreement, the Company may
borrow at variable rates of prime and at LIBOR plus 1.25% to 1.75%, dependent
on certain performance covenants. At March 31, 1997, the Company had
$25,500,000 outstanding under this facility and $69,500,000 available for
borrowing, subject to borrowing base limitations. The Revolver Agreement
currently is not hedged and is, therefore, exposed to upward movements in
interest rates.
As of January 31, 1995, the Company, along with its wholly-owned,
special-purpose subsidiary HPSC Bravo Corp ("Bravo"), established a
$50,000,000 revolving credit facility structured and guaranteed by Capital
Markets Assurance Corporation ("CapMAC"). Under the terms of the facility,
Bravo, to which the Company has sold and may continue to sell or contribute
certain of its portfolio assets, pledges its interests in these assets to a
commercial paper conduit entity. Bravo incurs interest at variable rates in
the commercial paper market and enters into interest rate swap agreements to
assure fixed rate funding. Monthly settlements of principal and interest
payments are made from the collection of payments on Bravo's portfolio.
HPSC may make additional sales to Bravo subject to certain covenants
regarding Bravo's portfolio performance and borrowing base calculations. The
Company is the servicer of the Bravo portfolio, subject to meeting certain
covenants. The required monthly payments of principal and interest to
purchasers of the commercial paper are guaranteed by CapMAC pursuant to the
terms of the agreement. Effective November 5, 1996, the Bravo facility was
increased to $100,000,000 and amended to provide that up to $30,000,000 of
such facility may be used for accounting purposes to finance sales of
receivables from Bravo. The Company had $17,341,000 outstanding at March 31,
1997 from sales of receivables under this portion of the Bravo facility. The
Company had $71,990,000 of indebtedness outstanding under the Bravo loan
facility at March 31, 1997, and in connection with this facility, had 16
separate interest rate swap agreements with the First National Bank of Boston
with a total notional value of $73,690,000.
9
<PAGE>
In April, 1995, the Company entered into a fixed rate, fixed term loan
agreement with Springfield Institution for Savings ("SIS") under which the
Company borrowed approximately $3,500,000 at 9.5% subject to certain recourse
and performance covenants. The Company had $2,174,000 outstanding under this
agreement at March 31, 1997.
In March 1997, the Company completed a $20,000,000 offering of unsecured
senior subordinated notes due 2007 bearing interest at a fixed rate of 11%
(the "Note Offering"). The Note Offering was completed on the terms and
conditions described in Amendment No. 2 to the Company's Registration
Statement No. 333-20733 on Form S-1. The Company received approximately
$18,500,000 in net proceeds from the Note Offering and used such proceeds to
repay amounts outstanding under the Revolver.
Management believes that the Company's liquidity, resulting from the
availability of credit under the Revolver, the Bravo facility and the loan
from SIS, along with cash obtained from the sales of its financing contracts
and from internally generated revenues, is adequate to meet current
obligations and future projected levels of financings and to carry on normal
operations. In order to finance adequately its anticipated growth, the
Company will continue to seek to raise additional capital from bank and
non-bank sources, make selective use of asset sale transactions in 1997 and
use its current credit facilities. The Company expects that it will be able
to obtain additional capital at competitive rates, but there can be no
assurance it will be able to do so.
Inflation in the form of rising interest rates could have an adverse impact
on the interest rate margins of the Company and its ability to maintain
adequate earning spreads on its portfolio assets.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act. If used in this Form 10-Q, the words
"believes," "anticipates," "expects," "plans," "intends," "estimates,"
"continue," "may," or "will" (or the negative of such words) and similar
expressions are intended to identify forward-looking statements. Such
statements are subject to a number of risks and uncertainties, including but
not limited to the following: the Company's dependence on funding sources;
restrictive covenants in funding documents; payment restrictions and default
risks in asset securitization transactions to which the Company is a party;
customer credit risks; competition for customers and for capital funding at
favorable rates relative to the capital costs of the Company's competitors;
changes in healthcare payment policies; interest rate risk; the risk that the
Company may not be able to realize the residual value on financed equipment
at the end of its lease term; risks associated with the sale of certain
receivable pools by the Company; dependence on sales representatives and the
current management team; and fluctuations in quarterly operating results.
The Company's filings with the Securities and Exchange Commission, including
its Annual Report on Form 10-K for the year ended December 31, 1996, contain
additional information concerning such risk factors. Actual results in the
future could differ materially from those described in the forward-looking
statements as a result of the risk factors set forth above, the risk factors
described in the Annual Report on Form 10-K for the year ended December 31,
1996, and the matters set forth in this Form 10-Q generally. HPSC cautions
the reader, however, that such list of risk factors may not be exhaustive.
HPSC undertakes no obligation to release publicly the result of any revisions
to these forward-looking statements that may be made to reflect any future
events or circumstances.
10
<PAGE>
HPSC, INC.
PART II. OTHER INFORMATION
Items 1 through 5 are omitted because they are inapplicable.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27 Financial Data Schedule
b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the three months
ended March 31, 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, HPSC, Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: May 14, 1997 HPSC, INC.
------------------------------------
(Registrant)
By: /s/ John W. Everets
------------------------------------
John W. Everets
Chief Executive Officer
Chairman of the Board
By: /s/ Rene Lefebvre
------------------------------------
Rene Lefebvre
Vice President
Chief Financial Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,275
<SECURITIES> 0
<RECEIVABLES> 185,253
<ALLOWANCES> 4,047
<INVENTORY> 0
<CURRENT-ASSETS> 164,361
<PP&E> 1,840
<DEPRECIATION> 612
<TOTAL-ASSETS> 169,730
<CURRENT-LIABILITIES> 29,215
<BONDS> 79,184
0
0
<COMMON> 48
<OTHER-SE> 34,556
<TOTAL-LIABILITY-AND-EQUITY> 169,730
<SALES> 0
<TOTAL-REVENUES> 5,747
<CGS> 0
<TOTAL-COSTS> 2,807
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 187
<INTEREST-EXPENSE> 2,437
<INCOME-PRETAX> 408
<INCOME-TAX> 197
<INCOME-CONTINUING> 211
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 211
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
