<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended: MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from ________ to ________
Commission file number 0-16271
DVI, INC.
--------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-2722773
--------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 HYDE PARK
DOYLESTOWN, PENNSYLVANIA 18901
------------------------ --------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number including area code: (215) 345-6600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, $.005 par value - 10,366,054 shares as of April 24, 1996.
<PAGE> 2
DVI, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION: PAGE
NUMBER
------
<S> <C>
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets -
March 31, 1996 (unaudited) and June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . 3-4
Consolidated Statements of Operations -
Three months and nine months ended March 31, 1996 and 1995 (unaudited) . . . . . . . . 5
Consolidated Statements of Shareholders' Equity -
July 1, 1994 through March 31, 1996 (unaudited) . . . . . . . . . . . . . . . . . . . . 6
Consolidated Statements of Cash Flows -
Nine months ended March 31, 1996 and 1995 (unaudited) . . . . . . . . . . . . . . . . . 7-8
Notes to Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . 9-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . 11-12
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
2
<PAGE> 3
DVI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1996 1995
------------- ----------
(Unaudited)
<S> <C> <C>
CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . $ 2,881 $ 1,953
---------- ----------
CASH AND SHORT-TERM INVESTMENTS, RESTRICTED . . . . . . . . . . . . . . . 23,253 12,241
---------- ----------
RECEIVABLES:
Investment in Direct Financing Leases and
Notes Secured by Equipment or Medical Receivables:
Receivable in installments . . . . . . . . . . . . . . . . . . . . . . 487,372 427,784
Receivable in installments - related parties . . . . . . . . . . . . . 22,132 23,828
Notes collateralized by medical receivables . . . . . . . . . . . . . 28,775 22,862
Residual valuation . . . . . . . . . . . . . . . . . . . . . . . . . . 3,878 3,578
Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . (77,425) (74,959)
---------- -------
Net investment in direct financing leases and
notes secured by equipment or medical receivables . . . . . . . . 464,732 403,093
--------- -------
Less: Allowance for possible losses on receivables . . . . . . . . . . . . (3,931) (3,282)
----------- -------
NET RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 460,801 399,811
--------- ---------
EQUIPMENT ON OPERATING LEASES
(net of accumulated depreciation of $2,424 at
March 31, 1996 and $1,646 at June 30, 1995) . . . . . . . . . . . . . . 1,929 2,722
----------- --------
FURNITURE AND FIXTURES
(net of accumulated depreciation of $1,070 at
March 31, 1996 and $726 at June 30, 1995) . . . . . . . . . . . . . . . 2,020 1,468
----------- --------
INVESTMENTS IN INVESTEES . . . . . . . . . . . . . . . . . . . . . . . . . 8,014 7,656
----------- --------
GOODWILL, NET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,150 1,867
----------- --------
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,843 5,213
----------- --------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $510,891 $432,931
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
DVI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1996 1995
---------- --------
(Unaudited)
<S> <C> <C>
ACCOUNTS PAYABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,298 $ 6,023
-------- --------
OTHER ACCRUED EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . 10,335 7,639
-------- --------
BORROWINGS UNDER WAREHOUSE FACILITIES . . . . . . . . . . . . . . . . . . . 207,042 155,172
-------- --------
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,802 4,717
-------- --------
LONG-TERM DEBT, NET:
Discounted receivables (primarily limited recourse) . . . . . . . . . . 154,101 205,376
Senior secured notes . . . . . . . . . . . . . . . . . . . . . . . . . 18,916
Convertible subordinated notes . . . . . . . . . . . . . . . . . . . . 13,831 13,754
-------- --------
Total long-term debt, net . . . . . . . . . . . . . . . . . . . . . 186,848 219,130
-------- --------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . 428,325 392,681
-------- --------
SHAREHOLDERS' EQUITY (Notes 4 and 5):
Preferred Stock, $10.00 par value; authorized
100,000 shares; no shares issued
Common Stock, $.005 par value; authorized
75,000,000 shares; outstanding 10,361,804 shares at
March 31, 1996 and 6,711,680 shares at June 30, 1995 . . . . . . . . 52 34
Additional capital . . . . . . . . . . . . . . . . . . . . . . . . . . 66,846 29,281
Unrealized gain (loss) on available-for-sale investments,
net of deferred taxes of $136 at March 31,
1996 and $769 at June 30, 1995 . . . . . . . . . . . . . . . . . . . (185) 1,061
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,853 9,874
-------- --------
TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . 82,566 40,250
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . . . . . . . . . . $510,891 $432,931
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
DVI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
---------------------- ---------------------
1996 1995 1996 1995
-------- ------ ------- -------
<S> <C> <C> <C> <C>
FINANCE AND OTHER INCOME:
Amortization of finance income . . . . . . . . . . $11,944 $9,556 $33,611 $24,015
Other income . . . . . . . . . . . . . . . . . . . 1,208 92 2,903 900
------- ------ ------- -------
Total finance and other income . . . . . . . . 13,152 9,648 36,514 24,915
Interest expense . . . . . . . . . . . . . . . . 8,215 6,314 22,533 15,450
------- ------ ------- -------
NET INTEREST INCOME . . . . . . . . . . . . . . . . 4,937 3,334 13,981 9,465
Gain on sale of financing transactions, net . . . 1,895 805 4,959 1,430
------- ------ ------- -------
NET FINANCE INCOME . . . . . . . . . . . . . . . . . 6,832 4,139 18,940 10,895
Selling, general and administrative expenses . . 2,741 1,827 7,064 5,491
Provision for possible losses on receivables . . 401 143 1,485 826
------- ------ ------- -------
EARNINGS BEFORE PROVISION FOR
INCOME TAXES . . . . . . . . . . . . . . . . . . 3,690 2,169 10,391 4,578
PROVISION FOR INCOME TAXES . . . . . . . . . . . . . 1,564 920 4,412 1,923
------- ------ ------- -------
NET EARNINGS . . . . . . . . . . . . . . . . . . . . $ 2,126 $1,249 $ 5,979 $ 2,655
======= ====== ======= =======
NET EARNINGS PER SHARE (Note 2):
Primary . . . . . . . . . . . . . . . . . . . . $ .20 $ .18 $ .61 $ .39
======= ====== ======= =======
Fully diluted . . . . . . . . . . . . . . . . . $ .19 $ .17 $ .58 $ .38
======= ====== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
DVI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS) ON
COMMON STOCK AVAILABLE- TOTAL
------------------ ADDITIONAL FOR-SALE RETAINED SHAREHOLDERS'
SHARES AMOUNT CAPITAL INVESTMENTS EARNINGS EQUITY
------------------ ----------- -------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JULY 1, 1994 . . . . . . 6,567,295 $33 $28,155 $ $ 5,805 $33,993
Issuance of common stock upon:
Exercise of stock options . . 97,216 1 626 627
Conversion of subordinated notes 47,169 500 500
Unrealized gain on available-for-
sale investments, net of
deferred taxes of $769 . . . . 1,061 1,061
Net earnings . . . . . . . . . . 4,069 4,069
--------- --- ------- ------- ------- -------
BALANCES AT JUNE 30, 1995 . . . . . . 6,711,680 34 29,281 1,061 9,874 40,250
Issuance of common stock upon:
Equity offering . . . . . . . 2,875,000 14 28,949 28,963
Exercise of stock options
and warrants . . . . . . . 775,124 4 8,616 8,620
Unrealized loss on available-for-
sale investments, net of
deferred taxes of $905 . . . . (1,246) (1,246)
Net earnings . . . . . . . . . . 5,979 5,979
--------- --- ------- ------- ------- -------
BALANCES AT MARCH 31, 1996 . . . . . 10,361,804 $52 $66,846 ($ 185) $15,853 $82,566
========== === ======= ======== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 7
DVI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
--------------------------
1996 1995
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,979 $ 2,655
--------- ---------
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . 5,900 4,506
Additions to allowance accounts, net . . . . . . . . . . . . . . . 649 592
Gain on sale of financing transactions, net . . . . . . . . . . . (4,959) (1,430)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . (10) 1,106
Changes in assets and liabilities:
(Increases) decreases in:
Cash and short-term investments, restricted . . . . . . . . (11,012) (36,753)
Other receivables . . . . . . . . . . . . . . . . . . . . . (3,236) 934
Other assets . . . . . . . . . . . . . . . . . . . . . . . (1,630) 4,076
Increases (decreases) in:
Accounts payable . . . . . . . . . . . . . . . . . . . . . 14,275 (18,078)
Other accrued expenses . . . . . . . . . . . . . . . . . . (754) (946)
--------- ---------
Total adjustments . . . . . . . . . . . . . . . . . . . . . (777) (45,993)
--------- ---------
Net cash provided by (used in) operating activities . . . . . . . . 5,202 (43,338)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of equipment acquired . . . . . . . . . . . . . . . . . . . . . . (233,571) (234,303)
Receipts in excess of amounts included in income and proceeds from
sales of financing transactions . . . . . . . . . . . . . . . . . . 183,028 102,648
Net increase in notes collateralized by medical receivables . . . . . (5,913) (5,951)
Furniture and fixtures additions . . . . . . . . . . . . . . . . . . . (896) (234)
Investments and advances to investees . . . . . . . . . . . . . . . . (2,509)
--------- ---------
Net cash (used in) investing activities . . . . . . . . . . . . . . ($59,861) ($137,840)
========= =========
</TABLE>
7
<PAGE> 8
DVI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
------------------------
1996 1995
--------- ----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . $ 8,620 $ 622
Equity offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,963
Borrowings:
Warehouse facilities . . . . . . . . . . . . . . . . . . . . . . . 387,129 398,354
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 110,242
Repayments:
Warehouse facilities . . . . . . . . . . . . . . . . . . . . . . . (335,259) (284,971)
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . (53,866) (40,216)
--------- ---------
Net cash provided by financing activities . . . . . . . . . . . . . . 55,587 184,031
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 928 2,853
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . 1,953 1,714
--------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,881 $ 4,567
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,389 $ 14,532
========= =========
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,297 $ 1,130
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE> 9
DVI, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission
("Commission"). Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles ("GAAP") for
complete financial statements. The consolidated financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's latest Annual Report on Form 10-K.
In the opinion of management, the consolidated financial statements contain all
adjustments, consisting only of normal recurring adjustments, considered
necessary for a fair statement of the consolidated balance sheets as of March
31, 1996 and June 30, 1995, the consolidated statements of operations for the
three and nine month periods ended March 31, 1996 and 1995, the consolidated
statements of shareholders' equity for the period from July 1, 1994 through
March 31, 1996, and the consolidated statements of cash flows for the nine
month periods ended March 31,1996 and 1995. The results of operations for the
three month period ended March 31, 1996, are not necessarily indicative of the
results of operations to be expected for the entire fiscal year ending June 30,
1996.
Certain amounts as previously reported have been reclassified to conform to the
March 31, 1996 presentation.
NOTE 2 - NET EARNINGS PER SHARE
Primary earnings per common share are based on the weighted average number of
shares of common stock and common stock equivalents outstanding during the
respective periods. The weighted average number of shares of common stock and
common equivalents was 10,757,974, 9,842,448, 6,978,420 and 6,869,901 for
primary earnings per share for the three and nine month periods ended March 31,
1996 and 1995, respectively, and 12,125,899, 11,210,373, 7,006,198 and
6,892,038 for fully diluted earnings per share for the same periods. Fully
diluted earnings per share assumes conversion of the subordinated notes as of
the beginning of the period.
9
<PAGE> 10
NOTE 3 - HEDGE TRANSACTIONS
The Company's equipment financing transactions are structured on a fixed
interest rate basis. These transactions are funded using variable rate interim
funding facilities until permanent fixed rate funding is obtained, generally
through asset securitizations. Interest rate risk for the Company occurs
during the interim funding period when the borrowing costs are floating at a
variable rate. To minimize this interest rate risk, the Company uses hedging
techniques to fix its future long-term borrowing costs. Hedging vehicles used
include interest rate swaps which permanently lock in costs and Treasury locks.
Treasury lock transactions lock in specific rates of Treasury notes having
maturities comparable to the average life of the hedged securitization or loan
sale. This strategy stabilizes the weighted average borrowing rate until
permanent fixed rate funding occurs.
At March 31, 1996, there were $140.0 million in notional amounts of Treasury
lock transactions. The Company also had notional amounts of $30.5 million in
interest rate swaps where the Company pays a fixed rate and receives a floating
rate and $26.5 million in interest rate caps. These transactions are to hedge
the effect of interest rate changes on the cash flows repriced monthly in an
off-balance-sheet loan sale.
When the hedge positions are matched to specific borrowings relating to
securitizations, gains or losses from the hedge positions are capitalized and
amortized to interest expense over the term of the securitized transaction.
When transactions are funded through whole loan sales, gains or losses from
hedge positions are recorded as an increase or decrease in the gain on sale
proceeds.
NOTE 4 - EQUITY OFFERING
In August 1995, the Company completed a public offering of 2,875,000 shares of
its Common Stock for which it received net proceeds of $29.0 million. The net
proceeds were utilized to reduce short-term indebtedness and for general
corporate purposes.
NOTE 5 - REDEMPTION OF WARRANTS AND UNITS
In January 1996, holders of 614,355 of the Company's warrants and units issued
in February 1991 redeemed their warrants and units for shares of the Company's
Common Stock at $12.00 or $12.60 per share by the final exercise date of
January 26, 1996. As a result of the redemption, the Company received cash
proceeds of $7.4 million.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total finance and other income increased to $13.2 million in the three month
period ended March 31, 1996 from $9.6 million for the three month period ended
March 31,1995. For the nine month period ended March 31, 1996, total finance
and other income was $36.5 million as compared to $24.9 million, an increase of
$11.6 million. Amortization of finance income increased to $11.9 million from
$9.6 million for the three month period ended March 31, 1996 as compared to the
same period of the prior year. For the nine month period ended March 31, 1996,
amortization of finance income increased to $33.6 million from $24.0 million
for the same period of the prior year. The increase was primarily a result of
the overall increase in the size of the Company's portfolio.
Other income increased to $1.2 million in the three month period ended March
31, 1996 from $92,000 in the comparable prior year quarter. The increase was
mainly due to increased sources of fee income. For the nine month period ended
March 31, 1996, other income totalled $2.9 million as compared to $900,000 for
1995.
Interest expense increased to $8.2 million for the three months ended March 31,
1996 from $6.3 million for the three months ended March 31, 1995. For the nine
months ended March 31, 1996 interest expense increased to $22.5 million from
$15.5 million during the same period in the prior year. The increase in both
the three and nine month periods during the current fiscal year is primarily a
result of the growth of the Company's loan portfolio. As a percentage of
finance and other income, interest expense declined to 62.5% in the three
months ended March 31, 1996 as compared to 65.4% in the same period in the
prior year. As a percentage of finance and other income, interest expense
declined to 61.7% in the nine months ended March 31, 1996 as compared to 62.0%
in the same period a year earlier.
The gain on sale of financing transactions, net was $1.9 million in the three
month period ended March 31, 1996 versus $805,000 in the same period of the
prior year. For the nine month period, gain on sale of financing transactions,
net was $5.0 million as compared to $1.4 million in the prior year. The
increase for both periods in the current fiscal year relates to the Company's
need to fund certain loans through whole loan sales to manage borrower
concentrations.
Selling, general and administrative expenses (S,G&A) increased to $2.7 million
from $1.8 million in comparing the three month period ended March 31, 1996 to
the prior year. This increase is due primarily to $519,000 of non-recurring
costs for the defense and settlement of lawsuits primarily relating to employee
matters occurring prior to the move of the Company's headquarters to
Doylestown, Pennsylvania. Also contributing to the increase in expenses were
the increasing costs of the Company's new business lines. As a percentage of
total finance and other income, S,G&A increased to 20.9% from 19.0% for the
same period in the prior year, however, excluding the impact of the
non-recurring legal and settlement expenses ($519,000), S,G&A declined to 16.9%
from 19.0% in fiscal 1995. For the nine month period ended March 31, 1996,
S,G&A expense increased to $7.1 million from $5.5 million. As a percentage of
total finance and other income, however, S,G&A declined to 19.4% from 22.0% for
the same period last year and excluding the impact of the non-recurring legal
and settlement expenses, S,G&A declined to 17.2% from 22.0%.
The provision for possible losses on receivables was $401,000 for the three
month period ended March 31, 1996 as compared to $143,000 for the three month
period ended March 31, 1995. On a year to date basis, the provision for
possible losses on receivables was $1.5 million in 1996 versus $826,000 in
1995. On a quarterly basis, the Company evaluates the collectibility of its
receivables and records a provision for amounts deemed uncollectible. In the
opinion of Management, the provisions are adequate based on current trends in
the Company's delinquencies and losses.
Earnings before provision for income taxes increased 70.1% to $3.7 million for
the quarter ended March 31, 1996 as compared to $2.2 million for the quarter
ended March 31, 1995. For the nine month period ended March 31, 1996, earnings
before provision for income taxes increased 127.0% to $10.4 million from $4.6
million in the prior year. Net earnings increased 70.2% to $2.1 million ($0.20
per share) from $1.2 million ($0.18 per share) in comparing the quarter ended
March 31, 1996 to the quarter ended March 31, 1995. For the nine month period
ended March 31, 1996, net earnings increased 125.2% to $6.0 million ($0.61 per
share) from $2.7 million ($0.39 per share) in the prior year.
11
<PAGE> 12
FINANCIAL CONDITION
Total Shareholders' Equity increased by $42.3 million to $82.6 million at March
31, 1996 from $40.3 million at June 30, 1995. The increase was due primarily
to an offering of 2,875,000 shares of the Company's common stock which
generated net proceeds of $29.0 million, redemption of stock warrants and units
which generated cash proceeds of $7.4 million and net earnings of $6.0 million.
The Company believes that its present warehouse and permanent funding sources
are sufficient to fund the Company's current needs for its equipment financing
business. As of April 26, 1996, the Company had available an aggregate of
$278.0 million in warehouse facilities of which $224.0 million was utilized.
In addition, in January 1996, the Company completed a $25.0 million private
placement of medium term notes to finance its medical receivables business.
The Company has completed nine securitizations or other structured finance
transactions totalling $520.8 million, including two public debt issues of
$75.7 million and $90.0 million and seven private placements of debt and whole
loan sales totalling $355.1 million. The Company expects to continue to use
securitization, on both a public and private basis, as its principal means to
permanently fund its loans for the foreseeable future, except when issues of
borrower concentration exist that warrant the sale of loans.
Total equipment financing loans originated in the third quarter of fiscal 1996,
excluding the Concord Leasing purchase, were $80.5 million compared with $50.9
million in the third quarter of fiscal 1995, an increase of 58.2%. In the
Equipment Finance Group (Core business), loans originated in the third quarter
of 1996 were $79.9 million compared to $50.9 million in the third quarter of
1995, an increase of 57.0%. Excluding the Concord Leasing purchase, loans
originated by the Equipment Finance Group for the nine months ended March 31,
1996 were $235.7 million compared with $166.4 million for the same period ended
March 31, 1995, an increase of 41.6%. Net financed receivables for this
business totaled $437.9 million at March 31, 1996, an increase of $96.1 million
or 25.9% over the prior year.
In the Company's receivable financing business, new commitments of credit in
the third quarter of fiscal 1996 were $8.8 million compared with $4.8 million
in the third quarter of fiscal 1995, an increase of 83.3%. New commitments for
the nine months ended March 31, 1996 were $23.4 million compared with $15.3
million for the same period ended March 31, 1995, an increase of 52.9%.
Medical receivables funded at March 31, 1996 totaled $28.8 million, an increase
of $14.7 million or 105.0% over the prior year.
12
<PAGE> 13
PART II - OTHER INFORMATION
Items 1 through 5 have been omitted because the related information is either
inapplicable or has been previously reported.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) The Company has not filed any reports on Form 8-K during the
quarter ended March 31, 1996.
13
<PAGE> 14
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.
DVI, INC.
-------------------------------------
(Registrant)
By: /s/ MICHAEL A. O'HANLON
-------------------------------------
Michael A. O'Hanlon
President and Chief Executive Officer
By: /s/ STEVEN R. GARFINKEL
-------------------------------------
Steven R. Garfinkel
Executive Vice President and
Chief Financial Officer
Date: May 3, 1996
14
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<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JAN-01-1996
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