<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 SECURITY EXCHANGE ACT OF 1934.
For the quarterly period ended: December 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 issuers classes of
common stock, as of the latest practical date:
Common stock, $.005 par value - 10,498,048 shares as of January 31, 1997.
<PAGE> 2
DVI, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I. FINANCIAL INFORMATION:
- -------------------------------
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets -
December 31, 1996 (unaudited) and June 30, 1996 . . . . . . . . . . . . . 3-4
Consolidated Statements of Operations -
Three and six months ended December 31, 1996 and 1995 (unaudited) . . . . 5
Consolidated Statements of Shareholders' Equity -
July 1, 1995 through December 31, 1996 (unaudited) . . . . . . . . . . . . 6
Consolidated Statements of Cash Flows -
Six months ended December 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>
DECEMBER 31, JUNE 30,
1996 1996
------------ ---------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . $ 10,287 $ 2,376
Cash and cash equivalents, restricted . . . . . . . . . . . . . . . . . . . 42,542 32,522
Amounts due from portfolio sale . . . . . . . . . . . . . . . . . . . . . . -- 54,797
Receivables:
Investment in direct financing leases and
notes secured by equipment or medical receivables:
Receivable in installments . . . . . . . . . . . . . . . . . . . . . . . 502,707 460,592
Receivable in installments-related parties . . . . . . . . . . . . . . . 17,986 16,999
Notes collateralized by medical receivables . . . . . . . . . . . . . . . 38,912 34,338
Residual valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,672 4,347
Unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (70,581) (65,722)
-------- --------
Net investment in direct financing leases and notes
secured by equipment or medical receivables . . . . . . . . . . . . . . 494,696 450,554
Less: Allowance for possible losses on receivables . . . . . . . . . . . . (4,071) (3,675)
-------- --------
Net receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490,625 446,879
Equipment on operating leases (net of accumulated depreciation of $2,253
at December 31, 1996 and $2,152) at June 30, 1996 . . . . . . . . . . . . 4,881 3,845
Furniture and fixtures (net of accumulated depreciation of $1,355 at
December 31, 1996 and $1,052) at June 30, 1996 . . . . . . . . . . . . . 2,093 2,046
Investments in investees . . . . . . . . . . . . . . . . . . . . . . . . . 6,954 7,019
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,105 4,259
Other assets (including loans to shareholders of $344 at
December 31, 1996 and June 30, 1996) . . . . . . . . . . . . . . . . . . 8,472 7,151
-------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $569,959 $560,894
======== ========
</TABLE>
3
<PAGE> 4
DVI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1996
------------ -----------
(Unaudited)
<S> <C> <C>
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36,179 $ 23,560
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . 12,428 11,650
Borrowings under warehouse facilities . . . . . . . . . . . . . . . . . 95,569 168,108
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 4,745 4,745
Long-term debt, net:
Notes payable - financial institutions . . . . . . . . . . . . . . . . 7,068 --
Securitized notes (primarily limited recourse) . . . . . . . . . . . . 309,797 253,759
Convertible subordinated notes . . . . . . . . . . . . . . . . . . . . 13,267 13,809
-------- --------
Total long-term debt, net . . . . . . . . . . . . . . . . . . . . . . . 330,132 267,568
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479,053 475,631
Shareholders' equity:
Preferred stock, $10.00 par value; authorized
100,000 shares; no shares issued . . . . . . . . . . . . . . . . . . -- --
Common stock, $0.005 par value; authorized
25,000,000 shares; outstanding 10,498,048 shares at
December 31, 1996 and 10,409,370 shares at June 30, 1996 . . . . . 52 52
Additional capital . . . . . . . . . . . . . . . . . . . . . . . . . 68,608 67,162
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 22,246 18,049
-------- --------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . 90,906 85,263
-------- --------
Total liabilities and shareholders' equity . . . . . . . . . . . . . . . $569,959 $560,894
======== ========
</TABLE>
4
<PAGE> 5
DVI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
---------------------- ----------------------
1996 1995 1996 1995
------- -------- -------- -------
<S> <C> <C> <C> <C>
Finance and other income:
Amortization of finance income . . . . . . . . . . . . . . . . $11,901 $10,639 $23,017 $21,145
Other income . . . . . . . . . . . . . . . . . . . . . . . . . 1,612 1,423 3,112 2,217
------- ------- ------- -------
Total finance and other income . . . . . . . . . . . . . . . . . 13,513 12,062 26,129 23,362
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . 9,102 7,329 17,404 14,318
------- ------- ------- -------
Net interest and other income . . . . . . . . . . . . . . . . . 4,411 4,733 8,725 9,044
Net gain on sale of financing transactions . . . . . . . . . . 2,763 1,661 4,966 3,064
------- ------- ------- -------
Net finance income . . . . . . . . . . . . . . . . . . . . . . . 7,174 6,394 13,691 12,108
Selling, general and administrative expenses . . . . . . . . . . 3,165 2,250 6,014 4,323
Provision for possible losses on receivables . . . . . . . . . . 268 634 411 1,084
------- ------- ------- -------
Earnings before provision for income taxes and
equity in net loss of investees . . . . . . . . . . . . . . . 3,741 3,510 7,266 6,701
Provision for income taxes . . . . . . . . . . . . . . . . . . . 1,482 1,432 2,978 2,848
Equity in net loss of investees . . . . . . . . . . . . . . . . 67 - 91 -
------- ------- ------- -------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,192 $ 2,078 $ 4,197 $ 3,853
======= ======= ======= =======
Net earnings per share:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.20 $ 0.21 $ 0.38 $ 0.41
======= ======= ======= =======
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . $ 0.19 $ 0.20 $ 0.37 $ 0.39
======= ======= ======= =======
</TABLE>
5
<PAGE> 6
DVI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
COMMON STOCK UNREALIZED
------------------- GAIN (LOSS) ON
$0.005 PAR VALUE AVAILABLE- TOTAL
------------------- ADDITIONAL FOR-SALE RETAINED SHAREHOLDERS'
SHARES AMOUNT CAPITAL INVESTMENTS EARNINGS EQUITY
---------- ------ ---------- -------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balances at July 1, 1995. . . . . . . . . 6,711,680 $34 $29,281 $ 1,061 $ 9,874 $40,250
Issuance of common stock upon
exercise of stock options and
warrants . . . . . . . . . . . . . . 822,690 4 8,934 8,938
Net proceeds from issuance
of common stock . . . . . . . . . . . 2,875,000 14 28,947 28,961
Sale of available-for-sale
investments, net of deferred
tax benefit of $769 . . . . . . . . . (1,061) (1,061)
Net earnings 8,175 8,175
---------- --- ------- ------- ------- -------
Balances at June 30, 1996 . . . . . . . . 10,409,370 52 67,162 -- 18,049 85,263
Issuance of common stock upon exercise
of stock options and warrants . . . . . 32,075 846 846
Conversion of subordinated notes . . 56,603 600 600
Net earnings . . . . . . . . . . . . 4,197 4,197
---------- --- ------- ------- ------- -------
Balances at December 31, 1996 . . . . . . 10,498,048 $52 $68,608 $ -- $22,246 $90,906
========== === ======= ======= ======= =======
</TABLE>
6
<PAGE> 7
DVI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
-------------------------------
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,197 $ 3,853
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Equity in net loss of investees . . . . . . . . . . . . . . . . . . 91 --
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 5,008 3,792
Additions to allowance accounts . . . . . . . . . . . . . . . . . . 411 1,084
Net gain on sale of financing transactions . . . . . . . . . . . . (4,966) (3,064)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . -- 1
Changes in assets and liabilities:
(Increases) decreases in:
Cash and cash equivalents, restricted . . . . . . . . . . . . . (10,020) 1,888
Amounts due from portfolio sale. . . . . . . . . . . . . . . . . 54,797 --
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . (2,019) (3,179)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . (1,347) (978)
Increases (decreases) in:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 12,619 14,939
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . 778 (582)
--------- --------
Total adjustments. . . . . . . . . . . . . . . . . . . . . . . . 55,352 13,901
--------- --------
Net cash provided by operating activities . . . . . . . . . . . . . . 59,549 17,754
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of equipment acquired . . . . . . . . . . . . . . . . . . . . . (212,469) (162,163)
Portfolio receipts net of amounts included in income and proceeds
from sales of financing transactions . . . . . . . . . . . . . . . 174,947 108,058
Net increase in notes collateralized by medical receivables. . . . . (3,599) (5,586)
Furniture and fixtures additions . . . . . . . . . . . . . . . . . . (350) (588)
--------- --------
Net cash (used in) investing activities . . . . . . . . . . . . . . . (41,471) (60,279)
</TABLE>
(continued)
7
<PAGE> 8
DVI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
-------------------------------
1996 1995
---------- -----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options and warrants . . . . . . . . . . . . . . . $ 846 $ 673
Equity offering . . . . . . . . . . . . . . . . . . . . . . . . . . -- 29,008
Borrowings under:
Warehouse facilities . . . . . . . . . . . . . . . . . . . . . . . 206,266 244,503
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 116,114 --
Repayments on:
Warehouse facilities . . . . . . . . . . . . . . . . . . . . . . . (278,805) (195,027)
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . (54,588) (37,963)
--------- ---------
Net cash (used in) provided by financing activities. . . . . . . . . (10,167) 41,194
--------- ---------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . 7,911 (1,331)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . 2,376 1,963
--------- ---------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . $ 10,287 $ 632
========= =========
CASH PAID DURING THE YEAR FOR:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,015 $ 14,165
========= =========
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,755 $ 1,146
========= =========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF NONCASH TRANSACTIONS:
In July 1996, $600,000 of convertible subordinated notes was converted into
common stock.
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
DVI, Inc.'s (the Company) latest annual report on Form 10-K for the fiscal year
ended June 30, 1996.
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
December 31, 1996 and June 30, 1996, the consolidated statements of operations
for the three and the six month periods ended December 31, 1996 and 1995, the
consolidated statements of shareholders' equity for the period from July 1,
1995 through December 31, 1996, and the consolidated statements of cash flows
for the six month periods ended December 31, 1996 and 1995. The results of
operations for the three and six month periods ended December 31, 1996 are not
necessarily indicative of the results of operations to be expected for the
entire fiscal year ending June 30, 1997.
Certain amounts as previously reported have been reclassified to conform to the
December 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 stock equivalents for primary earnings per share increased to 11,111,000
and 11,108,000 in the three and six month periods ended December 31, 1996 from
10,066,000 and 9,449,000 for the same prior year periods. Weighted average
shares for fully diluted earnings per share increased to 12,422,000 and
12,419,000 for the three and six month periods ended December 31, 1996 from
11,481,000 and 10,929,000 for the same periods of the prior year. Fully
diluted earnings per share assumes conversion of the subordinated notes as of
the beginning of the period.
9
<PAGE> 10
DVI, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 3 - HEDGE TRANSACTIONS
The Company's equipment loans are structured on a fixed interest rate basis.
When the Company originates equipment loans, it bases its pricing in part on
the "spread" it expects to achieve between the interest rate it charges its
equipment loan customers and the effective interest cost it will pay when it
permanently funds those loans. Increases in interest rates between the time
the loans are originated and the time they are permanently funded could narrow,
eliminate or even reverse the spread between the interest rate the Company
realizes on its equipment loans and the interest rate that the Company pays
under its warehouse facilities or under a permanent funding program. In an
attempt to protect itself against that risk, the Company uses a hedging
strategy.
The Company uses derivative financial instruments, such as forward rate
agreements, Treasury locks, and interest rate swaps, caps and collars, to
manage its interest rate risk. The derivatives are used to manage three
components of this interest rate risk: interest sensitivity adjustments,
pricing of anticipated loan securitizations and sales, and interest rate spread
protection. Forward rate agreements are for interest sensitivity adjustments
in conjunction with cash market activities and are used to extend the repricing
period of short-term floating rate warehouse facilities. Treasury locks and
collars are used to hedge the interest rate risk on anticipated loan
securitizations and sales. Treasury lock and collar transactions lock in
specific rates and a narrow range of rates, respectively, of Treasury notes
having maturities comparable to the average life of the anticipated
securitizations and sales. Interest rate swaps and caps are used for interest
rate spread protection to protect from rising interest rates in certain loan
sale facilities where the cash flows from the loans sold are fixed rate but the
borrowing costs are variable rate.
At December 31, 1996, the Company had $130.0 million in forward rate
agreements. In addition, there were $10.0 million in Treasury lock
transactions and $90.0 million in collars. The Company also had $29.5 million
in interest rate swaps and $5.0 million in interest rate caps.
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 $13.5 and $26.1 million in the
three and six month periods ended December 31, 1996 from $12.1 and $23.4
million for the three and six month periods ended December 31, 1995.
Amortization of finance income increased to $11.9 and $23.0 million from $10.6
and $21.1 million for the three and six month periods ended December 31, 1996
as compared to the same period of the prior year. The increase was primarily a
result of the overall increase in the size of the Company's loan portfolio.
Other income increased to $1.6 and $3.1 million in the three and six month
periods ended December 31, 1996 from $1.4 and $2.2 million in the comparable
prior year periods. The increases were mainly due to fees earned on larger
portfolios, and service fees earned on portfolios sold.
Interest expense increased to $9.1 and $17.4 million for the three and six
months ended December 31, 1996 from $7.3 and $14.3 million for the three and
six months ended December 31, 1995. The increase is primarily a result of the
growth of the Company's loan portfolio. As a percentage of finance and other
income, interest expense increased to 67.4% and 66.6% in the three and six
months ended December 31, 1996 as compared to 60.8% and 61.3% in the same
periods in the prior year.
Net gain on sale of financing transactions increased to $2.8 and $5.0 million
for the three and six months ended December 31, 1996 from $1.7 and $3.1 million
for the three and six months ended for the same period of the prior fiscal
year. Loans sold during the three and six month periods ended December 31,
1996 were $70.0 and $116.8 million compared to $26.1 and $58.5 million during
the same periods of the prior fiscal year.
Selling, general and administrative expenses for the second quarter ended
December 31, 1996 increased by 40.7% to $3.2 million from $2.3 million for the
same quarter of the prior fiscal year. For the six months ended December 31,
1996 selling, general and administrative expenses increased by 39.1% to $6.0
million from $4.3 million for the same prior year period. The increase in the
Company's selling, general and administrative expenses was primarily related to
the expansion of the Company's new domestic and international businesses and
the Company's 32.3% growth in managed net financed assets. This growth, in
turn, resulted in a 11.4% increase in personnel to 137 employees from 123 one
year earlier.
The provision for possible losses on receivables was $268,000 and $411,000 for
the three and six month periods ended December 31, 1996 as compared to $634,000
and $1.1 million for the three and six month periods ended December 31, 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 and equity in net loss of investees
increased 6.6% and 8.4% to $3.7 and $7.3 million for the three and six month
periods ended December 31, 1996 compared to $3.5 and $6.7 million for the same
periods ended December 31, 1995. Net earnings increased 5.5% and 8.9% to $2.2
and $4.2 million from $2.1 and $3.9 million in comparing the three and six
month periods ended December 31, 1996 to the same periods ended December 31,
1995. Net earnings per share decreased 4.8% and 7.3% to $0.20 and $0.38 from
$0.21 and $0.41 when comparing the three and six month periods ended December
31, 1996 to December 31, 1995. The decrease in net earnings per share results
from the weighted average number of shares used in calculating net earnings per
share increasing 10.3% and 17.6% to 11.1 million shares in both the three and
six month periods ended December 31, 1996 from 10.1 and 9.4 million shares in
the three and six month periods ended December 31, 1995.
11
<PAGE> 12
FINANCIAL CONDITION
Total shareholders' equity increased by $5.6 million to $90.9 million at
December 31, 1996 from $85.3 million at June 30, 1996. The increase was due
primarily to net earnings of $4.2 million, exercise of stock options and
warrants for $846,000 and conversion of subordinated notes for $600,000.
The Company believes that its present warehouse and permanent funding sources
are sufficient to fund the Company's current needs for its equipment and
medical receivables financing businesses.
At December 31, 1996, the Company had available an aggregate of $280.5 million
in warehouse facilities of which $95.6 million was utilized. During the first
quarter of fiscal 1997, the Company established a $100.0 million warehouse
facility with an investment banking firm to fund certain equipment loans which
are to be securitized. In addition, the Company secured a $50.0 million
warehouse credit facility to be used for securitizing its medical accounts
receivable-backed loans to healthcare providers.
On July 31, 1996, the Company completed a transaction raising $29.0 million
using as collateral the equity position the Company retains when it securitizes
equipment loans and leases.
On December 31, 1996, the Company obtained a $7.1 million facility with a
foreign bank to fund a portfolio of medical equipment contracts in Turkey.
On January 29, 1997, the Company obtained a $5.0 million facility to be used
mostly for loans and leases that do not conform to securitization criteria.
On January 30, 1997, the Company completed a public offering of $100.0 million
principal amount of 9 7/8% Senior Notes due 2004. Interest is payable
semiannually on February 1 and August 1 of each year, commencing on August 1,
1997. The Notes will be redeemable at the option of the Company in whole or in
part at any time on or after February 1, 2002 at specified redemption prices.
The proceeds from the sale will be used (i) to fund the Company's growth,
including increasing the amount of equipment and medical receivables loans the
Company can fund, (ii) to develop the Company's new international operations,
including the purchase of receivables originated outside the United States and
investment in joint ventures, (iii) for other working capital needs and (iv)
for general corporate purposes.
Through December 31, 1996, the Company has completed fourteen securitizations
or other structured finance transactions for medical equipment financings
totaling $902.1 million, including two public debt issues totaling $165.6
million and twelve private placements of debt and whole loan sales totaling
$736.5 million. The Company expects for the foreseeable future to continue to
use securitization, on both a public and private basis, as its principal means
to permanently fund its loans.
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) None.
(b) The Company has not filed any reports on Form 8-K
during the quarter ended December 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: February 12, 1997
14
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