<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 10 - K/A-1
(Mark One)
/X/ AMENDMENT NO.1 TO ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
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 CHARTER)
DELAWARE 22-2722773
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NO.)
500 HYDE PARK
DOYLESTOWN, PENNSYLVANIA 18901
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (215) 345-6600
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF CLASS ON WHICH REGISTERED
- -------------- -----------------------------
<S> <C>
COMMON STOCK
PAR VALUE $.005 PER SHARE NEW YORK STOCK EXCHANGE, INC.
9 7/8% SENIOR NOTES DUE 2004 NEW YORK STOCK EXCHANGE, INC.
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
TITLE OF CLASS
WARRANTS TO PURCHASE COMMON STOCK
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Yes /X/ No / /
The aggregate market value of the Common Stock (its only voting stock)
held by nonaffiliates of the Registrant as of August 29, 1997 was approximately
$91,892,419 based upon the last reported sale price of the Common Stock on the
New York Stock Exchange on that date.
As of August 29, 1997, the Registrant had 10,545,848 shares of Common
Stock outstanding.
<PAGE> 2
EXPLANATORY NOTE
This Amendment No.1 to the Annual Report on Form 10-K of DVI, Inc., a
Delaware corporation ("DVI" or the "Company"), is being filed to provide certain
information with respect to Items 10, 11, 12 and 13 which will not be
incorporated by reference to the Company's definitive proxy statement as such
statement will not be filed with the Securities and Exchange Commission on or
before October 28, 1997.
2
<PAGE> 3
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
As of June 30, 1997, the directors of DVI, Inc. were:
<TABLE>
<CAPTION>
NAME: AGE: POSITION:
- ----- ---- ---------
<S> <C> <C>
Gerald L. Cohn 69 Director since 1986
John E. McHugh 69 Director since 1990
Michael A. O'Hanlon 50 Chief Executive Officer since 1995
and Director since 1993
Nathan Shapiro 61 Director since 1995
William S. Goldberg 41 Director since 1995
Harry T.J. Roberts 63 Director since 1996
</TABLE>
Mr. Cohn is a Director of the Company and has served in that capacity
since 1986. Mr. Cohn is a private investor and consultant. Mr. Cohn presently
serves as a director of Niagara Steel Corporation and Diametrics Medical
Corporation. In addition to his responsibilities as a Director, Mr. Cohn also
acts as a consultant to the Company and serves on the Company's senior credit
committee. Mr. Cohn is the father of Cynthia J. Cohn, a Company Vice President.
Mr. McHugh is a Director of the Company and has served in that capacity
since 1990. Mr. McHugh was formerly the President of, and now serves in a
marketing and public relations capacity with, James McHugh Construction Company,
a firm he has been associated with since 1954.
Mr. O'Hanlon is the Company's Chief Executive Officer since November
1995 and the Company's President since September 1994. Mr. O'Hanlon became a
Director in November 1993. From the time Mr. O'Hanlon joined the Company in
March 1993 and until September 1994 he served as Executive Vice President of the
Company. Before joining the Company, for nine years, he served as President and
Chief Executive Officer of Concord Leasing, Inc. ("Concord Leasing"), a major
source of medical, aircraft, ship and industrial equipment financing.
Previously, Mr. O'Hanlon was a senior executive with Pitney Bowes Credit
Corporation.
Mr. Shapiro is a Director of the Company and has served in that
capacity since 1995. Mr. Shapiro is a founder and President of SF Investments,
Inc., a registered broker/dealer in business since 1972. Since 1979 he has been
a director of Baldwin & Lyons, Inc., a publicly traded property and casualty
insurance company. Mr. Shapiro is also the Chairman of the Investment Committee.
He is a trustee for CT&T Funds, a family of mutual funds sponsored by Chicago
Title and Trust Company. Mr. Shapiro is also a director of Amli Realty Co.
Mr. Goldberg is a Director of the Company and has served in that
capacity since 1995. Mr. Goldberg is currently Managing Director of GKH
Partners, L.P., a private equity investment and venture capital partnership with
which he has been involved since 1988. Mr.
3
<PAGE> 4
Goldberg is current or former director and/or executive officer of several
public and privately-owned companies controlled by GKH Partners, L.P.
Mr. Roberts is a Director of the Company and has served in that
capacity since 1996. In addition to his responsibilities as a Director, Mr.
Roberts also acts as a consultant to the Company. Mr. Roberts is President of
Nakebro, Boston, a privately-owned property group and since 1995 has been a
director of Calmar Inc., Los Angeles, the largest manufacturer of non-aerosol
plastic dispensing systems in the world. Prior to these posts, Mr. Roberts held
senior positions in international banking for thirty-five years. Since 1978 he
has worked in the United States as General Manager of Midland International
Bank, London and Svenska Handelsbanken, Stockholm. Mr. Roberts is a Fellow of
the Chartered Institute of Bankers.
Information regarding the Company's Executive Officer is set forth in
Part I of this Form 10-K.
COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended June 30, 1997, the Company paid $2,500 to
non-employee directors for each meeting attended in person. During the fiscal
year ended June 30, 1997, the Board of Directors met a total of four times.
Each of the incumbent directors attended all meetings of the Board and
committees of which he was a member held during the period he served on the
Board or such committee.
The Board of Directors has a standing Audit Committee and a
Compensation Committee. The Board has no nominating committee.
The Audit Committee consists of Messrs. Cohn, McHugh and Roberts and
makes recommendations concerning the engagement of the Company's independent
auditors, consults with the independent auditors concerning the audit plan and
thereafter concerning the auditor's report and management letter. During the
fiscal year ended June 30, 1997, the Audit Committee met one time.
The Compensation Committee consists of Messrs. Cohn, Goldberg, McHugh
and Roberts and did not meet at any time during the fiscal year ended June 30,
1997 other than in the normal course of the Board of Directors' meetings. The
Compensation Committee reviews the annual compensation rates of the officers and
key employees of the Company, administers the Company's compensation plans and
makes recommendations in connection with such plans.
4
<PAGE> 5
INDEMNIFICATION OF OFFICERS AND DIRECTORS
As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation limits the personal liability of a Director of the
Company for monetary damages for breach of fiduciary duty of care as a Director.
Liability is not eliminated for (i) any breach of the Director's duty of loyalty
to the Company or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
unlawful payment of dividends or stock purchases or redemptions pursuant to
Section 174 of the Delaware General Corporation Law, or (iv) any transaction
from which the Director derived an improper personal benefit.
COMPLIANCE WITH REPORTING REQUIREMENTS OF SECTION 16 OF THE EXCHANGE ACT
Under Section 16(a) of the Exchange Act, the Company's Directors,
executive officers and any persons holding 10% or more of the Company's Common
Stock are required to report their ownership of Common Stock and any changes in
that ownership to the Securities and Exchange Commission (the "SEC") and to
furnish the Company with copies of such report. Specific due dates for these
reports have been established and the Company is required to report in this
report any failure to file on a timely basis by such persons. Based solely upon
a review of copies filed with the SEC during the fiscal year ended June 30,
1997, all persons subject to the reporting requirements of Section 16(a) filed
all required reports on a timely basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Cohn, Goldberg, McHugh
and Roberts. No Directors other than those currently serving on the Board of
Directors served as members of the Compensation Committee during the last
completed fiscal year. No member of that Committee, other than Mr. Roberts was
an officer or employee of the Company or any of its subsidiaries during the
year. None of the executive officers of the Company has served on the board of
directors or on the compensation committee of any other entity, any of whose
officers served either on the Board of Directors or on the Compensation
Committee of the Company.
5
<PAGE> 6
ITEM 11 EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company for the
fiscal years 1997, 1996 and 1995 of the Company's Chief Executive Officer and
the four most highly compensated executive officers who were serving as
executive officers at the end of the 1997 fiscal year.
<TABLE>
<CAPTION> Long-Term Compensation
Annual Compensation Awards
--------------------- ---------------------------------
Name and Principal Position Year Salary(1) Bonus Stock Options and Grants (Shares)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael A. O'Hanlon 1997 $301,154 $50,000 30,000
President, Chief Executive 1996 $279,808 -0- -0-
Officer and Director 1995 $228,654 -0- 132,000
Steven R. Garfinkel 1997 $201,924 $25,000 15,000
Executive Vice President and 1996(1) $134,615 -0- 25,000
Chief Executive Officer 1995 -0- -0- -0-
Richard E. Miller 1997 $190,890 -0- 15,000
Executive Vice President 1996 $267,198 -0- 10,000
1995 $256,247 -0- -0-
Anthony J. Turek 1997 $170,654 $12,000 15,000
Executive Vice President 1996 $159,038 $35,000 10,000
1995 $142,621 -0- -0-
Alan J. Velotta 1997 $146,750 $50,000 25,000
Vice President 1996 $120,385 $50,000 25,000
1995 $110,846 $40,000 -0-
</TABLE>
- ----------------------------
(1) Mr. Garfinkel became an employee of the Company in September, 1996.
OPTION GRANTS IN 1997 FISCAL YEAR
During the 1997 fiscal year, options to purchase 100,000 shares of
Common Stock were granted to the executive officers listed in the Summary
Compensation Table.
6
<PAGE> 7
AGGREGATE OPTION EXERCISES IN THE LAST
FISCAL YEAR END AND FISCAL YEAR END OPTION VALUES
The following table sets forth further information for the executive
officers listed in the Summary Compensation Table with respect to previously
granted options.
<TABLE>
<CAPTION>
Shares Number of Securities Underlying Value of Unexercised
Acquired on Value Unexercised Options at In-The-Money Options at
Name Exercise (#)(1) Realized ($)(1) Fiscal Year-End(#) Fiscal Year-End($)(2)
- ----------------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael A. O'Hanlon -0- N/A 68,250 51,750 $447,844 $140,281
Steven R. Garfinkel -0- N/A 8,333 31,667 $34,374 $68,751
Richard E. Miller -0- N/A 73,333 21,667 $380,833 $9,167
Anthony J. Turek -0- N/A 62,583 27,417 $565,797 $51,698
Alan J. Velotta -0- N/A 15,833 44,167 $51,770 $36,355
</TABLE>
(1) During the 1997 fiscal year, no stock options were exercised by the
executive officers listed in the Summary Compensation Table.
(2) Represents the difference between the closing price of the Company's
Common Stock on June 30, 1997 and the exercise price of the options.
EMPLOYMENT AGREEMENTS AND INCENTIVE COMPENSATION
The Company has not entered into any employment agreements with any of
its executive officers or employees and, other than the Company's Incentive
Stock Option Plan (the "Plan"), has no long-term incentive compensation plan.
The Company, however, does provide short- term incentive compensation to certain
executive officers through the award of quarterly and/or annual bonuses based
upon certain agreed-upon performance criteria.
On November 20, 1995 the Company entered into a Severance Agreement
(the "Severance Agreement") with David L. Higgins, the Company's former Chairman
and Chief Executive Officer, pursuant to which Mr. Higgins agreed to continue to
perform certain consulting and other services for the Company through December
1, 1997 (the "Termination Date"). Pursuant to the Severance Agreement the
Company agreed (i) to pay Mr. Higgins an aggregate of $275,000 through the
Termination Date, in installments consistent with the Company's regular payroll
schedule; (ii) to provide Mr. Higgins, at the Company's sole expense, with
healthcare and life insurance benefits consistent with those provided to the
Company's executive officers; and (iii) to reimburse Mr. Higgins for certain
expenses incurred by him while performing services for the Company.
The Board of Directors and stockholders of the Company adopted the Plan
in 1986. The Plan has been amended to increase the number of shares of Common
Stock for which options could be issued. Currently, the total number of shares
of Common Stock pursuant to which options could be issued is 1,250,000, of which
options representing 758,800 shares of Common Stock are outstanding. Under the
Plan, the number of shares which may be issued on exercise of the options is
subject to adjustment by reason of stock splits or other similar capital events.
7
<PAGE> 8
The Plan provides for the granting of nonstatutory stock options, as
well as incentive stock options to certain key employees and provides that the
option price per share for options granted under the Plan must be at least 100%
of the fair market value of Common Stock on the date such options were granted.
Options are not transferrable under the Plan other than by will or by laws of
descent and distribution, and during the participant's lifetime are exercisable
only by the participant.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding beneficial
ownership of shares of Common Stock as of August 29, 1997 by each stockholder
known to the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, each director, each of the officers named in
the Summary Compensation Table and all current officers and directors as a
group. Persons named in the following table have sole voting and investment
powers with respect to all shares shown as beneficially owned by them, subject
to community property laws where applicable and other information contained in
the footnotes to the table. Information with respect to beneficial ownership is
based upon the Company's Common Stock records and data supplied to the Company
by its stockholders.
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Owner of Beneficial Ownership Percent of Class
- ------------------------------------ ----------------------- ----------------
<S> <C> <C>
Gerald L. Cohn*** 415,471.00(1)(2)(3) 3.9%
Steven R. Garfinkel*** 23,866.00(4) *
William S. Goldberg*** - -
John E. McHugh*** 50,400.00(1) *
Richard E. Miller** 83,800.00(5)(6) *
Michael A. O'Hanlon*** 94,755.00(7)(8)(9) *
Harry T. J. Roberts*** 2,000.00 *
Nathan Shapiro*** 57,200.00 *
Anthony J. Turek** 94,666.00(10) *
Alan J. Velotta*** 32,949.00(11) *
Ronald Baron**** 2,289,250.00(12) 21.7%
CIBC Trust Company
(Bahamas) Limited***** 2,200,720.00(13)(14) 19.5%
All directors & officers as a
group (13 persons) 976,071.00(1)(2)(3)(4)(5)(7) 8.9%(15)
(10)(11)(12)(15)
</TABLE>
- ----------------------------------
* Less than 1%
** 4041 MacArthur Boulevard, Suite 401, Newport Beach, California 92660
*** 500 Hyde Park, Doylestown, Pennsylvania 18901
**** 767 Fifth Avenue, New York, New York 10153
***** P.O. Box N-3933, Nassau, Bahamas
(footnotes continued on next page)
8
<PAGE> 9
(1) Includes 20,000 shares of Common Stock which may be purchased on the
exercise of warrants granted to directors of the Company.
(2) Does not include (a) 36,500 shares of Common Stock held of record by
Cynthia J. Cohn, who is a Vice President of the Company and one of Mr.
Cohn's daughters, in her capacity as trustee of the Cynthia J. Cohn
Revocable Trust and (b) 9,750 shares of Common Stock held of record by
a trust established for the benefit of Clayton Schmidt, Mr. Cohn's
grandchild, as to all of which Mr. Cohn disclaims any beneficial
interest.
(3) Includes 75,472 shares of Common Stock which may be exercised upon
conversion of $800,000 of the Company's 9 1/8% Convertible Subordinated
Notes due 2002.
(4) Includes 21,666 shares of Common Stock which may be purchased on the
exercise of stock options granted under the Plan.
(5) Includes 81,666 shares of Common Stock which may be purchased on the
exercise of stock options granted under the Plan.
(6) Includes 134 shares of Common Stock held through the Employee Savings
Plan.
(7) Includes 84,500 shares of Common Stock which may be purchased on the
exercise of stock options granted under the Plan.
(8) Includes 1,655 shares of Common Stock held through the Employee Savings
Plan.
(9) Does not include 132,000 shares of Common Stock which Mr. O'Hanlon, a
former shareholder of MEF Corp., is entitled to receive in connection
with the Company's acquisition of MEF Corp.
(10) Includes 94,666 shares of Common Stock which may be purchased on the
exercise of stock options granted under the Plan.
(11) Includes 32,499 shares of Common Stock which may be purchased on the
exercise of stock options granted under the Plan.
(12) According to Amendment No. 5 to a Schedule 13D dated June 20, 1997 (the
"Schedule 13D") filed with the Securities and Exchange Commission Mr.
Baron holds (i) 1,613,200 shares of Common Stock in his capacity as a
controlling person of BAMCO, Inc., a registered investment adviser
controlled by Mr. Baron, which advises Baron Asset Fund and Baron
Growth & Income Fund; (ii) 456,000 shares of Common Stock in his
capacity as a controlling person of Baron Capital Management, Inc., a
registered investment adviser; (iii) 220,00 shares of Common Stock in
his capacity as the general partner of Baron Capital Partners; and (iv)
50 shares of Common Stock personally. According to the Schedule 13D,
Mr. Baron disclaims beneficial ownership of the shares of Common Stock
described in subclauses (i) and (ii) of the preceding sentence.
(13) Held by Canadian Imperial Bank of Commerce Trust Company (Bahamas)
Limited ("CIBC"), as trustee of trusts for the benefit of the
grandchildren of A.N. Pritzker, deceased. Does not include 56,339
shares of Common Stock owned by a partnership comprised of trusts for
the benefit of members of the Pritzker Family. CIBC is not the trustee
of such trusts. As used herein, the term "Pritzker Family" refers to
the lineal descendants of Nicholas J. Pritzker, deceased.
(14) Includes 716,981 shares of Common Stock held by CIBC, as trustee for
certain trusts which may be exercised upon conversion of $7,600,000 of
the Company's 9 1/8% Convertible Subordinated Notes due 2002.
(15) Includes shares which may be purchased on the exercise of stock options
granted under the Plan, in addition to those shares that may be
purchased on the exercise of options and warrants set forth in
footnotes (1), (4), (5), (7), (10) and (11).
9
<PAGE> 10
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
DIAGNOSTIC IMAGING SERVICES, INC. The Company owns approximately 4.5
million shares of convertible preferred stock (Series F and Series G) of
Diagnostic Imaging Services, Inc. ("DIS"), a Company that operates diagnostic
imaging equipment. The DIS preferred stock has an aggregate liquidation
preference of approximately $4.5 million, is redeemable at the option of DIS for
approximately $4.5 million plus accrued dividends, and is convertible into
common stock of DIS at $2.42 per share for the Series F convertible preferred
stock and $1.00 per share for the Series G convertible preferred stock. In
addition, the majority shareholder of DIS has the right to repurchase the DIS
convertible preferred stock for approximately $4.5 million plus accrued
dividends through September 2001. DIS is a customer of the Company.
MEDICAL EQUIPMENT FINANCE CORP. In January 1993, the Company acquired
all of the outstanding shares of common stock of Medical Equipment Finance Corp.
("MEF Corp.") from MEFC Partners L.P., a Delaware limited partnership ("MEFC
Partners"). Under the terms of the original purchase agreement, the purchase
price was payable before October 15, 1998 in cash or Common Stock of the
Company, as elected by the Company. As initially structured, the purchase price
was to be determined as a percentage of the after-tax earnings of the MEF Corp.
division of the Company during the sixty-six month period following the date of
acquisition. During the year ended June 30, 1995, management entered into
negotiations with the former shareholders of MEF Corp. to revise certain terms
of the purchase agreement. The Company and the former shareholders of MEF Corp.
agreed in June 1995 to set the purchase price of MEF Corp. at 400,000 shares of
Common Stock (the "MEFC Shares"). Michael A. O'Hanlon (President, Chief
Executive Officer and a Director of the Company), Dominic A. Guglielmi (formerly
employed by the Company as a Vice President) and Mark H. Idzerda (an employee of
DVI Financial Services) are general partners of MEFC Partners and are entitled
to receive 132,000, 88,000 and 80,000 of the MEFC Shares, respectively. The
remaining 100,000 MEFC Shares are to be distributed among approximately 12 other
individuals. In addition, the MEFC Partners have been granted certain
registration rights with respect to the MEFC Shares.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
DVI, INC.
(Registrant)
Date: October 27, 1997 By: /s/MICHAEL A. O'HANLON
-----------------------
Michael A. O'Hanlon
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Principal Financial Officer:
/s/STEVEN R. GARFINKEL Executive Vice President and October 27, 1997
- ----------------------------
Steven R. Garfinkel Chief Financial Officer
Principal Accounting Officer:
/s/JOHN P. BOYLE Vice President and October 27, 1997
- ----------------------------
John P. Boyle Chief Accounting Officer
Directors:
/s/GERALD L. COHN
- ----------------------------
Gerald L. Cohn October 27, 1997
/s/WILLIAM S. GOLDBERG
- ----------------------------
William S. Goldberg October 27, 1997
/s/JOHN E. MCHUGH
- ----------------------------
John E. McHugh October 27, 1997
/s/MICHAEL A. O'HANLON
- ----------------------------
Michael A. O'Hanlon October 27, 1997
/s/HARRY T. J. ROBERTS
- ----------------------------
Harry T. J. Roberts October 27, 1997
/s/NATHANIEL SHAPIRO
- ----------------------------
Nathaniel Shapiro October 27, 1997
</TABLE>
