EX-99.2 3 y02792exv99w2.txt MONTHLY OPERATING REPORT: DVI FINANCIAL SERVICES INC. EXHIBIT 99.2 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re DVI Financial Services Inc. Case No. 03-12657 (MFW) Reporting Period: 09/01/04 - 09/30/04 MONTHLY OPERATING REPORT File with Court and submit copy to United States Trustee within 20 days after end of month Submit copy of report to any official committee appointed in the case.
DOCUMENT EXPLANATION REQUIRED DOCUMENTS FORM NO. ATTACHED ATTACHED ------------------ -------- -------- -------- Schedule of Cash Receipts and Disbursements MOR - 1A x Bank Reconciliations (or copies of Debtor's bank reconciliations) MOR - 1B x Statement of Operations MOR - 2 Balance Sheet MOR - 3 Status of Postpetition Taxes MOR - 4 x Copies of IRS Form 6123 or payment receipt (See Tax Affidavit) x Copies of tax returns filed during reporting period (See Tax Affidavit) x Summary of Unpaid Postpetition Debts MOR - 4 x Listing of aged accounts payable x Accounts Receivable Aging MOR - 5 x Debtor Questionnaire MOR - 5 x
I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents are true and correct to the best of my knowledge and belief. RESPONSIBLE PARTY: /s/ Montgomery W. Cornell Vice President ---------------------------------- ------------------------------- Signature of Responsible Party Title Montgomery W. Cornell 10/27/2004 ---------------------------------- ------------------------------- Printed Name of Responsible Party Date PREPARER: /s/ John Franks Operations Manager ---------------------------------- ------------------------------- Signature of Preparer Title John Franks 10/27/2004 ---------------------------------- ------------------------------- Printed Name of Preparer Date IN RE DVI FINANCIAL SERVICES INC. CASE NUMBER: 03-12657 (MFW) REPORTING PERIOD: 09/01/04 - 09/30/04 SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS (in thousands)
CURRENT MONTH CUMULATIVE FILING TO DATE ------------- ------------------------- DEBTOR NON-DEBTOR (K) ACTUALS ------ -------------- ------- CASH BEGINNING 1,082 (20) 7,565 ------ --- -------- RECEIPTS Owned Domestic Lease Payments 730 -- 29,435 Securitization Collections / (Transfers) (a) -- -- 240,701 Repayment From / (To) Trusts -- -- 89 Owned International Lease Payments (b) -- -- 16,040 International Bank Transfers In (l) -- -- 3,691 Receipts on Behalf of Affiliates -- -- 5,914 DIP Advances 2,250 -- 46,870 Other Receipts (c) 2,806 -- 77,692 ------ --- -------- TOTAL RECEIPTS 5,786 -- 420,432 ------ --- -------- DISBURSEMENTS Payroll (d)(e) (78) -- (7,102) Benefits (d)(e) 12 -- (824) Building Costs (f) (47) -- (1,466) Equipment Costs (13) -- (1,411) Auto, Travel & Entertainment (1) -- (195) Outside Services (g) (26) -- (928) Sales & Use Taxes 2 -- (1,337) Debt Repayment to Banks (b)(h) -- -- (13,499) International Bank Transfers Out (l) -- -- (4,667) Servicer Disbursements (a) -- -- (244,450) Payments on Behalf of Affiliates (i)(p) (1,025) (63) (26,538) Other Expense (j) (55) -- (2,888) DIP Repayments (3,730) -- (93,694) DIP Operating Reserve (o) -- -- (14,395) DIP Fees -- -- (3,108) Professional Fees (p) (444) -- (9,971) U.S. Trustee Quarterly Fees -- -- (144) ------ --- -------- TOTAL DISBURSEMENTS (5,405) (63) (426,617) ------ --- -------- NET CASH FLOW 381 (63) (6,185) ------ --- -------- CASH END OF MONTH 1,463 (83) 1,380 ------ --- --------
DISBURSEMENTS FOR CALCULATING U.S. TRUSTEE QUARTERLY FEES: (FROM CURRENT MONTH DEBTOR COLUMN) TOTAL DISBURSEMENTS (5,405) Transfers to Debtor in Possession Accounts -- Estate Disbursements Made By Outside Sources (i.e. from escrow accounts) -- Payments on Behalf of Affiliates (i) 1,025 TOTAL DISBURSEMENTS FOR CALCULATING U.S. TRUSTEE QUARTERLY FEES (4,380)
See footnotes following MOR - 1B. MOR - 1A IN RE DVI FINANCIAL SERVICES INC. CASE NUMBER: 03-12657 (MFW) REPORTING PERIOD: 09/01/04 - 09/30/04 BANK RECONCILIATIONS (in thousands)
DEBTOR ACCOUNTS NON-DEBTOR ACCOUNTS CURRENT MONTH --------------- ------------------- ------------- DEBTOR OPERATING INTERNATIONAL(M) RESTRICTED (K) LOCKBOX (A) ACTUALS ---------------- ---------------- --------------- ----------- ------- CASH BEGINNING OF MONTH 271 811 (20) 0 1,062 ------ ------ ------ ------ ------ RECEIPTS Owned Domestic Lease Payments 730 -- -- -- 730 Securitization Collections / (Transfers) (a) -- -- -- -- -- Repayment From / (To) Trusts -- -- -- -- -- Owned International Lease Payments (b) -- -- -- -- -- International Bank Transfers In (l) -- -- -- -- -- Receipts on Behalf of Affiliates -- -- -- -- -- DIP Advances 2,250 -- -- -- 2,250 Other Receipts (c) 2,806 -- -- -- 2,806 ------ ------ ------ ------ ------ TOTAL RECEIPTS 5,786 -- -- -- 5,786 ------ ------ ------ ------ ------ DISBURSEMENTS Payroll (d)(e) (78) -- -- -- (78) Benefits (d)(e) 12 -- -- -- 12 Building Costs (f) (47) -- -- -- (47) Equipment Costs (13) -- -- -- (13) Auto, Travel & Entertainment (1) -- -- -- (1) Outside Services (g) (8) (18) -- -- (26) Sales & Use Taxes 2 -- -- -- 2 Debt Repayment to Banks (b)(h) -- -- -- -- -- International Bank Transfers Out (l) -- -- -- -- -- Servicer Disbursements (a) -- -- -- -- -- Payments on Behalf of Affiliates (i)(p) (1,025) -- (63) -- (1,088) Other Expense (j) (52) (3) -- -- (55) DIP Repayments (3,730) -- -- -- (3,730) DIP Operating Reserve (o) -- -- -- -- -- DIP Fees -- -- -- -- -- Professional Fees (p) (444) -- -- -- (444) U.S. Trustee Quarterly Fees -- -- -- -- -- ------ ------ ------ ------ ------ TOTAL DISBURSEMENTS (5,384) (21) (63) -- (5,468) ------ ------ ------ ------ ------ NET CASH FLOW 402 (21) (63) -- 318 ------ ------ ------ ------ ------ CASH END OF MONTH 673 790 (83) 0 1,380 ------ ------ ------ ------ ------ BANK BALANCE 417 790 -- 0 1,207 Deposits in Transit -- -- -- -- -- Outstanding Checks 173 -- -- -- 173 Non-Debtor Funds in Debtor Accounts (k) 83 -- (83) -- -- Other (n) -- -- -- -- -- ADJUSTED BANK BALANCE 673 790 (83) 0 1,380 ------ ------ ------ ------ ------
See footnotes on following page. MOR - 1B DVI FINANCIAL SERVICES INC. REPORTING PERIOD: 09/01/04 - 09/30/04 CASE NUMBER: 03-12657 (MFW) MOR 1-A & 1-B FOOTNOTES (all $ amounts in thousands) (a) Effective February 3, 2004 DVI Financial Services, Inc. (DFS), case #03-12657 transferred its servicing responsibility to Lyon Financial Services, Inc. d/b/a US Bancorp Portfolio Services. As a result, lockbox activity has abated over time and is zero for the current period. (b) DFS has international branches in the United Kingdom and Turkey. Both branches have lease receivables from customers and debt payable to local banks. In September, $0 of customer payments was received in the Debtors bank accounts (see footnote h). (c) The $2,806 of other receipts consists primarily of $500 for the seventh of twelve monthly installments for payment of Servicer Rights arising from the transfer of servicing to US Bancorp (effective February 3, 2004), approximately $464 in proceeds from the sale of Macon, GA property, approximately $1,250 from the refinancing of a customer lease by Asian affiliate MEC, approximately $192 of Turkish asset sale proceeds, and approximately $400 of proceeds from the transfer of a membership interest in Atlantic Imaging Group. Please see sales appendix #1 for further information on the Macon, GA and American Imaging transactions. All other asset sale transactions were disclosed in prior periods. (d) The number of employees at the end of the period as compared to pre-petition: July 2003 231 September 2004 6
(e) The benefit-to-payroll (not including KERP) relationship, with an allocation of benefits similar to payroll was 7.7% for DFS. Expenses were adjusted for Cobra costs to be reimbursed and payments for prior period workers compensation. (f) Building costs of $47 consist of the following: Jamison rent expense - $23, rental storage - $4, and repossessed property repairs - $28. Allocation to DVI Business Credit Corporation (BC), case #03-12658 - ($8). (g) Outside services costs of $26 are comprised of the following: workout/collections consultants and counsel expenditures - $8, payroll processing costs - $1, and International - $18. Allocation to BC - ($1). (h) Certain foreign banks directed DFS foreign lessees to make payments directly to foreign banks which has resulted in the paydown of senior secured pre-petition debt owed to these foreign banks. Principal payments made from DFS accounts total $0 during September. (i) The $1,088 paid by DFS on behalf of affiliates consists of the allocation of professional fees and Jamison-based costs to BC of $477 and DVI, Inc. (case #03-12656) of $444, the direct payment of BC invoices for $104 and International payments of $63. (j) Other expenses of $55 are comprised of the following: electronic data processing - $35, staffing and clerical - $12, insurance costs $8, bank service charges - $2, other miscellaneous - $3, International - $3 and the allocation to BC - ($8). (k) Securitization collections and servicer disbursements are non-Debtor restricted funds passing through an unrestricted collection account (No. 6540). Procedures are in place to sweep these funds to the appropriate place in a timely manner. Due to the transfer of servicing, such activity will be limited in the current and future periods. (l) Transfers of $0 were received in the international branch accounts during September. These transfers are primarily for cash management within DFS and also for transfers from foreign subsidiaries. Transfers of $0 were paid out of the international branch accounts during September. These transfers are primarily for cash management within DFS and also for transfers to foreign subsidiaries. (m) Accounts for international branches of DFS (see footnote b). (n) Primarily returned wires and checks. (o) Estimated by DFS per DIP loan agreement approved by the Court. DIP balance, including accrued interest, as of the end of September is $66.5 million. (p) Unpaid non-ordinary course professional fees outstanding as of the end of September 2004 are estimated at $4,029. The fees consist of both Court required holdback amounts and unpaid invoices. DVI, Inc. (case #03-12656), DFS and BC have determined to allocate professional fees paid by DVI Financial Services Inc. in equal parts to each Debtor. In re DVI Financial Services Inc. Case No. 03-12657 (MFW) Reporting Period: 09/01/04 - 09/30/04 STATUS OF POSTPETITION TAXES (A) (in thousands) The beginning tax liability should be the ending liability from the prior month or, if this is the first report, the amount should be zero.
Beginning Amount Ending Tax Withheld or Amount Tax Liability Accrued Paid Liability --------- ------- ---- --------- FEDERAL Withholding -- 28 (28) -- FICA-Employee -- 5 (5) -- FICA-Employer(b) -- 5 (5) -- Unemployment -- -- -- -- Income (c)(d) 34,173 -- -- 34,173 Other -- -- -- -- Total Federal Taxes 34,173 38 (38) 34,173 STATE AND LOCAL Withholding -- 3 (3) -- Sales (b)(e) 3,188 -- -- 3,188 Excise -- -- -- -- Unemployment -- -- -- -- Real Property (e) -- -- -- -- Personal Property (e) -- -- -- -- Florida Doc Stamp -- -- -- -- Franchise -- -- -- -- Other: Local Income Tax Withholding -- 1 (1) -- Total State and Local 3,188 4 (4) 3,188 TOTAL TAXES 37,361 42 (42) 37,361
SUMMARY OF UNPAID POSTPETITION DEBTS (in thousands)
ACCOUNTS PAYABLE AGING (F) AMOUNT -------------------------- ------ 0 - 30 days 175 31 - 60 days -- 61 - 90 days -- 91+ days -- TOTAL ACCOUNTS PAYABLE 175
Explain how and when the Debtor intends to pay any past-due postpetition debts. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- See footnotes on following page. MOR-4 DVI FINANCIAL SERVICES INC. REPORTING PERIOD: 09/01/04 - 09/30/04 CASE NUMBER: 03-12657 (MFW) MOR 4 FOOTNOTES (a) Debtor is required to periodically pay state and federal income taxes, state franchise taxes, state and county personal property taxes, and license taxes. Per the tax affidavit, the Debtor submitted all required postpetition tax returns due during the reporting period. (b) Debtor has obtained authorization from the Bankruptcy Court to pay such tax liabilities. Amounts collected and remitted in any reporting period will vary due to variations in sales tax reporting periods and filing due dates. (c) Deferred taxes on income result from temporary differences between the reporting of income for financial statement and tax reporting purposes. Such differences arise principally from recording gains on sales of financing transactions, provision for losses on receivables, valuation allowances and lease transactions in which the operating lease method of accounting is used for tax purposes and the financing lease method is used for financial statement purposes. Under the operating lease method, leased equipment is recorded at cost and depreciated over the useful life of the equipment, and lease payments are recorded as revenue when earned. (d) Includes non-Debtor transfer of tax benefit to DVI Financial Services, Inc. from subsidiaries. At the end of its fiscal year on June 30, 2004, the Debtor discontinued the accrual for income tax benefits since the reorganization estate has sold or discontinued operations that were functioning during the prior fiscal year. (e) US Bancorp Portfolio Services, as part of the transfer of servicing, has administrative responsibility after January 2004 for sales taxes and property taxes. (f) Includes only postpetition trade payables. See footnote (p) in the MOR 1-A & 1-B footnotes for information regarding outstanding amounts due to professionals. In re DVI Financial Services Inc. Case No. 03-12657 (MFW) Reporting Period: 09/01/04 - 09/30/04 ACCOUNTS RECEIVABLE AGING (in thousands)
ACCOUNTS RECEIVABLE AGING (A)(B)(C) AMOUNT ----------------------------------- ------ Debtor-owned contract receivables 141,993
DEBTOR QUESTIONNAIRE
MUST BE COMPLETED EACH MONTH YES NO ---------------------------- --- -- 1. Have any assets been sold or transferred outside the normal course of business this reporting period? If yes, provide an explanation below. (SEE ATTACHED APPENDICES) X 2. Have any funds been disbursed from any account other than a debtor in possession account this reporting period? If yes, provide an explanation below. X 3. Have all postpetition tax returns been timely filed? If no, provide an explanation below. X 4. Are workers compensation, general liability and other necessary insurance coverages in effect? If no, provide an explanation below. X
-------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- See footnotes on following page. MOR 5 DVI FINANCIAL SERVICES INC. REPORTING PERIOD: 09/01/04 - 09/30/04 CASE NUMBER: 03-12657 (MFW) MOR 5 FOOTNOTES (all $ amounts in thousands) (a) Due to the transfer of servicing from DVI Financial Services Inc. ("DFS") to US Bancorp Portfolio Services ("USBPS") as of February 3, 2004, the Debtor no longer records activity for contract receivables within their portfolio management software (both owned and non-debtor). As a result, DFS is only able to provide aggregate receivable balances for contracts as of February 29, 2004. In addition, since DFS has ceased servicing non-debtor owned contracts in securitization pools, only the receivables balance for Debtor-owned contracts that are direct assets of the estate will be provided. Further information into the performance of securitized contracts can be collected through publicly filed documents filed with the Securities Exchange Commission ("SEC"). Such information can be retrieved by visiting the SEC website at www.sec.gov. (b) Consists of the following Debtor-owned contract receivables categories: Serviced by USBPS $ 80,163 Serviced by DFS and other parties 11,180 International owned contract receivables 50,650 ------ Total $141,993
(c) Receivables are listed at par, but are not expected to be recovered at par and will likely be severely impaired. DVI Financial Services Inc. Case No. 03-12657 (MFW) Reporting Period: 09/01/04 - 09/30/04 DVI FINANCIAL SERVICES INC. TAX AFFIDAVIT To the best of my knowledge, DVI Financial Services Inc. has filed all tax returns and made all required tax payments on a timely basis, except for pre-petition liabilities not authorized for payment by the Bankruptcy Court as well as $3.6 million of pre-petition sales and use tax liabilities which have been authorized but for which sufficient funds are not yet available. 10/27/2004 /s/ Montgomery W. Cornell ------------------------ -------------------------------- Date Signature of Responsible Party Montgomery W. Cornell APPENDIX 1 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re DVI Financial Services Inc. Case No. 03-12657 (MFW) Reporting period: 09/01/04 - 09/30/04 REPORT OF THE SALE, DISPOSAL, OR ABANDONMENT OF ESTATE ASSETS Asset Description: DVI Financial Services Inc. was granted authority by the Court on September 8, 2004 to sell its owned property in Macon, Georgia to Goldstar Medical Services, Inc. for $464,000 net of transaction costs. Effective Date: 09/08/04 Compensation: $464,000 ========
APPENDIX 2 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re DVI Financial Services Inc. Case No. 03-12657 (MFW) Reporting period: 09/01/04 - 09/30/04 REPORT OF THE SALE, DISPOSAL, OR ABANDONMENT OF ESTATE ASSETS Asset Description: DVI Financial Services Inc., as a result of a settlement of adversary proceeding, payoff of lien and exchange of releases ordered by the Court on September 9, 2004, received $400,000 from the transfer of a 50% membership interest in Atlantic Imaging Group, LLC. Effective Date: 09/09/04 Compensation: $400,000 ========