SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 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 No. 1-10555
POLYVISION CORPORATION
(Exact name of registrant as specified in its charter)
New York 13-3482597
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
866 North Main Street Extension
Wallingford, Connecticut 06492
(Address of principal executive offices) (Zip Code)
(203) 294-6906
(Registrant's telephone number, including area code)
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
The number of shares outstanding of the issuer's Common Stock, par
value $.001 per share, as of September 14, 1996, was 8,530,073.
POLYVISION CORPORATION
FORM 10-Q
INDEX
Page
PART I . FINANCIAL INFORMATION . . . . . . . . . . . . . . . .
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
July 31, 1996 and April 30, 1996 . . . . . . . . . .
Condensed Consolidated Statements of Operations -
Three Months Ended July 31, 1996 and 1995. . . . . .
Condensed Consolidated Statements of Cash Flows -
Three Months Ended July 31, 1996 and 1995. . . . . .
Notes to Condensed Consolidated Financial Statements -
July 31, 1996. . . . . . . . . . . . . . . . . . . .
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations . .
PART II OTHER INFORMATION. . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
July 31, April 30,
(In thousands, except share data) 1996 1996
Assets
Current assets:
Cash and cash equivalents $ 124 $ 670
Accounts receivable, less allowance
(July--$587 and April--$575) 9,379 8,027
Inventories 3,636 3,735
Costs and estimated earnings in excess
of billings on uncompleted contracts 1,170 823
Prepaid expenses, deposits and other 524 345
Total current assets 14,833 13,600
Property, plant and equipment:
Furniture and fixtures 149 142
Building and leasehold improvements 1,321 1,320
Machinery and equipment 1,921 2,080
3,391 3,542
Less allowance for depreciation 2,072 2,140
Net property, plant and equipment 1,319 1,402
Goodwill, less accumulated amortization 3,945 3,981
(July--$1,287 and April--$1,106)
Total assets $20,097 $18,983
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
July 31, April 30,
(In thousands, except share data) 1996 1996
Liabilities and stockholders' equity
Current liabilities:
Short-term borrowings $1,790 $1,252
Current maturities of long-term debt 240 220
Accounts payable 3,112 2,877
Accrued expenses 2,299 2,667
Accrued dividends 2,550 2,040
Billings in excess of costs and
estimated earnings on uncompleted
contracts 469 503
Total current liabilities 10,460 9,559
Long-term debt, less current maturities 920 980
Promissory note 3,881 3,335
Deferred interest 119 --
Royalties payable 750 750
Excess of net assets over purchase
price of acquisition, less
accumulated amortization (July--$12
and April--$10) 273 275
Stockholders' equity:
Series A Preferred stock, $.01
par value, at liquidation
value; authorized 1,500,000
shares, issued 1,029,253
shares 25,731 25,731
Common stock, $.001 par value;
authorized 25,000,000
shares, issued and outstanding
8,530,073 shares 9 9
Capital in excess of par value 38,524 38,524
Accumulated deficit (60,570) (60,180)
Total stockholders' equity 3,694 4,084
Total liabilities and stock-
holders' equity $20,097 $18,983
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
For The Three Months Ended
July 31,
(In thousands, except per share data) 1996 1995
Net sales $9,642 $10,619
Cost of goods sold 6,784 7,749
Gross profit 2,858 2,870
Research and development 329 745
Selling, general and administrative 2,272 2,365
Operating profit (loss) 257 (240)
Other income (expense):
Interest (expense) (201) (93)
Interest and other income 64 71
Income (loss) before income taxes 120 (262)
Income taxes -- --
Net income (loss) 120 (262)
Preferred stock dividends 510 511
Loss applicable to common stock ($390) ($773)
Loss per share of common stock ($0.05) ($0.09)
Average common shares outstanding 8,530,073 8,301,033
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Three Months Ended July 31,
(In thousands) 1996 1995
Cash flow from operating
activities
Net income (loss) $120 ($262)
Non-cash expenses included in
net income (loss):
Depreciation and amortization 120 181
Compensation expense for stock grants 23 --
Deferred interest 119 8
Changes in operating assets and
liabilities:
Accounts receivable (1,352) (1,606)
Inventory 99 554
Prepaid expenses, deposits and other (179) 144
Costs and estimated earnings in
excess of billings on uncompleted
contracts (347) (278)
Accounts payable and accrued
liabilities (156) (606)
Billings in excess of costs and
estimated earnings on uncompleted
contracts (34) 124
Cash used for operating activities (1,587) (1,741)
Cash flow from investing activities
Purchases of property, plant and
equipment (38) (161)
Proceeds from sale of equipment 35 --
Cash used for investing activities (3) (161)
Cash flow from financing activities
Short-term borrowings 538 828
Repayments of long-term borrowings (40) (1,115)
Net receipts of receivable from affiliates -- 1,362
Borrowings on Alpine promissory note 546 847
Cash provided by financing activities 1,044 1,922
Net increase (decrease) in cash and
cash equivalents (546) 20
Cash and cash equivalents
at beginning of period 670 260
Cash and cash equivalents at end
of period $ 124 $ 280
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
July 31, 1996
(Dollars in thousands, unless otherwise noted)
NOTE 1 - BASIS OF PRESENTATION
PolyVision Corporation (formerly Information Display Technology,
Inc. or ("IDT")), through its wholly-owned subsidiaries,
Greensteel, Inc. ("Greensteel"), Posterloid Corporation
("Posterloid"), and APV, Inc. ("APV"), collectively the "Company",
is engaged in the development, manufacture and sale of information
display products. Greensteel, formerly a division of PolyVision
Corporation, is engaged in the manufacture and sale of custom-
designed and engineered writing, projection and other visual
display surfaces (such as porcelain chalkboards and marker boards),
custom cabinets, and work station and conference center casework.
Posterloid, which became a wholly-owned subsidiary as a result of
the Merger (see below), is engaged in the manufacture and sale of
indoor and outdoor menuboard display systems to the fast food and
convenience store industries, and changeable magnetic signs used
principally by banks to display interest rates, currency exchange
rates and other information. APV, which also became a wholly-owned
subsidiary of the Company as a result of the Merger, is engaged in
the research, development, licensing and initial manufacturing and
testing of a proprietary technology known as PolyVisionTM, a
materials technology with electrochemical and physical
characteristics that allow it to address applications in a number
of display products markets.
On December 21, 1994, The Alpine Group, Inc. ("Alpine") acquired an
additional 82 percent of the outstanding common stock of Adience,
Inc. ("Adience") to increase its ownership in Adience to
approximately 87 percent, resulting in an indirect ownership in IDT
of approximately 70 percent. Also on December 21, 1994, IDT
entered into a Merger Agreement with Alpine and two of its
subsidiaries, APV and Posterloid (together, "IDG"), whereby the
Company would merge with IDG and the Company would be named
PolyVision Corporation. Because Alpine controlled both IDG and
IDT, the Merger, which was completed on May 24, 1995, resulted in
a new reporting entity which is being accounted for as a
reorganization of entities under common control. The merged entity
has adopted IDG's April 30 fiscal year end and, in order to provide
timely meaningful information, the accompanying financial
statements are presented as if the merger occurred on April 30,
1995. The accompanying financial statements give effect to push-
down accounting to adjust IDT's accounting basis to fair value
related to the December 21, 1994 acquisition of Adience by Alpine.
All significant intercompany transactions and accounts have been
eliminated in the accompanying consolidated financial statements.
In connection with the Merger, APV transferred its previously
wholly-owned subsidiary, PolyVision France S.A., to Alpine at its
book value. Also in connection with the Merger, Alpine distributed
to its shareholders 76% of its ownership in the Company resulting
in Alpine retaining a 19% ownership of the Company's common stock.
The accompanying unaudited condensed consolidated financial
statements of the Company have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. The results of operations for the three month
period ended July 31, 1996, are not necessarily indicative of the
results that may be expected for a full fiscal year.
The accompanying unaudited condensed consolidated financial
statements should be read in conjunction with the Company's audited
financial statements included in the Company's annual report on
Form 10-K for the year ended April 30, 1996.
Loss applicable to common stock is computed by dividing net income
available to common stock by the weighted average number of shares
outstanding.
NOTE 2 - INVENTORIES
Inventories consist primarily of raw materials of $3,084 and
$3,206, work in process of $371 and $365, and finished goods of
$181 and $164 at July 31, 1996 and April 30, 1996, respectively.
NOTE 3 - CONTRACTS IN PROGRESS
The status of contract costs on uncompleted construction contracts
was as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Costs and esti- Billings in
mated earnings excess of costs
in excess of and estimated
billings earnings Net
July 31, 1996:
Costs and estimated
earnings of $1,319 $6,287 $ 5,583
Billings 5,117 6,052
$1,170 $ (469) $ 701
April 30, 1996:
Costs and estimated
earnings of $1,425 $5,132 $ 6,551
Billings 4,309 7,054
$ 823 $ (503) $ 320
</TABLE>
Accounts receivable at July 31, 1996 and April 30, 1996 include
amounts billed but not yet paid by customers under retainage
provisions of approximately $1,614 and $1,754, respectively. Such
amounts are generally due within one year.
NOTE 4 - FINANCING ARRANGEMENTS
On April 25, 1996, Greensteel, as borrower, and the Company, as
guarantor, entered into a $5,000,000 Master Credit Agreement (the
"Agreement") with the Bank of Boston Connecticut to provide
financing for Greensteel's general working capital requirements.
The Agreement provides for a revolving credit facility of up to
$3,800,000 based upon eligible accounts receivable and inventory as
defined (unused and available borrowings were $1,831,000 at July
31, 1996) at the Bank's prime rate plus 1% (9.25% at July 31, 1996)
and a $1,200,000 term loan payable in equal monthly installments of
$20,000 with interest at the Bank's prime rate plus 1 1/2% (9.75%
at July 31, 1996) beginning June 1, 1996 through August 1, 1997,
with the remaining unpaid principal amount of $900,000 due on
August 31, 1997. The Agreement terminates August 31, 1997 and
provides for renewal at the Bank's sole and absolute discretion.
Substantially all of Greensteel's assets are pledged as collateral
for the credit facility. The Agreement requires Greensteel's
compliance with certain financial covenants including maintenance
of a minimum tangible net worth and minimum debt service coverage,
as defined, and a restriction on dividends to the Company, which
requires maintenance of a modified debt service coverage after
taking into account any such dividends, and on other transfers of
funds to the Company or its other subsidiaries. The Company is a
guarantor of the Agreement and has pledged Greensteel's common
stock in connection therewith. Greensteel is in compliance with
all material covenants at July 31, 1996.
On May 24, 1995, the Company entered into an agreement with Alpine
pursuant to which the Company may borrow from time to time, prior
to May 24, 1997, up to $5,000,000 from Alpine to be used by the
Company to fund its working capital needs, including research,
development and commercialization activities of APV's PolyVisionTM
display technology. Borrowings under the agreement are unsecured
and bear interest at an initial rate of 11%, with interest payable
semiannually in cash (but added to the outstanding principal amount
for the first 18 months). The principal balance outstanding is due
on May 24, 2005, subject to mandatory prepayment of principal and
interest, in whole or in part, from the net cash proceeds of any
public or private, equity or debt financing made by the Company at
any time before maturity. Alpine's obligation to lend such funds
to the Company is subject to a number of conditions, including
review by Alpine of the proposed use of such funds by the Company.
Alpine has informed the Company that this agreement is not in
conflict with the covenants of any other of its financing
arrangements currently in effect.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
In 1994, Reliance Insurance Company of New York (the "Plaintiff")
commenced an action in the Supreme Court of the State of New York,
County of Suffolk, against several defendants including the Company
seeking money damages based on the purported sale and delivery by
defendants of some 860 insulated metal curtain wall panels
manufactured by the Company. Plaintiff has alleged that such
panels were defective in their design and manufacture. In its
original complaint, Plaintiff seeks damages of $385,000 allegedly
already incurred and unspecified future damages. The alleged sales
fall into two categories, an original sale in 1987 and two or more
sales in 1991 and 1992 of so-called replacement panels. Among the
theories of liability advanced by Plaintiff are breach of contract,
breach of express warranty and implied warranty. Pursuant to
orders of the Court, the causes of action based on the 1987
transaction were dismissed on statute of limitation grounds.
However, Plaintiff has been granted leave to serve an amended
complaint to allege, among other things, a claim under the New
Jersey Consumer Fraud Act (which might permit treble damages),
while preserving the right of the defendants, including the Company
to challenge the applicability of such Act. Since an amended
complaint has not yet been served, Plaintiff's theories of
liability and damages are as yet not completely certain. Moreover,
since an answer to the amended complaint, if served, remains to be
served, and, as well, discovery has yet to commence, it is
premature to render an estimate of the outcome of this litigation.
In February 1992, the Company was cited by the Ohio Environmental
Protection Agency (the Ohio EPA) for violations of Ohio's hazardous
waste regulations, including speculative accumulation of waste and
illegal disposal of hazardous waste on the site of its Alliance,
Ohio, facility.
In December 1993, the Company and Adience signed a consent order
with the Ohio EPA and Ohio Attorney General that required the
Company and Adience to pay to the State of Ohio a civil penalty
of $200,000 of which the Company paid $175,000 and Adience paid
$25,000. In addition, the consent order required the payment of
stipulated penalties of up to $1,000 per day for failure to satisfy
certain requirements of the consent order, including milestones in
the closure plan. Removal and remediation activities as
contemplated under the consent order have been completed.
The Company has submitted risk assessment reports which
demonstrate, in management's opinion, that no further cleanup
actions will be required on the remaining property area not
addressed under the closure plan. Based on administrative
precedent, the Company believes that it is likely that the Ohio EPA
will agree with the risk assessment reports. If such an agreement
is not reached, additional costs may have to be incurred to
complete additional remediation efforts. Although there are no
assurances that additional costs will not have to be incurred, the
Company believes that such costs will not need to be incurred. At
July 31, 1996, environmental accruals amounted to $10,000, which
represents management's reasonable estimate of the amounts to be
incurred in the resolution of this matter. Since 1991, Adience and
the Company have paid $1,433,000 (excluding the $200,000 civil
penalty) for the environmental cleanup related to the Alliance
facility.
Under the acquisition agreement pursuant to which the Company
acquired the property from Adience in 1990, Adience represented and
warranted that, except as otherwise disclosed to the Company, no
hazardous material had been stored or disposed of on such property.
No disclosure of storage or disposal of hazardous material on the
site was made; accordingly, Adience is required to indemnify the
Company for any losses in excess of $250,000. The Company has
notified Adience that it is claiming the right to indemnification
for all costs in excess of $250,000 incurred by the Company in this
matter, and has received assurance from Alpine that Adience will
honor such claim. Adience has reimbursed the Company $1,383,000
through July 31, 1996. If Adience is financially unable to honor
its remaining obligation, such costs would be borne by the Company.
The Company is involved in other various matters of litigation
incidental to the normal conduct of its business. In management's
opinion, the disposition of such litigation will not have a
material adverse impact on the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JULY 31, 1996, COMPARED WITH THREE MONTHS ENDED
JULY 31, 1995
The following table summarizes, for the periods presented, the
respective amounts of Greensteel, APV (except as to Net sales and
Gross profit, of which there were none) and Posterloid:
<TABLE>
<CAPTION>
<S> <C>
Three Months
Ended July 31,
1996 1995
(in thousands, except percentages)
Net sales
Posterloid. . . . . . . . . . . $1,843 $ 1,533
Greensteel . . . . . . . . . . 7,799 9,086
9,642 10,619
Gross profit
Posterloid. . . . . . . . . . . 736 574
Greensteel . . . . . . . . . . 2,122 2,296
2,858 2,870
Gross margin . . . . . . . . . . . 29.6% 27.0%
Selling, general and administrative
expenses
Posterloid . . . . . . . . . . 440 392
Greensteel . . . . . . . . . . 1,666 1,620
APV and Corporate . . . . . . . 166 353
2,272 2,365
Research and development
APV . . . . . . . . . . . . 329 745
Operating income (loss)
Posterloid . . . . . . . . . . 296 182
Greensteel . . . . . . . . . . 456 676
APV and Corporate . . . . . . . (495) (1,098)
$ 257 ($ 240)
</TABLE>
THREE MONTHS ENDED JULY 31, 1996 COMPARED WITH THREE MONTHS ENDED
JULY 31, 1995
The comparative fiscal 1997 decrease in net sales for the three
months of $977,000 was attributable to a $1,287,000 or 14.2%
decrease in revenues from Greensteel's operations which was
partially offset by an increase in Posterloid's comparative
revenues of approximately $310,000 or 20.2%. Greensteel's
comparative decrease in sales was attributable to a $1,542,000 or
24% decrease in comparable contract sales, offset slightly by an
11% comparable increase in direct sales. Direct sales through
dealers and distributors, which do not require extended project
management and are not subject to construction cost overruns or
increased working capital requirements for performance bonds and
retainages, increased to 38% of sales for the three months ended
July 31, 1996 from 30% for the prior comparable period. In
addition, third party purchases of products not manufactured by
Greensteel and related to contract sales declined 60% from the
comparable prior period from $904,000 to $410,000, consistent with
the continued concentration on Greensteel manufactured products.
Greensteel is currently in the process of realigning its sales
force and expanding its dealer/distributor network and is
aggressively seeking to build its contract backlog in selective
regional markets. Greensteel's contract backlog was $12,259,000 at
July 31, 1996 as compared to $15,628,000 at July 31, 1995.
Posterloid's comparative increase in sales was primarily due to two
specific customer programs. Greensteel's business is seasonal and
a disproportionate amount of its sales and most of its operating
profits occur in the first and second fiscal quarters of the year.
This occurs as a result of increased business activity in the
summer months when schools are closed and construction activity
increases.
Gross profit for the three months decreased on a comparative basis
by $12,000 while the related comparative gross margin percentage
increased to 29.6% from 27.0%. The increase in the gross margin
percentage was attributable to both the effect of the new union
agreement at Greensteel's Dixonville facility which took effect on
May 1, 1996 and higher volume absorption of fixed costs at
Posterloid. Greensteel's comparative gross profit decreased
$174,000 on a gross margin percentage of 27.2% as compared to 25.3%
for the prior comparable period. Posterloid's comparative gross
profit increased $162,000 for the three months, while gross margin
increased to 39.9% from 37.4% for the three months.
Research and development expenses decreased on a comparative basis
by $416,000 for the three months ended July 31, 1996. The Company
has determined that the most cost effective method in the event of
full scale production of PolyVisionTM displays is through third
party subcontractors. In this regard, the Company has decided not
to exercise its option to renew the lease at its Wallingford,
Connecticut facility which expires in December 1996 and the Company
is currently exploring alternate sites. In connection with this
decision, PolyVisionTM technology manufacturing related costs have
been reduced.
The comparative three month decrease in selling, general and
administrative expense of $93,000 was primarily attributable to
expense reductions at Greensteel net of certain expenses which were
classified as corporate expenses in the prior comparable period.
Since the Merger in May 1995, management of the Company has focused
on the deployment of its asset base and its cost structure with a
near-term goal of achieving a break-even level of operating profit
for fiscal 1997. An expansion of Greensteel's Alliance, Ohio
facility was completed in February 1996 to allow for more efficient
laminating and distribution of its porcelain enameled chalkboards
and markerboards. In connection with its February 28, 1996 three-
year union agreement, Greensteel consolidated its Landis, North
Carolina facility into its Dixonville, Pennsylvania facility during
the first quarter of fiscal 1997. In addition to the efficiencies
expected from the foregoing, cost savings under the new labor
agreement and adoption of a new health care plan will further
enhance Greensteel's competitive position. In this regard,
management of the Company intends to focus its resources on
aggressively increasing its market share in fiscal 1997 for both
its Greensteel and Posterloid subsidiaries.
Liquidity and Capital Resources
During the three months ended July 31, 1996, the principal uses of
cash included approximately $1,587,000 used for operating
activities and approximately $3,000 for investing activities.
Approximately $596,000 of such uses were attributable to the
ongoing PolyVisionTM technology development efforts at APV and
corporate expenses and approximately $40,000 was used to repay
indebtedness. Sources of cash included approximately $546,000 of
long term borrowings from Alpine, $538,000 of short-term borrowings
and a decrease in cash balances of $546,000 used to finance
seasonal working capital growth at Greensteel.
During the three months ended July 31, 1996, Greensteel used
approximately $1,089,000 for its operating activities while
Posterloid provided approximately $98,000 from its operating
activities.
On April 25, 1996, Greensteel, as borrower, and the Company, as
guarantor, entered into a $5,000,000 Master Credit Agreement (the
"Agreement") with the Bank of Boston Connecticut to provide
financing for Greensteel's general working capital requirements.
The Agreement provides for a revolving credit facility of up to
$3,800,000 based upon eligible accounts receivable and inventory as
defined (unused and available borrowings were $1,831,000 at July
31, 1996) at the Bank's prime rate plus 1% (9.25% at July 31, 1996)
and a $1,200,000 term loan payable in equal monthly installments of
$20,000 with interest at the Bank's prime rate plus 1 1/2% (9.75%
at July 31, 1996) beginning June 1, 1996 through August 1, 1997,
with the remaining unpaid principal amount of $900,000 due on
August 31, 1997. The Agreement terminates August 31, 1997 and
provides for renewal at the Bank's sole and absolute discretion.
Substantially all of Greensteel's assets are pledged as collateral
for the credit facility. The Agreement requires Greensteel's
compliance with certain financial covenants including maintenance
of a minimum tangible net worth and minimum debt service coverage,
as defined, and a restriction on dividends to the Company, which
requires maintenance of a modified debt service coverage after
taking into account any such dividends, and on other transfers of
funds to the Company or its other subsidiaries. The Company is a
guarantor of the Agreement and has pledged Greensteel's common
stock in connection therewith. Greensteel was in compliance with
all such financial covenants at July 31, 1996.
On May 24, 1995, the Company entered into an agreement with Alpine,
pursuant to which the Company may borrow from time to time, until
May 24, 1997, up to $5,000,000 from Alpine to be used by the
Company to fund its working capital needs, including research,
development and commercialization activities in connection with
APV's PolyVisionTM display technology. Borrowings under the
agreement are unsecured and bear interest at a market rate
reflecting Alpine's cost of borrowing such funds (13% at July 31,
1996), with interest payable semiannually in cash (but added to the
outstanding principal amount for the first 18 months). The
principal balance outstanding will be due on May 24, 2005, subject
to mandatory prepayment of principal and interest, in whole or in
part, from the net cash proceeds of any public or private, equity
or debt financing made by the Company at any time before maturity.
Alpine's obligation to lend such funds to the Company is subject to
a number of conditions, including review by Alpine of the proposed
use of such funds by the Company. Alpine's revolving credit
facility provides the funds for it to extend such financing to the
Company. While no assurance can be given, management believes that
such financing availability representing $1,119,000 of remaining
funding commitment at July 31, 1996, together with anticipated
support from Posterloid's operations, will be sufficient to meet
the needs of APV and its PolyVisionTM development efforts for the
next 12 months, which are anticipated to require approximately
$1,000,000.
In the long term, the successful introduction of commercially
viable products will be required for APV to continue to support a
sustained research and development effort at its current level.
APV will continue to explore development and licensing
opportunities that further broaden the applications of its
PolyVisionTM technology and provide additional funding. In
addition, management will also consider the private and/or public
equity markets as potential capital sources in connection with the
goal of commercializing its PolyVisionTM technology and reducing
its dependence upon Alpine. There can be no assurance, however,
that commercially viable products will be introduced or that such
additional sources of funding will be available on reasonable
terms.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information included in Note 5, "Commitments and
Contingencies" of the Notes to Condensed Consolidated
Financial Statements is included herein by reference.
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K:
None
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.
POLYVISION CORPORATION
Date: September 12, 1996 By:/s/Lawrence W. Hay
Lawrence W. Hay
Vice President-Finance and
Secretary (as both a duly
authorized officer of the
registrant and the principal
financial officer or chief
accounting officer of the
registrant)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA STATEMENT - POLYVISION CORPORATION
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> APR-30-1996
<PERIOD-END> JUL-31-1996
<CASH> 124
<SECURITIES> 0
<RECEIVABLES> 9,379
<ALLOWANCES> 587
<INVENTORY> 3,636
<CURRENT-ASSETS> 14,833
<PP&E> 3,391
<DEPRECIATION> 2,072
<TOTAL-ASSETS> 18,983
<CURRENT-LIABILITIES> 10,460
<BONDS> 0
0
25,731
<COMMON> 9
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 20,097
<SALES> 9,642
<TOTAL-REVENUES> 9,642
<CGS> 6,784
<TOTAL-COSTS> 9,385
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (201)
<INCOME-PRETAX> 120
<INCOME-TAX> 0
<INCOME-CONTINUING> 120
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 120
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
