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 January 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 March 14, 1996, was 8,301,033.
POLYVISION CORPORATION
FORM 10-Q
INDEX
Page
PART I. FINANCIAL INFORMATION. . . . . . . . . . . . . . . . .
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
January 31, 1996 and April 30, 1995 . . . . . . .
Condensed Consolidated Statements of Operations -
Three Months Ended January 31, 1996 and 1995. . .
Condensed Consolidated Statements of Operations -
Nine Months Ended January 31, 1996 and 1995 . . .
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended January 31, 1996 and 1995 . . .
Notes to Condensed Consolidated Financial Statements -
January 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)
[CAPTION]
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January 31, April 30,
(In thousands, except share data) 1996 1995
Assets
Current assets:
Cash and cash equivalents $ 357 $ 260
Accounts receivable, less allowance
(January--$413 and April--$521) 9,191 8,358
Receivable from affiliates -- 1,532
Inventories 3,558 5,029
Costs and estimated earnings in excess
of billings on uncompleted contracts 780 823
Prepaid expenses, deposits and other 222 329
Total current assets 14,108 16,331
Property, plant and equipment:
Furniture and fixtures 120 84
Building and leasehold improvements 1,354 1,098
Machinery and equipment 2,164 1,937
3,638 3,119
Less allowance for depreciation 1,901 1,470
1,737 1,649
Goodwill, less accumulated amortization 4,018 4,126
(January--$1,214 and April--$1,106)
Other assets 47 47
Total assets $19,910 $22,153
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
[CAPTION]
<TABLE>
<S> <C> <C>
January 31, April 30,
(In thousands, except share data) 1996 1995
Liabilities and stockholders' equity
Current liabilities:
Note payable $2,500 $1,379
Current portion of long-term debt -- 1,115
Accounts payable 1,792 2,957
Accrued expenses 2,705 3,305
Billings in excess of costs and
estimated earnings on
uncompleted contracts 541 522
Total current liabilities 7,538 9,278
Promissory note 2,911 --
Royalties payable 750 750
Accrued dividends 1,530 --
Excess of net assets over purchase
price of acquisition, less
accumulated amortization
(January--$5 and April--$1) 280 1,035
Stockholders' equity:
Series A Preferred stock, $.01
par value, at liquidation
value; authorized 1,500,000
shares, issued 1,020,076 shares 25,502 25,502
Common stock, $.001 par value;
authorized 25,000,000
shares, issued and outstanding
8,301,033 shares 8 8
Capital in excess of par value 37,951 37,951
Accumulated deficit (56,560) (52,371)
Total stockholders' equity 6,901 11,090
Total liabilities and stockholders'
equity $19,910 $22,153
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
[CAPTION]
<TABLE>
<S> <C>
For The Three Months Ended
January 31,
(In thousands, except per 1996 1995
share data)
Net sales $7,354 $3,447
Cost of goods sold 5,962 2,779
Gross Profit 1,392 668
Research and development 735 848
Selling, general and
administrative 2,334 1,113
Operating (loss) (1,677) (1,293)
Other income (expense):
Interest (expense) (161) (46)
(Loss) before income taxes (1,838) (1,339)
Income taxes (benefit) -- --
Net (loss) (1,838) (1,339)
Preferred stock dividends 508 112
Loss applicable to common stock ($2,346) ($1,451)
Loss per share of common stock ($0.28) ($0.14)
Average common shares outstanding 8,301,033 10,241,922
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
[CAPTION]
<TABLE>
<S> <C>
For The Nine Months Ended
January 31,
(In thousands, except per 1996 1995
share data)
Net sales $28,417 $5,947
Cost of goods sold 21,606 4,356
Gross Profit 6,811 1,591
Research and development 2,131 2,488
Selling, general and administrative 7,026 2,169
Operating (loss) (2,346) (3,066)
Other income (expense):
Interest & other income 71 --
Interest expense (384) (129)
(Loss) before income taxes (2,659) (3,195)
Income taxes (benefit) -- --
Net (loss) (2,659) (3,195)
Preferred stock dividends 1,530 366
Loss applicable to common stock ($4,189) ($3,561)
Loss per share of common stock ($0.50) ($0.35)
Average common shares outstanding 8,301,033 10,241,922
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[CAPTION]
<TABLE>
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Nine Months Ended January 31,
(In thousands) 1996 1995
Cash flow from operating activities
Net (loss) ($2,659) ($3,195)
Non-cash expenses included in
net (loss):
Depreciation and amortization 705 548
Deferred interest 123 --
Changes in operating assets and
liabilities:
Accounts receivable (833) (218)
Inventory 1,471 86
Prepaid expenses, deposits and
other 107 126
Costs and estimated earnings
in excess of billings on
uncompleted contracts 43 (210)
Accounts payable and accrued
liabilities (2,515) (91)
Billings in excess of costs
and estimated earnings on
uncompleted contracts 19 106
Other -- (267)
Cash used for operating activities (3,539) (3,115)
Cash flow from investing activities
Purchases of property, plant and
equipment (690) (295)
Cash used for investing activities (690) (295)
Cash flow from financing activities
Borrowings (repayment) of Congress
revolving line of credit (1,379) 488
Repayments of long-term borrowings (1,115) (58)
Net receipts of receivable from
affiliate 3,584 248
Borrowings on Alpine working
capital note 2,500 --
Borrowings on Alpine promissory
note 2,788 --
Advances (repayments) from (to)
Alpine (2,052) 3,204
Cash provided by financing
activities 4,326 3,882
Net increase in cash and cash
equivalents 97 472
Cash and cash equivalents
at beginning of period 260 338
Cash and cash equivalents at
end of period $ 357 $ 810
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)
January 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"), APV, Inc. ("APV") and Posterloid
Corporation ("Posterloid"), 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.
APV, which became a wholly-owned subsidiary of the Company as a
result of the Merger (see below), 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. Posterloid, which also became a wholly-owned subsidiary
as a result of the Merger, 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.
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.
In accordance with APB No. 16, the Company has adjusted the
carrying values of certain liabilities on IDT's opening balance
sheet resulting in a $750,000 reduction of the excess of net assets
over purchase price of acquisition. 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 resulting in an increase of amounts due to Alpine by APV
of $702,000. 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 January 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, 1995.
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 $3,217 and
$4,415, work in process of $236 and $433, and finished goods of
$105 and $181 at January 31, 1996 and April 30, 1995, respectively.
NOTE 3 - CONTRACTS IN PROGRESS
The status of contract costs on uncompleted construction
contracts was as follows:
[CAPTION]
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Costs and estimated Billings in excess
earnings in of costs and
excess of billings estimated earnings Net
January 31, 1996:
Costs and estimated
earnings of $1,236 $5,724 $ 6,848
Billings 4,944 7,389
$ 780 $ (541) $ 239
April 30, 1995:
Costs and estimated
earnings of $1,416 $5,029 $8,035
Billings 4,206 8,557
$ 823 $ (522) $ 301
</TABLE>
Accounts receivable at January 31, 1996 and April 30, 1995 include
amounts billed but not yet paid by customers under retainage
provisions of approximately $2,315 and $2,366, respectively. Such
amounts are generally due within one year.
NOTE 4 - ALPINE FINANCING ARRANGEMENTS
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.
The Company entered into a further agreement with Alpine on May 24,
1995 pursuant to which Alpine agreed to fund working capital
deficiencies on a temporary basis through May 24, 1996 and in an
amount not to exceed $2,500,000, on terms and conditions mutually
agreeable to the parties, in the event the Company is not able to
obtain adequate alternative financing upon the termination of the
former revolving credit facility with Congress Financial
Corporation ("Congress") or if the availability under such
alternative financing is inadequate to cover working capital needs.
(See Note 6)
NOTE 5 - COMMITMENTS AND CONTINGENCIES
In February 1992, IDT 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, IDT and Adience signed a consent order with the
Ohio EPA and Ohio Attorney General that required IDT and Adience to
pay to the State of Ohio a civil penalty of $200,000 of which IDT
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. The work to be
conducted under the closure plan was substantially completed in
February 1995, subject to the Company receiving all necessary
approvals from the Ohio EPA. In addition, the Company is preparing
a risk assessment study which demonstrates, 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, IDT believes that it is likely
that the Ohio EPA will agree with the risk assessment study. 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 January 31, 1996, environmental accruals amounted to $39,000,
which represents management's reasonable estimate of the amounts to
be incurred in the resolution of this matter. Since 1991, Adience
and IDT have paid $1,404,000 (excluding the $200,000 civil penalty)
for the environmental cleanup related to the Alliance facility.
Under the acquisition agreement pursuant to which IDT acquired the
property from Adience in 1990, Adience represented and warranted
that, except as otherwise disclosed to IDT, 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. IDT has notified Adience that it is
claiming the right to indemnification for all costs in excess of
$250,000 incurred by IDT in this matter, and has received assurance
from Alpine that Adience will honor such claim. Adience has
reimbursed IDT $1,354,000 through October 31, 1995. If Adience is
financially unable to honor its remaining obligation, such costs
would be borne by Greensteel.
The Company is involved in 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's financial condition or results of
operations.
NOTE 6 - SUBSEQUENT EVENTS
UNION AGREEMENT
On February 28, 1996, Greensteel agreed to enter into a new three-
year labor agreement with the local bargaining unit of the
Carpenters Union at its Dixonville, Pennsylvania facility (the
"Union"), whose members voted on this date to accept such new labor
agreement. The labor agreement provides for a "working
partnership" between Greensteel management and the Union whereby
bargaining unit members will receive an aggregate of 230,000 shares
of the Company's common stock and will share in 50% of the excess
of targeted gross profit generated at the Dixonville facility. In
exchange for such equity participation and the understanding of the
importance of reducing Greensteel's cost structure to the future
growth of the business, Union members agreed to an approximate 14%
reduction in direct wages and a 6% reduction in benefits. The
labor agreement further provides for the termination of the
bargaining employees' defined benefit pension plan with any excess
funding to be distributed to its participants. Although the
Company believes this agreement will substantially enhance its
competitive position and allow it to aggressively pursue increased
market share, the issuance of common stock and the termination of
the pension plan will result in a fourth quarter non-cash charge of
approximately $700,000.
CREDIT COMMITMENT
On March 13, 1996, the Company received an executed commitment
letter from Bank of Boston Connecticut to provide various credit
facilities totaling, in the aggregate, $5,000,000 for the Company's
Greensteel subsidiary. The commitment generally provides for the
refinancing of Greensteel's working capital facility with Alpine
and requires an initial excess borrowing availability against
accounts receivable and inventory of $500,000 after giving effect
to the Alpine refinancing and any other advances. The commitment
further provides for a maturity of August 1, 1997, an interest rate
equal to the prime rate plus one percent, a first lien on all
tangible and intangible personal property of Greensteel and an
unconditional guaranty by the Company, and will be subject to
customary loan covenants and other financial coverage ratios. The
closing of the loan, which is anticipated to occur on or before
March 31, 1996, is subject to the satisfactory completion by the
Bank of customary legal and financial due diligence and the
negotiation, execution and delivery of definitive documentation for
the credit facilities.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of operations
Three and Nine Months Ended January 31, 1996, Compared With Three
and Nine Months Ended January 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:
[CAPTION]
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<S> <C> <C>
Three Months Nine Months
Ended January 31, Ended January 31,
1996 1995 1996 1995
(in thousands, except percentages)
Net sales
Posterloid $ 1,415 $1,164 $ 4,214 $3,664
Greensteel 5,939 2,283 24,203 2,283
7,354 3,447 28,417 5,947
Gross profit
Posterloid 359 349 1,214 1,272
Greensteel 1,033 319 5,597 319
1,392 668 6,811 1,591
Gross margin 18.9% 19.4% 24.0% 26.8%
Selling, general and
administrative expenses
Posterloid 416 407 1,209 1,132
Greensteel 1,452 555 4,572 555
APV and Corporate 466 151 1,245 482
2,334 1,113 7,026 2,169
Research and development
APV 735 848 2,131 2,488
Operating income (loss)
Posterloid (57) (58) 5 140
Greensteel (419) (236) 1,025 (236)
APV and Corporate (1,201) (999) (3,376) (2,970)
($1,677) ($1,293) ($2,346) ($3,066)
</TABLE>
Three and Nine Months Ended January 31, 1996 Compared with Three
and Nine Months Ended January 31, 1995
The comparative fiscal 1996 increases in net sales for the three
and nine months of $3,907,000 and $22,470,000, respectively, were
attributable to the inclusion of revenues from Greensteel's
operations subsequent to its effective purchase by Alpine on
December 21, 1994. Greensteel's comparable revenues for the three
and nine months ended January 31, 1995 were $6,508,000 and
$26,241,000, respectively. A portion of the nine month revenue
increase was attributable to an increase in Posterloid's
comparative revenues of approximately $550,000 or 15%.
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 and nine months increased on a
comparative basis by $724,000 and $5,220,000, respectively, while
the related comparative gross margin percentages declined from
19.4% to 18.9% and 26.8% to 24.0%, respectively. The increases in
the gross profit as well as the declines in the gross margin
percentages were primarily attributable to the inclusion of
Greensteel's operations in fiscal 1996. Greensteel contributed a
gross profit during the three and nine months of $1,033,000 and
$5,597,000 representing gross margin percentages of 17.4% and
23.1%, respectively. Posterloid's comparative gross profits
increased $10,000 and decreased $58,000 for the three and nine
months, while gross margins declined to 25.4% from 30.0% for the
three months and to 28.7% from 34.7% for the nine months.
Approximately $100,000 of the gross profit decrease for the nine
months ended January 31, 1995 was a result of moving and start-up
costs related to Posterloid's Viscon bank branch merchandising
operations which was moved to Wallingford, Connecticut in August
1995. Posterloid's comparative declines in gross margin also
reflects a reduction in business from the higher margin banking
sector.
Research and development expenses, excluding depreciation and
amortization charges, decreased on a comparative basis by $259,000
and $508,000 for the three and nine months ended January 31, 1996,
respectively. 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, depreciation
and amortization expenses have been accelerated while other
PolyVision technology manufacturing related costs have been
reduced.
The comparative three and nine month increases in selling, general
and administrative expense of $1,221,000 and $4,857,000,
respectively, were primarily attributable to the inclusion of
$897,000 and $4,017,000 of incremental Greensteel expenses and also
corporate overhead expenses which are estimated at $1,750,000 for
fiscal 1996.
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 on operating profit
for fiscal 1997. At Greensteel, the Company consolidated its
Portland, Oregon manufacturing facility with its Corona, California
facility in September 1995. 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 will be consolidating
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 nine months ended January 31, 1996, the principal uses
of cash included $3,539,000 for operating activities and $690,000
for investing activities. Approximately $3,130,000 of such uses
were attributable to the ongoing PolyVision development efforts at
APV and corporate overhead, including $145,000 of related capital
expenditures. Sources of cash included borrowings from Alpine of
$2,911,000 (including $123,000 of deferred interest) by APV and
$2,500,000 by Greensteel and $1,532,000 of net repayments by
Adience on amounts owed to Greensteel.
During the nine months ended January 31, 1996, Greensteel used
approximately $184,000 for its operating activities and invested
$525,000 of capital expenditures primarily attributable to an
18,000 square foot addition and laminating line at its Alliance,
Ohio facility, while Posterloid used approximately $370,000 for its
operating activities. Greensteel's use of funds consisted
primarily of liquidation of accounts payable and accruals of
$2,533,000 which was partially offset by cash flows of $1,489,000
provided from reductions in inventory levels.
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 in connection with
APV's PolyVision display technology. Borrowings under the
agreement are unsecured and bear interest at a market rate
reflecting Alpine's cost of borrowing such funds 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 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 further agreed to fund
working capital deficiencies on a temporary basis through May 24,
1996 and in an amount not to exceed $2,500,000 in the event the
Company is not able to obtain adequate alternative financing upon
the expiration of its credit facility with Congress (together with
the $5,000,000 commitment, the "Alpine Financing").
On July 21, 1995, Alpine repaid all amounts outstanding under the
Company's revolving credit facility with Congress and the Company
terminated the Congress facility. Also, on July 21, 1995, Alpine
repaid in full APV's equipment loan with the Connecticut
Development Authority. These repayments, which aggregated
$2,618,000, were advanced pursuant to the Alpine Financing noted
above. The Congress facility, which was due September 30, 1995,
was required to be repaid in connection with a financing completed
by Alpine on July 21, 1995 which included the sale of $153,000,000
of Senior Secured Notes and an $85,000,000 revolving credit
facility. Alpine's revolving credit facility provides the funds
for the Alpine Financing to the Company. On January 31, 1996, the
remaining availability under the Alpine Financing was $2,089,000.
The Company is currently reviewing its capital and operating
requirements in respect of calendar year 1996 and the fiscal year
beginning May 1, 1996. This review includes an appraisal of the
likely extent of its future PolyVision technology research and
development program, overall corporate expenses and other operating
expenses, with the objective of achieving operational break-even
status by early fiscal 1997 and establishing a revolving line of
credit with a third party lender to support its working capital
requirements. The Company believes that it will achieve these
objectives and will have adequate capital resources to conduct its
operations including any restructuring or realignment of such
operations.
On March 13, 1996, the Company received an executed commitment
letter from Bank of Boston Connecticut to provide various credit
facilities totaling, in the aggregate, $5,000,000 for the Company's
Greensteel subsidiary. The commitment generally provides for the
refinancing of Greensteel's working capital facility with Alpine
and requires an initial excess borrowing availability against
accounts receivable and inventory of $500,000 after giving effect
to the Alpine refinancing and any other advances. The commitment
further provides for a maturity of August 1, 1997, an interest rate
equal to the prime rate plus one percent, a first lien on all
tangible and intangible personal property of Greensteel and an
unconditional guaranty by the Company, and will be subject to
customary loan covenants and other financial coverage ratios. The
closing of the loan, which is anticipated to occur on or before
March 31, 1996, is subject to the satisfactory completion by the
Bank of customary legal and financial due diligence and the
negotiation, execution and delivery of definitive documentation for
the credit facilities.
The introduction of commercially viable products of APV will be
required to continue to support a sustained research and
development effort for such products. The Company will continue to
explore development and licensing opportunities for APV that
further broaden the applications of APV's PolyVision technology and
provide additional funding. In addition, the Company will explore
possibilities for private and/or public equity financings and
strategic alliances as potential capital sources in connection with
the introduction of commercially viable PolyVision products and
reducing its current dependence upon Alpine for such funding.
There can be no assurance, however, that either commercially viable
PolyVision 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
Settlement of Litigation
During the quarter ended January 31, 1996, the Company
settled a lawsuit brought by three former district sales managers
of Greensteel which had alleged discriminatory employment actions
and breach of their employment agreements. Settlement amounts were
not material to the Company and the Company received full releases
from such individuals.
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: March 14, 1996 By:/s/Alan J. Nickerson
Alan J. Nickerson
Chief Financial Officer and
Secretary
(as both a duly authorized
officer of the registrant
and the principal financial
officer or chief accounting
officer of the registrant)
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<ARTICLE> 5
<LEGEND>
Financial Data Schedule - PolyVision Corporation
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<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-3O-1996
<PERIOD-START> MAY-1-1995
<PERIOD-END> JAN-31-1996
<CASH> 357
<SECURITIES> 0
<RECEIVABLES> 9,604
<ALLOWANCES> 413
<INVENTORY> 3,558
<CURRENT-ASSETS> 14,108
<PP&E> 3,638
<DEPRECIATION> 1,901
<TOTAL-ASSETS> 19,910
<CURRENT-LIABILITIES> 7,538
<BONDS> 0
0
25,502
<COMMON> 8
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 19,910
<SALES> 7,354
<TOTAL-REVENUES> 7,354
<CGS> 5,962
<TOTAL-COSTS> 9,031
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 161
<INCOME-PRETAX> (1,838)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,838)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,838)
<EPS-PRIMARY> (.28)
<EPS-DILUTED> (.28)
</TABLE>
