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 October 31, 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 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.)
29 Laing Avenue
Dixonville, Pennsylvania 15734
(Address of principal executive offices) (Zip Code)
412-254-4321
(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 December 12, 1997, was 8,540,762.
POLYVISION CORPORATION
FORM 10-Q
INDEX
Page
PART I. FINANCIAL INFORMATION . . . . . . . . . . . . . .
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
October 31, 1997 and April 30, 1997. . . . . . . .
Condensed Consolidated Statements of Operations -
Three Months Ended October 31, 1997 and 1996 . . .
Condensed Consolidated Statements of Operations -
Six Months Ended October 31, 1997 and 1996 . . . .
Condensed Consolidated Statement of Cash Flows -
Three Months Ended October 31, 1997 and 1996 . . .
Condensed Consolidated Statements of Cash Flows -
Six Months Ended October 31, 1997 and 1996 . . . .
Notes to Condensed Consolidated Financial
Statements - October 31, 1997. . . . . . . . . . .
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]
<TABLE>
<S> <C> <C>
October 31, April 30,
(In thousands, except share data) 1997 1997
Assets
Current assets:
Cash and cash equivalents $ 238 $ 415
Accounts receivable, less allowance
(October--$852 and April--$1,103) 8,011 7,020
Inventories 3,529 3,336
Costs and estimated earnings in excess
of billings on uncompleted contracts 2,221 690
Prepaid expenses, deposits and other 406 146
Total current assets 14,405 11,607
Property, plant and equipment:
Furniture and fixtures 157 157
Building and leasehold improvements 1,507 1,507
Machinery and equipment 2,493 2,125
4,157 3,789
Less allowance for depreciation (2,439) (2,347)
Net property, plant and equipment 1,718 1,442
Goodwill, less accumulated amortization 3,764 3,836
(October--$1,468 and April--$1,396)
Other assets 30 16
Total assets $19,917 $16,901
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
[CAPTION]
<TABLE>
<S> <C> <C>
October 31, April 30,
(In thousands, except share data) 1997 1997
Liabilities and stockholders' equity
Current liabilities:
Short-term borrowings $3,999 $2,298
Current maturities of long-term debt 240 980
Accounts payable 2,568 2,361
Accrued expenses 2,245 2,494
Accrued dividends 5,128 4,099
Billings in excess of costs and estimated
earnings on uncompleted contracts 330 259
Total current liabilities 14,510 12,491
Long-term debt, less current maturities 324 ---
Royalties payable 750 750
Indebtedness to The Alpine Group, Inc. 6,702 6,382
Excess of net assets over purchase price
of acquisition, less accumulated
amortization (October--$21 and April--$17) 264 268
Stockholders' equity:
Series A Preferred stock, $.01 par value,
at $25 per share liquidation value;
authorized 1,500,000 shares, issued
and outstanding 1,029,253 shares 25,731 25,731
Common stock, $.001 par value;
authorized 25,000,000 shares, issued
and outstanding 8,540,762 shares 9 9
Capital in excess of par value 38,664 38,618
Accumulated deficit (67,037) (67,348)
Total stockholders' equity (2,633) (2,990)
Total liabilities and stockholders'
equity $19,917 $16,901
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
[CAPTION]
<TABLE>
<S> <C>
For The Three Months Ended October 31,
(In thousands, except
per share data) 1997 1996
Net sales $9,540 $9,523
Cost of goods sold 6,828 7,096
Gross profit 2,712 2,427
Research and development --- 296
Selling, general and administrative 1,976 2,110
Operating profit (loss) 736 21
Other income (expense):
Interest (expense) (211) (196)
Interest and other income 318 13
Income (loss) before income taxes 843 (162)
Income taxes --- ---
Net income (loss) 843 (162)
Preferred stock dividends 515 518
Net income (loss) applicable to
common stock $328 ($680)
Net income (loss) per share of
common stock $0.04 ($0.08)
Average common shares outstanding 8,540,762 8,530,073
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
[CAPTION]
<TABLE>
<S> <C>
For The Six Months Ended October 31,
(In thousands, except
per share data) 1997 1996
Net sales $18,039 $19,165
Cost of goods sold 12,710 13,880
Gross profit 5,329 5,285
Research and development --- 625
Selling, general and administrative 3,936 4,382
Operating profit (loss) 1,393 278
Other income (expense):
Interest (expense) (362) (397)
Interest and other income 309 77
Income (loss) before income taxes 1,340 (42)
Income taxes --- ---
Net income (loss) 1,340 (42)
Preferred stock dividends 1,029 1,029
Net income (loss) applicable to
common stock 311 ($1,071)
Net income (loss) per share of
common stock $0.04 ($0.13)
Average common shares outstanding 8,540,762 8,530,073
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
[CAPTION]
<TABLE>
<S> <C>
Three Months Ended October 31,
(In thousands) 1997 1996
Cash flow from operating activities
Net income (loss) $843 $(162)
Non-cash expenses included in net
income (loss):
Depreciation and amortization 80 127
Compensation expense for stock grants 23 0
Deferred interest 111 113
Changes in operating assets and
liabilities:
Accounts receivable (128) 354
Inventory 570 231
Prepaid expenses, deposits and other (153) 215
Costs and estimated earnings in
excess of billings on uncompleted
contracts (1,261) 150
Accounts payable and accrued
liabilities (623) (957)
Billings in excess of costs and
estimated earnings on uncompleted
contracts 33 61
Cash used for operating activities (505) 132
Cash flow from investing activities
Purchases of property, plant and
equipment (198) (173)
Proceeds from sale of equipment (3) 0
Cash used for investing activities (201) (173)
Cash flow from financing activities
Short-term borrowings 919 (132)
Repayments of long-term borrowings (356) (60)
Borrowings on Alpine promissory note 3 414
Cash provided by financing activities 566 222
Net increase (decrease) in cash and
cash equivalents (140) 181
Cash and cash equivalents
at beginning of period 378 124
Cash and cash equivalents at end of
period $ 238 $ 305
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
POLYVISION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
[CAPTION]
<TABLE>
<S> <C>
Six Months Ended October 31,
(In thousands) 1997 1996
Cash flow from operating activities
Net income (loss) $1,340 $(42)
Non-cash expenses included in net
income (loss):
Depreciation and amortization 161 247
Compensation expense for stock grants 47 23
Deferred interest (229) 232
Changes in operating assets and
liabilities:
Accounts receivable (991) (998)
Inventory (193) 330
Prepaid expenses, deposits and other (276) 36
Costs and estimated earnings in
excess of billings on uncompleted
contracts (1,531) (197)
Accounts payable and accrued
liabilities (42) (1,113)
Billings in excess of costs and
estimated earnings on uncompleted
contracts 71 27
Cash used for operating activities (1,643) (1,455)
Cash flow from investing activities
Purchases of property, plant and
equipment (368) (211)
Proceeds from sale of equipment 0 35
Cash used for investing activities (368) (176)
Cash flow from financing activities
Short-term borrowings 1,701 406
Repayments of long-term borrowings (416) (100)
Borrowings on Alpine promissory note 549 960
Cash provided by financing activities 1,834 1,266
Net increase (decrease) in cash and
cash equivalents (177) (365)
Cash and cash equivalents
at beginning of period 415 670
Cash and cash equivalents at end
of period $ 238 $ 305
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
POLYVISION CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
October 31, 1997
(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 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 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 was engaged in the
research, development, licensing and initial manufacturing and
testing of a proprietary display technology known as PolyVisionTM.
In April, 1997 the Company made the decision to discontinue its
research and development efforts and to market this technology
through licensing agreements.
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. 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 six month
period ended October 31, 1997, 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, 1997.
Net income (loss) applicable to common stock is computed by
dividing net income (loss) available to common stock by the
weighted average number of shares outstanding.
NOTE 2 - INVENTORIES
Inventories consist primarily of raw materials of $3,140 and
$2,679, work in process of $242 and $527, and finished goods of
$147 and $130 at October 31, 1997 and April 30, 1997, respectively.
NOTE 3 - CONTRACTS IN PROGRESS
The status of contract costs on uncompleted construction contracts
was as follows:
[CAPTION]
<TABLE>
<S> <C> <C> <C>
Costs and estimated Billings in excess
earnings in of costs and
excess of billings estimated earnings Net
October 31, 1997:
Cost and
estimated
earnings $5,911 $1,430 $7,341
Billings (3,690) (1,760) (5,450)
$2,221 $ (330) $1,891
April 30, 1997:
Cost and
estimated
earnings $2,779 $6,218 $ 8,997
Billings (2,089) (6,477) (8,566)
$ 690 $ (259) $ 431
</TABLE>
Accounts receivable at October 31, 1997 and April 30, 1997 include
amounts billed but not yet paid by customers under retainage
provisions of $1,022 and $1,384, respectively. Such amounts are
generally due within one year.
NOTE 4 - FINANCING ARRANGEMENTS
On July 23, 1997, Greensteel as borrower and the Company as
guarantor, entered into a restated master credit agreement with the
Bank of Boston, Connecticut, which amends the previous agreement
dated April 25, 1996 and which would have expired August 31, 1997.
The new agreement provides for a revolving credit line of up to
$3,800 based upon eligible accounts receivable and inventory, as
defined, at the Bank's prime rate plus a margin based on certain
performance ratios (10.00% at October 31, 1997) and a $920 term
loan payable in 17 consecutive equal monthly installments of $20
with interest at the Bank's prime rate plus a margin based on
certain performance ratios (10.50% at October 31, 1997) with the
remaining unpaid principal amount of $580 due on May 31, 1999. The
agreement terminates on May 31, 1999 and provides for renewal at
the Bank's discretion. As of October 31, 1997 the Company had
reduced the balance of the term loan to $564, including an
additional payment of $296 made in September.
Substantially all of Greensteel's assets are pledged as collateral
under the credit facility. The agreement requires Greensteel's
compliance with certain financial covenants including specific
levels of earnings before interest, taxes and depreciation, and
specific current ratio levels and debt levels. Greensteel is in
compliance with all material covenants at October 31, 1997.
On May 24, 1995, the Company entered into an agreement with Alpine,
pursuant to which the Company may borrow up to $5,000 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. As of
October 31, 1997 $5,000 was outstanding under this agreement.
From May 1, 1997 through October 31, 1997, the Company executed
promissory notes with Alpine totaling $1,360 including accrued
interest, to fund the Company's corporate borrowing requirements.
Borrowings under the agreement are at Alpine's cost of borrowing
such funds (8-1/2% at October 31, 1997).
As of October 31, 1997 the Company owed Alpine a total of $6,360
under this note and the foregoing agreement. Alpine has agreed to
advance further funds to the Company through July 31, 1998 as may
be necessary for the Company to meet its financial commitments
incurred in the ordinary course of business. The decision to
continue to provide such financial support is made annually by
Alpine and future decisions will be based upon the conditions
existing at that time.
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 in 1987 and of an additional 520
replacement panels in 1991 and 1992. Plaintiff has alleged that
such panels were defective in their design and manufacture. 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 (the "NJCFA") (which might permit treble
damages), while preserving the right of the defendants, including
the Company to challenge the applicability of the NJCFA. The
amended complaint was served during April, 1997 and Plaintiff
currently seeks $1,405 in damages as well as treble damages under
the NJCFA. The Company has served its answer to the amended
complaint substantially denying Plaintiff's allegations of
defective design and manufacture and pleading affirmative defenses,
as well as commencing third party claims against an adhesives
supplier whose product was utilized by the Company in fabricating
the subject panels. As of the date hereof, discovery has yet to
commence and it is premature to render an estimate of the outcome
of this litigation.
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 of which the Company paid $175 and Adience paid $25. In
addition, the consent order required the payment of stipulated
penalties of up to $1 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. The Company is
currently waiting for a determination from the Ohio EPA as to
whether the submitted reports are approved. 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
October 31, 1997, environmental accruals amounted to $26, which
represents management's reasonable estimate of the amounts to be
incurred in the resolution of this matter. Since 1991, the Company
and Adience have together paid $1,449 (excluding the $200 civil
penalty) for the environmental cleanup related to the Alliance
facility.
Under the acquisition agreement pursuant to which the Company
acquired the Alliance facility from Adience, Adience represented
and warranted that, except as otherwise disclosed to the Company,
no hazardous material had been stored or disposed of on such
property and agreed to indemnify the Company for any losses in
excess of $250. The Company has notified Adience that it is
claiming the right to indemnification for all costs in excess of
$250 incurred by the Company in this matter, and has received
assurance from Alpine that Adience will honor such claim. Adience
has reimbursed the Company $1,373 through October 31, 1997. 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
(Dollars in thousands unless otherwise noted)
Three and Six Months Ended October 31, 1997, Compared With Three
and Six Months Ended October 31, 1996
The following table summarizes, for the periods presented, the
respective amounts of Greensteel, Posterloid and APV (except as to
Bookings, Backlog, Net sales and Gross profit, of which there were
none):
[CAPTION]
<TABLE>
<S> <C> <C>
Three Months Six Months
Ended October 31, Ended October 31,
1997 1996 1997 1996
(in thousands, except percentages)
Net sales
Greensteel. . . $7,933 $7,615 $15,027 $15,414
Posterloid. . . 1,607 1,908 3,012 3,751
9,540 9,523 18,039 19,165
Gross profit
Greensteel. . . 2,108 1,701 4,193 3,824
Posterloid. . . 604 726 1,136 1,461
2,712 2,427 5,329 5,285
Gross profit . . . 28.4% 25.5% 29.5% 27.6%
Selling, general
and administrative
expenses
Greensteel. . . 1,424 1,492 2,862 3,158
Posterloid. . . 441 455 847 895
APV and
Corporate. . . 111 163 227 329
1,976 2,110 3,936 4,382
Research and
development
APV . . . . . . --- 296 --- 625
Operating income (loss)
Greensteel. . . 684 210 1,331 666
Posterloid. . . 163 271 289 566
APV and
Corporate. . . (111) (460) (227) (954)
$ 736 $ 21 $1,393 $ 278
Operating income . 7.7% 0.2% 7.7% 1.5%
Bookings
Greensteel. . . 8,926 5,607 16,408 14,704
Posterloid. . . 1,722 1,678 3,137 4,212
$10,648 $ 7,285 $19,545 $18,916
Backlog
Greensteel. . . 13,255 10,878
Posterloid. . . 698 950
$13,953 $11,829
</TABLE>
Three and Six Months Ended October 31, 1997 Compared with the Three
and Six Months Ended October 31, 1996
Bookings and backlog for the Company significantly improved for the
three month period ending October 31, 1997. Bookings of $10,648
were 46% higher than the prior year total of $7,285. This was due
primarily to strong demand in the Greensteel proprietary school
products markets. This increase in bookings was despite the
decision made by the Company beginning this year to eliminate field
installation and non-proprietary material pass-through from its
product offerings. These items accounted for approximately 15% of
company revenues in prior years. Backlog at the end of the current
period of $13,953 was 18% ahead of prior year results of $11,829.
For the six-month period ending October 31, 1997 bookings at
Greensteel of $16,408 were 11% ahead of prior year levels of
$14,704. Posterloid bookings of $3,137 were $1,075 below last year
reflecting the timing of one large order ($1,000+). This booking
shortfall should be made up by the end of the next quarter.
The change in incremental revenues for the Company improved 13% for
the three months ending October 31, 1997 when compared to the
previous year. Revenue for the three months ending October 31,
1996 declined $117 or 1% from the preceding three month period
($9,523 from $9,642). However, for the current three months ending
October 31, 1997 revenues increased $1,041 or 12% from the
preceding three months ($9,540 from $8,499). The improvement in
revenues was due to a small decline in Posterloid offset by
increased market demands in the school product business at
Greensteel.
Gross Profit for the Company as a percent of sales for the three
months ending October 31, 1997 improved 2.9 points over the same
period last year. Year to date the improvement is 1.9 points
(29.5% vs. 27.6%). Gross profit improvements were due to improved
product mix at Greensteel. Lower margin field installation labor
and pass through material has been replaced by higher margin
proprietary products revenue.
Operating results for the Company continue to show significant
improvement for the three month and six month period ending October
31, 1997 compared to last year. Operating income compared to last
year improved $715 and $1,115 respectively for the three month and
year to date period. Operating income as a percent of sales
continued at 7.7% for the period and the year compared with 0.2%
and 1.5% respectively last year.
Operating income improvements at the Company for the first six
months of the year have primarily resulted from overhead cost
reductions. As a result of the decision to market the PolyVisionTM
display technologies through third party licensing agreements, year
to date R&D expenses compared to last year have been reduced $625.
Corporate expenses and selling, general and administrative expenses
at Greensteel and Posterloid year to date have been reduced $446.
Combined these reductions account for $1,071 of the $1,115
improvement in year to year operating income.
LIQUIDITY AND CAPITAL RESOURCES
During the three month period ended October 31, 1997, cash used to
support operating activities increased $637 over last year from
positive $132 to ($505) this year. Cash from net income and non-
cash expenses increased significantly by $979 over last year
($1,057 from $78). However, this increase was offset by $1,616
used for changes in operating assets and liabilities over last
year. Operating inefficiencies in receivables and the invoicing of
progress billing contracts resulted in uses of cash of $482 and
$1,411 respectively over the prior year. These inefficiencies are
anticipated to be corrected over the rest of the year.
Cash financing for the three-month period ending October 31, 1997
was provided primarily by an increase in short term borrowings net
of repayments of $563. Alpine Promissory notes were increased only
$3 compared to $414 for the prior year.
On July 23, 1997, Greensteel, as borrower, and the Company, as
guarantor, entered into a restated master credit agreement with the
Bank of Boston Connecticut, which amends the previous agreement,
dated April 25, 1996, and which would have expired on August 31,
1997. The new agreement provides for a revolving credit line of up
to $3,800, based upon eligible accounts receivable and inventory,
as defined, at the Bank's prime rate plus a margin based on certain
performance ratios (10.00% at October 31, 1997) and a $920 term
loan payable in 17 consecutive equal monthly installments of $20
with interest at the Bank's prime rate plus a margin based on
certain performance ratios (10.50% at October 31, 1997) with the
remaining unpaid principal amount of $580 due on May 31, 1999. The
agreement terminates on May 31, 1999 and provides for renewal at
the Bank's discretion. As of October 31, 1997 the Company had
reduced the balance of the term loan to $564, including an
additional payment of $296 made in September.
Substantially all of Greensteel's assets are pledged as collateral
under the credit facility. The agreement requires Greensteel's
compliance with certain financial covenants including specific
levels of earnings before interest, taxes and depreciation, and
specific current ratio levels and debt levels. Greensteel is in
compliance with all material covenants at October 31, 1997.
On May 24 1995, the Company entered into an agreement with Alpine,
pursuant to which the Company may borrow up to $5,000 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. As of
October 31, 1997 $5,000 was outstanding under this agreement.
From May 1, 1997 through October 31, 1997, the Company executed
promissory notes with Alpine totaling $1,360, including accrued
interest, to fund the Company's corporate borrowing requirements.
Borrowings under the agreement are at Alpine's cost of borrowing
such funds (8-1/2% at October 31, 1997). As of October 31, 1997
the Company owed Alpine a total of $6,360 under this note and the
foregoing agreement. Alpine has agreed to advance further funds to
the Company through July 31, 1998 as may be necessary for the
Company to meet its financial commitments incurred in the ordinary
course of business. The decision to continue to provide such
financial support is made annually by Alpine and future decisions
will be based upon the conditions existing at that time.
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:
Exhibit 27: Financial Data Schedule
(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: December 12, 1997 By:/s/Lawrence W. Hay
Lawrence W. Hay
Vice President-
Finance (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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