<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
--------------------------------------------
For Quarter Ended Commission File
September 30, 1995 Number 0-15464
RADVA CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0715892
(State of Incorporation) (IRS Employer
Identification Number)
Drawer 2900 FSS
Radford, Virginia 24143
(Address of principal executive offices)
Registrant's telephone number, including area code (703) 639-2458
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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
At November 13, 1995, there were 3,742,060 shares of Registrant's Common Stock,
$.01 par value per share, outstanding.
<PAGE> 2
RADVA CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Balance Sheets,
December 31, 1994 and September 30, 1995 3
Statements of Operations, Three Months
and Nine Months Ended September 30, 1994
and September 30, 1995 4
Statements of Cash Flows, Nine Months
Ended September 30, 1994 and
September 30, 1995 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II. OTHER INFORMATION 10
</TABLE>
2
<PAGE> 3
RADVA CORPORATION
Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
September 30 December 31
ASSETS 1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash.................................. $ 22 $ 189
------------ -----------
Accounts and notes receivable......... 1,704 1,966
Less allowance for doubtful accounts.. 247 275
------------ -----------
Net receivables....................... 1,457 1,691
------------ -----------
Inventories:
Finished goods...................... 397 443
Work in process..................... 22 43
Raw materials and supplies.......... 252 260
Machinery inventory................. 509 240
------------ ----------
Total inventories................... 1,180 986
------------ ----------
Prepaid expenses...................... 82 119
Other current assets.................. 50 30
------------ ----------
Total current assets............ 2,791 3,015
------------ ----------
Property, plant & equipment, at cost..... 8,154 8,160
Less accumulated depreciation......... 4,779 4,593
------------ ----------
Net property, plant & equip..... 3,375 3,567
------------ ----------
Investment in RADOSLAV Joint Venture..... 336 336
Trademark rights......................... 313 367
Accounts receivable - noncurrent......... 58 58
Note receivable-noncurrent............... 484 488
Other assets............................. 617 487
------------ ----------
$ 7,974 $ 8,318
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft........................ $ 83 $ -
Current installments of long-term debt 373 373
Notes payable......................... 2,004 1,294
Accounts payable...................... 1,469 1,790
Accrued expenses...................... 729 483
Income taxes payable.................. 10 10
------------ ----------
Total current liabilities...... 4,668 3,950
------------ ----------
Long-term debt, excluding current
installments.......................... 1,272 2,011
Stockholders' equity:
Common stock of $.01 par value.
Authorized 10,000,000 shares; issued
and outstanding 3,742,060.......... 37 37
Additional paid-in capital............ 4,176 4,176
Retained earnings..................... (2,179) (1,856)
----------- ----------
Total stockholders' equity... 2,034 2,357
----------- ----------
$ 7,974 $ 8,318
=========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
RADVA CORPORATION
Statement of Operations
Three Months and Nine Months Ended September 30
(In Thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Revenues:
Manufacturing net revenues ...... $2,106 $2,795 $6,888 $7,633
Licensing & machinery sales ..... 65 571 344 571
------ ------ ------ ------
Net revenues .................... 2,171 3,366 7,232 8,204
------ ------ ------ ------
Cost and expenses:
Cost of sales ................... 1,745 2,126 5,647 5,830
Shipping and selling............. 205 266 711 820
General and administrative ...... 248 339 974 972
Research and development......... 5 6 27 8
------ ------ ------ ------
2,203 2,737 7,359 7,630
------ ------ ------ ------
Operating income (loss).......... (32) 629 (127) 574
------ ------ ------ ------
Other income (deductions):
Interest expense................. (69) (81) (218) (213)
Revenue from the discounted
satisfaction of notes payable . - - - 229
Other............................ (1) 11 22 27
------ ------ ------ ------
(70) (70) (196) 43
------ ------ ------ ------
Earnings before income taxes........ (102) 559 (323) 617
Income tax expense.................. - - - -
------ ------ ------ ------
Net earning (loss).................. (102) 559 (323) 617
====== ====== ====== ======
Earnings (loss) per common share ... (.03) .15 (.09) .16
====== ====== ====== ======
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
RADVA CORPORATION
Statements of Cash Flows
Nine Months Ended September 30
(In Thousands)
<TABLE>
<CAPTION>
1995 1994
----- -----
<S> <C> <C>
Cash flows from operating activities:
Net income.................................... $(323) $ 617
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation............................... 285 304
Amortization............................... 60 60
Loss (Gain) on sale of equipment........... (142) -
Change in assets and liabilities:
Decrease (Increase) in net receivables.... 234 (513)
Decrease (Increase) in inventories........ (194) (376)
Decrease (Increase) in prepaid expenses... 37 14
Increase in prepaid construction costs.... - (134)
Increase in other current assets.......... (20) (29)
Decrease (Increase) in other assets....... (132) (32)
Increase (Decrease) in cash overdraft..... 83 (12)
Increase (Decrease) in accounts payable... (321) 243
Increase (Decrease) in accrued expenses... 246 55
------ ------
Total adjustments....................... 136 (420)
------ ------
Net cash from operating activities...... (187) 197
------ ------
Cash flows from investing activities:
Proceeds from payments on notes receivable.... 3 7
Proceeds from sale of equipment............... 179 -
Capital expenditures for equipment and other
long-term assets............................ (133) (858)
------ ------
Net cash from investing activities...... 49 (851)
------ ------
Cash flows from financing activities:
Proceeds from notes payable................... 310 580
Principal payments under notes payable........ (100) (63)
Proceeds from long-term debt.................. - 877
Principal payments under long-term debt....... (239) (716)
------ ------
Net cash from financing activities...... (29) 678
------ ------
Net increase (decrease) in cash.................. (167) 24
Cash at January 1................................ 189 7
------ ------
Cash at September 30............................. $ 22 $ 31
====== ======
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
RADVA CORPORATION
Notes to Financial Statements
September 30, 1995
(1) General
-------
The financial statements conform to generally accepted accounting principles
and to general industry practices. The financial statements are unaudited.
However, in the opinion of management, all adjustments which are normal and
necessary for a fair presentation of the financial statements have been
included.
(2) Property, Plant and Equipment
-----------------------------
<TABLE>
<S> <C>
A summary of property, plant and equipment follows:
Land and improvements............................. $ 295,904
Buildings and improvements........................ 2,845,146
Machinery and equipment........................... 4,160,051
Transportation equipment.......................... 425,551
Office equipment.................................. 427,085
----------
$8,153,737
==========
</TABLE>
(3) Accrued Expenses
----------------
<TABLE>
<S> <C>
Accrued expenses are comprised of the following:
Payroll and employment benefits................... $ 207,193
Interest.......................................... 46,952
Other............................................. 474,713
---------
$ 728,858
=========
</TABLE>
(4) Notes Payable
-------------
<TABLE>
<S> <C>
Demand note, collateralized by certain
accounts receivable and inventory
Interest at prime plus 4%..................... $ 1,188,900
Unsecured demand note payable..................... 500,000
Unsecured notes payable to stockholder............ 314,775
-----------
$ 2,003,675
===========
</TABLE>
6
<PAGE> 7
RADVA CORPORATION
Notes to Financial Statements
September 30, 1995
(5) Long-term Debt
A summary of long-term debt follows:
<TABLE>
<S> <C>
Installment note payable to stockholders due in
monthly installments of $10,000, plus interest at
prime plus one half percent. $ 150,000
Installment notes payable to stockholder, due in
monthly installments of $4,588, including interest
at 7%, collateralized by a deed of trust on
Portsmouth, Virginia real estate. 260,009
Installment notes payable in aggregate monthly installments
of $9,757, including interest, with various maturities
until May 1997; collateralized by equipment. Interest rates
ranging from 7.25% to 12.50%. 92,513
Installment note payable to bank, due in monthly
installments of $5,300, including interest at
8.75%. 233,987
Installment note payable to bank, due in monthly installments
of 31,225 Austrian shillings, including interest at 12% 12,834
Installment note payable due in monthly installments of
$279, including interest at 8.125% with a final balloon
payment in August 1998, collateralized by a deed of trust
on certain real estate. 31,503
Installment note payable, due in monthly installments of
$1,250, plus interest at prime plus 2%, unsecured. 11,250
Installment note payable to bank, due in monthly
installments of $941, including interest at 9%,
collateralized by a deed of trust on real estate. 85,256
Industrial Development Authority of the City of
Radford, Virginia, due in monthly installments of
$8,592, including interest at 7.75%, collateralized
by a deed of trust on real estate at 609 Rock Road,
Radford Virginia 695,828
Industrial Development Authority of the City of
Radford, Virginia, due in monthly installments of
$674, including interest at 7%, collateralized by
a second deed of trust on real estate at 609 Rock
Road, Radford, Virginia 71,559
----------
Total long-term debt $1,644,739
Less current installments of long-term debt 372,875
----------
Long-term debt, excluding current installments $1,271,864
==========
</TABLE>
7
<PAGE> 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1995,
COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1994
Manufacturing net revenues decreased $745,000 due to reduced sales of
$1,119,000 by the Company's Thermastructure Panel Division, only partly offset
by increased packaging revenues of $300,000 and $245,000 in sales of building
materials shipped to Russia. The reduction of panel sales was due to unusually
large sales of panels shipped to Mexico in 1994, not matched by a similar sale
in 1995. The building materials shipped to Russia is a new project designed to
provide building materials purchased locally to Russian contractors using
Thermastructure panels manufactured in Russia by the Company's Russian joint
venture, Radoslav.
Cost of sales, as a percentage of manufacturing net revenues and after
elimination of revenues and cost from equipment sales, increased 5.3%, from
75.8% for the nine months ended September 30, 1994 to 81.1% for the nine months
ended September 30, 1995. This increase resulted from a deterioration of cost
relationships in the Door Core Division and reduced panel sales with no
corresponding reduction in fixed costs in the Thermastructure Division. The
Company sold its rights to its Door Core system in August, 1995 for $50,000,
and began the process of terminating production in this division.
Shipping and selling expenses, as a percentage of manufacturing net revenues,
decreased moderately by .4%, from 10.7% for the nine months ended September 30,
1994 to 10.3% for the nine months ended September 30, 1995. General and
administrative expenses were virtually unchanged, in spite of reduced sales,
partly due to increased bank charges and increased cost of $99,000 in the
activities of licensing and the purchase and sale of building materials.
RESULTS OF OPERATIONS -THREE MONTHS ENDED SEPTEMBER 30, 1995,
COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1994
Manufacturing net revenues decreased $689,000 primarily due to reduced
Thermastructure panel sales and reduced door core sales of $661,000 and
$148,000, respectively, partly offset by $101,000 of new sales of building
materials purchased locally and shipped to Russia. As stated above, the
reduction of panel sales was a result of unusually large sales to Mexico in
1994 without a corresponding sale in 1995.
Cost of sales, as a percentage of manufacturing net revenues, increased 6.8%,
from 76.1% for the three months ended September 30, 1994 to 82.9% for the three
months ended September 30, 1995. This cost increase resulted from reduced
panels sales along with an unfavorable change of sales mix and a deterioration
of revenue cost relationships within the Door Core Division. As stated above,
a decision was made to close the Door Core Division in August, 1995.
Shipping and selling expenses and general and administrative expenses remained
almost constant as a percentage of manufacturing net revenues.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
Although the Company earned net profits of $524,000, $93,000, $514,000, and
223,000 in 1994, 1993, 1992, and 1991, respectively, the Company had a working
capital deficiency of $1,877,000 at September 30, 1995. However, in November,
1995, the Company sold 80% in a subsidiary, Thermastructure, Ltd. This sale
provided much needed working capital and is expected to enable the Company to
both report higher earnings in 1995 than reported in 1994 and to obtain a bank
refinancing package by year end significantly reducing further the working
capital deficiency.
The Company owns a 31% interest in a joint venture in Russia which calls for a
distribution of profits in hard currency when available, However, should hard
currency not be available, profit distributions will be effected through
commodity transfers and bartering arrangements. These arrangements may be
facilitated by a regional commodity exchange in Russia with which Radva
Corporation is affiliated.
The Company has a revolving credit arrangement under which it could borrow an
amount not to exceed the lower of $1,190,000 or the aggregate of $650,000 and
75% of qualified accounts receivable. The amount available to the Company
under this line of credit was $1,100 at September 30, 1995.
9
<PAGE> 10
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
See item 3 of the Company's Form 10-K for the fiscal year ended
December 31, 1994.
Item 2. Changes in Securities
---------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders
-----------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Not applicable.
Pursuant to the requirements of the Securities Exchange Act of
1934,this form 10-Q has been signed on behalf of the
Registrant by its Assistant Secretary/Treasurer who is
authorized to sign on behalf of the Registrant.
RADVA CORPORATION
/s/ WILLIAM F. FRY
------------------------
William F. Fry
Assistant Secretary/Treasurer
November 13, 1995
10
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000792984
<NAME> RADVA CORP.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 22
<SECURITIES> 0
<RECEIVABLES> 1,704
<ALLOWANCES> 247
<INVENTORY> 1,180
<CURRENT-ASSETS> 2,791
<PP&E> 8,154
<DEPRECIATION> 4,779
<TOTAL-ASSETS> 7,974
<CURRENT-LIABILITIES> 4,668
<BONDS> 1,272
<COMMON> 37
0
0
<OTHER-SE> 1,997
<TOTAL-LIABILITY-AND-EQUITY> 7,974
<SALES> 2,106
<TOTAL-REVENUES> 2,171
<CGS> 1,745
<TOTAL-COSTS> 2,203
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69
<INCOME-PRETAX> (102)
<INCOME-TAX> 0
<INCOME-CONTINUING> (102)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (102)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
