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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
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For Quarter Ended Commission File
March 31, 1998 Number 0-15464
RADVA CORPORATION
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(Exact name of registrant as specified in its charter)
VIRGINIA 54-0715892
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(State of Incorporation) (IRS Employer
Identification Number)
Drawer 2900 FSS
Radford, Virginia 24143
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(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
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At May 13, 1998, there were 4,095,727 shares of Registrant's Common Stock, $.01
par value per share, outstanding.
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RADVA CORPORATION
INDEX
Page
Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Balance Sheets,
December 31, 1997 and March 31, 1998 3
Statements of Operations, Three Months
Ended March 31, 1997 and March 31, 1998 4
Statements of Cash Flows, Three Months
Ended March 31, 1997 and March 31, 1998 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION 9
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RADVA CORPORATION
Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
March 31 December 31
ASSETS 1998 1997
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<S> <C> <C>
Current assets:
Cash ................................. $ 169 $ 79
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Accounts and notes receivable ........ 2,118 1,755
Less allowance for doubtful accounts . 115 106
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Net receivables ...................... 2,003 1,649
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Inventories:
Finished goods ..................... 600 592
Work in process .................... 20 23
Raw materials and supplies ......... 376 395
Machinery inventory ................ 286 275
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Total inventories .................. 1,282 1,285
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Prepaid expenses ..................... 97 106
Other current assets ................. 71 30
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Total current assets ........... 3,622 3,149
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Property, plant & equipment, at cost .... 8,216 8,084
Less accumulated depreciation ........ 3,513 3,396
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Net property, plant & equip .... 4,703 4,688
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Investment in RADOSLAV Joint Venture .... 336 336
Trademark manufacturing and
marketing rights ....................... 1,304 1,354
Note receivable-noncurrent .............. 464 322
Other assets ............................ 1,540 1,343
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$ 11,969 $ 11,192
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 528 $ 528
Notes payable ........................ 905 569
Accounts payable ..................... 1,925 2,151
Accrued expenses ..................... 735 580
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Total current liabilities .... 4,093 3,828
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Long-term debt, excluding current
installments ......................... 3,893 3,844
Minority interest in consolidated
subsidiary ........................... 281 132
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Total liabilities ............ 8,267 7,804
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Stockholders' equity:
Common stock of $.01 par value
Authorized 10,000,000 shares; issued
and outstanding 4,104,727 ......... 41 41
Additional paid-in capital ........... 4,503 4,512
Retained earnings .................... (842) (1,165)
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Total stockholders' equity .. 3,702 3,388
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$ 11,969 $ 11,192
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</TABLE>
See accompanying notes to financial statements.
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RADVA CORPORATION
Statements of Operations
Three Months Ended March 31
(In Thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31
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1998 1997
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<S> <C> <C>
Net Revenues:
Manufacturing net revenues ... $ 3,432 2,632
Licensing & machinery sales .. 156 --
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Net revenues ................. 3,588 2,632
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Cost and expenses:
Cost of sales ................ 2,471 1,926
Shipping and selling ......... 265 194
General and administrative ... 403 208
Research and development ..... 13 32
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3,152 2,360
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Operating income ............. 436 272
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Other income (deductions):
Interest expense ............. (133) (88)
Other ........................ 1 32
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(132) (56)
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Earnings (loss) before minority
interest in net income (loss)
of subsidiary ................ 304 216
Minority interest in net income
(loss) of subsidiary ......... (19) --
Earnings (loss) before income tax 323 216
Income tax expense .............. -- --
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Net earnings (loss) ............. $ 323 216
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Earnings per common share ....... $ .07 .05
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</TABLE>
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RADVA CORPORATION
Statements of Cash Flows
Three Months Ended March 31
(In Thousands)
<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net income ................................. $ 323 $ 216
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ............................ 117 79
Amortization ............................ 50 21
Change in assets and liabilities:
Decrease (Increase) in net receivables . (354) (172)
Decrease (Increase) in inventories ..... 3 (26)
Decrease (Increase) in prepaid expenses 9 (4)
Increase in other current assets ....... (41) (21)
Decrease (Increase) in other assets .... (339) 60
Increase (Decrease) in accounts payable (226) 57
Increase (Decrease) in accrued expenses 155 25
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Total adjustments .................... (626) 19
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Net cash from operating activities ... (303) 235
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Increase in minority interest in
consolidated subsidiary .................... 149 --
Decrease in additional paid in capital ........ (9) --
Cash flows from investing activities:
Capital expenditures for equipment and other
long-term assets ......................... (132) (347)
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Net cash from investing activities ... (132) (347)
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Cash flows from financing activities:
Proceeds from notes payable ................ 336 78
Proceeds from long-term debt ............... 171 232
Principal payments under long-term debt .... (122) (74)
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Net cash from financing activities ... 385 236
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Net increase (decrease) in cash ............... 90 124
Cash at January 1 ............................. 79 24
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Cash at March 31 .............................. $ 169 $ 148
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</TABLE>
See accompanying notes to financial statements.
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RADVA CORPORATION
Notes to Financial Statements
March 31, 1998
(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
A summary of property, plant and equipment follows:
Land and improvements............................. $ 312,737
Buildings and improvements........................ 2,956,519
Machinery and equipment........................... 4,399,834
Transportation equipment.......................... 295,649
Office equipment.................................. 251,600
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$ 8,216,339
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(3) Accrued Expenses
Accrued expenses are comprised of the following:
Payroll and employment benefits................... $ 201,545
Interest.......................................... 27,852
Other............................................. 505,624
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$ 735,021
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(4) Notes Payable
Short term note with bank, interest at 10.75%..... $ 75,000
Demand notes, collateralized by certain
accounts receivable and inventory
Interest from 9% to prime plus 2%............ $ 829,613
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$ 904,613
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RADVA CORPORATION
Notes to Financial Statements
March 31, 1998
<TABLE>
<S> <C>
(5) Long-term Debt
A summary of long-term debt follows:
Installment note payable to bank, due in
monthly installments of $43,467, including
interest at prime plus 2% $2,470,967
Installment notes payable with financing
company collateralized by equipment with
interest at 8.8% 878,668
Installment note payable to bank, collateralized
by real estate, with interest at 9% 102,600
Installment notes payable with various maturities,
collateralized by equipment
Interest rates ranging from 7.25% to 12.50% 142,179
Installment note payable to bank, due in
monthly installments of $3,147.61, including
interest at prime plus 2% 122,176
Industrial Development Authority note 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 612,917
Industrial Development Authority note of the City of Radford, Virginia,
due in monthly installments of $674, including interest at 7%
collateralized by a deed of trust on real estate 62,864
Installment note payable due in monthly installments of $500, including
interest at 10.5% with a final balloon payment in August 1998,
collateralized by a deed of trust on certain real estate. 29,227
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Total long-term debt 4,421,598
Less current installments of long-term debt 527,793
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Long-term debt, excluding current installments $3,893,805
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</TABLE>
(6) Other Matters
On April 1, 1997 the Company's 19% owned subsidiary, Thermastructure Ltd.
was dissolved and the Company reacquired the assets of Thermastructure Ltd.,
giving in exchange its right to collect a $1,197,000 note receivable. A new 90%
owned corporation, Thermastructure XT Corporation, was then formed, receiving
all of the purchased assets.
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Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Net earnings were $304,000 during the first quarter of 1998 compared to $216,000
during the first quarter of 1997. Earnings for the quarter were increased
$88,000, even though the Company experienced losses in its panel operations
resumed in April, 1997. The Company had also recorded a one time profit of
$108,000 in March, 1997 as a result of a medical insurance rebate. The Shape
Molding Division accounted for $302,000 of increased earnings on increased
revenues of $634,000. The Company also recorded increased net income of $126,000
in its Licensing Division on increased revenues of $156,000.
Cost of sales, as a percentage of manufacturing net revenues, decreased from
73.2% for the first quarter of 1997 to 72.0% for the first quarter of 1998. This
improvement was most notable in the Company's shape molding operations where
cost of sales decreased by approximately 6%. These improvements were partly
offset by higher cost of sales percentages in both panel operations not present
in 1997 and in the manufacture of molds for the Shape Molding Division.
Shipping and selling expenses, as a percentage of manufacturing net revenues,
increased .3% for the first quarter of 1998 compared to the first quarter of
1997. General and administrative expenses increased $195,000, from $208,000 for
the first quarter of 1997 to $403,000 for the first quarter of 1998, primarily
as a result of the $108,000 insurance rebate noted above which reduced these
expenses in 1997 and $50,000 of general and administrative expenses in the panel
operations newly resumed in 1997.
Liquidity and Capital Resources
The Company has been profitable in each of the past seven years. The working
capital position at March 31, 1998, was a negative $471,000. Management is in
the process of concluding a major refinancing package expected to close in May,
1998. Management is also conducting negotiations for the sale of other assets
not included in working capital which, if concluded, will have a significant
favorable impact on working capital. The current financing package of the
Company includes both a term loan with a balance of $2,475,000 and a $1,000,000
credit line with an available balance of $170,000 on March 31, 1998.
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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, 1997.
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
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William F. Fry
Assistant Secretary/Treasurer
March 14, 1998
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AS OF MARCH 31, 1998 AND STATEMENT OF OPERATIONS FOR THE THREE MONTHS THEN
ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 169
<SECURITIES> 0
<RECEIVABLES> 2,118
<ALLOWANCES> 115
<INVENTORY> 1,282
<CURRENT-ASSETS> 3,622
<PP&E> 8,216
<DEPRECIATION> 3,513
<TOTAL-ASSETS> 11,969
<CURRENT-LIABILITIES> 4,093
<BONDS> 3,893
0
0
<COMMON> 41
<OTHER-SE> 3,661
<TOTAL-LIABILITY-AND-EQUITY> 11,969
<SALES> 3,588
<TOTAL-REVENUES> 3,589
<CGS> 2,471
<TOTAL-COSTS> 3,152
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 323
<INCOME-TAX> 0
<INCOME-CONTINUING> 323
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 323
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
