<PAGE> 1
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
September 30, 1999 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 (540) 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 October 20, 1999, there were 4,085,727 shares of Registrant's Common Stock,
$.01 par value per share, outstanding.
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RADVA CORPORATION
INDEX
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Page
Number
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PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Balance Sheets,
December 31, 1998 and September 30, 1999 3
Statements of Operations, Three Months
and Nine Months Ended September 30, 1998
and September 30, 1999 4
Statements of Cash Flows, Nine Months
Ended September 30, 1998 and September 30, 1999 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
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RADVA CORPORATION
Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
September 30 December 31
ASSETS 1999 1998
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<S> <C> <C>
Current assets:
Cash ....................................... $ 44 $ 246
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Accounts and notes receivable .............. 2,153 2,832
Less allowance for doubtful accounts ....... 134 113
------- -------
Net receivables ............................ 2,019 2,719
------- -------
Inventories:
Finished goods ........................... 388 601
Work in process .......................... 4 --
Raw materials and supplies ............... 398 332
------- -------
Total inventories ........................ 790 933
------- -------
Prepaid expenses ........................... 43 35
Other current assets ....................... 77 39
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Total current assets ................. 2,973 3,972
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Property, plant & equipment, at cost .......... 9,084 8,134
Less accumulated depreciation .............. 4,090 3,691
------- -------
Net property, plant & equip .......... 4,994 4,443
------- -------
Investment in Thermasteel Corp. ............... 262 262
Note receivable-noncurrent .................... 2,553 2,482
Manufacturing and marketing rights ............ 485 506
Other assets .................................. 190 225
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$11,457 $11,890
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt ..... $ 638 $ 594
Notes payable .............................. 895 854
Accounts payable ........................... 841 1,064
Accrued expenses ........................... 278 408
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Total current liabilities .......... 2,652 2,920
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Long-term debt, excluding current
installments ............................... 3,857 3,989
Minority interest in consolidated
subsidiary ................................. -- 95
------- -------
Total liabilities .................. 6,509 7,004
Stockholders' equity:
Common stock of $.01 par value .............
Authorized 10,000,000 shares; issued
and outstanding 4,085,727 ............... 41 41
Additional paid-in capital ................. 4,479 4,493
Retained earnings .......................... 428 352
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Total stockholders' equity ........ 4,948 4,886
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$11,457 $11,890
======= =======
</TABLE>
See accompanying notes to financial statements.
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RADVA CORPORATION
Statements 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
------------ ------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Revenues:
Manufacturing net revenues ......... $ 2,122 2,829 7,135 9,021
Licensing & machinery sales ........ -- 260 -- 1,291
------- ------- ------- -------
Net revenues ....................... 2,122 3,089 7,135 10,312
------- ------- ------- -------
Cost and expenses:
Cost of sales ...................... 1,650 2,192 5,348 6,728
Shipping and selling ............... 168 211 520 708
General and administrative ......... 327 362 999 1,202
Research and development ........... 1 -- 6 23
------- ------- ------- -------
2,146 2,765 6,873 8,661
------- ------- ------- -------
Operating income (loss) ............ (24) 324 262 1,651
------- ------- ------- -------
Other income (deductions):
Interest expense ................... (120) (124) (351) (392)
Interest income .................... 132 -- 132 --
Other .............................. 20 38 33 41
------- ------- ------- -------
32 (86) (186) (351)
------- ------- ------- -------
Earnings before minority
interest in net income (loss)
of subsidiary ...................... 8 238 76 1,300
Minority interest in net income (loss)
of subsidiary ...................... -- (2) -- (2)
Earnings before income tax ............ 8 240 76 1,302
Income tax expense .................... -- -- -- --
------- ------- ------- -------
Net earnings .......................... 8 240 76 1,302
======= ======= ======= =======
Earnings per common share ............. .00 .06 .02 .32
======= ======= ======= =======
Fully diluted earnings per common share .00 .06 .02 .32
======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
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RADVA CORPORATION
Statements of Cash Flows
Nine Months Ended September 30
(In Thousands)
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
Cash flows from operating activities:
Net income ................................. $ 76 $ 1,302
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ............................ 422 335
Amortization ............................ 25 70
Loss (Gain) on sale of equipment ........ (20) --
Change in assets and liabilities:
Decrease (Increase) in net receivables . 700 (1,053)
Decrease (Increase) in inventories ..... 143 473
Decrease (Increase) in prepaid expenses (8) 53
Increase in other current assets ....... (38) (71)
Decrease (Increase) in other assets .... (40) (558)
Increase (Decrease) in accounts payable (223) (693)
Increase (Decrease) in accrued expenses (130) (136)
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Total adjustments .................... 831 (1,580)
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Net cash from operating activities ... 907 (278)
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Increase (decrease) in minority interest in
consolidated subsidiary .................... (95) (37)
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Cash flows from investing activities:
Proceeds from sale of equipment ............ 33 1,578
Capital expenditures for equipment and other
long-term assets ......................... (986) (1,616)
------- -------
Net cash from investing activities ... (953) (38)
------- -------
Cash flows from financing activities:
Increase in other long-term debt ........... -- 61
Payments for repurchase of company stock ... (14) (19)
Proceeds from notes payable ................ 165 855
Principal payments under notes payable ..... (124) (569)
Proceeds from long-term debt ............... 407 4,047
Principal payments under long-term debt .... (495) (4,037)
------- -------
Net cash from financing activities ... (61) 338
------- -------
Net increase (decrease) in cash ............... (202) (15)
Cash at January 1 ............................. 246 79
------- -------
Cash at September 30 .......................... $ 44 $ 64
======= =======
</TABLE>
See accompanying notes to financial statements.
-5-
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RADVA CORPORATION
Notes to Financial Statements
September 30, 1999
(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.
<TABLE>
<CAPTION>
(2) Property, Plant and Equipment
<S> <C>
A summary of property, plant and equipment follows:
Land and improvements............................. $ 183,133
Buildings and improvements........................ 3,095,503
Machinery and equipment........................... 5,154,853
Transportation equipment.......................... 373,606
Office equipment.................................. 276,926
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$9,084,021
==========
(3) Accrued Expenses
Accrued expenses are comprised of the following:
Payroll and employment benefits................... $ 193,038
Interest.......................................... 4,531
Other............................................. 80,908
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$ 278,477
==========
(4) Notes Payable
Demand notes, collateralized by certain
accounts receivable and inventory
Interest at prime plus .25%....................... $ 895,204
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$ 895,204
===========
</TABLE>
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RADVA CORPORATION
Notes to Financial Statements
September 30, 1999
<TABLE>
<CAPTION>
(5) Long-term Debt
<S> <C>
A summary of long-term debt follows:
Installment note payable to bank, due in
monthly installments of $27,533, plus
interest at prime plus .25% $3,001,133
Installment notes payable with various maturities,
collateralized by equipment. Interest rates ranging
from 7.25% to 12.50% 10,345
Installment note payable to bank, due in
monthly installments of $11,905, plus interest
at prime plus .25% 785,217
Installment note payable to bank, due in
monthly installments of $4,762, plus interest
at prime 296,599
Installment note payable to financing
company, due in monthly installment of
$16,404, including interest at 8.8% 377,392
Installment note payable due in monthly installments
of $500, including interest at 8.125%, collateralized
by a deed of trust on certain real estate 24,542
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Total long-term debt 4,495,228
Less current installments of long-term debt 638,013
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Long-term debt, excluding current installments $3,857,215
==========
</TABLE>
(6) Other Matters
During the first quarter of 1999, Company acquired the remaining 10% minority
interest in Thermastructure XT Corp. resulting in 100% ownership at March 31,
1999. Thermastructure XT Corp is a vehicle dedicated to the development of a new
product, and is consolidated into the Company's financial statements.
During 1998, the Company transferred certain assets and liabilities to
Thermasteel Corp., retaining a 5% ownership interest in Thermastructure Corp.
Gain on this transaction ($806,796) was included in income from operation in
1998.
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<PAGE> 8
Item 2 - Management's Discussion and Analysis of
- ------------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Results of Operations - Nine months Ended September 30, 1999
- ------------------------------------------------------------
Compared to Nine Months Ended September 30, 1998
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The Company earned a profit of $76,000 for the nine months ended September 30,
1999 compared to a profit of $1,302,000 for the nine months ended September 30,
1998. Included in operating income in May, 1998, was $807,000 gain on the sale
of a portion of a line of business (building panel operations), without any
corresponding sales in 1999.
Manufacturing net revenues decreased $1,886,000, or 20.9%, from $9,021,000 in
the first nine months of 1998 to $7,135,000 for the first nine months of 1999.
This reduction in revenues included reduced revenues of $336,000 due to the sale
of the Company's building panel operations mentioned above. The Company has
taken active steps with the purpose of increasing future sales which includes an
increase in the advertising budget, new sales literature, and the establishment
of an internet web page (www.radva.com).
Cost of sales, as a percentage of manufacturing net revenues, increased .4% from
74.6% during the first nine months of 1998 to 75.0% for the first nine months of
1999. The percentage cost increase was held to a minimum by the absence of the
panel operations sold in May, 1998 which carried a higher cost percentage in
relation to revenues. This increase in cost is a result of fixed cost being
spread over reduced manufacturing revenues. Adding to the increased cost
percentage was an increase in depreciation of $87,000. The increased
depreciation resulted from adding new machinery and warehouse space, enhancing
the Company's capacity to service increased sales in the future.
Shipping and selling expenses and general and administrative expenses were down
$203,000 and $17,000, respectively, for the nine months ended September 30, 1999
when compared to the nine months ended September 30, 1998.
Results of Operations - Three Months Ended September 30, 1999
- -------------------------------------------------------------
Compared to Three Months Ended September 30, 1998
-------------------------------------------------
Manufacturing net revenues were down $707,000, or 25.0%, for the three months
ended September 30, 1999 as compared to the three months ended September 30,
1998.
Cost of sales, as a percentage of manufacturing net revenues, increased .3% from
77.5% for the three months ended September 30, 1998 to 77.8% for the three
months ended September 30, 1999. The causes of this increase are the same as was
discussed above for the increased percentages for the full nine months ended
September 30, 1999. Making the same comparisons, shipping and selling expenses,
and general and administrative expenses decreased $43,000 and $35,000,
respectively.
Liquidity and Capital Resources
- -------------------------------
The Company had one of its most profitable years in 1998. In addition, a major
refinancing of the Company was accomplished in 1998 under more favorable terms.
The new financing resulted in a $500,000 increase in the Company's operating
line to $1,500,000. At September 30, 1999, the balance available on this line of
credit was $605,000 and working capital was $321,000.
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<PAGE> 9
Year 2000 Issue
- ---------------
Most of Radva processes utilize the Windows 95 platform and can handle the
Century 2000 date format presently without problems. We have upgraded our
environment to Windows NT Server and Workstations. Our server for EDI is Century
2000 date format compliant and our Accounting Department, which currently uses a
UNIX based system, became Y2K compliant in May 1999 with the purchase and
installation of new software and hardware.
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<PAGE> 10
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
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See item 3 of the Company's Form 10-K for the fiscal year ended
December 31, 1998.
Item 2. Changes in Securities
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Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders
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Not applicable.
Item 5. Other Information
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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
October 26, 1999
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from Balance
Sheet as of September 30, 1999 and Statement of Operations for the nine months
then ended and is qualified in its entirety to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 44
<SECURITIES> 0
<RECEIVABLES> 2,153
<ALLOWANCES> 134
<INVENTORY> 790
<CURRENT-ASSETS> 2,973
<PP&E> 9,084
<DEPRECIATION> 4,090
<TOTAL-ASSETS> 11,457
<CURRENT-LIABILITIES> 2,652
<BONDS> 0
0
0
<COMMON> 41
<OTHER-SE> 4,907
<TOTAL-LIABILITY-AND-EQUITY> 11,457
<SALES> 7,135
<TOTAL-REVENUES> 7,300
<CGS> 5,348
<TOTAL-COSTS> 6,873
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 351
<INCOME-PRETAX> 76
<INCOME-TAX> 0
<INCOME-CONTINUING> 76
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
