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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, 1999 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 (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 May 10, 1999, there were 4,058,727 shares of Registrant's Common Stock, $.01
par value per share, outstanding.
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RADVA CORPORATION
INDEX
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<TABLE>
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Page
Number
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PART I. FINANCIAL INFORMATION:
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Item 1. Financial Statements
Balance Sheets,
December 31, 1998 and March 31, 1999 3
Statements of Operations, Three Months
Ended March 31, 1998 and March 31, 1999 4
Statements of Cash Flows, Three Months
Ended March 31, 1998 and March 31, 1999 5
Notes to Financial Statements 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION 10
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<TABLE>
RADVA CORPORATION
Balance Sheets
(In Thousands)
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March 31 December 31
ASSETS 1999 1998
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Current assets:
Cash .................................... $ 8 $ 246
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Accounts and notes receivable ........... 2,709 2,832
Less allowance for doubtful accounts .... 122 113
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Net receivables ......................... 2,587 2,719
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Inventories:
Finished goods ........................ 412 601
Work in process ....................... 18 --
Raw materials and supplies ............ 327 332
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Total inventories ..................... 757 933
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Prepaid expenses ........................ 29 35
Other current assets .................... 79 39
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Total current assets .............. 3,460 3,972
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Property, plant & equipment, at cost ....... 8,546 8,134
Less accumulated depreciation ........... 3,820 3,691
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Net property, plant & equip ....... 4,726 4,443
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Investment in Thermasteel Corporation ...... 262 262
Trademark manufacturing and
marketing rights .......................... 499 506
Note receivable-noncurrent ................. 2,498 2,482
Other assets ............................... 152 225
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$11,597 $11,890
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 594 $ 594
Notes payable ........................... 318 854
Accounts payable ........................ 1,037 1,064
Accrued expenses ........................ 455 408
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Total current liabilities ....... 2,404 2,920
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Long-term debt, excluding current
installments ............................ 4,231 3,989
Minority interest in consolidated
subsidiary .............................. -- 95
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Total liabilities ............... 6,635 7,004
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Stockholders' equity:
Common stock of $.01 par value
Authorized 10,000,000 shares; issued
and outstanding 4,073,727 ............ 41 41
Additional paid-in capital .............. 4,481 4,493
Retained earnings ....................... 440 352
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Total stockholders' equity ..... 4,962 4,886
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$11,597 $11,890
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</TABLE>
See accompanying notes to financial statements
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<TABLE>
RADVA CORPORATION
Statements of Operations
Three Months Ended March 31
(In Thousands, except per share data)
<CAPTION>
Three Months Ended
March 31
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1999 1998
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Net Revenues:
Manufacturing net revenues ....... $ 2,652 3,432
Licensing & machinery sales ...... -- 156
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Net revenues ..................... 2,652 3,588
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Cost and expenses:
Cost of sales .................... 1,919 2,471
Shipping and selling ............. 191 265
General and administrative ....... 335 403
Research and development ......... 2 13
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2,447 3,152
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Operating income ................. 205 436
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Other income (deductions):
Interest expense ................. (122) (133)
Other ............................ 5 1
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(117) (132)
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Earnings (loss) before minority
interest in net income (loss)
of subsidiary .................... 88 304
Minority interest in net income
(loss) of subsidiary ............. -- (19)
Earnings (loss) before income tax.... 88 323
Income tax expense .................. -- --
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Net earnings (loss) ................. $ 88 323
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Earnings per common share ........... $ .02 .07
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</TABLE>
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<TABLE>
RADVA CORPORATION
Statements of Cash Flows
Three Months Ended March 31
(In Thousands)
<CAPTION>
1999 1998
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Cash flows from operating activities:
Net income.................................... $ 88 $ 323
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation............................... 129 117
Amortization............................... 3 50
Change in assets and liabilities:
Decrease (Increase) in net receivables.... 132 (354)
Decrease (Increase) in inventories........ 176 3
Decrease (Increase) in prepaid expenses... 6 9
Increase in other current assets.......... (40) (41)
Decrease (Increase) in other assets....... 61 (339)
Increase (Decrease) in accounts payable... (27) (226)
Increase (Decrease) in accrued expenses... 47 155
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Total adjustments....................... 487 (626)
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Net cash from operating activities...... 575 (303)
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Increase (Decrease) in minority interest in
consolidated subsidiary...................... (95) 149
Cash flows from investing activities:
Capital expenditures for equipment and other
long-term assets............................ (412) (132)
Purchase of Treasury stock.................... (12) (9)
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Net cash from investing activities...... (424) (141)
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Cash flows from financing activities:
Proceeds from notes payable................... -- 336
Principal payments on notes payable........... (536) --
Proceeds from long-term debt.................. 407 171
Principal payments under long-term debt....... (165) (122)
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Net cash from financing activities...... (294) 385
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Net increase (decrease) in cash.................. (238) 90
Cash at January 1................................ 246 79
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Cash at March 31................................. $ 8 $ 169
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</TABLE>
See accompanying notes to financial statements.
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RADVA CORPORATION
Notes to Financial Statements
March 31, 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.
(2) Property, Plant and Equipment
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A summary of property, plant and equipment follows:
Land and improvements............................. $ 182,508
Buildings and improvements........................ 3,054,768
Machinery and equipment........................... 4,692,655
Transportation equipment.......................... 357,621
Office equipment.................................. 258,189
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$8,545,741
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(3) Accrued Expenses
Accrued expenses are comprised of the following:
Payroll and employment benefits................... $ 214,740
Interest.......................................... 4,531
Other............................................. 235,823
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$ 455,094
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(4) Notes Payable
Line of credit with commercial bank,
$1,500,000 limit, interest variable
(7.75% at March 31, 1999)......................... $ 318,204
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$ 318,204
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</TABLE>
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RADVA CORPORATION
Notes to Financial Statements
March 31, 1999
(5) Long-term Debt
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A summary of long-term debt follows:
Installment notes payable due in aggregate monthly installments of
$2,070, including interest, with various maturities until
February, 2001; collateralized by equipment.
Interest rates ranging from 7.5% to 12.5% $ 8,507
Installment notes payable with financing company, due in monthly
installments of $16,404, including interest at 8.8%;
collateralized by equipment 432,964
Installment note payable, due in monthly installments of $500,
including interest at 10.625% with a final balloon payment in August
1998, collateralized by a deed of trust on certain real estate 26,187
Installment note payable, due in monthly
installments of $428, including interest at
8.5%; collateralized by equipment 9,050
Installment note payable to bank, due in
monthly installments of $11,905, including
interest at 8%, collateralized by equipment 856,647
Installment note payable to bank, due in monthly
installments of $27,533, including interest
at 7.75%; collateralized by real estate 3,166,333
Installment note payable to bank, due in monthly
installments of $836, including interest at
7.75%; collateralized by equipment 325,770
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Total long-term debt 4,825,458
Less current installments of long-term debt 593,848
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Long-term debt, excluding current installments $4,231,610
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</TABLE>
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RADVA CORPORATION
Notes to Financial Statements
March 31, 1999
(6) Other Matters
Company acquired an additional 70% of common stock of Thermastructure, Ltd.
increasing its ownership to 90% of common stock. Company acquired the additional
stock by giving up certain assets making this entire transaction a noncash
transaction. Company and minority interest of Thermastructure, Ltd. transferred
all of the assets and liabilities into a new company in 1998, Thermastructure XT
Corp, while maintaining the same ownership percentages (90% for Company and 10%
for minority interest). During the first quarter of 1999, Company acquired the
remaining minority interest in Thermastructure XT Corp. resulting in 100%
ownership at March 31, 1999. Thermastructure XT Corp is consolidated into
Company's financial statements.
During 1998, the Company transferred certain assets and liabilities to
Thermasteel Corp. for $6,200,000 (discounted to $4,976,585). Company retained a
5% ownership interest in Thermasteel Corp. Company received $1,250,000 down with
balance to be received in installments. Gain on this transaction ($806,796) has
been included in income from operation for current year. The discounted portion
($1,223,415) of the receivable will be recognized as interest income as future
collections are received. Gain is recognized as income from operations since
transfer is deemed a disposal of a portion of a line of business rather than a
sale of a segment of business.
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Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Net earnings were $88,000 for the first quarter of 1999 compared to $323,000 for
the first quarter on 1998. Unusually strong shape molding revenues in the first
quarter of 1998 were not achieved in the first quarter of 1999, resulting in the
reduction in earnings.
Cost of sales, as a percentage of manufacturing net revenues, increased from
72.0% in the first quarter on 1998 to 72.4% in the first quarter of 1999. This
.4% increase in cost is a result of fixed cost being spread over reduced
manufacturing revenues of $780,000. 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.
Shipping and selling expenses, as a percentage of manufacturing net revenues,
reduced from 7.7% in the first quarter of 1998 to 7.2% in the first quarter of
1999. The reduction in manufacturing revenues occurred primarily from sales
requiring greater shipping and sales commissions than average, resulting in an
improvement in this cost percentage.
General and administrative expenses have a greater fixed element than average
and therefore tend to increase, as a percentage of revenues, on a reduction in
revenues. General and administrative expenses increased, as a percentage of
manufacturing net revenues, from 11.7% in the first quarter of 1998 to 12.6% in
the first quarter of 1999.
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 March 31, 1999 the balance available on this line of
credit was $1,182,000 and working capital was $1,056,000.
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 with the purchase and installation
of new software and hardware.
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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
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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.
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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
May 12, 1999
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AS OF 3/31/99 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 8
<SECURITIES> 0
<RECEIVABLES> 2,709
<ALLOWANCES> 122
<INVENTORY> 757
<CURRENT-ASSETS> 3,460
<PP&E> 8,546
<DEPRECIATION> 3,820
<TOTAL-ASSETS> 11,597
<CURRENT-LIABILITIES> 2,404
<BONDS> 0
41
0
<COMMON> 0
<OTHER-SE> 4,921
<TOTAL-LIABILITY-AND-EQUITY> 11,597
<SALES> 2,652
<TOTAL-REVENUES> 2,652
<CGS> 1,919
<TOTAL-COSTS> 2,447
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 122
<INCOME-PRETAX> 88
<INCOME-TAX> 0
<INCOME-CONTINUING> 88
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 88
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
