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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
September 30, 2000 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
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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 November 2, 2000, there were 3,998,027 shares of Registrant's Common Stock,
$.01 par value per share, outstanding.
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RADVA CORPORATION
INDEX
Page
Number
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PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Balance Sheets,
December 31, 1999 and September 30, 2000 3
Statements of Operations, Three Months
and Nine Months Ended September 30, 1999 and
September 30, 2000 4
Statements of Cash Flows, Nine Months
Ended September 30, 1999 and September 30, 2000 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>
September 30 December 31
ASSETS 2000 1999
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<S> <C> <C>
Current assets:
Cash ................................... $ (157) $ 42
-------- --------
Accounts and notes receivable .......... 2,327 2,645
Other accounts receivable .............. 282 223
Less allowance for doubtful accounts ... 157 126
-------- --------
Net receivables ........................ 2,452 2,742
-------- --------
Inventories:
Finished goods ....................... 560 544
Work in process ...................... 17 5
Raw materials and supplies ........... 324 270
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Total inventories .................... 901 819
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Prepaid expenses ....................... 37 48
Other current assets ................... 50 41
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Total current assets ............. 3,283 3,692
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Property, plant & equipment, at cost ...... 9,667 9,166
Less accumulated depreciation .......... 4,694 4,221
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Net property, plant & equip ...... 4,973 4,945
-------- --------
Investment in Thermasteel Corporation ..... 262 262
Trademark, manufacturing, and marketing
rights ................................. 458 479
Note receivable-noncurrent ................ 2,449 2,334
Other assets .............................. 290 251
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$ 11,715 $ 11,963
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt.. $ 785 $ 670
Notes payable .......................... 1,317 878
Accounts payable ....................... 1,550 898
Accrued expenses ....................... 215 213
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Total current liabilities ....... 3,867 2,659
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Long-term debt, excluding current
installments ........................... 3,602 4,069
Other long-term debt ...................... 58 58
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Total Liabilities ................ 7,527 6,786
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Stockholders' equity:
Common stock of $.01 par value,
Authorized 10,000,000 shares; issued
and outstanding 3,998,027 ........... 40 40
Additional paid-in capital ............. 4,489 4,508
Retained earnings ...................... (341) 629
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Total stockholders' equity .... 4,188 5,177
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$ 11,715 $ 11,963
======== ========
</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
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Net Revenues:
Manufacturing net revenues .............. $ 2,444 2,122 7,599 7,135
------- ------- ------- -------
Cost and expenses:
Cost of sales ........................... 2,150 1,650 6,687 5,348
Shipping and selling .................... 262 168 713 520
General and administrative .............. 329 327 993 999
Research and development ................ -- 1 -- 6
------- ------- ------- -------
2,741 2,146 8,393 6,873
------- ------- ------- -------
Operating income (loss) ................. (297) (24) (794) 262
------- ------- ------- -------
Other income (deductions):
Interest expense ........................ (145) (120) (403) (351)
Interest income ......................... 98 132 174 132
Other ................................... 10 20 54 33
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(37) 32 (175) (186)
------- ------- ------- -------
Earnings (loss) before income tax........... (334) 8 (969) 76
Income tax expense ......................... -- -- -- --
------- ------- ------- -------
Net earnings (loss) ........................ (334) 8 (969) 76
======= ======= ======= =======
Earnings (loss) per common share ........... (.08) .00 (.24) .02
======= ======= ======= =======
</TABLE>
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RADVA CORPORATION
Statements of Cash Flows
Nine Months Ended September 30
(In Thousands)
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net income ............................................... $ (969) $ 76
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Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation .......................................... 473 422
Amortization .......................................... 38 25
Loss (Gain) on sale of equipment ...................... -- (20)
Change in assets and liabilities:
Decrease (Increase) in net receivables ............... 290 700
Decrease (Increase) in inventories ................... (82) 143
Decrease (Increase) in prepaid expenses............... 11 (8)
Decrease (Increase) in other current
assets ............................................ (9) (38)
Decrease (Increase) in other assets .................. (171) (40)
Increase (Decrease) in accounts payable .............. 652 (223)
Increase (Decrease) in accrued expenses .............. 2 (130)
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Total adjustments ................................... 1,204 831
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Net cash from operating activities ................. 235 907
------- -------
Increase in minority interest in consolidated
subsidiary ............................................... -- (95)
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Cash flows from investing activities:
Purchase of Treasury Stock ............................... (19) (14)
Proceeds from sale of equipment .......................... -- 33
Capital expenditures for equipment and other
long-term assets ....................................... (502) (986)
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Net cash from investing activities ................. (521) (967)
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Cash flows from financing activities:
Proceeds from notes payable .............................. 439 165
Principal payments under notes payable ................... -- (124)
Proceeds from long-term debt ............................. 150 407
Principal payments under long-term debt .................. (502) (495)
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Net cash from financing activities ................. 87 (47)
------- -------
Net increase (decrease) in cash ............................. (199) (202)
Cash at January 1 ........................................... 42 246
------- -------
Cash at June 30 ............................................. $ (157) $ 44
======= =======
</TABLE>
See accompanying notes to financial statements.
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RADVA CORPORATION
Notes to Financial Statements
September 30, 2000
(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............................. $ 166,242
Buildings and improvements........................ 3,124,848
Machinery and equipment........................... 5,710,775
Transportation equipment.......................... 365,960
Office equipment.................................. 299,498
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$9,667,323
==========
(3) Accrued Expenses
Accrued expenses are comprised of the following:
Payroll and employment benefits................... $ 137,959
Other............................................. 77,281
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$ 215,240
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(4) Notes Payable
Demand note, collateralized by certain
accounts receivable and inventory,
interest at prime plus .25%...................... $1,317,204
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$1,317,204
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RADVA CORPORATION
Notes to Financial Statements
September 30, 2000
(5) Long-term Debt
A summary of long-term debt follows:
Installment note payable due in aggregate
monthly installments of $350, including
interest, collateralized by equipment $ 2,915
Installment notes payable with financing company,
due in monthly installments of $16,404, including
interest at 8.8%; collateralized by equipment 285,158
Installment note payable, due in monthly
installments of $500, including interest at
10.625%, collateralized by a deed of
trust on certain real estate 20,980
Installment note payable, due in monthly
installments of $428, including interest at
8.5%; collateralized by equipment 2,094
Installment note payable to manufacturer,
due in quarterly installments of 23,100,
including interest at 19.5% 134,227
Installment note payable to bank, due in
monthly installments of $11,905, including
interest at 8%, collateralized by equipment 642,357
Installment note payable to bank, due in
monthly installments of $4,762 including
interest at prime, collateralized by equipment 239,456
Installment note payable to bank, due in
monthly installments of $5,556 beginning
July 31, 2000, plus interest at prime 388,889
Installment note payable to bank, due in monthly
installments of $27,533, including interest
at 7.75%; collateralized by real estate 2,670,733
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Total long-term debt 4,386,809
Less current installments of long-term debt 785,103
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Long-term debt, excluding current installments $3,601,706
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Item 2 - Management's Discussion and Analysis of
Financial Conditions and Results of Operations
Results of Operations - Nine months Ended September 30, 2000
Compared to Nine Months Ended September 30, 1999
The Company incurred a $969,000 net loss in the nine months ended September 30,
2000 compared to a $76,000 profit in the nine months ended September 30, 1999.
This profit reduction was primarily caused by reduced margins as a response by
the Company to competitive pressures in the industry and by rapidly escalating
prices of raw materials, labor, and energy. Management believes that recently
enacted price increases for the Company's products will result in improved
margins in the last quarter of the year.
Cost of sales, as a percentage of manufacturing net revenues, increased from
75.0% for the nine months ended September 30, 1999 to 88.0% for the nine months
ended September 30, 2000. As noted above, this significant increase in cost as
compared to revenues was a result in a lowering of prices in response to
competitive pressures and to rapidly escalating prices of raw materials. Other
factors contributing to the erosion of margins were increases in labor and
utility cost of approximately 4.3% and 3.1%, respectively. Also as noted above,
management expects margins to improve in the last quarter of the year.
Shipping and sales expenses, as a percentage of manufacturing net revenues,
increased from 7.3% for the nine months ended September 30, 1999 to 9.4% for the
nine months ended September 30, 2000. A primary factor in this increase is
attributed to a changing sales mix favoring customers to whom the Company sells
on terms of FOB the customers factory. Other factors contributing to this
increase were rising labor costs and freight rates.
Results of Operations - Three Months Ended September 30, 2000
Compared to Three Months Ended September 30, 1999
The Company incurred a $334,000,000 net loss in the three months ended September
30, 2000 compared to a $8,000 profit in the three months ended September 30,
1999. The primary causes of the reduction in profits were the same as was
discussed previously when making nine month comparisons. Again, management
believes profit margins will be improved in the final quarter of 2000 as a
result of recently enacted price increases for the Company's products.
Liquidity and Capital Resources
The Company has been profitable for the years 1991 through 1999. At September
30, 2000 the balance available on the Company's $1,500,000 line of credit was
$183,000.
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 1999 with the purchase and
installation of new software and hardware.
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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, 1999.
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
November 2, 2000
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