<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
Commission file number 0-15464
RADVA CORPORATION
-----------------
(Exact name of registrant as specified in its charter)
Virginia 54-0715892
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Drawer 2900 First Street Station
Radford, Virginia 24143
(540) 639-2458
--------------------------------
Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
--------------------------------------
(Title of class)
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (par. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
Aggregate market value of voting stock held by non-affiliates of the registrant
as of February 25, 2000 (see ITEM 5 for explanation of calculation): $1,023,563
----------
Number of shares of common stock outstanding as of February 25, 2000: 4,047,227
1
<PAGE> 2
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference to the registrant's proxy
statement for its annual meeting of stockholders scheduled for March 22, 2000.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
- --------------------------------
GENERAL DEVELOPMENT OF BUSINESS
- -------------------------------
RADVA Corporation (the "Company") was organized in 1962 as a Virginia
corporation to engage in the production of molded and fabricated products from
expandable polystyrene. Historically, the Company has specialized in the
production of customized expanded polystyrene packaging materials used to
protect products during shipment; however, the Company developed a composite
building panel produced from expanded polystyrene and steel which it sold under
the trademark THERMASTRUCTURE. In November, 1995, The Company sold 80% interest
in its subsidiary, Thermastructure Ltd., which manufactured the building panels
and had rights to market licensing rights to territories in the United States
not previously licensed. During 1997, the Company reacquired 70% of common stock
of Thermastructure, Ltd increasing ownership to 90% of common stock. The Company
acquired the additional stock by giving up certain assets making this entire
transaction a noncash transaction. The Company and minority interest of
Thermastructure, Ltd transferred all of the assets and liabilities into a new
company, Thermastructure XT Corp, while maintaining the same ownership
percentages (90% for Company and 10% for minority interest). Thermastructure XT
Corp is consolidated into Company's financial statements. During 1998, the
Company acquired an additional 5% ownership in its consolidated subsidiary,
Thermastructure XT Corporation. Also, during 1998, the Company and its
subsidiary, Thermastructure XT, sold 95% of their assets and interest in the
composite building panel system. These assets were then transferred to a newly
organized company, ThermaSteel Corporation, which continues to market the system
worldwide. The Company acquired the remaining 5% of Thermastructure XT
Corporation in 1999 and dissolved Thermastructure XT in accordance with terms of
the sale of the building panel system.
INDUSTRY SEGMENTS
- -----------------
The Company's operations have in the past included three principal industry
segments: the manufacture of protective packaging and similar materials, the
manufacture of THERMASTRUCTURE building panels and other building products, and
licensing and related machinery sales. The THERMASTRUCTURE building panel,
licensing, and machinery operations were sold in 1998, leaving protective
packaging and similar materials as the sole remaining industry segment.
PRINCIPAL CLASSES OF PRODUCTS
- -----------------------------
The following table sets forth the approximate relative percentages of total net
revenues (after intersegment eliminations) generated by the principal classes of
products produced by the Company in each of its principal industry segments for
each of the past three fiscal years.
2
<PAGE> 3
<TABLE>
<CAPTION>
CLASS OF PRODUCT 1999 1998 1997
---------------- ---- ---- ----
<S> <C> <C> <C>
PROTECTIVE PACKAGING AND
SIMILAR MATERIALS
Protective Packaging 100.0% 87.0% 86.0%
THERMASTRUCTURE Building Panels
License fees & machinery sales .0% 2.8% 6.3%
Panel sales & related revenue .0% 10.2% 7.7%
----- ----- -----
100.0% 100.0% 100.0%
</TABLE>
PROTECTIVE PACKAGING PRODUCTS
- -----------------------------
RADVA is an industry leader in the design and manufacture of shape molded and
fabricated foam products for material handling, protective packaging, specialty
designs, point of purchase displays, insulated shipping containers, and a
variety of other needs. RADVA products are used in businesses as varied as
consumer electronics, seafood, and furniture.
RADVA's shape molded product line includes a variety of flexible and rigid,
molded and fabricated items from foam resins. RADVA products are offered as
custom-fabricated solutions to customer needs, and as standard shapes and
containers. All products share the same high quality of manufacture.
More than 400 customers, including many Fortune 500 firms, count on RADVA
solutions to help them meet their own customer's needs in a quick,
cost-effective manner.
When RADVA was incorporated in 1962, its primary production material was
expanded polystyrene (EPS). EPS remains a significant base material because of
its low cost and relatively low environmental impact. However, RADVA products
also use a variety of other materials, depending upon the customer's need.
Common materials include ARCEL(R), GECET(R), R-MER(R), EPP and EPE, PE and PU
and thermoformed PVC and styrene.
RADVA is headquartered in Radford, Virginia, and has manufacturing facilities in
Radford and Portsmouth, Virginia. Each facility includes more than 75,000 square
feet of manufacturing and warehouse space with additional off-site warehousing.
More than 35 molding presses, including new, highly efficient Kurtz & Hirsch
machines enable RADVA to meet strict customer requirements quickly and with
consistent high quality. Complete prototype and drop testing capabilities, a
tool and die shop, and very strong supplier relationships enable the firm to
develop creative, cost-effective solutions for customers.
RADVA employs more than 120 people, and serves as one of the country's largest
three mid-Atlantic EPS recycling drop-off facilities.
3
<PAGE> 4
RAW MATERIALS AND SUPPLIERS
- ---------------------------
The principal raw material used by the Company in the production of protective
packaging products is expandable polystyrene resin. This material may be
obtained from several major suppliers. In addition, the Company uses several
copolymer resins in the manufacture of engineered expanded foam protective
packaging. Although the copolymer resins currently used by the Company are only
available from one supplier, similar copolymer resins may be obtained from other
suppliers.
PATENTS AND TRADEMARKS
- ----------------------
The Company holds three United States patents relating to the THERMASTRUCTURE
system and certain corresponding patents in Canada, Mexico, and Great Britain.
These patents cover the THERMASTRUCTURE building panels, the manufacture of
THERMASTRUCTURE building panels and a method of combining THERMASTRUCTURE
building panels to construct a house. The Company also holds a patent for a new
construction material which the Company plans to market in the future. The
Company pursues a policy of filing for patents on any product development that
it considers to be significant. The Company has registered the trademark
THERMASTRUCTURE and WALLFRAMETM in the United States and has applied for
registration in Great Britain.
SEASONALITY
- -----------
The Company ordinarily experiences a reduction in the manufacture and sale of
protective packaging products during the winter months after filling holiday
season orders. The demand for building products is affected by the level of
activity in the construction industry and housing market and can be expected to
decrease during the fall and winter seasons when there has historically been a
decrease in construction activity and housing sales.
CUSTOMERS
- ---------
The Company's protective packaging business has a broad base of customers;
however, one customer accounted for approximately 33.3% of protective packaging
revenues in 1999.
BACKLOG
- -------
The Company had approximately $1,201,807 in backlog orders for protective
packaging products as of December 31, 1999, compared to backlog orders of
approximately $1,221,553 as of December 31, 1998. Although the Company believes
that such backlog orders are firm, the purchase orders for protective packaging
products generally may be canceled without cause by the customer. The Company
expects to fill all of these orders during 2000.
COMPETITION
- -----------
The protective packaging business is highly competitive, and some of the
Company's competitors are large and have greater financial and other resources
than the Company. The Company's competition in protective packaging products is
primarily from four local and regional manufacturers with plants within or close
to the Company's market area. The principal elements of competition in the sale
of protective packaging products are price and the ability to service customers.
Because of shipping costs and other factors, the Company has found it difficult
to compete for protective packaging business beyond a 200 mile radius of the
point of manufacture. The Company believes that its custom mold division and
technical design facility give it an advantage over competitors within its
market area who do not have the capacity to design and produce their own molds
for their protective packaging customers.
4
<PAGE> 5
RESEARCH AND DEVELOPMENT
- ------------------------
The Company maintains two laboratory and testing facilities within its
manufacturing plant in Radford, Virginia. The laboratory and testing facilities,
which consist of 2,000 square feet and 1,800 square feet, respectively, are used
for product testing, development of new products, and quality control
evaluations.
REGULATION
- ----------
The Company is subject to state and federal laws and regulations affecting its
business, including those promulgated under the Occupational Safety and Health
Act ("OSHA") and by the Environmental Protection Agency. The Company's
manufacturing facilities are subject to compliance with comprehensive OSHA
standards. The Company believes that its manufacturing facilities and processes
are currently in compliance with OSHA and does not anticipate capital
expenditures for environmental control facilities or for compliance with OSHA
standards during 2000. The Company does not believe that its compliance with
federal and state environmental regulations has had or will have a material
effect on its capital expenditures, earnings, or competitive position.
EMPLOYEES
- ---------
The Company employs approximately 120 persons. None of the Company's employees
is represented by a labor union, and the Company believes that its employee
relations are good.
EXECUTIVE OFFICERS
- ------------------
The following table identifies and sets forth certain information about the
executive officers of the Company
<TABLE>
<CAPTION>
Name Age Position and Year of Election
---- --- -----------------------------
<S> <C> <C>
Luther I. Dickens 67 Chief Executive Officer (1998)
Stephen L. Dickens 42 President (1998)
James M. Hylton 66 Secretary and Treasurer (1969)
William F. Fry 60 Chief Financial Officer (1989)
Michael R. Samples 47 Vice President, Manufacturing (1999)
</TABLE>
ITEM 2. PROPERTIES
- -------------------
REAL ESTATE
- -----------
The real estate owned or leased by the Company and used in the Company's primary
business operations is described below.
5
<PAGE> 6
(1) The Company owns approximately 10 acres of land in Radford, Virginia, and a
71,000 square foot building located on the Radford property. The building
includes approximately 5,000 square feet of office space and approximately
66,000 square feet of manufacturing space. The Radford property is subject
to deeds of trust which had outstanding balances as of December 31, 1999
aggregating approximately $2,919,000.
(2) The Company owns approximately 7 acres of land in Portsmouth, Virginia, and
a 74,000 square foot building located on the Portsmouth property. The
building includes approximately 2,000 square feet of office space and
approximately 42,000 square feet of manufacturing space. The Portsmouth
property is subject to a deed of trust which had an outstanding balance as
of December 31, 1999 of approximately $2,919,000.
(3) The Company leases approximately 12,000 square feet of manufacturing space
in Radford, Virginia, under a month-to-month lease which requires monthly
rental payments of $1,500. The property is used by the Company's Custom
Mold Division and is leased to the Company by a partnership in which Mr.
Dickens and Dr. Hylton are general partners.
(4) The Company rents approximately 6,000 square feet of office space in
Radford, Virginia, under a lease which requires monthly rental payments of
$3,700. The property is rented to the Company by a partnership in which Mr.
Dickens and Dr. Hylton have an interest.
PERSONAL PROPERTY AND EQUIPMENT
- -------------------------------
The personal property and equipment at the main Radford plant and the Portsmouth
plant consist principally of machinery and equipment used to produce expanded
polystyrene products. The personal property and equipment at the Custom Mold
Division in Radford consists of machine shop tools and pattern shop tools and
related aluminum foundry equipment. The personal property and equipment at the
THERMASTRUCTURE Machine Division in Radford consist of machine shop tools and
welding and electronic test equipment used primarily in the construction of
THERMASTRUCTURE panel molding machines.
The Company owns 3 trucks and 12 trailers and leases 2 tractors which it uses to
ship products to customers. The Company owns 1 van and 8 cars which it uses
principally for sales and sales service functions. The Company believes that its
present equipment is adequate, well maintained, and in good operating condition.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
None.
6
<PAGE> 7
PART II
STOCK INFORMATION
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ------------------------------------------------------------------------------
MARKET AND PRICE INFORMATION
- ----------------------------
The Company's common stock, par value $.01 per share (the "Common Stock"), has
been traded in the over-the-counter market since June 1986. The following table
provides the high and low bid quotations with respect to shares of the Common
Stock for the periods indicated as reported by the Dow Jones Historical Stock
Quote Reporter Service.
<TABLE>
<CAPTION>
1999 1998 1997
---- ----- ----
High Low High Low High Low
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
First
Quarter 1 3/4 1/2 7/16 5/8 7/16
Second
Quarter 1 3/16 3/4 1 1/2 7/16 7/16
Third
Quarter 15/16 1/2 1 5/8 5/8 1/2
Fourth
Quarter 3/4 3/8 1 3/8 9/16 9/16
</TABLE>
The foregoing quotations of high and low bid prices represent prices between
dealers and do not include retail mark-up, mark-down, or commissions. They do
not necessarily represent actual transactions. There was no established public
trading market for the Common Stock before June 1986.
The aggregate market value of the voting stock held by non-affiliates of the
Company as of February 25, 2000 shown on the facing page of this report was
calculated as follows: the number of shares beneficially owned by the officers
and directors of the Company as a group as of February 25, 2000 was subtracted
from 4,047,227, the total number of shares outstanding on that date, and the
resulting figure was multiplied by $.5625, the average of the bid and asked
prices of the Company's stock in the over-the-counter market on February 25,
2000. The foregoing calculation should not be deemed an admission that any of
the officers or directors of the Company is an "affiliate" of the Company.
NUMBER OF STOCKHOLDERS
- ----------------------
As of February 25, 2000, there were 228 record holders of the Common Stock.
DIVIDENDS
- ---------
The Company has not declared cash dividends on the Common Stock during its three
most recent fiscal years. The declaration and payment of dividends is entirely
within the discretion of the Board of Directors of the Company and will depend
upon the earnings, capital requirements, and financial condition of the Company.
The Company anticipates that it will retain earnings for the next several years
to finance the development of its business.
7
<PAGE> 8
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
<TABLE>
<CAPTION>
SELECTED STATEMENTS OF
INCOME (LOSS) DATA: Years Ended December 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(Dollar amounts in thousands except per share data)
<S> <C> <C> <C> <C> <C>
Net Revenues $10,186 $13,173 $10,955 $9,720 $10,777
Income before income
taxes 276 1,517 209 -- 492
Net income 276 1,517 209 -- 482
Net income per
common share .07 .37 .05 -- .13
<CAPTION>
SELECTED BALANCE
SHEET DATA: Years Ended December 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(Dollar amounts in thousands except per share data)
<S> <C> <C> <C> <C> <C>
Working capital $ 974 $ 1,051 $ (679) $1,871 $2,151
Net property, plant,
and equipment 4,945 4,443 4,688 2,497 2,308
Total assets 11,963 11,890 11,192 7,774 7,998
Long-term debt (including
current maturities) 4,738 4,583 4,371 2,971 3,075
Stockholders' equity 5,177 4,886 3,388 3,180 3,179
</TABLE>
8
<PAGE> 9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
-------------
RESULTS OF OPERATION
- --------------------
The following table sets forth the percentage relationship that certain items in
the statements of operations bear to the net revenues of the Company for each
year during the five-year period ended December 31, 1999. Additional financial
information as to the Company's three industry segments is set forth in note 14
to the financial statements.
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Manufacturing net revenues 100.0% 90.1% 93.7% 97.1% 86.0%
Licensing & related
machinery sales .0 9.9 6.3 2.9 14.0
----- ----- ----- ----- -----
Net revenues 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
Cost and expense:
Cost of sales 74.8 66.3 74.1 75.1 69.4
Shipping and sales 7.4 6.8 7.7 8.2 9.0
General and administrative 12.6 12.1 12.7 12.9 13.5
Research and development .0 .2 .9 .5 0.3
----- ----- ----- ----- -----
94.8 85.4 95.4 96.7 92.2
----- ----- ----- ----- -----
Operating income 5.2 14.6 4.6 3.3 7.8
----- ----- ----- ----- -----
Other income (deductions)
Interest expense (4.5) (3.6) (3.9) (3.3) (2.7)
Interest income 1.7 .3 .3 .0 .1
Other .1 .0 .0 .0 (.0)
----- ----- ----- ----- -----
(2.7) (3.3) (3.6) (3.3) (2.6)
----- ----- ----- ----- -----
Income before income taxes
and minority interest in
subsidiary 2.7 11.5 1.6 .0 4.6
Income tax expense .0 .0 .0 .0 (.1)
----- ----- ----- ----- -----
Income before minority
interest in net loss of
subsidiary 2.7 11.5 1.6 .0 4.5
Minority interest in net
loss of subsidiary .0 .0 .3 .0 .0
----- ----- ----- ----- -----
Net income 2.7% 11.5% 1.9% .0% 4.5%
===== ===== ===== ===== =====
</TABLE>
9
<PAGE> 10
1999 COMPARED TO 1998
- ---------------------
The Company's operating income decreased $1,394,000 from $1,922,000 in 1998 to
$528,000 in 1999. This decrease was the result of decreased manufacturing net
revenues of $1,683,000 and the inclusion in 1998 operating income of a sale of
the Company's THERMASTRUCTURE panel manufacturing and licensing rights,
including equipment, at a profit of approximately $807,000.
Revenues were lower in 1999 as compared to 1998 by $877,000 and $741,000 in the
Company's Radford and Portsmouth, Virginia plants, respectively. Also
contributing to the reduction of manufacturing revenues was the absence of
approximately $411,000 revenues from the Company's THERMASTRUTURE operations
sold in 1998. These reductions were partly offset by increased revenues from the
Company's Corporate Sales Division of $723,000.
Cost of sales, as a percent of manufacturing net revenues, was 74.8% in 1999 as
compared to 73.6% in 1998. Among the many factors contributing to this 1.2%
increase in costs were rising material prices and a changing sales mix.
Shipping and selling expenses, as a percent of manufacturing net revenues held
fairly constant from the prior year, decreasing .1% from 7.5% in 1998 to 7.4% in
1999. General and administration expenses were down in 1999 as compared to 1998
by $308,405 or .8% of manufacturing net revenues. This reduction was primarily
the result of the sale the THERMASTRCUTURE operations in 1998 and reduced
management bonuses on reduced income.
A significant contribution to net income in 1999 was made by an increase in
interest income of $125,000. Interest income was accrued on non-interest bearing
notes received on the sale of the THERMASTRUCTURE operations which were
discounted in 1998 to their net present value.
1998 COMPARED TO 1997
- ---------------------
The Company's operating income was $1,922,000 for 1998 compared to $508,000 for
1997. This $1,414,000 increase in operating income was primarily the result of
the Company's sale of its THERMASTRUCTURE panel manufacturing and licensing
rights, including equipment, at a profit of approximately $807,000 in May, 1998,
and increased profits in its shape molding operations before interest
allocations of approximately $950,000.
The Company retained a 5% ownership position in the company newly formed to hold
and operate the THERMASTRUCTURE assets, and has reported the $807,000 profit
from the sale as net licensing and machinery sales.
Manufacturing net revenues increased $1,602,000 for 1998 compared to 1997. This
increase was the result of strong sales growth in shape molding operations,
especially at the Company's plant in Portsmouth, Virginia, which accounted for
$1,662,000 of increased sales.
Cost of sales, as a percent of manufacturing net revenues, was 73.6% for 1998 as
compared to 79.1% for 1997. However, these percentages are effected greatly by
cost relationships in the THERMASTRUCTURE building product line sold in May,
1998. The cost of sale percentages within the remaining shape molding operations
for comparable period comparisons decreased from 75.7% in 1997 to 70.2% in 1998.
This reduction in cost percentages primarily resulted from manufacturing
efficiencies within the Company's shape molding operations. Labor rates in the
Radford and Portsmouth, Virginia plants were down 2.3% and 5.2%, respectively.
These increased manufacturing efficiencies were aided by the installation of new
and more modern equipment.
10
<PAGE> 11
Shipping and selling expenses decreased .7% for 1998 as compared to 1997.
General and administrative expenses decreased as a percent of manufacturing net
revenues .1% for the same period comparisons. The largest factor contributing to
the decreased shipping and selling expense percentage of manufacturing net
revenues was a large increase in sales at the Portsmouth plant not subject to
shipping cost.
1997 COMPARED TO 1996
- ---------------------
The Company's 1997 revenues were greater than 1996 revenues by $1,235,000, a
12.7% increase. These increased revenues were primarily the result of: increased
shape molding revenues of $383,000; increased license and machinery sales of
$416,000; increased panels sales of $813,000; all partly offset by reduced
shipments of building materials to Russia of $402,000.
The increased panel sales were the result of the Company's having reacquired 70%
of the rights to domestic panel sales on April 1, 1997. These rights, as well as
reacquired equipment, were added to the 20% rights to domestic panel sales
already owned by the Company and transferred to a newly formed company,
Thermastructure XT Corp., 90% owned by Radva Corporation. Thermastructure XT
Corp. had sales of $813,000 in 1997 and the Company recorded no panel sales in
1996, since the Company's 20% interest in panel sales were recorded on a cost
basis.
Operating income increased $192,000 in 1997 as compared to 1996. This increased
operating income was primarily the result of an increased Shape Molding Division
operating profit of $81,000 and of increased license and machinery sale income
of $484,000 partly offset by losses by Thermastructure XT of $281,000.
The Company's cost of sales as a percent of manufacturing net revenues increased
1.7%, from 77.4% in 1996 to 79.1% in 1997, primarily as a result of the
repurchase and inclusion of panel sales in 1997. The panel sales operation had a
higher cost of sales percentage due to operating at a low rate of manufacturing
capacity.
The Company's shipping and selling expenses decreased .3%, and the company's
general and administrative expenses increased by an almost identical .3%, both
as a percent of manufacturing net revenues. Research and development expenses
increased $47,000, from $51,000 in 1996 to $98,000 in 1997 due to work toward
the development of a new building material.
IMPACT OF INFLATION
- -------------------
The Company's standard purchase order form allows it to increase the price of
its protective packaging products on 30 days' notice and, therefore, to pass on
increases in the cost of raw materials. A significant increase in the rate of
inflation and a concomitant increase in interest rates could adversely affect
the Company since a large portion of the Company's indebtedness is linked to the
prime interest rate.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
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 year-end, the balance available on this line of
credit was $622,000 and working capital was $974,000.
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 Century 2000 date compliant during 1999.
11
<PAGE> 12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
INDEX TO FINANCIAL STATEMENTS
- -----------------------------
Page
----
Independent Auditors' Reports........................................ 13
Balance Sheets as of December 31, 1999 and 1998...................... 14-15
Statements of Operations for the Years Ended
December 31, 1999, 1998, and 1997................................. 16
Statements of Stockholders' Equity for the Years
Ended December 31, 1999, 1998, and 1997........................... 17
Statements of Cash Flows for the Years
Ended December 31, 1999, 1998, and 1997........................... 18-19
Notes to Financial Statements as of December 31,
1999, 1998, and 1997.............................................. 20-30
INDEX TO FINANCIAL STATEMENT SCHEDULES
- --------------------------------------
Schedule V - Property, Plant and Equipment........................... 31
Schedule VI - Accumulated Depreciation and
Amortization of Property, Plant, and Equipment.................... 32
Schedule VIII - Valuation and Qualifying Accounts.................... 33
12
<PAGE> 13
PERSINGER & COMPANY, L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
203 W. GRAYSON STREET
GALAX, VIRGINIA 24333
TELEPHONE: 540-236-8135
FAX: 540-236-0797
INDEPENDENT AUDITOR'S REPORT
Board of Directors
RADVA Corporation
Radford, Virginia
We have audited the consolidated financial statements and the consolidated
financial statement schedules of RADVA Corporation and subsidiary as of and for
the years ended December 31, 1999 and 1998 as listed in the accompanying index.
These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of RADVA Corporation
and subsidiary as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles. In addition, in our opinion, the 1999
and 1998 financial statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole, present fairly, in
all material respects, the information required to be included therein.
Galax, Virginia
January 26, 2000
13
<PAGE> 14
<TABLE>
RADVA CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
<CAPTION>
1999 1998
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Notes 2 and 3) $ 41,812 $ 246,380
----------- -----------
Accounts and notes receivable (Notes 7 and 8) 2,644,977 2,349,886
Receivable - other (Notes 3 and 15) 222,512 481,889
Less allowance for doubtful accounts 125,932 113,140
----------- -----------
Net receivables 2,741,557 2,718,635
----------- -----------
Inventories (Notes 7 and 8):
Finished goods 544,035 601,054
Work-in-process 5,121 --
Raw materials and supplies 270,295 331,666
----------- -----------
Total inventories 819,451 932,720
----------- -----------
Prepaid expenses 48,111 35,132
Other current assets 40,784 39,138
----------- -----------
Total current assets 3,691,715 3,972,005
----------- -----------
Property, plant and equipment, at cost (Notes 5, 7 and 8) 9,166,099 8,134,260
Less accumulated depreciation and amortization 4,220,646 3,691,264
----------- -----------
Net property, plant and equipment 4,945,453 4,442,996
----------- -----------
Other assets, at cost, less accumulated amortization:
Investment in Thermasteel (Note 15) 261,925 261,925
Trademark, marketing and manufacturing rights 478,497 506,325
Note receivable - long-term 2,334,290 2,481,964
Other (Note 16) 251,151 225,001
----------- -----------
3,325,863 3,475,215
----------- -----------
$11,963,031 $11,890,216
=========== ===========
</TABLE>
continued
14
<PAGE> 15
<TABLE>
RADVA CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<CAPTION>
1999 1998
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (Notes 3 and 8) $ 669,950 $ 593,848
Notes payable (Note 7) 878,204 854,204
Accounts payable 898,305 1,064,397
Accrued expenses (Note 6) 271,024 408,181
----------- -----------
Total current liabilities 2,717,483 2,920,630
----------- -----------
Long-term debt, excluding current installments
(Notes 3 and 8) 4,068,357 3,988,959
----------- -----------
Minority interest in subsidiary (Note 21) -- 94,316
----------- -----------
Total liabilities 6,785,840 7,003,905
----------- -----------
Commitments, contingencies and other matters
(Notes 8, 12, 15, 16 and 17)
Stockholders' equity:
Common stock, par value $.01 per share; authorized
10,000,000 shares; issued 4,047,227 and 4,085,727
shares in 1999 and 1998 40,473 40,857
Additional paid-in capital 4,508,141 4,493,129
Retained earnings (deficit) 628,577 352,325
----------- -----------
Total stockholders' equity 5,177,191 4,886,311
----------- -----------
$11,963,031 $11,890,216
=========== ===========
</TABLE>
See notes to consolidated financial statements.
15
<PAGE> 16
<TABLE>
RADVA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Net revenues:
Manufacturing net revenues $10,185,809 $11,868,780 $10,267,053
Licensing and related machinery sales (Note 15) -- 1,303,971 687,807
----------- ----------- -----------
10,185,809 13,172,751 10,954,860
----------- ----------- -----------
Costs and expenses:
Cost of sales 7,615,767 8,731,761 8,116,636
Shipping and selling expenses 749,242 894,938 840,549
General and administrative expenses 1,288,645 1,597,050 1,392,295
Research and development expenses 3,861 27,119 97,867
----------- ----------- -----------
9,657,515 11,250,868 10,447,347
----------- ----------- -----------
Operating income 528,294 1,921,883 507,513
----------- ----------- -----------
Other income (expense):
Interest expense (461,236) (484,211) (425,947)
Interest income 169,341 44,105 30,681
Other 16,200 4,200 4,200
----------- ----------- -----------
(275,695) (435,906) (391,066)
----------- ----------- -----------
252,599 1,485,977 116,447
----------- ----------- -----------
Gain (loss) on sale of assets:
Equipment 23,653 -- 12,141
Real estate -- 32,857 47,874
----------- ----------- -----------
23,653 32,857 60,015
----------- ----------- -----------
Equity in net income (loss) of investee -- -- --
----------- ----------- -----------
Minority interest in net (income) loss of subsidiary -- (1,927) 32,182
----------- ----------- -----------
Income before income taxes 276,252 1,516,907 208,644
Provision for income taxes (Note 9) -- -- --
----------- ----------- -----------
Net income $ 276,252 $ 1,516,907 $ 208,644
=========== =========== ===========
Income per common share (Note 18):
Basic $ .07 $ .37 $ .05
=========== =========== ===========
Diluted $ .07 $ N/A $ N/A
=========== =========== ===========
Weighted average number of shares outstanding:
Basic 4,059,352 4,091,560 4,104,727
Diluted 4,059,352 N/A N/A
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 17
<TABLE>
RADVA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>
ADDITIONAL RETAINED TOTAL
COMMON PAID-IN EARNINGS STOCKHOLDERS'
STOCK CAPITAL (DEFICIT) EQUITY
------- ---------- ----------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 $41,047 $4,511,939 $(1,373,226) $3,179,760
Net income -- -- 208,644 208,644
------- ---------- ----------- ----------
Balance at December 31, 1997 41,047 4,511,939 (1,164,582) 3,388,404
Treasury stock (190) (18,810) -- (19,000)
Net income -- -- 1,516,907 1,516,907
------- ---------- ----------- ----------
Balance at December 31, 1998 40,857 4,493,129 352,325 4,886,311
Treasury stock (384) (36,492) -- (36,876)
Purchase of subsidiary -- 51,504 -- 51,504
Net income -- -- 276,252 276,252
------- ---------- ----------- ----------
Balance at December 31, 1999 $40,473 $4,508,141 $ 628,577 $5,177,191
======= ========== =========== ==========
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 18
<TABLE>
RADVA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 276,252 $ 1,516,907 $ 208,644
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation 596,566 480,341 409,191
Amortization 41,721 137,904 169,402
Allowance for doubtful accounts 12,792 6,717 (66,137)
(Gain) loss on sale of assets (23,653) (32,857) (60,015)
(Gain) loss on sale of assets included in
operating revenues -- (806,796) --
Minority interest in net income (loss) of
consolidated subsidiaries -- 1,927 (32,182)
Changes in assets and liabilities:
Increase in accounts and notes receivable (295,091) (923,779) (515,730)
Decrease (increase) in receivable - other 259,377 (152,469) (329,420)
Decrease (increase) in inventories 113,269 352,189 (259,227)
Decrease (increase) in prepaid expenses (12,979) 70,975 27,712
Increase in other current assets (1,646) (8,900) --
Decrease (increase) in note receivable - noncurrent 147,674 (2,160,051) --
Increase in investment in Thermasteel Corp. -- (261,925) --
Decrease in Radoslav Joint Venture -- 336,103 --
Decrease (increase) in trademark -- 847,803 (17,154)
Decrease (increase) in other assets (40,043) 1,255,737 (362,079)
Increase (decrease) in accounts payable (166,092) (1,086,791) 813,273
Increase (decrease) in accrued expenses (137,157) (171,672) 373,246
Net effect of sale of assets to Thermasteel Corp. -- 379,487 --
----------- ----------- -----------
Net cash provided by (used in) operating activities 770,990 (219,150) 359,524
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from sale of assets 23,653 1,835,000 139,050
Company manufactured equipment and buildings -- (15,995) (220,491)
Capital expenditures on equipment (1,099,022) (1,910,112) (1,027,955)
Purchase minority interest in subsidiary (42,813) -- --
----------- ----------- -----------
Net cash used in investing activities (1,118,182) (91,107) (1,109,396)
----------- ----------- -----------
</TABLE>
continued
18
<PAGE> 19
<TABLE>
RADVA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from financing activities:
Net proceeds (payments) on notes payable 24,000 285,092 194,112
Proceeds from issuance of long-term debt 806,904 4,684,284 1,119,830
Principal payments under long-term debt (651,404) (4,472,702) (508,732)
Purchase of Treasury stock (36,876) (19,000) --
--------- ----------- ----------
Net cash provided by financing activities 142,624 477,674 805,210
--------- ----------- ----------
Net increase (decrease) in cash $(204,568) $ 167,417 $ 55,338
Cash and cash equivalents at beginning of year 246,380 78,963 23,625
--------- ----------- ----------
Cash and cash equivalents at end of year $ 41,812 $ 246,380 $ 78,963
========= =========== ==========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 465,086 $ 505,215 $ 411,043
========= =========== ==========
Cash paid during the year for income taxes $ 4,407 $ -- $ --
========= =========== ==========
</TABLE>
Supplemental disclosure of noncash investing activities:
During 1998 Radva transferred certain assets and liabilities for $6,200,000
(discounted to $4,976,585) which has been treated as disposal of a portion of a
line of business in which gain has been included in income from operations since
sale did not constitute a sale of a segment of business. This resulted in
transfer of the following assets and liabilities:
<TABLE>
<S> <C>
Assets and liabilities transferred:
Property, plant and equipment $1,525,483
Accounts receivable 516,460
Prepaid expenses 66,111
Inventory 151,519
Notes receivable 603,158
Licenses and trademarks 1,226,104
Patents 23,770
Manufacturing and marketing rights 635,744
Investments 406,199
Liabilities assumed (50,587)
Debt assumed (672,247)
Investment retained (5%) (261,925)
----------
$4,169,789
==========
</TABLE>
During 1997 Radva acquired ninety (90) percent of Thermastructure XT Corp. for
$1,481,141 which resulted in the transfer of the following assets:
<TABLE>
<S> <C>
Assets transferred:
Investment in Thermastructure, Ltd. $ 210,224
Notes receivable 1,197,308
Accounts receivable 42,928
Interest receivable 30,681
----------
$1,481,141
==========
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 20
RADVA CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operations
RADVA Corporation and subsidiary (the Company) produce and sell molded and
fabricated expanded polystyrene foam products such as packaging materials and
containers. The Company operates facilities in Radford and Portsmouth, Virginia.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiary, Thermastructure XT Corp. All significant inter-company accounts
and transactions have been eliminated in consolidation (see Note 21).
Cash and Cash Equivalents
Cash and cash equivalents consist primarily of demand deposits. For purposes of
the statements of cash flows, the Company considers all highly liquid
investments with an original maturity of less than three months to be cash
equivalents. The Company includes cash meeting this criteria whose use is
limited by restrictions contained in loan covenants.
Accounts Receivable
Accounts receivable are stated at cost less allowance for doubtful accounts. The
allowance for doubtful accounts is maintained at a level considered adequate to
provide for losses that can be reasonably anticipated.
Inventories
Inventories are stated at the lower of cost or market. Cost of raw materials,
supplies, work-in process and finished goods is determined by the first-in,
first-out method.
Investment in Radoslav Joint Venture
During 1998 Radva sold this investment (see Note 15). Prior to sale the Company
accounted for its investment in Radoslav, a 31% owned affiliate, by the equity
method of accounting under which the Company's proportionate results of the
affiliate's operations are recognized in the Company's statement of operations
and added to or taken from the investment account. Distributions received from
the affiliate are treated as a reduction of the investment account.
Investment in Thermasteel Corp.
As part of a transferring certain assets and liabilities to Thermasteel Corp.,
Radva retained a 5% ownership interest. Company accounts for this investment on
the cost basis.
20
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Other assets
Included in other assets are patents, loan costs and marketing and manufacturing
rights, which are amortized over their respective estimated lives, and trademark
rights, which are amortized over 12 years. Accumulated amortization was
$1,335,761 and $1,294,040 as of December 31, 1999 and 1998, respectively.
Property, Plant and Equipment
Depreciation of plant and equipment is provided on the straight-line basis over
the estimated useful lives of the respective assets as follows:
Buildings and improvements 5 to 30 years
Machinery and equipment 5 to 15 years
Automotive equipment 3 to 5 years
Office equipment 3 to 10 years
Leasehold improvements are amortized on a straight-line basis over the terms of
the respective leases.
Additions to property, plant and equipment are recorded at cost. All
expenditures for repairs, renewals and replacements which do not materially
extend the useful life of the property are charged to expense. Other
improvements and betterments are capitalized. With respect to dispositions, the
asset and accumulated depreciation accounts are relieved of cost and accumulated
depreciation with any resulting gain or loss credited or charged to earnings.
Revenue Recognition
Net revenues represent sales of fabricated foam products, machines and fees from
licensing agreements. Revenues from sales and the licensing agreements are
recognized upon completion of the transaction.
Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.
Investment tax credits are accounted for by the flow-through method whereby they
reduce income taxes currently payable and the provision for income taxes in the
period the assets giving rise to such credits are placed in service. To the
extent such credits are not currently utilized on the Company's tax return,
deferred tax assets, subject to considerations about the need for a valuation
allowance, are recognized for the carryforward amount.
21
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair value of financial instruments
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires disclosure about the fair value of
certain instruments. Cash, receivables, accounts payable and accrued liabilities
are reflected in the financial instruments at fair value because of the
short-term maturity of these instruments. The estimated fair values of the
company's financial instruments are disclosed in Note 3.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could vary from the estimates that were used.
Reclassification
Certain reclassifications have been made to prior years' financial statements to
place them on a comparable basis with the current year.
NOTE 2. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Petty cash and non-interest bearing accounts $ 41,812 $246,380 $57,484
Restricted by IDA bonds, series 1995 -- -- 21,479
-------- -------- -------
$ 41,812 $246,380 $78,963
======== ======== =======
</TABLE>
NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
Cash and cash equivalents:
The carrying amount approximates fair value because of the short maturity of
those instruments.
Receivable - other:
The carrying amount is a reasonable estimate of fair value since entire amount
is due within one year.
Long-term debt:
The fair value of the Company's long-term debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered to
the Company for debt of the same remaining maturities with similar collateral
requirements.
22
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The estimated fair values of the Company's financial instruments as of December
31, 1999 are as follows:
<TABLE>
<CAPTION>
1999
---------------------------
Carrying Amount Fair Value
--------------- ----------
<S> <C> <C>
Cash and cash equivalents $ 41,812 $ 41,812
Receivable - other 222,512 222,512
Long-term debt 4,738,307 4,733,301
</TABLE>
NOTE 4. RECEIVABLES
Information about impaired receivables as of and for the years ended December
31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Receivables for which there is a related
allowance for bad debts $48,000 $ --
Receivables for which there is no related
allowance for bad debts -- 48,000
------- -------
Total impaired receivables $48,000 $48,000
======= =======
Related allowance for possible bad debts $12,000 $ --
======= =======
Average balance (based on beginning and
ending of year) $48,000 $84,000
======= =======
</TABLE>
NOTE 5. PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Land and improvements $ 184,395 $ 182,508
Buildings and improvements 3,111,953 3,051,235
Machinery and equipment 5,213,965 4,312,478
Transportation equipment 365,960 338,915
Office equipment 289,826 249,124
---------- ----------
$9,166,099 $8,134,260
========== ==========
</TABLE>
NOTE 6. ACCRUED EXPENSES
Accrued expenses are composed of the following:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Payroll and employee benefits $203,587 $270,762
Interest 1,316 5,166
Customer deposits 794 890
Insurance 36,482 35,401
Licenses -- 65,000
Other 28,845 30,962
-------- --------
$271,024 $408,181
======== ========
</TABLE>
23
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. NOTES PAYABLE
A summary of notes payable follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Line of credit with commercial bank, $1,500,000
limit, interest at prime (8.5% at December 31, 1999) $ 878,204 $ 854,204
========== ==========
</TABLE>
NOTE 8. LONG-TERM DEBT
A summary of long-term debt follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
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% $ 5,746 $ 15,788
Installment notes payable with financing company, due in monthly installments
of $16,404, including interest at 7.56%; collateralized by equipment 352,844 456,069
Installment note payable, due in monthly installments of $500, including
interest at 10.625%; collateralized by a deed of trust on certain real estate 23,687 26,978
Installment note payable, due in monthly installments of $428, including
interest at 8.5%; collateralized by equipment 5,682 10,126
Installment note payable to bank, due in monthly installments of $11,905,
including interest at prime (8.5% at December 31, 1999); collateralized
by equipment 749,502 892,362
Installment note payable to bank, due in monthly installments of $27,533,
including interest at prime (8.5% at December 31, 1999); collateralized
by real estate 2,918,533 3,111,266
Installment note payable to bank, due in monthly installments of $4,762,
including interest at prime (8.5% at December 31, 1999); collateralized
by equipment 282,313 70,218
Installment note payable to bank, due in monthly installments of $5,556,
including interest at prime (8.5% at December 31, 1999); collateralized
by equipment 400,000 --
---------- ----------
Total long-term debt 4,738,307 4,582,807
Less current installments of long-term debt 669,950 593,848
---------- ----------
Long-term debt, excluding current installments $4,068,357 $3,988,959
========== ==========
</TABLE>
Substantially all real property, equipment, accounts receivable and inventory
are pledged as collateral on various debt instruments.
24
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. LONG-TERM DEBT (CONTINUED)
The aggregate principal maturities of long-term debt during each of the five
years subsequent to December 31, 1999 follows:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
<S> <C>
2000 $ 669,950
2001 677,392
2002 680,792
2003 661,433
2004 601,512
Thereafter 1,447,228
----------
$4,738,307
==========
</TABLE>
NOTE 9. INCOME TAX MATTERS
Net deferred tax assets and liabilities consist of the following components as
of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Deferred tax assets:
Bad debt allowance $ 47,854 $ 42,993
Accrued expenses 25,505 23,373
Bonuses 5,798 16,184
Inventory allowance 15,241 17,100
Contributions carryover -- 2,164
Loss carryforward 330,179 218,746
Investment tax credit carryforward 48,084 89,060
Minimum tax credit carryforward 20,073 20,073
-------- --------
492,734 429,693
Less valuation allowance 198,785 129,187
-------- --------
$293,949 $300,506
======== ========
Deferred tax liabilities:
Property and equipment $293,949 $300,506
======== ========
$ -- $ --
======== ========
</TABLE>
As noted, the deferred tax assets equal the deferred tax liabilities resulting
in no effect on the income statement or stockholders' equity for the year.
Loss carryforwards for tax purposes as of December 31, 1999 have the following
expiration dates:
<TABLE>
<CAPTION>
Expiration Date Amount
--------------- ------
<S> <C>
2005 $575,647
========
</TABLE>
Investment tax credit carryforwards for tax purposes as of December 31, 1999
have the following expiration dates:
<TABLE>
<CAPTION>
Expiration Date Amount
--------------- ------
<S> <C>
2000 $48,084
=======
</TABLE>
25
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9. INCOME TAX MATTERS (CONTINUED)
The income tax provision differs from the amount of income tax determined by
applying the U.S. Federal income tax rate to pretax income for the years ended
December 31, 1999, 1998 and 1997 due to the following:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Computed "expected" tax benefit $ 90,988 $ 515,748 $ 64,621
Non-deductible expenses 18,090 21,562 4,801
State income taxes, net of federal income tax benefit 13,047 52,250 8,087
Benefit of operating loss carryforward (122,125) (500,863) (77,509)
Other -- (88,697) --
--------- --------- --------
$ -- $ -- $ --
========= ========= ========
</TABLE>
NOTE 10. RETIREMENT PLANS
The Company has a profit sharing plan (the Plan) which covers all full-time
officers and employees who have at least one year of service and attained the
age of 21. Contributions to its profit sharing plan are at Company's discretion.
The Plan is a qualified plan under applicable sections of the Internal Revenue
Code. Profit sharing expense for the period ended December 31, 1999, 1998 and
1997 was $ -0-.
The Company adopted a 401K retirement plan during 1998 which covers all
full-time officers and employees who have at least one year of service and
attained the age of 21. Contributions to the plan are made at a rate of 25% of
each employees contribution up to a maximum of 4% of each employees earnings for
the year. The plan is a qualified plan under applicable sections of the Internal
Revenue Code. Company contributions for the year ended December 31, 1999 and
1998 was $18,618 and $17,593, respectively.
NOTE 11. RELATED PARTY TRANSACTIONS
The Company has a month-to-month lease on certain operating and warehouse space
with Jalu, a partnership in which the Company's Chief Executive Officer is a
partner. The space is currently rented for $1,000 per month. The Company also
rents on a month-to-month basis certain office space from Chuckatuck, a
partnership in which the Company's Chief Executive Officer is a partner. The
present rental payment is $3,700 per month.
NOTE 12. OPERATING LEASES
The Company leases certain of its manufacturing and office facilities and
equipment. Rental expense for the years ended December 31, 1999, 1998 and 1997
was $160,130, $180,771, and $173,763, respectively. All leases have expired;
however, the Company continues to lease these facilities under the previous
lease schedules for $4,685 per month.
NOTE 13. MAJOR CUSTOMER AND SUPPLIER
The percentage of net revenue attributable to the Company's major customers
(exceeding 10% of total revenues) is 33.3% for 1999, 13.0% for 1998, and 12.5%
for 1997.
The percentage of cost of sales attributable to the Company's major suppliers
(exceeding 10% of total cost of sales) is 38.1% for 1999 and 18.0% for 1998.
26
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14. INDUSTRY SEGMENTS
The Company considers its operations to include principally three industry
segments; (1) manufacture of protective packaging and similar materials, (2)
manufacture of THERMASTRUCTURE building products, and (3) licensing and related
machinery sales. Summary data for 1999, 1998, and 1997 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Net revenues:
Protective packaging and similar material $10,185,809 $11,458,112 $ 9,421,180
THERMASTRUCTURE products and similar materials -- 1,340,631 845,873
Licensing and related machinery sales -- 374,008 687,807
----------- ----------- -----------
Revenue $10,185,809 $13,172,751 $10,954,860
=========== =========== ===========
Operating income (loss):
Protective packaging and similar materials $ 2,618,517 $ 3,799,524 $ 2,477,830
THERMASTRUCTURE products and similar materials (48,475) 576,879 60,437
Licensing and related machinery sales -- 64,587 299,957
----------- ----------- -----------
Segment operating income 2,570,042 4,440,990 2,838,224
General corporate expense 2,041,748 2,519,107 2,330,711
----------- ----------- -----------
Operating profit $ 528,294 $ 1,921,883 $ 507,513
=========== =========== ===========
Capital expenditures:
Protective packaging and similar materials $ 1,071,927 $ 1,815,983 $ 1,026,830
THERMASTRUCTURE products - U.S. operations -- 63,697 206,892
General corporate 27,095 46,427 14,724
----------- ----------- -----------
Capital expenditures $ 1,099,022 $ 1,926,107 $ 1,248,446
=========== =========== ===========
Depreciation and amortization:
Protective packaging and similar materials $ 566,695 $ 547,091 $ 468,762
THERMASTRUCTURE products 35,696 45,217 82,257
General corporate 35,896 25,937 27,574
----------- ----------- -----------
Depreciation and amortization $ 638,287 $ 618,245 $ 578,593
=========== =========== ===========
Identifiable assets at December 31:
Protective packaging and similar materials $ 5,815,823 $ 5,361,044 $ 3,970,025
THERMASTRUCTURE products 3,827,588 1,577,933 2,938,691
Licensing and related machinery sales 63,715 63,515 1,745,769
General corporate 2,255,905 4,887,724 2,537,687
----------- ----------- -----------
Assets $11,963,031 $11,890,216 $11,192,172
=========== =========== ===========
</TABLE>
27
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15. OTHER MATTERS
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.
During 1998, the Company transferred its 100% owned subsidiary, RADVA RU, Inc.
as part of sale to Thermasteel Corp. Restatement of prior periods as a result of
this transfer resulted in no change to prior periods since RADVA RU, Inc. had no
assets, liabilities or activity during the periods presented.
During 1997, the 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 Thermastructure XT Corp while maintaining the same ownership percentages
(90% for Company and 10% for minority interest). Thermastructure XT Corp is
consolidated into Company's financial statements.
NOTE 16. OTHER ASSETS - OTHER
Other assets - other consist of the following:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Deposits $ 15,600 $ 15,600 $ 15,600
Loan costs 51,395 57,420 31,938
Patent costs 42,343 42,343 51,134
Mexican investment -- -- 70,096
Investment in Pereslav 55,000 55,000 55,000
Investment in licenses -- -- 1,105,135
Material rights 86,666 54,638 13,931
Other 147 -- --
-------- -------- ----------
$251,151 $225,001 $1,342,834
======== ======== ==========
</TABLE>
NOTE 17. CONTINGENCIES
Debt assumption:
On April 1, 1997 Company reacquired certain real estate of Thermastructure, Ltd.
by assuming obligations owed to the Industrial Development Authority (IDA)
amounting to $775,818.
As of December 31, 1999 Company remains primarily liable on debt assumed as part
of transfer of certain real estate. Outstanding balance on this debt amounted to
$570,000 as of December 31, 1999.
28
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17. CONTINGENCIES (CONTINUED)
Legal matters:
In the normal course of business, the Company is involved in various legal
proceedings. In the opinion of management, any liability resulting from such
proceedings would not have a material adverse effect on the Company's
consolidated financial statements.
NOTE 18. NET INCOME PER COMMON SHARE AND COMMON SHARE EQUIVALENT
Basic earnings per share excludes dilution and is computed by dividing net
income by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share is computed by dividing net income by the sum
of the weighted-average number of common shares outstanding for the period and
the number of equivalent shares assumed outstanding under the Company's stock
option plans.
Options held to purchase 400,000 common shares at $.81 were not dilutive and
were outstanding at December 31, 1999. These shares are not included in the
diluted earnings per share calculation because the options' exercise price was
greater than the average market price of the common shares. Diluted earnings per
share was calculated as follows:
<TABLE>
<CAPTION>
1999
----------
<S> <C>
Net income to common stockholders $ 272,252
==========
Weighted average common shares outstanding 4,059,352
Share equivalents, due to stock options --
----------
4,059,352
==========
Net income per share-diluted $ .07
==========
</TABLE>
NOTE 19. STOCK OPTION PLANS
During the year Company approved two Stock Option Plans, the 1998 Stock Option
Plan and the 1998 Non-employee Directors Stock Option Plan. Both Plans contained
retroactive effective dates of July 8, 1998 and September 28, 1998,
respectively.
The Company's 1998 Stock Option Plan (the Plan) authorizes the granting of stock
options, up to a total of 375,000 shares of common stock, to any employee of the
Company. Under the Plan, the exercise price of each option equals fair market
value of the Company's stock on the grant date, and an option's maximum term is
ten years. If the employee is a 10% shareholder the exercise price of each
option shall not be less than 110% of the fair market value on the grant date,
and an option's maximum term is five years.
The Company's 1998 Non-employee Directors Stock Option Plan (the Plan)
authorizes the granting of stock options, up to a total of 125,000 shares of
common stock, to the directors of the Company who are not otherwise employees of
the Company or any Subsidiary and were not employees for a period of at least
one year before the date of grant of an option under the Plan. Under the Plan,
the exercise price of each option equals fair market value of the Company's
stock on grant date, and an option's maximum term is ten years.
29
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19. STOCK OPTION PLANS (CONTINUED)
A summary of the status of the Company's Stock Option Plans as of December 31,
1999, and the changes during the year is presented below:
<TABLE>
<CAPTION>
FIXED OPTIONS SHARES WEIGHTED-AVERAGE EXERCISE PRICE
------------------------------------------------------ ------- -------------------------------
<S> <C> <C>
January 1, 1999 400,000 $.81
Granted -- --
Exercised -- --
Forfeited -- --
-------
December 31, 1999 400,000 $.81
=======
Exercisable at December 31, 1999 400,000 $.81
Options available for grant at December 31, 1999 100,000 $.81
</TABLE>
The range of option prices for options outstanding as of December 31, 1999, was
$.81 with a weighted average remaining contractual life of approximately 9
years.
If the Company had used the fair value based method of accounting for its
Employee Stock Option Plan, as prescribed by Statements of Financial Accounting
Standards No. 123, compensation cost in net income for the year ended December
31, 1999 would have increased by $222,750, resulting in net income of $53,502,
net of tax. The basic and diluted earnings per share would have been $.01.
The fair value of each option grant of $.81 is estimated on the date of grant
using the exercise price since fair value could not be reasonably estimated at
grant date.
NOTE 20. STOCK REPURCHASE PLAN
Board of Directors has authorized the Company to repurchase up to 200,000 shares
of the Company's common stock. The Company purchased 38,500 shares for
approximately $37,000, increasing the total number of shares purchased pursuant
to the Stock Repurchase Plan to 57,500 shares.
NOTE 21. LIQUIDATION OF SUBSIDIARY
During the year, RADVA Corporation (the Company) acquired the minority interest
of Thermastructure XT Corp. This made Thermastructure XT Corp. a wholly owned
subsidiary of the Company. At December 22, 1999 the Company elected to liquidate
subsidiary and combine the assets and liabilities with the Company's assets and
liabilities. Generally this type of transaction would be accounted for using the
purchase method of accounting, however, with transfers between entities under
common control, a parent company may transfer net assets of a wholly owned
subsidiary to itself and liquidate subsidiary. This type of transfer is
accounted for at historical cost in a manner similar to a pooling of interest.
As a result of this transfer the Company recorded an increase in paid-in capital
of $51,504.
30
<PAGE> 31
<TABLE>
RADVA CORPORATION AND SUBSIDIARY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>
OTHER
BALANCE CHANGES
AT ADD BALANCE
BEGINNING ADDITIONS (DEDUCT) AT END
CLASSIFICATION OF YEAR AT COST RETIREMENTS (A) (B) OF YEAR
-------------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Land and improvements $ 225,984 $ -- $ 5,000 $ 91,753 $ 312,737
Buildings and improvements 2,102,263 115,835 82,298 695,110 2,830,910
Machinery and equipment 2,702,842 837,480 38,630 909,608 4,411,300
Transportation equipment 333,289 23,579 78,075 -- 278,793
Office equipment 200,200 51,061 1,483 -- 249,778
---------- ---------- ---------- ---------- ----------
$5,564,578 $1,027,955 $ 205,486 $1,696,471 $8,083,518
========== ========== ========== ========== ==========
Year ended December 31, 1998:
Land and improvements $ 312,737 $ -- $ 130,229 $ -- $ 182,508
Buildings and improvements 2,830,910 925,148 704,823 -- 3,051,235
Machinery and equipment 4,411,300 859,230 974,047 15,995 4,312,478
Transportation equipment 278,793 79,100 18,978 -- 338,915
Office equipment 249,778 46,634 47,288 -- 249,124
---------- ---------- ---------- ---------- ----------
$8,083,518 $1,910,112 $1,875,365 $ 15,995 $8,134,260
========== ========== ========== ========== ==========
Year ended December 31, 1999:
Land and improvements $ 182,508 $ 1,887 $ -- $ -- $ 184,395
Buildings and improvements 3,051,235 60,718 -- -- 3,111,953
Machinery and equipment 4,312,478 936,125 34,638 -- 5,213,965
Transportation equipment 338,915 59,590 32,545 -- 365,960
Office equipment 249,124 40,702 -- -- 289,826
---------- ---------- ---------- ---------- ----------
$8,134,260 $1,099,022 $ 67,183 $ -- $9,166,099
========== ========== ========== ========== ==========
</TABLE>
(A) During 1999, 1998 and 1997, the Company placed in service certain property
which has previously been classified as inventory.
(B) During 1997 the Company acquired ninety (90) percent of Thermastructure XT
Corp. in a noncash transaction.
31
<PAGE> 32
<TABLE>
RADVA CORPORATION AND SUBSIDIARY
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>
ADDITIONS OTHER
BALANCE CHARGED CHANGES
AT TO COST ADD BALANCE
BEGINNING AND (DEDUCT) AT END
CLASSIFICATION OF YEAR EXPENSES RETIREMENTS (A) OF YEAR
-------------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Land and improvements $ 24,331 $ -- $ -- $ -- $ 24,331
Buildings and improvements 1,075,615 102,282 1,556 -- 1,176,341
Machinery and equipment 1,642,417 248,549 1,121 -- 1,889,845
Transportation equipment 193,817 35,466 78,075 -- 151,208
Office equipment 131,026 22,894 -- -- 153,920
---------- -------- -------- ----- ----------
$3,067,206 $409,191 $ 80,752 $ -- $3,395,645
========== ======== ======== ===== ==========
Year ended December 31, 1998:
Land and improvements $ 24,331 $ -- $ -- $ -- $ 24,331
Buildings and improvements 1,176,341 102,350 27,040 -- 1,251,651
Machinery and equipment 1,889,845 298,193 117,479 -- 2,070,559
Transportation equipment 151,208 51,813 25,113 -- 177,908
Office equipment 153,920 27,985 15,090 -- 166,815
---------- -------- -------- ----- ----------
$3,395,645 $480,341 $184,722 $ -- $3,691,264
========== ======== ======== ===== ==========
Year ended December 31, 1999:
Land and improvements $ 24,331 $ -- $ -- $ -- $ 24,331
Buildings and improvements 1,251,651 111,773 -- -- 1,363,424
Machinery and equipment 2,070,559 384,043 34,638 -- 2,419,964
Transportation equipment 177,908 70,880 32,545 (1) 216,242
Office equipment 166,815 29,870 -- -- 196,685
---------- -------- -------- ----- ----------
$3,691,264 $596,566 $ 67,183 $ (1) $4,220,646
========== ======== ======== ===== ==========
</TABLE>
(A) During 1999, 1998 and 1997, the Company placed in service certain property
which has previously been classified as inventory.
32
<PAGE> 33
<TABLE>
RADVA CORPORATION AND SUBSIDIARY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<CAPTION>
ADDITIONS
--------------------
BALANCE CHARGED CHARGED
AT TO TO BALANCE
BEGINNING COST AND OTHER AT END
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS (A) OF YEAR
----------- --------- -------- --------- -------------- -------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Allowance for doubtful
accounts $172,560 $(66,137) $ -- $ -- $106,423
======== ======== ==== ====== ========
Year ended December 31, 1998:
Allowance for doubtful
accounts $106,423 $ 6,717 $ -- $ -- $113,140
======== ======== ==== ====== ========
Year ended December 31, 1999:
Allowance for doubtful
accounts $113,140 $ 17,957 $ -- $5,165 $125,932
======== ======== ==== ====== ========
</TABLE>
(A) Represents uncollectible amounts written off, net of recoveries.
33
<PAGE> 34
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
Information as to the Company's directors is incorporated by reference to
material contained under the heading "Election of Directors" in the Company's
proxy statement for its annual meeting of stockholders scheduled for March 22,
2000.
Information as to the Company's executive officers is set forth under the
heading "Executive Officers" in ITEM 1 of this report.
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
Information as to executive compensation is incorporated by reference to
material contained under the headings "Cash Compensation" and "Compensation
Plans" in the Company's proxy statement for its annual meeting of stockholders
scheduled for March 22, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
Information as to the security ownership of certain beneficial owners and
management is incorporated by reference to material contained under the heading
"Principal Stockholders" in the Company's proxy statement for its annual meeting
of stockholders scheduled for March 22, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Information as to certain relationships and related transactions is incorporated
by reference to material contained under the heading "Certain Relationships and
Related Transactions" in the Company's proxy statement for its annual meeting of
stockholders scheduled for March 22, 2000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------
(a) (1) Financial Statements (Included in PART II)
------------------------------------------
See ITEM 8 in PART II
34
<PAGE> 35
(a) (2) Financial Statement Schedules (Included in PART II)
---------------------------------------------------
See ITEM 8 in PART II
(a) (3) Exhibits
--------
The exhibits filed with this report and the documents incorporated by reference
as exhibits to this report are described below.
(3)(a) Articles of Incorporation of the Company (Incorporated
by reference to Exhibit B to Registration Statement No. 0-15464 filed with the
Securities and Exchange Commission on March 9, 1987).
(3)(b) Bylaws of the Company (Incorporated by reference to
Exhibit C to Registration Statement No. 0-15464 filed with the Securities and
Exchange Commission on March 9, 1987).
(4)(a) Bond Purchase Agreement dated as of October 1, 1981
among the Industrial Development Authority of the City of Portsmouth, First &
Merchants National Bank, and the Company; Agreement of Sale dated as of October
1, 1981 between the Industrial Development Authority of the City of Portsmouth
and the Company; Assignment Agreement dated as of October 1, 1981 between the
Industrial Development Authority of the City of Portsmouth and First & Merchants
National Bank; $550,000 promissory note of the Company; Deed of Trust dated as
of October 1, 1981 between the Industrial Development Authority of the City of
Portsmouth and Joseph S. Lovering, Jr. and William H. West, as trustees
(Incorporated by reference to Exhibit 4(a) to Registration Statement No. 33-5319
filed with the Securities and Exchange Commission on June 25, 1986).
(4)(b) Letter of Commitment dated October 9, 1984 between the
Company and Sovran Bank, N.A.; $1,000,000 promissory note of the Company; Deed
of Trust dated as of October 10, 1984 between the Company and Joel S. Rhew and
H. Gregory Kilduff, as trustees; Security Agreement dated as of October 10, 1984
between the Company and Sovran Bank, N.A. (Incorporated by reference to Exhibit
4(b) to Registration Statement No. 33-5319 filed with the Securities and
Exchange Commission on June 25, 1986).
(4)(c) Letter of Commitment dated August 25, 1984 between the
Company and Sovran Bank, N.A. and related promissory note of the Company;
Security Agreement dated August 30, 1983 between the Company and First &
Merchants National Bank (*the predecessor to Sovran Bank, N.A.); Accounts
Receivable and Inventory Reporting Service Instructions dated March 18, 1986;
Collateral Services Rate Agreement dated August 17, 1983 between the Company and
First & Merchants National Bank (Incorporated by reference to Exhibit 4(c) to
Registration Statement No. 33-5319 filed with the Securities and Exchange
Commission on June 25, 1986).
(4)(d) Letter of Commitment dated September 16, 1987 between
the Company and Sovran Bank, N.A. relating to a $1,000,000 line of credit.
(Incorporated by reference to Exhibit 4(d) of Registrant's 1987 Form 10-K).
35
<PAGE> 36
(4)(e) In addition to the matters reported in Exhibits (4)(a)
through (4)(d) above, the long-term debt as shown on the consolidated balance
sheet of the Company at December 31, 1999 included additional obligations each
of which is less than 10% of the total assets of the Company. The documents
evidencing these obligations are omitted pursuant to Item 601(b)(4)(iii) of
Regulation S-K and will be furnished to the Securities and Exchange Commission
upon request.
(4)(f) See Article III, Section 4 of Exhibit 3(a).
(4)(g) See Articles II, III, VI, VIII and IX of Exhibit
(3)(b).
(4)(h) Form of Stock Purchase Warrant (Incorporated by
reference to Exhibit 4(g) to Registration Statement No. 33-5319 filed with the
Securities and Exchange Commission on June 25, 1986).
(10)(a) Lease Amendment #1 dated August 26, 1989 between the
Company and Gil Gillis, Gwenda Gillis, and Gayla Gillis relating to premises
located at 2500 South Main Street, Highway 293, Kennesaw, Georgia (Incorporated
by reference to Exhibit 10(a) of Registrant's 1987 Form 10-K).
(10)(b) Lease dated February 20, 1986 between Guam Capital
Investment Corporation and the Company relating to premises located at Lot No.
236, Agat, Guam (Incorporated by reference to Exhibit 10(c to Registration
Statement No. 33-5319 filed with the Securities and Exchange Commission on June
25, 1986).
(10)(c) Lease dated April 29, 1986 between Chuckatuck
Partnership and the Company relating to the Company's principal executive office
space in Radford, Virginia (Incorporated by reference to Exhibit 10(d) to
Registration Statement No. 33-5319 filed with the Securities and Exchange
Commission on June 25, 1986).
(10)(d) Lease dated July 1, 1987 between the Atlantic
Richfield Company and James M. Chamberlain and Patsy L. Chamberlain, as trustees
of the Chamberlain Family Trust, relating to premises located at 3802 East
Broadway, Phoenix, Arizona.
(10)(e) Agreement dated March 31, between the Department of
the Army and the Company relating to the construction of U.S. military housing
in Edgewood, Maryland. (Incorporated by reference to Exhibit 10(e) of
Registrant's 1987 Form 10-K).
(10)(f) Agreement dated September 1, 1987 between Zublin
Delaware, Inc. and the Company relating to the construction of U.S. military
housing in Vilseck, West Germany. (Incorporated by reference to Exhibit 10(f) of
Registrant's 1987 Form 10-K.)
(10)(g) Agreement dated as of July 1, 1985 between ARCO
Chemical Company and the Company relating to the sale of various copolymer
resins (Incorporated by reference to Exhibit 10(g) to Registration Statement No.
33-5319 filed with the Securities and Exchange Commission on June 25, 1986.)
36
<PAGE> 37
(10)(h) Agreement dated as of April 11, 1986 between ARCO
Technology, Inc. and the Company relating to a license of certain manufacturing
rights (Incorporated by reference to Exhibit 10(h) to Registration Statement No.
33-5319 filed with the Securities and Exchange Commission on June 5, 1986.)
(10)(i) Bank of Virginia Trust Company Prototype Plan and
Trust Agreement and accompanying Joinder Agreement (Incorporated by reference to
Exhibit 10(i) to Registration Statement No. 33-5319 filed with the Securities
and Exchange Commission on June 24, 1986.)
(10)(j) 1986 Stock Option Plan for employees of the Company
(Incorporated by reference to Exhibit 10(j) to Registration Statement No.
33-5319 filed with the Securities and Exchange Commission on June 24, 1986.)
(10)(k) Settlement Agreement dated June 19, 1986 among the
Company, Luther I. Dickens, and Great Northern Corporation (Incorporated by
reference to Exhibit 10(k) to Registration Statement No. 33-5319 filed with the
Securities and Exchange Commission on June 24, 1986.)
(10)(l) Purchase Agreement dated December 31, 1987 between the
Company and the Atlantic Richfield Company (Incorporated by reference to Exhibit
10 to the Company's current report on Form 8-K filed with the Securities and
Exchange Commission on January 13, 1988.
(11) Statement recomputation of per share earnings.
(b) Reports on Form 8-K
-------------------
None
(c) Exhibits
--------
See ITEM 14(a)(3) above.
(d) Financial Statement Schedules
-----------------------------
See ITEM 14(a)(2) above.
37
<PAGE> 38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
RADVA Corporation
Dated: March 23, 2000 By /s/ Luther I. Dickens
------------------------------
Luther I. Dickens
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Dated: March 23, 2000 By /s/ Luther I. Dickens
------------------------------
Luther I. Dickens
Chief Executive Officer
Dated: March 23, 2000 By /s/ James M. Hylton
------------------------------
James M. Hylton
Director
Dated: March 23, 2000 By /s/ Rush G. Allen
------------------------------
Rush G. Allen
Director
Dated: March 23, 2000 By /s/ J. Granger Macfarlane
------------------------------
J. Granger Macfarlane
Director
Dated: March 23, 2000 By /s/ Stephen L. Dickens
------------------------------
Stephen L. Dickens
President and Director
Dated: March 23, 2000 By /s/ David B. Kinney
------------------------------
David B. Kinney
Director
38
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AS OF DECEMBER 31, 1999 AND STATEMENT OF OPERATIONS FOR THE YEAR THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 42
<SECURITIES> 0
<RECEIVABLES> 2,867
<ALLOWANCES> 126
<INVENTORY> 819
<CURRENT-ASSETS> 3,692
<PP&E> 9,166
<DEPRECIATION> 4,221
<TOTAL-ASSETS> 11,963
<CURRENT-LIABILITIES> 2,717
<BONDS> 4,068
0
0
<COMMON> 40
<OTHER-SE> 5,137
<TOTAL-LIABILITY-AND-EQUITY> 11,963
<SALES> 10,186
<TOTAL-REVENUES> 10,395
<CGS> 7,616
<TOTAL-COSTS> 9,658
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 276
<INCOME-TAX> 0
<INCOME-CONTINUING> 276
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 276
<EPS-BASIC> .07
<EPS-DILUTED> .07
</TABLE>
