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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
June 30, 2000 Number 0-15464
RADVA CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0715892
(State of Incorporation) (IRS Employer
Identification Number)
Drawer 2900 FSS
Radford, Virginia 24143
(Address of principal executive offices)
Registrant's telephone number, including area code (703) 639-2458
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
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At August 7, 2000, there were 3,997,027 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 June 30, 2000 3
Statements of Operations, Three Months
and Six Months Ended June 30, 1999 and
June 30, 2000 4
Statements of Cash Flows, Six Months
Ended June 30, 1999 and June 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>
June 30 December 31
ASSETS 2000 1999
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<S> <C> <C>
Current assets:
Cash..................................... $ (203) $ 42
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Accounts and notes receivable............ 2,569 2,645
Other accounts receivable................ 212 223
Less allowance for doubtful accounts..... 142 126
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Net receivables.......................... 2,639 2,742
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Inventories:
Finished goods......................... 402 544
Work in process........................ 34 5
Raw materials and supplies............. 415 270
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Total inventories...................... 851 819
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Prepaid expenses......................... 22 48
Other current assets..................... 49 41
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Total current assets............... 3,358 3,692
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Property, plant & equipment, at cost........ 9,487 9,166
Less accumulated depreciation............ 4,536 4,221
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Net property, plant & equip........ 4,951 4,945
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Investment in Thermasteel Corporation....... 262 262
Trademark, manufacturing, and marketing
rights................................... 465 479
Note receivable-noncurrent.................. 2,411 2,334
Other assets................................ 284 251
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$ 11,731 $ 11,963
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt... $ 681 $ 670
Notes payable............................ 1,247 878
Accounts payable......................... 1,309 898
Accrued expenses......................... 169 213
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Total current liabilities......... 3,406 2,659
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Long-term debt, excluding current
installments............................. 3,745 4,069
Other long-term debt........................ 58 58
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Total Liabilities.................. 7,209 6,786
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Stockholders' equity:
Common stock of $.01 par value.
Authorized 10,000,000 shares; issued
and outstanding 3,998,027............. 40 40
Additional paid-in capital............... 4,489 4,508
Retained earnings........................ (7) 629
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Total stockholders' equity...... 4,522 5,177
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$ 11,731 $ 11,963
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</TABLE>
See accompanying notes to financial statements.
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RADVA CORPORATION
Statements of Operations
Three Months and Six Months Ended June 30
(In Thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Net Revenues:
Manufacturing net revenues....... $ 2,618 2,409 5,155 5,061
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Cost and expenses:
Cost of sales ................... 2,361 1,827 4,537 3,746
Shipping and selling ............ 238 161 451 352
General and administrative ...... 341 337 664 672
Research and development ........ -- 3 -- 5
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2,940 2,328 5,652 4,775
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Operating income (loss) ......... (322) 81 (497) 286
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Other income (deductions):
Interest expense ................ (133) (109) (258) (231)
Interest income ................. 38 -- 76 --
Other ........................... 40 8 44 13
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(55) (101) (138) (218)
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Earnings (loss) before income tax... (377) (20) (635) 68
Income tax expense ................. -- -- -- --
------- ------- ------- -------
Net earnings (loss) ................ (377) (20) (635) 68
======= ======= ======= =======
Earnings (loss) per common share.... (.09) (.00) (.16) .02
======= ======= ======= =======
</TABLE>
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RADVA CORPORATION
Statements of Cash Flows
Six Months Ended June 30
(In Thousands)
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net income.................................... $ (635) $ 68
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Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation............................... 315 272
Amortization............................... 22 18
Loss (Gain) on sale of equipment........... -- --
Change in assets and liabilities:
Decrease (Increase) in net receivables.... 103 438
Decrease (Increase) in inventories........ (32) 169
Decrease (Increase) in prepaid expenses... 26 (5)
Decrease (Increase) in other current
assets................................. (8) (51)
Decrease (Increase) in other assets....... (118) 44
Increase (Decrease) in accounts payable... 411 (332)
Increase (Decrease) in accrued expenses... (44) (23)
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Total adjustments...................... 675 530
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Net cash from operating activities...... 40 598
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Increase in minority interest in consolidated
subsidiary.................................... -- (95)
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Cash flows from investing activities:
Purchase of Treasury Stock.................... (19) (13)
Proceeds from sale of equipment............... -- --
Capital expenditures for equipment and other
long-term assets............................ (322) (600)
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Net cash from investing activities...... (341) (613)
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Cash flows from financing activities:
Proceeds from notes payable................... 369
Principal payments under notes payable........ -- (124)
Proceeds from long-term debt.................. -- 407
Principal payments under long-term debt....... (313) (324)
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Net cash from financing activities...... 56 (41)
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Net increase (decrease) in cash.................. (245) (151)
Cash at January 1................................ 42 246
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Cash at June 30.................................. $ (203) $ 95
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</TABLE>
See accompanying notes to financial statements.
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RADVA CORPORATION
Notes to Financial Statements
June 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............................. $ 173,013
Buildings and improvements........................ 3,124,431
Machinery and equipment........................... 5,525,873
Transportation equipment.......................... 365,960
Office equipment.................................. 298,009
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$9,487,286
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(3) Accrued Expenses
Accrued expenses are comprised of the following:
Payroll and employment benefits................... $ 146,654
Other............................................. 22,839
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$ 169,493
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(4) Notes Payable
Demand note, collateralized by certain
accounts receivable and inventory,
interest at prime plus .25%....................... $ 1,247,204
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$ 1,247,204
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RADVA CORPORATION
Notes to Financial Statements
June 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. $ 3,868
Installment notes payable with financing
company, due in monthly installments of
$16,404, including interest at 8.8%;
collateralized by equipment 310,926
Installment note payable, due in monthly
installments of $500, including interest at
10.625%, collateralized by a deed of
trust on certain real estate 21,906
Installment note payable, due in monthly
installments of $428, including interest at
8.5%; collateralized by equipment 3,315
Installment note payable to bank, due in
monthly installments of $11,905, including
interest at 8%, collateralized by equipment 678,072
Installment note payable to bank, due in
monthly installments of $4,762 including
interest at prime, collateralized by equipment 253,742
Installment note payable to bank, due in
monthly installments of $5,556 beginning
July 31, 2000, plus interest at prime. 400,000
Installment note payable to bank, due in monthly
installments of $27,533, including interest
at 7.75%; collateralized by real estate 2,753,333
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Total long-term debt 4,425,162
Less current installments of long-term debt 680,719
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Long-term debt, excluding current installments $3,744,443
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Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations - Six months Ended June 30, 2000 Compared to Six Months
Ended June 30, 1999
The Company incurred a $635,000 net loss in the six months ended June 30, 2000
compared to a $68,000 profit in the six months ended June 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.
Cost of sales, as a percentage of manufacturing net revenues, increased from
74.0% for the six months ended June 30, 1999 to 88.0% for the six months ended
June 30, 2000. 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
4.5% and 2.9%, respectively. Also as noted above, management expects margins to
improve in the second half of the year.
Shipping and sales expenses, as a percentage of manufacturing net revenues,
increased for 7.0% for the six months ended June 30, 1999 to 8.7% for the six
months ended June 30, 2000. Factors contributing to this increase were rising
labor costs and freight rates.
Results of Operations - Three Months Ended June 30, 2000 Compared to Three
Months Ended June 30, 1999
The Company incurred a $377,000 net loss in the three months ended June 30, 2000
compared to a $20,000 loss in the three months ended June 30, 1999. The primary
causes of the reduction in profits were the same as was discussed previously
when making six month comparisons. Again, management believes profit margins
will be improved in the second half of 2000 as a result of phasing out of the
product resulting in the greatest reduction in lower margins. Management is also
taking a variety of other steps to reverse the recent losses such as raising
prices, installing new more efficient machinery.
Liquidity and Capital Resources
The Company has been profitable for the years 1991 through 1999. At June 30,
2000 the balance available on the Company's $1,500,000 line of credit was
$253,000.
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, 1998.
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
August 8, 2000
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