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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
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For Quarterly Period Commission File
ended March 31, 2003 Number 0-15464
RADVA CORPORATION
(Exact name of small business issuer as specified in its charter)
VIRGINIA 54-0715892
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
Drawer 2900 FSS
Radford, Virginia 24143
(Address of principal executive offices)
Issuer's telephone number, including area code (540) 639-2458
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
--- ---
Applicable only to corporate issuers:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
3,987,987
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Transitional Small Business Disclosure Format: Yes No X
--- ---
RADVA CORPORATION
INDEX
Page
Number
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PART I. FINANCIAL INFORMATION:
INDEPENDENT ACCOUNTANTS' REPORT 3
Item 1. Financial Statements
Balance Sheets,
December 31, 2002 and March 31, 2003 4
Statements of Operations, Three Months
Ended March 31, 2002 and March 31, 2003 5
Statements of Cash Flows, Three Months
Ended March 31, 2002 and March 31, 2003 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION 9
- 2 -
PERSINGER & COMPANY, L.L.C.
Certified Public Accountants
203 W. Grayson Street Tel. (276) 236-8135
P.O. Box 797 Fax (276) 236-0797
Galax, VA 24333
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
RADVA Corporation
Radford, Virginia
We have reviewed the accompanying condensed consolidated balance sheet of Radva
Corporation and subsidiary as of March 31, 2003, and the related condensed
consolidated statements of income and cash flows for the three-month period
ended March 31, 2003. These financial statements are the responsibility of the
Corporation's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Radva Corporation and subsidiary as
of December 31, 2002, and the related consolidated statements of income,
stockholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated January 22, 2003, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 2002 is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
Galax, Virginia
May 12, 2003
- 3 -
RADVA CORPORATION
Balance Sheets
(Unaudited)
(In Thousands)
March 31 December 31
ASSETS 2003 2002
-------- -----------
Current assets:
Cash .................................... $ 442 $ 108
-------- --------
Accounts and notes receivable ........... 1,554 1,581
Other Accounts Receivable ............... 106 171
Less allowance for doubtful accounts .... 69 57
-------- --------
Net receivables ......................... 1,591 1,695
-------- --------
Inventories:
Finished goods ........................ 682 782
Work in process ....................... -- --
Raw materials and supplies ............ 359 259
-------- --------
Total inventories ..................... 1,041 1,041
-------- --------
Prepaid expenses ........................ 55 78
-------- --------
Total current assets .............. 3,129 2,922
-------- --------
Property, plant & equipment, at cost ....... 9,438 9,404
Less accumulated depreciation ........... 5,768 5,639
-------- --------
Net property, plant & equip ....... 3,670 3,765
-------- --------
Patents and other intangibles .............. 573 70
Investment in Thermasteel Corporation ...... 558 558
Trademark manufacturing and
marketing rights .......................... -- 395
Note receivable-noncurrent ................. 2,582 2,550
Other assets ............................... 205 312
-------- --------
$ 10,717 $ 10,572
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt .. $ 153 $ 165
Notes payable ........................... 1,315 1,475
Accounts payable ........................ 784 852
Accrued expenses ........................ 286 164
-------- --------
Total current liabilities ....... 2,538 2,656
Accrued long-term expenses ................. 63 63
Long-term debt, excluding current
installments ............................ 3,098 3,128
-------- --------
Total liabilities ............... 5,699 5,847
-------- --------
Minority interest .......................... 166 --
-------- --------
Stockholders' equity:
Preferred stock, 8% cumulative, par value
.01 600,000 shares outstanding ........ 6 6
Common stock of $.01 par value.
Authorized 10,000,000 shares; issued
and outstanding 3,998,027 ............ 124 40
Additional paid-in capital .............. 4,735 4,735
Retained earnings ....................... (13) (56)
-------- --------
Total stockholders' equity ..... 4,852 4,725
-------- --------
$ 10,717 $ 10,572
======== ========
See accountants' report and accompanying notes to financial statements.
- 4 -
RADVA CORPORATION
Statements of Operations
Three Months Ended March 31
(Unaudited)
(In Thousands, except per share data)
Three Months Ended
March 31
-----------------------
2003 2002
------- -------
Manufacturing net revenues ... $ 2,786 2,236
------- -------
Cost and expenses:
Cost of sales ............. 2,089 1,584
Shipping and selling ...... 305 212
General and administrative. 287 316
Research and development .. 19 --
------- -------
2,700 2,112
------- -------
Operating income .......... 86 124
------- -------
Other income (deductions):
Interest expense .......... (76) (105)
Other ..................... 33 40
------- -------
(43) (65)
------- -------
Earnings before income tax and
minority interest ............ 43 59
Income tax expense ........... -- --
Minority interest ............ -- --
------- -------
Net earnings ................. $ 43 59
======= =======
Earnings per common share .... $ .01 .01
======= =======
See accountants' report and accompanying notes to financial statements.
- 5 -
RADVA CORPORATION
Statements of Cash Flows
Three Months Ended March 31
(Unaudited)
(In Thousands)
2003 2002
----- -----
Cash flows from operating activities:
Net income (loss) .......................... $ 43 $ 59
----- -----
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ............................ 129 146
Amortization ............................ 3 14
Change in assets and liabilities:
Decrease (Increase) in net receivables . 104 12
Decrease (Increase) in inventories ..... -- 108
Decrease (Increase) in prepaid expenses 23 27
Decrease (Increase) in other assets .... (36) (23)
Increase (Decrease) in accounts payable (68) (336)
Increase (Decrease) in accrued expenses 122 51
----- -----
Total adjustments .................... 277 (1)
----- -----
Net cash from operating activities ... 320 58
----- -----
Cash flows from investing activities:
Increase in minority interest .............. 250 --
Capital expenditures for equipment and other
long-term assets ......................... (34) (14)
----- -----
Net cash from investing activities ... 216 (14)
----- -----
Cash flows from financing activities:
Principal payments on notes payable ........ (160) (67)
Principal payments under long-term debt .... (42) (35)
----- -----
Net cash from financing activities ... (202) (102)
----- -----
Net increase (decrease) in cash ............... 334 (58)
Cash at January 1 ............................. 108 70
----- -----
Cash at March 31 .............................. $ 442 $ 12
===== =====
See accountants' report and accompanying notes to financial statements.
- 6 -
RADVA CORPORATION
Notes to Financial Statements
March 31, 2003
(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............................. $ 169,565
Buildings and improvements........................ 3,125,193
Machinery and equipment........................... 5,454,203
Transportation equipment.......................... 372,130
Office equipment.................................. 316,813
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$9,437,904
==========
(3) Accrued Expenses
Accrued expenses are comprised of the following:
Payroll and employment benefits................... $ 159,754
Other............................................. 126,293
----------
$ 286,047
==========
(4) Notes Payable
Notes payable to stockholders..................... 19,643
Line of credit with commercial bank,
$1,500,000 limit, interest variable
(6.50% at March 31, 2003)......................... $ 1,295,125
-----------
$ 1,314,768
===========
(5) Long-term Debt
A summary of long-term debt follows:
Installment note payable to bank, due in variable
monthly installments, including interest at prime
plus 2.25% (6.50% at March 31, 2003); collateralized
by all of the company's assets. 1,943,163
Installment note payable to bank, due in monthly
installments of $17,402, including interest at prime
plus 2.25% (6.50% at March 31, 2003); collateralized
by all of the company's assets. 1,298,420
Installment note payable to bank, due in
monthly installments of $527, including
interest at 9.5%; collateralized by
equipment. 9,262
-----------
Total long-term debt 3,250,845
Less current installments of long-term debt 153,284
-----------
Long-term debt, excluding current installments $ 3,097,561
===========
- 7 -
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
The Company's net revenues increased $550,000, or 25%, in the first quarter of
2003 as compared to the first quarter of 2002. However, operating income was
lower by $38,000 due to increased costs.
Cost of sales, as a percentage of revenues, increased 4.2% from 70.8% for the
first quarter of 2002 to 75% for the first quarter of 2003. This percentage
increase was primarily due to increased costs of natural gas and expandable
polystyrene.
Shipping and selling expenses were $93,000 higher in the first quarter of 2003
than in the first quarter of 2002. Freight out and warehouse labor were $69,000
and $11,000 higher, respectively, at the Portsmouth, Virginia plant on sharply
higher sales.
General and administrative expenses were $29,000 lower in the first quarter of
2003 due to a variety of cost reductions and efficiencies. Interest expense was
also lower by $29,000 in the first quarter due to reduced debt and a lower prime
interest rate.
Funding of New Subsidiary
The most significant development in the first quarter of 2003 was the funding of
a new subsidiary, Triter Corporation. In March 2003, the Company's new
subsidiary, Triter Corporation, received $250,000 for 20% minority interest in
that corporation. Radva Corporation transferred $568,349 in patents and other
intangible assets, in addition to $12,156 in inventories and equipment, for its
remaining 80% interest in Triter Corporation.
Liquidity and Capital Resources
At March 31, 2003 the balance available on the Company's $1,500,000 line of
credit was $204,875 and working capital was $591,000. Management believes that
cash flow will be adequate to satisfy 2003 needs.
- 8 -
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, 2002.
Item 2. Changes in Securities and Use of Proceeds
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 and is the Registrant's principal
financial officer.
RADVA CORPORATION
/s/ William F. Fry
-------------------------------
William F. Fry
Secretary/Treasurer
May 2, 2003
- 9 -
CERTIFICATIONS
I, Luther I. Dickens, Chief Executive Officer of Radva Corporation, certify that
1. I have reviewed this quarterly report on Form 10-Q of Radva Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date");
c) and presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 14, 2003
/s/ Luther I. Dickens
----------------------------------
Luther I. Dickens
Chief Executive Officer
CERTIFICATIONS
I, William F. Fry, Vice President-Chief Financial Officer of Radva Corporation,
certify that
1. I have reviewed this quarterly report on Form 10-Q of Radva Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date");
c) and presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: May 14, 2003
/s/ William F. Fry
----------------------------------
William F. Fry
Vice President-Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Radva Corporation (the "Company") on
Form 10-Q for the period ended September 30, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), each of the
undersigned, in the capacities and on the dates indicated below, hereby
certifies pursuant to 19 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that to his knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: May 14, 2003 /s/ Luther I. Dickens
--------------------------
Luther I. Dickens
Chief Executive Officer
Date: May 14, 2003 /s/ William F. Fry
--------------------------
William F. Fry
Vice President-
Chief Financial Officer