Back to GetFilings.com
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
--------------------------------------------
For Quarter Ended Commission File
September 30, 2003 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 (540) 639-2458
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X
--- ---
At November 11, 2003, there were 3,987,987 shares of Registrant's Common Stock,
$.01 par value per share, outstanding.
RADVA CORPORATION
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION:
INDEPENDENT AUDITOR'S REPORT 3
Item 1. Financial Statements
Balance Sheets,
December 31, 2002 and September 30, 2003 4
Statements of Operations, Three Months
and Nine Months Ended September 30, 2002 and
September 30, 2003 5
Statements of Cash Flows, Nine Months
Ended September 30, 2002 and September 30, 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 Accountant's Report
Board of Directors
Radva Corporation
Radford, Virginia
We have reviewed the accompanying condensed consolidated balance sheet of RADVA
corporation and subsidiary as of September 30, 2003, and the related
consolidated statements of income and cash flows for the nine-month period ended
September 30, 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 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 fourth 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
November 12, 2003
- 3 -
RADVA CORPORATION
BALANCE SHEETS
(IN THOUSANDS)
September 30 December 31
ASSETS 2003 2002
------------ -----------
Current assets:
Cash .......................................... $ 245 $ 108
-------- --------
Accounts and notes receivable ................. 1,386 1,581
Other accounts receivable ..................... 106 171
Less allowance for doubtful accounts .......... 75 57
-------- --------
Net receivables ............................... 1,417 1,695
-------- --------
Inventories:
Finished goods .............................. 746 782
Work in process ............................. -- --
Raw materials and supplies .................. 318 259
-------- --------
Total inventories ........................... 1,064 1,041
-------- --------
Prepaid expenses .............................. 5 78
-------- --------
Total current assets ................... 2,731 2,922
-------- --------
Property, plant & equipment, at cost ............. 9,617 9,404
Less accumulated depreciation ................. 6,026 5,639
-------- --------
Net property, plant & equip ............. 3,591 3,765
-------- --------
Investment in Thermasteel Corporation ............ 558 558
Patents and other intangibles .................... 600 70
Trademark, manufacturing, and marketing
rights ........................................ -- 395
Note receivable-noncurrent ....................... 2,644 2,550
Other assets ..................................... 213 312
-------- --------
$ 10,337 $ 10,572
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt ........ $ 153 $ 165
Notes payable ................................. 1,314 1,475
Accounts payable .............................. 725 852
Accrued expenses .............................. 237 164
-------- --------
Total current liabilities .............. 2,429 2,656
-------- --------
Accrued long-term expenses ....................... 63 63
Long-term debt, excluding current
installments .................................. 3,112 3,128
-------- --------
Total Liabilities ....................... 5,604 5,847
-------- --------
Minority Interest ................................ 154 --
Stockholders' equity:
Preferred stock, 8% cumulative,
Par value $.01 .............................. 6 6
Common stock of $.01 par value
Authorized 10,000,000 shares; issued
and outstanding 3,987,987 .................. 124 40
Additional paid-in capital .................... 4,735 4,735
Retained earnings ............................. (286) (56)
-------- --------
Total stockholders' equity ........... 4,579 4,725
-------- --------
$ 10,337 $ 10,572
======== ========
See accompanying notes to financial statements.
- 4 -
RADVA CORPORATION
Statements of Operations
Three Months and Nine Months Ended September 30
(In Thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
-------------------- --------------------
2003 2002 2003 2002
---- ---- ---- ----
Net Revenues:
Manufacturing net revenues ..... $ 2,246 2,185 7,285 6,801
------- ------- ------- -------
Cost and expenses:
Cost of sales .................. 1,852 1,753 5,618 4,951
Shipping and selling ........... 253 237 823 692
General and administrative ..... 278 316 878 960
Research and development ....... 29 18 82 40
------- ------- ------- -------
2,412 2,324 7,401 6,643
------- ------- ------- -------
Operating income (loss) ........ (166) (139) (116) 158
------- ------- ------- -------
Other income (deductions):
Interest expense ............... (72) (91) (221) (290)
Interest income ................ 30 32 93 101
Other .......................... 9 4 20 23
------- ------- ------- -------
(33) (55) (108) (166)
------- ------- ------- -------
Earnings (loss) before income tax
and minority interest ............. (199) (194) (224) (8)
Minority Interest ................. 6 -- 12
Income tax expense ................ -- -- -- --
------- ------- ------- -------
Net earnings (loss) ............... (193) (194) (212) (8)
======= ======= ======= =======
Earnings (loss) per common share... (.05) (.05) (.05) --
======= ======= ======= =======
See accompanying notes to financial statements.
- 5 -
RADVA CORPORATION
Statements of Cash Flows
Nine Months Ended September 30
(In Thousands)
2003 2002
------ ------
Cash flows from operating activities:
Net income ................................. $(212) $ (8)
----- -----
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ............................ 387 441
Amortization ............................ 6 41
Loss (Gain) on sale of equipment ........ -- (12)
Change in assets and liabilities:
Decrease (Increase) in net receivables.. 278 371
Decrease (Increase) in inventories ..... (23) (37)
Decrease (Increase) in prepaid
expenses............................... 73 63
Decrease (Increase) in other current
assets .............................. -- --
Decrease (Increase) in other assets .... (136) (379)
Increase (Decrease) in accounts
payable.............................. (127) (378)
Increase (Decrease) in accrued
expenses............................. 73 (20)
----- -----
Total adjustments .................... 531 90
----- -----
Net cash from operating activities ... 319 82
----- -----
Cash flows from investing activities:
Increase in minority interest .............. 238 --
Proceeds from sale of property and equipment .. -- 58
Capital expenditures for equipment and other
long-term assets ......................... (213) (137)
----- -----
Net cash from investing activities ... 25 (79)
----- -----
Cash flows from financing activities:
Dividends paid ............................. (18) --
Proceeds (payments) on notes payable ....... (161) 102
Proceeds on long-term debt ................. 107 --
Principal payments under long-term debt ....... (135) (122)
----- -----
Net cash from financing activities ... (207) (20)
----- -----
Net increase (decrease) in cash ............... 137 (17)
Cash at January 1 ............................. 108 70
----- -----
Cash at June 30 ............................... $ 245 $ 53
===== =====
See accompanying notes to financial statements.
- 6 -
RADVA CORPORATION
Notes to Financial Statements
September 30, 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........................ 3,140,772
Machinery and equipment........................... 5,615,264
Transportation equipment.......................... 372,130
Office equipment.................................. 319,173
----------
$9,616,904
==========
(3) Accrued Expenses
Accrued expenses are comprised of the following:
Payroll and employment benefits................... $ 144,366
Other............................................. 92,000
----------
$ 236,366
==========
(4) Notes Payable
Demand notes payable to officers.................. 19,643
Demand note, collateralized by certain
accounts receivable and inventory,
interest at prime plus 2%........................ $1,294,518
----------
$1,314,161
==========
(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 1.5% 99,717
Installment note payable to bank, due in
variable monthly installments, including interest
at prime plus 2.25%; collateralized by all of
the company's assets. 1,918,663
Installment note payable to bank, due in monthly
installment of $17,402, including interest at
prime plus 2.25%; collateralized by all of the
company's assets. 1,239,923
Installment note payable to bank, due in
monthly installments of $527, including
interest at 9.5%; collateralized
by equipment. 6,485
----------
Total long-term debt 3,264,788
Less current installments of long-term debt 153,284
----------
Long-term debt, excluding current installments $3,111,504
==========
- 7 -
Item 2 - Management's Discussion and Analysis of
Financial Conditions and Results of Operations
Results of Operations - Nine months Ended September 30, 2002
Compared to Nine Months Ended September 30, 2003
The Company incurred a net loss of $212,000 in the first nine months of 2003
compared to net loss of $8,000 in the first nine months of 2002. This
deterioration in operating results occurred in spite of a $484,000 increase in
revenues from $6,801,000 for the nine months ended September 30, 2002 to
$7,285,000 for the nine months ended September 30, 2003.
The Company wrote down finished goods inventories by approximately $65,000 in
September, 2003. Half of this reduction was to eliminate obsolete inventory and
the remainder was a price-reduction on proprietary items on which cost is
estimated. Another major factor in depressing September 2003 operations was
hurricane Isabel, which resulted in a loss of power at the Portsmouth plant for
ten days.
Cost of sales, as a percent of manufacturing revenues, was up 4.3% from 72.8%
for the nine months ended September 30, 2002 to 77.1% for the nine months ended
September 30, 2003. The most significant factors contributing to this increase
in cost of sales were a 6.0% increase in raw material costs and a 2.4% increase
in the cost of gas and oil as a percent of production.
Shipping and selling expenses were up $131,000 for the first three quarters of
2003. This increase was due to a combination of factors, including: 1) increased
freight out costs of $68,485 at the Portsmouth plant resulting from a change
from FOB shipping point to FOB destination terms, 2) increased cost of warehouse
labor of $51,000 and 3) increased cost of truck lease and gasoline cost at the
Radford plant of $24,727 due to additional leased equipment.
The $82,000 decrease in general and administrative expenses primarily resulted
from reduced amortization expenses due to a change in generally accepted
accounting principals.
Interest was down $69,000 as a result of reductions in the prime interest rate
on which virtually all the Company's notes payable are based and reduced note
balances on which interest is assessed.
Results of Operations - Three Months Ended September 30, 2002
Compared to Three Months Ended September 30, 2003
The factors noted above in the nine month comparisons were also the factors
largely contributing to differences in results for the three months ended
September 30, 2002 compared to the three months ended September 30, 2003.
Cost of sales, as a percentage of manufacturing revenues, was up 2.3% from 80.2%
for the quarter ended September 20, 2002 to 82.5% for the quarter ended
September 30, 2003. This increase was primarily a result of an increase in the
cost of natural gas and raw materials and the inventory write down mentioned
above.
Funding of New Subsidiary
The most significant development in 2003 has been 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 $586,349 in patents and other
intangible assets, in addition to $12,156 in inventories and equipment, for its
remaining 80% interest in Triter Corporation.
- 8 -
Liquidity and Capital Resources
At September 30, 2003, the balance available on the Company's $1,500,000 line of
credit was $205,482 and working capital was $302,000. Management believes that
cash flow will be adequate to satisfy 2003 needs.
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
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
-------------------------------
William F. Fry
Assistant Secretary/Treasurer
November 11, 2003
- 9 -