10-Q 1 j9709801e10vq.txt RADVA CORP. 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, 2002 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 --- --- At October 16, 2002, 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, 2001 and September 30, 2002 4 Statements of Operations, Three Months and Nine Months Ended September 30, 2001 and September 30, 2002 5 Statements of Cash Flows, Nine Months Ended September 30, 2001 and September 30, 2002 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 consolidated balance sheet of Radva Corporation and subsidiary as of September 30, 2002, and the related consolidated statements of income and cash flows for the three month and nine month periods ended September 30, 2002 and 2001. 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. /s/ PERSINGER & COMPANY, L.L.C. Galax, Virginia November 6, 2002 A Virginia Limited Liability Company o Members American Institute of Certified Public Accounts - 3 - RADVA CORPORATION Balance Sheets (In Thousands)

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)

See accompanying notes to financial statements. - 5 - RADVA CORPORATION Statements of Cash Flows Nine Months Ended September 30 (In Thousands)

See accompanying notes to financial statements. - 6 - RADVA CORPORATION Notes to Financial Statements September 30, 2002 (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........................ 3,103,407 Machinery and equipment........................... 5,418,049 Transportation equipment.......................... 372,130 Office equipment.................................. 316,606 ---------- $9,379,757 ========== (3) Accrued Expenses Accrued expenses are comprised of the following: Payroll and employment benefits................... $ 146,347 Other............................................. 84,245 ---------- $ 230,592 ========== (4) Notes Payable Demand note, collateralized by certain accounts receivable and inventory, interest at prime plus 2%......................... $1,280,565 ---------- $1,280,565 ========== (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% (7.00% at September 30, 2002); collateralized by all of the company's assets ........................................... 1,964,685 Installment note payable to bank, due in monthly installment of $17,402, including interest at prime plus 2.25% (7.00% at September 30, 2002); collateralized by all of the company's assets ........................................... 1,354,290 Installment note payable to bank, due in monthly installments of $527, including interest at 9.5%; collateralized by equipment ........................................ 12,342 ---------- Total long-term debt ............................. 3,331,317 Less current installments of long-term debt ...... 152,662 ---------- Long-term debt, excluding current installments ... $3,178,655 ========== - 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, 2001 The Company incurred a net loss of $8000 for the nine months ended September 30, 2002 compared to having earned $145,000 for the nine months ended September 30, 2001. A significant portion of this $153,000 swing in net income can be attributed to the development of a new product which management believes will contribute positive cash flow and income in the near future. Including expensed research and development costs, the Company incurred losses of $133,000 for the nine months ended September 30, 2002 compared to losses of $33,000 for the nine months ended September 30, 2001 in the development of this new product. Interest and other income were down $116,000, only partly offset by a reduction in interest expense of $67,000, which can account for another $49,000 swing in net income for the nine months ended September 30, 2002 compared to the same period of the prior year. Cost of sales, as a percentage of manufacturing revenues, decreased 2.4%, from 75.2% for the nine months ended September 30, 2001 to 72.8% for the nine months ended September 30, 2002. A primary contributor to this reduction is the result of a change in terms of sales from FOB shipping point to FOB destination. This change in terms is also the primary cause of a corresponding increase in shipping and selling expenses of 1.8% of manufacturing revenues. Results of Operations - Three Months Ended September 30, 2002 Compared to Three Months Ended September 30, 2001 The Company incurred a net loss of $194,000 for the quarter ended September 30, 2002 compared to having earned net income of $53,000 for the quarter ended September 30, 2001. A significant portion of this $247,000 swing in net income is attributable to the development of the new product noted in the nine month comparison above. Including expensed research and development costs, the Company incurred losses of $92,000 in the third quarter of 2002 compared to losses of $10,000 in the third quarter of 2001 in the development of this new product. Interest costs and other income were each reduced in the current quarter compared to the third quarter of 2001, accounting for $23,000 of the increased losses. The remainder of the $247,000 swing in net income was the result of reduced sales and increased cost in the Company 's shape molding operations, primarily at the Company's Radford Virginia plant. Cost of sales, as a percentage of manufacturing revenues, increased 5.8%, from 74.4% in the third quarter of 2001 to 80.2% in the third quarter of 2002. This cost increase was the result of lower sales, increased cost of raw materials, and a change in sales mix, primarily impacting the Radford Virginia plant. Shipping and selling expenses increased $47,000 in the current quarter compared to the third quarter of 2001. This increase is primarily the result of a $57,000 increase in freight out at the Company's Portsmouth plant, offset by increased sales prices, due to a change in selling terms. General and administrative expenses increased $14,000, in the current quarter, compared to the third quarter of 2001. This increase was primarily the result of non-recurring adjustments reducing costs in August of 2001. - 8 - Liquidity and Capital Resources At September 30, 2002, the balance available on the Company's $1,500,000 line of credit was $171,217 and working capital was $(18,000). Management believes that cash flow will be adequate to satisfy 2002 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, 2000. 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 14, 2002 - 9 - CERTIFICATIONS -------------- I, Luther I. Dickens, Chief Executive Officer, 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 10 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: November 14, 2002 /s/ Luther I. Dickens ------------------------------------------- Luther I. Dickens Chief Executive Officer 11 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: (c) 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; (d) 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 12 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: November 14, 2002 /s/ William F. Fry ----------------------------------------- William F. Fry Vice President-Chief Financial Officer 13 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: November 14, 2002 /s/ Luther I. Dickens ------------------------------------------- Luther I. Dickens Chief Executive Officer Date: November 14, 2002 /s/ William F. Fry ----------------------------------------- William F. Fry Vice President-Chief Financial Officer 14

RADVA CORP 10-Q