RADVA CORP (RDVA) - Description of business

Company Description
GENERAL DEVELOPMENT OF BUSINESSRADVA 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. During 1998, the Company sold 95% of its 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. During 2002, the Company reacquired an additional 5% interest in Thermasteel Corporation, bringing its interest in Thermasteel Corporation to 10%. The Company also has a subsidiary, Triter Corporation, which was formed for the purpose of making the triterine. In March 2003, the Company transferred its patents into Triter Corporation and sold 20% interest in Triter Corporation for $250,000 for the purpose of obtaining funds necessary for the continued development of the product.PROTECTIVE PACKAGING PRODUCTSRADVA 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. These locations are within a day's drive of 75 percent of the U.S. market. Each facility includes more than 75,000 square feet of manufacturing and warehouse space with additional off-site warehousing. More than 30 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.RAW MATERIALS AND SUPPLIERSThe 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 TRADEMARKSThe Company 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.SEASONALITYThe 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.CUSTOMERSThe Company's protective packaging business has a broad base of customers; however, one customer accounted for approximately 11.7% of protective packaging revenues in 2004.BACKLOGThe Company had approximately $872,000 in backlog orders for protective packaging products as of December 31, 2004, compared to backlog orders of approximately $781,000 as of December 31, 2003. 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 2005.COMPETITIONThe 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. The Company believes that its technical design facility gives it an advantage over competitors within its market area.RESEARCH AND DEVELOPMENTThe Company maintains a laboratory and testing facility within its manufacturing plant in Radford, Virginia. The laboratory and testing facilities, which consist of 2,000 square feet is used for product testing, development of new products, and quality control evaluations.REGULATIONThe 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 2005. 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.EMPLOYEESThe Company employs approximately 85 persons. None of the Company's employees is represented by a labor union, and the Company believes that its employee relations are good.EXECUTIVE OFFICERSThe following table identifies and sets forth certain information about the executive officers of the Company NAME AGE POSITION AND YEAR OF ELECTION ---- --- ----------------------------- Luther I. Dickens 72 Chief Executive Officer (1998) Stephen L. Dickens 47 President and Chief Operations Officer (1998) William F. Fry 65 Chief Financial Officer (1989) Michael R. Samples 52 Vice President, Manufacturing (1999)