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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the quarterly period ended
June 27, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _______ to ___________
Commission file number: 333-19495
RADNOR HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-2674715
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Three Radnor Corporate Center, Suite 300 19087
100 Matsonford Road, Radnor, Pennsylvania (Zip Code)
(address of principal executive offices)
Registrant's telephone number, including area code: 610-341-9600
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 (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 [ ]
The number of shares outstanding of the Registrant's common stock as of
August 8, 1997:
Number
Class of Shares
----- ---------
Voting Common Stock; $.10 par value 600
Nonvoting Common Stock; $.10 par value 245
Class B Nonvoting Common Stock; $.01 par value 5,400
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
June 27, December 27,
1997 1996
--------- ---------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,349 $ 855
Accounts receivable, net 22,495 24,687
Inventories, net 22,566 19,078
Prepaid expenses and other 3,142 3,971
Deferred tax asset 2,380 2,380
--------- ---------
Total current assets 51,932 50,971
--------- ---------
PROPERTY, PLANT AND EQUIPMENT 122,945 115,763
LESS - ACCUMULATED DEPRECIATION (7,634) (4,372)
--------- ---------
NET PROPERTY, PLANT AND EQUIPMENT 115,311 111,391
--------- ---------
OTHER ASSETS 10,434 10,007
--------- ---------
Total assets $ 177,677 $ 172,369
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 24,640 $ 28,884
Accrued liabilities 11,378 13,166
Current portion of long-term debt 235 237
--------- ---------
Total current liabilities 36,253 42,287
--------- ---------
LONG-TERM DEBT, net of current portion 115,310 104,362
--------- ---------
DEFERRED TAX LIABILITY 11,286 11,173
--------- ---------
OTHER NONCURRENT LIABILITIES 450 218
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Voting and nonvoting common stock, 22,700 shares authorized,
6,245 shares issued and outstanding 1 1
Additional paid-in capital 17,720 17,720
Accumulated deficit (3,350) (3,420)
Cumulative translation adjustment 7 28
--------- ---------
Total stockholders' equity 14,378 14,329
--------- ---------
Total liabilities and stockholders' equity $ 177,677 $ 172,369
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
-------------------------- -------------------------
June 27, June 28, June 27, June 28,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 60,427 $ 47,761 $ 114,455 $ 84,526
Cost of goods sold 44,777 35,946 85,431 64,761
--------- --------- --------- ---------
Gross profit 15,650 11,815 29,024 19,765
Operating expenses:
Distribution 4,557 3,751 8,545 6,733
Selling, general and administrative 5,951 4,823 11,440 8,879
Restructuring charges -- 681 -- 681
--------- --------- --------- ---------
Income from operations 5,142 2,560 9,039 3,472
Other (income) expense:
Interest 2,964 1,147 5,788 2,132
Other, net (71) 209 (138) 223
--------- --------- --------- ---------
Income (loss) from operations before
income taxes and minority interest 2,249 1,204 3,389 1,117
Provision for income taxes
Current 131 -- 206 --
Deferred 113 -- 113 --
Minority interest in income -- 559 -- 661
--------- --------- --------- ---------
Income (loss) before extraordinary item 2,005 645 3,070 456
Extraordinary item-gain on early
extinguishment of debt -- -- -- 710
--------- --------- --------- ---------
Net income $ 2,005 $ 645 $ 3,070 $ 1,166
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the six months ended
------------------------
June 27, June 28,
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,070 $ 1,166
Adjustments to reconcile net income to cash provided by
(used in) operating activities-
Depreciation 3,262 2,087
Amortization 867 301
Deferred income taxes 113 --
Minority interest in income -- 661
Extraordinary gain on early extinguishment of debt -- (710)
Changes in operating assets and liabilities, net of
acquisition of business-
Accounts receivable, net 2,192 (8,880)
Inventories (3,488) (573)
Prepaid expenses and other 607 (1,000)
Accounts payable (4,244) 7,442
Accrued liabilities (1,556) 163
-------- --------
Net cash provided by continuing operations 823 657
Net cash provided by discontinued operations -- 982
-------- --------
Net cash provided by operating activities 823 1,639
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (6,981) (1,392)
Acquisition of JR Cup, net of cash acquired -- (21,042)
Increase in other assets (1,294) (1,293)
-------- --------
Net cash used in investing activities (8,275) (23,727)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on bank financed debt and
unsecured notes payable 10,946 22,104
Cash dividends (3,000) --
-------- --------
Net cash provided by financing activities 7,946 22,104
-------- --------
NET INCREASE IN CASH 494 16
CASH, beginning of period 855 5
-------- --------
CASH, end of period $ 1,349 $ 21
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest Paid $ 5,272 $ 874
======== ========
Income Taxes Paid $ 515 $ 7
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by Radnor Holdings Corporation ("Radnor") and subsidiaries
(collectively, the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in consolidated financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In the opinion
of the Company, the statements include all adjustments (which include only
normal recurring adjustments) required for a fair statement of financial
position, results of operations and cash flows for such periods. The results
of operations for the interim periods are not necessarily indicative of the
results for a full year.
Radnor is a holding company which has no operations or assets separate from
its investment in its subsidiaries. Radnor's $100 million senior notes are
guaranteed by all but two direct and two indirect wholly-owned subsidiaries
on a full, unconditional, joint and several basis. The four non-guarantor
subsidiaries are individually and in the aggregate inconsequential. Separate
financial statements of the guarantors are not presented because management
has determined that they would not be material.
(2) INVENTORIES
The components of inventories were as follows (in thousands):
June 30, December 27,
1997 1996
-------- --------
Raw Materials $ 5,534 $ 4,503
Work in Process 1,294 2,242
Finished Goods 15,738 12,333
-------- --------
$ 22,566 $ 19,078
======== ========
(3) INTEREST EXPENSE
Included in interest expense is $136,000 and $114,000 of amortization of
deferred financing costs for the three months ended June 27, 1997 and June
28, 1996, respectively. In addition, included in interest expense is
$276,000 and $152,000 of amortization of deferred financing costs for the
six months ended June 27, 1997 and June 28, 1996, respectively.
(4) PENDING ACCOUNTING CHANGES
In July 1997, the FASB issued Statement #130, "Reporting Comprehensive
Income," and Statement #131, "Disclosures About Segments of an Enterprise
and Related Information." Statement #130 establishes standards for reporting
comprehensive income in financial statements. Statement #131 expands certain
reporting and disclosure requirements for segments from current
requirements. The Company is not required to adopt these Statements until
1998 and does not expect the adoption of these new standards to result in
material changes to previously reported amounts or disclosures.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The Company has two main lines of business. The Company manufactures foam
packaging and sells its products to national, institutional and retail
customers located throughout the U.S., in Mexico and in other countries. The
Company, through its predecessors, has been manufacturing foam packaging
since 1961. The Company also manufactures a broad line of crystal
polystyrene and expandable polystyrene ("EPS") for sale to manufacturers of
foam packaging and insulation products worldwide.
The Company was organized in 1991 to facilitate the acquisition of Scott
Container Products Group, Inc. from Kimberly Clark Tissue Company, which
occurred in February 1992. In January 1996, the Company executed an
agreement with James River Paper Company, Inc., which resulted in the
acquisition of its Handi Kup business ("J.R. Cup"). In December 1996, the
Company purchased the outstanding capital stock of and other equity
interests in SP Acquisition Co. ("StyroChem"). StyroChem supplies the
Company's packaging operations with approximately 50% of the EPS beads used
in its manufacture of foam packaging.
Comparability of Periods
Financial results for the three months ended June 27, 1997 are not fully
comparable with the three months ended June 28, 1996 because of the December
1996 acquisition of StyroChem. In addition, financial results for the six
months ended June 27, 1997 are not fully comparable with the six months
ended June 28, 1996 because of the January 1996 J.R. Cup transaction and the
December 1996 acquisition of StyroChem.
Three Months Ended June 27, 1997 Compared to Three Months Ended June 28, 1996
Net sales increased to $60.4 million for the three months ended June 27,
1997 from $47.8 million for the same period in 1996, an increase of $12.6
million or 26.4%. The increase was due primarily to the StyroChem
acquisition on December 5, 1996.
Cost of goods sold as a percentage of net sales decreased to 74.1% for the
three months ended June 27, 1997, from 75.3% for the same period in 1996.
This decrease was due to a decline in raw material prices resulting from
improved market conditions and reductions in manufacturing overhead as a
percentage of net sales resulting from the J.R. Cup and StyroChem
acquisitions.
Gross profit increased to $15.7 million or 25.9% of net sales for the three
months ended June 27, 1997, from $11.8 million or 24.7% of net sales for the
same period in 1996.
Distribution expense as a percentage of net sales decreased to 7.5% for the
three months ended June 27, 1997, from 7.9% of net sales for the same period
in 1996. This decline in distribution expense as a percentage of net sales
was due primarily to the acquisition of StyroChem, whose distribution
expense was 3.7% of net sales.
Selling, general and administrative expenses as a percentage of net sales
decreased to 9.8% for the three months ended June 27, 1997, from 10.1% of
net sales for the same period in 1996. This was due to lower administrative
costs as a percentage of net sales resulting from the J.R. Cup and StyroChem
acquisitions.
<PAGE>
Income from operations increased to $5.1 million or 8.5% of net sales for
the three months ended June 27, 1997, from $2.6 million or 5.4% of net sales
for the same period in 1996.
Interest increased to $3.0 million for the three months ended June 27, 1997,
from $1.1 million for the same period in 1996. This increase was due
primarily to an increase in borrowings related to the J.R. Cup and StyroChem
acquisitions, including the issuance of Radnor's $100 million 10% Senior
Notes due 2003.
Net income increased to $2.0 million or 3.3% of net sales for the three
months ended June 27, 1997, from $0.6 million or 1.4% of net sales for the
same period in 1996 due to the reasons described above.
Six Months Ended June 27, 1997 Compared to Six Months Ended June 28, 1996
Net sales increased to $114.5 million for the six months ended June 27, 1997
from $84.5 million for the same period in 1996, an increase of $30.0 million
or 35.5%. The increase was due primarily to the J.R. Cup transaction on
January 20, 1996 and the StyroChem acquisition on December 5, 1996 as well
as overall growth in the foam packaging market.
Cost of goods sold as a percentage of net sales decreased to 74.6% for the
six months ended June 27, 1997, from 76.6% for the same period in 1996. This
decrease was due to a decline in raw material prices resulting from improved
market conditions and reductions in manufacturing overhead as a percentage
of net sales resulting from the J.R. Cup and StyroChem acquisitions.
Gross profit increased to $29.0 million or 25.4% of net sales for the six
months ended June 27, 1997, from $19.8 million or 23.4% of net sales for the
same period in 1996.
Distribution expense as a percentage of net sales decreased to 7.5% for the
six months ended June 27, 1997, from 8.0% of net sales for the same period
in 1996. This decline in distribution expense as a percentage of net sales
was due primarily to the acquisition of StyroChem, whose distribution
expense was 3.3% of net sales.
Selling, general and administrative expenses as a percentage of net sales
decreased to 10.0% for the six months ended June 27, 1997, from 10.5% of net
sales for the same period in 1996. This was due to lower administrative
costs as a percentage of net sales resulting from the J.R. Cup and StyroChem
acquisitions.
Income from operations increased to $9.0 million or 7.9% of net sales for
the six months ended June 27, 1997, from $3.5 million or 4.1% of net sales
for the same period in 1996.
Interest increased to $5.8 million for the six months ended June 27, 1997,
from $2.1 million for the same period in 1996. This increase was due
primarily to an increase in borrowings related to the J.R. Cup and StyroChem
acquisitions, including the issuance of Radnor's $100 million 10% Senior
Notes due 2003.
Net income increased to $3.1 million or 2.7% of net sales for the six months
ended June 27, 1997, from $1.2 million or 1.4% of net sales for the same
period in 1996 due to the reasons described above.
<PAGE>
Liquidity and Capital Resources
During the six months ended June 27, 1997 and June 28, 1996, the Company's
principal sources of funds consisted of cash from continuing operations and
financing sources. During the 1997 period, after tax cash flow increased to
$7.3 million offset by cash used for working capital of $6.5 million.
Additional borrowings under the credit facilities of $10.9 million, offset
by an increase in cash of $0.5 million, were used to fund capital
expenditures of $7.0 million and a dividend payment of $3.0 million.
As of June 27, 1997 the Company had $15.2 million outstanding and $13.0
million available under its revolving credit agreements. The Company's
principal uses of cash for the next several years will be working capital
requirements and capital expenditures. Management expects that annual
capital expenditures will increase from historical levels during the next
few years as the Company pursues new development and cost-reduction
opportunities.
As a holding company, Radnor is dependent upon dividends and other payments
from its subsidiaries to generate the funds necessary to meet its
obligations. Subject to certain limitations under applicable state law and
the Company's credit agreements, Radnor is, and will continue to be, able to
control its receipt of dividends and other payments from its subsidiaries.
Management believes that cash generated from operations, together with
available borrowings from the revolving credit facilities under the credit
agreements, will be sufficient to meet the Company's expected operating
needs, planned capital expenditures and debt service requirements.
Net Operating Loss Carryforwards
As of December 27, 1996, the Company had approximately $14.0 million of net
operating loss carryforwards for federal income tax purposes, which expire
through 2010. Since there can be no assurance that the Company's net
operating loss carryforwards will become available or that the Company will
generate future taxable income, a valuation allowance was provided for
substantially all of the loss carryforward tax benefit at December 27, 1996.
In 1997 a portion of the valuation allowance has been eliminated and a tax
benefit reflected in the 1997 financial statements.
Pending Accounting Changes
In July 1997, the FASB issued Statement #130, "Reporting Comprehensive
Income," and Statement #131, "Disclosures About Segments of an Enterprise
and Related Information." Statement #130 establishes standards for reporting
comprehensive income in financial statements. Statement #131 expands certain
reporting and disclosure requirements for segments from current
requirements. The Company is not required to adopt these Statements until
1998 and does not expect the adoption of these new standards to result in
material changes to previously reported amounts or disclosures.
Forward Looking Statements
All statements contained herein that are not historical facts are based on
current expectations. These statements are forward looking in nature and
involve a number of risks and uncertainties. Such risks and uncertainties
are described in detail in the Company's Prospectus dated April 10, 1997
included in the Company's Registration Statement on Form S-4, Commission
File No. 333-19495, to which reference is hereby made.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is involved in various legal actions arising in the normal
course of business. After taking into consideration legal counsel's
evaluation of such actions, management believes that these actions will
not have a material effect on the Company's financial position or
results of operations.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1* Restated Certificate of Incorporation of Radnor
Holdings Corporation
3.2* Bylaws of Radnor Holdings Corporation
3.3* Certificate of Incorporation of WinCup Holdings, Inc.
3.4* Bylaws of WinCup Holdings, Inc.
3.5* Certificate of Incorporation of Radnor Management, Inc.
3.6* Bylaws of Radnor Management, Inc.
3.9* Certificate of Incorporation of SP Acquisition Co.
3.10* Bylaws of SP Acquisition Co.
3.11* Articles of Incorporation of StyroChem International, Inc.
3.12* Bylaws of StyroChem International, Inc.
3.13* Certificate of Incorporation of StyroChem International,
Ltd.
3.14* Bylaws of StyroChem International, Ltd.
4.1* Indenture, dated as of December 5, 1996, among Radnor
Holdings Corporation, WinCup Holdings, Inc., WinCup
Holdings, L.P., SP Acquisition Co., StyroChem
International, Inc., StyroChem International, Ltd.,
Radnor Management, Inc., and First Union National Bank,
as amended by a First Supplemental Indenture dated as of
December 17, 1996, including form of Notes and Guarantees
10.67 Amendment dated April 28, 1992 to Equity Incentive Plan
7.0 Financial Data Schedule
* Incorporated by reference to identically numbered exhibit
to Radnor's Registration Statement No. 333-19495 on Form
S-4, filed on January 9, 1997.
(b) Reports on Form 8-K
There were no reports filed on form 8-K during the three month
period ended June 27, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, its duly authorized officer and chief financial officer.
RADNOR HOLDINGS CORPORATION
(registrant)
/s/ Michael V. Valenza
-------------------------------
Date: August 8, 1997 By:
Michael V. Valenza
Senior Vice President-Finance and Chief
Financial Officer
<PAGE>
EXHIBIT 10.67
AMENDMENT TO THE
BENCHMARK CORPORATION OF DELAWARE
EQUITY INCENTIVE PLAN
WHEREAS, Benchmark Corporation of Delaware, a Delaware corporation (the
"Company"), maintains the Benchmark Corporation of Delaware Equity Incentive
Plan (the "Plan"); and
WHEREAS, the Board of Directors has approved the amending of the Plan
in order to increase the flexibility of the administration of the Plan by
altering the required number of members of the Stock Option Plan Committee (the
"Committee").
NOW, THEREFORE, the Plan shall be hereby amended as follows:
1. The first sentence of Section 2(a) of the Plan is
hereby amended to read in its entirety as follows:
"The administrative functions required by the Plan
shall be performed by the Stock Option Plan Committee (the
"Committee") which shall consist of the Company's Board of
Directors ("Board") or any committee designated by the Board,
which designated committee shall consist of not less than
three (3) nor more than five (5) members, at least one of whom
shall be a Director of the Company."
2. This Amendment shall be effective as of April 28, 1992.
Except as expressly modified herein, all of the terms and
conditions of the Plan shall continue in full force and effect.
TO RECORD the adoption of this Amendment, the Company has caused its
duly authorized officers to affix its corporate name and seal hereto as of the
28th day of April, 1992.
ATTEST: BENCHMARK CORPORATION OF
DELAWARE
/s/ John P. McNiff By:/s/ Michael T. Kennedy
------------------------------- ----------------------------
Secretary President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-26-1997 DEC-27-1996
<PERIOD-START> DEC-28-1996 DEC-30-1995
<PERIOD-END> JUN-27-1997 JUN-28-1996
<CASH> 1,349 0
<SECURITIES> 0 0
<RECEIVABLES> 22,495 0
<ALLOWANCES> 0 0
<INVENTORY> 22,566 0
<CURRENT-ASSETS> 51,932 0
<PP&E> 122,945 0
<DEPRECIATION> 7,634 0
<TOTAL-ASSETS> 177,677 0
<CURRENT-LIABILITIES> 36,253 0
<BONDS> 115,310 0
0 0
0 0
<COMMON> 1 0
<OTHER-SE> 14,377 0
<TOTAL-LIABILITY-AND-EQUITY> 177,677 0
<SALES> 114,455 84,526
<TOTAL-REVENUES> 114,455 84,526
<CGS> 85,431 64,761
<TOTAL-COSTS> 105,416 81,054
<OTHER-EXPENSES> (138) 223
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 5,788 2,132
<INCOME-PRETAX> 3,389 1,117
<INCOME-TAX> 319 0
<INCOME-CONTINUING> 3,070 456
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 710
<CHANGES> 0 0
<NET-INCOME> 3,070 1,166
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
