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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 26, 1997
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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
100 Matsonford Road, Radnor, Pennsylvania 19087
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 610-341-9600
Securities registered pursuant to Section 12(b) of the act: None
Securities registered pursuant to Section 12(g) of the act: None
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 [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 20, 1998 there were 600 shares of the Registrant's Voting Common
Stock ($.10 par value), 245 shares of the Registrant's Nonvoting Common Stock
($.10 par value) and 5,400 shares of the Registrant's Class B Nonvoting Common
Stock ($.01 par value) outstanding. The aggregate market value of voting stock
held by non-affiliates of the Registrant as of such date was $0.
DOCUMENT INCORPORATED BY REFERENCE:
Portions of the Registrant's Prospectus dated February 6, 1998, included in
Amendment No. 1 to the Company's Registration Statement on Form S-4, Commission
File No. 333-42101, are incorporated by reference in Item 8.
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RADNOR HOLDINGS CORPORATION
1997 FORM 10-K
TABLE OF CONTENTS
Item Page
- ---- ----
PART I
------
1. Business 1
2. Properties 7
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security Holders 8
PART II
-------
5. Market for Registrant's Common Equity and Related Stock Matters 9
6. Selected Financial Data 10
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
8. Financial Statements and Supplementary Data 15
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 17
PART III
--------
10. Directors and Executive Officers of the Registrant 18
11. Executive Compensation 20
12. Security Ownership of Certain Beneficial Owners and Management 22
13. Certain Relationships and Related Transactions 24
PART IV
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14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 25
<PAGE>
PART I
ITEM 1. BUSINESS
General
- -------
Radnor Holdings Corporation (the "Company"), a Delaware corporation formed
in November 1991, is a leading worldwide manufacturer and distributor of
chemical and packaging products for the foodservice, insulation and packaging
industries. The Company, through its WinCup Holdings, Inc. ("WinCup")
subsidiary, is the second largest producer in the United States of foam cup and
container products for the foodservice industry. Through its Radnor Chemical
Corporation subsidiary, the Company is the fifth largest producer worldwide of
expandable polystyrene ("EPS"). The Company has 22 manufacturing facilities
located throughout the United States, Canada and Europe.
On October 15, 1997, the Company, through its Radnor Chemical Corporation
subsidiary, acquired substantially all of the assets and assumed certain
liabilities of the polystyrene production operations of Neste Oy ("StyroChem
Europe") for $52.3 million. Proceeds from the sale of $60.0 million of the
Company's 10% Series B Senior Notes due 2003 (the "Series B Notes"), issued
pursuant to exemptions under the Securities Act of 1933, as amended, were
utilized to pay the purchase price.
On December 5, 1996, the Company acquired Radnor Chemical Corporation and
its subsidiaries ("StyroChem"), for $23.5 million of cash plus consulting
payments, a non-compete agreement and $0.9 million of assumed indebtedness.
Effective January 1996, the Company acquired the U.S. foam cup and container
operations of Fort James Corporation, formerly James River Paper Company, Inc.
The Company, through WinCup, has been manufacturing foam cups and
containers for more than 30 years. The WinCup foam cup and container business
was established in 1961 and began purchasing EPS from StyroChem when that
company began operations in 1976. StyroChem Europe is a leading EPS producer in
Northern Europe and has produced EPS since 1972.
Industry Overview
- -----------------
An independent industry survey estimated that sales of disposable
foodservice products in the U.S. were in excess of $7.0 billion in 1994, with
sales of disposable cups and containers estimated to have been more than $2.0
billion. The foam segment of the disposable cup and container market, which the
Company believes had sales of approximately $600 million in 1997, is highly
concentrated, with the Company and its primary competitor accounting for more
than 80% of the market segment.
The EPS industry is generally comprised of three grades of material: block
grade for rigid board insulation and molded parts, shape grade for a broad range
of packaging and specialty applications and T-grade for foodservice containers
and lost foam casting. The North American market for EPS products is estimated
at approximately 940 million pounds annually, including insulation, packaging
and foodservice grades. The European market is estimated at approximately 1.5
billion pounds annually consisting primarily of shape grades. Worldwide, there
are in excess of 20 manufacturers with the top five accounting for approximately
60 percent of the market.
Products
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The Company manufactures a broad range of foam cups, bowls and containers,
foam packaging products and thermoformed plastic lids. The use of foam provides
an insulating feature to the Company's products, allowing them to be used for
both hot and cold beverages and food products while enhancing comfort for the
end user. Foam cups are manufactured in varying sizes for both hot and cold
beverages and are sold under the Dixie(R), COMpac(TM), Profit Pals(R),
STYROcup(R), Handi-Kup HK(R), and Simplicity(R) brand names. Foam bowls and
other containers are made in varying sizes for both hot and cold food products
and are sold under the STYROcontainers(R) brand name. The Company also
manufactures thermoformed leak-resistant plastic lids for its cups, bowls and
containers.
1
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The Company, through StyroChem, manufactures EPS for its internal
consumption in addition to selling directly to third party manufacturers of foam
containers, insulation products and packaging products. Prior to its acquisition
by the Company, StyroChem had been a long-term supplier of EPS to the Company.
StyroChem Europe manufactures EPS, general-purpose polystyrene and
high-impact polystyrene ("HIPS"), and also converts a significant portion of its
EPS production into a variety of standard and specialized insulation products.
StyroChem Europe's EPS is made primarily for the insulation and packaging
industries and includes a range of bead sizes and densities for conversion by
customers into light and heavy insulation boards as well as various shape
products, such as insulated fish packaging boxes. StyroChem Europe's foam
insulation operations directly convert internally produced EPS into a full range
of building insulation panels as well as specialized foam insulation products.
Sales, Marketing and Customers
- ------------------------------
The Company sells its disposable foam packaging products through a
64-person sales organization and through an extensive network of more than 50
independent sales representatives. Sales and marketing efforts are directed by
the Company's Senior Vice President of Sales and Marketing and are supported by
12 senior sales managers with an average of more than 14 years experience in the
foodservice industry. The Company believes its experienced sales team and
long-term representative relationships enhance the Company's ability to provide
high levels of customer service and specialized marketing programs, including
custom-designed foam products. In addition, the Company sells EPS through a
dedicated sales force to manufacturers of foam packaging and insulation
products.
StyroChem Europe markets its EPS and other polystyrene products throughout
Europe through a combination of its own sales force, sales agency arrangements
with sales offices and personnel of affiliates of Neste Oy and manufacturers'
representatives. In support of these sales and marketing efforts, StyroChem
Europe employs people who are knowledgeable of chemical engineering and
manufacturing processes in order to provide technical assistance to its
customers. StyroChem Europe maintains its own direct sales force for its foam
insulation products. A portion of this foam insulation product sales force is
decentralized, allowing StyroChem Europe to separately market specialized
products in addition to its standard product offerings.
The Company supplies products to a number of large national companies and
foodservice distributors. No customer represented more than 8.1% of the
Company's net sales for 1997. In addition, the five largest accounts represented
approximately 27.9% of the Company's net sales for 1997. Although the Company
has not lost sales from its key customers in 1995, 1996, 1997 or 1998 to date,
if any of such customers substantially reduces its level of purchases from the
Company, the Company's profitability may be adversely affected. Moreover,
continued consolidation among distributors in the foodservice industry could
result in an increasingly concentrated customer base or the loss of certain
customers.
Manufacturing
- -------------
The Company's foam products are made with custom-designed foam cup molding
machines, lid production machines and foam cup and container printing machines.
The Company operates ten foam plants located throughout the U.S. and four plants
located in the U.S. and Canada that manufacture EPS from styrene monomer.
StyroChem Europe operates two plants located in Finland that manufacture EPS,
general purpose polystyrene and HIPS from styrene monomer and six plants located
in Finland, Sweden and Denmark that manufacture foam insulation panels from EPS.
2
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Raw Materials
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The Company's foam products are manufactured from EPS, which is produced
from styrene monomer. Styrene monomer is a commodity petrochemical that is
readily available in bulk quantities from numerous large, vertically integrated
chemical companies. Historically, styrene monomer prices have fluctuated as a
result of changes in petrochemical prices and the capacity, supply and demand
for styrene monomer, although in recent years, such prices have been relatively
stable. Styrene monomer prices during 1996 ranged from $.27 to $.30 per pound.
During 1997 and 1998, styrene monomer prices have ranged from $.28 to $.30 per
pound.
The StyroChem and StyroChem Europe acquisitions have not insulated the
Company from price fluctuations for styrene monomer, although they mitigate the
impact of such fluctuations by increasing the Company's flexibility to purchase
styrene monomer. Radnor Chemical Corporation, through its subsidiaries,
purchases styrene monomer from various suppliers.
The raw materials used by the Company for the manufacture of thermoformed
lids are primarily plastic resins such as HIPS. Most of the plastic resins used
by the Company, including HIPS, are available from a variety of sources.
Risks Attendant to Foreign Operations
- -------------------------------------
The Company conducts its businesses in numerous foreign countries and as a
result is subject to risks of fluctuations in the exchange rates of various
foreign currencies and other political and economic risks associated with
international business. The Company's foreign entities report their assets,
liabilities and results of operations in the currency in which the entity
primarily conducts its businesses. The foreign currencies are ultimately
translated into U.S. dollars for financial reporting purposes.
See Note 11 to the Company's financial statements included herein for
information with respect to the geographic composition of the Company's
operations and financial position as of and for the year ended December 26,
1997.
Proprietary Technology and Trademarks
- -------------------------------------
The Company has developed a broad array of proprietary technology that is
utilized in various stages of its manufacturing operations. The Company relies
primarily upon confidentiality agreements and restricted plant access to protect
its proprietary technology. The Company does own or hold license rights with
respect to numerous patents relating to its lid design in manufacturing,
embossed cup design and continuous formed foam cup manufacturing processes.
However, the Company does not consider these patents material to its operations.
The Company holds approximately 30 registered trademarks and StyroChem
Europe holds approximately 15 trademarks. The Company does not consider these
trademarks material to its operations.
Competition
- -----------
The Company competes in the highly competitive foodservice industry. The
foam segment of the disposable cup and container market is highly concentrated
and, within this segment, the Company competes principally with Dart Container
Corp., which has significantly greater financial resources than the Company and
controls the largest share of this market segment. The Company does not believe
that companies operating in related markets are likely to enter the foam segment
due to the significant investment that would be required.
The Company believes that competition within the foam segment of the market
is based primarily on customer service, product quality and the price at which
products are offered. The Company believes that its market position is
attributable to its high level of customer service and product quality,
strategically located manufacturing facilities, proprietary technology and
experienced management team. The Company also competes with the paper
3
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segment, which is more fragmented than the foam segment. The Company believes
that competition between foam and paper is based on product appearance, quality
and price.
The U.S. EPS industry is highly concentrated. Management believes that each
of Nova Chemicals, Inc., Huntsman Chemical Corp. and BASF Corporation, which are
larger and have greater financial resources than the Company, controls a
significant share of the market for supplying EPS to manufacturers of insulation
and packaging products. The Company believes that competition within this
industry is primarily based on price, although customer service and support can
be significant competitive factors, particularly among the smaller manufacturers
of foam insulation and packaging products.
StyroChem Europe competes within the highly competitive European EPS
industry. Several companies, including BASF Corporation, Shell Oil Company,
Enichem S.P.A. and Huntsman Chemical Corp., are larger and have more substantial
financial resources than the Company. Management believes that competition is
based primarily on price, although technical support and consistently high
quality beads are important factors to many of StyroChem Europe's customers. The
Company expects that a significant percentage of StyroChem Europe's EPS
production will continue to be used internally for its foam insulation product
operations. These foam insulation product operations are located in Finland,
Sweden and Denmark, and compete primarily against other insulation manufacturers
located in these countries. Foam insulation products generally compete with
insulation products made from other materials such as mineral wool and glass
wool.
Employees
- ---------
As of December 26, 1997, the Company had approximately 1,800 full-time
employees. Except for StyroChem Europe employees, the Company's employees are
not represented by any union. In Finland, over 90% of StyroChem Europe's
employees are represented by one of five unions and StyroChem Europe is subject
to three collective bargaining agreements. In Sweden, over 90% of StyroChem
Europe's employees are represented by one of four unions and StyroChem Europe is
subject to two collective bargaining agreements. In Denmark, StyroChem Europe's
employees are not represented by any union, nor is StyroChem Europe subject to
any collective bargaining agreement. However, all contracts for white collar
employees in Denmark must include provisions that are at least as favorable as
those provided in the Danish Employees Act. In addition, contracts for blue
collar employees in Denmark must fulfill the requirements of applicable European
Union directives regarding employment. The European Union directives are also
applicable to StyroChem Europe in Finland and Sweden; however, the terms of the
collective bargaining agreements will control employment relationships in these
countries to the extent that these agreements address relevant issues in a more
detailed manner and include benefits exceeding the minimum standards established
by the directives. The Company has never experienced a labor strike or other
labor-related work stoppage and considers its relations with its employees to be
good.
The Company is dependent on the management experience and continued
services of the Company's executive officers, including Michael T. Kennedy. The
loss of the services of these officers could have a material adverse effect on
the Company's business. The Company is also dependent on the management
experience of the key StyroChem Europe employees who have joined the Company as
part of the StyroChem Europe acquisition. In addition, the Company's continued
growth depends on its ability to attract and retain experienced key employees.
Environmental Matters
- ---------------------
The Company's facilities are used for manufacturing or warehousing of foam
container products or the EPS from which such products are manufactured. Many of
these facilities are subject to federal, state, foreign and local laws and
regulations relating to, among other things, emissions to air, discharges to
water and the generation, handling, storage, transportation and disposal of
hazardous and non-hazardous materials and wastes.
Certain of the Company's manufacturing facilities generate air emissions,
including volatile organic compounds and particulate matter, that are regulated
and require permits and/or emissions control equipment. While the Company
believes that the majority of the air emissions from its facilities are properly
permitted and controlled, certain of the Company's facilities have been cited
for instances of noncompliance, although no material
4
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citations were issued within the periods covered by the financial statements
included in this Annual Report and all of these citations have been resolved
without a material adverse effect on the Company's financial condition or
results of operations. Certain of the Company's facilities also have failed to
report certain emissions as required, and it is possible that certain of the
Company's facilities lack proper air emission permits, that these permits do not
address all regulated emissions and/or that certain of the facilities are not in
full compliance with all permit conditions. Certain of the Company's Finnish and
Scandinavian facilities could be required in the future to reduce emissions of
pentane and styrene. The requirement to reduce such air emissions is subject to
negotiation with Finnish and Scandinavian regulatory authorities and could
require significant capital expenditures. The Company believes, however, that
the costs of achieving and maintaining compliance with laws and regulations
regarding air emissions are not reasonably likely to have a material adverse
effect on the Company's financial condition or results of operations, based on
its prior experience in addressing compliance matters that raised potentially
similar issues for other facilities and on the existence of an environmental
escrow account established in connection with the acquisition of StyroChem.
Furthermore, the Company has no knowledge of any claims regarding air emissions
that could be expected to have a material adverse effect on the Company's
financial condition or results of operations. However, it is possible that the
Company could incur significant fines, penalties or capital costs associated
with any confirmed noncompliance. There can be no assurance that future
environmental laws or regulations, or permit requirements under the Title V of
the Clean Air Act, will not require substantial expenditures by the Company or
significant modifications of the Company's operations.
Certain of the Company's manufacturing facilities generate wastewater that
is regulated and requires permits for discharge. While the Company believes that
the majority of the wastewater discharges from its facilities are properly
permitted, certain of the Company's facilities have been cited for instances of
past noncompliance, although the only material citation issued within the
periods covered by the financial statements included in this Annual Report was
in 1995 for alleged noncompliance by the Fort Worth, Texas facility with a
municipal wastewater discharge ordinance. All of these citations, including the
Fort Worth citation, have been resolved without a material adverse effect on the
Company's financial condition or results of operations. Moreover, one of the
Company's facilities has failed to report wastewater pretreatment system upset
conditions as required, and it is possible that certain of the Company's
facilities currently lack proper wastewater discharge permits and/or are not in
full compliance with all permit conditions. The Company has no knowledge of any
claims regarding wastewater discharge that could be expected to have a material
adverse effect on the Company's financial condition or results of operations.
The Company believes that the costs of achieving and maintaining compliance with
laws and regulations regarding wastewater discharges is not reasonably likely to
have a material adverse effect on the Company's financial condition or results
of operations, based both on the Company's prior experience in obtaining similar
permits or addressing compliance matters that raised potentially similar issues
for other facilities and on preliminary estimates of the cost of addressing such
potential permit issues, which would be within the scope of, and are preliminary
estimated to be significantly less than, the StyroChem environmental escrow.
However, it is possible that the Company could become subject to significant
fines, penalties or capital costs associated with any confirmed noncompliance.
Furthermore, there can be no assurance that future environmental laws or
regulations will not require substantial expenditures by the Company or
significant modifications of the Company's operations.
The Company generates and handles certain hazardous substances, including
petroleum products, and wastes in connection with its manufacturing processes.
The handling and disposal of these substances and wastes is subject to federal,
state and local regulations, and site contamination originating from the release
or disposal of such substances or wastes can lead to significant liabilities. It
is possible that certain of the Company's current or former facilities are or
were not in full compliance with applicable laws regarding the handling and
disposal of these substances and wastes. The soil and shallow groundwater at the
Company's domestic EPS facilities are known to contain elevated levels of
various contaminants. However, the Company does not believe, based on the
results of soil and groundwater testing, that material remediation efforts with
respect to these conditions will be required. Although the Company believes that
the elevated levels of various contaminants in the soil and shallow groundwater
at the Company's domestic EPS facilities and any confirmed noncompliance with
applicable laws regarding the handling and disposal of certain hazardous
substances have not had, and are not reasonably likely to have, either
individually or in the aggregate, a material adverse effect on the Company's
financial condition or results of operations, and the Company has no knowledge
of claims that could be expected to have a material adverse effect on its
financial condition or results of operations, there can be no assurance that the
Company will
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not incur significant costs, fines or penalties in connection with
historical on- or off-site handling or disposal of such substances and wastes or
cleanup costs for site contamination.
The Company owns and operates underground storage tanks ("USTs") at three
of its facilities for the storage of liquid pentane. Leak detection or
containment systems are in place at all three facilities. One of the tanks,
located at the Fort Worth, Texas facility, was pressure tested in 1996 and no
leaks were detected. USTs are generally subject to federal, state, local and
foreign laws and regulations that require testing and upgrading of USTs and
remediation of polluted soils and groundwater resulting from leaking USTs. In
addition, if leakage from the Company's USTs migrates onto the property of
others, the Company may be subject to civil liability to third parties for
remediation costs or other damages. Based on historical experience, the Company
believes that its liabilities associated with UST testing, upgrades and
remediation are unlikely to have a material adverse effect on its financial
condition or results of operations.
Certain of the Company's current and former facilities are located in
industrial areas and have been in operation for many years. As a consequence, it
is possible that historical or neighboring activities have affected properties
currently or formerly owned by the Company and that, as a result, additional
environmental issues may arise in the future, the precise nature of which the
Company cannot now predict.
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ITEM 2. PROPERTIES
The following table sets forth as of December 26, 1997 the Company's major
manufacturing, warehouse, machine assembly, utility and office facilities, all
of which are owned except as otherwise noted:
<TABLE>
<CAPTION>
Approximate
Floor Space
Location Use Sq. Ft.
- -------- --- -------
<S> <C> <C>
Corte Madera, California........................ Manufacturing, warehouse, machine assembly and office 85,000
(leased)
Richmond, California............................ Warehouse (leased) 103,000
El Campo, Texas................................. Manufacturing and warehouse 91,000
Higginsville, Missouri.......................... Manufacturing and warehouse 68,000
Jacksonville, Florida........................... Manufacturing and warehouse (leased) 128,000
Edison, New Jersey.............................. Warehouse (leased) 95,000
Metuchen, New Jersey............................ Manufacturing 85,000
Mount Sterling, Ohio............................ Manufacturing and warehouse 50,000
Shreveport, Louisiana........................... Manufacturing and warehouse 73,000
Stone Mountain, Georgia......................... Manufacturing and warehouse (leased) 315,000
Phoenix, Arizona................................ Manufacturing and machine assembly (leased) 182,000
West Chicago, Illinois.......................... Manufacturing, warehouse and office (partially leased) 287,000
Fort Worth, Texas............................... Manufacturing, warehouse and office (partially leased) 76,000
Saginaw, Texas ................................. Manufacturing, warehouse and office 106,000
Baie D'Urfe, Quebec............................. Manufacturing, warehouse and office (partially leased) 90,000
Porvoo, Finland ................................ Manufacturing, warehouse, machine assembly, utility and 109,000
office (partially leased)
Kokemaki, Finland .............................. Manufacturing, warehouse, utility and office (leased) 28,000
Nurmijarvi, Finland ............................ Manufacturing, warehouse and office 43,000
Vammala, Finland................................ Manufacturing, warehouse, office 122,000
Pietarsaari, Finland............................ Manufacturing, warehouse, office (leased) 32,000
Norrtalje, Sweden .............................. Manufacturing, warehouse, office (leased) 64,000
Vargarda, Sweden................................ Manufacturing, warehouse, office 64,000
Hedensted, Denmark.............................. Manufacturing, warehouse, office 44,000
</TABLE>
In addition, the Company leases approximately 8,000 square feet in Radnor,
Pennsylvania for its executive offices. The Company believes that its present
facilities are adequate for its current operations and that it will be able to
lease or otherwise acquire any additional facilities as may be required for its
future operations.
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ITEM 3. LEGAL PROCEEDINGS
On November 25, 1996, Jackson National Life Insurance Company ("Jackson")
and Benchmark Holdings, Inc. ("Holdings") filed suit in the Chancery Division of
the Circuit Court of Cook County, Illinois against Michael T. Kennedy, the
Company, WinCup, WinCup Holdings L.P., James River Paper Company, Inc. ("James
River") and James River Corporation of Virginia. The suit related to the
November 1995 sale to James River by Holdings of substantially all of Holdings'
assets, consisting of its cutlery and straws operations, and by WinCup of its
plastic cup operations. See Note 1 to the Company's Consolidated Financial
Statements included herein. Holdings had issued to Jackson certain shares of
nonvoting preferred stock in connection with the May 1991 acquisition of the
cutlery and straws operations, in which Jackson previously held an unsecured
subordinated debt position.
On February 27, 1998, the court dismissed the suit on the basis of forum
non conveniens. The Company does not know whether Jackson and Holdings will
appeal the court's decision or file an action in a court in another
jurisdiction.
The Company is also involved in a number of legal proceedings arising in
the ordinary course of business, none of which is expected to have a material
adverse effect on the Company's financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There are no matters to be reported hereunder.
8
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK MATTERS
Market Information
- ------------------
There currently exists no established public trading market for the
Company's Voting Common Stock, $.10 par value, Nonvoting Common Stock, $.10 par
value, or Class B Nonvoting Common Stock, $.01 par value. There have been no
sales of shares of any class of the Company's Common Stock by the holders
thereof since the Company's inception.
Holders
- -------
As of March 20, 1998, there were 3 holders of record of the Company's
Voting Common Stock, 12 holders of record of the Company's Nonvoting Common
Stock and 3 holders of record of the Company's Class B Nonvoting Common Stock.
Dividends
- ---------
In March 1997, the Company declared and paid a dividend of $480.38 per
share of the Company's Voting Common Stock, Nonvoting Common Stock and Class B
Nonvoting Common Stock. As with any company, the declaration and payment of
dividends are subject to the discretion of the Company's Board of Directors and
will depend on various factors, including the restriction of dividends to 50% of
net income contained in the Company's credit agreements and the indentures
pursuant to which the Company issued its 10% Senior Notes Due 2003 on December
5, 1996 (the "Series A Notes") and its Series B Notes.
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ITEM 6. SELECTED FINANCIAL DATA
The following table presents summary consolidated financial data for the
Company. The following data should be read in conjunction with the consolidated
financial statements and the related notes thereto and Management's Discussion
and Analysis of the Financial Condition and Results of Operations, included
elsewhere herein.
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------------------------------------------
Dec. 31, Dec. 30, Dec. 29, Dec. 27, Dec. 26,
1993 1994 1995 1996 (2) 1997 (3)
------------- ------------- ------------ ----------- -------------
($ in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Results of Operations (1):
Net sales $ 83,569 $ 80,850 $ 86,239 $ 177,395 $ 243,583
Cost of goods sold 68,454 64,078 75,690 135,982 181,404
----------- ----------- ------------ ----------- -----------
Gross profit 15,115 16,772 10,549 41,413 62,179
Distribution expense 6,599 5,584 6,027 14,099 18,076
Selling, general and administrative expenses 10,330 8,209 9,051 18,676 30,137
Restructuring charges - - - 910 -
----------- ----------- ------------ ----------- -----------
Income (loss) from operations (1,814) 2,979 (4,529) 7,728 13,966
Interest 2,518 3,001 2,822 4,496 13,004
Other (income) expense, net 386 290 526 374 (133)
----------- ----------- ------------ ----------- -----------
Income (loss) from continuing operations
Before income taxes and minority interest (4,718) (312) (7,877) 2,858 1,095
Income tax expense (benefit) (4) - - - 121 (2,516)
----------- ----------- ------------ ----------- -----------
Income (loss) from continuing operations
Before minority interest (4,718) (312) (7,877) 2,737 3,611
Minority interest in income (5) - - - 1,348 -
----------- ----------- ------------ ----------- -----------
Income (loss) from continuing operations $ (4,718) $ (312) $ (7,877) $ 1,389 $ 3,611
=========== =========== ============ =========== ===========
Balance Sheet data (at end of period) (1):
Working capital (deficit) $ (112) $ 1,620 (10,362)$ $ 8,684 $ 24,136
Total assets 36,650 43,033 46,588 172,369 249,818
Total debt (including current portion) 31,531 35,410 16,252 104,599 179,173
Stockholders' equity (deficit) (6,575) (11,969) 6,554 14,329 14,975
Cash dividends per share - - - - 480
</TABLE>
- -------------------
(1) The Company's financial data do not include the results from the cutlery,
straws and plastic cup operations which were sold in 1995 and reflected as
discontinued operations in the Company's consolidated financial statements.
See Note 1 to the Company's financial statements included herein.
(2) The financial data include the Company and its consolidated subsidiaries,
excluding discontinued operations, as of and for the year ended December
27, 1996. Prior to January 20, 1996 and December 5, 1996, the Company's
results from continuing operations do not include the results of J.R. Cup
and StyroChem, respectively, which were acquired on those respective dates.
See Note 1 to the Company's consolidated financial statements included
herein.
(3) The financial data include the Company and its consolidated subsidiaries,
excluding discontinued operations, as of and for the year ended December
26, 1997. Prior to October 15, 1997, the Company's results from continuing
operations do not include the results of StyroChem Europe, which was
acquired on that date. See Note 1 to the Company's consolidated financial
statements included herein.
(4) See Note 7 to the Company's consolidated financial statements included
herein.
(5) See Note 1 to the Company's consolidated financial statements included
herein.
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
General
- -------
The Company is a leading worldwide manufacturer and distributor of chemical
and packaging products for the foodservice, insulation and packaging industries.
The Company, through WinCup, is the second largest producer in the United States
of foam cup and container products for the foodservice industry. Through its
Radnor Chemical Corporation subsidiary, the Company is the fifth largest
producer worldwide of EPS. The Company has 22 manufacturing facilities located
throughout the United States, Canada and Europe.
WinCup manufactures foam cups for hot and cold drinks, foam bowls and
containers and thermoformed lids and sells its products to national,
institutional and retail customers located throughout the U.S., in Mexico and in
other countries. WinCup, through its predecessors, has been manufacturing foam
cups and containers since 1961.
The Company, through StyroChem, manufactures EPS for its internal
consumption, in addition to selling directly to third party manufacturers of
foam containers, insulation products and packaging products. Prior to its
acquisition by the Company, StyroChem had been a long-term supplier of EPS to
the Company. EPS is categorized by grade, with the highest grade, or cup-grade,
used to manufacture foam cups and containers. Block-grade and shape-grade are
sold to manufacturers of insulation and packaging products, respectively.
StyroChem Europe manufactures EPS, general-purpose polystyrene and HIPS,
and also converts a significant portion of its EPS production into a variety of
standard and specialized insulation products. StyroChem Europe's EPS is made
primarily for the insulation and packaging industries and includes a range of
bead sizes and densities for conversion by customers into light and heavy
insulation boards as well as various shape products, such as insulated fish
packaging boxes. StyroChem Europe works closely with its customers to
incorporate special product features into its EPS such as fire retardancy,
specialty coatings and higher thermal insulation qualities. StyroChem Europe's
foam insulation operations directly convert internally produced EPS into a full
range of building insulation panels as well as specialized foam insulation
products, such as combined metal and foam sandwich building panels, ship
insulation panels and cold room storage modules. These specialized products are
modified to conform to different building and construction requirements in
different countries.
Net sales
---------
Net sales represent the gross sales of the Company's products less cash
discounts and allowances, which historically have averaged approximately 2% of
net sales. Sales incentives and volume rebates to customers are classified as
selling expenses and are included in selling, general and administrative
expenses.
Cost of goods sold
------------------
Raw material costs represent a large portion of the Company's cost of
goods sold and are susceptible to price fluctuations based upon supply and
demand and general market conditions. Beginning in April 1994 and continuing
through August 1995, prices of raw materials reached historically high levels.
Since that time, raw material prices have declined and are near early 1994
levels. Although future raw material prices cannot be predicted with accuracy,
the prices for the raw materials used in the Company's products are forecasted
by independent industry surveys and producer reports to remain stable or decline
over the next several years.
In connection with the Company's engineering initiatives, the Company has
invested significant resources in research and development. The Company expenses
all research and development costs in the period incurred and includes such
costs in cost of goods sold. As a percentage of net sales, these costs have
represented 0.9%, 1.3% and 1.8% in 1995, 1996 and 1997, respectively.
11
<PAGE>
Distribution expense
The Company ships its products from manufacturing locations using a
combination of common carriers, its own fleet and leased vehicles. Distribution
expense consists of the costs to ship products, including costs of labor and
leased vehicles.
Restructuring charges
During the first quarter of 1996, the Company closed its Des Plaines,
Illinois manufacturing facility and consolidated those operations into its West
Chicago, Illinois facility. In addition, the Company consolidated certain
warehousing facilities and relocated its executive offices to Radnor,
Pennsylvania. The plant and warehouse consolidations, together with the
relocation of its executive offices, resulted in $910,000 of restructuring
charges expensed and paid during the year ended December 27, 1996.
Net operating loss carryforwards
As of December 26, 1997, the Company had approximately $20.5 million of
net operating loss carryforwards for federal income tax purposes, which expire
through 2012. A valuation allowance was provided for substantially all of the
loss carryforward tax benefit at December 27, 1996. In 1997, as a result of
management's reevaluation of the Company's future profit outlook, the valuation
allowance has been eliminated and a tax benefit of $4.8 million has been
reflected in the 1997 financial statements. See Note 7 to the Company's
consolidated financial statements included herein.
Pending accounting changes
In July 1997, the FASB issued Statement No. 130, "Reporting Comprehensive
Income", and Statement No. 131, "Disclosures About Segments of an Enterprise and
Related Information". Statement No. 130 establishes standards for reporting
comprehensive income in financial statements. Statement No. 131 expands certain
reporting and disclosure requirements for segments from current requirements.
The Company is not required to adopt these Statements until 1998 and is
currently evaluating the impact, if any, these new standards will have on its
financial reporting practices.
Year 2000 Compliance
The Company is currently in the process of evaluating its information
technology infrastructure for Year 2000 compliance. The Company does not
expect that the cost to modify its information technology infrastructure to be
Year 2000 compliant will be material to its financial condition or results of
operations. The Company does not anticipate any material disruptions in its
operations as a result of any failure by the Company to be in compliance. The
Company does not currently have any information concerning the Year 2000
compliance status of its suppliers and customers. In the event that any of the
Company's significant suppliers or customers does not successfully and timely
achieve Year 2000 compliance, the Company's business operations could be
adversely affected.
Comparability of Periods
Financial results for 1995, 1996 and 1997 are not fully comparable to each
other because of the January 1996 acquisition of the U.S. foam container
operations of Fort James Corporation, formerly James River Paper Company, Inc.
("J.R. Cup"), the December 1996 acquisition of StyroChem and the October 1997
acquisition of StyroChem Europe.
Results of Operations
The following discussion and analysis should be read in conjunction with
Item 6, "Selected Financial Data" and Item 8, "Financial Statements and
Supplementary Data" included elsewhere herein.
12
<PAGE>
Year Ended December 26, 1997 Compared to Year Ended December 27, 1996
Net sales increased to $243.6 million for 1997 from $177.4 million for
1996, an increase of $66.2 million or 37.3%. The increase was due primarily to
the acquisition of StyroChem Europe on October 15, 1997 and the acquisition of
StyroChem on December 5, 1996, as well as growth in the foam packaging business.
Cost of goods sold decreased to 74.5% of net sales for 1997, from 76.7% of
net sales in 1996. The decline in cost of goods sold as a percentage of sales
was due primarily to reductions in manufacturing overhead as a percentage of net
sales resulting from the acquisition of StyroChem Europe and a decline in raw
material prices resulting from improved market conditions.
Gross profit increased to $62.2 million or 25.5% of net sales for 1997,
from $41.4 million or 23.3% of net sales in 1996.
Distribution expense as a percentage of net sales decreased to 7.4% for
1997, from 7.9% of net sales in 1996. This decline in distribution expense as a
percentage of net sales was due primarily to the acquisitions of StyroChem and
StyroChem Europe, which had distribution expense as a percentage of net sales of
3.3% and 7.3% in 1997, respectively.
Selling, general and administrative expenses increased to $30.1 million or
12.4% of net sales for 1997, from $18.7 million or 10.5% of net sales in 1996.
The increase in selling, general and administrative costs as a percentage of net
sales is attributable to the acquisition of StyroChem Europe, which had selling,
general and administrative expenses as a percentage of net sales of 13.9%, and
an increase in commissions related to retail sales.
Income from operations increased to $14.0 million or 5.7% of net sales for
1997, from $7.7 million or 4.4% of net sales in 1996.
Interest increased to $13.0 million for 1997, from $4.5 million in 1996.
This increase was due primarily to an increase in borrowings related to the
acquisitions of J.R. Cup, StyroChem and StyroChem Europe, including the issuance
of the Series A Notes and Series B Notes.
Income taxes were a benefit of $2.5 million for 1997, compared to an
expense of $0.1 million in 1996. The benefit from income taxes in 1997 relates
to the elimination of the valuation allowance previously provided for net
operating loss carryforwards, partially offset by income taxes of $2.3 million
in 1997.
Net income increased to $3.6 million or 1.5% of net sales for 1997, from
$1.4 million or 0.8% of net sales for the same period in 1996 due to the reasons
described above.
Year Ended December 27, 1996 Compared to Year Ended December 29, 1995
Net sales for 1996 were $177.4 million, more than double the net sales of
$86.2 million for 1995. The increase was due primarily to the acquisitions of
J.R. Cup on January 20, 1996 and StyroChem on December 5, 1996.
Costs of goods sold decreased as a percentage of net sales to 76.7% for
1996, from 87.8% in 1995. The decline in cost of goods sold as a percentage of
net sales was due primarily to a decline in raw material prices resulting from
improved market conditions, the increased purchasing power of the combined
company and reductions in manufacturing overhead as a result of the J.R. Cup
acquisition.
Gross profit increased to $41.4 million or 23.3% of net sales for 1996,
from $10.5 million or 12.2% of net sales in 1995. The increase in gross profit
as a percentage of net sales was due primarily to lower raw material prices and
cost reductions related to the J.R. Cup acquisition.
13
<PAGE>
Distribution expense increased to $14.1 million or 7.9% of net sales for
1996, from $6.0 million or 7.0% of net sales in 1995. The increase in
distribution expense as a percentage of net sales was due primarily to rate
increases by freight carriers and a higher percentage of consumer sales, which
require greater delivery costs. The Company also temporarily incurred additional
freight costs as a result of a plant closure and the realignment of customer
shipping locations.
Selling, general and administrative expenses increased to $18.7 million or
10.5% of net sales for 1996, from $9.1 million or 10.5% of net sales in 1995.
Selling, general and administrative expenses were fairly constant as a
percentage of net sales.
Income (loss) from operations increased to $7.7 million or 4.4% of net
sales for 1996, from a loss from operations of $4.5 million in 1995. As noted
above, during 1996, the Company recorded restructuring charges of $0.9 million,
due primarily to a plant closure and the relocation of its executive offices.
Interest increased to $4.5 million or 2.5% of net sales for 1996, from $2.8
million or 3.3% of net sales in 1995 due primarily to an increase in borrowings
related to the acquisitions of J.R. Cup and StyroChem.
Other expense, net decreased to $0.4 million or 0.2% of net sales for 1996
from $0.5 million or 0.6% of net sales in 1995.
Income (loss) from continuing operations increased to $1.4 million or 0.8%
of net sales for 1996, from a loss from continuing operations of $7.9 million in
1995, for the reasons outlined above.
Liquidity and Capital Resources
During fiscal years 1996 and 1997, the Company's principal sources of funds
consisted of cash from operations and financing sources. During the year ended
December 26, 1997, after tax cash flow increased to $12.2 million, while working
capital provided cash of $0.8 million. Additional borrowings under the credit
facilities of $12.7 million and proceeds from the Series B Note offering, offset
by an increase in cash of $8.0 million, were used to fund capital expenditures
of $18.4 million, a dividend payment of $3.0 million and the acquisition of
StyroChem Europe in the amount of $52.3 million. The Company has managed its
growth in working capital and capital expenditures through a combination of
working capital financing and proceeds of long-term debt financing.
As of December 26, 1997, the Company had $16.8 million outstanding and
$15.1 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. The Company's capital expenditures for
fiscal years 1995, 1996 and 1997 were $5.5 million, $4.9 million and $18.4
million, respectively. By completing the sale of the Series A Notes and the
Series B Notes, and by entering into its revolving credit agreements, the
Company believes that it has increased its flexibility over the next five years
to make capital expenditures that management believes will provide an attractive
return on investment.
On October 15, 1997, the Company issued $60.0 million of Series B Notes.
The net proceeds to the Company from the offering in the amount of $60.6 million
were used to repay existing indebtedness under the Company's revolving credit
agreements and to finance the acquisition of StyroChem Europe. The Company also
amended its current credit facility, which increased the aggregate commitment to
$40.0 million and included a $10.0 million sub-limit for the StyroChem Europe
subsidiaries.
The Company has had an increase in annual debt service requirements from
historical levels, due primarily to the acquisitions of StyroChem Europe,
StyroChem and J.R. Cup. As a holding company, the Company is dependent upon
dividends and other payments from its subsidiaries to generate the funds
necessary to meet its obligations. Subject to certain limitations, the Company
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 under its revolving credit
facilities will be sufficient to meet the Company's expected operating needs,
planned capital expenditures and debt service requirements. However, there can
be no assurance
14
<PAGE>
that sufficient funds will be available from operations or borrowings under its
credit agreements to meet the Company's cash needs.
The statements contained in this Annual Report that are not historical
facts, including but not limited to the Company's plans for expansion, facility
consolidation, acquisition and raw material prices, are based on current
expectations. These statements are forward looking (as defined in the U.S.
Private Securities Litigation Reform Act of 1995) in nature and involve a number
of risks and uncertainties. Actual results may vary materially due to risks
relating to raw material price volatility, dependence on key customers,
international operations, dependence on key personnel and environmental matters,
as well as general business and economic conditions, both domestic and
international, and other risks that may be described from time to time in the
reports that the Company files with the Securities and Exchange Commission. See
"Business--Raw Materials," "Business--Sales, marketing and Customers,"
"Business--Risks Attendant to Foreign Operations," "Business--Employees" and
"Business--Environmental Matters."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<S> <C>
Radnor Holdings Corporation and Subsidiaries
Report of Independent Public Accountants F-1
Consolidated Balance Sheets as of December 27, 1996 and December 26, 1997 F-2
Consolidated Statements of Income for the Fiscal Years Ended December 29, 1995,
December 27, 1996 and December 26, 1997 F-3
Consolidated Statements of Changes of Stockholders' (Deficit) Equity for the
Fiscal Years Ended December 29, 1995, December 27, 1996 and December 26, 1997 F-4
Consolidated Statements of Cash Flows for the Fiscal Years Ended December 29,
1995, December 27, 1996 and December 26, 1997 F-5
Notes to Financial Statements F-7
</TABLE>
The following financial statements are incorporated by reference to the pages
indicated of the Company's Prospectus dated February 6, 1998 included in the
Company's Registration Statement on Form S-4, Commission File No. 333-42101 and
filed as Exhibit 99.1 to this Form 10-K:
<TABLE>
<S> <C>
J.R. Cup Foam Container Operations of James River Paper Company, Inc.
Report of Independent Public Accountants F-23
Balance Sheets as of December 25, 1994 and December 31, 1995 F-24
Statements of Operations for the Years Ended December 26, 1993, December
25, 1994 and December 31, 1995 F-25
Statements of Changes in Owner's Investment for the Years Ended December 26, 1993,
December 25, 1994 and December 31, 1995 F-26
Statements of Cash Flows for the Years Ended December 26, 1993, December 25, 1994
and December 31, 1995 F-27
Notes to Financial Statements F-28
SP Acquisition Co. and Subsidiaries
Report of Independent Public Accountants F-32
Independent Auditors' Report F-33
Consolidated Balance Sheets as of April 1, 1995, March 30, 1996 and December 5,
1996 F-34
Consolidated Statements of Income for the Years Ended April 1, 1995 and March 30,
1996 and the Eight Month Period Ended December 5, 1996 F-35
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
April 1, 1995 and March 30, 1996 and the Eight Month Period Ended December 5,
1996 F-36
Consolidated Statements of Cash Flows for the Years Ended April 1, 1995 and
March 30, 1996 and the Eight Month Period Ended December 5, 1996 F-37
</TABLE>
15
<PAGE>
<TABLE>
<S> <C>
Notes to Consolidated Financial Statements for the Years Ended April 1, 1995 and
March 30, 1996 and the Eight Month Period Ended December 5, 1996 F-38
Neste Oy Polystyrene Upstream Business in Porvoo and Kokemaki
Report of Independent Public Accountants F-48
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited) F-49
Statements of Operations for the Years ended December 31, 1994, 1995 and 1996 and
the Nine Month Periods Ended September 30, 1996 and 1997 (unaudited) F-50
Statements of Changes in Owner's Investment for the Years Ended December 31, 1994,
1995 and 1996 and the Nine Month Period Ended September 30, 1997 (unaudited) F-51
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and 1996 and the
Nine Month Periods Ended September 30, 1996 and 1997 (unaudited) F-52
Notes to Financial Statements F-53
Isora Oy
Report of Independent Public Accountants F-57
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997 (unaudited) F-58
Statements of Operations for the Years Ended December 31, 1994, 1995 and 1996 and the
Nine Month Periods Ended September 30, 1996 and 1997 unaudited) F-59
Statements of Changes in Stockholder's Equity for the Years Ended December 31, 1994,
1995 and 1996 and the Nine Month Period Ended September 30, 1997 (unaudited) F-60
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and 1996 and the
Nine Month Periods Ended September 30, 1996 and 1997 (unaudited) F-61
Notes to Financial Statements F-62
Neste Cellplast AB
Report of Independent Public Accountants F-66
Auditors' Report on Neste Cellplast AB F-67
Auditors' Report on Neste Cellplast Aktiebolag F-68
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997 (unaudited) F-69
Statements of Operations for the Years Ended December 31, 1994, 1995 and 1996 and
the Nine Month Periods Ended September 30, 1996 and 1997 (unaudited) F-70
Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1994,
1995 and 1996 and the Nine Month Period Ended September 30, 1997 (unaudited) F-71
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and 1996 and
the Nine Month Periods Ended September 30, 1996 and 1997 (unaudited) F-72
Notes to Financial Statements F-73
Neste Thermisol A/S
Report of Independent Public Accountants F-77
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited) F-78
Statements of Operations for the Years Ended December 31, 1994, 1995 and 1996 and
the Nine Month Periods Ended September 30, 1996 and 1997 (unaudited) F-79
Statements of Changes in Shareholder's Equity for the Years Ended December 31, 1994,
1995 and 1996 and the Nine Month Period Ended September 30, 1997 (unaudited) F-80
Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and 1996 and
the Nine Month Periods Ended September 30, 1996 and 1997 (unaudited) F-81
Notes to Financial Statements F-82
</TABLE>
16
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES
There are no matters to be reported hereunder.
17
<PAGE>
PART IV
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors and Executive Officers
The directors and executive officers of the Company and their ages as of
March 20, 1998 are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Michael T. Kennedy........ 43 President, Chief Executive Officer and Director
Michael V. Valenza........ 38 Senior Vice President - Finance and Chief Financial Officer
Richard C. Hunsinger...... 49 Senior Vice President - Sales and Marketing
Donald D. Walker.......... 56 Senior Vice President - Operations
John P. McNiff............ 37 Senior Vice President - Corporate Development and Director
R. Radcliffe Hastings..... 47 Senior Vice President, Treasurer and Director
Donald C. Rogalski........ 52 Senior Vice President - Administration
John P. McKelvey.......... 57 Vice President - Human Resources
Van D. Groenwold.......... 65 Vice President - Engineering
Caroline J. Williamson.... 30 Vice President and Corporate Counsel
Thomas J. Hopkins......... 41 Director
Vincent F. Garrity, Jr.... 60 Director
</TABLE>
Michael T. Kennedy has served as President, Chief Executive Officer and as
a director of the Company since its formation in November 1991. Between March
1985 and July 1990, Mr. Kennedy served as Chief Financial Officer of Airgas,
Inc., a New York Stock Exchange-listed distributor of industrial gases. Mr.
Kennedy is also a director of Commonwealth Bancorp and Chartwell Investment
Partners, LP.
Michael V. Valenza has served as Senior Vice President - Finance and Chief
Financial Officer of the Company since April 1993. He joined the Company in
September 1992 as Director of Finance. From 1984 until joining the Company, Mr.
Valenza served in a variety of positions with Arthur Andersen LLP, most recently
as a manager in the Enterprise Group.
Richard C. Hunsinger has served as Senior Vice President - Sales and
Marketing of the Company since its formation in November 1991. From 1979 through
August 1991, Mr. Hunsinger served in various management positions, including
Vice President of Sales and Marketing, for Winkler/Flexible Products, Inc., a
former division of The Coca Cola Company.
Donald D. Walker has served as Senior Vice President - Operations of the
Company since November 1992. Mr. Walker served as Vice President of
Manufacturing and as Director of Manufacturing of the Company from February 1992
through November 1992. From 1969 until February 1992, Mr. Walker served in
various management positions with Scott Container Products Group, Inc. (WinCup's
predecessor), WMF Corporation and Thompson Industries.
John P. McNiff has served as Senior Vice President - Corporate Development
of the Company since its formation in November 1991 and as a director since May
1997. Previously Mr. McNiff was Vice President-Corporate Development of Airgas,
Inc., a New York Stock Exchange-listed distributor of industrial gases. Mr.
McNiff is also a director of Chartwell Investment Partners, LP.
R. Radcliffe Hastings has served as Senior Vice President and Treasurer of
the Company since June 1996 and as a director since May 1997. Previously, Mr.
Hastings was with Continental Bank, N.A. and its successor, Bank of
18
<PAGE>
America, for 18 years. Mr. Hastings has held a variety of management positions
in the U.S. banking group and in Bank of America's securities operation, BA
Securities, Inc., and was most recently Managing Director of the Money Manager
Group.
Donald C. Rogalski has served as Senior Vice President - Administration of
the Company since July 1993. Previously Mr. Rogalski held the positions of Chief
Financial Officer and Vice President of Finance for Stiffel Lamp Co. for seven
years. Prior to that, Mr. Rogalski worked for Packard Instrument Company for
nine years, with his last position there as Controller.
John P. McKelvey has served as Vice President - Human Resources for the
Company since October 1992. From February 1992 until October 1992, Mr. McKelvey
was Director of Human Resources for the Company. From 1971 until joining the
Company, Mr. McKelvey served in a variety of human resources management
positions for Scott Container Products Group, Inc., Texstyrene Corporation, WMF
Corporation and Thompson Industries.
Van D. Groenwold has served as Vice President - Engineering for the Company
since November 1992. From February 1992 until November 1992, Mr. Groenwold was
Director of Engineering for the Company. From 1982 until joining the Company,
Mr. Groenwold held various engineering and quality assurance management
positions with Scott Container Products Group, Inc., WMF Corporation and
Thompson Industries.
Caroline J. Williamson has served as Vice President and Corporate Counsel
of the Company since March 1997. From March 1996 to March 1997, Ms. Williamson
served as counsel for Aetna U.S. Healthcare. From September 1992 to March 1996,
Ms. Williamson was an associate with Duane, Morris & Heckscher LLP.
Thomas J. Hopkins has served as a director of the Company since May 1997.
Mr. Hopkins has been a Managing Director of Bear, Stearns & Co. Inc. since March
1997. Mr. Hopkins was employed by Alex. Brown & Sons Incorporated from August
1991 to February 1997, most recently as a Principal.
Vincent F. Garrity, Jr. has served as a director of the Company since May
1997. Mr. Garrity has been a partner in the law firm of Duane, Morris &
Heckscher LLP since 1970.
19
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The directors do not receive separate compensation for their service as
directors of the Company. The following table sets forth certain information
concerning the compensation paid to the Company's chief executive officer and
the Company's four other most highly compensated executive officers whose total
annual salary and bonus exceeded $100,000 for the year ended December 26, 1997:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Annual Compensation Awards
----------------------- --------------
Securities
Underlying All Other
Name and Principal Position Year Salary Bonus Options(#) Compensation
- --------------------------- ---- ------ ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
Michael T. Kennedy.......................... 1997 $1,500,000 $875,000 - $ 99,214(1)
President and Chief Executive Officer 1996 863,597 - - 3,766(2)
R. Radcliffe Hastings....................... 1997 175,000 125,000 - 1,666,613(3)
Senior Vice President and Treasurer 1996 85,755 200,266 - -
Michael V. Valenza.......................... 1997 175,000 125,000 100 4,480(2)
Senior Vice President-Finance and 1996 126,923 100,000 - 3,359(2)
Chief Financial Officer
Richard C. Hunsinger........................ 1997 175,000 75,000 50 4,480(2)
Senior Vice President-Sales and Marketing 1996 146,742 50,000 - 4,070(2)
Donald D. Walker............................ 1997 175,000 75,000 50 4,480(2)
Senior Vice President-Operations 1996 146,154 50,000 - 4,073(2)
</TABLE>
- --------------
(1) Includes $4,480 of matching contributions by the Company under the 401(k)
Retirement Savings Plan and premiums of $94,734 paid by the Company with
respect to a supplemental life insurance policy for the benefit of Mr.
Kennedy.
(2) Represents a matching contribution by the Company under the 401(k)
Retirement Savings Plan.
(3) Represents compensation resulting from the transfer of 60 shares of
Voting Common Stock and 540 shares of Class B Nonvoting Common Stock
from the majority shareholder.
20
<PAGE>
The following table sets forth information with respect to options granted
during the fiscal year ended December 26, 1997 to the persons named in the
Summary Compensation Table above.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rate of Stock
Price Appreciation for
Individual Grants Option Term
- ---------------------------------------------------------------------------------------- ------------------------------
% of
Total
Number of Options
Securities Granted
Underlying to
Options Employees Exercise
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
------------ ----------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Michael T. Kennedy........... - - - - - -
R. Radcliffe Hastings........ - - - - - -
Michael V. Valenza........... 100(1) 22.7% $6,985 7/25/07 $439,283 $1,113,229
Richard C. Hunsinger......... 50(1) 11.4% 6,985 7/25/07 219,641 556,615
Donald D. Walker............. 50(1) 11.4% 6,985 7/25/07 219,641 556,615
</TABLE>
- -----------------
(1) These options vest in five equal cumulative installments on August 1, 1998
and each August 1st thereafter through August 1, 2002. All of these options
become fully vested, at the election of the committee administering the
Company's Equity Incentive Plan, upon certain mergers and consolidations
involving the Company or acquisitions by another corporation of a
controlling interest in the Company.
The following table sets forth information with respect to options held at
December 26, 1997 by the persons named in the Summary Compensation Table above.
No options were exercised by such persons during the fiscal year ended December
26, 1997.
<TABLE>
<CAPTION>
Fiscal Year-End Options Values
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
December 26, 1997 at December 26, 1997(1)
------------------------------------ -----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael T. Kennedy............................... - - - -
R. Radcliffe Hastings............................ - - - -
Michael V. Valenza............................... 32 106 116,320 21,810
Richard C. Hunsinger............................. 90 60 327,150 36,350
Donald D. Walker................................. 85 65 308,975 54,525
</TABLE>
- ------------
(1) Based on the estimated fair value of $6,985 per share (as determined by the
Company's Board of Directors) of the underlying securities.
Employment Agreements
- ---------------------
In May 1993, the Company entered into an employment agreement with Richard
C. Hunsinger, which was amended in January 1996, pursuant to which Mr. Hunsinger
serves as Senior Vice President - Sales and Marketing
21
<PAGE>
of the Company. The agreement is for an initial term of seven years and six
months and, absent 180 days' prior written notice by either party before the end
of the initial or any renewal term, renews from year to year thereafter. Under
the agreement as amended, Mr. Hunsinger is entitled to an annual salary of not
less than $145,000 beginning in 1996, subject to annual cost of living
increases. The agreement contains a covenant not to engage in any business that
is competitive with the business of the Company in any geographical area in
which it does business during the term of the agreement and for a period of two
years immediately following the termination of the agreement.
In April 1996, the Company entered into an employment agreement with R.
Radcliffe Hastings, pursuant to which Mr. Hastings serves as Senior Vice
President and Treasurer of the Company. The agreement is for an initial term of
three years and, absent 90 days' prior written notice by either party before the
end of the initial or any renewal term, renews from year to year thereafter. Mr.
Hastings received a bonus of $64,000 upon the signing of the agreement, and is
entitled to an annual salary of not less than $125,000, subject to annual review
by the Board of Directors. The agreement contains a covenant not to compete in
any business that is competitive with the business of the Company in the U.S.
during the term of the agreement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 20, 1998,
with respect to each person who is known by the Company to own beneficially 5%
or more of each class of voting securities of the Company.
<TABLE>
<CAPTION>
Number of
Shares
Title of Class of Beneficially Percent
Name of Individual or Identity of Group Capital Stock Owned of Class
- --------------------------------------------- ------------------------------ ---------------- ----------------
<S> <C> <C> <C>
Michael T. Kennedy........................... Voting Common Stock 480 80.0%
Three Radnor Corporate Center
Suite 300
Radnor, PA 19087
John P. McNiff............................... Voting Common Stock 60 10.0%
Three Radnor Corporate Center
Suite 300
Radnor, PA 19087
R. Radcliffe Hastings........................ Voting Common Stock 60 10.0%
Three Radnor Corporate Center
Suite 300
Radnor, PA 19087
</TABLE>
22
<PAGE>
The following table sets forth certain information as of March 20, 1998,
with respect to beneficial ownership of each class of equity securities of the
Company by (a) the directors of the Company, (b) the Named Executive Officers
and (c) the directors and all executive officers of the Company as a group.
<TABLE>
<CAPTION>
Number of
Shares Percent
Beneficially of
Name of Individual or Identity of Group Title of Class of Capital Stock Owned(1) Class(2)
--------------------------------------- ------------------------------- -------- --------
<S> <C> <C> <C>
Michael T. Kennedy................................ Voting Common Stock 480 80.0%
Class B Nonvoting Common Stock 3,760 69.6%
Nonvoting Common Stock - -
Michael V. Valenza................................ Voting Common Stock - -
Class B Nonvoting Common Stock - -
Nonvoting Common Stock 52 18.8%
Richard C. Hunsinger.............................. Voting Common Stock - -
Class B Nonvoting Common Stock - -
Nonvoting Common Stock 140 41.8%
Donald D. Walker.................................. Voting Common Stock - -
Class B Nonvoting Common Stock - -
Nonvoting Common Stock 135 40.9%
R. Radcliffe Hastings............................. Voting Common Stock 60 10.0%
Class B Nonvoting Common Stock 540 10.0%
Nonvoting Common Stock - -
John P. McNiff.................................... Voting Common Stock 60 10.0%
Class B Nonvoting Common Stock 540 10.0%
Nonvoting Common Stock - -
Vincent F. Garrity, Jr............................ Voting Common Stock - -
Class B Nonvoting Common Stock - -
Nonvoting Common Stock - -
Thomas J. Hopkins................................. Voting Common Stock - -
Class B Nonvoting Common Stock - -
Nonvoting Common Stock
Directors and all executive officers as
a group (12 persons)........................... Voting Common Stock 600 100.0%
Class B Nonvoting Common Stock 4,840 89.6%
Nonvoting Common Stock 535 90.7%
</TABLE>
(1) Includes shares of Nonvoting Common Stock that certain individuals have the
right to acquire, on or before May 19, 1998, upon the exercise of stock
options granted pursuant to the Company's Equity Incentive Plan, as
follows: Michael V. Valenza-32; Richard C. Hunsinger-90; Donald D.
Walker-85; and the directors and all executive officers as a group-345.
(2) Based upon 600, 245 and 5,400 outstanding shares of Voting Common Stock,
Nonvoting Common Stock and Class B Nonvoting Common Stock, respectively.
23
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has advanced $75,000 on a non-interest-bearing basis to Michael
V. Valenza, the Company's Senior Vice President -- Finance and Chief Financial
Officer, for certain incurred relocation costs.
Vincent F. Garrity, Jr., a director of the Company, is a partner of Duane,
Morris & Heckscher LLP, which serves as the Company's primary legal counsel.
Thomas J. Hopkins, a director of the Company, is a Managing Director of Bear,
Stearns & Co. Inc., an investment banking firm that performed services for the
Company in 1997 in addition to being one of the Initial Purchasers in the
offering of the Series B Notes.
24
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Annual Report
- --------------------------------------------------
1. The consolidated financial statements of the Company and its subsidiaries
are listed in Item 8.
2. Financial Statement Schedules - None.
3. Exhibits:
3.1 Restated Certificate of Incorporation of Radnor Holdings
Corporation (Incorporated by reference to Exhibit 3.1 filed
with Form S-4 Registration Statement, filed by Radnor Holdings
Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation (formerly SP Acquisition Co.), StyroChem U.S.,
Inc. (formerly StyroChem International, Inc.), StyroChem
Canada, Ltd. (formerly StyroChem International, Ltd.) and
Radnor Management, Inc., Commission File No. 333-19495 (the
"Original S-4"))
3.2 Bylaws of Radnor Holdings Corporation (Incorporated by
reference to Exhibit 3.2 filed with the Original S-4)
3.3 Certificate of Incorporation of WinCup Holdings, Inc.
(Incorporated by reference to Exhibit 3.3 filed with the
Original S-4)
3.4 Bylaws of WinCup Holdings, Inc. (Incorporated by reference to
Exhibit No. 3.4 filed with the Original S-4)
3.5 Certificate of Incorporation of Radnor Management, Inc.
(Incorporated by reference to Exhibit No. 3.5 filed with the
Original S-4)
3.6 Bylaws of Radnor Management, Inc. (Incorporated by reference
to Exhibit No. 3.6 filed with the Original S-4)
3.7 Certificate of Incorporation of Radnor Chemical Corporation
(Incorporated by reference to Exhibit 3.7 filed with Form S-4
Registration Statement, filed by Radnor Holdings Corporation,
WinCup Holdings, Inc., Radnor Chemical Corporation, StyroChem
U.S., Inc., and Radnor Management, Inc., Commission No. File
333-42101 (the "Series B S-4"))
3.8 Bylaws of Radnor Chemical Corporation (Incorporated by
reference to Exhibit No. 3.10 filed with the Original S-4)
3.9 Articles of Incorporation of StyroChem U.S., Inc.
(Incorporated by reference to Exhibit 3.9 filed with the
Series B S-4)
3.10 Bylaws of StyroChem U.S., Inc. (Incorporated by reference to
Exhibit No. 3.12 filed with the Original S-4)
3.11 Articles of Incorporation of StyroChem Canada, Ltd.
3.12 Bylaws of StyroChem Canada, Ltd. (Incorporated by reference to
Exhibit No. 3.14 filed with the Original S-4)
3.13 Certificate of Incorporation of Radnor Delaware, Inc.
3.14 Bylaws of Radnor Delaware, Inc.
3.15 Articles of Association of ThermiSol Finland Oy
3.16 Articles of Association of ThermiSol Denmark ApS
25
<PAGE>
3.17 Articles of Association of ThermiSol Sweden AB
3.18 Articles of Association of StyroChem Europe (The Netherlands)
B.V.
3.19 Articles of Association of StyroChem Finland Oy
4.1 Indenture, dated as of December 5, 1996 among Radnor Holdings
Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, StyroChem U.S., Inc., StyroChem Canada, Ltd. and
First Union National Bank, including form of Notes and
Guarantees (Incorporated by reference to Exhibit 4.1 filed
with the Original S-4)
4.2 First Supplemental Indenture, dated as of December 17, 1996
among Radnor Holdings Corporation, WinCup Holdings, Inc.,
Radnor Chemical Corporation, StyroChem U.S., Inc., StyroChem
Canada, Ltd., Radnor Management, Inc. and First Union National
Bank
4.3 Second Supplemental Indenture, dated as of October 15, 1997
among Radnor Holdings Corporation, WinCup Holdings, Inc.,
Radnor Chemical Corporation, StyroChem U.S., Inc., StyroChem
Canada, Ltd., Radnor Management, Inc., StyroChem Europe (The
Netherlands) B.V., StyroChem Finland Oy, ThermiSol Denmark
ApS, ThermiSol Finland Oy, ThermiSol Sweden AB and First Union
National Bank
4.4 Third Supplemental Indenture, dated as of February 9, 1998
among Radnor Holdings Corporation, WinCup Holdings, Inc.,
Radnor Chemical Corporation, StyroChem U.S., Inc., StyroChem
Canada, Ltd., Radnor Management, Inc., StyroChem Europe (The
Netherlands) B.V., StyroChem Finland Oy, ThermiSol Denmark
ApS, ThermiSol Finland Oy, ThermiSol Sweden AB, Radnor
Delaware, Inc. and First Union National Bank
4.5 Exchange and Registration Rights Agreement, dated as of
December 5, 1996 among Radnor Holdings Corporation, WinCup
Holdings, Inc., Radnor Chemical Corporation, StyroChem U.S.,
Inc., StyroChem Canada, Ltd., Alex. Brown & Sons Incorporated
and NatWest Capital Markets Limited (Incorporated by reference
to Exhibit 4.2 filed with the Original S-4)
4.6 Indenture, dated as of October 15, 1997 among Radnor Holdings
Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, StyroChem U.S., Inc., Radnor Management, Inc. and
First Union National Bank, including form of Notes and
Guarantees (Incorporated by reference to Exhibit 4.1 filed
with the Series B S-4)
4.7 First Supplemental Indenture, dated as of February 9, 1998
among Radnor Holdings Corporation, WinCup Holdings, Inc.,
Radnor Chemical Corporation, StyroChem U.S., Inc., Radnor
Management, Inc., Radnor Delaware, Inc. and First Union
National Bank
4.8 Exchange and Registration Rights Agreement, dated as of
October 15, 1997 among Radnor Holdings Corporation, WinCup
Holdings, Inc., Radnor Chemical Corporation, StyroChem U.S.,
Inc., Radnor Management, Inc., Bear, Stearns & Co. Inc.,
NatWest Capital Markets Limited and BT Alex. Brown
Incorporated (Incorporated by reference to Exhibit 4.2 filed
with the Series B S-4)
10.1 Stock Purchase Agreement among Radnor Holdings Corporation,
Richard Davidovich, the Davidovich Charitable Trust, James
River Paper Company, Inc., Grupo Industrial Hermes, SA. de
C.V., and the Rosenthal Group, dated October 30, 1996
(Incorporated by reference to Exhibit No. 10.1 filed with the
Original S-4)
10.2 Working Capital Escrow Agreement, dated as of December 5,
1996, among Radnor Holdings Corporation, Richard Davidovich
and Duane, Morris & Heckscher LLP (Incorporated by reference
to Exhibit No. 10.5 filed with the Original S-4)
10.3 Environmental Escrow Agreement, dated as of December 5, 1996,
among Radnor Holdings Corporation, Richard Davidovich and
Duane, Morris & Heckscher LLP (Incorporated by reference to
Exhibit No. 10.6 filed with the Original S-4)
26
<PAGE>
*10.4 Sales Agent Agreement, dated January 20, 1996, between
James River Paper Company, Inc. and WinCup Holdings, Inc. (as
successor in interest to WinCup Holdings, L.P.), as amended by
a Sales Agent Extension and Modification Agreement dated
December 5, 1996 (Incorporated by reference to Exhibit No.
10.7 filed with Amendment No.1 to the Original S-4)
*10.5 Equipment Use Agreement, dated January 20, 1996, as
amended by an Equipment Use Extension and Modification
Agreement dated December 5, 1996 (Incorporated by reference to
Exhibit No. 10.8 filed with Amendment No.1 to the Original
S-4)
10.6 License Agreement, dated January 20, 1996, among James River
Corporation of Virginia, James River Paper Company, Inc., and
WinCup Holdings, Inc. (as successor in interest to WinCup
Holdings, L.P.), as amended by a License Extension and
Modification Agreement dated December 5, 1996 (Incorporated by
reference to Exhibit No. 10.9 filed with Amendment No.1 to the
Original S-4)
10.7 Patent License Agreement, dated January 20, 1996, among James
River Corporation of Virginia, James River Paper Company,
Inc., and WinCup Holdings, Inc. (as successor in interest to
WinCup Holdings, L.P.), as amended by an Amendment to Patent
License Agreement dated December 5, 1996 (Incorporated by
reference to Exhibit No. 10.10 filed with Amendment No.1 to
the Original S-4)
*10.8 Contract of Sale, dated as of December 5, 1996, among
Chevron Chemical Company, Radnor Chemical Corporation,
StyroChem U.S., Inc. and StyroChem Canada, Ltd. (Incorporated
by reference to Exhibit No. 10.11 filed with Amendment No.1 to
the Original S-4)
*10.9 Contract between ARCO Chemical Company and WinCup
Holdings, Inc. (as successor in interest to WinCup Holdings,
L.P.), dated April 1, 1996, as amended on September, 1996
(Incorporated by reference to Exhibit No. 10.12 filed with
Amendment No.1 to the Original S-4)
10.10 Agreement between BASF Corporation and WinCup Holdings, Inc.
(as successor in interest to WinCup Holdings, L.P.), dated
March 27, 1996, as supplemented by letter agreement dated
April 25, 1996 (Incorporated by reference to Exhibit No. 10.14
filed with Amendment No.1 to the Series B S-4)
10.11 Sales Agreement between Fina Oil and Chemical Company and
WinCup Holdings, Inc. (as successor in interest to WinCup
Holdings, L.P.), dated May 21, 1996 (Incorporated by reference
to Exhibit No. 10.15 filed with Amendment No.1 to the Series B
S-4)
*10.12 Contract of Sale between Scott Polymers, Inc. and WinCup
Holdings, Inc., dated February 28, 1992, as amended on
February 25, 1994, assigned to WinCup Holdings, Inc. (as
successor in interest to WinCup Holdings, L.P.) on January 20,
1996 (Incorporated by reference to Exhibit No. 10.16 filed
with Amendment No. 1 to the Original S-4)
*10.13 Supply Agreement by and between Radnor Chemical Corporation
and James River Canada, Inc., dated March, 1996 (Incorporated
by reference to Exhibit No. 10.17 filed with Amendment No. 1
to the Original S-4)
10.14 Noncompetition Agreement by and between Radnor Holdings
Corporation and Richard Davidovich, dated December 5, 1996
(Incorporated by reference to Exhibit No. 10.18 filed with the
Original S-4)
10.15 Consulting Agreement by and between Radnor Holdings
Corporation and Richard Davidovich, dated December 5, 1996
(Incorporated by reference to Exhibit No. 10.19 filed with the
Original S-4)
10.16 Letter Agreement, dated December 5, 1996, between WinCup
Holdings, Inc. (as successor in interest to WinCup Holdings,
L.P.) and James River Paper Company, Inc., regarding Corte
Madera subleases (Incorporated by reference to Exhibit No.
10.24 filed with the Original S-4)
10.17 Warehouse Lease, dated October 27, 1992, between Safeway Inc.
and James River Paper Company, Inc., as amended, assigned to
WinCup Holdings, Inc. (as successor in interest to WinCup
Holdings, L.P.) on January 20, 1996 (Incorporated by reference
to Exhibit No. 10.25 filed with Amendment No. 1 to the
Original S-4)
27
<PAGE>
10.18 Amended Lease between Patricia M. Dunnell and James River
Paper Company, Inc., dated September 29, 1989, as amended in
September, 1994, assigned to WinCup Holdings, Inc. (as
successor in interest to WinCup Holdings, L.P.) on January 20,
1996 (Incorporated by reference to Exhibit No. 10.26 filed
with Amendment No. 1 to the Original S-4)
10.19 Warehouse Lease between Etzioni Partners and James River
Corporation, dated February 13, 1992, as amended on April 13,
1992 and on December 9, 1992, assigned to WinCup Holdings,
Inc. (as successor in interest to WinCup Holdings, L.P.) on
January 20, 1996 (Incorporated by reference to Exhibit No.
10.27 filed with Amendment No. 1 to the Original S-4)
10.20 Lease between Stone Mountain Industrial Park, Inc. and W.M.F.
Container Corporation, dated October 15, 1984, as amended on
September 20, 1989 and on February 28, 1994, assigned to
WinCup Holdings, Inc. (as successor in interest to WinCup
Holdings, L.P.) on January 20, 1996 (Incorporated by reference
to Exhibit No. 10.28 filed with Amendment No. 1 to the
Original S-4)
10.21 Lease between Stone Mountain Industrial Park, Inc. and W.M.F.
Container Corporation dated June 16, 1977, as amended on
August 7, 1984, and on October 15, 1984, and on February 25,
1994, assigned to WinCup Holdings, Inc. (as successor in
interest to WinCup Holdings, L.P.) on January 20, 1996
(Incorporated by reference to Exhibit No. 10.29 filed with
Amendment No. 1 to the Original S-4)
10.22 Lease between Stone Mountain Industrial Park, Inc. and Scott
Container Group, Inc., dated December 16, 1991, as amended on
February 28, 1994, assigned to WinCup Holdings on January 20,
1996 (Incorporated by reference to Exhibit No. 10.30 filed
with Amendment No. 1 to the Original S-4)
10.23 Operating Lease by and between R-K Ventures Unit I Limited
Partnership and WMF Container Corporation, dated August 20,
1987, as amended on November 30, 1990, assigned to WinCup
Holdings, Inc. (as successor in interest to WinCup Holdings,
L.P.) on January 20, 1996 (Incorporated by reference to
Exhibit No.
10.31 filed with Amendment No. 1 to the Original S-4)
10.24 Standard Form Multi-Tenancy Industrial Lease between WinCup
Holdings, Inc. and CK Airpark Associates, dated June 1, 1994,
assigned to WinCup Holdings, Inc. (as successor in interest to
WinCup Holdings, L.P.) on January 20, 1996 (Incorporated by
reference to Exhibit No. 10.32 filed with Amendment No. 1 to
the Original S-4)
10.25 Industrial Building Lease between Centerpoint Properties
Corporation and WinCup Holdings, Inc. (as successor in
interest to WinCup Holdings, L.P.) dated May 1996
(Incorporated by reference to Exhibit 10.33 filed with the
Series B S-4)
10.26 Radnor Corporate Center Office Lease by and between Radnor
Center Associates and WinCup Holdings, Inc. (as successor in
interest to WinCup Holdings, L.P.), dated May 31, 1996
(Incorporated by reference to Exhibit No. 10.34 filed with
Amendment No. 1 to the Original S-4)
10.27 Standard Commercial Lease by and between Bradford Management
Company of Dallas, Inc. and StyroChem U.S., Inc., dated June
22, 1994, as amended on April 5, 1996, and as renewed on
October 22, 1996 (Incorporated by reference to Exhibit No.
10.35 filed with Amendment No. 1 to the Original S-4)
10.28 Sublease between Cargologan Inc. and StyroChem Canada, Ltd.,
dated August 2, 1996 (Incorporated by reference to Exhibit No.
10.36 filed with Amendment No. 1 to the Original S-4)
**10.29 Executive Employment Agreement by and between Radnor Holdings
Corporation and Richard Hunsinger, dated May 1, 1993, as
amended in October, 1995 (Incorporated by reference to Exhibit
No. 10.38 filed with the Original S-4)
**10.30 Radnor Holdings Corporation Equity Incentive Plan, dated
April 24, 1992, as amended on November 1, 1993 (Incorporated
by reference to Exhibit No. 10.39 filed with Amendment No. 1
to the Original S-4)
**10.31 Radnor Holdings Corporation Management Equity Participation
Plan, dated March 10, 1993, as amended on November 1, 1993
(Incorporated by reference to Exhibit No. 10.40 filed with
Amendment No. 1 to the Original S-4)
28
<PAGE>
10.32 Amended and Restated Revolving Credit and Security Agreement,
dated December 5, 1996, among The Bank of New York Commercial
Corporation, NationsBank, N.A., WinCup Holdings, Inc. (as
successor in interest to WinCup Holdings, L.P.), Radnor
Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, and StyroChem U.S., Inc. (Incorporated by
reference to Exhibit No. 10.41 filed with Amendment No. 1 to
the Original S-4), as amended by Second Amended and Restated
Revolving Credit and Security Agreement among BNY Financial
Corporation, NationsBank, N.A., WinCup Holdings, Inc., Radnor
Chemical Corporation, StyroChem U.S., Inc. and Radnor Holdings
Corporation, dated October 15, 1997 (Incorporated by reference
to Exhibit 10.41 filed with the Series B S-4) as amended by
Joinder dated February 9, 1998 joining Radnor Delaware, Inc.
10.33 Amended and Restated Revolving Credit Note, dated December 5,
1996, made by Radnor Holdings Corporation, WinCup Holdings,
Inc., Radnor Chemical Corporation, and StyroChem U.S., Inc. in
favor of The Bank of New York Commercial Corporation
(Incorporated by reference to Exhibit No. 10.42 filed with
Amendment No. 1 to the Original S-4)
10.34 Amended and Restated Revolving Credit Note, dated December 5,
1996, made by Radnor Holdings Corporation, WinCup Holdings,
Inc., Radnor Chemical Corporation, and StyroChem U.S., Inc. in
favor of NationsBank, N.A. (Incorporated by reference to
Exhibit No. 10.43 filed with Amendment No. 1 to the Original
S-4)
10.35 Trademark Collateral Security Agreement, dated December 5,
1996, between StyroChem U.S., Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.44 filed with Amendment No. 1 to the Original S-4)
10.36 Trademark Assignment of Security, dated December 5, 1996,
between StyroChem U.S., Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.45 filed with Amendment No. 1 to the Original S-4)
10.37 Trademark Collateral Security Agreement, dated December 5,
1996, between WinCup Holdings, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.46 filed with Amendment No. 1 to the Original S-4)
10.38 Trademark Assignment of Security, dated December 5, 1996,
between WinCup Holdings, Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.47 filed with Amendment No. 1 to the Original S-4)
10.39 Patent Collateral Security Agreement, dated December 5, 1996,
between StyroChem U.S., Inc. and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.48 filed with Amendment No. 1 to the Original S-4)
10.40 Patent Assignment of Security, dated December 5, 1996, between
StyroChem U.S., Inc. and The Bank of New York Commercial
Corporation (Incorporated by reference to Exhibit No. 10.49
filed with Amendment No. 1 to the Original S-4)
10.41 Collateral Assignment, dated as of December 5, 1996, among
Radnor Holdings Corporation and The Bank of New York
Commercial Corporation (Incorporated by reference to Exhibit
No. 10.50 filed with Amendment No.
1 to the Original S-4)
10.42 Partnership Interest Purchase Agreement, dated December 5,
1996, among Radnor Holdings Corporation, WinCup Holdings, Inc.
and James River Paper Company, Inc. (Incorporated by reference
to Exhibit No. 10.60 filed with the Original S-4)
10.43 Redemption and Release Agreement by and among Radnor Holdings
Corporation, WinCup Holdings, Inc. and Kimberly-Clark Tissue
Company, dated December 5, 1996 (Incorporated by reference to
Exhibit No. 10.61 filed with the Original S-4)
10.44 Assumption and Modification Agreement, dated as of January 20,
1996, among Scott Paper Company and WinCup Holdings, Inc.
(Incorporated by reference to Exhibit No. 10.62 filed with the
Original S-4)
29
<PAGE>
10.45 Agreement Respecting a Term Loan and Other Credit Facilities,
dated February 25, 1994, between Bank of Montreal and
StyroChem Canada, Ltd., as amended (Incorporated by reference
to Exhibit No. 10.63 filed with Amendment No. 1 to the
Original S-4)
10.46 Letter of Undertaking, dated December 5, 1996, made by
StyroChem Canada, Ltd. and Radnor Holdings Corporation in
favor of Bank of Montreal (Incorporated by reference to
Exhibit No. 10.64 filed with the Original S-4)
10.47 Guaranty, dated February 25, 1994, made by Radnor Chemical
Corporation in favor of Bank of Montreal (Incorporated by
reference to Exhibit No. 10.65 filed with Amendment No. 1 to
the Original S-4)
**10.48 Employment Agreement, dated April 5, 1996, between
WinCup Holdings, Inc. and R. Radcliffe Hastings (Incorporated
by reference to Exhibit No. 10.66 filed with the Original S-4)
10.49 Sale of Assets Agreement between Neste Oy, Isora Oy, Neste
Cellplast AB, Neste Thermisol A/S and StyroChem Finland Oy,
ThermiSol Finland Oy, ThermiSol Sweden AB, ThermiSol Denmark
ApS and Radnor Holdings Corporation dated as of September 17,
1997 (Incorporated by reference to Exhibit No. 2.1 filed with
the Form 8-K filed by Radnor Holdings Corporation dated
October 15, 1997)
10.50 Neste Service Agreement by and between Neste Oy and StyroChem
Finland Oy and Radnor Holdings Corporation dated as of October
15, 1997 (Incorporated by reference to Exhibit 10.68 filed
with the Series B S-4)
10.51 Land Lease Agreement by and between Neste Oy and StyroChem
Finland Oy and Radnor Holdings Corporation dated as of October
15, 1997 (Incorporated by reference to Exhibit 10.69 filed
with the Series B S-4)
10.52 Plant Lease 195 Tamal Vista Boulevard, Corte Madera,
California, between Hunt Brothers Leasing, L.L.C. and WinCup
Holdings, Inc. (as successor in interest to WinCup Holdings,
L.P.), dated May 1, 1997 (Incorporated by reference to Exhibit
10.70 filed with the Series B S-4)
10.53 Engineering Lease 201 Tamal Vista Boulevard, Corte Madera,
California, between Hunt Brothers Leasing, L.L.C. and WinCup
Holdings, Inc. (as successor in interest to WinCup Holdings,
L.P.), dated May 1, 1997 (Incorporated by reference to Exhibit
10.71 filed with the Series B S-4)
10.54 Warehouse Lease 205 Tamal Vista Boulevard, Corte Madera,
California, between Hunt Brothers Leasing, L.L.C. and WinCup
Holdings, Inc. (as successor in interest to WinCup Holdings,
L.P.), dated May 1, 1997 (Incorporated by reference to Exhibit
10.72 filed with the Series B S-4)
10.55 Supplement Revolving Multicurrency Credit Agreement among BNY
Financial Limited, NationsBank, N.A., StyroChem Europe (The
Netherlands) B.V., StyroChem Finland Oy, ThermiSol Finland Oy,
ThermiSol Denmark ApS and ThermiSol Sweden AB Guaranteed by
Inter Alia WinCup Holdings, Inc., Radnor Chemical Corporation,
StyroChem U.S., Inc. and Radnor Holdings Corporation dated
October 15, 1997 as amended by Supplement Revolving
Multicurrency Credit Agreement among BNY Financial Limited,
NationsBank, N.A., StyroChem Europe (The Netherlands) B.V.,
StyroChem Finland Oy, ThermiSol Finland Oy, ThermiSol Denmark
ApS and ThermiSol Sweden AB Guaranteed by Inter Alia WinCup
Holdings, Inc., Radnor Chemical Corporation, StyroChem U.S.,
Inc. and Radnor Holdings Corporation dated November 21, 1997
(Incorporated by reference to Exhibit 10.73 filed with
Amendment No. 1 to the Series B S-4)
10.56 Lease Agreement between Oy KWH Plast Ab, Jakobstad and Isora
Oy dated January 24, 1995 (Incorporated by reference to
Exhibit 10.74 filed with the Series B S-4)
10.57 Lease and Cooperation Agreement between Suomen Polystyreeni
Tehdas Oy/Finska Polystyren Fabriken Ab and Borough of
Kokemaki dated February 27, 1971, as amended by Subcontract
dated October 13, 1976, Subcontract II dated February 26,
1981, Subcontract III dated August 13, 1985, Transfer of Lease
Agreement between City of Kokemaki and Neste Oy dated December
29, 1987, Lease dated April 15, 1994 and Lease Agreement II
dated September 26, 1996 (Incorporated by reference to Exhibit
10.75 filed with the Series B S-4)
30
<PAGE>
10.58 Lease Agreement between Avena Siilot Oy and Neste Oy
Polystyreeni dated March 13, 1997 (Incorporated by reference
to Exhibit 10.76 filed with the Series B S-4)
10.59 Office Lease Agreement between Keharakenpajat Oy and Neste Oy
Polystyreeni dated July 1, 1995 (Incorporated by reference to
Exhibit 10.77 filed with Amendment No. 1 to the Series B S-4)
10.60 Lease Contract between Lokalo Fastighetsforvaltning and Neste
Cellplast AB dated August 16, 1996 (Incorporated by reference
to Exhibit 10.78 filed with Amendment No. 1 to the Series B
S-4)
10.61 Lease Contract between Norrtalje Industri- och Hantverkshus AB
(NIHAB) and Neste Cellplast AB dated June 26, 1996
(Incorporated by reference to Exhibit 10.79 filed with
Amendment No. 1 to the Series B S-4)
*10.62 Styrene Monomer Supply Agreement dated as of October 15,
1997 between StyroChem Finland Oy and Elf Atochem SA
(Incorporated by reference to Exhibit 10.80 filed with
Amendment No. 1 to the Series B S-4)
**10.63 Employment Agreement dated February 21, 1997 between
Radnor Holdings Corporation and Caroline J. Williamson
(Incorporated by reference to Exhibit 10.81 filed with
Amendment No. 1 to the Series B S-4)
21.1 List of Subsidiaries of the Registrant
27.1 Financial Data Schedule (Radnor Holdings Corporation)
99.1 Pages F-23 to F-84 of the Company's Prospectus dated February
6, 1998, included in Amendment No. 1 to the Company's
Registration Statement on Form S-4, Commission File No.
333-42101
* Portions of this Exhibit have been deleted pursuant to the
Company's Requests for Confidential Treatment pursuant to Rule
406 promulgated under the Securities Act.
** This exhibit represents a management contract or compensatory
plan or arrangement.
(b) Reports on Form 8-K
The Company filed a Form 8-K on October 30, 1997 describing the acquisition of
StyroChem Europe on October 15, 1997.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
RADNOR HOLDINGS CORPORATION
Date: March 24, 1998 By: /s/ MICHAEL T. KENNEDY
-----------------------------
Michael T. Kennedy
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ MICHAEL T. KENNEDY Chairman of the Board and March 24, 1998
- -------------------------------- Chief Executive Officer
Michael T. Kennedy
/s/ R. RADCLIFFE HASTINGS Senior Vice President, March 24, 1998
- -------------------------------- Treasurer and Director
R. Radcliffe Hastings
/s/ MICHAEL V. VALENZA Senior Vice President - Finance, March 24, 1998
- -------------------------------- Chief Financial Officer and
Michael V. Valenza Chief Accounting Officer
/s/ JOHN P. MCNIFF Senior Vice President - Corporate March 24, 1998
- -------------------------------- Development and Director
John P. McNiff
/s/ VINCENT F. GARRITY, JR. Director March 24, 1998
- --------------------------------
Vincent F. Garrity, Jr.
/s/ THOMAS J. HOPKINS Director March 24, 1998
- --------------------------------
Thomas J. Hopkins
</TABLE>
32
<PAGE>
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act
Registrant has not sent and does not anticipate sending any annual report
to its security holders other than a copy of this Form 10-K report. Registrant
has not sent and does not anticipate sending any proxy statement, form of proxy
or other proxy solicitation material to more than ten of its security holders
with respect to any annual or other meeting of security holders, as it has only
three holders of voting securities. If any annual report other than this Form
10-K report is hereafter furnished to Registrant's security holders, or if any
proxy statement, form of proxy or other proxy solicitation material is hereafter
sent to more than ten of its security holders with respect to any annual or
other meeting of security holders, Registrant will furnish four copies thereof
to the Securities and Exchange Commission when it is so sent.
33
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Radnor Holdings Corporation:
We have audited the accompanying consolidated balance sheets of Radnor Holdings
Corporation (a Delaware corporation) and subsidiaries as of December 27, 1996
and December 26, 1997, and the related consolidated statements of income,
stockholders' (deficit) equity and cash flows for each of the three years in the
period ended December 26, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Radnor Holdings Corporation and
subsidiaries as of December 27, 1996 and December 26, 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 26, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
March 9, 1998
F-1
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
DECEMBER 27, 1996 AND DECEMBER 26, 1997
---------------------------------------
(In thousands, except share amounts)
<TABLE>
<CAPTION>
1996 1997
---------------- ---------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 855 $ 8,810
Accounts receivable, net 24,687 28,589
Inventories, net 19,078 28,451
Prepaid expenses and other 3,971 3,520
Deferred tax asset 2,380 1,708
---------------- ---------------
50,971 71,078
---------------- ---------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 3,747 4,073
Supplies and spare mold parts 2,529 2,825
Buildings and improvements 18,050 28,662
Machinery and equipment 91,437 141,421
---------------- ---------------
115,763 176,981
Less- Accumulated depreciation (4,372) (11,868)
---------------- ---------------
111,391 165,113
---------------- ---------------
OTHER ASSETS 10,007 13,627
---------------- ---------------
$ 172,369 $ 249,818
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 28,884 $ 28,565
Accrued liabilities 13,166 18,151
Current portion of long-term debt 237 226
---------------- ---------------
42,287 46,942
---------------- ---------------
LONG-TERM DEBT, net of current portion 104,362 178,947
---------------- ---------------
DEFERRED TAX LIABILITY 11,173 8,543
---------------- ---------------
OTHER NONCURRENT LIABILITIES 218 411
---------------- ---------------
COMMITMENTS AND CONTINGENCIES (Note 4)
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 19,387
Accumulated deficit (3,420) (2,809)
Cumulative translation adjustment 28 (1,604)
---------------- ---------------
Total stockholders' equity 14,329 14,975
---------------- ---------------
$ 172,369 $ 249,818
================ ===============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-2
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
FOR THE FISCAL YEARS ENDED DECEMBER 29, 1995,
---------------------------------------------
DECEMBER 27, 1996 AND DECEMBER 26, 1997
---------------------------------------
(In thousands)
<TABLE>
<CAPTION>
1995 1996 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
NET SALES $ 86,239 $ 177,395 $ 243,583
COST OF GOODS SOLD 75,690 135,982 181,404
---------------- ---------------- ----------------
GROSS PROFIT 10,549 41,413 62,179
---------------- ---------------- ----------------
OPERATING EXPENSES:
Distribution 6,027 14,099 18,076
Selling, general and administrative 9,051 18,676 30,137
Restructuring charges -- 910 --
---------------- ---------------- ----------------
15,078 33,685 48,213
---------------- ---------------- ----------------
INCOME (LOSS) FROM OPERATIONS (4,529) 7,728 13,966
---------------- ---------------- ----------------
OTHER (INCOME) EXPENSE:
Interest 2,822 4,496 13,004
Other, net 526 374 (133)
---------------- ---------------- ----------------
3,348 4,870 12,871
---------------- ---------------- ----------------
Income (loss) from continuing operations before
income taxes and minority interest (7,877) 2,858 1,095
PROVISION (BENEFIT) FOR INCOME TAXES -- 121 (2,516)
MINORITY INTEREST IN INCOME -- 1,348 --
---------------- ---------------- ----------------
Income (loss) from continuing operations (7,877) 1,389 3,611
---------------- ---------------- ----------------
DISCONTINUED OPERATIONS:
Income from operations 534 -- --
Gain on disposal 2,038 -- --
---------------- ---------------- ----------------
INCOME FROM DISCONTINUED OPERATIONS
2,572 -- --
Income (loss) before extraordinary item (5,305) 1,389 3,611
EXTRAORDINARY ITEM-GAIN ON EARLY EXTINGUISHMENT OF
DEBT 23,828 710 --
---------------- ---------------- ----------------
NET INCOME $ 18,523 $ 2,099 $ 3,611
================ ================ ================
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-3
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
----------------------------------------------------------
FOR THE FISCAL YEARS ENDED DECEMBER 29, 1995,
---------------------------------------------
DECEMBER 27, 1996 AND DECEMBER 26, 1997
---------------------------------------
(In thousands, except share amounts)
<TABLE>
<CAPTION>
Voting and
Nonvoting Series A
Common Stock Convertible Additional Cumulative
------------------- Preferred Paid-in Accumulated Translation
Shares Amount Stock Capital Deficit Adjustment Total
-------- ------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 30, 1994
6,245 $ 1 $ 8,014 $ 3,497 $ (23,481) $ -- $ (11,969)
Net income -- -- -- -- 18,523 -- 18,523
Accretion of Preferred
stock redemption value -- -- 561 -- (561) -- --
-------- ------- ------------ ----------- ----------- ----------- -----------
BALANCE, DECEMBER 29, 1995 6,245 1 8,575 3,497 (5,519) -- 6,554
Net income -- -- -- -- 2,099 -- 2,099
Effect of partnership
equity transaction
(Note 1) -- -- -- 8,648 -- -- 8,648
Redemption of
Preferred stock -- -- (8,575) 5,575 -- -- (3,000)
Cumulative translation
adjustment -- -- -- -- -- 28 28
-------- ------- ------------ ----------- ----------- ----------- -----------
BALANCE, DECEMBER 27, 1996 6,245 1 -- 17,720 (3,420) 28 14,329
Net income -- -- -- -- 3,611 -- 3,611
Transfer of stock
ownership -- -- -- 1,667 -- -- 1,667
Cash dividends -- $480
per share -- -- -- -- (3,000) -- (3,000)
Currency translation
adjustment -- -- -- -- -- (1,632) (1,632)
-------- ------- ------------ ----------- ----------- ----------- -----------
BALANCE, DECEMBER 26, 1997 6,245 $ 1 $ -- $ 19,387 $ (2,809) $ (1,604) $ 14,975
======== ======= ============ =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE FISCAL YEARS ENDED DECEMBER 29, 1995,
---------------------------------------------
DECEMBER 27, 1996 AND DECEMBER 26, 1997
---------------------------------------
(In thousands)
<TABLE>
<CAPTION>
1995 1996 1997
----------- ----------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 18,523 $ 2,099 $ 3,611
Adjustments to reconcile net income to net cash provided by (used
in) operating activities-
Depreciation and amortization 2,380 5,076 9,530
Deferred income taxes -- -- (2,627)
Transfer of stock ownership -- -- 1,667
Minority interest in income -- 1,348 --
Extraordinary gain on early extinguishment of debt (23,828) (710) --
Discontinued operations (2,572) -- --
Changes in operating assets and liabilities, net of effects of
acquisition and disposition of businesses--
Accounts receivable, net (135) (4,703) 9,540
Inventories 1,508 2,906 (3,666)
Prepaid expenses and other (1,465) (1,314) (766)
Accounts payable (573) 260 (6,511)
Accrued liabilities 3 263 2,196
----------- ---------- ----------
Net cash (used in) provided by continuing operations
(6,159) 5,225 12,974
Net cash provided by discontinued operations 5,978 982 --
----------- ---------- ----------
Net cash (used in) provided by operating activities
(181) 6,207 12,974
----------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,491) (4,944) (18,411)
Acquisition of J.R. Cup, net of cash acquired -- (21,592) --
Acquisition of StyroChem, net of cash acquired -- (26,168) --
Acquisition of StyroChem Europe, net of cash acquired -- -- (52,299)
Proceeds from sale of discontinued operations 50,995 -- --
Increase in other assets (2) (835) (1,368)
----------- ---------- ----------
Net cash provided by (used in) investing activities
45,502 (53,539) (72,078)
----------- ---------- ----------
</TABLE>
(Continued)
F-5
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE FISCAL YEARS ENDED DECEMBER 29, 1995,
---------------------------------------------
DECEMBER 27, 1996 AND DECEMBER 26, 1997
---------------------------------------
(In thousands)
(Continued)
<TABLE>
<CAPTION>
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) on revolving credit lines and unsecured
notes payable $ (15,802) $ (5,006) $ 12,663
Borrowings on mortgage note -- 364 --
Payments on mortgage note -- (4,616) (248)
Borrowings on bank term loans -- 19,426 --
Payments of bank term loans (29,518) (19,426) --
Issuance of senior notes -- 100,000 62,203
Payments of acquisition notes -- (35,760) --
Payment of dividend -- -- (3,000)
Retirement of Preferred stock -- (3,000) --
Other -- (3,800) (3,808)
----------- ---------- -----------
Net cash provided by (used in) financing activities (45,320) 48,182 67,810
----------- ---------- ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH -- -- (751)
----------- ----------- ------------
NET INCREASE IN CASH 1 850 7,955
CASH, beginning of period 4 5 855
----------- ---------- ------------
CASH, end of period $ 5 $ 855 $ 8,810
=========== ========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest, including
discontinued operations $ 4,702 $ 3,626 $ 11,667
=========== ========== ============
Cash paid during the period for income taxes, net of refunds of
$415 in 1997 $ -- $ -- $ 196
=========== ========== ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. ORGANIZATION, ACQUISITIONS AND DISCONTINUED OPERATIONS:
------------------------------------------------------
The Company
- -----------
Radnor Holdings Corporation ("Radnor") was incorporated in Delaware on November
6, 1991 to acquire the outstanding stock of Benchmark Holdings, Inc.
("Benchmark") and WinCup Holdings, Inc. ("WinCup"). Radnor, through its WinCup
subsidiary, is the second largest producer in the United States of foam cups and
containers for the foodservice industry. Through its Radnor Chemical Corporation
subsidiary, Radnor is the fifth largest worldwide producer of expandable
polystyrene ("EPS"). Radnor and its subsidiaries (collectively the "Company")
sell their products primarily to national, institutional, retail and
wholesale customers throughout the U.S., Canada, Mexico, and Europe. The Company
markets their products under a variety of brand and trade names, including
"WinCup", "Handi-Kup", "StyroChem" and "ThermiSol."
The Company has a number of large national accounts and supplies products to a
number of large foodservice distributors. The five largest accounts represented
approximately 37% and 28% of the Company's net sales for fiscal years 1996 and
1997, respectively. Although the Company has not lost sales from its key
customers in fiscal years 1996 and 1997, if any of such customers substantially
reduces its level of purchases from the Company, the Company's profitability
could be adversely affected. Moreover, continued consolidation among
distributors in the foodservice industry could result in an increasingly
concentrated customer base or the loss of certain customers.
StyroChem Europe Acquisition
- ----------------------------
On October 15, 1997, the Company acquired the polystyrene production and
conversion operations of Neste Oy ("StyroChem Europe"). The acquisition was
accounted for as a purchase and, accordingly, the purchased assets and assumed
liabilities of StyroChem Europe were recorded at estimated fair values at the
date of acquisition. The purchase price was 213.0 million Finnish Markkas
(approximately $40.8 million as of the date of closing) plus the net working
capital, estimated to be 60.0 million Finnish Markkas (approximately $11.5
million as of the date of closing). The purchase price was allocated to accounts
receivable ($13.8 million), inventory ($6.5 million), property, plant and
equipment ($40.8 million), accounts payable ($6.4 million) and accrued
liabilities ($2.4 million). A portion of the proceeds from the Company's
offering of $60.0 million 10% Series B Senior Notes due 2003 was utilized to
fund the purchase price.
F-7
<PAGE>
StyroChem Acquisition
- ---------------------
On December 5, 1996, the Company acquired all of the issued and outstanding
capital stock of and other equity interests in Radnor Chemcial Corporation,
formerly SP Acquisition Co. ("StyroChem"), a Delaware corporation. The
acquisition was accounted for as a purchase and, accordingly, the purchased
assets and assumed liabilities of StyroChem were recorded at estimated fair
values at the date of acquisition.
The purchase price consisted of approximately $23.5 million of cash plus $0.9
million of assumed indebtedness and consulting payments. The purchase price was
allocated to cash ($2.4 million), accounts receivable ($11.5 million), inventory
($7.3 million), property, plant and equipment ($23.5 million), other assets
($1.0 million), accounts payable ($16.3 million) and accrued liabilities ($5.0
million). Approximately $1.4 million of the purchase price has been placed in a
separate escrow account, and may be used by the Company to satisfy obligations
associated with specified environmental matters relating to StyroChem's Texas
and Quebec facilities. In addition, the former owner was paid $4.8 million in
connection with a five-year agreement not to compete.
J.R. Cup Acquisition
- --------------------
On January 20, 1996, WinCup entered into an agreement (the "Agreement") with
Fort James Corporation, formerly James River Paper Company, Inc. ("Fort James"),
whereby both parties contributed their fixed assets, leasehold improvements,
technology, patents, trademarks, real property and other noncurrent assets
associated with their foam cup and container and thermoformed lid manufacturing
operations and all inventory, spare parts and other current assets, excluding
cash and accounts receivable to WinCup Holdings, L.P. This new entity was
structured as a Delaware limited partnership with WinCup as the sole general
partner and Fort James as the sole limited partner. Ownership interests were
allocated 55% to WinCup and 45% to Fort James. The WinCup contribution of assets
and liabilities was accounted for at historical cost.
The acquisition of assets and liabilities from Fort James has been accounted for
as a purchase by the partnership in accordance with APB Opinion No. 16 and,
accordingly, the assets and liabilities of Fort James have been recorded at
estimated fair values at the date of the purchase. The purchase price consisted
of approximately (i) $19.1 million of cash, (ii) $16.8 million of promissory
notes (Note 3), (iii) the assumption of $1.0 million of liabilities and (iv) the
45% equity interest in the partnership valued at $17.7 million. This partnership
equity transaction resulted in an increase in WinCup's pro rata share (55%) of
the underlying equity in the partnership which has been recorded as an addition
to paid-in capital. The purchase price was allocated to inventories ($8.2
million) and property, plant and equipment ($46.4 million). At January 20, 1996
the minority interest in the partnership was reflected in the Company's
consolidated balance sheet at approximately $9.1 million. For the period January
20, 1996 through December 5, 1996, the minority interest (45%) in the income of
the partnership was approximately $1.3 million and this amount has been
reflected in the consolidated statement of operations.
Pursuant to the Agreement, the Company had the option to acquire Fort James's
partnership interest at the times and for the applicable prices set forth in the
Agreement,
F-8
<PAGE>
ranging from $15.0 million at January 20, 1996, to $37.3 million at
January 20, 2001. Furthermore, Fort James could at any time beginning on the
fifth anniversary of the Agreement have required the Company to acquire its
interest for $37.3 million. On December 5, 1996, Radnor exercised the option and
acquired the 45% partnership interest from Fort James. The price paid by Radnor
to acquire the 45% interest exceeded the carrying value of the minority interest
by approximately $7.3 million, and this amount has been allocated to fixed
assets in the consolidated balance sheet as of December 27, 1996.
Pro Forma Results of Operations
- -------------------------------
Operating results of the acquired businesses are included in consolidated
results only from the date of acquisition. Unaudited pro forma data reflecting
results as if the acquisitions were effective at the beginning of 1996 follow
(in thousands):
1996 1997
-------------- --------------
Net sales $ 317,125 $ 312,410
Income from operations 20,585 21,317
Income before extraordinary item 3,606 6,811
Pro forma results are unaudited and are based on historical results, adjusted
for the impact of certain acquisition related items, such as: increased
depreciation of property, plant and equipment, increased interest expense on
acquisition debt, and the related income tax effects. Pro forma results do not
reflect any synergies that might be achieved from combined operations and
therefore, in management's opinion, are not indicative of what actual results
would have been if the acquisitions had occurred at the beginning of 1996. In
addition, they are not intended to be a projection of future results.
Discontinued Operations
- -----------------------
Pursuant to an Asset Purchase Agreement among Benchmark, WinCup and Fort James
dated as of October 31, 1995, Benchmark and WinCup agreed to sell to Fort James
all of the assets of Benchmark's cutlery and straws business and all of the
assets of WinCup's thermoformed cup business, except for cash, accounts
receivable and prepaid assets. The only liabilities of Benchmark and WinCup
assumed by Fort James were obligations arising after the closing under the
assumed leases and assumed material contracts and vacation pay, holiday pay and
sick pay earned or accrued during 1995. The sale price was $51.0 million. The
gain on the sale was approximately $2.0 million.
The operations of Benchmark's cutlery and straws business and WinCup's
thermoformed cup business have been accounted for as discontinued operations in
the accompanying consolidated financial statements.
F-9
<PAGE>
Summary operating results for the operations sold, excluding the gain on sale,
are as follows (in thousands):
1995
--------------
Net sales $ 58,472
Cost of goods sold 45,016
--------------
Gross profit 13,456
Operating expenses 9,306
Other expense 3,616
--------------
Income from operations $ 534
==============
The Company used a portion of the proceeds from the sale to retire certain
outstanding debt totaling approximately $48.0 million. An additional $23.8
million of principal and accrued interest was forgiven by the bank lender as
part of this transaction. As a result, at the closing of this transaction, the
total amount of debt outstanding to the Company's primary bank was reduced to
$9.0 million. During 1996, the bank was paid $8.3 million in full satisfaction
of this obligation. The extinguishment gains resulting from these transactions
have been presented as extraordinary items in the accompanying financial
statements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Fiscal Year
- -----------
The Company's fiscal year is the fifty-two or fifty-three week period which ends
on the last Friday of December of each year. The fiscal years ended December 29,
1995, December 27, 1996 and December 26, 1997 are fifty-two week periods.
Principles of Consolidation
- ---------------------------
The accompanying consolidated financial statements include the accounts of
Radnor and all of its majority-owned subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation. Certain
reclassifications were made to the prior year financial statements to conform to
the 1997 presentation. The equity method of accounting is used when the Company
has a 20% to 50% ownership interest in other companies. Under the equity method,
original investments are recorded at cost and adjusted for the Company's share
of undistributed earnings or losses of these companies.
Accounts Receivable, Net
- ------------------------
Accounts receivable are net of allowances for doubtful accounts of $713,000 and
$829,000 at December 27, 1996 and December 26, 1997, respectively. Bad debt
expense was $135,000, $120,000 and $179,000 for fiscal years 1995, 1996 and
1997, respectively. The related writeoffs of accounts receivable were $57,000,
$112,000 and $63,000 for those years, respectively. Additional a reserve of
$209,000 was acquired in 1996 as part of the StyroChem Acquisition.
F-10
<PAGE>
Inventories
- -----------
Inventories are recorded at the lower of cost (first-in, first-out) or market.
Inventories at December 27, 1996 and December 26, 1997, consist of the following
(in thousands):
1996 1997
-------------- --------------
Raw materials $ 4,503 $ 9,612
Work in process 2,242 1,303
Finished goods 12,333 17,536
-------------- --------------
$ 19,078 $ 28,451
============== ==============
Property, Plant and Equipment
- -----------------------------
Property, plant and equipment are stated at cost and depreciated using the
straight-line method over estimated useful lives which range from 5 to 40 years.
Leasehold improvements are amortized over the lesser of their estimated useful
lives or the term of the lease using the straight-line method. Maintenance and
repairs are charged to operations currently, and replacements and significant
improvements are capitalized. Depreciation expense in fiscal 1995, 1996, and
1997 was $2,057,000, $4,451,000 and $7,504,000, respectively.
Supplies and Spare Mold Parts
- -----------------------------
Supplies and spare mold parts include maintenance parts maintained in a central
stores location. When needed at the manufacturing facilities, parts are shipped
and expensed.
Other Assets
- ------------
Other assets include deferred financing costs of $3.8 million and $6.8 million
as of December 27, 1996 and December 26, 1997, respectively, related to the
financing arrangements and note offerings executed in 1996 and 1997. Such costs
are being amortized over the terms of the related debt instruments. Amortization
of deferred financing costs of $232,000 and $836,000 is included in interest
expense for the years ended December 27, 1996 and December 26, 1997,
respectively. In addition, other assets include a noncompete agreement of $3.8
million, net of amortization of $1.0 million, resulting from the StyroChem
Acquisition, which is being amortized over five years.
Environmental Expenditures
- --------------------------
Environmental expenditures that relate to an existing condition caused by past
operations and that do not contribute to current or future revenue generation
are expensed. Liabilities are recorded when environmental assessments and/or
cleanups are probable, and the costs can be reasonably estimated.
F-11
<PAGE>
Income Taxes
- ------------
The Company accounts for income taxes under the liability method. Under this
method, deferred tax assets and liabilities are recognized for the tax effects
of temporary differences between the financial reporting and tax bases of assets
and liabilities using enacted tax law and statutory tax rates applicable to the
periods in which the temporary differences are expected to affect taxable
income.
Revenue Recognition
- -------------------
Revenue is recognized when goods are shipped.
Currency Translation
- --------------------
The Company conducts business in a number of foreign countries and as a result
is subject to the risk of fluctuations in foreign currency exchange rates and
other political and economic risks associated with international business. The
Company's foreign entities report their assets, liabilities and results of
operations in the currency in which the entity primarily conducts its business.
Adjustments resulting from the translation of the financial statements are
reflected as a currency translation adjustment in stockholders' equity. Currency
transaction gains and losses, which are included in operating results, are not
significant.
Research and Development
- ------------------------
Research and development costs are charged to expense as incurred and are
included in cost of goods sold. These costs have represented 0.9%, 1.3% and 1.8%
of net sales in 1995, 1996 and 1997, respectively.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
- -----------------------------------
The estimated fair value of financial instruments was determined by the Company
using market quotes, if available, or discounted cash flows using market
interest rates. The carrying values of cash, accounts receivable, accounts
payable and accrued liabilities approximate fair value due to the short-term
nature of these items. The carrying amounts of the Company's bank term loan and
the lines of credit approximate fair value because they have variable interest
rates based on either the prime rate or LIBOR. The fair value of the senior
notes was $166 million at December 26, 1997.
F-12
<PAGE>
3. LONG-TERM DEBT:
--------------
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
1996 1997
------------ -----------
<S> <C> <C>
Series A Senior Notes bearing interest at 10%, interest payable
semi- annually, due December 1, 2003 $ 100,000 $ 100,000
Series B Senior Notes, including a premium of $2,159, bearing interest at
10%, interest payable semi-annually, due December 1,
2003 -- 62,159
Outstanding balance under the $40 million Second Amended and Restated
Revolving Credit and Security Agreement (the "Amended Credit
Agreement"), which includes a $10 million European subsidiary sublimit,
bearing interest at the Company's option at a rate based upon various
formulae as defined within the agreement. At December 26, 1997, the
rate was based on 30-day LIBOR (6%) plus 1.75%. The revolving loans
under the Amended Credit Agreement will mature on October 15, 2002.
All the obligations of the Company under the Amended Credit Agreement
are secured by a lien on substantially all of the Company's U.S. and
European subsidiaries' inventory and receivables. 3,773 15,544
Outstanding balance under the Canadian Revolving Credit Facility
(borrowing capacity of $2.5 million Canadian including a letter of
credit subfacility and a Foreign Exchange Future Contracts
subfacility), Canadian dollar advances bearing interest at Canadian
prime rate (6.0% at December 26, 1997) plus 1.0% and U.S. dollar
advances bearing interest at the base rate plus 1.0%. Loans under the
Canadian Revolving Credit Facility are payable on demand and secured by
substantially all of the assets of the Canadian subsidiary. 352 1,244
Outstanding balance under the Canadian term loan, bearing interest at
Canadian prime rate (6.0% at December 26, 1997) plus 1.50% payable in
equal quarterly principal payments of $81,250 Canadian plus interest,
with final payment due November 1998. The term loan is secured by
substantially all of the assets of the Canadian subsidiary. 474 226
------------ ------------
104,599 179,173
Less - Current portion (237) (226)
------------ ------------
$ 104,362 $ 178,947
============ ============
</TABLE>
F-13
<PAGE>
On October 15, 1997, the Company completed a $60 million Series B Senior Note
offering. The proceeds were used to finance the StyroChem Europe acquisition and
repay a portion of the outstanding principal and accrued interest under the
revolving credit facility.
On December 5, 1996, the Company completed a $100 million Series A Senior Note
offering. The proceeds were used to (i) repay existing indebtedness, including
amounts outstanding under the Term Note, Revolver, the various subordinated
notes and mortgage note payable; (ii) repay certain J.R. Cup acquisition
obligations; (iii) redeem the outstanding redeemable convertible Preferred stock
and warrants; (iv) finance the StyroChem Acquisition; and, (v) provide working
capital.
On October 15, 1997, the Company also entered into the Second Amended Credit
Agreement with two banks, as agents and lenders, pursuant to which the Amended
and Restated Revolving Credit and Security Agreement dated as of December 5,
1996 was amended and restated. The Amended Credit Agreement includes the Company
and certain of its U.S. subsidiaries as borrowers. The Amended Credit Agreement
provides for a fee of 0.375% per annum on the undrawn amount of the credit
facility and letter of credit fees of 1.75% or 1.5% of the aggregate face
amounts of standby letters of credit and documentary letters of credit,
respectively. There is a $5 million sublimit on standby letters of credit and a
$1 million sublimit on documentary letters of credit. At December 27, 1996 and
December 26, 1997, the Company had outstanding $1.7 million and $1.9 million of
letters of credit, respectively.
Each of the above agreements contain certain restrictive covenants which
include, among other things, restrictions on the declaration or payment of
dividends, the repurchase of stock, the incurrence of additional debt, the
amount of capital expenditures and additional investments and the sale or
disposition of assets. The Company is also required to maintain a minimum net
worth and certain financial ratios including debt to equity, current, debt
coverage and earnings to interest expense. The Company is currently in
compliance with all financial covenants.
Future debt maturities, excluding the debt premium, are as follows (in
thousands):
1998 $ 226
1999 --
2000 --
2001 --
2002 16,788
2003 and thereafter 160,000
------------
$ 177,014
============
F-14
<PAGE>
4. COMMITMENTS AND CONTINGENCIES:
-----------------------------
Leases
- ------
The Company leases certain of its manufacturing, warehouse and office facilities
under noncancellable operating lease arrangements. The future minimum payments
under these leases are as follows (in thousands):
1998 $ 5,768
1999 4,285
2000 3,543
2001 2,907
2002 2,345
2003 and thereafter 3,829
------------
$ 22,677
============
Rental expense for all operating leases was $4,545,000, $4,148,000 and
$6,144,000 for fiscal years 1995, 1996 and 1997, respectively.
Litigation
- ----------
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.
Supply Agreements
- -----------------
In December 1996, in connection with the StyroChem Acquisition, the Company
renegotiated its contract with Chevron Chemical Company to provide a long-
term supply of styrene monomer with volume discounts. The initial term of the
new contract extends for seven years. Under the contract, the Company is
required to purchase the first 120 million pounds of its domestic styrene
monomer requirements per year from Chevron and has certain rights to purchase
additional styrene monomer.
In October 1997, in connection with the StyroChem Europe Acquisition, the
Company negotiated a contract with Elf AtoChem S.A. to provide a long-term
supply of styrene monomer at a reduced price and with volume discounts. The
initial term of the new agreement extends for three years. Under the agreement,
StyroChem Europe has the right to purchase up to 110 million pounds of styrene
monomer per year.
5. STOCKHOLDERS' EQUITY:
--------------------
The Company is currently authorized to issue up to 11,650 shares of Voting
Common Stock, 5,400 shares of Class B Nonvoting Common Stock, 5,650 shares of
Nonvoting Common Stock and 2,000 shares of series Preferred stock. At December
26, 1997, there are issued and outstanding 600 shares of Voting Common Stock,
5,400 shares of Class B
F-15
<PAGE>
Nonvoting Common Stock and 245 shares of Nonvoting Common Stock. All shares have
a par value of $.10 except for shares of Class B Nonvoting Common Stock, which
have a par value of $.01. In October 1996, the Company completed a
recapitalization in which each outstanding share of Voting Common Stock was
converted into 0.1 shares of Voting Common Stock and 0.9 shares of Class B
Nonvoting Common Stock.
The Company's principal stockholder transferred ownership of 60 shares of Voting
Common Stock and 540 shares of Class B Nonvoting Common Stock to an officer of
the Company, and the estimated fair value of such stock has been reflected as
compensation expense in the 1997 financial statements.
6. RESTRUCTURING CHARGES:
---------------------
In connection with the J.R. Cup Acquisition, the Company incurred certain
restructuring costs related principally to plant closures and severance
payments. These costs were incurred and paid during the year ended December 27,
1996.
7. INCOME TAXES:
------------
The components of income (loss) before taxes by source of income are as follows
(in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
----------- ---------- -----------
<S> <C> <C> <C>
United States $ (7,877) $ 1,648 $ (282)
Non-U.S. -- (138) 1,377
----------- ---------- -----------
$ (7,877) $ 1,510 $ 1,095
=========== ========== ===========
</TABLE>
The provision (benefit) for income taxes for each of the three years in the
period ended December 26, 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
----------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal $ -- $ 168 $ 20
State -- 10 34
Deferred 30 (57) 5,972
(Generation) utilization of net operating loss
carryforwards (3,465) 1,324 (3,785)
Change in valuation allowance 3,435 (1,324) (4,757)
----------- ---------- -----------
$ -- $ 121 $ (2,516)
=========== ========== ============
</TABLE>
F-16
<PAGE>
The components of deferred taxes at December 27, 1996 and December 26, 1997 are
as follows (in thousands):
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 4,757 $ 8,542
Vacation pay and compensation accruals 528 559
Bad debt, inventory and returns and allowances 829 656
Other accruals 1,261 967
Valuation allowance (4,757) --
---------- ----------
2,618 10,724
Deferred tax liabilities:
Accelerated tax depreciation 10,475 16,693
Other 936 866
---------- ----------
Net deferred tax liability $ (8,793) $ (6,835)
========== ==========
</TABLE>
The provision for income taxes varies from the amount determined by applying the
United States Federal statutory rate to pre-tax income as a result of the
following (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
------------ ---------- -----------
<S> <C> <C> <C>
United States federal statutory income tax $ (2,678) $ 972 $ 372
State income taxes, net of federal benefit (386) 140 50
Change in valuation allowance 3,435 (1,324) (4,757)
Non-deductible expenses 22 42 2
Dividends received from foreign affiliates -- -- 214
Other (393) 291 1,603
------------ ---------- -----------
$ -- $ 121 $ (2,516)
============ ========== ===========
</TABLE>
As of December 26, 1997, the Company had approximately $20.5 million of net
operating loss carryforwards for federal income tax purposes, which expire
through 2012. A valuation allowance was provided for substantially all of the
loss carryforward tax benefit at December 27, 1996. In 1997, as a result of
management's reevaluation of the Company's future profitability outlook, the
valuation allowance has been eliminated and a tax benefit of $4.8 million has
been reflected in the 1997 financial statements.
8. STOCK OPTION PLAN:
-----------------
The 1992 Equity Incentive Plan (the "Plan") provides for the grant of non-
qualified options to purchase shares of the Nonvoting Common Stock subject to
certain limitations. Non-qualified stock options are issuable only to eligible
officers and employees of the Company. The Company has reserved 1,249 shares of
its Nonvoting Common Stock for issuance under the Plan.
F-17
<PAGE>
The per share exercise price of a stock option may not be less than 75% of the
fair market value of the Nonvoting Common Stock, as determined by the board of
directors, on the date the option is granted. Such options may be exercised only
if the option holder remains continuously associated with the Company from the
date of grant to a date not less than three months prior to the date of
exercise. The exercise date of an option granted under the plan cannot be later
than ten years from the date of the grant. Any options that expire unexercised
or that terminate upon an optionee's ceasing to be employed by the Company
become available once again for issuance.
The following summarizes the stock option activity under the Plan:
<TABLE>
<CAPTION>
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Options outstanding at beginning of period 738 710 700
Granted -- -- 440
Exercised -- -- --
Canceled (28) (10) (25)
----------- ---------- -----------
Options outstanding at end of period 710 700 1,115
=========== ========== ===========
Options available for grant 539 549 134
=========== ========== ===========
Exercisable at end of period 327 362 584
=========== ========== ===========
</TABLE>
The exercise price for all options granted prior to 1997 is $3,350 per share
while the exercise price for all shares granted during 1997 is $6,985. These
amounts represent the fair market value as determined by the board of directors
on the grant dates.
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related interpretations in accounting for its
stock options plans. Accordingly, no compensation expense has been recognized
related to the plans described above. If compensation cost for these plans had
been determined using the fair-value method prescribed by SFAS No. 123,
"Accounting for Stock Based Compensation," the Company's net income would have
been reduced to the pro forma amounts indicated below.
(in thousands) 1997
-----------
Net income - as reported $ 3,611
Net income - pro forma 3,492
This pro forma impact may not be representative of the effects for future years
and is likely to increase as additional options are granted and amortized over
the vesting period.
F-18
<PAGE>
As the Company's stock is not publicly traded, the fair value of each option was
estimated on the grant date using the minimum value method (which excludes a
volatility assumption), with the following assumptions:
1997
-----
Risk-free rate of interest 6.31%
Expected life in years 10
Dividend yield 0%
9. EMPLOYEE BENEFIT PLAN:
---------------------
The Company sponsors a 401(k) savings and profit-sharing plan, which covers all
employees who have at least 1,000 hours of service during the year. The Company
will match employee contributions up to 2.8% of an employee's annual salary. The
Company may also, at the discretion of the board of directors, elect to make a
profit-sharing contribution. There have been no profit-sharing contributions for
the three years in the period ended December 26, 1997. Employer matching
contributions to the plan amounted to approximately $99,000, $441,000 and
$591,000 for each of the three years in the period ended December 26, 1997,
respectively.
Additionally, as a result of the StyroChem Europe acquisition, certain of the
European subsidiaries maintain retirement benefit plans. Pension expense related
to these plans was $181,000 in 1997.
10. RELATED PARTY TRANSACTIONS:
--------------------------
A director of the Company is a partner in the law firm which serves as the
Company's primary legal counsel. During 1997, the Company paid fees of $831,000
to this firm. A director of the Company is a Managing Director of an investment
banking firm that performed services for the Company in 1997. During 1997, the
Company paid total fees of $1,050,000 to this firm.
11. GEOGRAPHIC SEGMENT INFORMATION:
------------------------------
The Company does business in the following geographic locations (in thousands):
<TABLE>
<CAPTION>
United
1997 States Canada Europe(1) Eliminations Consolidated
- ---------------------- ------------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated
customers $ 210,788 $ 16,314 $ 16,481 $ -- $ 243,583
Transfers between
geographic segments -- 2,252 -- (2,252) --
Operating Income 10,431 1,739 1,796 -- 13,966
Identifiable Assets 174,581 8,182 67,055 -- 249,818
</TABLE>
(1) Represents the results of operations of StyroChem Europe from the October
15, 1997 (date of acquisition) through December 26, 1997.
F-19
<PAGE>
12. SUPPLEMENTAL FINANCIAL INFORMATION:
----------------------------------
Radnor Holdings Corporation is a holding company which has no operations or
assets separate from its investments in subsidiaries. The $100 million Series A
Senior Notes are guaranteed by all direct and indirect wholly owned subsidiaries
on a full, unconditional, joint and several basis other than certain non-
guarantor subsidiaries that individually and in the aggregate are
inconsequential. The financial information of the non-guarantor subsidiaries is
inconsequential. Separate financial statements of the guarantors are not
presented because management has determined that they would not be material to
investors.
The $60 million Series B Senior Notes are guaranteed by
substantially all of the Company's domestic subsidiaries. The following
represents summarized combining financial information of the holding company,
combined guarantor subsidiaries and the combined non-guarantor subsidiaries as
of and for the year ended December 26, 1997 (in thousands):
<TABLE>
<CAPTION>
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries/(1)/ Eliminations Consolidated
----------- ------------ ----------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Net Sales $ -- $ 210,788 $ 35,047 $ (2,252) $ 243,583
Gross Profit -- 53,132 9,047 -- 62,179
Operating Income -- 10,438 3,528 -- 13,966
Net Income -- 2,506 1,105 -- 3,611
Current Assets 1,166 42,273 28,775 (1,136) 71,078
Non-Current Assets 147,334 180,938 48,997 (198,529) 178,740
Current Liabilities 1,135 29,025 18,120 (1,338) 46,942
Non-Current Liabilities 162,159 61,421 55,447 (91,126) 187,901
</TABLE>
/(1)/ Includes the results of operations of StyroChem Europe from the October
15, 1997 (date of acquisition) through December 26, 1997.
F-20
<PAGE>
Exhibit 3.11
[LETTERHEAD OF GOUVERNMENT DU QUEBEC APPEARS HERE]
CERTIFICAT DE CONSTITUTION
Loi sur les compagnies
(L.R.Q., chap, C-38)
Partie IA
J'atteste par les presentes que la compagnie
2621-8529 QUEBEC INC
a ete constituee, sous l'autorite de la partie IA
de la Loi sur les compagnies, tel qu' indique dans
les statuts de constitution ci-joints.
Le 1988 08 31
[SIGNATURE APPEARS HERE]
Inspecteur general des institutions
financieres
[SEAL APPERS HERE] 2621-8529
<PAGE>
[LETTERHEAD OF GOUVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1 Denomination sociale du numero matricule
2621-8529 QUEBEC INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
2 District judicaire du Quebec ou la 3 Nombre precis ou nombres minimal et 4 Date d'entree en vigueur si posterieure
compagnie etablit son siege social maximal des administrateurs a celle du depot
<S> <C> <C>
Montreal Pas moins de 1 et S/O
pas plus de 10.
</TABLE>
- --------------------------------------------------------------------------------
5 Description du capital-actions
Un nombre illimite d'actions ordinaires sans valeur nominale
- --------------------------------------------------------------------------------
6 Restrictions sur le transiert des actions, ie cas echeant
L'Annexe I ci-jointe fait partie integrante de cette formule
- --------------------------------------------------------------------------------
7 Limites imposees a son activite, le cas echeant
S/O
- --------------------------------------------------------------------------------
8 Autres dispositions
L'Annexe II ci-jointe fait partie integrante de cette formule
- --------------------------------------------------------------------------------
9 Fondateurs
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Adresse incluant le code postal Signature de chaque fondateur
Nom et prenom (sil s'agit dune corporation, indiquer Profession (sil s'agit dune corporation, signature
le siege social et la loi constitutive) de la personne autorisee)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Claire Tousignant 5210, Avenue Randall Adjointe /s/ Claire Tousignant
App. 14 juridique
Montreal (Quebec)
H4V 2V3
</TABLE>
- --------------------------------------------------------------------------------
Si l'espace est insufficiant, joindre une annexe
- --------------------------------------------------------------------------------
Reserve a l'administration 2621-8529
<PAGE>
ANNEXE I
--------
Aucune action du capital-actions de la compagnie ne peut etre transferee
sans le consentement du conseil d'administration de la compagnie, donne par une
resolution adoptee par le conseil d'administration ou sans le consentement par
ecrit de tous les administrateurs de la compagnie.
<PAGE>
ANNEXE II
---------
1. Le nombre des actionnaires de la compagnie est limite a 50, non
comprises les personnes qui sont a l'emploi de la compagnie ou d'une
filiale, et les personnes qui, ayant ete dans le passe a l'emploi de la
compagnie ou d'une filiale, etaient pendant ce temps, et ont continue
apres l'expiration de leur emploi, a etre actionnaires de la compagnie,
2 ou plusieurs personnes detenant une action ou plusieurs actions
conjointement etant considerees comme un seul actionnaire.
2. Toute invitation au public pour la souscription de valeurs mobilieres
emises par la compagnie est interdite.
3. L'assemblee annuelle des actionnaires de la compagnia peut etre tenue a
tout endroit, dans la province de Quebec ou ailleurs, tel que les
administrateurs pouvent le determiner.
<PAGE>
[LETTERHEAD OF GOVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1 Denomination sociale ou numero matricule
. 2621-8529 QUEBEC INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2 Avis est donne par less presentes que l'addrese du siege social de la
compagnie, dans les limites du district judiciaire indique dans les statuts,
est la suivante:
1170 rue Peel
----------------------------------------------------------------------
Numero civique Nom de la rue
Montreal
----------------------------------------------------------------------
Localite
Quebec H3B 4S8
----------------------------------------------------------------------
Province ou pays Code postal
- --------------------------------------------------------------------------------
La compagnie
Fonction du
per: /s/ Claire Tousignant signataire Fondatrice
-------------------------------- ---------------------------------
(signatare)
- --------------------------------------------------------------------------------
Reserve a l'administration 2621-8529
<PAGE>
[LETTERHEAD OF GOUVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1 Denomination societe ou numero matricule
2621-8529 QUEBEC INC.
- --------------------------------------------------------------------------------
2 Les administrateurs de la compagnie sont:
- --------------------------------------------------------------------------------
Adrese residentiale complete
Nom et prenom (incluant le code postal) Profession
- --------------------------------------------------------------------------------
Claire Tousignant 5210, Avenue Randall Adjointe
App. 14 juridique
Montreal (Quebec)
H4V 2V3
- --------------------------------------------------------------------------------
Si l'espace est insuffisant, joindre une annexe en deux (2) exemplaires.
La compagnie
Fonction du
par: [SIGNATURE APPEARS HERE] signataire Fondatrice
----------------------------------- -----------------------------
(signature)
- --------------------------------------------------------------------------------
Reserve a l'administration 2621-8529
<PAGE>
[LETTERHEAD OF GOVERNMENT DU QUEBEC APPEARS HERE]
CERTIFICAT DE MODIFICATION
Loi sur les compagnies
(L.R.Q., chap. C-38)
Partie IA
J'atteste par les presentes que la compagnie
SCOTT STYRENE QUEBEC, INC.
a modifie ses statuts, sous l'autorite de
la partie IA de le Loi sur les compagnies,
tel qu'indique dans les statuts de modifi-
cation ci-joints.
Le 1988 10 14
[SEAL APPEARS HERE]
[SIGNATURE APPEARS HERE]
Inspecteur general des institutions financieres
2621-8529
<PAGE>
[LETTERHEAD OF GOUVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1. Corporate name or designating number
SCOTT STYRENE QUEBEC, INC.
- --------------------------------------------------------------------------------
2. The company's articles are amended as follows
Paragraph 1 therof is replaced with the following:
SCOTT STYRENE QUEBEC, INC.
- --------------------------------------------------------------------------------
3 Effective date, if different 4 Corporate name or designating number
from date of filing (see prior to amendment (if different from
instructions). that mentioned in item 1)
2621-8529 QUEBEC INC.
- --------------------------------------------------------------------------------
Signature of
authorized Post occupied
director [SIGNATURE APPEARS HERE] by signatory President
---------------------------- ------------------------
- --------------------------------------------------------------------------------
For departmental use only
<PAGE>
[LETTERHEAD OF GOUVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1 Corporate name or designating number
2621-8529 QUEBEC INC.
- --------------------------------------------------------------------------------
2 The directors of the company are
- --------------------------------------------------------------------------------
Name and surname Full mailing address Profession
(including postal code)
- --------------------------------------------------------------------------------
Ellis A. Horwitz Scott Plaza 1 businessman
Philadelphia, PA 19113
U.S.A.
- --------------------------------------------------------------------------------
If space is insufficient, attach an appendix in two (2) copies
The Company
Post occupied
By /s/ Ellis A. Horwitz by signatory President*
------------------------------- ---------------------------
(Signature)
- --------------------------------------------------------------------------------
2621-8529
<PAGE>
[LETTERHEAD OF GOUVERNMENT DU QUEBEC APPEARS HERE]
CERTIFICAT DE MODIFICATION
Loi sur les compagnies
(L.R.Q., chap. C-38)
Partie IA
J'atteste par les presentes que la compagnie
POLYMERES SCOTT, LTEE
ET SA VERSION
SCOTT POLYMERS, LTD.
a modifie ses statuts, sous l'autori'e de la partie IA
de la loi sur les compagnies, tel qu'indique dans les
statuts de modification ci-joints.
Le 1988 11 16
[SIGNATURE APPEARS HERE]
[SEAL APPEARS HERE] Inspecteur general des
institutions financieres
2621-8529
<PAGE>
[LETTERHEAD OF GOUVERNEMENT DU QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
1 Corporate name or designating number
POLYMERES SCOTT, LTEE -
SCOTT POLYMERS, LTD.
- --------------------------------------------------------------------------------
2 The company's articles are amended as follows
Paragraph 1 thereof is replaced with the following:
POLYMERES SCOTT, LTEE - SCOTT POLYMERS, LTD.
- --------------------------------------------------------------------------------
3 Effective date if different 4 Corporate name or designating number
from date of filing (see prior to amendment (if different from
instructions). that mentioned in item 1)
N/A SCOTT STYRENE QUEBEC, INC.
- --------------------------------------------------------------------------------
Signature of
authorized Post occupied
director [SIGNATURE APPEARS HERE] by signatory Director
---------------------------- ------------------------
- --------------------------------------------------------------------------------
For departmental use only
<PAGE>
[LOGO OF QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
CERTIFICAT DE MODIFICATION
Loi sur les compagnies, Partie IA
(L.R.Q., chap. C-38)
J'atteste par les presentes que la compagnie
STYROCHEM INTERNATIONAL, LTEE
et sa version
STYROCHEM INTERNATIONAL LTD.
a modifie ses statuts le 18 NOVEMBRE 1994, sous l'autorite de
la partie IA de la Loi sur les compagnies, tel qu'indique dans
les statuts de modification ci-joints.
Deposes au registre le 21 novembre 1994
sous le matricule 1141484460
[SEAL OF INSPECTEUR GENERAL DES INSTITUTIONS FINANCIERES APPEARS HERE]
T130L10164S43AA
[SIGNATURE APPEARS HERE]
Inspecteur general des institutions financieres
<PAGE>
[LOGO OF GOVERNMENT QUEBEC APPEARS HERE]
Form 5
ARTICLES OF AMENDMENT
The Companies Act R.S.Q.c C-38
Part 1A
- --------------------------------------------------------------------------------
1 Corporate name
StyroChem International, Ltee/StyroChem International Ltd.
- --------------------------------------------------------------------------------
2 Present address of the company
- --------------------------------------------------------------------------------
19250 CLARK GRAHAM
-----------------------------------------------------------------------
No Street name
BAIE D'URFE
-----------------------------------------------------------------------
Municipality
QUEBEC M9X1A1
-----------------------------------------------------------------------
Province Postal code
- --------------------------------------------------------------------------------
3 [ ] Application presented in conformity with Section 123 140 and following
of the Companies Act
4 The company's articles are amended as follows
1. Article 1 of the Articles of Incorporation is modified by changing the
name of "POLYMERES SCOTT, LTEE,/SCOTT POLYMERS, ltd." to "StyroChem
International, Ltee/StyroChem International Ltd."
- --------------------------------------------------------------------------------
5 Effective date, if different from date of filing (see instructions)
6 Corporate name (or designating number), prior to amendment, if different
from that mentioned in item 1
POLYMERES SCOTT, LTEE/SCOTT POLYMERS, LTD.
- --------------------------------------------------------------------------------
If space is insufficient, attach an appendix in two (2) copies
Signature of
authorized director /s/Richard Davidovich
----------------------------------------------------------
RICHARD DAVIDOVICH
- --------------------------------------------------------------------------------
For department use only CA-215 (Rev 12-93)
[LOGO OF GOVERNMENT QUEBEC APPEARS HERE]
18 NOV, 1994
L'Inspecteur general des
Institutions financieres
<PAGE>
[LOGO OF QUEBEC APPEARS HERE]
- --------------------------------------------------------------------------------
CERTIFICAT DE MODIFICATION
Loi sur les compagnies, Partie IA
(L.R.Q., chap. C-38)
J'atteste par les presentes que la compagnie
STYROCHEM CANADA, LTEE
et sa ou ses version(s)
STYROCHEM CANADA, LTD.
a modifie ses statuts le 13 NOVEMBRE 1997, en vertu de la
partie LA de la Loi sur les compagnies, tel qu'indique dans
les statuts de modification ci-joints.
DEPOSE AU REGISTRE LE 14 NOVEMBRE 1997
SOUS LE MATRICULE 1141484460
[SEAL OF INSPECTEUR GENERAL DES INSTITUTIONS FINANCIERS APPEARS HERE]
T130L10C64S43AB
[SIGNATURE APPEARS HERE]
Inspecteur general des institutions financieres
<PAGE>
[LOGO OF GOVERNMENT QUEBEC APPEARS HERE]
Formulaire 5
STATUTS DE MODIFICATION
Loi sur les compagnies, L.R.Q., c. C-38
<TABLE>
<CAPTION>
1 Denomination sociale
STYROCHEM CANADA, LTEE
STYROCHEM CANADA, LTD.
- -----------------------------------------------------------------------------------------------------
<S> <C>
2Adresse actuelle de la compagnie:
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
19250 CLARK GRAHAM
- -----------------------------------------------------------------------------------------------------
N Nom de la rue
BAIE D'URFE
- -----------------------------------------------------------------------------------------------------
Municipalite
QUEBEC H9X 1A1
- -----------------------------------------------------------------------------------------------------
Province Code postal
- -----------------------------------------------------------------------------------------------------
3 [_] Requete presentee en vertu de l'article 123.140 et suivants de la Loi sur les compagnies
4 Les statuts de la compagnie sont modifies de la facon suivante:
SECTION 1 OF THE ARTICLES OF AMENDMENT DATED NOVEMBER 21, 1994 IS REPLACED WITH THE FOLLOWING:
STYROCHEM CANADA, LTEE - STYROCHEM CANADA, LTD.
- -----------------------------------------------------------------------------------------------------
5 Date d'entree en vigueur, si differente 6 Denomination sociale (ou numero matricule) anteneure
de la date du depot (voir instructions) a la modification, si differente de celle mentionnee
a la case 1
STYROCHEM INTERNATIONAL, LTEE
STYROCHEM INTERNATIONAL LTD.
- -----------------------------------------------------------------------------------------------------
</TABLE>
Si l'espace est insuffisant, joindre une annexe en deux (2) exemplaires
<TABLE>
<CAPTION>
<S> <C>
Signature de
l'administrateur autorise /s/ Michael T. Kennedy
---------------------------------------------------------------------------
Michael T. Kennedy
Reserve a l'administration CA-215 (Rev 12-93)
</TABLE>
[LOGO OF GOVERNMENT APPEARS HERE]
13 NOV 1997
L'Inspecteur general des
Institutions financieres
<PAGE>
EXHIBIT 3.13
CERTIFICATE OF INCORPORATION
OF
RADNOR DELAWARE, INC.
FIRST: The name of the corporation is RADNOR DELAWARE, INC.
SECOND: The registered office of the corporation in the State of
Delaware is located at 1209 Orange Street, Wilmington, Delaware, 19801, County
of New Castle. The registered agent of the corporation at that address is The
Corporation Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware; provided that the corporation's
activities shall be confined to the maintenance and management of its intangible
investments and the collection and distribution of the income from such
investments or from tangible property physically located outside Delaware, all
as defined in such manner to qualify for exemption from income taxation under,
Section 1902(b)(8) of Title 30 of the Delaware Code, or under the corresponding
provision of any subsequent law.
FOURTH: The corporation shall have authority to issue One Thousand
(1,000) shares of common stock, having a par value of $.001 per share.
FIFTH: The corporation shall indemnify directors and officers of the
corporation to the fullest extent permitted by law.
SIXTH: The directors of the corporation shall incur no personal
liability to the corporation or its stockholders for monetary damages for any
breach of fiduciary duty as a director; provided, however, that the directors of
the corporation shall continue to be subject to liability (i) for any breach of
their duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which
<PAGE>
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the directors derived an improper personal benefit.
In discharging the duties of their respective positions, the board of directors,
committees of the board, individual directors and individual officers may, in
considering the best interest of the corporation, consider the effects of any
action upon employees, suppliers and customers of the corporation, communities
in which officers or other establishments of the corporation are located, and
all other pertinent factors. In addition, the personal liability of directors
shall further be limited or eliminated to the fullest extent permitted by any
future amendments to Delaware law.
SEVENTH: The business and affairs of the corporation shall be managed
by or under the direction of the board of directors, the number of members of
which shall be set forth in the bylaws of the corporation. The directors need
not be elected by ballot unless required by the bylaws of the corporation.
EIGHTH: Meetings of the stockholders will be held within the State of
Delaware. The books of the corporation will be kept (subject to the provisions
contained in the General Corporation Law) in the State of Delaware at such place
or places as may be designated from time to time by the board of directors or in
the bylaws of the corporation.
NINTH: In the furtherance and not in limitation of the object,
purposes and powers prescribed herein and conferred by the laws of the State of
Delaware, the board of directors is expressly authorized to make, amend and
repeal the bylaws.
TENTH: The corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereinafter prescribed by the laws of the State of Delaware. All rights herein
conferred are granted subject to this reservation.
ELEVENTH: The corporation shall have no power and may not be authorized
by its stockholders or directors (i) to perform or omit to do any act that would
prevent, inhibit, or cause the corporation to lose its status as a corporation
-2-
<PAGE>
exempt from the Delaware Corporation Income Tax under Section 1902(b)(8) of
Title 30 of the Delaware Code, or under the corresponding provision of any
subsequent law, or (ii) to conduct any activities in any state other than
Delaware which could result in the corporation being subject to the taxing
jurisdiction of any state other than Delaware.
TWELFTH: The name and mailing address of the incorporator is Donna
Juhrden, 314 South State Street, Dover, Delaware 19901.
THIRTEENTH: The powers of the incorporator shall terminate upon the
election of directors.
I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a
corporation under the laws of the State of Delaware do make, file and record
this Certificate of Incorporation, and, accordingly, have hereunto set my hand
and seal this 12th day of January, 1998.
/s/ Donna Jurden
-------------------------------------
Donna Juhrden, Sole Incorporator
-3-
<PAGE>
EXHIBIT 3.14
BY-LAWS
OF
RADNOR DELAWARE, INC.
ARTICLE 1 OFFICES
SECTION 1.1 The Corporation shall have and maintain in the State of
Delaware a registered office which may, but need not be, the same as its place
of business.
ARTICLE 2 STOCKHOLDERS
SECTION 2.1 All meetings of the stockholders shall be held at such place
within the State of Delaware, and at such date and time as may be designated by
the Board of Directors and as shall be specified in the notice of the meeting or
in a duly executed waiver of notice thereof.
SECTION 2.2 An annual meeting of the stockholders, for the election of
directors and for the transaction of such other business as may properly be
brought before the meeting, shall be held at such place within the State of
Delaware and at such, date and time as the Board of Directors may designate and
as shall be specified in the notice of the meeting or in a duly executed waiver
of notice thereof.
SECTION 2.3 Special meetings of the stockholders, for any purpose or
purposes, may be called by the Board of Directors or the President and shall be
called by the President or the Secretary at the request in writing of a majority
of the members of the Board of Directors then in office. Such request shall
state the purpose or purposes
<PAGE>
of the proposed meeting. Business transacted at all special meetings shall be
confined to the objects stated in the notice thereof.
SECTION 2.4 Written notice of any annual or special meeting of
stockholders shall be mailed to each stockholder entitled to vote thereat at his
address as it appears on the records of the Corporation, not fewer than ten nor
more than sixty days before the date of such meeting. Such notice shall be
deemed to be given when deposited in the United States mail, postage prepaid,
directed to each stockholder at his address as it last appears on the records of
the Corporation. Such notice shall state the place within the State of Delaware
and the date and hour of the meeting, and, in the case of a special meeting,
shall state the purpose or purposes for which the meeting is called.
SECTION 2.5 At any meeting of the stockholders, the holders of a majority
of all of the issued and outstanding shares of stock entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for all
purposes, except to the extent that the presence of a larger number of
stockholders may be required by law, by the Certificate of Incorporation of the
Corporation or by these By-laws. If a quorum shall fail to be present or
represented at any meeting, the chairman of the meeting or the holders of a
majority of the shares of the stock entitled to vote who are present, in person
or by proxy, may adjourn the meeting to another place, date or time. When a
meeting is so adjourned, written notice need not be given of the adjourned
meeting if the place, date and time thereof are announced at the meeting at
which the adjournment is taken; provided, however, that if the date of any
adjourned meeting is more than thirty days after the date for which the meeting
was
-2-
<PAGE>
originally noticed, or if a new record date is fixed for the adjourned meeting,
written notice of the place, date, and time of the adjourned meeting shall be
given in conformity herewith. At any adjourned meeting, any business may be
transacted that might have been transacted at the original meeting.
SECTION 2.6 At any meeting of the stockholders, every stockholder entitled
to vote may vote in person or by proxy authorized by an instrument in writing or
any complete and reliable copy, facsimile telecommunication or other
reproduction of the writing executed by such stockholder or by an authorized
officer, director, employee or agent of such stockholder, to the extent
permitted by law, and submitted to the Secretary at or before such meeting, but
no proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. Each stockholder shall have one vote
for each share of stock entitled to vote that is registered in his name on the
record date for the meeting, except as otherwise provided herein or required by
law. All elections of directors by the stockholders shall be by written ballot
and shall be determined by a plurality of the votes cast. All other voting need
not be by written ballot, except upon demand therefor by the Board of Directors
or the officer of the Corporation presiding at the meeting of stockholders where
the vote is to be taken. When a quorum exists at any meeting, the vote of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one for which, by express provision of law or of the Certificate of
Incorporation of the Corporation or of these By-laws, a different vote is
required.
-3-
<PAGE>
SECTION 2.7 The Board of Directors shall appoint either one or three
inspectors of election, in advance of any meeting of stockholders, to act at
such meeting of the stockholders or any adjournment thereof. Inspectors of
election need not be stock holders, and no person who is a candidate for
corporate office shall act as an inspector of election. If three inspectors of
election are appointed, such inspectors of election shall act by majority vote.
Each inspector of election shall sign an oath faithfully to execute the duties
of inspector with strict impartiality and to the best of the inspector's
ability and shall do all acts as are necessary and proper to conduct the
election or vote and all such other acts as may be prescribed by law with
fairness to all stockholders. Such inspectors of election shall make a written
report of any matter determined by them and shall execute a certificate as to
any fact found by them.
SECTION 2.8 The chairman of any meeting of the stockholders shall
determine the order of business and the procedure to be followed at such
meeting, including such regulation of the manner of voting and the conduct of
discussion as he shall deem to be fair and equitable.
SECTION 2.9 The stockholders may participate in any meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear one another, and such
participation shall constitute presence in person at such meeting; provided that
a quorum of stockholders is physically present in the State of Delaware.
SECTION 2.10 Unless otherwise required by the Certificate of
Incorporation of the Corporation, any action required or permitted to be taken
at any meeting of the stockholders may be taken without a meeting, without prior
notice and without a vote,
-4-
<PAGE>
if a written consent setting forth the action so taken shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of the
taking of any corporate action without a meeting by less than unanimous written
consent shall be given in conformity herewith to those stockholders who have not
consented thereto in writing.
ARTICLE 3 BOARD OF DIRECTORS
SECTION 3.1 The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors. In addition to the powers
expressly conferred upon the Board of Directors by these By-laws, the Board of
Directors may exercise all powers of the Corporation and perform all lawful acts
as are not required to be exercised or performed by the stockholders pursuant to
law, the Certificate of Incorporation of the Corporation or these By-laws.
SECTION 3.2 Directors shall be natural persons who need not be
stockholders of the Corporation. The specific number of directors shall be
designated from time to time exclusively by the Board of Directors. In the
absence of any such designation, the Board of Directors shall be composed of one
(1) director. Each director shall be elected for a term of one year and until
his successor is duly elected and qualified, subject, however, to such
director's prior death, resignation, retirement, disqualification or removal
from office. Whenever the authorized number of directors is increased between
annual meetings of the stockholders, a majority of the directors then in office
shall have the power to elect such new directors who shall serve until the next
annual
-5-
<PAGE>
meeting of stockholders and until their successors are duly elected and
qualified. Any decrease in the authorized number of directors shall not become
effective until the expiration of the term of the directors then in office
unless, at the time of such decrease, there shall be vacancies on the Board of
Directors that are being eliminated by such decrease.
SECTION 3.3 Any vacancy on the Board of Directors occurring by reason of
death, resignation, disqualification, removal or other cause may be filled by a
majority of the directors then in office, although less than a quorum, and each
director elected to fill a vacancy shall serve for the unexpired term of his
predecessor and until his successor is duly elected and qualified.
SECTION 3.4 The organizational meeting of each newly elected Board of
Directors may be held immediately following the stockholders' meeting at which
such directors were duly elected without the necessity of notice to such
directors or at such time, and at such place within the State of Delaware, as
may be fixed by notice or a duly executed waiver of notice thereof.
SECTION 3.5 Regular meetings of the Board of Directors shall be held
without call or notice at such time, and at such place within the State of
Delaware, as shall from time to time be fixed by the Board of Directors.
SECTION 3.6 Special meetings of the Board of Directors may be called by
the Chairman of the Board, by the President or by the Secretary upon his own
initiative or upon the written request of a majority of directors then in
office. Notice of the place, within the State of Delaware, and the time and date
of each such special meeting shall be given to each director by whom it is not
waived by mailing written
-6-
<PAGE>
notice to each director not less than two days before the meeting or by giving
notice in person or by telephone, telegram or facsimile transmission not less
than twenty-four hours before the meeting. Notice of special meetings of the
Board of Directors need not state the purpose thereof, except as otherwise
expressly provided by law, by the Certificate of Incorporation of the
Corporation, or by these By-laws. Any and all business may be transacted at a
special meeting, unless otherwise indicated in the notice thereof or provided by
law, by the Certificate of Incorporation of the Corporation or by these By-laws.
SECTION 3.7 Members of the Board of Directors or any committee thereof may
participate in any meeting of the Board of Directors or such committee, as the
case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
one another, and such participation shall constitute presence in person at such
meeting; provided that a quorum of directors is physically present in the State
of Delaware.
SECTION 3.8 At any meeting of the Board of Directors, the presence of a
majority of the total number of directors shall constitute a quorum for the
transaction of business, and the vote of a majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors, unless otherwise provided by law, by the Certificate of Incorporation
of the Corporation or by these By-laws. If a quorum shall not be present at any
meeting of the Board of Directors, a majority of the directors present may
adjourn the meeting to any place, date or time, without notice other than
announcement at the meeting, until a quorum shall be present.
-7-
<PAGE>
SECTION 3.9 Unless otherwise provided by law, by the Certificate of
Incorporation of the Corporation or these By-laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board of
Directors or such committee, as the case may be, consent thereto in writing and
such consent is filed with the minutes of proceedings of the Board of Directors
or committee thereof.
SECTION 3.10 Directors, in addition to expenses of attendance, shall be
allowed such compensation for their services as directors, including, without
limitation, their services as members of committees of the Board of Directors,
as may be fixed from time to time by the Board of Directors; provided, that
nothing contained in these By-laws shall be construed to preclude any director
from serving the Corporation in any other capacity and receiving compensation
therefor.
SECTION 3.11 A member of the Board of Directors or of any committee
thereof shall, in the performance of his duties, be fully protected in relying
in good faith upon the books of account or reports made to the Corporation by
any of its officers, or by an independent certified public accountant, or by an
appraiser selected with reasonable care by the Board of Directors or by any
committee thereof, or in relying in good faith upon other records of the
Corporation.
-8-
<PAGE>
ARTICLE 4 COMMITTEES
SECTION 4.1 The Board of Directors, by a vote of a majority of the whole
Board of Directors, may from time to time designate committees of the Board of
Directors, with such lawfully delegable powers and duties as it thereby confers,
to serve at the pleasure of the Board of Directors and shall, for those
committees and any others provided for herein, elect a director or directors to
serve as a member or members and designate, if it desires, one or more directors
as alternate members who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of any member of
any committee and any alternate member in his place, the member or members of
the committee present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any such absent or
disqualified member. The Board of Directors may, from time to time, suspend,
alter, continue or terminate any committee or the powers and functions thereof.
SECTION 4.2 The Board of Directors may appoint committees consisting of
officers or other persons, with chairmanships, vice chairmanships and
secretaryships and such duties and powers as the Board of Directors may from
time to time designate and prescribe. The Board of Directors may from time to
time suspend, alter, continue or terminate any of such committees or the powers
and functions thereof.
SECTION 4.3 One-third of the members of any committee shall constitute a
quorum unless the committee shall consist of one or two members, in which case
one
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<PAGE>
member shall constitute a quorum. All matters properly brought before any
committee shall be determined by a majority vote of the members present.
SECTION 4.4 Any action that may be taken by a committee at a meeting may
be taken without a meeting if all members thereof consent thereto in writing and
such writing is filed with the minutes of the proceedings of such committee.
SECTION 4.5 Each committee may determine the procedural rules for meeting
and conducting its business and shall act in accordance therewith, except as
otherwise provided by law, by the Certificate of Incorporation of the
Corporation or by these By-laws. Adequate provision shall be made for notice to
all members of any committee of all meetings of that committee.
ARTICLE 5 OFFICERS
SECTION 5.1 The officers of the Corporation shall consist of a Chairman of
the Board, a President, one or more Vice Presidents, a Secretary and a
Treasurer. Officers shall be appointed from time to time by the Board of
Directors. No officer except the Chairman of the Board need be a member of the
Board of Directors. Any number of offices may be held by the same person.
SECTION 5.2 The Board of Directors may appoint such other officers,
including assistant officers, and agents as it shall deem necessary, who shall
hold their offices for such terms and shall exercise such powers and perform
such duties as shall be determined from time to time by the Board of Directors.
SECTION 5.3 Each officer shall hold office until his successor is duly
elected and qualified or until his earlier death, resignation, retirement or
removal. Any officer
-10-
<PAGE>
appointed by the Board of Directors may be removed at any time by the Board of
Directors without prejudice to his contract rights. If the office of any officer
becomes vacant for any reason, such vacancy shall be filled by the Board of
Directors. Any officer appointed to fill such a vacancy shall hold office until
his successor is duly elected and qualified or until his earlier death,
resignation, retirement or removal.
SECTION 5.4 The Board of Directors may from time to time delegate the
powers or duties of any officer to any other officers or agents, notwithstanding
any provision of these By-laws.
SECTION 5.5 The Chairman of the Board shall be a director of the
Corporation. The Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors and shall perform such duties and
have such powers as may from time to time be assigned to him by the Board of
Directors.
SECTION 5.6 The President shall be the chief executive officer of the
Corporation and, subject to the provisions of these By-laws and to the
direction of the Board of Directors, he shall have responsibility for the
general management and control of the business and affairs of the Corporation.
Unless otherwise directed by the Board of Directors from time to time, the
President shall have the power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of stockholders of or with
respect to any action of stockholders of any other corporation in which the
Corporation may hold securities and otherwise to exercise any and all rights and
powers which the Corporation may possess by reason of its ownership of
securities in such other corporation. The President shall perform the duties
and exercise the powers of the Chairman of the Board in the absence or
disability of the
-11-
<PAGE>
Chairman.
SECTION 5.7 Each Vice President shall have such powers and perform such
duties as may be delegated to him by the Board of Directors or by the President.
In the absence or disability of the Chairman of the Board and the President, any
Vice President who is also a director of the Corporation may preside at meetings
of the stockholders and the Board of Directors to the extent and in the manner
authorized by a resolution of the Board of Directors.
SECTION 5.8 The Secretary shall attend all meetings of the Board of
Directors and of the stockholders and shall record all votes and the minutes of
all proceedings at such meetings in a book to be kept for that purpose and shall
perform such other duties as the Board of Directors may from time to time
prescribe. The Secretary shall perform the preceding duties for any committee of
the Board of Directors upon the request of the Board of Directors or such
committee. The Secretary shall give or cause to be given notice of all meetings
of the stockholders and the Board of Directors. The Secretary shall have charge
of the seal of the Corporation, and, where required, shall have the authority to
affix such seal to any instrument. In the absence or disability of the
Secretary, any Assistant Secretary shall perform the duties and exercise the
powers of the Secretary.
SECTION 5.9 The Treasurer shall have the custody of the Corporation's
funds and securities and shall deposit all monies and other valuable effects in
the name and to the credit of the Corporation, in such depositories as may be
designated by the Board of Directors. The Treasurer shall make such
disbursements of the Corporation's funds as are authorized by the Board of
Directors or by the President, taking proper
-12-
<PAGE>
vouchers for such disbursements, and shall render to the Board of Directors an
account of all such transactions and of the financial condition of the
Corporation, at such times as the Board of Directors may require. The Treasurer
shall also perform such other duties as the Board of Directors may from time to
time prescribe. In the absence or disability of the Treasurer, any Assistant
Treasurer shall perform the duties and exercise the powers of the Treasurer.
ARTICLE 6 INDEMNIFICATION
SECTION 6.1 Subject to Section 6.3 hereof, the Corporation shall indemnify
any person who was or is a party or has threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer or employee of the Corporation, or is or was serving at the request of
the Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a
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<PAGE>
manner that he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 6.2 Subject to Section 6.3 hereof, the Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer or employee of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, or employee of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Corporation; except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
SECTION 6.3 Any indemnification under this Article 6 (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer or employee
is proper in
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<PAGE>
the circumstances because he has met the applicable standard of conduct set
forth in Section 6.1 or Section 6.2 of this Article 6, as the case may be. Such
determination shall be made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who are not parties to such action, suit or
proceeding, (ii) if such a quorum is not attainable, or, even if attainable, if
a majority vote of a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion or (iii) by the stockholders. To
the extent, however, that a director, officer or employee of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith, without the necessity of
authorization in the specific case.
SECTION 6.4 For purposes of any determination under Section 6.3 of this
Article 6, a person shall be deemed to have acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Corporation, or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe his conduct was unlawful, if his action is based
on the records or books of account of the Corporation or another enterprise
(provided that such records or books of account have in each case been prepared
by persons whom the person relying thereon reasonably believes to be
professionally or expertly competent to prepare such records or books of
account), or on information supplied to him by the officers of the Corporation
or another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or records
-15-
<PAGE>
given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 6.4 shall mean any other corporation or any
partnership, joint venture, trust or other entity of which such person is or was
serving at the request of the Corporation as a director, officer or employee.
The provisions of this Section 6.4 shall not be deemed to be exclusive or to
limit in any way the circumstances in which a person may be deemed to have met
the applicable standard of conduct set forth in Section 6.1 or 6.2 of this
Article 6, as the case may be.
SECTION 6.5 Notwithstanding any contrary determination in the specific
case under Section 6.3 of this Article 6, and notwithstanding the absence of any
determination thereunder, any director, officer or employee may apply to any
court of competent jurisdiction in the State of Delaware for indemnification to
the extent otherwise permissible under Sections 6.1 and 6.2 of this Article 6.
The basis of such indemnification by a court shall be a determination by such
court that indemnification of the director, officer or employee is proper in the
circumstances because he has met the applicable standards of conduct set forth
in Section 6.1 or 6.2 of this Article 6, as the case may be. Notice of any
application for indemnification pursuant to this Section 6.5 shall be given to
the Corporation promptly upon the filing of such application.
SECTION 6.6 Expenses incurred in defending or investigating a threatened
or pending action, suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as authorized by the
Board of Directors upon receipt of an undertaking by or on behalf of the
director, officer or
-16-
<PAGE>
employee to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Corporation as authorized in this Article
6.
SECTION 6.7 The indemnification and advancement of expenses provided by,
or granted pursuant to, the other sections of this Article 6 shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any by-law, agreement, contract,
vote of stockholders or disinterested directors or pursuant to the direction
(howsoever embodied) of any court of competent jurisdiction or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office, it being the policy of the Corporation that indemnification
of, and advancement of expenses to, the persons specified in Sections 6.1 and
6.2 of this Article 6 shall be made to the fullest extent permitted by law. To
this end, the provisions of this Article 6 shall be deemed to have been amended
for the benefit of such persons effective immediately upon any modification of
the General Corporation Law of the State of Delaware which expands or enlarges
the power or obligation of corporations organized under such law to indemnify,
or advance expenses to, such persons. The provisions of this Article 6 shall not
be deemed to preclude the indemnification of, or advancement of expenses to, any
person who is not specified in Section 6.1 or 6.2 of this Article 6 but whom the
Corporation has the power or obligation to indemnify, or to advance expenses
for, under the provisions of the General Corporation Law of the State of
Delaware or otherwise. The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article 6 shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer or employee
-17-
<PAGE>
and shall inure to the benefit of the heirs, executors and administrators of
such person.
SECTION 6.8 The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer or employee of the Corporation,
or is or was serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power or the obligation to indemnify him against such
liability under the provisions of this Article 6.
SECTION 6.9 For purposes of this Article 6, references to the
"Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had the power and authority to indemnify its directors, officers and
employees, so that any person who is or was a director, officer or employee of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article 6 with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
-18-
<PAGE>
ARTICLE 7 STOCK
SECTION 7.1 The certificates representing shares of stock of the
Corporation shall be numbered and shall be entered in the books of the
Corporation as they are issued. Each stockholder shall be entitled to a
certificate exhibiting such stockholder's name and the number of shares held by
such stockholder, which certificate shall be signed by the Chairman of the Board
or the President or any Vice President, and by the Treasurer or the Secretary or
any Assistant Secretary. Any or all of the signatures on such certificate may
be a facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, such certificate may be issued by the Corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
SECTION 7.2 Transfers of stock shall be made only upon the transfer books
of the Corporation maintained in an office of the Corporation or by transfer
agents designated to transfer shares of the stock of the Corporation, and only
by the person named in the certificate or by his attorney, lawfully constituted
in writing, and upon surrender of the certificate therefor.
SECTION 7.3 In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors
-19-
<PAGE>
may fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting nor more than sixty days prior to
any other action. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
SECTION 7.4 The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, save as expressly provided by the
laws of the State of Delaware.
SECTION 7.5 The Board of Directors may authorize the issuance of a new
certificate representing shares of stock in place of any certificate previously
issued by the Corporation and alleged to have been lost, stolen or destroyed,
pursuant to such regulations as the Board of Directors may establish concerning
proof or advertisement of such alleged loss, theft or destruction and concerning
the giving of a satisfactory bond or bonds sufficient to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate.
SECTION 7.6 The issue, transfer, conversion and registration of
certificates of stock of the Corporation shall be governed by such other
regulations as the Board of Directors may from time to time establish.
-20-
<PAGE>
ARTICLE 8 PURPOSES AND POWERS
SECTION 1. The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware; provided that the Corporation's
activities shall be confined to the maintenance and management of its intangible
investments and the collection and distribution of the income from such
investments or from tangible property physically located outside Delaware, all
as defined in, and in such manner to qualify for exemption from income taxation
under, Section 1902(b)(8) of Title 30 of the Delaware Code, or under the
corresponding provision of any subsequent law; provided further that the
Corporation shall be empowered to conduct such other activities as permitted by
said Section 1902(b)(8) or the corresponding provision of any subsequent law in
such manner to qualify for exemption from income taxation under said Section
1902(b)(8) or the corresponding provision of any subsequent law. For purposes of
this Section "intangible investments" shall include, without limitation,
investments in stocks, bonds, notes and other debt obligations (including debt
obligations of affiliated corporations), patents, patent applications,
trademarks, trade names and similar types of intangible assets.
ARTICLE 9 NOTICES
SECTION 9.1 Whenever notice is required to be given to any director,
committee member, officer, stockholder, employee or agent, whether pursuant to
law, the Certificate of Incorporation of the Corporation or these By-laws, it
shall not be construed to mean personal notice, but such notice may be given, in
the case of stockholders, in writing, by depositing the same in the mail,
postage prepaid, or by
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<PAGE>
overnight carrier addressed to such stockholder at his last known address as the
same appears on the books of the Corporation, and, in the case of directors,
committee members, officers, employees and agents, by telephone, or by mail,
postage prepaid, or by prepaid telegram at his last known address as the same
appears on the books of the Corporation. All notices shall be deemed to be given
when mailed, telegraphed or telephoned.
SECTION 9.2 Whenever notice is required to be given to any stockholder,
director, committee member, officer, employee or agent, whether pursuant to law,
the Certificate of Incorporation of the Corporation or these By-laws, a written
waiver thereof, signed by the person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
as otherwise provided by law. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders, directors, or
members of a committee of directors need be specified in any written waiver of
notice unless so required by the Certificate of Incorporation of the Corporation
or by these By-laws.
ARTICLE 10 MISCELLANEOUS
SECTION 10.1 Any officer of the Corporation shall, if required by the
Board of Directors, give the Corporation a bond for the faithful performance of
the duties of his office, and for the restoration to the Corporation of all
corporate books, papers, vouchers, money and property of whatever kind in his
possession or under his control. Such bond shall be for a sum and with such
surety or sureties as the Board of
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<PAGE>
Directors may require.
SECTION 10.2 The corporate seal shall be in the charge of the Secretary
and shall have inscribed thereon the name of the Corporation and the words
"Incorporated 1996 Delaware." If and when so directed by the Board of Directors
or a committee thereof, the Secretary may have duplicates of such seal made and
deposited for use with other officers of the Corporation. It shall not be
necessary to the validity of any instrument executed by any authorized officer
or officers of the Corporation that the execution of such instrument be
evidenced by the corporate seal.
SECTION 10.3 The fiscal year of the Corporation shall be as determined by
the Board of Directors.
SECTION 10.4 All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers as the Board of Directors may from
time to time designate.
SECTION 10.5 The Board of Directors shall determine from time to time
whether, when and under what conditions and regulations, the books and records
of the Corporation (except such as may by statute be specifically open to
inspection) shall be open to the inspection of the stockholders, and the
stockholders' rights in this respect are and shall be restricted and limited
accordingly.
SECTION 10.6 Facsimile signatures of any officer of the Corporation may
be used at such time and in such manner as authorized by the Board of Directors
or a committee thereof.
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<PAGE>
ARTICLE 11 AMENDMENT
SECTION 11.1 These By-laws may be amended, suspended or repealed and new
By-laws may be adopted in a manner consistent with law: (a) if authorized by the
Certificate of Incorporation of the Corporation, by the affirmative vote of a
majority of the Directors then in office, at any meeting of the Board of
Directors, or (b) by the affirmative vote of the stockholders at any
stockholders' meeting called and maintained in accordance with Article 2 of
these By-laws; provided, however, that a brief description of such proposed
amendment, suspension or repeal and/or adoption of new By-laws is contained in
the notice of such meeting of the Board of Directors or of such annual or
special stockholders' meeting.
Adopted as of January 12, 1998
-24-
<PAGE>
EXHIBIT 3.15
THERMISOL FINLAND OY - ARTICLES OF ASSOCIATION
1(S) NAME AND SEAT OF THE COMPANY
The name of the company shall be Thermisol Finland Oy and its seat shall be in
Helsinki.
2(S) FIELD OF ACTIVITIES
The field of activity of the company shall comprise production and sale of
polystyrene insulating materials, special products and elements as well as
contracting related thereto.
The field of activities also includes purchase and sale of securities as well as
granting of loans and guarantees relating to operations of companies of the same
group and equivalent foreign companies.
3(S) MINIMUM AND MAXIMUM SHARE CAPITAL
The amount of the minimum share capital of the company is fifteen hundred
(15.000) markkas and the amount of maximum share capital is sixty thousand
(60.000) markkas, in which limits the share capital may be increased or
decreased without having obligation to revise the Articles of Association.
4(S) NOMINAL VALUE OF THE SHARES
The nominal value of each share is one hundred twenty five (125) markkas.
5(S) BOARD OF DIRECTORS
The board of directors comprises at least one (1) and not more than eight (8)
permanent members. When needed, at least one (1) and not more than four (4)
alternate members may be chosen to the board of directors. If less than three
(3) permanent members are chosen to the board of directors then at least one (1)
and not more than three (3) alternate members shall be chosen.
The term for which each member of the board is elected shall end at the
adjournment of the annual meeting next following the election of the member.
6(S) RIGHT TO SIGN ON BEHALF OF THE COMPANY
The name of the company shall be signed by the chairman of the board of
directors alone or by persons to whom the board of directors has given the right
to sign, or per procuram any person or persons to whom the board of directors
has given a written power of attorney.
<PAGE>
7(S) AUDITORS
The company shall have as its external auditors an auditing entity or one (1)
auditor and a deputy auditor. Auditors are elected for the time being.
8(S) ACCOUNTING PERIOD
The accounting period of the company is from 1 January until 31 December. The
first accounting period ends 31 December 1997.
9(S) INVITATION TO THE SHAREHOLDERS' MEETING
Invitation to a shareholders meeting must be delivered to each shareholder not
earlier than four (4) weeks and not later than eight (8) days prior to the
meeting in a written form and a way which can be proved.
10(S) ANNUAL SHAREHOLDERS MEETING
Annual shareholders' meeting shall be held within six (6) months from the end of
the accounting period on the date determined by the board of directors.
In such meeting:
there shall be presented:
- -------------------------
1 the financial statements of the most recently ended financial year,
including the profit and loss statement, balance sheet and annual report,
2 report of the auditors,
there shall be decided:
- -----------------------
3 whether the profit and loss statement and the balance sheet shall be
confirmed,
4 about disposition of the profit or loss confirmed in the balance sheet,
5 whether to grant a release from liability for the members of the board
and, if the company has a managing director, for the managing director
6 fees for the members of the board and basis of the compensation of
travelling costs
7 other matters which pursuant to law or articles of association must be
dealt with by annual shareholders' meeting,
8 the number of the members of the board.
there shall be elected:
- -----------------------
9 the members of the board of directors and
10 as needed, an auditing entity, or an auditor and his/her deputy.
<PAGE>
THERMISOL FINLAND OY - NIMISEN OSAKEYHTION YHTIOJARJESTYS
1 (S) YHTION TOIMINIMI JA KOTIPAIKKA
Yhtion toiminimi on Thermisol Finland Oy ja kotipaikka Helsinki.
2 (S) YHTION TOIMIALA
Yhtion toimialana on polystyreeniperusteisten eristeiden, erikoistuotteiden ja
elementtien valmistus ja myynti seka niihin liittyva urakointi. Yhtio voi
harjoittaa arvopapereiden ostoa ja myyntia, takausten ja lainojen antoa
konserniyhtioiden ja vastaavien ulkomaisten yhtioiden liiketoimintaan liittyen.
3 (S) VAHIMMAIS JA ENIMMAISPAAOMA
Yhtion vahimmaispaaoma on viisitoistatuhatta (15.000) markkaa ja enimmaispaaoma
kuusikymmentatuhatta (60.000) markkaa, joissa rajoissa osakepaaomaa voidaan
korottaa tai alentaa yhtiojarjestysta muuttamatta.
4 (S) OSAKKEIDEN NIMELLISARVO
Osakkeiden nimellisarvo on satakaksikymmentaviisi (125) markkaa.
5 (S) HALLITUS
Yhtiolla on hallitus, johon kuuluu yhdesta (1) kahdeksaan (8) varsinaista
jasenta. Varajasenia hallitukseen voidaan tarvittaessa valita yhdesta (1)
neljaan (4). Mikali hallitukseen valitaan vahemman kuin kolme varsinaista
jasenta on valittava yhdesta (1) kolmeen (3) varajasenta.
Hallituksen jasenten toimikausi paattyy vaalia ensiksi seuraavan varsinaisen
yhtiokokouksen paattyessa.
6 (S) TOIMINIMEN KIRJOITUS
Yhtion toiminimen kirjoittaa hallituksen puheenjohtaja yksin tai henkilot,
joille hallitus antaa toiminimen kirjoitusoikeuden tai per procuram henkilo tai
henkilot, joille yhtion hallitus on antanut kirjallisen valtuutuksen.
7 (S) TILINTARKASTAJAT
Yhtiossa on varsinaisena tilintarkastajana tilintarkastusyhteiso tai yksi
varsinainen tilintarkastaja ja hanella yksi varamies.
<PAGE>
Tilintarkastaja valitaan tehtavaansa toistaiseksi.
8 (S) TILIKAUSI
Yhtion tilikausi on 01.01. 31.12. kuitenkin siten, etta yhtion ensimmainen
tilikausi paattyy 31.12.1997.
9 (S) KOKOUSKUTSU
Kutsu yhtiokokoukseen on toimitettava osakkeenomistajille todistettavasti
kirjallisesti aikaisintaan nelja viikkoa ja viimeistaan kahdeksan paivaa ennen
kokousta.
10 (S) VARSINAINEN YHTIOKOKOUS
Varsinainen yhtiokokous on pidettava vuosittain hallituksen maaraamana paivana
kuuden kuukauden kuluessa tilikauden paattymisesta.
Kokouksessa on:
Esitettava:
- -----------
1 tilinpaatos, joka kasittaa tuloslaskelman, taseen ja toimintakertomuksen;
2 tilintarkastuskertomus;
paaettava:
- ----------
3 tuloslaskelman ja taseen vahvistamisesta;
4 toimenpiteista, joihin vahvistetun taseen mukainen voitto tai tappio antaa
aihetta;
5 vastuuvapaudesta hallituksen jasenille ja toimitusjohtajalle;
6 hallituksen jasenen palkkiosta ja matkakustannusten korvausperusteista;
7 muista asioista, jotka lain tai yhtiojarjestyksen mukaan kuuluvat
varsinaiselle yhtiokokoukselle.
8 hallituksen jasenten lukumaarasta;
valittava:
- ----------
9 hallituksen jasenet seka
10 tarvittaessa tilintarkastusyhteiso tai tilintarkastaja ja hanelle varamies.
<PAGE>
EXHIBIT 3.16
ARTICLES OF ASSOCIATION
FOR
THERMISOL DENMARK APS
(REG.NR. APS 237.115)
--OOOOO--
(S)1.
1.1. The name of the Company is Thermisol Denmark Aps.
1.2. The registered office of the Company will be situated in the municipality
of Hedensted.
(S)2.
2. The objects for which the Company is established are to produce and sell
materials for the use of the building industry, the furniture industry and
the metal industry and other related activities.
(S)3.
3.1. The capital of the Company is DKK 125,000 divided into parts of DKK 1,000
and multiples thereof.
3.2. The capital of the Company has been paid up in full.
3.3. The name and address of the Part Holder shall be recorded in the Company's
Register of Part Holders.
3.4. No part shall confer special rights upon the holder. No Part Holder shall
be liable to have his parts redeemed by the Company or others either in
full or in part.
3.5. Any transfer of parts shall be subject to the approval of the Management,
both in respect of the transferee and in respect of the terms and
conditions of the transfer.
(S)4.
4.1. General meetings of the Company shall be held in the municipality of the
registered office.
4.2. The ordinary general meeting shall be held each year within five months of
the expiry of each financial year.
4.3. An extraordinary general meeting shall be held whenever deemed appropriate
by the Management, the Auditor or a general meeting. An extraordinary
general meeting shall be convened within fourteen days whenever requested
in writing by Part Holders owning one tenth of the capital with a view to
dealing with a specific subject.
4.4. General meetings shall be convened by the Management by letter to the Part
Holders sent to addresses recorded in the Register of Part Holders, giving
not more than four weeks' and not less than eight days' notice. The notice
of conventions shall specify the business to be transacted at the general
meeting, and if proposals for amendments to the Articles of Association are
to be dealt with by the general meeting, the essential contents of the
proposals shall be indicated in the notice.
<PAGE>
4.5. Not later than eight days before the general meeting the agenda, the
complete proposals and, as far as the ordinary general meeting is
concerned, also the annual accounts with the Auditor's certificate an the
annual report shall be available at the Company's office for inspection by
the Part Holders and forwarded to the Part Holders.
4.6. All Part Holders shall be entitled to have a specific subject dealt with at
the general meeting provided a written request to this effect is submitted
to the Management in time for the Management to include the subject in the
agenda of the general meeting.
4.7. Part Holders can expect their subjects for the agenda of the ordinary
general meeting to be included in the agenda if submitted in writing to the
Management not later than two months after the expiry of the financial
year.
(S)5.
5.1 At the ordinary general meeting the annual accounts endorsed with the
Auditor's certificate and the annual report shall be presented and the
following business shall be transacted,
a) Report on the activities of the Company.
b) Submission for adoption of the annual accounts and discharge of the
Management.
c) Submission of proposal for applications of profits or covering of
losses according to the annual accounts adopted.
d) Election of Management.
e) Election of Auditor.
(S)6.
6. The Management shall appoint a Chairman to preside over the general meeting
and to settle all questions relating to the proceedings, the voting, and
the result of the voting.
(S)7.
7.1 Each part of DKK 1,000 shall entitle the holder to one vote.
7.2 The general meeting shall only be able to decide on subjects included in
the agenda.
7.3 The subjects dealt with at the general meeting shall be decided by simple
majority unless special rules on representation and majority are laid down
in the Danish Private Companies Act.
7.4 In order that decision on amendment of the Articles of Association can be
made, the decision shall be approved by at least two thirds of both the
votes cast and of the capital represented at the general meeting and
entitles to vote.
7.5 Minutes of the general meeting shall be entered into the Minute Book of the
Company and shall be signed by the Chairman and the members of the
Management present.
7.6 If all Part Holders agree thereto, a decision can be made without holding a
general meeting or without observing the rules of procedure for holding
general meetings; however, such decision shall be entered into the
Company's Minute Book.
<PAGE>
(S)8.
8.1. The Company has no Board of Directors.
8.2. The general meeting employs a Management that manages the Company.
(S)9.
9. The Company shall be bound by the signature of a manager.
(S)10.
10.1 Auditing shall be made by a state-authorized public accountant.
10.2 The Auditor shall be elected by the general meeting for the period until
the end of the following ordinary general meeting.
(S)11.
11. The financial year of the Company shall be 1 January to 31 December.
(S)12.
12. The annual accounts shall be presented in a clear manner and in conformity
with the legislation and shall give a true and fair view of the assets and
liabilities of the Company as well as of the financial position and the
result.
(S)13.
13. The Management shall be authorized to make such amendments to the
Articles of Association of the Company as may be requested by the Register
of Companies.
-- OOOOO--
IN THE MANAGEMENT:
OCTOBER 8, 1997
________________________
MICHAEL T. KENNEDY
<PAGE>
VEDTAEGTER
FOR
THERMISOL DENMARK APS
(REG.NR. APS 237.115)
---OOOOO---
(S)1.
1.1. Selskabets navn er Thermisol Denmark Aps.
1.2. Selskabets hjemsted er Hedensted.
(S)2.
2. Selskabets formal er produktion og handel med materialer til brug for
bygningsbranchen, mobelindustrien og metalindustrien og anden virksomhed i
forbindelse hermed.
(S)3.
3.1. Selskabets indskudskapital er DKK 125.000 fordelt i anparter a DKK 1.000
og multipla heraf.
3.2. Indskudskapitalen er fuldt indbetalt.
3.3. Anpartshaverens navn of adresse indfores i anpartshaverfortegnelsen.
3.4. Ingen anpart har saerlige rettigheder. Ingen anpartshaver er forpligtet
til at lade selskabet eller andre indlose sin anpart helt eller delvis.
3.5. Enhver overgang af anparter kraever direktionens godkendelse af savel den
nye ejer som af overgangsvilkarene.
(S)4.
4.1. Generalforsamlinger afholdes pa hjemstedet.
4.2. Ordinaer generalforsamling afholdes hvert ar inden fem maneder efter
udlobet af hvert regnskabsar.
4.3. Ekstraordinaer generalforsamling skal afholdes, nar direktionen, en
revisor eller en generalforsamling finder det hensigtsmaessigt.
Ekstraordinaer generalforsamling skal indkaldes inden fjorten dage, nar
det ril behandling af et bestemt angivet emne skriftligt forlanges af
anpartshavere, der ejer 1/10 af indskudskapitalen.
4.4. Generalforsamlinger indkaldes af direktionen ved brev til anpartshaverne
pa den til anpartshaverfortegnelsen opgivne adresse med hojst fire uger og
mindst otte dages varsel. I indkaldelsen skal angives, hvukje anliggender
der skal behandles pa generalforsamlingen, og safremt forslag til
vedtaegtsaendringer skal behandles pa generalforsamlingen, skal forslagets
vaesentligste indhold angives i indkaldelsen.
4.5. Senest otte dage for generalforsamlingen skal dagsordenen og de
fuldstaedige forslag sarnt for den ordinaere generalforsamlings
vedkommende tillige arsergnskab med revisionspategning og arsberetning
fremlaegges til eftersyn for anpartshaverne pa selskabets kontor og
tilsendes anpartshaverne.
<PAGE>
4.6. Enhver anpartshaver har ret til at fa et bestemt emne behandlet pa
generalforsamlingen, safremt han skriftligt fremsaetter krav herom over
for direktionen i sa god til, at emnet kan optages pa dagsordenen for
generalforsamlingen.
4.7. Emner fra anpartshaverne til den ordinaere generalforsamlings dagsorden
kan paregnes optaget pa denne, nar de fremkommer skriftligt til
bestyrelsen senest to maneder efter regnskabsarets udlob.
(S)5.
5. Pa den ordinaere generalforsamling skal arsregnskabet med
revisionspategning og arsberetning fremlaegges og folgende foretages:
a) Beretning om selskabets virksomhed.
b) Forelaeggelse til godkendelse af arsregnskabet og meddelelse af
decharge for direktionen.
c) Forelaeggelse af forslag om anvendelse af overskud eller daekning af
tan i henhold til det godkendte arsregnskab.
d) Valg af direktion.
e) Valg af revision.
(S)6.
6. En af direktionen valgt dirigent leder forhandlingerne pa
generalforsamlingen og afgor alle sporgsmal vedrorende sagernes
behandlingsmade, stemmeafgivningen og dennes resultat.
(S)7.
7.1 Hvert anpartsbelob pa DKK 1.000 giver en stemme.
7.2 Pa generalforsamlingen kan beslutning kun tages om de forslag, der har
vaeret optaget pa dagsordenen.
7.3 De pa generalforsamlingen behandlede anliggender afgores ved simpelt
stemmeflertal, medmindre anpartsselskabsloven foreskriver saerlige regler
om repraesentation og majoritet.
7.4 Til vedtagelse af beslutning om aendring i selskabets vedtaegter kraeves,
at beslutningen tiltraegter af mindst 2/3 savel af de afgivne stemmer som
af den pa generalforsamlingen repraesenterede stemmeberettigede
indskudskapital.
7.5 Over det pa generalforsamlingen passerede indfores beretning i selskabets
forhandlingsprotokol, der underskrives af dirigenten og den
tilstedevaerende direktion.
7.6 Safrernt samtlige anpartshavere er enige herom, kan en beslutning traeffes
unden afholdese af genersalforsamling eller unden iagttagelse af reglerne
om fremgangsmaden ved afholdelse af generalforsamling; beslutningen shal
dog indfores i selskabets forhandlingsprotokol.
(S)8.
8.1. Selskabet har ingen bestyrelse.
8.2. Generalforsamlingen ansaetter en direktion. der leder selskabet.
<PAGE>
(S)9.
9. Selskabet tegnes af en direktor.
(S)10.
10.1 Revision foretages af en statsautoriseret revisor.
10.2 Revisionen vaelges af generalforsamlingen for tiden indtil afslutningen af
naeste ordinaere generalforsamling.
(S)11.
11. Selskabets regnskabsar er 1. january til 31. december.
(S)12.
12. Arsregnskabet skal opstilles pa overskuelig made I overensstemmelse med
lovgivningen og skal give et retvisende billede af selskabets aktiver og
passiver, den okonomiske stilling sarnt resultatet.
(S)13.
13. Direktionen er bemyndiget til at foretage sadanne aendringer I selskabets
vedtaegter, som Erhvervsog Selskabsstyrelsen matte forlange.
---OOOOO--
I DIREKTIONEN:
OCTOBER 8, 1997
____________________________
MICHAEL T. KENNEDY
<PAGE>
EXHIBIT 3.17
ARTICLES OF ASSOCIATION
1 (S)
The corporate name of the company is Thermisol Sweden Aktiebolag.
2 (S)
The register office of the board shall be the municipality of Norrtalje.
3 (S)
The objects of the company shall be to carry on manufacture and sale of packing
products and building and road isolation products of polymer material as well as
other business compatible therewith.
4 (S)
The company's share capital shall be not less than SEK 100,000 and not more than
SEK 400.000.
5 (S)
The par value of each share shall be SEK 1,000.
6 (S)
The board of directors shall consist of 3-7 members with not more than 5 deputy
members. It shall be appointed annually at the ordinary shareholders meeting for
the period until the next ordinary shareholders meeting has been held.
1-2 auditors with or without deputy auditors shall be appointed annually at the
ordinary shareholders meeting for the period until the next ordinary
shareholders meeting has been held.
7 (S)
Notice convening a shareholders meeting shall be sent by mail at the earliest
four and at the latest two weeks before the meeting. Messages to the
shareholders shall be sent by mail.
8 (S)
An ordinary shareholders meeting shall be held once yearly within six (6) months
from the end of the financial year.
At the ordinary shareholders meeting the following matters shall be dealt with:
1. Election of chairman of the meeting,
2. Preparation and approval of the voting list,
3. Election of one or two persons to check the minutes,
4. Question of the due convening of the meeting,
5. Presentation of the annual report and the auditor's report,
6. Resolution
a) in respect of the adoption of the profit and loss accounts and the
balance sheet and where applicable the group profit and loss accounts
and the group balance sheet
<PAGE>
b) in respect of the profit or loss according to the approved balance sheet
c) in respect of discharge from liability for the members of the board and
the managing director,
7. Settlement of the fees for the board of directors and the auditors,
8. Election of the board of directors, auditors and possible deputy auditors,
9. Other matters which in due order have been submitted to the meeting.
Each person entitled to vote may at the shareholders meeting vote for the full
number of shares represented by him.
9 (S)
The financial year is the calendar year.
<PAGE>
BOLAGSORDNING
(S) 1
Bolagets firma ar Thermisol Sweden Aktiebolag.
(S) 2
Styrelsen har sitt sate i Norrtalje kommun.
(S) 3
Bolaget shall bedriva tillverkning och forsaljning av forpackningsprodukter samt
bygg och vagisoleringsprodukter av polymera material avensom idka annan darmed
forenlig verksamhet.
(S) 4
Aktiekapitalet utgor lagst etthundratusen (100.000) kronor och hogst
tvahundratusen (200.000) kronor.
(S) 5
Aktie lyder pa etthundra (100) kronor.
(S) 6
Styrelsen bestar av 3-7 ledamoter med hogat 5 suppleanter. Den vajs arligen pa
ordinarie bolagsstamma for tiden intill dess nasta ordinarie bolagestamma har
hallits.
1-2 revisorer med eller utan revisorssuppleanter valjes arligen pa ordinarie
bolagsstamma for tiden intill dess nasta ordinarie bolagsstamma har hallits.
(S) 7
Kallelse til bolagsstamma skall ske tidigast fyra och senast tva vockor fore
tiden stamman genom brev med posten. Meddelanden till aktieagarna skall ske
genom brev med posten.
(S) 8
Ordinarie bolagsstamma halles inom sex (6) manader efter rakenskapsarets utgang.
Pa ordinarie bolagsstamma skall foljande arenden forekomma:
1. Val av ordforande vid stamman
<PAGE>
2. Upprattande och godkannande av rostlangd
3. Val av en eller tva protokolljusterare
4. Provning av om stamman blivit behorigen sammankallad
5. Foredragning av framlagd arsredovianing och revisionsberattelse
6. Beslut
a) om faststallande av resultatrakning och balansrakning samr i
forekommande fall koncernresultatrakning och koncernbalansrakning
b) om dispositioner betraffande bolagets vinst eller forlust enligt
den faststallda balansrakningen
c) om ansvarsfrihet at styrelseledamoter och verkstallande direktor
7. Faststallande av styrelse och revisorsarvoden
8. Val av styrelse och revisorer samt revisorssuppleanter
9. Annar arende, som ankommer pa stamman enligt aktiebolagslagen eller
bolagsordningen.
Vid bolagsstamma ma envar rostberattigad rosta for hela antalet av honom agda
och foretradda aktier, utan begransning i rostetalet.
(S) 9
Rakenskapsar ar kalenderar.
<PAGE>
EXHIBIT 3.18
OFFICE TRANSLATION OF THE DEED OF INCORPORATION OF STYROCHEM EUROPE (THE
- ------------------------------------------------------------------------
NETHERLANDS) B.V., HAVING ITS REGISTERED OFFICE AT AMSTERDAM, THE NETHERLANDS
- -----------------------------------------------------------------------------
On the twenty-sixth day of September nineteen hundred and ninety-seven, there
appeared before me, Michiel George van Ravesteyn, civil law notary, officiating
in Rotterdam, the Netherlands: Pieter Heyme Bolland, deputy civil law notary,
residing at (3703 AP) Zeist, the Netherlands, ersbergenlaan 22, born at
Leidschendam, the Netherlands, on September nine, nineteen hundred and sixty-
one, married, of Dutch nationality, passport number N16562834, acting for the
purposes hereof as written attorney of the company organised under the laws of
the State of Delaware, United States of America: SP Acquisition Co., having its
------------------
registered office at Wilmington, Delaware 19801, United States of America, 1209
Orange Street, and with offices at Wilmington, Delaware 19801, United States of
America, 1209 Orange Street, - hereinafter referred to as: "THE INCORPORATER" -.
The appearer stated that the incorporater by this deed incorporates a private
limited liability company with enactment of the following articles of
association.
NAME AND DOMICILE
- -----------------
ARTICLE 1
- ---------
1. The name of the company is: StyroChem Europe (the Netherlands) B.V.
2. The company has its registered office at Amsterdam, the Netherlands.
OBJECT
- ------
ARTICLE 2
- ---------
The objects of the company shall be:
a. exploit trade mark rights, licenses and other industrial and intellectual
property;
b. to incorporate, to finance, to participate in, to manage and to supervise
enterprises and companies;
c. to obtain, alienate, manage and exploit real estate, securities and other
assets, as well as enter into lease agreements and other agreements related
thereto,
d. to render advice and services to enterprises and companies;
e. to render guarantees and to bind the company, or assets of the company on
behalf of enterprises and companies with which the company forms a group;
and moreover to engage in any activity which may be connected with or
conducive to the foregoing in the broadest sense.
CAPITAL AND SHARES
- ------------------
ARTICLE 3
- ---------
1. The authorised capital amounts to two hundred thousand Dutch guilders (NLG
200.000,=), divided into two hundred (200) shares, numbered 1 up to and
including 200, each share having a par value of one thousand Dutch guilders
(NLG 1.000,=).
2. The shares shall be registered shares.
3. No share certificate shall be issued.
4. The issuance of shares, alienation of shares in the capital of the company
by the company, as well as the granting of rights to subscribe for these
shares, shall be effected by the board of management pursuant to a
resolution of the general meeting of shareholders, - hereinafter referred
to as: "THE GENERAL MEETING" -, which resolution shall lay down the date of
issue, the number of shares to be issued, as well as the other conditions,
under the provisor that the shares are not issued below par.
5. The general meeting may delegate its powers to pass resolutions referred to
in the preceding paragraph to another corporate body and may revoke such
delegation.
<PAGE>
6. On the issuance of shares, each shareholder shall have a pre-emptive right
pro rata to the aggregate amount of his shares, subject to legal
provisions. The pre-emptive right shall not be transferable.
7. The shares shall only be issued against payment in full.
8. The company may grant loans for the subscription or acquisition of shares
in the capital of the company, but only to the extent of its distributable
reserves.
USUFRUCT AND RIGHT OF PLEDGE ON SHARES
- --------------------------------------
ARTICLE 4
- ---------
1. A right of usufruct or pledge may be established on the shares of the
company.
2. Usufructuaries and pledgees have no voting rights.
3. Usufructuaries and pledgees do not have the rights granted by law to holders
of depositary receipts for shares issued with the co-operation of the
company.
DEPOSITARY RECEIPTS FOR SHARES
- ------------------------------
ARTICLE 5
- ---------
1. The company will not co-operate with the issue of depositary receipts for
shares.
2. No bearer share-certificates may be issued.
REGISTER OF SHAREHOLDERS
- ------------------------
ARTICLE 6
- ---------
1. The board of managing directors will keep a register which contains:
a. the names and addresses of shareholders;
b. the amount paid on each share;
c. the names and addresses of those who have a right of usufruct or
pledge;
d. each release of liability for payment due on shares.
2. The register must be regularly updated.
3. Each shareholder is obliged to ensure that his address is known to the
company.
4. If requested, the board of managing directors will, free of charge, provide
a shareholder, a usufructuary or pledgee with an extract from the register
with respect to his rights to a share.
5. The board of managing directors makes the register available for inspection
by shareholders at the company's offices.
SHARES IN JOINT-OWNERSHIP
- -------------------------
ARTICLE 7
- ---------
1. If shares are jointly owned, the persons entitled to these shares may only
exercise the rights attached to these shares if they are represented for
this purpose vis-a-vis the company by a person appointed by them in writing
or by the judge.
2. The name and address of this representative are entered in the register of
shareholders.
TRANSFER OF SHARES
- ------------------
ARTICLE 8
- ---------
1. Each transfer of shares needs the approval of the general meeting.
2. The application for approval must be directed to the company, stating the
number of shares involved and the name of the person to which the applicant
intents to transfer the share(s).
3. The approval is supposed to be granted:
a. if no decision is taken within thirty days;
b. if in case the approval is denied, no others are appointed who are
willing and able to buy all shares the application refers to against
payment in cash of the price at which the shares will be valueted by one
or more experts.
4. The transfer of the shares can only take place within three months after the
approval has been granted or is supposed to be granted.
5. The company can only be appointed as person willing to buy the shares with
the agreement of the applicant.
<PAGE>
6. If the applicant accepts the person(s) willing to buy the shares on offer,
the price of the shares will be determined by the company accountant if he
is an independent accountant and otherwise by an expert appointed by the
court (Kantonrechter) within whose district the company is statutarily
established, unless the parties agree otherwise.
7. The applicant making the offer is entitled to withdraw his offer within a
month after being informed of the person(s) willing to buy the shares and
the price.
8. The application for approval and all notifications referred to in this
article must be send by registered mail unless all shareholders agree
unanimously otherwise.
ACQUISITION OF OWN SHARES
- -------------------------
ARTICLE 9
- ---------
1. The company may only acquire shares in its own capital free of charge, or if
all of the following provisions are complied with:
a. the company's own equity minus the acquisition price is not smaller than
the paid-in and called up part of the share capital plus the reserves
which must be maintained by law;
b. the nominal amount of the shares in its capital to be acquired and those
already held by the company and its subsidiaries does not amount to more
than half of the subscribed capital;
c. authorisation for the acquisition has been granted by the general
meeting or by another company body appointed by it.
2. The amount of the company's own capital according to the most recently
adopted balance sheet, minus the acquisition price for the shares in the
company's capital, and minus the distributions out of the profits or
reserves to others which were owed by the company and its subsidiaries after
the date the balance was adopted, determines the validity of the
acquisition. If more than six months have passed after a close of the
financial year without annual accounts having been adopted, the acquisition
in accordance with paragraph 1 is not permitted.
3. The previous paragraphs do no apply to shares acquired by the company by
operation of law.
4. Acquisition by the company of not fully paid-up shares in her own capital is
void.
ISSUE AND TRANSFER OF SHARES
- ----------------------------
ARTICLE 10
- ----------
1. For issue of shares after incorporation or for the transfer of shares or for
the creation or transfer of a limited right thereon, a notarial deed is
required.
2. Unless the company herself is a party to the transfer, the rights attached
to the shares may not be exercised before the acknowledgement by the company
- whether of not of her own accord - of the transfer, or before the transfer
has been served to the company.
MANAGEMENT
- ----------
ARTICLE 11
- ----------
1. The company is managed by a board of management, consisting of one or more
managing directors A and managing directors B. The general meeting
determines the number of managing directors A and managing directors B.
2. If a vacancy arises in the board of managing directors, the board of
managing directors retains its powers.
3. In the event of the absence or failure to appear of all the managing
directors, or of the sole managing director, the general meeting will make
temporarily provisions.
APPOINTMENT, DISMISSAL AND SALARIES OF MANAGING DIRECTORS
- ---------------------------------------------------------
ARTICLE 12
- ----------
1. The managing directors are appointed by the general meeting.
2. The general meeting will determine the salaries and other conditions of
employment of every managing director.
3. Managing directors may be suspended or dismissed by the general meeting at
any time.
<PAGE>
4. The board of managing directors adopt a charter, setting out rules on the
decisionmaking process of the board of managing directors. The charter
requires the approval of the general meeting.
5. The board of managing directors may adopt an allocation of duties stating
for which duty each managing director has a prime responsibility. Such
allocation of duties requires the approval of the general meeting.
APPROVAL OF MANAGEMENT DECISIONS
- --------------------------------
ARTICLE 13
- ----------
1. The general meeting may submit resolutions of the board of managing
directors to its approval. Such resolutions are to be clearly defined and
notified in writing to the board of managing directors.
2. The approval referred to in the previous paragraph does not have to be given
for each individual case if it has been granted in a general sense.
3. The board of managing directors has to act in accordance with the directions
of the general meeting concerning the financial, economical, social and
personnel management.
REPRESENTATION OF THE COMPANY
- -----------------------------
ARTICLE 14
- ----------
1. The company is represented at law and otherwise by the board of management,
each managing director A individually and by each managing director B acting
jointly with one managing director A.
2. If the company has conflicting interests with one or more managing
directors, the company may still be represented by that managing director.
The general meeting is always empowered to appoint one or more persons for
this purpose.
3. Legal acts between the company and the holder of all the shares in the
capital of the company have to be laid down in writing if the company has
been represented by the shareholder. The obligation to lay down the legal
act in writing also applies if the company is represented by a person who is
entitled to a matrimonial community of goods of which all shares are a part.
4. For the application of paragraph 3, shares held by the company or its
subsidiaries are not taken into account. Paragraph 3 does not apply if the
legal acts, and their conditions as agreed on, are part of the customary
conduct of the business of the company.
GENERAL MEETING
- ---------------
ARTICLE 15
- ----------
1. The annual general meeting is held no more than six months after the end of
the financial year.
2. The agenda of that meeting will contain at least the following points:
a. the annual report;
b. adoption of the annual accounts;
c. determination of the distribution of profits.
3. Extraordinary general meetings are held whenever one of the managing
directors considers this desirable, or one or more shareholders,
collectively representing at least one tenth of the issued share capital,
request this in writing, detailing the subjects to be dealt with.
PLACE AND CALLING OF THE MEETING
- --------------------------------
ARTICLE 16
- ----------
1. The general meetings will be held in Rotterdam, Amsterdam, The Hague and
Haarlemmermeer (Schiphol Airport).
2. All the shareholders must be notified of a general meeting.
3. The general meeting is called by the board of managing directors by letters
sent to the addresses stated in the register of shareholders.
4. The letters contain the time and place of the general meeting, as well as
the subjects to be dealt with.
<PAGE>
5. The general meeting will be called no later than fifteen days before the day
of the general meeting.
CHAIRMANSHIP
- ------------
ARTICLE 17
- ----------
The general meeting chooses its own chairman.
MINUTES
- -------
ARTICLE 18
- ----------
1. Minutes of the business of the general meeting shall be drawn up, which are
signed by the chairman of the general meeting and by a person appointed by
him.
2. If an official record of the business of the general meeting is drawn up by
a notary, it suffices for the chairman of the general meeting to co-sign
this.
RIGHTS RELATED TO THE MEETING
- -----------------------------
ARTICLE 19
- ----------
1. Each shareholder is entitled to attend and speak at the general meeting.
2. Each shareholder may be represented at the general meeting by someone
authorized in writing.
DECISION MAKING
- ---------------
ARTICLE 20
- ----------
1. Each share confers the right to cast one vote.
2. All resolutions are adopted with an absolute majority of the votes cast,
unless these articles of association require a larger majority.
3. Blank votes and invalid votes are considered not to have been cast.
4. Voting on business matters occurs orally; voting on persons takes place in
writing by unsigned ballot.
5. In the case of a tie in votes on business matters, the proposal has been
rejected.
6. If no one has acquired an absolute majority in a vote on persons in the
first vote, a new, free vote is held. If again there is no absolute
majority, there is another vote between the two persons who obtained the
most votes between them in the second vote. If necessary, an interim vote is
held to decide between which two persons the new vote will be held. In the
case of a tie in votes after the new vote lots will be drawn by the chairman
of the general meeting to reach a decision.
7. All proposals may be accepted by acclamation if none of the persons entitled
to vote opposes this.
8. No vote may be cast in the general meeting for a share which is held by the
company or by a subsidiary company.
9. In determining to what extent the shareholders are voting, attending or
represented, or to what extent the share capital is made available or
represented, the shares for which the law states that no vote can be cast,
are not taken into account.
DECISION-MAKING WHEN THE ENTIRE SUBSCRIBED CAPITAL IS PRESENT
- -------------------------------------------------------------
ARTICLE 21
- ----------
The general meeting may adopt resolutions regarding all subjects which arise,
provided that there is an unanimous vote, if all the shareholders are present,
even if the provisions on the place and calling of the general meeting have not
been complied with.
DECISION-MAKING WITHOUT CALLING A GENERAL MEETING
- -------------------------------------------------
ARTICLE 22
- ----------
Shareholders may also adopt resolutions without calling a general meeting,
provided that all the shareholders have declared to be in favour of the proposal
in writing, by telegraph, telex or fax.
FINANCIAL YEAR
- --------------
ARTICLE 23
- ----------
The financial year coincides with the calendar year.
ANNUAL ACCOUNTS
- ---------------
<PAGE>
ARTICLE 24
- ----------
1. The board of managing directors will draw up the annual accounts, consisting
of the balance sheets and a profit and loss account, with an explanation
thereto, within five months of the end of the financial year, unless this
period has been extended by the general meeting for a maximum of six months
on grounds of special circumstances.
2. The annual accounts are signed by all managing directors; if any signature
is missing, the reason for this is stated.
DISCHARGE OF THE MANAGEMENT
- ---------------------------
ARTICLE 25
- ----------
The unconditional adoption of the annual accounts by the general meeting
discharges, subject to legal limitations, the managing directors for their
management for the financial year concerned.
DIVIDEND
- --------
ARTICLE 26
- ----------
1. The profit is entirely at the disposal of the general meeting.
2. The company may only make distributions to shareholders and others entitled
to profits, in as far as its equity is larger than the paid-up and called
part of the capital, plus the reserves which must be maintained by law.
3. Distribution of profits occurs after the annual accounts have been adopted,
evidencing that such is justified.
4. The company may only make interim distributions if the provisions of
paragraph 2 have been complied with.
5. No profit is paid on shares to the company.
6. The claim to dividend expires after five years.
AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND DISSOLUTION OF THE COMPANY
- ------------------------------------------------------------------------
ARTICLE 27
- ----------
1. A resolution to amend the articles of association, or to dissolve the
company, may only be adopted by the general meeting.
2. In calling a general meeting in which there shall be dealt with a proposal
to amend the articles of association, the text of the proposed amendment to
the articles of association shall be included in the notification. In
addition, this text will be made available at the company's offices for
inspection by shareholders from the day the meeting is called until after
the meeting.
LIQUIDATION
- -----------
ARTICLE 28
- ----------
1. Following the dissolution of the company, the liquidation will be effected
by the managing directors, unless the general meeting resolves otherwise.
2. The general meeting determines the remuneration of the liquidators.
3. During the liquidation, the provisions of the articles of association will
remain in force in as far as possible, such that the provisions on the board
of managing directors apply to the liquidators.
4. Anything remaining after payment to the creditors is paid to the
shareholders in proportion to the number of shares they own.
5. The books and records of the company will remain with the person appointed
for this purpose by the general meeting for the period required by the law.
CONCLUDING DECLARATIONS
- -----------------------
The appearer further declared:
- - That forty (40) shares of the authorised capital, numbered 1 up to and
including 40, each share having a par value of one thousand Dutch guilders
(NLG 1.000,=), have been placed with the incorporator, so that the
subscribed capital amounts to forty thousand Dutch guilders (NLG.
40.000,=).
<PAGE>
- - That for the benefit of the company the incorporator has agreed to pay up
his shares in full in money, which payment has been effected, which appears
from the statement to be attached to this deed as referred to in the law,
which payment is hereby accepted by the company.
- - That payment in foreign currency is permitted.
- - That the initial managing director A shall be: Michael Thomas Kennedy,
residing at Villanova, Pennsylvania 19085, the United States of America,
770 Parkes Run Lane, born at Philadelphia, Pennsylvania, the United States
of America, on the twenty-sixth day of June, nineteen hundred and fifty-
four, married, holder of an American passport with number: 093383249.
- - That the initial managing director B shall be: the closed company with
limited liability, organised under the laws of the Netherlands: Holland
Intertrust Corporation B.V., having its registered office at Amsterdam, the
Netherlands, and with offices at (1075 AD) Amsterdam, the Netherlands,
Koningslaan 34.
- - That the first office address of the company shall be: (1075 AD) Amsterdam,
the Netherlands, Koningslaan 34.
- - That the first financial year shall end on December thirty-one, nineteen
hundred and ninety-seven.
- - That the ministerial declaration of non-objection, as referred to in
article 2:175 of the Dutch Civil Code was granted on the twenty-fifth day
of September nineteen hundred and ninety-seven, under number B.V. 609.374
and placed on the draft of this deed attached to this original.
POWER OF ATTORNEY
- -----------------
The aforementioned power of attorney appear sufficiently, to me, civil law
notary, from one (1) private deed, fax copy of which power of attorney will be
attached to this deed.
The appearer is known to me, civil law notary, and the identity of the appearer
has been established by me, civil law notary, by means of the abovementioned
identity document.
Whereof an original deed
- ------------------------
Was executed in Rotterdam on the date stated above.
After the contents of this deed have been stated to the appearer and he declared
that he had noted the contents of the deed and did not desire the deed to be
read out full, after being read out in part, this deed was immediately signed by
appearer and me, civil law notary.
(signed: P.H. Bolland; M.G. van Ravesteyn).
ISSUED FOR TRUE COPY
- --------------------
<PAGE>
AKTE VAN OPRICHTING VAN DE BESLOTEN VENNOOTSCHAP MET BEPERKTE AANSPRAKELIJKHEID:
- --------------------------------------------------------------------------------
STYROCHEM EUROPE (THE NETHERLANDS) B.V., STATUTAIR GEVESTIGD TE AMSTERDAM,
- --------------------------------------------------------------------------
NEDERLAND
- ---------
Op zes en twintig september negentienhonderd zeven en negentig is voor mij,
Michiel George van Ravesteyn, notaris te Rotterdam, Nederland verschenen:
Pieter Heyme Bolland, candidaat-notaris, wonende te (3703 AP) Zeist,
Kersbergenlaan 22, geboren te Leidschendam op negen september negentienhonderd
een en zestig, gehuwd, van Nederlandse nationaliteit, geidentificeerd aan de
hand van paspoort nummer N16562834, te dezen handelend als schriftelijk
gevolmachtigde van de naar het recht van Delaware, Verenigde Staten van Amerika,
opgerichte vennootschap: SP Acquisition Co., statutair gevestigd te Wilmington,
------------------
Delaware 19801, Verenigde Staten van Amerika, 1209 Orange Street, en
kantoorhoudende te Wilmington, Delaware 19801, Verenigde Staten van Amerika,
1209 Orange Street, - hierna te noemen "DE OPRICHTER"- .
De comparant, handelend als gemeld, verklaarde dat de oprichter bij deze opricht
een besloten vennootschap met beperkte aansprakelijkheid met de volgende
statuten:
NAAM EN ZETEL
- -------------
ARTIKEL 1
- ---------
1. De vennootschap draagt de naam: StyroChem Europe (the Netherlands) B.V.
2. Zij is gevestigd te Amsterdam, Nederland
DOEL
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ARTIKEL 2
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De vennootschap heeft ten doel:
a. het exploiteren van patenten, merkrechten, vergunningen en andere
industriele en intellectuele eigendoms-rechten;
b. het oprichten van, het financieren van, het deelnemen in, het besturen van
en het toezicht houden op ondernemingen en vennootschappen;
c. het verkrijgen, vervreemden, beheren en exploiteren van registergoederen,
effecten en andere vermogenswaarden, alsmede het aangaan van lease
overeenkomsten en andere overeenkomsten te dien aangaande,
d. het verlenen van adviezen en diensten aan ondernemingen en vennootschappen;
e. het verstrekken van garanties en het verbinden van de vennootschap, of
activa van de vennootschap, ten behoeve van ondernemingen en
vennootschappen waarmee de vennootschap in een groep is verbonden;
en voorts het verrichten van al hetgeen in de meest uitgebreide zin met het
vorenstaande verband houdt of daartoe bevorderlijk kan zijn.
KAPITAAL EN AANDELEN
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ARTIKEL 3
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1. Het maatschappelijk kapitaal van de vennootschap bedraagt tweehonderd
duizend gulden (NLG 200.000,=), verdeeld in twee honderd (200) aandelen
genummerd 1 tot en met 200, elk aandeel groot nominaal een duizend gulden
(NLG 1.000,=).
2. De aandelen luiden op naam.
3. Voor de aandelen worden geen aandeelbewijzen uitgegeven.
4. Uitgifte van aandelen, vervreemding van aandelen in het kapitaal van de
vennootschap door de vennootschap, alsmede het verlenen van rechten tot het
nemen van die aandelen geschiedt
<PAGE>
door de directie krachtens besluit van de algemene vergadering van
aandeelhouders, - hierna te noemen: "ALGEMENE VERGADERING" -,welk besluit
het tijdstip van uitgifte, het aantal uit te geven aandelen, alsmede de
verdere voorwaarden vaststelt, met dien verstande dat de uitgifte niet
beneden pari mag geschieden.
5. De algemene vergadering kan haar bevoegdheid tot het nemen van de in het
vorige lid bedoelde besluiten aan een ander vennootschapsorgaan overdragen
en kan deze overdracht herroepen.
6. Bij de uitgifte van aandelen heeft iedere aandeelhouder een recht van
voorkeur naar evenredigheid van het gezamenlijk bedrag van zijn aandelen,
behoudens het bepaalde in de wet. Het recht van voorkeur is niet
overdraagbaar.
7. Uitgifte kan alleen tegen volstorting geschieden.
8. Leningen met het oog op het nemen of verkrijgen van aandelen in haar
kapitaal, of certificaten daarvan, mag de vennootschap slechts verstrekken
tot ten hoogste het bedrag van de uitkeerbare reserves.
VRUCHTGEBRUIK EN PANDRECHT OP AANDELEN
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ARTIKEL 4
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1. Op aandelen van de vennootschap kan vruchtgebruik en pandrecht worden
gevestigd.
2. Aan de vruchtgebruiker en pandhouder kan geen stemrecht toekomen.
3. De vruchtgebruiker en pandhouder kunnen niet de rechten hebben die door de
wet zijn toegekend aan de houders van met medewerking van de vennootschap
uitgegeven certificaten.
CERTIFICERING VAN AANDELEN
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ARTIKEL 5
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1. De vennootschap kan niet meewerken aan de uitgifte van certificaten op naam
van aandelen.
2. Van de aandelen mogen geen certificaten aan toonder worden uitgegeven.
REGISTER VAN AANDEELHOUDERS
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ARTIKEL 6
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1. De directie houdt een register waarin zijn vermeld:
a. de namen en adressen van de aandeelhouders;
b. het op elk aandeel gestorte bedrag;
c. de namen en adressen van hen die een recht van vruchtgebruik of pand
op aandelen hebben;
d. elk verleend ontslag van aansprakelijkheid voor nog niet gedane
stortingen.
2. Het register moet regelmatig worden bijgehouden.
3. Iedere aandeelhouder is verplicht zorg te dragen dat zijn adres bij de
vennootschap bekend is.
4. De directie verstrekt desgevraagd aan een aandeelhouder, een
vruchtgebruiker en een pandhouder om niet een uittreksel uit het register
met betrekking tot zijn recht op een aandeel.
5. De directie legt het register ten kantore van de vennootschap ter inzage
van de aandeelhouders.
AANDELEN IN ONVERDEELDHEID
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ARTIKEL 7
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1. Indien aandelen tot een gemeenschap behoren, kunnen de tot die gemeenschap
gerechtigde personen de uit deze aandelen voortvloeiende rechten slechts
uitoefenen, indien zij zich daarbij tegenover de vennootschap door een door
hen schriftelijk aangewezen persoon dan wel door de rechter aangewezen
persoon laten vertegenwoordigen.
2. De naam en het adres van deze vertegenwoordiger worden aangetekend in het
register van aandeelhouders.
OVERDRACHT VAN AANDELEN
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ARTIKEL 8
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1. Elke overdracht van aandelen behoeft de goedkeuring van de algemene
vergadering.
<PAGE>
2. De goedkeuring wordt aan de vennootschap verzocht onder opgave van het
aantal aandelen, welke de aandeelhouder - hierna te noemen: "DE VERZOEKER"-
,wenst over te dragen en van de naam van degene(n), aan wie hij het aandeel
of de aandelen wil overdragen.
3. De goedkeuring wordt geacht te zijn verleend:
a. indien binnen dertig dagen geen beslissing ter kennis van de verzoeker
is gebracht;
b. indien de algemene vergadering niet gelijktijdig met de weigering van
de goedkeuring aan de verzoeker opgave doet van een of meer
gegadigden, die bereid zijn al de aandelen waarop het verzoek
betrekking heeft, voor de waarde waarop zij door een of meer
onafhankelijke deskundigen worden getaxeerd, tegen contante betaling
te kopen.
4. De overdracht kan slechts plaats vinden binnen drie maanden nadat de
goedkeuring is verleend of geacht wordt te zijn verleend.
5. De vennootschap kan alleen als gegadigde worden aangewezen met instemming
van de verzoeker.
6. De prijs van de over te dragen aandelen wordt, tenzij partijen anders
overeenkomen, indien de verzoeker de gegadigde(n) aanvaardt, vastgesteld
door de accountant van de vennootschap indien deze een onafhankelijke
accountant is en anders door een deskundige aan te wijzen door de
Kantonrechter binnen wiens kanton de vennootschap statutair is gevestigd.
7. De verzoeker is bevoegd zich terug te trekken, mits dit geschiedt binnen
een maand nadat hem de prijs en de gegadigde(n) zijn medegedeeld.
8. Het verzoek tot goedkeuring en alle kennisgevingen, te doen ingevolge het
in dit artikel bepaalde, dienen bij aangetekende brief te geschieden,
tenzij door alle aandeelhouders eenparig anders wordt overeengekomen.
VERKRIJGING VAN EIGEN AANDELEN
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ARTIKEL 9
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1. De vennootschap mag aandelen in het eigen kapitaal slechts verkrijgen om
niet of indien voldaan is aan alle hierna volgende bepalingen:
a. het eigen vermogen, verminderd met de verkrijgingsprijs, is niet
kleiner dan het gestorte en opgevraagde deel van het kapitaal
vermeerderd met de reserves die krachtens de wet moeten worden
aangehouden;
b. het nominale bedrag van de te verkrijgen en de reeds door de
vennootschap en haar dochtermaatschappijen tezamen gehouden aandelen
in haar kapitaal bedraagt niet meer dan de helft van het geplaatste
kapitaal;
c. door de algemene vergadering of door een door deze aangewezen ander
vennootschapsorgaan is machtiging tot de verkrijging verleend.
2. Voor de geldigheid van de verkrijging is bepalend de grootte van het eigen
vermogen volgens de laatst vastgestelde balans, verminderd met de
verkrijgingsprijs voor aandelen in het kapitaal van de vennootschap en
verminderd met de uitkeringen uit winst of reserves aan anderen die zij en
haar dochtermaatschappijen na de balansdatum verschuldigd werden. Is een
boekjaar meer dan zes maanden verstreken zonder dat de jaarrekening is
vastgesteld, dan is de verkrijging overeenkomstig lid 1 niet toegestaan.
3. De vorige leden gelden niet voor aandelen die de vennootschap onder
algemene titel verkrijgt.
4. Verkrijging door de vennootschap van niet volgestorte aandelen in haar
eigen kapitaal is nietig.
UITGIFTE EN LEVERING VAN AANDELEN
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ARTIKEL 10
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1. Voor uitgifte na de oprichting en voor levering van een aandeel of voor
levering van een beperkt recht daarop, is vereist een daartoe bestemde
notariele akte van levering.
<PAGE>
2. Tenzij de vennootschap zelf bij de levering partij is, kunnen de aan de
aandelen verbonden rechten eerst worden uitgeoefend nadat de vennootschap
de levering, al dan niet eigener beweging, heeft erkend of de levering aan
de vennootschap is betekend.
BESTUUR
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ARTIKEL 11
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1. De vennootschap wordt bestuurd door een directie, bestaande uit een of meer
directeuren A en directeuren B. De algemene vergadering bepaalt het aantal
directeuren A en directeuren B.
2. In geval van een vacature in de directie blijft de directie bevoegd.
3. In geval van ontstentenis of belet van alle directeuren of van de enige
directeur, wordt in het bestuur tijdelijk voorzien door de algemene
vergadering.
BENOEMING, ONTSLAG EN BEZOLDIGING VAN DIRECTEUREN
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ARTIKEL 12
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1. Directeuren worden door de algemene vergadering benoemd.
2. De algemene vergadering stelt de bezoldiging en de verdere
arbeidsvoorwaarden van iedere directeur vast.
3. Directeuren kunnen door de algemene vergadering te allen tijde worden
geschorst of ontslagen.
4. De directie kan een reglement vaststellen, waarbij regels worden gegeven
omtrent de besluitvorming van de directie. Het reglement behoeft de
goedkeuring van de algemene vergadering.
5. De directie kan bij een taakverdeling bepalen met welke taak iedere
directeur meer in het bijzonder zal zijn belast. De taakverdeling behoeft
de goedkeuring van de algemene vergadering.
GOEDKEURING BESTUURSBESLUITEN
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ARTIKEL 13
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1. De algemene vergadering is bevoegd besluiten van de directie aan haar
goedkeuring te onderwerpen. Die besluiten dienen duidelijk omschreven te
worden en schriftelijk aan de directie te worden meegedeeld.
2. De in het vorige lid bedoelde goedkeuring behoeft niet voor ieder bijzonder
geval te worden verleend indien deze in algemene vorm is gegeven.
3. De directie dient zich te gedragen naar de aanwijzingen van de algemene
vergadering betreffende de algemene lijnen van het te voeren financiele,
economische, sociale en het personeelsbeleid.
VERTEGENWOORDIGING VAN DE VENNOOTSCHAP
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ARTIKEL 14
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1. De vennootschap wordt in en buiten rechte vertegenwoordigd door de
directie, iedere directeur A zelfstandig en door iedere directeur B
handelend gezamenlijk met een directeur A.
2. Indien de vennootschap een tegenstrijdig belang heeft met een of meer
directeuren, kan de vennootschap niettemin vertegenwoordigd worden door die
directeur. De algemene vergadering is steeds bevoegd een of meer andere
personen daartoe aan te wijzen.
3. Rechtshandelingen van de vennootschap jegens de houder van alle aandelen in
het kapitaal van de vennootschap, waarbij de vennootschap wordt
vertegenwoordigd door deze aandeelhouder, worden schriftelijk vastgelegd.
De verplichting tot schriftelijke vastlegging geldt eveneens indien een
deelgenoot in een huwelijksgemeenschap waartoe alle aandelen in het
kapitaal van de vennootschap behoren de vennootschap vertegenwoordigt.
4. Voor de toepassing van het in lid 3 bepaalde worden aandelen gehouden door
de vennootschap of haar dochtermaatschappijen niet meegeteld. Het in lid 3
bepaalde is niet van toepassing op rechtshandelingen die onder de bedongen
voorwaarden tot de gewone bedrijfsuitoefening van de vennootschap behoren.
<PAGE>
ALGEMENE VERGADERING
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ARTIKEL 15
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1. De jaarlijkse algemene vergadering wordt uiterlijk in de zesde maand na
afloop van het boekjaar gehouden.
2. De agenda van die vergadering vermeldt ten minste de volgende punten:
a. het jaarverslag;
b. vaststelling van de jaarrekening;
c. vaststelling van de winstverdeling.
3. Buitengewone algemene vergaderingen worden gehouden zo dikwijls een van de
directeuren zulks wenselijk acht of een of meer aandeelhouders tezamen ten
minste een/tiende gedeelte van het geplaatste kapitaal vertegenwoordigende,
zulks schriftelijk en onder nauwkeurige opgave van de te behandelen
onderwerpen verzoeken.
PLAATS EN OPROEPING
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ARTIKEL 16
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1. De algemene vergaderingen worden gehouden te Rotterdam, Amsterdam, Den Haag
of Haarlemmermeer (Luchthaven Schiphol).
2. Tot een algemene vergadering dienen alle aandeelhouders te worden
opgeroepen.
3. De oproeping geschiedt door de directie door middel van brieven gericht aan
de adressen vermeld in het register van aandeelhouders.
4. De brieven vermelden, behalve plaats en tijdstip van de vergadering, de te
behandelen onderwerpen.
5. De oproeping geschiedt niet later dan op de vijftiende dag voor die der
algemene vergadering.
VOORZITTERSCHAP
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ARTIKEL 17
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De algemene vergadering voorziet zelf in haar leiding.
NOTULEN
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ARTIKEL 18
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1. Van het verhandelde in een algemene vergadering worden notulen opgemaakt,
welke door de voorzitter van de algemene vergadering en een door hem aan te
wijzen persoon worden ondertekend.
2. Indien van het verhandelde een notarieel proces-verbaal wordt opgemaakt, is
de mede-ondertekening daarvan door de voorzitter van de algemene
vergadering voldoende.
VERGADERRECHT
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ARTIKEL 19
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1. Iedere aandeelhouder is bevoegd een algemene vergadering bij te wonen en
daarin het woord te voeren.
2. Iedere aandeelhouder kan zich door een schriftelijk gevolmachtigde ter
algemene vergadering doen vertegen-woordigen.
BESLUITVORMING
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ARTIKEL 20
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1. Ieder aandeel geeft recht op het uitbrengen van een stem.
2. Alle besluiten worden genomen bij volstrekte meerderheid van de
uitgebrachte stemmen, tenzij in deze statuten een grotere meerderheid is
voorgeschreven.
3. Blanco stemmen en stemmen van onwaarde worden geacht niet te zijn
uitgebracht.
4. Over zaken wordt mondeling, over personen schriftelijk bij ongetekende
briefjes gestemd.
5. Bij staking van stemmen over zaken is het voorstel verworpen.
6. Indien bij een stemming over personen niemand bij de eerste stemming de
volstrekte meerderheid heeft verkregen, wordt een nieuwe vrije stemming
gehouden. Wordt dan wederom
<PAGE>
geen volstrekte meerderheid verkregen, dan wordt herstemd tussen de twee
personen die bij de tweede stemming de meeste stemmen op zich verenigd
hebben. Zo nodig wordt door een tussenstemming uitgemaakt tussen welke twee
personen herstemming zal plaats hebben. Bij staking van stemmen na
herstemming beslist het door de voorzitter ter algemene vergadering
getrokken lot.
7. Alle voorstellen kunnen bij acclamatie worden aangenomen, indien geen van
de stemgerechtigden zich daartegen verzet.
8. Voor een aandeel dat toebehoort aan de vennootschap of aan een
dochtermaatschappij daarvan kan in de algemene vergadering geen stem worden
uitgebracht.
9. Bij de vaststelling in hoeverre de aandeelhouders stemmen of aanwezig of
vertegenwoordigd zijn, dan wel in hoeverre het aandelenkapitaal verschaft
wordt of vertegenwoordigd is, wordt geen rekening gehouden met aandelen
waarvan de wet bepaalt dat daarvoor geen stem kan worden uitgebracht.
BESLUITVORMING BIJ AANWEZIGHEID VAN HET GEHELE GEPLAATSTE KAPITAAL
- ------------------------------------------------------------------
ARTIKEL 21
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De algemene vergadering kan, mits met algemene stemmen, besluiten nemen omtrent
alle aan de orde komende onderwerpen indien alle aandeelhouders aanwezig zijn,
ook al is het bepaalde betreffende plaats en oproeping van de algemene
vergadering niet in acht genomen.
BESLUITVORMING BUITEN ALGEMENE VERGADERING
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ARTIKEL 22
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Aandeelhouders kunnen ook buiten algemene vergadering besluiten nemen, mits alle
aandeelhouders zich schriftelijk, telegrafisch of per telex/telefax voor het
voorstel hebben verklaard.
BOEKJAAR
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ARTIKEL 23
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Het boekjaar is gelijk aan het kalenderjaar.
JAARREKENING
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ARTIKEL 24
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1. Binnen vijf maanden na afloop van het boekjaar behoudens verlenging van
deze termijn met ten hoogste zes maanden door de algemene vergadering op
grond van bijzondere omstandigheden maakt de directie een jaarrekening op
bestaande uit de balans en een winst- en verliesrekening met toelichting
daarop.
2. De jaarrekening wordt ondertekend door alle directeuren; ontbreekt een
handtekening dan wordt de reden daarvan vermeld.
DECHARGE BESTUUR
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ARTIKEL 25
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De vaststelling zonder enig voorbehoud van de jaarrekening door de algemene
vergadering strekt tot decharge van de directeuren voor hun bestuur gedurende
het betrokken boekjaar, alles behoudens de wettelijke beperkingen.
DIVIDEND
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ARTIKEL 26
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1. De winst staat geheel ter beschikking van de algemene vergadering.
2. De vennootschap kan aan de aandeelhouders en andere gerechtigden tot de
voor uitkering vatbare winst slechts uitkeringen doen voor zover het eigen
vermogen groter is dan het gestorte en opgevraagde deel van het kapitaal
vermeerderd met de reserves die krachtens de wet moeten worden aangehouden.
3. Uitkering van winst geschiedt na vaststelling van de jaarrekening waaruit
blijkt dat zij geoorloofd is.
<PAGE>
4. De vennootschap mag tussentijds slechts uitkeringen doen indien aan het
vereiste van lid 2 is voldaan.
5. Op aandelen wordt geen winst ten behoeve van de vennootschap uitgekeerd.
6. De vordering tot betaling van dividend vervalt na vijf jaar.
STATUTENWIJZIGING EN ONTBINDING
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ARTIKEL 27
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1. Een besluit tot wijziging van de statuten of tot ontbinding van de
vennootschap kan slechts door de algemene vergadering worden genomen.
2. Bij de oproeping van een algemene vergadering waarin een voorstel tot
statutenwijziging aan de orde komt wordt de tekst van de voorgestelde
statutenwijziging vermeld. De tekst wordt tevens van de dag van de
oproeping af tot na de vergadering ten kantore van de vennootschap voor de
aandeelhouders ter inzage gelegd.
VEREFFENING
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ARTIKEL 28
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1. Na ontbinding van de vennootschap geschiedt de vereffening door de
directeuren, tenzij de algemene vergadering anders besluit.
2. De algemene vergadering stelt de beloning voor de vereffenaars vast.
3. Gedurende de vereffening blijven de bepalingen van de statuten zoveel
mogelijk van kracht, met dien verstande dat het ten aanzien van de directie
bepaalde voor de vereffenaars geldt.
4. Hetgeen na de voldoening van de schuldeisers overblijft wordt uitgekeerd
aan de aandeelhouders in verhouding tot hun aandelenbezit.
5. De boeken en bescheiden van de vennootschap zullen gedurende de bij de wet
voorgeschreven periode blijven berusten onder de persoon, daartoe door de
algemene vergadering aan te wijzen.
TENSLOTTE VERKLAARDE DE COMPARANT:
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- - Van het maatschappelijk kapitaal zijn bij de oprichter geplaatst veertig
(40) aandelen, genummerd 1 tot en met 40, elk aandeel groot nominaal een
duizend gulden (NLG 1.000,=); het geplaatste kapitaal bedraagt derhalve
veertig duizend gulden (NLG 40.000,=).
- - Namens de vennootschap is met de oprichter overeengekomen dat de oprichter
zijn aandelen zal volstorten in geld, welke volstorting heeft
plaatsgevonden, hetgeen blijkt uit de aan deze akte te hechten verklaring
als bedoeld in de wet, welke storting bij deze door de vennootschap wordt
aanvaard.
- - Storting op de aandelen in vreemd geld is toegestaan.
- - Voor de eerste maal wordt tot directeur A benoemd: Michael Thomas Kennedy,
wonende te Villanova, Pennsylvania 19085, de Verenigde Staten van Amerika,
770 Parkes Run Lane, geboren te Philadelphia, Pennsylvania, de Verenigde
Staten van Amerika, op zes en twintig juni negentien honderd vier en
vijftig, gehuwd, houder van een Amerikaans paspoort nummer: 093383249.
- - Voor de eerste maal wordt tot directeur B benoemd: de besloten
vennootschap met beperkte aansprakelijkheid, opgericht naar het recht van
Nederland: Holland Intertrust Corporation B.V., statutair gevestigd te
Amsterdam, Nederland, en kantoor houdende te (1075 AD) Amsterdam,
Nederland, Koningslaan 34.
- - Het eerste adres van de vennootschap is: (1075 AD) Amsterdam, Nederland,
Koningslaan 34.
- - Het eerste boekjaar zal lopen tot en met een en dertig december
negentienhonderd zeven en negentig.
- - De Ministeriele Verklaring van Geen Bezwaar als bedoeld in artikel 2:175
van het Burgerlijk Wetboek is verleend op vijf en twintig september
negentienhonderd zeven en negentig onder nummer B.V. 609.374 en gesteld op
het aan deze minute gehechte ontwerp van deze akte.
VOLMACHT
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<PAGE>
Van gemelde volmacht op de comparant is mij, notaris, genoegzaam gebleken uit
een (1) onderhandse akte van volmacht, welke volmacht aan deze minuut is
gehecht.
De comparant is mij, notaris, bekend en de identiteit van de bij deze akte
betrokken comparant is door mij, notaris, aan de hand van het hiervoor gemelde
en daartoe bestemde document vastgesteld.
WAARVAN AKTE IN MINUUT
- ----------------------
Verleden te Rotterdam, ten dage in het hoofd dezer vermeld.
Na de zakelijke opgave van de inhoud van deze akte aan de comparant en zijn
verklaring van de inhoud daarvan te hebben kennis genomen en op volledige
voorlezing van de akte geen prijs te stellen, is deze akte onmiddellijk na de
beperkte voorlezing door de comparant en mij, notaris, ondertekend.
(getekend:) P.H. Bolland, M.G. van Ravesteyn
UITGEGEVEN VOOR AFSCHRIFT
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<PAGE>
EXHIBIT 3.19
STYROCHEM FINLAND OY - ARTICLES OF ASSOCIATION
1 (S) NAME AND SEAT OF THE COMPANY
The name of the company shall be Styrochem Finland Oy and its seat shall
be in Helsinki.
2 (S) FIELD OF ACTIVITY
The field of activity of the company shall comprise production and sale
of polystyrene and polystyrene products as well as development related
thereto. The field of activity also comprise control, purchase, leasing
and sell of production machines and equipment, real property and
industrial property rights relating to the operations as well as other
activities related thereto.
The field of activities also includes purchase and sale of securities as
well as granting of loans and guarantees relating to operations of
companies of the same group and equivalent foreign companies.
3 (S) MINIMUM AND MAXIMUM SHARE CAPITAL
The amount of the minimum share capital of the company is fifteen hundred
(15.000) markkas and the amount of maximum share capital is sixty
thousand (60.000) markkas, in which limits the share capital may be
increased or decreased without having obligation to revise the Articles
of Association.
4 (S) NOMINAL VALUE OF THE SHARES
The nominal value of each share is one hundred twenty five (125) markkas.
5 (S) BOARD OF DIRECTORS
The board of directors comprises at least one (1) and not more than eight
(8) permanent members. When needed, at least one (1) and not more than
four (4) alternate members may be chosen to the board of directors. If
less than three (3) permanent members are chosen to the board of
directors then at least one (1) and not more than three (3) alternate
members shall be chosen.
The term for which each member of the board is elected shall end at the
adjournment of the annual general meeting next following the election of
the member.
6 (S) RIGHT TO SIGN ON BEHALF OF THE COMPANY
<PAGE>
The name of the company shall be signed by the chairman of the board of
directors alone or by persons to whom the board of directors has given
the right to sign, or per procuram any person or persons to whom the
board of directors has given a written power of attorney.
7 (S) AUDITORS
The company shall have as its external auditors an auditing entity or one
(1) auditor and a deputy auditor. Auditors are elected for the time
being.
8 (S) ACCOUNTING PERIOD
The accounting period of the company is from 1 January until 31 December.
The first accounting period ends 31 December 1997.
9 (S) INVITATION TO THE SHAREHOLDERS' MEETING
Invitation to a shareholders meeting must be delivered to each
shareholder not earlier than four (4) weeks and not later than eight (8)
days prior to the meeting in a written form and a way which can be
proved.
10 (S) ANNUAL SHAREHOLDERS MEETING
Annual shareholders' meeting shall be held within six (6) months from the
end of the accounting period on the date determined by the board of
directors.
In such meeting:
there shall be presented:
--------------------------
1 the financial statements of the most recently ended financial year,
including the profit and loss statement, balance sheet and annual
report,
2 report of the auditors,
there shall be decided:
-----------------------
3 whether the profit and loss statement and the balance sheet shall be
confirmed,
4 about disposition of the profit or loss confirmed in the balance
sheet,
5 whether to grant a release from liability for the members of the
board and, if the company has a managing director, for the managing
director
6 fees for the members of the board and basis of the compensation of
travelling costs
7 other matters which pursuant to law or articles of association must
be dealt with by the annual shareholders' meeting,
8 the number of the members of the board
there shall be elected:
-----------------------
9 the members of the board of directors and
<PAGE>
10 as needed, an auditing entity, or an auditor and his/her deputy,
<PAGE>
STYROCHEM FINLAND OY - NIMISEN OSAKEYHTION YHTIOJARJESTYS
1 (S) YHTION TOIMINIMI JA KOTIPAIKKA
Yhtion toiminimi on Styrochem Finland Oy ja kotipaikka Helsinki.
2 (S) YHTION TOIMIALA
Yhtion toimialana on polystyreenin ja siita tehtyjen tuotteiden valmistus ja
myynti, siihen liittyva kehitystyo, toimintaan liittyvien tuotantokoneiden ja
laitteiden, kiinteistojen seka teollisoikeuksien hallinnointi, osto, vuokraus ja
myynti seka niihin liittyva toiminta. Yhtio voi harjoittaa arvopapereiden ostoa
ja myyntia, takausten ja lainojen antoa konserniyhtioiden ja vastaavien
ulkomaisten yhtioiden liiketoimintaan liittyen.
3 (S) VAHIMMAIS - JA ENIMMAISPAAOMA
Yhtion vahimmaispaaoma on viisitoistatuhatta (15.000) markkaa ja enimmaispaaoma
kuusikymmentatuhatta (60.000) markkaa, joissa rajoissa osakepaaomaa voidaan
korottaa tai alentaa yhtiojarjestysta muuttamatta.
4 (S) OSAKKEIDEN NIMELLISARVO
Osakkeiden nimellisarvo on satakaksikymmentaviisi (125) markkaa.
5 (S) HALLITUS
Yhtiolla on hallitus, johon kuuluu yhdesta (1) kahdeksaan (8) varsinaista
jasenta. Varajasenia hallitukseen voidaan tarvittaessa valita yhdesta (1)
neljaan (4). Mikali hallitukseen valitaan vahemman kuin kolme varsinaista
jasenta on valittava yhdesta (1) kolmeen (3) varajasenta.
Hallituksen jasenten toimikausi paattyy vaalia ensiksi seuraavan varsinaisen
yhtiokokouksen paattyessa.
6 (S) TOIMINIMEN KIRJOITUS
Yhtion toiminimen kirjoittaa hallituksen puheenjohtaja Yksin tai henkilot,
joille hallitus antaa toiminimen Kirjoitusoikeuden tai per procuram henkilo tai
henkilot, Joille yhtion hallitus on antanut kirjallisen valtuutuksen.
7 (S) TILINTARKASTAJAT
<PAGE>
Yhtiossa on varsinaisena tilintarkastajana tilintarkastusyhteiso tai yksi
varsinainen tilintarkastaja ja hanella yksi varamies.
Tilintarkastaja valitaan tehtavaansa toistaiseksi.
8 (S) TILIKAUSI
Yhtion tilikausi on 01.01. 31.12. kuitenkin siten, etta yhtion ensimmainen
tilikausi paattyy 31.12.1997.
9 (S) KOKOUSKUTSU
Kutsu yhtiokokoukseen on toimitettava osakkeenomistajille todistettavasti
kirjallisesti aikaisintaan nelja viikkoa ja viimeistaan kahdeksan paivaa ennen
kokousta.
10 (S) VARSINAINEN YHTIOKOKOUS
Varsinainen yhtiokokous on pidettava vuosittain hallituksen maaraamana paivana
kuuden kuukauden kuluessa tilikauden paattymisesta.
Kokouksessa on:
Esitettava:
- -----------
1 tilinpaatos, joka kasittaa tuloslaskelman, taseen ja
toimintakertomuksen;
2 tilintarkastuskertomus;
paaettava:
- ----------
3 tuloslaskelman ja taseen vahvistamisesta;
4 toimenpiteista, joihin vahvistetun taseen mukainen voitto tai tappio antaa
aihetta;
5 vastuuvapaudesta hallituksen jasenille ja toimitusjohtajalle;
6 hallituksen jasenen palkkiosta ja matkakustannusten korvausperusteista;
7 muista asioista, jotka lain tai yhtiojarjestyksen mukaan kuuluvat
varsinaiselle yhtiokokoukselle.
8 hallituksen jasenten lukumaarasta;
valittava:
- ----------
9 hallituksen jasenet seka
10 tarvittaessa tilintarkastusyhteiso tai tilintarkastaja ja hanelle varamies.
<PAGE>
EXHIBIT 4.2
- --------------------------------------------------------------------------------
RADNOR HOLDINGS CORPORATION
as Issuer,
WINCUP HOLDINGS, INC.
WINCUP HOLDINGS, L.P.
SP ACQUISITION CO.
STYROCHEM INTERNATIONAL, INC.
STYROCHEM INTERNATIONAL, LTD.
RADNOR MANAGEMENT, INC.
as Guarantors
and
FIRST UNION NATIONAL BANK
as Trustee
___________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of December 17, 1996
(Supplementing a Trust Indenture Dated as of December 5, 1996)
___________________
$100,000,000
10% Senior Notes due 2003
- --------------------------------------------------------------------------------
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE dated as of the 17th day of December
1996, (the "First Supplemental Indenture") among RADNOR HOLDINGS CORPORATION, a
Delaware corporation (the "Company"), WINCUP HOLDINGS, INC., a Delaware
corporation, WINCUP HOLDINGS, L.P., a Delaware limited partnership, SP
ACQUISITION CO., a Delaware corporation, STYROCHEM INTERNATIONAL, INC., a Texas
corporation, STYROCHEM INTERNATIONAL, LTD., a Quebec corporation (collectively,
the "Guarantors"), RADNOR MANAGEMENT, INC., a Delaware corporation ("Radnor
Management") and FIRST UNION NATIONAL BANK, as trustee (the "Trustee").
RECITALS:
The Company, the Guarantors and the Trustee are parties to a certain
Indenture dated December 5, 1996 (the "Indenture") relating to the creation by
the Company of an issue of $100,000,000 of its 10% Senior Notes, due 2003 (the
"Securities");
Each Guarantor has issued a guarantee of the Securities (collectively,
the "Guarantees")pursuant to which the Guarantors have guaranteed, in accordance
with Article Thirteen of the Indenture, all Indenture Obligations (as such term
is defined in the Indenture); and
The Company, the Guarantors and the Trustee now desire to enter into
this First Supplemental Indenture pursuant to Section 901(vi) of the Indenture,
without the consent of the Holders, in order to add Radnor Management, a
wholly-owned subsidiary of Radnor Holdings Corporation, as a Guarantor and
Restricted Subsidiary under the Indenture;
Capitalized terms used herein without definition shall have the
meanings given such terms in the Indenture.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and for other good and
valuable consideration, it is covenanted and agreed, for the benefit of each
other and for the equal and proportionate benefit of the Holders of the
Securities issued under the Indenture, as follows:
ARTICLE ONE
JOINDER AND GUARANTEE OF RADNOR MANAGEMENT
Section 101. Radnor Management hereby absolutely, unconditionally and
irrevocably guarantees, on a joint and several basis with the Guarantors, to the
Trustee and the
-2-
<PAGE>
Holders, as if Radnor Management was the principal debtor, the punctual payment
and performance when due of all Indenture Obligations (which for purposes of
this Guarantee shall also be deemed to include all commissions, fees, charges,
costs and expenses (including reasonable legal fees and disbursements of one
counsel) arising out of or incurred by the Trustee or the Holders in connection
with the enforcement of this Guarantee). This Guarantee shall rank pari passu
with any Senior Indebtedness of Radnor Management and shall be subject in all
respects to, and governed by all of the terms and provisions applicable to
Guarantees in, the Indenture, including without limitation Article Thirteen
thereof.
Section 102. As of the date hereof, all references to the
"Guarantors" in the Indenture shall be deemed to refer collectively to: (i) the
Guarantors in existence on the date hereof and (ii) Radnor Management.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the day and year first
above written.
RADNOR HOLDINGS CORPORATION
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: Michael T. Kennedy
Title: President
WINCUP HOLDINGS, INC.
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: Michael T. Kennedy
Title: President
WINCUP HOLDINGS, L.P.
By: WINCUP HOLDINGS, INC.,
General Partner
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: Michael T. Kennedy
Title: President
-3-
<PAGE>
SP ACQUISITION CO.
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ----------------------
Name: Michael T. Kennedy
Title: President
STYROCHEM INTERNATIONAL, INC.
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: Michael T. Kennedy
Title: President
STYROCHEM INTERNATIONAL, LTD.
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: Michael T. Kennedy
Title: President
RADNOR MANAGEMENT, INC.
Attest:/s/ R. Radcliffe Hastings By:/s/ Michael T. Kennedy
------------------------- ------------------------
Name: Michael T. Kennedy
Title: President
FIRST UNION NATIONAL BANK,
as Trustee
Attest:/s/ Terrence C. McPoyle By:/s/ Alan G. Finn
----------------------- ------------------------
Name: Alan G. Finn
Title: Asst. Vice President
-4-
<PAGE>
Exhibit 4.3
- --------------------------------------------------------------------------------
RADNOR HOLDINGS CORPORATION
as Issuer,
WINCUP HOLDINGS, INC.
SP ACQUISITION CO.
STYROCHEM INTERNATIONAL, INC.
STYROCHEM INTERNATIONAL, LTD.
RADNOR MANAGEMENT, INC.
STYROCHEM EUROPE (THE NETHERLANDS) B.V.
STYROCHEM FINLAND OY
THERMISOL DENMARK APS
THERMISOL FINLAND OY
THERMISOL SWEDEN AB
as Guarantors
and
FIRST UNION NATIONAL BANK
as Trustee
SECOND SUPPLEMENTAL INDENTURE
Dated as of October 15, 1997
(Supplementing a Trust Indenture Dated as of December 5, 1996,
as amended by a First Supplemental Indenture Dated
as of December 17, 1996)
$100,000,000
10% Senior Notes due 2003
<PAGE>
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of the 15th day of
October 1997, (this "Second Supplemental Indenture") is among RADNOR HOLDINGS
CORPORATION, a Delaware corporation (the "Company"), WINCUP HOLDINGS, INC., a
Delaware corporation, SP ACQUISITION CO., a Delaware corporation, STYROCHEM
INTERNATIONAL, INC., a Texas corporation, STYROCHEM INTERNATIONAL, LTD., a
Quebec corporation, and RADNOR MANAGEMENT, INC., a Delaware corporation
(collectively, the "Guarantors"), STYROCHEM EUROPE (THE NETHERLANDS) B.V.,
STYROCHEM FINLAND OY, THERMISOL DENMARK APS, THERMISOL FINLAND OY, and THERMISOL
SWEDEN AB (collectively, the "New Guarantors"), and FIRST UNION NATIONAL BANK,
as trustee (the "Trustee").
RECITALS:
The Company, the Guarantors and the Trustee are parties to a certain
Indenture dated December 5, 1996, as amended by a First Supplemental Indenture
dated December 17, 1996 (as amended, the "Indenture") relating to the creation
by the Company of an issue of $100,000,000 of its 10% Senior Notes, due 2003
(the "Securities");
Each Guarantor has issued a guarantee of the Securities (collectively,
the "Guarantees") pursuant to which the Guarantors have guaranteed, in
accordance with Article Thirteen of the Indenture, all Indenture Obligations (as
such term is defined in the Indenture); and
The Company, the Guarantors, the New Guarantors and the Trustee now
desire to enter into this Second Supplemental Indenture pursuant to Section
901(vi) of the Indenture, without the consent of the Holders, in order to add
the New Guarantors as Guarantors under the Indenture;
Capitalized terms used herein without definition shall have the
meanings given such terms in the Indenture.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and for other good and
valuable consideration, it is covenanted and agreed, for the benefit of each
other and for the equal and proportionate benefit of the Holders of the
Securities issued under the Indenture, as follows:
ARTICLE ONE
JOINDER AND GUARANTEE OF NEW GUARANTORS
Section 101. Each of the New Guarantors hereby absolutely,
unconditionally and irrevocably guarantees, on a
-1-
<PAGE>
joint and several basis with the Guarantors, to the Trustee and the Holders, as
if each such New Guarantor was the principal debtor, the punctual payment and
performance when due of all Indenture Obligations (which for purposes of this
Guarantee shall also be deemed to include all commissions, fees, charges, costs
and expenses (including reasonable legal fees and disbursements of one counsel)
arising out of or incurred by the Trustee or the Holders in connection with the
enforcement of this Guarantee). This Guarantee shall rank pari passu with any
Senior Indebtedness of the New Guarantors and shall be subject in all respects
to, and governed by all of the terms and provisions applicable to Guarantees in,
the Indenture, including without limitation Article Thirteen thereof.
Section 102. As of the date hereof, all references to the
"Guarantors" in the Indenture shall be deemed to refer collectively to: (i) the
Guarantors in existence on the date hereof and (ii) the New Guarantors.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, all as of the day and year first
above written.
RADNOR HOLDINGS CORPORATION
Attest:/s/R.Radcliffe Hastings By: /s/ Michael T. Kennedy
----------------------- --------------------------
Name: Michael T. Kennedy
Title: President
WINCUP HOLDINGS, INC.
Attest:/s/R.Radcliffe Hastings By: /s/ Michael T. Kennedy
----------------------- --------------------------
Name: Michael T. Kennedy
Title: President
SP ACQUISITION CO.
Attest:/s/R.Radcliffe Hastings By: /s/ Michael T. Kennedy
----------------------- --------------------------
Name: Michael T. Kennedy
Title: President
STYROCHEM INTERNATIONAL, INC.
Attest:/s/R.Radcliffe Hastings By: /s/ Michael T. Kennedy
----------------------- --------------------------
Name: Michael T. Kennedy
Title: President
STYROCHEM INTERNATIONAL, LTD.
Attest:/s/R.Radcliffe Hastings By: /s/ Michael T. Kennedy
----------------------- --------------------------
Name: Michael T. Kennedy
Title: President
RADNOR MANAGEMENT, INC.
Attest:/s/R.Radcliffe Hastings By: /s/ Michael T. Kennedy
----------------------- --------------------------
Name: Michael T. Kennedy
Title: President
-3-
<PAGE>
STYROCHEM EUROPE (THE NETHERLANDS) B.V.
Attest:_____________________ By: /s/ Michael T. Kennedy
--------------------------
Name: Name:
Title: Title:
STYROCHEM FINLAND OY
Attest:_____________________ By: /s/ Michael T. Kennedy
--------------------------
Name: Name:
Title: Title:
THERMISOL DENMARK APS
Attest:_____________________ By: /s/ Michael T. Kennedy
--------------------------
Name: Name:
Title: Title:
THERMISOL FINLAND OY
Attest:_____________________ By: /s/ Michael T. Kennedy
--------------------------
Name: Name:
Title: Title:
THERMISOL SWEDEN AB
Attest:_____________________ By: /s/ Michael T. Kennedy
--------------------------
Name: Name:
Title: Title:
FIRST UNION NATIONAL BANK,
as Trustee
Attest: signature illegible By: /s/ Alan G. Finn
-------------------- --------------------------
Name: Alan G. Finn
Title: Assistant Vice President
-4-
<PAGE>
Exhibit 4.4
- --------------------------------------------------------------------------------
RADNOR HOLDINGS CORPORATION
as Issuer,
WINCUP HOLDINGS, INC.
RADNOR CHEMICAL CORPORATION
STYROCHEM U.S., INC.
STYROCHEM CANADA, LTD.
RADNOR MANAGEMENT, INC.
STYROCHEM EUROPE (THE NETHERLANDS) B.V.
STYROCHEM FINLAND OY
THERMISOL DENMARK APS
THERMISOL FINLAND OY
THERMISOL SWEDEN AB
and
RADNOR DELAWARE, INC.
as Guarantors
and
FIRST UNION NATIONAL BANK
as Trustee
___________________
THIRD SUPPLEMENTAL INDENTURE
Dated as of February 9, 1998
(Supplementing a Trust Indenture dated as of December 5, 1996,
as amended by a First Supplemental Indenture dated as of
December 17, 1996, and as amended by a Second Supplemental
Indenture dated as of October 15, 1997)
___________________
$100,000,000
10% Senior Notes due 2003
- --------------------------------------------------------------------------------
<PAGE>
THIS THIRD SUPPLEMENTAL INDENTURE, dated as of the 9th day of February
1998 (this "Third Supplemental Indenture"), is among RADNOR HOLDINGS
CORPORATION, a Delaware corporation (the "Company"), WINCUP HOLDINGS, INC., a
Delaware corporation, RADNOR CHEMICAL CORPORATION (formerly known as SP
Acquisition Co.), a Delaware corporation, STYROCHEM U.S., INC. (formerly known
as StyroChem International, Inc.), a Texas corporation, STYROCHEM CANADA, LTD.
(formerly known as StyroChem International, Ltd.), a Quebec corporation, RADNOR
MANAGEMENT, INC., a Delaware corporation, STYROCHEM EUROPE (THE NETHERLANDS)
B.V., STYROCHEM FINLAND OY, THERMISOL DENMARK APS, THERMISOL FINLAND OY, and
THERMISOL SWEDEN AB (collectively, the "Guarantors"), RADNOR DELAWARE, INC., a
Delaware corporation ("Radnor Delaware") and FIRST UNION NATIONAL BANK, as
trustee (the "Trustee").
RECITALS:
The Company, the Guarantors and the Trustee are parties to a certain
Indenture dated December 5, 1996, as amended by a First Supplemental Indenture
dated as of December 17, 1996, and by a Second Supplemental Indenture dated as
of October 15, 1997 (as amended, the "Indenture"), relating to the creation by
the Company of an issue of $100,000,000 of its 10% Senior Notes, due 2003 (the
"Securities");
Each Guarantor has issued a guarantee of the Securities (collectively,
the "Guarantees") pursuant to which the Guarantors have guaranteed, in
accordance with Article Thirteen of the Indenture, all Indenture Obligations (as
such term is defined in the Indenture); and
The Company, the Guarantors, Radnor Delaware and the Trustee now
desire to enter into this Third Supplemental Indenture pursuant to Section
901(vi) of the Indenture, without the consent of the Holders, in order to add
Radnor Delaware as a Guarantor and Restricted Subsidiary under the Indenture;
Capitalized terms used herein without definition shall have the
meanings given such terms in the Indenture.
NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and for other good and
valuable consideration, it is covenanted and agreed, for the benefit of each
other and for the equal and proportionate benefit of the Holders of the
Securities issued under the Indenture, as follows:
-2-
<PAGE>
ARTICLE ONE
JOINDER AND GUARANTEE OF RADNOR DELAWARE
Section 101. Radnor Delaware hereby absolutely, unconditionally and
irrevocably guarantees, on a joint and several basis with the Guarantors, to the
Trustee and the Holders, as if Radnor Delaware was the principal debtor, the
punctual payment and performance when due of all Indenture Obligations (which
for purposes of this Guarantee shall also be deemed to include all commissions,
fees, charges, costs and expenses (including reasonable legal fees and
disbursements of one counsel) arising out of or incurred by the Trustee or the
Holders in connection with the enforcement of this Guarantee). This Guarantee
shall rank pari passu with any Senior Indebtedness of Radnor Delaware and shall
be subject in all respects to, and governed by all of the terms and provisions
applicable to Guarantees in, the Indenture, including without limitation Article
Thirteen thereof.
Section 102. As of the date hereof, all references to the
"Guarantors" in the Indenture shall be deemed to refer collectively to: (i) the
Guarantors in existence on the date hereof and (ii) Radnor Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed, all as of the day and year first
above written.
RADNOR HOLDINGS CORPORATION
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary President
WINCUP HOLDINGS, INC.
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary President
RADNOR CHEMICAL CORPORATION
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary President
-3-
<PAGE>
STYROCHEM U.S., INC.
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary President
STYROCHEM CANADA, LTD.
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary President
RADNOR MANAGEMENT, INC.
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary President
STYROCHEM EUROPE (THE NETHERLANDS) B.V.
Attest:_____________________ By: /s/ Michael T. Kennedy
-------------------------
Name: Michael T. Kennedy
Title: Class A Managing Director
STYROCHEM FINLAND OY
Attest:_____________________ By: /s/ Michael T. Kennedy
-------------------------
Name: Michael T. Kennedy
Title: Authorized Officer
THERMISOL DENMARK APS
Attest:_____________________ By: /s/ Michael T. Kennedy
-------------------------
Name: Michael T. Kennedy
Title: Authorized Officer
-4-
<PAGE>
THERMISOL FINLAND OY
Attest:_____________________ By: /s/ Michael T. Kennedy
-------------------------
Name: Michael T. Kennedy
Title: Authorized Officer
THERMISOL SWEDEN AB
Attest:_____________________ By: /s/ Michael T. Kennedy
-------------------------
Name: Michael T. Kennedy
Title: Authorized Officer
RADNOR DELAWARE, INC.
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary Chairman
FIRST UNION NATIONAL BANK,
as Trustee
Attest: /s/ Ralph E. Jones By: /s/ Alan G. Finn
------------------- -------------------------
Name: Ralph E. Jones Alan G. Finn
Title: Corporate Trust Assistant Vice President
Officer
-5-
<PAGE>
Exhibit 4.7
- --------------------------------------------------------------------------------
RADNOR HOLDINGS CORPORATION
as Issuer,
WINCUP HOLDINGS, INC.
RADNOR CHEMICAL CORPORATION
STYROCHEM U.S., INC.
RADNOR MANAGEMENT, INC.
and
RADNOR DELAWARE, INC.
as Guarantors
and
FIRST UNION NATIONAL BANK
as Trustee
____________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of February 9, 1998
(Supplementing a Trust Indenture dated as of October 15, 1997)
____________________
$60,000,000
10% Series B Senior Notes due 2003
- --------------------------------------------------------------------------------
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of the 9th day of February
1998 (this "First Supplemental Indenture"), is among RADNOR HOLDINGS
CORPORATION, a Delaware corporation (the "Company"), WINCUP HOLDINGS, INC., a
Delaware corporation, RADNOR CHEMICAL CORPORATION (formerly known as SP
Acquisition Co.), a Delaware corporation, STYROCHEM U.S., INC. (formerly known
as StyroChem International, Inc.), a Texas corporation, and RADNOR MANAGEMENT,
INC., a Delaware corporation (collectively, the "Guarantors"), RADNOR DELAWARE,
INC., a Delaware corporation ("Radnor Delaware") and FIRST UNION NATIONAL BANK,
as trustee (the "Trustee").
RECITALS:
The Company, the Guarantors and the Trustee are parties to a certain
Indenture dated October 15, 1997 (the "Indenture") relating to the creation by
the Company of an issue of $60,000,000 of its 10% Series B Senior Notes, due
2003 (the "Securities");
Each Guarantor has issued a guarantee of the Securities (collectively,
the "Guarantees") pursuant to which the Guarantors have guaranteed, in
accordance with Article Thirteen of the Indenture, all Indenture Obligations (as
such term is defined in the Indenture); and
The Company, the Guarantors, Radnor Delaware and the Trustee now
desire to enter into this First Supplemental Indenture pursuant to Section
901(vi) of the Indenture, without the consent of the Holders, in order to add
Radnor Delaware as a Guarantor and Restricted Subsidiary under the Indenture;
Capitalized terms used herein without definition shall have the
meanings given such terms in the Indenture.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and for other good and
valuable consideration, it is covenanted and agreed, for the benefit of each
other and for the equal and proportionate benefit of the Holders of the
Securities issued under the Indenture, as follows:
ARTICLE ONE
JOINDER AND GUARANTEE OF RADNOR DELAWARE
Section 101. Radnor Delaware hereby absolutely, unconditionally and
irrevocably guarantees, on a joint and several basis with the Guarantors, to the
Trustee and the Holders, as if Radnor Delaware was the principal debtor, the
-2-
<PAGE>
punctual payment and performance when due of all Indenture Obligations (which
for purposes of this Guarantee shall also be deemed to include all commissions,
fees, charges, costs and expenses (including reasonable legal fees and
disbursements of one counsel) arising out of or incurred by the Trustee or the
Holders in connection with the enforcement of this Guarantee). This Guarantee
shall rank pari passu with any Senior Indebtedness of Radnor Delaware and shall
be subject in all respects to, and governed by all of the terms and provisions
applicable to Guarantees in, the Indenture, including without limitation Article
Thirteen thereof.
Section 102. As of the date hereof, all references to the
"Guarantors" in the Indenture shall be deemed to refer collectively to: (i) the
Guarantors in existence on the date hereof and (ii) Radnor Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the day and year first
above written.
RADNOR HOLDINGS CORPORATION
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary President
WINCUP HOLDINGS, INC.
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary President
RADNOR CHEMICAL CORPORATION
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary President
STYROCHEM U.S., INC.
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary President
-3-
<PAGE>
RADNOR MANAGEMENT, INC.
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary President
RADNOR DELAWARE, INC.
Attest: /s/CJWilliamson By: /s/ Michael T. Kennedy
---------------- -------------------------
Name:C.J.Williamson Michael T. Kennedy
Title: Secretary Chairman
FIRST UNION NATIONAL BANK,
as Trustee
Attest: /s/ Ralph E. Jones By: /s/ Alan G. Finn
------------------- -------------------------
Name: Ralph E. Jones Alan G. Finn
Title: Corporate Trust Assistant Vice President
Officer
-4-
<PAGE>
EXHIBIT 10.32
JOINDER
Radnor Delaware, Inc., a Delaware corporation, hereby joins in the Second
Amended and Restated Revolving Credit and Security Agreement dated as of October
15, 1997 ("Loan Agreement") between WinCup Holdings, Inc., Radnor Chemical
Corporation (formerly SP Acquisition Co.), StyroChem U.S., Inc. (formerly
StyroChem International, Inc.), Radnor Holdings Corporation (collectively,
"Borrowers"), the financial institutions which are or became parties thereto
(collectively, "Lenders") and BNY Financial Corporation as administrative and
collateral agent for the Lenders (in such capacity, "Agent"), and agrees to
become jointly and severally liable for all of the Obligations (as defined in
the Loan Agreement) of the Borrowers thereunder and under any other agreement
between Borrowers, Agent and Lenders. Radnor Delaware, Inc. also hereby joins
in the European Supplement (as defined in the Loan Agreement) as one of the U.S.
Guarantors referenced therein and agrees to become jointly and severally liable
for the obligations of the U.S. Guarantors thereunder and under any other
agreement between U.S. Guarantors and the lenders acting under the European
Supplement. Without limiting the generality of the foregoing, in order to secure
the prompt payment and performance to Agent and Lenders of the Obligations,
Radnor Delaware hereby assigns, pledges and grants to Agent a continuing
security interest in and to all of its Collateral (as defined in the Loan
Agreement), whether now owned or existing or hereafter acquired or arising and
wheresoever located. The undersigned further agrees to deliver to Agent each of
the documents described on Exhibit A hereto.
IN WITNESS WHEREOF, and intending to be legally bound hereby, Radnor
Delaware, Inc. has duly executed this Joinder as of the 9th day of February,
1998.
RADNOR DELAWARE, INC.
By: /s/ Michael T. Kennedy
------------------------------
Michael T. Kennedy
President
<PAGE>
Exhibit A
(1) Schedules to the Loan Agreement and European Supplement updated to
reflect the joinder of Radnor Delaware as an additional Borrower thereto and
additional U.S. Guarantor, respectively.
(2) A copy of resolutions in form and substance reasonably satisfactory to
Agent, of the Board of Directors of Radnor Delaware authorizing the execution,
delivery and performance of the Joinder, the Loan Agreement and the granting
Liens upon its Collateral, each certified by the Secretary or an Assistant
Secretary of Radnor Delaware as of the date of this Joinder.
(3) A copy of the Articles or Certificate of Incorporation of Radnor
Delaware, and all amendments thereto, certified by the Secretary of State or
other appropriate official of its jurisdiction of incorporation together with
copies of the By-Laws of Radnor Delaware certified as accurate and complete by
the Secretary or an Assistant Secretary of Radnor Delaware.
(4) Good standing certificates for Radnor Delaware dated not more than
thirty (30) days prior to the date of this Joinder, issued by the Secretary of
State or other appropriate official of Radnor Delaware's jurisdiction of
incorporation and each jurisdiction where the conduct of Radnor Delaware's
business activities or the ownership of its properties necessitates
qualification.
(5) Executed legal opinion of Duane, Morris & Heckscher, counsel to Radnor
Delaware, in form and substance satisfactory to Agent regarding the due
authorization, enforceability and validity of the joinder and the transactions
contemplated herein.
(6) Executed UCC-1 Financing Statements.
<PAGE>
Exhibit 21.1
------------
SUBSIDIARIES OF THE REGISTRANT
------------------------------
<TABLE>
<CAPTION>
State or
Jurisidiction of
Incorporation Names Under Which
Name of Subsidiary or Organization Subsidiary Does Business
- ---------------------------- ---------------- ----------------------------------
<S> <C> <C>
WinCup Holdings, Inc.(1) Delaware WinCup Holdings, Inc.
WinCup Holdings of Texas, Inc.
Radnor Chemical Delaware Radnor Chemical Corporation
Corporation (1)
StyroChem U.S., Inc.(2) Texas StyroChem U.S., Inc.
StyroChem Canada, Ltd.(2) Quebec StyroChem Canada, Ltd.
Radnor Management, Inc.(1) Delaware Radnor Management, Inc.
StyroChem Europe (The The Netherlands StyroChem Europe (The Netherlands)
Netherlands) B.V.(2) B.V.
StyroChem Finland Oy(3) Finland StyroChem Finland Oy
ThermiSol Denmark ApS(3) Denmark ThermiSol Denmark ApS
ThermiSol Finland Oy(3) Finland ThermiSol Finland Oy
ThermiSol Sweden AB(3) Sweden ThermiSol Sweden AB
Radnor Delaware, Inc.(4) Delaware Radnor Delaware, Inc.
</TABLE>
- ------------------
(1) Owned 100% by Radnor Holdings Corporation.
(2) Owned 100% by Radnor Chemical Corporation.
(3) Owned 100% by StyroChem Europe (The Netherlands) B.V.
(4) Owned 100% by WinCup Holdings, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF RADNOR HOLDINGS CORPORATION AND ITS
SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-26-1997
<PERIOD-START> DEC-28-1996
<PERIOD-END> DEC-26-1997
<CASH> 8,810
<SECURITIES> 0
<RECEIVABLES> 29,418
<ALLOWANCES> 829
<INVENTORY> 28,451
<CURRENT-ASSETS> 71,078
<PP&E> 176,981
<DEPRECIATION> 11,868
<TOTAL-ASSETS> 249,818
<CURRENT-LIABILITIES> 46,942
<BONDS> 178,947
0
0
<COMMON> 1
<OTHER-SE> 14,974
<TOTAL-LIABILITY-AND-EQUITY> 249,818
<SALES> 243,583
<TOTAL-REVENUES> 243,583
<CGS> 181,404
<TOTAL-COSTS> 181,404
<OTHER-EXPENSES> 48,213
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,004
<INCOME-PRETAX> 1,095
<INCOME-TAX> (2,516)
<INCOME-CONTINUING> 3,611
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,611
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
Exhibit 99.1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To James River Paper Company, Inc.
and Radnor Holdings Corporation:
We have audited the accompanying balance sheets of J.R. CUP FOAM CONTAINER
OPERATIONS OF JAMES RIVER PAPER COMPANY, INC. (a Virginia corporation)
(formerly Handi-Kup Foam Container Operations of James River Paper Company,
Inc.), as of December 25, 1994 and December 31, 1995, and the related
statements of operations, changes in owner's investment and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the J.R. Cup Foam
Container Operations of James River Paper Company, Inc. as of December 25,
1994 and December 31, 1995, and the results of its operations for each of the
three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Phoenix, Arizona,
October 14, 1996
F-23
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
BALANCE SHEETS
(NOTE 1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 25, DECEMBER 31,
ASSETS 1994 1995
------ ------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Accounts receivable................................. $ 5,309 $ 4,901
Inventories, net.................................... 7,591 7,543
Prepaid expenses and other.......................... 221 224
-------- --------
Total current assets.............................. 13,121 12,668
-------- --------
PROPERTY, PLANT AND EQUIPMENT (Note 2):
Land and improvements............................... 1,196 1,064
Buildings and improvements.......................... 8,758 7,943
Machinery and equipment............................. 37,870 37,316
Supplies and spare mold parts....................... 1,609 1,376
-------- --------
49,433 47,699
Less accumulated depreciation....................... (30,011) (30,717)
-------- --------
19,422 16,982
-------- --------
OTHER ASSETS.......................................... 123 70
-------- --------
$ 32,666 $ 29,720
======== ========
<CAPTION>
LIABILITIES AND OWNER'S INVESTMENT
----------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable.................................... $ 4,477 $ 5,571
Accrued liabilities (Note 2)........................ 5,182 6,194
-------- --------
9,659 11,765
OTHER LONG-TERM LIABILITIES........................... 716 781
COMMITMENTS AND CONTINGENCIES (Note 3)
OWNER'S INVESTMENT.................................... 22,291 17,174
-------- --------
$ 32,666 $ 29,720
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-24
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
STATEMENTS OF OPERATIONS
(NOTE 1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
--------------------------------------
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES................................ $90,819 $94,644 $98,680
COST OF GOODS SOLD....................... 69,246 76,053 80,359
------- ------- -------
GROSS PROFIT............................. 21,573 18,591 18,321
OPERATING EXPENSES:
Distribution........................... 8,336 9,812 8,354
Selling, general and administrative.... 4,164 4,061 3,672
Allocation from James River (Note 1)... 3,880 4,725 10,101
------- ------- -------
INCOME (LOSS) FROM OPERATIONS............ 5,193 (7) (3,806)
OTHER (INCOME) EXPENSE .................. 144 253 (225)
------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES........ 5,049 (260) (3,581)
PROVISION FOR INCOME TAXES (Note 5)...... -- -- --
------- ------- -------
NET INCOME (LOSS)........................ $ 5,049 $ (260) $(3,581)
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
F-25
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
STATEMENTS OF CHANGES IN OWNER'S INVESTMENT
(NOTE 1)
(IN THOUSANDS)
<TABLE>
<S> <C>
BALANCE, January 1, 1993............................................... $25,086
Net income........................................................... 5,049
Net payments to James River.......................................... (6,373)
-------
BALANCE, December 26, 1993............................................. 23,762
Net loss............................................................. (260)
Net payments to James River.......................................... (1,211)
-------
BALANCE, December 25, 1994............................................. 22,291
Net loss............................................................. (3,581)
Net payments to James River.......................................... (1,536)
-------
BALANCE, December 31, 1995............................................. $17,174
=======
</TABLE>
The accompanying notes are an integral part of these statements.
F-26
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
STATEMENTS OF CASH FLOWS
(NOTE 1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
--------------------------------------
DECEMBER 26, DECEMBER 25, DECEMBER 31,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..................... $ 5,049 $ (260) $(3,581)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation........................ 2,434 2,478 2,580
Changes in operating assets and
liabilities--
Accounts receivable............... 866 503 408
Inventories, net.................. 20 551 48
Prepaid expenses and other........ (21) (64) (3)
Accounts payable.................. 559 (411) 1,094
Accrued liabilities............... (1,061) 387 1,012
Other assets...................... 202 16 53
Other long-term liabilities....... -- 6 65
------- ------- -------
Net cash provided by operating
activities..................... 8,048 3,206 1,676
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of property, plant and
equipment............................ (1,675) (1,995) (140)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments to James River........... (6,373) (1,211) (1,536)
------- ------- -------
CASH, beginning of period (Note 2)...... -- -- --
------- ------- -------
CASH, end of period (Note 2)............ $ -- $ -- $ --
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
F-27
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND BASIS OF PRESENTATION:
The Company
As of the dates and for the periods presented, J.R. Cup Foam Container
Operations (the Company) (formerly Handi-Kup Foam Container Operations of
James River Paper Company, Inc.) was an operating unit of James River Paper
Company, Inc. (James River). The Company manufactures and distributes foam
cups, containers and thermoformed lids primarily to national, institutional
and retail customers throughout the U.S.
Basis of Presentation
On January 20, 1996, James River entered into a Joint Venture with WinCup
Holdings, Inc. (WinCup), another foam cup manufacturer, whereby both parties
contributed their fixed assets, leasehold improvements, technology, patents,
trademarks, real property and other noncurrent assets associated with their
foam cup and container and thermoformed lid manufacturing operations and all
inventory, spare parts and other current assets, excluding cash and accounts
receivable, to the Joint Venture.
The Joint Venture is structured as a Delaware limited partnership with
WinCup as the sole general partner and James River as the sole limited
partner. Ownership interests are allocated 55% to WinCup and 45% to James
River.
The financial statements include certain amounts that have been allocated to
the Company by James River. Specifically, these allocations include general
and administrative expenses and accruals for advertising, market survey,
promotion, legal fees and customer performance allowances. Management believes
that the allocation methodologies used to allocate these corporate centrally
managed costs to the Company represent a reasonable basis for allocation.
Included in selling, general and administrative expenses are $3.0 million,
$2.6 million and $2.7 million in customer performance allowances allocated to
the Company by James River for the periods ended December 26, 1993, December
25, 1994 and December 31, 1995, respectively. All other expenses allocated
from James River are included in allocation from James River in the
accompanying statements of operations.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fiscal Year
The Company's fiscal year includes the 52 or 53 weeks ending on the last
Sunday in December. The year ended December 31, 1995 included 53 weeks while
the years ended December 25, 1994 and December 26, 1993 each included 52
weeks.
Cash
Prior to the date of its acquisition by WinCup, the Company was a
participant in the cash pool of James River. All of the cash of the James
River subsidiaries was deposited into a single account. All cash requirements
of James River and its subsidiaries were then funded out of this cash pool. As
a result, the Company had no cash balances recorded on its books prior to its
acquisition by WinCup.
Inventories, Net
Inventories are stated at the lower of cost (first-in, first-out) or market
and include the cost of materials, labor and manufacturing overhead.
Inventories consist of the following at December 25, 1994 and December 31,
1995:
F-28
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
1994 1995
------ ------
(IN
THOUSANDS)
<S> <C> <C>
Raw materials............................................... $ 897 $1,035
Finished goods.............................................. 6,908 6,508
------ ------
$7,805 $7,543
====== ======
</TABLE>
Property, Plant and Equipment
Property, plant and equipment is stated at cost, less accumulated
depreciation. Expenditures for improvements that increase the values or extend
the useful life are capitalized and maintenance repair costs are expensed as
incurred. For financial reporting purposes, depreciation is computed using the
straight-line method over the useful lives of the respective assets, which
range from 20 to 45 years for buildings and 5 to 20 years for machinery and
equipment. Leasehold improvements are amortized over the lesser of their
estimated useful lives or the term of the lease using the straight-line
method.
Supplies and Spare Mold Parts
Supplies and spare mold parts include maintenance parts maintained in a
central stores location. When parts are needed at the various manufacturing
facilities, the parts are shipped and expensed in that period.
Accrued Liabilities
The components of accrued liabilities are as follows at December 25, 1994
and December 31, 1995:
<TABLE>
<CAPTION>
1994 1995
------ ------
(IN
THOUSANDS)
<S> <C> <C>
Workers' compensation reserves............................. $1,630 $2,257
Payroll and employee related items......................... 1,443 1,431
Sales rebates.............................................. 700 890
Accrued utilities.......................................... 458 320
Other accrued liabilities.................................. 951 1,296
------ ------
$5,182 $6,194
====== ======
</TABLE>
Pension Assets and Post Retirement Benefits Other than Pensions
James River sponsors various contributory and noncontributory pension plans.
Benefits under the plans are primarily based on years of service and
compensation. An allocation of the total James River net pension asset
exclusive of the net minimum liabilities of $123,000 and $70,000 at December
25, 1994 and December 31, 1995, respectively, has been included in other
assets in the accompanying financial statements of the Company.
James River provides certain medical and life insurance benefits to eligible
employees upon retirement. An allocation of the amounts attributable to the
Company's employees of $716,000 and $781,000 at December 25, 1994 and December
31, 1995, respectively, has been included in other long-term liabilities in
the accompanying financial statements.
Revenue Recognition
Revenue is recognized when goods are shipped. Sales are recorded net of
expected cash discounts.
F-29
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The estimated fair value of financial instruments has been determined by the
Company using the available market information and valuation methodologies.
Considerable judgment is required in estimating fair values. Accordingly, the
estimates may not be indicative of the amounts the Company could realize in a
current market exchange.
The carrying values of accounts receivable, accounts payable and accrued
liabilities approximate fair values due to the short-term maturities of these
financial instruments.
(3) COMMITMENTS AND CONTINGENCIES:
The Company leases certain facilities, vehicles and equipment over varying
periods. None of the agreements contain unusual renewal or purchase options.
As of December 31, 1995, future minimum rental payments under noncancelable
operating leases were as follows (in thousands):
<TABLE>
<S> <C>
1996............................................................... $1,537
1997............................................................... 1,374
1998............................................................... 845
1999............................................................... 338
------
$4,094
======
</TABLE>
Rent expense totaled $2.2 million, $2.4 million and $2.4 million in 1993,
1994 and 1995, respectively.
Litigation
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
significant effect on the Company's financial position or results of
operations.
In July 1996, StyroChem, the Company's primary supplier of expandable
polystyrene beads (EPS) filed suit in the United States District Court for the
Northern District of Texas against James River for breach of a supply contract
between StyroChem and James River. The contract in question required James
River to purchase from StyroChem all of the EPS requirements for its foam
operations through February 1999, provided that the material satisfied certain
product specifications. Because the product supplied by StyroChem did not meet
such specifications, James River ceased purchasing EPS from StyroChem and did
not assign the contract to the Joint Venture in connection with its formation.
The Joint Venture agreed to indemnify James River for certain liabilities
relating to the failure of James River to assign the contract in question to
the Joint Venture and the Joint Venture has assumed the defense of such
litigation, subject to certain reservations of rights. The lawsuit has been
stayed pending the outcome of a proposed acquisition of StyroChem by WinCup,
and management expects the lawsuit will be dismissed with prejudice following
the consummation of the acquisition. Management does not believe the ultimate
outcome of the lawsuit will have a material effect on the Company's financial
position or results of operations.
F-30
<PAGE>
J.R. CUP FOAM CONTAINER OPERATIONS OF
JAMES RIVER PAPER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(4) RELATED PARTY TRANSACTIONS:
Transactions with other James River locations are reflected as though they
were settled immediately as an addition to or a reduction of James River's
investment and there are no amounts due to or from James River at the end of
any period.
(5) INCOME TAXES:
The Company has historically been included in the consolidated federal
income tax return and combined/unitary state income tax returns of James
River. No provision for income taxes has been reflected in the accompanying
financial statements as the Company has historically generated tax losses on a
standalone basis. Deferred income tax assets and liabilities have been
determined at the corporate level and have not been allocated on a standalone
basis. Because the Company is included in the James River consolidated federal
income tax return, net operating loss carryforwards, investment and other tax
credit carryforwards, if any, were utilized by James River. Accordingly, the
Company has no reportable net operating loss or tax credit carryforwards on a
standalone basis.
F-31
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To SP Acquisition Co.:
We have audited the accompanying consolidated balance sheet of SP
Acquisition Co. (a Delaware Corporation) and subsidiaries as of December 5,
1996 and the related consolidated statements of income, stockholders' equity
and cash flows for the eight month period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of SP
Acquisition Co. and subsidiaries as of December 5, 1996, and the results of
their operations and cash flows for the eight month period then ended in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
March 18, 1997
F-32
<PAGE>
INDEPENDENT AUDITORS' REPORT
SP Acquisition Co.
Fort Worth, Texas
We have audited the accompanying consolidated balance sheets of SP
Acquisition Co. and subsidiaries (the Company), as of April 1, 1995 and March
30, 1996 and the related consolidated statements of income, stockholders'
equity and cash flows for the years then ended. The consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of SP Acquisition Co. and
subsidiaries as of April 1, 1995 and March 30, 1996 and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
On October 30, 1996, as discussed in Note 16, the Company's shareholders
entered into a definitive agreement with Radnor Holdings Corporation (Radnor)
whereby Radnor agreed to acquire all the issued and outstanding capital stock
of and equity interests in the Company, subject to certain conditions.
DELOITTE & TOUCHE LLP
Fort Worth, Texas
October 18, 1996
(October 30, 1996 as to Note 16)
F-33
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 1, 1995, MARCH 30, 1996 AND DECEMBER 5, 1996
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, DECEMBER 5,
ASSETS 1995 1996 1996
------ ----------- ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............. $ 117,696 $ 73,342 $ 2,413,575
Accounts receivable................... 15,933,813 11,697,236 12,066,644
Refundable income taxes............... -- 391,340 436,629
Inventory............................. 7,839,053 6,794,310 7,411,516
Prepaid expenses...................... 313,636 436,823 443,336
Deferred income taxes................. 923,687 858,920 946,191
----------- ----------- -----------
Total current assets................ 25,127,885 20,251,971 23,717,891
PROPERTY, PLANT AND EQUIPMENT, NET...... 3,878,920 7,391,878 6,826,068
PROPERTY HELD FOR SALE.................. 1,600,000 1,771,176 --
DEFERRED INCOME TAXES................... 1,990,557 1,380,264 1,065,103
OTHER ASSETS............................ 253,113 171,248 60,018
----------- ----------- -----------
TOTAL................................... $32,850,475 $30,966,537 $31,669,080
=========== =========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Notes payable......................... $ 1,609,954 $ 1,832,581 $ 133,781
Accounts payable...................... 17,131,719 14,464,013 17,242,167
Accrued liabilities................... 1,509,801 1,207,789 2,979,653
Income taxes payable.................. 683,908 252,963 568,195
Current portion of long-term debt..... 1,219,135 1,242,556 1,320,179
----------- ----------- -----------
Total current liabilities........... 22,154,517 18,999,902 22,243,975
----------- ----------- -----------
LONG-TERM DEBT.......................... 6,235,010 6,318,873 2,859,264
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value,
100,000 shares authorized; 22,315
shares issued and outstanding
(liquidation preference of $500,000)
..................................... 223 223 223
Common stock, $.01 par value, 400,000
shares authorized; 65,184 shares
issued and outstanding............... 652 652 652
Additional paid-in capital............ 999,125 999,125 999,125
Retained earnings..................... 3,492,533 4,723,461 5,658,568
Cumulative translation adjustments.... (31,585) (75,699) (92,727)
----------- ----------- -----------
Total stockholders' equity.......... 4,460,948 5,647,762 6,565,841
----------- ----------- -----------
TOTAL................................... $32,850,475 $30,966,537 $31,669,080
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-34
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND THE EIGHT MONTH PERIOD
ENDED DECEMBER 5, 1996
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------
EIGHT MONTH
PERIOD ENDED
APRIL 1, DECEMBER 5,
1995 MARCH 30, 1996 1996
----------- -------------- -----------
<S> <C> <C> <C>
NET SALES....................... $72,106,153 $76,221,366 $52,375,480
COST OF GOODS SOLD.............. 61,472,165 68,121,794 44,534,090
----------- ----------- -----------
GROSS PROFIT.................... 10,633,988 8,099,572 7,841,390
DISTRIBUTION EXPENSE............ 2,011,000 2,604,026 1,316,131
SELLING, GENERAL AND ADMINISTRA-
TIVE EXPENSE................... 2,980,743 3,069,379 4,106,890
----------- ----------- -----------
INCOME FROM OPERATIONS.......... 5,642,245 2,426,167 2,418,369
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense.............. (924,033) (830,966) (684,129)
Other income (expense), net... 254,996 589,820 (175,633)
----------- ----------- -----------
TOTAL OTHER INCOME (EXPENSE).... (669,037) (241,146) (859,762)
----------- ----------- -----------
INCOME BEFORE INCOME TAXES...... 4,973,208 2,185,021 1,558,607
INCOME TAXES.................... 1,845,675 954,093 623,500
----------- ----------- -----------
NET INCOME...................... $ 3,127,533 $ 1,230,928 $ 935,107
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-35
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND THE EIGHT MONTH PERIOD
ENDED DECEMBER 5, 1996
<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED COMMON PAID-IN RETAINED TRANSLATION
STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS
--------- ------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, APRIL 3, 1994...... $223 $652 $999,125 $ 365,000 $ --
Net income................ -- -- -- 3,127,533 --
Translation adjustments... -- -- -- -- (31,585)
---- ---- -------- ---------- --------
BALANCE, APRIL 1, 1995...... 223 652 999,125 3,492,533 (31,585)
Net income................ -- -- -- 1,230,928 --
Translation adjustments... -- -- -- -- (44,114)
---- ---- -------- ---------- --------
BALANCE, MARCH 30, 1996..... 223 652 999,125 4,723,461 (75,699)
Net income................ -- -- -- 935,107 --
Translation adjustments... -- -- -- -- (17,028)
---- ---- -------- ---------- --------
BALANCE, DECEMBER 5, 1996... $223 $652 $999,125 $5,658,568 $(92,727)
==== ==== ======== ========== ========
</TABLE>
See notes to consolidated financial statements.
F-36
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND THE EIGHT MONTH PERIOD
ENDED DECEMBER 5, 1996
<TABLE>
<CAPTION>
YEAR ENDED
------------------------
EIGHT MONTH
PERIOD ENDED
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
----------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................ $ 3,127,533 $ 1,230,928 $ 935,107
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization....... 357,984 490,759 1,202,778
Deferred income taxes............... 245,756 675,060 228,118
Loss on sale of property............ -- -- 712,069
Changes in operating assets and lia-
bilities:
Accounts receivable............... (2,833,745) 4,236,577 (369,408)
Inventory......................... (3,497,510) 1,044,743 (617,206)
Prepaid expenses and other as-
sets............................. (300,042) (117,473) (6,513)
Accounts payable.................. 6,919,397 (2,667,706) 2,778,154
Accrued liabilities............... 60,096 (302,012) 1,771,635
Income taxes refundable and
payable.......................... 583,861 (822,285) 269,943
----------- ----------- ----------
Net cash provided by operating
activities..................... 4,663,330 3,768,591 6,904,677
----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment.... (3,241,588) (3,916,806) (1,046,646)
Additions to property held for sale... -- (226,049) --
Disposal of property and equipment.... -- -- 1,562,988
----------- ----------- ----------
Net cash provided by (used in)
investing activities........... (3,241,588) (4,142,855) 516,342
----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt..................... (858,877) (1,035,507) (3,381,986)
Net borrowings (repayment) on line of
credit and other..................... (392,519) 1,365,417 (1,698,800)
Payment of financing costs............ (160,192) -- --
----------- ----------- ----------
Net cash provided by (used in)
financing activities........... (1,411,588) 329,910 (5,080,786)
----------- ----------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................ 10,154 (44,354) 2,340,233
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR................................ 107,542 117,696 73,342
----------- ----------- ----------
CASH AND CASH EQUIVALENTS AT END OF
YEAR................................... $ 117,696 $ 73,342 $2,413,575
=========== =========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest............................ $ 800,745 $ 794,009 $ 605,226
Income taxes........................ 1,111,521 1,116,000 422,436
Noncash financing activities:
Note payable for insurance policy... $ 188,393 $ 203,462 $ --
</TABLE>
See notes to consolidated financial statements.
F-37
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND THE EIGHT MONTH
PERIOD ENDED DECEMBER 5, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS--SP Acquisition Co. (SPAC) and subsidiaries develop, manufacture
and market a broad line of crystal polystyrene and expandable polystyrene for
sale to manufacturers of foam cups and containers and insulation and packaging
products.
BASIS OF CONSOLIDATION--The accompanying consolidated financial statements
include the accounts of SP Acquisition Co. and its wholly-owned subsidiaries,
StyroChem International, Inc. and StyroChem International, Ltd. (collectively,
the Company). All significant intercompany accounts and transactions have been
eliminated in consolidation.
ACQUISITION--SPAC was incorporated on January 18, 1994 for the sole purpose
of acquiring certain operations of Kimberly-Clark Tissue Company, formerly
known as Scott Paper Company (KCTC). On February 25, 1994, SPAC acquired all
of the outstanding shares of common stock of StyroChem International, Inc. and
StyroChem International, Ltd. from KCTC for an aggregate cash purchase price,
including costs and expenses of approximately $14.5 million, subject to
adjustment for certain contingent consideration. The acquisition was funded by
the proceeds from the issuance of common and preferred stock of SPAC, along
with borrowings under term loans by SPAC and each of the Company's
subsidiaries.
The acquisition was accounted for using the purchase method of accounting
and, accordingly, the purchase price has been allocated to the assets acquired
and liabilities assumed based on their relative fair market values. As of the
acquisition date, assets acquired and liabilities assumed were as follows (in
thousands):
<TABLE>
<S> <C>
Purchase price................................................. $ 14,456
Fair values of net assets acquired:
Fair value of assets acquired................................ 34,473
Liabilities assumed.......................................... (10,307)
--------
24,166
--------
Excess fair value.............................................. $ (9,710)
========
</TABLE>
The excess of the fair value of the net assets acquired was accounted for as
a reduction in the fair value allocated to property and equipment.
FISCAL YEAR--The Company's fiscal year ends on the Saturday nearest March 31
of each year.
UNAUDITED SUMMARY OPERATING RESULTS--Summary operating results of the
Company for the unaudited three month period ended March 30, 1996 are as
follows:
<TABLE>
<S> <C>
Net sales................................................... $16,991,252
===========
Gross profit................................................ $ 1,834,560
===========
Income from operations...................................... $ 268,083
===========
Net income.................................................. $ 88,535
===========
Total depreciation, amortization, interest and income
taxes...................................................... $ 617,075
===========
</TABLE>
F-38
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
CASH AND CASH EQUIVALENTS--For the purposes of reporting cash flows, cash
and cash equivalents includes investments readily convertible to cash with
remaining maturities at date of purchase of three months or less.
FINANCIAL INSTRUMENTS--The Company's financial instruments under Statement
of Financial Accounting Standards No. 107, "Disclosure About Fair Value of
Financial Instruments," include cash and cash equivalents, accounts
receivable, accounts payable and long-term debt. The Company believes that the
carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable and long-term debt to banks are a reasonable estimate of their fair
value because of the short-term maturities of such instruments or, in the case
of long-term debt to banks, because of the floating interest rates on such
long-term debt.
INVENTORIES--Inventories are valued at the lower of cost or market with cost
determined using the average cost method. Inventories consist of finished
goods, work-in-process and raw materials. Finished goods costs include raw
materials, direct labor and indirect production and overhead costs. The
Company provides an allowance for obsolescence based on management's
evaluation of future usefulness and salability of inventory.
PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are recorded at
cost. Depreciation is recorded using the straight-line method over the
estimated useful lives of the assets, as follows:
<TABLE>
<CAPTION>
NUMBER OF YEARS
---------------
<S> <C>
Building and improvements................................. 20
Machinery and equipment................................... 3-10
Furniture and fixtures.................................... 5-10
</TABLE>
Expenditures that result in the enhancement of the assets involved are
capitalized and maintenance and repair costs are expensed when incurred. Upon
sale or other disposition, any gain or loss is included in income.
PROPERTY HELD FOR SALE--Land and structures currently being offered for sale
are classified separately from property and equipment.
INCOME TAXES--Federal income taxes have been computed in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," which requires income taxes to be accounted for under the liability
method. Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus deferred
income taxes related primarily to differences between the basis of property,
plant and equipment due to depreciation differences and to the application of
the purchase method of accounting for financial statement purposes but not for
tax purposes, and nondeductible asset and liability reserves for tax purposes.
The deferred tax assets and liabilities represent the future tax return
consequences of those differences, which will either be taxable or deductible
when the assets and liabilities are recovered or settled. Deferred tax assets
are evaluated based on the guidelines for realization and may be reduced by a
valuation allowance.
FOREIGN CURRENCY TRANSLATION--The assets and liabilities of the Company's
Canadian subsidiary, StyroChem International, Ltd., whose functional currency
is other than the U.S. dollar are translated at year-end exchange rates.
Revenue and expense accounts are translated using the weighted average
exchange rate during the periods. Translation gains and losses are not
included in determining net income but are accumulated in a separate component
of stockholders' equity, as is required by Statement of Financial Accounting
Standards No. 52, "Foreign Currency Translation."
RESEARCH AND DEVELOPMENT--Research and development expenses are charged to
income as incurred. Total research and development expenses were approximately
$1.3 million and $1.6 million for the years ended
F-39
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
April 1, 1995 and March 30, 1996, respectively, and approximately $1.5 million
for the eight month period ended December 5, 1996.
ACCOUNTING ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS--Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Impairment is evaluated by
comparing future cash flows (undiscounted and without interest charges)
expected to result from the use of the asset and its eventual disposition to
the carrying amount of the asset. The Company adopted this pronouncement
during the eight month period ended December 5, 1996 and the adoption did not
have a material impact on its consolidated financial position or results of
operations.
2. ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
----------- ----------- -----------
<S> <C> <C> <C>
Trade accounts receivable......... $15,964,399 $11,680,811 $12,120,749
Other receivables................. 54,414 125,425 29,397
----------- ----------- -----------
16,018,813 11,806,236 12,150,146
Allowance for doubtful accounts... (85,000) (109,000) (83,502)
----------- ----------- -----------
$15,933,813 $11,697,236 $12,066,644
=========== =========== ===========
</TABLE>
3. INVENTORY
Inventory consists of the following:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
---------- ---------- -----------
<S> <C> <C> <C>
Finished goods....................... $3,921,857 $3,149,525 $3,455,685
Work-in-process...................... 897,126 1,076,670 1,989,546
Raw materials........................ 3,384,070 3,067,115 2,239,108
---------- ---------- ----------
8,203,053 7,293,310 7,684,339
Allowance for obsolescence........... (364,000) (499,000) (272,823)
---------- ---------- ----------
$7,839,053 $6,794,310 $7,411,516
========== ========== ==========
</TABLE>
F-40
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
---------- ---------- -----------
<S> <C> <C> <C>
Land................................. $ 138,964 $ 138,964 $ 138,964
Building and improvements............ 118,029 201,761 201,761
Machinery and equipment.............. 3,666,995 5,881,326 6,324,086
Furniture and fixtures............... 111,028 152,448 152,448
Construction in progress............. 167,180 1,744,503 1,830,098
---------- ---------- ----------
4,202,196 8,119,002 8,647,357
Accumulated depreciation............. (323,276) (727,124) (1,821,289)
---------- ---------- ----------
$3,878,920 $7,391,878 $6,826,068
========== ========== ==========
</TABLE>
5. PROPERTY HELD FOR SALE
The Company had property held for sale, which included land and a building
and related improvements. During the eight months ended December 5, 1996, the
Company made net improvements of $222,898 to this property, which were
capitalized. This property was sold on November 21, 1996 at a loss of
approximately $700,000 to a real estate company owned by certain of the
Company's stockholders.
The Company had leased this property to a third party. Rental income related
to this property was approximately $148,200 and $141,300 for the years ended
April 1, 1995 and March 30, 1996, respectively, and approximately $155,564 for
the eight month period ended December 5, 1996.
6. OTHER ASSETS
Other assets include primarily loan origination costs associated with long-
term debt which are being amortized over the term of the related debt.
Accumulated amortization was $34,708, $66,746 and $160,192 as of April 1,
1995, March 30, 1996 and December 5, 1996, respectively.
F-41
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
7. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable represent advances from a Canadian bank under a $2.5 million
operating line of credit for the Company's Canadian subsidiary, which is
payable on demand and bears interest at a rate of Canadian prime (4.75% at
December 5, 1996) plus 1.25%. The advances under the line of credit are
secured by substantially all of the assets of the Company's Canadian
subsidiary.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
----------- ----------- -----------
<S> <C> <C> <C>
Bank term note, with interest at
prime (8.25% at December 5, 1996)
plus 1.25%, collateralized by all
assets and outstanding common stock
of the Company, payable in monthly
principal payments of $66,667 plus
interest, with the final payment
due February 1999.................. $ 3,200,000 $ 2,400,000 $ 2,559,482
Note payable to bank under a $6 mil-
lion line of credit which expires
on September 1, 1998, with interest
at prime plus 1%, collateralized by
all assets and outstanding common
stock of the Company. Interest is
due and payable quarterly along
with commitment fees of 0.5% on the
unused balance..................... 2,200,011 3,300,000 860,000
Term loan payable to Canadian bank,
with interest at Canadian prime
plus 1.50%, collateralized by sub-
stantially all assets of the Cana-
dian subsidiary, payable in quar-
terly principal payments of $59,773
plus interest, with the final pay-
ment due November 1998............. 865,282 657,508 478,646
Notes payable to stockholders, with
interest at 17.5% payable quarter-
ly, due February 28, 1999, subject
to prepayment penalties............ 1,000,459 1,000,459 --
Other............................... 188,393 203,462 281,315
----------- ----------- -----------
7,454,145 7,561,429 4,179,443
Less--current maturities............ (1,219,135) (1,242,556) (1,320,179)
----------- ----------- -----------
$ 6,235,010 $ 6,318,873 $ 2,859,264
=========== =========== ===========
</TABLE>
The Company's notes payable and long-term debt agreements contain certain
restrictive covenants. These covenants require that the Company meet certain
requirements such as a minimum current ratio, a minimum trailing twelve-months
operating cash flow, a minimum tangible net worth, a minimum fixed charge
coverage ratio, a maximum ratio of indebtedness to tangible net worth and
maximum dividend distributions. The Company was not in compliance with certain
of these covenants at April 1, 1995 and March 30, 1996, but subsequently
obtained a waiver or an amendment for these instances of noncompliance.
Effective August 31, 1996, the bank term note and line of credit agreement
was amended to revise certain covenants and to extend the final maturities to
September 1, 1998. Under the terms of the loan agreements, the Company has the
option to designate the interest rate for borrowings under the loan agreements
using either a prime plus or London Interbank Offering Rate (LIBOR) option.
The interest rate for domestically designated borrowings under the bank term
note and the line of credit was adjusted to prime plus 0.25% and prime,
respectively. LIBOR designated borrowings under the bank term note and line of
credit agreement bear interest at LIBOR plus 2% and LIBOR plus 1.75%,
respectively. In addition, effective November 1996, the commitment fee was
reduced to 0.25% of the unused balance of the line of credit which is payable
quarterly.
F-42
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
The following represents the future annual maturities for the Company's
long-term debt obligations:
<TABLE>
<CAPTION>
DECEMBER 5,
1996
-----------
<S> <C>
1997............................................................. $1,320,179
1998............................................................. 1,899,790
1999............................................................. 959,474
----------
$4,179,443
==========
</TABLE>
In conjunction with the acquisition (see Note 16), the bank term loan and
note payable to bank were paid off in the amounts of $2,559,482 and $860,000,
respectively.
8. INCOME TAXES
Income tax expense included in the consolidated statements of income is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED EIGHT MONTH
-------------------- PERIOD ENDED
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
---------- --------- ------------
<S> <C> <C> <C>
Current income tax expense:
Federal..................................... $1,362,656 $209,727 $296,440
State....................................... 237,263 69,306 98,942
---------- -------- --------
1,599,919 279,033 395,382
---------- -------- --------
Deferred income tax expense:
Federal..................................... 215,817 592,920 200,361
State....................................... 29,939 82,140 27,757
---------- -------- --------
245,756 675,060 228,118
---------- -------- --------
Income tax expense ........................... $1,845,675 $954,093 $623,500
========== ======== ========
</TABLE>
A reconciliation of the Company's effective income tax rate is as follows:
<TABLE>
<CAPTION>
YEAR ENDED EIGHT MONTH
------------------ PERIOD ENDED
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
-------- --------- ------------
<S> <C> <C> <C>
Federal income taxes computed at the statutory
rate......................................... 34.0% 34.0% 34.0%
State income taxes, net of federal income tax
benefit...................................... 3.1 2.0 2.7
Net operating (income) loss of Canadian sub-
sidiary...................................... -- 4.4 --
Other......................................... -- 3.3 3.3
---- ---- ----
37.1% 43.7% 40.0%
==== ==== ====
</TABLE>
F-43
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
The tax effect of the Company's temporary differences giving rise to the net
deferred income tax assets is as follows:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
---------- ---------- -----------
<S> <C> <C> <C>
Deferred income tax assets:
Current:
Inventory.............................. $ 285,213 $ 408,331 $ 282,864
Accrued liabilities and reserves....... 607,031 411,771 629,927
Allowance for doubtful accounts........ 31,443 38,818 33,400
---------- ---------- ----------
923,687 858,920 946,191
---------- ---------- ----------
Noncurrent:
Property and equipment................. 2,585,104 2,095,410 1,721,656
Valuation allowance.................... (594,547) (715,146) (656,553)
---------- ---------- ----------
1,990,557 1,380,264 1,065,103
---------- ---------- ----------
Net deferred income tax assets........... $2,914,244 $2,239,184 $2,011,294
========== ========== ==========
</TABLE>
The Company has established a valuation allowance for deferred tax assets of
the Company's Canadian subsidiary. The deferred tax assets represent primarily
the excess of the tax over the book basis of property, plant and equipment.
Because of the past operating losses of this subsidiary, the Company has been
unable to determine that it is more likely than not that the net deferred tax
assets of this subsidiary will be realized.
9. MAJOR SUPPLIER
The Company agreed to purchase a minimum of 67% of its styrene monomer used
in production from one supplier. The agreement was for a five year period
ending February 1999, was renewable for successive annual terms, and provided
for purchases at prevailing market-related prices and for favorable payment
terms.
In connection with this agreement, the Company's majority shareholder
granted this supplier an option to purchase 51,000 shares of common stock held
by the shareholder at the fair market value, as defined, of such shares at the
date of exercise. This option, which is exercisable between March 1, 1997 and
February 28, 1999, also requires this supplier to offer to purchase all the
outstanding shares of the Company's common stock at date of exercise.
During the years ended April 1, 1995 and March 30, 1996, the Company's
purchases from this supplier amounted to approximately $41.0 million and $42.8
million, respectively, and the balance payable to this supplier by the Company
as of April 1, 1995 and March 30, 1996 amounted to approximately $8.6 million
and $8.2 million, respectively. During the eight month period ended December
5, 1996, the Company's purchases from this supplier amounted to approximately
$31.3 million. As of December 5, 1996, the balance payable to this supplier
was approximately $13.4 million.
10. CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of accounts receivable. Generally, the
Company does not require collateral to support customer receivables. The
Company follows established credit inquiry and investigation procedures in an
attempt to minimize credit risk associated with customer receivables. The
Company has one related party customer,
F-44
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
WinCup Holdings, L.P., a subsidiary of Radnor Holdings Corporation, which
accounted for more than 10% of sales in both 1995 and 1996. Sales to this
customer were approximately $24.0 million and $23.0 million for the years
ended April 1, 1995 and March 30, 1996, respectively, and approximately $12.8
million for the eight month period ended December 5, 1996. As of April 1,
1995, March 30, 1996 and December 5, 1996, outstanding accounts receivable
from this customer were approximately $6.5 million, $4.2 million and $2.6
million, respectively.
11. EMPLOYEE BENEFIT PLAN
The Company sponsors a tax-qualified defined contribution plan under Section
401(a) of the Internal Revenue Code covering all full-time employees in the
U.S. who have completed one year of service. This plan includes a 401(k)
arrangement pursuant to which participants may contribute, subject to certain
limitations, a percentage of their salary on a pretax basis. The Company
contributes a matching contribution with respect to the contributions made by
participants at a rate determined by the Board of Directors of the Company
each year. The Company's 401(k) matching contributions were $62,763 and
$64,674 for the years ended April 1, 1995 and March 30, 1996, respectively,
and $66,505 for the eight month period ended December 5, 1996.
12. RELATED PARTY TRANSACTIONS
Grupo Industrial Hermes and James River Paper Company, Inc. (James River)
are shareholders of the Company. Sales by the Company for the years ended
April 1, 1995 and March 30, 1996 and for the eight month period ended December
5, 1996 to Convermex, a subsidiary of Grupo Industrial Hermes, and to James
River are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
----------------------
EIGHT MONTH
PERIOD ENDED
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
----------- ---------- -----------
<S> <C> <C> <C>
Convermex.......................... $ 1,262,144 $1,218,230 $2,031,650
James River........................ 12,072,402 4,635,959 2,730,555
</TABLE>
Receivables from the above related parties are as follows:
<TABLE>
<CAPTION>
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
---------- --------- -----------
<S> <C> <C> <C>
Convermex............................. $ 138,600 $201,600 $619,760
James River........................... 1,396,305 76,698 122,488
</TABLE>
F-45
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
Effective January 20, 1996, James River, one of the Company's shareholders,
acquired an interest in the Company's largest customer, WinCup Holdings, L.P.,
a subsidiary of Radnor Holdings Corporation.
13. GEOGRAPHIC INFORMATION
Information about the Company's operations in different geographic areas for
the years ended April 1, 1995 and March 30, 1996 and for the eight month
period ended December 5, 1996 is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------
EIGHT MONTH
PERIOD ENDED
APRIL 1, MARCH 30, DECEMBER 5,
1995 1996 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net sales:
United States...................... $57,764,433 $61,357,065 $39,294,285
Canada............................. 14,341,720 14,864,301 13,081,195
----------- ----------- -----------
Total............................ $72,106,153 $76,221,366 $52,375,480
=========== =========== ===========
Operating income (loss):
United States...................... $ 5,096,319 $ 2,639,092 $ 1,389,043
Canada............................. 511,218 (244,963) 935,880
----------- ----------- -----------
Total............................ $ 5,607,537 $ 2,394,129 $ 2,324,923
=========== =========== ===========
Identifiable assets (at end of
period):
United States...................... $25,709,341 $24,150,958 $23,684,841
Canada............................. 7,141,134 6,815,579 7,984,239
----------- ----------- -----------
Total............................ $32,850,475 $30,966,537 $31,669,080
=========== =========== ===========
</TABLE>
14. STOCKHOLDERS' EQUITY
On February 25, 1994, the Company issued to its preferred stockholders
warrants to allow for the purchase of 25,313 shares (the "Warrant Shares") of
the Company's common stock at an exercise price of $.01 per share. The
warrants are not exercisable until the notes to stockholders (the Notes) are
repaid; however, they become immediately exercisable in full on the Company's
capital reorganization, merger or acquisition of the Company. The Warrant
Shares are subject to adjustment or cancellation upon the occurrence of
certain events; including the repayment of the Notes in advance of their
scheduled maturity. In addition, the terms of the warrants provide for
adjustments to the exercise price as a result of stock splits, dividends or
issuances. During 1995, warrants for 12,500 shares of common stock were
canceled as a result of early repayments or payments of certain of the Notes.
At April 1, 1995, March 30, 1996 and December 5, 1996, warrants for 12,813
shares were outstanding, which expire at March 31, 1999.
15. COMMITMENTS AND CONTINGENCIES
SUPPLY AGREEMENT--The Company is committed under a supply agreement to sell
to WinCup Holdings, L.P. all of WinCup's requirements for expandable
polystyrene for certain of its plants at sales prices based on prevailing
market prices for up to 40 million pounds annually, and no less than 75% of
the requirements for those plants in excess of 40 million pounds annually. The
agreement is for an eight-year period ending February 2000, with options for
annual extensions thereafter.
F-46
<PAGE>
SP ACQUISITION CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED APRIL 1, 1995 AND MARCH 30, 1996 AND
THE EIGHT MONTH PERIOD ENDED DECEMBER 5, 1996
OPERATING LEASES--The Company leases certain buildings and equipment under
operating leases for periods ranging from one to five years. These leases
generally contain optional renewal provisions for one or more periods. Future
annual minimum lease payments as of December 5, 1996 are as follows:
<TABLE>
<S> <C>
1997............................................................. $211,859
1998............................................................. 197,779
1999............................................................. 169,261
2000............................................................. 83,655
2001............................................................. 6,817
--------
Total............................................................ $669,371
========
</TABLE>
Rental expense under operating leases for the years ended April 1, 1995 and
March 30, 1996 was approximately $170,000 and $329,000, respectively, and
approximately $263,000 for the eight month period ended December 5, 1996.
OTHER--The Company is involved in various legal proceedings arising in the
normal course of business. Management believes the outcome of these matters
will not materially affect the consolidated financial position or results of
operations of the Company.
Like other chemical manufacturers, the Company's operations are subject to
extensive and rapidly changing federal and state environmental regulations,
including original and renewal permit application proceedings in connection
with its business operations. These environmental laws and regulations may
require the Company to take action in the future to correct the effects of
prior environmental issues at the Company's facilities, if any. In connection
with the Company's acquisition of its business operations from KCTC on
February 25, 1994, as discussed in Note 1, the Company was indemnified by KCTC
as to environmental matters existing prior to the acquisition date. The extent
of loss related to environmental matters depends on a number of factors,
including technological developments and changes in environmental laws, among
others. Based on currently known facts, management believes that any
environmental costs the Company may incur would not have a material adverse
effect on the consolidated financial position or results of operations of the
Company.
The Company participates in a self-insurance program that provides for the
payment of employee health claims. The program provides for specific excess
loss reinsurance for aggregate claims greater than a specified amount for any
one claimant. The Company accrues the estimated liabilities for the ultimate
costs of both reported claims and incurred but not reported claims.
16. ACQUISITION BY RADNOR HOLDINGS CORPORATION
On October 30, 1996, the Company's shareholders entered into a definitive
agreement with Radnor Holdings Corporation (Radnor) whereby Radnor agreed to
acquire all the issued and outstanding shares of capital stock of and other
equity interests in the Company for an aggregate purchase price of $31.0
million, subject to satisfactory resolution of environmental matters and
financing and subject to certain adjustments, as defined. The closing of the
acquisition occurred on December 5, 1996.
F-47
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Neste Oy:
We have audited the accompanying balance sheets of NESTE OY POLYSTYRENE
UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI (an operating unit of the NESTE Oy
Chemicals division) as of December 31, 1995 and 1996, and the related
statements of operations, changes in owner's investment and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of NESTE OY POLYSTYRENE
UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI as of December 31, 1995 and 1996, and
the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1996, in conformity with generally accepted
accounting principles (see Note 1).
ARTHUR ANDERSEN OY
Helsinki, Finland
September 5, 1997
(except with respect to the matters discussed in Note 10,
as to which the date is October 15, 1997)
F-48
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
BALANCE SHEETS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
------
CURRENT ASSETS:
Accounts receivable.................. $ 7,615 $ 6,499 $ 8,659
Inventories, net..................... 10,498 5,149 5,718
Prepaid expenses and other........... 71 735 553
-------- -------- --------
18,184 12,383 14,930
-------- -------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land and improvements................ 483 453 398
Buildings and improvements........... 19,680 18,648 16,531
Machinery and equipment.............. 30,374 28,146 25,519
-------- -------- --------
50,537 47,247 42,448
Less accumulated depreciation........ (23,263) (22,963) (21,240)
-------- -------- --------
27,274 24,284 21,208
Share of common assets allocated by
Neste (Note 5)...................... 2,581 1,735 1,357
-------- -------- --------
Total property, plant, and
equipment......................... 29,855 26,019 22,565
-------- -------- --------
OTHER ASSETS........................... 332 344 323
-------- -------- --------
$ 48,371 $ 38,746 $ 37,818
======== ======== ========
LIABILITIES AND OWNER'S INVESTMENT
----------------------------------
CURRENT LIABILITIES:
Accounts payable..................... $ 3,811 $ 3,657 $ 3,708
Accrued liabilities.................. 1,024 1,353 1,160
-------- -------- --------
4,835 5,010 4,868
COMMITMENTS AND CONTINGENCIES (Note 9)
OWNER'S INVESTMENT..................... 43,536 33,736 32,950
-------- -------- --------
$ 48,371 $ 38,746 $ 37,818
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these finanacial statements.
F-49
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
STATEMENTS OF OPERATIONS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH PERIOD
FOR THE YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------- ---------------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES............... $ 58,188 $ 63,179 $ 60,805 $ 45,905 $ 46,380
COST OF GOODS SOLD...... 41,060 47,944 40,752 30,635 32,455
---------- ---------- ---------- ------------ ------------
GROSS PROFIT............ 17,128 15,235 20,053 15,270 13,925
OPERATING EXPENSES:
Distribution.......... 2,961 2,471 3,392 2,440 2,632
Selling, general and
administrative....... 7,515 10,652 10,768 7,774 8,781
Allocation from
Neste................ 1,529 2,026 1,610 1,324 --
---------- ---------- ---------- ------------ ------------
INCOME FROM OPERATIONS.. 5,123 86 4,283 3,732 2,512
OTHER INCOME............ 1 1 -- -- --
---------- ---------- ---------- ------------ ------------
INCOME BEFORE INCOME
TAXES.................. 5,124 87 4,283 3,732 2,512
PROVISION FOR INCOME
TAXES.................. 1,434 24 1,199 1,045 703
---------- ---------- ---------- ------------ ------------
NET INCOME.............. $ 3,690 $ 63 $ 3,084 $ 2,687 $ 1,809
========== ========== ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-50
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
STATEMENTS OF CHANGES IN OWNER'S INVESTMENT
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<S> <C>
BALANCE, January 1, 1994........................................... $ 39,522
Net income....................................................... 3,690
Contributions from Neste......................................... 932
--------
BALANCE, December 31, 1994......................................... $ 44,144
Net income....................................................... 63
Distributions to Neste........................................... (2,107)
Translation adjustment........................................... 1,436
--------
BALANCE, December 31, 1995......................................... 43,536
Net income....................................................... 3,084
Distributions to Neste........................................... (10,170)
Translation adjustment........................................... (2,714)
--------
BALANCE, December 31, 1996......................................... 33,736
Net income (unaudited)........................................... 1,809
Contributions to Neste (unaudited)............................... (2,547)
Translation adjustment (unaudited)............................... (48)
--------
BALANCE, September 30, 1997 (unaudited)............................ $ 32,950
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-51
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH PERIOD
FOR THE YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------------- ----------------------------
1994 1995 1996 1996 1997
---------- ---------- ----------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERAT-
ING ACTIVITIES:
Net income............ $ 3,690 $ 63 $ 3,084 $ 2,687 $ 1,809
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation.......... 2,141 2,455 1,975 1,506 1,286
Changes in operating
assets and liabili-
ties--
Accounts receivable.. (3,739) 4,016 648 (1,597) (2,160)
Inventories, net..... (1,354) 306 4,704 5,288 (569)
Prepaid expenses and
other............... -- (71) (668) (274) 182
Accounts payable..... 541 (2,605) 80 751 51
Accrued liabilities.. (587) 903 392 285 (193)
---------- ---------- ----------- ------------ ------------
Net cash provided by
operating activi-
ties............... 692 5,067 10,215 8,646 406
---------- ---------- ----------- ------------ ------------
CASH FLOWS FROM INVEST-
ING ACTIVITIES:
Net purchases of
property, plant,
equipment and other
assets............... (1,517) (3,081) (699) 938 1,811
Net (increase)
decrease in share of
common assets
allocated by Neste... (485) 121 695 (156) 378
---------- ---------- ----------- ------------ ------------
Net cash provided by
(used in) investing
activities......... (2,002) (2,960) (4) 782 2,189
---------- ---------- ----------- ------------ ------------
CASH FLOWS FROM FINANC-
ING ACTIVITIES:
Other................. 378 -- (41) 27 (48)
Contributions from
(distributions to)
Neste................ 932 (2,107) (10,170) (9,455) (2,547)
---------- ---------- ----------- ------------ ------------
Net cash provided by
(used in) financing
activities......... 1,310 (2,107) (10,211) (9,428) (2,595)
---------- ---------- ----------- ------------ ------------
CASH, BEGINNING OF PERI-
OD..................... -- -- -- -- --
---------- ---------- ----------- ------------ ------------
CASH, END OF PERIOD..... $ -- $ -- $ -- $ -- $ --
========== ========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-52
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
(1) ORGANIZATION AND BASIS OF PRESENTATION:
The Business Unit
Neste Oy (Neste) is an international oil, exploration and production, energy
and chemicals company, which is registered in Espoo, Finland and the shares of
which are quoted on the Helsinki stock exchange. The Neste Oy Polystyrene
Upstream Business in Porvoo and Kokemaki (the Company) has been an operating
unit of the Neste Oy Chemicals division.
The production and sales of the Company consist of polystryrene resins
including expandable polystyrene (EPS), general purpose polystyrene (PS) and
high-impact polystyrene (HIPS). EPS is manufactured in the Porvoo and Kokemaki
plants and PS and HIPS are manufactured in the Porvoo plant. EPS is sold
through Neste Oy Chemicals' European sales network mainly to construction
applications and approximately 30% is sold for packaging uses. Approximately
70% of the PS and HIPS grades are sold in Finland through the Company's
salespeople. The remainder of the PS and HIPS is sold by the Neste Oy
Chemicals sales force.
Neste is establishing a production base in St. Petersburg, Russia where
exploratory marketing efforts have been underway since 1994, using products
exported from Finland. The St. Petersburg plant started operations in the
spring of 1997. These financial statements do not include the St. Petersburg
conversion business.
Basis of Presentation
Neste Oy's records are maintained in accordance with Finnish law and
reporting requirements. These financial statements have been converted from
Finnish generally accepted accounting principles (GAAP) to U.S. GAAP.
The financial statements of the Company include certain amounts that have
been allocated to the Company by Neste Oy. These allocations include general
and administrative expenses incurred at the Porvoo site, but do not include
expenses incurred in the Espoo headquarters. The balance sheet includes a
share of common facilities at the Porvoo site. The definition of common
facilities and the method of allocating them has changed during 1997 such that
these costs are invoiced, not allocated, directly to the Company. Management
believes that the allocation methodologies used to allocate these costs and
corresponding assets to the Company represent a reasonable basis for
allocation. The amounts of the allocations have been shown as separate line
items in the balance sheets and statements of operations in 1994, 1995 and
1996 and are included in selling, general and administrative in the nine month
period ended September 30, 1997.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fiscal year
The fiscal year of the Company presented in the financial statements is the
calendar year.
Foreign Currency Translation
The assets and liabilities of the Company, whose functional currency is
other than the U.S. dollar, are translated into U.S. dollars at year end
exchange rates. Revenues and expense accounts are translated using the
weighted average exchange rate during the periods indicated. The functional
currency of the Company is the Finnish markka and the exchange rates used were
those quoted by the Bank of Finland. Translation gains and losses are not
included in determining net income but are accumulated in a separate component
of owner's investment, as is required by Statement of Financial Accounting
Standards No. 52, "Foreign Currency Translation."
F-53
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Cash
The Company is an operating unit of the Neste Oy Chemicals division, and
participates in the cash pool of Neste Oy. All cash requirements of the
Company have been funded out of this cash pool. As a result, the entity has no
cash balances recorded on its books.
Revenue Recognition
Revenue is recognized when goods are shipped. Sales are recorded gross
before cash and other discounts, which are deducted from the value of sales,
when the customer fulfills the terms of trade agreed upon.
Research and Development
Research and development expenses are charged to operations as incurred.
Total research and development expenses were approximately $859,000,
$1,233,000, $1,206,000, $885,000 and $861,000 for the years ended December 31,
1994, 1995 and 1996 and the nine month periods ended September 30, 1996 and
1997, respectively.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
The fair value of financial instruments, including accounts receivable and
accounts payable, approximate their recorded values due primarily to the
short-term nature of their maturities.
(3) ACCOUNTS RECEIVABLE
Accounts receivable include the following balances due from affiliated
companies:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Isora Oy......................................... $ 949 $ 756 $ 657
Neste Cellplast AB............................... 691 380 475
Neste Thermisol A/S.............................. 417 175 243
------ ------ ------
Total............................................ $2,057 $1,311 $1,375
====== ====== ======
</TABLE>
(4) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1995 1996 1997
------- ------ -------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Raw materials................................... $ 5,130 $2,493 $3,734
Work-in-progress................................ 382 187 208
Finished goods.................................. 4,986 2,469 1,776
------- ------ ------
Total......................................... $10,498 $5,149 $5,718
======= ====== ======
</TABLE>
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Expenditures for
improvements that increase the values or extend the useful life are
capitalized and maintenance repair costs are expensed as incurred.
Depreciation is
F-54
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
recorded using the straight-line method over the useful lives of the
respective assets, which range from 20 to 40 years for buildings, 5 to 20
years for machinery and equipment and 5 to 10 years for other property and
equipment.
The share of common facilities allocated from Neste has been shown as a
separate line item, net of accumulated depreciation, in the balance sheets. In
addition to an allocated share of common facilities it includes spare parts
stored in a central stores location, but apportioned to the Company in the
Neste Oy stock records. The amount of spare parts at December 31, 1995 was
$565,000, at December 31, 1996 was $502,000, and at September 30, 1997 was
$419,000. Spare parts are expensed in the period they are needed and shipped
to the various manufacturing facilities.
(6) ACCRUED LIABILITIES
Accrued liabilities consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1995 1996 1997
------ ------ -------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Accrued holiday................................. $ 764 $ 839 $ 540
Payroll related items........................... 322 318 534
Added value tax................................. (88) 95 --
Other........................................... 26 101 86
------ ------ ------
Total......................................... $1,024 $1,353 $1,160
====== ====== ======
</TABLE>
(7) PENSION COSTS
The pensions of the Company personnel are covered by the Joint Pension
Foundation of Neste Corporation (the Foundation) in accordance with the local
laws and practices. The Foundation has been able to offer pension services at
lower annual fees than the market prices of pension insurance companies. The
compulsory deficit of the foundation is immaterial but has been provided for
in the accounts of Neste Oy. Under Finnish GAAP the future salary increases
have not been taken into account when calculating the pension liability. U.S.
GAAP calculations have been prepared only for that part of pension liability
that exceeds the normal pension liability stipulated by law. The calculations
are at the level of total Neste Corporation only, and show that at December
31, 1996 the local method had resulted in a somewhat higher pension liability
and somewhat higher annual pension cost than the U.S. GAAP method.
(8) INCOME TAXES
The Company, having legally been part of Neste Oy, has been included in the
tax return of Neste Oy. The tax in the statements of operations has been
calculated by applying the general company tax rate of 28% to the income
before income taxes. No possible tax losses, accelerated depreciation or other
similar effects, which usually have been considered at the level of Neste Oy
only, have been reflected in the calculations. Accordingly no deferred tax
assets or liabilities have been recorded. All taxes are paid by the parent
company.
(9) COMMITMENTS AND CONTINGENCIES
The Company is a party to various legal actions arising in the ordinary
course of its business. The liability, if any, associated with these matters
will not have a material adverse effect upon financial condition, results of
operations or cash flows of the Company.
The Company is also subject to environmental regulations, including rules
relating to air and water pollution and the storage and disposal of chemicals
and waste. The Company believes it complies in all material respects with
applicable laws.
It has been Neste Oy's policy to not make use of leased assets except for
minor office equipment.
F-55
<PAGE>
NESTE OY POLYSTYRENE UPSTREAM BUSINESS IN PORVOO AND KOKEMAKI
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(10) SUBSEQUENT EVENT
On October 15, 1997, Neste Oy, Isora Oy, Neste Cellplast AB and Neste
Thermisol A/S sold certain EPS, PS and HIPS assets in Finland, Sweden and
Denmark, which include the assets of the Company, to StyroChem Finland Oy,
ThermiSol Finland Oy, ThermiSol Sweden AB and ThermiSol Denmark ApS and Radnor
Holdings Corporation as parent and guarantor.
F-56
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Isora Oy:
We have audited the accompanying balance sheets of ISORA OY (a Finnish Joint
Stock company) as of December 31, 1995 and 1996, and the related statements of
operations, changes in stockholder's equity and cash flows for each of the
three years in the period ended December 31, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ISORA OY as of December
31, 1995 and 1996, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles (see Note 1).
ARTHUR ANDERSEN OY
Helsinki, Finland
September 5, 1997
(except with respect to the matters discussed in Note 12,
as to which the date is October 15, 1997).
F-57
<PAGE>
ISORA OY
BALANCE SHEETS
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash.................... $ 3,182 $ 4,863 $ 4,241
Accounts receivable..... 1,708 1,311 2,462
Inventories, net........ 1,495 1,383 1,311
Prepaid expenses and
other.................. 378 199 208
Loans to Neste Oy and
affiliates............. 2,960 2,048 1,086
------- ------- -------
9,723 9,804 9,308
------- ------- -------
PROPERTY, PLANT AND
EQUIPMENT, at cost:
Machinery and
equipment.............. 8,470 8,133 7,213
Less accumulated
depreciation........... (3,068) (3,887) (3,758)
------- ------- -------
5,402 4,246 3,455
------- ------- -------
OTHER ASSETS.............. 330 236 195
------- ------- -------
$15,455 $14,286 $12,958
======= ======= =======
LIABILITIES AND
STOCKHOLDER'S EQUITY
--------------------
CURRENT LIABILITIES:
Accounts payable........ $ 1,656 $ 2,220 $ 1,227
Accrued liabilities..... 1,048 1,260 2,337
Loans from credit
institutions........... 23 95 --
------- ------- -------
2,727 3,575 3,564
------- ------- -------
LONG-TERM LIABILITIES..... 3,597 1,818 990
COMMITMENTS AND
CONTINGENCIES (Note 10)
STOCKHOLDER'S EQUITY
Common stock............ 3,858 3,858 3,858
Retained earnings....... 4,531 4,859 5,490
Cumulative translation
adjustment............. 742 176 (944)
------- ------- -------
9,131 8,893 8,404
------- ------- -------
$15,455 $14,286 $12,958
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-58
<PAGE>
ISORA OY
STATEMENTS OF OPERATIONS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE NINE MONTH PERIOD
DECEMBER 31, ENDED SEPTEMBER 30,
------------------------- ---------------------------
1994 1995 1996 1996 1997
------- ------- ------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES............... $15,823 $20,561 $19,298 $ 14,392 $ 13,759
COST OF GOODS SOLD...... 12,484 16,800 14,960 10,406 9,842
------- ------- ------- ------------ ------------
GROSS PROFIT............ 3,339 3,761 4,338 3,986 3,917
OPERATING EXPENSES:
Distribution.......... 730 841 938 682 664
Selling, general and
administrative....... 3,069 3,567 3,336 2,861 2,692
------- ------- ------- ------------ ------------
INCOME (LOSS) FROM
OPERATIONS............. (460) (647) 64 443 561
OTHER INCOME............ 32 637 112 58 70
------- ------- ------- ------------ ------------
INCOME (LOSS) BEFORE
INCOME TAXES........... (428) (10) 176 501 631
(PROVISION) BENEFIT FOR
INCOME TAXES........... (63) (17) 152 113 --
------- ------- ------- ------------ ------------
NET INCOME (LOSS)....... $ (491) $ (27) $ 328 $ 614 $ 631
======= ======= ======= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-59
<PAGE>
ISORA OY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK CUMULATIVE
------------- RETAINED TRANSLATION
SHARES AMOUNT EARNINGS ADJUSTMENT TOTAL
------ ------ -------- ----------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1994............ 18,300 $3,858 $4,744 $ 18 $8,620
Net loss.......................... -- -- (491) --
Group contribution................ -- -- 305 --
Translation adjustment............ -- -- -- (18)
------ ------ ------ -------
BALANCE, December 31, 1994.......... 18,300 3,858 4,558 -- 8,416
Net loss.......................... -- -- (27) --
Translation adjustment............ -- -- -- 742
------ ------ ------ -------
BALANCE, December 31, 1995.......... 18,300 3,858 4,531 742 9,131
Net income........................ -- -- 328 --
Translation adjustment............ -- -- -- (566)
------ ------ ------ -------
BALANCE, December 31, 1996.......... 18,300 3,858 4,859 176 8,893
Net income (unaudited)............ -- -- 631 --
Translation adjustment
(unaudited)...................... -- -- -- (1,120)
------ ------ ------ -------
BALANCE, September 30, 1997
(unaudited)........................ 18,300 $3,858 $5,490 $ (944) $8,404
====== ====== ====== ======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-60
<PAGE>
ISORA OY
STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH
FOR THE YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------- ----------------------
1994 1995 1996 1996 1997
------ ------ ------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income(loss)............ $ (491) $ (27) $ 328 $ 614 $ 631
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation............... 658 575 1,101 828 353
Other...................... 50 1 (19) 1
Changes in operating assets
and liabilities:
Accounts receivable....... (286) 476 293 (1,543) (1,314)
Inventories, net.......... (935) 1,134 20 (20) (100)
Loans, prepaid expenses
and other................ 500 1,325 887 305 674
Accounts payable.......... 677 (934) 665 242 (718)
Loans from credit
institutions and accrued
liabilities.............. (399) (154) 349 505 1,150
Other assets.............. 2 (9) (11) 11
------ ------ ------- ------- -------
Net cash (used in)
provided by operating
activities.............. (224) 2,387 3,624 920 688
------ ------ ------- ------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net purchases of property,
plant and equipment........ (589) (293) (190) (114) (88)
------ ------ ------- ------- -------
Net cash used in
investing activites..... (589) (293) (190) (114) (88)
------ ------ ------- ------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Group contribution....... 305 -- -- -- --
Long-term liabilities.... (191) (95) (1,557) (33) (603)
------ ------ ------- ------- -------
Net cash provided by
(used in) financing
activities.............. 114 (95) (1,557) (33) (603)
------ ------ ------- ------- -------
Translation effect on cash.... -- 95 (196) (142) (619)
------ ------ ------- ------- -------
CASH, BEGINNING OF PERIOD..... 1,787 1,088 3,182 3,182 4,863
------ ------ ------- ------- -------
CASH, END OF PERIOD........... $1,088 $3,182 $ 4,863 $ 3,813 $ 4,241
====== ====== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-61
<PAGE>
ISORA OY
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
(1) ORGANIZATION AND BASIS OF PRESENTATION:
The Business Unit
Isora Oy (the Company) is a Finnish Joint Stock company 100% owned by Neste
Oy.
Isora has three production sites--Nurmijarvi, Vammala and Pietarsaari.
Nurmijarvi is an almost fully automated site for standard insulation products.
Vammala produces standard as well as special products. Pietarsaari, located on
the northwest coast, covers the northern region. In addition to its EPS
conversion business, Isora also produces and markets patented EPS sandwich
elements for a broad range of construction applications. Sales are carried out
through Isora's sales organization located at the three sites.
Neste is establishing a production base in St. Petersburg, Russia where
exploratory marketing efforts have been underway since 1994, using products
exported from Finland. The plant started operations in spring 1997. These
statements do not include any part of the St. Petersburg conversion business.
Basis of Presentation
Isora Oy's records are maintained in accordance with Finnish law and
reporting requirements. These financial statements have been converted from
Finnish generally accepted accounting principles (GAAP) to U.S. GAAP.
The following adjustments have been made to Finnish GAAP amounts to comply
with U.S. GAAP requirements:
. Voluntary provisions (difference between fiscal depreciation and the
planned depreciation) have been transferred to stockholder's equity.
Deferred tax at 28% has been deduced from the difference and added to
long-term liabilities. The change of deferred tax is included in the
statements of operations (provision for income taxes). The Company has
accumulated tax losses from fiscal years 1992 and 1994, which can be
deducted from future taxable profits. Deferred tax on accumulated tax
losses has not been calculated as the effect on income of 1994 is not
material.
. Obligatory provisions have been classified as long term liabilities.
. In 1994 Neste Oy paid a group contribution of $305,000 to Isora Oy. In
these statements the amount has been reflected as a capital contribution,
so that it has no effect on the income of 1994.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fiscal year
The fiscal year of the Company presented in the financial statements is the
calendar year.
Foreign Currency Translation
The assets and liabilities of the Company, whose functional currency is
other than the U.S. dollar, are translated into U.S. dollars at year end
exchange rates. Revenues and expense accounts are translated using the
weighted average exchange rate during the periods. The functional currency of
the Company is the Finnish markka and the exchange rates used were those
quoted by the Bank of Finland. Translation gains and losses are not included
in determining net income but are accumulated in a separate component of
owner's investment, as is required by Statement of Financial Accounting
Standards No. 52, "Foreign Currency Translation."
F-62
<PAGE>
ISORA OY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Revenue Recognition
Revenue is recognized when goods are shipped. Sales are recorded gross
before cash and other discounts, which are deducted from the value of sales,
when the customer fulfils the terms of trade agreed upon.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
The fair value of financial instruments, including accounts receivables and
accounts payable, approximate their recorded values due primarily to the
short-term nature of their maturities.
(3) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------------------
1995 1996 SEPTEMBER 30, 1997
------ ------ ------------------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials............................... $ 915 $1,086 $ 968
Work-in-progress............................ 247 149 194
Finished goods.............................. 333 148 149
------ ------ ------
Total....................................... $1,495 $1,383 $1,311
====== ====== ======
</TABLE>
(4) PROPERTY PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Expenditures for
improvements that increase the values or extend the useful life are
capitalized and maintenance repair costs are expensed as incurred.
Depreciation is recorded using the straight-line method over the useful lives
of the respective assets, which is 15 years for machinery and equipment and 5
years for other capitalized expenditures.
(5) OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
------------------------------
1995 1996 SEPTEMBER 30, 1997
----- ----- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Intangible rights............................ $ 17 $ 19 $ 17
Other capitalized expenditures............... 155 82 60
Shares in housing and other corporations..... 158 135 118
----- ----- ----
Total........................................ $ 330 $ 236 $195
===== ===== ====
</TABLE>
F-63
<PAGE>
ISORA OY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(6) ACCRUED LIABILITIES
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
----------------------------------
1995 1996 SEPTEMBER 30, 1997
------- ------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Unpaid rent to Neste.................... $ -- $ 672 $ 442
Provision for holiday payment........... 441 377 225
Other accrued liabilities............... 607 211 1,670
------- ------- ------
Total................................... $ 1,048 $ 1,260 $2,337
======= ======= ======
(7) LONG-TERM LIABILITIES
Long-term liabilities consist of the following:
<CAPTION>
(IN THOUSANDS)
----------------------------------
1995 1996 SEPTEMBER 30, 1997
------- ------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Loans from pension institutions......... $ 2,128 $ 756 $ 38
Other non-current liabilities........... 69 43 121
Difference between fiscal and planned
depreciation........................... 1,032 835 725
Obligatory provisions................... 368 184 106
------- ------- ------
Total................................... $ 3,597 $ 1,818 $ 990
======= ======= ======
</TABLE>
(8) PENSION COSTS
The pensions of the personnel have been covered by the Joint Pension
Foundation of Neste Corporation in line with the local laws and practices. The
foundation has been able to offer pension services at lower annual fees than
the market prices of pension insurance companies. The compulsory deficit of
the foundation, which is immaterial, has been provided for in the accounts of
the company. In Finnish GAAP the future salary increases have not been taken
into account when calculating the pension liability. U.S. GAAP calculations
have been prepared only for that part of pension liability that exceeds the
normal pension liability stipulated by law. The calculations are at the level
of total Neste Corporation only, and show, that at December 31, 1996 the local
method had resulted in a somewhat higher pension liability and somewhat higher
annual pension cost than the U.S. GAAP method.
(9) INCOME TAXES
The tax in the statements of operations has been calculated by applying the
general company tax rate of 28% to the income before taxes (according to
Finnish GAAP). Deferred taxes on the differences between the fiscal and
planned depreciation has been added.
(10) COMMITMENTS AND CONTINGENCIES
The Company is a party to various legal actions arising in the ordinary
course of its business. The liability, if any, associated with these matters
will not have a material adverse effect upon financial condition, results of
operations or cash flows of the Company.
The Company is also subject to environmental regulations, including rules
relating to air and water pollution and the storage and disposal of chemicals
and waste. The Company believes it complies in all material respects with
applicable laws.
F-64
<PAGE>
ISORA OY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The land and buildings in Vammala and Nurmijarvi are owned by Neste Oy and
rented to the Company under two separate rental agreements. The annual rent of
the Vammala agreement is $480,000. The rental payment can be renegotiated
annually in February. The Nurmijarvi agreement is similar to the Vammala
agreement. The annual rent is $144,000. The right to rent the property cannot,
however be transferred to a third party without the consent of the lessor. The
Pietarsaari production facilities have been rented from a third party at an
annual rent of $65,000. The rental period ends 12th of April 2000, but notice
can be given by both parties any time upon six months notice. The contract
includes an option to buy the land and buildings at a price offered by a third
party. The contract cannot be transferred to a third party without the consent
of the lessor.
(11) RELATED PARTY TRANSACTIONS:
The Company had accounts receivable from Neste Oy of $125,000, $81,000 and
$69,000 at December 31, 1995 and 1996 and September 30, 1997, respectively.
Additionally, the Company had accounts payable to Neste Oy and Neste Cellplast
AB of $952,000 and $46,000 at December 31, 1995, $907,000 and $44,000 at
December 31, 1996 and $613,000 and $0 at September 30, 1997.
(12) SUBSEQUENT EVENT:
On October 15, 1997, Neste Oy, Isora Oy, Neste Cellplast AB and Neste
Thermisol A/S sold certain EPS, PS and HIPS assets in Finland, Sweden and
Denmark, which include the assets of the Company, to StyroChem Finland Oy,
ThermiSol Finland Oy, ThermiSol Sweden AB and ThermiSol Denmark ApS and Radnor
Holdings Corporation as parent and guarantor.
F-65
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Neste Cellplast AB:
We have audited the accompanying balance sheet of NESTE CELLPLAST AB (a
Swedish Corporation and subsidiary of Neste Sverige AB) as of December 31,
1996, and the related statements of operations, changes in stockholders'
equity and cash flows for the year ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of NESTE CELLPLAST AB as of
December 31, 1996, and the results of its operations and its cash flows for
the year ended December 31, 1996, in conformity with generally accepted
accounting principles (see Note 2).
The financial statements of Neste Cellplast AB for the two years ended
December 31, 1994 and 1995 were audited by other auditors whose reports dated
February 17, 1995 and February 21, 1996, respectively, expressed unqualified
opinions on these statements. The opinion of such auditors, however, does not
cover the restatement of those financial statements as described in Note 2.
We have also audited the adjustments described in Note 2 that were applied
to restate the December 31, 1994 and December 31, 1995 financial statements.
In our opinion, such adjustments are appropriate and have been properly
applied.
ARTHUR ANDERSEN AB
Stockholm, Sweden
September 12, 1997
(except with respect to the matters discussed in Note 10,
as to which the date is October 15, 1997).
F-66
<PAGE>
ORGANISATION NUMBER: 556190-3419
AUDITORS' REPORT ON NESTE CELLPLAST AB
We have examined the annual report, the accounting records and the
administration by the Board of Directors and the Managing Director for the
financial year 1995. The examination was made in accordance with generally
accepted auditing standards.
The accounts have been prepared in conformity with the Swedish Companies Act.
We recommend,
that the Income Statement and the Balance Sheet be adopted,
that the profit be disposed as proposed in the administration report and
that the members of the Board of Directors and the Managing Director be
discharged from personal liability for the fiscal year.
1996-02-21
Ohrlings Coopers & Lybrand AB
F-67
<PAGE>
ORGANISATION NUMBER: 556190-3419
AUDITORS' REPORT ON NESTE CELLPLAST AKTIEBOLAG
We have examined the annual report, the accounting records and the
administration by the Board of Directors and the Managing Director for the
financial year 1994. The examination was made in accordance with generally
accepted auditing standards.
The accounts have been prepared in conformity with the Swedish Companies
Act.
We recommend,
that the Income Statement and the Balance Sheet be adopted,
that the profit be disposed as proposed in the administration report and
that the members of the Board of Directors and the Managing Director be
discharged from personal liability for the fiscal year.
1995-02-17
Ohrlings Reveko AB
F-68
<PAGE>
NESTE CELLPLAST AB
BALANCE SHEETS
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
------
CURRENT ASSETS
Cash................................. $ 1,029 $ 2,631 $ 1,636
Accounts receivable, net............. 1,159 727 1,372
Inventories, net..................... 489 439 505
Prepaid expenses and other current
assets.............................. 651 122 199
------- ------- -------
3,328 3,919 3,712
------- ------- -------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land................................. 11 11 10
Buildings and improvements........... 973 946 856
Machinery and equipment.............. 4,478 4,546 4,202
------- ------- -------
5,462 5,503 5,068
Less--accumulated depreciation....... (4,789) (4,869) (4,557)
------- ------- -------
673 634 511
------- ------- -------
TOTAL ASSETS........................... $ 4,001 $ 4,553 $ 4,223
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENTS LIABILITIES
Accounts payable..................... $ 933 $ 1,748 $ 1,381
Accrued liabilities.................. 383 489 493
Other current liabilities............ 333 60 221
------- ------- -------
1,649 2,297 2,095
------- ------- -------
DEFERRED TAX LIABILITY................. 61 51 36
------- ------- -------
COMMITMENTS AND CONTINGENCIES (Note 7)
STOCKHOLDERS' EQUITY
Share capital, 67,000 shares of nom.
SEK 100 each........................ 804 804 804
Retained earnings.................... 1,130 1,131 1,228
Cumulative translation adjustment.... 357 270 60
------- ------- -------
Total stockholders' equity......... 2,291 2,205 2,092
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY AND
LIABILITIES............................ $ 4,001 $ 4,553 $ 4,223
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-69
<PAGE>
NESTE CELLPLAST AB
STATEMENTS OF OPERATIONS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH
FOR THE YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------- -----------------------
1994 1995 1996 1996 1997
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES.................. $ 8,961 $10,072 $10,319 $ 7,715 $ 7,275
COST OF GOODS SOLD......... (6,251) (7,810) (6,904) (5,013) (4,685)
------- ------- ------- ------- -------
GROSS PROFIT............... 2,710 2,262 3,415 2,702 2,590
OPERATING EXPENSES:
Distribution............. (736) (766) (870) (705) (801)
Selling, general and
administrative.......... (1,236) (1,253) (1,725) (1,104) (1,108)
------- ------- ------- ------- -------
(1,972) (2,019) (2,595) (1,809) (1,909)
------- ------- ------- ------- -------
INCOME FROM OPERATIONS..... 738 243 820 893 681
OTHER INCOME:
Interest income, net..... 23 74 80 61 37
------- ------- ------- ------- -------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES..................... 761 317 900 954 718
Current income tax
provision............... (2) (6) (4) (4) 8
Deferred income tax
benefit................. 39 2 8 6 10
------- ------- ------- ------- -------
NET INCOME................. $ 798 $ 313 $ 904 $ 956 $ 736
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-70
<PAGE>
NESTE CELLPLAST AB
STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK CUMULATIVE
------------- RETAINED TRANSLATION
SHARES AMOUNT EARNINGS ADJUSTMENT TOTAL
------ ------ -------- ----------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1994............ 67,000 $804 $1,244 $(127) $1,921
Net income........................ -- -- 798 --
Group contribution................ -- -- (895) --
Translation Adjustment............ -- -- -- 221
------ ---- ------ -----
BALANCE, December 31, 1994.......... 67,000 804 1,147 94 2,045
Net income........................ -- -- 313 --
Group contribution................ -- -- (330) --
Translation Adjustment............ -- -- -- 263
------ ---- ------ -----
BALANCE, December 31, 1995.......... 67,000 804 1,130 357 2,291
Net income........................ 904
Group contribution................ (903)
Translation Adjustment............ -- -- -- (87)
------ ---- ------ -----
BALANCE, December 31, 1996.......... 67,000 804 1,131 270 2,205
Net income (unaudited)............ 736
Group contribution (unaudited).... (639)
Translation Adjustment
(unaudited)...................... -- -- -- (210)
------ ---- ------ -----
BALANCE, September 30, 1997
(unaudited)........................ 67,000 $804 $1,228 $ 60 $2,092
====== ==== ====== ===== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-71
<PAGE>
NESTE CELLPLAST AB
STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE
FOR THE YEAR MONTH PERIOD
ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------ -----------------------
1994 1995 1996 1996 1997
------- ------ ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income................. $ 798 $ 313 $ 904 $ 956 $ 736
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Depreciation.............. 336 205 233 167 164
Changes in operating
assets and liabilities
Accounts receivable...... (246) (296) 432 (440) (645)
Inventories.............. (255) 112 50 (107) (67)
Prepaid expense and
other................... 673 204 529 441 (76)
Accounts payable......... 423 (275) 815 325 (367)
Accrued liabilities and
other liabilities....... 22 270 (177) 203 150
------- ------ ------- ------ ------
Net cash provided by
(used in) operating
activities............. 1,751 533 2,786 1,545 (105)
------- ------ ------- ------ ------
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures....... (110) (331) (212) (97) (115)
Group contribution......... (895) (330) (903) (716) (639)
------- ------ ------- ------ ------
Net cash used in
investing activities... (1,005) (661) (1,115) (813) (754)
------- ------ ------- ------ ------
CASH FLOWS FROM FINANCING
ACTIVITIES
Payments of bank loans..... (127) (142) -- -- --
------- ------ ------- ------ ------
Net cash used in
financing activities... (127) (142) -- -- --
------- ------ ------- ------ ------
Translation effect on
cash...................... 153 198 (69) (21) (136)
------- ------ ------- ------ ------
NET INCREASE (DECREASE) IN
CASH........................ 772 (72) 1,602 711 (995)
CASH, beginning of period.... 329 1,101 1,029 1,029 2,631
------- ------ ------- ------ ------
CASH, end of period.......... $ 1,101 $1,029 $ 2,631 $1,740 $1,636
======= ====== ======= ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-72
<PAGE>
NESTE CELLPLAST AB
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
(1) ORGANIZATION
The Company
Neste Cellplast AB (the Company), a Swedish company, is owned by Neste
Sverige AB (91%) and Gullfiber AB (9%). Neste Sverige AB is a wholly owned
subsidiary of the Finnish oil-chemistry and energy company, Neste Oy. The
Company carries on thermisol manufacturing for insulation purposes in the
building and packaging industry. The Company has two manufacturing plants, one
in Norrtalje, and one in Vargarda. The Company's headquarters are located in
Norrtalje.
Intercompany transaction
For 1995 and 1996 91% and 89%, respectively, of total purchases were made
from other group companies, and 1% and 0%, respectively, of total sales were
made to group companies.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company's records are maintained in accordance with Swedish laws and
reporting requirements. These financial statements have been prepared in
accordance with United States generally accepted accounting principles ("U.S.
GAAP") and have been translated into U.S. dollars.
For Swedish statutory reporting purposes, operating expenses in the
statement of operations include cost of goods sold, distribution cost and
selling, general and administration costs. For U.S. GAAP purposes these costs
have been separated.
Foreign currency translation
The functional currency for the Company's operations is Swedish krona. The
translation from Swedish krona to U.S. dollars is performed for the balance
sheet accounts using the exchange rates in effect at the balance sheet date
and for revenue and expense accounts using a weighted average exchange rate
during the period. Translation gains and losses are not included in
determining net income but are accumulated in a separate component of
stockholders' equity, as is required by Statement of Financial Accounting
Standards No. 52, "Foreign Currency Translation."
Contributions to Neste Sverige AB
The Company has given group contribution to Neste Sverige AB during each of
the three years ended December 31, 1994, 1995 and 1996. Group contributions
are principally made to transfer taxable income from one group entity with the
objective of reducing the group's total current tax expenses. These
contributions lead to a taxable income for the recipient and a taxable expense
for the donor. The Company's annual current tax expense has therefore been
impacted by the group contributions. Since the contributions are permanent
differences for tax purposes, no deferred tax accounting related to group
contribution has been made.
For Swedish statutory reporting purposes, group contributions are accounted
for as an appropriation in the statement of operations. This accounting
methodology is utilized primarily to obtain an agreement between a company's
financial statement income and taxable income. Group contributions are thus
not related to a company's operations. For U.S. GAAP purposes, group
contributions provided have been treated as a transfer from stockholders'
equity.
F-73
<PAGE>
NESTE CELLPLAST AB
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Cash
Cash is deposited on a group account held by the Swedish parent company
Neste Sverige AB. The Company has access to these accounts. For Swedish
statutory purposes these liquid funds are disclosed as a short-term receivable
from the parent company. For U.S. GAAP purposes the item is restated to cash.
Revenue Recognition
Revenue is recognized when goods are shipped.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
The fair value of financial instruments is determined by reference to
various market data and other valuation techniques, as appropriate. Unless
otherwise disclosed, the fair value of financial instruments, including
accounts receivable and accounts payable, approximate their recorded values
due primarily to the short-term nature of their maturities.
(3) INVENTORY
Inventories are valued at the lower of cost (first-in, first-out) or market.
Provision for obsolescence has been calculated based on review of individual
items. Inventories at December 31, 1995 and 1996, and for the nine month
period ended September 30, 1997 consist of the following items:
<TABLE>
<CAPTION>
(IN THOUSANDS)
-----------------------
SEPTEMBER 30,
1995 1996 1997
---- ---- -------------
(UNAUDITED)
<S> <C> <C> <C>
Raw material............................................ $199 $171 $201
Work in progress........................................ 87 72 86
Finished goods.......................................... 203 196 218
---- ---- ----
Total................................................. $489 $439 $505
==== ==== ====
</TABLE>
The Company purchases most of its raw material from Neste Oy in Finland. The
prices are based on market prices of polystyrene, the primal component of
thermisol products.
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and depreciated using the
straight-line method with estimated lives ranging as follows:
<TABLE>
<S> <C>
Land................................................................ None
Land improvements................................................... 27 years
Buildings........................................................... 20 years
Equipment........................................................... 5 years
</TABLE>
F-74
<PAGE>
NESTE CELLPLAST AB
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(5) PROVISION FOR PENSION LIABILITIES
Providing for future pension liabilities, two main systems are used in
Sweden. One where actuarially computed premiums are currently paid to an
independent pension insurance company, and the other where an independent body
computes the actuarial liability for unfunded pensions which a company has to
include among long-term liabilities (the book reserve method).
When a company uses the method by paying premiums to an insurance company
there is no remaining risk or cost to the company for benefits earned to date
once the premium is paid. It is only benefits financed by the book reserve
method that has to be actuarially valued according to FAS 87.
The Company is paying a fixed premium to a Swedish independent insurance
company, SPP. The Company has therefore no pension liability to provide for
and no restatement is to be made according to FAS 87.
(6) INCOME TAXES
Deferred income taxes are provided under the asset and liability method.
This method requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this period, deferred income taxes
are determined based on the difference between the financial statement and tax
basis of assets and liabilities using enacted tax rates in effect for the year
in which the differences are expected to reverse. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts
expected to be realized. Income tax expense consists of the Company's current
liability for income taxes and the change in the Company's deferred tax assets
and liabilities.
The provision for income taxes varies from the amount of income tax
determined by applying the applicable domestic statutory tax rate to pre-tax
income as a result of the following:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Statutory tax rate........................................ 28% 28% 28%
Group contribution........................................ (26)% (27)% (27)%
Other..................................................... -- (1)% (1)%
--- --- ---
Effective tax rate........................................ 2% 0% 0%
=== === ===
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES
Patent dispute with Sundolitt AB
The Company is involved in a patent dispute with Sundolitt AB, a Swedish
competitor. In 1991, Sundolitt commenced a patent infringement for the product
"Makribbdack". In 1995, the Swedish Patent and Registration Office accorded
another patent for the product to Sundolitt AB. In November 1995, Sundolitt AB
claimed damages of $110,000. The Company filed an objection towards the patent
to the Swedish Patent and Registration Office in June 1997. The dispute is
expected to be settled in 1997. If the Company loses the dispute, they are to
pay $110,000 in damages to Sundolitt AB.
The Company is a party to various legal actions arising in the ordinary
course of its business. The liability, if any, associated with these matters
will not have a material adverse effect upon financial condition, results of
operations or cash flows of the Company.
F-75
<PAGE>
NESTE CELLPLAST AB
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Company is also subject to environmental regulations, including rules
relating to air and water pollution and the storage and disposal of chemicals
and waste. The Company believes it complies in all material respects with
applicable laws.
(8) EMPLOYEE BENEFIT PLAN:
The Company has a profit sharing plan, which covers all employees. The
Company will pay the employees a total annual bonus amounting to 10% of income
after depreciation. The profit sharing plan exists on a voluntary basis and
the management is free to abolish the plan from one year to another. The board
of directors has decided that a bonus will be paid to the employees according
to the plan in 1997. The bonus amounted to $82,000, $29,000 and $38,000 in
1996, 1995 and 1994, respectively. The amount for 1997 has not yet been
decided upon.
(9) RESTRICTIONS ON RETAINED EARNINGS
Retained earnings available for dividends are based upon statutory financial
statements. Under the provisions of the Swedish Companies Act a legal reserve
must be established in an amount equal to 20% of the share capital. This
reserve is established by appropriating 10% of the statutory net income each
year until the prescribed amount has been appropriated. The legal reserve may
be used to absorb deficit, but usually may not be distributed as dividends.
Retained earnings available for dividends were $905,000 at December 31,
1996.
(10) SUBSEQUENT EVENTS:
On October 15, 1997, Neste Oy, Isora Oy, Neste Cellplast AB and Neste
Thermisol A/S sold certain EPS, PS and HIPS assets in Finland, Sweden and
Denmark, which include the assets of the Company, to StyroChem Finland Oy,
ThermiSol Finland Oy, ThermiSol Sweden AB and ThermiSol Denmark ApS and Radnor
Holdings Corporation as parent and guarantor.
On October 15, 1997, the minority interest of Gullfiber AB was acquired by
Neste Sverige AB.
F-76
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Neste Thermisol A/S:
We have audited the accompanying balance sheets of NESTE THERMISOL A/S as of
December 31, 1995 and 1996, and the related statements of operations, changes
in shareholder's equity and cash flows for each of the three years in the
period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of NESTE Thermisol A/S as of
December 31, 1995 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles (see Note 1).
ARTHUR ANDERSEN
Arhus, Denmark
August 29, 1997
(except with respect to the matters discussed in Note 8,
as to which the date is October 15, 1997).
F-77
<PAGE>
NESTE THERMISOL A/S
BALANCE SHEETS
(IN THOUSANDS OF US DOLLARS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1995 1996 1997
------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents................. $ 787 $ 872 $ 720
Accounts receivable.................. 403 327 575
Inventories, net..................... 481 242 332
Prepaid expenses and other........... 174 32 71
------- ------- -------
1,845 1,473 1,698
------- ------- -------
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements................ 207 193 170
Buildings and improvements........... 2,076 1,979 1,747
Machinery and equipment.............. 2,920 2,864 2,452
------- ------- -------
5,203 5,036 4,369
Less accumulated depreciation........ (1,758) (1,936) (1,800)
------- ------- -------
Total fixed assets................. 3,445 3,100 2,569
------- ------- -------
$ 5,290 $ 4,573 $ 4,267
======= ======= =======
LIABILITIES AND OWNER'S INVESTMENT
CURRENT LIABILITIES:
Accounts payable..................... $ 652 $ 439 $ 501
Accrued liabilities.................. 1,248 1,280 875
------- ------- -------
1,900 1,719 1,376
OTHER LONG-TERM LIABILITIES............ 2,073 1,710 1,310
COMMITMENTS AND CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY:
Share capital........................ 2,398 2,237 1,973
Accumulated deficit.................. (1,074) (1,096) (354)
Translation adjustment............... (7) 3 (38)
------- ------- -------
1,317 1,144 1,581
------- ------- -------
$ 5,290 $ 4,573 $ 4,267
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-78
<PAGE>
NESTE THERMISOL A/S
STATEMENTS OF OPERATIONS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH
PERIOD ENDED
FOR THE YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------- -----------------------
1994 1995 1996 1996 1997
---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES............... $ 4,538 $ 5,675 $ 5,470 $4,074 $5,083
COST OF GOODS SOLD...... 3,105 3,800 3,405 2,617 2,816
---------- ---------- ---------- ------ ------
GROSS PROFIT............ 1,433 1,875 2,065 1,457 2,267
OPERATING EXPENSES
Distribution.......... 561 624 642 473 616
Selling, general and
administrative....... 1,094 1,241 1,368 1,002 965
---------- ---------- ---------- ------ ------
INCOME (LOSS) FROM
OPERATIONS............. (222) 10 55 (18) 686
FINANCIAL EXPENSES...... 186 151 142 114 76
---------- ---------- ---------- ------ ------
NET INCOME (LOSS)....... $ (408) $ (141) $ (87) $ (132) $ 610
========== ========== ========== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-79
<PAGE>
NESTE THERMISOL A/S
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<S> <C>
BALANCE, January 1, 1994................................................ $1,070
Increase to share capital............................................. 575
Reduction of share capital............................................ (575)
Share capital transferred to cover the loss........................... 575
Net loss.............................................................. (408)
Translation adjustment................................................ 98
------
BALANCE, December 31, 1994.............................................. 1,335
Net loss.............................................................. (141)
Translation adjustment................................................ 123
------
BALANCE, December 31, 1995.............................................. 1,317
Net loss.............................................................. (87)
Translation adjustment................................................ (86)
------
BALANCE, December 31, 1996.............................................. 1,144
Net income (unaudited)................................................ 610
Translation adjustment (unaudited).................................... (173)
------
BALANCE, September 30, 1997 (unaudited)................................. $1,581
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-80
<PAGE>
NESTE THERMISOL A/S
STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF US DOLLARS)
<TABLE>
<CAPTION>
FOR THE NINE MONTH
FOR THE YEAR ENDED PERIOD ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------- -----------------------
1994 1995 1996 1996 1997
------ ------ ------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING
ACTIVITIES:
Net income (loss)............ $ (408) $ (141) $ (87) $(132) $ 610
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation................. 372 413 320 239 231
Changes in operating assets
and liabilities:
Accounts receivable.......... (17) (145) 76 37 (247)
Inventories, net............. (76) (77) 238 184 (89)
Prepaid expenses and other... (41) (107) 142 39 (39)
Accounts payable............. 357 39 (212) (214) 61
Accrued liabilities.......... 362 83 50 (228) (383)
------ ------ ------ ----- -----
Net cash provided (used) by
operating activities...... 549 65 527 (75) 144
------ ------ ------ ----- -----
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net purchases of property,
plant & equipment........... (121) (134) (201) (116) (57)
------ ------ ------ ----- -----
Net cash used in investing
activities................ (121) (134) (201) (116) (57)
------ ------ ------ ----- -----
CASH FLOWS FROM FINANCING
ACTIVITIES:
Increase of share capital.... 575
Installment on bank debt..... (133) (7) -- -- --
Installment on loan.......... -- (29) (232) (234) (211)
------ ------ ------ ----- -----
Net cash (provided by) used
in financing activites.... 442 (36) (232) (234) (211)
------ ------ ------ ----- -----
Increase (decrease) in cash.... 870 (105) 94 (425) (124)
CASH, beginning of period...... 46 878 787 787 872
Translation effect on cash... (38) 14 (9) (6) (28)
------ ------ ------ ----- -----
CASH, end of period............ $ 878 $ 787 $ 872 $ 356 $ 720
====== ====== ====== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-81
<PAGE>
NESTE THERMISOL A/S
NOTES TO FINANCIAL STATEMENTS
(INCLUDING NOTES APPLICABLE TO UNAUDITED PERIODS)
(1) ORGANIZATION AND BASIS OF PRESENTATION:
The Business Unit
Neste Thermisol A/S (the Company) is owned by the Finnish concern Neste Oy,
who has activities within chemistry, gas and natural gas. The company is
registered in Denmark.
The Company produces and markets insulation material made of polystyrene for
the Danish and German construction activities, and has considerable market
shares within floor and roof insulation.
Basis of Presentation
The Company's records are maintained in accordance with Danish law and
reporting requirements. These financial statements have been converted from
Danish GAAP to U.S. GAAP.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fiscal year
The fiscal year of the Company presented in the financial statements is the
calendar year.
Foreign Currency Translation
The assets and liabilities of the Company, whose functional currency is
other than the U.S. dollar, are translated into U.S. dollars at year end
exchange rates. Revenues and expense accounts are translated using the
weighted average exchange rate during the periods. Translation gains and
losses are not included in determining net income but are accumulated in a
separate component of owner's investment, as is required by Statement of
Financial Accounting Standards No. 52, "Foreign Currency Translation."
Cash
The Company is an operating unit of Neste Oy, and participates in the cash
pool of Neste Oy. All cash requirements of the Company have been funded out of
this cash pool.
Revenue Recognition
Revenue is recognized when goods are shipped. Sales are recorded gross
before cash and other discounts, which are deducted from the value of sales,
when the customer fulfills the terms of trade agreed upon.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
The fair value of financial instruments is determined by reference to
various market data and other valuation techniques, as appropriate. Unless
otherwise disclosed, the fair value of financial instruments, including
accounts
F-82
<PAGE>
NESTE THERMISOL A/S
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
receivables and accounts payable, approximate their recorded values due
primarily to the short-term nature of their maturities.
(3) INVENTORIES
Inventories are stated at acquisition cost or production cost--determined on
the basis of FIFO (first-in, first-out) method and include the cost of
materials, labor and manufacturing overhead.
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------------------
1995 1996 SEPTEMBER 30, 1997
---- ---- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Raw material and supplies................... $204 $ 69 $ 135
Work in progress............................ 213 104 137
Finished goods.............................. 64 69 60
---- ---- -----
$481 $242 $ 332
==== ==== =====
</TABLE>
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost, less accumulated
depreciation. Expenditures for improvements that increase the values or extend
the useful life are capitalized and maintenance repair costs are expensed as
incurred. For financial reporting purposes, depreciation is computed using the
straight-line method over the useful lives of the respective assets, which
range from 10 to 25 years for buildings and 3 to 15 years for machinery and
equipment. The depreciation time for the production plant has from 1996 been
changed from 10 to 15 years.
(5) ACCRUED LIABILITIES
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
----------------------------------
1995 1996 SEPTEMBER 30, 1997
------- ------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Bonus due to customers................... $ 510 $ 591 $ 454
A-Tax, vacation pay, etc................. 178 185 159
Other accrued liabilities................ 320 280 64
Current part of long term liabilities.... 240 224 198
------- ------- ------
$ 1,248 $ 1,280 $ 875
======= ======= ======
(6) LONG-TERM LIABILITIES
Long-term liabilities consist of the following:
<CAPTION>
(IN THOUSANDS)
----------------------------------
1995 1996 SEPTEMBER 30, 1997
------- ------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
Due 1-5 years............................ $ 1,322 $ 1,065 $ 791
Due after 5 years........................ 751 645 519
------- ------- ------
$ 2,073 $ 1,710 $1,310
======= ======= ======
</TABLE>
F-83
<PAGE>
NESTE THERMISOL A/S
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(7) COMMITMENTS AND CONTINGENCIES
The Company is a party to various legal actions arising in the ordinary
course of its business. The liability if any, associated with these matters
will not have a material adverse effect upon financial condition, results of
operations or cash flows of the Company.
The Company is also subject to environmental regulations, including rules
relating to air and water pollution and the storage and disposal of chemicals
and waste. The Company believes it complies in all material respects with
applicable laws.
The company has no contracts of guarantee or pension provisions.
(8) SUBSEQUENT EVENT:
On October 15, 1997, Neste Oy, Isora Oy, Neste Cellplast AB and Neste
Thermisol A/S sold certain EPS, PS and HIPS assets in Finland, Sweden and
Denmark, which include the assets of the Company, to StyroChem Finland Oy,
ThermiSol Finland Oy, ThermiSol Sweden AB and ThermiSol Denmark ApS and Radnor
Holdings Corporation as parent and guarantor.
F-84
