<PAGE>
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the quarterly period ended
June 30, 2000
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________ to __________
Commission file number: 333-19495
RADNOR HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-2674715
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Three Radnor Corporate Center, Suite 300
100 Matsonford Road, Radnor, Pennsylvania 19087
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 610-341-9600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [_]
The number of shares outstanding of the Registrant's common stock as of
August 10, 2000:
<TABLE>
<CAPTION>
Number
Class of Shares
------------------------------------------------- -------------
<S> <C>
Voting Common Stock; $.10 par value 600
Nonvoting Common Stock; $.10 par value 245
Class B Nonvoting Common Stock; $.01 par value 5,400
</TABLE>
--------------------------------------------------------------------------------
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS
Cash $ 4,116 $ 7,579
Accounts receivable, net 44,285 29,135
Inventories, net 49,120 34,781
Prepaid expenses and other 6,386 6,480
Deferred tax asset 1,656 1,660
---------- ----------
Total current assets 105,563 79,635
---------- ----------
PROPERTY, PLANT AND EQUIPMENT 228,777 226,347
LESS - ACCUMULATED DEPRECIATION (40,492) (34,235)
---------- ----------
NET PROPERTY, PLANT AND EQUIPMENT 188,285 192,112
---------- ----------
OTHER ASSETS 21,770 21,936
---------- ----------
Total assets $ 315,618 $ 293,683
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 58,834 $ 39,447
Accrued liabilities 19,699 23,486
Current portion of long-term debt and
capital lease obligations 4,584 3,818
---------- ----------
Total current liabilities 83,117 66,751
---------- ----------
LONG-TERM DEBT, net of current portion 216,174 206,264
---------- ----------
CAPITAL LEASE OBLIGATIONS, net of current portion 4,751 5,335
---------- ----------
DEFERRED TAX LIABILITY 6,246 7,245
---------- ----------
OTHER NONCURRENT LIABILITIES 2,119 514
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Voting and nonvoting common stock, 22,700 shares authorized,
6,245 shares issued and outstanding 1 1
Additional paid-in capital 19,387 19,387
Retained deficit (7,142) (5,297)
Cumulative translation adjustment (9,035) (6,517)
---------- ----------
Total stockholders' equity 3,211 7,574
---------- ----------
Total liabilities and stockholders' equity $ 315,618 $ 293,683
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
--------------------------------- ---------------------------------
June 30, June 25, June 30, June 25,
2000 1999 2000 1999
------------ ------------ ---------------- ---------------
<S> <C> <C> <C> <C>
NET SALES $ 93,164 $ 80,995 $ 174,479 $ 148,747
COST OF GOODS SOLD 68,066 57,854 131,205 107,006
------------ ------------- --------------- ---------------
GROSS PROFIT 25,098 23,141 43,274 41,741
OPERATING EXPENSES:
Distribution 6,294 6,313 12,162 11,350
Selling, general and
administrative 12,067 10,477 22,816 20,668
------------ ------------- --------------- ---------------
INCOME FROM OPERATIONS 6,737 6,351 8,296 9,723
OTHER EXPENSE:
Interest, net 5,523 5,089 10,942 10,110
Other, net 167 156 330 570
------------ ------------- --------------- ---------------
INCOME (LOSS) BEFORE INCOME TAXES 1,047 1,106 (2,976) (957)
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 166 68 (156) (59)
Deferred 232 336 (975) (302)
------------ ------------- --------------- ---------------
398 404 (1,131) (361)
------------ ------------- --------------- ---------------
NET INCOME (LOSS) $ 649 $ 702 $ (1,845) $ (596)
============ ============ =============== ===============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the six months ended
-----------------------------------
June 30, June 25,
2000 1999
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,845) $ (596)
Adjustments to reconcile net loss to cash used
in operating activities-
Depreciation and amortization 9,252 8,262
Unrealized gain on marketable securities -- (47)
Deferred income taxes (975) (302)
Changes in operating assets and liabilities, net of
acquisition of business-
Accounts receivable, net (15,668) (7,006)
Inventories, net (14,898) 4,323
Prepaid expenses and other 33 (3,421)
Accounts payable 18,011 (2,302)
Accrued liabilities and other (2,884) 822
-------------- -------------
Net cash used in continuing operations (8,974) (267)
Net cash used in discontinued operations (2,207) --
-------------- --------------
Net cash used in operating activities (11,181) (267)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (4,910) (10,293)
Increase in other assets (979) (1,220)
-------------- --------------
Net cash used in investing activities (5,889) (11,513)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on bank financed debt and
unsecured notes payable 14,282 12,048
Net payments on capital lease obligations (536) (220)
-------------- --------------
Net cash provided by financing activities 13,746 11,828
-------------- --------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (139) (43)
-------------- --------------
NET INCREASE (DECREASE) IN CASH (3,463) 5
CASH, beginning of period 7,579 3,975
-------------- --------------
CASH, end of period $ 4,116 $ 3,980
============== ==============
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $ 10,125 $ 9,240
============== ==============
Income taxes paid, net of refunds of $168 in 2000 $ (162) $ 161
============== ==============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
4
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
SUMMARY BY OPERATING SEGMENTS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
------------------------------------ -----------------------------------
June 30, June 25, June 30, June 25,
2000 1999 2000 1999
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Sales to Unaffiliated Customers:
Packaging and Insulation $ 64,359 $ 59,255 $ 119,119 $ 109,277
Specialty Chemicals 37,372 28,709 68,305 49,774
Corporate and Other 681 507 1,515 900
Transfers Between Operating
Segments/(1)/ (9,248) (7,476) (14,460) (11,204)
------------- ------------- ------------- ------------
Consolidated $ 93,164 $ 80,995 $ 174,479 $ 148,747
------------- ------------- ------------- ------------
Operating Income (Loss):
Packaging and Insulation $ 5,854 $ 7,520 $ 10,531 $ 13,765
Specialty Chemicals 2,604 45 859 (1,564)
Corporate and Other (1,721) (1,214) (3,094) (2,478)
------------- ------------- ------------- ------------
Consolidated $ 6,737 $ 6,351 $ 8,296 $ 9,723
------------- ------------- ------------- ------------
Income (Loss) from Operations
before Income Taxes:
Packaging and Insulation $ 1,300 $ 4,451 $ 2,525 $ 7,588
Specialty Chemicals 2,749 (872) 145 (3,215)
Corporate and Other (3,002) (2,473) (5,646) (5,330)
------------- ------------- ------------- -----------
Consolidated $ 1,047 $ 1,106 $ (2,976) $ (957)
------------- ------------- ------------- -----------
</TABLE>
/(1)/ Transfers between operating segments reflect the sale of EPS bead from
the Specialty Chemicals operating segment to the Packaging and
Insulation operating segment.
5
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
SUMMARY BY GEOGRAPHIC REGION
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
-------------------------- ------------------------
June 30, June 25, June 30, June 25,
2000 /(1)/ 1999 /(2)/ 2000 /(1)/ 1999 /(2)/
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales to Unaffiliated Customers:
United States $ 59,710 $ 54,879 $ 115,692 $ 104,909
Canada 7,009 6,128 14,097 10,922
Europe 28,584 22,270 48,464 36,720
Transfers Between Geographic
Regions (2,139) (2,282) (3,774) (3,804)
---------- ---------- --------- ---------
Consolidated $ 93,164 $ 80,995 $ 174,479 $ 148,747
---------- ---------- --------- ---------
Operating Income:
United States $ 1,137 $ 3,545 $ 1,642 $ 7,082
Canada 429 472 653 863
Europe 5,171 2,334 6,001 1,778
---------- --------- --------- ---------
Consolidated $ 6,737 $ 6,351 $ 8,296 $ 9,723
---------- --------- --------- ---------
Income (Loss) from Operations
before Income Taxes:
United States $ (2,681) $ 179 $ (6,059) $ 6
Canada (57) 60 (330) 171
Europe 3,785 867 3,413 (1,134)
--------- --------- --------- ---------
Consolidated $ 1,047 $ 1,106 $ (2,976) $ (957)
--------- --------- --------- ---------
</TABLE>
/(1)/ Transfers between geographic regions reflect the sale of EPS bead from
the Company's Canadian specialty chemical operations to its domestic
food packaging operations as well as the sale of product from the
Company's domestic food packaging operations to its European food
packaging operations.
/(2)/ Transfers between geographic regions reflect the sale of EPS bead from
the Company's Canadian specialty chemical operations to its domestic
food packaging operations.
6
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by Radnor Holdings Corporation and subsidiaries (collectively,
"Radnor" or the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in consolidated financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In the opinion
of the Company, the statements include all adjustments (which include only
normal recurring adjustments) required for a fair statement of financial
position, results of operations and cash flows for such periods. The
results of operations for the interim periods are not necessarily
indicative of the results for a full year.
(2) DISCONTINUED OPERATIONS
Pursuant to an asset purchase agreement among Benchmark Holdings, Inc.
("Benchmark"), WinCup Holdings, Inc. ("WinCup"), and the Fort James
Corporation, formerly James River Paper Company, Inc. ("Fort James"), dated
October 31, 1995, Benchmark and WinCup sold 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 operations of Benchmark's cutlery and straws
business and WinCup's thermoformed cup business were accounted for as
discontinued operations. Net cash used in discontinued operations for the
six months ended June 30, 2000 represented payments made in connection with
the 1999 settlement of a contingent liability related to the discontinued
operations.
(3) INVENTORIES
The components of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------- ------------
<S> <C> <C>
Raw Materials $15,759 $10,632
Work in Process 1,619 1,054
Finished Goods 31,742 23,095
------- -------
$49,120 $34,781
======= =======
</TABLE>
(4) INTEREST EXPENSE
Included in interest expense was $375,000 and $369,000 of amortization of
deferred financing costs for the three months ended June 30, 2000 and June
25, 1999, respectively, and $750,000 and $760,000 of amortization of
deferred financing costs for the six months ended June 30, 2000 and June
25, 1999, respectively. Premium amortization related to the issuance of the
Company's 10% Series B Senior Notes due 2003 of $86,000 and $80,000 for the
three months ended June 30, 2000 and June 25, 1999, respectively, and
$170,000 and $158,000 for the six months ended June 30, 2000 and June 25,
1999, respectively, was also included in interest expense.
7
<PAGE>
(5) COMPREHENSIVE INCOME
Comprehensive income is the total of net income (loss) and non-owner
changes in equity. The Company had comprehensive income (loss) as follows
(in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------- ----------------------
June 30, June 25, June 30, June 25,
2000 1999 2000 1999
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net Income (Loss) $ 649 $ 702 $(1,845) $ (596)
Foreign Currency Translation Adjustment (232) (1,243) (2,518) (4,886)
----- ------- ------- -------
Comprehensive Income (Loss) $ 417 $ (541) $(4,363) $(5,482)
===== ======= ======= =======
</TABLE>
(6) SUPPLEMENTAL FINANCIAL INFORMATION
Radnor Holdings Corporation is a holding company that has no operations
separate from its investment in subsidiaries. The Company's $100 million
10% Senior Notes due 2003 and $60 million 10% Series B Senior Notes due
2003 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 three months and six
months ended June 30, 2000 and June 25, 1999 (in thousands):
<TABLE>
<CAPTION>
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
Three Months Ended June 30, 2000
--------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ -- $ 59,845 $35,458 $(2,139) $ 93,164
Gross Profit -- 14,240 10,858 -- 25,098
Operating Income -- 960 5,777 -- 6,737
Net Income (Loss) -- (3,387) 4,036 -- 649
Three Months Ended June 25, 1999
--------------------------------
Net Sales $ -- $ 54,879 $28,398 $(2,282) $ 80,995
Gross Profit -- 14,932 8,209 -- 23,141
Operating Income -- 3,453 2,898 -- 6,351
Net Income (Loss) -- (376) 1,078 -- 702
Six Months Ended June 30, 2000
------------------------------
Net Sales $ -- $115,952 $62,301 $(3,774) $174,479
Gross Profit -- 26,483 16,791 -- 43,274
Operating Income -- 1,103 7,193 -- 8,296
Net Income (Loss) -- (5,615) 3,770 -- (1,845)
</TABLE>
8
<PAGE>
(6) SUPPLEMENTAL FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
Six Months Ended June 25, 1999
------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ -- $104,909 $47,642 $(3,804) $148,747
Gross Profit -- 29,213 12,528 -- 41,741
Operating Income -- 6,990 2,733 -- 9,723
Net Income (Loss) -- 219 (815) -- (596)
As of June 30, 2000
-------------------
Current Assets $ 178 $ 59,528 $50,237 $ (4,380) $105,563
Non-Current Assets 139,903 212,655 49,834 (192,337) 210,055
Current Liabilities 1,383 54,132 33,747 (6,145) 83,117
Non-Current Liabilities 168,081 106,786 53,028 (98,605) 229,290
As of June 25, 1999
-------------------
Current Assets $ 1,437 $ 50,828 $29,271 $ (2,403) $ 79,133
Non-Current Assets 138,604 204,011 50,721 (182,739) 210,597
Current Liabilities 1,051 36,504 16,915 (3,793) 50,677
Non-Current Liabilities 161,704 96,595 55,189 (89,902) 223,586
</TABLE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
-------
Radnor Holdings Corporation, through acquisition and internal development,
has established itself as a leading worldwide manufacturer and distributor of
specialty chemicals and foam packaging and insulation products for the
foodservice, insulation and packaging industries.
The packaging and insulation business segment manufactures and distributes
foam cup and container products for the foodservice industry as well as a
variety of standard and specialized insulation products. Through its WinCup
subsidiary, the Company is the second largest producer in the United States of
foam cups and containers for the foodservice industry. The specialty chemicals
business segment manufactures and distributes expandable polystyrene bead
("EPS") for internal consumption and distribution to the insulation and
packaging industries. Through its Radnor Chemical Corporation ("Radnor
Chemical") subsidiary, the Company is the third largest worldwide producer of
EPS.
9
<PAGE>
Results of Operations
---------------------
CONSOLIDATED
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------- -----------------------------------
June 30, June 25, June 30, June 25,
(Millions of dollars) 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $93.2 $81.0 $174.5 $148.7
-----------------------------------------------------------------------------------------------------------------
Gross profit 25.1 23.2 43.3 41.7
-----------------------------------------------------------------------------------------------------------------
Operating expenses 18.4 16.8 35.0 32.0
-----------------------------------------------------------------------------------------------------------------
Income from operations 6.7 6.4 8.3 9.7
-----------------------------------------------------------------------------------------------------------------
</TABLE>
Net sales for the three months ended June 30, 2000 were $93.2 million, an
increase of $12.2 million from the three months ended June 25, 1999. This
increase was primarily due to growth in sales volume in the packaging and
insulation segment and increased pricing across all operating segments. Gross
profit for the three months ended June 30, 2000 increased by $1.9 million to
$25.1 million from $23.2 million for the same period in 1999. This increase was
primarily caused by increased net sales as well as improved manufacturing
efficiencies, partially offset by increased raw material costs and the time lag
between rising styrene monomer prices and increases in EPS selling prices.
Operating expenses for the three months ended June 30, 2000 increased to $18.4
million from $16.8 million for the same period in 1999 primarily due to selling
expenses which vary as a function of sales and increased corporate operating
costs.
Net sales for the six months ended June 30, 2000 were $174.5 million. This
$25.8 million or 17.4% increase from the same period in the prior year was
primarily due to growth in sales volume in the packaging and insulation segment
and increased pricing across all operating segments. Gross profit for the six
months ended June 30, 2000 increased by $1.6 million to $43.3 million from $41.7
million for the same period in 1999. This increase was primarily caused by
increased net sales as well as improved manufacturing efficiencies, partially
offset by increased raw material costs and the time lag between rising styrene
monomer prices and increases in EPS selling prices. Operating expenses increased
by $3.0 million to $35.0 million for the six months ended June 30, 2000 due to
higher selling and distribution costs as well as increased amortization of
intangible assets.
SEGMENT ANALYSIS
Packaging & Insulation
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------- -----------------------------------
June 30, June 25, June 30, June 25,
(Millions of dollars) 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $64.4 $59.3 $119.1 $109.3
-----------------------------------------------------------------------------------------------------------------
Gross profit 17.4 18.3 32.5 33.9
-----------------------------------------------------------------------------------------------------------------
Operating expenses 11.5 10.8 22.0 20.1
-----------------------------------------------------------------------------------------------------------------
Income from operations 5.9 7.5 10.5 13.8
-----------------------------------------------------------------------------------------------------------------
</TABLE>
Net sales in the packaging and insulation business segment increased by
$5.1 million to $64.4 million for the three months ended June 30, 2000 primarily
due to volume growth and increased pricing. Gross profit declined to 27.0% of
net sales for the three months ended June 30, 2000 from 30.9% of net sales for
the same
10
<PAGE>
period in 1999 primarily due to increased raw material and energy costs,
partially offset by improved manufacturing efficiencies. Operating expenses
increased to $11.5 million for the three months ended June 30, 2000 from $10.8
million for the same period in 1999 primarily due to higher selling costs in the
domestic packaging business. Income from operations decreased by $1.6 million
for the three months ended June 30, 2000 over the same period in 1999 for the
reasons described above.
Net sales for the six months ended June 30, 2000 were $119.1 million. This
$9.8 million or 9.0% increase over the six months ended June 25, 1999 was
primarily due to increased pricing and volume growth. Gross profit as a
percentage of net sales decreased to 27.3% for the six months ended June 30,
2000 from 31.0% for the same period in 1999. This decrease was primarily caused
by increased raw material and energy costs, partially offset by improved
manufacturing efficiencies. Operating expenses increased by $1.9 million to
$22.0 million for the six months ended June 30, 2000 due to higher selling and
distribution costs. Income from operations decreased by $3.3 million for the
six months ended June 30, 2000 over the same period in 1999 for the reasons
described above.
Specialty Chemicals
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------- -----------------------------------
June 30, June 25, June 30, June 25,
(Millions of dollars) 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $37.4 $28.7 $68.3 $49.8
-----------------------------------------------------------------------------------------------------------------
Gross profit 6.6 4.3 8.7 6.5
-----------------------------------------------------------------------------------------------------------------
Operating expenses 4.0 4.3 7.8 8.1
-----------------------------------------------------------------------------------------------------------------
Income from operations 2.6 - 0.9 (1.6)
-----------------------------------------------------------------------------------------------------------------
</TABLE>
Net sales for the second quarter of fiscal 2000 increased to $37.4 million
from $28.7 million for the same period in 1999, primarily due to increased
selling prices. Net sales for the three months ended June 30, 2000 and June 25,
1999 included sales to the packaging and insulation segment of $9.2 million and
$7.5 million, respectively. Gross profit increased $2.3 million to $6.6 million
for the three months ended June 30, 2000. As a percentage of net sales, gross
profit increased to 17.6% for the second quarter of fiscal 2000 from 15.0% for
the same period in 1999. This increase was primarily caused by increased
selling prices and manufacturing efficiencies throughout the segment, partially
offset by the time lag between rising styrene monomer costs and sales price
increases. Operating expenses decreased $0.3 million to $4.0 million for the
three months ended June 30, 2000 primarily as a result of cost containment
initiatives.
Net sales in the specialty chemicals segment increased by $18.5 million to
$68.3 million for the six months ended June 30, 2000 primarily due to increased
selling prices. Gross profit increased $2.2 million to $8.7 million for the six
months ended June 30, 2000. This increase was primarily caused by increased net
sales as well as improved manufacturing efficiencies, partially offset by the
time lag between rising raw material costs and selling price increases during
the beginning of the period. Operating expenses decreased $0.3 million to $7.8
million primarily as a result of cost containment initiatives.
Corporate & Other
For the three month and six month periods ended June 30, 2000, corporate
operating expenses increased by $1.1 million and $1.4 million, respectively,
from the same periods in 1999. This increase was primarily due to increased
amortization of intangible assets and increased operating costs at the Company's
executive offices.
11
<PAGE>
Interest Expense
----------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------------------- ---------------------------------------
June 30, June 25, June 30, June 25,
(Millions of dollars) 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest expense $ 5.5 $ 5.1 $10.9 $10.1
---------------------------------------------------------------------------------------------------------------
</TABLE>
Interest expense for the three months and the six months ended June 30, 2000
increased by $0.4 million and $0.8 million, respectively, over the same periods
in 1999. These increases were primarily due to an increase in interest rates,
greater borrowings related to the purchase of the Company's Tolleson, Arizona
facility and other capital expenditures, and an increased level of working
capital.
Income Taxes
------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------------------- ---------------------------------------
June 30, June 25, June 30, June 25,
(Millions of dollars) 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income tax expense (benefit) $ 0.4 $ 0.4 $(1.1) $(0.4)
----------------------------------------------------------------------------------------------------------------
</TABLE>
The effective tax rate for the three months ended June 30, 2000 increased to
38.0% of pre-tax income from 36.5% of pre-tax income for the same period in
1999. The effective tax rates for the six months ended June 30, 2000 and June
25, 1999 were 38.0% and 37.7% of pre-tax income, respectively. As of June 30,
2000 the Company had approximately $49.4 million of net operating loss
carryforwards for federal income tax purposes, which expire through 2020.
Liquidity and Capital Resources
-------------------------------
During the six months ended June 30, 2000 and June 25, 1999, the Company's
principal source of funds consisted of cash from financing activities. During
the 2000 period, after tax cash flow of $6.4 million, net borrowings on bank
financed debt and capital leases of $13.7 million and a decrease in cash of $3.5
million were primarily used to fund capital expenditures of $4.9 million and a
$17.6 million increase in working capital.
As of June 30, 2000 the Company had $33.5 million outstanding and $7.9 million
of availability under its revolving credit agreements. The principal uses of
cash for the next several years will be working capital requirements and capital
expenditures.
As a holding company, Radnor Holdings Corporation is dependent upon dividends
and other payments from its subsidiaries to generate the funds necessary to meet
its obligations. Subject to certain limitations under applicable state law and
the Company's credit agreements, Radnor Holdings Corporation 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 the revolving credit facilities, will
be sufficient to meet the Company's expected operating needs, planned capital
expenditures and debt service requirements.
12
<PAGE>
Other Financial Data
--------------------
Financial Instruments
There has been no material change in the net financial instrument position or
sensitivity to market risk since the disclosure in the annual report.
Forward Looking Statements
--------------------------
All statements contained herein that are not historical facts are based on
current expectations. These statements are forward looking in nature and
involve a number of risks and uncertainties. Such risks and uncertainties are
described in detail in the Company's Report on Form 10-K for the year ended
December 31, 1999, Commission File No. 333-19495, to which reference is hereby
made.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is involved in various legal actions arising in the normal course
of business. After taking into consideration legal counsel's evaluation of such
actions, management believes that these actions will not have a material effect
on the Company's financial position or results of operations.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the three month period
ended June 30, 2000.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, its duly authorized officer and chief financial officer.
RADNOR HOLDINGS CORPORATION
(registrant)
/s/ Michael V. Valenza
---------------------------
Date: August 10, 2000 By:
Michael V. Valenza
Senior Vice President-Finance and
Chief Financial Officer
14
