<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
September 29, 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
November 13, 2000:
Number
Class of Shares
----- ---------
Voting Common Stock; $.10 par value 600
Nonvoting Common Stock; $.10 par value 245
Class B Nonvoting Common Stock; $.01 par value 5,400
================================================================================
<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>
September 29, December 31,
2000 1999
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS
Cash $ 3,198 $ 7,579
Accounts receivable, net 45,030 29,135
Inventories, net 43,730 34,781
Prepaid expenses and other 9,684 6,480
Deferred tax asset 1,654 1,660
------------- ------------
Total current assets 103,296 79,635
------------- ------------
PROPERTY, PLANT AND EQUIPMENT 230,330 226,347
LESS - ACCUMULATED DEPRECIATION (43,279) (34,235)
------------- ------------
NET PROPERTY, PLANT AND EQUIPMENT 187,051 192,112
------------- ------------
OTHER ASSETS 21,214 21,936
------------- ------------
Total assets $ 311,561 $ 293,683
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 51,804 $ 39,447
Accrued liabilities 23,239 23,486
Current portion of long-term debt and capital
lease obligations 4,376 3,818
------------- ------------
Total current liabilities 79,419 66,751
------------- ------------
LONG-TERM DEBT, net of current portion 218,107 206,264
------------- ------------
CAPITAL LEASE OBLIGATIONS, net of current portion 4,596 5,335
------------- ------------
DEFERRED TAX LIABILITY 6,806 7,245
------------- ------------
OTHER NONCURRENT LIABILITIES 2,126 514
------------- ------------
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 (6,014) (5,297)
Cumulative translation adjustment (12,867) (6,517)
------------- ------------
Total stockholders' equity 507 7,574
------------- ------------
Total liabilities and stockholders' equity $ 311,561 $ 293,683
============= ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE>
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
------------------------------- -------------------------------
September 29, September 24, September 29, September 24,
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET SALES $ 97,296 $ 82,442 $ 271,775 $ 231,189
COST OF GOODS SOLD 73,380 59,321 204,585 166,327
----------- ----------- ----------- -----------
GROSS PROFIT 23,916 23,121 67,190 64,862
OPERATING EXPENSES:
Distribution 6,874 6,014 19,036 17,364
Selling, general and administrative 9,201 10,928 32,017 31,596
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS 7,841 6,179 16,137 15,902
OTHER EXPENSE:
Interest, net 5,688 5,230 16,630 15,340
Other, net 173 393 503 963
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES
AND DISCONTINUED OPERATIONS 1,980 556 (996) (401)
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 111 80 (45) 21
Deferred 642 149 (333) (153)
----------- ----------- ----------- -----------
753 229 (378) (132)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS 1,227 327 (618) (269)
LOSS FROM DISCONTINUED OPERATIONS (99) (6,766) (99) (6,766)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 1,128 $ (6,439) $ (717) $ (7,035)
=========== =========== =========== ===========
</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 nine months ended
------------------------------
September 29, September 24,
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (717) $ (7,035)
Adjustments to reconcile net loss to cash used
in operating activities-
Depreciation and amortization 14,034 12,980
Unrealized gain on marketable securities - (14)
Deferred income taxes (333) (153)
Discontinued operations 99 6,766
Changes in operating assets and liabilities, net of
acquisition and disposition of businesses-
Accounts receivable, net (17,702) (7,031)
Inventories, net (10,551) 1,341
Prepaid expenses and other (3,381) (2,003)
Accounts payable 11,803 (101)
Accrued liabilities and other 973 4,516
---------- ----------
Net cash provided by (used in) continuing operations (5,775) 9,266
Net cash used in discontinued operations (2,409) (530)
---------- ----------
Net cash provided by (used in) operating activities (8,184) 8,736
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (9,943) (13,490)
Increase in other assets (1,835) (3,391)
---------- ----------
Net cash used in investing activities (11,778) (16,881)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings on bank financed debt and
unsecured notes payable 16,893 7,748
Net payments on capital lease obligations (813) (420)
---------- ----------
Net cash provided by financing activities 16,080 7,328
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (499) 97
---------- ----------
NET DECREASE IN CASH (4,381) (720)
CASH, beginning of period 7,579 3,975
---------- ----------
CASH, end of period $ 3,198 $ 3,255
========== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $ 11,537 $ 9,961
========== ==========
Income taxes paid, net of refunds of $168 in 2000 $ (162) $ 162
========== ==========
</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 nine months ended
-------------------------------- ---------------------------------
September 29, September 24, September 29, September 24,
2000 1999 2000 1999
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales to Unaffiliated Customers:
Packaging and Insulation $ 64,272 $ 58,787 $ 183,391 $ 168,064
Specialty Chemicals 41,515 29,606 109,820 79,380
Corporate and Other 794 586 2,309 1,486
Transfers Between Operating
Segments /(1)/ (9,285) (6,537) (23,745) (17,741)
----------- ----------- ----------- -----------
Consolidated $ 97,296 $ 82,442 $ 271,775 $ 231,189
----------- ----------- ----------- -----------
Income (Loss) from Continuing Operations:
Packaging and Insulation $ 5,571 $ 7,169 $ 16,102 $ 20,934
Specialty Chemicals 2,063 601 2,922 (963)
Corporate and Other 207 (1,591) (2,887) (4,069)
----------- ----------- ----------- -----------
Consolidated $ 7,841 $ 6,179 $ 16,137 $ 15,902
----------- ----------- ----------- -----------
Income (Loss) before Income Taxes and
Discontinued Operations:
Packaging and Insulation $ 1,873 $ 2,071 $ 4,398 $ 9,659
Specialty Chemicals 1,129 1,644 1,274 (1,571)
Corporate and Other (1,022) (3,159) (6,668) (8,489)
----------- ----------- ----------- -----------
Consolidated $ 1,980 $ 556 $ (996) $ (401)
----------- ----------- ----------- -----------
</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 nine months ended
-------------------------------- ---------------------------------
September 29, September 24, September 29, September 24,
2000 1999 2000 1999
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales to Unaffiliated Customers:
United States $ 62,662 $ 53,622 $ 178,354 $ 158,531
Canada 8,460 5,755 22,557 16,677
Europe 29,775 25,271 78,239 61,991
Transfers Between Geographic
Regions /(1)/ (3,601) (2,206) (7,375) (6,010)
----------- ----------- ----------- -----------
Consolidated $ 97,296 $ 82,442 $ 271,775 $ 231,189
----------- ----------- ----------- -----------
Income from Continuing Operations:
United States $ 3,642 $ 2,650 $ 5,284 $ 9,732
Canada 862 402 1,515 1,265
Europe 3,337 3,127 9,338 4,905
----------- ----------- ----------- -----------
Consolidated $ 7,841 $ 6,179 $ 16,137 $ 15,902
----------- ----------- ----------- -----------
Income (Loss) before Income Taxes and
Discontinued Operations:
United States $ (331) $ (1,281) $ (6,390) $ (1,275)
Canada 332 45 2 216
Europe 1,979 1,792 5,392 658
----------- ----------- ----------- -----------
Consolidated $ 1,980 $ 556 $ (996) $ (401)
----------- ----------- ----------- -----------
</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.
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. The loss in the third quarters of 2000 and 1999,
net of tax benefits of $0.1 million and $3.7 million, respectively,
represents the settlement of a contingent liability related to the
discontinued operations.
(3) INVENTORIES
The components of inventories were as follows (in thousands):
September 29, December 31,
2000 1999
------------ -----------
Raw Materials $13,550 $10,632
Work in Process 1,808 1,054
Finished Goods 28,372 23,095
------- -------
$43,730 $34,781
======= =======
(4) INTEREST EXPENSE
Included in interest expense was $376,000 and $387,000 of amortization of
deferred financing costs for the three months ended September 29, 2000 and
September 24, 1999, respectively, and $1,126,000 and $1,147,000 of
amortization of deferred financing costs for the nine months ended
September 29, 2000 and September 24, 1999, respectively. Premium
amortization related to the issuance of the Company's 10% Series B Senior
Notes due 2003 of $87,000 and $81,000 for three months ended September 29,
2000 and September 24, 1999, respectively, and $257,000 and $239,000 for
nine months ended September 29, 2000 and September 24, 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 as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
September 29, September 24, September 29, September 24,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Income (Loss) $ 1,128 $(6,439) $ (717) $ (7,035)
Foreign Currency Translation Adjustment (3,832) 53 (6,350) (4,833)
-------- ------- ------- ---------
Comprehensive Income (Loss) $ (2,704) $(6,386) $(7,067) $ (11,868)
======== ======= ======= =========
</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 nine
months ended September 29, 2000 and September 24, 1999 (in thousands):
<TABLE>
<CAPTION>
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
Three Months Ended September 29, 2000
-------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ - $ 62,839 $ 38,058 $(3,601) $97,296
Gross Profit - 14,694 9,222 - 23,916
Income from Continuing
Operations - 3,064 4,777 - 7,841
Net Income (Loss) (99) (1,566) 2,793 - 1,128
<CAPTION>
Three Months Ended September 24, 1999
-------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ - $ 53,699 $ 30,949 $(2,206) $ 82,442
Gross Profit - 14,351 8,770 - 23,121
Income from Continuing
Operations - 2,577 3,602 - 6,179
Net Income (Loss) (6,766) (1,637) 1,964 - (6,439)
<CAPTION>
Nine Months Ended September 29, 2000
------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ - $178,791 $100,359 $(7,375) $271,775
Gross Profit - 41,177 26,013 - 67,190
Income from Continuing
Operations - 4,167 11,970 - 16,137
Net Income (Loss) (99) (7,181) 6,563 - (717)
</TABLE>
8
<PAGE>
!sPAGE>
(6) SUPPLEMENTAL FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
Nine Months Ended September 24, 1999
------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ - $158,608 $ 78,591 $ (6,010) $ 231,189
Gross Profit - 43,564 21,298 - 64,862
Income from Continuing
Operations - 9,567 6,335 - 15,902
Net Income (Loss) (6,766) (1,418) 1,149 - (7,035)
<CAPTION>
As of September 29, 2000
------------------------
<S> <C> <C> <C> <C> <C>
Current Assets $ 178 $ 62,501 $ 45,351 $ (4,734) $ 103,296
Non-Current Assets 143,398 211,677 47,884 (194,694) 208,265
Current Liabilities 5,332 55,782 26,873 (8,568) 79,419
Non-Current Liabilities 168,975 110,306 51,247 (98,893) 231,635
<CAPTION>
As of September 24, 1999
------------------------
<S> <C> <C> <C> <C> <C>
Current Assets $ 652 $ 51,069 $ 30,876 $ (2,677) $ 79,920
Non-Current Assets 141,499 204,991 51,550 (185,921) 212,119
Current Liabilities 15,011 37,001 19,470 (4,605) 66,877
Non-Current Liabilities 157,900 97,637 52,606 (92,062) 216,081
</TABLE>
9
<PAGE>
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
Holdings, Inc. 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 primarily manufactures and distributes
expandable polystyrene ("EPS") bead for internal consumption and distribution to
the insulation and packaging industries. Through its Radnor Chemical Corporation
subsidiary, the Company is the third largest worldwide producer of EPS.
Results of Operations
---------------------
CONSOLIDATED
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------------- -------------------------------
September 29, September 24, September 29, September 24,
(Millions of dollars) 2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $97.3 $82.4 $271.8 $231.2
--------------------------------------------------------------------------------------------------------------------
Gross profit 23.9 23.1 67.2 64.9
--------------------------------------------------------------------------------------------------------------------
Operating expenses 16.1 16.9 51.1 49.0
--------------------------------------------------------------------------------------------------------------------
Income from continuing operations 7.8 6.2 16.1 15.9
--------------------------------------------------------------------------------------------------------------------
</TABLE>
Net sales for the three months ended September 29, 2000 were $97.3 million,
an increase of $14.9 million from the three months ended September 24, 1999.
This increase was primarily caused by growth in sales volume and increased
pricing across all operating segments. Gross profit for the three months ended
September 29, 2000 increased by $0.8 million to $23.9 million from $23.1 million
for the same period in 1999. This increase was primarily caused by increased
sales as well as improved manufacturing efficiencies, partially offset by
increased energy and raw material costs. Operating expenses for the three months
ended September 29, 2000 decreased to $16.1 million from $16.9 million for the
same period in 1999 primarily as a result of cost containment initiatives,
partially offset by increased distribution costs across all business segments.
Net sales for the nine months ended September 29, 2000 were $271.8 million.
This $40.6 million or 17.6% increase from the same period in the prior year was
primarily due to growth in sales volume and increased pricing across all
operating segments. Gross profit for the nine months ended September 29, 2000
increased by $2.3 million to $67.2 million from $64.9 million for the same
period in 1999. This increase was primarily caused by increased sales as well as
improved manufacturing efficiencies, partially offset by increased energy and
raw material costs. Operating expenses increased by $2.1 million to $51.1
million for the nine months ended September 29, 2000 due to higher selling and
distribution costs, partially offset by the positive impact of cost containment
initiatives.
10
<PAGE>
SEGMENT ANALYSIS
Packaging & Insulation
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------- -------------------------------
September 29, September 24, September 29, September 24,
(Millions of dollars) 2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $64.3 $58.8 $183.4 $168.1
--------------------------------------------------------------------------------------------------------------------
Gross profit 16.9 17.8 49.4 51.7
--------------------------------------------------------------------------------------------------------------------
Operating expenses 11.3 10.6 33.3 30.8
--------------------------------------------------------------------------------------------------------------------
Income from continuing operations 5.6 7.2 16.1 20.9
--------------------------------------------------------------------------------------------------------------------
</TABLE>
Net sales in the packaging and insulation business segment increased by
$5.5 million to $64.3 million for the three months ended September 29, 2000
primarily due to volume growth in the domestic packaging business and increased
pricing in both the domestic and European operations. Gross profit decreased to
26.3% of net sales for the three months ended September 29, 2000 from 30.3% of
net sales for the same period in 1999 primarily as a result of increased energy
and raw material costs, partially offset by improved manufacturing efficiencies.
Operating expenses increased to $11.3 million for the three months ended
September 29, 2000 from $10.6 million for the same period in 1999 primarily due
to higher distribution costs in the domestic packaging operations, partially
offset by cost containment initiatives.
Net sales for the nine months ended September 29, 2000 were $183.4 million.
This $15.3 million or 9.1% increase over the nine months ended September 24,
1999 was primarily due to volume growth and increased pricing. Gross profit
decreased to 27.0% of net sales for the nine months ended September 29, 2000
from 30.8% for the same period in 1999. This decrease was primarily caused by
increased energy and raw material costs, partially offset by manufacturing
efficiencies. Operating expenses increased by $2.5 million to $33.3 million for
the nine months ended September 29, 2000 due to higher selling and distribution
costs, partially offset by administrative cost containment initiatives.
Specialty Chemicals
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------------- -------------------------------
September 29, September 24, September 29, September 24,
(Millions of dollars) 2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $32.2 $29.6 $86.1 $79.4
--------------------------------------------------------------------------------------------------------------------
Gross profit 6.2 4.7 14.9 11.2
--------------------------------------------------------------------------------------------------------------------
Operating expenses 4.1 4.1 12.0 12.2
--------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations 2.1 0.6 2.9 (1.0)
--------------------------------------------------------------------------------------------------------------------
</TABLE>
Net sales for the third quarter of fiscal 2000 increased to $32.2 million
from $29.6 million for the same period in 1999. This $2.6 million increase was
due to higher sales volume and selling prices. Net sales for the three months
ended September 29, 2000 and September 24, 1999 included sales to the packaging
and insulation segment of $9.3 million and $6.5 million, respectively. Gross
profit increased by $1.5 million to $6.2 million for the three months ended
September 29, 2000. As a percentage of net sales, gross profit increased to
19.3% for the third quarter of fiscal 2000 from 15.9% for the same period in
1999. This increase was primarily due to
11
<PAGE>
increased selling prices and manufacturing efficiencies throughout the segment.
Operating expenses remained constant at $4.1 million for each of the three-month
periods ended September 29, 2000 and September 24, 1999.
Net sales in the specialty chemicals business segment increased by $6.7
million to $86.1 million for the nine months ended September 29, 2000 primarily
due to increased sales volume and selling prices. Net sales for the nine months
ended September 29, 2000 and September 24, 1999 included sales to the packaging
and insulation segment of $23.7 million and $17.7 million, respectively. Gross
profit increased by $3.7 million to $14.9 million for the nine months ended
September 29, 2000. As a percentage of net sales, gross profit increased to
17.3% for the third quarter of fiscal 2000 from 14.1% for the same period in
1999. This increase was primarily caused by increased selling prices as well as
improved manufacturing efficiencies. Operating expenses decreased by $0.2
million to $12.0 million for the nine months ended September 29, 2000 primarily
as a result of cost containment initiatives.
Corporate & Other
For the three-month and nine-month periods ended September 29, 2000,
corporate operating expenses decreased by $1.6 million and $0.2 million to $0.6
million and $5.8 million, respectively, from the same periods in 1999. These
decreases were due to lower administrative costs at the Company's executive
offices, partially offset by increased amortization of intangible assets.
Interest Expense
----------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------------- ---------------------------------
September 29, September 24, September 29, September 24,
(Millions of dollars) 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest expense $ 5.7 $ 5.2 $ 16.6 $ 15.3
-----------------------------------------------------------------------------------------------------------
</TABLE>
Interest expense for the three months and nine months ended September 29,
2000 increased by $0.5 million and $1.3 million, respectively, over the same
periods in 1999. These increases were primarily due to increased interest rates
as well as greater borrowings related to capital expenditures and an increased
level of working capital.
Income Taxes
------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------------- ---------------------------------
September 29, September 24, September 29, September 24,
(Millions of dollars) 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income tax expense (benefit) $ 0.8 $ 0.2 $ (0.4) $ (0.1)
</TABLE>
The effective tax rate for the three months ended September 29, 2000
decreased to 38.0% of pre-tax income from 41.2% of pre-tax income for the same
period in 1999. The effective tax rates for the nine months ended September 29,
2000 and September 24, 1999 were 38.0% and 32.9% of pre-tax income,
respectively. As of September 29, 2000, the Company had approximately $50.3
million of net operating loss carryforwards for federal income tax purposes,
which expire through 2020.
12
<PAGE>
Liquidity and Capital Resources
-------------------------------
During the nine months ended September 29, 2000, the Company's principal
source of funds consisted of cash from financing activities. During the nine
months ended September 24, 1999, the Company's principal source of funds
consisted of cash from operating and financing activities. During the 2000
period, after tax cash flow of $13.1 million and net borrowings on bank financed
debt and capital lease obligations of $16.1 million were primarily used to fund
capital expenditures of $9.9 million and a $21.3 million increase in working
capital.
As of September 29, 2000, the Company had $36.4 million outstanding and
$5.5 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.
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.
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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
10.1 Amendment No. 1 to Styrene Monomer Supply Agreement between
StyroChem Finland Oy and Elf Atochem SA.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the nine month
period ended September 29, 2000.
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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
---------------------------------
By: Michael V. Valenza
Senior Vice President-Finance and
Chief Financial Officer
Date: November 13, 2000
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