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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the quarterly period ended
September 27, 2002
[_] 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 12, 2002:
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
================================================================================
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
September 27, December 28,
2002 2001
------------ ------------
ASSETS
------
CURRENT ASSETS:
Cash $ 921 $ 4,304
Accounts receivable, net 42,509 33,044
Inventories, net 38,660 30,939
Prepaid expenses and other current assets 10,378 9,908
Deferred income tax asset 2,125 2,123
--------- ---------
Total current assets 94,593 80,318
--------- ---------
PROPERTY, PLANT AND EQUIPMENT, at cost: 243,243 232,586
LESS - ACCUMULATED DEPRECIATION (69,512) (58,102)
--------- ---------
NET PROPERTY, PLANT AND EQUIPMENT 173,731 174,484
--------- ---------
OTHER NON-CURRENT ASSETS 21,073 19,384
--------- ---------
Total assets $ 289,397 $ 274,186
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 34,760 $ 34,865
Accrued liabilities and other current liabilities 20,317 18,098
Short-term borrowings 2,929 -
Current portion of long-term debt 4,214 3,987
Current portion of capitalized lease obligations 1,059 1,050
--------- ---------
Total current liabilities 63,279 58,000
--------- ---------
LONG-TERM DEBT, net of current portion 209,632 205,426
--------- ---------
CAPITALIZED LEASE OBLIGATIONS, net of current portion 1,688 2,447
--------- ---------
DEFERRED INCOME TAX LIABILITY 7,175 6,064
--------- ---------
OTHER NON-CURRENT LIABILITIES 2,146 2,132
--------- ---------
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 (7,285) (9,310)
Cumulative translation adjustment (6,626) (9,961)
--------- ---------
Total stockholders' equity 5,477 117
--------- ---------
Total liabilities and stockholders' equity $ 289,397 $ 274,186
========= =========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands)
For the three months ended For the nine months ended
------------------------------- ----------------------------
September 27, September 28, September 27, September 28,
2002 2001 2002 2001
------------- ------------- ------------- -------------
NET SALES $ 88,413 $ 81,531 $ 249,046 $ 250,134
COST OF GOODS SOLD 65,968 55,780 182,646 185,231
--------- --------- --------- ---------
GROSS PROFIT 22,445 25,751 66,400 64,903
OPERATING EXPENSES:
Distribution 5,927 7,233 16,867 19,218
Selling, general and administrative 9,535 11,154 29,072 29,851
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS 6,983 7,364 20,461 15,834
OTHER EXPENSE:
Interest, net 6,133 5,524 16,229 16,505
Other, net 482 813 985 1,458
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES, EXTRAORDINARY
ITEM AND DISCONTINUED OPERATIONS 368 1,027 3,247 (2,129)
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 15 35 130 (85)
Deferred 125 334 1,104 (681)
--------- --------- --------- ---------
140 369 1,234 (766)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND
DISCONTINUED OPERATIONS 228 658 2,013 (1,363)
EXTRAORDINARY GAIN, net of tax - - 60 -
LOSS FROM DISCONTINUED OPERATIONS, net of tax - (40) (48) (165)
--------- --------- --------- ---------
NET INCOME (LOSS) $ 228 $ 618 $ 2,025 $ (1,528)
========= ========= ========= =========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the nine months ended
---------------------------------------
September 27, September 28,
2002 2001
------------------ ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,025 $ (1,528)
Adjustments to reconcile net income (loss) to cash
used in operating activities-
Depreciation and amortization 13,112 14,376
Deferred income taxes 1,104 (681)
Extraordinary gain (60) -
Loss from discontinued operations 48 165
Changes in operating assets and liabilities, net of
disposition of businesses-
Accounts receivable, net (8,119) 89
Inventories, net (7,151) (7,832)
Prepaid expenses and other current assets (1,491) 395
Accounts payable (1,981) (8,550)
Accrued liabilities and other current liabilities 2,167 3,381
------------------ ----------------
Net cash used in continuing operations (346) (185)
Net cash used in discontinued operations (130) (15)
------------------ ----------------
Net cash used in operating activities (476) (200)
------------------ ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (7,071) (10,539)
Increase in other assets (2,408) (1,865)
------------------ ----------------
Net cash used in investing activities (9,479) (12,404)
------------------ ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on bank financed debt and
unsecured notes payable 7,191 13,618
Net payments on capitalized lease obligations (750) (868)
------------------ ----------------
Net cash provided by financing activities 6,441 12,750
------------------ ----------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 131 (164)
------------------ ----------------
NET DECREASE IN CASH (3,383) (18)
CASH, beginning of period 4,304 3,726
------------------ ----------------
CASH, end of period $ 921 $ 3,708
================== ================
SUPPLEMENTAL CASH FLOW DISCLOSURES
Interest paid $ 10,217 $ 10,747
================== ================
Income taxes paid $ 257 $ 33
================== ================
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
SUMMARY BY OPERATING SEGMENTS
(Unaudited)
(In thousands)
For the three months ended For the nine months ended
----------------------------------- ------------------------------------
September 27, September 28, September 27, September 28,
2002 2001 2002 2001
---------------- --------------- ---------------- -----------------
Sales to Unaffiliated Customers:
Packaging and Insulation $ 51,154 $ 60,227 $ 152,467 $ 181,766
Specialty Chemicals 39,108 28,670 102,412 87,786
Corporate and Other 480 563 1,424 1,732
Transfers Between Operating Segments/(1)/ (2,329) (7,929) (7,257) (21,150)
---------------- --------------- ---------------- -----------------
Consolidated $ 88,413 $ 81,531 $ 249,046 $ 250,134
---------------- --------------- ---------------- -----------------
Income (Loss) from Continuing Operations:
Packaging and Insulation $ 6,557 $ 8,751 $ 22,680 $ 19,878
Specialty Chemicals 2,684 254 4,237 115
Corporate and Other (2,258) (1,641) (6,456) (4,159)
---------------- --------------- ---------------- -----------------
Consolidated $ 6,983 $ 7,364 $ 20,461 $ 15,834
---------------- --------------- ---------------- -----------------
Income (Loss) before Income Taxes, Extraordinary
Item and Discontinued Operations:
Packaging and Insulation $ 3,480 $ 5,045 $ 13,774 $ 9,523
Specialty Chemicals 231 (1,721) (1,204) (6,456)
Corporate and Other (3,343) (2,297) (9,323) (5,196)
---------------- --------------- ---------------- -----------------
Consolidated $ 368 $ 1,027 $ 3,247 $ (2,129)
---------------- --------------- ---------------- -----------------
/(1)/ Transfers between operating segments reflect the sale of expandable
polystyrene ("EPS") bead from the specialty chemicals operating segment
to the packaging and insulation operating segment. Excluding the impact
of the European insulation operations, which were divested on December
12, 2001, transfers between operating segments would have been $2.7
million and $8.2 million for the three and nine months ended September
28, 2001, respectively.
5
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
SUMMARY BY GEOGRAPHIC REGIONS
(Unaudited)
(In thousands)
For the three months ended For the nine months ended
--------------------------------- ----------------------------------
September 27, September 28, September 27, September 28,
2002 2001 2002 2001
------------- ------------- ------------- -------------
Net Sales to Unaffiliated Customers:
United States $ 60,925 $ 56,170 $ 177,515 $ 172,784
Canada 7,997 6,516 23,783 21,017
Europe 21,773 21,545 55,005 64,565
Transfers Between Geographic Regions /(1)/ (2,282) (2,700) (7,257) (8,232)
------------- ------------- ------------- -------------
Consolidated $ 88,413 $ 81,531 $ 249,046 $ 250,134
------------- ------------- ------------- -------------
Income from Continuing Operations:
United States $ 4,461 $ 5,218 $ 13,341 $ 10,817
Canada 800 1,269 3,725 2,985
Europe 1,722 877 3,395 2,032
------------- ------------- ------------- -------------
Consolidated $ 6,983 $ 7,364 $ 20,461 $ 15,834
------------- ------------- ------------- -------------
Income (Loss) before Income Taxes, Extraordinary
Item and Discontinued Operations:
United States $ (417) $ 402 $ (553) $ (2,517)
Canada 499 923 2,659 1,974
Europe 286 (298) 1,141 (1,586)
------------- ------------- ------------- -------------
Consolidated $ 368 $ 1,027 $ 3,247 $ (2,129)
------------- ------------- ------------- -------------
/(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
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, due to the seasonality inherent
in some of the Company's operations and the possibility for general
economic changes.
(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. Discontinued operations represent legal costs
incurred in conjunction with the above mentioned business.
(3) EXTRAORDINARY GAIN
In February 2002, the Company retired $500,000 principal amount of its 10%
Senior Notes due December 1, 2003. An extraordinary gain of $60,000 was
realized as a result of the early retirement, net of a $36,000 provision
for income taxes.
(4) INVENTORIES
The components of inventories were as follows (in thousands):
September 27, December 28,
2002 2001
------------- ------------
Raw Materials $ 9,626 $ 6,813
Work in Process 1,902 1,290
Finished Goods 27,132 22,836
--------- ---------
$ 38,660 $ 30,939
========= =========
7
(5) INTEREST EXPENSE
Included in interest expense was $375,000 of amortization of deferred
financing costs for the three months ended September 27, 2002 and September
28, 2001, and $1,124,000 of amortization of deferred financing costs for
the nine months ended September 27, 2002 and September 28, 2001. Premium
amortization related to the issuance of the Company's 10% Series B Senior
Notes due 2003 of $105,000 for the three months ended September 27, 2002
and September 28, 2001, and $315,000 and $285,000 for the nine months ended
September 27, 2002 and September 28, 2001, respectively, was also included
in interest expense.
(6) 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):
Three Months Ended Nine Months Ended
--------------------------------- -------------------------------
September 27, September 28, September 27, September 28,
2002 2001 2002 2001
--------------- -------------- -------------- --------------
Net Income (Loss) $ 228 $ 618 $ 2,025 $ (1,528)
Foreign Currency Translation Adjustment (297) 2,694 3,335 (1,987)
--------------- -------------- -------------- --------------
Comprehensive Income (Loss) $ (69) $ 3,312 $ 5,360 $ (3,515)
=============== ============== ============== ==============
(7) NEW ACCOUNTING STANDARDS
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This Statement rescinds SFAS No. 4, "Reporting Gains and
Losses from Extinguishment of Debt," and SFAS No. 64, "Extinguishments of
Debt Made to Satisfy Sinking-Fund Requirements." The Statement requires
gains and losses from debt extinguishments that are used as part of the
company's risk management strategy to be classified as income from
operations rather than as extraordinary items, net of tax. Upon adoption,
the Company will reclassify debt extinguishments previously recorded as
extraordinary items into operating income. SFAS No. 145 is effective for
fiscal years beginning after May 15, 2002, with early adoption permitted.
(8) 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
Series A Senior Notes and the $60 million Series B Senior Notes are
guaranteed by substantially all of the Company's domestic subsidiaries. The
following consolidating financial statements of Radnor Holdings Corporation
and subsidiaries have been prepared pursuant to Rule 3-10 of Regulation
S-X:
8
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
As of September 27, 2002
(In thousands, except share amounts)
Holding Guarantor Non-Gurantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
---------- ------------ ------------ ------------ ------------
ASSETS
------
CURRENT ASSETS:
Cash $ - $ 295 $ 626 $ - $ 921
Accounts receivable, net - 23,923 23,692 (5,106) 42,509
Inventories, net - 28,711 9,949 - 38,660
Intercompany receivable - - 15,643 (15,643) -
Prepaid expenses and other current assets 148 9,485 803 (58) 10,378
Deferred income tax asset - 1,991 134 - 2,125
--------- --------- --------- --------- ---------
Total current assets 148 64,405 50,847 (20,807) 94,593
--------- --------- --------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT, at cost: - 196,716 46,527 - 243,243
LESS - ACCUMULATED DEPRECIATION - (57,242) (12,270) - (69,512)
--------- --------- --------- --------- ---------
NET PROPERTY, PLANT AND EQUIPMENT - 139,474 34,257 - 173,731
--------- --------- --------- --------- ---------
INTERCOMPANY RECEIVABLE 30,646 909 - (31,555) -
INVESTMENT IN SUBSIDIARIES 106,153 25,078 - (131,231) -
OTHER NON-CURRENT ASSETS 2,155 7,082 11,836 - 21,073
--------- --------- --------- --------- ---------
Total assets $ 139,102 $ 236,948 $ 96,940 $(183,593) $ 289,397
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ - $ 24,787 $ 10,287 $ (314) $ 34,760
Accrued liabilities and other current liabilities 5,118 12,717 2,539 (57) 20,317
Intercompany payable - 19,986 - (19,986) -
Short-term borrowings - - 2,929 - 2,929
Current portion of long-term debt and capitalized
lease obligations - 4,428 845 - 5,273
--------- --------- --------- --------- ---------
Total current liabilities 5,118 61,918 16,600 (20,357) 63,279
--------- --------- --------- --------- ---------
LONG-TERM DEBT, net of current portion 159,990 60,260 5,942 (16,560) 209,632
--------- --------- --------- --------- ---------
CAPITALIZED LEASE OBLIGATIONS, net of current portion - 1,688 - - 1,688
--------- --------- --------- --------- ---------
INTERCOMPANY PAYABLE 18,663 - 17,693 (36,356) -
--------- --------- --------- --------- ---------
DEFERRED INCOME TAX LIABILITY (3,979) 11,177 (23) - 7,175
--------- --------- --------- --------- ---------
OTHER NON-CURRENT LIABILITIES - 2,146 - - 2,146
--------- --------- --------- --------- ---------
COMMITMENTS AND CONTINGENCIES - - - - -
STOCKHOLDERS' EQUITY:
Voting and nonvoting common stock 1 4 22 (26) 1
Additional paid-in capital 9,164 97,634 22,590 (110,001) 19,387
Retained earnings (deficit) (49,855) 8,784 34,079 (293) (7,285)
Cumulative translation adjustment - (6,663) 37 - (6,626)
--------- --------- --------- --------- ---------
Total stockholders' equity (deficit) (40,690) 99,759 56,728 (110,320) 5,477
--------- --------- --------- --------- ---------
Total liabilities and stockholders' equity $ 139,102 $ 236,948 $ 96,940 $(183,593) $ 289,397
========= ========= ========= ========= =========
9
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended September 27, 2002
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
NET SALES $ - $ 61,345 $ 29,350 $ (2,282) $ 88,413
COST OF GOODS SOLD - 44,395 23,855 (2,282) 65,968
-------- -------- -------- -------- --------
GROSS PROFIT - 16,950 5,495 - 22,445
OPERATING EXPENSES:
Distribution - 4,457 1,470 - 5,927
Selling, general and administrative - 9,386 149 - 9,535
-------- -------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS - 3,107 3,876 - 6,983
OTHER EXPENSE:
Interest, net 1,140 2,786 2,207 - 6,133
Other, net - (18) 500 - 482
-------- -------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES, EXTRAORDINARY
ITEM AND DISCONTINUED OPERATIONS (1,140) 339 1,169 - 368
PROVISION (BENEFIT) FOR INCOME TAXES:
Current - (252) 267 - 15
Deferred - 125 - - 125
-------- -------- -------- -------- --------
- (127) 267 - 140
-------- -------- -------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND
DISCONTINUED OPERATIONS (1,140) 466 902 - 228
EXTRAORDINARY GAIN, net of tax - - - - -
LOSS FROM DISCONTINUED OPERATIONS, net of tax - - - - -
-------- -------- -------- -------- --------
NET INCOME (LOSS) $ (1,140) $ 466 $ 902 $ - $ 228
======== ======== ======== ======== ========
10
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF OPERATIONS
For the nine months ended September 27, 2002
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
-------------- -------------- -------------- -------------- ------------
NET SALES $ - $ 178,827 $ 77,476 $ (7,257) $ 249,046
COST OF GOODS SOLD - 128,287 61,616 (7,257) 182,646
-------------- -------------- -------------- --------------- ------------
GROSS PROFIT - 50,540 15,860 - 66,400
OPERATING EXPENSES:
Distribution - 12,792 4,075 - 16,867
Selling, general and administrative - 26,737 2,335 - 29,072
-------------- -------------- -------------- -------------- ------------
INCOME FROM CONTINUING OPERATIONS - 11,011 9,450 - 20,461
OTHER EXPENSE:
Interest, net 3,580 9,673 2,976 - 16,229
Other, net - (306) 1,291 - 985
-------------- -------------- -------------- -------------- ------------
INCOME (LOSS) BEFORE INCOME TAXES, EXTRAORDINARY
ITEM AND DISCONTINUED OPERATIONS (3,580) 1,644 5,183 - 3,247
BENEFIT FOR INCOME TAXES:
Current - (137) 267 - 130
Deferred - 1,104 - - 1,104
-------------- -------------- -------------- -------------- ------------
- 967 267 - 1,234
-------------- -------------- -------------- -------------- ------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND
DISCONTINUED OPERATIONS (3,580) 677 4,916 - 2,013
EXTRAORDINARY GAIN, net of tax 60 - - - 60
LOSS FROM DISCONTINUED OPERATIONS, net of tax (48) - - - (48)
-------------- -------------- -------------- -------------- ------------
NET INCOME (LOSS) $ (3,568) $ 677 $ 4,916 $ - $ 2,025
============== ============== ============== ============== ============
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATNG STATEMENTS OF CASH FLOWS
For the nine months ended September 27, 2002
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
-------------- -------------- -------------- -------------- ------------
Net cash provided by (used in) operating activities: $ 164 $ 2,788 $ (3,578) $ 150 $ (476)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - (6,684) (387) - (7,071)
Decrease (Increase) other assets 742 60 (3,210) - (2,408)
-------------- -------------- -------------- -------------- ------------
Net cash provided by (used in) investing activities 742 (6,624) (3,597) - (9,479)
-------------- -------------- -------------- -------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) on bank financed debt
and unsecured notes payable (404) 4,418 3,177 - 7,191
Net payments on capitalized lease obligations - (750) - - (750)
Change in intercompany, net (502) (2,528) 3,180 (150) -
-------------- -------------- -------------- -------------- ------------
Net cash provided by (used in) financing activities (906) 1,140 6,357 (150) 6,441
-------------- -------------- -------------- -------------- ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH - (29) 160 - 131
-------------- -------------- -------------- -------------- ------------
NET DECREASE IN CASH - (2,725) (658) - (3,383)
Cash, beginning of period - 3,020 1,284 - 4,304
-------------- -------------- -------------- -------------- ------------
Cash, end of period $ - $ 295 $ 626 $ - $ 921
============== ============== ============== ============== ============
11
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
As of December 28, 2001
(In thousands, except share amounts)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
-------------- -------------- -------------- -------------- ------------
ASSETS
------
CURRENT ASSETS:
Cash $ - $ 3,020 $ 1,284 $ - $ 4,304
Accounts receivable, net - 22,524 10,520 - 33,044
Inventories, net - 24,568 6,371 - 30,939
Intercompany receivable - - 24,906 (24,906) -
Prepaid expenses and other current assets 148 8,520 1,240 - 9,908
Deferred income tax asset - 1,994 132 (3) 2,123
-------------- -------------- -------------- -------------- ------------
Total current assets 148 60,626 44,453 (24,909) 80,318
-------------- -------------- -------------- -------------- ------------
PROPERTY, PLANT AND EQUIPMENT, at cost: - 190,065 42,521 - 232,586
LESS - ACCUMULATED DEPRECIATION - (48,914) (9,188) - (58,102)
-------------- -------------- -------------- -------------- ------------
NET PROPERTY, PLANT AND EQUIPMENT - 141,151 33,333 - 174,484
-------------- -------------- -------------- -------------- ------------
INTERCOMPANY RECEIVABLE 11,481 2,093 - (13,574) -
INVESTMENT IN SUBSIDIARIES 106,153 25,078 1 (131,232) -
DEFERRED INCOME TAX ASSET 3,985 - - (3,985) -
OTHER NON-CURRENT ASSETS 3,226 9,756 6,402 - 19,384
-------------- -------------- -------------- -------------- ------------
Total assets $ 124,993 $ 238,704 $ 84,189 $ (173,700) $ 274,186
============== ============== ============== ============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ - $ 25,366 $ 9,499 $ - $ 34,865
Accrued liabilities and other current liabilities 1,310 15,070 1,718 - 18,098
Intercompany payable - 24,516 - (24,516) -
Current deferred income tax liability - - 3 (3) -
Current portion of long-term debt and capitalized
lease obligations - 4,245 792 - 5,037
-------------- -------------- -------------- -------------- ------------
Total current liabilities 1,310 69,197 12,012 (24,519) 58,000
-------------- -------------- -------------- -------------- ------------
LONG-TERM DEBT, net of current portion 160,805 39,456 5,165 - 205,426
-------------- -------------- -------------- -------------- ------------
CAPITALIZED LEASE OBLIGATIONS, net of current portion - 2,447 - - 2,447
-------------- -------------- -------------- -------------- ------------
INTERCOMPANY PAYABLE - - 35,155 (35,155) -
-------------- -------------- -------------- -------------- ------------
DEFERRED INCOME TAX LIABILITY - 10,072 (23) (3,985) 6,064
-------------- -------------- -------------- -------------- ------------
OTHER NON-CURRENT LIABILITIES - 2,132 - - 2,132
-------------- -------------- -------------- -------------- ------------
COMMITMENTS AND CONTINGENCIES - - - - -
STOCKHOLDERS' EQUITY:
Voting and nonvoting common stock 1 4 23 (27) 1
Additional paid-in capital 9,164 97,634 22,590 (110,001) 19,387
Retained earnings (deficit) (46,287) 25,745 11,225 7 (9,310)
Cumulative translation adjustment - (7,983) (1,958) (20) (9,961)
-------------- -------------- -------------- -------------- ------------
Total stockholders' equity (deficit) (37,122) 115,400 31,880 (110,041) 117
-------------- -------------- -------------- -------------- ------------
Total liabilities and stockholders' equity $ 124,993 $ 238,704 $ 84,189 $ (173,700) $ 274,186
============== ============== ============== ============== ============
12
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF INCOME
For the three months ended September 28, 2001
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
----------- ------------ ------------- ------------ ------------
NET SALES $ - $ 56,602 $ 27,629 $ (2,700) $ 81,531
COST OF GOODS SOLD - 37,868 20,612 (2,700) 55,780
----------- ------------ ------------- ------------ ------------
GROSS PROFIT - 18,734 7,017 - 25,751
OPERATING EXPENSES:
Distribution - 5,150 2,083 - 7,233
Selling, general and administrative - 8,892 2,262 - 11,154
----------- ------------ ------------- ------------ ------------
INCOME FROM CONTINUING OPERATIONS - 4,692 2,672 - 7,364
OTHER EXPENSE:
Interest, net 1,226 3,240 1,058 - 5,524
Other, net - 340 473 - 813
----------- ------------ ------------- ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES
AND DISCONTINUED OPERATIONS (1,226) 1,112 1,141 - 1,027
PROVISION (BENEFIT) FOR INCOME TAXES:
Current - 42 (7) - 35
Deferred - 334 - - 334
----------- ------------ ------------- ------------ ------------
- 376 (7) - 369
----------- ------------ ------------- ------------ ------------
INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS (1,226) 736 1,148 - 658
LOSS FROM DISCONTINUED OPERATIONS, net of tax (40) - - - (40)
----------- ------------ ------------- ------------ ------------
NET INCOME (LOSS) $ (1,266) $ 736 $ 1,148 $ - $ 618
=========== ============ ============= ============ ============
13
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF INCOME
For the nine months ended September 28, 2001
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------- ------------ ------------
NET SALES $ - $ 173,799 $ 84,567 $ (8,232) $ 250,134
COST OF GOODS SOLD - 128,644 64,819 (8,232) 185,231
--------- --------- --------- --------- ---------
GROSS PROFIT - 45,155 19,748 - 64,903
OPERATING EXPENSES:
Distribution - 13,502 5,716 - 19,218
Selling, general and administrative 2 22,435 7,414 - 29,851
--------- --------- --------- --------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS (2) 9,218 6,618 - 15,834
OTHER EXPENSE:
Interest, net 2,463 10,720 3,322 - 16,505
Other, net 9 116 1,333 - 1,458
--------- --------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES
AND DISCONTINUED OPERATIONS (2,474) (1,618) 1,963 - (2,129)
PROVISION (BENEFIT) FOR INCOME TAXES:
Current - (96) 11 - (85)
Deferred - (681) - - (681)
--------- --------- --------- --------- ---------
- (777) 11 - (766)
--------- --------- --------- --------- ---------
INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS (2,474) (841) 1,952 - (1,363)
LOSS FROM DISCONTINUED OPERATIONS, net of tax (165) - - - (165)
--------- --------- --------- --------- ---------
NET INCOME (LOSS) $ (2,639) $ (841) $ 1,952 $ - $ (1,528)
========= ========= ========= ========= =========
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF CASH FLOWS
For the nine months ended September 28, 2001
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
-------- ------------ ------------- ------------ ------------
Net cash provided by (used in) operating activities $ 82 $ (3,723) $ 3,441 $ - $ (200)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures - (5,720) (4,819) - (10,539)
Decrease (Increase) in other assets 714 (1,224) (1,355) - (1,865)
-------- -------- -------- ------ --------
Net cash provided by (used in) investing activities 714 (6,944) (6,174) - (12,404)
-------- -------- -------- ------ --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on bank financed debt and
unsecured notes payable - 7,554 6,064 - 13,618
Net payments on capitalized lease obligations - (689) (179) - (868)
Change in intercompany, net (796) 3,681 (2,885) - -
-------- -------- -------- ------ --------
Net cash provided by (used in) financing activities (796) 10,546 3,000 - 12,750
-------- -------- -------- ------ --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH - 527 (691) - (164)
-------- -------- -------- ------ --------
NET INCREASE (DECREASE) IN CASH - 406 (424) - (18)
Cash, beginning of period - 894 2,832 - 3,726
-------- -------- -------- ------ --------
Cash, end of period $ - $ 1,300 $ 2,408 $ - $ 3,708
======== ======== ======== ====== ========
14
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 chemical and foam packaging 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, through its WinCup
Holdings, Inc. ("WinCup") subsidiary. WinCup 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
("Radnor Chemical") subsidiary, the Company is the third largest worldwide
producer of EPS.
On December 12, 2001, the Company sold its European insulation operations.
Prior to that date, the Company's results of operations include the results of
the divested European insulation operations. See Note 1 to the financial
statements included under Item 8 in the Company's Report on Form 10-K for the
year ended December 28, 2001.
Results of Operations
CONSOLIDATED
Three Months Ended Nine Months Ended
--------------------------------------- --------------------------------------
September 27, September 28, September 27, September 28,
(Millions of dollars) 2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Net sales $ 88.4 $ 81.5 $ 249.0 $ 250.1
- --------------------------------------------------------------------------------------------------------------------------
Gross profit 22.4 25.8 66.4 64.9
- --------------------------------------------------------------------------------------------------------------------------
Operating expenses 15.4 18.4 45.9 49.1
- --------------------------------------------------------------------------------------------------------------------------
Income from operations 7.0 7.4 20.5 15.8
- --------------------------------------------------------------------------------------------------------------------------
Net sales for the three months ended September 27, 2002 were $88.4 million,
an increase of $6.9 million from the three months ended September 28, 2001.
Excluding the impact of the divested European insulation operations, which were
sold in December 2001, net sales increased by $11.9 million or 15.6%. This
increase was caused by higher sales volumes in the North American packaging and
specialty chemicals operations, as well as higher EPS selling prices at the
European specialty chemicals operations.
Gross profit for the three months ended September 27, 2002 decreased to
$22.4 million from $25.8 million for the same period in 2001. Excluding the
impact of the divested European insulation operations, gross profit for the
three months ended September 27, 2002 increased by $0.6 million or 2.8%. This
increase was primarily caused by higher EPS selling prices in the European
specialty chemicals operations, as described above.
Operating expenses for the three months ended September 27, 2002 decreased
to $15.4 million or 17.4% of net sales from $18.4 million or 22.6% of net sales
for the comparable period in 2001. This decrease was due primarily to lower
transportation costs throughout North America.
Income from operations decreased by $0.4 million to $7.0 million for the
three months ended September 27, 2002. For the reasons described above,
excluding the results of the divested European insulation operations,
15
income from operations increased by $1.6 million or 29.6% to $7.0 million for
the three months ended September 27, 2002 from $5.4 million for the comparable
period in the prior year.
Net sales for the nine months ended September 27, 2002 were $249.0 million,
a decrease of $1.1 million from the comparable period in the prior year.
Excluding the impact of the divested European insulation operations, net sales
increased by $16.1 million or 6.9%. This increase was primarily due to higher
sales volumes throughout the specialty chemicals segment combined with higher
selling prices in the North American packaging and European specialty chemicals
operations.
Gross profit for the nine months ended September 27, 2002 increased by $1.5
million to $66.4 million or 26.7% of net sales from $64.9 million or 25.9% of
net sales for the same period in 2001. Excluding the impact of the divested
European insulation operations, gross profit increased by $11.4 million to $66.4
million for the nine months ended September 27, 2002 from $55.0 million for the
comparable period in the prior year. This 20.7% increase over the prior year was
primarily caused by lower energy-related costs and improved manufacturing
efficiencies in the domestic food packaging operations, combined with higher
sales volumes and selling prices at the Company's European specialty chemicals
operations, as described above.
Operating expenses decreased by $3.2 million to $45.9 million for the nine
months ended September 27, 2002 from the same period in 2001. Excluding the
impact of the divested European insulation operations, operating expenses
increased $2.9 million over the nine-month period ended September 28, 2001. This
increase was primarily due to higher insurance and personnel related costs at
the Company's corporate office.
For the reasons described above, income from operations increased by $4.7
million to $20.5 million for the nine-month period ended September 27, 2002.
Excluding the results of the divested European insulation operations, income
from operations for the nine months ended September 27, 2002 increased by $8.5
million or 70.8% to $20.5 million from $12.0 million for the similar period in
the prior year.
SEGMENT ANALYSIS
Packaging & Insulation
Three Months Ended Nine Months Ended
--------------------------------------- --------------------------------------
September 27, September 28, September 27, September 28,
(Millions of dollars) 2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Net sales $ 51.1 $ 60.2 $ 152.5 $ 181.8
- --------------------------------------------------------------------------------------------------------------------------
Gross profit 15.6 20.9 49.6 52.3
- --------------------------------------------------------------------------------------------------------------------------
Operating expenses 9.0 12.1 26.9 32.4
- --------------------------------------------------------------------------------------------------------------------------
Income from operations 6.6 8.8 22.7 19.9
- --------------------------------------------------------------------------------------------------------------------------
Net sales in the packaging and insulation business segment decreased by
$9.1 million to $51.1 million for the three months ended September 27, 2002.
Excluding the impact of the European insulation operations, net sales increased
by $1.1 million or 2.2% over the same period in the prior year. This increase
was caused by higher sales volumes and increased selling prices at the Company's
domestic packaging operations.
Excluding the impact of the European insulation operations, gross profit
for the three months ended September 27, 2002 decreased by $1.4 million to $15.6
million or 30.5% of net sales from $17.0 million or 34.0% of net sales for the
comparable period in the prior year. This decrease was primarily caused by
higher raw material costs, partially offset by increased sales volumes, higher
selling prices, increased manufacturing efficiencies and cost containment
initiatives implemented during the first quarter of 2002.
16
Operating expenses decreased to $9.0 million for the three months ended
September 27, 2002 from $12.1 million for the similar period in 2001. Excluding
the impact of the divested European insulation operations, operating expenses
decreased by $1.2 million or 11.8%, primarily as a result of reduced selling and
distribution costs in the domestic operations.
For the reasons described above, income from operations decreased by $2.2
million to $6.6 million for the three months ended September 27, 2002. Excluding
the results of the divested European insulation operations, income from
operations decreased by $0.2 million to $6.6 million for the three months ended
September 27, 2002 from $6.8 million for the same period in 2001.
Net sales for the nine months ended September 27, 2002 were $152.5 million.
Excluding the impact of the divested European insulation operations, net sales
increased by $1.0 million. This increase over the nine-month period ended
September 28, 2001 was due to higher selling prices at the Company's domestic
packaging operations.
Gross profit decreased by $2.7 million to $49.6 million for the nine months
ended September 27, 2002 from $52.3 million for the comparable nine-month period
in 2001. Excluding the impact of the divested European insulation operations,
gross profit increased by $7.2 million to $49.6 million or 32.5% of net sales
for the nine months ended September 27, 2002 from $42.4 million or 28.0% of net
sales for the similar period in the prior year. This increase was primarily
caused by higher selling prices and lower energy-related costs, as well as from
improved manufacturing efficiencies resulting from engineering projects and
technology upgrades.
Operating expenses decreased to $26.9 million for the nine months ended
September 27, 2002 from $32.4 million for the same period in the prior year.
Excluding the impact of the divested European insulation operations, operating
expenses increased by $0.6 million, primarily as a result of higher selling
costs, almost entirely offset by lower distribution resulting from decreased
transportation costs.
For the reasons described above, income from operations increased by $2.8
million to $22.7 million for the nine months ended September 27, 2002 versus the
similar nine-month period in 2001. Excluding the results of the divested
European insulation operations, income from operations for the nine months ended
September 27, 2002 increased by $6.7 million or 41.9% to $22.7 million from
$16.0 million for the comparable period in 2001.
Specialty Chemicals
Three Months Ended Nine Months Ended
--------------------------------------- --------------------------------------
September 27, September 28, September 27, September 28,
(Millions of dollars) 2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Net sales $ 39.1 $ 28.7 $ 102.4 $ 87.8
- --------------------------------------------------------------------------------------------------------------------------
Gross profit 6.4 4.3 15.4 11.7
- --------------------------------------------------------------------------------------------------------------------------
Operating expenses 3.7 4.1 11.1 11.3
- --------------------------------------------------------------------------------------------------------------------------
Income from operations 2.7 0.2 4.2 0.4
- --------------------------------------------------------------------------------------------------------------------------
For the three months ended September 27, 2002 net sales increased by $10.4
million or 36.2% to $39.1 million due to higher EPS selling prices and sales
volumes. Net sales for the three months ended September 27, 2002 and September
28, 2001 included sales to the packaging and insulation segment of $2.3 million
and $7.9 million, respectively. Excluding the impact of the divested European
insulation operations, net sales to the packaging and insulation segment were
$2.7 million for the three-month period ended September 28, 2001.
Gross profit increased from $4.3 million or 15.0% of net sales to $6.4
million or 16.4% of net sales for the three months ended September 27, 2002.
This increase was primarily caused by higher EPS selling prices and
17
sales volumes, as described above, partially offset by increased raw material
costs throughout the entire segment.
Operating expenses as a percentage of net sales decreased to 9.5% for the
three-month period ended September 27, 2002 from 14.3% for the similar period in
the prior year, due primarily to decreases in distribution resulting from lower
transportation costs. For the reasons described above, income from operations
increased by $2.5 million to $2.7 million for the three months ended September
27, 2002.
For the nine-month period ended September 27, 2002 net sales increased by
$14.6 million or 16.6% to $102.4 million. This increase was primarily due to
higher sales volumes throughout the segment combined with increased EPS selling
prices in the European operations. Net sales for the nine months ended September
27, 2002 and September 28, 2001 included sales to the packaging and insulation
segment of $7.3 million and $21.2 million, respectively. Excluding the impact of
the divested European insulation operations, net sales to the packaging and
insulation segment would have been $8.2 million for the same nine-month period
ended September 28, 2001.
Gross profit increased by $3.7 million or 31.6% to $15.4 million for the
nine months ended September 27, 2002 from $11.7 million for the comparable
period in 2001. As a percentage of net sales, gross profit increased to 15.0%
for the nine months ended September 27, 2002 from 13.3% for the similar period
for 2001. This increase was primarily caused by higher sales volumes, improved
manufacturing efficiencies and cost containment initiatives experienced
throughout the segment, partially offset by increased raw material costs.
Operating expenses as a percentage of net sales decreased to 10.8% for the
nine months ended September 27, 2002 from 12.9% for the same period in 2001.
This decrease was primarily caused by reduced distribution costs resulting from
lower transportation costs and lower selling, general and administrative costs
resulting from cost containment initiatives implemented during 2002. For the
reasons described above, income from operations increased by $3.8 million to
$4.2 million for the nine months ended September 27, 2002 compared to the
similar period in 2001.
Corporate & Other
For the three months and nine months ended September 27, 2002, corporate
operating expenses increased by $0.5 million and $2.8 million, respectively,
over the comparable periods in 2001. This increase was primarily due to higher
insurance and personnel costs.
Interest Expense, net
Three Months Ended Nine Months Ended
-------------------------------------- ----------------------------------------
September 27, September 28, September 27, September 28,
(Millions of dollars) 2002 2001 2002 2001
- ------------------------------------------------------------------------------------------------------------------------
Interest expense, net $ 6.1 $ 5.5 $ 16.2 $ 16.5
- ------------------------------------------------------------------------------------------------------------------------
Interest expense increased by $0.6 million to $6.1 million for the three
months ended September 27, 2002. A decrease in interest expense resulting from a
reduction in long-term debt and lower interest rates was more than offset by a
reduction in interest income as compared to the same quarter in the prior year.
Interest expense for the nine-month period ended September 27, 2002
decreased by $0.3 million. This decrease was caused by a reduction in long-term
debt resulting from the sale of the European insulation operations in December
2001, combined with lower interest rates on the Company's revolving credit
facility.
18
Income Taxes
Three Months Ended Nine Months Ended
-------------------------------------- --------------------------------------
September 27, September 28, September 27, September 28,
(Millions of dollars) 2002 2001 2002 2001
- ------------------------------------------------------------------------------------------------------------------------
Income tax expense (benefit) $ 0.1 $ 0.4 $ 1.2 $ (0.8)
- ------------------------------------------------------------------------------------------------------------------------
The effective tax rate for the three months and nine months ended September
27, 2002 increased to 38.0% of pre-tax income from 35.9% of pre-tax income for
the comparable periods in 2001. The higher effective tax rate in 2002 was
primarily due to a higher proportion of total taxable income being in the United
States and Canada. As of September 27, 2002, the Company had approximately $59.3
million of net operating loss carryforwards for federal income tax purposes,
which expire through 2021.
Liquidity and Capital Resources
During the nine months ended September 27, 2002, the Company generated
after-tax cash flow of $16.2 million. Combined with a $3.4 million reduction in
cash and $6.4 million of net borrowings on bank financed debt and capital lease
obligations, after-tax cash flow was used to fund capital expenditures of $7.1
million and a $16.6 million investment in working capital.
As of September 27, 2002, the Company had $32.7 million outstanding under
its credit facilities. Including cash on hand, the Company had $6.3 million of
availability under these facilities as of September 27, 2002. The principal uses
of cash for the near-term will be working capital requirements, capital
expenditures and debt service.
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 and planned capital expenditures, as well as debt service
requirements through December 1, 2003. In addition, the Company is evaluating
various refinancing options with respect to its Series A and Series B notes due
December 1, 2003.
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 28,
2001, Commission File No. 333-19495, to which reference is hereby made.
Item 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
The Chief Executive Officer and Chief Financial Officer, after evaluating
the effectiveness of the Company's disclosure controls and procedures as of a
date within 90 days prior to the filing of this Form 10-Q ("the Evaluation
Date"), concluded that such disclosure controls and procedures are effective to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is being made known to them, particularly during the
period for which the periodic reports are being prepared.
(b) Changes in Internal Controls
No significant changes were made in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
Evaluation Date.
19
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, results of operations or liquidity.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.1 Statement of Chief Executive Officer Pursuant to Section 1350 of
Title 18 of the United States Code
99.2 Statement of Chief Financial Officer Pursuant to Section 1350 of
Title 18 of the United States Code
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the three-month period ended
September 27, 2002.
20
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 thereunto duly authorized.
RADNOR HOLDINGS CORPORATION
By: /s/ Michael V. Valenza
---------------------------------
Date: November 12, 2002 Michael V. Valenza
Senior Vice President-Finance and
Chief Financial Officer
21
CERTIFICATIONS
I, Michael T. Kennedy, Chairman and Chief Executive Officer of Radnor Holdings
Corporation (the "Registrant"), certify that:
1. I have reviewed this quarterly report on Form 10-Q of the Registrant;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
quarterly report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and audit
committee of Registrant's board of directors:
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. The Registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002 /s/ Michael T. Kennedy
-----------------------------
Michael T. Kennedy
Chairman of the Board
Chief Executive Officer
22
CERTIFICATIONS
I, Michael V. Valenza, Senior Vice President and Chief Financial Officer of
Radnor Holdings Corporation (the "Registrant"), certify that:
1. I have reviewed this quarterly report on Form 10-Q of the Registrant;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
quarterly report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and audit
committee of Registrant's board of directors:
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. The Registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 12, 2002 /s/ Michael V. Valenza
----------------------------------
Michael V. Valenza
Senior Vice President-Finance and
Chief Financial Officer
23