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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 29, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 333-19495
RADNOR HOLDINGS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 23-2674715
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Three Radnor Corporate Center, Suite 300
100 Matsonford Road, Radnor, Pennsylvania 19087
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 610-341-9600
Securities registered pursuant to Section 12(b) of the act: None
Securities registered pursuant to Section 12(g) of the act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 29, 2001 there were 600 shares of the Registrant's Voting Common
Stock ($.10 par value), 245 shares of the Registrant's Nonvoting Common Stock
($.10 par value) and 5,400 shares of the Registrant's Class B Nonvoting Common
Stock ($.01 par value) outstanding. The aggregate market value of voting stock
held by non-affiliates of the Registrant as of such date was $0.
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RADNOR HOLDINGS CORPORATION
2000 FORM 10-K
TABLE OF CONTENTS
Item Page
- ---- ----
PART I
------
1. Business 1
Packaging & Insulation
Food Packaging Products 1
Insulation Products 2
Specialty Chemicals 2
General
Raw Materials 3
Risks Attendant to Foreign Operations 3
Proprietary Technology and Trademarks 3
Competition 3
Employees 4
Environmental Matters 4
2. Properties
Packaging & Insulation 7
Specialty Chemicals 7
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security Holders 8
PART II
-------
5. Market for Registrant's Common Equity and Related Stock
Matters 9
6. Selected Financial Data 10
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
7A. Quantitative and Qualitative Disclosures About Market Risk 15
8. Financial Statements and Supplementary Data 15
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 15
PART III
--------
10. Directors and Executive Officers of the Registrant 16
11. Executive Compensation 18
12. Security Ownership of Certain Beneficial Owners and Management 20
13. Certain Relationships and Related Transactions 22
PART IV
-------
14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K 23
PART I
ITEM 1. BUSINESS
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. ("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 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.
Financial information concerning the Company's business segments appears in
Note 11 to the Consolidated Financial Statements included under Item 8 herein.
As used in this Report, the term "Radnor" or "Company" includes subsidiaries,
unless the context indicates otherwise.
PACKAGING & INSULATION
Radnor's downstream operations consist of food packaging and insulation
products where the Company is able to differentiate itself by its product
quality, customer service and production technology. The downstream operations
obtain nearly 100% of their external EPS requirements from the specialty
chemicals segment.
FOOD PACKAGING PRODUCTS
The foam sector of the U.S. disposable cup and container market, which the
Company believes had sales in excess of $650 million in 2000, is highly
concentrated, with the Company and its primary competitor accounting for more
than 85% of the sector.
The Company manufactures a broad range of foam cups, bowls, containers,
packaging products and thermoformed plastic lids. The use of foam provides an
insulating feature to the Company's products, allowing them to be used for both
hot and cold beverages and food products while enhancing comfort for the end
user. Foam cups are manufactured in varying sizes for both hot and cold
beverages and are sold under the Dixie(R), COMpac(TM), Profit Pals(R),
STYROcup(R), Handi-Kup HK(R), and Simplicity(R) brand names. Foam bowls and
other containers are made in varying sizes for both hot and cold food products
and are sold under the STYROcontainers(R) brand name. The Company also
manufactures thermoformed leak-resistant plastic lids for its cups, bowls and
containers.
The Company sells its disposable food packaging products through a 64-person
sales organization and through an extensive network of more than 56 independent
sales representatives. Sales and marketing efforts are directed by the Company's
Senior Vice President of Sales and Marketing and are supported by 15 senior
sales managers with an average of more than 11 years experience in the
foodservice industry. The Company believes its experienced sales team and long-
term representative relationships enhance the Company's ability to provide high
levels of customer service and specialized marketing programs, including custom-
designed foam products.
The Company's food packaging products are made with custom-designed foam cup
molding machines, lid production machines and foam cup and container printing
machines. The Company operates ten plants throughout the U.S. that produce foam
cups, containers and lids.
The Company supplies food packaging products to a number of large national
companies and foodservice distributors. No customer represented more than 5.6%
of the Company's net sales for 2000. In addition, the five largest accounts
represented approximately 22.6% of the Company's net sales for 2000. Although
the Company has
1
not lost sales from its key customers in 1998, 1999, 2000 or 2001 to date, if
any of such customers substantially reduces its level of purchases from the
Company, the Company's profitability may be adversely affected. Moreover,
continued consolidation among distributors in the foodservice industry could
result in an increasingly concentrated customer base or the loss of certain
customers.
INSULATION PRODUCTS
The Company's insulation operations directly convert EPS produced by the
specialty chemicals segment into a full range of building insulation panels,
such as roof, wall and floor panels for the building industry, as well as
specialized insulation products. These products are sold primarily in Finland
and the Scandinavian countries of Denmark, Sweden and Norway and accounted for
approximately 11.8% of the Company's consolidated net sales for 2000.
The Company maintains its own direct sales force for insulation products,
which sells to more than 2,000 customers, including large building wholesalers,
residential and commercial construction companies and distributors. A portion of
the insulation sales force is decentralized, allowing the Company to effectively
market specialized products in addition to its standard product offerings.
The Company operates seven plants located in Finland, Sweden and Denmark that
manufacture insulation panels from EPS. These plants convert approximately
27.4% of the Company's production of EPS in Europe into insulation products.
SPECIALTY CHEMICALS
The EPS industry is generally comprised of three grades of material: block
grade for rigid board insulation and molded parts, shape grade for a broad range
of packaging and specialty applications and T-grade for foodservice containers
and lost foam casting. The North American market for EPS products is estimated
at approximately 936 million pounds annually, including insulation, packaging
and foodservice grades. The European market is estimated at approximately 1.7
billion pounds annually consisting primarily of block and shape grades.
Worldwide, there are in excess of 20 manufacturers with the top five accounting
for approximately 68% of the market.
The Company manufactures EPS for its internal consumption in addition to
selling directly to third party manufacturers. The specialty chemicals segment
supplies nearly 100% of the packaging and insulation segment's external EPS
requirements. Sales to the packaging and insulation operations were $32.1
million or 22.3% of the specialty chemicals segment's total sales for 2000. The
Company's EPS includes a range of bead sizes and densities for conversion into
foam containers, light and heavy insulation boards, and various shape products.
In North America, the Company sells EPS through a dedicated sales force to
manufacturers of foam packaging and insulation products. In Europe, the Company
markets its EPS and other polystyrene products through a combination of its own
sales force, sales agency arrangements with third-party sales offices and
manufacturers' representatives. In support of these sales and marketing efforts,
the Company employs individuals who are knowledgeable of chemical engineering
and manufacturing processes in order to provide technical assistance to
customers.
The Company operates four plants in North America and two plants in Europe
that manufacture EPS from styrene monomer. These plants produced more than 312
million pounds or 141,600 metric tons of EPS during 2000.
2
GENERAL
RAW MATERIALS
The Company's packaging and insulation products are manufactured from EPS,
which is produced from styrene monomer. Styrene monomer is a commodity
petrochemical that is readily available in bulk quantities from numerous large,
vertically integrated chemical companies. Historically, styrene monomer prices
have fluctuated as a result of changes in petrochemical prices, capacity,
utilization and in supply and demand for styrene monomer. Styrene monomer
prices ranged from $.23 to $.33 per pound during 1999. During 2000 and 2001 to
date, styrene monomer prices have ranged from $.33 to $.44 per pound. Styrene
monomer prices are at approximately $.38 per pound as of March 29, 2001.
The specialty chemicals business does not insulate the Company's packaging and
insulation operations from styrene monomer price fluctuations, although it
mitigates the impact of such fluctuations by increasing the Company's
flexibility to purchase styrene monomer. Radnor purchases styrene monomer from
various suppliers through long-term contracts as well as through spot market
transactions.
The raw materials used by the Company for the manufacture of thermoformed lids
are primarily plastic resins such as high-impact polystyrene ("HIPS"). Most of
the plastic resins used by the Company, including HIPS, are available from a
variety of sources.
RISKS ATTENDANT TO FOREIGN OPERATIONS
The Company conducts its businesses in numerous foreign countries and, as a
result, is subject to risks customarily encountered in foreign operations,
including fluctuations in foreign currency exchange rates and controls, import
and export controls, and other economic, political and regulatory policies of
local governments. The Company's foreign entities report their assets,
liabilities and results of operations in the currency in which the entity
primarily conducts its businesses. The foreign currencies are ultimately
translated into U.S. dollars for financial reporting purposes.
Note 11 to the Company's financial statements included under Item 8 herein
contains information with respect to the geographic composition of the Company's
operations and financial position as of and for the years ended December 29,
2000, December 31, 1999 and December 25, 1998.
PROPRIETARY TECHNOLOGY AND TRADEMARKS
The Company has developed a broad array of proprietary technology that is
utilized in various stages of its manufacturing operations. The Company relies
primarily upon confidentiality agreements and restricted plant access to protect
its proprietary technology. The Company owns or holds license rights with
respect to numerous patents relating to its lid design in manufacturing,
embossed cup design and continuous formed foam cup manufacturing processes. The
Company, however, does not consider these patents material to its operations.
The Company holds approximately 57 registered trademarks that are not
considered material to its operations.
COMPETITION
The Company's businesses face strong competition from others, some of which
are larger and have greater resources than Radnor.
Radnor's food packaging business competes in the U.S. principally with Dart
Container Corp., which has significantly greater financial resources than the
Company and controls the largest share of this market segment. In Europe,
Radnor's insulation business competes primarily with several regional
manufacturers who have financial resources and market share similar to that of
the Company.
3
Competition in the packaging and insulation segment is based primarily on
customer service, product quality and the price at which the products are
offered. The Company believes that its market position is attributable to its
high level of customer service and product quality, strategically located
manufacturing facilities, proprietary technology and experienced management
team. The Company does not believe that other companies operating in related
markets are likely to enter the packaging and insulation segment due to the
significant investment that would be required.
In North America, the specialty chemicals business segment competes with Nova
Chemicals, Inc., Huntsman Chemical Corp. and BASF Corporation, which are larger
and have greater financial resources than the Company and which control a
significant share of the market for supplying EPS to manufacturers of insulation
and packaging products. In Europe, the Company competes with several companies
including Nova Chemicals, Inc., BASF Corporation and B.P. Amoco PLC, which are
larger and have substantially greater financial resources than Radnor.
The Company believes that competition within the EPS market is primarily based
on price, although customer service and support and high quality products can be
significant competitive factors, particularly among the smaller manufacturers of
foam insulation and packaging products.
EMPLOYEES
As of December 29, 2000, the Company had approximately 1,935 full-time
employees. Except for employees in Europe, Radnor's employees are not
represented by any union. The Company has never experienced a material labor
strike or other material labor-related work stoppage and considers its relations
with its employees to be good.
In Finland, over 90% of the Company's employees are represented by one of
three unions and the Company is subject to three collective bargaining
agreements. In Sweden, over 90% of the Company's employees are represented by
one of two unions and the Company is subject to two collective bargaining
agreements. The Company is represented in Swedish collective bargaining
negotiations by Byggnadamnesforbundet (Construction Materials Federation). The
European Union directives regarding employment are applicable to the Company in
Finland and Sweden; however, the terms of the collective bargaining agreements
will control employment relationships in these countries to the extent that
these agreements address relevant issues in a more detailed manner and include
benefits exceeding the minimum standards established by the directives.
In Denmark, the Company is a member of Dansk Industri, a large Danish employer
association, which has negotiated collective bargaining agreements with various
trade unions throughout Denmark. Most of the Company's blue collar employees in
Denmark are represented by the trade union SID (semi-skilled workers union). In
addition, the Company has negotiated local agreements with its Danish workers
that supplement the collective bargaining agreements. Moreover, all contracts
for white collar employees in Denmark must include provisions that are at least
as favorable as those provided in the Danish Employees Act.
The Company is dependent on the management experience and continued services
of the Company's executive officers, including its Chief Executive Officer,
Michael T. Kennedy. The loss of the services of these officers could have a
material adverse effect on the Company's business. In addition, the Company's
continued growth depends on its ability to attract and retain experienced key
employees.
ENVIRONMENTAL MATTERS
The Company's facilities are used for manufacturing or warehousing foam
conversion products or the EPS from which such products are manufactured. Many
of these facilities are subject to federal, state, foreign and local laws and
regulations relating to, among other things, emissions to air, discharges to
water and the generation, handling, storage, transportation and disposal of
hazardous and non-hazardous materials and wastes.
Certain of the Company's manufacturing facilities generate air emissions,
including volatile organic compounds and particulate matter, that are regulated
and require permits and/or emissions control equipment. While the Company
believes that the majority of the air emissions from its facilities are properly
permitted and
4
controlled, certain of the Company's facilities have been cited for instances of
noncompliance, although no material citations were issued within the periods
covered by the financial statements included in this Annual Report and all of
these citations have been resolved without a material adverse effect to the
Company's financial condition or results of operations. Certain of the Company's
facilities also have failed to report certain emissions as required, and it is
possible that certain of the Company's facilities lack proper air emission
permits, that these permits do not address all regulated emissions and/or that
certain of the facilities are not in full compliance with all permit conditions.
Certain of the Company's Scandinavian, Finnish and Polish facilities could be
required in the future to reduce emissions of pentane and styrene. The
requirement to reduce such air emissions is subject to negotiation with
regulatory authorities and could require significant capital expenditures. The
Company believes, however, that the costs of achieving and maintaining
compliance with laws and regulations regarding air emissions are not reasonably
likely to have a material adverse effect on the Company's financial condition or
results of operations, based on its prior experience in addressing compliance
matters that raised potentially similar issues for other facilities.
Furthermore, the Company has no knowledge of any claims regarding air emissions
that could be expected to have a material adverse effect on the Company's
financial condition or results of operations. However, it is possible that the
Company could incur significant fines, penalties or capital costs associated
with any confirmed noncompliance. There can be no assurance that recently
promulgated or future environmental laws or regulations, or permit requirements
under Title V of the Clean Air Act, will not require substantial expenditures by
the Company or significant modifications of the Company's operations.
Certain of the Company's manufacturing facilities generate wastewater that is
regulated and requires permits for discharge. While the Company believes that
the majority of the wastewater discharges from its facilities are properly
permitted, certain of the Company's facilities have been cited for instances of
past noncompliance. All of these citations have been resolved without a material
adverse effect on the Company's financial condition or results of operations.
Moreover, one of the Company's facilities has failed to report wastewater
pretreatment system upset conditions as required, and it is possible that
certain of the Company's facilities currently lack proper wastewater discharge
permits and/or are not in full compliance with all permit conditions. The
Company has no knowledge of any claims regarding wastewater discharge that could
be expected to have a material adverse effect on the Company's financial
condition or results of operations. The Company believes that the costs of
achieving and maintaining compliance with laws and regulations regarding
wastewater discharges are not reasonably likely to have a material adverse
effect on the Company's financial condition or results of operations, based both
on the Company's prior experience in obtaining similar permits or addressing
compliance matters that raised potentially similar issues for other facilities
and on preliminary estimates of the cost of addressing such potential permit
issues. It is possible, however, that the Company could become subject to
significant fines, penalties or capital costs associated with any confirmed
noncompliance. Furthermore, there can be no assurance that recently promulgated
or future environmental laws or regulations will not require substantial
expenditures by the Company or significant modifications of the Company's
operations.
The Company generates and handles certain hazardous substances, including
petroleum products, and wastes in connection with its manufacturing processes.
The handling and disposal of these substances and wastes is subject to federal,
state, foreign and local regulations, and site contamination originating from
the release or disposal of such substances or wastes can lead to significant
liabilities. It is possible that certain of the Company's current or former
facilities are or were not in full compliance with applicable laws regarding the
handling and disposal of these substances and wastes. The soil and shallow
groundwater at the Company's domestic EPS facilities are known to contain
elevated levels of various contaminants. However, the Company does not believe,
based on the results of soil and groundwater testing, that material remediation
efforts with respect to these conditions will be required. Although the Company
believes that the elevated levels of various contaminants in the soil and
shallow groundwater at the Company's domestic EPS facilities and any confirmed
noncompliance with applicable laws regarding the handling and disposal of
certain hazardous substances have not had, and are not reasonably likely to
have, either individually or in the aggregate, a material adverse effect on the
Company's financial condition or results of operations, and the Company has no
knowledge of claims that could be expected to have a material adverse effect on
its financial condition or results of operations, there can be no assurance that
the Company will not incur significant costs, fines or penalties in connection
with historical on- or off-site handling or disposal of such substances and
wastes or cleanup costs for site contamination.
5
The Company owns and operates underground storage tanks ("USTs") at two of its
facilities for the storage of liquid pentane and heavy fuel oil. Leak detection
or containment systems are in place at both facilities. One of the tanks,
located at the Fort Worth, Texas facility, was pressure tested in 1996 and no
leaks were detected. USTs are generally subject to federal, state, local and
foreign laws and regulations that require testing and upgrading of USTs and
remediation of polluted soils and groundwater resulting from leaking USTs. In
addition, if leakage from the Company's USTs migrates onto the property of
others, the Company may be subject to civil liability to third parties for
remediation costs or other damages. Based on historical experience, the Company
believes that its liabilities associated with UST testing, upgrades and
remediation are unlikely to have a material adverse effect on its financial
condition or results of operations.
Certain of the Company's current and former facilities are located in
industrial areas and have been in operation for many years. As a consequence, it
is possible that historical or neighboring activities have affected properties
currently or formerly owned by the Company and that, as a result, additional
environmental issues may arise in the future, the precise nature of which the
Company cannot now predict.
6
ITEM 2. PROPERTIES
The following tables set forth, as of December 29, 2000, the Company's major
manufacturing, warehouse, machine assembly, utility and office facilities, all
of which are owned except as otherwise noted:
Packaging & Insulation
----------------------
Approximate
Floor Space
Location Use Sq. Ft.
- -------- --- -------
Corte Madera, California.................... Manufacturing, warehouse, machine assembly and office 85,000
(leased)
Richmond, California........................ Warehouse (leased) 103,000
El Campo, Texas............................. Manufacturing and warehouse 91,000
Higginsville, Missouri...................... Manufacturing and warehouse 68,000
Warrensburg, Missouri....................... Warehouse (leased) 10,000
Jacksonville, Florida....................... Manufacturing and warehouse (leased) 128,000
Edison, New Jersey.......................... Warehouse (leased) 95,000
Metuchen, New Jersey........................ Manufacturing 84,000
Mount Sterling, Ohio........................ Manufacturing and warehouse 56,000
Shreveport, Louisiana....................... Manufacturing and warehouse 73,000
Stone Mountain, Georgia..................... Manufacturing and warehouse (partially leased) 347,000
Phoenix, Arizona............................ Machine assembly (leased) 20,000
Tolleson, Arizona........................... Manufacturing, warehouse, and office 170,000
West Chicago, Illinois...................... Manufacturing, warehouse and office (partially leased) 350,000
Nurmijarvi, Finland......................... Manufacturing, warehouse and office 49,000
Vammala, Finland............................ Manufacturing, warehouse and office 172,000
Muurola, Finland............................ Manufacturing, warehouse and office (leased) 11,000
Pietarsaari, Finland........................ Manufacturing, warehouse and office (leased) 36,000
Norrtalje, Sweden........................... Manufacturing, warehouse and office (leased) 63,000
Vargarda, Sweden............................ Manufacturing, warehouse and office 63,000
Lodz, Poland................................ Manufacturing and warehouse (leased) 30,500
Hedensted, Denmark.......................... Manufacturing, warehouse and office 44,000
_____________________________
Specialty Chemicals
-------------------
Approximate
Floor Space
Location Use Sq. Ft.
- -------- --- -------
Fort Worth, Texas........................... Manufacturing, warehouse and office (partially leased) 208,000
Saginaw, Texas.............................. Manufacturing, warehouse and office 60,000
Baie D'Urfe, Quebec......................... Manufacturing, warehouse and office 90,000
Manufacturing, warehouse, machine assembly, utility and 112,000
Porvoo, Finland............................. office (partially leased)
Kokemaki, Finland............................. Manufacturing, warehouse, utility and office (leased) 52,000
7
In addition, the Company leases approximately 8,000 square feet in Radnor,
Pennsylvania for its executive offices. The Company believes that its present
facilities are adequate for its current operations and that it will be able to
lease or otherwise acquire any additional facilities as may be required for its
future operations.
ITEM 3. LEGAL PROCEEDINGS
In December 2000, the Company filed a lawsuit in Texas state court as a
result of excess charges for raw materials purchased from a major supplier. In
January 2001, the Company settled the litigation resulting in an amendment to
the Company's supply agreement. The amount of the excess charges in 1999 and
2000 was approximately $7.7 million. The settlement, in like amount, will be
realized over the next three years through discounts and rebates for materials
purchased.
The Company is also 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
adverse effect on the Company's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There are no matters to be reported hereunder.
8
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK MATTERS
Market Information
- ------------------
There currently exists no established public trading market for the Company's
Voting Common Stock, $.10 par value, Nonvoting Common Stock, $.10 par value, or
Class B Nonvoting Common Stock, $.01 par value.
Holders
- -------
As of March 29, 2001, there were 3 holders of record of the Company's Voting
Common Stock, 11 holders of record of the Company's Nonvoting Common Stock and 7
holders of record of the Company's Class B Nonvoting Common Stock.
Dividends
- ---------
No dividends were declared or paid during the years ended December 29, 2000
or December 31, 1999. As with any company, the declaration and payment of
dividends are subject to the discretion of the Company's Board of Directors and
will depend on various factors, including restrictions on dividends contained in
the Company's credit agreements and the indentures pursuant to which the Company
issued its 10% Senior Notes due 2003 on December 5, 1996 (the "Series A Notes")
and its 10% Series B Senior Notes due 2003 on October 15, 1997 (the "Series B
Notes").
9
ITEM 6. SELECTED FINANCIAL DATA
The following table presents summary consolidated financial data for the
Company. The following data should be read in conjunction with the consolidated
financial statements and the related notes thereto and Management's Discussion
and Analysis of the Financial Condition and Results of Operations, included
elsewhere herein.
Fiscal Year Ended
----------------------------------------------------------------------------
Dec. 27, Dec. 26, Dec. 25, Dec. 31, Dec. 29,
1996(1) 1997(1) 1998 1999(2) 2000(3)
---------- ----------- ---------- ---------- -------------
($ in thousands, except per share amounts)
Results of Operations:
Net sales $ 177,395 $ 243,583 $ 311,137 $ 318,115 $ 362,527
Cost of goods sold 135,982 181,404 220,691 226,509 277,254
---------- ----------- ---------- ---------- -------------
Gross profit 41,413 62,179 90,446 91,606 85,273
Distribution expense 14,099 18,076 23,004 24,535 26,003
Selling, general and administrative expenses 18,676 30,137 38,965 43,922 45,027
Restructuring charges 910 - - - -
---------- ----------- ---------- ---------- -------------
Income from operations 7,728 13,966 28,477 23,149 14,243
Interest 4,496 13,004 18,776 21,070 21,725
Other (income) expense, net 374 (133) 965 1,363 1,104
---------- ----------- ---------- ---------- -------------
Income (loss) from continuing operations
before income taxes and minority interest 2,858 1,095 8,736 716 (8,586)
Income tax expense (benefit) (4) 121 (2,516) 3,340 241 (3,074)
---------- ----------- ---------- ---------- -------------
Income (loss) from continuing operations
before minority interest 2,737 3,611 5,396 475 (5,512)
Minority interest in income (5) 1,348 - - - -
---------- ----------- ---------- ---------- -------------
Income (loss) from continuing operations $ 1,389 $ 3,611 $ 5,396 $ 475 $ (5,512)
========== =========== ========== ========== =============
Balance Sheet data (at end of period):
Working capital $ 8,684 $ 24,136 $ 23,909 $ 12,884 $ 16,117
Total assets 172,369 249,818 278,796 293,683 305,999
Total debt (including current portion) 104,599 179,173 195,998 215,417 229,508
Stockholders' equity (deficit) 14,329 14,975 20,949 7,574 (1,811)
Cash dividends per share - 480 240 - -
_______________________
(1) The financial data include the Company and its consolidated subsidiaries,
excluding discontinued operations, as of and for the years ended December
27, 1996 and December 26, 1997, respectively. Prior to January 20, 1996,
the Company's results from continuing operations do not include the results
of the foam cup and container operations purchased from Fort James
Corporation on that date ("J.R. Cup acquisition"). Prior to December 5,
1996 the Company's results from continuing operations do not include the
results of Radnor Chemical Corporation, formerly S.P. Acquisition Co.,
which was acquired on that date. Prior to October 15, 1997, the Company's
results from continuing operations do not include the results of StyroChem
Europe, which was acquired on that date.
(2) The Company's fiscal year is the fifty-two or fifty-three week period that
ends on the last Friday of December of each year. The years presented in
the above table are 52-week years with the exception of 1999 which is a
53-week year.
(3) Excludes the benefit of a $7.7 million settlement related to overbillings
on raw material purchases. See Note 3 to the Company's consolidated
financial statements included in Item 8 herein.
(4) See Note 7 to the Company's consolidated financial statements included in
Item 8 herein.
(5) Amount represents minority interest in the income of the Company's
partnership with Fort James Corporation in conjunction with the J.R. Cup
acquisition for the period January 20, 1996 through December 5, 1996.
10
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
- ---------------------
The following discussion and analysis should be read in conjunction with
Item 6, "Selected Financial Data" and Item 8, "Financial Statements and
Supplementary Data" included elsewhere herein.
In January 1999, the EPS production operations located in Minton, Texas
were sold by the Company's Radnor Chemical subsidiary to its WinCup subsidiary.
This facility manufactures a substantial portion of the EPS utilized by the
Company's domestic food packaging operations with the remainder purchased from
Radnor Chemical's Canadian EPS manufacturing facility. The Company's segment
analysis for 1998 has been restated to reflect the impact of this transaction
for purposes of Management's Discussion and Analysis of Financial Condition and
Results of Operations.
CONSOLIDATED
(Millions of dollars) 2000 1999 1998
- ------------------------------------------------------------------------
Net sales $362.5 $318.1 $311.1
- ------------------------------------------------------------------------
Gross profit 85.3 91.6 90.4
- ------------------------------------------------------------------------
Operating expenses 71.1 68.5 61.9
- ------------------------------------------------------------------------
Income from continuing operations 14.2 23.1 28.5
- ------------------------------------------------------------------------
The Company achieved record sales for the year ended December 29, 2000. Net
sales increased $44.4 million to $362.5 million as a result of growth in volume
and sales prices in each of the Company's operating segments. Gross profit
decreased to $85.3 million from $91.6 million in 2000 primarily as a result of
increased styrene costs at the Company's specialty chemical operations and
higher than expected costs of goods sold due to increased natural gas rates,
partially offset by the increased sales. If the benefit of the settlement
described in Note 3 of the Company's audited financial statements had been
included in the results of 2000, gross profit would have increased to $93.0
million and income from continuing operations would have been $22.0 million.
Operating expenses decreased to 19.6% of net sales in 2000 from 21.5% of net
sales in 1999. This decrease was primarily due to reduced general and
administrative expenses, partially offset by increased amortization costs.
Fiscal 1999 net sales increased by $7.0 million or 2.3% over 1998. This
increase was primarily attributable to growth in the Company's domestic food
packaging business. Gross profit increased to $91.6 million in 1999 from $90.4
million in 1998. This increase was primarily a result of increased sales and
manufacturing efficiencies at the Company's packaging and insulation operations,
offset by the impact of reduced specialty chemicals prices. Operating expenses
increased to 21.5% of net sales in 1999 from 19.9% of net sales in 1998. This
increase was primarily attributable to increased distribution costs resulting
from higher sales volumes at both the specialty chemicals and packaging and
insulation segments combined with increased amortization and administrative
costs at the Company's executive offices.
SEGMENT ANALYSIS
Packaging & Insulation
(Millions of dollars) 2000 1999 1998
- ------------------------------------------------------------------------
Net sales $247.5 $231.3 $221.6
- ------------------------------------------------------------------------
Gross profit 62.9 71.6 66.3
- ------------------------------------------------------------------------
Operating expenses 46.3 46.6 43.0
- ------------------------------------------------------------------------
Income from continuing operations 16.6 25.0 23.3
- ------------------------------------------------------------------------
11
Net sales in the packaging and insulation business segment increased by
$16.2 million in fiscal 2000 to $247.5 million. This 7.0% increase over 1999 was
due to increased sales volumes and prices in both the packaging and insulation
segments. Gross profit decreased to 25.4% of net sales from 31.0% of net sales
in 2000 primarily as a result of the steady increase in natural gas costs during
the second half of the year as well as increased raw material costs at the
Company's European insulation business. These increases were partially offset by
manufacturing efficiencies in the domestic packaging operations. If the benefit
of the settlement described in Note 3 to the Company's audited financial
statements had been included in the results of 2000, gross profit would have
only decreased to 26.5% of net sales from 31.0% and income from continuing
operations would have been $19.3 million for the Company's packaging and
insulation segment. Operating expenses decreased $0.3 million to 18.7% of net
sales in 2000 from $46.6 million or 20.1% of net sales in 1999 as a result of
cost containment initiatives and reduced corporate allocations, partially offset
by increased distribution and selling costs associated with higher sales
volumes.
Fiscal 1999 net sales increased by $9.7 million to $231.3 million from
fiscal 1998. This 4.4% increase was primarily due to the growth within the
domestic packaging operations. Gross profit increased to 31.0% of net sales in
1999 from 29.9% of net sales in 1998 as a result of increased manufacturing
efficiencies in both the packaging and insulation operations. Operating expenses
increased to 20.1% of net sales in 1999 from 19.4% of net sales in 1998 as a
result of higher distribution and administrative costs within the domestic
packaging operations.
Specialty Chemicals
(Millions of dollars) 2000 1999 1998
- ------------------------------------------------------------------------
Net sales $144.1 $108.9 $112.4
- ------------------------------------------------------------------------
Gross profit 18.5 16.8 24.1
- ------------------------------------------------------------------------
Operating expenses 16.0 18.6 17.8
- ------------------------------------------------------------------------
Income (loss) from continuing operations 2.5 (1.8) 6.3
- ------------------------------------------------------------------------
Fiscal 2000 net sales in the specialty chemicals business segment increased
by $35.2 million to $144.1 million. Net sales included $32.1 million, $24.3
million and $23.6 million of sales to the packaging and insulation segment for
fiscal 2000, 1999 and 1998, respectively, that are eliminated in consolidation.
The increase in net sales from 1999 to 2000 was due to growth in selling prices
across the entire business segment as well as increased volumes at the Company's
European operations. Gross profit increased to $18.5 million from $16.8 million
in 1999 as a result of the increase in sales, partially offset by a dramatic
increase in the cost of styrene monomer, the segment's primary raw material. If
the benefit of the settlement described in Note 3 to the Company's audited
financial statements had been included in the results of 2000, gross profit
would have increased to $23.5 million from $16.8 million in 1999 and income from
continuing operations would have been $7.5 million for the Company's specialty
chemicals segment. Operating expenses decreased to 11.1% of net sales in 2000
from 17.1% in 1999 due to cost containment initiatives at the European
operations as well as decreased corporate expense allocations, partially offset
by increased amortization of intangible assets.
Net sales in the specialty chemicals business segment decreased by $3.5
million to $108.9 million in the year ended December 31, 1999. This decrease in
net sales from 1998 to 1999 was primarily due to reduced selling prices
resulting from excess supply in the EPS market, partially offset by a 13.7%
increase in sales volume. Gross profit decreased to 15.4% of net sales in 1999
from 21.4% in 1998. This decrease was primarily caused by the reduction in
selling prices described above, partially offset by increased sales volume and
manufacturing efficiencies. Operating expenses increased $0.8 million to $18.6
million for the year ended December 31, 1999 primarily due to increased
distribution costs and depreciation expense in the European specialty chemicals
business.
12
Corporate and Other
Corporate operating expenses increased by $5.5 million for the year ended
December 29, 2000. The overall increase in operating expenses was the result of
a reduction in corporate overhead allocations. Prior to corporate allocations,
operating expenses increased by $0.5 million primarily due to increased
amortization.
Interest Expense
- ----------------
(Millions of dollars) 2000 1999 1998
- --------------------------------------------------------------
Interest expense $21.7 $21.1 $18.8
- --------------------------------------------------------------
Interest expense for the year ended December 29, 2000 increased by $0.6
million over the prior year. This increase was primarily due to the combination
of increased interest rates and higher borrowings on the Company's revolving
credit facility. Also included in interest expense is the amortization of
deferred financing fees and debt issuance premium of $1.2 million in each of the
years ended December 29, 2000 and December 31, 1999. In 1999, interest expense
rose by $2.3 million due primarily to increased borrowings related to the
purchase of the Company's Tolleson, Arizona food packaging facility and the
reengineering of the Company's Stone Mountain, Georgia food packaging facility.
Other Expenses
- --------------
(Millions of dollars) 2000 1999 1998
- --------------------------------------------------------------
Other expense $ 1.1 $ 1.4 $ 1.0
- --------------------------------------------------------------
Other expenses for the years ended December 31, 1999 and December 28, 1998
included $0.4 million and $0.6 million in corporate development costs,
respectively. Excluding the effect of these costs, other expenses remained
relatively constant from 1999 to 2000.
Income Taxes
- ------------
(Millions of dollars) 2000 1999 1998
- --------------------------------------------------------------
Income tax expense (benefit) ($ 3.1) $ 0.2 $ 3.3
- --------------------------------------------------------------
The Company recorded a benefit for income taxes in 2000 due to a $9.3
million decrease in pre-tax income for the reasons described above. During 1999,
income tax expense decreased to $0.2 million from $3.3 million in 1998. This
decrease was primarily due to an $8.0 million decrease in pre-tax income in
1999.
As of December 29, 2000, the Company had approximately $60.1 million of net
operating loss carryforwards for federal income tax purposes, which expire
through 2020.
Liquidity and Capital Resources
- -------------------------------
During fiscal 2000, the Company's principal sources of funds consisted of
cash from financing sources. During the year ended December 29, 2000, after-tax
cash flow of $10.2 million and a decrease in cash of $3.9 million were primarily
used for managing the $9.2 million increase in working capital and cash payments
related to discontinued operations of $2.4 million. Capital expenditures of
$15.3 million were funded by borrowings under the Company's credit facilities,
capital leases and term loans. The Company has managed its growth in working
capital and capital expenditures through a combination of working capital
financing and proceeds of long-term debt financing.
As of December 29, 2000, the Company had $41.9 million outstanding and $4.0
million available under its revolving credit agreements. The Company's principal
uses of cash for the next several years will be working
13
capital requirements and capital expenditures. The Company's capital
expenditures for fiscal years 1998, 1999 and 2000 were $17.7 million, $20.0
million and $15.3 million, respectively. By amending its credit facility to an
aggregate commitment of $50.0 million in 2000, the Company believes that it has
increased its flexibility over the next five years to make capital expenditures
that management believes will provide an attractive return on investment.
As a holding company, the Company is dependent upon dividends and other
payments from its subsidiaries to generate the funds necessary to meet its
obligations. Subject to certain limitations, the Company is, and will continue
to be, able to control its receipt of dividends and other payments from its
subsidiaries. Management believes that cash generated from operations, together
with available borrowings under its revolving credit facilities will be
sufficient to meet the Company's expected operating needs, planned capital
expenditures and debt service requirements. However, there can be no assurance
that sufficient funds will be available from operations or borrowings under its
credit agreements to meet the Company's cash needs.
Other Financial Data
- --------------------
Cost of Goods Sold
In December 2000, the Company filed a lawsuit in Texas state court as a
result of excess charges for raw materials purchased from a major supplier. In
January 2001, the Company settled the litigation resulting in an amendment to
the Company's supply agreement. The amount of the excess charges in 1999 and
2000 was approximately $7.7 million. The settlement, in like amount, will be
realized over the next three years through discounts and rebates for materials
purchased. If the impact of the settlement was recorded in 2000, it would have
resulted in gross profit of $93.0 million, income from continuing operations of
$22.0 million, a net loss of $0.7 million, and net worth of $3.2 million.
Raw material costs represent a large portion of the Company's cost of goods
sold and are susceptible to price fluctuations based upon supply and demand and
general market conditions. Beginning in June 1999 and continuing through August
2000, prices of the Company's primary raw material rose by almost 85%. Since
that time, prices have decreased by more than 17%. Although future raw material
prices cannot be predicted with accuracy, prices for raw materials used in the
Company's products are forecasted by independent industry surveys and producer
reports to remain stable or decrease over the next year. While the Company has
been able to pass on the majority of these increases to customers, there can be
no assurance that the Company will be able to increase prices if raw material
costs rise in the future.
In connection with the Company's engineering initiatives, the Company has
invested significant resources in research and development. The Company expenses
all research and development costs in the period incurred and includes such
costs in cost of goods sold. As a percentage of net sales, these costs have
represented 2.2%, 1.7% and 1.0% in 1998, 1999 and 2000, respectively.
Forward Looking Statements
The statements contained in this Annual Report that are not historical
facts, including but not limited to the Company's plans for expansion and raw
material prices, are based on current expectations. These statements are forward
looking (as defined in the U.S. Private Securities Litigation Reform Act of
1995) in nature and involve a number of risks and uncertainties. Actual results
may vary materially due to risks relating to raw material price volatility,
dependence on key customers, international operations, dependence on key
personnel and environmental matters, as well as general business and economic
conditions, both domestic and international, and other risks that may be
described from time to time in the reports that the Company files with the
Securities and Exchange Commission. See "Business--Raw Materials", "Business--
Risks Attendant to Foreign Operations", "Business--Competition", "Business--
Employees", "Business--Environmental Matters," and "Quantitative and Qualitative
Disclosures about Market Risk."
14
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk is the potential loss arising from adverse
changes in interest rates. The Company's long-term debt obligations are mostly
at fixed interest rates and denominated in U.S. dollars. The Company manages its
interest rate risk by monitoring trends in interest rates as a basis for
determining whether to enter into fixed rate or variable rate agreements. Market
risk is estimated as the potential increase in fair value of the Company's long-
term debt obligations resulting from a hypothetical one-percent decrease in
interest rates and amounts to approximately $4.1 million over the term of the
debt.
Although the Company continues to evaluate derivative financial instruments
to manage foreign currency exchange rate changes, the Company does not currently
hold derivatives for managing these risks or for trading purposes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Radnor Holdings Corporation and Subsidiaries
Report of Independent Public Accountants F-1
Consolidated Balance Sheets as of December 29, 2000 and December 31, 1999 F-2
Consolidated Statements of Operations for the Fiscal Years Ended December 29, 2000,
December 31, 1999 and December 25, 1998 F-3
Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended December 29, 2000,
December 31, 1999 and December 25, 1998 F-4
Consolidated Statements of Cash Flows for the Fiscal Years Ended December 29, 2000,
December 31, 1999 and December 25, 1998 F-5
Notes to Consolidated Financial Statements F-7
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There are no matters to be reported hereunder.
15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors and Executive Officers
The directors and executive officers of the Company and their ages as of
March 29, 2001 are as follows:
Name Age Position
---- --- --------
Michael T. Kennedy......... 46 President, Chief Executive Officer and Director
Michael V. Valenza......... 41 Senior Vice President - Finance and Chief Financial Officer
Richard C. Hunsinger....... 52 Senior Vice President - Sales and Marketing
Donald D. Walker........... 59 Senior Vice President - Operations
John P. McNiff............. 40 Senior Vice President - Corporate Development and Director
R. Radcliffe Hastings...... 50 Senior Vice President, Treasurer and Director
Donald C. Rogalski......... 55 Senior Vice President - Administration
John P. McKelvey........... 60 Vice President - Human Resources
Van D. Groenewold.......... 68 Vice President - Engineering
Caroline J. Williamson..... 33 Vice President and Corporate Counsel
Paul M. Finigan............ 46 Director
Vincent F. Garrity, Jr..... 63 Director
Michael T. Kennedy has served as President, Chief Executive Officer and as
a director of the Company since its formation in November 1991. Between March
1985 and July 1990, Mr. Kennedy served as Chief Financial Officer of Airgas,
Inc., a New York Stock Exchange-listed distributor of industrial gases. Mr.
Kennedy is also a director of Commonwealth Bancorp, Chartwell Investment
Partners, LP and SkinHealth, Inc.
Michael V. Valenza has served as Senior Vice President - Finance and Chief
Financial Officer of the Company since April 1993. He joined the Company in
September 1992 as Director of Finance. From 1984 until joining the Company, Mr.
Valenza served in a variety of positions with Arthur Andersen LLP, most recently
as a manager in the Enterprise Group.
Richard C. Hunsinger has served as Senior Vice President - Sales and
Marketing of the Company since its formation in November 1991. From 1979 through
August 1991, Mr. Hunsinger served in various management positions, including
Vice President of Sales and Marketing for Winkler/Flexible Products, Inc., a
former division of The Coca Cola Company.
Donald D. Walker has served as Senior Vice President - Operations of the
Company since November 1992. Mr. Walker served as Vice President of
Manufacturing and as Director of Manufacturing of the Company from February 1992
through November 1992. From 1969 until February 1992, Mr. Walker served in
various management positions with Scott Container Products Group, Inc. (WinCup's
predecessor), WMF Corporation and Thompson Industries.
John P. McNiff has served as Senior Vice President - Corporate Development
of the Company since its formation in November 1991 and as a director since May
1997. Previously Mr. McNiff was Vice President-Corporate Development of Airgas,
Inc., a New York Stock Exchange-listed distributor of industrial gases. Mr.
McNiff is also a director of Chartwell Investment Partners, LP.
16
R. Radcliffe Hastings has served as Senior Vice President and Treasurer of
the Company since June 1996 and as a director since May 1997. Previously, Mr.
Hastings was with Continental Bank, N.A. and its successor, Bank of America, for
18 years. Mr. Hastings has held a variety of management positions in the U.S.
banking group and in Bank of America's securities operation, BA Securities,
Inc., and was most recently Managing Director of the Money Manager Group .
Donald C. Rogalski has served as Senior Vice President - Administration of
the Company since July 1993. Previously Mr. Rogalski held the positions of Chief
Financial Officer and Vice President of Finance for Stiffel Lamp Co. for seven
years. Prior to that, Mr. Rogalski worked for Packard Instrument Company for
nine years, with his last position there as Controller.
John P. McKelvey has served as Vice President - Human Resources for the
Company since October 1992. From February 1992 until October 1992, Mr. McKelvey
was Director of Human Resources for the Company. From 1971 until joining the
Company, Mr. McKelvey served in a variety of human resources management
positions for Scott Container Products Group, Inc., Texstyrene Corporation, WMF
Corporation and Thompson Industries.
Van D. Groenewold has served as Vice President - Engineering for the
Company since November 1992. From February 1992 until November 1992, Mr.
Groenewold was Director of Engineering for the Company. From 1982 until joining
the Company, Mr. Groenewold held various engineering and quality assurance
management positions with Scott Container Products Group, Inc., WMF Corporation
and Thompson Industries.
Caroline J. Williamson has served as Vice President and Corporate Counsel
of the Company since March 1997. From March 1996 to March 1997, Ms. Williamson
served as counsel for Aetna U.S. Healthcare. From September 1992 to March 1996,
Ms. Williamson was an associate with Duane, Morris & Heckscher LLP.
Paul M. Finigan has served as a director of the Company since July 2000.
Mr. Finigan serves as Chief Legal Officer of Lumenos, Inc. where he has been
employed since November 1999. Mr. Finigan is also a director of SkinHealth, Inc.
where he served as Executive Vice President from March 1999 to November 1999.
From November 1988 to September 1997, Mr. Finigan served as Senior Vice
President and General Counsel of Value Health, Inc.
Vincent F. Garrity, Jr. has served as a director of the Company since May
1997. Mr. Garrity has been a partner in the law firm of Duane, Morris &
Heckscher LLP since 1970.
17
ITEM 11. EXECUTIVE COMPENSATION
The directors do not receive separate compensation for their service as
directors of the Company. The following table sets forth certain information
concerning the compensation paid to the Company's chief executive officer and
the Company's four other most highly compensated executive officers whose total
annual salary and bonus exceeded $100,000 for the year ended December 29, 2000:
Summary Compensation Table
Annual Compensation
------------------------------------------------
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation Compensation
- -------------------------------- --------- ------------- ------------ ------------------ ----------------
Michael T. Kennedy 2000 $2,500,000 $1,130,000 $103,255/(1)/ $99,329/(2)/
President and Chief 1999 2,500,000 1,400,000 126,906/(1)/ 99,205/(2)/
Executive Officer.............. 1998 2,000,000 1,400,000 61,459/(1)/ 99,183/(2)/
R. Radcliffe Hastings 2000 300,000 125,000 - 4,480/(3)/
Senior Vice President and 1999 250,000 125,000 - 4,480/(3)/
Treasurer...................... 1998 225,000 150,000 - 4,480/(3)/
Michael V. Valenza 2000 275,000 - - 4,480/(3)/
Senior Vice President-Finance 1999 250,000 210,000 - 4,480/(3)/
and Chief Financial Officer.... 1998 225,000 150,000 - 4,480/(3)/
Richard C. Hunsinger 2000 275,000 - - 4,480/(3)/
Senior Vice President-Sales 1999 250,000 120,000 - 4,480/(3)/
and Marketing.................. 1998 225,000 100,000 - 4,480/(3)/
Donald D. Walker 2000 275,000 - - 4,480/(3)/
Senior Vice President- 1999 250,000 120,000 - 4,480/(3)/
Operations..................... 1998 225,000 100,000 - 4,480/(3)/
(1) Represents transportation costs paid by the Company on behalf of Mr.
Kennedy.
(2) Includes $4,480 of matching contributions by the Company under the 401(k)
Retirement Savings Plan and premiums of $94,849, $94,725 and $94,703 in
2000, 1999 and 1998, respectively, paid by the Company with respect to a
supplemental life insurance policy for the benefit of Mr. Kennedy.
(3) Represents a matching contribution by the Company under the 401(k)
Retirement Savings Plan.
18
The following table sets forth information with respect to options held at
December 29, 2000 by the persons named in the Summary Compensation Table above.
No options were granted to or exercised by such persons during the fiscal year
ended December 29,2000.
Number of Securities Underlying
Unexercised Options at
December 29, 2000/(1)/
----------------------------------
Name Exercisable Unexercisable
- ---- ------------- ---------------
Michael T. Kennedy.............. - -
R. Radcliffe Hastings........... - -
Michael V. Valenza.............. 98 40
Richard C. Hunsinger............ 130 20
Donald D. Walker................ 130 20
_____________
(1) Based on the estimated per share value of the securities underlying the
unexercised options, as determined by the Company's Board of Directors,
there were no in-the-money options at December 29, 2000.
Employment Agreements
- ----------------------
In May 1993, the Company entered into an employment agreement with Richard
C. Hunsinger, which was amended in January 1996, pursuant to which Mr. Hunsinger
serves as Senior Vice President - Sales and Marketing of the Company. The
agreement is for an initial term of seven years and six months and, absent 180
days prior written notice by either party before the end of the initial or any
renewal term, renews for twelve months from year to year thereafter. Under the
agreement as amended, Mr. Hunsinger is entitled to an annual salary of not less
than $145,000 beginning in 1996, subject to annual cost of living increases. The
agreement contains a covenant not to engage in any business that is competitive
with the business of the Company in any geographical area in which it does
business during the term of the agreement and for a period of two years
immediately following the termination of the agreement.
In April 1996, the Company entered into an employment agreement with R.
Radcliffe Hastings, pursuant to which Mr. Hastings serves as Senior Vice
President and Treasurer of the Company. The agreement is for an initial term of
three years and, absent 90 days prior written notice by either party before the
end of the initial or any renewal term, renews for twelve months from year to
year thereafter. Mr. Hastings is entitled to an annual salary of not less than
$125,000, subject to annual review by the Board of Directors. The agreement
contains a covenant not to compete in any business that is competitive with the
business of the Company in the U.S. during the term of the agreement.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Michael T. Kennedy, the Company's Chief Executive Officer and a director,
is also a director of SkinHealth, Inc. of which Paul Finigan, a director of the
Company, is a director and executive officer.
19
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 29, 2001,
with respect to each person who is known by the Company to own beneficially 5%
or more of each class of voting securities of the Company.
Number of
Shares
Title of Class of Beneficially Percent
Name of Individual or Identity of Group Capital Stock Owned of Class
- ---------------------------------------- ----------------------- ---------------- ------------
Michael T. Kennedy...................... Voting Common Stock 480 80.0%
Three Radnor Corporate Center
Suite 300
Radnor, PA 19087
John P. McNiff.......................... Voting Common Stock 60 10.0%
Three Radnor Corporate Center
Suite 300
Radnor, PA 19087
R. Radcliffe Hastings................... Voting Common Stock 60 10.0%
Three Radnor Corporate Center
Suite 300
Radnor, PA 19087
20
The following table sets forth certain information as of March 29, 2001,
with respect to beneficial ownership of each class of equity securities of the
Company by (a) the directors of the Company, (b) the Named Executive Officers
and (c) the directors and all executive officers of the Company as a group.
Number of
Shares Percent
Beneficially of
Name of Individual or Identity of Group Title of Class of Capital Stock Owned/(1)/ Class/(2)/
- ----------------------------------------- ------------------------------------ ---------------- -----------
Michael T. Kennedy....................... Voting Common Stock 480 80.0%
Class B Nonvoting Common Stock 3,760/(3)/ 69.6%
Nonvoting Common Stock - -
Michael V. Valenza....................... Voting Common Stock - -
Class B Nonvoting Common Stock - -
Nonvoting Common Stock 118 34.4%
Richard C. Hunsinger..................... Voting Common Stock - -
Class B Nonvoting Common Stock - -
Nonvoting Common Stock 180 48.0%
Donald D. Walker......................... Voting Common Stock - -
Class B Nonvoting Common Stock - -
Nonvoting Common Stock 187 49.9%
R. Radcliffe Hastings.................... Voting Common Stock 60 10.0%
Class B Nonvoting Common Stock 540 10.0%
Nonvoting Common Stock - -
John P. McNiff........................... Voting Common Stock 60 10.0%
Class B Nonvoting Common Stock 540 10.0%
Nonvoting Common Stock - -
Vincent F. Garrity, Jr................... Voting Common Stock - -
Class B Nonvoting Common Stock 2,640/(4)/ 48.9%
Nonvoting Common Stock - -
Paul M. Finigan.......................... Voting Common Stock - -
Class B Nonvoting Common Stock - -
Nonvoting Common Stock - -
Directors and all executive officers as
a group (12 persons).................... Voting Common Stock 600 100.0%
Class B Nonvoting Common Stock 5,400 100.0%
Nonvoting Common Stock 782 95.1%
- --------------
(1) Includes shares of Nonvoting Common Stock that certain individuals have the
right to acquire, on or before May 29, 2001, upon the exercise of stock
options granted pursuant to the Company's Equity Incentive Plan, as
follows: Michael V. Valenza-98; Richard C. Hunsinger-130; Donald D. Walker-
130; and the directors and all executive officers as a group-577.
(2) Based upon 600, 5,400 and 245 outstanding shares of Voting Common Stock,
Class B Nonvoting Common Stock and Nonvoting Common Stock, respectively.
(3) Includes 2,080 shares held in a grantor retained annuity trust created by
Mr. Kennedy. Mr. Kennedy retained the right to acquire these shares from
the trust under certain circumstances specified in the instrument governing
the trust.
(4) Represents 560 shares held in various trusts for the benefit of Mr.
Kennedy's children of which Mr. Garrity is a trustee and the 2,080 shares
held in the trust that is the subject of footnote 3 above of which Mr.
Garrity is also trustee. Mr. Garrity disclaims beneficial ownership of all
of these shares.
21
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 29, 2000, the Company had advanced $2.8 million on an
interest-bearing basis to Michael T. Kennedy, the Company's Chief Executive
Officer.
Vincent F. Garrity, Jr., a director of the Company, is a partner of Duane,
Morris & Heckscher LLP, which serves as the Company's primary legal counsel.
The Company provides certain management services and rights to a related
company. For the management services and rights the Company receives a fee and
royalties and is reimbursed for all expenses advanced on behalf of the entity.
During 2000, the Company earned management fees, interest and royalties of $1.1
million. At December 29, 2000 unpaid management fees, interest, royalties and
expense advances totaled $6.1 million.
22
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Annual Report
1. The consolidated financial statements of the Company and its subsidiaries
are listed in Item 8.
2. Financial Statement Schedules - None.
3. Exhibits:
3.1 Restated Certificate of Incorporation of Radnor Holdings Corporation,
as amended (Incorporated by reference to Exhibit No. 3.1 filed with
the Form 10-K for the year ended December 25, 1998 filed by Radnor
Holdings Corporation)
3.2 Bylaws of Radnor Holdings Corporation (Incorporated by reference to
Exhibit 3.2 filed with Form S-4 Registration Statement, filed by
Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation (formerly SP Acquisition Co.), StyroChem U.S., Ltd.
(formerly StyroChem U.S., Ltd. and StyroChem International, Inc.),
StyroChem Canada, Ltd. (formerly StyroChem International, Ltd.) and
Radnor Management, Inc., Commission File No. 333-19495 (the "Original
S-4''))
4.1 Indenture, dated as of December 5, 1996 among Radnor Holdings
Corporation, WinCup Holdings, Inc., Radnor Chemical Corporation,
StyroChem U.S., Ltd., StyroChem Canada, Ltd. and First Union National
Bank, including form of Notes and Guarantees (Incorporated by
reference to Exhibit 4.1 filed with the Original S-4)
4.2 First Supplemental Indenture, dated as of December 17, 1996 among
Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, StyroChem U.S., Ltd., StyroChem Canada, Ltd., Radnor
Management, Inc. and First Union National Bank (Incorporated by
reference to Exhibit No. 4.2 filed with the Form 10-K for the year
ended December 26, 1997 filed by Radnor Holdings Corporation)
4.3 Second Supplemental Indenture, dated as of October 15, 1997 among
Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, StyroChem U.S., Ltd., StyroChem Canada, Ltd., Radnor
Management, Inc., StyroChem Europe (The Netherlands) B.V., StyroChem
Finland Oy, ThermiSol Denmark ApS, ThermiSol Finland Oy, ThermiSol
Sweden AB and First Union National Bank (Incorporated by reference to
Exhibit No. 4.3 filed with the Form 10-K for the year ended December
26, 1997 filed by Radnor Holdings Corporation)
4.4 Third Supplemental Indenture, dated as of February 9, 1998 among
Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, StyroChem U.S., Ltd., StyroChem Canada, Ltd., Radnor
Management, Inc., StyroChem Europe (The Netherlands) B.V., StyroChem
Finland Oy, ThermiSol Denmark ApS, ThermiSol Finland Oy, ThermiSol
Sweden AB, Radnor Delaware, Inc. and First Union National Bank
(Incorporated by reference to Exhibit No. 4.4 filed with the Form 10-K
for the year ended December 26, 1997 filed by Radnor Holdings
Corporation)
4.5 Fourth Supplemental Indenture, dated as of July 16, 1998 among Radnor
Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, StyroChem U.S., Ltd., Radnor Management, Inc., Radnor
Delaware, Inc. and First Union National Bank (Incorporated by
reference to Exhibit No. 4.1 filed with the Form 10-Q for the quarter
ended June 26, 1998 filed by Radnor Holdings Corporation)
4.6 Fifth Supplemental Indenture, dated as of January 21, 1999 among
Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, Radnor Delaware, Inc., Radnor Management, Inc., StyroChem
U.S., Ltd., WinCup Texas, Ltd., StyroChem GP, L.L.C., StyroChem LP,
L.L.C., WinCup GP, L.L.C. and WinCup LP, L.C.C. and First Union
National Bank (Incorporated by reference
23
to Exhibit No. 4.6 filed with the Form 10-K for the year ended
December 25, 1998 filed by Radnor Holdings Corporation)
4.7 Sixth Supplemental Indenture, dated as of March 23, 1999 among Radnor
Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, Radnor Delaware, Inc., Radnor Management, Inc., StyroChem
U.S., Ltd., WinCup Texas, Ltd., StyroChem GP, L.L.C., StyroChem LP,
L.L.C., WinCup GP, L.L.C. and WinCup LP, L.C.C., Radnor Management
Delaware, Inc., StyroChem Delaware, Inc. and WinCup Europe Delaware
and First Union National Bank (Incorporated by reference to Exhibit
No. 4.7 filed with the Form 10-K for the year ended December 31, 1999
filed by Radnor Holdings Corporation)
4.8 Exchange and Registration Rights Agreement, dated as of December 5,
1996 among Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor
Chemical Corporation, StyroChem U.S., Ltd., StyroChem Canada, Ltd.,
Alex. Brown & Sons Incorporated and NatWest Capital Markets Limited
(Incorporated by reference to Exhibit 4.2 filed with the Original S-4)
4.9 Indenture, dated as of October 15, 1997 among Radnor Holdings
Corporation, WinCup Holdings, Inc., Radnor Chemical Corporation,
StyroChem U.S., Ltd., Radnor Management, Inc. and First Union National
Bank, including form of Notes and Guarantees (Incorporated by
reference to Exhibit 4.1 filed with Form S-4 Registration Statement,
filed by Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor
Chemical Corporation, StyroChem U.S., Ltd., and Radnor Management,
Inc., Commission File No. 333-42101 (the "Series B S-4"))
4.10 First Supplemental Indenture, dated as of February 9, 1998 among
Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, StyroChem U.S., Ltd., Radnor Management, Inc., Radnor
Delaware, Inc. and First Union National Bank (Incorporated by
reference to Exhibit 4.7 filed with the Form 10-K for the year ended
December 26, 1997 filed by Radnor Holdings Corporation)
4.11 Second Supplemental Indenture, dated as of January 21, 1999 among
Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, Radnor Delaware, Inc., Radnor Management, Inc., StyroChem
U.S., Ltd., WinCup Texas, Ltd., StyroChem GP, L.L.C., StyroChem LP,
L.L.C., WinCup GP, L.L.C. and WinCup LP, L.C.C. and First Union
National Bank (Incorporated by reference to Exhibit No. 4.10 filed
with the Form 10-K for the year ended December 25, 1998 filed by
Radnor Holdings Corporation)
4.12 Third Supplemental Indenture, dated as of March 23, 1999 among Radnor
Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, Radnor Delaware, Inc., Radnor Management, Inc., StyroChem
U.S., Ltd., WinCup Texas, Ltd., StyroChem GP, L.L.C., StyroChem LP,
L.L.C., WinCup GP, L.L.C. and WinCup LP, L.C.C., Radnor Management
Delaware, Inc., StyroChem Delaware, Inc. and WinCup Europe Delaware
and First Union National Bank (Incorporated by reference to Exhibit
No. 4.12 filed with the Form 10-K for the year ended December 31, 1999
filed by Radnor Holdings Corporation)
4.13 Exchange and Registration Rights Agreement, dated as of October 15,
1997 among Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor
Chemical Corporation, StyroChem U.S., Ltd., Radnor Management, Inc.,
Bear, Stearns & Co. Inc., NatWest Capital Markets Limited and BT Alex.
Brown Incorporated (Incorporated by reference to Exhibit 4.2 filed
with the Series B S-4)
* 10.1 Sales Agent Agreement, dated January 20, 1996, between James River
Paper Company, Inc. and WinCup Holdings, Inc. (as successor in
interest to WinCup Holdings, L.P.), as amended by a Sales Agent
Extension and Modification Agreement dated December 5, 1996
(Incorporated by reference to Exhibit No. 10.7 filed with Amendment
No.1 to the Original S-4)
* 10.2 Equipment Use Agreement, dated January 20, 1996, as amended by an
Equipment Use Extension and Modification Agreement dated December 5,
1996 (Incorporated by reference to Exhibit No. 10.8 filed with
Amendment No.1 to the Original S-4)
10.3 License Agreement, dated January 20, 1996, among James River
Corporation of Virginia, James River Paper Company, Inc., and WinCup
Holdings, Inc. (as successor in interest to WinCup Holdings, L.P.), as
amended by a License Extension and Modification Agreement dated
December 5, 1996 (Incorporated by reference to Exhibit No. 10.9 filed
with Amendment No.1 to the Original S-4)
24
10.4 Patent License Agreement, dated January 20, 1996, among James River
Corporation of Virginia, James River Paper Company, Inc., and WinCup
Holdings, Inc. (as successor in interest to WinCup Holdings, L.P.),
as amended by an Amendment to Patent License Agreement dated
December 5, 1996 (Incorporated by reference to Exhibit No. 10.10
filed with Amendment No.1 to the Original S-4)
* 10.5 Contract of Sale, dated as of December 5, 1996, among Chevron
Chemical Company, Radnor Chemical Corporation, StyroChem U.S., Ltd.
and StyroChem Canada, Ltd. (Incorporated by reference to Exhibit No.
10.11 filed with Amendment No.1 to the Original S-4)
** 10.6 First Amendment to Styrene Monomer Contract of Sale, dated as of
October 1, 1998, among Chevron Chemical Company LLC, Radnor Chemical
Corporation, StyroChem U.S., Ltd. and StyroChem Canada, Ltd.
(Incorporated by reference to Exhibit No. 10.6 filed with the Form
10-K for the year ended December 25, 1998 filed by Radnor Holdings
Corporation)
* 10.7 Contract between ARCO Chemical Company and WinCup Holdings, Inc. (as
successor in interest to WinCup Holdings, L.P.), dated April 1,
1996, as amended on September, 1996 (Incorporated by reference to
Exhibit No. 10.12 filed with Amendment No.1 to the Original S-4)
10.8 Noncompetition Agreement by and between Radnor Holdings Corporation
and Richard Davidovich, dated December 5, 1996 (Incorporated by
reference to Exhibit No. 10.18 filed with the Original S-4)
10.9 Amended Lease between Patricia M. Dunnell and James River Paper
Company, Inc., dated September 29, 1989, as amended in September,
1994, assigned to WinCup Holdings, Inc. (as successor in interest to
WinCup Holdings, L.P.) on January 20, 1996 (Incorporated by
reference to Exhibit No. 10.26 filed with Amendment No. 1 to the
Original S-4)
10.10 Warehouse Lease between Etzioni Partners and James River
Corporation, dated February 13, 1992, as amended on April 13, 1992
and on December 9, 1992, assigned to WinCup Holdings, Inc. (as
successor in interest to WinCup Holdings, L.P.) on January 20, 1996
(Incorporated by reference to Exhibit No. 10.27 filed with Amendment
No. 1 to the Original S-4)
10.11 Lease between Stone Mountain Industrial Park, Inc. and Scott
Container Group, Inc., dated December 16, 1991, as amended on
February 28, 1994, assigned to WinCup Holdings on January 20, 1996
(Incorporated by reference to Exhibit No. 10.30 filed with Amendment
No. 1 to the Original S-4)
10.12 Standard Form Multi-Tenancy Industrial Lease between WinCup
Holdings, Inc. and CK Airpark Associates, dated June 1, 1994,
assigned to WinCup Holdings, Inc. (as successor in interest to
WinCup Holdings, L.P.) on January 20, 1996 (Incorporated by
reference to Exhibit No. 10.32 filed with Amendment No. 1 to the
Original S-4)
10.13 Industrial Building Lease between Centerpoint Properties Corporation
and WinCup Holdings, Inc. (as successor in interest to WinCup
Holdings, L.P.) dated May 1996 (Incorporated by reference to Exhibit
10.33 filed with the Series B S-4)
10.14 Radnor Corporate Center Office Lease by and between Radnor Center
Associates and WinCup Holdings, Inc. (as successor in interest to
WinCup Holdings, L.P.), dated May 31, 1996 (Incorporated by
reference to Exhibit No. 10.34 filed with Amendment No. 1 to the
Original S-4)
10.15 Standard Commercial Lease by and between Bradford Management Company
of Dallas, Inc. and StyroChem U.S., Ltd., dated June 22, 1994, as
amended on April 5, 1996, and as renewed on October 22, 1996
(Incorporated by reference to Exhibit No. 10.35 filed with Amendment
No. 1 to the Original S-4)
*** 10.16 Executive Employment Agreement by and between Radnor Holdings
Corporation and Richard Hunsinger, dated May 1, 1993, as amended in
October, 1995 (Incorporated by reference to Exhibit No. 10.38 filed
with the Original S-4)
*** 10.17 Radnor Holdings Corporation Equity Incentive Plan, dated April 24,
1992, as amended on November 1, 1993 (Incorporated by reference to
Exhibit No. 10.39 filed with Amendment No. 1 to the Original S-4)
25
*** 10.18 Radnor Holdings Corporation Management Equity Participation Plan,
dated March 10, 1993, as amended on November 1, 1993 (Incorporated
by reference to Exhibit No. 10.40 filed with Amendment No. 1 to the
Original S-4)
10.19 Third Amended and Restated Revolving Credit and Security Agreement
dated as of December 29, 1999, among WinCup Holdings, Inc., Radnor
Chemical Corporation, StyroChem U.S., Ltd., Radnor Holdings
Corporation, Radnor Delaware, Inc., StyroChem Delaware, Inc., WinCup
Texas, Ltd., StyroChem Europe (The Netherlands) B.V., StyroChem
Finland Oy, Thermisol Denmark A/S, Thermisol Sweden AB, Thermisol
Finland OY, Bank of America, N.A. and First Union National Bank
(Incorporated by reference to Exhibit 10.19 filed with the form 10-K
for the year ended December 31, 1999 filed by Radnor Holdings
Corporation)
10.20 Amendment No. 1 to Third Amended and Restated Revolving Credit and
Security Agreement, dated as of March 13, 2000, among WinCup
Holdings, Inc., Radnor Chemical Corpration, StyroChem U.S., Ltd.,
Radnor Holdings Corporation, Radnor Delaware, Inc., StyroChem
Delaware, Inc., WinCup Texas, Ltd., StyroChem Europe (the
Netherlands) B.V., StyroChem Finland Oy, Thermisol Denmark A/S,
Thermisol Sweden AB, Thermisol Finland Oy, Bank of America, N.A. and
First Union National Bank
10.21 Amendment No. 2 to Third Amended and Restated Revolving Credit and
Security Agreement, dated as of May 16, 2000, among WinCup Holdings,
Inc., Radnor Chemical Corpration, StyroChem U.S., Ltd., Radnor
Holdings Corporation, Radnor Delaware, Inc., StyroChem Delaware,
Inc., WinCup Texas, Ltd., StyroChem Europe (the Netherlands) B.V.,
StyroChem Finland Oy, Thermisol Denmark A/S, Thermisol Sweden AB,
Thermisol Finland Oy, Bank of America, N.A. and First Union National
Bank
10.22 Amendment No. 3 to Third Amended and Restated Revolving Credit and
Security Agreement, dated as of December 8, 2000, among WinCup
Holdings, Inc., Radnor Chemical Corpration, StyroChem U.S., Ltd.,
Radnor Holdings Corporation, Radnor Delaware, Inc., StyroChem
Delaware, Inc., WinCup Texas, Ltd., StyroChem Europe (the
Netherlands) B.V., StyroChem Finland Oy, Thermisol Denmark A/S,
Thermisol Sweden AB, Thermisol Finland Oy, Bank of America, N.A. and
First Union National Bank
10.23 Amended and Restated U.S. Revolving Credit Note dated December 29,
1999, made by WinCup Holdings, Inc., Radnor Chemical Corporation,
Radnor Holdings Corporation, Radnor Delaware, Inc., StyroChem U.S.,
Ltd., StyroChem Delaware, Inc. and WinCup Texas, Ltd. in favor of
Bank of America, N.A. (Incorporated by reference to Exhibit 10.20
filed with the form 10-K for the year ended December 31, 1999 filed
by Radnor Holdings Corporation)
10.24 Amended and Restated U.S. Revolving Credit Note dated December 29,
1999, made by WinCup Holdings, Inc., Radnor Chemical Corporation,
Radnor Holdings Corporation, Radnor Delaware, Inc., StyroChem U.S.,
Ltd., StyroChem Delaware, Inc. and WinCup Texas, Ltd. in favor of
First Union National Bank (Incorporated by reference to Exhibit
10.21 filed with the form 10-K for the year ended December 31, 1999
filed by Radnor Holdings Corporation)
10.25 Swingline Note dated December 29, 1999, made by WinCup Holdings,
Inc., Radnor Chemical Corporation, Radnor Holdings Corporation,
Radnor Delaware, Inc., StyroChem U.S., Ltd., StyroChem Delaware,
Inc. and WinCup Texas, Ltd. in favor of Bank of America, N.A.
(Incorporated by reference to Exhibit 10.22 filed with the form 10-K
for the year ended December 31, 1999 filed by Radnor Holdings
Corporation)
10.26 Assignment Agreement dated as of December 29, 1999, among GMAC
Commercial Credit LLC (formerly BNY Factoring LLC, successor by
merger to BNY Financial Corporation), GMAC Commercial Credit
Development Limited (formerly BNY Financial Limited) and Bank of
America, N.A. (Incorporated by reference to Exhibit 10.23 filed with
the form 10-K for the year ended December 31, 1999 filed by Radnor
Holdings Corporation)
10.27 Trademark Collateral Security Agreement, dated December 5, 1996,
between StyroChem U.S., Ltd. and The Bank of New York Commercial
Corporation (Incorporated by reference to Exhibit No. 10.44 filed
with Amendment No. 1 to the Original S-4)
10.28 Trademark Assignment of Security, dated December 5, 1996, between
StyroChem U.S., Ltd. and The Bank of New York Commercial Corporation
(Incorporated by reference to Exhibit No. 10.45 filed with Amendment
No. 1 to the Original S-4)
26
10.29 Trademark Collateral Security Agreement, dated December 5, 1996,
between WinCup Holdings, Inc. and The Bank of New York Commercial
Corporation (Incorporated by reference to Exhibit No. 10.46 filed with
Amendment No. 1 to the Original S-4)
10.30 Trademark Assignment of Security, dated December 5, 1996, between
WinCup Holdings, Inc. and The Bank of New York Commercial Corporation
(Incorporated by reference to Exhibit No. 10.47 filed with Amendment
No. 1 to the Original S-4)
10.31 Patent Collateral Security Agreement, dated December 5, 1996, between
StyroChem U.S., Ltd. and The Bank of New York Commercial Corporation
(Incorporated by reference to Exhibit No. 10.48 filed with Amendment
No. 1 to the Original S-4)
10.32 Patent Assignment of Security, dated December 5, 1996, between
StyroChem U.S., Ltd. and The Bank of New York Commercial Corporation
(Incorporated by reference to Exhibit No. 10.49 filed with Amendment
No. 1 to the Original S-4)
10.33 Collateral Assignment, dated as of December 5, 1996, among Radnor
Holdings Corporation and The Bank of New York Commercial Corporation
(Incorporated by reference to Exhibit No. 10.50 filed with Amendment
No. 1 to the Original S-4)
10.34 Amended and Restated Guaranty dated December 29, 1999, made by
StyroChem GP, L.L.C., StyroChem LP, L.L.C., WinCup GP, L.L.C., WinCup
LP, L.L.C., Radnor Management Delaware, Inc. and WinCup Europe
Delaware, Inc. in favor of Bank of America, N.A. and certain other
lenders (Incorporated by reference to Exhibit 10.31 filed with the
form 10-K for the year ended December 31, 1999 filed by Radnor
Holdings Corporation)
10.35 Agreement Respecting a Term Loan and Other Credit Facilities, dated
February 25, 1994, between Bank of Montreal and StyroChem Canada,
Ltd., as amended (Incorporated by reference to Exhibit No. 10.63 filed
with Amendment No. 1 to the Original S-4)
10.36 Letter of Undertaking, dated December 5, 1996, made by StyroChem
Canada, Ltd. and Radnor Holdings Corporation in favor of Bank of
Montreal (Incorporated by reference to Exhibit No. 10.64 filed with
the Original S-4)
10.37 Guaranty, dated February 25, 1994, made by Radnor Chemical Corporation
in favor of Bank of Montreal (Incorporated by reference to Exhibit No.
10.65 filed with Amendment No. 1 to the Original S-4)
***10.38 Employment Agreement, dated April 5, 1996, between WinCup Holdings,
Inc. and R. Radcliffe Hastings (Incorporated by reference to Exhibit
No. 10.66 filed with the Original S-4)
10.39 Neste Service Agreement by and between Neste Oy and StyroChem Finland
Oy and Radnor Holdings Corporation dated as of October 15, 1997
(Incorporated by reference to Exhibit 10.68 filed with the Series B S-
4)
10.40 Land Lease Agreement by and between Neste Oy and StyroChem Finland Oy
and Radnor Holdings Corporation dated as of October 15, 1997
(Incorporated by reference to Exhibit 10.69 filed with the Series B S-
4)
10.41 Plant Lease 195 Tamal Vista Boulevard, Corte Madera, California,
between Hunt Brothers Leasing, L.L.C. and WinCup Holdings, Inc. (as
successor in interest to WinCup Holdings, L.P.), dated May 1, 1997
(Incorporated by reference to Exhibit 10.70 filed with the Series B S-
4)
10.42 Engineering Lease 201 Tamal Vista Boulevard, Corte Madera, California,
between Hunt Brothers Leasing, L.L.C. and WinCup Holdings, Inc. (as
successor in interest to WinCup Holdings, L.P.), dated May 1, 1997
(Incorporated by reference to Exhibit 10.71 filed with the Series B S-
4)
10.43 Warehouse Lease 205 Tamal Vista Boulevard, Corte Madera, California,
between Hunt Brothers Leasing, L.L.C. and WinCup Holdings, Inc. (as
successor in interest to WinCup Holdings, L.P.), dated May 1, 1997
(Incorporated by reference to Exhibit 10.72 filed with the Series B S-
4)
27
10.44 Security Agreement dated as of December 29, 1999, between Thermisol
Finland Oy and Bank of America (Incorporated by reference to Exhibit
10.41 filed with the Form 10-K for the year ended December 31, 1999
filed by Radnor Holdings Corporation)
10.45 Security Agreement dated as of December 29, 1999, between Styrochem
Finland Oy and Bank of America (Incorporated by reference to Exhibit
10.42 filed with the Form 10-K for the year ended December 31, 1999
filed by Radnor Holdings Corporation)
10.46 European Revolving Note dated December 29, 1999, made by StyroChem
Europe (The Netherlands) B.V., StyroChem Finland OY, ThermiSol Denmark
A/S, ThermiSol Finland OY and ThermiSol Sweden AB in favor of Bank of
America, N.A. (Incorporated by reference to Exhibit 10.43 filed with
the Form 10-K for the year ended December 31, 1999 filed by Radnor
Holdings Corporation)
10.47 European Revolving Note dated December 29, 1999, made by StyroChem
Europe (The Netherlands) B.V., StyroChem Finland OY, ThermiSol Denmark
A/S, ThermiSol Finland OY and ThermiSol Sweden AB in favor of First
Union National Bank (Incorporated by reference to Exhibit 10.44 filed
with the Form 10-K for the year ended December 31, 1999 filed by
Radnor Holdings Corporation)
10.48 Lease Agreement between Oy KWH Plast Ab, Jakobstad and Isora Oy dated
January 24, 1995 (Incorporated by reference to Exhibit 10.74 filed
with the Series B S-4)
10.49 Lease and Cooperation Agreement between Suomen Polystyreeni Tehdas
Oy/Finska Polystyren Fabriken Ab and Borough of Kokemaki dated
February 27, 1971, amended by Subcontract dated October 13, 1976,
Subcontract II dated February 26, 1981, Subcontract III dated August
13, 1985, Transfer of Lease Agreement between City of Kokemaki and
Neste Oy dated December 29, 1987, Lease dated April 15, 1994 and Lease
Agreement II dated September 26, 1996 (Incorporated by reference to
Exhibit 10.75 filed with the Series B S-4)
10.50 Lease Agreement between Avena Siilot Oy and Neste Oy Polystyreeni
dated March 13, 1997 (Incorporated by reference to Exhibit 10.76 filed
with the Series B S-4)
10.51 Office Lease Agreement between Keharakenpajat Oy and Neste Oy
Polystyreeni dated July 1, 1995 (Incorporated by reference to Exhibit
10.77 filed with Amendment No. 1 to the Series B S-4)
10.52 Lease Contract between Lokalo Fastighetsfarvaltning and Neste
Cellplast AB dated August 16, 1996 (Incorporated by reference to
Exhibit 10.78 filed with Amendment No. 1 to the Series B S-4)
10.53 Lease Contract between Norrtalje Industri- och Hantverkshus AB (NIHAB)
and Neste Cellplast AB dated June 26, 1996 (Incorporated by reference
to Exhibit 10.79 filed with Amendment No. 1 to the Series B S-4)
10.54 Styrene Monomer Supply Agreement dated as of October 15, 1997 between
StyroChem Finland Oy and Elf Atochem SA (Incorporated by reference to
Exhibit 10.80 filed with Amendment No. 1 to the Series B S-4)
10.55 Amendment No. 1 to Styrene Monomer Supply Agreement between StyroChem
Finland Oy and Elf Atochem SA (Incorporated by reference to Exhibit
10.1 filed with the Form 10-Q for the quarter ended September 29, 2000
filed by Radnor Holdings Corporation)
***10.56 Employment Agreement dated February 21, 1997 between Radnor Holdings
Corporation and Caroline J. Williamson (Incorporated by reference to
Exhibit 10.81 filed with Amendment No. 1 to the Series B S-4)
** 10.57 Agreement of Sale dated as of January 1, 1998 between ARCO Chemie
Nederland, Ltd. and StyroChem Finland Oy (Incorporated by reference to
Exhibit No 10.49 filed with the Form 10-K for the year ended December
25, 1998 filed by Radnor Holdings Corporation)
28
***10.58 Radnor Holdings Corporation Key Executive Retirement Plan
(Incorporated by reference to Exhibit No. filed with the Form 10-K for
the year ended December 25, 1998 filed by Radnor Holdings Corporation)
***10.59 Radnor Holdings Corporation Senior Executive Retirement Plan, amended
as of September 1, 1999 (Incorporated by reference to Exhibit 10.55
filed with Form 10-K for the year ended December 31, 1999 filed by
Radnor Holdings Corporation)
***10.60 Executive Employment Agreement dated as of July 1, 1993 between Radnor
Holdings Corporation and Don Rogalski (Incorporated by reference to
Exhibit No. 10.51 filed with the Form 10-K for the year ended December
25, 1998 filed by Radnor Holdings Corporation)
***10.61 Letter Agreement dated as of December 10, 1998 between Radnor Holdings
Corporation and Van D. Groenewold (Incorporated by reference to
Exhibit No. 10.52 filed with the Form 10-K for the year ended December
25, 1998 filed by Radnor Holdings Corporation)
21.1 List of Subsidiaries of the Registrant
* Portions of this Exhibit have been deleted pursuant to an Order
Granting the Company's Application under Securities Act and Rule 406
Promulgated Thereunder for Confidential Treatment.
** Portions of this Exhibit have been deleted pursuant to an Order
Granting the Company's Application under Exchange Act and Rule 24b-2
Promulgated Thereunder for Confidential Treatment.
*** This exhibit represents a management contract or compensatory plan or
arrangement.
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the fiscal year ended December
29, 2000.
29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
RADNOR HOLDINGS CORPORATION
Date: March 29, 2001 By: /s/ MICHAEL T. KENNEDY
-----------------------------
Michael T. Kennedy
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
/s/ MICHAEL T. KENNEDY Chairman of the Board and March 29, 2001
- ------------------------------
Michael T. Kennedy Chief Executive Officer
/s/ R. RADCLIFFE HASTINGS Senior Vice President, March 29, 2001
- ------------------------------
R. Radcliffe Hastings Treasurer and Director
/s/ MICHAEL V. VALENZA Senior Vice President - Finance, March 29, 2001
- ------------------------------
Michael V. Valenza Chief Financial Officer and
Chief Accounting Officer
/s/ JOHN P. MCNIFF Senior Vice President - Corporate March 29, 2001
- ------------------------------
John P. McNiff Development and Director
/s/ VINCENT F. GARRITY, JR. Director March 29, 2001
- ------------------------------
Vincent F. Garrity, Jr.
/s/ PAUL M. FINIGAN Director March 29, 2001
- ------------------------------
Paul M. Finigan
30
Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act
Registrant has not sent and does not anticipate sending any annual report to
its security holders other than a copy of this Form 10-K report. Registrant has
not sent and does not anticipate sending any proxy statement, form of proxy or
other proxy solicitation material to more than ten of its security holders with
respect to any annual or other meeting of security holders, as it has only three
holders of voting securities. If any annual report other than this Form 10-K
report is hereafter furnished to Registrant's security holders, or if any proxy
statement, form of proxy or other proxy solicitation material is hereafter sent
to more than ten of its security holders with respect to any annual or other
meeting of security holders, Registrant will furnish four copies thereof to the
Securities and Exchange Commission when it is so sent.
31
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Radnor Holdings Corporation:
We have audited the accompanying consolidated balance sheets of Radnor Holdings
Corporation (a Delaware corporation) and subsidiaries as of December 29, 2000
and December 31, 1999, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 29, 2000. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Radnor Holdings Corporation and
subsidiaries as of December 29, 2000 and December 31, 1999, and the results of
their operations and their cash flows for each of the three years in the period
ended December 29, 2000, in conformity with accounting principles generally
accepted in the United States.
/s/ Arthur Andersen LLP
Philadelphia, Pennsylvania
March 29, 2001
F-1
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
DECEMBER 29, 2000 AND DECEMBER 31, 1999
---------------------------------------
(In thousands, except share amounts)
2000 1999
-------- --------
ASSETS
------
CURRENT ASSETS:
Cash $ 3,726 $ 7,579
Accounts receivable, net 37,036 29,135
Inventories, net 38,120 34,781
Prepaid expenses and other 12,669 6,480
Deferred tax asset 1,617 1,660
-------- --------
93,168 79,635
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 7,218 7,253
Supplies and spare parts 4,726 5,277
Buildings and improvements 44,823 45,046
Machinery and equipment 181,709 168,771
-------- --------
238,476 226,347
Less- Accumulated depreciation (47,083) (34,235)
-------- --------
191,393 192,112
-------- --------
OTHER ASSETS 21,438 21,936
-------- --------
$305,999 $293,683
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 52,385 $ 39,447
Accrued liabilities 19,869 23,486
Current portion of long-term debt 3,617 2,755
Current portion of capitalized lease obligations 1,180 1,063
-------- --------
77,051 66,751
-------- --------
LONG-TERM DEBT, net of current portion 220,566 206,264
-------- --------
CAPITALIZED LEASE OBLIGATIONS, net of current portion 4,145 5,335
-------- --------
DEFERRED TAX LIABILITY 3,990 7,245
-------- --------
OTHER NONCURRENT LIABILITIES 2,058 514
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDERS' EQUITY:
Voting and nonvoting common stock, 22,700 shares authorized, 6,245 shares 1 1
issued and outstanding
Additional paid-in capital 19,387 19,387
Retained earnings (deficit) (10,953) (5,297)
Cumulative translation adjustment (10,246) (6,517)
-------- --------
Total stockholders' equity (deficit) (1,811) 7,574
-------- --------
$305,999 $293,683
======== ========
The accompanying notes are an integral part of these consolidated statements.
F-2
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
FOR THE FISCAL YEARS ENDED DECEMBER 29, 2000, DECEMBER 31, 1999
---------------------------------------------------------------
AND DECEMBER 25, 1998
---------------------
(In thousands)
2000 1999 1998
-------- -------- --------
NET SALES $362,527 $318,115 $311,137
COST OF GOODS SOLD (Note 3) 277,254 226,509 220,691
-------- -------- --------
GROSS PROFIT 85,273 91,606 90,446
-------- -------- --------
OPERATING EXPENSES:
Distribution 26,003 24,535 23,004
Selling, general and administrative 45,027 43,922 38,965
-------- -------- --------
71,030 68,457 61,969
-------- -------- --------
INCOME FROM CONTINUING OPERATIONS 14,243 23,149 28,477
-------- -------- --------
OTHER EXPENSE:
Interest 21,725 21,070 18,776
Other, net 1,104 1,363 965
-------- -------- --------
22,829 22,433 19,741
-------- -------- --------
Income (loss) before income taxes and discontinued operations (8,586) 716 8,736
PROVISION (BENEFIT) FOR INCOME TAXES (3,074) 241 3,340
-------- -------- --------
Income (loss) before discontinued operations (5,512) 475 5,396
-------- -------- --------
LOSS FROM DISCONTINUED OPERATIONS 144 6,859 --
-------- -------- --------
NET INCOME (LOSS) $ (5,656) $ (6,384) $ 5,396
======== ======== ========
The accompanying notes are an integral part of these consolidated statements.
F-3
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------
FOR THE FISCAL YEARS ENDED DECEMBER 29, 2000, DECEMBER 31, 1999
---------------------------------------------------------------
AND DECEMBER 25, 1998
---------------------
(In thousands, except share amounts)
Voting and
Nonvoting
Common Stock Additional Retained Cumulative
-------------- Paid-in Earnings/ Translation
Shares Amount Capital (Deficit) Adjustment Total
------ ------ ---------- ---------- ------------ ---------
BALANCE, DECEMBER 26, 1997 6,245 $ 1 $19,387 $ (2,809) $ (1,604) $ 14,975
Comprehensive income-
Net income -- -- -- 5,396 -- 5,396
Translation adjustment -- -- -- -- 2,078 2,078
--------
Total comprehensive income 7,474
--------
Cash dividends - $240 per share -- -- -- (1,500) -- (1,500)
------ ---- ------- -------- -------- --------
BALANCE, DECEMBER 25, 1998 6,245 1 19,387 1,087 474 20,949
Comprehensive income-
Net loss -- -- -- (6,384) -- (6,384)
Translation adjustment -- -- -- -- (6,991) (6,991)
--------
Total comprehensive loss (13,375)
------ ---- ------- -------- -------- --------
BALANCE, DECEMBER 31, 1999 6,245 1 19,387 (5,297) (6,517) 7,574
Comprehensive income-
Net loss -- -- -- (5,656) -- (5,656)
Translation adjustment -- -- -- -- (3,729) (3,729)
--------
Total comprehensive loss (9,385)
------ ---- ------- -------- -------- --------
BALANCE, DECEMBER 29, 2000 6,245 $ 1 $19,387 $(10,953) $(10,246) $ (1,811)
====== ==== ======= ======== ======== ========
The accompanying notes are an integral part of these consolidated statements.
F-4
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE FISCAL YEARS ENDED DECEMBER 29, 2000, DECEMBER 31, 1999
---------------------------------------------------------------
AND DECEMBER 25, 1998
---------------------
(In thousands)
2000 1999 1998
-------- -------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (5,656) $ (6,384) $ 5,396
Adjustments to reconcile net income (loss) to net cash provided by
operating activities-
Depreciation and amortization 18,790 17,137 13,857
Unrealized loss (gain) on marketable securities -- 46 (46)
Deferred income taxes (3,113) (115) 2,612
Discontinued operations 144 6,859 --
Changes in operating assets and liabilities, net of effects of
acquisition and disposition of businesses-
Accounts receivable, net (8,968) (1,718) 394
Inventories, net (4,663) (558) (6,815)
Prepaid expenses and other (6,271) (2,988) (921)
Accounts payable 11,935 11,230 328
Accrued liabilities (1,189) 1,123 2,339
-------- -------- --------
Net cash provided by continuing operations 1,009 24,632 17,144
Net cash used in discontinued operations (2,446) (8,360) --
-------- -------- --------
Net cash provided by (used in) operating activities (1,437) 16,272 17,144
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (15,292) (20,032) (17,661)
Acquisition of StyroChem Europe, net of cash acquired -- -- (345)
Acquisition of Epsilevy Oy, net of cash acquired -- -- (794)
Increase in other assets (3,432) (3,599) (10,141)
-------- -------- --------
Net cash used in investing activities $(18,724) $(23,631) $(28,941)
-------- -------- --------
(Continued)
F-5
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE FISCAL YEARS ENDED DECEMBER 29, 2000, DECEMBER 31, 1999
---------------------------------------------------------------
AND DECEMBER 25, 1998
---------------------
(In thousands)
(Continued)
2000 1999 1998
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on revolving credit lines and unsecured
notes payable $16,402 $ 3,602 $ 5,820
Borrowings on term debt and mortgage notes 8,951 10,607 259
Payments on term debt and mortgage notes (7,825) (2,159) (252)
Borrowings on capitalized lease obligations -- 158 4,871
Payments on capitalized lease obligations (1,089) (784) (373)
Payments of dividends -- -- (1,500)
Other -- -- (1,956)
------- ------- -------
Net cash provided by financing activities 16,439 11,424 6,869
------- ------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (131) (461) 93
------- ------- -------
NET INCREASE (DECREASE) IN CASH (3,853) 3,604 (4,835)
CASH, beginning of period 7,579 3,975 8,810
------- ------- -------
CASH, end of period $ 3,726 $ 7,579 $ 3,975
======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest, including $21,064 $19,330 $17,619
discontinued operations ======= ======= =======
Cash paid during the period for income taxes, net of refunds of $ (168) $ 438 $ (48)
$168 in 2000, $7 in 1999 and $132 in 1998 ======= ======= =======
The accompanying notes are an integral part of these consolidated statements.
F-6
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
--------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. ORGANIZATION AND DISCONTINUED OPERATIONS:
-------------------------------------------------------
The Company
- -----------
Radnor Holdings Corporation ("Radnor") was incorporated in Delaware on November
6, 1991 to acquire the outstanding stock of Benchmark Holdings, Inc.
("Benchmark") and WinCup Holdings, Inc. ("WinCup"). Radnor, through its WinCup
subsidiary, is the second largest producer in the United States of foam cups and
containers for the foodservice industry. Through its Radnor Chemical
Corporation subsidiary, Radnor is the third largest worldwide producer of
expandable polystyrene ("EPS"). Radnor and its subsidiaries (collectively the
"Company") sell their products primarily to national, institutional, retail and
wholesale customers throughout the U.S., Canada, Mexico and Europe. The
Company markets its products under a variety of brand and trade names, including
"WinCup," "Handi-Kup," "StyroChem" and "ThermiSol."
The Company has a number of large national accounts and supplies products to a
number of large foodservice distributors. The five largest accounts represented
approximately 23% of the Company's net sales for each of the fiscal years 2000
and 1999. Although the Company has not lost sales from its key customers in
fiscal years 2000 and 1999, if any of such customers substantially reduces its
level of purchases from the Company, the Company's profitability could be
adversely affected. Moreover, continued consolidation among distributors in the
foodservice industry could result in an increasingly concentrated customer base
or the loss of certain customers.
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 fiscal 2000 and 1999,
net of a tax benefit of $0.1 million and $3.8 million, respectively, represents
the settlement of a contingent liability related to the discontinued operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Fiscal Year
- -----------
The Company's fiscal year is the fifty-two or fifty-three week period that ends
on the last Friday of December of each year. The fiscal years ended December
29, 2000 and December 25, 1998 were fifty-two week periods, while the fiscal
year ended December 31, 1999 was a fifty-three week period.
Principles of Consolidation
- ---------------------------
The accompanying consolidated financial statements include the accounts of
Radnor and all of its majority-owned subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation. The equity
method of accounting is used when the Company has a 20%
F-7
to 50% ownership interest in other companies. Under the equity method, original
investments are recorded at cost and adjusted for the Company's share of
undistributed earnings or losses of these companies.
Accounts Receivable, Net
- ------------------------
Accounts receivable are net of allowances for doubtful accounts of $895,000 and
$899,000 at December 29, 2000 and December 31, 1999, respectively. Bad debt
expense was $101,000, $213,000 and $150,000 for fiscal years 2000, 1999, and
1998, respectively. The related write-offs of accounts receivable were $97,000,
$78,000 and $215,000 for those years, respectively.
Inventories
- -----------
Inventories are recorded at the lower of cost (first-in, first-out) or market.
Inventories at December 29, 2000 and December 31, 1999, consisted of the
following (in thousands):
2000 1999
------- -------
Raw materials $11,911 $10,632
Work-in-process 1,459 1,054
Finished goods 24,750 23,095
------- -------
$38,120 $34,781
======= =======
Property, Plant and Equipment
- -----------------------------
Property, plant and equipment are stated at cost and depreciated using the
straight-line method over estimated useful lives which range from 5 to 40 years.
Leasehold improvements are amortized over the lesser of their estimated useful
lives or the term of the lease using the straight-line method. Maintenance and
repairs are charged to operations currently, and replacements and significant
improvements are capitalized. Depreciation expense in fiscal 2000, 1999 and
1998 was $13,273,000, $12,421,000 and $10,933,000, respectively.
Supplies and Spare Parts
- ------------------------
Supplies and spare parts include maintenance parts maintained in central stores
locations. When needed at the manufacturing facilities, parts are shipped and
expensed.
Other Assets
- ------------
Other assets include deferred financing costs of $4.4 million and $5.9 million
as of December 29, 2000 and December 31, 1999, respectively, related to the
financing arrangements and note offerings executed in 1996 and 1997. Such costs
are being amortized over the terms of the related debt instruments.
Amortization of deferred financing costs of $1,499,000, $1,564,000 and
$1,286,000 was included in interest expense for the years ended December 29,
2000, December 31, 1999 and December 25, 1998, respectively. In addition,
other assets included a noncompete agreement of $1.0 million, net of
amortization of $3.8 million, resulting from the acquisition of Radnor
Chemical Corporation, formerly S.P. Acquisition Co., which is being
amortized over five years.
Environmental Expenditures
- --------------------------
Environmental expenditures that relate to an existing condition caused by past
operations and that do not contribute to current or future revenue generation
are expensed. Liabilities are recorded when environmental assessments and/or
cleanups are probable, and the costs can be reasonably estimated.
F-8
Income Taxes
- ------------
The Company accounts for income taxes under the liability method. Under this
method, deferred tax assets and liabilities are recognized for the tax effects
of temporary differences between the financial reporting and tax bases of assets
and liabilities using enacted tax law and statutory tax rates applicable to the
periods in which the temporary differences are expected to affect taxable
income.
Revenue Recognition
- -------------------
Revenue is recognized as risk of ownership and title to the product transfers to
the customer which usually occurs when goods are shipped.
Currency Translation
- --------------------
The Company conducts business in a number of foreign countries and as a result
is subject to the risk of fluctuations in foreign currency exchange rates and
other political and economic risks associated with international business. The
Company's foreign entities report their assets, liabilities and results of
operations in the currency in which the entity primarily conducts its business.
Foreign assets and liabilities are translated into U.S. dollars at current
exchange rates- that is, the rates in effect at the end of the fiscal period.
The revenue and expense accounts of foreign subsidiaries are translated into
U.S. dollars at the average exchange rates that prevailed during the period.
Adjustments resulting from the translation of the financial statements are
reflected as a currency translation adjustment in stockholders' equity.
Currency transaction gains and losses, which are included in operating results,
are not significant.
Research and Development
- ------------------------
Research and development costs are charged to expense as incurred and are
included in cost of goods sold. These costs represented 1.0%, 1.7% and 2.2% of
net sales in 2000, 1999 and 1998, respectively.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
- -----------------------------------
The estimated fair value of financial instruments was determined by the Company
using market quotes, if available, or discounted cash flows using market
interest rates. The carrying values of cash, accounts receivable, accounts
payable and accrued liabilities approximate fair value due to the short-term
nature of these items. The carrying amounts of the Company's bank term loans
and the lines of credit approximate fair value because they have variable
interest rates based on either the prime rate or the interbank offering rate of
the currency in which the Company borrows. The fair value of the senior notes
was $160.0 million at December 29, 2000.
F-9
3. COST OF GOODS SOLD:
-------------------
In December 2000, the Company filed a lawsuit in Texas state court as a result
of excess charges for raw materials purchased from a major supplier. In January
2001, the Company settled the litigation resulting in an amendment to the
Company's supply agreement. The amount of the excess charges in 1999 and 2000
was approximately $7.7 million. The settlement, in like amount, will be realized
over the next three years through discounts and rebates for materials purchased.
If the impact of the settlement was recorded in 2000, it would have resulted in
gross profit of $93.0 million, income from continuing operations of $22.0
million, a net loss of $0.7 million and net worth of $3.2 million.
4. LONG-TERM DEBT:
---------------
Long-term debt consists of the following (in thousands):
2000 1999
-------- --------
Series A and Series B Senior Notes bearing interest at 10%, interest
payable semi-annually, due December 1, 2003, including a premium of
$1,196 and $1,540 at December 29, 2000 and at December 31, 1999,
respectively. $161,196 $161,540
Outstanding balance under the $50 million Third Amended and Restated
Revolving Credit and Security Agreement (the "Amended Credit
Agreement"), which includes a $12 million European subsidiary
sublimit, bearing interest at the Company's option at a rate based
upon various formulae as defined within the agreement. At December
29, 2000, the domestic rate was based upon LIBOR (6.63%) with various
maturities plus 2.0%. There was $7,947 outstanding
pertaining to the European sublimit at December 29, 2000. The
European rate was based on interbank offering rates of various
currencies (with a weighted average of 6.49%) with various maturities
plus 2.0% as well as the U.S. prime rate of 9.5% plus 0.50%. The
revolving loans under the Amended Credit Agreement mature on
October 15, 2002. All obligations of the Company under the Amended
Credit Agreement are secured by a lien on substantially all of the
Company's U.S. and European subsidiaries' inventory, receivables, and
general intangibles. 41,447 25,000
Outstanding balance under the Canadian Revolving Credit Facility with
borrowing capacity of $4.0 million Canadian including a letter of
credit subfacility and a Foreign Exchange Future Contracts
subfacility and U.S. dollar advances bearing interest at U.S. prime
(9.5% at December 29, 2000). There was no outstanding balance
pertaining to Canadian dollar advances at December 29, 2000. Loans
under the Canadian Revolving Credit Facility are payable on demand
and secured by substantially all of the assets of the Company's
Canadian subsidiary. 450 952
Outstanding balances under Canadian term loans, bearing interest at
Canadian prime (7.5% at December 29, 2000) plus 1.0%, secured by
substantially all assets of the Company's Canadian subsidiary, payable in
monthly or quarterly installments of principal plus interest, over five
to seven years. 800 460
F-10
2000 1999
-------- --------
Outstanding balance under a Canadian term loan, bearing interest at
8.0% at December 29, 2000, collateralized by a mortgage agreement,
payable in monthly installments of principal and interest of
approximately $4,000, commencing January 2000 with final payment
due December 2025. 445 468
Outstanding balances under capital expenditure loans bearing interest
at various rates between 8.36% and 9.86%, payable in quarterly
principal and interest installments, due between February 2005 and
December 2006, secured by equipment purchased with the proceeds. 12,080 8,384
Outstanding balances under two term loan facilities, bearing interest at
the Company's option at a rate based upon various formulae as defined
in the agreements. At December 29, 2000, the rates were based upon
LIBOR (6.48% to 6.52%) with various maturities plus margin (2.25%). The
term loans are payable in quarterly principal installments plus interest.
Final payments are due September 2003 and March 2009. The term loans
are secured by certain mortgage agreements. 7,004 11,348
Outstanding balance under a term loan facility, bearing interest at
6.03%, payable in quarterly installments of approximately $17,000
including principal and interest, commencing March 31, 1999 with
final payment due March 2019. The term loan is secured by a
mortgage agreement. 718 790
Outstanding balance under a term loan facility, bearing interest at
6-month EURIBOR (4.9% at December 29, 2000) plus margin (1.25% at
December 29, 2000) payable in semi-annual principal installments of
approximately $14,000 plus interest with final payment due January
2002. 43 77
-------- --------
224,183 209,019
Less- Current portion (3,617) (2,755)
-------- --------
$220,566 $206,264
======== ========
On March 29, 2001, the Company entered into the fourth amendment to the
Amended Credit Agreement that provided for changes to certain key terms and
covenants included therein. On December 8, 2000, the Company entered into the
third amendment to the Amended Credit Agreement which allowed for an increase in
the credit facility basis from $40 million to $50 million, as well as an
increase in the European sublimit from $7 million to $12 million.
On December 29, 1999, the Company entered into the Amended Credit Agreement with
two banks, as agents and lenders, pursuant to which the Second Amended and
Restated Revolving Credit and Security Agreement dated as of October 15, 1997
was amended and restated. The Amended Credit Agreement includes the Company and
certain of its U.S. and European subsidiaries as borrowers. The Amended Credit
Agreement provides for a fee of 0.50% per annum on the undrawn amount of the
credit facility and letter of credit fees of 1.75% or 1.50% of the aggregate
face amounts of standby letters of credit and documentary letters of credit,
respectively. There is a $5 million sub-limit on standby letters of credit and a
$1 million sub-limit on documentary letters of credit. At each of the years
ended December 29, 2000 and December 31, 1999, the Company had outstanding $1.6
million of standby letters of credit.
F-11
In March 1999 and July 1998, the Company entered into term loan facilities to
finance the purchase of its Tolleson, Arizona administrative, manufacturing, and
warehouse facility and its Stone Mountain, Georgia manufacturing facility,
respectively.
On October 15, 1997, the Company completed a $60 million Series B Senior Note
offering. The proceeds were used to finance the StyroChem Europe acquisition and
repay a portion of the outstanding principal and accrued interest under the
revolving credit facility. The debt issuance premium on the Series B Notes is
being amortized over the life of the notes. For fiscal years 2000, 1999 and
1998, premium amortization of $344,000, $322,000 and $297,000, respectively, has
been recorded as a reduction of interest expense.
Each of the above agreements contain certain restrictive covenants which
include, among other things, restrictions on the declaration or payment of
dividends, the repurchase of stock, the incurrence of additional debt, the
amount of capital expenditures and additional investments and the sale or
disposition of assets. The Company is also required to maintain a minimum net
worth and certain financial ratios including debt to equity, current, debt
coverage and earnings to interest expense. The Company is in compliance with all
financial covenants.
Future debt maturities, excluding the debt premium, are as follows (in
thousands):
2001 $ 3,617
2002 45,661
2003 163,929
2004 4,127
2005 3,153
2006 and thereafter 2,500
--------
$222,987
========
5. COMMITMENTS AND CONTINGENCIES:
------------------------------
Leases
- ------
The Company leases certain of its manufacturing, warehouse and office facilities
and transportation equipment under noncancelable operating and capital lease
arrangements.
The future minimum payments under noncancelable operating leases are as follows
(in thousands):
2001 $ 6,960
2002 6,201
2003 5,532
2004 4,043
2005 2,582
2006 and thereafter 3,096
-------
$28,414
=======
Rental expense for all operating leases was $7,447,000, $7,470,000 and
$7,249,000 for fiscal years 2000, 1999 and 1998, respectively.
F-12
The future minimum payments under capital leases are as follows (in thousands):
2001 $1,534
2002 1,524
2003 1,517
2004 899
2005 594
2006 and thereafter 189
------
Total minimum lease payments 6,257
Less interest 932
------
Present value of net minimum lease payments 5,325
Less current maturities 1,180
------
Capital lease obligations $4,145
======
Litigation
- ----------
In October 1999, the Company settled the litigation filed by Jackson National
Life Insurance Company and Benchmark Holdings, Inc. in the Court of Chancery for
the State of Delaware in and for New Castle County. See Item 3 of the Company's
Report on Form 10-K for the year ended December 31, 1999. Although the Company
believed it had meritorious defenses and was prepared to assert such defenses
vigorously, the Company determined it was in its best interests to settle the
litigation due to the expense of such litigation and the attendant diversion and
disruption of management resources, as well as the inherent uncertainties of
litigation.
The Company is involved in various legal actions arising in the normal course of
business. After taking into consideration legal counsel's evaluation of such
actions, management believes that these actions will not have a material effect
on the Company's financial position or results of operations.
Supply Agreements
- -----------------
In January 2001, the Company amended its primary North American styrene monomer
supply contract. The initial term of the contract extends through December 2006.
Under the amended contract, the Company is required to purchase the first 150
million pounds of its North American styrene monomer requirements from one
supplier and has certain rights to purchase additional styrene monomer. Other
purchasing terms were amended that resulted in a $7.7 million reduction in costs
to be realized over the next three years.
In connection with the 1997 acquisition of StyroChem Europe, the Company
negotiated a contract to provide a long-term supply of styrene monomer at a
reduced price and with volume discounts to its European operations. The term of
this contract extends through December 2001.
6. STOCKHOLDERS' EQUITY:
---------------------
The Company is currently authorized to issue up to 11,650 shares of Voting
Common Stock, 5,400 shares of Class B Nonvoting Common Stock, 5,650 shares of
Nonvoting Common Stock and 2,000 shares of series preferred stock. At December
29, 2000, there are issued and outstanding 600 shares of Voting Common Stock,
5,400 shares of Class B Nonvoting Common Stock and 245 shares of Nonvoting
Common Stock. All shares have a par value of $.10 except for shares of Class B
Nonvoting Common Stock, which have a par value of $.01.
F-13
7. INCOME TAXES:
-------------
The components of income (loss) before taxes by source of income are as follows
(in thousands):
2000 1999 1998
------- ------ ------
United States $(9,034) $ (625) $4,261
Non-U.S. 448 1,341 4,475
------- ------ ------
$(8,586) $ 716 $8,736
======= ====== ======
The provision (benefit) for income taxes for each of the three years in the
period ended December 29, 2000 is as follows (in thousands):
2000 1999 1998
------- ------- ------
Current:
Federal $ -- $ -- $ 47
State 34 20 176
Foreign 5 336 505
Deferred 3,761 3,953 3,061
Generation of net operating loss
carryforwards (excluding generation of net
operating loss due to discontinued
operations in 1999 and 2000) (6,874) (4,068) (449)
------- ------- ------
$(3,074) $ 241 $3,340
======= ======= ======
The components of deferred taxes at December 29, 2000 and December 31, 1999 are
as follows (in thousands):
2000 1999
------- -------
Deferred tax assets:
Net operating loss carryforwards including loss
from discontinued operations $23,088 $16,834
Vacation pay and compensation accruals 641 495
Bad debt, inventory and returns and allowances 252 679
Other accruals 479 920
------- -------
24,460 18,928
Deferred tax liabilities:
Accelerated tax depreciation 26,833 24,513
------- -------
Net deferred tax liability $ 2,373 $ 5,585
======= =======
The provision (benefit) for income taxes varies from the amount determined by
applying the United States federal statutory rate to pre-tax income as a result
of the following (in thousands):
2000 1999 1998
------- ----- ------
United States federal statutory income tax $(2,919) $ 243 $2,970
State income taxes, net of federal benefit (259) 44 177
Nondeductible expenses 112 14 77
Foreign tax rate differential 4 (53) (141)
Other (12) (7) 257
------- ----- ------
$(3,074) $ 241 $3,340
======= ===== ======
F-14
As of December 29, 2000, the Company had approximately $60.1 million of net
operating loss carryforwards for federal income tax purposes, which expire
through 2020.
8. STOCK OPTION PLAN:
------------------
The 1992 Equity Incentive Plan (the "Plan") provides for the grant of
nonqualified options to purchase shares of the Nonvoting Common Stock subject to
certain limitations. Nonqualified stock options are issuable only to eligible
officers and employees of the Company. The Company has reserved 1,249 shares of
its Nonvoting Common Stock for issuance under the Plan.
The per share exercise price of a stock option may not be less than 75% of the
fair market value of the Nonvoting Common Stock, as determined by the board of
directors, on the date the option is granted. Such options may be exercised only
if the option holder remains continuously associated with the Company from the
date of grant to a date not less than three months prior to the date of
exercise. The exercise date of an option granted under the plan cannot be later
than ten years from the date of the grant. Any options that expire unexercised
or that terminate upon an optionee's ceasing to be employed by the Company
become available once again for issuance.
The following summarizes the stock option activity under the Plan:
2000 1999 1998
------- ----- -----
Options outstanding at beginning of period: 1,111 1,113 1,115
Granted -- -- --
Exercised -- -- --
Canceled (2) (2) (2)
----- ----- -----
Options outstanding at end of period 1,109 1,111 1,113
===== ===== =====
Options available for grant 140 138 136
===== ===== =====
Exercisable at end of period 935 847 761
===== ===== =====
There were no options granted during 2000, 1999 or 1998.
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related interpretations in accounting for its
stock options plans. Accordingly, no compensation expense has been recognized
related to the plans described above. If compensation cost for these plans had
been determined using the fair-value method prescribed by Statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based Compensation," the
Company's net income would have been reduced to the pro forma amounts indicated
below.
(in thousands) 2000 1999 1998
------- ------- ------
Net income (loss)- as reported $(5,656) $(6,384) $5,396
Net income (loss)- pro forma (5,942) (6,670) 5,110
This pro forma impact may not be representative of the effects for future years
and is likely to increase as additional options are granted and amortized over
the vesting period.
F-15
As the Company's stock is not publicly traded, the fair value of each option was
estimated on the grant date using the minimum value method (which excludes a
volatility assumption), with the following assumptions:
2000 1999 1998
---- ---- ----
Risk-free rate of interest 6.31% 6.31% 6.31%
Expected life in years 10 10 10
Dividend yield 0% 0% 0%
9. EMPLOYEE BENEFIT PLAN:
----------------------
The Company sponsors a 401(k) savings and profit sharing plan, which covers all
employees who have at least 1,000 hours of service during the year. The Company
will match employee contributions up to 2.8% of an employee's annual salary. The
Company may also, at the discretion of the board of directors, elect to make a
profit sharing contribution. There have been no profit sharing contributions for
the three years in the period ended December 29, 2000. Employer matching
contributions to the plan amounted to approximately $729,000, $688,000 and
$689,000 for each of the three years in the period ended December 29, 2000,
respectively.
Certain of the Company's European subsidiaries maintain benefit plans. Pension
expense related to these plans was $2,074,000 in 2000, $1,984,000 in 1999 and
$1,375,000 in 1998.
10. RELATED PARTY TRANSACTIONS:
---------------------------
A director of the Company is a partner in the law firm which serves as the
Company's primary legal counsel. During 2000, 1999 and 1998, the Company paid
fees of $267,000, $652,000 and $471,000 to this firm. A former director of the
Company was Senior Managing Director of an investment banking firm that
performed services for the Company in 1998. During 1998, the Company paid total
fees of $252,000 to this firm.
The Company licenses certain rights and provides administrative support to a
related company from which approximately $6.1 million and $5.5 million was due
at December 29, 2000 and December 31, 1999, respectively.
The Company has advanced $2.8 million on an interest-bearing basis to Michael T.
Kennedy, the Company's Chief Executive Officer.
11. SEGMENT INFORMATION:
--------------------
The Company has two business segments that operate within three distinct
geographic regions. The packaging and insulation segment produces food packaging
and insulation products for distribution to the foodservice, insulation and
packaging industries. The specialty chemicals segment produces EPS for internal
consumption by the packaging and insulation segment in addition to selling to
third-party manufacturers. Each of these segments operates in the United States,
Canada and Europe.
In January 1999, the EPS production operations located in Minton, Texas were
sold by the Company's Radnor Chemical subsidiary to its WinCup subsidiary. This
facility manufactures a substantial portion of the EPS utilized by the Company's
domestic food packaging operations with the remainder purchased from Radnor
Chemical's Canadian EPS manufacturing facility. The Company's segment
information for 1998 have been restated to reflect the impact of this
transaction.
F-16
The following tables summarize the Company's financial information and results
of operations by segment and geographic region for fiscal years 1998 through
2000 (in thousands):
Operating:
Packaging
and Specialty Corporate
2000 Insulation Chemicals and Other Eliminations Consolidated
- ---------------------- ---------- --------- --------- ------------ ------------
Sales to Unaffiliated
Customers $ 247,549 $ 112,007 $ 2,971 $ -- $ 362,527
Transfers Between
Operating Segments 190 32,127 -- (32,317) --
Income (Loss) from
Continuing Operations 16,621 2,527 (4,905) -- 14,243
Identifiable Assets 188,729 87,347 29,923 -- 305,999
Capital Expenditures 9,684 5,512 96 -- 15,292
Depreciation Expense 8,876 4,249 148 -- 13,273
Packaging
and Specialty Corporate
1999 Insulation Chemicals and Other Eliminations Consolidated
- ---------------------- ---------- --------- --------- ------------ ------------
Sales to Unaffiliated
Customers $ 231,253 $ 84,644 $ 2,218 $ -- $ 318,115
Transfers Between
Operating Segments -- 24,298 -- (24,298) --
Income (Loss) from
Continuing Operations 25,016 (1,780) (87) -- 23,149
Identifiable Assets 185,840 83,511 24,332 -- 293,683
Capital Expenditures 12,643 6,915 474 -- 20,032
Depreciation Expense 9,240 3,076 105 -- 12,421
Packaging
and Specialty Corporate
1998 Insulation Chemicals and Other Eliminations Consolidated
- ---------------------- ---------- --------- --------- ------------ ------------
Sales to Unaffiliated
Customers $ 221,573 $ 88,861 $ 703 $ -- $ 311,137
Transfers Between
Operating Segments -- 23,559 -- (23,559) --
Income (Loss) from
Continuing Operations 23,257 6,273 (1,053) -- 28,477
Identifiable Assets 172,754 85,013 21,029 -- 278,796
Capital Expenditures 10,816 6,490 355 -- 17,661
Depreciation Expense 8,002 2,845 86 -- 10,933
F-17
Geographic:
United
2000 States Canada Europe Eliminations Consolidated
- ---------------------- --------- -------- --------- ------------ ------------
Sales to Unaffiliated
Customers $ 241,247 $ 19,744 $ 101,536 $ -- $ 362,527
Transfers Between
Geographic Segments 954 10,444 -- (11,398) --
Income from Continuing
Operations 2,461 2,089 9,693 -- 14,243
Identifiable Assets 227,611 11,488 66,900 -- 305,999
United
1999 States Canada Europe Eliminations Consolidated
- ---------------------- --------- -------- --------- ------------ ------------
Sales to Unaffiliated
Customers $ 218,090 $ 15,363 $ 84,662 $ -- $ 318,115
Transfers Between
Geographic Segments 1,207 7,692 -- (8,899) --
Income from Continuing
Operations 14,939 1,276 6,934 -- 23,149
Identifiable Assets 217,291 11,102 65,290 -- 293,683
United
1998 States Canada Europe Eliminations Consolidated
- ---------------------- --------- -------- --------- ------------ ------------
Sales to Unaffiliated
Customers $ 212,004 $ 13,013 $ 86,120 $ -- $ 311,137
Transfers Between
Geographic Segments -- 8,190 -- (8,190) --
Income from Continuing
Operations 15,322 2,539 10,616 -- 28,477
Identifiable Assets 198,269 8,248 72,279 -- 278,796
12. SUPPLEMENTAL FINANCIAL INFORMATION:
-----------------------------------
Radnor Holdings Corporation is a holding company which has no operations or
assets separate from its investments in subsidiaries. The $100 million Series A
Senior Notes and the $60 million Series B Senior Notes are guaranteed by
substantially all of the Company's domestic subsidiaries. The following
condensed consolidating financial statements of Radnor Holdings Corporation and
Subsidiaries have been prepared pursuant to Rule 3-10 of Regulation S-X:
F-18
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 29, 2000
(In thousands, except share amounts)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
ASSETS
------
CURRENT ASSETS
Cash $ - $ 894 $ 2,832 $ - $ 3,726
Accounts receivable, net - 23,332 13,704 - 37,036
Inventories, net - 27,614 10,506 - 38,120
Intercompany receivable - - 5,820 (5,820) -
Prepaid expenses and other 178 10,013 2,478 - 12,669
Deferred tax asset - 1,505 140 (28) 1,617
--------- --------- ------- ---------- ---------
Total current assets 178 63,358 35,480 (5,848) 93,168
--------- --------- ------- ---------- ---------
PROPERTY, PLANT AND EQUIPMENT - 182,864 55,612 - 238,476
LESS - ACCUMULATED DEPRECIATION - (38,005) (9,078) - (47,083)
NET PROPERTY, PLANT AND EQUIPMENT - 144,859 46,534 - 191,393
--------- --------- ------- ---------- ---------
INTERCOMPANY RECEIVABLE 15,693 10,608 - (26,301) -
INVESTMENT IN SUBSIDIARIES 106,153 7,005 - (113,158) -
DEFERRED TAX ASSET 3,852 - - (3,852) -
OTHER ASSETS 4,614 11,838 4,986 - 21,438
--------- --------- ------- ---------- ---------
Total assets $ 130,490 $ 237,668 $87,000 $ (149,159) $ 305,999
========= ========= ======= ========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ - $ 36,806 $15,579 $ - $ 52,385
Accrued liabilities 1,268 14,012 4,589 - 19,869
Intercompany Payable - 9,492 - (9,492) -
Current deferred tax liability - - 28 (28) -
Current portion of long-term debt and capital -
lease obligations - 4,288 509 - 4,797
--------- --------- ------- ---------- ---------
Total current liabilities 1,268 64,598 20,705 (9,520) 77,051
--------- --------- ------- ---------- ---------
LONG-TERM DEBT, net of current portion 161,196 49,226 10,144 - 220,566
--------- --------- ------- ---------- ---------
CAPITAL LEASE OBLIGATIONS, net of current portion - 3,495 650 - 4,145
--------- --------- ------- ---------- ---------
INTERCOMPANY PAYABLE - - 43,820 (43,820) -
--------- --------- ------- ---------- ---------
DEFERRED TAX LIABILITY - 7,482 360 (3,852) 3,990
--------- --------- ------- ---------- ---------
OTHER NONCURRENT LIABILITIES - 2,058 - 2,058
--------- --------- ------- ---------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Voting and nonvoting common stock, 22,700 shares
authorized 6,245 shares issued and outstanding 1 4 22 (26) 1
Additional paid-in capital 9,164 97,634 4,517 (91,928) 19,387
Retained earnings (deficit) (41,139) 21,348 8,831 7 (10,953)
Cumulative translation adjustment - (8,177) (2,049) (20) (10,246)
--------- --------- ------- ---------- ---------
Total stockholders' equity (31,974) 110,809 11,321 (91,967) (1,811)
--------- --------- ------- ---------- ---------
Total liabilities and stockholders' equity $ 130,490 $ 237,668 $87,000 $ (149,159) $ 305,999
========= ========= ======= ========== =========
F-19
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the fiscal year ended December 29, 2000
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
NET SALES $ - $ 242,860 $ 131,065 $ (11,398) $ 362,527
COST OF GOODS SOLD - 189,723 98,929 (11,398) 277,254
-------- --------- --------- --------- ---------
GROSS PROFIT - 53,137 32,136 - 85,273
OPERATING EXPENSES:
Distribution - 18,392 7,611 - 26,003
Selling, general and administrative - 34,244 10,783 - 45,027
-------- --------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS - 501 13,742 - 14,243
OTHER EXPENSE:
Interest, net - 16,910 4,815 - 21,725
Other, net - (5,354) 6,458 - 1,104
-------- --------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES
AND DISCONTINUED OPERATIONS - (11,055) 2,469 - (8,586)
PROVISION (BENEFIT) FOR INCOME TAXES:
Current - 15 24 - 39
Deferred - (3,112) (1) - (3,113)
-------- --------- --------- --------- ---------
- (3,097) 23 - (3,074)
-------- --------- --------- --------- ---------
INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS - (7,958) 2,446 - (5,512)
LOSS FROM DISCONTINUED OPERATIONS 144 - - - 144
-------- --------- --------- --------- ---------
NET INCOME (LOSS) $ (144) $ (7,958) $ 2,446 $ - $ (5,656)
======== ========= ========= ========= =========
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the fiscal year ended December 29, 2000
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
Net cash provided by (used in) operating activities:
$ (7,225) $ 6,600 $ (767) $ - $ (1,392)
Cash flows from investing activities:
Capital expenditures - (11,920) (3,372) - (15,292)
Increase in other assets 1,001 (2,673) (1,805) - (3,477)
-------- -------- ------- -------- ---------
Net cash provided by (used in) investing activities 1,001 (14,593) (5,177) - (18,769)
-------- -------- ------- -------- ---------
Cash flows from financing activities:
Net borrowings on bank financed debt and
unsecured notes payable - 9,420 8,108 - 17,528
Net payments on capital lease obligations - (855) (234) - (1,089)
Change in intercompany, net 6,224 (2,783) (3,441) - -
-------- -------- ------- -------- ---------
Net cash provided by financing activities 6,224 5,782 4,433 - 16,439
-------- -------- ------- -------- ---------
Effect of exchange rate changes on cash - 191 (322) - (131)
-------- -------- ------- -------- ---------
Net decrease in cash - (2,020) (1,833) - (3,853)
Cash, beginning of period - 2,914 4,665 - 7,579
-------- -------- ------- -------- ---------
Cash, end of period $ - $ 894 $ 2,832 $ - $ 3,726
======== ======== ======= ======== =========
F-20
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 1999
(In thousands, except share amounts)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
ASSETS
------
CURRENT ASSETS
Cash $ - $ 2,914 $ 4,665 $ - $ 7,579
Accounts receivable, net - 18,905 10,230 - 29,135
Inventories, net - 25,130 9,651 - 34,781
Intercompany receivable - - 1,990 (1,990) -
Prepaid expenses and other 330 4,847 1,303 - 6,480
Deferred tax asset - 1,514 142 4 1,660
--------- -------- ------- --------- --------
Total current assets 330 53,310 27,981 (1,986) 79,635
--------- -------- ------- --------- --------
PROPERTY, PLANT AND EQUIPMENT - 170,925 55,422 - 226,347
LESS - ACCUMULATED DEPRECIATION - (27,870) (6,365) - (34,235)
--------- -------- ------- --------- --------
NET PROPERTY, PLANT AND EQUIPMENT - 143,055 49,057 - 192,112
--------- -------- ------- --------- --------
INTERCOMPANY RECEIVABLE 21,917 4,518 - (26,435) -
INVESTMENT IN SUBSIDIARIES 106,153 7,005 - (113,158) -
DEFERRED TAX ASSET 3,775 - - (3,775) -
OTHER ASSETS 6,071 12,617 3,248 - 21,936
--------- -------- ------- --------- --------
Total assets $ 138,246 $220,505 $80,286 $(145,354) $293,683
========= ======== ======= ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ - $ 25,567 $13,880 $ - $ 39,447
Accrued liabilities 3,590 13,881 6,015 - 23,486
Intercompany Payable - 3,354 - (3,354) -
Current deferred tax liability - (4) - 4 -
Current portion of long-term debt and capital - -
lease obligations - 3,457 361 - 3,818
--------- -------- ------- --------- --------
Total current liabilities 3,590 46,255 20,256 (3,350) 66,751
--------- -------- ------- --------- --------
LONG-TERM DEBT, net of current portion 161,540 42,132 2,592 - 206,264
--------- -------- ------- --------- --------
CAPITAL LEASE OBLIGATIONS, net of current portion - 4,423 912 - 5,335
--------- -------- ------- --------- --------
INTERCOMPANY PAYABLE - - 46,262 (46,262) -
--------- -------- ------- --------- --------
DEFERRED TAX LIABILITY - 10,608 412 (3,775) 7,245
--------- -------- ------- --------- --------
OTHER NONCURRENT LIABILITIES - 514 - - 514
--------- -------- ------- --------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Voting and nonvoting common stock, 22,700 shares
authorized 6,245 shares issued and outstanding 1 4 22 (26) 1
Additional paid-in capital 9,164 97,634 4,517 (91,928) 19,387
Retained earnings (deficit) (36,049) 24,360 6,385 7 (5,297)
Cumulative translation adjustment - (5,425) (1,072) (20) (6,517)
--------- -------- ------- --------- --------
Total stockholders' equity (26,884) 116,573 9,852 (91,967) 7,574
--------- -------- ------- --------- --------
Total liabilities and stockholders' equity $ 138,246 $220,505 $80,286 $(145,354) $293,683
========= ======== ======= ========= ========
F-21
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the fiscal year ended December 31, 1999
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
NET SALES $ - $219,493 $107,521 $ (8,899) $318,115
COST OF GOODS SOLD - 156,589 78,819 (8,899) 226,509
-------- -------- -------- --------- --------
GROSS PROFIT - 62,904 28,702 - 91,606
OPERATING EXPENSES:
Distribution - 16,736 7,799 - 24,535
Selling, general and administrative - 31,457 12,465 - 43,922
-------- -------- -------- --------- --------
INCOME FROM CONTINUING OPERATIONS - 14,711 8,438 - 23,149
OTHER EXPENSE:
Interest, net - 15,259 5,811 - 21,070
Other, net - (11,308) 823 11,848 1,363
-------- -------- -------- --------- --------
INCOME (LOSS) BEFORE INCOME TAXES
AND DISCONTINUED OPERATIONS - 10,760 1,804 (11,848) 716
PROVISION (BENEFIT) FOR INCOME TAXES:
Current - (138) 494 - 356
Deferred - (84) (31) - (115)
-------- -------- -------- --------- --------
- (222) 463 - 241
-------- -------- -------- --------- --------
INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS - 10,982 1,341 (11,848) 475
LOSS FROM DISCONTINUED OPERATIONS 6,859 - - - 6,859
-------- -------- -------- --------- --------
NET INCOME (LOSS) $ (6,859) $ 10,982 $ 1,341 $ (11,848) $ (6,384)
======== ======== ======== ========= ========
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the fiscal year ended December 31, 1999
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------ ------------
Net cash provided by (used in) operating activities:
$ (7,008) $ 12,729 $ 10,551 $ - $ 16,272
Cash flows from investing activities:
Capital expenditures - (15,598) (4,434) - (20,032)
Increase in other assets 940 (4,019) (520) - (3,599)
-------- -------- -------- ------- --------
Net cash provided by (used in) investing activities 940 (19,617) (4,954) - (23,631)
-------- -------- -------- ------- --------
Cash flows from financing activities:
Net borrowings on bank financed debt and
unsecured notes payable - 11,781 269 - 12,050
Net borrowings (payments) on capital lease obligations - (785) 159 - (626)
Change in intercompany, net 6,068 (1,876) (4,192) - -
-------- -------- -------- ------- --------
Net cash provided by financing activities 6,068 9,120 (3,764) - 11,424
-------- -------- -------- ------- --------
Effect of exchange rate changes on cash - (195) (266) - (461)
-------- -------- -------- ------- --------
Net decrease in cash - 2,037 1,567 - 3,604
Cash, beginning of period - 877 3,098 - 3,975
-------- -------- -------- ------- --------
Cash, end of period $ - $ 2,914 $ 4,665 $ - $ 7,579
======== ======== ======== ======= ========
F-22
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the fiscal year ended December 25, 1998
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------- ------------ ------------
NET SALES $ - $ 212,004 $ 107,323 $ (8,190) $ 311,137
COST OF GOODS SOLD - 155,038 73,843 (8,190) 220,691
------- ------------ ------------- ------------ ------------
GROSS PROFIT - 56,966 33,480 - 90,446
OPERATING EXPENSES:
Distribution - 15,651 7,353 - 23,004
Selling, general and administrative - 26,446 12,943 (424) 38,965
------- ------------ ------------- ------------ ------------
INCOME FROM OPERATIONS - 14,869 13,184 424 28,477
OTHER EXPENSE:
Interest, net - 12,916 5,860 - 18,776
Other, net - (3,473) 2,815 1,623 965
------- ------------ ------------- ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES - 5,426 4,509 (1,199) 8,736
PROVISION (BENEFIT) FOR INCOME TAXES:
Current - 248 480 - 728
Deferred - 2,573 39 - 2,612
------- ------------ ------------- ------------ ------------
- 2,821 519 - 3,340
------- ------------ ------------- ------------ ------------
NET INCOME (LOSS) $ - $ 2,605 $ 3,990 $ (1,199) $ 5,396
======= ============ ============= ============ ============
RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the fiscal year ended December 25, 1998
(In thousands)
Holding Guarantor Non-Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------- ------------ ------------- ------------ ------------
Net cash provided by (used in) operating activities: $(3,315) $ 19,647 $ 812 $ - $ 17,144
Cash flows from investing activities:
Capital expenditures - (11,937) (5,724) - (17,661)
Acquisition of StyroChem Europe, net of cash acquired (376) - 31 - (345)
Acquisition of Epsilevy Oy, net of cash acquired - - (794) - (794)
Increase in other assets (2,044) (7,795) (302) - (10,141)
------- ------------ ------------- ------------ ------------
Net cash provided by (used in) investing activities (2,420) (19,732) (6,789) - (28,941)
------- ------------ ------------- ------------ ------------
Cash flows from financing activities:
Net borrowings on bank financed debt and
unsecured notes payable - 5,016 811 - 5,827
Net borrowings (payments) on capital lease obligations - 4,498 - - 4,498
Payments of dividends (1,500) - - - (1,500)
Other (1,956) - - (1,956)
Change in intercompany, net 7,235 (8,966) 1,731 - -
------- ------------ ------------- ------------ ------------
Net cash provided by financing activities 5,735 (1,408) 2,542 - 6,869
------- ------------ ------------- ------------ ------------
Effect of exchange rate changes on cash - 1,386 (1,293) - 93
------- ------------ ------------- ------------ ------------
Net decrease in cash - (107) (4,728) - (4,835)
Cash, beginning of period - 984 7,826 - 8,810
------- ------------ ------------- ------------ ------------
Cash, end of period $ - $ 877 $ 3,098 $ - $ 3,975
======= ============ ============= ============ ============
F-23