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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended April 1, 2005



| ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to



Commission file number: 333-19495



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RADNOR HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 23-2674715                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



|                                                                                 |  |           
|-------------------------------------------------------------------------------- |  | ----------
|Radnor Financial Center, Suite 300 150 Radnor Chester Road, Radnor, Pennsylvania |  | 19087     
|(address of principal executive offices)                                         |  | (Zip Code)



Registrants
telephone number, including area code: 610-341-9600



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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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes ̈No  x



The number of shares outstanding of the Registrants common stock as of

May 16, 2005:



|                                               |  |                 
|---------------------------------------------- |  | ----------------
|Class                                          |  | Number of Shares
|Voting Common Stock; $.10 par value            |  | 600             
|Nonvoting Common Stock; $.10 par value         |  | 245             
|Class B Nonvoting Common Stock; $.01 par value |  | 5,400           



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PART I - FINANCIAL INFORMATION



Item 1. FINANCIAL STATEMENTS



RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)



|                                                      |  |              |          |   |                  |   |          |  
|----------------------------------------------------- |  | ------------ | -------- | - | ---------------- | - | -------- | -
|                                                      |  | April 1,2005 |          |   | December 31,2004 |  
|Assets                                                |  |              |          |   |                  |   |          |  
|                                                      |  |             
|Current assets:                                       |  |              |          |   |                  |   |          |  
|Cash                                                  |  | $            | 713      |   |                  | $ | 3,393    |  
|Accounts receivable, net                              |  |              | 60,881   |   |                  |   | 50,048   |  
|Inventories, net                                      |  |              | 79,500   |   |                  |   | 67,526   |  
|Note receivable                                       |  |              | 17,556   |   |                  |   |         |  
|Prepaid expenses and other                            |  |              | 8,974    |   |                  |   | 8,849    |  
|Deferred tax asset                                    |  |              | 2,077    |   |                  |   | 2,075    |  
|                                                      |  |              |          |   |                  |   |          |  
|                                                      |  |              | 169,701  |   |                  |   | 131,891  |  
|                                                      |  |              |          |   |                  |   |          |  
|Property, plant and equipment, at cost                |  |              | 333,049  |   |                  |   | 329,826  |  
|Less accumulated depreciation                         |  |              | (116,313 | ) |                  |   | (112,255 | )
|                                                      |  |              |          |   |                  |   |          |  
|                                                      |  |              | 216,736  |   |                  |   | 217,571  |  
|                                                      |  |              |          |   |                  |   |          |  
|Investments                                           |  |              | 1,845    |   |                  |   | 41,676   |  
|Intangible assets                                     |  |              | 9,549    |   |                  |   | 9,894    |  
|Deferred tax asset                                    |  |              | 6,761    |   |                  |   | 3,949    |  
|Other assets                                          |  |              | 16,237   |   |                  |   | 16,075   |  
|                                                      |  |              |          |   |                  |   |          |  
|                                                      |  | $            | 420,829  |   |                  | $ | 421,056  |  
|                                                      |  |              |          |   |                  |   |          |  
|Liabilities and Stockholders Equity                  |  |              |          |   |                  |   |          |  
|                                                      |  |             
|Current liabilities:                                  |  |              |          |   |                  |   |          |  
|Accounts payable                                      |  | $            | 69,633   |   |                  | $ | 56,940   |  
|Accrued liabilities                                   |  |              | 22,346   |   |                  |   | 29,838   |  
|Current portion of long-term debt                     |  |              | 8,641    |   |                  |   | 8,571    |  
|Current portion of capitalized lease obligations      |  |              | 2,492    |   |                  |   | 2,315    |  
|                                                      |  |              |          |   |                  |   |          |  
|                                                      |  |              | 103,112  |   |                  |   | 97,664   |  
|                                                      |  |              |          |   |                  |   |          |  
|Long-term debt, net of current portion                |  |              | 317,309  |   |                  |   | 294,992  |  
|Capitalized lease obligations, net of current portion |  |              | 3,084    |   |                  |   | 3,726    |  
|Other non-current liabilities                         |  |              | 3,716    |   |                  |   | 4,191    |  
|Minority interest in consolidated subsidiary          |  |              |         |   |                  |   | 21,253   |  
|                                                      |  |             
|Commitments and contingencies                         |  |              |         |   |                  |   |         |  
|                                                      |  |             
|Stockholders equity:                                 |  |              |          |   |                  |   |          |  
|Common stock                                          |  |              | 1        |   |                  |   | 1        |  
|Additional paid-in capital                            |  |              | 19,387   |   |                  |   | 19,387   |  
|Retained earnings (deficit)                           |  |              | (31,038  | ) |                  |   | (27,628  | )
|Cumulative translation adjustment                     |  |              | 5,258    |   |                  |   | 7,470    |  
|                                                      |  |              |          |   |                  |   |          |  
|Total stockholders equity                            |  |              | (6,392   | ) |                  |   | (770     | )
|                                                      |  |              |          |   |                  |   |          |  
|                                                      |  | $            | 420,829  |   |                  | $ | 421,056  |  
|                                                      |  |              |          |   |                  |   |          |  



The accompanying notes
are an integral part of these condensed consolidated financial statements.



2



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RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands)

(Unaudited)



|                                                           |  |                            |         |   |               |   |        |  
|---------------------------------------------------------- |  | -------------------------- | ------- | - | ------------- | - | ------ | -
|                                                           |  | For the three months ended |        
|                                                           |  | April 1,2005               |         |   | March 26,2004 |  
|Net sales                                                  |  | $                          | 114,883 |   |               | $ | 96,300 |  
|                                                           |  |                           
|Cost of goods sold                                         |  |                            | 96,381  |   |               |   | 77,627 |  
|Cost of goods sold - other                                 |  |                            | 538     |   |               |   |       |  
|                                                           |  |                            |         |   |               |   |        |  
|Gross profit                                               |  |                            | 17,964  |   |               |   | 18,673 |  
|                                                           |  |                           
|Operating expenses:                                        |  |                            |         |   |               |   |        |  
|Distribution                                               |  |                            | 6,833   |   |               |   | 6,248  |  
|Selling, general and administrative                        |  |                            | 9,523   |   |               |   | 7,874  |  
|                                                           |  |                            |         |   |               |   |        |  
|Income from operations                                     |  |                            | 1,608   |   |               |   | 4,551  |  
|                                                           |  |                           
|Interest, net                                              |  |                            | 7,394   |   |               |   | 5,607  |  
|Income from unconsolidated affiliates                      |  |                            | (150    | ) |               |   | (159   | )
|Other, net                                                 |  |                            | 101     |   |               |   | 190    |  
|Minority interest in operations of consolidated subsidiary |  |                            | (315    | ) |               |   | (806   | )
|                                                           |  |                            |         |   |               |   |        |  
|Loss before income taxes                                   |  |                            | (5,422  | ) |               |   | (281   | )
|                                                           |  |                           
|Provision (benefit) for income taxes:                      |  |                            |         |   |               |   |        |  
|Current                                                    |  |                            | 801     |   |               |   | 459    |  
|Deferred                                                   |  |                            | (2,813  | ) |               |   | (569   | )
|                                                           |  |                            |         |   |               |   |        |  
|                                                           |  |                            | (2,012  | ) |               |   | (110   | )
|                                                           |  |                            |         |   |               |   |        |  
|Net loss                                                   |  | $                          | (3,410  | ) |               | $ | (171   | )
|                                                           |  |                            |         |   |               |   |        |  



The accompanying notes
are an integral part of these condensed consolidated financial statements.



3



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RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



|                                                                            |  |                            |         |   |               |   |         |  
|--------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ------------- | - | ------- | -
|                                                                            |  | For the three months ended |        
|                                                                            |  | April 1,2005               |         |   | March 26,2004 |  
|Cash flows from operating activities:                                       |  |                            |         |   |               |   |         |  
|Net loss                                                                    |  | $                          | (3,410  | ) |               | $ | (171    | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                            |         |   |               |   |         |  
|Depreciation and amortization                                               |  |                            | 6,002   |   |               |   | 4,848   |  
|Deferred income taxes                                                       |  |                            | (2,813  | ) |               |   | (569    | )
|Income from unconsolidated affiliates                                       |  |                            | (150    | ) |               |   | (159    | )
|Minority interest in operations of consolidated subsidiary                  |  |                            | (315    | ) |               |   | (806    | )
|Changes in operating assets and liabilities:                                |  |                            |         |   |               |   |         |  
|Accounts receivable, net                                                    |  |                            | (11,665 | ) |               |   | (7,564  | )
|Inventories                                                                 |  |                            | (12,430 | ) |               |   | (5,512  | )
|Prepaid expenses and other                                                  |  |                            | 1,175   |   |               |   | (559    | )
|Accounts payable                                                            |  |                            | 13,495  |   |               |   | 6,380   |  
|Accrued liabilities and other                                               |  |                            | (7,817  | ) |               |   | (7,039  | )
|                                                                            |  |                            |         |   |               |   |         |  
|Net cash used in operating activities                                       |  |                            | (17,928 | ) |               |   | (11,151 | )
|                                                                            |  |                            |         |   |               |   |         |  
|Cash flows from investing activities:                                       |  |                            |         |   |               |   |         |  
|Capital expenditures                                                        |  |                            | (5,693  | ) |               |   | (2,810  | )
|Distributions from unconsolidated affiliates                                |  |                            | 155     |   |               |   | 2,630   |  
|Investments in unconsolidated affiliates                                    |  |                            |        |   |               |   | (1,947  | )
|Increase in other assets                                                    |  |                            | (319    | ) |               |   | (3,469  | )
|                                                                            |  |                            |         |   |               |   |         |  
|Net cash used in investing activities                                       |  |                            | (5,857  | ) |               |   | (5,596  | )
|                                                                            |  |                            |         |   |               |   |         |  
|Cash flows from financing activities:                                       |  |                            |         |   |               |   |         |  
|Proceeds from borrowings                                                    |  |                            | 24,762  |   |               |   | 18,462  |  
|Repayment of debt                                                           |  |                            | (2,051  | ) |               |   | (7,237  | )
|Payments on capitalized lease obligations                                   |  |                            | (465    | ) |               |   | (691    | )
|Payment of financing fees                                                   |  |                            | (444    | ) |               |   |        |  
|                                                                            |  |                            |         |   |               |   |         |  
|Net cash provided by financing activities                                   |  |                            | 21,802  |   |               |   | 10,534  |  
|                                                                            |  |                            |         |   |               |   |         |  
|Effect of exchange rate changes on cash                                     |  |                            | (697    | ) |               |   | (81     | )
|                                                                            |  |                            |         |   |               |   |         |  
|Net decrease in cash                                                        |  |                            | (2,680  | ) |               |   | (6,294  | )
|                                                                            |  |                           
|Cash, beginning of period                                                   |  |                            | 3,393   |   |               |   | 6,896   |  
|                                                                            |  |                            |         |   |               |   |         |  
|Cash, end of period                                                         |  | $                          | 713     |   |               | $ | 602     |  
|                                                                            |  |                            |         |   |               |   |         |  
|Supplemental disclosure of cash flows information:                          |  |                            |         |   |               |   |         |  
|Cash paid during the period for interest                                    |  | $                          | 10,850  |   |               | $ | 9,146   |  
|                                                                            |  |                            |         |   |               |   |         |  
|Cash paid during the period for income taxes                                |  | $                          | 15      |   |               | $ | 28      |  
|                                                                            |  |                            |         |   |               |   |         |  



The accompanying notes
are an integral part of these condensed consolidated financial statements.



4



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RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Summary of Operating Segments

(In thousands)

(Unaudited)



|                                        |  |                            |         |   |               |   |        |  
|--------------------------------------- |  | -------------------------- | ------- | - | ------------- | - | ------ | -
|                                        |  | For the three months ended |        
|                                        |  | April 1,2005               |         |   | March 26,2004 |  
|Net Sales to Unaffiliated Customers:    |  |                            |         |   |               |   |        |  
|Packaging                               |  | $                          | 64,239  |   |               | $ | 55,898 |  
|Specialty Chemicals                     |  |                            | 54,603  |   |               |   | 43,321 |  
|Transfers Between Operating Segments(1) |  |                            | (3,959  | ) |               |   | (2,919 | )
|                                        |  |                            |         |   |               |   |        |  
|Consolidated                            |  | $                          | 114,883 |   |               | $ | 96,300 |  
|                                        |  |                            |         |   |               |   |        |  
|Income (Loss) From Operations:          |  |                            |         |   |               |   |        |  
|Packaging                               |  | $                          | 959     |   |               | $ | 5,323  |  
|Specialty Chemicals                     |  |                            | 3,192   |   |               |   | 1,725  |  
|Corporate and Other                     |  |                            | (2,543  | ) |               |   | (2,497 | )
|                                        |  |                            |         |   |               |   |        |  
|Consolidated                            |  | $                          | 1,608   |   |               | $ | 4,551  |  
|                                        |  |                            |         |   |               |   |        |  
|Income (Loss) Before Income Taxes:      |  |                            |         |   |               |   |        |  
|Packaging                               |  | $                          | (156    | ) |               | $ | 1,786  |  
|Specialty Chemicals                     |  |                            | (1,765  | ) |               |   | 294    |  
|Corporate and Other                     |  |                            | (3,501  | ) |               |   | (2,361 | )
|                                        |  |                            |         |   |               |   |        |  
|Consolidated                            |  | $                          | (5,422  | ) |               | $ | (281   | )
|                                        |  |                            |         |   |               |   |        |  

---

|(1) | Transfers between operating segments reflect the sale of expandable polystyrene (EPS) from the specialty chemicals operating segment to the packaging
operating segment.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



5



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RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Summary by Geographic Region

(In thousands)

(Unaudited)



|                                        |  |                            |         |   |               |   |        |  
|--------------------------------------- |  | -------------------------- | ------- | - | ------------- | - | ------ | -
|                                        |  | For the three months ended |        
|                                        |  | April 1,2005               |         |   | March 26,2004 |  
|Net Sales to Unaffiliated Customers:    |  |                            |         |   |               |   |        |  
|United States                           |  | $                          | 75,258  |   |               | $ | 63,727 |  
|Canada                                  |  |                            | 12,918  |   |               |   | 9,300  |  
|Europe                                  |  |                            | 30,666  |   |               |   | 26,192 |  
|Transfers Between Geographic Regions(1) |  |                            | (3,959  | ) |               |   | (2,919 | )
|                                        |  |                            |         |   |               |   |        |  
|Consolidated                            |  | $                          | 114,883 |   |               | $ | 96,300 |  
|                                        |  |                            |         |   |               |   |        |  
|Income (Loss) From Operations:          |  |                            |         |   |               |   |        |  
|United States                           |  | $                          | (1,038  | ) |               | $ | 1,948  |  
|Canada                                  |  |                            | 2,502   |   |               |   | 1,827  |  
|Europe                                  |  |                            | 144     |   |               |   | 776    |  
|                                        |  |                            |         |   |               |   |        |  
|Consolidated                            |  | $                          | 1,608   |   |               | $ | 4,551  |  
|                                        |  |                            |         |   |               |   |        |  
|Income (Loss) Before Income Taxes:      |  |                            |         |   |               |   |        |  
|United States                           |  | $                          | (7,058  | ) |               | $ | (1,929 | )
|Canada                                  |  |                            | 1,951   |   |               |   | 1,432  |  
|Europe                                  |  |                            | (315    | ) |               |   | 216    |  
|                                        |  |                            |         |   |               |   |        |  
|Consolidated                            |  | $                          | (5,422  | ) |               | $ | (281   | )
|                                        |  |                            |         |   |               |   |        |  

---

|(1) | Transfers between geographic regions reflect the sale of EPS from the Companys Canadian specialty chemicals operations to its domestic packaging operations.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------



6



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RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



1. BASIS OF PRESENTATION



General



The condensed consolidated financial statements included herein have been
prepared by Radnor Holdings Corporation and subsidiaries (collectively, Radnor, we, us, our or the Company) pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in consolidated financial statements, prepared in accordance with U.S. generally accepted accounting principles, have been condensed or omitted pursuant to such rules and regulations. In
the opinion of the Company, the statements include all adjustments (which include only normal recurring adjustments) required for a fair statement of financial position, results of operations and cash flows for such periods. The preparation of the
statements requires the use of management estimates. The results of operations for the interim periods are not necessarily indicative of the results for a full year, due to the seasonality inherent in some of the Companys operations and the
possibility for general economic changes.



Stock-based
Compensation



At April 1, 2005, the Company had a
stock-based compensation plan as described in Note 10 to the consolidated financial statements in the Companys Form 10-K for fiscal 2004. In the third quarter of fiscal 2003, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure, and accounts for all prospective option grants under the fair value method. No stock options have been issued by the Company subsequent to its adoption
of SFAS No. 148.



2. INVENTORIES



The components of inventories were as follows (in thousands):



|                |  |              |        |                  |   |       
|--------------- |  | ------------ | ------ | ---------------- | - | ------
|                |  | April 1,2005 |        | December 31,2004
|Raw Materials   |  | $            | 22,259 |                  | $ | 15,904
|Work in Process |  |              | 3,731  |                  |   | 2,444 
|Finished Goods  |  |              | 53,510 |                  |   | 49,178
|                |  |              |        |                  |   |       
|                |  | $            | 79,500 |                  | $ | 67,526
|                |  |              |        |                  |   |       



7



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3. INTANGIBLE ASSETS



Intangible assets consisted of (in thousands):



|                      |  |               |        |                   |   |        |           |  |             |       |              |   |        |            |   |        |   |  |   |      
|--------------------- |  | ------------- | ------ | ----------------- | - | ------ | --------- |  | ----------- | ----- | ------------ | - | ------ | ---------- | - | ------ | - |  | - | -----
|                      |  | April 1, 2005 |        | December 31, 2004
|                      |  | GrossAmount   |        | Accum.Amort.      |   |        | NetAmount |  | GrossAmount |       | Accum.Amort. |   |        | Net Amount
|Customer List         |  | $             | 8,582  |                   | $ | (1,180 | )         |  | $           | 7,402 |              | $ | 8,582  |            | $ | (930   | ) |  | $ | 7,652
|Non-Compete Agreement |  |               | 2,671  |                   |   | (524   | )         |  |             | 2,147 |              |   | 2,671  |            |   | (429   | ) |  |   | 2,242
|                      |  |               |        |                   |   |        |           |  |             |       |              |   |        |            |   |        |   |  |   |      
|                      |  | $             | 11,253 |                   | $ | (1,704 | )         |  | $           | 9,549 |              | $ | 11,253 |            | $ | (1,359 | ) |  | $ | 9,894
|                      |  |               |        |                   |   |        |           |  |             |       |              |   |        |            |   |        |   |  |   |      



Intangible assets are
being amortized on a straight-line basis over the expected period of benefit. The aggregate amortization expense related to intangible assets for the three months ended April 1, 2005 and March 26, 2004 was $0.3 million and $0.2 million,
respectively.



4. LONG-TERM DEBT



On April 27, 2004, the Company issued $70.0 million of Senior Secured
Floating Rate Notes due 2009. The notes bear interest at a floating rate of LIBOR plus 6.75% per year. Interest on the notes is reset quarterly and is payable quarterly, with the first payment having been made on July 15, 2004. The notes will mature
on April 15, 2009. The net proceeds were used to repay a then outstanding $40.5 million term loan and outstanding borrowings under the existing revolving credit facilities.



In February 2005 and March 2005, the Company amended certain financial covenants in its domestic credit facility to permit
flexibility in operating the Companys business and address compliance issues and instances of non-compliance. In April 2005, the Company amended its domestic credit facility to provide further flexibility in the Companys operations.



5. COST OF GOODS SOLD - OTHER



In March 2005, the Company amended its primary North American styrene
monomer requirements contract. Based on this amendment, the contract will terminate effective August 1, 2005. As a result of this amendment, effective December 31, 2004, the Company wrote-off $2.1 million in prepaid costs related to the contract. In
addition, the Company recorded a $0.5 million termination fee in March 2005 related to the amendment.



6. INTEREST EXPENSE



Included in interest expense was $323,000 and $171,000 of amortization of deferred financing costs for the three months ended April 1, 2005 and March 26, 2004, respectively.



8



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7. COMPREHENSIVE INCOME



Comprehensive income is the total of net income (loss) and non-owner changes in equity. The Company had comprehensive losses as follows (in thousands):



|                                        |  |                    |        |   |               |   |        |  
|--------------------------------------- |  | ------------------ | ------ | - | ------------- | - | ------ | -
|                                        |  | Three Months Ended |       
|                                        |  | April 1,2005       |        |   | March 26,2004 |  
|Net Loss                                |  | $                  | (3,410 | ) |               | $ | (171   | )
|Foreign Currency Translation Adjustment |  |                    | (2,212 | ) |               |   | (1,118 | )
|                                        |  |                    |        |   |               |   |        |  
|Comprehensive Loss                      |  | $                  | (5,622 | ) |               | $ | (1,289 | )
|                                        |  |                    |        |   |               |   |        |  



8. INVESTMENTS IN AFFILIATED
COMPANIES



Beginning in the fourth quarter of the fiscal
year ended December 26, 2003, the Company adopted Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities, and began to consolidate Radnor Investments, L.P., an affiliated investment
partnership in which the Company was the sole limited partner. On January 31, 2005, the Companys $18.9 million limited partnership interest in Radnor Investments, L.P., which was the maximum amount that the Company could have received on that
date with respect to the limited partnership interest under the partnership agreement, was converted into a note receivable due from Radnor Investment Advisors, L.P., bearing interest at an annual rate equal to the Prime Index reported by Bloomberg
plus one percent (1%) with interest compounded daily. In exchange for the note, the Company assigned its remaining interests as a limited partner in Radnor Investments, L.P. to Radnor Investment Advisors, L.P. Radnor Investment Advisors, L.P. was
the general partner of Radnor Investments, L.P. and is owned by certain executives, stockholders and employees of the Company. The general partner of Radnor Investment Advisors, L.P. is Radnor Investment Advisors, Inc., an entity controlled by the
Chief Executive Officer of the Company and whose other owners consist of certain stockholders and executives of the Company.



As described in Notes 2 and 4 of the consolidated financial statements included in the Companys Form 10-K for the year ended December 31, 2004, the
accounts of Radnor Investments, L.P. were consolidated using specialized accounting guidance that required investments to be recorded at fair value and the fair value of investments was determined in good faith by Radnor Investment Advisors, L.P.
The difference between the fair value of investments of $39.8 million and the Companys $18.9 million limited partnership interest represented the minority interest in Radnor Investments, L.P. of $20.9 million included in the Companys
consolidated financial statements at January 31, 2005. The sole minority interest holder in Radnor Investments, L.P. was Radnor Investment Advisors, L.P. As a result of the transaction described above, the Company no longer consolidates Radnor
Investments, L.P. and the investments and minority interest of Radnor Investments, L.P. are no longer reflected in the consolidated financial statements of the Company. On March 11, 2005, $1.5 million of the note receivable was collected. On April
8, 2005 the remainder of the note receivable, including accrued interest in the amount of $0.2 million, was collected in full.



9. NEW ACCOUNTING STANDARDS



In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, Inventory Costs - An Amendment of ARB No. 43, Chapter
4, which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Under this Statement, such items will be recognized as current-period charges. In addition, the Statement
requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of SFAS No. 151 will be effective for inventory costs incurred during fiscal years
beginning after June 15, 2005. We continue to assess the potential impact that the adoption of SFAS No. 151 could have on our financial position or results of operations.



9



---

In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which establishes
standards for transactions in which an entity exchanges its equity instruments for goods or services. This standard requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on
the grant-date fair value of the award. This eliminates the exception to account for such awards using the intrinsic method previously allowable under APB Opinion No. 25. SFAS 123(R) will be effective for fiscal years beginning after December 15,
2005. We previously adopted the fair value recognition provisions of SFAS No. 123 Accounting for Stock-Based Compensation, in the third quarter of 2003. Accordingly, we continue to access the potential impact that the adoption of SFAS No. 123(R)
will have on our financial statements.



On March 30, 2005, FASB
interpretation No. 47 Accounting for Conditional Asset Retirement Obligations was issued. This interpretation clarifies FASB Statement No. 143 Asset Retirement Obligations in that an entity is required to recognize a
liability for the fair value of a conditional asset retirement obligation when incurred if the liabilitys fair value can be reasonably estimated. The interpretation states that when an existing law, regulation, or contract requires an entity
to perform an asset retirement activity, an unambiguous requirement to perform the retirement activity exists, even if that activity can be deferred indefinitely. The interpretation is effective no later than the end of fiscal years ending after
December 15, 2005. We are evaluating the effect that FIN 47 will have on our consolidated financial statements.



On October 22, 2004, the American Jobs Creation Act (the AJCA) was signed into law. The AJCA provides for the deduction for U.S. federal
income tax purposes of 85% of certain foreign earnings that are repatriated, as defined in the AJCA. As the Company currently plans to permanently reinvest the undistributed earnings of its foreign subsidiaries, it does not expect that the AJCA will
have a material impact on its financial position or results of operations. The AJCA also provides for a domestic manufacturing deduction for U.S. federal income tax purposes. We will not benefit from this deduction until the date in the future that
our U.S. federal tax losses have been fully absorbed.



10. SUPPLEMENTAL
FINANCIAL INFORMATION



Radnor Holdings Corporation is a
holding company that has no operations separate from its investment in subsidiaries. The Companys $135.0 million of 11.0% Senior Notes due 2010 and $70.0 million of Senior Secured Floating Rate Notes due 2009 are fully and unconditionally
jointly and severally guaranteed by substantially all of the Companys domestic subsidiaries, all of which are 100% owned by the Company.



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.



There are no direct prohibitions on the ability of the Company or any guarantor to obtain funds from its respective
subsidiaries by dividend or by loan, but certain of the Companys foreign subsidiaries credit agreements contain covenants, such as minimum debt to equity and current assets to current liabilities ratios, that indirectly limit the ability
of these subsidiaries to transfer funds to the Company. As of April 1, 2005 and December 31, 2004, the net assets of these foreign subsidiaries totaled $33.7 million.



10



---

The following condensed consolidating financial statements of Radnor Holdings Corporation and
subsidiaries have been prepared pursuant to Rule 3-10 of Regulation S-X:



RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES



Condensed Consolidating Balance Sheet

April 1, 2005

(In thousands)



|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|------------------------------------------------------------------- |  | -------------- | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | -------- | - |  | - | -------- | -
|                                                                    |  | HoldingCompany |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |         
|Assets                                                              |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  |                |         |   |                      
|Current assets:                                                     |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Cash                                                                |  | $              |        |   |                       | $ | (824    | )                         |  | $ | 1,537        |   |  | $            |         |   |  | $ | 713      |  
|Accounts receivable, net                                            |  |                |        |   |                       |   | 33,683  |                           |  |   | 33,237       |   |  |              | (6,039   | ) |  |   | 60,881   |  
|Inventories, net                                                    |  |                |        |   |                       |   | 65,704  |                           |  |   | 13,796       |   |  |              |         |   |  |   | 79,500   |  
|Intercompany receivable                                             |  |                |        |   |                       |   |        |                           |  |   | 22,775       |   |  |              | (22,775  | ) |  |   |         |  
|Note receivable                                                     |  |                |        |   |                       |   |        |                           |  |   | 17,556       |   |  |              |         |   |  |   | 17,556   |  
|Prepaid expenses and other                                          |  |                | 52      |   |                       |   | 8,148   |                           |  |   | 832          |   |  |              | (58      | ) |  |   | 8,974    |  
|Deferred tax asset                                                  |  |                | (25     | ) |                       |   | 2,486   |                           |  |   | (384         | ) |  |              |         |   |  |   | 2,077    |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  |                | 27      |   |                       |   | 109,197 |                           |  |   | 89,349       |   |  |              | (28,872  | ) |  |   | 169,701  |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Property, plant and equipment, at cost                              |  |                |        |   |                       |   | 267,971 |                           |  |   | 65,078       |   |  |              |         |   |  |   | 333,049  |  
|Less accumulated depreciation                                       |  |                |        |   |                       |   | (89,762 | )                         |  |   | (26,551      | ) |  |              |         |   |  |   | (116,313 | )
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  |                |        |   |                       |   | 178,209 |                           |  |   | 38,527       |   |  |              |         |   |  |   | 216,736  |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Intercompany receivable                                             |  |                | 54,111  |   |                       |   |        |                           |  |   |             |   |  |              | (54,111  | ) |  |   |         |  
|Investments in subsidiaries                                         |  |                | 106,153 |   |                       |   | 22,094  |                           |  |   |             |   |  |              | (128,247 | ) |  |   |         |  
|Investments                                                         |  |                |        |   |                       |   |        |                           |  |   | 1,845        |   |  |              |         |   |  |   | 1,845    |  
|Other assets                                                        |  |                | 6,421   |   |                       |   | 25,602  |                           |  |   | 524          |   |  |              |         |   |  |   | 32,547   |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  | $              | 166,712 |   |                       | $ | 335,102 |                           |  | $ | 130,245      |   |  | $            | (211,230 | ) |  | $ | 420,829  |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Liabilities and Stockholders Equity                                |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  |                |         |   |                      
|Current liabilities:                                                |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Accounts payable                                                    |  | $              |        |   |                       | $ | 47,166  |                           |  | $ | 22,710       |   |  | $            | (243     | ) |  | $ | 69,633   |  
|Accrued liabilities and other                                       |  |                | 2,066   |   |                       |   | 14,428  |                           |  |   | 6,028        |   |  |              | (176     | ) |  |   | 22,346   |  
|Intercompany payable                                                |  |                | 24,332  |   |                       |   | 27,280  |                           |  |   |             |   |  |              | (51,612  | ) |  |   |         |  
|Current portion of long-term debt and capitalized lease obligations |  |                |        |   |                       |   | 10,119  |                           |  |   | 1,014        |   |  |              |         |   |  |   | 11,133   |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  |                | 26,398  |   |                       |   | 98,993  |                           |  |   | 29,752       |   |  |              | (52,031  | ) |  |   | 103,112  |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Long-term debt, net of current portion                              |  |                | 205,000 |   |                       |   | 113,819 |                           |  |   | 15,050       |   |  |              | (16,560  | ) |  |   | 317,309  |  
|Capital lease obligations, net of current portion                   |  |                |        |   |                       |   | 3,084   |                           |  |   |             |   |  |              |         |   |  |   | 3,084    |  
|Intercompany payable                                                |  |                | (46     | ) |                       |   | 24,600  |                           |  |   | 6,517        |   |  |              | (31,071  | ) |  |   |         |  
|Deferred tax liability                                              |  |                | (10,234 | ) |                       |   | 8,689   |                           |  |   | 1,426        |   |  |              | 119      |   |  |   |         |  
|Other non-current liabilities                                       |  |                |        |   |                       |   | 3,713   |                           |  |   | 3            |   |  |              |         |   |  |   | 3,716    |  
|                                                                    |  |                |         |   |                      
|Commitments and contingencies                                       |  |                |        |   |                       |   |        |                           |  |   |             |   |  |              |         |   |  |   |         |  
|                                                                    |  |                |         |   |                      
|Stockholders equity:                                               |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Common stock                                                        |  |                | 1       |   |                       |   | 4       |                           |  |   | 22           |   |  |              | (26      | ) |  |   | 1        |  
|Additional paid-in capital                                          |  |                | 9,164   |   |                       |   | 99,251  |                           |  |   | 22,620       |   |  |              | (111,648 | ) |  |   | 19,387   |  
|Retained earnings (deficit)                                         |  |                | (63,571 | ) |                       |   | (14,924 | )                         |  |   | 47,450       |   |  |              | 7        |   |  |   | (31,038  | )
|Cumulative translation adjustment                                   |  |                |        |   |                       |   | (2,127  | )                         |  |   | 7,405        |   |  |              | (20      | ) |  |   | 5,258    |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Total stockholders equity (deficit)                                |  |                | (54,406 | ) |                       |   | 82,204  |                           |  |   | 77,497       |   |  |              | (111,687 | ) |  |   | (6,392   | )
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  | $              | 166,712 |   |                       | $ | 335,102 |                           |  | $ | 130,245      |   |  | $            | (211,230 | ) |  | $ | 420,829  |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  



11



---

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES



Condensed Consolidating Statement of Operations

For the three months ended April 1, 2005

(In thousands)



|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|---------------------------------------------------------- |  | -------------- | ------ | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                           |  | HoldingCompany |        |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Net sales                                                  |  | $              |       |   |                       | $ | 75,258  |                           |  | $ | 43,584       |   |  | $            | (3,959 | ) |  | $ | 114,883 |  
|                                                           |  |                |        |   |                      
|Cost of goods sold                                         |  |                |       |   |                       |   | 64,157  |                           |  |   | 36,721       |   |  |              | (3,959 | ) |  |   | 96,919  |  
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Gross profit                                               |  |                |       |   |                       |   | 11,101  |                           |  |   | 6,863        |   |  |              |       |   |  |   | 17,964  |  
|                                                           |  |                |        |   |                      
|Operating expenses:                                        |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Distribution                                               |  |                |       |   |                       |   | 4,836   |                           |  |   | 1,997        |   |  |              |       |   |  |   | 6,833   |  
|Selling, general and administrative                        |  |                |       |   |                       |   | 7,209   |                           |  |   | 2,314        |   |  |              |       |   |  |   | 9,523   |  
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) from operations                              |  |                |       |   |                       |   | (944    | )                         |  |   | 2,552        |   |  |              |       |   |  |   | 1,608   |  
|                                                           |  |                |        |   |                      
|Interest, net                                              |  |                | 1,962  |   |                       |   | 5,117   |                           |  |   | 315          |   |  |              |       |   |  |   | 7,394   |  
|Income from unconsolidated affiliates                      |  |                |       |   |                       |   |        |                           |  |   | (150         | ) |  |              |       |   |  |   | (150    | )
|Other, net                                                 |  |                |       |   |                       |   | (396    | )                         |  |   | 497          |   |  |              |       |   |  |   | 101     |  
|Minority interest in operations of consolidated subsidiary |  |                |       |   |                       |   |        |                           |  |   | (315         | ) |  |              |       |   |  |   | (315    | )
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) before income taxes                          |  |                | (1,962 | ) |                       |   | (5,665  | )                         |  |   | 2,205        |   |  |              |       |   |  |   | (5,422  | )
|                                                           |  |                |        |   |                      
|Provision (benefit) for income taxes:                      |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Current                                                    |  |                |       |   |                       |   | 163     |                           |  |   | 638          |   |  |              |       |   |  |   | 801     |  
|Deferred                                                   |  |                | 1,514  |   |                       |   | 718     |                           |  |   | (5,045       | ) |  |              |       |   |  |   | (2,813  | )
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|                                                           |  |                | 1,514  |   |                       |   | 881     |                           |  |   | (4,407       | ) |  |              |       |   |  |   | (2,012  | )
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Net income (loss)                                          |  | $              | (3,476 | ) |                       | $ | (6,546  | )                         |  | $ | 6,612        |   |  | $            |       |   |  | $ | (3,410  | )
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|                                                          
|RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES               | 
|Condensed Consolidating Statement of Cash Flows            | 
|For the three months ended April 1, 2005                   | 
|(In thousands)                                             | 
|                                                           |  | HoldingCompany |        |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Net cash provided by (used in) operating activities        |  | $              | (5,225 | ) |                       | $ | (10,692 | )                         |  | $ | (3,371       | ) |  | $            | 1,360  |   |  | $ | (17,928 | )
|                                                           |  |                |        |   |                      
|Cash flows from investing activities:                      |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Capital expenditures                                       |  |                |       |   |                       |   | (5,203  | )                         |  |   | (490         | ) |  |              |       |   |  |   | (5,693  | )
|Change in other assets                                     |  |                | (35    | ) |                       |   | (266    | )                         |  |   | 137          |   |  |              |       |   |  |   | (164    | )
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Net cash used in investing activities                      |  |                | (35    | ) |                       |   | (5,469  | )                         |  |   | (353         | ) |  |              |       |   |  |   | (5,857  | )
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Cash flows from financing activities:                      |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Net borrowings on bank financed debt and notes payable     |  |                |       |   |                       |   | 16,623  |                           |  |   | 6,088        |   |  |              |       |   |  |   | 22,711  |  
|Net payments on capitalized lease obligations              |  |                |       |   |                       |   | (465    | )                         |  |   |             |   |  |              |       |   |  |   | (465    | )
|Payment of financing costs                                 |  |                | (13    | ) |                       |   | (431    | )                         |  |   |             |   |  |              |       |   |  |   | (444    | )
|Change in intercompany, net                                |  |                | 5,273  |   |                       |   | (753    | )                         |  |   | (3,160       | ) |  |              | (1,360 | ) |  |   |        |  
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Net cash provided by (used in) financing activities        |  |                | 5,260  |   |                       |   | 14,974  |                           |  |   | 2,928        |   |  |              | (1,360 | ) |  |   | 21,802  |  
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Effect of exchange rate changes on cash                    |  |                |       |   |                       |   | 11      |                           |  |   | (708         | ) |  |              |       |   |  |   | (697    | )
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Net decrease in cash                                       |  |                |       |   |                       |   | (1,176  | )                         |  |   | (1,504       | ) |  |              |       |   |  |   | (2,680  | )
|                                                           |  |                |        |   |                      
|Cash, beginning of period                                  |  |                |       |   |                       |   | 352     |                           |  |   | 3,041        |   |  |              |       |   |  |   | 3,393   |  
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Cash, end of period                                        |  | $              |       |   |                       | $ | (824    | )                         |  | $ | 1,537        |   |  | $            |       |   |  | $ | 713     |  
|                                                           |  |                |        |   |                       |   |         |                           |  |   |              |   |  |              |        |   |  |   |         |  



12



---

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES



Condensed Consolidating Balance Sheet

December 31, 2004

(In thousands)



|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|------------------------------------------------------------------- |  | -------------- | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | -------- | - |  | - | -------- | -
|                                                                    |  | HoldingCompany |         |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |         
|Assets                                                              |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  |                |         |   |                      
|Current assets:                                                     |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Cash                                                                |  | $              |        |   |                       | $ | 352     |                           |  | $ | 3,041        |   |  | $            |         |   |  | $ | 3,393    |  
|Accounts receivable, net                                            |  |                |        |   |                       |   | 29,511  |                           |  |   | 25,294       |   |  |              | (4,757   | ) |  |   | 50,048   |  
|Inventories, net                                                    |  |                |        |   |                       |   | 54,827  |                           |  |   | 12,699       |   |  |              |         |   |  |   | 67,526   |  
|Intercompany receivable                                             |  |                |        |   |                       |   |        |                           |  |   | 19,724       |   |  |              | (19,724  | ) |  |   |         |  
|Prepaid expenses and other                                          |  |                | 52      |   |                       |   | 7,255   |                           |  |   | 1,600        |   |  |              | (58      | ) |  |   | 8,849    |  
|Deferred tax asset                                                  |  |                | (25     | ) |                       |   | 2,484   |                           |  |   | (384         | ) |  |              |         |   |  |   | 2,075    |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  |                | 27      |   |                       |   | 94,429  |                           |  |   | 61,974       |   |  |              | (24,539  | ) |  |   | 131,891  |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Property, plant and equipment, at cost                              |  |                |        |   |                       |   | 262,768 |                           |  |   | 67,058       |   |  |              |         |   |  |   | 329,826  |  
|Less accumulated depreciation                                       |  |                |        |   |                       |   | (85,680 | )                         |  |   | (26,575      | ) |  |              |         |   |  |   | (112,255 | )
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  |                |        |   |                       |   | 177,088 |                           |  |   | 40,483       |   |  |              |         |   |  |   | 217,571  |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Intercompany receivable                                             |  |                | 58,535  |   |                       |   |        |                           |  |   |             |   |  |              | (58,535  | ) |  |   |         |  
|Investments in subsidiaries                                         |  |                | 106,153 |   |                       |   | 22,094  |                           |  |   |             |   |  |              | (128,247 | ) |  |   |         |  
|Investments in unconsolidated affiliates                            |  |                |        |   |                       |   |        |                           |  |   | 41,676       |   |  |              |         |   |  |   | 41,676   |  
|Other assets                                                        |  |                | 9,607   |   |                       |   | 19,763  |                           |  |   | 548          |   |  |              |         |   |  |   | 29,918   |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  | $              | 174,322 |   |                       | $ | 313,374 |                           |  | $ | 144,681      |   |  | $            | (211,321 | ) |  | $ | 421,056  |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Liabilities and Stockholders Equity                                |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  |                |         |   |                      
|Current liabilities:                                                |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Accounts payable                                                    |  | $              |        |   |                       | $ | 36,724  |                           |  | $ | 20,537       |   |  | $            | (321     | ) |  | $ | 56,940   |  
|Accrued liabilities and other                                       |  |                | 5,652   |   |                       |   | 17,983  |                           |  |   | 6,379        |   |  |              | (176     | ) |  |   | 29,838   |  
|Intercompany payable                                                |  |                | 23,437  |   |                       |   | 25,577  |                           |  |   |             |   |  |              | (49,014  | ) |  |   |         |  
|Current portion of long-term debt and capitalized lease obligations |  |                |        |   |                       |   | 9,820   |                           |  |   | 1,066        |   |  |              |         |   |  |   | 10,886   |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  |                | 29,089  |   |                       |   | 90,104  |                           |  |   | 27,982       |   |  |              | (49,511  | ) |  |   | 97,664   |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Long-term debt, net of current portion                              |  |                | 205,000 |   |                       |   | 97,318  |                           |  |   | 9,234        |   |  |              | (16,560  | ) |  |   | 294,992  |  
|Capital lease obligations, net of current portion                   |  |                |        |   |                       |   | 3,726   |                           |  |   |             |   |  |              |         |   |  |   | 3,726    |  
|Intercompany payable                                                |  |                |        |   |                       |   | 26,549  |                           |  |   | 7,133        |   |  |              | (33,682  | ) |  |   |         |  
|Deferred tax liability                                              |  |                | (8,837  | ) |                       |   | 2,247   |                           |  |   | 6,471        |   |  |              | 119      |   |  |   |         |  
|Other non-current liabilities                                       |  |                |        |   |                       |   | 4,184   |                           |  |   | 7            |   |  |              |         |   |  |   | 4,191    |  
|Minority interest in consolidated subsidiary                        |  |                |        |   |                       |   |        |                           |  |   | 21,253       |   |  |              |         |   |  |   | 21,253   |  
|                                                                    |  |                |         |   |                      
|Commitments and contingencies                                       |  |                |        |   |                       |   |        |                           |  |   |             |   |  |              |         |   |  |   |         |  
|                                                                    |  |                |         |   |                      
|Stockholders equity:                                               |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Common stock                                                        |  |                | 1       |   |                       |   | 4       |                           |  |   | 22           |   |  |              | (26      | ) |  |   | 1        |  
|Additional paid-in capital                                          |  |                | 9,164   |   |                       |   | 99,251  |                           |  |   | 22,620       |   |  |              | (111,648 | ) |  |   | 19,387   |  
|Retained earnings (deficit)                                         |  |                | (60,095 | ) |                       |   | (8,378  | )                         |  |   | 40,838       |   |  |              | 7        |   |  |   | (27,628  | )
|Cumulative translation adjustment                                   |  |                |        |   |                       |   | (1,631  | )                         |  |   | 9,121        |   |  |              | (20      | ) |  |   | 7,470    |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|Total stockholders equity (deficit)                                |  |                | (50,930 | ) |                       |   | 89,246  |                           |  |   | 72,601       |   |  |              | (111,687 | ) |  |   | (770     | )
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  
|                                                                    |  | $              | 174,322 |   |                       | $ | 313,374 |                           |  | $ | 144,681      |   |  | $            | (211,321 | ) |  | $ | 421,056  |  
|                                                                    |  |                |         |   |                       |   |         |                           |  |   |              |   |  |              |          |   |  |   |          |  



13



---

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES



Condensed Consolidating Statement of Operations

For the three months ended March 26, 2004

(In thousands)



|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|---------------------------------------------------------- |  | -------------- | ------ | - | --------------------- | - | ------ | ------------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                           |  | HoldingCompany |        |   | GuarantorSubsidiaries |   |        | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Net sales                                                  |  | $              |       |   |                       | $ | 63,727 |                           |  | $ | 35,492       |   |  | $            | (2,919 | ) |  | $ | 96,300  |  
|                                                           |  |                |        |   |                      
|Cost of goods sold                                         |  |                |       |   |                       |   | 51,477 |                           |  |   | 29,069       |   |  |              | (2,919 | ) |  |   | 77,627  |  
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Gross profit                                               |  |                |       |   |                       |   | 12,250 |                           |  |   | 6,423        |   |  |              |       |   |  |   | 18,673  |  
|                                                           |  |                |        |   |                      
|Operating expenses:                                        |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Distribution                                               |  |                |       |   |                       |   | 4,298  |                           |  |   | 1,950        |   |  |              |       |   |  |   | 6,248   |  
|Selling, general and administrative                        |  |                | 2      |   |                       |   | 5,942  |                           |  |   | 1,930        |   |  |              |       |   |  |   | 7,874   |  
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) from operations                              |  |                | (2     | ) |                       |   | 2,010  |                           |  |   | 2,543        |   |  |              |       |   |  |   | 4,551   |  
|                                                           |  |                |        |   |                      
|Interest, net                                              |  |                | 1,325  |   |                       |   | 3,691  |                           |  |   | 591          |   |  |              |       |   |  |   | 5,607   |  
|Income from unconsolidated affiliates                      |  |                |       |   |                       |   |       |                           |  |   | (159         | ) |  |              |       |   |  |   | (159    | )
|Other, net                                                 |  |                |       |   |                       |   | (156   | )                         |  |   | 346          |   |  |              |       |   |  |   | 190     |  
|Minority interest in operations of consolidated subsidiary |  |                |       |   |                       |   |       |                           |  |   | (806         | ) |  |              |       |   |  |   | (806    | )
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) before income taxes                          |  |                | (1,327 | ) |                       |   | (1,525 | )                         |  |   | 2,571        |   |  |              |       |   |  |   | (281    | )
|                                                           |  |                |        |   |                      
|Provision (benefit) for income taxes:                      |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Current                                                    |  |                |       |   |                       |   | 6      |                           |  |   | 453          |   |  |              |       |   |  |   | 459     |  
|Deferred                                                   |  |                | (282   | ) |                       |   | (104   | )                         |  |   | (183         | ) |  |              |       |   |  |   | (569    | )
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|                                                           |  |                | (282   | ) |                       |   | (98    | )                         |  |   | 270          |   |  |              |       |   |  |   | (110    | )
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Net income (loss)                                          |  | $              | (1,045 | ) |                       | $ | (1,427 | )                         |  | $ | 2,301        |   |  | $            |       |   |  | $ | (171    | )
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|                                                          
|RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES               | 
|Condensed Consolidating Statement of Cash Flows            | 
|For the three months ended March 26, 2004                  | 
|(In thousands)                                             | 
|                                                           |  | HoldingCompany |        |   | GuarantorSubsidiaries |   |        | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Net cash provided by (used in) operating activities        |  | $              | (5,047 | ) |                       | $ | (5,421 | )                         |  | $ | (2,101       | ) |  | $            | 1,418  |   |  | $ | (11,151 | )
|                                                           |  |                |        |   |                      
|Cash flows from investing activities:                      |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Capital expenditures                                       |  |                |       |   |                       |   | (2,187 | )                         |  |   | (623         | ) |  |              |       |   |  |   | (2,810  | )
|Change in other assets                                     |  |                | 251    |   |                       |   | (3,888 | )                         |  |   | 851          |   |  |              |       |   |  |   | (2,786  | )
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Net cash provided by (used in) investing activities        |  |                | 251    |   |                       |   | (6,075 | )                         |  |   | 228          |   |  |              |       |   |  |   | (5,596  | )
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|                                                           |  |                |        |   |                      
|Cash flows from financing activities:                      |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Net borrowings on bank financed debt and notes payable     |  |                |       |   |                       |   | 7,268  |                           |  |   | 3,957        |   |  |              |       |   |  |   | 11,225  |  
|Net payments on capitalized lease obligations              |  |                |       |   |                       |   | (691   | )                         |  |   |             |   |  |              |       |   |  |   | (691    | )
|Dividends paid                                             |  |                | 350    |   |                       |   | (350   | )                         |  |   |             |   |  |              |       |   |  |   |        |  
|Change in intercompany, net                                |  |                | 4,446  |   |                       |   | 2,470  |                           |  |   | (5,498       | ) |  |              | (1,418 | ) |  |   |        |  
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Net cash provided by (used in) financing activities        |  |                | 4,796  |   |                       |   | 8,697  |                           |  |   | (1,541       | ) |  |              | (1,418 | ) |  |   | 10,534  |  
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Effect of exchange rate changes on cash                    |  |                |       |   |                       |   | (32    | )                         |  |   | (49          | ) |  |              |       |   |  |   | (81     | )
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Net decrease in cash                                       |  |                |       |   |                       |   | (2,831 | )                         |  |   | (3,463       | ) |  |              |       |   |  |   | (6,294  | )
|                                                           |  |                |        |   |                      
|Cash, beginning of period                                  |  |                |       |   |                       |   | 2,863  |                           |  |   | 4,033        |   |  |              |       |   |  |   | 6,896   |  
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  
|Cash, end of period                                        |  | $              |       |   |                       | $ | 32     |                           |  | $ | 570          |   |  | $            |       |   |  | $ | 602     |  
|                                                           |  |                |        |   |                       |   |        |                           |  |   |              |   |  |              |        |   |  |   |         |  



14



---

Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



General



Radnor Holdings Corporation is a leading manufacturer and distributor of a broad line of disposable foodservice products in
the United States and specialty chemical products worldwide. We operate 15 plants in North America and 3 in Europe and distribute our foodservice products from 10 distribution centers throughout the United States. The November 2003 acquisition of
Polar Plastics, Inc. extended our product line to include thermoformed and injection molded disposable foodservice products. We continue to upgrade our thermoforming equipment and install new production lines for our proprietary polypropylene cold
drink cups. This product line expansion is necessary to meet accelerating customer demand, including business awards from quick service restaurant customers.



We have been manufacturing expandable polystyrene, or EPS, and related products sold to the foodservice, insulation and protective packaging industries
for more than 26 years. In the foodservice industry, we are the second largest U.S. manufacturer of foam cups and containers and we also manufacture polystyrene and polypropylene drinking cups, stemware, plates, bowls, containers and cutlery. By
capacity, we are also the fifth largest worldwide producer of EPS. In fiscal 2004, we produced 14.7 billion foam and plastic cups for hot and cold drinks, foam bowls and containers and thermoformed lids and 1.5 billion pieces of plastic cutlery. In
fiscal 2004, we also produced 364 million pounds of EPS. We supply 100% of our own EPS needs in addition to supplying EPS to other manufacturers of foodservice, insulation and protective packaging products.



Net Sales



Net sales represent the sales of the Companys products less (i) cash discounts and allowances, which historically have
averaged approximately 2% of gross sales, and (ii) sales and marketing rebates.



Cost of Goods Sold



Raw material and
energy-related costs represent a large portion of the Companys cost of goods sold and are susceptible to price fluctuations based upon supply and demand as well as general market conditions. While the Company has been able to pass on the
majority of past raw material price increases to customers, the scope of the recent increases have led to a delay in the Companys ability to pass on these costs, and the Company may not be able to further increase prices if the raw material
costs continue to rise in the future. The Company currently purchases only a limited amount of raw materials pursuant to long-term supply agreements, which the Company believes allows for flexibility in its raw material purchases.



Beginning in January 2003 through April 2005, market prices of styrene
monomer, the primary raw material in the Companys foam products, increased by 82% to $0.71 per pound. Although future raw material prices cannot be predicted with accuracy, market prices for styrene monomer have declined to $0.63 per pound in
May 2005 and are forecasted by independent industry surveys and producer reports to decline to $0.57 per pound by the end of 2005.



Our plastic cups and cutlery are thermoformed and injection molded from polypropylene and polystyrene resins. The prices of polystyrene resins have
generally fluctuated in a fashion similar to the fluctuations affecting styrene monomer. Polystyrene is largely a derivative of styrene monomer and prices typically react in a similar manner over time. Prices also can change based on the operating
rates of the polystyrene manufacturing facilities. Published contract pricing for high-impact polystyrene, or HIPS, was $0.93 per pound as of April 2005 and has declined to $0.89 per pound in May 2005. The contract price of HIPS is forecasted to
decline to $0.77 per pound by the end of 2005.



15



---

The primary raw materials used to manufacture our thermoformed plastic products are polypropylene resins,
which are made from propylene. Polypropylene resin pricing will generally follow the raw material price of propylene and be influenced by the operating rates of the respective polypropylene manufacturing locations, as well as general supply and
demand conditions. Polypropylene has also had the tendency to fluctuate significantly over time. For example, the contract price for polypropylene ranged from $0.36 to $0.69 from the beginning of 2003 through April 2005. The published polypropylene
contract price was $0.66 per pound for April 2005, declined to $0.60 in May 2005 and is projected by independent industry surveys and producer reports to remain constant over 2005.



Distribution Expense



The Company ships its products from manufacturing locations using a combination of common carriers and its own fleet of leased vehicles. Distribution
expense consists of the costs to ship products, including costs of labor and leased vehicles.



Key Business Indicators



The
Companys financial results are directly impacted by several key items, which management has identified as key indicators in its evaluation of the business. These indicators include:



| |  |  | Sales Volumes  The comparison of unit volumes sold versus the comparable period in prior years provides key operating information.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pricing Spread over Raw Material Costs  The selling prices of the Companys products as compared to various raw material costs, including styrene monomer,
polystyrene and polypropylene, are key financial performance metrics.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Energy-Related Costs Energy-related costs provide key information with respect to overall profitability.
| | - |  | ---------------------------------------------------------------------------------------------------------



Results of Operations



Executive Summary



While net sales increased 19.3% during the three months ended April 1, 2005 compared to the three months ended March 26, 2004, gross profit decreased by
$0.7 million, including a $0.5 million charge related to the termination of the Companys primary North American styrene monomer requirements contract. Higher across-the-board selling prices and increased sales volumes at our food packaging
operations were almost fully offset by increases in raw material and energy-related costs, as well as a $0.7 million increase in depreciation expense. Increased operating expenses, resulting primarily from increased sales volumes, contributed to a
$3.0 million decrease in income from operations for the three months ended April 1, 2005 as compared to the same period in the prior year. In response to increased raw material prices and higher operating costs, the Company initiated a cost
reduction program at the end of the first quarter of fiscal 2005 which is expected to reduce annual operating costs by approximately $9.0 million. In addition, since April 2005, published prices for the Companys primary raw materials, styrene
monomer, HIPS and polypropylene resins have decreased by approximately $0.08, $0.04 and $0.06 per pound, respectively.



16



---

Three months ended April 1, 2005 compared with the three months ended March 26, 2004



Consolidated Results



The following table summarizes the consolidated results of operations for
the three months ended April 1, 2005 and March 26, 2004.



|                       |  |                    |       |               |   |                    |  |   |          |   |  |       |   
|---------------------- |  | ------------------ | ----- | ------------- | - | ------------------ |  | - | -------- | - |  | ----- | --
|                       |  | Three Months Ended |       |               |   |                    |  |  
|(dollars in millions)  |  | Apr. 1, 2005       |       | Mar. 26, 2004 |   | Increase(Decrease) |  |   | % Change |  
|Net sales              |  | $                  | 114.9 |               | $ | 96.3               |  | $ | 18.6     |   |  | 19.3  | % 
|Gross profit           |  |                    | 18.0  |               |   | 18.7               |  |   | (0.7     | ) |  | (3.7  | )%
|Operating expenses     |  |                    | 16.4  |               |   | 14.1               |  |   | 2.3      |   |  | 16.3  | % 
|Income from operations |  |                    | 1.6   |               |   | 4.6                |  |   | (3.0     | ) |  | (65.2 | )%



Net sales for the
three months ended April 1, 2005 were $114.9 million, a 19.3% increase from $96.3 million for the three months ended March 26, 2004. This increase was primarily caused by higher average selling prices (13.9% or $13.3 million), higher sales volumes
(3.1% or $3.0 million), and favorable changes in foreign currency rates (2.1% or $2.0 million).



Gross profit decreased $0.7 million to $18.0 million for the three months ended April 1, 2005 from $18.7 million for the similar three-month period in
2004. This decrease was primarily due to higher raw material ($11.5 million) and energy-related costs ($1.5 million), higher depreciation expense ($0.7 million), and additional costs related to the introduction of our new proprietary cold-drink cup
product line, including facilities preparation, training, personnel and other overhead costs ($0.8 million). In addition, a $0.5 million charge was recorded related to the amendment of the Companys primary North American styrene monomer
requirements contract. These cost increases were almost entirely offset by higher across the board selling prices ($13.3 million) and the impact of increased sales volumes ($1.1 million) at the packaging operations.



During the three months ended April 1, 2005, operating expenses increased
$2.3 million to $16.4 million from $14.1 million for the three months ended March 26, 2004. The increase was primarily due to higher selling, general and administrative costs ($1.3 million) and higher distribution costs ($0.6 million) resulting from
higher sales volumes at the packaging operations. As a percentage of net sales, operating costs decreased to 14.3% for the three months ended April 1, 2005 as compared to 14.6% for the three months ended March 26, 2004.



For the reasons described above, income from operations decreased by $3.0
million for the three months ended April 1, 2005 to $1.6 million from $4.6 million for the comparable period in 2004.



Interest expense increased $1.8 million to $7.4 million during the three months ended April 1, 2005 from $5.6 million in the prior year period due to
higher average debt levels and increased interest rates.



The
effective tax rate for the three months ended April 1, 2005 was 37%, as compared to 39% in the same period in the prior year. As of April 1, 2005, the Company had $106.9 million of net operating loss carryforwards for federal income tax purposes,
which expire through 2024.



17



---

Segment Analysis



Packaging Segment Results



The following table summarizes the packaging segment results of operations for the three months ended April 1, 2005 and March 26, 2004.



|                       |  |                    |      |               |   |                    |  |   |          |   |  |       |   
|---------------------- |  | ------------------ | ---- | ------------- | - | ------------------ |  | - | -------- | - |  | ----- | --
|                       |  | Three Months Ended |      |               |   |                    |  |  
|(dollars in millions)  |  | Apr. 1, 2005       |      | Mar. 26, 2004 |   | Increase(Decrease) |  |   | % Change |  
|Net sales              |  | $                  | 64.2 |               | $ | 55.9               |  | $ | 8.3      |   |  | 14.8  | % 
|Gross profit           |  |                    | 9.8  |               |   | 12.4               |  |   | (2.6     | ) |  | (21.0 | )%
|Operating expenses     |  |                    | 8.8  |               |   | 7.1                |  |   | 1.7      |   |  | 23.9  | % 
|Income from operations |  |                    | 1.0  |               |   | 5.3                |  |   | (4.3     | ) |  | (81.1 | )%



Net sales in the
packaging segment for the three months ended April 1, 2005 increased $8.3 million to $64.2 million from $55.9 million during the first quarter of 2004. This increase was primarily due to higher average selling prices ($4.3 million), which resulted
from price increases implemented after the first fiscal quarter in the prior year, and a 7.1% increase in sales volumes ($3.8 million).



Gross profit decreased $2.6 million to $9.8 million for the three months ended April 1, 2005 compared to $12.4 million for the three-month period ended
March 26, 2004. This decrease was primarily caused by the increase in the cost of raw materials ($4.8 million) and higher energy-related costs ($1.5 million), as well as higher other manufacturing costs ($0.8 million), which were only partially
offset by higher selling prices ($4.3 million) and the impact of increased sales volumes ($1.1 million). Operating results for the first fiscal quarter ended April 1, 2005 were also negatively impacted by costs related to the introduction of our new
proprietary cold-drink cup product line, including facilities preparation, training, personnel and other overhead costs ($0.8 million), as well as by an increase in depreciation expense ($0.6 million) resulting from higher fixed assets from the
installation of the new thermoforming equipment.



Operating
expenses increased $1.7 million to $8.8 million during the three months ended April 1, 2005 from $7.1 million during the same period in the prior year. This increase was primarily due to higher distribution costs ($0.6 million) resulting from higher
sales volumes as described above, combined with higher selling, general and administrative costs ($0.8 million) mainly due to higher sales and marketing personnel costs ($0.3 million) and bad debt expenses ($0.2 million).



For the reasons described above, income from operations decreased $4.3
million to $1.0 million for the three months ended April 1, 2005 from $5.3 million in the prior year period.



Specialty Chemicals Segment Results



The following table summarizes the specialty chemicals segment results of operations for the three months ended April 1, 2005 and March 26, 2004.



|                       |  |                    |      |               |   |          |  |          |      |  |      |  
|---------------------- |  | ------------------ | ---- | ------------- | - | -------- |  | -------- | ---- |  | ---- | -
|                       |  | Three Months Ended |      |               |   |          | 
|(dollars in millions)  |  | Apr. 1, 2005       |      | Mar. 26, 2004 |   | Increase |  | % Change |     
|Net sales              |  | $                  | 54.6 |               | $ | 43.3     |  | $        | 11.3 |  | 26.1 | %
|Gross profit           |  |                    | 8.1  |               |   | 6.3      |  |          | 1.8  |  | 28.6 | %
|Operating expenses     |  |                    | 4.9  |               |   | 4.6      |  |          | 0.3  |  | 6.5  | %
|Income from operations |  |                    | 3.2  |               |   | 1.7      |  |          | 1.5  |  | 88.2 | %



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For the three months ended April 1, 2005, net sales in the specialty chemicals segment increased $11.3
million, or 26.1%, to $54.6 million from $43.3 million during the three months ended March 26, 2004. This increase was primarily due to higher average selling prices (23.9% or $10.4 million). Net sales included $3.9 million and $2.9 million of sales
to the packaging segment for the three months ended April 1, 2005 and March 26, 2004, respectively, which were eliminated in consolidation.



Gross profit increased $1.8 million, or 28.6%, to $8.1 million for the three months ended April 1, 2005 from $6.3 million for the similar three-month
period in the prior year. As a percentage of net sales, gross profit increased to 14.8% for the three months ended April 1, 2005 from 14.5% in the prior year period. This increase was primarily due to the higher selling prices ($10.4 million),
offset by higher styrene monomer and other manufacturing costs ($8.1 million), lower sales volumes ($0.3 million) and a $0.5 million charge related to the amendment of the Companys primary North American styrene monomer requirements contract.



For the three months ended April 1, 2005, operating expenses
increased by $0.3 million to $4.9 million from $4.6 million in the prior year period primarily due to the impact of changes in foreign currency exchange rates ($0.2 million). As a percentage of net sales, operating expenses decreased to 9.0% for the
three months ended April 1, 2005 compared to 10.6% for the three months ended March 26, 2004.



For the reasons described above, income from operations increased $1.5 million to $3.2 million during the three months ended April 1, 2005 compared to $1.7 million in the prior year period.



Corporate and Other



For the three months ended April 1, 2005, corporate operating expenses were
the same as the three months ended March 26, 2004.



Liquidity and Capital
Resources



During the three months ended April 1, 2005,
cash used in operating activities totaled $17.9 million mainly due to an increase in working capital of $17.2 million. The increase in working capital was due to higher accounts receivable ($11.7 million), inventory ($12.4 million) and lower accrued
expenses ($7.8 million), partially offset by higher accounts payable ($13.5 million). Accounts receivable increased due to higher sales volumes and selling prices, while inventory increased primarily due to increases in raw material costs. The
increase in accounts payable was primarily due to higher raw material costs.



During the three months ended April 1, 2005, inventory turnover rate was approximately 5.2 times per year compared to 5.5 times per year during the same period last year. As of April 1, 2005, the average collection
period for our accounts receivable was 44 days as compared to 42 days in the prior year period.



The Company used $5.9 million in investing activities during the three months ended April 1, 2005 mainly due to capital expenditures of $5.7 million.



On April 27, 2004, the Company issued $70.0 million of Senior
Secured Floating Rate Notes due 2009. The notes bear interest at a floating rate of LIBOR plus 6.75% per year. Interest on the notes resets and is payable quarterly, with the first payment having been made on July 15, 2004. The notes will mature on
April 15, 2009. The net proceeds of the issuance were used to repay a then outstanding $40.5 million term loan and outstanding borrowings under the existing revolving credit facilities.



In February 2005 and March 2005, the Company amended certain financial covenants in its domestic credit facility to permit
flexibility in operating the Companys business and address compliance issues and instances of non-compliance. In April 2005, the Company once again amended certain financial covenants in its domestic credit facility to further permit
flexibility in the Companys operations.



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On January 31, 2005, the Companys $18.9 million limited partnership interest in Radnor Investments,
L.P., an affiliated investment partnership in which the Company was the sole limited partner, was converted into a note receivable due from Radnor Investment Advisors, L.P., bearing interest at an annual rate equal to the Prime Index reported by
Bloomberg plus one percent (1%) with interest compounded daily. In exchange for the note, the Company assigned its remaining interests as a limited partner in Radnor Investments, L.P. to Radnor Investment Advisors, L.P. Radnor Investment Advisors,
L.P. was the general partner of Radnor Investments, L.P. and is owned by certain executives, stockholders and employees of the Company. The general partner of Radnor Investment Advisors, L.P. is Radnor Investment Advisors, Inc., an entity controlled
by the Chief Executive Officer of the Company and whose other owners consist of certain stockholders and executives of the Company. On March 11, 2005, $1.5 million of the note receivable was collected. On April 8, 2005 the remainder of the note
receivable, including accrued interest in the amount of $0.2 million, was collected in full.



As of April 1, 2005, the Company had $84.6 million outstanding under its revolving credit facilities. On April 8, 2005, the Company received $17.6 million representing the remainder of the Companys note
receivable from Radnor Investment Advisors, L.P. After permanently repaying $8.0 million of indebtedness with the proceeds of this transaction, the Company had approximately $10 million in availability under its revolving credit facilities. The
principal uses of cash for the next several years will be debt service, capital expenditures and working capital requirements. The Company is currently pursuing the divestiture of certain non-core assets to enhance its liquidity. The Company also
anticipates entering into additional credit facilities, including capital equipment financings. From time to time, the Company evaluates and may pursue various capital raising transactions including the sale of debt or equity securities and the
divestiture of other non-core assets, in order to further enhance the Companys overall liquidity and improve its capital structure.



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. Under the Companys current business plan, the Company expects that in 2005
and in the long-term, cash generated from operations and borrowings from current and new credit facilities will be sufficient to meet the Companys expected operating needs. However, as a result of uncertainties including pricing of the
Companys products, general market and economic conditions and fluctuations in raw material prices, the Company is not able to accurately predict the amount of cash that will be generated from operating activities and cash generated from
operating activities, if any, may not be sufficient to meet the Companys operating needs. To the extent that the Company uses cash in operating activities, we expect that such amounts will be financed from borrowings under existing and new
credit facilities.



New Accounting Standards



See note Note 9 to our condensed consolidated financial statements
included in this Form 10-Q.



Contractual Obligations and Commercial
Commitments



The Company is obligated to make future
payments under various contracts such as debt agreements, lease agreements, purchase obligations and other long-term obligations. There have been no material changes to contractual obligations as reflected in the Managements Discussion and
Analysis in the Companys 2004 report on Form 10-K.



Critical
Accounting Policies and Estimates



Managements
Discussion and Analysis of Financial Condition and Results of Operations is based on the consolidated financial statements and accompanying notes that have been prepared in conformity with U.S. generally accepted accounting principles. The
preparation of such consolidated financial statements 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.



Included in the Companys 2004 annual report on Form 10-K are the significant accounting policies of the Company, which are described in Note 2 to
the consolidated financial statements, and the critical accounting policies and estimates, which are described in the Managements Discussion and Analysis of Financial Condition and Results of Operations. Information concerning the
Companys implementation and impact of new accounting standards issued by the Financial Accounting Standards Board (FASB) is included in the notes



20



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to the condensed consolidated financial statements included herein. Otherwise, there were no changes in the
Companys accounting policies and estimates in the current period that had a material impact on the Companys financial condition, change in financial condition, liquidity or results of operations.



Forward Looking Statements



All statements contained herein that are not historical facts are based on
current expectations. These statements are forward looking in nature and involve a number of risks and uncertainties. Such risks and uncertainties are described in detail in the Companys annual report on Form 10-K for the year ended December
31, 2004, Commission File No. 333-19495, to which reference is hereby made.



Item 4. CONTROLS AND PROCEDURES



|(a) | Evaluation of Disclosure Controls and Procedures
|--- | ------------------------------------------------



An evaluation was performed under the supervision and with the participation of the Companys management, including its Chief Executive Officer, or
CEO, and Chief Financial Officer, or CFO, of the effectiveness of the Companys disclosure control and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the
Exchange Act), as of April 1, 2005. Based on that evaluation, the Companys management, including the CEO and CFO, concluded that the Companys disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is accumulated and communicated to the Companys management and is recorded, processed, summarized and reported as specified in Securities and
Exchange Commission rules and forms.



|(b) | Change in Internal Controls Over Financial Reporting
|--- | ----------------------------------------------------



There were no changes in the Companys internal controls over financial reporting identified in connection with the evaluation of such controls that
occurred during the Companys most recent fiscal quarter that has materially affected, or that is reasonably likely to materially affect the Companys internal control over financial reporting.

|
|

|
|

|
|

|
|





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PART II  OTHER INFORMATION



Item 1. LEGAL PROCEEDINGS



The Company is involved in various legal actions arising in the normal course of business. After taking into consideration legal counsels evaluation
of such actions, management believes that these actions will not have a material effect on the Companys financial position, results of operations or liquidity.



Item 5. OTHER INFORMATION



On May 16, 2005, the Company withdrew its registration statement with the United States Securities and Exchange Commission for an initial public offering
of its common stock due to market conditions and internal business developments.



Item 6. EXHIBITS



|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Twelfth Amendment to Fourth Amended and Restated Revolving Credit and Security Agreement dated April 8, 2005 by and among WinCup Holdings, Inc., Radnor Chemical Corporation, StyroChem U.S.,
Ltd., Radnor Holdings Corporation, Radnor Delaware II, Inc., StyroChem Delaware, Inc., WinCup Texas, Ltd., StyroChem GP, L.L.C., StyroChem LP, L.L.C., WinCup GP, L.L.C., WinCup LP, L.L.C., PNC Bank, National Association, Fleet Capital Corporation,
LaSalle Business Credit, LLC and Fifth Third Bank
|     | 
|10.2 |  | Summary of 2005 Bonus Plan for Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     | 
|31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                     
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                     
|     | 
|32.1 |  | Certification of Chief Executive Officer pursuant to Section 1350 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                          
|     | 
|32.2 |  | Certification of Chief Financial Officer pursuant to Section 1350 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                          



22



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.



|                   |  |                             |  |                                  
|------------------ |  | --------------------------- |  | ---------------------------------
|                   |  | RADNOR HOLDINGS CORPORATION
|                   |  |                            
|Date: May 16, 2005 |  | By:                         |  | /s/ Michael V. Valenza           
|                   |  |                             |  | Michael V. Valenza               
|                   |  |                             |  | Senior Vice PresidentFinance and
|                   |  |                             |  | Chief Financial Officer          



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