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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



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|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



for the fiscal year ended December 26, 2003



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



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)
|                                                                                   | 
|Three Radnor Corporate Center, Suite 300 100 Matsonford Road, Radnor, Pennsylvania |  | 19087                                  
|(address of principal executive offices)                                           |  | (Zip Code)                             



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



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Securities registered pursuant to Section 12(b) of the act: None



Securities registered pursuant to Section 12(g) of the act: None



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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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x



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



As of March 23, 2004 there were 600 shares of the Registrants Voting Common Stock ($.10 par value), 245 shares of the Registrants Nonvoting Common Stock ($.10 par value) and 5,400 shares of the
Registrants Class B Nonvoting Common Stock ($.01 par value) outstanding. The aggregate market value of voting stock held by non-affiliates of the Registrant as of such date was $0.

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RADNOR HOLDINGS CORPORATION



2003 FORM
10-K

TABLE OF CONTENTS



|         |  |                                                                                                                                                                                                               |  |           
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------
|Item     |  |                                                                                                                                                                                                               |  | Page      
|PART I   |  |                                                                                                                                                                                                              
|         |  |                                                                                                                                                                                                              
|1.       |  | Business                                                                                                                                                                                                      |  |           
|         |  | Industry Overview Products Sales, Marketing and Customers Manufacturing Raw Materials Risks Attendant to Foreign Operations Proprietary Technology and Trademarks Competition Employees Environmental Matters |  | 1234677788
|         |  |                                                                                                                                                                                                              
|2.       |  | Properties Packaging Specialty Chemicals                                                                                                                                                                      |  | 1010      
|         |  |                                                                                                                                                                                                              
|3.       |  | Legal Proceedings                                                                                                                                                                                             |  | 11        
|         |  |                                                                                                                                                                                                              
|4.       |  | Submission of Matters to a Vote of Security Holders                                                                                                                                                           |  | 11        
|         | 
|PART II  |  |                                                                                                                                                                                                              
|         |  |                                                                                                                                                                                                              
|5.       |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities                                                                                                  |  | 12        
|         |  |                                                                                                                                                                                                              
|6.       |  | Selected Financial Data                                                                                                                                                                                       |  | 13        
|         |  |                                                                                                                                                                                                              
|7.       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                         |  | 15        
|         |  |                                                                                                                                                                                                              
|7A.      |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                    |  | 27        
|         |  |                                                                                                                                                                                                              
|8.       |  | Financial Statements and Supplementary Data                                                                                                                                                                   |  | 28        
|         |  |                                                                                                                                                                                                              
|9.       |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                                                                                                                          |  | 28        
|         |  |                                                                                                                                                                                                              
|9A.      |  | Controls and Procedures                                                                                                                                                                                       |  | 29        
|         | 
|PART III |  |                                                                                                                                                                                                              
|         |  |                                                                                                                                                                                                              
|10.      |  | Directors and Executive Officers of the Registrant                                                                                                                                                            |  | 30        
|         |  |                                                                                                                                                                                                              
|11.      |  | Executive Compensation                                                                                                                                                                                        |  | 33        
|         |  |                                                                                                                                                                                                              
|12.      |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                                                                                                                |  | 36        
|         |  |                                                                                                                                                                                                              
|13.      |  | Certain Relationships and Related Transactions                                                                                                                                                                |  | 38        
|         |  |                                                                                                                                                                                                              
|14.      |  | Principal Accountant Fees and Services                                                                                                                                                                        |  | 38        
|         | 
|PART IV  |  |                                                                                                                                                                                                              
|         |  |                                                                                                                                                                                                              
|15.      |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                                                                                                                               |  | 39        



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ITEM 1. BUSINESS



Radnor
Holdings Corporation (the Company, Radnor, we, us or our) 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. On November 14, 2003 we acquired the operations of Polar Plastics,
Inc. and its subsidiary (Polar Plastics or the Acquisition). The Acquisition extended our product line to include thermoform and injection molded foodservice products. We are also upgrading our thermoforming equipment and
installing new production lines to facilitate the introduction of our proprietary cold drink cups. This product line expansion is necessary to meet accelerating customer demand, including business awards from quick service restaurant customers for
delivery in 2004.



We have been manufacturing expandable
polystyrene, or EPS, and related products sold to the foodservice, insulation and protective packaging industries for more than 25 years. In the foodservice industry, we are the second largest manufacturer of foam cup and container products in the
U.S. By capacity, we are also the fifth largest worldwide producer of EPS. In fiscal 2003, we produced 13 billion foam cups for hot and cold drinks, foam bowls and containers and thermoformed lids and 354 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.



Financial information concerning the Companys business segments appears in Note 12 to the Consolidated Financial Statements included under Item 8
herein.



Industry Overview



Packaging.According to recent research by an independent industry research firm, the institutional disposable foodservice packaging industry, which includes foodservice distributors and quick service restaurants (QSRs), but excludes retail and consumer
customers such as mass merchandisers, drug stores and club stores, generated $11.6 billion in U.S. sales in 2002. Of this amount, we estimate approximately $3.2 billion represented sales of disposable cups and lids. Including sales to retail and
consumer customers, we estimate that a total of $4.0 billion of disposable cups and lids were sold in the U.S. in 2002.



The use of disposable foam cups and containers in the U.S. market has increased significantly over the last three decades. According to recent independent
industry analyses, the U.S. foam cup and container market is projected to grow at an annual rate of up to 3% through 2010. Key growth factors include the superior insulating and molding qualities of foam, lower production costs as compared to other
disposable and reusable products, sanitary considerations, the expansion of warehouse retailers and the growth in consumption of take-out foods and beverages.



The plastic segment of the disposable cup and container market in which we compete is significantly more fragmented. We believe that the plastic drink
cup and container market in the U.S. has exhibited strong growth in recent years, and we expect similar growth in the future as beverage producers, convenience stores and QSR operators increase their marketing efforts for the larger sized drinks
that are served in plastic cups. A recent independent industry analysis of the U.S. plastic cup and container market through 2006 projects an annual growth rate of approximately 2.5% to 3% for sales of disposable cups and lids to institutions and
QSRs. Plastic cups and containers offer a number of advantages compared to paper, including elimination of sogginess, greater rigidity, more uniform seamless construction and unique design and printing capabilities. In addition, larger size cups can
be molded to fit into car cup holders, thereby taking advantage of growing take-out markets, including drive-thru windows at QSRs. Industry publications report that as much as 60% of revenues of QSRs in 2002 were derived from drive-thru window sales
and that drive-thrus accounted for approximately 80% of revenue growth of QSRs from 1998 through 2002.



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The large majority of plastic drink cups are manufactured through an injection molding or thermoforming
process that uses polystyrene as its principal raw material. We have recently developed a proprietary thermoformed deep-draw cold drink cup that uses polypropylene instead of polystyrene, which should result in significant raw material cost savings.
In addition, polypropylene products feature enhanced appearance, durability and feel characteristics as compared to polystyrene products and paper products. Over time, we expect the superior attributes and cost-savings of polypropylene cups to
assist in accelerating the conversion from paper to plastic in the disposable cup market.



Specialty Chemicals.We compete in the North American and European EPS markets. In North America, we sell EPS to the insulation, protective packaging and foodservice industries. A recent independent industry
analysis estimated the U.S. EPS market to have been in excess of 400,000 metric tons in 2000 and projected an annual growth rate of approximately 3% through 2010. This market is concentrated, with Radnor and three other competitors accounting for
over 90% of the North American market.



In Europe, we sell EPS
to the insulation and protective packaging industries. The EPS market in Europe includes a broader range of product applications and is more fragmented than the North American market. A recent independent industry analysis estimated the European EPS
market to have been in excess of 995,000 metric tons in 2000 and projected an annual growth rate of approximately 3% through 2005.



Products



Packaging.Radnor manufactures a broad range of disposable foodservice products, including cups, bowls, plates, containers, lids, cutlery, barware and stemware from expandable polystyrene, polypropylene and polystyrene.



The use of foam provides an insulating feature to our products, allowing them
to be used for both hot and cold beverages and food products while enhancing comfort for the end user. Foam cups are manufactured in varying sizes (4 to 64 ounces) for both hot and cold beverages and are sold under numerous brand names, including
the WinCup, COMpac, Profit Pals, STYROcup, Big Cool and Simplicity brand names. Foam bowls and other containers are made in varying sizes (3.5 to 32 ounces) for both hot and cold food products and are sold under the STYROcontainers brand name. Our
thermoformed leak-resistant plastic lids feature a stacking ring that minimizes the shifting of a second cup when placed on top of the first cup. Other enhanced lid features include vents, tear-away tabs and straw slots, depending on the
intended use. Cups, bowls, containers and lids are designed so that the same lid can be interchanged with many different cup, bowl or container sizes, which simplifies inventory and display area requirements. For example, our 10 cup-2 lid product
line allows two different lids to fit with ten different size cups.



Our cups, bowls and containers are available with custom offset or embossed printing. We also manufacture a broad range of custom-designed foam containers for many of our large national accounts. A significant component of this business is
the manufacturing of containers for customers, which use the containers for dried noodle products sold through retail grocery and supermarket chains. We also supply our products in private label packaging for certain of our customers.



Our thermoform and injection molded polypropylene and polystyrene product
lines include more than 450 cups and containers ranging in size from 3.5 oz. to 42 oz. with matching lids. To simplify display and inventory requirements, we design our cold drink cups so that the same lid can be interchanged with many cup sizes.
The use of polypropylene as a raw material provides drink cups with enhanced appearance qualities, including a rolled lip that is less abrasive to the user and a sturdy, yet flexible and comfortable, feel. We mold our thermoformed cold drink cups to
meet our customers specific needs and to permit the largest sizes to fit into a cars cup holder. Polypropylene also allows us to improve printing quality for our customers, permitting photography-quality printing that is superior to the
print capabilities for other substitute products. We also manufacture thermoformed polypropylene portion cups used for salad dressing, condiments and similar applications, as well as rigid plastic cutlery products.



We continuously work to develop new products that fit with our
customers specific needs. One of our early customer-driven developments was the flare cup design that replaced the heavier rim typically built into the top of a foam cup



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with a smooth, flared edge that improves the stability of the cups construction. The flare cup was well-received by
customers because it combined the favorable appearance of paper with the insulating qualities of foam. More recently, our car carrier cups have addressed the end users desire for a cup that can contain larger volumes of liquid while fitting
into an automobiles cup holder.



Specialty Chemicals.In North America, we manufacture EPS for our internal consumption, in addition to selling directly to third-party manufacturers of foodservice, insulation and protective packaging products. EPS is categorized by size, with the smallest size, or
cup-grade, used to manufacture foam cups and containers. Larger sizes are sold to manufacturers of insulation and protective packaging products and include EPS modified for fire retardancy.



We manufacture a broad range of EPS formulations in Europe for conversion
into a variety of standard and specialized insulation and packaging products. This EPS is made primarily for the insulation and protective packaging industries and includes a range of bead sizes and densities for conversion by customers into light
and heavy insulation boards as well as various shape products, such as insulated fish packaging boxes. We work closely with our European customers to incorporate special product features into our EPS, such as fire retardancy, specialty coatings,
higher thermal insulation qualities and antistatic properties.



Sales, Marketing and Customers



Packaging.Radnor sells its broad range of disposable products in the foodservice industry through a 36-person sales organization and through an extensive network of 54 independent sales representatives. Sales and marketing efforts
are directed by our Senior Vice President of Sales and Marketing and are supported by 12 senior sales managers averaging more than ten years experience in the foodservice industry. We believe our experienced sales team and long-term
representative relationships enhance our ability to provide high levels of customer service and specialized marketing programs, including custom-designed products. Major end users of these products include fast-food restaurants, full-service
restaurants, hospitals, nursing homes, educational institutions, airlines, business offices, movie theaters and other leisure time concessionaires, such as sports stadiums.



We sell disposable products in the foodservice industry to more than 1,400 national, institutional and retail accounts
throughout the United States, in Mexico and in other countries. This customer base, which includes many of the foodservice industrys largest companies, can be divided into three major categories:



National Accounts. National accounts are customers that
utilize our disposable foodservice products in the sale of their own products and consist primarily of large fast-food restaurant chains and convenience stores. During fiscal 2003, sales to these customers accounted for approximately 11.9% of our
net sales.



Institutional Accounts.
Institutional accounts are customers that purchase our disposable foodservice products with a view toward reselling such products in bulk to institutional end users, such as hospitals, nursing homes, educational institutions, airlines, movie
theaters and similar leisure time concessionaires, such as sports stadiums. These customers, representing approximately 40.5% of our net sales in fiscal 2003, are primarily large foodservice distributors.



Retail Accounts. Retail accounts are customers that purchase
our disposable foodservice products for resale to actual consumers of the products and consist primarily of supermarket chains and discount stores. In fiscal 2003, retail customers accounted for approximately 8.8% of our net sales.



Approximately 10.0% of our packaging product sales are made pursuant to
arrangements under which product prices are automatically adjusted based on changes in prices of styrene monomer and other raw materials. Substantially all of our other packaging product sales are made pursuant to contracts or other arrangements
under which we have the right to change product prices on 30 to 60 days prior written notice.



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Specialty Chemicals.In North America, we sell EPS through a dedicated sales force averaging 20
years experience and two broker organizations to manufacturers of foam protective packaging and insulation products. In Europe, we market through our Europe-wide sales office network. In support of these sales and marketing efforts, we employ people
who are knowledgeable about chemical engineering and manufacturing processes in order to provide technical assistance to our customers.



In Europe, we sell EPS to 200 primarily mid-sized companies throughout Europe. We have actively pursued these customers because they provide potential for
higher margins and because of their increased reliance on our technical support, which results in a greater ability to foster long-term customer relationships. We sell approximately 25% of our European EPS production to our former European
insulation business pursuant to a long-term supply agreement.



Customer Concentration. No customer represented more than 6.5% of our net sales for fiscal 2003, although the five largest accounts represented approximately 25.6% of such sales. Because we are focusing our marketing efforts for our
new thermoformed polypropylene products on our key customers, we anticipate that this customer concentration may increase in the future.



Manufacturing



We operate 15
plants in North America and three plants in Europe. Our eleven U.S. and European foam plants generally operate 24 hours a day, seven days a week and 355 days a year. Our plastic cup and cutlery products are manufactured through an injection molding
or thermoforming process that uses polystyrene and polypropylene as its principal raw materials in our state-of-the-art manufacturing facility in North Carolina. This plant generally operates 24 hours a day, five days a week. We expect the North
Carolina plant utilization to increase in 2004 and to eventually operate 24 hours a day, seven days a week and 355 days a year. We also operate six plants located in the United States, Canada and Europe that manufacture EPS from styrene monomer.
These plants generally operate 24 hours a day, seven days a week and 355 days a year.



Manufacturing Process.The manufacture of EPS, the primary raw material in the manufacture of foam products, has two steps: polymerization and impregnation. In the polymerization phase, styrene monomer, which
is a commodity petrochemical derived primarily from benzene and ethylene, is suspended in water and then treated with chemicals and catalysts to produce polystyrene crystal in various sizes, each of which has different end-use applications,
including general purpose polystyrene. To produce EPS, the crystal is impregnated with a high-purity pentane gas.



We manufacture our foam cups and containers utilizing a custom molding process. First, the cup-grade EPS is blended with a lubricating agent and then
pre-expanded so that the EPS is of the appropriate density. This pre-expanded EPS is then fed through special screeners to remove undersized and oversized beads. The pre-expanded EPS is then injected into machine molds and fused by injecting steam
into the mold cavity. After the EPS is fused, the mold shells are cooled, the mold halves are opened and the finished cups are ejected. The finished products are vacuum tested, counted and packaged.



We manufacture polypropylene cups and containers using a complete line
process. In this process, polypropylene pellets and desired colorants are mixed, heated and extruded into a continuous sheet, which is then fed into a thermoformer and molded into the size and shape of the preferred product design. After the cups
are cooled, they are trimmed from the sheet while still in the mold and are subsequently transferred to a forming station where the rims are rolled over in a coining process to provide attractive and highly functional lips for the finished products.
The finished cups are automatically transferred for packaging into finished cases or to printing and then packaged into finished cases.



We manufacture both polypropylene and polystyrene cutlery and cups using an injection molding process in which resins and colorant are mixed and heated
through an extrusion process. The liquid resin is then injected



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into the cavities of the mold to form the shape of the product. The material is cooled inside the mold through the use of
chilled water. Both halves of the mold are then separated and the parts ejected where they are transported to either an automatic or manual packing station, depending on the type of finished product.



Our lid products are produced from high-impact polystyrene, or HIPS, which is
subjected to heat and pressure, after which the product is extruded through a thin die. The lids are then trimmed for finished goods packing, while the scrap is ground and reintroduced into the original material blend.



Quality Control.Our manufacturing quality control program for foam
foodservice products involves automated testing of all products for leaks. In addition, random testing is performed at least hourly at each facility for various attributes: seepage, weight, appearance, strength and, where applicable, print. We
centrally collect the resulting data, subject it to statistical analysis and review the results. In addition, each machine operator and packer performs various quality checks during the production process. We also obtain random samples of finished
foam packaging products from our various manufacturing facilities and perform an analysis similar to that described above at our Phoenix laboratory.



Our manufacturing quality control program for thermoformed plastic products enables us to meet our customers requirements through a documented
Quality Management System. We monitor and measure the attributes that are critical to quality. We then statistically analyze the data to ensure that the processes are consistent in conforming to the customers desires.



In addition to our own programs, certain of our larger customers have
established their own product standards and perform periodic manufacturing audits at our facilities, either through their own personnel or through an independent testing group such as ASI Food Safety Consultants. We also submit products to
third-party laboratories for microbiologic and physical tests to assure that we conform to or exceed industry product safety standards.



We utilize our quality, service, manufacturing and customer partners to enact and follow through on initiatives consistent with total quality management
and good manufacturing practices. Through these programs, we work with our customers to ensure product quality and to create new products that reflect the present and future needs of our customers.



Our North American EPS quality control laboratory includes infrared
spectrograph and atomic absorption units. Our laboratory chemists are capable of performing complex chemical and atomic analysis of styrene monomer, polystyrene crystal, expandable polystyrene and all other material components of EPS production.
This gives us the ability to customize EPS formulas to meet any special customer requirements. The EPS quality control program includes testing every production batch of EPS to ensure it meets specific customer requirements. Each batch is tested for
particle sizes, pentane gas volume and, if the EPS is to be used for insulation, their fire retardation capability.



In Europe, our sophisticated quality control laboratory is complemented by a fully equipped analytical laboratory containing three fully instrumented,
automatically controlled pilot reactors, a fully equipped reactor bay, including a reactor and equipment for screening and coating, as well as two complete lines for converting EPS into insulation boards and shape-molded products. Testing equipment
for analytical and quality audit work includes electronic balancers, equipment for testing burning behavior, gas chromatographs, sweep electron microscopes, colorimeters, flexural/compressive strength testers, an izod impact tester and lambda value
testers. We regularly test our EPS for a range of key attributes that vary by specific product. Our European facilities are either ISO 9001 or ISO 9002 certified and both are also ISO 14001 certified.



Engineering.We employ 69 full-time technical personnel, including 27
full-time engineers and engineering managers, based in the Phoenix, Corte Madera, Fort Worth, Mooresville and Canadian facilities. The engineering staff uses computer-aided design and computer-aided manufacturing systems to design advanced,
three-dimensional models of products and molds. Once an electronic image of the machine and mold part design is generated, the part can be custom manufactured. We have the capacity to construct all of the proprietary equipment,



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machines and molds used in the production, testing and packaging of our foam products. At least initially, we will not be
constructing any of the proprietary equipment, machines and molds used in the production, testing and packaging of our polypropylene products. We have also developed and are installing in our manufacturing facilities automated materials handling
equipment that includes in-line printing, automatic case packaging equipment and more advanced molding machines.



We continually examine how to improve our manufacturing process efficiencies. Sophisticated infra-red imaging systems, providing real-time video displays,
are used to evaluate the thermal efficiency of molds and machines under development. We also can create special prototype mold forms for new lid designs and single-cavity cup and container molds, both of which enhance our ability to evaluate
customer design requests rapidly.



The managing director of our
European EPS operations is an engineer, as are each of the managers and supervisors of the production facilities located in Europe. In Europe, we also employ two full-time engineers who are responsible for process and production engineering and
interact regularly with research and development personnel based in the analytical laboratory as well as senior technical support staff responsible for assisting the sales team.



Raw Materials



Our foam products
are manufactured from EPS, which is produced from styrene monomer. High-purity pentane is also used as an expanding agent in the production of EPS. The raw materials we use for the manufacture of thermoformed lids are primarily plastic resins such
as HIPS. Our plastic cups and cutlery are thermoformed and injection molded from polypropylene and polystyrene resins.



Styrene monomer is a commodity petrochemical that is readily available throughout the world in bulk quantities from numerous large, vertically integrated
chemical companies. Styrene monomer prices have fluctuated significantly as a result of changes in petrochemical prices and the capacity, supply and demand for styrene monomer. For example, the contract price for styrene monomer increased from $0.25
per pound in 2001 to a high of $0.37 per pound in 2002. The contract price for styrene monomer increased to $0.46 per pound in March 2003, decreased to $0.40 per pound in November 2003 and increased to $0.48 per pound in February 2004. Although
future styrene monomer prices cannot be predicted with accuracy, prices are forecasted by independent industry surveys and producer reports to decline to $.41 by the end of 2004. While the Company has been able to pass on the majority of past price
increases to customers, the Company may not be able to increase prices if styrene monomer costs rise in the future.



We have historically purchased a majority of our styrene monomer requirements under a variety of long-term supply contracts. These contracts provide a
supply of styrene monomer under several different pricing mechanisms and with volume discounts. The various pricing mechanisms include those tied to raw material prices, spot market indices, contract indices and varying mixtures of the three. Under
our styrene monomer supply contracts, which expire through 2009, we currently acquire approximately 75% of our current styrene monomer needs.



High-purity pentane, which is used as the expanding agent in the production of EPS, is available from a limited number of suppliers. Should high-purity
pentane become unavailable, however, high-purity butane may be substituted as the expanding agent.



The raw materials used in the manufacture of our polystyrene plastic cups and cutlery and for the manufacture of thermoformed lids are primarily plastic
resins such as polystyrene, which are available from a number of sources. Our polystyrene resin supplies are purchased under various agreements that contain minimum and maximum purchase requirements. The price we pay for polystyrene resin is
determined at the time of purchase and can be supported by our styrene monomer purchases. The prices of polystyrene resins fluctuated in a fashion similar to the fluctuations affecting styrene monomer as described above. Polystyrene is largely a
derivative of styrene monomer and prices react the same way over time. Prices also can change based on the operating rates of the polystyrene manufacturing facilities. Published contract HIPS pricing is currently $0.65 per pound. The forecasted
price of HIPS is expected to range between $0.58 and $0.67 during 2004.



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The primary raw materials used to manufacture our thermoformed plastic products are polypropylene resins
that are made from propylene. We do not currently have long-term supply agreements for polypropylene and may not be able to enter into such agreements on favorable terms or at all. Polypropylene resin pricing follows the raw material price of
propylene and is influenced by the operating rates of the respective polypropylene manufacturing locations. The published homopolymer polypropylene contract price was $0.47 per pound for February 2004 and is forecasted by independent industry
surveys and producer reports to decline to $0.42 per pound by the end of 2004. Polypropylene has had the tendency to fluctuate significantly over time. For example, the contract price for polypropylene ranged from $0.28 to $0.46 from the beginning
of 2000 through December 2003. We anticipate entering into long-term contracts to provide consistent supply of polypropylene resins. We expect the pricing mechanisms in those contracts to be market driven and to change monthly. We also anticipate
that we will obtain rebates based on volume incentives with the respective suppliers.



If pricing of either polystyrene or polypropylene resins would put us in an uncompetitive position, we can switch to the other resin to make our products competitively.



Risks Attendant to Foreign Operations



The Company conducts its businesses in numerous foreign countries and, as a result, is subject to risks customarily encountered in foreign operations, including fluctuations in foreign currency exchange rates and controls, import and export
controls, and other economic, political and regulatory policies of local governments. The Companys foreign entities report their assets, liabilities and results of operations in the currency in which the entity primarily conducts its
businesses. The foreign currencies are ultimately translated into U.S. dollars for financial reporting purposes.



Note 12 to the Companys financial statements included under Item 8 herein contains information with respect to the geographic composition of the
Companys operations and financial position as of and for the years ended December 26, 2003, December 27, 2002 and December 28, 2001.



Proprietary Technology and Trademarks



We have developed a broad array of proprietary technology that is utilized in various stages of our manufacturing operations. We rely primarily upon confidentiality agreements and restricted plant access to protect our proprietary
technology. We own several patents relating to our cup design and our EPS manufacturing processes. However, we do not consider these patents material to our operations.



We hold 50 trademarks registered in the United States, several of which are also registered in other countries. We also hold
a number of unregistered trademarks. We do not consider any of these trademarks material to our operations.



Competition



We compete in the
highly competitive foodservice industry. The foam segment of the disposable cup and container market is highly concentrated and, within this segment, we compete principally with Dart Container, which has significantly greater financial resources
than we have and controls the largest share of this market segment. We do not believe that companies operating in related markets are likely to enter the foam segment due to the significant investment that would be required.



We believe that competition within the foam segment of the market is based
primarily on customer service, product quality and the price at which products are offered. We believe that our market position is attributable to our high level of customer service and product quality, strategically located manufacturing
facilities, proprietary technology and experienced management team.



The plastic segment of the disposable cup and container market is significantly fragmented. Major producers of thermoformed plastic cups and containers include Pactiv, Solo Cup, Alcoa Packaging



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and Dart Container. However, the Company believes that only one other competitor, Berry Plastics, manufactures deep-draw
thermoformed polypropylene cold cups. It is possible that other competitors may enter the plastic segment of the disposable cup and container market despite the significant investment, especially in equipment and technology, that would be required.
In addition, as thermoformed polypropylene cold cups gain market acceptance, we would anticipate that producers of polystyrene plastic cups may enter this market.



We believe that competition within the plastic segment of the disposable cup and container market is based primarily on
customer service, product quality and appearance and the price at which products are offered. We believe that the manufacturing capability we are developing, together with our experience customizing products, superior customer service, national
distribution capabilities, demonstrated ability to successfully integrate acquisitions and ability to leverage our long-term customer relationships and our other competitive strengths, will position us to capture a meaningful portion of the plastic
cold drink cup market.



We also compete with the paper segment,
which is significantly more fragmented than the foam segment. We believe that competition between foam, plastic and paper is based on product appearance, quality and price.



In North America, the EPS industry is highly concentrated. Management believes that each of NOVA Chemicals, Inc., Huntsman
Chemical Corp. and BASF Corporation, which are larger than we are and have greater financial resources than we have, controls a significant share of the market for supplying EPS to manufacturers of insulation and protective packaging products. We
believe that competition within this industry is primarily based on price, although customer service, support and specialized product development can be significant competitive factors, particularly among the smaller manufacturers of foam insulation
and protective packaging products.



The European EPS industry
is more fragmented than in North America. Several companies, including BASF Corporation, NOVA Chemicals, Inc. and B.P. Amoco PLC, are larger and have greater financial resources than we have. We believe that competition is based primarily on price,
although technical support, specialized product development and consistent quality are important factors to many of our customers.



Employees



As of December 26,
2003, we had 1,851 full-time employees. We have never experienced a material labor strike or other labor-related work stoppage. We consider our relations with our employees to be good.



Our U.S. employees are not represented by any union. In Canada, approximately 60% of our employees are represented by a
union and are covered by a collective bargaining agreement. In Finland, over 80% of our employees are represented by one of three unions and we are subject to two collective bargaining agreements. The European Union directives regarding employment
are applicable to us in Finland; however, the terms of the collective bargaining agreements will control employment relationships to the extent that these agreements address relevant issues in a more detailed manner and include benefits exceeding
the minimum standards established by the directives.



We are
dependent on the management experience and continued services of our executive officers, including our Chief Executive Officer, Michael T. Kennedy. The loss of the services of these officers could have a material adverse effect on our business. In
addition, our continued growth depends on our ability to attract and retain experienced key employees.



Environmental Matters



Our
facilities are used for manufacturing or warehousing of foam container, thermoformed or injection molded products, as well as the EPS from which foam products are manufactured. Many of these facilities are subject to federal, state, foreign and
local laws and regulations relating to, among other things, emissions to air such as pentane, styrene and particulate matter, discharges to water, and the generation, handling, storage, transportation and disposal of hazardous and non-hazardous
materials and wastes.



8



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##### Table of Contents

In 1996, the soil and shallow groundwater at our domestic EPS facilities were found to contain elevated
levels of various contaminants. However, based on the results of soil and groundwater testing, material remediation efforts with respect to these conditions have not been, and we believe will not be, required. We own and operate, or owned or
operated, underground storage tanks, also referred to as USTs, at several of our facilities for the storage of liquid pentane and heavy fuel oil. Leak detection or containment systems are in place at each facility with USTs that we currently own or
operate. USTs are generally subject to federal, state, local and foreign laws and regulations that require testing and upgrading of USTs and remediation of polluted soils and groundwater resulting from leaking USTs. In addition, if any leakage from
our USTs were to migrate onto the property of others, we could be subject to civil liability to third parties for remediation costs or other damages.



Some of our facilities have been alleged or are known to have failed to comply with various reporting or permitting obligations under applicable
environmental laws and regulations. The resolution of these allegations and failures has not had a material adverse effect on our financial condition or results of operations, nor do we believe that any future costs of achieving and maintaining
compliance with these laws and regulations will have that effect. It is possible that we could incur significant fines, penalties or capital costs associated with any confirmed noncompliance with these laws and regulations. Moreover, there can be no
assurance that recently promulgated or future environmental laws or regulations, including regulations affecting the volume of and permitting for air emissions in the United States, Canada and in Europe, will not require us to incur substantial
expenditures or significantly modify our operations.



Certain
of our current and former facilities are located in industrial areas and have been in operation for many years. As a consequence, it is possible that historical or neighboring activities have affected properties currently or formerly owned or
operated by us and that, as a result, additional environmental issues may arise in the future, the precise nature of which we cannot now predict.



9



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##### Table of Contents

ITEM 2. PROPERTIES



We lease
approximately 8,000 square feet in Radnor, Pennsylvania, a suburb of Philadelphia, for our executive offices. We believe that our present facilities are adequate for our current operations and that we will be able to lease or otherwise acquire any
additional facilities as may be required for our future operations.



We also own or lease manufacturing, warehouse, office, machine assembly and utilities facilities at the locations shown in the following table:



Packaging



|                              |  |                                                                |  |                               
|----------------------------- |  | -------------------------------------------------------------- |  | ------------------------------
|Location                      |  | Use                                                            |  | Approximate FloorSpace Sq. Ft.
|Corte Madera, California      |  | Manufacturing, warehouse, machine assembly and office (leased) |  | 88,000                        
|                              |  |                                                               
|Richmond, California          |  | Warehouse (leased)                                             |  | 103,000                       
|                              |  |                                                               
|Higginsville, Missouri        |  | Manufacturing and warehouse                                    |  | 68,000                        
|                              |  |                                                               
|Warrensburg, Missouri         |  | Warehouse (leased)                                             |  | 10,000                        
|                              |  |                                                               
|Jacksonville, Florida         |  | Manufacturing and warehouse (leased)                           |  | 128,000                       
|                              |  |                                                               
|Edison, New Jersey            |  | Warehouse (leased)                                             |  | 95,000                        
|                              |  |                                                               
|Metuchen, New Jersey          |  | Manufacturing                                                  |  | 84,000                        
|                              |  |                                                               
|Mount Sterling, Ohio          |  | Manufacturing and warehouse                                    |  | 56,000                        
|                              |  |                                                               
|Shreveport, Louisiana         |  | Manufacturing and warehouse                                    |  | 73,000                        
|                              |  |                                                               
|Stone Mountain, Georgia       |  | Manufacturing and warehouse (partially leased)                 |  | 377,000                       
|                              |  |                                                               
|Phoenix, Arizona              |  | Machine assembly (leased)                                      |  | 12,000                        
|                              |  |                                                               
|Tolleson, Arizona             |  | Manufacturing, warehouse and office                            |  | 170,000                       
|                              |  |                                                               
|West Chicago, Illinois        |  | Manufacturing, warehouse and office (partially leased)         |  | 350,000                       
|                              |  |                                                               
|El Campo, Texas               |  | Manufacturing and warehouse                                    |  | 91,000                        
|                              |  |                                                               
|Mooresville, North Carolina   |  | Manufacturing, warehouse and office (leased)                   |  | 389,000                       
|                              |  |                                                               
|Winston-Salem, North Carolina |  | Manufacturing and warehouse (leased)                           |  | 58,000                        
|                              |  |                                                               
|Lodz, Poland                  |  | Manufacturing and warehouse (leased)                           |  | 31,000                        



Specialty Chemicals



|                    |  |                                                                                   |  |                               
|------------------- |  | --------------------------------------------------------------------------------- |  | ------------------------------
|Location            |  | Use                                                                               |  | Approximate FloorSpace Sq. Ft.
|Fort Worth, Texas   |  | Manufacturing, warehouse and office (partially leased)                            |  | 204,000                       
|                    |  |                                                                                  
|Saginaw, Texas      |  | Manufacturing, warehouse and office                                               |  | 60,000                        
|                    |  |                                                                                  
|Baie DUrfe, Quebec |  | Manufacturing, warehouse and office                                               |  | 74,000                        
|                    |  |                                                                                  
|Porvoo, Finland     |  | Manufacturing, warehouse, machine assembly, utility and office (partially leased) |  | 112,000                       
|                    |  |                                                                                  
|Kokemaki, Finland   |  | Manufacturing, warehouse, utility and office (leased)                             |  | 52,000                        



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##### Table of Contents

Our lease for the manufacturing and warehousing facility in Winston-Salem, North Carolina expires in May
2004 and our lease for 46,500 square feet of warehouse space in Mooresville, North Carolina expires in March 2004. We anticipate vacating these facilities prior to the expiration of the leases.



ITEM 3. LEGAL PROCEEDINGS



We
are involved in a number of legal proceedings arising in the ordinary course of business. After taking into consideration legal counsels evaluation of such actions, management believes that these actions will not have a material adverse effect
on our consolidated financial condition or consolidated results of operations.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



There are no matters to be reported hereunder.



11



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##### Table of Contents

PART II



ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES



Market Information



There currently exists no established public trading market for the Companys Voting Common Stock, $.10 par value, Nonvoting Common Stock, $.10 par
value, or Class B Nonvoting Common Stock, $.01 par value.



Holders



As of March 23, 2004, there were 3 holders of record of
the Companys Voting Common Stock, 11 holders of record of the Companys Nonvoting Common Stock and 13 holders of record of the Companys Class B Nonvoting Common Stock.



Dividends



No dividends were declared or paid during the years ended December 26, 2003 or December 27, 2002. The declaration and payment of dividends are subject to
the discretion of the Companys Board of Directors and will depend on various factors, including restrictions on dividends contained in the Companys credit agreements and the indenture pursuant to which the Company issued its 11% Senior
Notes due 2010 on March 11, 2003.



12



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##### Table of Contents

ITEM 6. SELECTED FINANCIAL DATA



The following table presents selected consolidated financial data for the Company. The following data should be read in conjunction with the consolidated financial statements, the related notes thereto and Managements Discussion
and Analysis of Financial Condition and Results of Operations included elsewhere herein. Financial results for the periods presented are not fully comparable because of the December 2001 disposition of our European insulation operations.
Fiscal years 1999, 2000 and 2001 contain the results of operations from the European insulation operations.



|                                                              |  |                  |         |   |              |   |         |              |  |   |              |   |  |              |         |   |  |   |         |  
|------------------------------------------------------------- |  | ---------------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                              |  | Year Ended       |        
|                                                              |  | Dec. 31,1999     |         |   | Dec. 29,2000 |   |         | Dec. 28,2001 |  |   | Dec. 27,2002 |   |  | Dec. 26,2003 |        
|                                                              |  | ($ in thousands) |        
|Results of Operations (1):                                    |  |                  |         |   |              |   |         |              |  |   |              |   |  |              |         |   |  |   |         |  
|Net sales                                                     |  | $                | 310,470 |   |              | $ | 353,752 |              |  | $ | 325,734      |   |  | $            | 323,182 |   |  | $ | 341,664 |  
|Cost of goods sold                                            |  |                  | 226,509 |   |              |   | 277,254 |              |  |   | 250,719      |   |  |              | 243,501 |   |  |   | 279,013 |  
|                                                              |  |                  |         |   |              |   |         |              |  |   |              |   |  |              |         |   |  |   |         |  
|Gross profit                                                  |  |                  | 83,961  |   |              |   | 76,498  |              |  |   | 75,015       |   |  |              | 79,681  |   |  |   | 62,651  |  
|Distribution expense                                          |  |                  | 24,535  |   |              |   | 26,003  |              |  |   | 25,176       |   |  |              | 22,621  |   |  |   | 23,335  |  
|Selling, general and administrative expenses                  |  |                  | 36,460  |   |              |   | 37,128  |              |  |   | 32,464       |   |  |              | 33,124  |   |  |   | 31,567  |  
|Gain on sale of business (2)                                  |  |                  |        |   |              |   |        |              |  |   | (10,493      | ) |  |              |        |   |  |   |        |  
|Other expenses (3)                                            |  |                  |        |   |              |   |        |              |  |   |             |   |  |              |        |   |  |   | 1,838   |  
|                                                              |  |                  |         |   |              |   |         |              |  |   |              |   |  |              |         |   |  |   |         |  
|Income from operations                                        |  |                  | 22,966  |   |              |   | 13,367  |              |  |   | 27,868       |   |  |              | 23,936  |   |  |   | 5,911   |  
|Interest, net (4)                                             |  |                  | 21,070  |   |              |   | 21,725  |              |  |   | 22,331       |   |  |              | 21,382  |   |  |   | 21,027  |  
|Income from unconsolidated affiliates                         |  |                  | (183    | ) |              |   | (876    | )            |  |   | (1,160       | ) |  |              | (6,165  | ) |  |   | (3,623  | )
|Other expense, net                                            |  |                  | 1,363   |   |              |   | 1,104   |              |  |   | 2,657        |   |  |              | 1,146   |   |  |   | 902     |  
|                                                              |  |                  |         |   |              |   |         |              |  |   |              |   |  |              |         |   |  |   |         |  
|Income (loss) before income taxes and discontinued operations |  |                  | 716     |   |              |   | (8,586  | )            |  |   | 4,040        |   |  |              | 7,573   |   |  |   | (12,395 | )
|Income tax expense (benefit)                                  |  |                  | 241     |   |              |   | (3,074  | )            |  |   | 2,150        |   |  |              | 2,878   |   |  |   | (2,612  | )
|                                                              |  |                  |         |   |              |   |         |              |  |   |              |   |  |              |         |   |  |   |         |  
|Income (loss) from continuing operations                      |  | $                | 475     |   |              | $ | (5,512  | )            |  | $ | 1,890        |   |  | $            | 4,695   |   |  | $ | (9,783  | )
|                                                              |  |                  |         |   |              |   |         |              |  |   |              |   |  |              |         |   |  |   |         |  
|Balance Sheet Data (at end of period)(1)(5):                  |  |                  |         |   |              |   |         |              |  |   |              |   |  |              |         |   |  |   |         |  
|Working capital                                               |  | $                | 12,884  |   |              | $ | 16,117  |              |  | $ | 22,318       |   |  | $            | 29,908  |   |  | $ | 25,579  |  
|Total assets                                                  |  |                  | 293,683 |   |              |   | 305,999 |              |  |   | 274,186      |   |  |              | 284,132 |   |  |   | 396,295 |  
|Total debt, including current portion (6)                     |  |                  | 215,417 |   |              |   | 229,508 |              |  |   | 212,910      |   |  |              | 215,214 |   |  |   | 259,466 |  
|Stockholders equity (deficit)                                |  |                  | 7,574   |   |              |   | (1,811  | )            |  |   | 117          |   |  |              | 10,061  |   |  |   | 7,829   |  

---

|(1) | The Companys fiscal year is the 52- or 53-week period that ends on the last Friday of December of each year. The years presented in the above table were 52-week years with the
exception of 1999, which was a 53-week year.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents gain resulting from sale of European insulation operations. See Note 1 to the Companys audited consolidated financial statements included elsewhere herein.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | On March 11, 2003, the Company issued $135.0 million of senior notes due 2010 and amended its domestic revolving credit facility to include a $45.0 million term loan and to increase
the revolving credit commitment from $35.0 million to $45.0 million. The proceeds were used to repay the then
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

outstanding $159.5 million of Series A and Series B senior notes due 2003 and outstanding borrowings
under the existing revolving credit facilities. The Company recorded $1.8 million of other expenses related to the extinguishment of the long-term debt described above, which included the $1.0 million write-off of deferred financing costs and debt
premium related to the Companys Series A and Series B senior notes due 2003, as well as $0.8 million of personnel costs directly related to the debt extinguishment.

|(4) | Interest includes amortization of premium and debt issuance costs related to the Companys senior notes of $1.2 million for the years ended December 31, 1999 and December 29,
2000, $1.1 million for the years ended December 28, 2001 and December 27, 2002 and $0.9 million for the year ended December 26, 2003.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Fiscal 2003 balance sheet data is not fully comparable due to the Acquisition.
|--- | ------------------------------------------------------------------------------

|(6) | Total debt includes capital lease obligations.
|--- | ----------------------------------------------



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##### Table of Contents

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Results of Operations



The following discussion and analysis should be read in conjunction with Item 6, Selected Financial Data and Item 8, Financial
Statements and Supplementary Data included elsewhere herein. Financial results for the periods presented are not fully comparable because of the December 2001 disposition of the European insulation operations as well as the November 2003
Acquisition. Fiscal year 2001 contains the results of operations from the European insulation operations, while fiscal 2003 contains the results of the newly acquired food packaging and cutlery operations discussed below.



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. On November 14, 2003 we acquired
the operations of Polar Plastics, Inc. and its subsidiary (Polar Plastics or the Acquisition). The Acquisition extended our product line to include thermoform and injection molded foodservice products. We are also upgrading
our thermoforming equipment and installing new production lines to facilitate the introduction of our proprietary cold drink cups. This product line expansion is necessary to meet accelerating customer demand, including business awards from quick
service restaurant customers for delivery in 2004.



We have
been manufacturing expandable polystyrene, or EPS, and related products sold to the foodservice, insulation and protective packaging industries for more than 25 years. In the foodservice industry, we are the second largest manufacturer of foam cup
and container products in the U.S. By capacity, we are also the fifth largest worldwide producer of EPS. In fiscal 2003, we produced 13 billion foam cups for hot and cold drinks, foam bowls and containers and thermoformed lids and 354 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.



Recent Acquisition



In November 2003, we acquired the operations of Polar Plastics Inc. and its subsidiary, consisting of a state-of-the-art manufacturing facility, including
thermoforming and injection molding machines capable of producing polypropylene and polystyrene products, raw material storage and handling equipment, as well as related production assets and net working capital. The purchase price for the assets
was approximately $22.3 million, consisting of $4.5 million in cash paid at closing, issuance of a six-year note in the amount of $10.0 million bearing interest at 6.0% (with interest but no principal payable until January 1, 2005), the assumption
of $9.3 million in other long-term contractual liabilities, net of an estimated $1.5 million due from Polar Plastics based on certain working capital levels. Polar Plastics and certain of its affiliates and key management also entered into
seven-year non-competition agreements that will require an additional $3.0 million in payments over five years.



As part of the Acquisition, we identified approximately $13.0 million in annual costs saving measures, including those related to raw materials, plant
consolidations, reductions in force and operating expenses. The Company has taken the actions necessary to result in annual savings of approximately $11.5 million and continues to work on the remaining cost savings measures, such as the
consolidation of its Winston Salem facility, which is expected to be completed in May 2004 and result in annual savings of $0.9 million.



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 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. Beginning in January 2003 through February 2004, market prices of styrene monomer, the primary raw
material in the Companys foam products, increased by 25%. Although future raw material prices cannot be predicted with accuracy, prices for styrene monomer are forecasted by independent industry surveys and producer reports to decline by
approximately 20% over the remainder of 2004. While the Company has been able to pass on the majority of past raw material price increases to customers, the Company may not be able to increase prices if raw material costs rise in the future.



15



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##### Table of Contents

Our plastic cups and cutlery are thermoformed and injection molded from polypropylene and polystyrene
resins. The prices of polystyrene resins have fluctuated in a fashion similar to the fluctuations affecting styrene monomer as previously described. Polystyrene is largely a derivative of styrene monomer and prices typically react the same way 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, is currently $0.65 per pound. The forecasted price of HIPS is expected to range
between $0.58 and $0.67 during 2004.



The primary raw materials
used to manufacture our thermoformed plastic products are polypropylene resins, which are made from propylene. We do not currently have long-term supply agreements for propylene. Polypropylene resin pricing will follow the raw material price of
propylene and be influenced by the operating rates of the respective polypropylene manufacturing locations. Polypropylene has had the tendency to fluctuate significantly over time. For example, the contract price for polypropylene ranged from $0.36
to $0.46 from the beginning of 2001 through December 2003. The published polypropylene contract price was $0.47 per pound for February 2004 and is projected by independent industry surveys and producer reports to decline to about $0.42 per pound by
the end of 2004.



In connection with the Companys
engineering initiatives, the Company has invested significant resources in research and development. The Company expenses all research and development costs in the period incurred and includes such costs in cost of goods sold. As a percentage of net
sales, these costs have represented 0.5%, 0.8% and 0.8% in fiscal 2003, 2002 and 2001, respectively.



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.



Gain on Sale of Business



On December 12, 2001, the Company completed the sale of its European
insulation operations, which included seven manufacturing plants that convert EPS into insulation products for sale primarily to the Nordic construction industry. The consideration for the sale was approximately $35.1 million in cash and assumption
of debt. In connection with the sale, we realized a $10.5 million gain.



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.
| | - | --------------------------------------------------------------------------------------------------------



16



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##### Table of Contents

Year Ended December 26, 2003 Compared to the Year Ended December 27, 2002



Executive Summary



The Companys profitability was lower in 2003 as compared to 2002 due
to higher raw material and energy-related costs, which had a negative impact on our operating results. Fiscal 2003 net sales of $341.7 million increased 5.7% over the prior year mainly due to changes in foreign currency rates and the Acquisition
which occurred on November 14, 2003. Income from operations decreased $18.0 million from the prior year to $5.9 million mainly due to significant increases in energy-related costs at our packaging segment and a contraction in the spread between
selling prices and raw material costs at our specialty chemicals segment, both due in large part to the hostilities which occurred in the Middle East, partially offset by the impact of changes in foreign currency rates.



Consolidated Results



The following table summarizes the results of operations for the fiscal
years ended December 26, 2003 and December 27, 2002.



|                       |  |      |       |      |   |                    |  |   |          |   |  |       |   
|---------------------- |  | ---- | ----- | ---- | - | ------------------ |  | - | -------- | - |  | ----- | --
|(millions of dollars)  |  | 2003 |       | 2002 |   | Increase(Decrease) |  |   | % Change |  
|Sales                  |  | $    | 341.7 |      | $ | 323.2              |  | $ | 18.5     |   |  | 5.7   | % 
|Gross profit           |  |      | 62.7  |      |   | 79.7               |  |   | (17.0    | ) |  | (21.3 | )%
|Operating expenses     |  |      | 56.8  |      |   | 55.8               |  |   | 1.0      |   |  | 1.8   | % 
|Income from operations |  |      | 5.9   |      |   | 23.9               |  |   | (18.0    | ) |  | (75.3 | )%



Net sales in fiscal
2003 were $341.7 million, an increase of $18.5 million from $323.2 million in fiscal 2002. This increase was primarily caused by foreign currency changes driven by the strengthening of the Euro against the U.S. dollar ($17.4 million) combined with
higher selling prices at the specialty chemicals segment ($1.6 million), and the Acquisition in November 2003 ($3.0 million). These increases were partially offset by decreased sales volumes at our domestic packaging and specialty chemicals
operations ($2.2 million).



Gross profit decreased to $62.7
million or 18.3% of net sales in fiscal 2003 from $79.7 million or 24.7% of net sales in fiscal 2002. This decrease was primarily caused by higher raw material costs ($9.8 million), and higher energy-related costs ($7.4 million) combined with higher
depreciation at our specialty chemicals segment ($1.1 million) and higher employee costs ($1.1 million). These decreases were partially offset by foreign currency changes driven by the strengthening of the Euro against the U.S. dollar ($2.6
million), higher selling prices at the specialty chemicals segment ($1.6 million) and the impact of the Acquisition ($1.3 million).



Operating expenses increased by $1.0 million or 1.8% in fiscal 2003 to $56.8 million. This was primarily caused by an increase in operating costs at our
packaging operations ($1.8 million) and specialty chemicals operations ($1.1 million), partially offset by lower operating expenses at our corporate offices ($1.9 million). Included in operating expenses for the year ended December 26, 2003 were
approximately $1.0 million of foreign currency transaction losses, as well as $ 0.4 million of internal costs related to the Acquisition and costs related to the Companys registration statement relating to the proposed sale of the
Companys common stock.



For the reasons described above,
income from operations decreased by $18.0 million in fiscal 2003 to $5.9 million or 1.7% of net sales from $23.9 million or 7.4% of net sales in 2002.



Interest expense of $21.0 million in 2003 was comparable to $21.4 million in the prior year, as lower average interest rates more than offset the impact
of higher average levels of outstanding debt. Income from unconsolidated affiliates decreased $2.5 million from the prior year to $3.6 million due to a reduction in partners capital from an investment partnership in which the Company serves as
a limited partner. Other expenses of $0.9 million in 2003 were comparable to $1.1 million in 2002.



17



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##### Table of Contents

The effective tax rate for fiscal 2003 decreased to 21.1% from 38.0% in the prior year. This reduction
was primarily due to the creation of a valuation allowance against certain of the Companys state net operating loss carryforwards.



Segment Analysis



Packaging Segment Results



The following table summarizes the packaging segment results of operations for the fiscal years ended December 26, 2003 and December 27, 2002.



|                       |  |      |       |      |   |                    |  |   |          |   |  |       |   
|---------------------- |  | ---- | ----- | ---- | - | ------------------ |  | - | -------- | - |  | ----- | --
|(millions of dollars)  |  | 2003 |       | 2002 |   | Increase(Decrease) |  |   | % Change |  
|Sales                  |  | $    | 196.4 |      | $ | 195.4              |  | $ | 1.0      |   |  | 0.5   | % 
|Gross profit           |  |      | 44.5  |      |   | 54.4               |  |   | (9.9     | ) |  | (18.2 | )%
|Operating expenses     |  |      | 26.6  |      |   | 24.7               |  |   | 1.9      |   |  | 7.7   | % 
|Income from operations |  |      | 17.9  |      |   | 29.7               |  |   | (11.8    | ) |  | (39.7 | )%



Financial results at
the Companys packaging operations were negatively impacted by higher energy-related costs, higher raw material costs and lower sales volumes of foam packaging products, primarily during the first half of fiscal 2003. These factors were due in
large part to the hostilities which occurred in the Middle East. Partially offsetting these items were savings realized from implemented cost containment measures.



Net sales in the packaging segment in fiscal 2003 increased $1.0 million to $196.4 million compared to $195.4 million in
fiscal 2002. The increase was primarily due to the Acquisition in mid-November ($3.0 million) and increased sales at our European packaging operations ($0.7 million). These increases were partially offset by lower selling prices ($1.7 million)
resulting primarily from changes in product mix and lower sales volumes ($1.0 million), primarily during the first half of 2003.



Gross profit decreased $9.9 million to $44.5 million or 22.7% of net sales in fiscal 2003 from $54.4 million or 27.8% of net sales in fiscal 2002. This
decrease was primarily caused by higher energy-related costs ($6.2 million) and raw material costs ($2.1 million). The increase in energy-related costs stemmed from an increase in the average price per million British thermal units of natural gas,
primarily during the first half of 2003. The increase in raw materials related to higher EPS production costs, resulting from increased styrene monomer costs over the prior year.



Operating expenses increased $1.9 million to $26.6 million in fiscal 2003 from $24.7 million in fiscal 2002. This increase
was due to higher general and administrative costs ($2.2 million), primarily at our European packaging operations, partially offset by lower distribution costs ($0.6 million) in the domestic packaging operations resulting from lower sales volumes.
For the reasons described above, primarily higher energy-related and raw material costs, income from operations decreased $11.8 million to $17.9 million in fiscal 2003 from $29.7 million in the prior year.



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Specialty Chemicals Segment Results



The following table summarizes the specialty chemicals segment results of operations for the fiscal years ended December 26,
2003 and December 27, 2002.



|                              |  |      |       |   |      |   |                    |  |   |          |   |  |        |   
|----------------------------- |  | ---- | ----- | - | ---- | - | ------------------ |  | - | -------- | - |  | ------ | --
|(millions of dollars)         |  | 2003 |       |   | 2002 |   | Increase(Decrease) |  |   | % Change |  
|Sales                         |  | $    | 154.2 |   |      | $ | 134.3              |  | $ | 19.9     |   |  | 14.8   | % 
|Gross profit                  |  |      | 18.1  |   |      |   | 21.9               |  |   | (3.8     | ) |  | (17.4  | )%
|Operating expenses            |  |      | 18.6  |   |      |   | 17.5               |  |   | 1.1      |   |  | 6.3    | % 
|Income (loss) from operations |  |      | (0.5  | ) |      |   | 4.4                |  |   | (4.9     | ) |  | (111.4 | )%



For fiscal 2003, net
sales in the specialty chemicals segment increased $19.9 million or 14.8% to $154.2 million from $134.3 million in fiscal 2002. This increase was primarily due to currency effects driven by the strengthening of both the Euro and the Canadian dollar.
Sales at our North American specialty chemicals operations increased $6.6 million primarily due to the favorable currency effects ($3.6 million) combined with higher selling prices ($6.5 million), partially offset by lower sales volumes ($3.8
million). Sales at our European operations increased $13.3 million primarily due to the favorable currency effects ($13.8 million) combined with higher sales volumes ($2.7 million), partially offset by lower selling prices ($3.1 million). Net sales
included $8.9 million and $9.8 million of sales to the packaging segment for fiscal 2003 and 2002, respectively, which are eliminated in consolidation.



Gross profit decreased by $3.8 million to $18.1 million in fiscal 2003 from $21.9 million in fiscal 2002. This was mainly due to higher styrene monomer
costs ($7.7 million), the primary raw material in EPS, combined with higher energy costs ($1.2 million) and depreciation expense ($1.1 million), partially offset by higher selling prices ($3.3 million) as discussed above and the favorable impact of
changes in foreign currency rates ($2.6 million).



For fiscal
2003, operating expenses increased by $1.1 million to $18.6 million from $17.5 million in fiscal 2002. This increase was primarily caused by changes in foreign currency rates ($2.3 million) combined with increased selling costs ($0.4 million) and
higher distribution costs resulting from increased sales volumes ($0.4 million). These increases were partially offset by lower general and administrative expenses resulting from cost savings initiatives that were implemented during fiscal 2003. For
the reasons described above, primarily higher raw material and energy-related costs, income from operations decreased $4.9 million in fiscal 2003 from $4.4 million in the prior year.



Corporate and Other



Corporate operating expenses decreased by $1.9 million during fiscal 2003. This favorable change was caused by lower general and administrative expenses
($2.0 million) resulting from cost savings initiatives implemented during fiscal 2003 and lower amortization costs, partially offset by an increase in foreign currency losses ($1.0 million) as well as $1.8 million in expenses related to the
extinguishment of long-term debt as described in Note 5 to the consolidated financial statements included elsewhere herein.



Year Ended December 27, 2002 Compared to the Year Ended December 28, 2001



Consolidated



Net sales in fiscal 2002 were $323.2 million, a decrease of $2.5 million from $325.7 million in fiscal 2001. Excluding the results of the European
insulation operations, which were divested in December 2001, net sales increased by $20.4 million or 6.7%. This was primarily caused by an 18.1% increase in sales at the specialty chemicals segment resulting from an increase in sales volume (13.8%)
and higher average selling prices (3.9%).



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Gross profit increased to $79.7 million or 24.7% of net sales in fiscal 2002 from $75.0 million or 23.0%
of net sales in fiscal 2001. Excluding the impact of the divested European insulation operations, gross profit in fiscal 2002 increased by $17.0 million from $62.7 million in fiscal 2001. This increase was caused by higher sales volumes at the
specialty chemicals segment ($4.4 million), higher selling prices across both operating segments ($3.2 million) and lower energy-related costs at the domestic packaging operations ($3.2 million), combined with improved manufacturing efficiencies at
both the packaging and specialty chemicals segments ($6.1 million).



Operating expenses increased by $8.6 million in fiscal 2002 to $55.8 million. Excluding the results of the European insulation operations and the $10.5 million gain recognized on its sale, operating expenses increased by $6.0 million in
fiscal 2002 to $55.8 million. This was primarily caused by an increase in operating costs at our corporate offices ($6.5 million) and our specialty chemical operations ($1.8 million), which were partially offset by lower operating costs at our
packaging operations ($2.4 million).



Income from operations
decreased by $3.9 million in fiscal 2002 to $23.9 million. Excluding the impact of the divested European insulation operations and the gain resulting from its sale, income from operations increased by $11.0 million to $23.9 million or 7.4% of net
sales from 4.0% in fiscal 2001.



Interest expense decreased by
$0.9 million to $21.4 million for fiscal 2002 from $22.3 million for fiscal 2001. This decrease was primarily due to a reduction in long-term debt resulting from the sale of the European insulation operations ($0.6 million), combined with lower
interest rates on the Companys revolving credit facilities ($0.6 million). Included in interest expense for fiscal 2002 and 2001 was $1.1 million of deferred financing fee and premium amortization related to the Companys senior notes.
Other expenses decreased by $1.5 million for the year ended December 27, 2002 primarily as a result of non-recurring costs ($0.7 million) that were incurred in fiscal 2001, as well as decreased currency transaction losses.



The $5.0 million increase in income from unconsolidated affiliates resulted
from a gain that caused a net increase in partners capital from operations in an investment partnership in which the Company serves as a limited partner. This gain represented unrealized gains on investments held by the investment partnership
for which there is no established market. The Company expects that income from unconsolidated affiliates will be substantially lower in fiscal 2003 and subsequent years.



The Company recorded a $2.9 million provision for income taxes in fiscal 2002, representing a $0.7 million increase over
fiscal 2001. This increase was primarily caused by a $3.5 million increase in pre-tax income, partially offset by a reduction in the Companys effective tax rate as compared to fiscal 2001.



Segment Analysis



Packaging Segment



Net sales in the packaging segment in fiscal 2002 were $195.4 million as
compared to $235.9 million in fiscal 2001. Excluding the results of the divested European insulation operations, net sales in fiscal 2002 decreased by $1.8 million or 0.9% over fiscal 2001. This was primarily caused by a decrease in sales volumes
(2.0%), partially offset by higher average selling prices (1.1%). The decrease in sales volumes resulted from a planned rationalization of lower margin business to provide capacity for higher margin business which came on stream during the fourth
quarter of 2002.



Gross profit increased to 27.9% of net sales
in fiscal 2002 from 25.9% of net sales in fiscal 2001. Excluding the impact of the divested European insulation operations, gross profit for fiscal 2002 increased by $5.6 million to $54.4 million. This increase was primarily caused by lower energy
costs ($3.2 million), combined with higher selling prices ($2.1 million) and improved manufacturing efficiencies resulting from engineering projects and technology upgrades ($1.4 million).



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Operating expenses decreased by $10.3 million to $24.7 million for fiscal 2002 from $35.0 million for
fiscal 2001. Excluding the results of the divested European operations, operating expenses decreased by $2.4 million to 12.7% of net sales in fiscal 2002 from 13.8% of net sales in fiscal 2001. This decrease was primarily due to lower distribution
costs resulting from the reduction in sales volumes ($0.5 million), combined with savings resulting from cost containment initiatives including implemented workforce reductions ($1.7 million).



Income from operations increased by $3.5 million over fiscal 2001 to $29.7
million in fiscal 2002 for the reasons described above. Fiscal 2001 income from operations for the European insulation operations, which were sold on December 12, 2001, was $4.5 million. Excluding these results, income from operations increased by
$8.0 million or 36.8% for fiscal 2002.



Specialty Chemicals
Segment



For fiscal 2002, net sales in the specialty
chemicals business segment increased by $20.6 million (18.1%) to $134.3 million from $113.7 million in fiscal 2001. This was caused by an increase in sales volume (13.8%), primarily in the domestic specialty chemicals operations, and higher average
selling prices (3.9%). Net sales included $9.8 million and $25.6 million of sales to the packaging segment for fiscal 2002 and 2001, respectively, that are eliminated in consolidation. Excluding the impact of the divested European insulation
operations, net sales to the packaging segment were $9.8 million for fiscal 2001.



Gross profit increased by $9.4 million to $21.9 million for fiscal 2002 from $12.5 million for fiscal 2001. This was primarily due to increased sales volumes ($4.4 million) and improved manufacturing efficiency ($7.1
million), combined with a favorable change in the spread between average selling prices and the average cost of the styrene monomer ($1.1 million).



For fiscal 2002, operating expenses increased by $1.8 million to $17.5 million from $15.7 million in fiscal 2001. This increase was primarily caused by
higher distribution costs resulting from increased sales volume ($0.9 million) and an increase in currency transaction losses at the European operations ($0.5 million). Income from operations for fiscal 2002 was $4.4 million, representing a $7.6
million improvement over fiscal 2001 for the reasons described above.



Corporate and Other



Corporate operating
expenses, excluding the $10.5 million gain on the divestiture of the Companys European insulation operations in 2001, increased by $6.5 million during fiscal 2002. This was primarily caused by an increase in amortization ($1.2 million),
insurance ($2.0 million) and compensation to corporate personnel ($3.2 million). Included in the higher corporate compensation for fiscal 2002 was $2.5 million in additional salary and bonus to our chief executive officer. From 1999 to 2001, our
chief executive officers salary and bonus were reduced by 23% or $900,000, based primarily on the Companys results of operations for those periods. Our chief executive officers compensation for 2002 reflects the positive financial
results experienced during 2002 as compared to each of the prior three fiscal periods, due in part to the divestiture of the European insulation operations in December 2001. While compensation is reviewed annually, we do not anticipate that our
chief executive officers compensation will materially increase in fiscal 2004.



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Liquidity and Capital Resources



During fiscal 2003, the Companys cash flow from operating activities totaled $1.9 million. During the 2003 period, the
Company had after tax cash flow of $1.4 million combined with a $0.5 million decrease in working capital. The decrease in working capital was primarily due to lower accounts receivable ($1.9 million), as well as higher accounts payable ($5.9
million) and higher inventory ($7.2 million), both due in large part to increased raw material and energy-related costs.



During fiscal 2003, inventory turnover was approximately 6.3 times per year compared to 6.9 in 2002. The turnover was negatively impacted by the November
14, 2003 Acquisition. As of December 26, 2003, the average collection period for our accounts receivable was 45 days, which was slightly lower than the 47 day average collection period as of December 27, 2002.



The Company used $18.1 million in investing activities during fiscal 2003.
The Company made $11.4 million in capital expenditures and spent $4.5 million in cash for the Acquisition. In addition, other assets increased by $2.9 million primarily due to deposits paid related to manufacturing equipment. Distributions received
from investments in unconsolidated affiliates exceeded the additional investments in these affiliates by $0.7 million during fiscal 2003.



On March 11, 2003, the Company issued $135 million of 11% Senior Notes due 2010 and amended its domestic revolving credit facility to include a $45
million term loan and to increase the revolving credit commitment from $35 million to $45 million. The proceeds were used to repay the existing $159.5 million Series A and Series B Senior Notes due December 1, 2003 and outstanding borrowings under
the existing revolving credit facilities. On November 17, 2003, in connection with the Acquisition, the Company amended its domestic credit facility to include a new $5.0 million term loan and to increase the limit of revolving loans to the lesser
of (i) the $55.0 million committed amount less the outstanding principal balance of the new $5.0 million term loan or (ii) a borrowing base amount less, in each case, the principal amounts of outstanding letters of credit. The
Companys revolving credit facility under the Amended Credit Agreement expires in March 2008.



As of December 26, 2003, the Company had $45.1 million outstanding under its revolving credit facilities. After taking into account cash on hand, we had
the ability to draw up to an additional $19.1 million under these facilities as of December 26, 2003. The principal uses of cash for the next several years will be debt service, capital expenditures and working capital requirements. The
Companys capital expenditures for fiscal years 2002 and 2003 were $10.6 million and $11.4 million, respectively.



As part of the Acquisition, we issued a six-year unsecured note in the amount of $10.0 million bearing interest at 6% and assumed $9.3 million in other
long-term contractual liabilities. Polar Plastics and certain of its affiliates and key management also entered into seven-year non-competition agreements that will require us to pay an additional $3.0 million over five years.



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 2004 and in the long-term, cash generated from operations 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



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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 credit facilities.



The
Company expects to spend approximately $24.0 million on capital expenditures in 2004. Of this amount, approximately $19.0 million relates to new capital expenditures, while $5.0 million relates to maintenance-related capital expenditures on existing
equipment. Management estimates that the majority of capital expenditures will be made from cash generated from operating activities with the remainder financed with other long-term debt. The Companys planned spending on capital investments is
expected to provide sufficient capacity to satisfy the production requirements under the Companys current business plan. The Company believes that the levels of capital expenditures permitted by its credit facilities will be sufficient to meet
long-term capital expenditure requirements under the Companys current business plan. The Company has flexibility regarding its long-term capital spending as it is not subject to contractual commitments, has the ability to adjust capital
spending based on results of operations, excluding maintenance-related capital expenditures, and can assess the overall liquidity position of the Company at the time future investment decisions are made. 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 non-core assets, which will enhance the Companys overall liquidity and improve its capital structure.



The Companys projected fiscal 2004 debt service payments as of December
26, 2003 were $36.1 million, which included debt principal payments of $16.0 million and interest payments of $20.1 million. As of December 26, 2003, if the interest rate on the Companys variable rate debt had changed by 1%, the Companys
annual debt service payment obligations would have changed by approximately $0.9 million.



Credit Agreements



Effective September 2003, in November 2003 in connection with the Acquisition and again in March 2004, we amended certain financial covenants in the Amended Credit Agreement to permit additional flexibility in operating our business and to
address compliance issues. The recent amendments caused changes to the following financial covenants: (i) the minimum fixed charge coverage ratios, (ii) the maximum ratio of funded indebtedness to earnings before interest, taxes, depreciation and
amortization, (iii) the limitation of capital expenditures and (iv) the limitation of operating lease arrangements. As amended, the Amended Credit Agreement contains the following financial covenants:



| |  | a minimum fixed charge coverage ratio, which is 1.05 to 1.00 for the quarter ending December 31, 2003, tested for the two most recent fiscal quarters, 0.90 to 1.00 for the quarter
ending March 31, 2004, tested for the three most recent quarters, and 1.10 to 1.00 thereafter until reaching 1.15 to 1.00 for quarters ending December 31, 2004 and thereafter, tested for the most recent four fiscal quarters;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | a maximum ratio of funded indebtedness to earnings before interest, taxes, depreciation and amortization, which is 6.00 to 1.00 for the quarter ending December 31, 2003, tested for
the two most recent fiscal quarters, and declines thereafter until reaching 3.75 to 1.00 for quarters ending March 31, 2006 and thereafter, tested for the most recent four fiscal quarters;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | a minimum ratio of borrowers consolidated tangible assets to consolidated tangible assets of our domestic subsidiaries of 85%;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| |  | a minimum ratio of the borrowers consolidated earnings before interest, taxes, depreciation and amortization to consolidated earnings before interest, taxes, depreciation and
amortization of our domestic subsidiaries of 85%;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | limitation of capital expenditures to $25.0 million per year; and
| | - | -----------------------------------------------------------------



| |  | limitation of operating lease arrangements to $11.0 million per year.
| | - | ---------------------------------------------------------------------



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As a result of the amendments discussed above, we are in compliance with all covenants, including
financial covenants, under all of our credit arrangements.



As
part of the March 2004 amendment, our obligations under the Amended Credit Agreement are further secured by mortgages on an additional seven of our U.S. manufacturing facilities and our interests in an unconsolidated affiliate. Our President and
Chief Executive Officer, agreed to guarantee our obligations under the Amended Credit Agreement up to an amount not exceeding $5.0 million. There were a number of other changes made as part of the seventh amendment as follows:



| |  | The $5.0 million supplemental term loan which was added by the 6th amendment effective November 17, 2003 was paid early and the additional mortgages provided $6.0 million additional
availability under the revolving credit facility.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | A Mandatory Prepayment Event was defined by reference to a sale of certain non-core assets, an initial public offering of the company common stock, or any other transaction in which
the borrowers raise equity capital or reduce outstanding shareholder loans. Upon receipt of proceeds from such an event, various paydowns of the term loan and revolving loans will be required and upon certain paydowns, the pledge of the
unconsolidated affiliate interest and the guaranty will be released.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Contractual Obligations and Commercial Commitments



The Company has future obligations for debt repayments, capital leases, future minimum rental and similar commitments under noncancelable operating leases, non-competition agreement and purchase obligations as well as contingent obligations
related to outstanding letters of credit. These obligations as of December 26, 2003 are summarized in the tables below.



|                                         |  |                        |         |                 |   |           |  |           |         |               |   |         |  |   |        
|---------------------------------------- |  | ---------------------- | ------- | --------------- | - | --------- |  | --------- | ------- | ------------- | - | ------- |  | - | -------
|(thousands of dollars)                   |  | Payments Due by Period
|Contractual Obligations                  |  | Total                  |         | Less than1 year |   | 1-3 years |  | 4-5 years |         | After 5 years
|Long-term borrowings, including interest |  | $                      | 367,915 |                 | $ | 33,365    |  | $         | 61,781  |               | $ | 102,803 |  | $ | 169,966
|Capital lease obligations                |  |                        | 9,309   |                 |   | 2,760     |  |           | 4,778   |               |   | 1,771   |  |   |       
|Operating lease obligations              |  |                        | 51,670  |                 |   | 7,954     |  |           | 10,991  |               |   | 8,152   |  |   | 24,573 
|Non-compete obligations                  |  |                        | 3,000   |                 |   | 600       |  |           | 1,200   |               |   | 1,200   |  |   |       
|Purchase obligations(1)                  |  |                        | 313,830 |                 |   | 103,830   |  |           | 105,000 |               |   | 70,000  |  |   | 35,000 
|                                         |  |                        |         |                 |   |           |  |           |         |               |   |         |  |   |        
|                                         |  | $                      | 745,724 |                 | $ | 148,509   |  | $         | 183,750 |               | $ | 183,926 |  | $ | 229,539
|                                         |  |                        |         |                 |   |           |  |           |         |               |   |         |  |   |        

---

|(1) | These amounts represent commitments under long-term styrene monomer supply contracts, as discussed in Note 6 to the Companys consolidated financial statements, as well as
short term commitments under natural gas contracts.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|                             |  |                                            |       |                 |   |           |  |           |   |               |   |   |  |   |  
|---------------------------- |  | ------------------------------------------ | ----- | --------------- | - | --------- |  | --------- | - | ------------- | - | - |  | - | -
|(thousands of dollars)       |  | Amount of Commitment Expiration Per Period
|Other Commercial Commitments |  | TotalAmountsCommitted                      |       | Less than1 year |   | 1-3 years |  | 4-5 years |   | After 5 years
|Letters of credit            |  | $                                          | 3,274 |                 | $ | 3,274     |  | $         |  |               | $ |  |  | $ | 



Critical Accounting Policies and
Estimates



The Company prepares its financial statements
in conformity with accounting principles generally accepted in the United States of America (GAAP). The preparation of such consolidated financial statements requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of those financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.



The Company discloses its significant accounting
policies in the notes to its audited consolidated financial statements. Judgments and estimates of uncertainties are required in applying the Companys accounting policies in certain areas. Following are some of the areas requiring significant
judgments and estimates: determination of an assets useful life; estimates of allowances for bad debts; cash flow and valuation assumptions in performing asset impairment tests of long-lived assets; valuation assumption in determining the fair
value of investments held by affiliates; and estimates of realizability of deferred tax assets.



The Companys senior management has reviewed these critical accounting policies and estimates and the discussion below with its Audit Committee.



There are numerous critical assumptions that may influence
accounting estimates in these and other areas. We base our critical assumptions on historical experience, third-party data and on various other estimates we believe to be reasonable. Certain of the more critical assumptions include:



Bad Debt Risk



| |  | Credit worthiness of specific customers and aging of customer balances
| | - | ----------------------------------------------------------------------



| |  | Contractual rights and obligations
| | - | ----------------------------------



| |  | General and specific economic conditions
| | - | ----------------------------------------



Depreciable Lives of Plant and Equipment



| |  | Changes in technological advances
| | - | ---------------------------------



| |  | Wear and tear
| | - | -------------



| |  | Changes in market demand
| | - | ------------------------



The depreciable lives of the plant and equipment used in the operation of our business average approximately 16.6 years. Management monitors the
assumptions underlying the useful lives of these assets and may potentially need to adjust the corresponding depreciable lives as circumstances change. A change in the average depreciable life of the Companys plant and equipment by one year
would impact depreciation expense by $0.9 million.



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Asset Impairment Determinations



| |  | Intended use of assets and expected future cash flows
| | - | -----------------------------------------------------



| |  | Industry specific trends and economic conditions
| | - | ------------------------------------------------



| |  | Customer preferences and behavior patterns
| | - | ------------------------------------------



| |  | Impact of regulatory initiatives
| | - | --------------------------------



Fair Value of Investments Held by Affiliates



| |  | Expected future cash flows of underlying investments
| | - | ----------------------------------------------------



| |  | Changes in market demand
| | - | ------------------------



| |  | Industry specific trends and economic conditions
| | - | ------------------------------------------------



| |  | Third-party valuations
| | - | ----------------------



Changes in key assumptions about the financial condition of an underlying investment or actual condition which differs from estimates could result in an
other than temporary impairment charge. However, given the substantial margin by which the fair value of the underlying investments exceeds the carrying value of our investment, the Company does not anticipate a material impact on the consolidated
financial statements from differences in these assumptions.



Deferred Taxes



| |  | Expected future profitability and cash flows
| | - | --------------------------------------------



| |  | Impact of regulatory initiatives
| | - | --------------------------------



| |  | Timing of reversals of existing temporary differences between book and taxable income
| | - | -------------------------------------------------------------------------------------



Changes in key assumptions about expected future profitability and cash flows could result in changes to the Companys
tax provision and deferred tax liability position resulting from its ability to utilize existing net operating loss carry forwards. Given the margin by which expected future profitability and cash flows exceed those levels required to utilize
existing net operating loss carry forwards, the Company does not anticipate a material impact on the consolidated financial statements from differences in these assumptions.



Recently Issued Accounting Standards



In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143,
Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company
adopted the provisions of this pronouncement on December 28, 2002. The adoption of this statement did not have an effect on the Companys financial statements.



In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company was required to adopt the provisions of this pronouncement in the beginning of fiscal 2002. The adoption had no effect on the
Companys financial statements.



In April 2002, the FASB
issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This Statement rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt,
and SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. The Statement requires gains and losses from debt extinguishments that are used as part of the Companys risk management strategy to be classified
as income



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from operations rather than as extraordinary items, net of tax. The Company adopted this Statement during the fourth
quarter of its year ended December 27, 2002. The impact on the Company was to reclassify the extraordinary item recorded during the quarter ended March 29, 2002 to income from continuing operations.



In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation - Transition and Disclosure. SFAS No. 148 amends the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation, to require more prominent and frequent disclosures in financial
statements. Also, SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation. The Company has included the disclosures prescribed by SFAS No. 148
and adopted the prospective method of adoption as prescribed by SFAS No. 148.



In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities an interpretation of ARB No. 51. This Interpretation clarifies the application of Accounting Research
Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties. The Interpretation applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an
interest after that date. It applies in the first fiscal year or interim period ending after December 15, 2003, to variable interest entities in which an entity holds a variable interest that it acquired prior to February 1, 2003.



As a result of the adoption of FIN 46, the Company began to consolidate
Radnor Investments, L.P. beginning in the fourth quarter of the year ended December 26, 2003. As discussed in Note 4 to the Companys consolidated financial statements, the adoption of this interpretation resulted in an increase to the
investment assets on its consolidated balance sheet to $65.3 million with a corresponding minority interest payable of $48.9 million. This transaction did not have a material effect on the Companys consolidated net income or cash flows. Prior
to the adoption of FIN 46, the Company utilized the equity method of accounting. Under the equity method, original investments were recorded at cost in other assets and adjusted for the Companys share of undistributed earnings or losses of
these companies.



Forward Looking Statements



The statements contained in this Annual Report that are not historical
facts, including but not limited to raw material prices, are based on current expectations. These statements are forward looking (as defined in the U.S. Private Securities Litigation Reform Act of 1995) in nature and involve a number of risks and
uncertainties. Actual results may vary materially due to risks relating to raw material price volatility, dependence on key customers, international operations, dependence on key personnel and environmental matters, as well as general business and
economic conditions, both domestic and international, and other risks that may be described from time to time in the reports that the Company files with the Securities and Exchange Commission. See BusinessRaw Materials,
BusinessRisks Attendant to Foreign Operations, BusinessCompetition, BusinessEmployees, BusinessEnvironmental Matters, and Quantitative and Qualitative Disclosures about
Market Risk.



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



The Companys market risk is the potential loss arising from adverse changes in interest rates. The Companys long-term debt obligations are
mostly at fixed interest rates and denominated in U.S. dollars. The Company manages its interest rate risk by monitoring trends in interest rates as a basis for determining whether to enter into fixed rate or variable rate agreements. Market risk is
estimated as the potential increase in fair value of the Companys long-term debt obligations resulting from a hypothetical one-percent decrease in interest rates and amounts to approximately $6.3 million over the term of the debt.



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Although the Company continues to evaluate derivative financial instruments to manage foreign currency
exchange rate changes, the Company does not currently hold derivatives for managing these risks or for trading purposes.



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



Radnor Holdings Corporation and Subsidiaries



|                                                                                                                                      |  |    
|------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|Independent Auditors Report                                                                                                          |  | F-1
|                                                                                                                                      | 
|Report of Independent Public Accountants                                                                                              |  | F-2
|                                                                                                                                      | 
|Consolidated Balance Sheets as of December 26, 2003 and December 27, 2002                                                             |  | F-3
|                                                                                                                                      | 
|Consolidated Statements of Operations for the Fiscal Years Ended December 26, 2003, December 27, 2002 and December 28, 2001           |  | F-4
|                                                                                                                                      | 
|Consolidated Statements of Stockholders Equity for the Fiscal Years Ended December 26, 2003, December 27, 2002 and December 28, 2001 |  | F-5
|                                                                                                                                      | 
|Consolidated Statements of Cash Flows for the Fiscal Years Ended December 26, 2003, December 27, 2002 and December 28, 2001           |  | F-6
|                                                                                                                                      | 
|Notes to Consolidated Financial Statements                                                                                            |  | F-8



Radnor Investments, L.P.



|                                                                                                      |  |     
|----------------------------------------------------------------------------------------------------- |  | ----
|Independent Auditors Report                                                                          |  | F-29
|                                                                                                      | 
|Statements of Assets, Liabilities and Partners Capital as of December 31, 2002 and 2001 (unaudited)  |  | F-30
|                                                                                                      | 
|Statements of Operations for the Years Ended December 31, 2002 and 2001 (unaudited)                   |  | F-31
|                                                                                                      | 
|Statements of Changes in Partners Capital for the Years Ended December 31, 2002 and 2001 (unaudited) |  | F-32
|                                                                                                      | 
|Statements of Cash Flows for the Years Ended December 31, 2002 and 2001 (unaudited)                   |  | F-33
|                                                                                                      | 
|Statements of Investments as of December 31, 2002 and 2001 (unaudited)                                |  | F-34
|                                                                                                      | 
|Notes to Financial Statements as of December 31, 2002 and 2001 (unaudited)                            |  | F-35



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



On June 27, 2002, we dismissed Arthur Andersen LLP (Arthur Andersen) as our independent public accountants and engaged KPMG LLP
(KPMG) to serve as our independent public accountants for the fiscal year ended December 27, 2002. The decision to change independent public accountants was approved by our Board of Directors.



Arthur Andersens report on the our consolidated financial statements
for the fiscal year ended December 28, 2001 did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.



During the fiscal year ended December 28, 2001 and through June 27, 2002,
there were no disagreements with Arthur Andersen on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which, if not resolved to Arthur Andersens satisfaction, would have



28



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caused them to make reference to the subject matter in connection with their report on our consolidated financial
statements for such years; and there were no reportable events as defined in item 304(a)(1)(v) of Regulation S-K.



We provided both Arthur Andersen and KPMG with a copy of the foregoing disclosures. We requested and received from Arthur Andersen a letter, dated June
27, 2002, stating its agreement with such statements and filed the same as Exhibit 16.1 to our report on Form 8-K filed on June 27, 2002.



During the fiscal year ended December 28, 2001 and through the date of our decision, we did not consult KPMG with respect to the application of accounting
principles to a specified transaction either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, or any other matters or reportable events as set forth in Items 304(a)(2)(i) and (ii)
of Regulation S-K.



ITEM 9A. CONTROLS AND PROCEDURES



Under the supervision of the Chief Executive Officer and Chief Financial Officer, the Companys management conducted an evaluation of the effectiveness of the design and operation of the Companys disclosure controls and
procedures as of December 26, 2003. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of its disclosure controls and procedures have been effective in ensuring that information
required to be disclosed by the Company in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange
Commission. There have been no changes in the Companys internal control over financial reporting subsequent to the date of such evaluation.



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PART III



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



Directors and Executive Officers



The directors and executive officers of the Company and their ages as of March 23, 2004 are as follows:



|                       |  |     |  |                                                            
|---------------------- |  | --- |  | -----------------------------------------------------------
|Name                   |  | Age |  | Position                                                   
|Michael T. Kennedy     |  | 49  |  | President, Chief Executive Officer and Director            
|Michael V. Valenza     |  | 44  |  | Senior Vice President  Finance and Chief Financial Officer
|Richard C. Hunsinger   |  | 55  |  | Senior Vice President  Sales and Marketing                
|Donald D. Walker       |  | 62  |  | Senior Vice President  Operations                         
|R. Radcliffe Hastings  |  | 53  |  | Executive Vice President, Treasurer and Director           
|John P. McKelvey       |  | 63  |  | Senior Vice President, Human Resources and Administration  
|Caroline J. Williamson |  | 36  |  | Vice President and Corporate Counsel                       
|Paul D. Ridder         |  | 32  |  | Vice President and Corporate Controller                    
|Paul M. Finigan        |  | 49  |  | Director                                                   



Michael T.
Kennedy has served as President, Chief Executive Officer and as a director of the Company since its formation in November 1991. Between March 1985 and July 1990, Mr. Kennedy served as Chief Financial Officer of Airgas, Inc., a New York Stock
Exchange-listed distributor of industrial gases.



Michael V.
Valenza has served as Senior Vice President-Finance and Chief Financial Officer of the Company since April 1993. He joined the Company in September 1992 as Director of Finance. From 1984 until joining the Company, Mr. Valenza served in a variety
of positions with Arthur Andersen LLP, most recently as a manager in the Enterprise Group.



Richard C. Hunsinger has served as Senior Vice President-Sales and Marketing of the Company since its formation in November 1991. From 1979 through August 1991, Mr. Hunsinger served in various management
positions, including Vice President of Sales and Marketing, for Winkler/Flexible Products, Inc., a former division of The Coca Cola Company.



Donald D. Walker has served as Senior Vice President-Operations of the Company since November 1992. Mr. Walker served as Vice President of
Manufacturing and as Director of Manufacturing of the Company from February 1992 through November 1992. From 1969 until February 1992, Mr. Walker served in various management positions with Scott Container Products Group, Inc. (WinCups
predecessor), WMF Corporation and Thompson Industries.



R.
Radcliffe Hastings has served as Executive Vice President and Treasurer of the Company since March 2004. Mr. Hastings served as Senior Vice President and Treasurer of the Company since June 1996 and as a director since May 1997. Previously, Mr.
Hastings was with Continental Bank, N.A. and its successor, Bank of America, for 18 years. Mr. Hastings held a variety of management positions in the U.S. banking group and in Bank of Americas securities operation, BA Securities, Inc.



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John P. McKelvey has served as Senior Vice President-Human Resources and Administration for the
Company since March 22, 2002. From October 1992 through March 2002, Mr. McKelvey was the Vice President-Human Resources and Quality Assurance for the Company. From February 1992 until October 1992, Mr. McKelvey was Director of Human Resources for
the Company. From 1971 until joining the Company, Mr. McKelvey served in a variety of human resources management positions for Scott Container Products Group, Inc., Texstyrene Corporation, WMF Corporation and Thompson Industries.



Caroline J. Williamson has served as Vice President and Corporate
Counsel of the Company since March 1997. From March 1996 to March 1997, Ms. Williamson served as counsel for Aetna U.S. Healthcare. From September 1992 to March 1996, Ms. Williamson was an associate with Duane Morris LLP.



Paul D. Ridderhas served as Vice President and Corporate Controller
of the Company since December 2002. From January 1998 through December 2002, Mr. Ridder served as Corporate Controller for the Company. From August 1996 through January 1998, Mr. Ridder held various management positions with the Company, including
Director of Financial Reporting and Manager of Financial Reporting. From 1993 until joining the Company, Mr. Ridder served in a variety of positions with Price Waterhouse LLP, most recently as a senior accountant.



Paul M. Finigan has served as a director of the Company since July
2000. Mr. Finigan has served as counsel to the law firm of Day Berry & Howard, LLP since October 2002. From November 1999 to June 2002, Mr. Finigan served as Chief Legal Officer of Lumenos, Inc. Mr. Finigan is also a director of SkinHealth, Inc.
where he served as Executive Vice President from March 1999 to November 1999. From November 1988 to September 1997, Mr. Finigan served as Senior Vice President and General Counsel of Value Health, Inc.



Board Committees



Our board of directors has the authority to appoint committees to perform certain management and administrative functions.
Currently, the Board has appointed an Audit Committee and a Compensation Committee.



The Audit Committee has the responsibility for the appointment, compensation, retention and oversight of our independent accountants for the purpose of preparing or issuing an audit report or performing other audit,
review or attest services. The audit committee also has the responsibility of reviewing the results and scope of audit and other services provided by the independent accountants, evaluating the objectivity and independence of our outside auditors
and reviewing and evaluating our audit functions generally. The audit committee also exercises oversight of our internal controls and financial reporting processes, and ethical and legal compliance matters. The Audit Committee is comprised of Mr.
Kennedy, Mr. Hastings and Mr. Finigan. The Board of Directors has determined that Mr. Kennedy is an audit committee financial expert. Neither Mr. Kennedy nor Mr. Hastings is independent within the meaning of the rules adopted by the New
York Stock Exchange and the Nasdaq Stock Market, although we are not currently subject to those rules. Our Board of Directors has determined that the qualifications and experience of Messrs. Kennedy and Hastings provide valuable guidance to the
Audit Committee notwithstanding their lack of independence, and that their significant stock ownership enhances the likelihood that they will perform their duties as members of the Audit Committee in a manner that is in the best interest of our
stockholders and other constituencies.



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The Compensation Committee is responsible for approving, or making recommendations to the Board of
Directors with respect to, the compensation arrangements (including bonus payments) for our executive officers, approving or making recommendations with respect to our equity incentive plans and making recommendations with respect to our general
compensation plans and programs. The sole member of the Compensation Committee is Mr. Finigan. Mr. Finigan qualifies as independent within the meaning of the rules adopted by the New York Stock Exchange and the Nasdaq Stock Market.



Code of Ethics for Senior Officers



We have adopted a Code of Ethics for our chief executive officer and our
other senior financial officers, including our chief financial officer, treasurer and controller. We will provide a copy of the code of ethics to any person upon request without charge. Any such request should include the name and mailing address of
the person making the request, which should be directed to:



Radnor Holdings Corporation

Three Radnor Corporate Center

Suite 300

Radnor, PA 19087

Attention: Corporate Controller



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ITEM 11. EXECUTIVE COMPENSATION



Officers of the Company who serve as directors are not compensated for serving as directors of the Company. The Companys non-officer director receives an annual retainer of $20,000 for his services as director. In addition, all
directors are reimbursed for their expenses incurred in attending meetings. The following table sets forth certain information concerning the compensation paid to the Companys chief executive officer and the Companys five other most
highly compensated executive officers (the Named Executive Officers) whose total annual salary and bonus exceeded $100,000 for the year ended December 26, 2003:



Summary Compensation Table



|                                                                               |  |              |  |                     |                             |       |   |                             |  |   |                        |           |  |   |                   |          
|------------------------------------------------------------------------------ |  | ------------ |  | ------------------- | --------------------------- | ----- | - | --------------------------- |  | - | ---------------------- | --------- |  | - | ----------------- | ---------
|                                                                               |  |              |  | Annual Compensation |                             |       |   |                            
|Name and Principal Position                                                    |  | Year         |  | Salary              |                             | Bonus |   | Other AnnualCompensation(1) |  |   | All Other Compensation |          
|Michael T. Kennedy President and Chief Executive Officer                       |  | 200320022001 |  | $                   | 3,000,0003,000,0002,500,000 |       | $ | 2,800,0002,500,000500,000   |  | $ | 144,790152,08787,112   | (2)(2)(2) |  | $ | 4,76075,81476,376 | (4)(3)(3)
|                                                                               |  |              |  |                     |                            
|R. Radcliffe Hastings Senior Vice President and Treasurer                      |  | 200320022001 |  |                     | 550,000500,000300,000       |       |   | 350,000300,000             |  |   |                     |           |  |   | 4,7604,7604,480   | (4)(4)(4)
|                                                                               |  |              |  |                     |                            
|Michael V. Valenza Senior Vice President - Finance and Chief Financial Officer |  | 200320022001 |  |                     | 325,000300,000275,000       |       |   | 200,000200,000             |  |   |                     |           |  |   | 4,7604,7604,480   | (4)(4)(4)
|                                                                               |  |              |  |                     |                            
|Caroline J. Williamson Senior Vice President and Corporate Counsel             |  | 200320022001 |  |                     | 250,000225,000195,000       |       |   | 200,000200,000             |  |   |                     |           |  |   | 4,7604,7604,480   | (4)(4)(4)
|                                                                               |  |              |  |                     |                            
|Richard C. Hunsinger Senior Vice President - Sales and Marketing               |  | 200320022001 |  |                     | 325,000300,000275,000       |       |   | 200,000                   |  |   |                     |           |  |   | 4,7604,7604,480   | (4)(4)(4)
|                                                                               |  |              |  |                     |                            
|Donald D. Walker Senior Vice President- Operations                             |  | 200320022001 |  |                     | 325,000300,000275,000       |       |   | 200,000                   |  |   |                     |           |  |   | 4,7604,7604,480   | (4)(4)(4)

---

|(1) | In accordance with the rules of the Securities and Exchange Commission, other compensation in the form of perquisites and other personal benefits has been omitted in those instances
where the aggregate amount of such perquisites and other personal benefits constituted less than the lesser of $50,000 or 10% of the total of annual salary and bonuses for the officer for such year.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | Represents transportation costs paid by the Company on behalf of Mr. Kennedy.
|--- | -----------------------------------------------------------------------------

|(3) | Includes $4,760 and $4,480 in 2002 and 2001, respectively, of matching contributions by the Company under its 401(k) Retirement Savings Plan and premiums of $71,054 and $71,896 in
2002 and 2001, respectively, paid by the Company with respect to a supplemental life insurance policy for the benefit of Mr. Kennedy.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Represents a matching contribution by the Company under its 401(k) Retirement Savings Plan.
|--- | -------------------------------------------------------------------------------------------



The following table sets forth information with respect to options to purchase the Companys Nonvoting Common Stock
held at December 26, 2003 by the Named Executive Officers. No options were granted to or exercised by such persons during the fiscal year ended December 26, 2003.



|                       |  |                                                                        |  |                                                                   |  |             |           |               |  
|---------------------- |  | ---------------------------------------------------------------------- |  | ----------------------------------------------------------------- |  | ----------- | --------- | ------------- | -
|                       |  | Number of Securities UnderlyingUnexercised Options atDecember 26, 2003 |  | Value of Unexercised In-the-Money Options at December 26, 2003(1)
|Name                   |  | Exercisable                                                            |  | Unexercisable                                                     |  | Exercisable |           | Unexercisable
|Michael T. Kennedy     |  |                                                                       |  |                                                                  |  |             |          |               | 
|                       |  |                                                                        |  |                                                                  
|R. Radcliffe Hastings  |  |                                                                       |  |                                                                  |  |             |          |               | 
|                       |  |                                                                        |  |                                                                  
|Michael V. Valenza     |  | 130                                                                    |  |                                                                  |  | $           | 2,483,500 |               | 
|                       |  |                                                                        |  |                                                                  
|Caroline J. Williamson |  | 40                                                                     |  |                                                                  |  | $           | 730,600   |               | 
|                       |  |                                                                        |  |                                                                  
|Richard C. Hunsinger   |  | 100                                                                    |  |                                                                  |  | $           | 2,008,250 |               | 
|                       |  |                                                                        |  |                                                                  
|Donald D. Walker       |  | 125                                                                    |  |                                                                  |  | $           | 2,555,750 |               | 

---

|(1) | Based on the estimated fair value of $25,250 per share of the underlying securities, as determined by the Companys Board of Directors.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------



Employment Agreements



In May 1993, the Company entered into an employment agreement with Richard C. Hunsinger, which was amended in January 1996,
pursuant to which Mr. Hunsinger serves as Senior Vice President - Sales and Marketing of the Company. The agreement was for an initial term of seven years and six months and, absent 180 days prior written notice by either party before the end of any
renewal term, renews for twelve months from year to year. Under the agreement as amended, Mr. Hunsinger is entitled to an annual salary of not less than $145,000 beginning in 1996, subject to annual cost of living increases. The agreement contains a
covenant not to engage in any business that is competitive with the business of the Company in any geographical area in which it does business during the term of the agreement and for a period of two years immediately following the termination of
the agreement.



In April 1996, the Company entered into an
employment agreement with R. Radcliffe Hastings, pursuant to which Mr. Hastings serves as Senior Vice President and Treasurer of the Company. The agreement was for an initial term of three years and, absent 90 days prior written notice by either
party before the end of any renewal term, renews for twelve months from year to year. Mr. Hastings is entitled to an annual salary of not less than $125,000, subject to annual review by the Board of Directors. The agreement contains a covenant not
to compete in any business that is competitive with the business of the Company in the United States during the term of the agreement.



In February 1997, the Company entered into an employment agreement with Caroline J. Williamson, pursuant to which Ms. Williamson serves as Corporate
Counsel and Secretary of the Company. The agreement was for an initial term of three years and, absent 90 days prior written notice by either party before the end of any renewal term, renews for twelve months from year to year. Ms. Williamson is
entitled to an annual salary of not less than $125,000, subject to annual review by the Company.



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We entered into an employment agreement with Mr. Kennedy that is contingent upon closing of a public
offering by us of common stock. The agreement, which will be for an initial three-year term (subject to possible one-year renewals after this three-year period), will provide for an annual base salary of $1,000,000. The employment agreement will
also provide for a minimum guaranteed annual bonus for 2004 of 100% of Mr. Kennedys annual base salary. For 2004, the maximum annual bonus payable will be capped at 200% of Mr. Kennedys annual base salary. All bonuses payable during, or
in respect of, the employment term, other than the guaranteed minimum annual bonus for 2004, will be set by our compensation committee based upon reasonable performance criteria established by the committee no later than March 31 of the year to
which it relates and after consultation with Mr. Kennedy. Mr. Kennedy will have the right to elect whether to receive any bonus that may become payable in the form of cash or shares of our common stock. As a long-term incentive, Mr. Kennedy will
receive an award of 70,000 shares of restricted stock, assuming a 1,803-for-one stock split, upon the closing of the offering. All of these shares will be subject to forfeiture under the circumstances to be described in the award. The risk of
forfeiture for such shares generally lapses with respect to one-third of such shares on each of the first three anniversaries of the closing of the offering. Mr. Kennedy will be eligible to participate in all of the Companys employee benefits
(including retirement, health and fringe benefits) made available generally to other officers and key employees and to such other benefits provided to him in accordance with past practice. Under the employment agreement, Mr. Kennedys
employment may be terminated with or without cause by us at any time. In the event that we terminate Mr. Kennedys employment other than for cause or Mr. Kennedy terminates for good reason (as such terms will
be defined in the agreement), we will be obligated to provide severance pay equal to two times his then current annual base salary and bonus amount and two years health insurance continuation and to unrestrict his restricted stock award to the
extent such restrictions had not then already lapsed. The severance benefits increase to three times annual base salary and bonus and the health insurance continuation extends to three years in the event the qualifying termination occurs within two
years following a change of control of the Company (as will be defined in the agreement). This agreement will also provide that, upon a change of control, (i) Mr. Kennedy will have the right to resign during a 60-day period following the
first anniversary of the date of the change of control and receive the severance pay and benefits that would otherwise be provided if his employment were terminated other than for cause and (ii) Mr. Kennedy will be entitled to receive a
tax gross-up payment to fully offset any excise taxes incurred if the after-tax benefit to Mr. Kennedy of the gross-up is at least 10% greater than the after-tax benefit that Mr. Kennedy would receive if he were cut back to the maximum
amount that could be paid to him without incurring any such excise taxes. The employment agreement will also contain customary post-employment restrictive covenants in connection with Mr. Kennedys ability to compete and to solicit customers
and employees of the Company.



Compensation Committee Interlocks and Insider
Participation



There were no Compensation Committee
interlocks required to be disclosed under Item 402(j) of Regulation S-K under the Securities Act of 1933 during 2003.



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##### Table of Contents

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The following table sets forth certain information as of March 23, 2004, with respect to each person who is known by the Company to own beneficially 5% or
more of each class of voting securities of the Company.



|                                                                               |  |                                 |  |                                  |  |                  |  
|------------------------------------------------------------------------------ |  | ------------------------------- |  | -------------------------------- |  | ---------------- | -
|Name of Individual or Identity of Group                                        |  | Title of Class of Capital Stock |  | Number ofSharesBeneficiallyOwned |  | Percent of Class |  
|Michael T. Kennedy Three Radnor Corporate Center Suite 300 Radnor, PA 19087    |  | Voting Common Stock             |  | 480                              |  | 80.0             | %
|                                                                               |  |                                 | 
|John P. McNiff 322 Stenton Avenue Plymouth Meeting, PA 19462                   |  | Voting Common Stock             |  | 60                               |  | 10.0             | %
|                                                                               |  |                                 | 
|R. Radcliffe Hastings Three Radnor Corporate Center Suite 300 Radnor, PA 19087 |  | Voting Common Stock             |  | 60                               |  | 10.0             | %



The following table
sets forth certain information as of December 26, 2003, with respect to compensation plans under which equity securities of the Company are authorized for issuance.



|                                                           |  |                                                                                          |  |                                                                          |       |                                                                                             |  
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | ----- | ------------------------------------------------------------------------------------------- | -
|Plan Category                                              |  | Number of securities tobe issued upon exerciseof outstanding options,warrants and rights |  | Weighted-averageexercise price ofoutstanding options,warrants and rights |       | Number of securitiesremaining available forfuture issuance underequity compensationplans(1)
|Equity Compensation plans approved by security holders     |  | 711                                                                                      |  | $                                                                        | 5,523 |                                                                                             | 
|                                                           |  |                                                                                          | 
|Equity Compensation plans not approved by security holders |  |                                                                                         |  |                                                                          |      |                                                                                             | 
|                                                           |  |                                                                                          |  |                                                                          |       |                                                                                             |  
|Total                                                      |  | 711                                                                                      |  | $                                                                        | 5,523 |                                                                                             | 
|                                                           |  |                                                                                          |  |                                                                          |       |                                                                                             |  

---

|(1) | Excludes the number of securities to be issued upon exercise of outstanding options, warrants and rights. Also excludes securities issuable pursuant to the Companys 2003
Incentive Compensation Plan, which was approved by the Companys stockholders in November 2003 but will not be effective until completion of a recapitalization of the Company. The recapitalization is expected to involve the conversion of each
class of our common stock into a single class of common stock and a related stock split and is not expected to be implemented until shortly before the completion of an initial public offering of our common stock.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The following table sets forth certain information as of March 23, 2004, with respect to beneficial
ownership of each class of equity securities of the Company by (a) the directors of the Company, (b) the Named Executive Officers and (c) the directors and all executive officers of the Company as a group.



|                                                            |  |                                                                           |  |                                        |        |  |                     |    
|----------------------------------------------------------- |  | ------------------------------------------------------------------------- |  | -------------------------------------- | ------ |  | ------------------- | ---
|Name of Individual or Identity of Group                     |  | Title of Class of Capital Stock                                           |  | Number of Shares Beneficially Owned(1) |        |  | Percent of Class(2) |    
|Michael T. Kennedy                                          |  | Voting Common Stock Class B Nonvoting Common Stock Nonvoting Common Stock |  | 4802,212                              | (3)    |  | 80.041.0           | %% 
|                                                            |  |                                                                           | 
|Michael V. Valenza                                          |  | Voting Common Stock Class B Nonvoting Common Stock Nonvoting Common Stock |  | 150                                  |        |  | 40.0              | %  
|                                                            |  |                                                                           | 
|Caroline J. Williamson                                      |  | Voting Common Stock Class B Nonvoting Common Stock Nonvoting Common Stock |  | 40                                   |        |  | 14.0              | %  
|                                                            |  |                                                                           | 
|Richard C. Hunsinger                                        |  | Voting Common Stock Class B Nonvoting Common Stock Nonvoting Common Stock |  | 150                                  |        |  | 43.5              | %  
|                                                            |  |                                                                           | 
|Donald D. Walker                                            |  | Voting Common Stock Class B Nonvoting Common Stock Nonvoting Common Stock |  | 182                                  |        |  | 49.2              | %  
|                                                            |  |                                                                           | 
|R. Radcliffe Hastings                                       |  | Voting Common Stock Class B Nonvoting Common Stock Nonvoting Common Stock |  | 60540                                 | (4)    |  | 10.010.0           | %% 
|                                                            |  |                                                                           | 
|Paul M. Finigan                                             |  | Voting Common Stock Class B Nonvoting Common Stock Nonvoting Common Stock |  |                                     |        |  |                  |    
|                                                            |  |                                                                           | 
|Directors and all executive officers as a group (9 persons) |  | Voting Common Stock Class B Nonvoting Common Stock Nonvoting Common Stock |  | 5402,752625                            | (3)(4) |  | 90.051.087.4        | %%%

---

|(1) | Includes shares of Nonvoting Common Stock that certain individuals have the right to acquire, on or before May 22, 2004, upon the exercise of stock options granted pursuant to the
Companys Equity Incentive Plan, as follows: Michael V. Valenza-130; Caroline J. Williamson-40; Richard C. Hunsinger-100; Donald D. Walker-125; and the directors and all executive officers as a group-470.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Based upon 600, 5,400 and 245 outstanding shares of Voting Common Stock, Class B Nonvoting Common Stock and Nonvoting Common Stock, respectively, as well as the shares the
respective individual has the right to acquire on or before May 21, 2004.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes 450 shares held in a grantor retained annuity trust created by Mr. Kennedy. Mr. Kennedy retains the right to acquire the balance of these shares for value from the trust
under certain circumstances specified in the instrument governing the trust. Excludes 2,108 shares owned by eight trusts for the benefit of Mr. Kennedys children.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes 300 shares held in a grantor retained annuity trust created by Mr. Hastings. Mr. Hastings retains the right to acquire the balance of these shares for value from the trust
under certain circumstances specified in the instrument governing the trust.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



The Company has made interest-bearing advances to Michael T. Kennedy, the Companys Chief Executive Officer, for personal use. As of December 26, 2003, outstanding principal and interest from these advances
totaled $4.3 million, which was the highest amount outstanding in fiscal 2003. These advances accrue interest monthly at the 100% short-term semi-annual applicable federal rate for the current month. As of March 23, 2004, the outstanding principal
and interest from these advances totaled $4.0 million.



Michael
T. Kennedy is also a director of SkinHealth, Inc. of which Paul M. Finigan, one of our directors, is a director.



Vincent F. Garrity, Jr. is of counsel to Duane Morris LLP, which serves as the Companys primary legal counsel. Mr. Garrity is also a trustee of
eight trusts for the benefit of Mr. Kennedys children and a grantor retained annuity trust for the benefit of Mr. Kennedys children and the other family members and certain charities that own an aggregate of 2,558 shares of our Class B
Nonvoting Common Stock and for which Mr. Garrity, in his capacity as trustee, has sole dispositive power and, to the extent such shares are entitled to vote on any matter, sole voting power.



The Company provides certain management services to a related company of
which Mr. Kennedy is also a director for which the Company receives a fee. During 2003, the Company earned management fees of $0.8 million. At December 26, 2003, unpaid management fees totaled $0.4 million.



Michael T. Kennedy agreed to guarantee our obligations under the Amended
Credit Agreement up to an amount not exceeding $5.0 million.



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



The Company has recently formed an Audit Committee. Prior to the formation of the Audit Committee, the Board of Directors performed the duties that are now the responsibility of the Audit Committee. The Board of
Directors has engaged the Companys independent auditors and has pre-approved all non-audit services provided by KPMG LLP.



During fiscal years 2003 and 2002, the company retained KPMG LLP to provide services in the following categories and amounts (in thousands):



|                   |  |      |       |         |   |    
|------------------ |  | ---- | ----- | ------- | - | ---
|                   |  | 2003 |       | 2002(1)
|Audit fees         |  | $    | 190   |         | $ | 174
|Audit-related fees |  |      | 456   |         |   | 252
|Tax fees           |  |      | 388   |         |   | 136
|All other fees     |  |      |      |         |   |   
|                   |  |      |       |         |   |    
|Total fees         |  | $    | 1,034 |         | $ | 562
|                   |  |      |       |         |   |    



Audit fees are those
fees for professional services rendered in connection with the audit of the Companys annual consolidated financial statements included in its Annual Report on Form 10-K and the review of the Companys quarterly consolidated financial
statements included in its Quarterly Report on Form 10-Qs that are customary under auditing standards generally accepted in the United States of America, as well as for statutory audits in foreign jurisdictions. Audit-related fees consist
primarily of services rendered in connection with employee benefit plan audits, SEC registration statements on Form S-4 and Form S-1, due diligence assistance and consultation on financial accounting and reporting standards. Tax fees are primarily
for preparation of tax returns, assistance with tax audits and appeals, advice on acquisitions and divestitures and technical assistance.

---

(1)KPMG LLP was not
engaged as the Companys independent auditor until June of 2002. Therefore, the 2002 fees represent only a partial year.



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PART IV



ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



(a) Documents filed as part of this Annual Report



|1. | The consolidated financial statements of the Company and its subsidiaries are listed in Item 8.
|-- | -----------------------------------------------------------------------------------------------



|2. | Financial Statement Schedules - None.
|-- | -------------------------------------



|3. | Exhibits:
|-- | ---------



|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1    |  | Restated Certificate of Incorporation of Radnor Holdings Corporation, as amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |  | (Incorporated by reference to Exhibit 3.1 filed with the Form 10-K for the year ended December 25, 1998 filed by Radnor Holdings Corporation)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | 
|3.3    |  | Bylaws of Radnor Holdings Corporation (Incorporated by reference to Exhibit 3.2 filed with Form S-4 Registration Statement, filed by Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor
Chemical Corporation (formerly SP Acquisition Co.), StyroChem U.S., Ltd. (formerly StyroChem U.S., Inc. and StyroChem International, Inc.), StyroChem Canada, Ltd. (formerly StyroChem International, Ltd.) and Radnor Management, Inc., Commission File
No. 333-19495 (the Original S-4))                                                                                                                                                                                                
|       | 
|4.1    |  | Indenture, dated as of March 11, 2003, among Radnor Holdings Corporation, Radnor Chemical Corporation, Radnor Delaware II, Inc., Radnor Management Delaware, Inc., Radnor Management, Inc.,
StyroChem Delaware, Inc., StyroChem Europe Delaware, Inc., StyroChem U.S., Ltd., StyroChem GP, L.L.C., StyroChem LP, L.L.C., WinCup Europe Delaware, Inc., WinCup GP, L.L.C., WinCup LP, L.L.C., WinCup Texas, Ltd. and WinCup Holdings, Inc. and
Wachovia Bank, National Association, as trustee, including form of Notes and Guarantees (Incorporated by reference to Exhibit 4.1 filed with the Form 10-Q for the quarterly period ended March 28, 2003 filed by Radnor Holdings
Corporation)
|       | 
|*10.1  |  | Amended and Restated Contract of Sale, dated as of November 7, 2003, by and between Chevron Phillips Chemical Company LP and Radnor Chemical Corporation, StyroChem U.S., Ltd., StyroChem
Canada, Ltd., StyroChem Finland Oy, WinCup Texas, Ltd. and WinCup Holdings, Inc. (Incorporated by reference to Exhibit 10.1 filed with Amendment No. 1 to the Form S-1 Registration Statement, filed by Radnor Holdings Corporation, Commission File No.
333-110443 (the Form S-1))                                                                                                                                                                                                             
|       | 
|+10.2  |  | Agreement of Sale dated as of January 1, 1998 by and between Lyondell Chemie Nederland, B.V., as assignee of Lyondell Chemical Nederland, Ltd. (formerly known as ARCO Chemie Nederland, Ltd.)
and StyroChem Finland Oy (Incorporated by reference to Exhibit 10.49 filed with the Form 10-K for the Year Ended December 25, 1998 filed by Radnor Holdings Corporation)                                                                                                                                                                                                                                                                                                                     
|       | 
|++10.3 |  | Amendment dated November 8, 2002 by and between Lyondell Chemie Nederland, B.V. and StyroChem Finland Oy (Incorporated by reference to Exhibit 10.48 filed with Amendment No. 1 to the Form
10-K for the Year Ended December 27, 2002 filed by Radnor Holdings Corporation)                                                                                                                                                                                                                                                                                                                                                                                                                 

|
|

|
|



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|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.4  |  | Amended Lease between Patricia M. Dunnell and James River Paper Company, Inc., dated September 29, 1989, as amended in September, 1994, assigned to WinCup Holdings, Inc. (as successor in
interest to WinCup Holdings, L.P.) on January 20, 1996 (Incorporated by reference to Exhibit 10.26 filed with Amendment No. 1 to the Original S-4)                                                                                                                                                             
|      | 
|10.5  |  | Warehouse Lease between Etzioni Partners and James River Corporation, dated February 13, 1992, as amended on April 13, 1992 and on December 9, 1992, assigned to WinCup Holdings, Inc. (as
successor in interest to WinCup Holdings, L.P.) on January 20, 1996 (Incorporated by reference to Exhibit 10.27 filed with Amendment No. 1 to the Original S-4)                                                                                                                                                
|      | 
|10.6  |  | Lease between Stone Mountain Industrial Park, Inc. and Scott Container Group, Inc., dated December 16, 1991, as amended on February 28, 1994, assigned to WinCup Holdings, Inc. (as successor
in interest to WinCup Holdings, L.P.) on January 20, 1996 (Incorporated by reference to Exhibit 10.30 filed with Amendment No. 1 to the Original S-4)                                                                                                                                                       
|      | 
|10.7  |  | Plant Lease 195 Tamal Vista Boulevard, Corte Madera, California, between Hunt Brothers Leasing, L.L.C. and WinCup Holdings, Inc. dated February 10, 2003 (Incorporated by reference to Exhibit
10.12 filed with the Form 10-Q for the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)                                                                                                                                                                                         
|      | 
|10.8  |  | Engineering Lease 201 Tamal Vista Boulevard, Corte Madera, California, between Hunt Brothers Leasing, L.L.C. and WinCup Holdings, Inc. (as successor in interest to WinCup Holdings, L.P.),
dated May 1, 1997 (Incorporated by reference to Exhibit 10.71 filed with the Form S-4 Registration Statement, filed by Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical Corporation, StyroChem U.S., Ltd., and Radnor Management,
Inc., Commission File No. 333-42101 (the Series B S-4))
|      | 
|10.9  |  | Amendment to Lease 201 Tamal Vista Boulevard, Corte Madera, California, between Hunt Brothers Leasing, L.L.C. and WinCup Holdings, Inc. dated February 10, 2003 (Incorporated by reference to
Exhibit 10.13 filed with the Form 10-Q for the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)                                                                                                                                                                                  
|      | 
|10.10 |  | Warehouse Lease 205 Tamal Vista Boulevard, Corte Madera, California, between Hunt Brothers Leasing, L.L.C. and WinCup Holdings, Inc. dated February 10, 2003 (Incorporated by reference to
Exhibit 10.14 filed with the Form 10-Q for the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)                                                                                                                                                                                     
|      | 
|10.11 |  | Standard Form Multi-Tenancy Industrial Lease between WinCup Holdings, Inc. and CK Airpark Associates, dated June 1, 1994, assigned to WinCup Holdings, Inc. (as successor in interest to WinCup
Holdings, L.P.) on January 20, 1996 (Incorporated by reference to Exhibit 10.32 filed with Amendment No. 1 to the Original S-4)                                                                                                                                                                           
|      | 
|10.12 |  | Industrial Building Lease between CenterPoint Properties Trust (as successor in interest to CenterPoint Properties Corporation) and WinCup Holdings, Inc. (as successor in interest to WinCup
Holdings, L.P.) dated May 1996 (Incorporated by reference to Exhibit 10.33 filed with the Series B S-4)                                                                                                                                                                                                     
|      | 
|10.13 |  | Amendment to Lease by and between CenterPoint Properties Trust and WinCup Holdings, Inc. dated April 1998 (Incorporated by reference to Exhibit 10.15 filed with the Form 10-Q for the
quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)                                                                                                                                                                                                                                        
|      | 
|10.14 |  | Second Amendment to Lease by and between CenterPoint Properties Trust and WinCup Holdings, Inc. dated February 4, 2003 (Incorporated by reference to Exhibit 10.16 filed with the Form 10-Q for
the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)                                                                                                                                                                                                                           
|      | 
|10.15 |  | Radnor Corporate Center Office Lease by and between Radnor Center Associates and WinCup Holdings, Inc. (as successor in interest to WinCup Holdings, L.P.), dated May 31, 1996 (Incorporated by
reference to Exhibit 10.34 filed with Amendment No. 1 to the Original S-4)                                                                                                                                                                                                                                
|      | 
|10.16 |  | Neste Service Agreement by and between Neste Oy and StyroChem Finland Oy and Radnor Holdings Corporation dated as of October 15, 1997 (Incorporated by reference to Exhibit 10.68 filed with
the Series B S-4)                                                                                                                                                                                                                                                                                            

|
|





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|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.17 |  | Land Lease Agreement by and between Neste Oy and StyroChem Finland Oy and Radnor Holdings Corporation dated as of October 15, 1997 (Incorporated by reference to Exhibit 10.69 filed with the
Series B S-4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      | 
|10.18 |  | Lease and Cooperation Agreement between Suomen Polystyreeni Tehdas Oy/Finska Polystyren Fabriken Ab and Borough of Kokemaki dated February 27, 1971, as amended by Subcontract dated October
13, 1976, Subcontract II dated February 26, 1981, Subcontract III dated August 13, 1985, Transfer of Lease Agreement between City of Kokemaki and Neste Oy dated December 29, 1987, Lease dated April 15, 1994 and Lease Agreement II dated September 26,
1996 (Incorporated by reference to Exhibit 10.75 filed with the Series B S-4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|      | 
|10.19 |  | Office Lease Agreement between Keharakenpajat Oy and Neste Oy Polystyreeni dated July 1, 1995 (Incorporated by reference to Exhibit 10.77 filed with Amendment No. 1 to the Series B
S-4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|      | 
|10.20 |  | Fourth Amended and Restated Revolving Credit and Security Agreement dated as of December 26, 2001, among Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical Corporation,
StyroChem U.S., Ltd., Radnor Delaware, 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. and PNC Bank, National Association (Incorporated by reference to Exhibit
10.19 filed with the Form 10-K for the year ended December 28, 2001 filed by Radnor Holdings Corporation (the 2001 10-K))                                                                                                                                                                                                                                                                                                                                                                                                                                        
|      | 
|10.21 |  | First Amendment to Fourth Amended and Restated Revolving Credit and Security Agreement dated as of February 4, 2002, among Radnor Holdings Corporation, WinCup Holdings, Inc., Radnor Chemical
Corporation, StyroChem U.S., Ltd., 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. and PNC Bank, National Association (Incorporated by reference
to Exhibit 10.20 filed with the 2001 10-K)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|      | 
|10.22 |  | Second Amendment to Fourth Amended and Restated Revolving Credit and Security Agreement dated as of March 5, 2003, 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., and WinCup LP, L.L.C. and PNC Bank, National Association. (Incorporated by
reference to Exhibit 10.1 filed with the Form 10-Q for the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)                                                                                                                                                                                                                                                                                                                                                                                                                          
|      | 
|10.23 |  | Third Amendment to Fourth Amended and Restated Revolving Credit, Term Loan and Security Agreement dated as of August 1, 2003, 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., and WinCup LP, L.L.C. and PNC Bank, National Association
(Incorporated by reference to Exhibit 10.59 filed with Amendment No. 2 to the Form S-4 Registration Statement, filed by Radnor Holdings Corporation, Radnor Chemical Corporation, Radnor Delaware II, Inc., Radnor Management Delaware, Inc., Radnor
Management, Inc., StyroChem Delaware, Inc., StyroChem Europe Delaware, Inc., StyroChem U.S., Ltd., StyroChem GP, L.L.C., StyroChem LP, L.L.C., WinCup Europe Delaware, Inc., WinCup GP, L.L.C., WinCup LP, L.L.C., WinCup Texas, Ltd., and WinCup
Holdings, Inc., Commission File No. 333-105123 (the 2003 S-4))
|      | 
|10.24 |  | Fourth Amendment to Fourth Amended and Restated Revolving Credit, Term Loan and Security Agreement dated September 12, 2003, 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., and WinCup LP, L.L.C. and PNC Bank, National Association
(Incorporated by reference to Exhibit 10.1 filed with the Form 10-Q for the quarterly period ended September 26, 2003 filed by Radnor Holdings Corporation)                                                                                                                                                                                                                                                                                                                                                                                                             
|      | 
|10.25 |  | Fifth Amendment to Fourth Amended and Restated Revolving Credit, Term Loan and Security Agreement dated October 27, 2003, 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., and WinCup LP, L.L.C. and PNC Bank, National Association (Incorporated by
reference to Exhibit 10.2 filed with the Form 10-Q for the quarterly period ended September 26, 2003 filed by Radnor Holdings Corporation)                                                                                                                                                                                                                                                                                                                                                                                                                



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|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.26 |  | Sixth Amendment to Fourth Amended and Restated Revolving Credit, Term Loan and Security Agreement dated November 17, 2003, 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., and WinCup LP, L.L.C. and PNC Bank, National Association (Incorporated by
reference to Exhibit 10.26 filed with Amendment No. 1 to the Form S-1)                
|      | 
|10.27 |  | Amended and Restated Revolving Credit Note dated March 5, 2003, made by 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., and WinCup LP, L.L.C. in favor of PNC Bank, National Association (Incorporated by reference to Exhibit 10.2 filed with the Form
10-Q for the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)
|      | 
|10.28 |  | Amended and Restated Revolving Credit Note dated March 5, 2003, made by 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., and WinCup LP, L.L.C. in favor of Fleet Capital Corporation (Incorporated by reference to Exhibit 10.3 filed with the Form 10-Q
for the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)     
|      | 
|10.29 |  | Amended and Restated Revolving Credit Note dated March 5, 2003, made by 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., and WinCup LP, L.L.C. in favor of LaSalle Business Credit, LLC (Incorporated by reference to Exhibit 10.4 filed with the Form 10-Q
for the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)  
|      | 
|10.30 |  | Term Loan Note dated March 5, 2003, made by 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., and WinCup LP, L.L.C. in favor of PNC Bank, National Association (Incorporated by reference to Exhibit 10.5 filed with the Form 10-Q for the quarterly
period ended March 28, 2003 filed by Radnor Holdings Corporation)                            
|      | 
|10.31 |  | Term Loan Note dated March 5, 2003, made by 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., and WinCup LP, L.L.C. in favor of Fleet Capital Corporation (Incorporated by reference to Exhibit 10.6 filed with the Form 10-Q for the quarterly
period ended March 28, 2003 filed by Radnor Holdings Corporation)                                 
|      | 
|10.32 |  | Term Loan Note dated March 5, 2003, made by 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., and WinCup LP, L.L.C. in favor of LaSalle Business Credit, LLC (Incorporated by reference to Exhibit 10.7 filed with the Form 10-Q for the quarterly
period ended March 28, 2003 filed by Radnor Holdings Corporation)                              
|      | 
|10.33 |  | Trademark Collateral Security Agreement, dated December 5, 1996, between StyroChem U.S., Ltd. and The Bank of New York Commercial Corporation (Incorporated by reference to Exhibit 10.44 filed
with Amendment No. 1 to the Original S-4)                                                                                                                                                                                                                                                                                                     
|      | 
|10.34 |  | Trademark Assignment of Security, dated December 5, 1996, between StyroChem U.S., Ltd. and The Bank of New York Commercial Corporation (Incorporated by reference to Exhibit 10.45 filed with
Amendment No. 1 to the Original S-4)                                                                                                                                                                                                                                                                                                            
|      | 
|10.35 |  | Trademark Collateral Security Agreement, dated December 5, 1996, between WinCup Holdings, Inc. and The Bank of New York Commercial Corporation (Incorporated by reference to Exhibit 10.46
filed with Amendment No. 1 to the Original S-4)                                                                                                                                                                                                                                                                                                    



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|      |  |                                                                                                                                                                                                                                                                                                                                                          
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.36 |  | Trademark Assignment of Security, dated December 5, 1996, between WinCup Holdings, Inc. and The Bank of New York Commercial Corporation (Incorporated by reference to Exhibit 10.47 filed with
Amendment No. 1 to the Original S-4)                                                                                                                      
|      | 
|10.37 |  | Trademark Security Agreement, dated December 26, 2001, between Radnor Delaware, Inc. and PNC Bank, National Association (Incorporated by reference to Exhibit 10.28 filed with the 2001
10-K)                                                                                                                                                            
|      | 
|10.38 |  | Patent Security Agreement, dated December 26, 2001, between StyroChem Delaware, Inc. and PNC Bank, National Association (Incorporated by reference to Exhibit 10.29 filed with the 2001
10-K)                                                                                                                                                            
|      | 
|10.39 |  | Patent Security Agreement, dated December 26, 2001, between Radnor Delaware, Inc. and PNC Bank, National Association (Incorporated by reference to Exhibit 10.30 filed with the 2001
10-K)                                                                                                                                                               
|      | 
|10.40 |  | Copyright Security Agreement, dated December 26, 2001, between Radnor Delaware, Inc. and PNC Bank, National Association (Incorporated by reference to Exhibit 10.31 filed with the 2001
10-K)                                                                                                                                                            
|      | 
|10.41 |  | Assignment Agreement dated as of December 26, 2001, among Bank of America, N.A., First Union National Bank and PNC Bank, National Association (Incorporated by reference to Exhibit 10.32 filed
with the 2001 10-K)                                                                                                                                      
|      | 
|10.42 |  | Amended and Restated Guaranty dated as of December 26, 2001, by Radnor Management Delaware, Inc. in favor of PNC Bank, National Association (Incorporated by reference to Exhibit 10.33 filed
with the 2001 10-K)                                                                                                                                        
|      | 
|10.43 |  | Amended and Restated Guaranty dated as of December 26, 2001, by WinCup Europe Delaware, Inc. in favor of PNC Bank, National Association (Incorporated by reference to Exhibit 10.34 filed with
the 2001 10-K)                                                                                                                                            
|      | 
|10.44 |  | Affirmation of Guaranty dated as of March 5, 2003, by Radnor Management Delaware, Inc. in favor of PNC Bank, National Association (Incorporated by reference to Exhibit 10.8 filed with the
Form 10-Q for the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)                                                                
|      | 
|10.45 |  | Affirmation of Guaranty dated as of March 5, 2003, by WinCup Europe Delaware, Inc. in favor of PNC Bank, National Association (Incorporated by reference to Exhibit 10.9 filed with the Form
10-Q for the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)                                                                    
|      | 
|10.46 |  | Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing between WinCup Holdings, Inc. and PNC Bank, National Association with respect to Metuchen, New Jersey property
(Incorporated by reference to Exhibit 10.10 filed with the Form 10-Q for the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)  
|      | 
|10.47 |  | Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing between WinCup Holdings, Inc. and PNC Bank, National Association with respect to West Chicago, Illinois
property (Incorporated by reference to Exhibit 10.11 filed with the Form 10-Q for the quarterly period ended March 28, 2003 filed by Radnor Holdings Corporation)
|      | 
|10.48 |  | Joinder dated January 24, 2002 joining Radnor Delaware II, Inc. to the Fourth Amended and Restated Revolving Credit and Security Agreement (Incorporated by reference to Exhibit 10.35 filed
with the 2001 10-K)                                                                                                                                         
|      | 
|10.49 |  | Commitment Transfer Supplement, dated as of February 4, 2002, among PNC Bank, National Association, Fleet Capital Corporation, and PNC Bank, National Association, as agent for Lenders under
the Fourth Amended and Restated Revolving Credit and Security Agreement. (Incorporated by reference to Exhibit 10.36 filed with the 2001 10-K)             
|      | 
|10.50 |  | Agreement Respecting a Term Loan and Other Credit Facilities, dated February 25, 1994, between Bank of Montreal and StyroChem Canada, Ltd., as amended (Incorporated by reference to Exhibit
10.63 filed with Amendment No. 1 to the Original S-4)                                                                                                       
|      | 
|10.51 |  | Letter of Undertaking, dated December 5, 1996, made by StyroChem Canada, Ltd. and Radnor Holdings Corporation in favor of Bank of Montreal (Incorporated by reference to Exhibit 10.64 filed
with the Original S-4)                                                                                                                                      



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|        |  |                                                                                                                                                                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        | 
|10.52   |  | Guaranty, dated February 25, 1994, made by Radnor Chemical Corporation in favor of Bank of Montreal (Incorporated by reference to Exhibit 10.65 filed with Amendment No. 1 to the Original
S-4)                                                                                                       
|        | 
|**10.53 |  | Executive Employment Agreement by and between Radnor Holdings Corporation and Richard Hunsinger, dated May 1, 1993, as amended in October, 1995 (Incorporated by reference to Exhibit 10.38
filed with the Original S-4)                                                                              
|        | 
|**10.54 |  | Employment Agreement, dated April 5, 1996, between WinCup Holdings, Inc. and R. Radcliffe Hastings (Incorporated by reference to Exhibit 10.66 filed with the Original S-4)                                                                                                                           
|        | 
|**10.55 |  | Employment Agreement dated February 21, 1997 between Radnor Holdings Corporation and Caroline J. Williamson (Incorporated by reference to Exhibit 10.81 filed with Amendment No. 1 to the
Series B S-4)                                                                                               
|        | 
|**10.56 |  | Letter Agreement dated as of December 10, 1998 between Radnor Holdings Corporation and Van D. Groenewold (Incorporated by reference to Exhibit 10.52 filed with the Form 10-K for the year
ended December 25, 1998 filed by Radnor Holdings Corporation)                                              
|        | 
|**10.57 |  | Employment Agreement dated November 20, 2003 by and between Radnor Holdings Corporation and Michael T. Kennedy, to be effective upon the closing of the initial public offering of Radnor
Holdings Corporation (Incorporated by reference to Exhibit 10.57 filed with Amendment No. 1 to the Form S-1)
|        | 
|**10.58 |  | First Amendment to Employment Agreement, dated December 15, 2003, by and between Radnor Holdings Corporation and Michael T. Kennedy (Incorporated by reference to Exhibit 10.58 filed with
Amendment No. 2 to the Form S-1)                                                                           
|        | 
|**10.59 |  | Radnor Holdings Corporation Equity Incentive Plan, dated April 24, 1992, as amended on November 1, 1993 (Incorporated by reference to Exhibit 10.39 filed with Amendment No. 1 to the Original
S-4)                                                                                                   
|        | 
|**10.60 |  | Amendment to the Radnor Holdings Corporation Equity Incentive Plan, dated April 28, 1992 (Incorporated by reference to Exhibit 10.67 filed with the Form 10-Q for the quarterly period ended
June 27, 1997 filed by Radnor Holdings Corporation)                                                      
|        | 
|**10.61 |  | Amendment No. 2003-1 to the Radnor Holdings Corporation Equity Incentive Plan, dated October 29, 2003 (Incorporated by reference to Exhibit 10.60 filed with Amendment No. 1 to the Form
S-1)                                                                                                         
|        | 
|**10.62 |  | Radnor Holdings Corporation Senior Executive Retirement Plan, amended as of September 1, 1999 (Incorporated by reference to Exhibit 10.55 filed with Form 10-K for the year ended December 31,
1999 filed by Radnor Holdings Corporation)                                                             
|        | 
|**10.63 |  | Radnor Holdings Corporation 2003 Omnibus Equity Compensation Plan adopted by Radnor Holdings Corporations Board of Directors and approved by its stockholders on December 15, 2003
(Incorporated by reference to Exhibit 10.63 filed with Amendment No. 2 to the Form S-1)                           
|        | 
|10.64   |  | Lease Agreement dated September 4, 2002 by and between Cairn Studio Ltd. and Polar Plastics Inc, as amended on February 5, 2003 and October 1, 2003, assigned to WinCup Holdings, Inc. on
November 14, 2003 (Incorporated by reference to Exhibit 10.64 filed with Amendment No. 2 to the Form S-1)   
|        | 
|10.65   |  | Lease Agreement dated February 25, 2003 by and between POL (NC) QRS 15-25, Inc. and Polar Plastics (NC) Inc, assigned to WinCup Holdings, Inc. on November 14, 2003 (Incorporated by reference
to Exhibit 10.65 filed with Amendment No. 2 to the Form S-1)                                           
|        | 
|10.66   |  | First Amendment to Lease Agreement dated November 14, 2003 by and between WinCup Holdings, Inc. and POL (NC) QRS 15-25, Inc. (Incorporated by reference to Exhibit 10.66 filed with Amendment
No. 2 to the Form S-1)                                                                                  
|        | 
|10.67   |  | Guaranty and Suretyship Agreement dated November 14, 2003, made by Radnor Holdings Corporation to POL (NC) QRS 15-25, Inc. (Incorporated by reference to Exhibit 10.67 filed with Amendment No.
2 to the Form S-1)                                                                                    



44



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##### Table of Contents

|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.68 |  | Lease Agreement dated November 14, 2003 by and between Polar Plastics (NC) Inc and WinCup Holdings, Inc. (Incorporated by reference to Exhibit 10.68 filed with Amendment No. 2 to the Form
S-1)                                                                                                                                                                                                                                       
|      | 
|10.69 |  | Seventh Amendment to Fourth Amended and Restated Revolving Credit, Term Loan and Security Agreement dated March 12, 2004, 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., and WinCup LP, L.L.C. and PNC Bank, National
Association.
|      | 
|21.1  |  | List of Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                                                                                                                 
|      | 
|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                                                                                                                                                                                                                                                          

---

|* | Portions of this Exhibit have been deleted pursuant to the Companys Application under Securities Act and Rule 406 Promulgated Thereunder for Confidential Treatment.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | This Exhibit represents a management contract or compensatory plan or arrangement.
|-- | ----------------------------------------------------------------------------------

|+ | Portions of this Exhibit have been deleted pursuant to the Companys Application Requesting Extension of Previous Grant of Confidential Treatment under Exchange Act and Rule
24b-2 Promulgated Thereunder.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|++ | Portions of this Exhibit have been deleted pursuant to the Companys Application under Exchange Act and Rule 24b-2 Promulgated Thereunder for Confidential Treatment.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



(b) Reports on Form 8-K



The Company filed a Current Report on Form 8-K under Item 9 on November 5,
2003 to announce a conference call to discuss its third quarter 2003 financials.



The Company filed a Current Report on Form 8-K under Item 2 on November 26, 2003 to announce the acquisition of the plastic packaging assets of Polar Plastics, Inc. and its subsidiary, Polar Plastics (NC) Inc. The
effective date of the closing of the acquisition was November 14, 2003. On November 13, 2003, the Company issued a press release announcing the execution of the Asset Purchase Agreement and on November 19, 2003 the Company issued a press release
announcing the completion of the acquisition. Under Item 7, the Company announced that it would file the financial statements required pursuant to Item 7(a) of Form 8-K within 60 days after the date that the report on Form 8-K must be filed.



The Company filed a Current Report on Form 8-K/A under Item 7
on January 23, 2004 as an amendment to the Companys Form 8-K Current Report under Item 2 and Item 7 dated November 14, 2003 (date of earliest event reported), filed with the Securities and Exchange Commission on November 26, 2003. This Form
8-K included the consolidated financial statements of Polar Plastics Inc., unaudited pro forma consolidated financial statements and required exhibits.



45



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##### Table of Contents

SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.



|                     |  |                             |  |                                                  
|-------------------- |  | --------------------------- |  | -------------------------------------------------
|                     |  | RADNOR HOLDINGS CORPORATION
|                     |  |                            
|Date: March 23, 2004 |  | By:                         |  | /s/ MICHAEL T. KENNEDY                           
|                     |  |                             |  | Michael T. Kennedy                               
|                     |  |                             |  | Chairman of the Board and Chief Executive Officer



Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant in the capacities and on the dates indicated.



|                          |  |                                                                                                       |  |               
|------------------------- |  | ----------------------------------------------------------------------------------------------------- |  | --------------
|/s/ MICHAEL T. KENNEDY    |  | Chairman of the Board and Chief Executive Officer                                                     |  | March 23, 2004
|Michael T. Kennedy        |  |                                                                                                       | 
|                          |  |                                                                                                      
|/s/ R. RADCLIFFE HASTINGS |  | Executive Vice President, Treasurer and Director                                                      |  | March 23, 2004
|R. Radcliffe Hastings     |  |                                                                                                       | 
|                          |  |                                                                                                      
|/s/ MICHAEL V. VALENZA    |  | Senior Vice President - Finance, Chief Financial Officer (principal accounting and financial officer) |  | March 23, 2004
|Michael V. Valenza        |  |                                                                                                       | 
|                          |  |                                                                                                      
|/s/ PAUL M. FINIGAN       |  | Director                                                                                              |  | March 23, 2004
|Paul M. Finigan           |  |                                                                                                       |  |               



46



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##### Table of Contents

Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which
Have Not Registered Securities Pursuant to Section 12 of the Act



Registrant has not sent and does not anticipate sending any annual report to its security holders other than a copy of this Form 10-K report. Registrant has not sent and does not anticipate sending any proxy statement, form of proxy or
other proxy solicitation material to more than ten of its security holders with respect to any annual or other meeting of security holders, as it has only three holders of voting securities. If any annual report other than this Form 10-K report is
hereafter furnished to Registrants security holders, or if any proxy statement, form of proxy or other proxy solicitation material is hereafter sent to more than ten of its security holders with respect to any annual or other meeting of
security holders, Registrant will furnish four copies thereof to the Securities and Exchange Commission when it is so sent.



47



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##### Table of Contents

INDEPENDENT AUDITORS REPORT



The Board of Directors and Stockholders

Radnor Holdings Corporation:



We have audited the accompanying consolidated balance sheets of Radnor Holdings Corporation
and subsidiaries as of December 26, 2003 and December 27, 2002, and the related consolidated statements of operations, stockholders equity and cash flows for the fiscal years then ended. These consolidated financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The fiscal 2001 consolidated financial statements of Radnor Holdings Corporation and
subsidiaries were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those consolidated financial statements, before the revision described in Note 2 to the consolidated financial statements, in
their report dated March 13, 2002.



We conducted our audits in accordance with
auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the fiscal 2003 and 2002 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position
of Radnor Holdings Corporation and subsidiaries as of December 26, 2003 and December 27, 2002, and the results of their operations and their cash flows for the fiscal years then ended in conformity with accounting principles generally accepted in
the United States of America.



As discussed above, the fiscal 2001 consolidated
financial statements of Radnor Holdings Corporation and subsidiaries, were audited by other auditors who have ceased operations. As described in Note 2, these consolidated financial statements have been revised to reflect the Companys change
in reporting of sales and marketing rebates. We audited the adjustments described in Note 2 that were applied to revise the fiscal 2001 consolidated financials statements. In our opinion, such adjustments are appropriate and have been properly
applied. However, we were not engaged to audit, review or apply any procedures to the fiscal 2001 consolidated financial statements of Radnor Holdings Corporation and subsidiaries other than with respect to such adjustments and disclosures, and,
accordingly, we do not express an opinion or any other form of assurance on the fiscal 2001 consolidated financial statements taken as a whole.



As discussed in Note 2 in the consolidated financial statements, the Company changed its accounting for certain equity investments and its accounting for stock-based
compensation.



/s/ KPMG LLP



Philadelphia, Pennsylvania

March 22, 2004



F-1



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##### Table of Contents

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Radnor Holdings Corporation:



We have
audited the accompanying consolidated balance sheets of Radnor Holdings Corporation (a Delaware corporation) and subsidiaries as of December 28, 2001 and December 29, 2000, and the related consolidated statements of operations, stockholders
equity and cash flows for each of the three years in the period ended December 28, 2001. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements
based on our audits.



We conducted our audits in accordance with auditing
standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Radnor Holdings Corporation and subsidiaries as of December 28, 2001 and December 29,
2000, and the results of their operations and their cash flows for each of the three years in the period ended December 28, 2001, in conformity with accounting principles generally accepted in the United States.



/s/ ARTHUR ANDERSEN LLP



Philadelphia, Pennsylvania

March 13, 2002



Above is a copy of the report previously issued by Arthur Andersen LLP in connection with Radnor Holdings Corporations filing on Form 10-K for the year ended
December 28, 2001. This audit report has not been reissued by Arthur Andersen LLP in connection with Radnor Holdings Corporations filing on Form 10-K for the year ended December 26, 2003. In accordance with EITF 00-22, the Company has changed
its reporting of sales and marketing rebates as discussed in Note 2.



F-2



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##### Table of Contents

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

December 26, 2003 and December 27, 2002

(In
thousands, except share amounts)



|                                                                                                 |  |      |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                                 |  | 2003 |         |   | 2002 |  
|Assets                                                                                           |  |      |         |   |      |   |         |  
|                                                                                                 |  |     
|Current assets:                                                                                  |  |      |         |   |      |   |         |  
|Cash                                                                                             |  | $    | 6,896   |   |      | $ | 4,059   |  
|Accounts receivable, net                                                                         |  |      | 41,441  |   |      |   | 36,165  |  
|Inventories                                                                                      |  |      | 52,202  |   |      |   | 37,715  |  
|Prepaid expenses and other                                                                       |  |      | 11,430  |   |      |   | 7,115   |  
|Deferred tax asset                                                                               |  |      | 2,466   |   |      |   | 1,838   |  
|                                                                                                 |  |      |         |   |      |   |         |  
|                                                                                                 |  |      | 114,435 |   |      |   | 86,892  |  
|                                                                                                 |  |      |         |   |      |   |         |  
|Property, plant, and equipment, at cost:                                                         |  |      |         |   |      |   |         |  
|Land                                                                                             |  |      | 7,034   |   |      |   | 6,956   |  
|Supplies and spare parts                                                                         |  |      | 6,044   |   |      |   | 4,282   |  
|Buildings and improvements                                                                       |  |      | 40,897  |   |      |   | 39,385  |  
|Machinery and equipment                                                                          |  |      | 236,820 |   |      |   | 198,794 |  
|                                                                                                 |  |      |         |   |      |   |         |  
|                                                                                                 |  |      | 290,795 |   |      |   | 249,417 |  
|Less accumulated depreciation                                                                    |  |      | (92,142 | ) |      |   | (73,921 | )
|                                                                                                 |  |      |         |   |      |   |         |  
|                                                                                                 |  |      | 198,653 |   |      |   | 175,496 |  
|                                                                                                 |  |     
|Investments                                                                                      |  |      | 66,606  |   |      |   | 14,735  |  
|                                                                                                 |  |     
|Intangible assets                                                                                |  |      | 5,790   |   |      |   |        |  
|                                                                                                 |  |     
|Other assets                                                                                     |  |      | 10,811  |   |      |   | 7,009   |  
|                                                                                                 |  |      |         |   |      |   |         |  
|                                                                                                 |  | $    | 396,295 |   |      | $ | 284,132 |  
|                                                                                                 |  |      |         |   |      |   |         |  
|Liabilities and Stockholders Equity                                                             |  |      |         |   |      |   |         |  
|                                                                                                 |  |     
|Current liabilities:                                                                             |  |      |         |   |      |   |         |  
|Accounts payable                                                                                 |  | $    | 45,993  |   |      | $ | 34,141  |  
|Accrued liabilities                                                                              |  |      | 26,913  |   |      |   | 15,154  |  
|Current portion of long-term debt                                                                |  |      | 13,626  |   |      |   | 6,548   |  
|Current portion of capitalized lease obligations                                                 |  |      | 2,324   |   |      |   | 1,141   |  
|                                                                                                 |  |      |         |   |      |   |         |  
|                                                                                                 |  |      | 88,856  |   |      |   | 56,984  |  
|                                                                                                 |  |      |         |   |      |   |         |  
|Long-term debt, net of current portion                                                           |  |      | 237,478 |   |      |   | 205,928 |  
|Capitalized lease obligations, net of current portion                                            |  |      | 6,038   |   |      |   | 1,597   |  
|Deferred tax liability                                                                           |  |      | 3,552   |   |      |   | 7,816   |  
|Other non-current liabilities                                                                    |  |      | 3,608   |   |      |   | 1,746   |  
|Minority interest in consolidated subsidiary                                                     |  |      | 48,934  |   |      |   |        |  
|                                                                                                 |  |     
|Commitments and contingencies (Note 6)                                                           |  |      |        |   |      |   |        |  
|                                                                                                 |  |     
|Stockholders equity:                                                                            |  |      |         |   |      |   |         |  
|Voting and nonvoting common stock. Authorized 22,700 shares; issued and outstanding 6,245 shares |  |      | 1       |   |      |   | 1       |  
|Additional paid-in capital                                                                       |  |      | 19,387  |   |      |   | 19,387  |  
|Retained earnings (deficit)                                                                      |  |      | (14,446 | ) |      |   | (4,663  | )
|Cumulative translation adjustment                                                                |  |      | 2,887   |   |      |   | (4,664  | )
|                                                                                                 |  |      |         |   |      |   |         |  
|Total stockholders equity                                                                       |  |      | 7,829   |   |      |   | 10,061  |  
|                                                                                                 |  |      |         |   |      |   |         |  
|                                                                                                 |  | $    | 396,295 |   |      | $ | 284,132 |  
|                                                                                                 |  |      |         |   |      |   |         |  



See accompanying notes
to consolidated financial statements.



F-3



---

##### Table of Contents

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

Fiscal years ended December 26, 2003, December 27, 2002

and December 28, 2001

(In thousands)



|                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                              |  | 2003 |         |   | 2002 |   |         | 2001 | 
|Net sales                                                     |  | $    | 341,664 |   |      | $ | 323,182 |      |  | $ | 325,734 |  
|                                                              |  |      |        
|Cost of goods sold                                            |  |      | 279,013 |   |      |   | 243,501 |      |  |   | 250,719 |  
|                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|Gross profit                                                  |  |      | 62,651  |   |      |   | 79,681  |      |  |   | 75,015  |  
|                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|Operating expenses:                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Distribution                                                  |  |      | 23,335  |   |      |   | 22,621  |      |  |   | 25,176  |  
|Selling, general and administrative                           |  |      | 31,567  |   |      |   | 33,124  |      |  |   | 32,464  |  
|Gain on sale of business                                      |  |      |        |   |      |   |        |      |  |   | (10,493 | )
|Other expenses (Note 5)                                       |  |      | 1,838   |   |      |   |        |      |  |   |        |  
|                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|                                                              |  |      | 56,740  |   |      |   | 55,745  |      |  |   | 47,147  |  
|                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|Income from operations                                        |  |      | 5,911   |   |      |   | 23,936  |      |  |   | 27,868  |  
|                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|Interest, net                                                 |  |      | 21,027  |   |      |   | 21,382  |      |  |   | 22,331  |  
|Income from unconsolidated affiliates                         |  |      | (3,623  | ) |      |   | (6,165  | )    |  |   | (1,160  | )
|Other, net                                                    |  |      | 902     |   |      |   | 1,146   |      |  |   | 2,657   |  
|                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|                                                              |  |      | 18,306  |   |      |   | 16,363  |      |  |   | 23,828  |  
|                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|Income (loss) before income taxes and discontinued operations |  |      | (12,395 | ) |      |   | 7,573   |      |  |   | 4,040   |  
|                                                              |  |      |        
|Provision (benefit) for income taxes                          |  |      | (2,612  | ) |      |   | 2,878   |      |  |   | 2,150   |  
|                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|Income (loss) before discontinued operations                  |  |      | (9,783  | ) |      |   | 4,695   |      |  |   | 1,890   |  
|                                                              |  |      |        
|Loss from discontinued operations, net of tax                 |  |      |        |   |      |   | 48      |      |  |   | 247     |  
|                                                              |  |      |         |   |      |   |         |      |  |   |         |  
|Net income (loss)                                             |  | $    | (9,783  | ) |      | $ | 4,647   |      |  | $ | 1,643   |  
|                                                              |  |      |         |   |      |   |         |      |  |   |         |  



See accompanying notes
to consolidated financial statements.



F-4



---

##### Table of Contents

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity

Fiscal years ended December 26, 2003, December 27, 2002

and December 28, 2001

(In thousands, except share amounts)



|                           |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   |        |  
|-------------------------- | ------ | --------------------------------- | ------ | -------------------------- | - | --------------------------- | - | ------ | --------------------------------- | - | ------- | ----- |  | - | ------- | - |  | - | ------ | -
|                           |        | Voting and nonvoting common stock |        | Additional paid-in capital |   | Retained earnings (deficit) |   |        | Cumulative translation adjustment |   |         | Total | 
|                           | Shares |                                   | Amount |                            |   |                             |  
|Balance, December 29, 2000 |        | 6,245                             |        | $                          | 1 |                             | $ | 19,387 |                                   | $ | (10,953 | )     |  | $ | (10,246 | ) |  | $ | (1,811 | )
|Comprehensive income:      |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   |        |  
|Net income                 |        |                                  |        |                            |  |                             |   |       |                                   |   | 1,643   |       |  |   |        |   |  |   | 1,643  |  
|Translation adjustment     |        |                                  |        |                            |  |                             |   |       |                                   |   |        |       |  |   | 285     |   |  |   | 285    |  
|                           |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   |        |  
|Total comprehensive income |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   | 1,928  |  
|                           |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   |        |  
|Balance, December 28, 2001 |        | 6,245                             |        |                            | 1 |                             |   | 19,387 |                                   |   | (9,310  | )     |  |   | (9,961  | ) |  |   | 117    |  
|Comprehensive income:      |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   |        |  
|Net income                 |        |                                  |        |                            |  |                             |   |       |                                   |   | 4,647   |       |  |   |        |   |  |   | 4,647  |  
|Translation adjustment     |        |                                  |        |                            |  |                             |   |       |                                   |   |        |       |  |   | 5,297   |   |  |   | 5,297  |  
|                           |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   |        |  
|Total comprehensive income |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   | 9,944  |  
|                           |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   |        |  
|Balance, December 27, 2002 |        | 6,245                             |        |                            | 1 |                             |   | 19,387 |                                   |   | (4,663  | )     |  |   | (4,664  | ) |  |   | 10,061 |  
|Comprehensive loss:        |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   |        |  
|Net loss                   |        |                                  |        |                            |  |                             |   |       |                                   |   | (9,783  | )     |  |   |        |   |  |   | (9,783 | )
|Translation adjustment     |        |                                  |        |                            |  |                             |   |       |                                   |   |        |       |  |   | 7,551   |   |  |   | 7,551  |  
|                           |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   |        |  
|Total comprehensive loss   |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   | (2,232 | )
|                           |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   |        |  
|Balance, December 26, 2003 |        | 6,245                             |        | $                          | 1 |                             | $ | 19,387 |                                   | $ | (14,446 | )     |  | $ | 2,887   |   |  | $ | 7,829  |  
|                           |        |                                   |        |                            |   |                             |   |        |                                   |   |         |       |  |   |         |   |  |   |        |  



See accompanying notes
to consolidated financial statements.



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##### Table of Contents

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Fiscal years ended December 26, 2003, December 27, 2002

and December 28, 2001

(In thousands)



|                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                         |  | 2003 |         |   | 2002 |   |         | 2001 | 
|Cash flows from operating activities:                                                                    |  |      |         |   |      |   |         |      |  |   |         |  
|Net income (loss)                                                                                        |  | $    | (9,783  | ) |      | $ | 4,647   |      |  | $ | 1,643   |  
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:       |  |      |         |   |      |   |         |      |  |   |         |  
|Depreciation and amortization                                                                            |  |      | 17,946  |   |      |   | 19,010  |      |  |   | 19,321  |  
|Gain on sale of business                                                                                 |  |      |        |   |      |   |        |      |  |   | (10,493 | )
|Deferred income taxes                                                                                    |  |      | (3,163  | ) |      |   | 2,233   |      |  |   | 1,703   |  
|Income from unconsolidated affiliates                                                                    |  |      | (3,623  | ) |      |   | (6,165  | )    |  |   | (1,160  | )
|Discontinued operations                                                                                  |  |      |        |   |      |   | 48      |      |  |   | 247     |  
|Changes in operating assets and liabilities, net of effects of acquisition and disposition of businesses |  |      |         |   |      |   |         |      |  |   |         |  
|Accounts receivable, net                                                                                 |  |      | 1,852   |   |      |   | (761    | )    |  |   | (1,882  | )
|Inventories                                                                                              |  |      | (7,180  | ) |      |   | (5,817  | )    |  |   | 4,150   |  
|Prepaid expenses and other                                                                               |  |      | (2,515  | ) |      |   | (440    | )    |  |   | 1,623   |  
|Accounts payable                                                                                         |  |      | 5,939   |   |      |   | (825    | )    |  |   | (14,924 | )
|Accrued liabilities                                                                                      |  |      | 2,393   |   |      |   | (3,839  | )    |  |   | (2,058  | )
|                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash provided by (used in) continuing operations                                                     |  |      | 1,866   |   |      |   | 8,091   |      |  |   | (1,830  | )
|Net cash used in discontinued operations                                                                 |  |      |        |   |      |   | (130    | )    |  |   | (67     | )
|                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash provided by (used in) operating activities                                                      |  |      | 1,866   |   |      |   | 7,961   |      |  |   | (1,897  | )
|                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Cash flows from investing activities:                                                                    |  |      |         |   |      |   |         |      |  |   |         |  
|Capital expenditures                                                                                     |  |      | (11,405 | ) |      |   | (10,558 | )    |  |   | (12,358 | )
|Net cash proceeds from sale of business                                                                  |  |      |        |   |      |   |        |      |  |   | 30,935  |  
|Business acquisitions                                                                                    |  |      | (4,502  | ) |      |   |        |      |  |   |        |  
|Distributions from unconsolidated affiliates                                                             |  |      | 6,611   |   |      |   | 6,767   |      |  |   | 380     |  
|Investments in unconsolidated affiliates                                                                 |  |      | (5,930  | ) |      |   | (4,939  | )    |  |   | (747    | )
|Increase in other assets                                                                                 |  |      | (2,852  | ) |      |   | (1,364  | )    |  |   | (1,478  | )
|                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Net cash provided by (used in) investing activities                                                      |  | $    | (18,078 | ) |      | $ | (10,094 | )    |  | $ | 16,732  |  
|                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  



(Continued)



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##### Table of Contents

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Fiscal
years ended December 26, 2003, December 27, 2002

and December 28, 2001

(In thousands)



|                                                                            |  |      |          |   |      |   |        |      |  |   |         |  
|--------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                                            |  | 2003 |          |   | 2002 |   |        | 2001 | 
|Cash flows from financing activities:                                       |  |      |          |   |      |   |        |      |  |   |         |  
|Proceeds from borrowings                                                    |  | $    | 206,163  |   |      | $ | 7,583  |      |  | $ | 7,158   |  
|Repayment of debt                                                           |  |      | (178,252 | ) |      |   | (4,520 | )    |  |   | (20,063 | )
|Payments on capitalized lease obligations                                   |  |      | (2,152   | ) |      |   | (759   | )    |  |   | (1,147  | )
|Payments of financing fees                                                  |  |      | (6,092   | ) |      |   |       |      |  |   |        |  
|                                                                            |  |      |          |   |      |   |        |      |  |   |         |  
|Net cash provided by (used in) financing activities                         |  |      | 19,667   |   |      |   | 2,304  |      |  |   | (14,052 | )
|                                                                            |  |      |          |   |      |   |        |      |  |   |         |  
|Effect of exchange rate changes on cash                                     |  |      | (618     | ) |      |   | (416   | )    |  |   | (205    | )
|                                                                            |  |      |          |   |      |   |        |      |  |   |         |  
|Net increase (decrease) in cash                                             |  |      | 2,837    |   |      |   | (245   | )    |  |   | 578     |  
|                                                                            |  |      |         
|Cash, beginning of period                                                   |  |      | 4,059    |   |      |   | 4,304  |      |  |   | 3,726   |  
|                                                                            |  |      |          |   |      |   |        |      |  |   |         |  
|Cash, end of period                                                         |  | $    | 6,896    |   |      | $ | 4,059  |      |  | $ | 4,304   |  
|                                                                            |  |      |          |   |      |   |        |      |  |   |         |  
|Supplemental disclosure of cash flow information:                           |  |      |          |   |      |   |        |      |  |   |         |  
|Cash paid during the period for interest                                    |  | $    | 16,698   |   |      | $ | 19,163 |      |  | $ | 21,031  |  
|                                                                            |  |      |          |   |      |   |        |      |  |   |         |  
|Cash paid during the period for income taxes, net of refunds of $17 in 2001 |  | $    | 1,066    |   |      | $ | 648    |      |  | $ | 123     |  
|                                                                            |  |      |          |   |      |   |        |      |  |   |         |  



See accompanying notes
to consolidated financial statements.



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##### Table of Contents

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. | ORGANIZATION, SALE OF BUSINESS AND DISCONTINUED OPERATIONS
|-- | ----------------------------------------------------------



The Company



Radnor Holdings Corporation (Radnor) was incorporated in Delaware on November 6, 1991 to acquire the outstanding stock of Benchmark Holdings,
Inc. (Benchmark) and WinCup Holdings, Inc. (WinCup). Radnor, through its WinCup subsidiary, is a leading manufacturer and distributor of disposable foodservice products and the second largest producer in the United States of
foam cups and containers. In November 2003, the Company extended its product line to include thermoformed and injection molded products through the acquisition of certain thermoforming equipment and other assets of Polar Plastics Inc. and a
subsidiary (collectively Polar Plastics or the Acquisition) (Note 3). Through its Radnor Chemical Corporation subsidiary, Radnor is the fifth largest worldwide producer of expandable polystyrene (EPS). Radnor and
its subsidiaries (collectively the Company) sell their products primarily to national, institutional, retail, and wholesale customers throughout the U.S., Canada, Mexico, and Europe. The Company markets its products under a variety of
brand and trade names, including WinCup®, Handi-Kup®, and StyroChem®.



The Company has a number of large national accounts and supplies products to a number of large foodservice distributors. The five largest accounts
represented approximately 26% and 28% of the Companys net sales for each of the fiscal years 2003 and 2002 respectively. Although the Company did not lose sales from its key customers in fiscal years 2003 and 2002, if any of such customers
substantially reduces its level of purchases from the Company, the Companys profitability could be adversely affected. Moreover, continued consolidation among distributors in the foodservice industry could result in an increasingly
concentrated customer base or the loss of certain customers.



Sale of ThermiSol Business



On December 12,
2001 the Company completed the sale of its ThermiSol operations, which included seven manufacturing plants that convert EPS into insulation products for sale primarily to the Nordic construction industry, to CRH Europe B.V. and CRH Denmark A/S
(collectively CRH). In accordance with the stock purchase agreement dated November 16, 2001, CRH purchased all of the stock of ThermiSol Finland Oy, ThermiSol Sweden AB and ThermiSol Denmark A/S from Radnor. In connection with the sale
transaction, Radnor and its affiliates agreed not to engage in certain activities that would compete with the business for a period of two years following the closing (the Competition Covenant).



The consideration for the sale of the business and the Competition Covenant
was $34.4 million in cash, and the assumption of net third party debt of $0.7 million. In connection with the sale of the business, Radnor realized a $10.5 million gain.



Discontinued Operations



Pursuant to an asset purchase agreement among Benchmark, WinCup and the Fort James Corporation, formerly James River Paper Company, Inc. (Fort
James), dated October 31, 1995. Benchmark and WinCup sold to Fort James all of the assets of Benchmarks cutlery and straws business and all of the assets of WinCups thermoformed cup business, except for cash, accounts receivable,
and prepaid assets. The operations of Benchmarks cutlery and straws business and WinCups thermoformed cup business were accounted for as discontinued operations. The loss in fiscal 2002 and 2001, net of tax benefits of $32,000 and
$165,000, respectively, represents the settlement of a contingent liability related to the discontinued operations. The Company has no further exposure to this contingent liability.



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##### Table of Contents

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------



Fiscal Year



The Companys fiscal year is the fifty-two or fifty-three week period that ends on the last Friday of December of each year. The fiscal years ended
December 26, 2003, December 27, 2002 and December 28, 2001 were fifty-two week periods.



Principles of Consolidation



The accompanying consolidated financial statements include the accounts of Radnor and all of its majority owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. The equity method of
accounting is used when the Company has a 20% to 50% ownership interest in other companies. Certain reclassifications have been made to the prior years presentations to conform to the current years presentation.



Fair Value Accounting



The Company owns a 20% limited partner investment in Radnor Investments,
L.P. (the Partnership). The Partnership values substantially all of its investments, which are generally subject to restrictions on resale and generally have no established market, at fair value, as determined in good faith by its
general partner in accordance with the Partnerships valuation policy. The Partnership determines fair value to be the amount for which an investment could be exchanged in an orderly disposition over a reasonable period of time between willing
parties other than in a forced or liquidation sale. The Partnerships valuation policy considers the fact that no ready market exists for substantially all of the entities in which it invests. The Partnerships valuation policy is intended
to provide a consistent basis for determining the fair value of the portfolio. The Partnership will record unrealized depreciation on investments when it believes that an investment has become other than temporarily impaired, including where
collection of a loan or when the enterprise value of the company does not currently support the cost of the Partnerships investments. Conversely, the Partnership will record unrealized appreciation if it believes that the underlying portfolio
company has appreciated in value and, therefore, the Partnerships investment has also appreciated in value. Because of the inherent uncertainty of such valuation, estimated values may differ significantly from the values that would have been
used had a ready market for these investments existed and/or the Partnership liquidated its position and the differences could be material.



The Partnerships primary investment is a 71.4% ownership in a media programming company whose major operation is a basic tier arts and entertainment
channel. The fair value of this investment was determined on a discounted cash flow basis. The significant drivers of the fair value determination are the estimated number of subscribers to the channel, the estimated level of advertising shown on
the channel, reliance on the contract through which the channels content is distributed and the assessed likelihood of renewal of the contract. While the estimates made by the Partnership with respect to these significant drivers taken as a
whole remain valid, actual future results could differ from those estimates.



Accounts Receivable, Net



Accounts receivable are net of allowances for doubtful accounts of $149,000 and $205,000 at December 26, 2003 and December 27, 2002, respectively. Bad debt expense was $677,000, $294,000 and $565,000 for fiscal years 2003, 2002 and 2001,
respectively. The related write-offs of accounts receivable were $733,000, $627,000 and $463,000 for those years, respectively.



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##### Table of Contents

Inventories



Inventories are recorded at the lower of cost (first-in, first-out) or market. Inventories at December 26, 2003 and December
27, 2002, consisted of the following (in thousands):



|                |  |      |        |      |   |       
|--------------- |  | ---- | ------ | ---- | - | ------
|                |  | 2003 |        | 2002
|Raw materials   |  | $    | 14,003 |      | $ | 8,378 
|Work-in process |  |      | 1,550  |      |   | 1,442 
|Finished goods  |  |      | 36,649 |      |   | 27,895
|                |  |      |        |      |   |       
|                |  | $    | 52,202 |      | $ | 37,715
|                |  |      |        |      |   |       



Property, Plant,
and Equipment



Property, plant, and equipment are stated
at cost and depreciated using the straight-line method over estimated useful lives, which range from 5 to 40 years. Leasehold improvements are amortized over the lesser of their estimated useful lives or the term of the lease using the straight-line
method. Maintenance and repairs are charged to operations currently, and replacements and significant improvements are capitalized. Depreciation expense in 2003, 2002 and 2001 was $15,311,000, $14,122,000 and $14,590,000, respectively.



Supplies and Spare Parts



Supplies and spare parts include maintenance parts maintained in central
stores locations. When needed at the manufacturing facilities, parts are shipped and expensed.



Intangible Assets



At
December 26, 2003, intangible assets amounted to $5.8 million (net of accumulated amortization of $0.1 million) consisting of customer lists of $3.2 million and a non-competition agreement of $2.6 million, both in connection with the Acquisition
(Note 3). The customer list is being amortized over ten years, its estimated useful life, while the non-competition agreement is being amortized over seven years, the term of the agreement. There are no expected residual values related to these
intangible assets. The amortization expense for 2003 was $0.1 million. Estimated future amortization expense by fiscal year is as follows: 2004 - $0.7 million; 2005 - $0.7 million; 2006 - $0.7 million; 2007 - $0.7 million; 2008 - $0.7 million and
$2.3 million thereafter.



Other Assets



Other assets include deferred financing costs of $4.4 million and $1.4
million as of December 26, 2003 and December 27, 2002, respectively, related to the financing arrangements and note offerings executed in 1996, 1997 and 2003. Such costs are being amortized over the terms of the related debt instruments. The 1996
and 1997 costs were written-off in connection with the debt refinancing (Note 5). Amortization of deferred costs of $891,000, $1,492,000 and $1,498,000 was included in interest expense for the years ended December 26, 2003, December 27, 2002 and
December 28, 2001, respectively.



Income Taxes



The Company accounts for income taxes under the liability
method. Under this method, deferred tax assets and liabilities are recognized for the tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities using enacted tax law and statutory tax rates
applicable to the periods in which the temporary differences are expected to affect taxable income.



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Revenue Recognition



Revenue is recognized as risk of ownership and title to the product transfers to the customer, which occurs when goods are
shipped.



In accordance with Emerging Issues Task Force Issue
No. 00-22, the Company reports sales and marketing rebates as an offset to revenues. Prior to fiscal 2002, they were included in selling, general and administrative expenses. The consolidated statement of operations for fiscal 2001 has been adjusted
to reflect this reclassification. The sales and marketing rebates were $6.6 million in fiscal 2001.



Currency Translation



The Company conducts business in a number of foreign countries and as a result is subject to the risk of fluctuations in foreign currency exchange rates
and other political and economic risks associated with international business. The Companys foreign entities report their assets, liabilities, and results of operations in the currency in which the entity primarily conducts its business.
Foreign assets and liabilities are translated into U.S. dollars at the rates in effect at the end of the fiscal period. The revenue and expense accounts of foreign subsidiaries are translated into U.S. dollars at the average rates that prevailed
during the period. Adjustments resulting from the translation of the financial statements are reflected as a currency translation adjustment in stockholders equity. Currency transaction losses were $1.0 million in fiscal 2003, while gains and
losses in the prior year were not material.



Research and
Development



Research and development costs are charged to
expense as incurred and are included in cost of goods sold. These costs represented 0.5%, 0.8% and 0.8% of net sales in 2003, 2002 and 2001, respectively.



Stock Option Accounting



The Company applied the intrinsic-value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations including FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25, issued in
March 2000, to account for its stock options. In the third quarter of fiscal 2003, the Company adopted SFAS No. 148 and will account for all prospective option grants under the fair value method. See Note 9 for additional information regarding the
Companys stock option plan. No stock options have been issued by the Company subsequent to their adoption of SFAS No. 148.



Use of Estimates



The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates. Judgments and estimates of uncertainties are required in applying the Companys accounting policies in certain areas. Following are some of the areas
requiring significant judgments and estimates: determination of an assets useful life; estimates of allowances for bad debts; cash flow and valuation assumptions in performing asset impairment tests of long-lived assets; valuation assumption
in determining the fair value of investments held by affiliates; and estimates of realizability of deferred tax assets.



Fair Value of Financial Instruments



The estimated fair value of financial instruments was determined by the Company using market quotes, if available, or discounted cash flows using market
interest rates. The carrying values of cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these items. The carrying amounts of the Companys bank term loans and the lines
of credit approximate fair value



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##### Table of Contents

because they have variable interest rates based on either the prime rate or the interbank offering rate of the currency
in which the Company borrows. The fair value of the senior notes at December 26, 2003 approximate their carrying values.



Recently Issued Accounting Standards



In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143,
Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company
adopted the provisions of this pronouncement on December 28, 2002. The adoption of this statement did not have an effect on the Companys financial statements.



In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company was required to adopt the provisions of this pronouncement in the beginning of fiscal 2002. The adoption had no effect on the
Companys financial statements.



In April 2002, the FASB
issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This Statement rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt,
and SFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. The Statement requires gains and losses from debt extinguishments that are used as part of the Companys risk management strategy to be classified
as income from operations rather than as extraordinary items, net of tax. The Company adopted this Statement during the fourth quarter of its year ended December 27, 2002. The impact on the Company was to reclassify the extraordinary item recorded
during the quarter ended March 29, 2002 to income from continuing operations.



In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure. SFAS No. 148 amends the disclosure requirements of SFAS No. 123, Accounting for
Stock-Based Compensation, to require more prominent and frequent disclosures in financial statements. Also, SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value-based method of accounting for
stock-based employee compensation. The Company has included the interim disclosures prescribed by SFAS No. 148 and adopted the prospective method of adoption as prescribed in SFAS No. 148.



In January 2003, the FASB issued Interpretation No. 46, Consolidation
of Variable Interest Entities an interpretation of ARB No. 51. This Interpretation clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors
do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The Interpretation applies
immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period ending after December 15,
2003, to variable interest entities in which an entity holds a variable interest that it acquired prior to February 1, 2003.



As a result of the adoption of FIN 46, the Company began to consolidate Radnor Investments, L.P. beginning in the fourth quarter of the year ended
December 26, 2003. As discussed in Note 4 to the Companys consolidated financial statements, the adoption of this interpretation resulted in an increase to the investment assets on its consolidated balance sheet to $65.3 million with a
corresponding minority interest payable of $48.9 million. This transaction did not have a material effect on the Companys consolidated net income or cash flows. Prior to the adoption of FIN 46, the Company utilized the equity method of
accounting. Under the equity method, original investments were recorded at cost in other assets and adjusted for the Companys share of undistributed earnings or losses of these companies.



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|3. | POLAR PLASTICS ACQUISITION
|-- | --------------------------



On November 14, 2003, the Company purchased a business consisting of a state-of-the-art manufacturing facility, including thermoforming and injection
molding machines capable of producing polypropylene and polystyrene products, raw material storage and handling equipment, as well as related production assets and net working capital. The Company assumed the long-term lease for a 342,000 square
foot facility in Mooresville, North Carolina that includes manufacturing, warehouse and office space. The machinery and equipment in a smaller manufacturing and warehouse facility in Winston-Salem, North Carolina was also acquired. The Company also
acquired the rights to the product lines currently manufactured at these facilities, which include a broad range of plastic cups, stemware, plates, bowls, containers and cutlery. The Company expects that this purchase will provide the manufacturing
capacity to accelerate the development and marketing of new polypropylene foodservice packaging products, particularly disposable cold drink cups.



The Acquisition was recorded using the purchase method of accounting, and accordingly, results of its operations have been included in the Companys
consolidated financial statements since November 14, 2003, the effective date of the acquisition. The purchase price for the assets was approximately $22.3 million, consisting of $4.5 million in cash paid at closing, issuance of a six-year note in
the amount of $10.0 million bearing interest at 6.0% (with interest but no principal payable until January 1, 2005), the assumption of $9.3 million in other long-term contractual liabilities, net of an estimated $1.5 million due from Polar Plastics
based on working capital levels. Polar Plastics and certain of its affiliates and key management also entered into seven-year non-competition agreements that will require an additional $3.0 million in payments over five years. The Company negotiated
the purchase price based on the cash flows expected to be derived from their operations after integration into the Companys existing business. In connection with the acquisition, the Company plans to vacate the Winston-Salem facility and has
accrued $1.3 million for the related estimated costs to be incurred. The facility is expected to be vacated in May 2003. The results of the acquired business have been included in the Companys Packaging segment since the effective date of the
acquisition.



The purchase price of the acquisition was
allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the date of the acquisition. Such allocations were based on preliminary estimates of fair value at the date of the acquisition, which may be revised
at a later date based on final valuations. The purchase price allocation to each major asset and liability caption of the Acquisition is as follows (in thousands):



|                              |  |   |         |  
|----------------------------- |  | - | ------- | -
|Current assets                |  | $ | 10,023  |  
|Property, plant and equipment |  |   | 20,541  |  
|Intangible assets             |  |   | 3,228   |  
|Current liabilities           |  |   | (11,542 | )
|                              |  |   |         |  
|Total                         |  | $ | 22,250  |  
|                              |  |   |         |  



Pro Forma Operating
Results



The following presents unaudited pro forma
operating results as if the Acquisition had occurred on December 28, 2001. The pro forma results were prepared from financial information obtained during the due diligence process and have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisition been made as of December 28, 2001 or the results that may occur in the future. (unaudited) (in thousands):



|                  |  |      |         |   |      |   |        
|----------------- |  | ---- | ------- | - | ---- | - | -------
|                  |  | 2003 |         |   | 2002
|Net sales         |  | $    | 372,015 |   |      | $ | 360,086
|Net income (loss) |  |      | (12,311 | ) |      |   | 4,725  



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##### Table of Contents

|4. | INVESTMENTS
|-- | -----------



The Companys investment partnership accounts for its investments by the fair value method of accounting as described in Note 2. The
Partnerships investments are generally subject to restriction on resale and generally have no established market. The Partnership values all of its investments at fair value as determined in good faith by Radnor Investment Advisors, L.P. (the
General Partner) in accordance with the Partnerships valuation policy.



The Partnerships investments in and advances to affiliates totaled $64.8 million as of December 31, 2003. The Partnerships largest investment, totaling $63.9 million, relates to interests in Creative
Networks International (the Netherlands) B.V., a pay-television programming company whose major operation is a basic tier arts and entertainment channel on the British Sky Broadcasting satellite platform in Italy. In addition, the Partnership
maintains a $0.9 million investment in SkinHealth, Inc., a Massachusetts-based firm that provides cosmetic, dermatology and skin rejuvenation products and procedures. The Partnership invested $5.8 million and $0.1 million during the fiscal year
ended December 31, 2003, respectively, in Creative Networks International (the Netherlands) B.V. and SkinHealth, Inc.



The following is a summary of cost versus fair value for the Partnerships investment portfolio for the year ended December 31, 2003 (in thousands,
except share amounts):



|                                                       |  |                                          |  |      |       |            |   |       
|------------------------------------------------------ |  | ---------------------------------------- |  | ---- | ----- | ---------- | - | ------
|                                                       |  |                                          |  | 2003
|                                                       |  |                                          |  | Cost |       | Fair Value
|Creative Networks International (the Netherlands) B.V. |  | Debt Securities                          |  | $    | 851   |            | $ | 851   
|                                                       |  | Common Stock (30 shares)                 |  |      | 997   |            |   | 63,055
|                                                       |  |                                          | 
|SkinHealth, Inc.                                       |  | Debt Securities                          |  |      | 410   |            |   | 410   
|                                                       |  | Series A Preferred Stock (33,334 shares) |  |      | 2,000 |            |   | 528   
|                                                       |  | Common Stock (79,711 shares)             |  |      | 92    |            |   | 1     
|                                                       |  |                                          |  |      |       |            |   |       
|                                                       |  |                                          |  | $    | 4,350 |            | $ | 64,845
|                                                       |  |                                          |  |      |       |            |   |       



In addition, the
Company holds certain investments accounted for under the equity method of accounting, which totaled $1,761,000 at December 26, 2003.



|5. | LONG-TERM DEBT
|-- | --------------



Long-term debt consists of the following (in thousands):



|                                                                                                                                                                      |  |      |         |      |   |        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                                                                                                                                                      |  | 2003 |         | 2002
|Series A and Series B Senior Notes bearing interest at 10.0%, interest payable semi-annually, due December 1, 2003, including a premium of
$386 at December 27, 2002. |  | $    |        |      | $ | 159,886
|                                                                                                                                                                      |  |     
|Senior Notes bearing interest at 11.0%, interest payable semi-annually, due March 15, 2010.                                                                           |  |      | 135,000 |      |   |       



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##### Table of Contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |        |  |       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------ |  | ------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | 2003   |  | 2002  
|Term loan payable under the Amended Credit Agreement bearing interest at the Companys option at a rate based upon various formulae as
defined within the agreement. At December 26, 2003, the domestic rate was based upon LIBOR rates with various maturities (1.15%) plus 3.25% or at prime (4.0%) plus 0.25%, payable in quarterly principal installments (currently $2.4 million through
December 2004) with final payment due March 4, 2008.                                                                                                                                                                                   |  | 46,625 |  |      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |       
|Outstanding balance under the Fourth Amended and Restated Revolving Credit and Security Agreement (the Amended Credit Agreement),
bearing interest at the Companys option at a rate based upon various formulae as defined within the agreement. At December 26, 2003, the interest rate was based upon LIBOR rates with various maturities (1.16%) plus 3.00% or at U.S. prime
(4.0%). The obligations of the Company under the Credit Agreement are secured by a lien on substantially all of the Companys U.S. subsidiaries inventory, receivables, general intangibles, equipment and mortgages on two domestic
facilities. |  | 39,607 |  | 29,652
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |       
|Promissory note payable with interest at 6.0% payable quarterly commencing on January 1, 2004 and twenty quarterly principal and interest
payments commencing on January 1, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 10,000 |  |      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |       
|Outstanding balance under the Canadian Revolving Credit Facility (borrowing capacity of $5.0 million Canadian including a letter of credit
subfacility and a Foreign Exchange Future Contracts subfacility), with Canadian dollar advances bearing interest at Canadian prime (4.50%) at December 26, 2003. There were no U.S dollar advances outstanding at December 26, 2003. Loans under the
Canadian Revolving Credit Facility are payable on demand and secured by substantially all of the assets of the Companys Canadian subsidiary.                                                                                        |  | 3,712  |  | 2,568 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |       
|Outstanding balances under Canadian term loans, bearing interest at Canadian prime (4.50% at December 26, 2003) plus 1.0%, secured by
substantially all assets of the Companys Canadian subsidiary, payable in monthly or quarterly installments of principal plus interest, over a maximum of five to seven years.                                                                                                                                                                                                                                                                                                                 |  | 271    |  | 393   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |       
|Outstanding balance under Canadian term loan, bearing interest at 5.75% at December 26, 2003, collateralized by a mortgage agreement, payable
in monthly installments of principal and interest of approximately $4.4 Canadian commencing January 2000 with final payment due December 2025.                                                                                                                                                                                                                                                                                                                                         |  | 482    |  | 411   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |       
|Notes payable under the Finnish Credit Agreements with a combined borrowing capacity of 6.0 million Euros, bearing interest at the one month
EURIBOR (2.12% at December 26, 2003) plus 1.5%. Loans under the Finnish Credit Agreements are secured by a floating charge over the Finnish assets, inventories and accounts.                                                                                                                                                                                                                                                                                                           |  | 1,866  |  |      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |       
|Outstanding balances under capital expenditure loans bearing interest at various rates between 8.36% and 9.86%, payable in quarterly principal
and interest installments, due between February 2005 and December 2006, secured by equipment purchased with the proceeds.                                                                                                                                                                                                                                                                                                                                                             |  | 5,588  |  | 7,962 



F-15



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##### Table of Contents

|                                                                                                                                                                                                                                                                 |  |      |         |   |      |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                                                                                                                                                                                                 |  | 2003 |         |   | 2002 |  
|Outstanding balance under a term loan facility, bearing interest at a fixed rate (7.04% at December 26, 2003). The term loan is payable in
monthly principal installments plus interest with final payment due June 2013 and is secured by a mortgage agreement. |  |      | 6,070   |   |      |   | 9,320   |  
|                                                                                                                                                                                                                                                                 |  |     
|Outstanding balances under term loan facility, bearing interest at 3 month EURIBOR (2.14% at December 26, 2003) plus margin (1.00% at December
26, 2003) payable in quarterly principal installments plus interest with final payment due in March 2006.         |  |      | 1,883   |   |      |   | 2,284   |  
|                                                                                                                                                                                                                                                                 |  |      |         |   |      |   |         |  
|                                                                                                                                                                                                                                                                 |  |      | 251,104 |   |      |   | 212,476 |  
|                                                                                                                                                                                                                                                                 |  |     
|Less current portion                                                                                                                                                                                                                                             |  |      | (13,626 | ) |      |   | (6,548  | )
|                                                                                                                                                                                                                                                                 |  |      |         |   |      |   |         |  
|                                                                                                                                                                                                                                                                 |  | $    | 237,478 |   |      | $ | 205,928 |  
|                                                                                                                                                                                                                                                                 |  |      |         |   |      |   |         |  



Effective in September
2003, in November 2003 in connection with the Acquisition and again in March 2004, we amended certain financial covenants in the Amended Credit Agreement to permit additional flexibility in operating our business and address compliance issues. The
recent amendments caused changes to the following financial covenants: (i) the minimum fixed charge coverage ratios, (ii) the maximum ratio of funded indebtedness to earnings before interest, taxes, depreciation and amortization, (iii) the
limitation of capital expenditures and (iv) the limitation of operating lease arrangements. As amended, the Amended Credit Agreement contains the following financial covenants:



| |  | a minimum fixed charge coverage ratio, which is 1.05 to 1.00 for the quarter ending December 31, 2003, tested for the two most recent fiscal quarters, 0.90 to 1.00 for the quarter
ending March 31, 2004, tested for the three most recent quarters, and 1.10 to 1.00 thereafter until reaching 1.15 to 1.00 for quarters ending December 31, 2004 and thereafter, tested for the most recent four fiscal quarters;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | a maximum ratio of funded indebtedness to earnings before interest, taxes, depreciation and amortization, which is 6.00 to 1.00 for the quarter ending December 31, 2003, tested for
the two most recent fiscal quarters, and declines thereafter until reaching 3.75 to 1.00 for quarters ending March 31, 2006 and thereafter, tested for the most recent four fiscal quarters;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | a minimum ratio of borrowers consolidated tangible assets to consolidated tangible assets of our domestic subsidiaries of 85%;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| |  | a minimum ratio of the borrowers consolidated earnings before interest, taxes, depreciation and amortization to consolidated earnings before interest, taxes, depreciation and
amortization of our domestic subsidiaries of 85%;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | limitation of capital expenditures to $25.0 million per year; and
| | - | -----------------------------------------------------------------



| |  | limitation of operating lease arrangements to $11.0 million per year.
| | - | ---------------------------------------------------------------------



As a result of the amendments discussed above, we are in compliance with all covenants, including financial covenants, under all of our credit
arrangements.



As part of the March 2004 amendment, our
obligations under the Amended Credit Agreement are further secured by mortgages on an additional seven of our U.S. manufacturing facilities. We also pledged our ownership interests in an unconsolidated affiliate and our President and Chief Executive
Officer, who is also a director, agreed to guarantee our obligations under the Amended Credit Agreement up to an amount not exceeding $5.0 million. There were a number of other changes made as part of the seventh amendment as follows:



| |  | The $5.0 million supplemental term loan which was added by the 6th amendment effective November 17, 2003 was paid off early and the additional mortgages provided $6.0 million
additional availability under the Revolving Credit.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-16



---

##### Table of Contents

| |  | A Mandatory Prepayment Event was defined by reference to a sale of certain non-core assets, an IPO, or any other transaction in which the borrowers raise equity capital or reduce
outstanding shareholder loans, and upon receipt of proceeds from such an event, various paydowns of the term loan and revolving loans are required and upon certain paydowns, the pledge of the unconsolidated affiliate interest and the guaranty are
released.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On March 11, 2003, the Company issued
$135.0 million of 11.0% Senior Notes due 2010 and amended its domestic revolving credit facility to include a $45.0 million term loan and to increase the revolving credit commitment from $35.0 million to $45.0 million. The proceeds were used to
repay the existing $159.5 million Series A and Series B Senior Notes and outstanding borrowings under the existing revolving credit facilities.



The Company recorded $1.8 million of other expenses related to the extinguishment of the long-term debt described above, which included the $1.0 million
write-off of deferred financing costs and debt premium related to the Companys 10% Series A and Series B Senior Notes due 2003, as well as $0.8 million of personnel costs directly related to the debt extinguishment.



The debt issuance premium on the Series B Notes was amortized over the life
of the notes. During fiscal 2003, premium amortization of $105,000 was recorded as a reduction of interest expense.



Future debt maturities are as follows (in thousands):



|                    |  |   |        
|------------------- |  | - | -------
|2004                |  | $ | 13,626 
|2005                |  |   | 11,926 
|2006                |  |   | 11,850 
|2007                |  |   | 11,589 
|2008                |  |   | 55,738 
|2009 and thereafter |  |   | 146,375
|                    |  |   |        
|                    |  | $ | 251,104
|                    |  |   |        



|6. | COMMITMENTS AND CONTINGENCIES
|-- | -----------------------------



Leases



The Company leases certain of its manufacturing, warehouse and office facilities and transportation equipment under noncancellable operating and capital
lease arrangements.



The future minimum payments under
noncancellable operating leases are as follows (in thousands):



|                    |  |   |       
|------------------- |  | - | ------
|2004                |  | $ | 7,954 
|2005                |  |   | 6,195 
|2006                |  |   | 4,796 
|2007                |  |   | 5,165 
|2008                |  |   | 2,987 
|2009 and thereafter |  |   | 24,573
|                    |  |   |       
|                    |  | $ | 51,670
|                    |  |   |       



F-17



---

##### Table of Contents

Rental expense for all operating leases was $7,265,000, $6,953,000 and $7,492,000 for 2003, 2002 and
2001, respectively.



The future minimum payments under capital
leases are as follows (in thousands):



|                                             |  |   |      
|-------------------------------------------- |  | - | -----
|2004                                         |  | $ | 2,760
|2005                                         |  |   | 2,616
|2006                                         |  |   | 2,162
|2007                                         |  |   | 1,771
|                                             |  |   |      
|Total minimum lease payments                 |  |   | 9,309
|                                             | 
|Less interest (at rates from 4.37% to 8.49%) |  |   | 947  
|                                             |  |   |      
|Present value of net minimum lease payments  |  |   | 8,362
|                                             | 
|Less current maturities                      |  |   | 2,324
|                                             |  |   |      
|Capital lease obligations                    |  | $ | 6,038
|                                             |  |   |      



Litigation



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



Supply Agreements



In November 2003, the Company amended its primary North American styrene
monomer supply contract. The initial term of the contract extends through December 2009. Under the amended contract, the Company is required to purchase from one supplier 150 million pounds of its annual North American styrene monomer requirements
through December 2006, decreasing to 100 million pounds annually through December 2009, and has certain rights to purchase additional styrene monomer.



In connection with the 1997 acquisition of its European specialty chemicals operations, the Company negotiated a contract to provide a long-term supply of
styrene monomer through December 2004 at a reduced price and with volume discounts to such operations.



|7. | STOCKHOLDERS EQUITY
|-- | --------------------



The Company is authorized to issue up to 11,650 shares of Voting Common Stock, 5,400 shares of Class B Nonvoting Common Stock, 5,650 shares of Nonvoting
Common Stock and 2,000 shares of series preferred stock. At December 26, 2003, there were issued and outstanding 600 shares of Voting Common Stock, 5,400 shares of Class B Nonvoting Common Stock and 245 shares of Nonvoting Common Stock. All shares
have a par value of $0.10 except for shares of Class B Nonvoting Common Stock, which have a par value of $0.01.



|8. | INCOME TAXES
|-- | ------------



The components of income (loss) before taxes by source of income are as follows (in thousands):



|              |  |      |         |   |      |   |       |  |   |       |  
|------------- |  | ---- | ------- | - | ---- | - | ----- |  | - | ----- | -
|              |  | 2003 |         |   | 2002 |   | 2001  | 
|United States |  | $    | (11,385 | ) |      | $ | 3,363 |  | $ | 4,394 |  
|Non U.S.      |  |      | (1,010  | ) |      |   | 4,210 |  |   | (354  | )
|              |  |      |         |   |      |   |       |  |   |       |  
|              |  | $    | (12,395 | ) |      | $ | 7,573 |  | $ | 4,040 |  
|              |  |      |         |   |      |   |       |  |   |       |  



F-18



---

##### Table of Contents

The provision (benefit) for income taxes for each of the three years in the period ended December 26,
2003 is as follows (in thousands):



|                                                                                                                                                                |  |      |        |   |      |   |       |      |  |   |        |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ----- | ---- |  | - | ------ | -
|                                                                                                                                                                |  | 2003 |        |   | 2002 |   |       | 2001 | 
|Current:                                                                                                                                                        |  |      |        |   |      |   |       |      |  |   |        |  
|Federal                                                                                                                                                         |  | $    |       |   |      | $ | (105  | )    |  | $ |       |  
|State                                                                                                                                                           |  |      | 55     |   |      |   | 82    |      |  |   | 25     |  
|Foreign                                                                                                                                                         |  |      | 496    |   |      |   | 668   |      |  |   | 422    |  
|Deferred                                                                                                                                                        |  |      | 928    |   |      |   | 951   |      |  |   | 5,405  |  
|Utilization (generation) of net operating loss carryforwards (excluding generation of net operating loss due to discontinued operations in
2003, 2002 and 2001) |  |      | (5,751 | ) |      |   | 1,234 |      |  |   | (3,907 | )
|Valuation allowance                                                                                                                                             |  |      | 1,660  |   |      |   | 48    |      |  |   | 205    |  
|                                                                                                                                                                |  |      |        |   |      |   |       |      |  |   |        |  
|                                                                                                                                                                |  | $    | (2,612 | ) |      | $ | 2,878 |      |  | $ | 2,150  |  
|                                                                                                                                                                |  |      |        |   |      |   |       |      |  |   |        |  



The components of
deferred taxes at December 26, 2003 and December 27, 2002 are as follows (in thousands):



|                                                                             |  |      |        |   |      |   |        |  
|---------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                                             |  | 2003 |        |   | 2002 |  
|Deferred tax assets:                                                         |  |      |        |   |      |   |        |  
|Net operating loss carryforwards including loss from discontinued operations |  | $    | 31,822 |   |      | $ | 25,859 |  
|Vacation pay and compensation accruals                                       |  |      | 706    |   |      |   | 493    |  
|Bad debt, inventory, and returns and allowances                              |  |      | 829    |   |      |   | 609    |  
|Other accruals                                                               |  |      | 2,721  |   |      |   | 571    |  
|Valuation allowance                                                          |  |      | (2,027 | ) |      |   | (367   | )
|                                                                             |  |      |        |   |      |   |        |  
|                                                                             |  |      | 34,051 |   |      |   | 27,165 |  
|                                                                             |  |      |        |   |      |   |        |  
|Deferred tax liabilities:                                                    |  |      |        |   |      |   |        |  
|Accelerated tax depreciation                                                 |  |      | 27,972 |   |      |   | 27,924 |  
|Gain on sale of business                                                     |  |      | 1,095  |   |      |   | 1,101  |  
|Investment in partnership                                                    |  |      | 5,145  |   |      |   | 3,559  |  
|Other                                                                        |  |      | 1,219  |   |      |   | 559    |  
|                                                                             |  |      |        |   |      |   |        |  
|                                                                             |  |      | 35,431 |   |      |   | 33,143 |  
|                                                                             |  |      |        |   |      |   |        |  
|Net deferred tax liability                                                   |  | $    | 1,380  |   |      | $ | 5,978  |  
|                                                                             |  |      |        |   |      |   |        |  



Net current deferred
tax liabilities of $294,000 were included in accrued liabilities at December 26, 2003.



The provision (benefit) for income taxes varies from the amount determined by applying the United States Federal statutory rate to pre-tax income as a result of the following (in thousands):



|                                           |  |      |        |   |      |   |       |      |  |   |      
|------------------------------------------ |  | ---- | ------ | - | ---- | - | ----- | ---- |  | - | -----
|                                           |  | 2003 |        |   | 2002 |   |       | 2001
|United States federal statutory income tax |  | $    | (4,214 | ) |      | $ | 2,575 |      |  | $ | 1,366
|State income taxes, net of federal benefit |  |      | (151   | ) |      |   | 228   |      |  |   | 176  
|Nondeductible expenses                     |  |      | 92     |   |      |   | 133   |      |  |   | 108  
|Foreign tax rate differential              |  |      | 25     |   |      |   | (106  | )    |  |   | 258  
|Other                                      |  |      | (24    | ) |      |   |      |      |  |   | 37   
|Valuation allowance                        |  |      | 1,660  |   |      |   | 48    |      |  |   | 205  
|                                           |  |      |        |   |      |   |       |      |  |   |      
|                                           |  | $    | (2,612 | ) |      | $ | 2,878 |      |  | $ | 2,150
|                                           |  |      |        |   |      |   |       |      |  |   |      



F-19



---

##### Table of Contents

As of December 26, 2003, the Company had approximately $81.1 million of net operating loss carryforwards
for federal income tax purposes, which expire through 2022. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more
likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowances at December 26, 2003. The amount of the deferred tax asset considered realizable, however, could be reduced in the
near term if estimates of future taxable income during the carryforward period are reduced.



The Company has not recognized a deferred tax liability for the undistributed earnings of its foreign operations that arose in 2003 and prior years because the Company currently does not expect those unremitted
earnings to reverse and become taxable to the Company in the foreseeable future. A deferred tax liability will be recognized when the Company is no longer able to demonstrate that it plans to permanently reinvest undistributed earnings. As of
December 26, 2003 the undistributed earnings of these subsidiaries were approximately $10.7 million.



|9. | STOCK OPTION PLAN
|-- | -----------------



The 1992 Equity Incentive Plan (the Plan) provides for the grant of nonqualified options to purchase shares of the Nonvoting Common Stock
subject to certain limitations. Nonqualified stock options are issuable only to eligible officers and employees of the Company. There are no shares reserved for issuance under the Companys Plan.



The per share exercise price of a stock option may not be less than 75% of
the fair market value of the Nonvoting Common Stock, as determined by the board of directors, on the date the option is granted. Such options may be exercised only if the option holder remains continuously associated with the Company from the date
of grant to a date not less than three months prior to the date of exercise. The exercise date of an option granted under the plan cannot be later than ten years from the date of the grant. Any options that expire unexercised or that terminate upon
an optionees ceasing to be employed by the Company become available once again for issuance.



The following summarizes the stock option activity under the Plan:



|                                            |  |      |   |  |       |   |  |       |  
|------------------------------------------- |  | ---- | - |  | ----- | - |  | ----- | -
|                                            |  | 2003 |   |  | 2002  |   |  | 2001  |  
|Options outstanding at beginning of period: |  | 736  |   |  | 1,051 |   |  | 1,109 |  
|                                            |  |      |   |  |       |   |  |       |  
|Granted                                     |  |     |   |  |      |   |  |      |  
|Exercised                                   |  |     |   |  |      |   |  |      |  
|Canceled                                    |  | (25  | ) |  | (315  | ) |  | (58   | )
|                                            |  |      |   |  |       |   |  |       |  
|Options outstanding at end of period        |  | 711  |   |  | 736   |   |  | 1,051 |  
|                                            |  |      |   |  |       |   |  |       |  
|Options available for grant                 |  |     |   |  |      |   |  | 198   |  
|                                            |  |      |   |  |       |   |  |       |  
|Exercisable at end of period                |  | 711  |   |  | 736   |   |  | 963   |  
|                                            |  |      |   |  |       |   |  |       |  



The Company applied
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock options plans. Accordingly, no compensation expense has been recognized to date related to the plans
described above. If compensation cost for these plans had been determined using the fair-value method prescribed by Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation, the Companys net income
would have been reduced to the pro forma amounts indicated below.



|                                                                                                                             |  |                |        |   |      |   |       |      |  |   |       |  
|---------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                                                                             |  | 2003           |        |   | 2002 |   |       | 2001 | 
|                                                                                                                             |  | (In thousands) |       
|Net income (loss):                                                                                                           |  |                |        |   |      |   |       |      |  |   |       |  
|As reported                                                                                                                  |  | $              | (9,783 | ) |      | $ | 4,647 |      |  | $ | 1,643 |  
|Deduct total stock option employee compensation expense determined under fair value-based method, net of related tax effects |  |                |       |   |      |   | (167  | )    |  |   | (286  | )
|                                                                                                                             |  |                |        |   |      |   |       |      |  |   |       |  
|Pro forma net income (loss)                                                                                                  |  | $              | (9,783 | ) |      | $ | 4,480 |      |  | $ | 1,357 |  
|                                                                                                                             |  |                |        |   |      |   |       |      |  |   |       |  



F-20



---

##### Table of Contents

This pro forma impact may not be representative of the effects for future years and is likely to increase
as additional options are granted and amortized over the vesting period.



As the Companys stock is not publicly traded, the fair value of each option was estimated on the grant date using the minimum value method (which excludes a volatility assumption), with the following
assumptions: risk-free rate of interest  6.31%; expected life  10 years; and no dividends paid.



|10. | EMPLOYEE BENEFIT PLAN
|--- | ---------------------



The Company sponsors a 401(k) savings and profit sharing plan, which covers all employees who have at least 1,000 hours of service during the year. The
Company will match employee contributions up to 2.8% of an employees annual salary. The Company may also, at the discretion of the board of directors, elect to make a profit sharing contribution. There have been no profit sharing contributions
for the three years in the period ended December 26, 2003. Employer matching contributions to the plan amounted to $625,000, $709,000 and $700,000 for each of the three years in the period ended December 26, 2003, respectively.



Certain of the Companys European subsidiaries maintain defined
contribution benefit plans. Pension expense related to these plans was $1,550,000, $1,299,000 and $1,795,000 in 2003, 2002 and 2001, respectively.



|11. | RELATED PARTY TRANSACTIONS
|--- | --------------------------



A former director of the Company is of counsel to the law firm which serves as the Companys primary legal counsel. During 2003, 2002 and 2001, the
Company paid fees of $697,000, $472,000 and $203,000, respectively, to this firm.



The Company provides certain management services and rights to a related company. For the management services and rights, the Company receives fees and royalties and is reimbursed for all expenses advanced on behalf
of the entity. During 2003, 2002 and 2001, the Company earned management fees, interest and royalties of $0.8 million, $0.5 million and $1.1 million, respectively. At December 26, 2003 and December 27, 2002, unpaid management fees, interest,
royalties and expense advances totaled $0.4 million and $0.9 million, respectively.



The Company has made interest-bearing advances to Michael T. Kennedy, the Companys Chief Executive Officer. As of December 26, 2003, outstanding principal and interest from these advances totaled $4.3 million.



Michael T. Kennedy is also a director of SkinHealth, Inc. of
which Paul M. Finigan, one of our directors, is a director. As discussed in Note 4, the Company has made investments in and advances to SkinHealth, Inc.



Michael T. Kennedy agreed to guarantee our obligations under the Amended Credit Agreement up to an amount not exceeding $5.0 million.



F-21



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##### Table of Contents

|12. | SEGMENT INFORMATION
|--- | -------------------



The Company has two business segments that operate within three distinct geographic regions. The packaging and insulation segment produces food packaging
and insulation products for distribution to the foodservice, insulation, and packaging industries. The specialty chemicals segment produces EPS for internal consumption by the packaging and insulation segment in addition to selling to third-party
manufacturers. Each of these segments operates in the United States, Canada, and Europe. Financial results for the periods presented are not fully comparable because of the December 2001 disposition of the Companys European insulation
operations and the November 2003 Acquisition, which has been included in the Companys Packaging segment since the effective date of the acquisition.



The following tables summarize the Companys financial information and results of operations by segment and geographic region for fiscal years 2001
through 2003 (in thousands):



Operating:



|                                     |  |                          |         |                     |   |         |                     |  |   |              |   |  |              |         |   |  |   |        
|------------------------------------ |  | ------------------------ | ------- | ------------------- | - | ------- | ------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | -------
|2003                                 |  | Packaging and insulation |         | Specialty chemicals |   |         | Corporate and other |  |   | Eliminations |   |  | Consolidated
|Sales to unaffiliated customers      |  | $                        | 196,350 |                     | $ | 145,314 |                     |  | $ |             |   |  | $            |        |   |  | $ | 341,664
|Transfers between operating segments |  |                          | 77      |                     |   | 8,890   |                     |  |   |             |   |  |              | (8,967  | ) |  |   |       
|Income (loss) from operations        |  |                          | 17,932  |                     |   | (499    | )                   |  |   | (11,522      | ) |  |              |        |   |  |   | 5,911  
|Total assets                         |  |                          | 210,091 |                     |   | 103,680 |                     |  |   | 82,524       |   |  |              |        |   |  |   | 396,295
|Capital expenditures                 |  |                          | 8,953   |                     |   | 2,298   |                     |  |   | 154          |   |  |              |        |   |  |   | 11,405 
|Depreciation expense                 |  |                          | 9,184   |                     |   | 5,918   |                     |  |   | 209          |   |  |              |        |   |  |   | 15,311 
|                                     |  |                          |         |                     |  
|2002                                 |  | Packaging and insulation |         | Specialty chemicals |   |         | Corporate and other |  |   | Eliminations |   |  | Consolidated
|Sales to unaffiliated customers      |  | $                        | 195,328 |                     | $ | 124,508 |                     |  | $ | 3,346        |   |  | $            |        |   |  | $ | 323,182
|Transfers between operating segments |  |                          | 79      |                     |   | 9,804   |                     |  |   |             |   |  |              | (9,883  | ) |  |   |       
|Income (loss) from operations        |  |                          | 29,707  |                     |   | 4,353   |                     |  |   | (10,124      | ) |  |              |        |   |  |   | 23,936 
|Total assets                         |  |                          | 162,123 |                     |   | 94,528  |                     |  |   | 27,481       |   |  |              |        |   |  |   | 284,132
|Capital expenditures                 |  |                          | 7,632   |                     |   | 2,641   |                     |  |   | 285          |   |  |              |        |   |  |   | 10,558 
|Depreciation expense                 |  |                          | 9,074   |                     |   | 4,859   |                     |  |   | 189          |   |  |              |        |   |  |   | 14,122 
|                                     |  |                          |         |                     |  
|2001                                 |  | Packaging and insulation |         | Specialty chemicals |   |         | Corporate and other |  |   | Eliminations |   |  | Consolidated
|Sales to unaffiliated customers      |  | $                        | 235,634 |                     | $ | 88,013  |                     |  | $ | 2,087        |   |  | $            |        |   |  | $ | 325,734
|Transfers between operating segments |  |                          | 232     |                     |   | 25,645  |                     |  |   |             |   |  |              | (25,877 | ) |  |   |       
|Income (loss) from operations        |  |                          | 26,193  |                     |   | (3,228  | )                   |  |   | 4,903        |   |  |              |        |   |  |   | 27,868 
|Total assets                         |  |                          | 167,063 |                     |   | 79,645  |                     |  |   | 27,478       |   |  |              |        |   |  |   | 274,186
|Capital expenditures                 |  |                          | 5,851   |                     |   | 6,216   |                     |  |   | 291          |   |  |              |        |   |  |   | 12,358 
|Depreciation expense                 |  |                          | 9,582   |                     |   | 4,706   |                     |  |   | 302          |   |  |              |        |   |  |   | 14,590 



F-22



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##### Table of Contents

Geographic:



|                                      |  |               |         |        |   |        |  |   |              |   |  |              |         |   |  |   |        
|------------------------------------- |  | ------------- | ------- | ------ | - | ------ |  | - | ------------ | - |  | ------------ | ------- | - |  | - | -------
|2003                                  |  | United States |         | Canada |   | Europe |  |   | Eliminations |   |  | Consolidated
|Sales to unaffiliated customers       |  | $             | 226,598 |        | $ | 25,661 |  | $ | 89,405       |   |  | $            |        |   |  | $ | 341,664
|Transfers between geographic segments |  |               | 77      |        |   | 8,890  |  |   |             |   |  |              | (8,967  | ) |  |   |       
|Income (loss) from operations         |  |               | 3,516   |        |   | 2,670  |  |   | (275         | ) |  |              |        |   |  |   | 5,911  
|Total assets                          |  |               | 322,876 |        |   | 15,195 |  |   | 58,224       |   |  |              |        |   |  |   | 396,295
|                                      |  |               |         |        |  
|2002                                  |  | United States |         | Canada |   | Europe |  |   | Eliminations |   |  | Consolidated
|Sales to unaffiliated customers       |  | $             | 226,129 |        | $ | 21,712 |  | $ | 75,341       |   |  | $            |        |   |  | $ | 323,182
|Transfers between geographic segments |  |               | 79      |        |   | 9,804  |  |   |             |   |  |              | (9,883  | ) |  |   |       
|Income from operations                |  |               | 16,487  |        |   | 4,691  |  |   | 2,758        |   |  |              |        |   |  |   | 23,936 
|Total assets                          |  |               | 219,679 |        |   | 11,767 |  |   | 52,686       |   |  |              |        |   |  |   | 284,132
|                                      |  |               |         |        |  
|2001                                  |  | UnitedStates  |         | Canada |   | Europe |  |   | Eliminations |   |  | Consolidated
|Sales to unaffiliated customers       |  | $             | 223,559 |        | $ | 16,516 |  | $ | 85,659       |   |  | $            |        |   |  | $ | 325,734
|Transfers between geographic segments |  |               | 232     |        |   | 9,845  |  |   |             |   |  |              | (10,077 | ) |  |   |       
|Income from operations                |  |               | 21,753  |        |   | 3,971  |  |   | 2,144        |   |  |              |        |   |  |   | 27,868 
|Total assets                          |  |               | 219,008 |        |   | 11,010 |  |   | 44,168       |   |  |              |        |   |  |   | 274,186



|13. | SUPPLEMENTAL FINANCIAL INFORMATION
|--- | ----------------------------------



Radnor Holdings Corporation is a holding company that has no operations or assets separate from its investments in subsidiaries. The $135.0 million of
11.0% Senior Notes due 2010 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 currents
liabilities ratios, that indirectly limit the ability of these subsidiaries to transfer funds to the Company. As of December 26, 2003 and December 27, 2002, the net assets of these foreign subsidiaries totaled $29.8 million and $26.8 million,
respectively.



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



F-23



---

##### Table of Contents

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidating Balance Sheets

December 26, 2003

(In thousands)



|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|--------------------------------------------------------------- |  | --------------- | ------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | -------- | - |  | - | ------- | -
|                                                                |  | Holding Company |         |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |         
|Assets                                                          |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Current assets:                                                 |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Cash                                                            |  | $               |        |   |                        | $ | 2,863   |                            |  | $ | 4,033        |   |  | $            |         |   |  | $ | 6,896   |  
|Accounts receivable, net                                        |  |                 |        |   |                        |   | 24,634  |                            |  |   | 23,905       |   |  |              | (7,098   | ) |  |   | 41,441  |  
|Inventory                                                       |  |                 |        |   |                        |   | 41,131  |                            |  |   | 11,071       |   |  |              |         |   |  |   | 52,202  |  
|Intercompany receivable                                         |  |                 |        |   |                        |   | 270     |                            |  |   | 21,409       |   |  |              | (21,679  | ) |  |   |        |  
|Prepaid expenses and other                                      |  |                 | 49      |   |                        |   | 10,149  |                            |  |   | 1,290        |   |  |              | (58      | ) |  |   | 11,430  |  
|Deferred tax asset                                              |  |                 | (25     | ) |                        |   | 2,491   |                            |  |   |             |   |  |              |         |   |  |   | 2,466   |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|                                                                |  |                 | 24      |   |                        |   | 81,538  |                            |  |   | 61,708       |   |  |              | (28,835  | ) |  |   | 114,435 |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Property, plant, and equipment                                  |  |                 |        |   |                        |   | 230,506 |                            |  |   | 60,289       |   |  |              |         |   |  |   | 290,795 |  
|Less accumulated depreciation                                   |  |                 |        |   |                        |   | (71,509 | )                          |  |   | (20,633      | ) |  |              |         |   |  |   | (92,142 | )
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|                                                                |  |                 |        |   |                        |   | 158,997 |                            |  |   | 39,656       |   |  |              |         |   |  |   | 198,653 |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Intercompany receivable                                         |  |                 | 38,051  |   |                        |   | 22,934  |                            |  |   |             |   |  |              | (60,985  | ) |  |   |        |  
|Investments in subsidiaries                                     |  |                 | 106,153 |   |                        |   | 25,078  |                            |  |   |             |   |  |              | (131,231 | ) |  |   |        |  
|Investments in unconsolidated affiliates                        |  |                 |        |   |                        |   |        |                            |  |   | 66,606       |   |  |              |         |   |  |   | 66,606  |  
|Other assets                                                    |  |                 | 4,669   |   |                        |   | 11,380  |                            |  |   | 552          |   |  |              |         |   |  |   | 16,601  |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|                                                                |  | $               | 148,897 |   |                        | $ | 299,927 |                            |  | $ | 168,522      |   |  | $            | (221,051 | ) |  | $ | 396,295 |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Liabilities and Stockholders Equity                            |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Current liabilities:                                            |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Accounts payable                                                |  | $               |        |   |                        | $ | 28,664  |                            |  | $ | 17,675       |   |  | $            | (346     | ) |  | $ | 45,993  |  
|Accrued liabilities                                             |  |                 | 4,054   |   |                        |   | 18,965  |                            |  |   | 4,070        |   |  |              | (176     | ) |  |   | 26,913  |  
|Intercompany payable                                            |  |                 |        |   |                        |   | 9,036   |                            |  |   | 63           |   |  |              | (9,099   | ) |  |   |        |  
|Current portion of long-term debt and capital lease obligations |  |                 |        |   |                        |   | 14,933  |                            |  |   | 1,017        |   |  |              |         |   |  |   | 15,950  |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|                                                                |  |                 | 4,054   |   |                        |   | 71,598  |                            |  |   | 22,825       |   |  |              | (9,621   | ) |  |   | 88,856  |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Long-term debt, net of current portion                          |  |                 | 135,000 |   |                        |   | 111,841 |                            |  |   | 7,197        |   |  |              | (16,560  | ) |  |   | 237,478 |  
|Capital lease obligations, net of current portion               |  |                 |        |   |                        |   | 6,038   |                            |  |   |             |   |  |              |         |   |  |   | 6,038   |  
|Intercompany payable                                            |  |                 | 65,962  |   |                        |   | 119     |                            |  |   | 18,868       |   |  |              | (84,949  | ) |  |   |        |  
|Deferred tax liability                                          |  |                 | (8,564  | ) |                        |   | 7,113   |                            |  |   | 4,884        |   |  |              | 119      |   |  |   | 3,552   |  
|Other non-current liabilities                                   |  |                 |        |   |                        |   | 3,571   |                            |  |   | 37           |   |  |              |         |   |  |   | 3,608   |  
|Minority interest in consolidated subsidiary                    |  |                 |         |   |                        |   |         |                            |  |   | 48,934       |   |  |              |          |   |  |   | 48,934  |  
|                                                                |  |                 |         |   |                       
|Commitments and contingencies                                   |  |                 |        |   |                        |   |        |                            |  |   |             |   |  |              |         |   |  |   |        |  
|Stockholders equity:                                           |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Voting and nonvoting common Stock                               |  |                 | 1       |   |                        |   | 4       |                            |  |   | 22           |   |  |              | (26      | ) |  |   | 1       |  
|Additional paid-in capital                                      |  |                 | 9,164   |   |                        |   | 97,604  |                            |  |   | 22,620       |   |  |              | (110,001 | ) |  |   | 19,387  |  
|Retained earnings (deficit)                                     |  |                 | (56,720 | ) |                        |   | 5,129   |                            |  |   | 37,138       |   |  |              | 7        |   |  |   | (14,446 | )
|Cumulative translation adjustment                               |  |                 |        |   |                        |   | (3,090  | )                          |  |   | 5,997        |   |  |              | (20      | ) |  |   | 2,887   |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Total stockholders equity                                      |  |                 | (47,555 | ) |                        |   | 99,647  |                            |  |   | 65,777       |   |  |              | (110,040 | ) |  |   | 7,829   |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|                                                                |  | $               | 148,897 |   |                        | $ | 299,927 |                            |  | $ | 168,522      |   |  | $            | (221,051 | ) |  | $ | 396,295 |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  



F-24



---

##### Table of Contents

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidating Statements of Income

Fiscal year ended December 26, 2003

(In thousands)



|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------- | ------- | - | ---------------------- | - | ------- | --------------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                                                                                                                 |  | Holding Company |         |   | Guarantor Subsidiaries |   |         | Non- Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Net sales                                                                                                                                        |  | $               |        |   |                        | $ | 226,675 |                             |  | $ | 123,956      |   |  | $            | (8,967 | ) |  | $ | 341,664 |  
|Cost of goods sold                                                                                                                               |  |                 |        |   |                        |   | 183,238 |                             |  |   | 104,742      |   |  |              | (8,967 | ) |  |   | 279,013 |  
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Gross profit                                                                                                                                     |  |                 |        |   |                        |   | 43,437  |                             |  |   | 19,214       |   |  |              |       |   |  |   | 62,651  |  
|Operating expenses:                                                                                                                              |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Distribution                                                                                                                                     |  |                 |        |   |                        |   | 16,450  |                             |  |   | 6,885        |   |  |              |       |   |  |   | 23,335  |  
|Selling, general and administrative                                                                                                              |  |                 | 127     |   |                        |   | 21,465  |                             |  |   | 9,975        |   |  |              |       |   |  |   | 31,567  |  
|Other expenses (Note 5)                                                                                                                          |  |                 | 1,013   |   |                        |   | 825     |                             |  |   |             |   |  |              |       |   |  |   | 1,838   |  
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) from operations                                                                                                                    |  |                 | (1,140  | ) |                        |   | 4,697   |                             |  |   | 2,354        |   |  |              |       |   |  |   | 5,911   |  
|Interest, net                                                                                                                                    |  |                 | 5,388   |   |                        |   | 13,407  |                             |  |   | 2,232        |   |  |              |       |   |  |   | 21,027  |  
|Income from unconsolidated affiliates                                                                                                            |  |                 |        |   |                        |   |        |                             |  |   | (3,623       | ) |  |              |       |   |  |   | (3,623  | )
|Other, net                                                                                                                                       |  |                 |        |   |                        |   | (538    | )                           |  |   | 1,440        |   |  |              |       |   |  |   | 902     |  
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) before income taxes                                                                                                                |  |                 | (6,528  | ) |                        |   | (8,172  | )                           |  |   | 2,305        |   |  |              |       |   |  |   | (12,395 | )
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Provision for income taxes:                                                                                                                      |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Current                                                                                                                                          |  |                 |        |   |                        |   | 25      |                             |  |   | 526          |   |  |              |       |   |  |   | 551     |  
|Deferred                                                                                                                                         |  |                 | (954    | ) |                        |   | (3,409  | )                           |  |   | 1,200        |   |  |              |       |   |  |   | (3,163  | )
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|                                                                                                                                                 |  |                 | (954    | ) |                        |   | (3,384  | )                           |  |   | 1,726        |   |  |              |       |   |  |   | (2,612  | )
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Net income (loss)                                                                                                                                |  | $               | (5,574  | ) |                        | $ | (4,788  | )                           |  | $ | 579          |   |  | $            |       |   |  | $ | (9,783  | )
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|                                                                                                                                                
|RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES Condensed Consolidating Statements of Cash Flows Fiscal year ended December 26,
2003 (In thousands) | 
|                                                                                                                                                 |  |                 |         |   |                       
|                                                                                                                                                 |  | Holding Company |         |   | GuarantorSubsidiaries  |   |         | Non- Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Net cash provided by (used in) operating activities                                                                                              |  | $               | (1,968  | ) |                        | $ | (4,573  | )                           |  | $ | 6,550        |   |  | $            | 1,857  |   |  | $ | 1,866   |  
|Cash flows from investing activities:                                                                                                            |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Capital expenditures                                                                                                                             |  |                 |        |   |                        |   | (10,712 | )                           |  |   | (693         | ) |  |              |       |   |  |   | (11,405 | )
|Increase in other assets                                                                                                                         |  |                 | (3,588  | ) |                        |   | (7,483  | )                           |  |   | 4,398        |   |  |              |       |   |  |   | (6,673  | )
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Net cash provided by (used in) investing activities                                                                                              |  |                 | (3,588  | ) |                        |   | (18,195 | )                           |  |   | 3,705        |   |  |              |       |   |  |   | (18,078 | )
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Cash flows from financing activities:                                                                                                            |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Net borrowings on bank financed debt and unsecured notes payable                                                                                 |  |                 | (24,500 | ) |                        |   | 51,811  |                             |  |   | 600          |   |  |              |       |   |  |   | 27,911  |  
|Net payments on capital lease obligations                                                                                                        |  |                 |        |   |                        |   | (2,152  | )                           |  |   |             |   |  |              |       |   |  |   | (2,152  | )
|Payment of financing fees                                                                                                                        |  |                 | (4,870  | ) |                        |   | (1,222  | )                           |  |   |             |   |  |              |       |   |  |   | (6,092  | )
|Change in intercompany, net                                                                                                                      |  |                 | 34,926  |   |                        |   | (22,269 | )                           |  |   | (10,800      | ) |  |              | (1,857 | ) |  |   |        |  
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Net cash provided by (used in) financing activities                                                                                              |  |                 | 5,556   |   |                        |   | 26,168  |                             |  |   | (10,200      | ) |  |              | (1,857 | ) |  |   | 19,667  |  
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Effect of exchange rate changes on cash                                                                                                          |  |                 |        |   |                        |   | (798    | )                           |  |   | 180          |   |  |              |       |   |  |   | (618    | )
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Net increase (decrease) in cash                                                                                                                  |  |                 |        |   |                        |   | 2,602   |                             |  |   | 235          |   |  |              |       |   |  |   | 2,837   |  
|Cash, beginning of period                                                                                                                        |  |                 |        |   |                        |   | 261     |                             |  |   | 3,798        |   |  |              |       |   |  |   | 4,059   |  
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Cash, end of period                                                                                                                              |  | $               |        |   |                        | $ | 2,863   |                             |  | $ | 4,033        |   |  | $            |       |   |  | $ | 6,896   |  
|                                                                                                                                                 |  |                 |         |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  



F-25



---

##### Table of Contents

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidating Balance Sheets

December 27, 2002

(In thousands)



|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|--------------------------------------------------------------- |  | --------------- | ------- | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | -------- | - |  | - | ------- | -
|                                                                |  | Holding Company |         |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |         
|Assets                                                          |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Current assets:                                                 |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Cash                                                            |  | $               |        |   |                        | $ | 261     |                            |  | $ | 3,798        |   |  | $            |         |   |  | $ | 4,059   |  
|Accounts receivable, net                                        |  |                 |        |   |                        |   | 21,390  |                            |  |   | 20,188       |   |  |              | (5,413   | ) |  |   | 36,165  |  
|Inventory                                                       |  |                 |        |   |                        |   | 29,578  |                            |  |   | 8,137        |   |  |              |         |   |  |   | 37,715  |  
|Intercompany receivable                                         |  |                 |        |   |                        |   | (1,660  | )                          |  |   | 10,791       |   |  |              | (9,131   | ) |  |   |        |  
|Prepaid expenses and other                                      |  |                 | 1,840   |   |                        |   | 6,280   |                            |  |   | 840          |   |  |              | (1,845   | ) |  |   | 7,115   |  
|Deferred tax asset                                              |  |                 |        |   |                        |   | 1,838   |                            |  |   |             |   |  |              |         |   |  |   | 1,838   |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|                                                                |  |                 | 1,840   |   |                        |   | 57,687  |                            |  |   | 43,754       |   |  |              | (16,389  | ) |  |   | 86,892  |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Property, plant, and equipment                                  |  |                 |        |   |                        |   | 199,253 |                            |  |   | 50,164       |   |  |              |         |   |  |   | 249,417 |  
|Less accumulated depreciation                                   |  |                 |        |   |                        |   | (59,742 | )                          |  |   | (14,179      | ) |  |              |         |   |  |   | (73,921 | )
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|                                                                |  |                 |        |   |                        |   | 139,511 |                            |  |   | 35,985       |   |  |              |         |   |  |   | 175,496 |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Intercompany receivable                                         |  |                 | 32,641  |   |                        |   | 1,990   |                            |  |   | (266         | ) |  |              | (34,365  | ) |  |   |        |  
|Investments in subsidiaries                                     |  |                 | 106,153 |   |                        |   | 24,235  |                            |  |   | 843          |   |  |              | (131,231 | ) |  |   |        |  
|Investments in unconsolidated affiliates                        |  |                 |        |   |                        |   |        |                            |  |   | 14,735       |   |  |              |         |   |  |   | 14,735  |  
|Other assets                                                    |  |                 | 1,809   |   |                        |   | 4,408   |                            |  |   | 792          |   |  |              |         |   |  |   | 7,009   |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|                                                                |  | $               | 142,443 |   |                        | $ | 227,831 |                            |  | $ | 95,843       |   |  | $            | (181,985 | ) |  | $ | 284,132 |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Liabilities and Stockholders Equity                            |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Current liabilities:                                            |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Accounts payable                                                |  | $               |        |   |                        | $ | 23,008  |                            |  | $ | 11,601       |   |  | $            | (468     | ) |  | $ | 34,141  |  
|Accrued liabilities                                             |  |                 | 1,161   |   |                        |   | 13,725  |                            |  |   | 2,231        |   |  |              | (1,963   | ) |  |   | 15,154  |  
|Intercompany payable                                            |  |                 |        |   |                        |   | 8,601   |                            |  |   | (3,171       | ) |  |              | (5,430   | ) |  |   |        |  
|Current portion of long-term debt and capital lease obligations |  |                 |        |   |                        |   | 6,811   |                            |  |   | 878          |   |  |              |         |   |  |   | 7,689   |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|                                                                |  |                 | 1,161   |   |                        |   | 52,145  |                            |  |   | 11,539       |   |  |              | (7,861   | ) |  |   | 56,984  |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Long-term debt, net of current portion                          |  |                 | 159,886 |   |                        |   | 57,824  |                            |  |   | 4,778        |   |  |              | (16,560  | ) |  |   | 205,928 |  
|Capital lease obligations, net of current portion               |  |                 |        |   |                        |   | 1,597   |                            |  |   |             |   |  |              |         |   |  |   | 1,597   |  
|Intercompany payable                                            |  |                 | 25,736  |   |                        |   | 5,074   |                            |  |   | 16,553       |   |  |              | (47,363  | ) |  |   |        |  
|Deferred tax liability                                          |  |                 | (3,991  | ) |                        |   | 7,521   |                            |  |   | 4,167        |   |  |              | 119      |   |  |   | 7,816   |  
|Other non-current liabilities                                   |  |                 |        |   |                        |   | 1,745   |                            |  |   | 1            |   |  |              |         |   |  |   | 1,746   |  
|Commitments and contingencies                                   |  |                 |        |   |                        |   |        |                            |  |   |             |   |  |              |         |   |  |   |        |  
|Stockholders equity:                                           |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Voting and nonvoting common stock                               |  |                 | 1       |   |                        |   | 4       |                            |  |   | 22           |   |  |              | (26      | ) |  |   | 1       |  
|Additional paid-in capital                                      |  |                 | 9,164   |   |                        |   | 96,761  |                            |  |   | 23,463       |   |  |              | (110,001 | ) |  |   | 19,387  |  
|Retained earnings (deficit)                                     |  |                 | (49,514 | ) |                        |   | 10,928  |                            |  |   | 34,216       |   |  |              | (293     | ) |  |   | (4,663  | )
|Cumulative translation adjustment                               |  |                 |        |   |                        |   | (5,768  | )                          |  |   | 1,104        |   |  |              |         |   |  |   | (4,664  | )
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|Total stockholders equity                                      |  |                 | (40,349 | ) |                        |   | 101,925 |                            |  |   | 58,805       |   |  |              | (110,320 | ) |  |   | 10,061  |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  
|                                                                |  | $               | 142,443 |   |                        | $ | 227,831 |                            |  | $ | 95,843       |   |  | $            | (181,985 | ) |  | $ | 284,132 |  
|                                                                |  |                 |         |   |                        |   |         |                            |  |   |              |   |  |              |          |   |  |   |         |  



F-26



---

##### Table of Contents

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidating Statements of Income

Fiscal year ended December 27, 2002

(In thousands)



|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------- | ------ | - | ---------------------- | - | ------- | --------------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                                                                                                                 |  | Holding Company |        |   | Guarantor Subsidiaries |   |         | Non- Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Net sales                                                                                                                                        |  | $               |       |   |                        | $ | 226,208 |                             |  | $ | 106,857      |   |  | $            | (9,883 | ) |  | $ | 323,182 |  
|Cost of goods sold                                                                                                                               |  |                 |       |   |                        |   | 167,290 |                             |  |   | 86,094       |   |  |              | (9,883 | ) |  |   | 243,501 |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Gross profit                                                                                                                                     |  |                 |       |   |                        |   | 58,918  |                             |  |   | 20,763       |   |  |              |       |   |  |   | 79,681  |  
|Operating expenses:                                                                                                                              |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Distribution                                                                                                                                     |  |                 |       |   |                        |   | 17,009  |                             |  |   | 5,612        |   |  |              |       |   |  |   | 22,621  |  
|Selling, general and administrative                                                                                                              |  |                 | 1      |   |                        |   | 26,346  |                             |  |   | 6,777        |   |  |              |       |   |  |   | 33,124  |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) from operations                                                                                                                    |  |                 | (1     | ) |                        |   | 15,563  |                             |  |   | 8,374        |   |  |              |       |   |  |   | 23,936  |  
|Interest, net                                                                                                                                    |  |                 | 4,804  |   |                        |   | 13,927  |                             |  |   | 2,651        |   |  |              |       |   |  |   | 21,382  |  
|Income from unconsolidated affiliates                                                                                                            |  |                 |       |   |                        |   |        |                             |  |   | (6,165       | ) |  |              |       |   |  |   | (6,165  | )
|Other, net                                                                                                                                       |  |                 | 6      |   |                        |   | (393    | )                           |  |   | 1,533        |   |  |              |       |   |  |   | 1,146   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) before income taxes and discontinued operations                                                                                    |  |                 | (4,811 | ) |                        |   | 2,029   |                             |  |   | 10,355       |   |  |              |       |   |  |   | 7,573   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Provision for income taxes:                                                                                                                      |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Current                                                                                                                                          |  |                 | (1,781 | ) |                        |   | 2,019   |                             |  |   | 407          |   |  |              |       |   |  |   | 645     |  
|Deferred                                                                                                                                         |  |                 | 149    |   |                        |   | (310    | )                           |  |   | 2,394        |   |  |              |       |   |  |   | 2,233   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|                                                                                                                                                 |  |                 | (1,632 | ) |                        |   | 1,709   |                             |  |   | 2,801        |   |  |              |       |   |  |   | 2,878   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Income (loss) before discontinued operations                                                                                                     |  |                 | (3,179 | ) |                        |   | 320     |                             |  |   | 7,554        |   |  |              |       |   |  |   | 4,695   |  
|Loss from discontinued operations, net of tax                                                                                                    |  |                 | 48     |   |                        |   |        |                             |  |   |             |   |  |              |       |   |  |   | 48      |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Net income (loss)                                                                                                                                |  | $               | (3,227 | ) |                        | $ | 320     |                             |  | $ | 7,554        |   |  | $            |       |   |  | $ | 4,647   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|                                                                                                                                                
|RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES Condensed Consolidating Statements of Cash Flows Fiscal year ended December 27, 2002 (In
thousands) | 
|                                                                                                                                                 |  |                 |        |   |                       
|                                                                                                                                                 |  | Holding Company |        |   | Guarantor Subsidiaries |   |         | Non- Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |       
|Net cash provided by (used in) operating activities                                                                                              |  | $               | (5,014 | ) |                        | $ | 11,896  |                             |  | $ | 846          |   |  | $            | 233    |   |  | $ | 7,961   |  
|Cash flows from investing activities:                                                                                                            |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Capital expenditures                                                                                                                             |  |                 |       |   |                        |   | (10,000 | )                           |  |   | (558         | ) |  |              |       |   |  |   | (10,558 | )
|Increase in other assets                                                                                                                         |  |                 | 977    |   |                        |   | 25      |                             |  |   | (608         | ) |  |              | 70     |   |  |   | 464     |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Net cash provided by (used in) investing activities                                                                                              |  |                 | 977    |   |                        |   | (9,975  | )                           |  |   | (1,166       | ) |  |              | 70     |   |  |   | (10,094 | )
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Cash flows from financing activities:                                                                                                            |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Net borrowings on bank financed debt and unsecured notes payable                                                                                 |  |                 | (404   | ) |                        |   | 4,283   |                             |  |   | (816         | ) |  |              |       |   |  |   | 3,063   |  
|Net payments on capital lease obligations                                                                                                        |  |                 |       |   |                        |   | (759    | )                           |  |   |             |   |  |              |       |   |  |   | (759    | )
|Change in intercompany, net                                                                                                                      |  |                 | 4,472  |   |                        |   | (7,195  | )                           |  |   | 3,026        |   |  |              | (303   | ) |  |   |        |  
|Change in deferred tax liability                                                                                                                 |  |                 | (31    | ) |                        |   | (457    | )                           |  |   | 488          |   |  |              |       |   |  |   |        |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Net cash provided by (used in) financing activities                                                                                              |  |                 | 4,037  |   |                        |   | (4,128  | )                           |  |   | 2,698        |   |  |              | (303   | ) |  |   | 2,304   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Effect of exchange rate changes on cash                                                                                                          |  |                 |       |   |                        |   | (552    | )                           |  |   | 136          |   |  |              |       |   |  |   | (416    | )
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Net increase (decrease) in cash                                                                                                                  |  |                 |       |   |                        |   | (2,759  | )                           |  |   | 2,514        |   |  |              |       |   |  |   | (245    | )
|Cash, beginning of period                                                                                                                        |  |                 |       |   |                        |   | 3,020   |                             |  |   | 1,284        |   |  |              |       |   |  |   | 4,304   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  
|Cash, end of period                                                                                                                              |  | $               |       |   |                        | $ | 261     |                             |  | $ | 3,798        |   |  | $            |       |   |  | $ | 4,059   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                             |  |   |              |   |  |              |        |   |  |   |         |  



F-27



---

##### Table of Contents

RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES

Condensed Consolidating Statements of Income

Fiscal year ended December 28, 2001

(In thousands)



|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------- | ------ | - | ---------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ------- | -
|                                                                                                                                                 |  | Holding Company |        |   | Guarantor Subsidiaries |   |         | Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                                                                                                                        |  | $               |       |   |                        | $ | 226,817 |                            |  | $ | 110,565      |   |  | $            | (11,648 | ) |  | $ | 325,734 |  
|Cost of goods sold                                                                                                                               |  |                 |       |   |                        |   | 177,835 |                            |  |   | 84,532       |   |  |              | (11,648 | ) |  |   | 250,719 |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Gross profit                                                                                                                                     |  |                 |       |   |                        |   | 48,982  |                            |  |   | 26,033       |   |  |              |        |   |  |   | 75,015  |  
|Operating expenses:                                                                                                                              |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Distribution                                                                                                                                     |  |                 |       |   |                        |   | 17,542  |                            |  |   | 7,634        |   |  |              |        |   |  |   | 25,176  |  
|Selling, general, and administrative                                                                                                             |  |                 |       |   |                        |   | 21,069  |                            |  |   | 11,395       |   |  |              |        |   |  |   | 32,464  |  
|Gain on sale of business                                                                                                                         |  |                 |       |   |                        |   | (10,493 | )                          |  |   |             |   |  |              |        |   |  |   | (10,493 | )
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Income from operations                                                                                                                           |  |                 |       |   |                        |   | 20,864  |                            |  |   | 7,004        |   |  |              |        |   |  |   | 27,868  |  
|Interest, net                                                                                                                                    |  |                 |       |   |                        |   | 18,376  |                            |  |   | 3,955        |   |  |              |        |   |  |   | 22,331  |  
|Income from unconsolidated affiliates                                                                                                            |  |                 |       |   |                        |   |        |                            |  |   | (1,160       | ) |  |              |        |   |  |   | (1,160  | )
|Other, net                                                                                                                                       |  |                 |       |   |                        |   | 670     |                            |  |   | 1,987        |   |  |              |        |   |  |   | 2,657   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Income before income taxes and discontinued operations                                                                                           |  |                 |       |   |                        |   | 1,818   |                            |  |   | 2,222        |   |  |              |        |   |  |   | 4,040   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Provision (benefit) for income taxes:                                                                                                            |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Current                                                                                                                                          |  |                 |       |   |                        |   | 329     |                            |  |   | 118          |   |  |              |        |   |  |   | 447     |  
|Deferred                                                                                                                                         |  |                 |       |   |                        |   | 1,993   |                            |  |   | (290         | ) |  |              |        |   |  |   | 1,703   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|                                                                                                                                                 |  |                 |       |   |                        |   | 2,322   |                            |  |   | (172         | ) |  |              |        |   |  |   | 2,150   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Income (loss) before discontinued operations                                                                                                     |  |                 |       |   |                        |   | (504    | )                          |  |   | 2,394        |   |  |              |        |   |  |   | 1,890   |  
|Loss from discontinued operations, net of tax                                                                                                    |  |                 | 247    |   |                        |   |        |                            |  |   |             |   |  |              |        |   |  |   | 247     |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Net income (loss)                                                                                                                                |  | $               | (247   | ) |                        | $ | (504    | )                          |  | $ | 2,394        |   |  | $            |        |   |  | $ | 1,643   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|                                                                                                                                                
|RADNOR HOLDINGS CORPORATION AND SUBSIDIARIES Condensed Consolidating Statements of Cash Flows Fiscal year ended December 28,
2001 (In thousands) | 
|                                                                                                                                                 |  |                 |        |   |                       
|                                                                                                                                                 |  | Holding Company |        |   | Guarantor Subsidiaries |   |         | Non-GuarantorSubsidiaries  |  |   | Eliminations |   |  | Consolidated |        
|Net cash provided by (used in) operating activities                                                                                              |  | $               | (5,161 | ) |                        | $ | 610     |                            |  | $ | 2,654        |   |  | $            |        |   |  | $ | (1,897  | )
|Cash flows from investing activities:                                                                                                            |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Capital expenditures                                                                                                                             |  |                 |       |   |                        |   | (7,197  | )                          |  |   | (5,161       | ) |  |              |        |   |  |   | (12,358 | )
|Investment in subsidiary                                                                                                                         |  |                 |       |   |                        |   | (18,073 | )                          |  |   |             |   |  |              | 18,073  |   |  |   |        |  
|Net cash proceeds from sale of business                                                                                                          |  |                 |       |   |                        |   | 30,935  |                            |  |   |             |   |  |              |        |   |  |   | 30,935  |  
|Increase in other assets                                                                                                                         |  |                 | 949    |   |                        |   | (2,290  | )                          |  |   | (504         | ) |  |              |        |   |  |   | (1,845  | )
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Net cash provided by (used in) investing activities                                                                                              |  |                 | 949    |   |                        |   | 3,375   |                            |  |   | (5,665       | ) |  |              | 18,073  |   |  |   | 16,732  |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Cash flows from financing activities:                                                                                                            |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Net borrowings on bank financed debt and unsecured notes payable                                                                                 |  |                 |       |   |                        |   | (9,933  | )                          |  |   | (2,972       | ) |  |              |        |   |  |   | (12,905 | )
|Net payments on capital lease obligations                                                                                                        |  |                 |       |   |                        |   | (928    | )                          |  |   | (219         | ) |  |              |        |   |  |   | (1,147  | )
|Change in paid-in-capital                                                                                                                        |  |                 |       |   |                        |   |        |                            |  |   | 18,073       |   |  |              | (18,073 | ) |  |   |        |  
|Change in intercompany, net                                                                                                                      |  |                 | 4,212  |   |                        |   | 8,574   |                            |  |   | (12,786      | ) |  |              |        |   |  |   |        |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Net cash provided by (used in) financing activities                                                                                              |  |                 | 4,212  |   |                        |   | (2,287  | )                          |  |   | 2,096        |   |  |              | (18,073 | ) |  |   | (14,052 | )
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Effect of exchange rate changes on cash                                                                                                          |  |                 |       |   |                        |   | 428     |                            |  |   | (633         | ) |  |              |        |   |  |   | (205    | )
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Net increase (decrease) in cash                                                                                                                  |  |                 |       |   |                        |   | 2,126   |                            |  |   | (1,548       | ) |  |              |        |   |  |   | 578     |  
|Cash, beginning of period                                                                                                                        |  |                 |       |   |                        |   | 894     |                            |  |   | 2,832        |   |  |              |        |   |  |   | 3,726   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  
|Cash, end of period                                                                                                                              |  | $               |       |   |                        | $ | 3,020   |                            |  | $ | 1,284        |   |  | $            |        |   |  | $ | 4,304   |  
|                                                                                                                                                 |  |                 |        |   |                        |   |         |                            |  |   |              |   |  |              |         |   |  |   |         |  



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INDEPENDENT AUDITORS REPORT



The Partners

Radnor Investments, L.P.:



We have audited the accompanying statement of assets, liabilities and
partners capital of Radnor Investments, L.P. (the Partnership), including the statement of investments, as of December 31, 2002, and the related statements of operations, changes in partners capital and cash flows for the year then
ended. These financial statements are the responsibility of the management of the Partnership. Our responsibility is to express an opinion on these financial statements based on our audit.



We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities and partners capital of Radnor Investments, L.P. as of December 31, 2002, and the
results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.



/s/ KPMG LLP



Philadelphia, Pennsylvania

August 26, 2003



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RADNOR INVESTMENTS, L.P.

Statements of Assets, Liabilities and Partners Capital

December 31, 2002 and 2001



|                                  |  |      |            |             |   |          
|--------------------------------- |  | ---- | ---------- | ----------- | - | ---------
|                                  |  | 2002 |            | 2001       
|                                  |  |      |            | (Unaudited)
|Assets                            |  |      |            |             |   |          
|Cash                              |  | $    | 3,232      |             | $ | 3,478    
|Interest receivable               |  |      | 60,248     |             |   | 34,586   
|Other receivables                 |  |      | 9,632      |             |   | 6,428    
|Investments, at fair value        |  |      | 47,786,512 |             |   | 7,238,262
|                                  |  |      |            |             |   |          
|                                  |  | $    | 47,859,624 |             | $ | 7,282,754
|                                  |  |      |            |             |   |          
|Liabilities and Partners Capital |  |      |            |             |   |          
|Partners capital:                |  |      |            |             |   |          
|General partner                   |  | $    | 34,551,134 |             | $ | 2,580,900
|Limited partner                   |  |      | 13,308,490 |             |   | 4,701,854
|                                  |  |      |            |             |   |          
|Total partners capital           |  |      | 47,859,624 |             |   | 7,282,754
|                                  |  |      |            |             |   |          
|                                  |  | $    | 47,859,624 |             | $ | 7,282,754
|                                  |  |      |            |             |   |          



See accompanying notes
to financial statements.



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RADNOR INVESTMENTS, L.P.

Statements of Operations

Years ended December 31, 2002 and 2001



|                                                                |  |      |            |   |             |   |        
|--------------------------------------------------------------- |  | ---- | ---------- | - | ----------- | - | -------
|                                                                |  | 2002 |            |   | 2001       
|                                                                |  |      |            |   | (Unaudited)
|Revenue:                                                        |  |      |            |   |             |   |        
|Interest income                                                 |  | $    | 65,121     |   |             | $ | 21,326 
|                                                                |  |     
|Operating expenses:                                             |  |      |            |   |             |   |        
|Selling, general and administrative                             |  |      | 626,503    |   |             |   | 6,438  
|                                                                |  |      |            |   |             |   |        
|Total operating expenses                                        |  |      | 626,503    |   |             |   | 6,438  
|                                                                |  |      |            |   |             |   |        
|Net income (loss) before unrealized appreciation of investments |  |      | (561,382   | ) |             |   | 14,888 
|                                                                |  |     
|Net unrealized appreciation of investments                      |  |      | 38,518,467 |   |             |   | 826,638
|                                                                |  |      |            |   |             |   |        
|Net increase in partners capital from operations               |  | $    | 37,957,085 |   |             | $ | 841,526
|                                                                |  |      |            |   |             |   |        



See accompanying notes
to financial statements.



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RADNOR INVESTMENTS, L.P.

Statements of Changes in Partners Capital

Years ended December 31, 2002 and 2001



|                                                              |  |                |            |                |   |            |       |  |   |            |  
|------------------------------------------------------------- |  | -------------- | ---------- | -------------- | - | ---------- | ----- |  | - | ---------- | -
|                                                              |  | Generalpartner |            | Limitedpartner |   |            | Total | 
|Balance, December 31, 2000 (Unaudited)                        |  | $              | 2,519,506  |                | $ | 3,175,091  |       |  | $ | 5,694,597  |  
|Contributions (Unaudited)                                     |  |                |           |                |   | 746,631    |       |  |   | 746,631    |  
|Distributions (Unaudited)                                     |  |                |           |                |   |           |       |  |   |           |  
|Net increase in partners capital from operations (Unaudited) |  |                | 61,394     |                |   | 780,132    |       |  |   | 841,526    |  
|                                                              |  |                |            |                |   |            |       |  |   |            |  
|Balance, December 31, 2001                                    |  | $              | 2,580,900  |                | $ | 4,701,854  |       |  | $ | 7,282,754  |  
|Contributions                                                 |  |                |           |                |   | 7,591,725  |       |  |   | 7,591,725  |  
|Distributions                                                 |  |                |           |                |   | (4,971,940 | )     |  |   | (4,971,940 | )
|Net increase in partners capital from operations             |  |                | 31,970,234 |                |   | 5,986,851  |       |  |   | 37,957,085 |  
|                                                              |  |                |            |                |   |            |       |  |   |            |  
|Balance, December 31, 2002                                    |  | $              | 34,551,134 |                | $ | 13,308,490 |       |  | $ | 47,859,624 |  
|                                                              |  |                |            |                |   |            |       |  |   |            |  



See accompanying notes
to financial statements.



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RADNOR INVESTMENTS, L.P.

Statements of Cash Flows

Years ended December 31, 2002 and 2001



|                                                                              |  |      |             |   |             |   |          |  
|----------------------------------------------------------------------------- |  | ---- | ----------- | - | ----------- | - | -------- | -
|                                                                              |  | 2002 |             |   | 2001        |  
|                                                                              |  |      |             |   | (Unaudited) |  
|Cash flows from operating activities:                                         |  |      |             |   |             |   |          |  
|Net increase in partners capital from operations                             |  | $    | 37,957,085  |   |             | $ | 841,526  |  
|Adjustments to reconcile net income to net cash used in operating activities: |  |      |             |   |             |   |          |  
|Unrealized appreciation of investments                                        |  |      | (38,518,467 | ) |             |   | (826,638 | )
|Increase in other receivables                                                 |  |      | (3,205      | ) |             |   | (6,427   | )
|Increase in interest receivable                                               |  |      | (25,661     | ) |             |   | (21,326  | )
|                                                                              |  |      |             |   |             |   |          |  
|Net cash used in operating activities                                         |  |      | (590,248    | ) |             |   | (12,865  | )
|                                                                              |  |      |             |   |             |   |          |  
|Cash flows from investing activities:                                         |  |      |             |   |             |   |          |  
|Purchase of investments                                                       |  |      | (1,998,001  | ) |             |   | (734,008 | )
|Repayment of investment principal                                             |  |      | 5,010,598   |   |             |   |         |  
|                                                                              |  |      |             |   |             |   |          |  
|Net cash provided by (used in) investing activities                           |  |      | 3,012,597   |   |             |   | (734,008 | )
|                                                                              |  |      |             |   |             |   |          |  
|Cash flows from financing activities:                                         |  |      |             |   |             |   |          |  
|Cash contributions                                                            |  |      | 2,549,345   |   |             |   | 746,631  |  
|Cash distributions                                                            |  |      | (4,971,940  | ) |             |   |         |  
|                                                                              |  |      |             |   |             |   |          |  
|Net cash provided by (used in) financing activities                           |  |      | (2,422,595  | ) |             |   | 746,631  |  
|                                                                              |  |      |             |   |             |   |          |  
|Net decrease in cash                                                          |  |      | (246        | ) |             |   | (242     | )
|                                                                              |  |     
|Cash, beginning of period                                                     |  |      | 3,478       |   |             |   | 3,720    |  
|                                                                              |  |      |             |   |             |   |          |  
|Cash, end of period                                                           |  | $    | 3,232       |   |             | $ | 3,478    |  
|                                                                              |  |      |             |   |             |   |          |  



See accompanying notes
to financial statements.



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RADNOR INVESTMENTS, L.P.

Statements of Investments

December 31, 2002 and 2001



|                                                       |  |                                          |  |             |           |            |   |           
|------------------------------------------------------ |  | ---------------------------------------- |  | ----------- | --------- | ---------- | - | ----------
|                                                       |  |                                          |  | 2002       
|                                                       |  |                                          |  | Cost        |           | Fair Value
|Creative Networks International (the Netherlands) B.V. |  | Debt Securities                          |  | $           | 1,071,084 |            | $ | 1,071,084 
|                                                       |  |                                          | 
|                                                       |  | Common Stock (30 shares)                 |  |             | 996,811   |            |   | 45,639,000
|                                                       |  |                                          | 
|SkinHealth, Inc.                                       |  | Debt Securities                          |  |             | 210,000   |            |   | 210,000   
|                                                       |  |                                          | 
|                                                       |  | Series A Preferred stock (33,334 shares) |  |             | 2,000,000 |            |   | 716,944   
|                                                       |  |                                          | 
|                                                       |  | Common Stock (79,711 shares)             |  |             | 92,388    |            |   | 797       
|                                                       |  |                                          | 
|Radnor Ventures, LLC                                   |  | 1.5 member units                         |  |             | 150,000   |            |   | 23,687    
|                                                       |  |                                          | 
|Prism e-Solutions, LLC                                 |  | 140 member units                         |  |             | 125,000   |            |   | 125,000   
|                                                       |  |                                          |  |             |           |            |   |           
|                                                       |  |                                          |  | $           | 4,645,283 |            | $ | 47,786,512
|                                                       |  |                                          |  |             |           |            |   |           
|                                                       |  |                                         
|                                                       |  |                                          |  | 2001       
|                                                       |  |                                          |  | (Unaudited)
|                                                       |  |                                          |  | Cost        |           | Fair Value
|Creative Networks International (the Netherlands) B.V. |  | Common Stock (30 shares)                 |  | $           | 55,000    |            | $ | 5,613,000 
|                                                       |  |                                          | 
|SkinHealth, Inc.                                       |  | Debt Securities                          |  |             | 200,000   |            |   | 200,000   
|                                                       |  |                                          | 
|                                                       |  | Series A Preferred stock (33,334 shares) |  |             | 2,000,000 |            |   | 1,229,909 
|                                                       |  |                                          | 
|                                                       |  | Common Stock (50,000 shares)             |  |             | 80,500    |            |   | 500       
|                                                       |  |                                          | 
|Radnor Ventures, LLC                                   |  | 1.5 member units                         |  |             | 150,000   |            |   | 94,853    
|                                                       |  |                                          | 
|Prism e-Solutions, LLC                                 |  | 115 member units                         |  |             | 100,000   |            |   | 100,000   
|                                                       |  |                                          |  |             |           |            |   |           
|                                                       |  |                                          |  | $           | 2,585,500 |            | $ | 7,238,262 
|                                                       |  |                                          |  |             |           |            |   |           



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RADNOR INVESTMENTS, L.P.

NOTES TO FINANCIAL STATEMENTS



|1. | ORGANIZATION AND BUSINESS
|-- | -------------------------



Radnor Investments, L.P. (the Partnership), a Delaware limited partnership, was formed pursuant to an Agreement of Limited Partnership (the Partnership
Agreement) for the purpose of making investments generally in privately-held companies in a variety of industries.



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------



The financial statements have been prepared on the value method of accounting in accordance with accounting principles generally accepted in the United
States of America for investment companies.



Valuation of
Investments



The Partnerships investments are
generally subject to restrictions on resale and generally have no established market. The Partnership values substantially all of its investments at fair value as determined in good faith by Radnor Investment Advisors, L.P. (the General Partner) in
accordance with the Partnerships valuation policy. The Partnership determines fair value to be the amount for which an investment could be exchanged in an orderly disposition over a reasonable period of time between willing parties other than
in a forced or liquidation sale. The Partnerships valuation policy considers the fact that no ready market exists for substantially all of the entities in which it invests. The Partnerships valuation policy is intended to provide a
consistent basis for determining the fair value of the portfolio. The Partnership will record unrealized depreciation on investments when it believes that an investment has become impaired, including where collection of a loan or when the enterprise
value of the company does not currently support the cost of the Partnerships investments. Conversely, the Partnership will record unrealized appreciation if it believes that the underlying portfolio company has appreciated in value and,
therefore, the Partnerships investment has also appreciated in value. Because of the inherent uncertainty of such valuation, estimated values may differ significantly from the values that would have been used had a ready market for these
investments existed and/or the Partnership liquidated its position and the differences could be material.



Use of Estimates



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.



Income Taxes



The Partnership itself is not
subject to income taxes; each partner is severally liable for income taxes, if any, on his, her or its proportionate share of the Partnerships net taxable income.



Capital Calls



The Partnership calls capital from certain of its partners in connection with proposed portfolio investments and to provide for partnership and
organizational expenses specified by the Partnership Agreement. At the time the capital is called it is recorded as a capital contribution.



Recently Issued Accounting Standards



In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of Variable Interest
Entities an interpretation of ARB No. 51. This Interpretation clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have



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sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from
other parties. The Interpretation applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or
interim period beginning after June 15, 2003, to variable interest entities in which an entity holds a variable interest that it acquired prior to February 1, 2003. The Partnership continues to evaluate the impact, if any, that adopting FASB
Interpretation No. 46 may have on its financial statements.



|3. | PARTNERSHIP AGREEMENT
|-- | ---------------------



The following summarizes certain matters related to the organization of the Partnership. Partners should refer to the Partnership Agreement for a more
complete description of the Partnership terms.



The Partnership
ceases to exist on December 31, 2047, unless earlier terminated in accordance with the Partnership Agreement.



The General Partner is not required to contribute capital to the Partnership. The General Partner must notify the limited partner when additional capital
contributions to the Partnership are required. Within ten days thereafter, the limited partner shall notify the General Partner as to whether it agrees to make such additional capital contributions.



A Capital Account, as defined in the Partnership Agreement, is maintained on
the books of the Partnership for each partner. The balance in each partners Capital Account is adjusted by the partners allocable share of net profit or loss, capital contributions and the amount of cash distributed to such partner, as
set forth in the Partnership Agreement. Allocations of income, gains, losses and deductions of the Partnership are allocated among the capital accounts of the Partners, as set forth in the Partnership Agreement.



|4. | RELATED-PARTY TRANSACTIONS
|-- | --------------------------



The Partnership has paid certain administrative expenses on behalf of SkinHealth, Inc. and is entitled to reimbursement of these amounts. At December 31,
2002, $9,632 in advances was included in other receivables in the accompanying balance sheet.



|5. | COMMITMENTS AND CONTINGENCIES
|-- | -----------------------------



During fiscal 2002, the Partnership committed to fund an additional $1,500,000 to Creative Networks International (the Netherlands) B.V. At December 31,
2002, $535,297 had been advanced to the company and was included in investments in the accompanying balance sheet.



|6. | INVESTMENTS
|-- | -----------



Creative Networks International (the Netherlands) B.V.



Creative Networks International (the Netherlands) B.V. and subsidiaries is a pay-television programming company whose major operation is a basic tier arts
and entertainment channel on the Sky satellite platform in Italy. Sky, which is owned by Rupert Murdochs The News Corporation Limited and is akin to BSkyB in the United Kingdom, is currently one of two pay-television platforms in Italy and
merged with its only competitor, Vivendi Universals Telepiu, on July 15, 2003.



In September 1997, the Partnership invested approximately $55,000 to acquire 16 Class A Shares and 14 Class B Shares, representing 55.6% of the total outstanding shares and approximately 40.0% of the voting interest
of Creative Networks International (the Netherlands) B.V. In July 2002, the Partnership converted its Class B shares into an equal number of Class A Shares, thereby increasing its total voting interest in Creative Networks International (the
Netherlands) B.V. to approximately 55.6%. The total cost of the conversion, including the capital contribution and legal and accounting fees, totaled $941,811.



The Partnerships investment at cost in Creative Networks International (the Netherlands) B.V. and its subsidiaries as of December 31, 2001 was
$55,000. The Partnerships investment was valued at $5,613,000 in the accompanying balance sheet, which approximated fair market value as of December 31, 2001.



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The Partnerships investment at cost in Creative Networks International (the Netherlands) B.V. and
its subsidiaries as of December 31, 2002 was $996,811. The Partnerships investment was valued at $45,639,000 in the accompanying balance sheet, which approximated fair market value as of December 31, 2002.



During fiscal 2002, the limited partner contributed a $5,042,380 debt
security due from Creative Networks International (the Netherlands) B.V. to the Partnership. The Partnership subsequently established a revolving line of credit with Creative Networks International (the Netherlands) B.V., which enables Creative
Networks International (the Netherlands) B.V. to borrow up to a maximum of $1,500,000. Interest accrues on the outstanding principle amount at an annual rate equal to the prime rate plus 2.50% and compounds monthly. As of December 31, 2002, the
outstanding principal balance under both the debt security and the line of credit was $1,071,084 and was included in investments in the accompanying balance sheet.



SkinHealth, Inc.



SkinHealth, Inc. is an operator of retail, self-pay cosmetic dermatology and skin rejuvenation centers based inside dermatology practices. The company
partners with respected dermatologists and offers its clients cosmetic and aesthetic services as well as a full line of skin care products. The company has targeted the Boston, Massachusetts region for its first market.



Since July 1999, the Partnership invested $2,092,388 to acquire approximately
31.1% of the issued and outstanding shares of common and preferred stock of SkinHealth, Inc.



The Partnerships investment at cost in SkinHealth, Inc. as of December 31, 2001 was $2,080,500. The Partnerships investment was valued at $1,230,409 in the accompanying balance sheet, which approximated
fair market value as of December 31, 2001.



The
Partnerships investment at cost in SkinHealth, Inc. as of December 31, 2002 was $2,092,388. The Partnerships investment was valued at $717,741 in the accompanying balance sheet, which approximated fair market value as of December 31,
2002.



On May 4, 2000, the Partnership advanced SkinHealth,
Inc. $200,000 under a promissory note. Interest accrues on the outstanding principle at a rate of 10.0% and compounds annually. All interest accrued from inception through the third anniversary date shall be added to the principal and repaid in 16
equal principal installments on the first day of each calendar quarter commencing on April 1, 2003. As of December 31, 2002, the original $200,000 was included in investments while the $58,198 of accrued interest was included in interest receivable
in the accompanying balance sheet.



On August 20, 2002, the
Partnership established a grid note with SkinHealth, Inc., which enables SkinHealth, Inc. to borrow up to a maximum of $25,000. Interest accrues on the outstanding principal amount at an annual rate equal to the prime rate as published from time to
time by Bank of America plus 1.0%. As of December 31, 2002, the outstanding principal balance under the grid note was $10,000 and was included in investments in the accompanying balance sheet.



Radnor Ventures, LLC



Radnor Ventures, LLC was formed for the sole purpose of investing, through
e-Healthcare Partners, LLC, in healthcare-related companies  Internet Healthcare Group (IHCG) and Lumenos, Inc. (Lumenos), respectively.



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IHCG is a holding company partnered with Internet Capital Group of Wayne, Pennsylvania and is focused
exclusively on healthcare and insurance. By acquiring stakes in partner companies and integrating them into a collaborative network, IHCG seeks to exploit technology enhanced opportunities within the healthcare segment of the U.S. economy.



In April 2000, the Partnership invested $150,000 to acquire
approximately 11.3% of the member units of Radnor Ventures, LLC.



The Partnerships investment at cost in Radnor Ventures, LLC as of December 31, 2001 was $150,000. The Partnerships investment was valued at $94,853 in the accompanying balance sheet, which approximated fair market value as of
December 31, 2001.



The Partnerships investment at cost
in Radnor Ventures, LLC as of December 31, 2002 was $150,000. The Partnerships investment was valued at $23,687 in the accompanying balance sheet, which approximated fair market value as of December 31, 2002.



Prism e-Solutions, LLC



Prism e-Solutions, LLC is a start-up software company that plans to deliver
a variety of software products to end users via the internet.



Since inception, the Partnership invested $125,000 to acquire 140 member units of Prism e-Solutions, LLC.



The Partnerships investment in Prism e-Solutions, LLC as of December 31, 2001 was $100,000. The Partnerships investment was valued at cost as
of December 31, 2001.



The Partnerships investment in
Prism e-Solutions, LLC as of December 31, 2002 was $125,000. The Partnerships investment was valued at cost as of December 31, 2002.



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