-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OJVleargv+z2c2GedJhZPOHLNhFNGpOEwPZzAlk4TVVIfddXZ+E3volXWu113Bww DvdjgOZdpe2hIzGZgSszNw== /in/edgar/work/0000033073-00-000010/0000033073-00-000010.txt : 20000927 0000033073-00-000010.hdr.sgml : 20000927 ACCESSION NUMBER: 0000033073-00-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000925 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VISKASE COMPANIES INC CENTRAL INDEX KEY: 0000033073 STANDARD INDUSTRIAL CLASSIFICATION: [3089 ] IRS NUMBER: 952677354 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05485 FILM NUMBER: 727866 BUSINESS ADDRESS: STREET 1: 6855 W. 65TH ST. CITY: CHICAGO STATE: IL ZIP: 60638 BUSINESS PHONE: 7084964200 FORMER COMPANY: FORMER CONFORMED NAME: ENVIRODYNE INDUSTRIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MGN INC DATE OF NAME CHANGE: 19790425 10-Q 1 0001.txt FIRST QTR - MAR 2000 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______ FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 --------------------- OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------- ------------- Commission file number 0-5485 ---------- VISKASE COMPANIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 95-2677354 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6855 W. 65th Street, Chicago, Illinois 60638 - --------------------------------------- ------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (708) 496-4200 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 ----- ----- As of May 15, 2000, there were 15,096,458 shares outstanding of the registrant's Common Stock, $.01 par value. Page 1 of 18 Pages INDEX TO FINANCIAL STATEMENTS VISKASE COMPANIES, INC. AND SUBSIDIARIES UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS PAGE Consolidated balance sheets at March 31, 2000 (unaudited) and December 31, 1999 4 Unaudited consolidated statements of operations for the three months ended March 31, 2000 and March 31, 1999 5 Unaudited consolidated statements of cash flows for the three months ended March 31, 2000 and March 31, 1999 6 Notes to consolidated financial statements 7 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS -------------------- The financial information included in this quarterly report has been prepared in conformity with the accounting principles and practices reflected in the financial statements included in the annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1999 (1999 Form 10-K). These quarterly financial statements should be read in conjunction with the financial statements and the notes thereto included in the 1999 Form 10-K. The accompanying financial information, which is unaudited, reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The condensed consolidated balance sheet as of December 31, 1999 was derived from the audited consolidated financial statements in the Company's annual report on Form 10-K. Reported interim results of operations are based in part on estimates which may be subject to year-end adjustments. In addition, these quarterly results of operations are not necessarily indicative of those expected for the year. VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
March 31, December 31, 2000 1999 ---------- ----------- (unaudited) (in thousands) ASSETS Current assets: Cash and equivalents $ 6,224 $ 6,243 Receivables, net 45,426 48,971 Inventories 81,394 78,672 Other current assets 13,849 14,540 ---------- -------- Total current assets 146,893 148,426 Property, plant and equipment, including those under capital leases 487,076 488,369 Less accumulated depreciation and amortization 186,313 178,122 ---------- -------- Property, plant and equipment, net 300,763 310,247 Deferred financing costs, net 1,813 3,059 Other assets 31,913 32,086 ---------- -------- Total assets $ 481,382 $493,818 ========== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligations under capital leases $ 124,757 $ 23,095 Accounts payable 27,518 35,202 Accrued liabilities 55,900 46,966 Current deferred income taxes 8,683 8,683 ---------- -------- Total current liabilities 216,858 113,946 Long-term debt including obligations under capital leases 301,344 404,151 Accrued employee benefits 46,947 46,787 Deferred and noncurrent income taxes 16,642 18,376 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; none outstanding Common stock, $.01 par value; 15,089,790 shares issued and outstanding at March 31, 2000 and 15,058,439 shares at December 31, 1999 151 151 Paid in capital 137,523 137,454 Accumulated (deficit) (238,108) (229,212) Cumulative foreign currency translation adjustments 25 2,165 ---------- -------- Total stockholders'(deficit) (100,409) (89,442) ---------- -------- Total liabilities and stockholders' equity $ 481,382 $493,818 ========== ======== The accompanying notes are an integral part of the consolidated financial statements.
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Three Months Ended March Ended March 31, 2000 31, 1999 --------------- --------------- (in thousands, except for number of shares and per share amounts) NET SALES $ 51,770 $55,136 ---------- -------- COSTS AND EXPENSES Cost of sales 38,705 40,493 Selling, general and administrative 11,186 12,285 Amortization of intangibles 500 500 ---------- -------- OPERATING INCOME 1,379 1,858 Interest income 53 103 Interest expense 12,159 10,290 Other expense, net 113 2,009 ---------- -------- (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (10,840) (10,338) Income tax (benefit) (713) (2,373) ---------- -------- NET (LOSS) FROM CONTINUING OPERATIONS (10,127) (7,965) DISCONTINUED OPERATIONS: Income (loss) from operations net of income taxes (Note 5) 1,231 (3,371) ---------- -------- NET (LOSS) (8,896) (11,336) Other comprehensive (loss), net of tax: Foreign currency translation adjustments (1,305) (995) ---------- -------- COMPREHENSIVE (LOSS) $(10,201) $(12,331) ========== ======== WEIGHTED AVERAGE COMMON SHARES - BASIC AND DILUTED 15,085,642 14,867,057 ========== ========== PER SHARE AMOUNTS: EARNINGS (LOSS) PER SHARE - basic and diluted Continuing operations $(.67) $(.54) Discontinued operations: Income (loss) from operations .08 (.22) ------ ----- NET (LOSS) $(.59) $(.76) ====== ===== The accompanying notes are an integral part of the consolidated financial statements.
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three Months Ended ----------------------------------- March 31, March 31, 2000 1999 ------------- ------------ (in thousands) Cash flows from operating activities: Net (loss) $(8,896) $(11,336) Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: Depreciation and amortization under capital lease 10,140 10,120 Amortization of intangibles 1,250 1,250 Amortization of deferred financing fees and discount 1,564 286 (Decrease) in deferred and noncurrent income taxes (1,011) (2,030) Foreign currency transaction loss 307 43 Loss on disposition of assets 24 Bad debt provision 179 233 Changes in operating assets and liabilities: Receivables 2,456 (967) Inventories (3,692) (2,859) Other current assets 482 (6,509) Accounts payable and accrued liabilities 2,091 1,582 Other (338) 1,525 ---------- -------- Total adjustments 13,428 2,698 ---------- -------- Net cash provided by (used in) operating activities 4,532 (8,638) Cash flows from investing activities: Capital expenditures (3,242) (5,997) Proceeds from disposition of assets 12 ---------- -------- Net cash (used in) investing activities (3,242) (5,985) Cash flows from financing activities: Issuance of common stock 69 49 Deferred financing costs (317) (26) Proceeds from revolving loan and long-term borrowings 59,002 30,134 Repayment of revolving loan, long-term borrowings and capital lease obligation (60,066) (13,353) ---------- -------- Net cash (used in) provided by financing activities (1,312) 16,804 Effect of currency exchange rate changes on cash 3 (510) ---------- -------- Net (decrease) increase in cash and equivalents (19) 1,671 Cash and equivalents at beginning of period 6,243 9,028 ---------- -------- Cash and equivalents at end of period $ 6,224 $10,699 ========== ======== ______________________________________________________________________________ Supplemental cash flow information: Interest paid $ 4,940 $ 10,616 Income taxes paid $ 452 $ 631 The accompanying notes are an integral part of the consolidated financial statements.
VISKASE COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. INVENTORIES (dollars in thousands) Inventories consisted of: March December 31, 2000 31, 1999 ---------- ----------- Raw materials $ 9,953 $10,361 Work in process 31,209 31,039 Finished products 40,232 37,272 ------- ------- $81,394 $78,672 ======= ======= Approximately 59% of the inventories at March 31, 2000 were valued at Last- In, First-Out (LIFO). These LIFO values exceeded current manufacturing cost by approximately $7,642 at March 31, 2000. 2. DEBT OBLIGATIONS (dollars in thousands) Viskase Corporation and Viskase Sales Corporation entered into two-year secured credit agreements consisting of a $50 million senior revolving credit facility, including a $26 million sublimit for issuance of letters of credit (Senior Revolving Credit Facility), a $50 million senior term facility (Senior Term Facility), collectively the "Senior Secured Credit Facility," and $35 million of junior secured term loans (Junior Term Loans). The Senior Secured Credit Facility and Junior Term Loans have a maturity date of June 30, 2001. The Company entered into an Agreement dated March 3, 2000, amended March 9, 2000, March 23, 2000 and March 30, 2000, that extended the grace period for the payment of its February 28, 2000 annual GECC lease payment in the amount of $23.5 million. The principal portion of the 2001 GECC lease payment, the Senior Secured Credit Facility and Junior Term Loans have been reclassed to current from long term. (See Note 9.) Outstanding short-term and long-term debt consisted of:
March December 31, 2000 31, 1999 ---------- -------- Short-term debt, current maturity of long-term debt, and capital lease obligation: Senior Revolving Credit Facility $ 9,557 Senior Term Facility 48,214 $ 7,144 Junior Term Facility 35,000 Current maturity of Viskase Capital Lease Obligation 30,238 14,377 Current maturity of Viskase Limited Term Loan (3.2%) 722 753 Other 1,026 821 ---------- -------- Total short-term debt $124,757 $23,095 ========== ======== Long-term debt: Senior Revolving Credit Facility $ 8,551 Senior Term Facility 42,856 Junior Term Facility 35,000 10.25% Senior Notes due 2001 $219,262 219,262 Viskase Capital Lease Obligation 81,605 97,466 Other 477 1,016 ---------- -------- Total long-term debt $301,344 $404,151 ========== ========
On April 13, 2000 the Company entered into an Agreement and Amendment with GECC that extended the payment date to June 30, 2000 and waived the noncompliance of the Fixed Charge Coverage Ratio for the quarter ended March 31, 2000. The June 30, 2000 payment extension date was subsequently modified to September 26, 2000 under an Agreement dated June 13, 2000. Under the terms of the April 13, 2000 Agreement and Amendment with GECC, the Company agreed to amend the amortization schedule of annual lease payments, maintain a letter of credit in the amount of $23.5 million at all times, limit additional borrowings and provide a subordinated security interest collateralized by the Collateral Pool. Holders of the Senior Secured Credit Facility and the Junior Term Loans consented to the payment extensions and the subordinated security interest granted to GECC. The revised amortization schedule is presented below. The required $47.0 million payment, per the amended amortization schedule, which was due no later than September 26, 2000, was made on August 31, 2000. August 31, 2000 $46,998 November 1, 2001 11,750 February 28, 2002 11,749 February 28, 2003 23,499 February 28, 2004 23,499 February 28, 2005 23,499 The Company's Senior Secured Credit Facility and Junior Term Loans contain a number of financial covenants that, among other things, require the maintenance of a minimum level of tangible net worth, a minimum fixed charge coverage ratio and a minimum leverage ratio of total liabilities to EBDIAT, and a limitation on capital expenditures. As of March 31, 2000, the Company is in compliance with the covenants under the Company's Senior Secured Credit Facility and Junior Term Loans. As of June 30, 2000, the Company received an amendment and waiver under the Company's Senior Secured Credit Facility and Junior Term Loans. The Company determined that, as of June 30, 2000, without the amendment and waiver, it would not have been in compliance with the tangible net worth and leverage ratio covenants. The Company's 10.25% Notes, of which $219.3 million principal amount is outstanding, will mature in December 2001. The Company anticipates it will refinance the 10.25% Notes or seek alternative strategies including, but not limited to, using proceeds from asset sales, litigation, if any, or selling additional equity capital. 3. CONTINGENCIES In late 1993, Viskase commenced a legal action against American National Can Company (ANC) in Federal District Court for the Northern District of Illinois, Eastern Division, 93C7651. Viskase claimed that ANC's use of two different very low density polyethylene plastic resins in the manufacture of ANC's multi-layer barrier shrink film products was infringing various Viskase patents relating to multi-layer barrier plastic films used for fresh red meat, processed meat and poultry product applications. In November 1996, after a three-week trial, a jury found that ANC had willfully infringed Viskase's patents and awarded Viskase $102.4 million in compensatory damages. The Court also entered an order permanently enjoining ANC from making or selling infringing products. In September 1997, the Court set aside the jury verdict in part and ordered a retrial on certain issues. The Court upheld the jury finding on the validity of all of Viskase's patents and the jury finding that ANC had willfully infringed Viskase's patents by ANC's use of Dow Chemical Company's "Attane" brand polyethylene plastic resin in ANC's products. However, the Court ordered a new trial on the issue of whether ANC's use of Dow Chemical Company's "Affinity" brand polyethylene plastic resin infringed Viskase's patents and whether such conduct was willful. Because the jury rendered one general damage verdict, the Court ordered a retrial of all damage issues. By operation of the Court's order, the injunction in respect of ANC's future use of the "Affinity" brand resin was removed. On August 19, 1998, the Court granted Viskase's motion for partial summary judgment finding that ANC's use of the "Affinity" brand resin infringed Viskase's patents. The Court also reinstated the permanent injunction. Viskase filed a motion to have the jury verdict as to compensatory damages reinstated. ANC filed a motion to dismiss the lawsuit claiming that Viskase's patents are invalid and Viskase failed to join an indispensable party to the lawsuit. On May 10, 1999, the Court granted Viskase's motion to have the jury verdict as to the compensatory damages reinstated. In May and June 1999, the parties briefed the issue of enhanced damages and on July 2, 1999, the Court awarded Viskase total damages of $164.9 million. ANC filed a motion for reconsideration which was denied. On May 3, 1999, ANC commenced legal action in the Federal District Court for the Northern District of Illinois seeking declaratory relief that one of the litigated patents is invalid. ANC also filed a motion to consolidate the declaratory action with the 1993 suit. ANC's motion to consolidate was granted and then the Court dismissed ANC's suit with prejudice at the same time the Court awarded Viskase total damages of $164.9 million. ANC has filed a notice of appeal to the United States Court of Appeals for the Federal Circuit. Oral arguments before the United States Circuit of Appeals for the Federal Circuit were held on June 6, 2000 and Viskase expects a decision during fourth quarter of 2000 or first quarter of 2001. In addition, ANC has challenged two of the five Viskase patents in suit by filing requests for reexamination with the United States Patent and Trademark office (USPTO). Both patents under reexamination have been rejected by the USPTO. In both cases, Viskase has filed appeals to the Board of Patent Appeals and Interferences of the USPTO. For the first patent, Viskase's brief was filed July 13, 2000, and the Examiner's Answer is awaited. For the second patent, Viskase's brief is due October 23, 2000. On January 14, 2000, Pechiney Plastic Packaging, Inc. and Pechiney Emballage Flexible Europe, Inc. (successors in interest in ANC) filed suit against the Company and Viskase in the United States District Court for the Northern District of Illinois, Eastern Division. This suit alleges infringement of U.S. Reissue Patent No. 35,567, which patent is set to expire on April 26, 2002, and further alleges patent interference with one of the five Viskase patents litigated in Viskase's legal action against ANC. In May 2000, the District Court dismissed the patent interference count. Pechiney filed an Amended Complaint on June 30, 2000 seeking to reinstate the dismissed count (Count III). On July 25, 2000, Viskase filed a Motion to Dismiss Count III of the Amended Complaint and also filed a Motion for Sanctions related thereto. On August 9, 2000, Viskase filed a Supplemental Motion for Sanctions. On August 24, 2000, Pechiney responded to these motions and Viskase filed its reply on September 14, 2000. Rulings on these motions are presently set for October 13, 2000. Viskase's Answer to the Amended Complaint is presently due October 23, 2000. No part of the pending claims has been recorded in the Company's financial statements. Through March 31, 2000, $5.1 million in patent defense costs had been accrued and capitalized. In March 1997, Viskase received a subpoena from the Antitrust Division of the United States Department of Justice relating to a grand jury investigation of the sausage casings industry. In September 1999, Viskase Corporation received a subpoena from the Antitrust Division of the United States Department of Justice relating to the expansion of the grand jury investigation into the specialty films industry. Viskase is cooperating fully with the investigations. In November 1999, the Company and certain of its subsidiaries and one other sausage casings manufacturer were named in a civil complaint, Leon's Sausage -------------- Company, on behalf of itself and all others similarly situated v. Viskase - ------------------------------------------------------------------------- Companies, Inc., Envirodyne Industries, Inc., Viskase Corporation, Devro- - ------------------------------------------------------------------------- Teepak, Inc., Civil Action No. 99C7200, United States District Court for the - ------------ Northern District of Illinois, Eastern Division. This complaint alleged that the defendants unlawfully conspired to fix prices and allocate business in the sausage casings industry. In December 1999, the plaintiff in this action voluntarily dismissed the complaint without prejudice. In late 1999 and early 2000, the Company and certain of its subsidiaries and one other sausage manufacturer were named in ten virtually identical civil complaints filed in the District of New Jersey by the following plaintiffs: Smith Provision Co., Inc.; Parks LLC (d/b/a Parks Sausage Company); Real Kosher Sausage Company, Inc.; Sahlen Packing Co., Inc.; Marathon Enterprises, Inc.; Ventures East, Inc.; Keniston's, Inc.; Smithfield Foods, Inc.; Clougherty Packing Co.; and Klement Sausage Co. The District Circuit ordered all of these cases consolidated in the District of New Jersey. Civil Action No. 99-5195-MLC (D.N.J.). Each complaint brought on behalf of a purported class of sausage casings customers alleges that the defendants unlawfully conspired to fix prices and allocate business in the sausage casings industry. The Company and its subsidiaries have filed answers to each of these complaints denying liability. The Company and its subsidiaries are involved in various legal proceedings arising out of their business and other environmental matters, none of which is expected to have a material adverse effect upon results of operations, cash flows or financial position. 4. UNUSUAL CHARGE (dollars in millions) During the third quarter of 1998, due to the business conditions leading to the Viskase plan of restructuring, the Company evaluated the recoverability of long-lived assets including property, plant and equipment, patents and excess reorganization on a consolidated basis. Based upon the analysis, the Company recognized an impairment because the estimated consolidated undiscounted future cash flows derived from long-lived assets were determined to be less than their carrying value. The amount of the impairment was calculated using the present value of the Company's estimated future net cash flows to determine the assets' fair value. Based on this analysis, an impairment charge of $91.2 million for excess reorganization and $4.3 million for the write-down of the Chicago facility was taken. In addition, the Viskase plan of restructuring included charges for the decommissioning of the Chicago plant and the decommissioning of some of its foreign operations. In the first quarter of 2000, cash payments against the reserve were $.4 million; total payments through March 31, 2000 were $9.6 million. A remaining restructuring reserve of $1.9 million is included in accrued liabilities on the balance sheet. 5. DISCONTINUED OPERATIONS (dollars in thousands) On January 17, 2000, the Company's Board of Directors announced its intent to sell the plastic barrier and non-barrier shrink film business. The business being sold includes production facilities in the United States, United Kingdom, and Brazil. The sale of the films business was completed on August 31, 2000. The aggregate purchase price of $245 million will be used principally to retire debt, including the Senior Secured Credit Facility and Junior Term Loans, pay GECC $47.0 million per the amended amortization schedule, and for general corporate purposes. The Company expects an approximate net gain on the sale in the amount of $52 million. The gain will be recorded in the third quarter 2000 results. In conjunction with the sale of the films business, the Company will shut down its oriented polypropylene (OPP) films business located in Newton Aycliffe, England and the films operation in Canada; the costs of this are included in the business discontinuance. (See Note 9.) Operating results from discontinued operations are as follows: Three Months Three Months Ended March 31, Ended March 31, 2000 1999 -------------- -------------- Net sales $38,850 $36,931 Costs and expenses Cost of sales 28,796 28,889 Selling, general and administrative 7,199 7,992 Amortization of intangibles 750 750 Operating income 2,105 (700) Interest income Interest expense 27 43 Other expense, net 394 1,075 -------- ------- Income (loss) from discontinued operations before taxes 1,684 (1,818) Income tax provision 453 1,553 -------- ------- Net income (loss) from discontinued operations $ 1,231 $(3,371) ======== ======= The net assets of the films segment included in the accompanying Balance Sheets as of March 31, 2000 and December 31, 1999 consisted of the following: March 31, 2000 December 31, 1999 -------------- ----------------- Accounts receivable, net $ 18,555 $ 19,537 Inventories 34,066 33,965 Other current assets 4,640 4,156 -------- -------- Total current assets 57,261 57,658 Property, plant and equipment, net 107,246 110,657 Long-term assets 11,940 12,459 -------- -------- Total assets 176,447 180,774 Accounts payable and other current liabilities 25,573 28,396 Short-term debt 983 1,016 -------- -------- Total current liabilities 26,556 29,412 Long-term debt and lease obligations 386 465 Deferred and noncurrent income taxes 5,375 5,762 -------- -------- Total liabilities 32,317 35,639 Net assets $144,130 $145,135 ======== ======== 6. COMPREHENSIVE INCOME (dollars in thousands) The following sets forth the components of other comprehensive (loss) and the related income tax (benefit): Three Months Three Months Ended March 31, Ended March 31, 2000 1999 Foreign currency translation adjustment (1) $(1,305) $(995) (1) Net of related tax (benefit) of $(835) and $(636) for the first quarter ended 2000 and 1999, respectively. 7. EARNINGS PER SHARE Following are the reconciliations of the numerators and denominators of the basic and diluted EPS. Three Months Three Months Ended March 31, Ended March 31, 2000 1999 -------------- -------------- (in thousands, except for weighted average shares outstanding) NUMERATOR: Net (loss) available to common stockholders: From continuing operations: $(10,127) $ (7,965) Discontinued operations: (Loss) from discontinued operations 1,231 (3,371) -------- -------- Net loss available to common stockholders for basic and diluted EPS $ (8,896) $(11,336) ======== ======== DENOMINATOR: Weighted average shares outstanding for basic EPS 15,085,642 14,867,057 Effect of dilutive securities 0 0 ---------- ---------- Weighted average shares outstanding for diluted EPS 15,085,642 14,867,057 ========== ========== Common stock equivalents are excluded from the loss-per-share calculations as the result is antidilutive since the numerator is a loss from continuing operations. 8. ACCOUNTING STANDARDS The Company will adopt the provisions of Statement of Financial Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133" (SFAS No. 137). SFAS No. 137 is effective for the Company's 2001 financial statements. 9. SUBSEQUENT EVENTS There were no Y2K issues materially affecting the business. On January 17, 2000, the Company's Board of Directors announced its intent to sell the plastic barrier and non-barrier shrink film business. The business being sold includes production facilities in the United States, United Kingdom, and Brazil. The sale of the films business was completed on August 31, 2000. The aggregate purchase price of $245 million will be used principally to retire debt, including the Senior Secured Credit Facility and Junior Term Loans, pay GECC $47.0 million per the amended amortization schedule, and for general corporate purposes. The Company expects an approximate net gain on the sale in the amount of $52 million. The gain will be recorded in the third quarter 2000 results. In conjunction with the sale of the films business, the Company will shut down its oriented polypropylene (OPP) films business located in Newton Aycliffe, England and the films operation in Canada; the costs of this are included in the business discontinuance. On April 13, 2000 the Company entered into an Agreement and Amendment with GECC that extended the payment date to June 30, 2000 and waived the noncompliance of the Fixed Charge Coverage Ratio for the quarter ended March 31, 2000. The June 30, 2000 payment extension date was subsequently modified to September 26, 2000 under an Agreement dated June 13, 2000. Under the terms of the April 13, 2000 Agreement and Amendment with GECC, the Company agreed to amend the amortization schedule of annual lease payments, maintain a letter of credit in the amount of $23.5 million at all times, limit additional borrowings and provide a subordinated security interest collateralized by the Collateral Pool. Holders of the Senior Secured Credit Facility and the Junior Term Loans consented to the payment extensions and the subordinated security interest granted to GECC. The revised amortization schedule is presented below. The required $47.0 million payment, per the amended amortization schedule, which was due no later than September 26, 2000, was made on August 31, 2000. August 31, 2000 $46,998 November 1, 2001 11,750 February 28, 2002 11,749 February 28, 2003 23,499 February 28, 2004 23,499 February 28, 2005 23,499 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- The accompanying management's discussion and analysis of financial condition and results of operations should be read in conjunction with the following table: Three Months Ended --------------------------- March 31, March 31, 2000 1999 --------- --------- (in thousands) Net sales: Casings - continuing operations $51,770 $55,136 Films - discontinued operations 38,850 36,931 ------- ------- $90,620 $92,067 ======= ======= Operating income: Casings - continuing operations $1,379 $1,858 Films - discontinued operations 2,105 (700) ------ ------ $3,484 $1,158 ====== ====== March 31, December 31, 2000 1999 --------- ------------ (in thousands) Identifiable assets: Casings - continuing operations $304,935 $313,044 Films - discontinued operations 176,447 180,774 -------- -------- $481,382 $493,818 ======== ======== Results of Operations - --------------------- The Company's net sales from continuing operations for the first quarter of 2000 were $51.8 million, which represented a decrease of 6.1% from the comparable period of 1999. The decline in net sales reflects the continuing effect of competitive selling prices in the worldwide casings industry. European sales were negatively affected by foreign currency translation due to the strengthening of the U.S. dollar. Operating income from continuing operations for the first quarter of 2000 was $1.4 million representing a decrease of 25.8% from the comparable period of 1999. The decrease in operating income resulted primarily from declines in sales and gross margins caused by continued price competition in the worldwide casings industry. Net interest expense from continuing operations for the three month period totaled $12.1 million representing an increase of $1.9 million from the first three months of 1999. The increase is primarily due to an increase in deferred fees amortization and interest cost due to the refinancing in June 1999. Other expense from continuing operations of approximately $.1 million and $2.0 million for the first three months of 2000 and 1999, respectively, consists principally of foreign exchange losses. The Company uses foreign exchange forward contracts to hedge some of its non- functional currency receivables and payables which are denominated in major currencies that can be traded on open markets. This strategy is used to reduce the overall exposure to the effects of currency fluctuations on cash flows. The Company's policy is not to speculate in financial instruments. Receivables and payables which are denominated in non-functional currencies are translated to the functional currency at month end and the resulting gain or loss is taken to other income/expense on the income statement. Gains and losses on hedges of receivables and payables are marked to market. The result is recognized in other net expense on the income statement. The tax benefit for the first three months of 2000 resulted from the benefit of US losses partially offset by the provision related to income from foreign subsidiaries. Due to the permanent differences in the US resulting from foreign losses for which no tax benefit is provided, a benefit of $.7 million was provided on a loss from continuing operations of $10.8 million. The US tax benefit is recorded as a reduction of the deferred tax liability and does not result in a refund of income taxes. Discontinued operations - ----------------------- On January 17, 2000, the Company's Board of Directors announced its intent to sell the plastic barrier and non-barrier shrink film business. The business being sold includes production facilities in the United States, United Kingdom, and Brazil. The sale of the films business was completed on August 31, 2000. The aggregate purchase price of $245 million will be used principally to retire debt, including the Senior Secured Credit Facility and Junior Term Loans, pay GECC $47.0 million per the amended amortization schedule, and for general corporate purposes. The Company expects an approximate net gain on the sale in the amount of $52 million. The gain will be recorded in the third quarter 2000 results. In conjunction with the sale of the films business, the Company will shut down its oriented polypropylene (OPP) films business located in Newton Aycliffe, England and the films operation in Canada; the costs of this are included in the business discontinuance. Other - ----- The Company will adopt the provisions of Statement of Financial Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133" (SFAS No. 137). SFAS No. 137 is effective for the Company's 2001 financial statements. Liquidity and Capital Resources - ------------------------------- Cash and equivalents decreased by $.02 million during the three months ended March 31, 2000. Cash flows provided by operating activities of $4.5 million were used in financing activities of $1.3 million and investing activities of $3.2 million. Cash flows provided by operating activities were principally attributable to the Company's loss from operations offset by a decrease in working capital usage and the effect of depreciation and amortization. Cash flows used in financing activities were principally due to repayments of the revolving loan and long-term borrowings partially offset by proceeds from the revolver. Cash flows used in investing activities consist principally of capital expenditures for property, plant and equipment. During June 1999, Viskase Corporation and Viskase Sales Corporation entered into two-year secured credit agreements consisting of a $50 million senior revolving credit facility, including a $26 million sublimit for issuance of letters of credit (Senior Revolving Credit Facility), a $50 million senior term facility (Senior Term Facility), collectively the "Senior Secured Credit Facility," and $35 million of junior secured term loans (Junior Term Loans). The proceeds of the Senior Secured Credit Facility and the Junior Term Loans were used to repay the $55 million Senior Secured Notes outstanding and obligations outstanding under the Company's existing Revolving Credit Facility. The Senior Secured Credit Facility has a maturity date of June 30, 2001. The Company finances its working capital needs through a combination of internally generated cash from operations and borrowings under its $50 million Senior Revolving Credit Facility entered into in June 1999. The availability of funds under the Senior Revolving Credit Facility is subject to the Company's compliance with certain covenants, borrowing base limita- tions measured by accounts receivable and inventory of the Company and reserves that may be established at the discretion of the lenders. There is approximately $9.6 million outstanding under the Senior Revolving Credit Facility at March 31, 2000. The Company's Senior Secured Credit Facility contains a number of financial covenants that, among other things, require the maintenance of a minimum level of tangible net worth, a minimum fixed charge coverage ratio and minimum leverage ratio of total liabilities to EBDIAT and a limitation on capital expenditures. Currently, the Company is in compliance with the covenants under the Company's Senior Secured Credit Facility and Junior Term Loans. As of June 30, 2000, the Company received an amendment and waiver under the Company's Senior Secured Credit Facility and Junior Term Loans. The Company determined that, as of June 30, 2000, without the amendment and waiver, it would not have been in compliance with the tangible net worth and leverage ratio covenants. The Company entered into an Agreement dated March 3, 2000, amended March 9, 2000, March 23, 2000 and March 30, 2000, that extended the grace period for the payment of its February 28, 2000 annual GECC lease payment in the amount of $23.5 million. (See Note 9.) The Company anticipates that its current cash position, its operating cash flows, the availability under its credit agreement and proceeds from asset sales will be sufficient to meet its operating expenses and current debt service requirements. The Company's 10.25% Notes, of which $219.3 million principal amount is outstanding, will mature in December 2001. The Company anticipates it will refinance the 10.25% Notes or seek alternative strategies including, but not limited to, using proceeds from asset sales, litigation, if any, or selling additional equity capital. Capital expenditures for continuing operations for the first three months of 2000 and 1999 totaled $2.4 million and $4.2 million, respectively. Capital expenditures for discontinued operations for the first three months of 2000 totaled $.9 million. Significant 2000 and 1999 capital expenditures for continuing operations included a new information technology system at Viskase and costs associated with the Nucel(R) project. Capital expenditures for discontinued operations included additional production capacity for specialty films. Capital expenditures for continuing operations for 2000 are expected to be approximately $7.5 million. Capital expenditures for continuing operations for 2001 are expected to be $6.0 million. The Company has spent approximately $8 million annually on research and development programs, including product and process development, and on new technology development during each of the past three years. The 2000 research and development and product introduction expenses are expected to be in the $9 million range. Among the projects included in the current research and development efforts is the application of certain patents and technology licensed by Viskase to the manufacture of cellulosic casings under the Nucel(R) process. The commercialization of these applications and the related fixed asset expense associated with such commercialization may require substantial financial commitments in future periods. Forward-looking Statements - -------------------------- Forward-looking statements in this report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results and Company plans and objectives to differ materially from those projected. Such risks and uncertainties include, but are not limited to, general business and economic conditions; competitive pricing pressures for the Company's products; changes in other costs; and opportunities that may be presented to and pursued by the Company; determinations by regulatory and governmental authorities; and the ability to achieve synergistic and other cost reductions and efficiencies. ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ---------------------------------------------------------- The Company is exposed to certain market risks related to foreign currency exchange rates. In order to manage the risk associated with this exposure to such fluctuations, the Company uses derivative financial instruments. The Company does not enter into derivatives for trading purposes. The Company also prepared sensitivity analyses to determine the impact of a hypothetical 10% devaluation of the U.S. dollar relative to the European receivables and payables denominated in U.S. dollars. Based on its sensitivity analyses at March 31, 2000, a 10% devaluation of the U.S. dollar would affect the Company's annual consolidated operating results, financial position and cash flows by approximately $0.3 million. The Company uses foreign exchange forward contracts to manage the risk associated with its exposure to foreign currency exchange rate fluctuations. At March 31, 2000, there were no foreign exchange forward contracts outstanding. PART II. OTHER INFORMATION Item 1 - Legal Proceedings ----------------- For a description of pending litigation and other contingencies, see Part 1, Note 3, Contingencies in Notes to Consolidated Financial Statements for Viskase Companies, Inc. and Subsidiaries. Item 2 - Changes in Securities --------------------- No reportable events occurred during the quarter ended March 31, 1999. Item 3 - Defaults Upon Senior Securities ------------------------------- None. Item 4 - Submission of Matters to a Vote of Security Holders --------------------------------------------------- None. Item 5 - Other Information ----------------- None. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits 10.35 Agreement dated as of March 3, 2000, between Viskase Corporation and State Street Bank and Trust Company relating to the Lease Agreement dated as of December 18, 1990, among Viskase Corporation (the Lessee), and State Street Bank and Trust Company (the Lessor), as successor trustee to Fleet National Bank formerly known as Shawmut Bank Connecticut, National Association, formerly known as The Connecticut National Bank as Owner Trustee under the Trust Agreement. 10.36 Extension executed March 9, 2000 of Agreement dated as of March 3, 2000, between Viskase Corporation and State Street Bank and Trust Company relating to the Lease Agreement dated as of December 18, 1990, among Viskase Corporation (the Lessee) and State Street Bank and Trust Company (the Lessor), as successor trustee to Fleet National Bank formerly known as Shawmut Bank Connecticut, National Association, formerly known as The Connecticut National Bank as Owner Trustee under the Trust Agreement. 10.37 Extension executed March 23, 2000 of Agreement dated as of March 3, 2000, between Viskase Corporation and State Street Bank and Trust Company relating to the Lease Agreement dated as of December 18, 1990, among Viskase Corporation (the Lessee) and State Street Bank and Trust Company (the Lessor), as successor trustee to Fleet National Bank formerly known as Shawmut Bank Connecticut, National Association, formerly known as The Connecticut National Bank as Owner Trustee under the Trust Agreement. 10.38 Extension executed March 30, 2000 of Agreement dated as of March 3, 2000, between Viskase Corporation and State Street Bank and Trust Company relating to the Lease Agreement dated as of December 18, 1990, among Viskase Corporation (the Lessee) and State Street Bank and Trust Company (the Lessor), as successor trustee to Fleet National Bank formerly known as Shawmut Bank Connecticut, National Association, formerly known as The Connecticut National Bank as Owner Trustee under the Trust Agreement. 27 Financial Data Schedules. (b) Reports on Form 8-K (1) On January 17, 2000, Viskase Companies, Inc. announced its intent to sell its plastic barrier and non-barrier shrink film business. (2) On February 23, 2000, Viskase Companies, Inc. announced that the Company participated in a Nasdaq Stock Market, Inc. (NASDAQ) hearing with respect to the continued listing of the Company's common stock on the Nasdaq SmallCap Market. On February 22, 2000, the Company was notified by Nasdaq that, effective as of the close of business on February 22, 2000, the Company's common stock would be delisted from the Nasdaq SmallCap Market. SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VISKASE COMPANIES, INC. ---------------------- Registrant By: /s/ ---------------------- Gordon S. Donovan Vice President, Chief Financial Officer and Treasurer (Duly authorized officer and principal financial officer of the registrant) Date: September 22, 2000 EX-10.35 2 0002.txt AGREEMENT dated as of March 3, 2000 (this "Agreement"), between VISKASE CORPORATION, a Pennsylvania corporation, and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, relating to the Lease Agreement dated as of December 18, 1990 (the "Lease Agreement"), among Viskase Corporation (the "Lessee"), and State Street Bank and Trust Company (the "Lessor"), as successor trustee to Fleet National Bank, formerly known as Shawmut Bank Connecticut, National Association, formerly known as The Connecticut National Bank, not in its individual capacity (except as expressly provided therein) but solely as Owner Trustee under the Trust Agreement (capitalized terms used herein and not defined have the meanings assigned to such terms in the Lease Agreement). Whereas, the Lessee was obligated under the terms of the Lease to pay to the Lessor the Basic Rent due on the Basic Rent Payment Date occurring on February 28, 2000; Whereas, such payment has not been made as of the date hereof; Whereas, the Lessee has requested that the Lessor extend the 5 day grace period under the Lease in order to prevent the nonpayment from resulting in an Event of Default under the Lease; and Whereas, the Lessee has agreed to enter into good faith discussions with Lessor to reach a mutually acceptable agreement regarding the February 28, 2000 payment. Now therefore, in consideration of the mutual agreements herein contained and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Payment Default Extension. For as long as no -------------------------- Default or Event of Default shall have occurred (excluding a Default or Event of Default related to the failure of the Lessor to make the payment of Basic Rent due on February 28, 2000), Lessor agrees to extend the 5 day grace period referenced in Paragraph A of Article XVII of the Lease Agreement by an additional 5 days (the "Payment Default Extension"). SECTION 2. Representations and Warranties. The Lessee ------------------------------- represents and warrants to the Lessor that after giving effect to this Agreement, no Event of Default or Default has occurred and is continuing, except that the Guarantor may not have met the Fixed Charge Coverage Ratio set forth in Section 5.09 of the Participation Agreement for the fiscal quarter immediately preceding the date hereof. SECTION 3. Conditions to Effectiveness. This Agreement ---------------------------- shall become effective as of the date first above written when the parties hereto shall have received counterparts of this Agreement that, when taken together, bear the signatures of the Lessee and the Lessor. SECTION 4. Lease Agreement. Except with respect to the ---------------- effectiveness of the Payment Default Extension, the Lease Agreement shall continue in full force and effect in accordance with the provisions thereof as in existence on the date hereof. This Agreement shall be a Basic Document as defined in the Lease Agreement. Accordingly, the parties hereto acknowledge that any breach of a party's representations, warranties or covenants hereunder may result in an Event of Default, together with any consequences relating thereto as set forth in the Basic Documents. SECTION 5. Effect of Extension Date. Except as expressly ------------------------- set forth herein with respect to the Payment Default Extension, this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lessor under the Lease Agreement or the Lessor or Owner Participant under any other Basic Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Lease Agreement or any other Basic Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle the Lessee or the Guarantor to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Lease Agreement or any other Basic Document in similar or different circumstances. SECTION 6. Expenses. The Lessee agrees to reimburse the --------- Owner Participant and the Lessor for its out-of-pocket expenses in connection with this Agreement, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Owner Participant. SECTION 7. Term. This Agreement shall automatically ----- terminate without further action by any of the parties hereto upon the earlier to occur of (i) the day following the last day of the Payment Default Extension or (ii) the violation of any of the representations of the Lessee set forth herein or the occurrence of any Default or Event of Default. SECTION 8. Applicable Law. THIS AGREEMENT SHALL BE --------------- GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 9. Counterparts. This Agreement may be executed ------------- in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers, all as of the date and year first above written. STATE STREET BANK AND TRUST COMPANY, by --------------------------------- Name: Title: VISKASE CORPORATION, by --------------------------------- Name: Title: EX-10.36 3 0003.txt EXTENSION EXECUTED MARCH 9, 2000 AGREEMENT dated as of March 3, 2000 (this "Agreement"), between VISKASE CORPORATION, a Pennsylvania corporation, and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, relating to the Lease Agreement dated as of December 18, 1990 (the "Lease Agreement"), among Viskase Corporation (the "Lessee"), and State Street Bank and Trust Company (the "Lessor"), as successor trustee to Fleet National Bank, formerly known as Shawmut Bank Connecticut, National Association, formerly known as The Connecticut National Bank, not in its individual capacity (except as expressly provided therein) but solely as Owner Trustee under the Trust Agreement (capitalized terms used herein and not defined have the meanings assigned to such terms in the Lease Agreement). Whereas, the Lessee was obligated under the terms of the Lease to pay to the Lessor the Basic Rent due on the Basic Rent Payment Date occurring on February 28, 2000; Whereas, such payment has not been made as of the date hereof; Whereas, the Lessee has requested that the Lessor extend the 5 day grace period under the Lease in order to prevent the nonpayment from resulting in an Event of Default under the Lease; and Whereas, the Lessee has agreed to enter into good faith discussions with Lessor to reach a mutually acceptable agreement regarding the February 28, 2000 payment. Now therefore, in consideration of the mutual agreements herein contained and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Payment Default Extension. For as long as no -------------------------- Default or Event of Default shall have occurred (excluding a Default or Event of Default related to the failure of the Lessor to make the payment of Basic Rent due on February 28, 2000), Lessor agrees to extend the 5 day grace period referenced in Paragraph A of Article XVII of the Lease Agreement by an additional 19 days (the "Payment Default Extension"). SECTION 2. Representations and Warranties. The Lessee ------------------------------- represents and warrants to the Lessor that after giving effect to this Agreement, no Event of Default or Default has occurred and is continuing, except that the Guarantor may not have met the Fixed Charge Coverage Ratio set forth in Section 5.09 of the Participation Agreement for the fiscal quarter immediately preceding the date hereof. SECTION 3. Conditions to Effectiveness. This Agreement ---------------------------- shall become effective as of the date first above written when the parties hereto shall have received counterparts of this Agreement that, when taken together, bear the signatures of the Lessee and the Lessor. SECTION 4. Lease Agreement. Except with respect to the ---------------- effectiveness of the Payment Default Extension, the Lease Agreement shall continue in full force and effect in accordance with the provisions thereof as in existence on the date hereof. This Agreement shall be a Basic Document as defined in the Lease Agreement. Accordingly, the parties hereto acknowledge that any breach of a party's representations, warranties or covenants hereunder may result in an Event of Default, together with any consequences relating thereto as set forth in the Basic Documents. SECTION 5. Effect of Extension Date. Except as expressly ------------------------- set forth herein with respect to the Payment Default Extension, this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lessor under the Lease Agreement or the Lessor or Owner Participant under any other Basic Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Lease Agreement or any other Basic Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle the Lessee or the Guarantor to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Lease Agreement or any other Basic Document in similar or different circumstances. SECTION 6. Expenses. The Lessee agrees to reimburse the --------- Owner Participant and the Lessor for its out-of-pocket expenses in connection with this Agreement, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Owner Participant. SECTION 7. Term. This Agreement shall automatically ----- terminate without further action by any of the parties hereto upon the earlier to occur of (i) the day following the last day of the Payment Default Extension or (ii) the violation of any of the representations of the Lessee set forth herein or the occurrence of any Default or Event of Default. SECTION 8. Applicable Law. THIS AGREEMENT SHALL BE --------------- GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 9. Counterparts. This Agreement may be executed ------------- in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers, all as of the date and year first above written. STATE STREET BANK AND TRUST COMPANY, by --------------------------------- Name: Title: VISKASE CORPORATION, by --------------------------------- Name: Title: EX-10.37 4 0004.txt EXTENSION EXECUTED MARCH 23, 2000 AGREEMENT dated as of March 3, 2000 (this "Agreement"), between VISKASE CORPORATION, a Pennsylvania corporation, and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, relating to the Lease Agreement dated as of December 18, 1990 (the "Lease Agreement"), among Viskase Corporation (the "Lessee"), and State Street Bank and Trust Company (the "Lessor"), as successor trustee to Fleet National Bank, formerly known as Shawmut Bank Connecticut, National Association, formerly known as The Connecticut National Bank, not in its individual capacity (except as expressly provided therein) but solely as Owner Trustee under the Trust Agreement (capitalized terms used herein and not defined have the meanings assigned to such terms in the Lease Agreement). Whereas, the Lessee was obligated under the terms of the Lease to pay to the Lessor the Basic Rent due on the Basic Rent Payment Date occurring on February 28, 2000; Whereas, such payment has not been made as of the date hereof; Whereas, the Lessee has requested that the Lessor extend the 5 day grace period under the Lease in order to prevent the nonpayment from resulting in an Event of Default under the Lease; and Whereas, the Lessee has agreed to enter into good faith discussions with Lessor to reach a mutually acceptable agreement regarding the February 28, 2000 payment. Now therefore, in consideration of the mutual agreements herein contained and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Payment Default Extension. For as long as no -------------------------- Default or Event of Default shall have occurred (excluding a Default or Event of Default related to the failure of the Lessor to make the payment of Basic Rent due on February 28, 2000), Lessor agrees to extend the 5 day grace period referenced in Paragraph A of Article XVII of the Lease Agreement by an additional 26 days (the "Payment Default Extension"). SECTION 2. Representations and Warranties. The Lessee ------------------------------- represents and warrants to the Lessor that after giving effect to this Agreement, no Event of Default or Default has occurred and is continuing, except that the Guarantor may not have met the Fixed Charge Coverage Ratio set forth in Section 5.09 of the Participation Agreement for the fiscal quarter immediately preceding the date hereof. SECTION 3. Conditions to Effectiveness. This Agreement ---------------------------- shall become effective as of the date first above written when the parties hereto shall have received counterparts of this Agreement that, when taken together, bear the signatures of the Lessee and the Lessor. SECTION 4. Lease Agreement. Except with respect to the ---------------- effectiveness of the Payment Default Extension, the Lease Agreement shall continue in full force and effect in accordance with the provisions thereof as in existence on the date hereof. This Agreement shall be a Basic Document as defined in the Lease Agreement. Accordingly, the parties hereto acknowledge that any breach of a party's representations, warranties or covenants hereunder may result in an Event of Default, together with any consequences relating thereto as set forth in the Basic Documents. SECTION 5. Effect of Extension Date. Except as expressly ------------------------- set forth herein with respect to the Payment Default Extension, this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lessor under the Lease Agreement or the Lessor or Owner Participant under any other Basic Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Lease Agreement or any other Basic Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle the Lessee or the Guarantor to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Lease Agreement or any other Basic Document in similar or different circumstances. SECTION 6. Expenses. The Lessee agrees to reimburse the --------- Owner Participant and the Lessor for its out-of-pocket expenses in connection with this Agreement, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Owner Participant. SECTION 7. Term. This Agreement shall automatically ----- terminate without further action by any of the parties hereto upon the earlier to occur of (i) the day following the last day of the Payment Default Extension or (ii) the violation of any of the representations of the Lessee set forth herein or the occurrence of any Default or Event of Default. SECTION 8. Applicable Law. THIS AGREEMENT SHALL BE --------------- GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 9. Counterparts. This Agreement may be executed ------------- in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers, all as of the date and year first above written. STATE STREET BANK AND TRUST COMPANY, by --------------------------------- Name: Title: VISKASE CORPORATION, by --------------------------------- Name: Title: EX-10.38 5 0005.txt EXTENSION EXECUTED MARCH 30, 2000 AGREEMENT dated as of March 3, 2000 (this "Agreement"), between VISKASE CORPORATION, a Pennsylvania corporation, and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, relating to the Lease Agreement dated as of December 18, 1990 (the "Lease Agreement"), among Viskase Corporation (the "Lessee"), and State Street Bank and Trust Company (the "Lessor"), as successor trustee to Fleet National Bank, formerly known as Shawmut Bank Connecticut, National Association, formerly known as The Connecticut National Bank, not in its individual capacity (except as expressly provided therein) but solely as Owner Trustee under the Trust Agreement (capitalized terms used herein and not defined have the meanings assigned to such terms in the Lease Agreement). Whereas, the Lessee was obligated under the terms of the Lease to pay to the Lessor the Basic Rent due on the Basic Rent Payment Date occurring on February 28, 2000; Whereas, such payment has not been made as of the date hereof; Whereas, the Lessee has requested that the Lessor extend the 5 day grace period under the Lease in order to prevent the nonpayment from resulting in an Event of Default under the Lease; and Whereas, the Lessee has agreed to enter into good faith discussions with Lessor to reach a mutually acceptable agreement regarding the February 28, 2000 payment. Now therefore, in consideration of the mutual agreements herein contained and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Payment Default Extension. For as long as no -------------------------- Default or Event of Default shall have occurred (excluding a Default or Event of Default related to the failure of the Lessor to make the payment of Basic Rent due on February 28, 2000), Lessor agrees to extend the 5 day grace period referenced in Paragraph A of Article XVII of the Lease Agreement by an additional 40 days (the "Payment Default Extension"). SECTION 2. Representations and Warranties. The Lessee ------------------------------- represents and warrants to the Lessor that after giving effect to this Agreement, no Event of Default or Default has occurred and is continuing, except that the Guarantor may not have met the Fixed Charge Coverage Ratio set forth in Section 5.09 of the Participation Agreement for the fiscal quarter immediately preceding the date hereof. SECTION 3. Conditions to Effectiveness. This Agreement ---------------------------- shall become effective as of the date first above written when the parties hereto shall have received counterparts of this Agreement that, when taken together, bear the signatures of the Lessee and the Lessor. SECTION 4. Lease Agreement. Except with respect to the ---------------- effectiveness of the Payment Default Extension, the Lease Agreement shall continue in full force and effect in accordance with the provisions thereof as in existence on the date hereof. This Agreement shall be a Basic Document as defined in the Lease Agreement. Accordingly, the parties hereto acknowledge that any breach of a party's representations, warranties or covenants hereunder may result in an Event of Default, together with any consequences relating thereto as set forth in the Basic Documents. SECTION 5. Effect of Extension Date. Except as expressly ------------------------- set forth herein with respect to the Payment Default Extension, this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lessor under the Lease Agreement or the Lessor or Owner Participant under any other Basic Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Lease Agreement or any other Basic Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle the Lessee or the Guarantor to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Lease Agreement or any other Basic Document in similar or different circumstances. SECTION 6. Expenses. The Lessee agrees to reimburse the --------- Owner Participant and the Lessor for its out-of-pocket expenses in connection with this Agreement, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Owner Participant. SECTION 7. Term. This Agreement shall automatically ----- terminate without further action by any of the parties hereto upon the earlier to occur of (i) the day following the last day of the Payment Default Extension or (ii) the violation of any of the representations of the Lessee set forth herein or the occurrence of any Default or Event of Default. SECTION 8. Applicable Law. THIS AGREEMENT SHALL BE --------------- GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 9. Counterparts. This Agreement may be executed ------------- in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one agreement. Delivery of an executed signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually signed counterpart of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers, all as of the date and year first above written. STATE STREET BANK AND TRUST COMPANY, by --------------------------------- Name: Title: VISKASE CORPORATION, by --------------------------------- Name: Title: EX-27 6 0006.txt
5 3-MOS DEC-31-2000 MAR-31-2000 6,224,000 0 47,213,000 (1,787,000) 81,394,000 146,893,000 487,076,000 186,313,000 481,382,000 216,858,000 301,344,000 0 0 151,000 (100,560,000) 481,382,000 51,770,000 51,770,000 38,705,000 38,705,000 0 179,000 12,159,000 (10,840,000) (713,000) (10,127,000) 1,231,000 0 0 (8,896,000) (.59) (.59)
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