-----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, Cu/gPOLKWsMRnRwc+XbRLNoGSGAW9OzRmQvN3hk/C26pCUIn1X7TiWbvTR7KniEp gkneCRHCIaQHTWUIiBzB2g== 0000033073-98-000015.txt : 19981110 0000033073-98-000015.hdr.sgml : 19981110 ACCESSION NUMBER: 0000033073-98-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980924 FILED AS OF DATE: 19981109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VISKASE COMPANIES INC CENTRAL INDEX KEY: 0000033073 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [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: 98740993 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 THIRD QTR Q 1998 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-Q / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 24, 1998 ------------------ 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 West 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 ------ ------- APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes X No ------ ------ As of November 6, 1998, there were 14,859,467 shares outstanding of the registrant's Common Stock, $.01 par value. Page 1 of 34 Pages INDEX TO FINANCIAL STATEMENTS VISKASE COMPANIES, INC. AND SUBSIDIARIES UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Consolidated balance sheets at September 24, 1998 (unaudited) and December 25, 1997 4 Unaudited consolidated statements of operations for the three months ended September 24, 1998 and September 25, 1997 and for the nine months ended September 24, 1998 and September 25, 1997 5 Unaudited consolidated statements of cash flows for the nine months ended September 24, 1998 and September 25, 1997 6 Notes to consolidated financial statements 7 VISKASE HOLDING CORPORATION AND SUBSIDIARIES UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Consolidated balance sheets at September 24, 1998 (unaudited) and December 25, 1997 22 Unaudited consolidated statements of operations for the three months ended September 24, 1998 and September 25, 1997 and for the nine months ended September 24, 1998 and September 25, 1997 23 Unaudited consolidated statements of cash flows for the nine months ended September 24, 1998 and September 25, 1997 24 Notes to consolidated financial statements 25 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 25, 1997 (1997 Form 10-K). These quarterly financial statements should be read in conjunction with the financial statements and the notes thereto included in the 1997 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 25, 1997 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
September 24, December 25, 1998 1997 ------------- ------------- (unaudited) (in thousands) ASSETS Current assets: Cash and equivalents $ 17,559 $ 24,407 Receivables, net 50,265 75,039 Inventories 97,295 97,802 Other current assets 26,218 25,286 -------- -------- Total current assets 191,337 222,534 Property, plant and equipment, including those under capital leases 534,418 580,981 Less accumulated depreciation and amortization 164,075 145,855 -------- -------- Property, plant and equipment, net 370,343 435,126 Deferred financing costs, net 1,514 4,574 Other assets 35,172 39,193 Excess reorganization value, net 112,426 -------- -------- Total assets $598,366 $813,853 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligations under capital leases $ 71,013 $ 12,880 Accounts payable 28,423 41,734 Accrued liabilities 128,872 71,589 Current deferred income taxes 10,516 10,516 -------- -------- Total current liabilities 238,824 136,719 Long-term debt including obligations under capital leases 334,860 511,183 Accrued employee benefits 48,211 48,521 Deferred and noncurrent income taxes 22,113 26,510 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; none outstanding Common stock, $.01 par value; 14,851,152 shares issued and outstanding at September 24, 1998 and 14,753,442 shares at December 25, 1997 149 148 Paid in capital 136,681 136,183 Accumulated (deficit) (187,200) (48,458) Cumulative foreign currency translation adjustments 4,748 3,098 Unearned restricted stock issued for future service (20) (51) -------- -------- Total stockholders' equity (45,642) 90,920 -------- -------- Total liabilities and stockholders' equity $598,366 $813,853 ======== ======== 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 Nine Months Nine Months Ended September Ended September Ended September Ended September 24, 1998 25, 1997 24, 1998 25, 1997 --------------- -------------- -------------- ---------------- (in thousands, except for number of shares and per share amounts) NET SALES $102,567 $125,682 $309,233 $377,287 COSTS AND EXPENSES Cost of sales 76,629 92,900 229,177 277,655 Selling, general and administrative 22,164 24,376 65,813 70,552 Amortization of intangibles and excess reorganization value 3,469 3,566 10,408 10,598 Unusual charge 148,569 3,500 150,069 3,500 -------- -------- -------- -------- OPERATING INCOME (LOSS) (148,264) 1,340 (146,234) 14,982 Interest income 283 97 585 855 Interest expense 12,461 13,902 40,488 42,255 Other expense, net 374 296 840 1,593 -------- -------- -------- -------- (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (160,816) (12,761) (186,977) (28,011) Income tax (benefit) (10,714) (8,393) (19,252) (16,128) -------- -------- -------- -------- NET (LOSS) FROM CONTINUING OPERATIONS (150,102) (4,368) (167,725) (11,883) DISCONTINUED OPERATIONS: Income from discontinued operations net of income taxes (Note 5) 264 615 320 1,072 Gain on sale of discontinued operations net of income tax benefit of $23,667 and $22,669 37,016 35,456 -------- -------- -------- -------- NET (LOSS) BEFORE EXTRAORDINARY ITEM (112,822) (3,753) (131,949) (10,811) Extraordinary (loss) on early extinguishment of debt net of income tax benefit of $4,343 (6,793) (6,793) -------- -------- -------- -------- NET (LOSS) $(119,615) $(3,753) $(138,742) $(10,811) ========= ======== ========= ======== WEIGHTED AVERAGE COMMON SHARES - BASIC AND DILUTED 14,846,420 14,645,809 14,812,897 14,587,810 ========== ========== ========== ========== PER SHARE AMOUNTS: EARNINGS (LOSS) PER SHARE - basic and diluted Continuing operations $(10.11) $(.30) $(11.32) $(.81) Discontinued operations: Income from discontinued operations .02 .04 .02 .07 Gain on sale of discontinued operations 2.49 2.39 -------- -------- -------- -------- Net (loss) before extraordinary item (7.60) (.26) (8.91) (.74) Extraordinary (loss) (.46) (.46) -------- -------- -------- -------- NET (LOSS) $(8.06) $(.26) $(9.37) $(.74) ======== ======== ======== ======== The accompanying notes are an integral part of the consolidated financial statements.
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended --------------------------------- September 24, September 25, 1998 1997 ------------- ------------- (in thousands) Cash flows from operating activities: Net (loss) $(138,742) $(10,811) Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: Depreciation and amortization under capital leases 29,808 32,024 Amortization of intangibles and excess reorganization value 10,408 12,064 Amortization of deferred financing fees and discount 1,449 1,298 (Decrease) in deferred and noncurrent income taxes (1,952) (17,392) Foreign currency transaction loss (gain) (155) 1,231 (Gain) on disposition of assets (58,221) (928) Bad debt provision 740 222 Impairment loss excess reorganization 91,169 Extraordinary loss on debt extinguishment 11,136 Changes in operating assets and liabilities: Accounts receivable 17,084 (1,033) Inventories (20,110) (9,171) Other current assets (3,353) (5,833) Accounts payable and accrued liabilities 49,110 6,116 Other (10,103) (202) -------- -------- Total adjustments 117,010 18,396 -------- -------- Net cash provided by (used in) operating activities (21,732) 7,585 Cash flows from investing activities: Capital expenditures (24,028) (36,036) Proceeds from disposition of assets 163,758 11,873 -------- -------- Net cash provided by (used in) investing activities 139,730 (24,163) Cash flows from financing activities: Issuance of common stock 530 813 Deferred financing costs (604) (522) Proceeds from revolving loan and long-term borrowings 1,475 314 Repayment of revolving loan, long-term borrowings and capital lease obligation (117,178) (8,043) Premium on early extinguishment of debt (8,927) -------- -------- Net cash (used in) financing activities (124,704) (7,438) Effect of currency exchange rate changes on cash (142) (1,006) -------- -------- Net (decrease) in cash and equivalents (6,848) (25,022) Cash and equivalents at beginning of period 24,407 41,794 -------- -------- Cash and equivalents at end of period $ 17,559 $ 16,772 ======== ======== - ---------------------------------------------------------------------------------------------------------- Supplemental cash flow information: Interest paid $36,013 $33,706 Income taxes paid $ 4,831 $ 3,908 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: September December 24, 1998 25, 1997 ---------- ---------- Raw materials $11,446 $16,847 Work in process 36,411 29,297 Finished products 49,438 51,658 ------- ------- $97,295 $97,802 ======= ======= Approximately 57% of the inventories at September 24, 1998 were valued at Last-In, First-Out (LIFO). These LIFO values exceeded current manufacturing cost by approximately $6.3 million at September 24, 1998. 2. DEBT OBLIGATIONS (dollars in thousands) Outstanding short-term and long-term debt consisted of: September December 24, 1998 25, 1997 ---------- ---------- Short-term debt, current maturity of long-term debt, and capital lease obligation: 12% Senior Secured Notes $55,000 Current maturity of Viskase Capital Lease Obligation 13,031 $ 9,675 Current maturity of Viskase Limited Term Loan (3.2%) 1,753 1,629 Other 1,229 1,576 -------- -------- Total short-term debt $71,013 $12,880 ======= ======= Long-term debt: 12% Senior Secured Notes $160,000 10.25% Senior Notes due 2001 $219,262 219,262 Viskase Capital Lease Obligation 111,842 124,873 Viskase Limited Term Loan (3.2%) 1,721 2,443 Other 2,035 4,605 -------- -------- Total long-term debt $334,860 $511,183 ======== ======== On August 24, 1998, the Company redeemed $105.0 million of the aggregate principal amount of its 12% Senior Secured Notes using proceeds from the Clear Shield National, Inc. (Clear Shield) divestiture. The notes were redeemed at approximately 108.5% of principal amount, plus accrued interest to the date of redemption. The Company recognized an extraordinary after-tax loss of $6.8 million on the partial redemption of its 12% Senior Secured Notes. The extraordinary loss is comprised of $8.9 million of yield maintenance premiums and $2.2 million write-off of deferred debt issuance costs; net of a $4.3 million income tax benefit. The remaining $55.0 million of principal outstanding on the 12% Senior Secured Notes is due and payable at par on June 15, 1999. 3. CONTINGENCIES (dollars in thousands) 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. Patent validity and infringement having been established, the remaining issues for trial are whether ANC willfully infringed Viskase's patents by using "Affinity" brand resin and the determination of the amount of compensatory damages. Viskase has filed a motion to have the jury verdict as to compensatory damages reinstated. The motion has been fully briefed and the parties are awaiting the Court's ruling. If the motion is not granted, the Company expects the trial on damages to occur in the first quarter of 1999. 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). With respect to the first request for reexamination, on September 25, 1998, the USPTO, after initially rejecting Viskase's claims, gave notice of its intent to reissue Viskase's patent in its entirety. With respect to the second request for reexamination, the USPTO has preliminarily rejected Viskase's claims under another patent. Viskase is preparing its response. If the USPTO ultimately disallows the claims of the second Viskase patent, the effect upon the Court action will not be significant. The Company expects ANC to vigorously contest this matter in the Court and the USPTO and to appeal any final judgment. No part of the pending claims has been recorded in the Company's financial statements. Through September 24, 1998, $4,631 in patent defense costs had been accrued and capitalized. In March 1997 Viskase Corporation 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. Viskase Corporation is cooperating fully with the investigation. 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, 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. Based upon the analysis, the Company recognized an impairment because the estimated 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 $7.3 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. The Company recognized a third quarter unusual charge of $148.6 million consisting of the following: Impairment of excess reorganization value $ 91.2 Write-down of assets to net realizable value 7.3 Cash severance and decommissioning costs 6.0 Write-down of Chicago plant assets 32.8 Write-down of spare parts 1.5 Write-down of inventory 1.5 Allowance for shutdown of foreign operations 8.3 ------ Unusual Charge: Third Quarter 1998 148.6 Restructuring Reserve: Second Quarter 1998 1.5 ------ Unusual Charge: Nine Months 1998 $150.1 ====== During the third quarter, cash provisions to the reserve were $.7 million. A restructuring reserve of $58.2 is included in accrued liabilities on the balance sheet. 5. DISCONTINUED OPERATIONS (dollars in thousands) In June 1998 the Company's Board of Directors agreed to sell the Clear Shield and Sandusky Plastics, Inc. (Sandusky) subsidiaries. Sandusky was sold on June 12, 1998 and Clear Shield was sold on July 24, 1998. Accordingly, the operating results from both subsidiaries have been segregated from continuing operations and reported as a separate line item, Results of Discontinued Operations, on the Statements of Operations. Operating results from discontinued operations are as follows:
Three Months Three Months Nine Months Nine Months Ended September Ended September Ended September Ended September 24, 1998 25, 1997 24, 1998 25, 1997 --------------- -------------- -------------- ---------------- Net sales $5,536 $29,322 $62,317 $88,785 Costs and expenses Cost of sales 4,176 23,434 50,810 72,406 Selling, general and administrative 725 4,158 9,457 12,182 Amortization of intangibles and excess reorganization value 136 400 863 1,466 ------ ------- ------- ------- Operating income 499 1,330 1,187 2,731 Interest income Interest expense 7 25 50 80 Other expense (income), net (12) 67 91 221 ------ ------- ------- ------- Income from discontinued operations before taxes 504 1,238 1,046 2,430 Income tax provision 240 623 726 1,358 ------ ------- ------- ------- Net Income from discontinued operations $ 264 $ 615 $ 320 $ 1,072 ====== ======= ======= =======
The net assets of the discontinued operations included in the December 25, 1997 Balance Sheet consisted of the following: December 25, 1997 ----------------- Accounts receivable, net $ 9,731 Inventories 17,427 Other current assets 2,782 -------- Total current assets 29,940 Property, plant and equipment, net 61,805 Long-term assets 15,128 -------- Total assets 106,873 Accounts payable and other current liabilities 9,802 Short-term debt 558 -------- Total current liabilities 10,360 Long-term debt and lease obligations 1,956 -------- Total liabilities 12,316 Net Assets $ 94,557 ======== 6. COMPREHENSIVE INCOME (dollars in thousands) The Financial Accounting Standard Board (SFAS) established Statement No. 130, "Reporting Comprehensive Income." This pronouncement established new standards for reporting comprehensive income and its components; however, the adoption of SFAS No. 130 has had no effect on the Company's net income or shareholders' equity. For the Company, the difference between net income, as historically reported in the statements of consolidated income, and comprehensive income is foreign currency translation recorded in stockholders' equity. Comprehensive income, net of tax, for the first nine months and third quarter of 1998 was $(137,736) and $(118,444), respectively, and for comparable periods in 1997 was $(13,865) and $(4,375), respectively. 7. EARNINGS PER SHARE In February 1997 the Financial Accounting Standards Board issued Statement No. 128, "Earnings Per Share," which became effective for both interim and annual financial statement periods ending after December 15, 1997. As required by this Statement, the Company adopted the new standards for computing and presenting earnings per share (EPS) in fiscal 1997, and for all period earnings per share data presented. Following are the reconciliations of the numerators and denominators of the basic and diluted EPS.
Three Months Three Months Nine Months Nine Months Ended September Ended September Ended September Ended September 24, 1998 25, 1997 24, 1998 25, 1997 --------------- -------------- -------------- ---------------- (in thousands, except for weighted average shares outstanding) NUMERATOR): Net (loss) available to common stockholders: From continuing operations: $(150,102) $(4,368) $(167,725) $(11,883) Discontinued operations: Income from discontinued operations: 264 615 320 1,072 Gain on disposal 37,016 35,456 --------- ------- --------- -------- Net (loss) before extraordinary item (112,822) (3,753) (131,949) (10,811) Extraordinary (loss) (6,793) (6,793) --------- ------- --------- -------- Net loss available to common stockholders for basic and diluted EPS $(119,615) $(3,753) $(138,742) $(10,811) ========= ======= ========= ======== DENOMINATOR: Weighted average shares outstanding for basic EPS 14,846,420 14,645,809 14,812,897 14,587,810 Effect of dilutive securities 0 0 0 0 ---------- ---------- ---------- ---------- Weighted average shares outstanding for diluted EPS 14,846,420 14,645,809 14,812,897 14,587,810 ========== ========== ========== ==========
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 implement the provisions of Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS No. 131), which will be effective for fiscal years beginning after December 15, 1997. SFAS No. 131 specifies revised guidelines for determining an entity's operating segments and the type and level of financial information to be disclosed. Management believes that adoption of SFAS No. 131 will not have a significant effect on the Company's financial statements. The Company will implement the provisions of Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" (SFAS No. 132), which will be effective for fiscal years beginning after December 15, 1997. SFAS No. 132 standardizes the disclosure requirements for pensions and other postretirement benefits, requires additional information on changes in the benefit obligation and fair values of plan assets, and eliminates certain disclosures that are no longer useful. Management believes the adoption of SFAS No. 132 will not have a significant effect on the Company's financial statements. The Company will implement the provisions of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133), which will be effective for all fiscal quarters of fiscal years beginning after June 15, 1999. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires recognition of all derivative instruments as either assets or liabilities in the statement of financial condition and the measurement of those instruments at fair value. Management believes the adoption of SFAS No. 133 will not have a significant effect on the Company's financial statements. 9. SUBSIDIARY GUARANTORS The Company's payment obligations under the Senior Secured Notes are fully and unconditionally guaranteed on a joint and several basis (collectively, Subsidiary Guarantees) by Viskase Corporation, Viskase Holding Corporation, Viskase Sales Corporation, and Viskase Films, Inc., each a direct or indirect wholly owned subsidiary of Viskase Companies, Inc. and each a "Guarantor." These subsidiaries represent substantially all of the operations of Viskase Companies, Inc. conducted in the United States. The remaining subsidiaries of Viskase Companies, Inc. generally are foreign subsidiaries or otherwise relate to foreign operations. The obligations of each Guarantor under its Subsidiary Guarantee are the senior obligation of such Guarantor, and are collateralized, subject to certain permitted liens, by substantially all of the domestic assets of the Guarantor and, in the case of Viskase Holding Corporation, by a pledge of 65% of the cap- ital stock of Viskase Europe Limited. The Subsidiary Guarantees and security are shared with the lenders under the Amended and Restated Credit Agreement on a pari passu basis and are subject to the priority interest of the holders of obligations under the Letter of Credit Facility, each pursuant to an intercreditor agreement. The following consolidating condensed financial data illustrate the composition of the combined Guarantors. No single Guarantor has any signifi- cant legal restrictions on the ability of investors or creditors to obtain access to its assets in the event of default on the Subsidiary Guarantee other than its subordination to senior indebtedness described above. Separate financial statements of the Guarantors are not presented because management has determined that these would not be material to investors. Based on the book value and the market value of the pledged securities of Viskase Corporation, Viskase Sales Corporation and Viskase Films, Inc., these Subsidiary Guarantors do not constitute a substantial portion of the collateral and, therefore, the separate financial statements of these subsidiaries have not been provided. Separate unaudited interim financial statements of Viskase Holding Corporation are being filed within this quarterly report. Investments in subsidiaries are accounted for by the parent and Subsidiary Guarantors on the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are therefore reflected in the parent's and Subsidiary Guarantors' investment accounts and earnings. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions. VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATING BALANCE SHEETS SEPTEMBER 24, 1998 (unaudited)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations (1) Total -------- ------------ ------------ ------------ ------------- (in thousands) ASSETS Current assets: Cash and equivalents $ 8,615 $ 778 $ 8,166 $ 17,559 Receivables and advances, net 97,997 45,745 38,810 $(132,287) 50,265 Inventories 55,411 43,460 (1,576) 97,295 Other current assets 4,835 11,408 9,975 26,218 --------- --------- -------- --------- -------- Total current assets 111,447 113,342 100,411 (133,863) 191,337 Property, plant and equipment including those under capital lease 149 380,237 154,032 534,418 Less accumulated depreciation and amortization 140 117,417 46,518 164,075 --------- --------- -------- --------- -------- Property, plant and equipment, net 9 262,820 107,514 370,343 Deferred financing costs 1,190 324 1,514 Other assets 33,126 2,046 35,172 Investment in subsidiaries (118,790) 92,106 26,684 Excess reorganization value --------- --------- -------- --------- -------- Total assets $ (6,144) $501,394 $210,295 $(107,179) $598,366 ========= ========= ======== ========= ======== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligation under capital lease $ 55,000 $ 13,031 $ 2,982 $ 71,013 Accounts payable and advances 35 115,304 45,371 $(132,287) 28,423 Accrued liabilities 11,716 96,232 20,924 128,872 Current deferred taxes 10,581 (65) 10,516 --------- --------- -------- --------- -------- Total current liabilities 66,751 235,148 69,212 (132,287) 238,824 Long-term debt including obligation under capital lease 219,262 111,842 3,756 334,860 Accrued employee benefits 45,461 2,750 48,211 Deferred and noncurrent income taxes 28,108 (26,721) 20,726 22,113 Intercompany loans (274,623) 264,994 9,629 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; none outstanding Common stock, $.01 par value; 14,851,152 shares issued and outstanding 149 1 32,739 (32,740) 149 Paid in capital 136,681 79,898 88,359 (168,257) 136,681 Accumulated earnings (deficit) (187,200) (213,917) (21,564) 235,481 (187,200) Cumulative foreign currency translation adjustments 4,748 4,688 4,688 (9,376) 4,748 Unearned restricted stock issued for future services (20) (20) --------- --------- -------- --------- -------- Total stockholders' equity (45,642) (129,330) 104,222 25,108 (45,642) --------- --------- -------- --------- -------- Total liabilities and stockholders' equity $ (6,144) $ 501,394 $210,295 $(107,179) $598,366 ========= ========= ======== ========= ======== (1) Elimination of intercompany receivables, payables and investment accounts.
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATING BALANCE SHEETS DECEMBER 25, 1997
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations (1) Total -------- ------------ ------------ ------------ ------------- (in thousands) ASSETS Current assets: Cash and equivalents $ 19,004 $ 865 $ 4,538 $ 24,407 Receivables and advances, net 59,223 58,201 44,221 $ (86,606) 75,039 Inventories 63,967 35,029 (1,194) 97,802 Other current assets 1,746 12,612 10,928 25,286 --------- --------- -------- --------- -------- Total current assets 79,973 135,645 94,716 (87,800) 222,534 Property, plant and equipment including those under capital lease 145 442,506 138,330 580,981 Less accumulated depreciation and amortization 119 113,672 32,064 145,855 --------- --------- -------- --------- -------- Property, plant and equipment, net 26 328,834 106,266 435,126 Deferred financing costs 4,100 474 4,574 Other assets 36,779 2,414 39,193 Investment in subsidiaries 53,619 120,824 (174,443) Excess reorganization value 79,595 32,831 112,426 --------- --------- -------- --------- -------- Total assets $137,718 $ 701,677 $236,701 $(262,243) $813,853 ========= ========= ======== ========= ======== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligation under capital lease $ 10,233 $ 2,647 $ 12,880 Accounts payable and advances $ 121 86,514 41,706 $ (86,607) 41,734 Accrued liabilities 5,836 46,595 19,158 71,589 Current deferred taxes 10,581 (65) 10,516 --------- --------- -------- --------- -------- Total current liabilities 5,957 153,923 63,446 (86,607) 136,719 Long-term debt including obligation under capital lease 379,262 126,830 5,091 511,183 Accrued employee benefits 46,018 2,503 48,521 Deferred and noncurrent income taxes 13,084 (7,396) 20,822 26,510 Intercompany loans (1) (351,505) 339,995 11,510 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; none outstanding Common stock, $.01 par value; 14,753,442 shares issued and outstanding 148 3 32,738 (32,741) 148 Paid in capital 136,183 88,816 88,280 (177,096) 136,183 Accumulated earnings (deficit) (48,458) (49,550) 9,273 40,277 (48,458) Cumulative foreign currency translation adjustments 3,098 3,038 3,038 (6,076) 3,098 Unearned restricted stock issued for future services (51) (51) --------- --------- -------- --------- -------- Total stockholders' equity 90,920 42,307 133,329 (175,636) 90,920 --------- --------- -------- --------- -------- Total liabilities and stockholders equity $137,718 $701,677 $236,701 $(262,243) $813,853 ========= ========= ======== ========= ======== (1) Elimination of intercompany receivables, payables and investment accounts.
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENTS OF OPERATIONS FOR NINE MONTHS ENDED SEPTEMBER 24, 1998 (unaudited)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------- (in thousands) NET SALES $ 189,517 $150,852 $(31,136) $309,233 COSTS AND EXPENSES Cost of sales 146,282 113,700 (30,805) 229,177 Selling, general and administrative $3,158 34,460 28,195 65,813 Amortization of intangibles and excess reorganization value 8,146 2,262 10,408 Unusual charge 119,436 30,633 150,069 --------- --------- -------- --------- -------- OPERATING INCOME (LOSS) (3,158) (118,807) (23,938) (331) (146,234) Interest income 372 213 585 Interest expense 31,640 7,745 1,103 40,488 Intercompany interest expense (income) (27,367) 25,691 1,676 Management fees (income) (3,286) 2,375 911 Other expense (income), net (53) (254) 1,147 840 Equity loss (income) in subsidiary 165,136 30,399 (195,535) --------- --------- -------- --------- -------- INCOME (LOSS) BEFORE INCOME TAXES (168,856) (184,763) (28,562) 195,204 (186,977) Income tax provision (benefit) (1,451) (19,638) 1,837 (19,252) NET INCOME (LOSS) FROM CONTINUING OPERATIONS (167,405) (165,125) (30,399) 195,204 (167,725) DISCONTINUED OPERATIONS: Income from operations net of an income tax provision of $726 320 320 Gain on disposal net of an income tax provision of $22,669 35,456 35,456 --------- --------- -------- --------- -------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (131,949) (164,805) (30,399) 195,204 (131,949) EXTRAORDINARY (LOSS): on early extinguishment of debt net of income tax benefit of $4,343 (6,793) (6,793) --------- --------- -------- --------- -------- NET INCOME (LOSS) $(138,742) $(164,805) $(30,399) $195,204 $(138,742) ========= ========= ======== ========= ========
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENTS OF OPERATIONS FOR THREE MONTHS ENDED SEPTEMBER 24, 1998 (unaudited)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------- (in thousands) NET SALES $ 64,261 $50,600 $(12,294) $102,567 COSTS AND EXPENSES Cost of sales 50,833 37,582 (11,786) 76,629 Selling, general and administrative $ 1,034 11,425 9,705 22,164 Amortization of intangibles and excess reorganization value 2,715 754 3,469 Unusual charge 117,936 30,633 148,569 --------- --------- -------- --------- -------- OPERATING INCOME (LOSS) (1,034) (118,648) (28,074) (508) (148,264) Interest income 146 137 283 Interest expense 9,441 2,710 310 12,461 Intercompany interest expense (income) (8,096) 6,999 1,097 Management fees (income) (949) 645 304 Other expense (income), net (117) 68 421 2 374 Equity loss (income) in subsidiary 149,125 30,754 (179,879) --------- --------- -------- --------- -------- INCOME (LOSS) BEFORE INCOME TAXES (150,292) (159,824) (30,069) 179,369 (160,816) Income tax provision (benefit) (456) (10,943) 685 (10,714) --------- --------- -------- --------- -------- NET INCOME (LOSS) FROM CONTINUING OPERATIONS (149,836) (148,881) (30,754) 179,369 (150,102) DISCONTINUED OPERATIONS: Income from operations net of an income tax provision of $240 264 264 Gain on disposal net of an income tax benefit of $23,667 37,016 37,016 --------- --------- -------- --------- -------- NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (112,820) (148,617) (30,754) 179,369 (112,822) EXTRAORDINARY (LOSS): on early extinguishment of debt net of income tax benefit of $4,343 (6,793) (6,793) --------- --------- -------- --------- -------- NET INCOME (LOSS) $(119,613) $(148,617) $(30,754) $179,369 $(119,615) ========= ========= ======== ========= ========
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENTS OF OPERATIONS FOR NINE MONTHS ENDED SEPTEMBER 25, 1997 (unaudited)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------- (in thousands) NET SALES $223,547 $184,711 $(30,971) $377,287 COSTS AND EXPENSES Cost of sales 168,255 140,313 (30,913) 277,655 Selling, general and administrative $3,735 33,525 33,292 70,552 Amortization of intangibles and excess reorganization value 8,200 2,398 10,598 Unusual charge 3,500 3,500 --------- --------- -------- --------- -------- OPERATING INCOME (LOSS) (3,735) 10,067 8,708 (58) 14,982 Interest income 584 271 855 Interest expense 32,410 8,687 1,158 42,255 Intercompany interest expense (income) (30,380) 28,135 2,245 Management fees (income) (3,393) 2,615 778 Other expense (income), net 1,392 (42) 243 1,593 Equity loss (income) in subsidiary 8,868 (2,407) (6,461) --------- --------- -------- --------- -------- INCOME (LOSS) BEFORE INCOME TAXES (12,048) (26,921) 4,555 6,403 (28,011) Income tax provision (benefit) (1,237) (17,039) 2,148 (16,128) --------- --------- -------- --------- -------- NET INCOME (LOSS) FROM CONTINUING OPERATIONS (10,811) (9,882) 2,407 6,403 (11,883) DISCONTINUED OPERATIONS: Income from discontinued operations net of an income tax provision of $1,358 1,072 1,072 --------- --------- -------- --------- -------- NET INCOME (LOSS) $(10,811) $(8,810) $2,407 $6,403 $(10,811) ========= ========= ======== ========= ========
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENTS OF OPERATIONS FOR THREE MONTHS ENDED SEPTEMBER 25, 1997 (unaudited)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------- (in thousands) NET SALES $75,543 $59,905 $(9,766) $125,682 COSTS AND EXPENSES Cost of sales 57,570 45,164 (9,834) 92,900 Selling, general and administrative $1,320 12,100 10,956 24,376 Amortization of intangibles and excess reorganization value 2,733 833 3,566 Unusual charge 3,500 3,500 --------- --------- -------- --------- -------- OPERATING INCOME (LOSS) (1,320) (360) 2,952 68 1,340 Interest income 93 4 97 Interest expense 10,697 2,853 352 13,902 Intercompany interest expense (income) (10,145) 9,435 710 Management fees (income) (1,050) 854 196 Other expense (income), net 529 1,031 (1,264) 296 Equity loss (income) in subsidiary 2,983 (1,727) (1,256) --------- --------- -------- --------- -------- INCOME (LOSS) BEFORE INCOME TAXES (4,241) (12,806) 2,962 1,324 (12,761) Income tax provision (benefit) (488) (9,139) 1,234 (8,393) --------- --------- -------- --------- -------- NET INCOME (LOSS) FROM CONTINUING OPERATIONS (3,753) (3,667) 1,728 1,324 (4,368) DISCONTINUED OPERATIONS: Income from discontinued operations net of an income tax provision of $623 615 615 --------- --------- -------- --------- -------- NET INCOME (LOSS) $(3,753) $(3,052) $ 1,728 $1,324 $(3,753) ========= ========= ======== ========= ========
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATING CASH FLOWS FOR NINE MONTHS ENDED SEPTEMBER 24, 1998 (unaudited)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------- (in thousands) Net cash provided by (used in) operating activities $(119,303) $84,554 $13,017 $(21,732) Cash flows from investing activities: Capital expenditures (4) (17,670) (6,354) (24,028) Proceeds from disposition of assets 146,032 17,711 15 163,758 --------- --------- -------- --------- -------- Net cash provided by (used in) investing activities 146,028 41 (6,339) 139,730 Cash flows from financing activities: Issuance of common stock 530 530 Proceeds from revolving loan and long-term borrowings 1,475 1,475 Deferred financing costs (604) (604) Repayment of revolving loan, long-term borrowings and capital lease obligations (105,000) (9,676) (2,502) (117,178) Premium on early extinguishment of debt (8,927) (8,927) Increase (decrease) in Envirodyne loan 76,887 (75,006) (1,881) --------- --------- -------- --------- -------- Net cash provided by (used in) financing activities (37,114) (84,682) (2,908) (124,704) Effect of currency exchange rate changes on cash (142) (142) --------- --------- -------- --------- -------- Net (decrease) in cash and equivalents (10,389) (87) 3,628 (6,848) Cash and equivalents at beginning of period 19,004 865 4,538 24,407 --------- --------- -------- --------- -------- Cash and equivalents at end of period $ 8,615 $ 778 $ 8,166 $17,559 ========= ========= ======== ========= ========
VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATING CASH FLOWS FOR NINE MONTHS ENDED SEPTEMBER 25, 1997 (unaudited)
Guarantor Nonguarantor Consolidated Parent Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------- (in thousands) Net cash provided by (used in) operating activities $(10,997) $31,008 $(12,426) $7,585 Cash flows from investing activities: Capital expenditures (11) (26,285) (9,740) (36,036) Proceeds from disposition of assets 1,151 10,722 11,873 --------- --------- -------- --------- -------- Net cash provided by (used in) investing activities (11) (25,134) 982 (24,163) Cash flows from financing activities: Issuance of common stock 813 813 Proceeds from revolving loan and long-term borrowings 314 314 Deferred financing costs (522) (522) Repayment of revolving loan, long-term borrowings and capital lease obligations (7,047) (996) (8,043) Increase (decrease) in Envirodyne loan (5,357) 5,357 --------- --------- -------- --------- -------- Net cash provided by (used in) financing activities (5,066) (7,047) 4,675 (7,438) Effect of currency exchange rate changes on cash (1,006) (1,006) --------- --------- -------- --------- -------- Net (decrease) in cash and equivalents (16,074) (1,173) (7,775) (25,022) Cash and equivalents at beginning of period 25,785 (162) 16,171 41,794 --------- --------- -------- --------- -------- Cash and equivalents at end of period $ 9,711 $(1,335) $ 8,396 $16,772 ========= ========= ======== ========= ========
VISKASE HOLDING CORPORATION AND SUBSIDIARIES 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 25, 1997 (1997 Form 10-K). These quarterly financial statements should be read in conjunction with the financial statements and the notes thereto included in the 1997 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 25, 1997 was derived from the audited Viskase Holding Corporation's consolidated financial statements included in Viskase Companies, Inc.'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 HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
September 24, December 25, 1998 1997 ------------- ------------- (unaudited) (in thousands) ASSETS Current assets: Cash and equivalents $ 8,166 $ 4,538 Receivables, net 32,265 38,081 Receivables, affiliates 52,145 51,796 Inventories 43,460 35,029 Other current assets 9,896 10,928 --------- --------- Total current assets 145,932 140,372 Property, plant and equipment including those under capital lease 154,032 138,330 Less accumulated depreciation and amortization 46,518 32,064 --------- --------- Property, plant and equipment, net 107,514 106,266 Deferred financing costs 324 474 Other assets 2,046 2,414 Excess reorganization value 32,831 --------- --------- Total assets $255,816 $282,357 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt including current portion of long-term debt and obligation under capital lease $ 2,982 $ 2,647 Accounts payable 10,967 15,438 Accounts payable and advances, affiliates 39,637 34,210 Accrued liabilities 20,924 19,158 Current deferred income taxes (65) (65) --------- --------- Total current liabilities 74,445 71,388 Long-term debt 3,756 5,091 Accrued employee benefits 2,750 2,503 Deferred and noncurrent income taxes 20,726 20,822 Intercompany loans 47,639 49,520 Commitments and contingencies Stockholders' equity: Common stock, $1.00 par value, 1,000 shares authorized; 100 shares issued and outstanding Paid in capital 103,464 103,463 Accumulated (deficit) (1,688) 26,496 Cumulative foreign currency translation adjustments 4,724 3,074 --------- --------- Total stockholders' equity 106,500 133,033 --------- --------- Total liabilities and stockholders' equity $255,816 $282,357 ========= ========= The accompanying notes are an integral part of the consolidated financial statements. /TABLE VISKASE HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Three Months Nine Months Nine Months Ended September Ended September Ended September Ended September 24, 1998 25, 1997 24, 1998 25, 1997 --------------- -------------- -------------- ---------------- (in thousands) NET SALES $50,600 $59,905 $150,852 $184,711 COSTS AND EXPENSES Cost of sales 37,582 45,164 113,700 140,313 Selling, general and administrative 8,251 9,554 23,703 29,017 Amortization of intangibles and excess reorganization value 754 833 2,262 2,398 Unusual charge 30,633 30,633 -------- ------- -------- -------- OPERATING INCOME (26,620) 4,354 (19,446) 12,983 Interest income 137 4 213 271 Interest expense 310 352 1,103 1,158 Intercompany interest expense 1,097 710 1,676 2,245 Management fees 304 196 911 778 Other expense (income), net 421 (1,264) 1,147 (757) -------- ------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES (28,615) 4,364 (24,070) 9,830 Income tax provision 1,328 1,790 3,675 4,225 -------- ------- -------- -------- NET INCOME (LOSS) $(29,943) $ 2,574 $(27,745) $ 5,605 ======== ======= ======== ======== The accompanying notes are an integral part of the consolidated financial statements.
VISKASE HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended --------------------------------- September 24, September 25, 1998 1997 ------------- ------------- (in thousands) Cash flows from operating activities: Net income $(27,745) $ 5,605 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 8,070 7,488 Amortization of intangibles and excess reorganization value 2,262 2,398 Amortization of deferred financing fees and discount 144 152 (Decrease) in deferred and noncurrent income taxes 100 (254) Loss (Gain) on disposition of assets 190 (878) Bad debt provision 334 165 Impairment loss excess reorganization 30,633 Changes in operating assets and liabilities: Accounts receivable 7,597 (3,360) Accounts receivable, affiliates (8,520) (5,741) Inventories (5,834) (492) Other current assets 1,492 (691) Accounts payable and accrued liabilities (3,320) (285) Accounts payable, affiliates 7,614 (17,134) Other (399) -------- -------- Total adjustments 40,762 (19,031) -------- -------- Net cash provided by (used in) operating activities 13,017 (13,426) Cash flows from investing activities: Capital expenditures (6,354) (9,740) Proceeds from disposition of assets 15 11,722 -------- -------- Net cash provided by (used in) investing activities (6,339) 1,982 Cash flows from financing activities: Proceeds from revolving loan and long-term borrowings 1,475 314 Repayment of revolving loan and long-term borrowings (2,502) (996) Increase (decrease) in Envirodyne loan and advances (1,881) 5,357 -------- -------- Net cash provided by (used in) financing activities (2,908) 4,675 Effect of currency exchange rate changes on cash (142) (1,006) -------- -------- Net (decrease) in cash and equivalents 3,628 (7,775) Cash and equivalents at beginning of period 4,538 16,171 -------- -------- Cash and equivalents at end of period $ 8,166 $ 8,396 ======== ======== - ------------------------------------------------------------------------------------------------------ Supplemental cash flow information: Interest paid $160 $186 Income taxes paid $3,125 $3,579 The accompanying notes are an integral part of the consolidated financial statements. /TABLE VISKASE HOLDING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. INVENTORIES (dollars in thousands) Inventories consisted of: September 24, December 25, 1998 1997 ------------ ----------- Raw materials $ 3,585 $ 4,418 Work in process 13,736 10,511 Finished products 26,139 20,100 ------- ------- $43,460 $35,029 ======= ======= 2. CONTINGENCIES (dollars in thousands) 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. Patent validity and infringement having been established, the remaining issues for trial are whether ANC willfully infringed Viskase's patents by using "Affinity" brand resin and the determination of the amount of compensatory damages. Viskase has filed a motion to have the jury verdict as to compensatory damages reinstated. The motion has been fully briefed and the parties are awaiting the Court's ruling. If the motion is not granted, the Company expects the trial on damages to occur in the first quarter of 1999. 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). With respect to the first request for reexamination, on September 25, 1998, the USPTO, after initially rejecting Viskase's claims, gave notice of its intent to reissue Viskase's patent in its entirety. With respect to the second request for reexamination, the USPTO has preliminarily rejected Viskase's claim under another patent. Viskase is preparing its response. If the USPTO ultimately disallows the claims of the second Viskase patent, the effect upon the Court action will not be significant. The Company expects ANC to vigorously contest this matter in the Court and the USPTO and to appeal any final judgment. No part of the pending claims has been recorded in the Company's financial statements. Through September 24, 1998, $4,631 in patent defense costs had been accrued and capitalized. In March 1997 Viskase Corporation 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. Viskase Corporation is cooperating fully with the investigation. 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. 3. ACCOUNTING STANDARDS The Company will implement the provisions of Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS No. 131), which will be effective for fiscal years beginning after December 15, 1997. SFAS No. 131 specifies revised guidelines for determining an entity's operating segments and the type and level of financial information to be disclosed. Management believes that adoption of SFAS No. 131 will not have a significant effect on the Company's financial statements. The Company will implement the provisions of Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" (SFAS No. 132), which will be effective for fiscal years beginning after December 15, 1997. SFAS No. 132 standardizes the disclosure requirements for pensions and other postretirement benefits, requires additional information on changes in the benefit obligation and fair values of plan assets, and eliminates certain disclosures that are no longer useful. Management believes the adoption of SFAS No. 132 will not have a significant effect on the Company's financial statements. The Company will implement the provisions of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133), which will be effective for all fiscal quarters of fiscal years beginning after June 15, 1999. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires recognition of all derivative instruments as either assets or liabilities in the statement of financial condition and the measurement of those instruments at fair value. Management believes the adoption of SFAS No. 133 will not have a significant effect on the Company's financial statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- Results of Operations - --------------------- The Company's net sales from continuing operations for the first nine months and third quarter of 1998 were $309.2 million and $102.6 million, respectively, which represented decreases of 18.0% and 18.4%, respectively, from comparable periods of 1997. After excluding the sales of both the oriented polystyrene (OPS) business (which was sold in January 1997) and the polyvinyl chloride (PVC) business (which was sold in December 1997) of $39.4 million and $13.7 million for the first nine months and third quarter of 1997, respectively, the effective decreases were 8.5% and 8.4%, respectively. The decline in net sales is principally due to declines in casing volume in both the domestic and European markets as a result of the effect of the Company's strategy to increase casing prices and to adverse conditions in the Russian and Southeast Asian economies. Operating loss from continuing operations for the first nine months and third quarter of 1998 was $146.2 million and $148.3 million, respectively. The operating losses resulted primarily from a third quarter unusual charge comprised of a $91.2 million excess reorganization impairment and a $57.4 million restructuring due to previously announced restructuring of Viskase' worldwide operations, neither of which had a significant effect on cash flow. The impairment and restructuring charges were the result of business conditions leading to the Viskase plan of restructuring. (See Note 4.) Net interest expense from continuing operations for the nine month period totaled $39.9 million representing a decrease of $1.5 million from the first nine months of 1997. The decrease is primarily due to interest savings from the redemption of $105 million of the 12% Senior Secured Notes on August 24, 1998. Other expense from continuing operations approximated $.8 million and $1.6 million for the first nine months of 1998 and 1997, respectively. The 1998 expense consists of losses on the disposition of assets and foreign exchange losses. The 1997 expense consists principally of foreign exchange losses. The extraordinary loss for the third quarter of 1998 of $6.8 million, net of a tax benefit of $4.3 million, represents the loss on the early extinguishment of $105 million of the 12% Senior Secured Notes. The extraordinary loss before taxes is comprised of a $8.9 million prepayment penalty and a $2.2 million write-off of the unamortized portion of financing fees attributable to the debt. The Company has entered into forward foreign exchange contracts to hedge certain foreign currency transactions on a continuing basis for periods consistent with its committed foreign exchange exposures. This practice seeks to minimize the effect of foreign exchange rate movements on the Company's operating results. The Company's hedging activities do not subject the Company to additional exchange risk because gains and losses on these contracts offset losses and gains on the transactions being hedged. The cash flows from forward contracts are classified consistent with the cash flows from the transactions or events being hedged. The tax benefit for the first nine months of 1998 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 the non-deductible write-off of the excess reorganization impairment and foreign losses for which no tax benefit is provided, a benefit of $(19.3) million was provided on a loss from continuing operations of $(187.0) 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 June 8, 1998, the Company's Board of Directors approved the sale of two of the Company's subsidiaries, Clear Shield and Sandusky. Accordingly, the operating results of the two subsidiaries have been segregated from continuing operations and reported as a separate line item on the income statement under the heading Discontinued Operations. The Company has restated its prior financial statements to present the operating results as discontinued operations. The sale of Sandusky and Clear Shield was completed on June 12, 1998 and July 24, 1998, respectively. A $35.5 million gain, net of taxes, was recognized on these sales. Other - ----- In September 1997 the Company announced that it had retained Donaldson, Lufkin and Jenrette Securities Corporation to assist the Board of Directors in evaluating the Company's strategic alternatives. Such alternatives included, among other things, sale of the entire company, sale of business units or recapitalization. In June 1998, the Company sold its wholly owned subsidiary Sandusky, and in July 1998 the Company sold its wholly owned subsidiary Clear Shield. The Company is still reviewing strategic and recapitalization alternatives available. The Company will implement the provisions of Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS No. 131), which will be effective for fiscal years beginning after December 15, 1997. SFAS No. 131 specifies revised guidelines for determining an entity's operating segments and the type and level of financial information to be disclosed. Management believes that adoption of SFAS No. 131 will not have a significant effect on the Company's financial statements. The Company will implement the provisions of Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" (SFAS No. 132), which will be effective for fiscal years beginning after December 15, 1997. SFAS No. 132 standardizes the disclosure requirements for pensions and other postretirement benefits, requires additional information on changes in the benefit obligation and fair values of plan assets, and eliminates certain disclosures that are no longer useful. Management believes the adoption of SFAS No. 132 will not have a significant effect on the Company's financial statements. The Company will implement the provisions of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133), which will be effective for all fiscal quarters of fiscal years beginning after June 15, 1999. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires recognition of all derivative instruments as either assets or liabilities in the statement of financial condition and the measurement of those instruments at fair value. Management believes the adoption of SFAS No. 133 will not have a significant effect on the Company's financial statements. Liquidity and Capital Resources - ------------------------------- Cash and equivalents decreased by $6.8 million during the nine months ended September 24, 1998. Cash flows used in operating activities of $21.7 million and financing activities of $124.7 million exceeded funds provided by investing activities of $139.7 million. Cash flows used in operating activities were principally attributable to the Company's loss from operations and an increase in working capital usage offset by the effect of depreciation, amortization, the write-off of the excess reorganization value and the recognition of the restructuring reserve. Cash flows used in financing activities were principally due to the repayment of the $105 million 12% Senior Secured Notes, the $8.9 million prepayment penalty on the 12% Senior Secured Notes repayment and a $9.7 million principal payment under the GECC lease. Cash flows provided by investing activities consist principally of capital expenditures for property, plant and equipment, net of proceeds from the sale of Sandusky and Clear Shield. The Company finances its working capital needs through a combination of internally generated cash from operations and borrowings under its $30 million domestic Revolving Credit Facility and the residual proceeds from previously completed asset sales. The availability of funds under the Revolving Credit Facility is subject to the Company's compliance with certain covenants (which are substantially similar to those included in the Indenture), to borrowing base limitations measured by accounts receivable and inventory of the Company and to reserves that may be established in the discretion of the lenders. Currently, there are no borrowings under the $30 million domestic Revolving Credit Facility. The Company's Senior Secured Notes, Revolving Credit Facility and Letter of Credit Facility contain a number of financial covenants that, among other things, require the maintenance of a minimum level of tangible net worth, maximum ratios of debt and senior debt to total capitalization, and a minimum fixed charge coverage. As described in more detail below, the Company solicited and has received the required consents from the holders of Senior Secured Notes for an amendment to, and waiver under, the Indenture effective as of June 25, 1998. In addition, the Company has amended and received a similar waiver under the Amended and Restated Credit Agreement. The Company determined that, as a result of the write-off of the excess reorganization value, without the amendment and waiver, it would not have been in compliance with the covenant level for the maximum level of debt to total capitalization. The Company is currently in compliance with the amended covenants under the Indenture and Amended and Restated Credit Agreement. On July 24, 1998, the Company completed the divestiture of the capital stock of Clear Shield. The aggregate purchase price for the capital stock was $140.0 million and is subject to a working capital adjustment. The gain, net of taxes, was $37.0 million. Concurrent with the Clear Shield divestiture, the Company mailed a notice of redemption to holders of its 12% Senior Secured Notes to redeem $105 million of aggregate principal amount of the $160 million outstanding together with accrued interest payable and yield maintenance premium thereon. The notes were redeemed on August 24, 1998 at a price of 108.5%. The Company used $116.3 million of the proceeds for the redemption of the 12% Senior Secured Notes. In addition, the remainder of the proceeds, after deducting taxes and transaction expenses, were used to repay balances outstanding under the Company's Revolving Credit Facility. There are no significant restrictions on the Company's ability to transfer funds among its operations under the terms of its principal debt agreements. The Company anticipates that its current cash position, operating cash flows, residual proceeds from completed asset sales and the available borrowings under its Revolving Credit Facility will be sufficient to meet its operating expenses and to service its interest payments on the Senior Secured Notes, the 10.25% Notes and its other outstanding indebtedness. The Company will be required to satisfy its $55 million mandatory redemption obligation with respect to the Senior Secured Notes in June 1999. The Company expects that in order to make the payment it will be required to pursue one or more alternative strategies, such as refinancing of the 12% Senior Secured Notes or selling additional equity capital. Additionally, the Company's 10.25% Notes, of which $219.3 million principal amount is outstanding, will mature in December 2001. There can be no assurance that any of these strategies will be effected on satisfactory terms, if at all. Capital expenditures for continuing operations for the first nine months of 1998 and 1997 totaled $24.0 million and $29.5 million, respectively. Capital expenditures for discontinued operations for the first nine months of 1998 and 1997 totaled $9.0 million and $6.5 million, respectively. Significant 1998 and 1997 capital expenditures for continuing operations included a new information technology system at Viskase, costs associated with the Nucel(R) project, and additional production capacity for specialty films. Capital expenditures for discontinued operations included the construction of Clear Shield's Twin Falls, Idaho facility. Capital expenditures for continuing operations for 1998 are expected to be approximately $35 million. Capital expenditures for continuing operations for 1999 are expected to be $25 million. The Company has spent approximately $7 million to $11 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 1998 research and development and product introduction expenses are expected to be in the $8 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. Year 2000 - --------- The Year 2000 (Y2K) issue concerns the inability of information systems to properly recognize and process date-sensitive information beyond January 1, 2000. Businesses are at risk for possible miscalculations or systems failures that may disrupt their business operations due to the Year 2000 issue. In order to address the Y2K issue, the Company has formed a Year 2000 committee (Y2K Committee) that has segregated the Company's risk into three categories: significant business information technology (IT) systems, internal non- information technology (Non-IT) systems and external noncompliance by customers and vendors. Significant Business Information Technology Systems In January 1996, the Company began a system conversion which incorporated Y2K compliance. The following table shows the status of the business system conversions by country: Country Implementation Date Status - -------------- ------------------- -------- United States January 1, 1998 Complete France October 1, 1998 Complete United Kingdom March 1, 1999 Planned completion by March 1, 1999 Brazil January 1, 1998 Complete Canada Unknown Action Plan in process The Y2K Committee is in the planning stage to bring Canada into compliance. Because the Company is in the information gathering phase, the Company does not currently have a contingency plan in place for Canada. The Company's significant business IT system is run on servers and a wide-area network outsourced to IBM Global Services. IBM has been certified Y2K compliant for all its system components. All of the Company's personal computers, network server hardware and software are being checked for Y2K compatibility with the vendors. The targeted completion date is February 28, 1999. The Company has capitalized the costs necessary to upgrade its significant business systems. Internal Non-IT Systems The Non-IT systems consist primarily of PC-based manufacturing systems and process control units. The Y2K Committee has designated a member at each plant to inventory its systems and determine the status of its Y2K compliance. This process is ongoing and the plan is to have these systems tested for compliance by March 31, 1999. The Company does not, at this time, have sufficient data to estimate the cost of achieving Y2K compliance for its non-financial systems. If the Company is unable to achieve Y2K compliance for its major Non-IT systems, the Y2K issue could have a material impact on the operations of the Company. Because the Company is in the information gathering phase, the Company does not currently have a contingency plan in place for its Non-IT systems. Y2K Compliance by Customers and Vendors The Y2K Committee is in the process of developing a questionnaire that is expected to be mailed to material third party vendors by November 30, 1998 to address material third party compliance with Y2K. The responses to the questionnaires will be reviewed by the Committee and appropriate action will be taken on a timely basis. Should responses to the questionnaires indicate that suppliers, service providers or contractors are not Y2K compliant, the Company will change to those vendors who have demonstrated Y2K readiness. The Company cannot be assured that it will be successful in finding such alternative suppliers, service providers and contractors. 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. 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 September 24, 1998. Item 3 - Defaults Upon Senior Securities ------------------------------- None. Item 4 - Submission of Matters to a Vote of Security Holders --------------------------------------------------- The Company held its Annual Meeting of Stockholders (the "Meeting") on August 27, 1998. The following business was conducted at the Meeting: (i) the election of six (6) directors; (ii) the ratification of the appointment of PricewaterhouseCoopers as the Company's independent accountants for the fiscal year ended December 31, 1998; and (iii) the approval of a stockholder proposal to change the name of the Company. The results were as follows: Election of Directors For Withheld - ------------------------- ---------- ---------- Robert N. Dangremond 13,529,012 7,001 Avram A. Glazer 13,063,783 472,230 Malcolm I. Glazer 13,063,783 472,230 F. Edward Gustafson 13,529,012 7,001 Gregory R. Page 13,529,012 7,001 Mark D. Senkpiel 13,529,012 7,001 Ratification of Appointment of For Against Abstaining - ------------------------------ ---------- --------- ---------- PricewaterhouseCoopers - ------------------------------ 13,533,411 200 2,402 Approval of Stockholder Proposal For Against Abstaining - -------------------------------- ---------- --------- ---------- 10,462,447 7,106 3,344 There were 3,063,116 broker non-votes. Item 5 - Other Information ----------------- None. Item 6 - Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits 10.14 Amendment dated July 2, 1998, to the Amended and Restated Credit Agreement, dated June 1, 1998, among Viskase Companies, Inc., the Lenders identified therein and BT Commercial Corporation, as Agent (incorporated herein by reference to Exhibit 10.14 to Form 10-Q filed June 25, 1998, of Viskase Companies, Inc.). 10.23 Third Supplemental Indenture, dated as of July 2, 1998, between Viskase Companies, Inc. and State Street Bank and Trust Company of Connecticut, N.A. (formerly Fleet National Bank Connecticut and previously Shawmut Bank Connecticut, National Association), as Trustee. 27 Financial Data Schedules. (b) Reports on Form 8-K (1) On July 24, 1998, the Company filed a Form 8-K to report that on June 24, 1998 the Company completed the sale of its wholly owned subsidiary, Clear Shield National, Inc., to Solo Cup Company. 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: November 9, 1998 EX-10.23 2 BT 3RD SUPPLEMENTAL INDENTURE 7-02-1998 ENVIRODYNE INDUSTRIES, INC. 701 HARGER ROAD, SUITE 190 OAK BROOK, ILLINOIS 60523 July 2, 1998 TO: BT Commercial Corporation, Holders of the First Priority Senior as Collateral Agent under Secured Notes due 2000 the Intercreditor Agreement CUSIP No. 294037 AJ5 referred to below CUSIP No. 294037 AK2 233 South Wacker Drive Chicago, Illinois 60606 and The First Priority Notes Indenture Trustee, The Requisite First Priority Noteholders, the Majority Noteholders, the LC Agent, the LC Lender, the Revolving Lender, and the Requisite Working Capital Lenders, as defined in the Intercreditor Agreement referred to below or as otherwise defined below Re: Proposed Disposition of Clear Shield National, Inc. -------------------------------------------------- Ladies and Gentlemen: Envirodyne Industries, Inc. (the "Company") hereby solicits (the "Solicitation"), by this letter ("Consent"), consent from (i) the holders (the "Holders") of First Priority Senior Secured Notes due 2000 (the "Notes") of the Company issued pursuant to an Indenture (the "Indenture"), dated as of June 20, 1995 and amended as of October 13, 1995 and on September 2, 1997, between the Company and State Street Bank and Trust Company of Connecticut, N.A. (formerly Fleet National Bank Connecticut and previously Shawmut Bank Connecticut, National Association), as trustee (the "Trustee"), to the Company's entering into a transaction more fully described below (the "Transaction") and the use of proceeds of the Transaction and (ii) the lenders identified in the Amended and Restated Credit Agreement (the "Credit Agreement"), dated as of June 1, 1998, among the Company, the lenders identified therein (the "Lenders," and collectively with the Holders, the "Creditors") and BT Commercial Corporation, as Agent, to the Company's entering into the Transaction and the use of proceeds of the Transaction. The Company hereby simultaneously solicits, by this same Solicitation and Consent, consent from (i) the Holders to certain amendments to, and waivers under, the Indenture and (ii) the Lenders to certain amendments to, and waivers under, the Credit Agreement. THIS SOLICITATION COMMENCES ON JULY 2, 1998 AND WILL EXPIRE AT 5:00 P.M., CHICAGO TIME, ON JULY 15, 1998 (THE "SOLICITATION PERIOD") UNLESS OTHERWISE EXTENDED BY THE COMPANY. THE COMPANY RESERVES THE RIGHT TO EXTEND THE SOLICITATION AT ANY TIME AND FROM TIME TO TIME, WHETHER OR NOT EXECUTED COUNTERPARTS TO THIS CONSENT HAVE BEEN RECEIVED, BY WRITTEN NOTICE TO THE CREDITORS OR BY PRESS RELEASE OR OTHER PUBLIC ANNOUNCEMENT. IN ADDITION, THE COMPANY RESERVES THE RIGHT, IN ITS SOLE DISCRETION, SUBJECT TO APPLICABLE LAW, TO TERMINATE THIS SOLICITATION, BY WRITTEN NOTICE TO THE CREDITORS OR BY PRESS RELEASE OR OTHER PUBLIC ANNOUNCEMENT, UPON FAILURE TO RECEIVE THE NECESSARY EXECUTED COUNTERPARTS TO THIS CONSENT. SUMMARY OF PROPOSED TRANSACTION AND RESTRICTIONS Reference is hereby made to that certain Intercreditor and Collateral Agency Agreement, dated as of June 20, 1995 (as may have been heretofore amended or modified, "Intercreditor Agreement"), among BT Commercial Corporation, in its capacities as "LC Agent," "LC Lender," "Collateral Agent" and "Revolving Lender" thereunder, and the Trustee. Undefined capitalized terms which are used in this letter shall have the meanings ascribed to such terms in the Intercreditor Agreement. The Company has proposed to enter into a stock purchase agreement (the "Sale Agreement") pursuant to which the Company will sell all of the issued and outstanding capital stock of Clear Shield National, Inc., a California corporation ("Clear Shield"), to an unrelated third party for cash consideration of $140,000,000, all of which would be payable to the Company at the closing of such transaction subject to any purchase price adjustments as provided in such Sale Agreement (the "Clear Shield Sale"). The execution and delivery by the Company of the Sale Agreement and the consummation of the Clear Shield Sale have been duly authorized by a resolution of the Company's Board of Directors, subject to the effectiveness of the waivers, approvals and authorizations set forth in this letter. The Company intends to consummate the sale of Clear Shield as soon as practicable following receipt of consents from the Lenders under the Credit Agreement and Holders of a majority in aggregate principal amount of the Notes. Of the $140,000,000 that the Company expects to receive at the closing of the Clear Shield Sale, the Company anticipates that its expenses, state and local taxes and Federal alternative minimum taxes will equal approximately $7,000,000. The remaining proceeds (approximately $133,000,000) will be used to make a pro rata payment under the Credit Agreement and a pro rata redemption of the outstanding Notes (such payments are collectively referred to herein as the "Use of Proceeds"). The calculation of the pro rata amounts for the Use of Proceeds shall be made as of the closing date of the Clear Shield Sale, although the Company will not redeem the Notes until the Transfer Redemption Date (the next business day following the 30th day after the closing date of the Clear Shield Sale, as defined in the Indenture). Upon receipt of the consideration for the Clear Shield Sale, the Company intends to make a payment to BT Commercial Corporation of $30,000,000 (the current amount outstanding under the Credit Agreement) or such lesser amount then outstanding under the Credit Agreement and will invest the remaining net proceeds of the Clear Shield Sale in permitted Cash Equivalents until the Transfer Redemption Date. The Company estimates that on the Transfer Redemption Date the Noteholders will be entitled to receive approximately $112,000,000 (of which approximately $105,000,000 will be applied to the retirement of the principal amount of the outstanding Notes to be redeemed with the remaining amount applied to satisfy the Yield Maintenance Amount thereon). The consummation of the Clear Shield Sale and the proposed Use of Proceeds of the Clear Shield Sale would violate (a) Sections 4.06, 4.09 and 4.13 of the Indenture (the "Specified Indenture Restrictions"), unless the Holders of a majority in aggregate principal amount of the Notes, by notice to the Trustee, waive the Company's compliance with the Specified Indenture Restrictions (excluding 4.06(e)(3) or any other provision of Section 4.06, 4.09 or 4.13 that would require unanimous written consent) with respect to the Clear Shield Sale (the "Majority Noteholders") and (b) Sections 8.6, 8.9 and 8.13 of the Credit Agreement (the "Specified Credit Agreement Restrictions"), unless waived in writing by each of the sole existing LC Lender and the sole existing Revolving Lender and the Clear Shield Sale would violate (a) Section 7 of the Company Pledge Agreement, dated as of June 20, 1995, by and between the Company and the Collateral Agent, unless waived in writing by the Collateral Agent (the "Specified Pledge Restriction") and (b) Section 5(j) of the Company Security Agreement, dated as of June 20, 1995, by and between the Company and the Collateral Agent, unless waived in writing by the Collateral Agent (the "Specified Sale Restriction"). Moreover, pursuant to the terms of Section 6 of the Intercreditor Agreement, the Trustee is prohibited from waiving the Specified Indenture Restrictions without the prior written consent of the Requisite Working Capital Lenders, each of the LC Lender and the Revolving Lender are prohibited from waiving the Specified Credit Agreement Restrictions without the prior written consent of each of the Requisite First Priority Noteholders and the Revolving Lender, and pursuant to Section 2(e) of the Intercreditor Agreement, the Collateral Agent is prohibited from waiving the Specified Pledge Restriction and the Specified Sale Restriction without the prior written consent of the Requisite First Priority Noteholders and the Requisite Working Capital Lenders. It is a condition precedent to the consummation of the Clear Shield Sale that the capital stock and assets of Clear Shield be conveyed to the purchaser under the Sale Agreement free and clear of all claims, liens and security interests of the Secured Parties under the Financing Agreements and the Collateral Documents. The outstanding capital stock and assets of Clear Shield are currently subject to liens and security interests in favor of the Collateral Agent pursuant to the Collateral Documents, and the Secured Indebtedness of the Company under the Financing Agreements is guaranteed by Clear Shield pursuant to the Guaranty Agreement. SUMMARY OF AMENDMENTS AND WAIVERS The Company is considering a reorganization at Viskase Corporation, a wholly-owned subsidiary of the Company, in which case the Company will take a restructuring charge of approximately $25,000,000 for costs and expenses relating thereto (the "Restructuring Charge"), and therefore hereby seeks consent to amendments (collectively, the "Amendments") to the terms of the Notes issued pursuant to the Indenture. The Amendments would be effective for all purposes as of March 27,1998. A copy of the proposed Third Supplemental Indenture is attached hereto as Attachment B. The Company also seeks consent to amendments that are substantially identical to the Amendments with respect to the Credit Agreement (collectively, the "Additional Amendments"). The Amendments would modify the negative covenant in Section 4.01(b) of the Indenture to provide that the Fixed Charge Coverage Ratio (as defined in the Indenture) may not be less than 1.35:1 for the period from March 27, 1998 through June 30, 1999 (rather than 1.50:1 as currently provided in the Indenture), and 1.55:1 for the period from July 1, 1999 and thereafter. In addition, for purposes of determining Consolidated Cash Flow (as defined in the Indenture) for the calculation of the Fixed Charge Coverage Ratio (as defined in the Indenture) only and notwithstanding any tax effect of such Restructuring Charge, the Restructuring Charge will be added back to the calculation of Consolidated Net Worth and Consolidated Net Income (as those terms are defined in the Indenture) to the extent previously deducted therefrom. In addition, the Amendments would modify Section 4.03(a) of the Indenture to provide that at no time may (i) Consolidated Senior Debt (as defined in the Indenture) be greater than 58.5% of Consolidated Total Capitalization (as defined in the Indenture) (rather than 52.5% as currently provided in the Indenture) or (ii) Consolidated Debt (as defined in the Indenture) be greater than 92.5% of Consolidated Total Capitalization (rather than 88% as currently provided in the Indenture). The Company is also requesting that (i) Holders waive any prior default by the Company of Section 4.01(a), 4.01(b), or 4.03(a) of the Indenture (the "Specified Indenture Financial Covenants"), if any, and (ii) the Revolving Lender and the LC Lender each waives any prior default by the Company of Sections 8.1(a), 8.1(b) and 8.3 of the Credit Agreement (the "Specified Credit Financial Covenants"), if any. Pursuant to the terms of Section 6 of the Intercreditor Agreement, the Trustee is prohibited from amending the Indenture or waiving the Specified Indenture Financial Covenants without the prior written consent of the Requisite Working Capital Lenders and each of the LC Lender and the Revolving Lender are prohibited from amending the Credit Agreement or waiving the Specified Credit Financial Covenants without the prior written consent of each of the Requisite First Priority Noteholders and the Revolving Lender. The timing of receipt of the consents from the requisite holders will ultimately affect the Yield Maintenance Amount on the redeemed portion of the Notes. The Yield Maintenance Amount, assuming a constant treasury rate, decreases approximately $0.15 per day for each $1,000 in principal amount of outstanding Notes redeemed. Therefore, any delay in the return of the requisite Consents reduces the overall yield on the Notes (assuming that funds that are repaid are invested at a similar rate of return). Please do not delay in returning your consent. CONSENTS, WAIVERS AND AUTHORIZATIONS The Company hereby requests and, subject to the terms and conditions of this Consent, the parties signatory hereto respectively agree (as applicable), that: 1. the Holders hereby (i) waive the Specified Indenture Restrictions with respect to the Clear Shield Sale, (ii) waive the Specified Indenture Financial Covenants and (iii) consent to the Amendments; 2. the LC Lender and the Revolving Lender each hereby (i) waives the Specified Credit Agreement Restrictions with respect to the Clear Shield Sale, (ii) waives the Specified Credit Financial Covenants and (iii) consents to the Additional Amendments; 3. the Collateral Agent hereby waives each of the Specified Pledge Restriction and the Specified Sale Restriction with respect to the Clear Shield Sale; 4. the Requisite Working Capital Lenders hereby consent to the Trustee's and/or the Holders' (i) waiver of the Specified Indenture Restrictions with respect to the Clear Shield Sale, (ii) waiver of the Specified Indenture Financial Covenants and (iii) consent to the Amendments; 5. the Requisite First Priority Noteholders and the Revolving Lender each hereby consent to each of the LC Lender's and the Revolving Lender's (i) waiver of the Specified Credit Agreement Restrictions with respect to the Clear Shield Sale, (ii) waiver of the Specified Credit Financial Covenants and (iii) consents to the Additional Amendments; 6. the Requisite First Priority Noteholders and the Requisite Working Capital Lenders each hereby consent to the Collateral Agent's waiver of the Specified Pledge Restriction and the Specified Sale Restriction; 7. the Requisite First Priority Noteholders and the Requisite Working Capital Lenders each hereby authorize and direct the Collateral Agent, and the Collateral Agent simultaneously with the consummation of the Clear Shield Sale, hereby (a) releases its security interests in and liens securing the Secured Indebtedness on all Collateral consisting of property or capital stock of Clear Shield, (b) releases Clear Shield from all obligations under the Guaranty Agreement and all other Collateral Documents to which it is a party, (c) agrees to deliver to the Company all original stock certificates evidencing any of the outstanding capital stock of Clear Shield and all stock powers relating thereto, (d) agrees to execute and deliver to the Company such documents and agreements as may be reasonably requested by the Company to fully effectuate or evidence (of record or otherwise) such releases, including, without limitation, UCC termination statements, mortgage releases, intellectual property release and reconveyances, and termination letters with respect to blocked account agreements, (e) waives the Specified Pledge Restriction and (f) agrees to execute and deliver this letter. The foregoing consents, waivers, authorizations and agreements are expressly subject to the condition precedent that counterparts of this Consent be executed and delivered in accordance with the procedures described in this Consent by the Company, the Collateral Agent, the Majority Noteholders, the LC Lender, the LC Agent, the Revolving Lender, the Requisite First Priority Noteholders, and the Requisite Working Capital Lenders and, unless and until such parties have so executed and delivered this Consent, this Consent shall have no force or effect. COMPANY'S REPRESENTATIONS AND WARRANTIES The Company hereby represents, warrants and covenants to and with the Collateral Agent and each of the Secured Parties that, as of March 26, 1998 (the most recent date on which detailed financial information was available) and as of the date of consummation of the Clear Shield Sale, in each case with the same effect as if made as of such date, no Event of Default has occurred and is continuing, or will result from, the consummation of the Clear Shield Sale. Detailed financial information for the quarter ended June 26, 1998 is not yet available. Additional Representations and Warranties The undersigned further acknowledges that: (i) except as expressly set forth above, (x) the execution and delivery of this letter by the Collateral Agent and such other Secured Parties shall in no way affect any of the respective rights, powers or remedies of any of such Persons with respect to any Event of Default nor constitute a waiver of any term or provision of any of the Financing Agreements or Collateral Documents, and (y) all of the respective terms and provisions of the Financing Agreements, the Collateral Documents and all other documents, instruments, amendments and agreements executed or delivered by the undersigned and any of the other Loan Parties pursuant thereto or in connection therewith shall remain in full force and effect and are hereby ratified and confirmed in all respects; and (ii) the execution and delivery of this letter by the Collateral Agent and such other Secured Parties shall in no way obligate the Collateral Agent or any of such other Secured Parties, at any time hereafter, to consent to any other modification of any term or provision of any of the Financing Agreements or Collateral Documents, whether of a similar or different nature. CONSENT PROCEDURE Only Holders of record (or their respective legal representatives) as of June 24, 1998 (the "Record Date") may execute counterparts to this Consent, and such Consent will be binding on all subsequent transferees of the Notes. Any beneficial owner of Notes who is not a Holder or record of such Notes must arrange with the person who, on the Record Date, was the Holder of record of such Holder's assignee or nominee to execute and deliver counterparts to this Consent on its behalf. For purposes of this Solicitation, the term "Holder" shall be deemed to include the participants ("DTC Participants") through which a beneficial owner's Notes are held on the Record Date in The Depository Trust Company ("DTC"). DTC has authorized DTC Participants to execute counterparts to this Consent as if they were Holders. The timing of receipt of the consents from the requisite holders will ultimately affect the Yield Maintenance Amount on the redeemed portion of the Notes. The Yield Maintenance Amount, assuming a constant treasury rate, decreases approximately $0.15 per day for each thousand dollars in principal amount of outstanding Notes redeemed. Therefore, any delay in the return of the requisite Consents reduces the overall yield on the Notes (assuming that funds that are repaid are invested at a similar rate of return). Please do not delay in returning your consent. Each Holder that agrees with the terms and conditions of this Consent should complete the appropriate information on Attachment A to this Consent and return it, as soon as possible but no later than the expiration of the Solicitation, by facsimile to Envirodyne Industries, Inc., 701 Harger Road, Suite 190, Oak Brook, Illinois 60523, Attention: Gordon S. Donovan, Tel. No. (630) 575-2400, Facsimile No. (630) 575-2401. Each of the Collateral Agent, the LC Agent, the LC Lender and the Revolving Lender that agrees with the terms and conditions of this Consent should execute and deliver an executed counterpart to this Consent to the Company at its address indicated immediately above prior to the expiration of the Solicitation. Once a consent is delivered to the Company, it may not be revoked. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Securities and Exchange Commission (the "Commission") are hereby incorporated by reference: (a) the Annual Report on Form 10-K for the year ended December 25, 1997, as amended pursuant to an amendment thereto filed on April 27, 1998; and (b) the Quarterly Report on Form 10-Q for the quarter ended March 26, 1998; and (c) the Company's Report on Form 8-K dated June 16, 1998; and (d) the Company's Report of Form 8-K dated June 25, 1998. All documents filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), subsequent to the date of this Consent and prior to the termination thereof shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Consent to the extent that a statement contained herein or in any other subsequently filed document which is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Consent. The Company will provide without charge to each Holder, including any beneficial holder, to whom this Consent is delivered, upon the written or oral request of any such person, a copy of any or all of the documents relating to the Company that are incorporated herein by reference (other than exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents). Such requests should be directed to Envirodyne Industries, Inc., 701 Harger Road, Suite 190, Oak Brook, Illinois 60523 (Tel. No. (630) 575-2400), Attention: Gordon S. Donovan. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Exchange Act and, in accordance therewith, files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information can be inspected and copied at the Public Reference Section of the Commission located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549, and at regional public reference facilities maintained by the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at prescribed rates. In addition, the Commission maintains a World Wide Web site that contains reports, proxy statements and other information regarding companies (including the Company) that file electronically with the Commission. The address of the Commission's Web site is http://www.sec.gov. The Company's Common Stock is traded in the over-the-counter market on the Nasdaq SmallCap Market, and reports, proxy statements and other information concerning the Company may also be inspected at the offices of The Nasdaq Stock Market, Inc., 1735 K Street, N.W., Washington D.C. 20006. QUESTIONS AND REQUESTS Questions and requests for additional information or additional copies of this Consent may be directed to Envirodyne Industries, Inc., 701 Harger Road, Suite 190, Oak Brook, Illinois 60523, Attention: Gordon S. Donovan, Tel. No. (630) 575-2400, Facsimile No. (630) 575-2401. Very truly yours, ENVIRODYNE INDUSTRIES, INC. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY PRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS CONSENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS SOLICITATION IS NOT BEING MADE TO, AND NO COUNTERPARTS TO THIS CONSENT ARE BEING SOLICITED FROM, HOLDERS OF NOTES OR OTHER CREDITORS OF THE COMPANY IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH SOLICITATION OR DELIVER SUCH COUNTERPARTS. THE DELIVERY OF COUNTERPARTS TO THIS CONSENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ENVIRODYNE INDUSTRIES, INC. 701 HARGER ROAD, SUITE 190 OAK BROOK, ILLINOIS 60523 Letter Agreement dated as of July 2, 1998 Re: Consent ATTACHMENT A The undersigned hereby agrees with the terms and conditions of the foregoing Letter of Consent dated July 2, 1998. THE UNDERSIGNED UNDERSTANDS THAT ONCE A CONSENT IS DELIVERED TO THE COMPANY, IT MAY NOT BE REVOKED. Holder:___________________________________________________________ (Please Type or Print) By:_______________________________________________________________ (Sign Here) Name:_____________________________________________________________ (Please Type or Print) Title:____________________________________________________________ Address:_________________________________________________________ (Street) (Suite) ________________________________________________________________ (City) (State) (Zip) Telephone No.:____________________________________________________________ Aggregate Principal Amounts* of Note(s):__________________________________________ * Unless otherwise indicated, the Holder will be deemed to have consented in respect of the entire principal amount of Notes held by such Holder. ENVIRODYNE INDUSTRIES, INC. 701 HARGER ROAD, SUITE 190 OAK BROOK, ILLINOIS 60523 Letter Agreement dated as of July 2, 1998 Re: Consent Signature Counterpart --------------------- BT COMMERCIAL CORPORATION, in its respective capacities as Collateral Agent and LC Agent, and in its individual capacity as the sole LC Lender and as the sole Revolving Lender By: ___________________________ Name: ___________________ Title: ____________________ ATTACHMENT B THIRD SUPPLEMENTAL INDENTURE THIS THIRD SUPPLEMENTAL INDENTURE, dated as of __________, 1998 (this "Supplemental Indenture"), between ENVIRODYNE INDUSTRIES INC., a Delaware corporation (the "Company"), and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, N.A. (formerly Fleet National Bank Connecticut and previously Shawmut Bank Connecticut, National Association), as trustee (the "Trustee"), under the Indenture, dated as of June 20, 1995 and amended by the First Supplemental Indenture, dated as of October 13, 1995, and the Second Supplemental Indenture, dated as of September 2, 1997, between the Company and the Trustee (the "Indenture"). WHEREAS, the Company has issued, the Trustee has authenticated and there have been delivered pursuant to the Indenture $160,000,000 aggregate principal amount of the Company's First Priority Senior Secured Notes due 2000, all of which are currently outstanding; WHEREAS, the Company desires, by this Supplemental Indenture, to amend the negative covenants contained in Section 4.01(b) and Section 4.03(a) of the Indenture (collectively, the "Amendment"); WHEREAS, Section 8.02 of the Indenture provides that the Company and the Trustee may enter into a supplemental indenture, with the consent of the holders of not less than a majority in aggregate principal amount of the then outstanding Securities (as defined therein), for the purpose of changing any provisions of the Indenture except as otherwise set forth therein; WHEREAS, pursuant to Section 5.05 of the Indenture, the holders of not less than a majority in aggregate principal of the then outstanding Securities, as of 5:00 p.m., New York time, on June 24, 1998, the record date for such purposes, have waived any prior default by the Company of Section 4.01(a), 4.01(b) or 4.03(a) of the Indenture, if any; WHEREAS, the holders of not less than a majority in principal amount of the Securities outstanding, as of 5:00 p.m., New York City time, on June 24, 1998, the record date for such purpose, have consented to the Amendment; and WHEREAS, the Company is legally empowered and has been duly authorized by the necessary corporate action to make, execute and deliver this Supplemental Indenture, and all acts and things whatsoever necessary to make this Supplemental Indenture, when executed and delivered by the Company and the Trustee, a valid, binding and legal instrument have been taken. NOW, THEREFORE, each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the holders of the Securities: ARTICLE 1 DEFINITIONS All terms used in this Supplemental Indenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture. ARTICLE 2 AMENDMENT OF INDENTURE 2.1 Section 4.01(b) of the Indenture is amended by deleting such section in its entirety and substituting in lieu thereof the following: (b) Fixed Charge Coverage Ratio. The Company covenants --------------------------- that it will not cause or permit the ratio of (i) Consolidated Cash Flow for the twelve month period ending at the end of any fiscal quarter of the Company to (ii) Consolidated Fixed Charges for each such twelve month period to be less than the ratio set forth below for the period set forth below in which such fiscal quarter ends: Ratio Period ----- ------ 1.45:1 Effective Date through December 26, 1996 1.50:1 December 27, 1996 through March 26, 1998 1.35:1 March 27, 1998 through June 30, 1999 1.55:1 July 1, 1999 and thereafter provided, however for purposes of determining Consolidated Cash Flow for the calculation of the Fixed Charge Coverage Ratio only and notwithstanding any tax effect of such restructuring charges, restructuring charges in amounts not to exceed $25,000,000 shall be added back to the calculation of the Consolidated Net Worth and Consolidated Net Income to the extent previously deducted therefrom. 2.2 Section 4.03 (a) of the Indenture is hereby amended by deleting the last clause of such section beginning with "provided, however" and substituting in lieu thereof the following: provided, however, that at no time shall (1) Consolidated Senior -------- ------- Debt be more than 58.5% of Consolidated Total Capitalization, or (2) Consolidated Debt be more than 92.5% of Consolidated Total Capitalization. ARTICLE 3 MISCELLANEOUS 3.1 This Supplemental Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and all of such counterparts shall together constitute one and the same instrument. 3.2 The internal laws of the State of New York shall govern this Supplemental Indenture without regard to principles of conflicts of law. 3.3 All provisions of this Supplemental Indenture shall be deemed to be incorporated in, and made a part of, the Indenture; and the Indenture, as amended and supplemented by this Supplemental Indenture, shall be read, taken and construed as one and the same instrument. 3.4 The provisions of Section 4.01(b) and Section 4.03(a), as amended by Article 2 of this Supplemental Indenture, shall be deemed effective for all purposes as of March 27, 1998; provided, however, that this Supplemental Indenture shall not become effective as of such date until the Company has entered into amendments that are substantially identical to the Amendment contained herein with respect to the Amended and Restated Credit Agreement, dated as of June 1, 1998, between the Company, the lenders identified therein and BT Commercial Corporation, as Agent. The Company shall provide to the Trustee written notice that it has entered into such amendments and that this Supplemental Indenture has become effective. 3.5 The recitals to this Supplemental Indenture shall not be construed as representations of the Trustee and the Trustee makes no representation as to the accuracy of such recitals. 3.6 The Trustee enters into this Supplemental Indenture in its capacity as Trustee under the Indenture and in reliance on an Opinion of Counsel and Officers' Certificate. IN WITNESS WHEREOF, the parties have caused this Third Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. ENVIRODYNE INDUSTRIES, INC. By: _________________________________ Gordon S. Donovan Vice President, Chief Financial Officer and Treasurer Attest: __________________________ Stephen M. Schuster Vice President and Secretary STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, N.A. By: ________________________ Name: ________________________ Title: _______________________ Attest: ______________________ By: ______________________ Name: ______________________ Title: ______________________ EX-27 3
5 9-MOS DEC-31-1998 SEP-24-1998 17,559,000 0 52,561,000 (2,296,000) 97,295,000 191,337,000 534,418,000 164,075,000 598,366,000 238,824,000 334,860,000 0 0 149,000 (50,539,000) 598,366,000 309,233,000 309,233,000 229,177,000 229,177,000 0 716,000 40,488,000 (186,977,000) (19,252,000) (167,725,000) 35,776,000 (6,793,000) 0 (138,742,000) (9.37) (9.37)
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