Viskase : Annual Report for 2023

CONSOLIDATED FINANCIAL STATEMENTS

OF VISKASE COMPANIES, INC. AND SUBSIDIARIES

1. Financial Statements:

• - Report of Independent Certified Public Accountants

• - Consolidated Balance Sheets as of December 31, 2023 and 2022

• - Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021

• - Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021

• - Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021

• - Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2022

• - Notes to Consolidated Financial Statements

  2. Management's Discussion and Analysis of Financial Condition and Results of Operations (unaudited)

GRANT THORNTON LLP

Grant Thornton Tower

171 N. Clark Street, Suite 200 Chicago, IL 60601

• D [phone]

• F [phone]

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors Viskase Companies, Inc.

Opinion

We have audited the consolidated financial statements of Viskase Companies, Inc. (a Delaware corporation) and subsidiaries (the "Company"), which comprise the consolidated balance sheets as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income (or loss), changes in stockholders' equity, and cash flows for each of the three years in the period ended, and the related notes to the financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended in accordance with accounting principles generally accepted in the United States of America.

Basis for opinion

We conducted our audits of the consolidated financial statements in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of management for the financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date the financial statements are issued.

GT.COM

Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd (GTIL). GTIL and each of its member firms are separate legal entities and are not a worldwide partnership.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with US GAAS, we:

•  Exercise professional judgment and maintain professional skepticism throughout the audit.

•  Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

•  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

•  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

•  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Chicago, Illinois

March 28, 2024

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except for Number of Shares)

December 31, 2023

December 31, 2022

ASSETS
Current assets:
Cash and cash equivalents	$7,862	$8,783
Receivables, net	88,950	87,584
Inventories	111,310	103,172
Other current assets	42,674	40,152
Total current assets	250,796	239,691
Property, plant and equipment	436,372	416,628
Less accumulated depreciation	(302,027)	(274,781)
Property, plant and equipment, net	134,345	141,847
Right of use assets	22,309	24,520
Other assets, net	15,676	23,258
Intangible assets	15,799	16,808
Goodw ill	3,321	3,207
Deferred income taxes	18,597	22,261
Total Assets	$460,844	$471,592
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt	$21,747	$39,375
Accounts payable	44,768	43,377
Accrued liabilities	39,163	31,491
Short-term portion lease liabilities	4,777	4,851
Total current liabilities	110,454	119,094
Long-term debt, net of current maturities	111,738	122,521
Long-term liabilities	1,330	7,383
Accrued employee benefits	32,257	36,211
Deferred income taxes	3,021	3,405
Long-term lease liabilities	20,408	22,693
Stockholders' equity:
Common stock, $0.01 par value; 103,995,935 shares issued
and 103,190,665 outstanding	1,040	1,040
Paid in capital	182,343	182,343
Retained earnings	58,974	45,467
Less 805,270 treasury shares, at cost	(298)	(298)
Accumulated other comprehensive loss	(59,200)	(67,114)
Total Viskase stockholders' equity	182,859	161,438
Deficit attributable to non-controlling interest	(1,223)	(1,153)
Total stockholders' equity	181,636	160,285
Total Liabilities and Stockholders' Equity	$460,844	$471,592
See notes to consolidated financial statements

VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS

Year	Year
Ended	Ended
December	December
31, 2022	31, 2021
NET SALES	$430,834	$415,672
Cost of sales	356,701	343,636
GROSS MARGIN	74,133	72,036
Selling, general and administrative	52,436	50,283	48,169
Amortization of intangibles	1,606	1,576	1,755
Asset impairment charge	338	27	498
Restructuring expense	-	-	507
OPERATING INCOME	39,383	22,247	21,107
Interest income	-	5	-
Interest expense, net	12,018	8,433	6,157
Other expense, net	10,395	4,396	13,779
INCOME BEFORE INCOME TAXES	16,970	9,423	1,171
Income tax provision	3,534	7,139	4,527
NET INCOME (LOSS)	$13,436	$2,284	($3,356)
Less: net loss attributable to noncontrolling interests	(70)	(245)	(137)
Net income (loss) attributable to Viskase Companies, Inc	$13,506	$2,529	($3,219)
WEIGHTED AVERAGE COMMON SHARES
- BASIC AND DILUTED	103,190,665	103,190,665	103,190,665
PER SHARE AMOUNTS:
EARNINGS PER SHARE
- BASIC AND DILUTED	$0.13	$0.02	($0.03)
See notes to consolidated financial statements.

$445,984 352,221 93,763

Year

Ended December 31, 2023

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year	Year	Year
Ended	Ended	Ended
December	December	December
31, 2023	31, 2022	31, 2021
Net income (loss)	$13,436	$2,284	($3,356)
Other comprehensive income (loss), net of tax
Pension liability adjustment	2,634	11,304	9,914
Foreign currency translation adjustment	5,280	(4,779)	(4,902)
Other comprehensive income, net of tax	7,914	6,525	5,012
Comprehensive income	$21,350	$8,809	$1,656
Less: comprehensive loss attributable to noncontrolling
interests	(70)	(245)	(137)
Net comprehensive income attributable to Viskase
Companies, Inc	$21,420	$9,054	$1,793
See notes to consolidated financial statements.

VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Common	Paid in	Treasury	Retained
stock	capital	stock	earnings
Balance December 31, 2020	$1,040	$182,343	($298)	$46,157	($78,651)
Net loss	-	-	-	(3,219)	-
Foreign currency translation adjustment	-	-	-	-	(4,902)
Pension liability adjustment, net of tax	-	-	-	-	9,914
Balance December 31, 2021	$1,040	$182,343	($298)	$42,938	($73,639)
Net income (loss)	-	-	-	$2,529	-
Foreign currency translation adjustment	-	-	-	-	(4,779)
Pension liability adjustment, net of tax	-	-	-	-	11,304
Balance December 31, 2022	$1,040	$182,343	($298)	$45,467	($67,114)
Net income (loss)	-	-	-	13,506	-
Foreign currency translation adjustment	-	-	-	-	5,280
Pension liability adjustment, net of tax	-	-	-	-	2,634
Balance December 31, 2023	$1,040	$182,343	($298)	$58,973	($59,200)

Accumulated other	Total Viskase	Total
comprehensive	stockholders'	Non-controlling	stockholders'
loss	equity	Interest	equity
$150,591	($771)	$149,820
(3,219)	(137)	(3,356)
(4,902)	-	(4,902)
9,914	-	9,914
$152,384	($908)	$151,476
2,529	(245)	2,284
(4,779)	-	(4,779)
11,304	-	11,304
$161,438	$160,285
13,506	13,436
5,280	5,280
2,634	2,634
$182,858	$181,635

$

(1,153)

(70)

- - ($1,223)

See notes to consolidated financial statements.

VISKASE COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

Year	Year
Ended	Ended
December	December
31, 2022	31, 2021
Cash flows from operating activities:
Net income (loss)	$13,436	$2,284	($3,356)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization	25,223	27,303	27,994
Amortization of deferred financing fees	464	403	572
Deferred income taxes	3,241	(99)	(803)
Loss on disposition/impairment of assets	449	337	505
Bad debt and accounts receivable provision	175	187	277
Changes in operating assets and liabilities:
Receivables	598	(8,795)	2,926
Inventories	(5,934)	(13,019)	(7,102)
Other current assets	(1,104)	3,509	850
Accounts payable	480	9,109	1,264
Accrued current liabilities	6,508	(2,186)	(6,859)
Accrued employee benefits	(699)	(1,636)	(8,844)
Other assets	748	(4,349)	(3,070)
Other	580	(2,669)	(1,140)
Total adjustments	30,729	8,095	6,570
Net cash provided by operating activities	44,165	10,379	3,214
Cash flows from investing activities:
Capital expenditures	(14,470)	(22,336)	(17,234)
Proceeds from disposition of assets	10	149	9
Net cash used in investing activities	(14,460)	(22,187)	(17,225)
Cash flows from financing activities:
Deferred financing costs	(16)	(294)	(605)
Proceeds from short-term debt	10,101	14,000	13,000
Repayment of short-term debt	(30,240)	-	-
Repayment of long-term debt	(9,126)	(7,500)	(8,690)
Repayment of capital lease	(11)	(12)	(27)
Net cash (used in) provided by financing activities	(29,292)	6,194	3,678
Effect of currency exchange rate changes on cash	(1,334)	4,521	4,361
Net decrease in cash and equivalents	(921)	(1,093)	(5,972)
Cash and cash equivalents at beginning of period	8,783	9,876	15,848
Cash and cash equivalents at end of period	$7,862	$8,783	$9,876
Supplemental cash flow information:
Interest paid less capitalized interest	$11,418	$7,427	$5,217
Income taxes paid	$4,060	$7,324	$4,180
See notes to consolidated financial statements.

Ended December 31, 2023

Year

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands)

1. Summary of Significant Accounting Policy

Nature of Operations

Viskase Companies, Inc. together with its subsidiaries ("we" or the "Company") is a producer of non-edible cellulosic, fibrous and plastic casings used to prepare and package processed meat products, and provides value-added support services relating to these products, for some of the largest global consumer products companies. We were incorporated in Delaware in 1970. The Company operates ten manufacturing facilities in North America, Europe, South America, and Asia and, as a result, is able to sell its products in nearly one hundred countries throughout the world.

Seasonality

Historically, our domestic sales and profits have been seasonal in nature, increasing in the spring and summer months. Sales outside of the United States follow a relatively stable pattern throughout the year.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

The financial statements are prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America and include the use of estimates and assumptions that affect a number of amounts included in the Company's financial statements, including, among other things, pensions and other postretirement benefits and related disclosures, reserves for excess and obsolete inventory, allowance for doubtful accounts, and income taxes. Management bases its estimates on historical experience and other assumptions that we believe are reasonable. If actual amounts are ultimately different from previous estimates, the revisions are included in the Company's results for the period in which the actual amounts become known. Historically, the aggregate differences, if any, between the Company's estimates and actual amounts in any year have not had a significant effect on the Company's consolidated financial statements.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers cash equivalents to consist of all highly liquid debt investments purchased with an initial maturity of approximately three months or less. Due to the short-term nature of these instruments, the carrying values approximate the fair market value. Of the cash held on deposit in the U.S., approximately $252 of the cash balance was in excess of amounts insured by the Federal Deposit Insurance Corporation. The Company performs periodic evaluations of these institutions for relative credit standing and has not experienced any losses as a result of its cash concentration. Consequently, no significant concentrations of credit risk are considered to exist.