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 June 29, 1995
-------------------
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
----------
ENVIRODYNE INDUSTRIES, 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.)
701 Harger Road, Suite 190, Oak Brook, Illinois 60521
----------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 571-8800
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 August 11, 1995, there were 13,515,000 shares
outstanding of the registrant's Common Stock, $.01 par value.
<PAGE>
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 29, 1994 (1994 Form 10-K).
These quarterly financial statements should be read in conjunction
with the financial statements and the notes thereto included in the
1994 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.
<PAGE>
ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 29, December 29,
1995 1994
--------------- ------------
(unaudited)
(in thousands)
ASSETS
Current assets:
Cash and equivalents $ 6,291 $ 7,289
Receivables, net 95,460 86,868
Inventories 125,754 110,483
Other current assets 27,173 19,466
--------- ---------
Total current assets 254,678 224,106
Property, plant and
equipment, including those
under capital lease 527,129 506,099
Less accumulated depreciation
and amortization 56,537 35,761
--------- ---------
Property, plant
and equipment, net 470,592 470,338
Deferred financing costs 9,081 9,143
Other assets 44,446 47,181
Excess reorganization value 140,634 145,868
--------- ---------
$919,431 $896,636
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt including
current portion oflong-term
debt and obligation
under capital lease $ 14,798 $ 25,798
Accounts payable 42,455 34,335
Accrued liabilities 62,623 72,246
--------- ---------
Total current liabilities 119,876 132,379
Long-term debt including
obligation
under capital lease 534,298 489,358
Accrued employee benefits 56,851 56,217
Deferred and noncurrent
income taxes 80,671 83,333
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value;
none outstanding
Common stock, $.01 par value;
13,515,000 shares issued and
outstanding 135 135
Paid in capital 134,865 134,865
Accumulated (deficit) (15,020) (3,612)
Cumulative foreign currency
translation adjustments 7,755 3,961
--------- ---------
Total stockholders' equity 127,735 135,349
--------- ---------
$919,431 $896,636
======== ========
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
<PAGE>
<TABLE>
ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<CAPTION>
Three Months Three Months Six Months Six Months
Ended June Ended June Ended June Ended June
29, 1995 30, 1994 29, 1995 30, 1994
------------- -------------- ------------- ---------------
(in thousands, except for number of shares and per share amounts)
<S> <C> <C> <C> <C>
NET SALES $165,184 $150,788 $ 321,008 $293,381
COSTS AND EXPENSES
Cost of sales 122,083 108,083 235,772 210,202
Selling, general and administrative 29,107 29,582 58,643 56,500
Patent infringement settlement income 9,457 9,457
Amortization of intangibles
and excess reorganization value 3,905 3,841 7,815 7,687
-------- -------- -------- --------
OPERATING INCOME 10,089 18,739 18,778 28,449
Interest income 19 71 83 132
Interest expense 13,796 12,315 27,230 24,374
Other income, net 548 1,403 1,139 1,684
Minority interest in
loss of subsidiary 50
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (3,140) 7,898 (7,230) 5,941
Income tax provision (benefit) 177 4,450 (18) 5,000
-------- -------- -------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (3,317) 3,448 (7,212) 941
Extraordinary loss, net of tax 4,196 4,196
-------- -------- -------- --------
NET INCOME (LOSS) $ (7,513) $ 3,448 $(11,408) $ 941
======== ======== ======== =====
WEIGHTED AVERAGE
COMMON SHARES 13,515,000 13,500,000 13,515,000 13,500,000
PER SHARE AMOUNTS:
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM $(.25) $.26 $(.53) $.07
===== ==== ===== ====
NET INCOME (LOSS) $(.56) $.26 $(.84) $.07
===== ==== ===== ====
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
Six Months Ended
-----------------------------------
June 29, June 30,
1995 1994
------------ ------------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Income (loss) before extraordinary item $ (7,212) $ 941
Extraordinary (loss) on debt extinguishment (4,196)
-------- -------
Net income (loss) (11,408) 941
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization under capital lease 20,132 17,996
Amortization of intangibles and excess
reorganization value 7,815 7,687
Amortization of deferred financing fees and discount 1,031 729
Increase (decrease) in deferred and
noncurrent income taxes (3,705) 995
Loss on debt extinguishment 6,778
Foreign currency transaction (gain) (2,079) (2,659)
(Gain) on sales of property, plant and equipment (11) (2)
Changes in operating assets and liabilities:
Accounts receivable (6,130) (9,608)
Inventories (12,851) (11,585)
Other current assets (7,360) (5,777)
Accounts payable and accrued liabilities (3,834) 7,841
Other (25) 15
-------- -------
Total adjustments (239) 5,632
-------- -------
Net cash provided by (used in) operating
activities (11,647) 6,573
Cash flows from investing activities:
Capital expenditures (13,597) (15,967)
Proceeds from sale of property, plant and equipment 29 76
Purchase of minority interest in subsidiary (4,200)
-------- -------
Net cash (used in) investing activities (13,568) (20,091)
Cash flows from financing activities:
Proceeds from revolving loan and long-term borrowings 206,053 23,188
Deferred financing costs (7,667) (227)
Repayment of revolving loan, long-term borrowings
and capital lease obligations (173,494) (8,003)
-------- -------
Net cash provided by financing activities 24,892 14,958
Effect of currency exchange rate changes on cash (675) (526)
-------- -------
Net increase (decrease) in cash and equivalents (998) 914
Cash and equivalents at beginning of period 7,289 7,743
-------- -------
Cash, restricted cash and equivalents at end of period $ 6,291 $ 8,657
======= ========
---------------------------------------------------
Supplemental cash flow information:
Interest paid $33,373 $28,459
Income taxes paid $ 3,996 $ 2,715
<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. CHAPTER 11 REORGANIZATION PROCEEDINGS
On January 6, 1993, a group of bondholders filed an involuntary
petition for reorganization of Envirodyne Industries, Inc. under
Chapter 11 of the U.S. Bankruptcy Code. On January 7, 1993 Viskase
Corporation, Viskase Sales Corporation, Viskase Holding
Corporation, Clear Shield National, Inc., Sandusky Plastics of
Delaware, Inc., Sandusky Plastics, Inc. and Envirodyne Finance
Company each filed voluntary petitions under Chapter 11 of the U.S.
Bankruptcy Code in the United States Bankruptcy Court for the
Northern District of Illinois, Eastern Division (the Bankruptcy
Court). On December 17, 1993, the Bankruptcy Court confirmed the
First Amended Joint Plan of Reorganization as twice modified (Plan
of Reorganization) with respect to Envirodyne Industries, Inc.
(Envirodyne) and certain of its subsidiaries. The Plan of
Reorganization was consummated and Envirodyne and certain of its
subsidiaries emerged from Chapter 11 on December 31, 1993
(Effective Date). For accounting purposes, the Plan of
Reorganization was deemed to be effective as of December 31, 1993.
The Plan of Reorganization provided for the initial issuance of
approximately 13,500,000 shares of Envirodyne common stock,
warrants to purchase an additional 1,500,000 shares (subject to
adjustment) and $219,262,000 principal amount of 10-1/4% Senior
Notes Due 2001 (10-1/4% Notes).
Holders of allowed general unsecured claims of Envirodyne (as
opposed to subsidiaries of Envirodyne) became entitled to receive
32.28 shares of common stock for each $500 amount of their
prepetition claims, or a total of 8,070 shares of common stock,
representing .06% of the common stock initially issued pursuant to
the Plan of Reorganization. These claims totaled approximately
$125,000. If the allowed amount of general unsecured claims of
Envirodyne exceeds $125,000, for example upon the resolution of
disputed claims, additional shares of common stock will have to be
issued to the holders of allowed general unsecured claims of
Envirodyne in order to provide equitable allocation of value among
Envirodyne's unsecured creditors under the Plan of Reorganization.
Such additional shares of common stock would be distributed with
respect to allowed general unsecured claims of Envirodyne as
follows: (i) approximately 2.58 additional shares per $500 in
claims in the event allowed general unsecured claims of Envirodyne
are between $125,000 and $25,000,000; (ii) approximately 5.61
additional shares per $500 in claims in the event allowed general
unsecured claims of Envirodyne are between $25,000,000 and
$50,000,000; (iii) approximately 9.22 additional shares per $500 in
claims in the event allowed general unsecured claims of Envirodyne
are between $50,000,000 and $75,000,000; and (iv) approximately
13.58 additional shares per $500 in claims in the event allowed
general unsecured claims of Envirodyne are between $75,000,000 and
$100,000,000. Refer to Note 5 for a discussion of disputed claims
which, if determined adversely to Envirodyne, would result in the
issuance of common stock.
The Company accounted for the reorganization using the principles
of fresh start reporting in accordance with the American Institute
of Certified Public Accountants Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization under the
Bankruptcy Code." Accordingly, all assets and liabilities were
restated to reflect their reorganization value. A reorganization
value of the Company's equity of $135,000,000 was based on the
consideration of many factors and various valuation methods,
including discounted cash flows, comparable multiples of earnings
and other applicable measurements and valuation techniques believed
by management and its financial advisors to be representative of
the Company's business and industry. The excess of the
reorganization value over the fair value of net assets and
liabilities has been reported as excess reorganization value and is
being amortized over a fifteen-year period.
2. INVENTORIES
Inventories consisted of:
June 29, December 29,
1995 1994
----------- -------------
(in thousands)
Raw materials $ 23,378 $ 20,358
Work in process 41,250 37,613
Finished products 61,126 52,512
-------- --------
$125,754 $110,483
======== ========
Approximately 52% of the inventories at June 29, 1995 were valued
at Last-In, First-Out (LIFO). These LIFO values exceeded current
manufacturing cost by approximately $3.7 million at June 29, 1995.
3. DEBT OBLIGATIONS
On June 20, 1995, Envirodyne completed the sale of $160,000,000
aggregate principal amount of senior secured notes to certain
institutional investors in a private placement. The senior secured
notes were issued pursuant to an indenture dated June 20, 1995
(Indenture) and consist of (i) $151,500,000 of 12% Senior Secured
Notes due 2000 and (ii) $8,500,000 of Floating Rate Senior Secured
Notes due 2000 (collectively, the Senior Secured Notes).
Envirodyne used the net proceeds of the offering primarily to (i)
repay the Company's $86,125,000 domestic term loan, (ii) repay the
$68,316,000 of obligations under the Company's domestic and foreign
revolving loans and (iii) pay transaction fees and expenses.
Concurrently with the June 20, 1995 placement, Envirodyne entered
into a new $20,000,000 domestic revolving credit facility
(Revolving Credit Facility) and a new $28,000,000 letter of credit
facility (Letter of Credit Facility). The Senior Secured Notes and
the obligations under the Revolving Credit Facility and the Letter
of Credit Facility are guaranteed by Envirodyne's significant
domestic subsidiaries and secured by a collateral pool (Collateral
Pool) comprised of: (i) all domestic accounts receivable (including
intercompany receivables) and inventory; (ii) all patents,
trademarks and other intellectual property (subject to non-
exclusive licensing agreements); (iii) substantially all domestic
fixed assets (other than assets subject to a lease agreement with
General Electric Capital Corporation); and (iv) a senior pledge of
100% of the capital stock of Envirodyne's significant domestic
subsidiaries and 65% of the capital stock of Viskase S.A. Such
guarantees and security are shared by the holders of the Senior
Secured Notes and the holders of the obligations under the
Revolving Credit Facility on a pari passu basis pursuant to an
---- -----
intercreditor agreement. Pursuant to such intercreditor agreement,
the security interest of the holders of the obligations under the
Letter of Credit Facility has priority over all other liens on the
Collateral Pool.
The $151,500,000 tranche of Senior Secured Notes bears interest at
a rate of 12% per annum and the $8,500,000 tranche bears interest
at a rate equal to the six month London Interbank Offered Rate
(LIBOR) plus 575 basis points. The initial interest rate on the
floating rate tranche was approximately 11.7%. The interest rate
on the floating rate tranche is reset semi-annually on June 15 and
December 15. Interest on the Senior Secured Notes is payable each
June 15 and December 15, commencing December 15, 1995.
On June 15, 1999, $80,000,000 of the aggregate principal amount of
the Senior Secured Notes is subject to a mandatory redemption. The
remaining principal amount outstanding will mature on June 15,
2000.
In the event the Company has Excess Cash Flow (as defined) in
excess of $5,000,000 in any fiscal year, beginning with fiscal
1995, Envirodyne will be required to make an offer to purchase
Senior Secured Notes together with any borrowed money obligations
outstanding under the Revolving Credit Facility, on a pro rata
basis, in an amount equal to the Excess Cash Flow at a purchase
price of 100% plus any accrued interest to the date of purchase.
The Senior Secured Notes are redeemable, in whole or from time to
time in part, at Envirodyne's option, at the greater of (i) the
outstanding principal amount or (ii) the present value of the
expected future cash flows from the Senior Secured Notes discounted
at a rate equal to the Treasury Note yield corresponding closest to
the remaining average life of the Senior Secured Notes at the time
of prepayment plus 100 basis points.
The Indenture contains covenants with respect to Envirodyne and its
subsidiaries limiting (subject to a number of important
qualifications), among other things, (i) the ability to pay
dividends or redeem or repurchase common stock, (ii) the incurrence
of indebtedness, (iii) the creation of liens, (iv) certain
affiliate transactions and (v) the ability to consolidate with or
merge into another entity and to dispose of assets.
Borrowings under the Revolving Credit Facility bear interest at a
rate per annum equal to the three month London Interbank Offered
Rate (LIBOR) on the first day of each calendar quarter plus 300
basis points. The Revolving Credit Facility expires on June 20,
1998.
Envirodyne has entered into $50 million of interest rate protection
agreements that cap the Company's LIBOR interest component
(excludes spread) at an average rate of 6.50% until January 1997.
The fair value of interest rate cap agreements is estimated by
obtaining quotes from banks. At June 29, 1995, the carrying amount
and estimated fair value of interest rate cap agreements were
$868,000 and $163,000, respectively.
The Letter of Credit Facility expires on June 20, 1998. Fees on
the outstanding amount of letters of credit are 2.0% per annum,
with an issuance fee of 0.5% on the face amount of the letter of
credit. There is a commitment fee of 0.5% per annum on the unused
portion of the Letter of Credit Facility plus an issuance fee.
Had the refinancing taken place at the beginning of 1995, the pro
forma Envirodyne consolidated statement of operations would have
been:
(in thousands, except for number of shares and per share amounts)
Pro forma Six Months
Ended June 29, 1995
--------------------
Net sales $321,008
Cost of sales 235,772
Selling, general and administrative 58,643
Amortization of intangibles and
excess reorganization cost 7,815
---------
Operating income 18,778
Interest income 83
Interest expense 29,726
Other expense (income), net 1,139
---------
(Loss) before income taxes (9,726)
Income tax (benefit) (991)
---------
Net (loss) $ (8,735)
========
Weighted average common shares 13,515,000
Net (loss) per share $(.65)
=====
The pro forma information reflects the change in interest expense
and related tax effect due to the issuance of $160 million
principal amount of Senior Secured Notes and refinancing of the
Company's bank debt.
The $219,262,000 principal amount of 10-1/4% Notes were issued
pursuant to an Indenture dated as of December 31, 1993 (10-1/4%
Note Indenture) between Envirodyne and Bankers Trust Company, as
Trustee. The 10-1/4% Notes are the unsecured senior obligations of
Envirodyne, bear interest at the rate of 10-1/4% per annum, payable
on each June 1 and December 1, and mature on December 1, 2001. The
10-1/4% Notes are redeemable, in whole or from time to time in
part, at the option of Envirodyne, at the percentages of principal
amount specified below plus accrued and unpaid interest to the
redemption date, if the 10-1/4% Notes are redeemed during the
twelve-month period commencing on January 1 of the following years:
Year Percentage
---- ----------
1995 105%
1996 104%
1997 103%
1998 102%
1999 101%
2000 and thereafter 100%
The 10-1/4% Note Indenture contains covenants with respect to
Envirodyne and its subsidiaries limiting (subject to a number of
important qualifications), among other things, (i) the ability to
pay dividends on or redeem or repurchase capital stock, (ii) the
incurrence of indebtedness, (iii) certain affiliate transactions
and (iv) the ability of the Company to consolidate with or merge
with or into another entity or to dispose of substantially all its
assets.
Outstanding short-term and long-term debt consisted of:
June December
29, 1995 29, 1994
---------- ----------
(in thousands)
Short-term debt,
current maturity of long-term
debt, and capital lease
obligation:
Current maturity of Bank Term Loan $11,100
Current maturity of
Viskase Capital Lease Obligation $ 6,012 5,450
Current maturity of
Viskase Limited Term Loan (5.2%) 2,056 1,882
Other 6,730 7,366
------- -------
Total short-term debt $14,798 $25,798
======= =======
Long-term debt:
Bank Credit Agreement:
Term Loan due 1999 $ 80,575
Revolving Loan due 1999 32,524
Revolving loans (9.3%) $ 4,000
12% Senior Secured Notes due 2000 160,000
10.25% Senior Notes due 2001 219,262 219,262
Viskase Capital Lease Obligation 141,182 147,194
Viskase Limited Term Loan (5.2%) 8,367 8,466
Other 1,487 1,337
-------- --------
Total long-term debt $534,298 $489,358
======== ========
The fair value of the Company's debt obligation (excluding capital
lease obligation) is estimated based upon the quoted market prices
for the same or similar issues or on the current rates offered to
the Company for the debt of the same remaining maturities. At June
29, 1995, the carrying amount and estimated fair value of debt
obligations (excluding capital lease obligation) were $401,690 and
$348,741, respectively.
On December 28, 1990, Viskase and GECC entered into a sale and
leaseback transaction. The sale and leaseback of assets included
the production and finishing equipment at Viskase's four domestic
casing production and finishing facilities. The facilities are
located in Chicago, Illinois; Loudon, Tennessee; Osceola, Arkansas
and Kentland, Indiana. Viskase, as the Lessee under the relevant
agreements, will continue to operate all of the facilities. The
lease has been accounted for as a capital lease.
The principal terms of the sale and leaseback transaction include:
(a) a 15 year basic lease term (plus selected renewals at
Viskase's option), (b) annual rent payments in advance beginning in
February 1991, and (c) a fixed price purchase option at the end of
the basic 15 year term and fair market purchase options at the end
of the basic term and each renewal term. Further, the Lease
Documents contain covenants requiring maintenance by the Company of
certain financial ratios and restricting the Company's ability to
pay dividends, make payments to affiliates, make investments and
incur indebtedness.
Annual rental payments under the Lease will be approximately $19.2
million through 1997, $21.4 million in 1998 and $23.5 million
through the end of the basic 15-year term. Viskase is required to
provide credit support consisting of a standby letter of credit in
an amount up to one year's rent through at least 1997. This credit
support can be reduced up to $4,000,000 currently if the Company
achieves and maintains certain financial ratios. As of June 29,
1995, the Company had met the required financial ratios and the
letter of credit has been reduced by $4,000,000. The letter can be
further reduced in 1997 or eliminated after 1998 if the Company
achieves and maintains certain financial ratios. Envirodyne and
its other principal subsidiaries guaranteed the obligations of
Viskase under the Lease.
The following is a schedule of minimum future lease payments under
the capital lease together with the present value of the net
minimum lease payments as of June 29, 1995:
Year ending December (000's)
---------------
1996 $ 19,227
1997 19,227
1998 21,363
1999 23,499
2000 23,499
Thereafter 117,495
--------
Net minimum lease payments 224,310
Less:
Amount representing interest (77,116)
--------
$147,194
========
The 1995 rental payment of $19,227,000 was paid on February 28,
1995. Principal payments under the capital lease obligation for
the years ended 1995 through 1999 range from approximately $5
million to $13 million.
Aggregate maturities of remaining long-term debt, after reflecting
the June 20, 1995 refinancing, for each of the next five fiscal
years are (in thousands):
Total
-------------
1995 (last six months only) $ 3,181
1996 8,258
1997 8,880
1998 11,920
1999 95,082
4. SUBSIDIARY GUARANTORS
Envirodyne'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, Clear
Shield National, Inc., Sandusky Plastics, Inc. and Sandusky
Plastics of Delaware, Inc., each a direct or indirect wholly-owned
subsidiary of Envirodyne and each a "Guarantor." These subsidiaries
represent substantially all of the operations of Envirodyne
conducted in the United States. The remaining subsidiaries of
Envirodyne 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
capital stock of Viskase S.A. The Subsidiary Guarantees and
security are shared with the lenders under the Revolving 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.
In accordance with previous positions taken by the Securities and
Exchange Commission, the following consolidating condensed finan-
cial data illustrate the composition of the combined Guarantors.
Separate complete financial statements of the respective Guarantors
would not provide additional material information that would be
useful in assessing the financial composition of the Guarantors.
No single Guarantor has any significant legal restrictions on the
ability of investors or creditors to obtain access to its assets in
event of default on the Subsidiary Guarantee other than its
subordination to senior indebtedness described above.
Investments in subsidiaries are accounted for by the parent on the
equity method for purposes of the supplemental consolidating
presentation. Earnings of subsidiaries are therefore reflected in
the parent's investment accounts and earnings. The principal
elimination entries eliminate investments in subsidiaries and
intercompany balances and transactions.
<PAGE>
<PAGE>
ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
FOR SIX MONTHS ENDED JUNE 29, 1995
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations (1) Total
-------- ------------ ------------ ------------ -------------
(in thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 3,062 $ (549) $ 3,778 $ 6,291
Receivables, net 73,992 55,411 $(33,943) 95,460
Inventories 73,441 54,386 (2,073) 125,754
Other current assets 663 18,948 7,562 27,173
------- ------- -------- -------- --------
Total current assets 3,725 165,832 121,137 (36,016) 254,678
Property, plant and equipment including
those under capital lease 260 377,376 149,493 527,129
Less accumulated depreciation
and amortization 113 41,002 15,422 56,537
------- ------- -------- -------- --------
Property, plant and equipment, net 147 336,374 134,071 470,592
Deferred financing costs 9,044 37 9,081
Other assets 42,991 1,455 44,446
Investment in subsidiaries 80,010 92,020 (172,030)
Excess reorganization value 98,096 42,538 140,634
------- ------- -------- -------- --------
$ 92,926 $735,313 $299,238 $(208,046) $919,431
======== ======== ======== ========= ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt including current
portion of long-term debt and
obligation under capital lease $8,236 $6,562 $14,798
Accounts payable $ 113 26,051 50,234 $ (33,943) 42,455
Accrued liabilities 9,669 29,052 23,902 62,623
------- ------- -------- -------- --------
Total current liabilities 9,782 63,339 80,698 (33,943) 119,876
Long-term debt including obligations
under capital lease 383,262 141,804 9,232 534,298
Accrued employee benefits 52,684 4,167 56,851
Deferred and noncurrent income taxes 22,726 33,785 24,160 80,671
Other long-term liabilities (2) (450,579) 399,710 50,832 37
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value;
none outstanding
Common stock, $.01 par value;
13,515,000 shares issued and
outstanding 135 3 32,738 (32,741) 135
Paid in capital 134,865 46,785 50,560 (97,345) 134,865
Accumulated earnings (deficit) (15,020) (2,797) 43,544 (40,747) (15,020)
Cumulative foreign currency
translation adjustments 7,755 3,307 (3,307) 7,755
------- ------- -------- -------- --------
Total stockholders' equity 127,735 43,991 130,149 (174,140) 127,735
------- ------- -------- -------- --------
$ 92,926 $735,313 $299,238 $(208,046) $919,431
======== ======== ======== ========= ========
<FN>
(1) Elimination of intercompany receivables, payables and investment accounts.
(2) Includes intercompany loans.
/TABLE
<PAGE>
<PAGE>
ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 29, 1995
<TABLE>
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
------- ------------ ------------ ------------ ----------
(in thousands)
<S> <C> <C> <C> <C> <C>
NET SALES $211,180 $129,214 $(19,386) $321,008
COSTS AND EXPENSES
Cost of sales 154,687 100,359 (19,274) 235,772
Selling, general and administrative $ 3,125 33,391 22,127 58,643
Amortization of intangibles and
excess reorganization value 6,133 1,682 7,815
------- ------- ------- ------- --------
OPERATING INCOME (LOSS) (3,125) 16,969 5,046 (112) 18,778
Interest income 4 38 41 83
Interest expense 18,232 7,033 1,965 27,230
Intercompany interest expense (income) (18,441) 17,000 1,441
Management fees (income) (3,700) 3,219 481
Other expense (income), net (2,714) 9 580 986 (1,139)
Equity Loss (income) in subsidiary 10,072 (10,072)
------- ------- ------- ------- --------
INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM (6,570) (10,254) 620 8,974 (7,230)
Income tax provision (benefit) 1,332 (2,663) 1,313 (18)
------- ------- ------- ------- --------
INCOME (LOSS) BEFORE EXTRAORDINARY
ITEM (7,902) (7,591) (693) 8,974 (7,212)
Extraordinary loss, net of tax 3,506 690 4,196
------- ------- ------- ------- --------
NET INCOME (LOSS) $(11,408) $ (7,591) $ (1,383) $ 8,974 $(11,408)
======== ======== ======== ======== ========
</TABLE>
<TABLE>
CONSOLIDATING CASH FLOWS
FOR SIX MONTHS ENDED JUNE 29, 1995
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ----------
(in thousands)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities $(34,518) $ 13,465 $ 9,406 $(11,647)
Cash flows from investing activities:
Capital expenditures (33) $(10,289) (3,275) (13,597)
Proceeds from sale of property,
plant and equipment 29 29
------- -------- ------- ------- --------
Net cash (used in)
investing activities (33) (10,289) (3,246) (13,568)
Cash flows from financing activities:
Proceeds from revolving loan and
long term borrowings 164,000 42,053 206,053
Deferred financing costs (7,667) (7,667)
Repayment of revolving loan,
long-term borrowings and
capital lease obligations (119,275) (5,578) (48,641) (173,494)
------- -------- ------- ------- --------
Net cash provided by (used in)
financing activities 37,058 (5,578) (6,588) 24,892
Effect of currency exchange
rate changes on cash (675) (675)
------- -------- ------- ------- --------
Net increase (decrease) in cash
and cash equivalents 2,507 (2,402) (1,103) (998)
Cash and cash equivalents at
beginning of period 555 1,853 4,881 7,289
------- -------- ------- ------- --------
Cash and cash equivalents at
end of period $ 3,062 $ (549) $3,778 $6,291
======= ====== ====== ======= ======
/TABLE
<PAGE>
<TABLE>
ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF OPERATIONS
FOR SIX MONTHS ENDED JUNE 30, 1994
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
NET SALES $206,154 $101,885 $ (14,658) $293,381
COSTS AND EXPENSES
Cost of sales 147,087 77,430 (14,315) 210,202
Selling, general and administrative $ 3,182 38,455 14,863 56,500
Patent infringement settlement income 9,457 9,457
Amortization of intangibles and
excess reorganization value 7,388 299 7,687
------- -------- ------- ------- --------
OPERATING INCOME (LOSS) (3,182) 22,681 9,293 (343) 28,449
Interest income 3 20 109 132
Interest expense 15,628 7,012 1,734 24,374
Intercompany interest expense (income) (16,168) 14,168 2,000
Management fees (income) (3,700) 3,225 475
Other expense (income), net (2,640) 126 830 (1,684)
Equity loss (income) in subsidiary 1,315 (1,315)
Minority interest in subsidiary 50 50
------- -------- ------- ------- --------
INCOME (LOSS) BEFORE INCOME TAXES 2,386 (1,830) 4,363 1,022 5,941
Income tax provision (benefit) 1,445 556 2,999 5,000
------- -------- ------- ------- --------
NET INCOME (LOSS) $ 941 $ (2,386) $ 1,364 $ 1,022 $ 941
===== ======== ======= ======== =======
<FN>
</TABLE>
<TABLE>
CONSOLIDATING CASH FLOWS
FOR SIX MONTHS ENDED JUNE 30, 1994
<CAPTION>
Guarantor Nonguarantor Consolidated
Parent Subsidiaries Subsidiaries Eliminations Total
--------- ------------ ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities $(15,917) $21,752 $ 738 $ 6,573
Cash flows from investing activities:
Capital expenditures (15) (10,205) (5,747) (15,967)
Proceeds from sales of property,
plant and equipment 76 76
Purchase of minority interest
in subsidiary (4,200) (4,200)
------- -------- ------- ------- --------
Net cash (used in)
investing activities (15) (14,329) (5,747) (20,091)
Cash flows from financing activities:
Proceeds from revolving loan and
long term borrowings 15,050 8,138 23,188
Deferred financing costs (174) (53) (227)
Repayment of revolving loan,
long-term borrowings and
capital lease obligations (5,058) (2,945) (8,003)
------- -------- ------- ------- --------
Net cash provided by (used in)
financing activities 14,876 (5,058) 5,140 14,958
Effect of currency exchange
rate changes on cash (526) (526)
------- -------- ------- ------- --------
Net increase (decrease) in cash
and cash equivalents (1,056) 2,365 (395) 914
Cash and cash equivalents
at beginning of period 930 1,922 4,891 7,743
------- -------- ------- ------- --------
Cash and cash equivalents
at end of period $(126) $4,287 $4,496 $8,657
===== ====== ====== ======= ======
</TABLE>
<PAGE>
<PAGE>
5. CONTINGENCIES
A class action lawsuit by former employees of subsidiary
corporations comprising most of the Company's former steel and
mining division (SMD) was pending as of the commencement of the
bankruptcy case in which the plaintiffs are seeking substantial
damages. The Company and the plaintiffs are currently
participating in a mediation process to attempt to resolve the
case. Envirodyne denies liability and in the absence of successful
mediation or other settlement negotiations will continue to
vigorously defend these claims. However, inasmuch as the Plan of
Reorganization provides for the issuance of common stock with
respect to prepetition Envirodyne general unsecured claims (refer
to Note 1), an adverse finding of liability and damages could
result in substantial dilution to the holders of the common stock.
Litigation has been initiated with respect to events arising out of
the bankruptcy cases and the 1989 acquisition of Envirodyne by
Emerald Acquisition Corporation (Emerald) with respect to which,
although Envirodyne is not presently a party to such litigation,
certain defendants have asserted indemnity rights against
Envirodyne. In ARTRA Group Incorporated v. Salomon Brothers
Holding
----------------------------------------------------
Company Inc, Salomon Brothers Inc, D.P. Kelly & Associates, L.P.,
----------------------------------------------------------------
Donald P. Kelly, Charles K. Bobrinskoy, James L. Massey, William
----------------------------------------------------------------
Rifkind and Michael Zimmerman, Case No. 93 A 1616, United States
-----------------------------
Bankruptcy Court for the Northern District of Illinois, Eastern
Division (Bankruptcy Court), ARTRA Group Incorporated (ARTRA)
alleges breach of fiduciary duty and tortious inference in
connection with the negotiation and consummation of the Plan of
Reorganization. In ARTRA Group Incorporated v. Salomon Brothers
--------------------------------------------
Holding Company Inc, Salomon Brothers Inc, D.P. Kelly & Associates,
------------------------------------------------------------------
L.P., Donald P. Kelly, Charles K. Bobrinskoy and Michael Zimmerman,
------------------------------------------------------------------
Case No. 93 L 2198, Circuit Court of the Eighteenth Judicial
Circuit, County of DuPage, State of Illinois, ARTRA alleges
negligence, breach of fiduciary duty and duty of loyalty,
fraudulent misrepresentation and breach of contract in connection
with the 1989 acquisition of Envirodyne by Emerald. The plaintiff
seeks damages in the total amount of $136,200,000 plus interest and
punitive damages of $408,600,000. D.P. Kelly & Associates, L.P.
and Messrs. Kelly, Bobrinskoy, Massey, Rifkind and Zimmerman have
asserted common law and contractual rights of indemnity against
Envirodyne for attorneys' fees, costs and any ultimate liability
relating to the claims set forth in the complaints. Envirodyne is
continuing its evaluation of the merits of the indemnification
claims against Envirodyne and the underlying claims in the
litigation. Upon the undertaking of D.P. Kelly & Associates, L.P.
to repay such funds in the event it is ultimately determined that
there is no right to indemnity, Envirodyne is advancing funds to
D.P. Kelly & Associates, L.P. and Mr. Kelly for the payment of
legal fees in the case pending before the Bankruptcy Court.
Although the case is in a preliminary stage and the Company is not
a party thereto, the Company believes that the plaintiff's claims
raise similar factual issues to those raised in the Envirodyne
bankruptcy cases which, if resolved in a manner similar to that in
the Envirodyne bankruptcy cases, would render it difficult for the
plaintiff to establish liability. Accordingly, the Company
believes that the indemnification claims would not have a material
adverse effect upon the business or financial position of the
Company, even if the claimants were successful in establishing
their right to indemnification.
In the Envirodyne bankruptcy case the United States Environmental
Protection Agency (USEPA), the Economic Development Authority
(EDA), and Navistar International Transportation Corp. (Navistar
Transportation) filed proofs of claim with respect to unreimbursed
environmental response costs at the location of the former SMD
operations. Envirodyne and Navistar Transportation have negotiated
a definitive settlement agreement, subject to final approval by the
FDA and USEPA, Bankruptcy Court approval and public comment
pursuant to regulations applicable to EDA and USEPA, to settle the
claims against Envirodyne through the payment of $5,000 to the
USEPA and the issuance of 64,460 shares of common stock to Navistar
Transportation. In the event that the settlement is not completed,
Envirodyne believes that it has valid defenses to the claims and
will continue its objections to the claims. To the extent that
USEPA, EDA or Navistar Transportation were able to establish
liability and damages as to their respective proofs of claim, such
parties would receive Common Stock under the Plan of Reorganization
in satisfaction of their claims.
Certain of Envirodyne's stockholders prior to the acquisition of
Envirodyne by Emerald failed to exchange their certificates
representing old Envirodyne common stock for the $40 per share cash
merger consideration specified by the applicable acquisition
agreement. In the Envirodyne bankruptcy case, Envirodyne is
seeking to equitably subordinate the interests of the holders of
untendered shares, in which event such holders would receive no
distribution pursuant to the Plan of Reorganization. The
Bankruptcy Court granted Envirodyne's motion for summary judgment
to equitably subordinate the holders of untendered shares. The
United States District Court for the Northern District of Illinois
has affirmed the Bankruptcy Court's summary judgment. If such
holders were nonetheless ultimately successful in a further appeal
of this matter, Envirodyne believes that the maximum number of
shares of common stock that it would be required to issue to such
claimants is approximately 106,000.
Clear Shield National, Inc. and some of its employees have received
subpoenas from the Antitrust Division of the United States
Department of Justice relating to a grand jury investigation of the
disposable plastic cutlery industry. Clear Shield National, Inc.
is cooperating fully with the investigation.
The Company and its subsidiaries are involved in various legal
proceedings arising out of its business and other environmental
matters, none of which is expected to have a material adverse
effect upon its results of operations, cash flows or financial
position.<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
The accompanying management's discussion and analysis of financial
condition and results of operations should be read in conjunction
with the following table:
Three Months Ended
---------------------------
June 29, June 30,
1995 1994
----------- -----------
(in thousands)
(unaudited)
Net sales:
Food packaging products $144,261 $133,013
Disposable foodservice supplies 20,923 17,775
Other and eliminations
-------- --------
$165,184 $150,788
======== ========
Operating income:
Food packaging products $ 9,958 $18,922
Disposable foodservice supplies 1,683 1,374
Other and eliminations (1,552) (1,557)
-------- --------
$10,089 $18,739
======== ========
Depreciation and amortization
under capital lease and amortization
of intangible expense:
Food packaging products $12,897 $11,495
Disposable foodservice supplies 1,133 1,327
Other 21 15
-------- --------
$14,051 $12,837
======== ========
Capital expenditures:
Food packaging products $5,278 $7,563
Disposable foodservice supplies 655 1,042
Other 33 8
-------- --------
$5,966 $8,613
======== ========
Results of Operations
---------------------
The Company's net sales for the first six months and second quarter
of 1995 were $321.0 million and $165.2 million, respectively, which
represented an increase of 9.4% and 9.5% over the comparable
periods of 1994, respectively. Second quarter net sales at Viskase
increased by 11.1% over the prior year due to the expansion of
European and Latin American sales, selected price increases, strong
worldwide film sales, combined with the favorable effects of
foreign currency translation. Second quarter net sales at Sandusky
declined 19.0% due to the loss of Scott Paper Company's
premoistened baby wipe container business, combined with an 11.8%
reduction in dairy and deli container sales. The loss in container
sales is primarily attributed to a shift in demand from
thermoformed to injection molded containers. The Company has
purchased injection molding equipment that will increase capacity.
This effort is expected to substantially contribute to improving
the Company's competitiveness in this market. Second quarter net
sales at Clear Shield increased 17.7% from the prior year primarily
due to selling price increases.
Operating income for the first six months and second quarter of
1995 was $18.8 million and $10.1 million, respectively,
representing decreases of $9.7 million and $8.7 million,
respectively, from the comparable periods of 1994. The operating
income decline for the first six months and second quarter from the
prior year is the result of 1994 benefitting from a net $8.7
million settlement of a patent infringement suit. In addition, for
the first six months of 1995 the Company continued to experience
resin price increases, price competition in domestic and foreign
markets, coupled with additional selling, general and
administrative expenses resulting from strategic expansions in
foreign markets, including Europe, Latin America and Australia and
the decline in Sandusky's sales, partially offset by the
consolidation of manufacturing operations at its Sandusky, Ohio
facility.
External factors affecting casing sales in both the domestic and
foreign markets include a general softness in hot dog sales in the
U.S. and a weakening of processed meat sales in Europe. In
addition, Viscofan, S.A., a Spanish small diameter casing producer
entered the U.S. market in November 1994. Although the Company has
yet to experience any significant volume loss to Viscofan,
management believes that Viskase will experience further pricing
pressures as a result of Viscofan's entrance into the domestic
market.
Net interest expense for the six months period totaled $27.2
million representing an increase of $2.9 million from the first six
months of 1994. The increase is primarily the result of both
increased borrowing and higher interest rates on the term and
revolving loan facilities.
Other income of $1.1 million and $1.7 million in the first six
months of 1995 and 1994, respectively, consists principally of
foreign currency transaction gains and losses.
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of," was issued in March 1995 and established
financial accounting and reporting standards for the impairment of
long-lived assets and certain identifiable intangibles to be
disposed of. The Company is not required to adopt this statement
until the first quarter of fiscal year 1996, although earlier
adoption is permitted. The adoption of this statement is not
expected to have a significant impact on the Company's income from
continuing operations nor cash flows.
The tax benefit for the first six months resulted from the benefit
of U.S. losses partially offset by the provision related to income
from foreign subsidiaries. Due to the permanent differences in the
U.S. resulting from non-deductible amortization and foreign losses
for which no tax benefit is provided, a benefit of $18 thousand was
provided on a loss before income taxes and extraordinary items of
$7.2 million. The U.S. tax benefit is recorded as a reduction of
the deferred tax liability and does not result in a refund of
income taxes.
The extraordinary loss represents the write-off of unamortized
financing fees related to the Company's senior secured bank
facility that was refinanced by the private placement. The
extraordinary loss of $4.2 million is net of a tax benefit of $2.6
million. (Refer to Part I, Item I, Note 3 of Notes to Consolidated
Financial Statements.)
Liquidity and Capital Resources
-------------------------------
On June 20, 1995, Envirodyne completed the sale of $160,000,000
aggregate principal amount of senior secured notes to certain
institutional investors in a private placement. The senior secured
notes were issued pursuant to an indenture dated June 20, 1995
(Indenture) and consist of (i) $151,500,000 of 12% Senior Secured
Notes due 2000 and (ii) $8,500,000 of Floating Rate Senior Secured
Notes due 2000 (collectively, the Senior Secured Notes).
Envirodyne used the net proceeds of the offering primarily to (i)
repay the Company's $86,125,000 domestic term loan, (ii) repay the
$68,316,000 of obligations under the Company's domestic and foreign
revolving loans and (iii) pay transaction fees and expenses.
Concurrently with the June 20, 1995 placement, Envirodyne entered
into a new $20,000,000 domestic revolving credit facility
(Revolving Credit Facility) and a new $28,000,000 letter of credit
facility (Letter of Credit Facility). The Senior Secured Notes and
the obligations under the Revolving Credit Facility and the Letter
of Credit Facility are guaranteed by Envirodyne's significant
domestic subsidiaries and secured by a collateral pool (Collateral
Pool) comprised of: (i) all domestic accounts receivable (including
intercompany receivables) and inventory; (ii) all patents,
trademarks and other intellectual property (subject to non-
exclusive licensing agreements); (iii) substantially all domestic
fixed assets (other than assets subject to a lease agreement with
General Electric Capital Corporation); and (iv) a senior pledge of
100% of the capital stock of Envirodyne's significant domestic
subsidiaries and 65% of the capital stock of Viskase S.A. Such
guarantees and security are shared by the holders of the Senior
Secured Notes and the holders of the obligations under the
Revolving Credit Facility on a pari passu basis pursuant to an
---- -----
intercreditor agreement. Pursuant to such intercreditor agreement,
the security interest of the holders of the obligations under the
Letter of Credit Facility has priority over all other liens on the
Collateral Pool.
The Company finances its working capital needs through a
combination of cash generated through operations and borrowings
under the Revolving Credit Facility. 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 which may be established in the discretion of the lenders.
The available borrowing capacity under the Revolving Credit
Facility was approximately $16 million at June 29, 1995.
The Company anticipates that its operating cash flow will be
sufficient to meet its operating expenses and to service its
interest payments on the Senior Secured Notes and its other
outstanding indebtedness. The Company will be required to satisfy
its $80 million mandatory redemption obligation with respect to the
Senior Secured Notes in 1999 and to pay the remaining principal
amount of the Senior Secured Notes in 2000. Additionally, the
Company's 10.25% Notes, of which $219.3 million principal amount is
outstanding, will mature in December 2001. The Company expects
that in order to make these payments it will be required to pursue
one or more alternative strategies, such as refinancing its
indebtedness, selling additional equity capital, reducing or
delaying capital expenditures, or selling assets. There can be no
assurance that any of these strategies could be effected on
satisfactory terms, if at all.
Capital expenditures for the first six months of 1995 and 1994
totaled $13.6 million and $16 million, respectively. Capital
expenditures for 1995 and future years are expected to be
approximately $30 million. Capital expenditures totaled $32.6
million during 1994. This represents an $8.3 million decrease from
1993 capital expenditure levels. The decreased level of capital
expenditures in 1994 was principally related to the completion of
both the second phase of the European expansion program and initial
productive capacity investment program in Brazil during the prior
year.
The Company acquired the minority shareholder's interest in
Viskase's Brazilian subsidiary for $4.2 million during the first
quarter of 1994.
The Company has spent approximately $12 million to $17 million
annually on research and development programs, including product
and process development, and on new technology development during
each of the past three years, and the 1995 research and development
and product introduction expenses are expected to be approximately
$16 million. Among the projects included in the current research
and development efforts is the application of certain patents and
technology recently licensed by Viskase to the manufacture of
cellulosic casings. The commercialization of these applications
and the related fixed asset expense associated with such
commercialization may require substantial financial commitments in
future periods.
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
-----------------
For a description of pending litigation and other contingencies,
see Part 1, Note 5, Contingencies.
Item 2 - Changes in Securities
---------------------
No reportable events occurred during the quarter ended June 29,
1995.
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 May 10, 1995. The business conducted at the Meeting was
previously reported in the Company's Quarterly Report on Form 10-Q
for the quarterly period ended March 30, 1995.
Item 5 - Other Information
-----------------
None.<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit No. Description of Exhibits
---------- -----------------------------------------------
4.3 Indenture dated as of June 20, 1995 (the Indenture)
between Envirodyne Industries, Inc. and Shawmut Bank
Connecticut, National Association, as Trustee. *
4.4 Forms of the Senior Secured Notes issued pursuant to
the Indenture (included in Exhibit 4.3). *
4.5 Exchange and Registration Rights Agreement dated as of
June 20, 1995 between Envirodyne Industries, Inc. and
the purchasers of the Senior Secured Notes. *
4.6 Guaranty Agreement, dated as of June 20, 1995, made by
Clear Shield National, Inc., Sandusky Plastics, Inc.,
Sandusky Plastics of Delaware, Inc., Viskase
Corporation, Viskase Holding Corporation and Viskase
Sales Corporation, in favor of BT Commercial
Corporation, as Collateral Agent. *
10.10 Note Agreement, dated as of June 20, 1995, between
Envirodyne Industries, Inc. and each of the purchaers
identified therein. *
10.11 Letter Agreement, dated as of June 20, 1995, between
Envirodyne Industries, Inc. and certain purchasers of
the Senior Secured Notes. *
10.12 Revolving Credit Agreement, dated as of June 20, 1995,
between Envirodyne Industries, Inc. and The Prudential
Insurance Company of America. *
10.13 Credit Agreement, dated as of June 20, 1995, among
Envirodyne Industries, Inc., the lenders identified
therein and BT Commercial Corporation, as Agent. *
10.14 Intercreditor and Collateral Agency Agreement, dated
as of June 20, 1995, among BT Commercial Corporation,
The Prudential Insurance Company of America, Shawmut
Bank Connecticut, National Association, and certain
other parties identified therein. *
10.15 GECC Intercreditor Agreement, dated as of June 20,
1995, among BT Commercial Corporation, General
Electric Capital Corporation, Shawmut Bank
Connecticut, National Association, Envirodyne
Industries, Inc. and Viskase Corporation. *
* Incorporated herein by reference to Exhibits with the same
number to the Company's Registration Statement on Form S-4
(Registration No. 33-61161), filed with the Securities and
Exchange Commission on July 20, 1995.
(b) Reports on Form 8-K
None.
<PAGE>
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.
ENVIRODYNE INDUSTRIES, INC.
---------------------------
Registrant
By: /s/
-----------------------
John S. Corcoran
Executive Vice President and
Chief Financial Officer
(Duly authorized officer
and principal financial
officer of the registrant)
Date: August 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000033073
<NAME> ENVIRODYNE INDUSTRIES, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1995
<PERIOD-END> JUN-29-1995
<CASH> 6,291,000
<SECURITIES> 0
<RECEIVABLES> 97,731,000
<ALLOWANCES> (2,271,000)
<INVENTORY> 125,754,000
<CURRENT-ASSETS> 254,678,000
<PP&E> 527,129,000
<DEPRECIATION> 56,537,000
<TOTAL-ASSETS> 919,431,000
<CURRENT-LIABILITIES> 119,876,000
<BONDS> 534,298,000
<COMMON> 135,000
0
0
<OTHER-SE> 119,845,000
<TOTAL-LIABILITY-AND-EQUITY> 919,431,000
<SALES> 321,008,000
<TOTAL-REVENUES> 321,008,000
<CGS> 235,772,000
<TOTAL-COSTS> 235,772,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 459,000
<INTEREST-EXPENSE> 27,230,000
<INCOME-PRETAX> (7,230,000)
<INCOME-TAX> (18,000)
<INCOME-CONTINUING> (7,212,000)
<DISCONTINUED> 0
<EXTRAORDINARY> (4,196,000)
<CHANGES> 0
<NET-INCOME> (11,408,000)
<EPS-PRIMARY> (.84)
<EPS-DILUTED> (.84)
</TABLE>
