Financial Report for
year end
December 31, 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 +1 312 856 0200
F +1 312 602 8099
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
VISKASE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except for Number of Shares)
See notes to consolidated financial statements
December 31, 2023December 31, 2022ASSETS Current assets: Cash and cash equivalents$7,862$8,783 Receivables, net88,95087,584 Inventories111,310103,172 Other current assets42,67440,152Total current assets250,796239,691Property, plant and equipment436,372416,628Less accumulated depreciation(302,027)(274,781)Property, plant and equipment, net134,345141,847Right of use assets22,30924,520Other assets, net15,67623,258Intangible assets15,79916,808Goodwill3,3213,207Deferred income taxes18,59722,261Total Assets$460,844$471,592LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities: Short-term debt$21,747$39,375 Accounts payable44,76843,377 Accrued liabilities39,16331,491 Short-term portion lease liabilities4,777 4,851 Total current liabilities110,454119,094Long-term debt, net of current maturities111,738 122,521 Long-term liabilities1,330 7,383Accrued employee benefits32,25736,211Deferred income taxes3,0213,405Long-term lease liabilities20,40822,693Stockholders’ equity:Common stock, $0.01 par value; 103,995,935 shares issued and 103,190,665 outstanding 1,0401,040Paid in capital182,343182,343Retained earnings58,97445,467Less 805,270 treasury shares, at cost(298)(298)Accumulated other comprehensive loss(59,200)(67,114)Total Viskase stockholders' equity182,859161,438Deficit attributable to non-controlling interest(1,223)(1,153)Total stockholders' equity181,636160,285Total Liabilities and Stockholders' Equity$460,844$471,592
VISKASE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands)
See notes to consolidated financial statements.
YearYearYearEndedEndedEndedDecemberDecemberDecember31, 202331, 202231, 2021 NET SALES$445,984$430,834$415,672Cost of sales352,221356,701343,636GROSS MARGIN93,76374,13372,036Selling, general and administrative52,43650,28348,169Amortization of intangibles1,6061,5761,755Asset impairment charge338 27 498 Restructuring expense- - 507 OPERATING INCOME39,38322,24721,107Interest income- 5 - Interest expense, net12,0188,4336,157Other expense, net10,3954,39613,779INCOME BEFORE INCOME TAXES16,9709,4231,171Income tax provision 3,5347,1394,527NET 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 DILUTED103,190,665103,190,665103,190,665 PER SHARE AMOUNTS:EARNINGS PER SHARE- BASIC AND DILUTED$0.13$0.02($0.03)
VISKASE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Thousands)
See notes to consolidated financial statements.
YearYearYearEndedEndedEndedDecemberDecemberDecember31, 202331, 202231, 2021Net income (loss)$13,436$2,284($3,356)Other comprehensive income (loss), net of tax Pension liability adjustment2,63411,3049,914 Foreign currency translation adjustment5,280(4,779)(4,902)Other comprehensive income, net of tax7,9146,5255,012Comprehensive income $21,350$8,809$1,656Less: comprehensive loss attributable to noncontrolling interests(70)(245)(137) Net comprehensive income attributable to Viskase Companies, Inc$21,420$9,054$1,793
VISKASE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands)
See notes to consolidated financial statements.
Accumulated otherTotal ViskaseTotalCommonPaid inTreasury Retained comprehensive stockholders’Non-controllingstockholders’stockcapitalstockearningslossequityInterest equityBalance December 31, 2020$1,040$182,343($298)$46,157($78,651)$150,591($771)$149,820Net loss- - - (3,219)- (3,219)(137)(3,356) Foreign currency translation adjustment- - - - (4,902) (4,902)- (4,902) Pension liability adjustment, net of tax- - - - 9,914 9,914- 9,914 Balance December 31, 2021$1,040$182,343($298)$42,938($73,639)$152,384($908)$151,476Net income (loss)- - - $2,529- 2,529 (245) 2,284 Foreign currency translation adjustment- - - - (4,779) (4,779) - (4,779) Pension liability adjustment, net of tax- - - - 11,304 11,304 - 11,304 Balance December 31, 2022$1,040$182,343($298)$45,467($67,114)$161,438(1,153)$ $160,285Net income (loss)- - - 13,506 - 13,506 (70) 13,436 Foreign currency translation adjustment- - - - 5,280 5,280 - 5,280 Pension liability adjustment, net of tax- - - - 2,634 2,634 - 2,634 Balance December 31, 2023$1,040$182,343($298)$58,973($59,200)$182,858($1,223)$181,635
VISKASE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
See notes to consolidated financial statements.
YearYearYearEndedEndedEndedDecemberDecemberDecember31, 202331, 202231, 2021Cash 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 amortization25,22327,30327,994Amortization of deferred financing fees464403572Deferred income taxes3,241 (99)(803)Loss on disposition/impairment of assets449337505Bad debt and accounts receivable provision175187277Changes in operating assets and liabilities:Receivables598(8,795)2,926Inventories(5,934)(13,019)(7,102)Other current assets(1,104)3,509850Accounts payable4809,1091,264Accrued current liabilities6,508(2,186)(6,859)Accrued employee benefits(699)(1,636)(8,844)Other assets748(4,349)(3,070)Other580(2,669)(1,140)Total adjustments30,7298,0956,570Net cash provided by operating activities44,16510,3793,214Cash flows from investing activities:Capital expenditures(14,470)(22,336)(17,234)Proceeds from disposition of assets101499Net 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 debt10,10114,00013,000Repayment 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)6,1943,678Effect of currency exchange rate changes on cash(1,334)4,5214,361Net decrease in cash and equivalents(921)(1,093)(5,972)Cash and cash equivalents at beginning of period8,7839,87615,848Cash and cash equivalents at end of period$7,862$8,783$9,876Supplemental cash flow information:Interest paid less capitalized interest$11,418$7,427$5,217Income taxes paid $4,060$7,324$4,180
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
Intercompany accounts and transactions have been eliminated in consolidation.
include the accounts of the Company.
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.
Receivables, net
Trade accounts receivable are classified as current assets and are reported net of
allowance for doubtful accounts, which includes the evaluation of expected credit
losses following the adoption of ASC Topic 326. This estimated allowance is primarily
based upon our evaluation of the future expected loss for the asset. The Company
estimates this using the financial condition of each customer, each customer’s ability to
pay and the economic conditions of the country the customer resides in. For all trade
accounts receivable, the Company defines “past due” as any payment, that is at least
15 days past the contractual due date. For the year ended December 31, 2023, there
have been write offs of $175 related to expected credit losses.
Inventories
Inventories are valued at the lower of cost or net realizable value. Cost is determined by
using the first-in, first-out (“FIFO”) basis method.
Property, Plant and Equipment
The Company carries property, plant and equipment at cost, less accumulated
depreciation. Property and equipment additions include acquisition of property and
equipment and costs incurred for computer software purchased for internal use including
related external direct costs of materials and services and payroll costs for employees
directly associated with the project. Upon retirement or other disposition, cost and
related accumulated depreciation are removed from the accounts, and any gain or loss
is included in results of operations. Depreciation is computed on the straight-line method
using a half year convention over the estimated useful lives of the assets ranging from (i)
building and improvements - 10 to 32 years, (ii) machinery and equipment - 4 to 12 years,
(iii) furniture and fixtures - 3 to 12 years, (iv) auto and trucks - 2 to 5 years, (v) data
processing – 3 to 7 years and (vi) leasehold improvements - shorter of lease or useful life.
In the ordinary course of business, we lease certain equipment, consisting mainly of autos,
and certain real property. Real property consists of manufacturing, distribution and office
facilities.
Deferred Financing Costs
Deferred financing costs are presented in the balance sheet as a direct deduction from
the carrying amount of debt liability and amortized as expense using the effective
interest rate method over the expected term of the related debt agreement.
Amortization of deferred financing costs is classified as interest expense.
Intangible Assets and Goodwill
The Company has recognized definite lived intangible assets for patents and trademarks,
customer relationships, technologies and in-place leases. The intangible assets are
amortized on the straight-line method over an estimated weighted average useful life of
12 years for patents and trademarks, 20 years for customer relationships, 13 years for
technologies and 14 years for in-place leases.
Our estimates of the useful lives of finite-lived intangible assets consider judgments
regarding the future effects of obsolescence, demand, competition and other
economic factors. We conduct
in
circumstances indicate that the carrying value of these finite-lived assets may not be
recoverable. Undiscounted cash flow analyses are used to determine if an impairment
exists. If an impairment is determined to exist, the loss is calculated based on the
estimated fair value of the assets.
impairment tests when events or changes
Current accounting guidance provides entities an option of performing a qualitative
assessment (a "step-zero" test) before performing a quantitative analysis. If the entity
determines, on the basis of certain qualitative factors, that it is more-likely than- not that
the goodwill is not impaired, the entity would not need to proceed to the two step
impairment testing process (quantitative analysis) as prescribed in the guidance. During
fourth quarter 2023, the Company performed a “step zero” test of its goodwill and
concluded that there was no impairment based on this guidance.
Long-Lived Assets
The Company continues to evaluate the recoverability of long-lived assets including
property, plant and equipment, trademarks and patents. Impairments are recognized
when the expected undiscounted future operating cash flows derived from long-lived
assets are less than their carrying value. If impairment is identified, valuation techniques
deemed appropriate under the particular circumstances will be used to determine the
asset’s fair value. The loss will be measured based on the excess of carrying value over
the determined fair value. The review for impairment is performed whenever events or
changes in circumstances indicate that the carrying amount of assets may not be
recoverable. No events or changes in circumstances were identified in the current year
that would indicate a change in carrying amount.
Shipping and Handling
The Company periodically bills customers for shipping charges. These amounts are
included in net sales, with the associated costs included in cost of sales.
Repairs and Maintenance
Routine repairs and maintenance are charged to operations as incurred. Improvements
and major repairs, which extend the useful life of an asset, are capitalized and
depreciated.
Pensions and Other Postretirement Benefits
The Company uses appropriate actuarial methods and assumptions in accounting for its
defined benefit pension plans and non-pension postretirement benefits.
Actual results that differ from assumptions used are accumulated and amortized over
future periods and, accordingly, generally affect recognized expense and the recorded
obligation in future periods. Therefore, assumptions used to calculate benefit obligations
as of the end of a fiscal year directly impact the expense to be recognized in future
periods. The primary assumptions affecting the Company’s accounting for employee
benefits as of December 31, 2023 are as follows:
• Long-term rate of return on plan assets: The required use of the expected long-term
rate of return on plan assets may result in recognized returns that are greater or less than
the actual returns on those plan assets in any given year. Over time, however, the
expected long-term rate of return on plan assets is designed to approximate actual
earned long-term returns. The Company uses long-term historical actual return
information, the mix of investments that comprise plan assets, and future estimates of
long-term investment returns by reference to external sources to develop an assumption
of the expected long-term rate of return on plan assets. The expected long-term rate of
return is used to calculate net periodic pension cost. In determining its pension
obligations, the Company is using a long-term rate of return on U.S. plan assets of 6.00%
for December 31, 2023. The Company is using a long-term rate of return on French plan
assets of 2.60% for 2023. The German pension plan has no assets.
• Discount rate: The discount rate is used to calculate future pension and postretirement
obligations. The Company is using a Mercer Bond yield curve in determining its pension
obligations. The Company is using a discount rate of 5.48% for December 31, 2023. The
Company is using a weighted average discount rate of 3.40% on its non-U.S. pension
plans for December 31, 2023.
Income Taxes
Deferred tax assets and liabilities are measured using enacted tax laws and tax rates
expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities
due to a change in tax rates is recognized in income in the period that includes the
enactment date. In addition, the amounts of any future tax benefits are reduced by a
valuation allowance to the extent such benefits are not expected to be realized on a
more likely than not basis. Interest and penalties related to unrecognized tax benefits are
included as a component of tax expense.
Other Comprehensive Income (Loss)
Other comprehensive income (loss) includes all other non-stockholder changes in equity.
Changes in other comprehensive income (loss) in 2023, 2022 and 2021 resulted from
changes in foreign currency translation and pension liability.
Revenue Recognition
The Company’s revenues are comprised of product sales. All revenue is recognized when
the Company satisfies its performance obligation(s) under the contract (either implicit or
explicit) by transferring the promised product to its customer when its customer obtains
control of the product. A performance obligation is a promise in a contract to transfer a
distinct product or service to a customer. A contract’s transaction price is allocated to
each distinct performance obligation. Substantially all of the Company’s contracts have
a single performance obligation, as the promise to transfer products is not separately
identifiable from other promises in the contract and, therefore, not distinct.
Revenue is measured as the amount of consideration the Company expects to receive
in exchange for transferring products or providing services. The nature of the Company’s
contracts gives rise to several types of variable consideration. As such, revenue is
recorded net of estimated discounts, rebates and allowances. These estimates are
based on historical experience, anticipated performance and the Company’s best
judgment at the time. Because of the Company’s certainty in estimating these amounts,
they are included in the transaction price of its contracts.
Sales, value add, and other taxes collected from customers and remitted to
governmental authorities are accounted for on a net (excluded from revenues) basis.
Substantially all of the Company’s revenue is from products transferred to customers at a
point in time. The Company recognizes revenue at the point in time in which the customer
obtains control of the product, which is generally when product title passes to the
customer upon shipment. In certain cases, title does not transfer and revenue is not
recognized until the customer has received the products at its physical location or at
port.
Financial Instruments
The Company routinely enters into fixed price natural gas agreements which require us
to purchase a portion of our natural gas each month at fixed prices. These fixed price
agreements qualify for the “normal purchases” scope exception under derivative and
hedging standards, therefore the natural gas purchases under these contracts were
expensed as incurred and included within cost of sales. As of December 31, 2023, future
annual minimum purchases remaining under the agreement are $3,472.
The Company’s financial instruments include cash and cash equivalents, accounts
receivable and accounts payable. The carrying amounts of these financial assets and
liabilities approximate
these
instruments. Management believes the fair value of the Company’s revolving loans
approximate the carrying value due to credit risk or current market rates, which
approximate the effective interest rates on those instruments. The fair value of the
Company’s term loans is estimated by discounting the future cash flow using the
Company’s current borrowing rates for similar types and maturities of debt.
short maturities of
fair value due
the
to
Leases
The Company accounts for leases under FASB ASC Topic 842, Leases, which has resulted
in the company reporting a right of use (“ROU”) asset and lease liability related to
operating leases reported on our balance sheet. Financing leases under current U.S.
GAAP are classified and accounted for in substantially the same manner as capital
leases under prior U.S. GAAP and therefore, we do not distinguish between financing
leases and capital leases unless the context requires. The determination of whether an
arrangement is or contains a lease occurs at inception. We have elected the practical
expedient to include both the lease component and the non-lease component as a
single component when accounting for each lease and calculating the resulting lease
liability and ROU asset. The following is our accounting policy for leases in which we are
the lessee.
Leases are classified as either operating or financing by the lessee depending on whether
the lease terms provide for control of the underlying asset to be transferred to the lessee.
When control transfers to the lessee, we classify the lease as a financing lease. All other
leases are recorded as operating leases. For leases with an initial lease term in excess of
twelve months, we record a ROU asset with a corresponding lease liability in our balance
sheet. We have elected the practical expedient for all leases less than 12 months to not
record a ROU asset or corresponding lease liability. ROU assets represent our right to use
an underlying asset for the lease term and lease liabilities represent our obligation to
make lease payments arising from the lease. Right-of-use assets and lease liabilities are
recognized at commencement of the lease based on the present value of lease
payments over the lease term. ROU assets are adjusted for any lease payments made
on or before commencement of the lease, less any lease incentives received.
The lease liability represents future lease payments for lease and non-lease components
discounted for present value. Lease payments that may be included in the lease liability
include fixed payments, variable lease payments that are based on an index or rate and
payments for penalties for terminating the lease if the lessee is reasonably certain to utilize
a termination option, among others. Certain of our leases contain rent escalation clauses
that are specifically stated in the lease and these are included in the calculation of the
lease liability. Variable lease payments for lease and non-lease components which are
not based on an index or rate are excluded from the calculation of the lease liability and
are recognized in the statement of operations during the period incurred.
We utilize discount rates to determine the net present value of our gross lease obligations
when calculating the lease liability and related ROU asset. In cases in which the rate
implicit in the lease is readily determinable, we utilize that discount rate for purposes of
the net present value calculation. In most cases, our lease agreements do not have a
discount rate that is readily determinable and therefore we utilize an estimate of our
incremental borrowing rate. Our incremental borrowing rate is determined at lease
commencement or lease modification and represents the rate of interest we would have
to pay to borrow on a collateralized basis over a similar term an amount equal to the
lease payments in a similar economic environment. For adoption of the new standard,
the rate was determined at the adoption date.
The lease term is determined by taking into account the initial period as stated in the
lease contract and adjusted for any renewal options that the company is reasonably
certain to exercise as well as any period of time that the lessee has control of the space
before the stated initial term of the lease. If we determine that we are reasonably certain
to exercise a termination option, the lease term is then adjusted to account for the
expected termination date.
Operating lease expense is recorded as a single expense recognized on a straight-line
basis over the lease term. Financing lease expense consists of interest expense on the
financing lease liability and amortization of the ROU financing lease asset on a straight-
line basis over the lease term.
New Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate
Reform on Financial Reporting, which amends FASB ASC Topic 848, Reference Rate
Reform. Banks are no longer required to report information that is used to determine
London Interbank Offered Rate (“LIBOR”) which is used globally by all types of entities for
various types of transactions. As a result, LIBOR could be discontinued, as well as other
interest rates used globally. This ASU provides companies with optional expedients for
contract modifications under U.S. GAAP, excluded components of certain hedging
relationships, fair value hedges, and cash flow hedges, as well as certain exceptions,
which are intended to help ease the potential accounting burden associated with
transitioning away from these reference rates. We adopted this ASU effective January 1,
2023. The adoption of this standard did not have a significant impact on our consolidated
financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) –
Improvements to Income Tax Disclosures, which requires enhanced income tax
disclosures that reflect how operations and related tax risks, as well as how tax planning
and operational opportunities, affect the tax rate and prospects for future cash flows.
This standard is effective for the Company beginning January 1, 2025 with early adoption
permitted. We are currently assessing the impact of adopting this standard on our
consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) –
Improvements to Reportable Segment Disclosures, which includes requirements for more
robust disclosures of significant segment expenses and measures of a segment’s profit
and loss used in assessing performance. This standard is effective for the Company’s
annual period beginning January 1, 2024 and interim periods beginning January 1, 2025
with early adoptions permitted. We are currently assessing the impact of adopting this
standard on our consolidated financial statements.
2. Cash and cash equivalents
As of December 31, 2023, and December 31, 2022, cash held in foreign banks was $7,218
and $9,134, respectively.
Letters of credit for $735 were outstanding under our New Senior Credit Facility.
3. Receivables, net
December 31, 2023December 31, 2022Cash and cash equivalents$7,862 $8,783 December 31, 2023December 31, 2022Accounts receivable, gross$91,858 $91,431 Less allowance for doubtful accounts (2,908)(3,847)$88,950 $87,584 December 31, 2023December 31, 2022December 31, 2021Beginning balance$3,847 $3,404 $3,470 Provision (recoveries) (132)187 277 Write-offs - 373 (306) Other and translation(807)(117)(37)Ending balance$2,908 $3,847 $3,404
4. Inventories
5. Property, Plant and Equipment, Net
Depreciation expense associated with property, plant and equipment was $23,617,
$25,727 and $26,239 for the years ended December 31, 2023, 2022 and 2021, respectively.
6. Other Assets
December 31, 2023December 31, 2022Raw materials$35,573 $30,630 Work in process51,872 46,210 Finished products 23,865 26,332 $111,310 $103,172 December 31, 2023December 31, 2022Land and improvements $1,939 $1,920 Buildings and improvements 53,613 48,883 Machinery and equipment372,311 354,544 Construction in progress 8,509 11,281 $436,372 $416,628 Accumulated depreciationDecember 31, 2023December 31, 2022 Land and improvements $496 $472 Buildings and improvements 26,790 23,662 Machinery and equipment274,741 250,647 $302,027 $274,781 December 31, 2023December 31, 2022Other taxes receivable$15,048 $15,828 Indemnification asset - 6,793 Other 628 637 $15,676 $23,258
7. Accrued Liabilities
8. Debt Obligations
Senior Credit Facility
On October 09, 2020, the Company entered into a Credit Agreement with Bank of
America, N.A. (“BofA”) as Administrative Agent, Swingline Lender and L/C Issuer, and the
other Lender parties thereto, providing for a $150,000 term loan (the “Term Loan”) and a
$30,000 revolving credit facility (the “Revolving Credit Facility” and together with the Term
Loan, the “Senior Credit Facility”).
On August 10, 2022, the Company entered into the Second Amendment to the New
Senior Credit Facility (the “Amended Senior Credit Facility”). The Amended Senior Credit
Facility increased the commitment of the New Revolving Credit Facility to $37,000 and
transitioned Term Loans on September 30, 2022 and Revolving Loans on August 30,2022
from LIBOR Loans to SOFR Loans. Amended terms of the facility are stated below.
The interest rates per annum applicable to the Amended Senior Credit Facility (other than
in respect of Swingline Loans) will be SOFR, but in any event, not less than 0.00%, plus the
Applicable Rate (as defined below), or, for U.S. dollar denominated loans only, made to
the Company at the option of the Company, the Base Rate, defined as the highest of:
(a) the Federal Funds Rate plus one-half percent (0.50%); (b) the Bank of America prime
rate; and (c) the one (1) month SOFR (adjusted daily) plus one percent (1.00%), but in
any case not less than 1.00%. plus the Applicable Rate. Applicable Rate means, with
respect to the Amended Senior Credit Facility, a percentage per annum to be
determined in accordance with the applicable pricing grid set forth in the Amended
Senior Credit Facility based upon the Company’s Consolidated Coverage Ratio as
reflected in a quarterly Compliance Certificate. Each Swingline Loan shall bear interest
at the Base Rate plus the Applicable Rate for Base Rate loans under the New Revolving
Credit Facility. As of December 31, 2023, our current interest rate is 7.49%.
December 31, 2023December 31, 2022Compensation and employee benefits$15,919 $8,017 Taxes payable17,171 16,124 Accrued volume and sales rebates2,409 3,410 Other3,664 3,940 $39,163 $31,491 December 31, 2023December 31, 2022Short-term debt: Senior credit facility$11,250$39,375 Europe Line of Credit10,497- Total short-term debt21,74739,375Long-term debt: Senior credit facility, net $111,176$121,978 Other562543 Total long-term debt111,738122,521 Total debt$133,485$161,896
The Amended Senior Credit Facility requires the Company to repay principal of the New
Term Loan at the rate of 5% of the original principal balance during each of the first two
years, 7.5% during the third and fourth years and 10% of the original principal balance
during the fifth year. The maturity date on the Amended Senior Credit Facility is August
13, 2026.
The Company may prepay the Amended Senior Credit Facility, in whole or in part, at any
time without premium or penalty, subject to reimbursement of the Lenders’ breakage
and redeployment costs in the case of prepayment of LIBOR borrowings and foreign
currency borrowings bearing interest at a rate other than LIBOR. Each such prepayment
of the New Term Facility shall be applied as directed by the Company. The unutilized
portion of the commitments under the Amended Senior Credit Facility may be
irrevocably reduced or terminated by the Company at any time without penalty.
The Amended Senior Credit Facility is guaranteed by each existing and future direct and
indirect wholly owned material domestic Restricted Subsidiary and foreign Restricted
Subsidiary of the Company (other than any Brazilian subsidiary). The Amended Senior
Credit Facility is secured by substantially all assets of the Company and its material
domestic Restricted Subsidiaries, with the exception of real property.
The Amended Senior Credit Facility contains various covenants which restrict the
Company’s ability to, among other things, incur indebtedness, create liens on our assets,
make investments, enter into merger, consolidation or acquisition transactions, dispose
of assets (other than in the ordinary course of business), make certain restricted
payments, enter into sale and leaseback transactions and transactions with affiliates, in
each case subject to permitted exceptions. The Amended Senior Credit Facility also
requires that we comply with certain financial covenants, including meeting a
consolidated leverage ratio and consolidated fixed charge coverage ratio. The
Company is in compliance with the Amended Senior Credit Facility covenants as of
December 31, 2023.
Foreign Lines of Credit
In its foreign operations, the Company has unsecured lines of credit with various banks
providing approximately $12,000 of availability. There were borrowings of $10,498 under
the lines of credit at December 31, 2023 and no borrowings at December 31, 2022. As of
December 31, 2023, our current interest rate is 5.85%.
Debt Maturity
The aggregate maturities of debt (1) for each of the next five years are:
(1) The aggregate maturities of debt represent amounts to be paid at maturity and not the
current carrying value of the debt.
20242025202620272028ThereafterTerm Loan Facility $ 11,250 $ 13,125 $ 99,375 $ - $ - $ - Other 10,498 - 889 - - - $ 21,748 $ 13,125 $ 100,264 $ - $ - $ -
9. Leases
We have operating leases primarily for real estate, equipment, and vehicles. Our lease
agreements do not contain any material residual value guarantees or material restrictive
covenants. ROU assets and related lease liabilities are recorded on the balance sheet
for leases with an initial term in excess of twelve months.
ROU assets and lease liabilities are as follows:
The following is an analysis of leased property under financing leases by major classes as
of December 31, 2023 and December 31, 2022.
Additional information with respect to our operating and finance leases as of December
31, 2023 is presented below.
Lease expense consists of the following:
Cash flow information related to leases is as follows:
December 31, 2023December 31, 2022Operating Leases: ROU assets $ 22,309 $ 24,520 Lease liabilities 25,185 27,544 Financing Leases: ROU assets (property, plant and equipment, net) - 10 Lease liabilities - 11 December 31,December 31,20232022Building and improvements$453$453Machinery and equipment3,5353,599Less: Accumulated depreciation(3,988)(4,042)$0$10OperatingFinanceWeighted average remaining lease term (years)9.140.00Weighted average discount rate7.40%0.00%December 31, 2023December 31, 2022Operating lease rent expense5,255$ 5,182$ Financing Leases: Amortization of ROU assets10 20 Interest expense on lease liabilities- 3 10$ 23$
Maturities of operating lease liabilities as of December 31, 2023 are as follows:
10. Retirement Plans
The Company has contributed $2,235 and $75 to pension benefits in the U.S. during the
years ended December 31, 2023 and December 31, 2022, respectively.
The Company and its subsidiaries have defined contribution and defined benefit plans
varying by country and subsidiary.
The Company’s operations in the United States, France, and Germany historically offered
defined benefit retirement plans (“Plan”) to their employees. Most of these benefits have
been terminated, resulting in various reductions in liabilities and curtailment gains.
Included in accumulated other comprehensive loss, net of tax is $(22,160) as of
December 31, 2023. The following amounts not yet recognized in net periodic benefit
cost:
Amounts included in other comprehensive income (loss) expected to be recognized as
a component of net periodic benefit cost for the year ending December 31, 2023 are:
December 31, 2023December 31, 2022Cash Paid For Amounts Included in the Measurement of Lease Liabilities: Cash used in operating activities (operating leases)5,164$ 5,069$ Cash used in operating activities (financing leases)12 42 Supplemental Cash Flow Information: ROU assets obtained in exchange for lease obligations (operating leases)114$ 755$ YearOperating Leases20234,777$ 20244,548 20253,926 20263,819 20273,545 Thereafter14,714 Total lease payments35,329 Less: discounted interest(10,144) 25,185$ U.S. Pension Benefits Non U.S. Pension BenefitsNet actuarial gain (loss) Prior service credit $12,835 (1,777)(1) -
The measurement date for all defined benefit plans is December 31. The year-end status
of the plans is as follows:
The funded status of these pension plans as a percentage of the projected benefit
obligation was 77% in 2023 compared to 73% in 2022.
U.S. Pension Benefits Non U.S. Pension BenefitsNet actuarial (loss) gain ($186)$50 U.S. Pension Benefits Non U.S. Pension Benefits2023202220232022 Change in benefit obligation:Projected benefit obligation at beginning of year$97,738$128,974$17,761$25,597Service cost- - 297415Interest cost5,1853,655737300Plan amendments- - (133)- Actuarial (gain) loss (487)(27,697)1,962(6,375)Benefits paid(7,051)(7,194)(686)(684)Currency translation- - 640(1,492)Estimated benefit obligation at end of year$95,385$97,738$20,578$17,761Change in plan assets:Fair value of plan assets at beginning of year$82,693$104,774$1,367$1,418Actual return on plan assets9,661(14,964)3332Employer contribution2,23676617 684 Plan settlements- - (154) - Benefits paid(7,052)(7,193)(686) (384) Currency translation- - 50 (383)Fair value of plan assets at end of year$87,538$82,693$1,227$1,367Unfunded status of the plan($7,847)($15,045)($19,351)($16,394)U.S. Pension Benefits Non U.S. Pension Benefits2023202220232022Amounts recognized in statement of financial position:Current liabilities($73)($73)($798)($592)Noncurrent liabilities(7,774)(14,972)(18,553)(15,802)Net amount recognized($7,847)($15,045)($19,351)($16,394)
In connection with our adoption of FASB issued ASU No. 2017-07, Improving the
Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,
the components of net periodic benefit cost other than the service cost component are
included in the line item other expense in the income statement.
Components of net periodic benefit cost for the years ended December 31:
Weighted average assumptions used to determine the benefit obligation and net
periodic benefit cost as of December 31:
The Company evaluates its discount rate assumption annually as of December 31 for
each of its retirement-related benefit plans. The Company is using a Mercer bond model
for determining its U.S. pension benefits.
The Company’s expected return on plan assets is evaluated annually based upon a
study which includes a review of anticipated future long-term performance of individual
asset classes, and consideration of the appropriate asset allocation strategy to provide
for the timing and amount of benefits included in the projected benefit obligation. While
the study gives appropriate consideration to recent fund performance and historical
returns, the assumption is primarily a long-term prospective rate.
Information for defined benefit plans with projected benefit obligations in excess of plan assets:U.S. Pension Benefits Non U.S. Pension Benefits2023202220232022Projected benefit obligation$95,385 $97,738 $20,578 $17,761 Fair value of plan assets$87,538$82,693$1,227$1,367Information for defined benefit plans with accumulated benefit obligations in excess of plan assets:U.S. Pension Benefits Non U.S. Pension Benefits2023202220232022Accumulated benefit obligation$95,385 $97,738 $20,578 $17,761 Fair value of plan assets$87,538$82,693$1,227$1,367Non U.S. Pension Benefits202320222021202320222021Component of net period benefit costService cost-$ -$ -$ $296$412$479Interest cost5,1853,6553,434725298270Expected return on plan assets(4,774)(5,029)(4,928)(36)(35)(37)Amortization of prior service cost- - - 10 1012Amortization of actuarial loss474 752 1,240 (326) 47 106 $885(622)$ (254)$ $669$732$830U.S. Pension BenefitsU.S. Pension Benefits Non U.S. Pension Benefits2023202220232022Discount rate5.48%5.55%3.40%4.11%Expected return on plan assets6.00%5.00%2.60%2.60%Rate of compensation increaseN/AN/A3.30%3.18%
The Company’s overall investment strategy is a glide path to manage the plan to a fully
funded status through a mix of approximately 75% of investments for long-term growth
and 25% for near-term benefit payments with a wide diversification of asset types, fund
strategies, and fund managers. The target allocations for plan assets are 45% equity
securities, 5% in alternatives and 48% to fixed income investments. Equity securities
primarily include investments in large-cap, mid-cap and small-cap companies primarily
located in the United States and international developed markets. Fixed income
securities include corporate bonds of companies from diversified industries, mortgage-
backed securities, and U.S. Treasuries. Other types of investments include investments in
hedge funds that follow several different strategies.
Plan management uses the following methods and significant assumptions to estimate
fair value of investments.
Money market – overnight bank deposits and money market mutual funds maintaining
at all times $1.00 Net Asset Value (“NAV”).
US Government and agency obligations – U.S. Treasury bonds, notes and other
government obligations.
Exchange traded funds – marketable securities tracking asset baskets traded on active
markets.
Mutual funds - Valued at the net asset value (“NAV”) of shares or units held by the Plan
at year-end which is obtained from an active market or at share or unit prices provided
by the fund manager with significant observable inputs.
Hedge funds - Value provided by the administrator of the fund. The pricing for these funds
is provided monthly by the fund to determine the quoted price.
Common stocks - marketable corporate equity securities traded on active markets.
The fair values of the Company’s pension plan asset allocation at December 31, 2023
and 2022, by asset category are as follows:
The following table provides a summary of the estimated benefit payments for the
postretirement plans for the next five fiscal years and thereafter.
Fair Value Measurement atDecember 31, 2023Quoted Prices in Active Markets for Identical AssetsSignificant Observable InputsSignificant Unobservable InputsTotal(Level 1)(Level 2)(Level 3)Money market$2,448$2,448-$ -$ US Government and agency obligations40,435 1,519 38,916 - Exchange traded funds10,699 10,699 - - Mutual funds19,100 19,100 - - Common stocks16,083 16,083 - - Total Assets in the fair value hierarchy88,765 $49,849$38,916- Investments measured at NAV (a)- Investments at fair value$88,765(a) Hedge funds are measured at fair value using the NAV per share practical expedient, and therefore have not been classified in the fair value hierarchy.Fair Value Measurement atDecember 31, 2022Quoted Prices in Active Markets for Identical AssetsSignificant Observable InputsSignificant Unobservable InputsTotal(Level 1)(Level 2)(Level 3)Money market$13,206$13,206-$ -$ US Government and agency obligations15,142 2,336 12,806 - Exchange traded funds11,738 11,738 - - Mutual funds19,564 19,564 - - Common stocks24,410 24,410 - - Total Assets in the fair value hierarchy84,060 $71,254$12,806- Investments measured at NAV (a)- Investments at fair value$84,060(a) Hedge funds are measured at fair value using the NAV per share practical expedient, and therefore have not been classified in the fair value hierarchy.
The Company’s expected contribution for the 2024 fiscal year is $3,789 for the U.S.
pension plan. There is no funding requirement for non-U.S. pension plans.
Savings Plans
The Company also has defined contribution savings and similar plans for eligible
employees, which vary by subsidiary. The Company’s aggregate contributions to these
plans are based on eligible employee contributions and certain other factors. The
Company expenses for these plans were $1,218, $1,160 and $1,212 in 2023, 2022 and
2021, respectively.
International Plans
The Company maintains various pension and statutory separation pay plans for its
European employees. The expense, not including the French and German pension plan,
in 2023, 2022, and 2021 was $1,767, $(431) and $379, respectively. As of their most recent
valuation dates, for those plans where vested benefits exceeded plan assets, the
actuarially computed value of vested benefits exceeded those plans’ assets by
approximately $6,652.
11. Capital Stock, Treasury Stock and Paid in Capital
Authorized shares of preferred stock ($0.01 par value per share) and common stock
($0.01 par value per share) for the Company are 50,000,000 shares and 150,000,000
shares, respectively. No preferred stock has been issued.
On October 9, 2020, the Company completed a private placement of 50,000,000 shares
of common stock at $2.00 per share. The Company used the net proceeds of the private
placement to complete a refinancing of its short-term debt.
As a result of the private placement to complete an extinguishment of the Revolving
Credit Facility and Term Loan Facility in 2020 and subsequent purchases, Icahn Enterprises
L.P. currently owns approximately 90.0% of our outstanding common stock.
In 2004, the Company purchased 805,270 shares of its common stock from the
underwriter for a purchase price of $298. The common stock has been accounted for as
treasury stock.
Total Estimated Benefit PaymentsU.S.Non U.S 2024$8,065$7712025 8,0597722026 8,0231,0302027 8,0928752028 7,978914Thereafter 37,1606,184
12. Income Taxes
Income tax provision (benefit) consisted of:
The reconciliation of income tax provision (benefit) attributable to earnings differed from
the amounts computed by applying the U.S. Federal statutory income tax rate to
earnings by the following amounts:
202320222021CurrentDomestic$1,213 $51 $1,097 Foreign (920) 7,187 4,233 Total current 293 7,238 5,330 Deferred Domestic 2,170 (32) 1,379 Foreign 1,071 (67) (2,182)Total deferred 3,241 (99) (803) Total$3,534 $7,139 $4,527 Income (loss) before income taxes: 202320222021Domestic($2,995)($6,297)($4,680)Foreign 19,965 15,720 5,851 Total$16,970 $9,423 $1,171 Computed income tax provision (benefit) $3,592$1,979$246State and local taxes, net of federal tax113 341 48 Foreign taxes, net1,355 655 (103) Valuation allowance(1,568) (887) (1,866) Uncertain tax positions - (benefit) expense (6,214) 860 545 Foreign exchange impact(24) 18 930 Permanent differences, net2,880 1,687 3,544 Revaluation of deferreds(328) 1,016 795 Other, net3,728 1,470 388 Total income tax provision$3,534 $7,139 $4,527 Computed income tax (benefit) provision 21.0%21.0%21.0%State and local taxes, net of federal tax0.7%3.6%4.1%Foreign taxes, net7.9%6.9%-8.8%Valuation allowance-9.2%-9.4%-159.3%Uncertain tax positions - expense (benefit) -36.3%9.1%46.5%Foreign exchange impact-0.1%0.2%79.4%Permanent differences, net16.8%17.9%302.6%Revaluation of deferreds-1.9%10.8%67.9%Other, net21.8%15.7%33.1%Effective income tax rate20.7%75.8%386.5%Statutory federal rate21.0%21.0%21.0%
Temporary differences and net operating loss carryforwards that give rise to a significant
portion of deferred tax assets and liabilities for 2023 and 2022 are as follows:
The net deferred tax asset (liability) is classified in the balance sheet as follows:
A valuation allowance is provided when it is more likely than not that some portion or all
of the net deferred tax assets will not be realized. Management believes that is more
likely than not that its net deferred tax assets will be realized based on the weight of
positive evidence and future income except with respect to the loss in Brazil and a portion
of the state loss in the US. The Company has a valuation allowance for Brazil December
31, 2023 and December 31, 2022 of $4,427 and $7,355, respectively. The Company has
a valuation allowance in the U.S. at December 31, 2023 and December 31, 2022 of $265
and $426, respectively. The Company has gross U.S. federal net operating loss
carryforwards at December 31, 2023 and December 31, 2022 of $36,649 and $50,829,
respectively, with amounts beginning to expire in 2024. The Company has gross net
operating loss carryforwards in Brazil at December 31, 2023 and December 31, 2022 of
$5,059 and $6,015, respectively, and has an unlimited carryforward period. The
Company has no gross net operating loss carryforwards in Poland at December 31, 2023
and $346 as of December 31, 2022. The Company has gross net operating loss
carryforwards in France at December 31, 2023 and December 31, 2022 of $4,321 and
$7,433, respectively, and has an unlimited carryforward period. The Company has gross
net operating loss carryforwards in Viskase Germany at December 31, 2023 and
December 31, 2022 of $5,882 and $7,704 for Income Tax and Trade Tax, respectively. The
Company has no gross net operating loss carryforwards in CT Casings at December 31,
2023 and $2,551 as of December 31, 2022 for Income Tax and Trade Tax.
20232022Deferred tax asset Provisions not currently deductible$10,520$7,756 Inventory basis differences1,7973,031 Stock options41 42 Pension and healthcare 4,3126,281 Net operating loss carryforwards15,79519,903 Lease liability6,4096,003 Foreign exchange and other2,0211,067 Valuation allowance(4,692) (7,781) Total deferred tax asset$36,203$36,302Deferred tax liability Property, plant, and equipment($7,106)($6,631) Intangible asset(4,772)(4,912) Right of use assets(6,480)(5,903) Foreign exchange and other(2,269) - Total deferred tax liability($20,627)($17,446)$15,576$18,85620232022Non-current deferred tax assets$18,597$22,261Non-current deferred tax liability(3,021) (3,405) Non-current deferred tax assets, net$15,576$18,856
Following the Equity Private Placement, Icahn Enterprises L.P. (“IELP”) became the
beneficial owner of more than 80% of the shares of our common stock and the Company
became a member of the consolidated group of a corporate subsidiary of Icahn
Enterprises for U.S. federal income tax purposes (the “IEP Corporate Subsidiary”). As a
result, the IEP Corporate Subsidiary and the Company entered into a tax allocation
agreement for the allocation of certain income tax items. The Company and its
subsidiaries consented to join the IEP Corporate Subsidiary’s federal consolidated return
and, if elected by the IEP Corporate Subsidiary, certain state consolidated returns.
Uncertainty in Income Taxes
The uncertain tax positions as of December 31, 2023 totaled $9,190. The following table
summarizes the activity related to the unrecognized tax benefits.
In 2023, the Company recognized an approximate net decrease of $6,793 to the reserves
for uncertain tax positions.
Approximately $9,190 of the total gross unrecognized tax benefits represents the amount
that, if recognized, would affect the effective income tax rate in future periods. The
Company and its subsidiaries are subject to U.S. federal income tax as well as income tax
of multiple state and foreign jurisdictions. The Company has substantially concluded all
U.S. federal income tax matters for years through 2016. Substantially all material state
and local and foreign income tax matters have been concluded for years through 2013.
Based on the expiration of the statute of limitations for certain jurisdictions, it is reasonably
possible that the unrecognized tax benefits will decrease in the next twelve months by
approximately $1,600.
The Company's continuing practice is to recognize interest and/or penalties related to
income tax matters in income tax expense. During the years ended December 31, 2023
and 2022, the Company recorded adjustments for interest of $569 and $835, respectively,
and for penalties of $10 and $10, respectively, related to these unrecognized tax benefits.
In total, as of December 31, 2023 and 2021, the Company has recorded a liability of
interest of $3,715 and $3,146, respectively, and $167 and $157, respectively, for potential
penalties.
13. Goodwill and Intangible Assets, net
The Company currently has $3,321 of goodwill with no impairment.
Goodwill consists of the following:
(in thousands)20232022Unrecognized tax benefits as of January 1$15,983 $16,158Increases in positions taken in a prior period - 26 Decreases in positions taken in a prior period - - Decreases de to settlements- - Increases due to currency translation- - Decreases due to currency translation- (201) Decreases due to lapse of statute of limitations(6,793) - Unrecognized tax benefits as of December 31$9,190$15,983
Intangible assets, net consists of the following:
Amortization expense associated with definite-lived intangible assets was $1,606, $1,576
and $1,755 for the years ended December 31, 2023, 2022 and 2021, respectively. We
utilize the straight-line method of amortization, recognized over the estimated useful lives
of the assets.
The estimated future amortization expense for our definite-lived intangible assets is as
follows:
December 31, 2023December 31, 2022Beginning balance$3,207 $3,373 Translation114 (166)Ending balance $3,321 $3,207 Gross Carrying ValueAccumulated AmortizationNet Carrying ValueDefinite live intangible assets: Customer relationships$19,382 ($6,969)$12,413 Technologies2,318 (1,295)1,023 Patents/Trademarks9,866 (7,603)2,263 In-place leases201 (101)100 $31,767 ($15,968)$15,799 December 31, 2023Gross Carrying ValueAccumulated AmortizationNet Carrying ValueDefinite live intangible assets: Customer relationships$18,708 ($5,760)$12,948 Technologies2,234 (1,077)1,157 Patents/Trademarks9,681 (7,089)2,592 In-place leases194 (83)111 $30,817 ($14,009)$16,808 December 31, 20222024$1,625 20251,625 20261,625 20271,625 20281,625 Total thereafter7,674 Total amortization$15,799
14. Contingencies
The Company from time to time is involved in various other legal proceedings, none of
which are expected to have a material adverse effect upon results of operations, cash
flows or financial condition.
15. Stock-based compensation (Dollars in Thousands, except Per Share Amount)
Stock-based compensation cost is measured at the grant date based on fair value of
the award and is recognized as an expense on a straight-line basis over the requisite
service period, which is the vesting period. Included in net income is non-cash
compensation expense of $0 for the years ended December 31, 2023, 2022 and 2021.
The fair values of the options granted during 2013 were estimated on the date of grant
using the binomial option pricing model. The assumptions used and the estimated fair
values are as follows:
In April 2013, the Company granted non-qualified stock options to its current Chief
Administrative Officer for the purchase of 325,000 shares of its common stock under an
employment agreement. Options were granted at the fair market value at date of
grant and are fully vested. The options for the Chief Administrative Officer were
forfeited on June 26, 2022.
The Company's outstanding options were:
Vested and exercisable options as of December 31, 2023 were zero.
16. Research and Development Costs
Research and development costs are expensed as incurred and totaled $4,755, $5,267
and $4,531 for 2023, 2022, and 2021, respectively.
2013Expected term10 yearsExpected stock volatility17.33%Risk-free interest rate1.75%Expected forfeiture rate0.00%Fair value per option$0.51Weighted AverageWeighted AverageShares Under Weighted AverageRemainingGrant-DateOptionExercise PriceContractual LifeFair ValueOutstanding, December 31, 2021325,0008.00$ 41 months0.51$ Vested and exercisable at Dec. 31, 2021325,000 8.00$ 41 months0.51$ Granted- -$ - - Exercised- -$ - - Forfeited(325,000) -$ - - Outstanding, December 31, 2022- -$ - -$ Vested and exercisable at Dec. 31, 2022- -$ - -$ Granted- -$ - - Exercised- -$ - - Forfeited- -$ - - Outstanding, December 31, 2023- -$ -$ Vested and exercisable at Dec. 31, 2023- -$ -$
17. Related-Party Transactions
As of December 31, 2023, and December 31, 2022, Icahn Enterprises L.P. owned
approximately 90.14% and 90.0% of our outstanding common stock, respectively.
Equity Private Placement of Common Stock & Change in Number of Authorized Shares
Beginning in the first quarter of 2020, the Company entered into discussions with a number
of banks, including BofA, regarding the terms of a new senior credit facility which would
replace both the Term Loan and the ABL Loan. Under the new senior credit facility
proposed by BofA, the Company was required to raise at least $100,000 in equity capital,
the proceeds of which were to be used, together with borrowings under the new senior
credit facility, to repay the Term Loan and the ABL Loan. The Company met this condition
through the issuance of 50,000,000 shares of common stock to an affiliate of IELP in a
private placement transaction at a purchase price of $2.00 per share (the “Equity Private
Placement”). In order to complete the offering of the Equity Private Placement, the
Company amended its Amended and Restated Certificate of Incorporation to increase
the number of authorized shares of the Company’s common stock by 50,000,000 shares.
Prior to the completion of the Equity Private Placement, IELP beneficially owned
approximately 78.6% of the Company’s outstanding common stock. As a result of the
Equity Private Placement, IELP is the beneficial owner of approximately 89.0% of the
Company’s outstanding common stock. The Equity Private Placement was approved by
a Special Committee of disinterested directors of the Company.
Pension Liabilities
Applicable pension and tax laws make each member of a "controlled group" of entities,
generally defined as entities in which there is at least an 80% common ownership interest,
jointly and severally liable for certain pension plan obligations of any member of the
controlled group. These pension obligations include ongoing contributions to fund the
plan, as well as liability for any unfunded liabilities that may exist at the time the plan is
terminated. In addition, the failure to pay these pension obligations when due may result
in the creation of liens in favor of the pension plan or the Pension Benefit Guaranty
Corporation ("PBGC") against the assets of each member of the controlled group.
As a result of the Equity Private Placement, IELP became the beneficial owner of more
than 80% of the shares of our common stock and the Company became subject to the
pension liabilities of all entities in which Mr. Icahn has a direct or indirect ownership interest
of at least 80%. One such entity, ACF Industries LLC ("ACF"), is the sponsor of several
pension plans. All the minimum funding requirements of the Internal Revenue Code, as
amended, and the Employee Retirement Income Security Act of 1974, as amended, for
the ACF plans have been met as of December 31, 2021. If the plans were voluntarily
terminated,
they would be underfunded by approximately $6,800 as of
December 31, 2023. These results are based on the most recent information provided by
the plans’ actuary. These liabilities could increase or decrease, depending on a number
of factors, including future changes in benefits, investment returns, and the assumptions
used to calculate the liability. As members of the controlled group, we would be liable
for any failure of ACF to make ongoing pension contributions or to pay the unfunded
liabilities upon a termination of the ACF pension plans. In addition, other entities now or
in the future within the controlled group in which we are included may have pension plan
obligations that are, or may become, underfunded and we would be liable for any failure
of such entities to make ongoing pension contributions or to pay the unfunded liabilities
upon termination of such plans.
The current underfunded status of the ACF pension plans requires them to notify the
PBGC of certain “reportable events,” such as if we cease to be a member of the ACF
controlled group, or if we make certain extraordinary dividends or stock redemptions.
The obligation to report could cause us to seek to delay or reconsider the occurrence of
such reportable events.
In connection with the Equity Private Placement, the Company entered into an
agreement with Icahn Enterprises Holdings L.P. pursuant to which Icahn Enterprises
Holdings L.P. has agreed to indemnify us and our subsidiaries from losses resulting from
any imposition of certain pension funding or termination liabilities that may be imposed
on us and our subsidiaries or our assets as a result of being a member of the Icahn
controlled group.
Based on the contingent nature of potential exposure related to these affiliate pension
obligations and the indemnification from Icahn Enterprises Holdings L.P., no liability has
been recorded in the accompanying consolidated financial statements.
Tax Allocation
Following the Equity Private Placement, IELP became the beneficial owner of more than
80% of the shares of our common stock and the Company became a member of the
consolidated group IEP Corporate Subsidiary for U.S. federal income tax purposes. As a
result, the IEP Corporate Subsidiary and the Company entered into a tax allocation
agreement for the allocation of certain income tax items. The Company and its
subsidiaries consented to join the IEP Corporate Subsidiary’s federal consolidated return
and, if elected by the IEP Corporate Subsidiary, certain state consolidated returns. In
those jurisdictions where the Company and its subsidiaries will file consolidated returns
with the IEP Corporate Subsidiary, the Company will pay to the IEP Corporate Subsidiary
any tax it would have owed had it and its subsidiaries continued to file as a separate
consolidated group. To the extent that the IEP Corporate Subsidiary consolidated group
is able to reduce its tax liability as a result of including the Company and its subsidiaries
in its consolidated group, the IEP Corporate Subsidiary will pay the Company 20% of such
reduction on a current basis and the Company will be treated as if it would carry forward
for its own use under the tax allocation agreement, 80% of the items that caused the tax
reduction (the “Excess Tax Benefits”). Moreover, if the Company and its subsidiaries
should ever become deconsolidated from the IEP Corporate Subsidiary, the IEP
Corporate Subsidiary will reimburse the Company for any tax liability in post-consolidation
years that the Company and its subsidiaries would have avoided had they actually had
the Excess Tax Benefits for their own consolidated group use. The cumulative payments
to the Company by the IEP Corporate Subsidiary post-consolidation will not exceed the
cumulative reductions in tax to the IEP Corporate Subsidiary group resulting from the use
of the Excess Tax Benefits by the IEP Corporate Subsidiary group.
18. Business Segment Information and Geographic Area Information
The Company primarily manufactures and sells cellulosic food casings as its sole business
segment. The Company’s operations are viewed in geographic regions of North
America, South America, Europe and Asia. Intercompany sales and charges (including
royalties) have been reflected as appropriate in the following information. Certain items
are maintained at the Company’s corporate headquarters and are not allocated
geographically. They include most of the Company’s debt and related interest expense
and income tax benefits.
Reporting Segment Information:
19. Interest Expense, Net
Net interest expense, net consisted of:
202320222021Net salesNorth America$222,093$216,819$203,525South America53,20150,62149,674Europe201,629187,401184,823Asia46,16248,94049,951Other and eliminations(77,101)(72,947)(72,301)$445,984$430,834$415,672Operating income North America$5,008$269($1,290)South America6,0946,3348,074Europe20,5977,7746,445Asia7,6847,8707,878 $39,383$22,247$21,107Net Sales by countryUnited States$135,057$134,885$121,114Brazil28,73325,22628,808Italy27,18428,24928,093Germany22,59423,01429,747France12,15910,97612,946Philippines27,29931,64428,741Poland9,9979,32810,154Other international182,961167,512156,069$445,984$430,834$415,672December 31, 2023December 31, 2022December 31, 2021Interest expense$12,152$8,433$6,319Less Capitalized interest(134) - (162) Interest expense, net$12,018$8,433$6,157
20. Changes in Accumulated Other Comprehensive Loss
21. Variable Interest Entity
The Company holds a variable interest in a joint venture for which the Company is the
primary beneficiary. The joint venture, VE Netting, LLC, is a manufacturing, marketing and
selling company of high-quality netting solutions for the meat and poultry industry. VE
Netting, LLC is a Delaware limited liability company with its principal place of business in
Lombard, IL. The netting product is manufactured under agreement by Viskase’s affiliate
located in Monterrey, Mexico.
As the primary beneficiary of the variable interest entity (VIE), the VIEs’ assets, liabilities,
and results of operations are included in the Company’s consolidated financial
statements as of, and for the period ended, December 31, 2023 and December 31, 2022.
The other equity holders’ interests are reflected in “Net loss attributable to noncontrolling
interests” in the Consolidated Statements of Operations and “Noncontrolling interests” in
the Consolidated Balance Sheets.
The following table summarizes the carrying amount of the VIEs’ assets and liabilities
included in the Company’s Consolidated Balance Sheets at December 31, 2023 and
December 31, 2022:
Accrued Employee BenefitsTranslation AdjustmentsTotalBalance at December 31, 2022($24,747)($42,367)($67,114)Other comprehensive income (loss) before reclassifications 2,476 5,280 7,756 Reclassifications from accumulated other comprehensive loss to earnings158- 158Balance at December 31, 2023($22,113)($37,087)($59,200)Amounts Reclassified from Accumulated Other Comprehensive Loss Affected Line Items in the Consolidated Statement of Operations Accrued Employee Benefits Amortization of net actuarial loss 158Other Expense, net$158
All assets in the above table can only be used to settle obligations of the consolidated
VIE. Liabilities are nonrecourse obligations. Amounts presented in the table above are
adjusted for intercompany eliminations.
The following table summarizes the Statement of Operations of the VIE included in the
Company’s Consolidated Statement of Operations for the period ended December 31,
2023 and December 31, 2022.
December 31, 2023December 31, 2022ASSETS Current assets: Cash and cash equivalents$23$114 Receivables, net104131 Inventories508682 Other current assets10956Property, plant and equipment1,2771,309Less: Accumulated depreciation(742)(631) Property, plant and equipment,net535678Other assets2025Total Assets$1,299$1,686LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities8141,059Total Liabilites8141,059Paid in capital2,9312,931Retained earnings(2,446)(2,304)Total Stockholder Equity485627Total Liabilities and Stockholders' Equity$1,299$1,686December 31, 2023December 31, 2022December 31, 2021Net sales$1,348$1,197$974Cost of sales1,2071,371981Gross margin141(174)(7)Selling, general and administrative197228206Asset impairment18- - Operating loss(74)(402)(213)Other expense 648760 Loss before income taxes(138)(489)(273) Income tax expense- - - Net loss($138)($489)($273)
22. Subsequent Events
Viskase evaluated its December 31, 2023 consolidated financial statements for
subsequent events through March 28, 2024, the date the consolidated financial
statements were available to be issued.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
AND RESULTS OF OPERATIONS (Unaudited)
FINANCIAL CONDITION
Company Overview
The Company operates in the casing product segment of the food industry. Viskase is a
worldwide leader in the production and sale of cellulosic, fibrous and plastic casings for
the processed meat and poultry industry. Viskase currently operates ten manufacturing
facilities throughout North America, Europe, South America and Asia. Viskase provides
value-added support services relating to these products for some of the world's largest
global consumer products companies. Viskase is one of the two largest worldwide
producers of non-edible cellulosic casings for processed meats and one of the three
largest manufacturers of non-edible fibrous casings.
Our net sales are driven by consumer demand for meat products and the level of
demand for casings by processed meat manufacturers, as well as the average selling
prices of our casings. Specifically, demand for our casings is dependent on population
growth, overall consumption of processed meats and the types of meat products
purchased by consumers. Average selling prices are dependent on overall supply and
demand for casings and our product mix.
Our cellulose, fibrous and plastic casing extrusion operations are capital-intensive and
are characterized by high fixed costs. Our finishing operations are labor intensive. The
industry’s operating results have historically been sensitive to the global balance of
capacity and demand. The industry’s extrusion facilities produce casings under a timed
chemical process and operate continuously.
Our contribution margin varies with changes in selling price, input material costs, labor
costs and manufacturing efficiencies. The total contribution margin increases as demand
for our casings increases. Our financial results benefit from increased volume because
we do not have to increase our fixed cost structure in proportion to increases in demand.
For certain products, we operate at near capacity in our existing facilities. We regularly
evaluate our capacity and projected market demand. We believe the current and
planned cellulosic production capacity in our industry is in balance with global demand.
Comparison of Results of Operations for Years Ended December 31, 2023, 2022 and 2021.
The following discussion compares the results of operations for the fiscal year ended
December 31, 2023 to the results of operations for the fiscal year ended December 31,
2022, and compares the results of operations for the fiscal year ended December 31,
2022 to the results of operations for the fiscal year ended December 31, 2021. We have
provided the table below in order to facilitate an understanding of this discussion. The
table shows our results of operations (in millions) for the 2023, 2022 and 2021 fiscal years.
NM= Not meaningful when comparing positive to negative numbers or to zero.
2023 Versus 2022
Net Sales. Our net sales for 2023 were $446.0 million, which represents an increase of
$15.2 million or 3.5% from the prior year. Net sales increased $40 million from price and
mix, $2 million due to foreign currency translation and decrease $27 million due to
volume.
Cost of Sales. Cost of sales for 2023 decreased 1.3% from the comparable prior year
period. The decrease is mainly due to lower sales volume, decreased expense for raw
materials and distribution cost offset by lower absorption of manufacturing costs at our
plants and manufacturing performance.
Selling, General and Administrative Expenses. We increased selling, general and
administrative expenses from $50.3 million in 2022 to $52.4 million in 2023. The increase is
mainly due to increased costs for employee compensation plans.
Amortization of Intangibles. The Company incurred an expense of $1.6 million during 2023
and 2022 on the amortization of intangibles recognized with the acquisitions.
Asset Impairment Charge. The Company incurred an asset impairment charge of $0.3
million in 2023 related to assts removed from service.
Operating Income. Operating income for 2023 was $39.4 million, representing an
increase of $17.2 million from the prior year. The increase in operating income was
primarily due to items discussed above.
YearYearYearEndedEndedEndedDecDecDec31, 202331, 202231, 2021NET SALES$446.03.5%$430.83.6%$415.7Cost of sales352.2-1.3%356.73.8%343.6Selling, general and administrative52.44.2%50.34.4%48.2Amortization of intangibles1.60.0%1.6-11.1%1.8Asset impairment0.3 NM- -100.0%0.5Restructing expense- NM- -100.0%0.5OPERATING INCOME39.477.5%22.25.2%21.1Interest expense, net of income12.042.9%8.435.5%6.2Other expense, net10.4136.4%4.4-68.1%13.8Income tax provision 3.5-50.7%7.157.8%4.5NET INCOME (LOSS) $13.5487.0%$2.3NM($3.4)
Interest Expense. Interest expense, net of interest income, for 2023 was $12.0 million,
representing an increase of $3.6 million compared to 2022. The increase is a result of a
higher interest rate on our Term loan.
Other Expense. Other expense for 2023 was approximately $10.4 million, representing an
increase of $6.0 million over 2022. The increase is primarily due to the reversal of a
receivable on an uncertain tax position with the benefit running through the income tax
provision.
Income Tax Provision. During 2023, an income tax expense of $3.5 million was recognized
on the income before income taxes of $17.0 million compared to income tax expense of
$7.1 million in 2022. The 2023 effective income tax rate was 20.7% compared to 75.8% for
2022. The income tax rate benefited from the reversal of an uncertain tax position.
Primarily as a result of the factors discussed above, net income for 2023 was $12.8 million
compared to net income of $2.3 million for 2022.
2022 Versus 2021
Net Sales. Our net sales for 2022 were $430.8 million, which represents an increase of
$15.1 million or 3.6% from the prior year. Net sales increased $60 million from price and
mix, offset by a decrease of $16 million due to foreign currency translation and $29 million
due to volume.
Cost of Sales. Cost of sales for 2022 increased 3.8% from the comparable prior year
period. The increase is mainly due to inflation of raw material cost and lower absorption
of manufacturing costs at our plants due to labor and raw material supply shortages.
Selling, General and Administrative Expenses. We increased selling, general and
administrative expenses from $48.2 million in 2021 to $50.3 million in 2022. The increase is
mainly due to higher costs for employee compensation plans.
Amortization of Intangibles. The Company incurred an expense of $1.6 million during 2022
on the amortization of intangibles recognized with the acquisitions compared to $1.8
million in 2021.
Asset Impairment Charge. The Company incurred an asset impairment charge of $0.5
million in 2021 related to a prepaid IP royalty.
Restructuring Expense. Restructuring expense of $0.5 million during 2021 resulted from the
planned partial relocation of our manufacturing operation in Thaon, France and a
downsizing of our facility in Bomlitz, Germany. The plan involved the involuntary
termination of approximately 150 employees. The Company anticipates an annual
savings of $10.0 million per year when the plan is fully implemented.
Operating Income. Operating income for 2022 was $22.2 million, representing an
increase of $1.1 million from the prior year. The increase in operating income was primarily
due to higher gross profit.
Interest Expense. Interest expense, net of interest income, for 2022 was $8.4 million,
representing an increase of $2.2 million compared to 2021. The increase is a result of a
higher interest rate on our Term loan and increased borrowing.
Other Expense. Other expense for 2022 was approximately $4.4 million, representing an
decrease of $9.4 million over 2021. The decrease is primarily due to foreign currency
translation loss.
Income Tax Provision. During 2022, an income tax expense of $7.1 million was recognized
on the income before income taxes of $9.4 million compared to income tax expense of
$4.5 million in 2021. The 2022 effective income tax rate was 75.8% compared to 386.5%
for 2021.
Primarily as a result of the factors discussed above, net income for 2022 was $2.3 million
compared to net loss of $3.4 million for 2021.
Liquidity and Capital Resources
Cash and cash equivalents decreased by $0.9 million during 2023. Net cash provided by
operating activities was $45.9 million and net cash used in investing activities was $14.5
million. Net cash used in financing activities was $29.3 million. Cash flows provided by
operating activities were principally attributable to results from operations. Our inventory
increased during 2023 due to increased raw material pricing for our manufacturing
plants. Cash flows used in investing activities were principally attributable to capital
expenditure. Cash flows provided by financing activities principally consisted of debt
repayments.
Our cash held in foreign banks was $7.2 million (against a total cash balance of $7.7
million) and $9.1 million (against a total cash balance of $8.7 million) as of December 31,
2023 and December 31, 2022, respectively. Any cash held by our foreign subsidiaries does
not have a significant impact on our overall liquidity, but if we fail to generate sufficient
cash through our domestic operations, our foreign operations could be a potential
source of liquidity.
As of December 31, 2023, the Company had positive working capital of approximately
$140.3 million, with additional amounts of credit available under its New Senior Credit
Facility.
New Senior Credit Facility
On October 09, 2020, the Company entered into a Credit Agreement with Bank of
America, N.A. (“BofA”) as Administrative Agent, Swingline Lender and L/C Issuer, and the
other Lender parties thereto, providing for a $150,000 term loan (the “New Term Loan”)
and a $30,000 revolving credit facility (the “New Revolving Credit Facility” and together
with the New Term Loan, the “New Senior Credit Facility”).
On August 10, 2022, the Company entered into the Second Amendment to the New
Senior Credit Facility (the “Amended Senior Credit Facility”). The Amended Senior Credit
Facility increased the commitment of the New Revolving Credit Facility to $37,000 and
transitioned Term Loans on September 30, 2022 and Revolving Loans on August 30,2022
from LIBOR Loans to SOFR Loans. Amended terms of the facility are stated below.
The interest rates per annum applicable to the Amended Senior Credit Facility (other than
in respect of Swingline Loans) will be SOFR, but in any event, not less than 0.00%, plus the
Applicable Rate (as defined below), or, for U.S. dollar denominated loans only, made to
the Company at the option of the Company, the Base Rate, defined as the highest of:
(a) the Federal Funds Rate plus one-half percent (0.50%); (b) the Bank of America prime
rate; and (c) the one (1) month SOFR (adjusted daily) plus one percent (1.00%), but in
any case not less than 1.00%. plus the Applicable Rate. Applicable Rate means, with
respect to the Amended Senior Credit Facility, a percentage per annum to be
determined in accordance with the applicable pricing grid set forth in the Amended
Senior Credit Facility based upon the Company’s Consolidated Coverage Ratio as
reflected in a quarterly Compliance Certificate. Each Swingline Loan shall bear interest
at the Base Rate plus the Applicable Rate for Base Rate loans under the New Revolving
Credit Facility. As of December 31, 2023, our current interest rate is 7.49%.
The Amended Senior Credit Facility requires the Company to repay principal of the New
Term Loan at the rate of 5% of the original principal balance during each of the first two
years, 7.5% during the third and fourth years and 10% of the original principal balance
during the fifth year. The maturity date on the Amended Senior Credit Facility is August
13, 2026.
The Company may prepay the Amended Senior Credit Facility, in whole or in part, at any
time without premium or penalty, subject to reimbursement of the Lenders’ breakage
and redeployment costs in the case of prepayment of LIBOR borrowings and foreign
currency borrowings bearing interest at a rate other than LIBOR. Each such prepayment
of the New Term Facility shall be applied as directed by the Company. The unutilized
portion of the commitments under the Amended Senior Credit Facility may be
irrevocably reduced or terminated by the Company at any time without penalty.
The Amended Senior Credit Facility is guaranteed by each existing and future direct and
indirect wholly owned material domestic Restricted Subsidiary and foreign Restricted
Subsidiary of the Company (other than any Brazilian subsidiary). The Amended Senior
Credit Facility is secured by substantially all assets of the Company and its material
domestic Restricted Subsidiaries, with the exception of real property.
The Amended Senior Credit Facility contains various covenants which restrict the
Company’s ability to, among other things, incur indebtedness, create liens on our assets,
make investments, enter into merger, consolidation or acquisition transactions, dispose
of assets (other than in the ordinary course of business), make certain restricted
payments, enter into sale and leaseback transactions and transactions with affiliates, in
each case subject to permitted exceptions. The Amended Senior Credit Facility also
requires that we comply with certain financial covenants, including meeting a
consolidated leverage ratio and consolidated fixed charge coverage ratio. The
Company is in compliance with the Amended Senior Credit Facility covenants as of
December 31, 2023.
Foreign Lines of Credit
In its foreign operations, the Company has unsecured lines of credit with various banks
providing approximately $12,000 of availability. There were borrowings of $10,498 under
the lines of credit on December 31, 2023 and no borrowings at December 31, 2022. As
of December 31, 2023, our current interest rate is 5.85%.
Pension and Postretirement Benefits
Our long-term pension and postretirement benefit liabilities totaled $32.2 million at
December 31, 2023.
Expected annual cash contributions for U.S. pension liabilities are expected to be (in
millions):
Contract Obligations
As of December 31, 2023, the aggregate maturities of debt(1), leases and purchase
commitments for each of the next five years are (in millions):
(1) The aggregate maturities of debt represent amounts to be paid at maturity and not the
current carrying value.
New Accounting Pronouncements
Please reference Footnote 1 in our Notes to Consolidated Financial Statements.
FORWARD-LOOKING STATEMENTS
This report includes “forward-looking statements.” Forward-looking statements are those
that do not relate solely to historical fact. These statements relate to future events or our
future financial performance and implicate known and unknown risks, uncertainties and
other factors that may cause the actual results, performances or levels of activity of our
business or our industry to be materially different from that expressed or implied by any
such forward-looking statements. They include, but are not limited to, any statement that
may predict, forecast, indicate or imply future results, performance, achievements or
events. In some cases, you can identify forward-looking statements by use of words such
as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” “will,”
“would,” “could,” “predict,” “propose,” “potential,” “may” or words or phrases of similar
meaning. Statements concerning our financial position, business strategy and measures
to implement that strategy, including changes to operations, competitive strengths,
goals, plans, references to future success and other similar matters are forward-looking
statements. Forward-looking statements may relate to, among other things:
our ability to meet liquidity requirements and to fund necessary capital expenditures;
the strength of demand for our products, prices for our products and changes in overall
demand;
assessment of market and industry conditions and changes in the relative market shares of
industry participants;
consumption patterns and consumer preferences;
20242025202620272028Pension $ 3.0 $ 5.9 $ 6.0 $ 6.0 $ 6.1 20242025202620272028ThereafterTerm Credit Facility $ 11.3 $ 13.1 $ 99.4 $ - $ - $ - Operating Leases4.84.53.93.83.514.7Other 10.5 - 0.9 - - - $ 26.6 $ 17.6 $ 104.2 $ 3.8 $ 3.5 $ 14.7
the effects of competition and competitor responses to our products and services ;
our ability to realize operating improvements and anticipated cost savings;
pending or future legal proceedings and regulatory matters;
general economic conditions and their effect on our business;
changes in the cost or availability of raw materials and changes in energy prices or other costs;
pricing pressures for our products;
the cost of and compliance with environmental laws and other governmental regulations;
our results of operations for future periods;
our anticipated capital expenditures;
our ability to pay, and our intentions with respect to the payment of, dividends on shares of our
capital stock;
our ability to protect our intellectual property;
economic and industry conditions affecting our customers and suppliers
our ability to identify, complete and integration acquisitions; and
our strategy for the future, including opportunities that may be presented to and/or pursued by
us.
These forward-looking statements are not guarantees of future performance. Forward-
looking statements are based on management’s expectations that involve risks and
uncertainties.