<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                       __

                                    FORM 10-Q


[ X ]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

        For the quarterly period ended       March 31, 1999
                                      --------------------------

                                       OR

[   ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

        For the transition period from ____________ to ____________


                          Commission file number  0-5485
                                                 --------

                             VISKASE COMPANIES, INC.
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Delaware                                             95-2677354
-------------------------------                              ----------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

6855 W. 65th Street, Chicago, Illinois                                 60638
--------------------------------------                                -------
(Address of principal executive offices)                             (Zip Code)

       Registrant's telephone number, including area code: (708) 496-4200



      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X   No
                                             ---    ---

      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 May 15, 1999, there were 14,879,707 shares outstanding of the
registrant's Common Stock, $.01 par value.


                               Page 1 of 33 Pages


<PAGE>   2


                          INDEX TO FINANCIAL STATEMENTS



                    VISKASE COMPANIES, INC. AND SUBSIDIARIES

               UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S>                                                                                           <C>
Consolidated balance sheets at March 31, 1999 (unaudited) and December 31, 1998                4

Unaudited consolidated statements of operations for the three months ended
     March 31, 1999 and March 26, 1998                                                         5

Unaudited consolidated statements of cash flows for the three months ended
     March 31, 1999 and March 26, 1998                                                         6

Notes to consolidated financial statements                                                     7
</TABLE>


                  VISKASE HOLDING CORPORATION AND SUBSIDIARIES

               UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S>                                                                                           <C>
Consolidated balance sheets at March 31, 1999 (unaudited) and December 31, 1998               21

Unaudited consolidated statements of operations for the three months ended
     March 31, 1999 and March 26, 1998                                                        22

Unaudited consolidated statements of cash flows for the three months ended
     March 31, 1999 and March 26, 1998                                                        23

Notes to consolidated financial statements                                                    24
</TABLE>










                                       2

<PAGE>   3




                          PART I. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


The financial information included in this quarterly report has been prepared in
conformity with the accounting principles and practices reflected in the
financial statements included in the annual report on Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 1998 (1998
Form 10-K). These quarterly financial statements should be read in conjunction
with the financial statements and the notes thereto included in the 1998 Form
10-K. The accompanying financial information, which is unaudited, reflects all
adjustments which are, in the opinion of management, necessary for a fair
statement of the results for the interim periods presented.

The condensed consolidated balance sheet as of December 31, 1998 was derived
from the audited consolidated financial statements in the Company's annual
report on Form 10-K.

Reported interim results of operations are based in part on estimates which may
be subject to year-end adjustments. In addition, these quarterly results of
operations are not necessarily indicative of those expected for the year.











                                       3

<PAGE>   4

                    VISKASE COMPANIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                           March 31,            December 31,
                                                             1999                   1998
                                                             ----                   ----
                                                         (unaudited)
                                                                    (in thousands)

<S>                                                       <C>                    <C>
ASSETS
Current assets:
   Cash and equivalents                                    $ 10,699               $  9,028
   Receivables, net                                          47,902                 47,718
   Inventories                                               94,871                 93,228
   Other current assets                                      21,598                 15,337
                                                           --------               --------
     Total current assets                                   175,070                165,311

Property, plant and equipment,
   including those under capital leases                     475,582                475,525
   Less accumulated depreciation
     and amortization                                       153,771                145,680
                                                           --------               --------
   Property, plant and equipment, net                       321,811                329,845

Deferred financing costs, net                                   946                  1,198
Other assets                                                 33,896                 34,715
Excess reorganization value, net
                                                           --------               --------
     Total assets                                          $531,723               $531,069
                                                           ========               ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Short-term debt including current portion
     of long-term debt and obligations
     under capital leases                                  $ 17,420               $ 16,120
   Accounts payable                                          35,122                 36,337
   Accrued liabilities                                       63,702                 62,319
   Current deferred income taxes                              8,810                  8,810
                                                           --------               --------
     Total current liabilities                              125,054                123,586

Long-term debt including obligations
   under capital leases                                     404,032                388,880

Accrued employee benefits                                    48,146                 48,115
Deferred and noncurrent income taxes                         23,316                 26,395

Commitments and contingencies

Stockholders' equity:
   Preferred stock, $.01 par value;
     none outstanding
   Common stock, $.01 par value;
     14,869,087 shares issued and
     outstanding at March 31, 1999 and
     14,859,467 shares at December 31, 1998                     149                    149
   Paid in capital                                          136,754                136,715
   Accumulated (deficit)                                   (208,790)              (197,454)
   Cumulative foreign currency
     translation adjustments                                  3,062                  4,693
   Unearned restricted stock issued
     for future service                                                                (10)
                                                           --------               --------
     Total stockholders' equity (deficit)                   (68,825)               (55,907)
                                                           --------               --------
     Total liabilities and stockholders' equity            $531,723               $531,069
                                                           ========               ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.



                                       4

<PAGE>   5

                    VISKASE COMPANIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                   Three Months         Three Months
                                                                   Ended March          Ended March
                                                                     31, 1999             26, 1998
                                                                     --------             --------
                                                    (in thousands, except for number of shares and per share amounts)

<S>                                                               <C>                  <C>
NET SALES                                                            $ 92,067             $101,277

COSTS AND EXPENSES
    Cost of sales                                                      69,382               74,261
    Selling, general and administrative                                20,277               21,378
    Amortization of intangibles
      and excess reorganization value                                   1,250                3,468
                                                                     --------             --------

OPERATING INCOME                                                        1,158                2,170

    Interest income                                                       103                  185
    Interest expense                                                   10,333               13,475
    Other expense, net                                                  3,084                  789
                                                                     --------             --------

(LOSS) FROM CONTINUING OPERATIONS
  BEFORE INCOME TAXES                                                 (12,156)             (11,909)

    Income tax (benefit)                                                 (820)                (726)
                                                                     --------             --------

NET (LOSS) FROM CONTINUING OPERATIONS                                 (11,336)             (11,183)

DISCONTINUED OPERATIONS:
  (Loss) from discontinued operations
    net of income taxes (Note 5)                                                              (207)
                                                                     --------             --------

NET (LOSS)                                                            (11,336)             (11,390)

Other comprehensive (loss) income, net of tax:
  Foreign currency translation adjustments                               (995)                 331
                                                                     --------             --------

COMPREHENSIVE LOSS                                                   $(12,331)            $(11,059)
                                                                     ========             ========

WEIGHTED AVERAGE COMMON SHARES
  - BASIC AND DILUTED                                              14,867,057           14,773,346
                                                                   ==========           ==========

PER SHARE AMOUNTS:

EARNINGS (LOSS) PER SHARE
  - basic and diluted
  Continuing operations                                                 $(.76)               $(.76)

  Discontinued operations:
    (Loss) from discontinued operations                                                       (.01)
                                                                        -----                -----

NET (LOSS)                                                              $(.76)               $(.77)
                                                                        =====                =====
</TABLE>




The accompanying notes are an integral part of the consolidated financial
statements.






                                       5

<PAGE>   6

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

<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                            ---------------------------
                                                                            March 31,         March 26,
                                                                              1999              1998
                                                                            ---------         ---------
                                                                                 (in thousands)
<S>                                                                        <C>               <C>
Cash flows from operating activities:
     Net (loss)                                                            $(11,336)         $(11,390)
     Adjustments to reconcile net (loss) to net cash
       provided by (used in) operating activities:
         Depreciation and amortization under capital lease                   10,120            11,556
         Amortization of intangibles and excess
           reorganization value                                               1,250             3,801
         Amortization of deferred financing fees and discount                   286               428
         (Decrease) in deferred and
             noncurrent income taxes                                         (2,030)           (1,582)
         Foreign currency transaction loss (gain)                                43              (106)
         Loss on disposition of assets                                           24               103
         Bad debt provision                                                     233               248

         Changes in operating assets and liabilities:
             Receivables                                                       (967)            7,377
             Inventories                                                     (2,859)          (14,581)
             Other current assets                                            (6,509)           (6,545)
             Accounts payable and accrued liabilities                         1,582             2,132
             Other                                                            1,525               590
                                                                           --------          --------
         Total adjustments                                                    2,698             3,421
                                                                           --------          --------

             Net cash (used in) operating activities                         (8,638)           (7,969)

Cash flows from investing activities:
     Capital expenditures                                                    (5,997)          (15,081)
     Proceeds from disposition of assets                                         12                37
                                                                           --------          --------
             Net cash (used in) investing activities                         (5,985)          (15,044)

Cash flows from financing activities:
     Issuance of common stock                                                    49               307
     Deferred financing costs                                                   (26)               (4)
     Proceeds from revolving loan and long-term
       borrowings                                                            30,134            20,069
     Repayment of revolving loan, long-term borrowings
       and capital lease obligation                                         (13,353)           (9,994)
                                                                           --------          --------
             Net cash provided by financing activities                       16,804            10,378

Effect of currency exchange rate changes on cash                               (510)              (58)
                                                                           --------          --------
Net increase (decrease) in cash and equivalents                               1,671           (12,693)
Cash and equivalents at beginning of period                                   9,028            24,407
                                                                           --------          --------
   Cash and equivalents at end of period                                   $ 10,699          $ 11,714
                                                                           ========          ========
----------------------------------------------------------------------------------------------------------

   Supplemental cash flow information:
     Interest paid                                                         $ 10,616          $ 11,773
     Income taxes paid                                                     $    631          $    574
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.





                                       6

<PAGE>   7


                    VISKASE COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. INVENTORIES (dollars in thousands)

Inventories consisted of:
                                                           March     December
                                                         31, 1999    31, 1998
                                                         --------    --------

Raw materials                                            $ 10,043    $ 10,500
Work in process                                            37,012      38,291
Finished products                                          47,816      44,437
                                                         --------    --------

                                                         $ 94,871    $ 93,228
                                                         ========    ========

Approximately 59% of the inventories at March 31, 1999 were valued at Last-In,
First-Out (LIFO). These LIFO values exceeded current manufacturing cost by
approximately $4.6 million at March 31, 1999.

2. DEBT OBLIGATIONS (dollars in thousands)

As discussed in Subsequent Events (refer to Note 9), the Company entered into a
$100,000 Senior Secured Credit Facility and $35,000 of Junior Term Loans in June
1999. The proceeds were used to redeem the 12% Senior Secured Notes and the
existing Revolving Credit Facility. The 12% Senior Secured Notes and existing
Revolving Credit Facility have been reclassified to long-term debt based upon
the Company's refinancing of obligations on a long-term basis.

Outstanding short-term and long-term debt consisted of:

                                                          March      December
                                                         31, 1999    31, 1998
                                                         --------    --------
Short-term debt, current maturity of long-term
  debt, and capital lease obligation:


  Current maturity of Viskase Capital Lease Obligation     14,377    $ 13,031
  Current maturity of Viskase Limited Term Loan (3.2%)      1,651       1,742
  Other                                                     1,392       1,347
                                                         --------    --------

              Total short-term debt                      $ 17,420    $ 16,120
                                                         ========    ========






                                       7

<PAGE>   8




Long-term debt:

  Secured Revolver                                       $ 30,000
  12% Senior Secured Notes due 1999                        55,000    $ 55,000
  10.25% Senior Notes due 2001                            219,262     219,262
  Viskase Capital Lease Obligation                         97,466     111,842
  Viskase Limited Term Loan (3.2%)                            815         868
  Other                                                     1,489       1,908
                                                         --------    --------
              Total long-term debt                       $404,032    $388,880
                                                         ========    ========

On August 24, 1998, the Company redeemed $105,000 of the aggregate principal
amount of its 12% Senior Secured Notes using proceeds from the Clear Shield
National, Inc. (Clear Shield) divestiture. The notes were redeemed at
approximately 108.5% of principal amount, plus accrued interest to the date of
redemption. The Company recognized an extraordinary after-tax loss of $6,800 on
the partial redemption of its 12% Senior Secured Notes. The extraordinary loss
is comprised of $8,900 of yield maintenance premiums and $2,200 write-off of
deferred debt issuance costs; net of a $4,300 income tax benefit. The remaining
$55,000 of principal outstanding on the 12% Senior Secured Notes is due and
payable at par on June 15, 1999. (Refer to Note 9)

As of March 31, 1999, the Company is in compliance with the amended covenants
under the Indenture and Amended and Restated Credit Agreement.

3. CONTINGENCIES (dollars in thousands)

In late 1993, Viskase commenced a legal action against American National Can
Company (ANC) in Federal District Court for the Northern District of Illinois,
Eastern Division, 93C7651. Viskase claimed that ANC's use of two different very
low density polyethylene plastic resins in the manufacture of ANC's multi-layer
barrier shrink film products was infringing various Viskase patents relating to
multi-layer barrier plastic films used for fresh red meat, processed meat and
poultry product applications. In November 1996, after a three-week trial, a jury
found that ANC had willfully infringed Viskase's patents and awarded Viskase
$102.4 million in compensatory damages. The Court also entered an order
permanently enjoining ANC from making or selling infringing products.

In September 1997, the Court set aside the jury verdict in part and ordered a
retrial on certain issues. The Court upheld the jury finding on the validity of
all of Viskase's patents and the jury finding that ANC had willfully infringed
Viskase's patents by ANC's use of Dow Chemical Company's "Attane" brand
polyethylene plastic resin in ANC's products. However, the Court ordered a new
trial on the issue of whether ANC's use of Dow Chemical Company's "Affinity"
brand polyethylene plastic resin infringed Viskase's patents and whether such
conduct was willful. Because the jury rendered one general damage verdict, the
Court ordered a retrial of all damage issues. By operation of the Court's order,
the injunction in respect of ANC's future use of the "Affinity" brand resin was
removed.

On August 19, 1998, the Court granted Viskase's motion for partial summary
judgment finding that ANC's use of the "Affinity" brand resin infringed
Viskase's patents. The Court also reinstated the permanent injunction. Patent
validity and infringement having been established, the remaining issues for
trial are whether ANC willfully infringed Viskase's patents by using "Affinity"
brand resin and the determination of the amount of compensatory damages. Viskase
filed a motion to have the jury verdict as to


                                       8

<PAGE>   9
compensatory damages reinstated. ANC filed a motion to dismiss the lawsuit
claiming that Viskase's patents are invalid and Viskase failed to join an
indispensable party to the lawsuit. On May 10, 1999, the Court granted Viskase's
motion to have the jury verdict as to the compensatory damages reinstated.
Viskase filed its memorandum in support of enhanced damages and ANC is expected
to file its response to Viskase's memorandum by June 18, 1999.

In addition, ANC has challenged two of the five Viskase patents in suit by
filing requests for reexamination with the United States Patent and Trademark
Office (USPTO). With respect to the challenge of the first patent, on September
25, 1998, the USPTO, after initially rejecting Viskase's claims, gave notice of
its intent to reissue Viskase's patent in its entirety. ANC filed another
request for reexamination of the patent, which has the effect of staying the
reissuance. The USPTO initially rejected Viskase's claims to which Viskase is
preparing its response. With respect to the challenge of the second patent, the
USPTO, after initially rejecting Viskase's claims, withdrew the rejection in
view of Viskase's response and raised new grounds of rejection. Viskase is
preparing a response to the new grounds of rejection. If the USPTO ultimately
disallows the claims of the second Viskase patent, the effect upon the Court
action will not be significant. If Viskase's motion to reinstate the damages is
denied, Viskase expects the trial on damages to occur during the second half of
1999 or early 2000.

On May 3, 1999, ANC commenced legal action in the Federal District Court for the
Northern District of Illinois seeking declaratory relief that Viskase's second
patent is invalid. ANC also filed a motion to consolidate the new action with
the existing suit. Viskase is preparing an answer to ANC's complaint and has
filed its response to ANC's motion to consolidate.

The Company expects ANC to vigorously contest these matters in the Court and the
USPTO and to appeal any final judgment. No part of the pending claims has been
recorded in the Company's financial statements. Through March 31, 1999, $4,651
in patent defense costs had been accrued and capitalized.

In March 1997 Viskase Corporation received a subpoena from the Antitrust
Division of the United States Department of Justice relating to a grand jury
investigation of the sausage casings industry. Viskase Corporation is
cooperating fully with the investigation.

The Company and its subsidiaries are involved in various legal proceedings
arising out of their business and other environmental matters, none of which is
expected to have a material adverse effect upon results of operations, cash
flows or financial position.

4. UNUSUAL CHARGE (dollars in millions)

During the third quarter of 1998, due to the business conditions leading to the
Viskase plan of restructuring, the Company evaluated the recoverability of
long-lived assets including property, plant and equipment, patents and excess
reorganization on a consolidated basis. Based upon the analysis, the Company
recognized an impairment because the estimated consolidated undiscounted future
cash flows derived from long-lived assets were determined to be less than their
carrying value. The amount of the impairment was calculated using the present
value of the Company's estimated future net cash flows to determine the assets'
fair value. Based on this analysis, an impairment charge of $91.2 million for
excess reorganization and $4.3 million for the write-down of the Chicago
facility was taken. In addition, the Viskase plan of restructuring included
charges for the decommissioning of the Chicago plant and the decommissioning of
some of its foreign operations.



                                       9

<PAGE>   10


During the first quarter of 1999 and accumulated to date, cash payments against
the reserve were $1.2 million and $7.7 million, respectively. A remaining
restructuring reserve of $4.8 is included in accrued liabilities on the balance
sheet.


5. DISCONTINUED OPERATIONS (dollars in thousands)

In June 1998 the Company's Board of Directors agreed to sell the Clear Shield
and Sandusky Plastics, Inc. (Sandusky) subsidiaries. Sandusky was sold on June
11, 1998 and Clear Shield was sold on July 23, 1998. Accordingly, the operating
results from both subsidiaries have been segregated from continuing operations
and reported as a separate line item, Results of Discontinued Operations, on the
Statements of Operations.

Operating results from discontinued operations are as follows:

                                                         Three Months
                                                         Ended  March
                                                           26, 1998
                                                         ------------

Net sales                                                   $27,378
Costs and expenses
  Cost of sales                                              22,305
  Selling, general and administrative                         4,297
  Amortization of intangibles and
    excess reorganization value                                 333
                                                            -------

Operating income                                                443

  Interest expense                                               22
  Other expense, net                                            544
                                                            -------

(Loss) from discontinued operations before taxes               (123)
  Income tax provision                                           84
                                                            -------

Net (loss) from discontinued operations                     $  (207)
                                                            =======

6. COMPREHENSIVE INCOME (dollars in thousands)

During 1998 the Company adopted the Statement of Financial Accounting Standards
(SFAS) No. 130, "Reporting Comprehensive Income," which requires the Company to
disclose comprehensive income in addition to net income. Comprehensive income
includes all other non-shareholder changes in equity. All such changes in equity
resulted from changes in foreign currency translation adjustments.






                                       10

<PAGE>   11


The following sets forth the components of other comprehensive income (loss) and
the related income tax provision (benefit):

<TABLE>
<CAPTION>
                                             Three Months Ended   Three Months Ended
                                                  March 31,            March 26,
                                                    1999                 1998
                                                  ---------            ---------

<S>                                               <C>                   <C>
Foreign currency translation adjustment (1)        $(995)                $331
</TABLE>

(1)  Net of related tax (benefit) provision of $(636) and $211 for the first
     quarter ended 1999 and 1998, respectively.

7. EARNINGS PER SHARE

In February 1997 the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share," which became effective for both interim and annual
financial statement periods ending after December 15, 1997. As required by this
Statement, the Company adopted the new standards for computing and presenting
earnings per share (EPS) in fiscal 1997, and for all period earnings per share
data presented. Following are the reconciliations of the numerators and
denominators of the basic and diluted EPS.

<TABLE>
<CAPTION>
                                                               Three Months    Three Months
                                                               Ended March     Ended March
                                                                 31, 1999         26, 1998
                                                               -----------     -----------
                                             (in thousands, except for weighted average shares outstanding)

<S>                                                          <C>              <C>
NUMERATOR:

Net (loss) available
  to common stockholders:

  From continuing operations:                                   $(11,336)        $(11,183)

  Discontinued operations:
  (Loss) from discontinued operations                                                (207)
                                                                --------         --------

Net loss available to common stockholders
  for basic and diluted EPS                                     $(11,336)        $(11,390)
                                                                ========         ========

DENOMINATOR:

Weighted average shares outstanding
  for basic EPS                                               14,867,057       14,773,346

Effect of dilutive securities                                          0                0
                                                              ----------       ----------

Weighted average shares outstanding
  for diluted EPS                                             14,867,057       14,773,346
                                                              ==========       ==========
</TABLE>


Common stock equivalents are excluded from the loss per share calculations as
the result is antidilutive since the numerator is a loss from continuing
operations.



                                       11

<PAGE>   12

8. ACCOUNTING STANDARDS

The Company will implement the provisions of Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS No. 133), which will be effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting
and reporting standards for derivative instruments and for hedging activities.
It requires recognition of all derivative instruments as either assets or
liabilities in the statement of financial condition and the measurement of those
instruments at fair value. Management believes the adoption of SFAS No. 133 will
not have a significant effect on the Company's financial statements.

9. SUBSEQUENT EVENTS

On May 10, 1999, the Court granted Viskase's motion to have the jury verdict as
to the compensatory damages reinstated. Viskase filed its memorandum in support
of enhanced damages and ANC is expected to file its response to Viskase's
memorandum by June 18, 1999.

During June 1999, Viskase Corporation and Viskase Sales Corporation entered into
two-year secured credit agreements consisting of a $50 million senior revolving
credit facility, including a $26 million sublimit for issuance of letters of
credit (Senior Revolving Credit Facility), a $50 million senior term facility
(Senior Term Facility), collectively the "Senior Secured Credit Facility," and
$35 million of junior secured term loans (Junior Term Loans). The proceeds of
the Senior Secured Credit Facility and the Junior Term Loans were used to repay
the $55 million Senior Secured Notes outstanding and obligations outstanding
under the Company's existing Revolving Credit Facility. The Senior Secured
Credit Facility and the Junior Term Loans have a maturity date of June 30, 2001.

The Senior Secured Credit Facility is guaranteed by Viskase Companies, Inc. and
Viskase Holding Corporation and is 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 and intangible assets; (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 Viskase
Companies, Inc.'s significant domestic subsidiaries and 65% of the capital stock
of Viskase Europe Limited and Viskase Brazil.

Borrowings under the Senior Revolving Credit Facility bear interest either at
the bank's prime interest rate plus a margin of 75 basis points or the London
Interbank Offered Rate (LIBOR) plus a margin of 275 basis points. The Senior
Term Facility bears interest at either the bank's prime interest rate plus a
margin of 125 basis points or LIBOR plus a margin of 325 basis points.

Fees on the outstanding amount of standby letters of credit are 2.25% per annum,
with an issuance fee of 0.5% on the face amount of the letter of credit. The
unused commitment fee for the Senior Revolving Credit Facility is 0.5% per
annum.

The Senior Term Facility is payable in six equal quarterly principal payments of
$1.786 million beginning on January 4, 2000. The remaining principal balance
outstanding under the Senior Term Facility is payable on the June 30, 2001
maturity date.

In the event the Company has Surplus Cash (as defined) in any year, the Company
is required to use an amount equal to 50% of the Surplus Cash to redeem Senior
Term Facility obligations at par. The Company may elect, at its option, to
prepay amounts due under the Senior Term Facility; such prepayments may be
subject to a prepayment premium of 25 to 100 basis points of the principal
amount redeemed depending on the source of funds used for such prepayment.



                                       12

<PAGE>   13

The $35 million of Junior Term Loans bear interest at an initial rate of 14% per
annum, and increase .5% every six months thereafter, and mature on June 30,
2001. The Junior Term Loans are collateralized by the Collateral Pool for the
Senior Secured Credit Facility; however, the Junior Term Loans are subordinated
to the obligations outstanding under the Senior Secured Credit Facility. D.P.
Kelly and Associates L.P., which owns approximately 13% of the outstanding
common stock of Viskase Companies, Inc. is a lender under the Junior Term Loans.

The Company's Senior Secured Credit Facility and Junior Term Loans contain a
number of financial covenants that, among other things, require the maintenance
of a minimum level of tangible net worth, a minimum fixed charge coverage ratio
and a minimum leverage ratio of total liabilities to earnings before
depreciation, interest, amortization and taxes (EBDIAT) and a limitation on
capital expenditures.


10. SUBSIDIARY GUARANTORS

The Company's payment obligations under the Senior Secured Notes are fully and
unconditionally guaranteed on a joint and several basis (collectively,
Subsidiary Guarantees) by Viskase Corporation, Viskase Holding Corporation,
Viskase Sales Corporation, and Viskase Films, Inc., each a direct or indirect
wholly owned subsidiary of Viskase Companies, Inc. and each a "Guarantor." These
subsidiaries represent substantially all of the operations of Viskase Companies,
Inc. conducted in the United States. The remaining subsidiaries of Viskase
Companies, Inc. generally are foreign subsidiaries or otherwise relate to
foreign operations.

The obligations of each Guarantor under its Subsidiary Guarantee are the senior
obligation of such Guarantor, and are collateralized, subject to certain
permitted liens, by substantially all of the domestic assets of the Guarantor
and, in the case of Viskase Holding Corporation, by a pledge of 65% of the
capital stock of Viskase Europe Limited. The Subsidiary Guarantees and security
are shared with the lenders under the Amended and Restated Credit Agreement on a
pari passu basis and are subject to the priority interest of the holders of
obligations under the Letter of Credit Facility, each pursuant to an
intercreditor agreement.

The following consolidating condensed financial data illustrate the composition
of the combined Guarantors. No single Guarantor has any significant legal
restrictions on the ability of investors or creditors to obtain access to its
assets in the event of default on the Subsidiary Guarantee other than its
subordination to senior indebtedness described above. Separate financial
statements of the Guarantors are not presented because management has determined
that these would not be material to investors. Based on the book value and the
market value of the pledged securities of Viskase Corporation, Viskase Sales
Corporation and Viskase Films, Inc., these Subsidiary Guarantors do not
constitute a substantial portion of the collateral and, therefore, the separate
financial statements of these subsidiaries have not been provided. Separate
unaudited interim financial statements of Viskase Holding Corporation are being
filed within this report.

Investments in subsidiaries are accounted for by the parent and Subsidiary
Guarantors on the equity method for purposes of the supplemental consolidating
presentation. Earnings of subsidiaries are therefore reflected in the parent's
and Subsidiary Guarantors' investment accounts and earnings. The principal
elimination entries eliminate investments in subsidiaries and intercompany
balances and transactions.






                                       13

<PAGE>   14


                    VISKASE COMPANIES, INC. AND SUBSIDIARIES
                          CONSOLIDATING BALANCE SHEETS
                                 MARCH 31, 1999
                                   (unaudited)

<TABLE>
<CAPTION>
                                                              Guarantor      Nonguarantor                         Consolidated
                                                    Parent  Subsidiaries     Subsidiaries    Eliminations (1)        Total
                                                    ------  ------------     ------------    ------------            -----
ASSETS                                                                           (in thousands)
<S>                                              <C>           <C>              <C>               <C>                <C>
  Current assets:
    Cash and equivalents                          $  6,042      $    263         $  4,394                             $ 10,699
    Receivables and advances, net                  138,764        46,623           38,792          $(176,277)           47,902
    Inventories                                                   55,700           40,191             (1,020)           94,871
    Other current assets                               395        13,576            7,627                               21,598
                                                  --------      --------         --------          ---------          --------

      Total current assets                         145,201       116,162           91,004           (177,297)          175,070

Property, plant and equipment including
  those under capital lease                            149       320,754          154,679                              475,582
  Less accumulated depreciation
    and amortization                                   149       102,867           50,755                              153,771
                                                  --------      --------         --------          ---------          --------
Property, plant and equipment, net                       0       217,887          103,924                              321,811

Deferred financing costs                               710                            236                                  946
Other assets                                                      31,545            2,351                               33,896
Investment in subsidiaries                        (141,742)       82,894                              58,848
                                                  --------      --------         --------          ---------          --------

      Total assets                                $  4,169      $448,488         $197,515          $(118,449)         $531,723
                                                  ========      ========         ========          =========          ========

LIABILITIES & STOCKHOLDERS' EQUITY
  Current liabilities:
    Short-term debt including current
      portion of long-term debt and
      obligation under capital lease                            $ 14,377         $  3,043                             $ 17,420
    Accounts payable and advances                 $    122       162,421           48,856          $(176,277)           35,122
    Accrued liabilities                             12,613        35,516           15,573                               63,702
    Current deferred taxes                             (39)        9,000             (151)                               8,810
                                                  --------      --------         --------          ---------          --------

      Total current liabilities                     12,696       221,314           67,321           (176,277)          125,054

Long-term debt including obligation
  under capital lease                              304,262        97,466            2,304                              404,032

Accrued employee benefits                                         45,584            2,562                               48,146
Deferred and noncurrent income taxes                30,091       (27,434)          20,659                               23,316
Intercompany loans                                (274,055)      265,000            9,055

Commitments and contingencies

Stockholders' equity:
  Preferred stock, $.01 par value;
    none outstanding
  Common stock, $.01 par value;
    14,869,087 shares issued and
    outstanding                                        149             1           32,609            (32,610)              149
  Paid in capital                                  136,754        79,734           88,359           (168,093)          136,754
  Accumulated earnings (deficit)                  (208,790)     (236,179)         (28,356)           264,535          (208,790)
  Foreign currency translation adjustments           3,062         3,002            3,002             (6,004)            3,062
                                                  --------      --------         --------          ---------          --------
    Total stockholders' equity (deficit)           (68,825)     (153,442)          95,614             57,828           (68,825)
                                                  --------      --------         --------          ---------          --------

    Total liabilities and stockholders' equity    $  4,169      $448,488         $197,515          $(118,449)         $531,723
                                                  ========      ========         ========          =========          ========
</TABLE>



(1)  Elimination of intercompany receivables, payables and investment accounts.




                                       14

<PAGE>   15


                    VISKASE COMPANIES, INC. AND SUBSIDIARIES
                          CONSOLIDATING BALANCE SHEETS
                                DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                   Guarantor     Nonguarantor                         Consolidated
                                                        Parent   Subsidiaries    Subsidiaries    Eliminations (1)        Total
                                                        ------   ------------    ------------    ------------            -----
ASSETS                                                                               (in thousands)
<S>                                                  <C>            <C>             <C>               <C>                <C>
  Current assets:
    Cash and equivalents                              $  1,675       $     97        $  7,256                             $  9,028
    Receivables and advances, net                      105,652         45,155          36,328          $(139,417)           47,718
    Inventories                                                        53,790          40,256               (818)           93,228
    Other current assets                                   530          6,466           8,341                               15,337
                                                      --------       --------        --------          ---------          --------

      Total current assets                             107,857        105,508          92,181           (140,235)          165,311

Property, plant and equipment including
  those under capital lease                                149        315,315         160,061                              475,525
  Less accumulated depreciation
    and amortization                                       147         96,212          49,321                              145,680
                                                      --------       --------        --------          ---------          --------
Property, plant and equipment, net                           2        219,103         110,740                              329,845

Deferred financing costs                                   920                            278                                1,198
Other assets                                                           32,363           2,352                               34,715
Investment in subsidiaries                            (129,351)        88,324                             41,027
                                                      --------       --------        --------          ---------          --------

Total assets                                          $(20,572)      $445,298        $205,551          $ (99,208)         $531,069
                                                      ========       ========        ========          =========          ========

LIABILITIES & STOCKHOLDERS' EQUITY
  Current liabilities:
    Short-term debt including current
      portion of long-term debt and
      obligation under capital lease                                 $ 13,031        $  3,089                             $ 16,120
    Accounts payable and advances                     $     60        128,436          47,258          $(139,417)           36,337
    Accrued liabilities                                  5,340         40,495          16,484                               62,319
    Current deferred taxes                                 (39)         9,000            (151)                               8,810
                                                      --------       --------        --------          ---------          --------
      Total current liabilities                          5,361        190,962          66,680           (139,417)          123,586

Long-term debt including obligation
  under capital lease                                  274,262        111,842           2,776                              388,880

Accrued employee benefits                                              45,510           2,605                               48,115
Deferred and noncurrent income taxes                    30,602        (26,762)         22,555                               26,395
Intercompany loans (1)                                (274,890)       264,999           9,891

Commitments and contingencies

Stockholders' equity:
  Preferred stock, $.01 par value;
    none outstanding
  Common stock, $.01 par value;
    14,859,467 shares issued and
    outstanding                                            149              1          32,609            (32,610)              149
  Paid in capital                                      136,715         79,734          88,359           (168,093)          136,715
  Accumulated earnings (deficit)                      (197,454)      (225,621)        (24,557)           250,178          (197,454)
  Foreign currency translation adjustment                4,693          4,633           4,633             (9,266)            4,693
  Unearned restricted stock issued
    for future services                                    (10)                                                                (10)
                                                      --------       --------        --------          ---------          --------
    Total stockholders' equity (deficit)               (55,907)      (141,253)        101,044             40,209           (55,907)
                                                      --------       --------        --------          ---------          --------

Total liabilities and stockholders' equity (deficit)  $(20,572)      $445,298        $205,551          $ (99,208)         $531,069
                                                      ========       ========        ========          =========          ========
</TABLE>


(1)  Elimination of intercompany receivables, payables and investment accounts.




                                       15

<PAGE>   16

                    VISKASE COMPANIES, INC. AND SUBSIDIARIES
                     CONSOLIDATING STATEMENTS OF OPERATIONS
                      FOR THREE MONTHS ENDED MARCH 31, 1999
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                    Guarantor      Nonguarantor                    Consolidated
                                                       Parent     Subsidiaries     Subsidiaries     Eliminations      Total
                                                       ------     ------------     ------------     ------------      -----
                                                                                    (in thousands)

<S>                                                   <C>           <C>               <C>             <C>             <C>
NET SALES                                                           $ 55,783          $ 46,911        $(10,627)       $ 92,067

COSTS AND EXPENSES
  Cost of sales                                                       42,534            37,273         (10,425)         69,382
  Selling, general and administrative                 $    648        10,474             9,155                          20,277
  Amortization of intangibles and
    excess reorganization value                                        1,250                                             1,250
                                                      --------      --------          --------        --------        --------

OPERATING INCOME (LOSS)                                   (648)        1,525               483            (202)          1,158

  Interest income                                           33             8                62                             103
  Interest expense                                       7,786         2,230               317                          10,333
  Intercompany interest expense (income)                (7,533)        6,666               867
  Management fees (income)                                              (251)              251
  Other expense (income), net                               76            38             2,970                           3,084
  Equity loss (income) in subsidiary                    10,760         3,799                           (14,559)
                                                      --------      --------          --------        --------        --------

INCOME (LOSS) BEFORE INCOME TAXES                      (11,704)      (10,949)           (3,860)         14,357         (12,156)
  Income tax provision (benefit)                          (368)         (391)              (61)                           (820)
                                                      --------      --------          --------        --------        --------

NET INCOME (LOSS) FROM CONTINUING
  OPERATIONS                                           (11,336)      (10,558)           (3,799)         14,357         (11,336)

DISCONTINUED OPERATIONS:
Income from operations, net of an income tax
                                                      --------      --------          --------        --------        --------

NET INCOME (LOSS)                                      (11,336)      (10,558)           (3,799)         14,357         (11,336)

Other comprehensive (loss) income, net of tax
  Foreign currency translation adjustments                (995)         (995)             (995)          1,990            (995)
                                                      --------      --------          --------        --------        --------

COMPREHENSIVE (LOSS) INCOME                           $(12,331)     $(11,553)         $ (4,794)       $ 16,347        $(12,331)
                                                      ========      ========          ========        ========        ========
</TABLE>








                                       16

<PAGE>   17
                  ENVIRODYNE INDUSTRIES, INC. AND SUBSIDIARIES
                     CONSOLIDATING STATEMENTS OF OPERATIONS
                      FOR THREE MONTHS ENDED MARCH 26, 1998


<TABLE>
<CAPTION>
                                                                  Guarantor     Nonguarantor                            Consolidated
                                                    Parent       Subsidiaries   Subsidiaries          Eliminations          Total
                                                    ------       ------------   ------------          ------------      ------------
                                                                                  (in thousands)
<S>                                                <C>             <C>             <C>                 <C>               <C>
NET SALES                                                           $61,375           $47,879          $(7,977)          $101,277

COSTS AND EXPENSES
  Cost of sales                                                      46,887            35,617           (8,243)            74,261
  Selling, general and administrative                $  989          10,681             9,708                              21,378
  Amortization of intangibles and
    excess reorganization value                                       2,714               754                               3,468
                                                   --------        --------        ----------          -------           --------

OPERATING INCOME (LOSS)                                (989)          1,093             1,800              266              2,170

  Interest income                                       139                                46                                 185
  Interest expense                                   10,921           2,207               347                              13,475
  Intercompany interest expense (income)             (9,667)          9,359               308
  Management fees (income)                           (1,184)            867               317
  Other expense (income), net                           (80)             67               802                                 789
  Equity loss (income) in subsidiary                 10,878             677                            (11,555)
                                                   --------        --------        ----------          -------           --------

INCOME (LOSS) BEFORE INCOME TAXES                   (11,718)        (12,084)               72           11,821            (11,909)
  Income tax provision (benefit)                       (328)         (1,147)              749                                (726)
                                                   --------        --------        ----------          -------           --------

NET INCOME (LOSS) FROM CONTINUING OPERATIONS        (11,390)        (10,937)             (677)          11,821            (11,183)

DISCONTINUED OPERATIONS

 Income from operations net of an
   income tax provision of $84                                         (207)                                                 (207)
                                                   --------        --------        ----------          -------           --------

NET (LOSS) INCOME                                   (11,390)        (11,144)             (677)          11,821            (11,390)

Other comprehensive (loss) income, net of tax
  Foreign currency translation adjustments              331             331               331             (662)               331
                                                   --------        --------        ----------          -------           --------

COMPREHENSIVE (LOSS) INCOME                        $(11,059)       $(10,813)       $     (346)         $11,159           $(11,059)
                                                   ========        ========        ==========          =======           ========

</TABLE>



                                       17

<PAGE>   18

                    VISKASE COMPANIES, INC. AND SUBSIDIARIES
                            CONSOLIDATING CASH FLOWS
                      FOR THREE MONTHS ENDED MARCH 31, 1999
                                   (unaudited)

<TABLE>
<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        $(26,491)      $18,602          $ (749)                       $(8,638)

Cash flows from investing activities:
  Capital expenditures                                                     (5,410)           (587)                        (5,997)
  Proceeds from disposition of assets                                           5               7                             12
                                                           --------      --------          ------      ----------       --------
      Net cash provided by (used in)
         investing activities                                              (5,405)           (580)                        (5,985)

Cash flows from financing activities:
  Issuance of common stock                                       49                                                           49
  Proceeds from revolving loan and
    long-term borrowings                                     30,000                           134                         30,134
  Deferred financing costs                                      (26)                                                         (26)
  Repayment of revolving loan, long-term
    borrowings and capital lease obligations                              (13,031)           (322)                       (13,353)
  Increase (decrease) in Viskase Companies, Inc. loan           835                          (835)
                                                           --------      --------          ------      ----------       --------
      Net cash provided by (used in)
         financing activities                                30,858       (13,031)         (1,023)                        16,804
Effect of currency exchange rate changes on cash                                             (510)                          (510)
                                                           --------      --------          ------      ----------        -------

Net (decrease) in cash and equivalents                        4,367           166          (2,862)                         1,671
Cash and equivalents at beginning of period                   1,675            97           7,256                          9,028
                                                           --------       -------         -------       ---------        -------
Cash and equivalents at end of period                      $  6,042       $   263         $ 4,394                        $10,699
                                                           ========       =======         =======       =========        =======

</TABLE>


                                       18

<PAGE>   19
                    VISKASE COMPANIES, INC. AND SUBSIDIARIES
                            CONSOLIDATING CASH FLOWS
                      FOR THREE MONTHS ENDED MARCH 26, 1998

<TABLE>
<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                                  $(32,409)      $ 21,873          $ 2,567                        $  (7,969)

Cash flows from investing activities:
  Capital expenditures                                         (4)       (12,805)          (2,272)                         (15,081)
  Proceeds from disposition of assets                                         34                3                               37
                                                         --------       --------          -------         ---------      ---------
      Net cash provided by (used in)
         investing activities                                  (4)       (12,771)          (2,269)                         (15,044)

Cash flows from financing activities:
  Issuance of common stock                                    307                                                              307
  Proceeds from revolving loan and
    long-term borrowings                                   20,000                              69                           20,069
  Deferred financing costs                                     (4)                                                              (4)
  Repayment of revolving loan, long-term
    borrowings and capital lease obligations                              (9,814)            (180)                          (9,994)
  Increase (decrease) in Viskase Companies, Inc. loan         603                            (603)
                                                         --------       --------          -------         ---------      ---------
      Net cash provided by (used in)
         financing activities                              20,906         (9,814)            (714)                          10,378
Effect of currency exchange rate changes on cash                                              (58)                             (58)
                                                         --------       --------          -------         ---------      ---------

Net (decrease) in cash and equivalents                    (11,507)          (712)            (474)                         (12,693)
Cash and equivalents at beginning of period                19,004            865            4,538                           24,407
                                                         --------       --------          -------         ---------      ---------
Cash and equivalents at end of period                    $  7,497       $    153          $ 4,064                        $  11,714
                                                         ========       ========          =======         =========      =========

</TABLE>







                                       19

<PAGE>   20

                  VISKASE HOLDING CORPORATION AND SUBSIDIARIES

The financial information included in this quarterly report has been prepared in
conformity with the accounting principles and practices reflected in the
financial statements included in the annual report on Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 1998 (1998
Form 10-K). These quarterly financial statements should be read in conjunction
with the financial statements and the notes thereto included in the 1998 Form
10-K. The accompanying financial information, which is unaudited, reflects all
adjustments which are, in the opinion of management, necessary for a fair
statement of the results for the interim periods presented.

The condensed consolidated balance sheet as of December 31, 1998 was derived
from the audited Viskase Holding Corporation's consolidated financial statements
included in Viskase Companies, Inc.'s annual report on Form 10-K.

Reported interim results of operations are based in part on estimates which may
be subject to year-end adjustments. In addition, these quarterly results of
operations are not necessarily indicative of those expected for the year.



                                       20

<PAGE>   21

                  VISKASE HOLDING CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                    March 31,       December 31,
                                                      1999              1998
                                                  -----------       ------------
                                                  (unaudited)
                                                      (in thousands)
<S>                                                <C>                <C>
ASSETS
 Current assets:
   Cash and equivalents                            $   4,394          $   7,256
   Receivables, net                                   29,727             30,462
   Receivables, affiliates                            55,390             51,906
   Inventories                                        40,191             40,256
   Other current assets                                7,627              8,341
                                                   ---------          ---------
     Total current assets                            137,329            138,221

 Property, plant and equipment
    including those under capital lease              154,679            160,061
   Less accumulated depreciation
     and amortization                                 50,755             49,321
                                                   ---------          ---------
   Property, plant and equipment, net                103,924            110,740

 Deferred financing costs                                236                278
 Other assets                                          2,350              2,351
                                                   ---------          ---------
     Total assets                                  $ 243,839          $ 251,590
                                                   =========          =========


LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
   Short-term debt including current
     portion of long-term debt and obligation
     under capital lease                           $   3,043          $   3,089
   Accounts payable                                   14,277             13,998
   Accounts payable and advances, affiliates          38,578             37,956
   Accrued liabilities                                15,573             16,484
   Current deferred income taxes                        (151)              (151)
                                                   ---------          ---------
     Total current liabilities                        71,320             71,376

 Long-term debt                                        2,304              2,776

 Accrued employee benefits                             2,562              2,605
 Deferred and noncurrent income taxes                 20,659             22,555
 Intercompany loans                                   47,065             47,901

 Commitments and contingencies

 Stockholders' equity:
   Common stock, $1.00 par value,
     1,000 shares authorized;
     100 shares issued and outstanding
   Paid in capital                                   103,463            103,463
   Accumulated (deficit)                              (6,572)            (3,755)
   Foreign currency translation adjustments            3,038              4,669
                                                   ---------          ---------
     Total stockholders' equity                       99,929            104,377
                                                   ---------          ---------
     Total liabilities and
       stockholders' equity                        $ 243,839          $ 251,590
                                                   =========          =========
</TABLE>


               The accompanying notes are an integral part of the
                       consolidated financial statements.



                                       21

<PAGE>   22

                  VISKASE HOLDING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)


<TABLE>
<CAPTION>
                                                          Three  Months    Three  Months
                                                           Ended March     Ended March
                                                            31, 1999         26, 1998
                                                          -------------   -------------
                                                                  (in thousands)
<S>                                                       <C>             <C>
NET SALES                                                 $ 46,911          $ 47,879

COSTS AND EXPENSES
   Cost of sales                                            37,273            35,617
   Selling, general
     and administrative                                      7,515             8,365
   Amortization of intangibles
     and excess reorganization value                                             754
                                                          --------          --------
OPERATING INCOME                                             2,123             3,143

   Interest income                                              62                46
   Interest expense                                            317               347
   Intercompany interest expense                               867               308
   Management fees                                             251               317
   Other expense, net                                        2,970               802
                                                          --------          --------

(LOSS) INCOME BEFORE INCOME TAXES                           (2,220)            1,415

   Income tax provision                                        597             1,278
                                                          --------          --------

NET (LOSS) INCOME                                           (2,817)              137
                                                          --------          --------

Other comprehensive (loss) income, net of tax
  Foreign currency translation adjustments                    (995)              331
                                                          --------          --------

COMPREHENSIVE (LOSS) INCOME                               $ (3,812)         $    468
                                                          ========          ========
</TABLE>



               The accompanying notes are an integral part of the
                       consolidated financial statements.



                                       22

<PAGE>   23

                  VISKASE HOLDING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                              ------------------------------
                                                               March 31,           March 26,
                                                                 1999                 1998
                                                              -----------         ----------
                                                                       (in thousands)
<S>                                                           <C>                 <C>
Cash flows from operating activities:
   Net (loss) income                                            $(2,817)            $   137
   Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
       Depreciation                                               3,438               2,834
       Amortization of intangibles and excess
         reorganization value                                                           754
       Amortization of deferred financing fees and discount          50                  48
       (Decrease) in deferred and
          noncurrent income taxes                                  (990)               (191)
       Loss on disposition of assets                                                    110
       Bad debt provision                                            84                  80

       Changes in operating assets and liabilities:
          Receivables                                               (89)              1,383
          Receivables, affiliates                                (6,159)             (3,223)
          Inventories                                              (954)               (772)
          Other current assets                                      677               1,809
          Accounts payable and accrued liabilities                 (223)             (5,430)
          Accounts payable and advances,  affiliates              6,234               5,028
                                                                -------             -------
Total adjustments                                                 2,068               2,430
                                                                -------             -------

          Net cash provided by (used in) operating activities      (749)              2,567
Cash flows from investing activities:
   Capital expenditures                                            (587)             (2,272)
   Proceeds from disposition of assets                                7                   3
                                                                -------             -------
          Net cash (used in) investing activities                  (580)             (2,269)

Cash flows from financing activities:
   Proceeds from revolving loan and long-term borrowings            134                  69
   Repayment of revolving loan and long-term borrowings            (322)               (180)
   (Decrease) in Viskase Companies, Inc. loan and advances         (835)               (603)
                                                                -------             -------
          Net cash (used in) financing activities                (1,023)               (714)

Effect of currency exchange rate changes on cash                   (510)                (58)
                                                                -------             -------
Net (decrease) in cash and equivalents                           (2,862)               (474)
Cash and equivalents at beginning of period                       7,256               4,538
                                                                -------             -------
Cash and equivalents at end of period                           $ 4,394             $ 4,064
                                                                =======             =======
--------------------------------------------------------------------------------------------------
Supplemental cash flow information:
   Interest paid                                                $    25             $    40
   Income taxes paid                                            $   479             $   407
</TABLE>


               The accompanying notes are an integral part of the
                       consolidated financial statements.



                                       23
<PAGE>   24

                  VISKASE HOLDING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. INVENTORIES (dollars in thousands)

Inventories consisted of:

                                               March 31,    December 31,
                                                 1999          1998
                                               ---------    ------------


Raw materials                                   $ 3,121       $ 3,347
Work in process                                  13,046        14,302
Finished products                                24,024        22,607
                                                -------       -------
                                                $40,191       $40,256
                                                =======       =======

2. CONTINGENCIES (dollars in thousands)

In late 1993, Viskase commenced a legal action against American National Can
Company (ANC) in Federal District Court for the Northern District of Illinois,
Eastern Division, 93C7651. Viskase claimed that ANC's use of two different very
low density polyethylene plastic resins in the manufacture of ANC's multi-layer
barrier shrink film products was infringing various Viskase patents relating to
multi-layer barrier plastic films used for fresh red meat, processed meat and
poultry product applications. In November 1996, after a three-week trial, a jury
found that ANC had willfully infringed Viskase's patents and awarded Viskase
$102.4 million in compensatory damages. The Court also entered an order
permanently enjoining ANC from making or selling infringing products.

In September 1997, the Court set aside the jury verdict in part and ordered a
retrial on certain issues. The Court upheld the jury finding on the validity of
all of Viskase's patents and the jury finding that ANC had willfully infringed
Viskase's patents by ANC's use of Dow Chemical Company's "Attane" brand
polyethylene plastic resin in ANC's products. However, the Court ordered a new
trial on the issue of whether ANC's use of Dow Chemical Company's "Affinity"
brand polyethylene plastic resin infringed Viskase's patents and whether such
conduct was willful. Because the jury rendered one general damage verdict, the
Court ordered a retrial of all damage issues. By operation of the Court's order,
the injunction in respect of ANC's future use of the "Affinity" brand resin was
removed.

On August 19, 1998, the Court granted Viskase's motion for partial summary
judgment finding that ANC's use of the "Affinity" brand resin infringed
Viskase's patents. The Court also reinstated the permanent injunction. Patent
validity and infringement having been established, the remaining issues for
trial are whether ANC willfully infringed Viskase's patents by using "Affinity"
brand resin and the determination of the amount of compensatory damages. Viskase
filed a motion to have the jury verdict as to compensatory damages reinstated.
ANC filed a motion to dismiss the lawsuit claiming that Viskase's patents are
invalid and Viskase failed to join an indispensable party to the lawsuit. On May
10, 1999, the Court granted Viskase's motion to have the jury verdict as to the
compensatory damages reinstated. Viskase filed its memorandum in support of
enhanced damages and ANC is expected to file its response to Viskase's
memorandum by June 18, 1999.




                                       24

<PAGE>   25

In addition, ANC has challenged two of the five Viskase patents in suit by
filing requests for reexamination with the United States Patent and Trademark
Office (USPTO). With respect to the challenge of the first patent, on September
25, 1998, the USPTO, after initially rejecting Viskase's claims, gave notice of
its intent to reissue Viskase's patent in its entirety. ANC filed another
request for reexamination of the patent, which has the effect of staying the
reissuance. The USPTO initially rejected Viskase's claims to which Viskase is
preparing its response. With respect to the challenge of the second patent, the
USPTO, after initially rejecting Viskase's claims, withdrew the rejection in
view of Viskase's response and raised new grounds of rejection. Viskase is
preparing a response to the new grounds of rejection. If the USPTO ultimately
disallows the claims of the second Viskase patent, the effect upon the Court
action will not be significant. If Viskase's motion to reinstate the damages is
denied, Viskase expects the trial on damages to occur during the second half of
1999 or early 2000.

On May 3, 1999, ANC commenced legal action in the Federal District Court for the
Northern District of Illinois seeking declaratory relief that Viskase's second
patent is invalid. ANC also filed a motion to consolidate the new action with
the existing suit. Viskase is preparing an answer to ANC's complaint and has
filed its response to ANC's motion to consolidate.

The Company expects ANC to vigorously contest these matters in the Court and the
USPTO and to appeal any final judgment. No part of the pending claims has been
recorded in the Company's financial statements. Through March 31, 1999, $4,651
in patent defense costs had been accrued and capitalized.

In March 1997 Viskase Corporation received a subpoena from the Antitrust
Division of the United States Department of Justice relating to a grand jury
investigation of the sausage casings industry. Viskase Corporation is
cooperating fully with the investigation.

The Company and its subsidiaries are involved in various legal proceedings
arising out of their business and other environmental matters, none of which is
expected to have a material adverse effect upon results of operations, cash
flows or financial position.

3. ACCOUNTING STANDARDS

The Company will implement the provisions of Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS No. 133), which will be effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting
and reporting standards for derivative instruments and for hedging activities.
It requires recognition of all derivative instruments as either assets or
liabilities in the statement of financial condition and the measurement of those
instruments at fair value. Management believes the adoption of SFAS No. 133 will
not have a significant effect on the Company's financial statements.

4. SUBSEQUENT EVENTS

On May 10, 1999, the Court granted Viskase's motion to have the jury verdict as
to the compensatory damages reinstated. Viskase filed its memorandum in support
of enhanced damages and ANC is expected to file its response to Viskase's
memorandum by June 18, 1999.

During June 1999, Viskase Corporation and Viskase Sales Corporation entered into
two-year secured credit agreements consisting of a $50 million senior revolving
credit facility, including a $26 million



                                       25

<PAGE>   26

sublimit for issuance of letters of credit (Senior Revolving Credit Facility), a
$50 million senior term facility (Senior Term Facility), collectively the
"Senior Secured Credit Facility," and $35 million of junior secured term loans
(Junior Term Loans). The proceeds of the Senior Secured Credit Facility and the
Junior Term Loans were used to repay the $55 million Senior Secured Notes
outstanding and obligations outstanding under the Company's existing Revolving
Credit Facility. The Senior Secured Credit Facility and the Junior Term Loans
have a maturity date of June 30, 2001.

The Senior Secured Credit Facility is guaranteed by Viskase Companies, Inc. and
Viskase Holding Corporation and is 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 and intangible assets; (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 Viskase
Companies, Inc.'s significant domestic subsidiaries and 65% of the capital stock
of Viskase Europe Limited and Viskase Brazil.

Borrowings under the Senior Revolving Credit Facility bear interest either at
the bank's prime interest rate plus a margin of 75 basis points or the London
Interbank Offered Rate (LIBOR) plus a margin of 275 basis points. The Senior
Term Facility bears interest at either the bank's prime interest rate plus a
margin of 125 basis points or LIBOR plus a margin of 325 basis points.

Fees on the outstanding amount of standby letters of credit are 2.25% per annum,
with an issuance fee of 0.5% on the face amount of the letter of credit. The
unused commitment fee for the Senior Revolving Credit Facility is 0.5% per
annum.

The Senior Term Facility is payable in six equal quarterly principal payments of
$1.786 million beginning on January 4, 2000. The remaining principal balance
outstanding under the Senior Term Facility is payable on the June 30, 2001
maturity date.

In the event the Company has Surplus Cash (as defined) in any year, the Company
is required to use an amount equal to 50% of the Surplus Cash to redeem Senior
Term Facility obligations at par. The Company may elect, at its option, to
prepay amounts due under the Senior Term Facility; such prepayments may be
subject to a prepayment premium of 25 to 100 basis points of the principal
amount redeemed depending on the source of funds used for such prepayment.

The $35 million of Junior Term Loans bear interest at an initial rate of 14% per
annum, and increase .5% every six months thereafter, and mature on June 30,
2001. The Junior Term Loans are collateralized by the Collateral Pool for the
Senior Secured Credit Facility; however, the Junior Term Loans are subordinated
to the obligations outstanding under the Senior Secured Credit Facility. D.P.
Kelly and Associates L.P., which owns approximately 13% of the outstanding
common stock of Viskase Companies, Inc. is a lender under the Junior Term Loans.

The Company's Senior Secured Credit Facility and Junior Term Loans contain a
number of financial covenants that, among other things, require the maintenance
of a minimum level of tangible net worth, a minimum fixed charge coverage ratio
and a minimum leverage ratio of total liabilities to EBDIAT and a limitation on
capital expenditures.







                                       26

<PAGE>   27


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Results of Operations

The Company's net sales from continuing operations for the first quarter of 1999
were $92.1 million, which represented a decrease of 9.1% from the comparable
period of 1998. The decline in domestic net sales is partially due to the
Company's 1998 second quarter strategy to increase casing prices. Additionally,
both the domestic and European casing markets are experiencing competitive
pricing pressures. European sales have been affected by the adverse economic
conditions in the Russian market and were also negatively affected by foreign
currency translation due to the strengthening of the U.S. dollar. Brazil's sales
have increased over prior year due to significant volume gains in both the
casing and films product lines offset by the translation effect of the
strengthening of the U.S. dollar against the real.

Operating income from continuing operations for the first quarter of 1999 was
$1.2 million representing a decrease of 46.6% from the comparable period of
1998. The decrease in operating income resulted primarily from declines in sales
and gross margins caused by continued price competition in the U.S. and in
Europe.

Net interest expense from continuing operations for the three month period
totaled $10.2 million representing a decrease of $3.1 million from the first
three months of 1998. The decrease is primarily due to interest savings from the
redemption of $105 million of the 12% Senior Secured Notes.

Other expense from continuing operations of approximately $3.1 million and $0.8
million for the first three months of 1999 and 1998, respectively, consists
principally of foreign exchange losses.

The Company uses foreign exchange forward contracts to hedge some of its
non-functional currency receivables and payables which are denominated in major
currencies that can be traded on open markets. This strategy is used to reduce
the overall exposure to the effects of currency fluctuations on cash flows. The
Company's policy is not to speculate in financial instruments.

Receivables and payables which are denominated in non-functional currencies are
translated to the functional currency at month end and the resulting gain or
loss is taken to other income/expense on the income statement. Gains and losses
on hedges of receivables and payables are marked to market. The result is
recognized in other net expense on the income statement.

The tax benefit for the first three months of 1999 resulted from the benefit of
US losses partially offset by the provision related to income from foreign
subsidiaries. Due to the permanent differences in the US resulting from foreign
losses for which no tax benefit is provided, a benefit of $.8 million was
provided on a loss from continuing operations of $12.2 million. The US tax
benefit is recorded as a reduction of the deferred tax liability and does not
result in a refund of income taxes.



Discontinued operations

On June 8, 1998, the Company's Board of Directors approved the sale of two of
the Company's subsidiaries, Clear Shield and Sandusky. Accordingly, the
operating results of the two subsidiaries have been segregated from continuing
operations and reported as a separate line item on the



                                       27

<PAGE>   28

income statement under the heading Discontinued Operations. The Company has
restated its prior financial statements to present the operating results as
discontinued operations.

The sales of Sandusky and Clear Shield were completed on June 11, 1998 and July
23, 1998, respectively. A $39.1 million combined gain, net of taxes, was
recognized on these sales.

Other

In September 1997 the Company retained Donaldson, Lufkin and Jenrette Securities
Corporation to assist the Board of Directors in evaluating the Company's
strategic alternatives. Such alternatives included, among other things, sale of
the entire company, sale of business units or recapitalization. In June 1998,
the Company sold its wholly owned subsidiary Sandusky, and in July 1998 the
Company sold its wholly owned subsidiary Clear Shield. The Company is still
reviewing strategic and recapitalization alternatives available.

The Company will implement the provisions of SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", which will be effective for all
fiscal quarters of fiscal years beginning after June 15, 2000. SFAS No. 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities. It requires recognition of all derivative instruments as
either assets or liabilities in the balance sheet and the measurement of those
instruments at fair value. Management believes the adoption of SFAS No. 133 will
not have a significant effect on the Company's financial statements.

Liquidity and Capital Resources

Cash and equivalents increased by $1.7 million during the three months ended
March 31, 1999. Cash flows provided by financing activities of $16.8 million
exceeded funds used in operating activities of $8.6 million and investing
activities of $6.0 million. Cash flows used in operating activities were
principally attributable to the Company's loss from operations and an increase
in working capital usage offset by the effect of depreciation and amortization.
Cash flows provided by financing activities were principally due to a $30
million draw under the Company's domestic revolving credit facility (Revolving
Credit Facility) offset by a $13 million principal repayment under the GECC
lease. Cash flows used in investing activities consist principally of capital
expenditures for property, plant and equipment.

During June 1999, Viskase Corporation and Viskase Sales Corporation entered into
two-year secured credit agreements consisting of a $50 million senior revolving
credit facility, including a $26 million sublimit for issuance of letters of
credit (Senior Revolving Credit Facility), a $50 million senior term facility
(Senior Term Facility), collectively the "Senior Secured Credit Facility," and
$35 million of junior secured term loans (Junior Term Loans). The proceeds of
the Senior Secured Credit Facility and the Junior Term Loans were used to repay
the $55 million Senior Secured Notes outstanding and obligations outstanding
under the Company's existing Revolving Credit Facility. The Senior Secured
Credit Facility has a maturity date of June 30, 2001.

The Company finances its working capital needs through a combination of
internally generated cash from operations and borrowings under its $50 million
Senior Revolving Credit Facility entered into in June 1999. The availability of
funds under the Senior Revolving Credit Facility is subject to the Company's
compliance with certain covenants, borrowing base limitations measured by
accounts receivable and inventory of the Company and reserves that may be
established at the discretion of the lenders. There is approximately $9.4
million outstanding under the Senior Revolving Credit Facility at June 15, 1999.



                                       28

<PAGE>   29
The Company's Senior Secured Credit Facility contains a number of financial
covenants that, among other things, require the maintenance of a minimum level
of tangible net worth, a minimum fixed charge coverage ratio and minimum
leverage ratio of total liabilities to EBDIAT and a limitation on capital
expenditures. Currently, the Company is in compliance with the amended covenants
under the Indenture and Amended and Restated Credit Agreement.

As of March 31, 1999, the Company is in compliance with the amended covenants
under the Indenture and Amended and Restated Credit Agreement.

The Company anticipates that its current cash position, its operating cash flows
and the availability under its credit agreement will be sufficient to meet its
operating expenses and debt service requirements. The Company's 10.25% Notes, of
which $219.3 million principal amount is outstanding, will mature in December
2001. The Company anticipates it will refinance the 10.25% Notes or seek
alternative strategies including, but not limited to, selling additional equity
capital.

Capital expenditures for continuing operations for the first three months of
1999 and 1998 totaled $6.0 million and $10.0 million, respectively. Capital
expenditures for discontinued operations for the first three months of 1998
totaled $5.0 million. Significant 1999 and 1998 capital expenditures for
continuing operations included a new information technology system at Viskase,
costs associated with the Nucel(R) project, and additional production capacity
for specialty films. Capital expenditures for discontinued operations included
the construction of Clear Shield's Twin Falls, Idaho facility. Capital
expenditures for continuing operations for 1999 are expected to be approximately
$27 million. Capital expenditures for continuing operations for 2000 are
expected to be $13 million.

The Company has spent approximately $7 million annually on research and
development programs, including product and process development, and on new
technology development during each of the past three years. The 1999 research
and development and product introduction expenses are expected to be in the $9
million range. Among the projects included in the current research and
development efforts is the application of certain patents and technology
licensed by Viskase to the manufacture of cellulosic casings under the Nucel(R)
process. The commercialization of these applications and the related fixed asset
expense associated with such commercialization may require substantial financial
commitments in future periods.

Year 2000

The Year 2000 (Y2K) issue concerns the inability of information systems to
properly recognize and process date-sensitive information beyond January 1,
2000. Businesses are at risk for possible miscalculations or systems failures
that may disrupt their business operations due to the Year 2000 issue.

In order to address the Y2K issue, the Company has formed a Year 2000 committee
(Y2K Committee) that has separated the Company's risk into three categories:
significant business information technology (IT) systems, internal
non-information technology (Non-IT) systems and external readiness by customers
and vendors.









                                       29

<PAGE>   30


Significant Business Information Technology Systems

In January 1996, the Company began a system conversion which incorporated Y2K
readiness. The following table shows the status of the business system
conversions by country:


   Country           Implementation Date         Status
   -------           -------------------         ------

United States            January 1, 1998         Complete
France                   October 1, 1998         Complete
United Kingdom           January 1, 1999         Complete
Brazil                   January 1, 1998         Complete
Canada                   October 1, 1999         Planned completion


The Company's significant business IT system is run on servers and a wide-area
network outsourced to IBM Global Services. IBM has been certified Y2K compliant
for all its system components. All of the Company's personal computers, network
server hardware and software are being checked for Y2K compatibility with the
vendors. The targeted completion date is June 30, 1999. The expenditures for the
European implementation totaled approximately $4.9 million in 1998 and the first
quarter of 1999. The Company has capitalized the costs necessary to upgrade its
significant business systems.

Internal Non-IT Systems

The Non-IT systems consist primarily of PC-based manufacturing systems and
process control units. The Y2K Committee has designated a member at each plant
to inventory its systems and determine the status of its Y2K readiness. This
process is ongoing and the plan is to have these systems tested for compliance
by June 30, 1999. The Company has estimated the cost of Y2K readiness to be
approximately $.4 million for its non-financial systems. If the Company is
unable to achieve Y2K readiness for its major Non-IT systems, the Y2K issue
could have a material impact on the operations of the Company. A contingency
plan will be in place by June 30, 1999.

Y2K Compliance by Customers and Vendors

The Y2K Committee mailed a questionnaire to material third party vendors in
January 1999 to address material third party readiness with Y2K. Responses to
the questionnaires have been received from most key suppliers. Those failing to
respond to the questionnaire have been contacted. To date, no significant
compliance issues have been uncovered.

Should responses to the questionnaires indicate that suppliers, service
providers or contractors are not Y2K ready, the Company will change to those
vendors who have demonstrated Y2K readiness. The Company cannot be assured that
it will be successful in finding such alternative suppliers, service providers
and contractors.








                                       30

<PAGE>   31



Forward-looking Statements

Forward-looking statements in this report are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties that could cause actual results and Company
plans and objectives to differ materially from those projected. Such risks and
uncertainties include, but are not limited to, general business and economic
conditions; competitive pricing pressures for the Company's products; changes in
other costs; and opportunities that may be presented to and pursued by the
Company; determinations by regulatory and governmental authorities; and the
ability to achieve synergistic and other cost reductions and efficiencies.









                                       31

<PAGE>   32


                           PART II. OTHER INFORMATION

Item 1 - Legal Proceedings

For a description of pending litigation and other contingencies, see Part 1,
Note 3, Contingencies in Notes to Consolidated Financial Statements for Viskase
Companies, Inc. and Subsidiaries.

Item 2 - Changes in Securities

No reportable events occurred during the quarter ended March 31, 1999.

Item 3 - Defaults Upon Senior Securities

None.

Item 4 - Submission of Matters to a Vote of Security Holders

None.

Item 5 - Other Information

None.

Item 6 - Exhibits and Reports on Form 8-K

(a) Exhibits

   4.14  Fifth Supplemental Indenture, dated as of March 17, 1999, between the
         Company and State Street Bank and Trust Company of Connecticut, N.A.
         (formerly Fleet National Bank Connecticut and previously Shawmut Bank
         Connecticut, National Association), as Trustee.

  10.22  Amendment No. 3 dated March 17, 1999, to the Amended and Restated
         Credit Agreement, dated June 1, 1999, among the Company, the Lenders
         identified therein, and BT

  10.23  Viskase Companies, Inc. Corporate Office Management Incentive Plan for
         Fiscal Year 1999.

     27  Financial Data Schedules.

(b) Reports on Form 8-K

  (1)   On February 4, 1999, the Company filed a Form 8-K to report that the
        Board of Directors of Viskase Companies, Inc. approved the change of
        Viskase's fiscal year end and quarter end to December 31 each year and
        the last day of each calendar quarter, respectively, beginning January
        1, 1999.






                                       32

<PAGE>   33


                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                    VISKASE COMPANIES, INC.
                                    -----------------------
                                    Registrant




                                    By: /s/ Gordon S. Donovan
                                        ----------------------
                                        Gordon S. Donovan
                                        Vice President, Chief Financial
                                         Officer and Treasurer
                                         (Duly authorized officer
                                         and principal financial
                                         officer of the registrant)












Date:  June 17, 1999








                                       33