SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 29, 1996
W. R. GRACE & CO.
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(Exact name of registrant as specified in its charter)
Delaware 1-12139 65-0654331
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
One Town Center Road, Boca Raton, Florida 33486-1010
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 561/362-2000
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<PAGE>
Item 5. Other Events.
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On October 29, 1996, the Company announced its consolidated
results of operations for the quarter ended September 30, 1996. The Company's
October 29, 1996 press release and accompanying financial and statistical data
are filed as an exhibit hereto and are incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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The Company's October 29, 1996 press release and accompanying
financial and statistical data are filed as an exhibit hereto.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed by the
undersigned thereunto duly authorized.
W. R. GRACE & CO.
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(Registrant)
By s/Kathleen A. Browne
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Kathleen A. Browne
Vice President and Controller
Dated: November 8, 1996
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<PAGE>
W. R. GRACE & CO.
Current Report on Form 8-K
Exhibit Index
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Exhibit No. Description
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99.1 Press Release dated October 29, 1996 and accompanying
financial and statistical data
<PAGE>
GRACE NEWS
CONTACT: Chuck Suits or Mary Lou Kromer 561/362-2600 or
800/GRACE99
GRACE REPORTS THIRD QUARTER RESULTS
QUARTER INCLUDES $2.5 BILLION ESTIMATED GAIN
FROM HEALTH CARE COMBINATION WITH FRESENIUS
PRETAX OPERATING EARNINGS UP 12 PERCENT FOR NEW GRACE
BOCA RATON, Fla., Oct. 29, 1996 --W.R. Grace & Co. (NYSE: GRA) today
reported third quarter operating earnings, before interest and taxes, of $108
million, an increase of 12 percent over the year-ago quarter (excluding
special items in 1995). The increase was a result of the improved cost
structure and strong performance from Grace's catalysts, silicas and
construction products businesses.
The packaging and specialty chemicals company reported net earnings from
continuing operations of $.61 per share, compared to $.20 (after $.34 of
special charges) in the prior year's third quarter. Revenues increased to
$821 million, a 1.4 percent increase (excluding 1995 revenues of $136
million, primarily related to the divested Dearborn water treatment
business).
Including special and one-time items in both periods, net earnings were
$2.52 billion, or $27.66 per share, compared to $21.7 million, or $.22 per
share in the year-ago quarter.
(more)
<PAGE>
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Results for the 1996 quarter included approximately $2.5 billion of income
from discontinued operations, which includes an estimated gain resulting from
the September spin-off of the packaging and specialty chemicals businesses
and the combination of Grace's National Medical Care subsidiary with the
worldwide dialysis business of Fresenius AG to form a new company called
Fresenius Medical Care AG.
Grace chairman, president and chief executive officer Albert J. Costello
said, "We continue to be optimistic about the future of the new Grace and the
progress we are making toward our goal of becoming a top quartile performer
among packaging and specialty chemicals companies. We are encouraged by our
margin improvement of three percentage points compared to the year-ago
quarter, as well as our continuing sales levels --especially in the face of
adverse market conditions and in comparison to the exceptionally strong
growth we experienced in 1995."
As a result of the company's share repurchase program, average common
shares outstanding in the third quarter declined six percent versus the
year-ago quarter. The favorable impact on per share results from repurchasing
shares was largely offset by a higher effective tax rate in the current
quarter.
The company has bought more than 6 million shares since October 1 under a
second program to repurchase up to 20 percent of the 89 million shares
outstanding following the spin-off.
(more)
<PAGE>
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Packaging earnings declined two percent on essentially flat revenues,
compared to exceptionally strong results in the year-ago quarter. Sales and
earnings continued to be impacted by lower pork production in North America
and by lower volumes of fresh red meat in Europe and Japan, as well as by
competitive pressures in North America and Asia Pacific for display films
used to package consumer goods.
During the quarter, Grace completed the acquisition of Cypress Packaging,
Inc., which positioned Grace Packaging as the leading supplier of pre-cut
produce packaging in North America --one of several key growth drivers for
the future.
Earnings from the catalysts and silicas business rose 12 percent on strong
performance from silicas and polyolefin and hydroprocessing catalysts
worldwide. Earnings from fluid cracking catalysts were depressed due to
continuing weakness in the North American market and competitive pricing
pressures.
Results for construction products were up sharply, resulting from revenue
gains in all regions, as well as lower operating and overhead costs.
Grace is a leading global supplier of packaging and specialty chemicals,
with annual sales of approximately $3.3 billion. The company operates in more
than 100 countries.
<PAGE>
W.R. GRACE & CO.
CONSOLIDATED STATEMENT OF OPERATIONS (a)
FOR QUARTER ENDED SEPTEMBER 30, 1996
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($ MILLIONS EXCEPT PER SHARE)
<TABLE>
<CAPTION>
THIRD QUARTER YEAR-TO-DATE
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Sales $ 821.3 $946.4 $2,656.2 $2,732.1
Other income 8.2 4.5 26.1 13.3
Total $ 829.5 $950.9 $2,682.3 $2,745.4
Cost of goods sold and operating expenses $ 503.9 $565.4 $1,607.7 $1,617.6
Selling, general and administrative
expenses 150.5 225.3 (d) 556.2 693.5 (d)
Depreciation and amortization 43.4 45.8 135.3 124.2
Interest expense and related financing
costs 18.2 17.8 54.9 52.3
Research and development expenses 22.5 27.2 80.3 92.2
(Gain) on sale of businesses (b) -- -- (326.4) --
Provision for restructuring -- 44.3 53.7 44.3
Total $ 738.5 $925.8 $2,161.7 $2,624.1
Income before income taxes $ 91.0 $ 25.1 $ 520.6 $ 121.3
Prov. for income taxes 35.5 5.3 190.4 33.6
Income from continuing operations $ 55.5 $ 19.8 $ 330.2 $ 87.7
Income from discontinued operations (c) 2,464.4 1.9 2,587.2 60.2
Net income $2,519.9 $ 21.7 $2,917.4 $ 147.9
Earnings per share
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Continuing operations $ .61 $ .20 $ 3.46 $ .92
Discontinued operations (c) 27.05 .02 27.18 .63
Net income $ 27.66 $ .22 $ 30.64 $ 1.55
Average number of shares (millions) 91.1 96.7 95.2 95.3
</TABLE>
(a) 1995 results have been restated to reflect the classification of the
health care segment as a discontinued operation in the second quarter of
1995.
(b) Includes divestment of Grace Dearborn and Biopesticides.
(c) 1996 includes estimated gain on spin of National Medical Care.
(d) Includes a pretax charge of $10.0 million ($6.1 after-tax) in the third
quarter and $30.0 million ($18.6 after-tax) year-to-date for matters
relating to corporate governance.
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<PAGE>
W. R. GRACE & CO.
OPERATING RESULTS
QUARTER ENDED SEPTEMBER 30
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($ MILLIONS EXCEPT PER SHARE)
<TABLE>
<CAPTION>
PERCENT
1996 1995 CHANGE
<S> <C> <C> <C>
Sales - Specialty Chemicals $ 821.3 $946.4 (13.2)%
Operating Income - Specialty Chemicals $ 108.2 $ 96.7 11.9
Other Expenses/(Income):
Interest/Financing (a) $ 18.2 $ 17.8 2.2
Other (1.0) (0.5) (100.0)
Total Other Expenses $ 17.2 $ 17.3 (0.6)
Pretax Operating Earnings before Special Items $ 91.0 $ 79.4 14.6
Provision for Income Taxes 35.5 26.4 34.5
Operating Income before Special Items $ 55.5 $ 53.0 4.7
Special Items - after-tax - Chemicals/Corporate:
- -----------------------------------------------
Provision for Restructuring - (27.1) 100.0
Provision for Corporate Governance - (6.1) 100.0
Income from Continuing Operations $ 55.5 $ 19.8 180.3
Income from Discontinued Operations 2,464.4 (b) 1.9 ND
Net Income $2,519.9 $ 21.7 ND
Earnings Per Share
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From Continuing Operations $ .61 $ .20 205.0 %
From Discontinued Operations 27.05 (b) .02 ND
Net Income $ 27.66 $ .22 ND
Earnings Per Share - Operating Earnings (before special items)
- --------------------------------------------------------------
From Operations - Specialty Chemicals $ .61 $ .54 13.0%
Average Number of Shares (Millions) 91.1 96.7
</TABLE>
(a) After an allocation of interest/financing expenses to discontinued
operations.
(b) Includes estimated gain on NMC spin.
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<PAGE>
W. R. GRACE & CO.
OPERATING RESULTS
NINE MONTHS ENDED SEPTEMBER 30
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($ MILLIONS EXCEPT PER SHARE)
<TABLE>
<CAPTION>
PERCENT
1996 1995 CHANGE
<S> <C> <C> <C>
Sales - Specialty Chemicals $2,656.2 $2,732.1 (2.8)%
Operating Income - Specialty Chemicals $ 294.2 $ 250.4 17.5
Other Expenses/(Income):
Interest/Financing (a) $ 54.9 $ 52.3 5.0
Other (8.5) 2.5 ND
Total Other Expenses $ 46.4 $ 54.8 (15.3)
Pretax Operating Earnings before Special Items $ 247.8 $ 195.6 26.7
Provision for Income Taxes 95.3 62.2 53.2
Operating Income before Special Items $ 152.5 $ 133.4 14.3
Special Items - after-tax - Chemicals/Corporate:
- -------------------------------------------------
Provision for Corporate Governance - (18.6) 100.0
Gain on Sale of Dearborn/Biopesticides 210.1 - ND
Provision for Restructuring (32.4) (27.1) (19.2)
Income from Continuing Operations $ 330.2 $ 87.7 ND
Income from Discontinued Operations 2,507.8 (b) 60.2 ND
Gain on Sale of Agracetus (after-tax) 79.4 - ND
Net Income $2,917.4 $ 147.9 ND
Earnings Per Share
- ------------------
From Continuing Operations $ 3.46 $ .92 ND
From Discontinued Operations 27.18 (b) .63 ND
Net Income $ 30.64 $ 1.55 ND
Earnings Per Share - Operating Earnings (before special items)
- -------------------------------------------------------------
From Operations - Specialty Chemicals $ 1.60 $ 1.40 14.3 %
Average Number of Shares (Millions) 95.2 95.3
</TABLE>
(a) After an allocation of interest/financing expenses to discontinued
operations.
(b) Includes estimated gain on NMC spin.
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<PAGE>
W. R. GRACE & CO.
SPECIALTY CHEMICALS SUPPLEMENTAL DATA
1996 SALES AND PERCENT CHANGE VERSUS PRIOR PERIOD
-------------------------------------------------
(DOLLARS IN MILLIONS)
QUARTER ENDED SEPTEMBER 30
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<TABLE>
<CAPTION>
AMOUNT OF INC/(DEC) DUE TO:
SALES PRICE/
1996 1995 VOL. MIX TOTAL
<S> <C> <C> <C> <C> <C>
Packaging $ 435.6 $ 437.2 2.4% (2.8)% (0.4)%
Container 70.6 72.5 3.1 (5.7) (2.6)
Total Packaging $ 506.2 $ 509.7 2.5 (3.2) (0.7)
Catalysts/Silicas 177.6 176.7 5.4 (4.9) 0.5
Construction/Other 137.5 123.6 10.7 0.5 11.2
$ 821.3 $ 810.0 4.4% (3.0)% 1.4 %
NINE MONTHS ENDED SEPTEMBER 30
- ------------------------------
AMOUNT OF INC/(DEC) DUE TO:
SALES PRICE/
1996 1995 VOL. MIX TOTAL
Packaging $1,267.0 $1,251.5 3.1% (1.9)% 1.2 %
Container 207.5 215.4 (0.5) (3.2) (3.7)
Total Packaging $1,474.5 $1,466.9 2.6 (2.1) 0.5
Catalysts/Silicas 553.6 519.6 6.7 (0.2) 6.5
Construction/Other 373.2 357.9 3.9 0.4 4.3
$2,401.3 $2,344.4 3.7% (1.3)% 2.4 %
</TABLE>
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<PAGE>
W. R. GRACE & CO.
SPECIALTY CHEMICALS
GEOGRAPHIC DATA
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(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
PRETAX
EARNINGS
BEFORE
INTEREST, TAX,
AND
SPECIAL
QUARTER ENDED SEPTEMBER 30 SALES CHARGES
- ---------------------------- -------------- --------------
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Specialty Chemicals
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North America .............. $414 $473 $ 56 $54
Europe ..................... 246 296 30 27
Latin America .............. 48 65 7 2
Asia Pacific ............... 113 112 15 14
------ ------ ------ ------
Total Specialty Chemicals $821 $946 $108 $97
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
PRETAX
EARNINGS
BEFORE
INTEREST, TAX,
AND
SPECIAL
NINE MONTHS ENDED SALES CHARGES
- --------------------- ------------------ --------------
SEPTEMBER 30 1996 1995 1996 1995
--------------- -------- -------- ------ ------
<S> <C> <C> <C> <C>
Specialty Chemicals
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North America .............. $1,300 $1,362 $148 $123
Europe ..................... 830 856 78 70
Latin America .............. 180 187 22 10
Asia Pacific ............... 346 327 46 47
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Total Specialty Chemicals $2,656 $2,732 $294 $250
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</TABLE>
