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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): May 5, 1998
W. R. GRACE & CO.
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(Exact name of registrant as specified in its charter)
Delaware 1-13953 65-0773649
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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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ITEM 5. OTHER EVENTS.
On May 5, 1998, W. R. Grace & Co. ("Company") announced its
consolidated results of operations for the quarter ended March 31, 1998. The
Company's May 5, 1998 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.
The Company's May 5, 1998 press release and accompanying financial and
statistical data are filed as an exhibit hereto.
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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: May 11, 1998
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W. R. GRACE & CO.
Current Report on Form 8-K
Exhibit Index
Exhibit No. Description
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99.1 Press Release dated May 5, 1998 and accompanying financial and
statistical data
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GRACE NEWS #2702
CONTACT: Media Relations: Investor Relations:
Jane D. McGuinness Susan G. Eccher
(561) 362-1343 (561) 362-1331
GRACE REPORTS FIRST QUARTER EARNINGS
EPS FROM CONTINUING OPERATIONS UP 25% VERSUS 1997
EXCLUDING DIVESTED OPERATIONS
BOCA RATON, Florida, May 5, 1998 -- W. R. Grace & Co. (NYSE: GRA)
reported 1998 first quarter income from continuing operations of $11.8 million,
or $.16 per basic share, up 25% versus $.13 per share in the prior-year
quarter, excluding the results of Grace's specialty polymers business, which
was divested in May 1997.
"We are very pleased that new Grace earnings were on target in the first
quarter despite the translation impact of the strong U.S. dollar and the
difficult economic situation in parts of Asia," said Grace Chairman, President
and Chief Executive Officer Albert J. Costello. "Grace Davison's operating
income was up 11% overall and 45% in North America. Grace Construction
Products' operating income increased 12%, excluding a first quarter 1998
restructuring charge, from a record 1997 first quarter. Darex Container
Products' operating profit margin improved to 11%. And, Grace's consolidated
operating margin was more than 2 percentage points above the first quarter
of 1997."
Sales from Grace Davison, Grace Construction Products and Darex Container
Products were 5% above the 1997 quarter before the effect of foreign currency
translation. Including the effect of a strengthening U.S. dollar against
European and Asian currencies, sales for these businesses were off 1%.
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Operating income before divested businesses was up 3%, but 11% prior to
currency translation.
Grace consolidated results included an after-tax charge of $35.2 million
($0.47 per share) associated with the company's repurchase of $620 million of
publicly traded debt in connection with the transaction with Sealed Air
Corporation. Results also included a loss from discontinued operations of $2.6
million ($.04 per share) consisting of $34.3 million of after-tax income from
the Cryovac flexible packaging business, which was separated from Grace and
merged with Sealed Air on March 31, $28.3 million in after-tax costs associated
with effecting the separation and merger and $8.6 million in after-tax interest
charges.
Following are highlights of Grace's business unit performance:
GRACE DAVISON
Grace Davison, a leading global supplier of catalysts and silica products,
reported operating income of $24.4 million, up 11% compared to the year-ago
quarter. Sales of $176 million were up 1% above the prior year, but up 7%
before currency translation. Davison's operating margin of 13.8% was 1.2
percentage points above the 1997 quarter.
Davison's results reflected continued strengthening in fluid cracking
catalyst (FCC) sales, which were up 13% before currency translation, driven by
higher North American refinery utilization rates, stronger sales to China and
increased worldwide catalyst additive sales. Worldwide FCC volumes were up 11%.
Sales of silicas and adsorbents were up 3% before currency translation, driven
by volume growth in Europe and Asia Pacific. Polyolefin catalyst sales were up
13% (26% excluding currency translation) versus the first quarter of 1997 due to
continued strength of the plastics industry.
Costello said, "Grace Davison continues to show strong improvement as
conditions in the FCC market stabilize and the effects of our cost management
efforts flow through to earnings."
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GRACE CONSTRUCTION PRODUCTS
Grace Construction Products, a leading global supplier of specialty
construction chemicals and building materials, reported sales for the quarter
of $103 million, essentially even with the 1997 quarter, which was the unit's
strongest first quarter ever. Excluding currency translation, sales were 4%
above the 1997 quarter. Operating income of $4.8 million was down 7% versus
a record 1997 first quarter, and included a $1 million charge for restructuring
the manufacturing and sales organization in Europe.
North American and European sales were strong due to continued growth in
construction activity as well as further penetration of Grace's new and value-
added products; sales of these products grew 21% in the quarter and now
comprise 33% of Grace Construction Products' total sales. Sales to the Asia
Pacific region were down 24% (8% before currency translation) due to economic
conditions there.
Costello said, "Grace Construction Products continues to demonstrate
strong growth despite difficult times in Asia Pacific. The increasing
acceptance of our value-added products is driving top-line growth, improving
gross margins and helping to offset weakness in Asia. Excluding the quarter's
restructuring charge, profits were up 12% versus a very strong quarter a year
ago."
DAREX CONTAINER PRODUCTS
Darex Container Products, a leading global producer of container sealants
and closure systems, reported sales of $61 million in the quarter, 7% lower
than 1997 but essentially flat excluding the effect of currency translation.
Operating income of $6.7 million was 2% above that of the first quarter of 1997
(11% prior to currency translation). Darex's quarterly operating profit margin
of 11.0% was 1 percentage point above 1997, driven by cost reduction programs
initiated in the fourth quarter of 1997. These programs included administrative
headcount reductions and consolidation of research activities.
"While we are disappointed with Darex's top-line performance, the cost
reduction program implemented last year is beginning to restore profit growth.
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We continue to evaluate our strategic alternatives with respect to this
business," Costello remarked.
OTHER HIGHLIGHTS
As previously announced, on April 2 Grace entered into a definitive
agreement to acquire the Crosfield catalysts and silicas business of Imperial
Chemical Industries PLC for $455 million. Completion of the transaction is
expected to occur by the end of June 1998.
Grace is a leading global supplier of catalysts and silica products,
specialty construction chemicals and building materials, and container sealants
and coatings.
For more information, visit Grace's Web site at www.grace.com.
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THIS ANNOUNCEMENT CONTAINS "FORWARD-LOOKING" INFORMATION. FUTURE RESULTS
MAY DIFFER FROM THOSE DISCUSSED IN THIS ANNOUNCEMENT. INFORMATION CONCERNING
THE FACTORS THAT COULD CAUSE SUCH DIFFERENCES CAN BE FOUND IN GRACE'S ANNUAL
REPORT ON FORM 10-K FOR 1997.
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W. R. GRACE & CO.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THREE MONTHS ENDED MARCH 31
($ MILLIONS EXCEPT PER SHARE)
<TABLE>
<CAPTION>
FIRST QUARTER
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1998 1997
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<S> <C> <C>
Sales ......................................... $ 340.8 $ 361.8
Other income .................................. 7.8 5.8
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Total ....................................... $ 348.6 $ 367.6
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Cost of goods sold and operating expenses 209.6 223.0
Selling, general and administrative expenses .. 80.6 86.6
Depreciation and amortization ................. 21.8 23.5
Interest expense and related financing costs .. 6.8 6.4
Research and development expenses ............. 10.4 10.6
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Total ....................................... $ 329.2 $ 350.1
Income before income taxes .................... $ 19.4 $ 17.5
Provision for income taxes .................... 7.6 6.4
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Income from continuing operations ............. $ 11.8 $ 11.1
(Loss)/income from discontinued operations .... (2.6) 35.3
Loss from extraordinary item -- early debt
retirement .................................. (35.2) --
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Net (loss)/income ........................... $ (26.0) $ 46.4
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Basic Earnings Per Share
Continuing operations ....................... $ 0.16 $ 0.15
Net (loss)/income ........................... $ (0.35) $ 0.62
Basic average number of shares (millions) ..... 75.1 75.3
Diluted Earnings Per Share
Continuing operations ....................... $ 0.15 $ 0.14
Net (loss)/income ........................... $ (0.32) $ 0.60
Diluted average number of shares (millions) ... 81.6 77.7
</TABLE>
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W. R. GRACE & CO.
OPERATING RESULTS
QUARTER ENDED MARCH 31
($ MILLIONS EXCEPT PER SHARE)
<TABLE>
<CAPTION>
PERCENT
1998 1997 CHANGE
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<S> <C> <C> <C>
Sales:
Grace Davison .............................. $ 176.2 $ 174.6 0.9
Grace Construction Products................. 103.3 103.0 0.0
Darex Container Products ................... 61.3 66.1 (7.3)%
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Sales before divested business ........... $ 340.8 $ 343.7 (0.8)
Divested business .......................... -- 18.1 (a) (100.0)
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Total sales .............................. $ 340.8 $361.8 (5.8)
Operating Income:
Grace Davison .............................. $ 24.4 $ 21.9 11.1
Grace Construction Products ................ 4.8 5.1 (7.3)
Darex Container Products ................... 6.7 6.6 2.1
Other ...................................... (1.0) 0.2 (577.8)
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Operating income before divested business. $ 34.9 $ 33.8 2.9
Divested business .......................... -- 2.6 (a) (100.0)
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Total operating income ................... $ 34.9 $ 36.4 (4.4)
Other expenses/(income):
Interest/financing ......................... 6.8 6.4 6.8
Interest income ............................ (1.1) (4.7) (75.6)
Corporate .................................. 10.0 15.8 (36.3)
Other ...................................... (0.2) 1.4 (119.0)
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Total other expenses, net ................ $ 15.5 $ 18.9 (17.8)
Pretax operating income before discontinued
operations and extraordinary items ......... $ 19.4 $ 17.5 10.6
Provision for income taxes ................... 7.6 6.4 17.6
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Income from continuing operations ............ $ 11.8 $ 11.1 6.6
(Loss)/income from discontinued operations ... (2.6) 35.3 (107.5)
Loss from extraordinary item -- early debt
retirement ................................. (35.2) -- ND
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Net (loss)/income ............................ $ (26.0) $ 46.4 (156.0)%
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</TABLE>
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(a) Consists of the Specialty Polymers business divested in May 1997.
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W. R. GRACE & CO.
GEOGRAPHIC DATA
(DOLLARS IN MILLIONS)
QUARTER ENDED MARCH 31
<TABLE>
<CAPTION>
SALES
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1997 INCL. 1997 DIVESTED 1997 EXCL.
1998 DIVESTED BUSINESS BUSINESS (a) DIVESTED BUSINESS
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<S> <C> <C> <C> <C>
North America ............ $ 185 $ 183 $ 9 $ 174
Europe ................... 93 106 4 102
Latin America ............ 15 18 -- 18
Asia Pacific ............. 48 55 5 50
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Total .................. $ 341 $ 362 $ 18 $ 344
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</TABLE>
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(a) Consists of the Specialty Polymers business divested in May 1997.
