<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 1-3720
W. R. GRACE & CO. HOURLY EMPLOYEES
SAVINGS AND INVESTMENT PLAN
W. R. Grace & Co.
One Town Center Road
Boca Raton, Florida 33486-1010
<PAGE>
FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS. Filed as part of this Report on Form 11-K are
the financial statements of the W. R. Grace & Co. Hourly Employees Savings and
Investment Plan, as required by Form 11-K, together with the report thereon of
Price Waterhouse, independent accountants, dated June 27, 1994.
(b) EXHIBITS. A Consent of Price Waterhouse is being filed as an exhibit
to this Report.
<PAGE>
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
June 27, 1994
To the Participants and
Administrative Committee of the
W. R. Grace & Co. Hourly Employees
Savings and Investment Plan
In our opinion, the accompanying statements of nets assets available for
benefits and the related statements of changes in net assets available for
benefits appearing on pages F-2 through F-12 of this report present fairly, in
all material respects, the net assets available for plan benefits of the W. R.
Grace & Co. Hourly Employees Savings and Investment Plan at December 31, 1993
and 1992, and the changes in net assets available for plan benefits for the
years then ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the plan administrator; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by the
plan administrator, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse
<PAGE>
F-2
W. R. GRACE & CO. HOURLY EMPLOYEES
SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
1993 1992
---------- ----------
<S> <C> <C>
Assets:
Investments:
Insurance company contracts at contract value $4,683,303 $3,004,805
Other securities (cost: 1993, $239,421;
1992, $867,475) 239,421 963,765
W. R. Grace & Co. common stock
(cost: 1993, $1,869,203;
1992, $1,627,300) 2,957,338 2,064,906
Fidelity Mutual Funds
(cost, 1993: $1,376,316)
Balanced Fund 770,974 --
Growth & Income Fund 15,315 --
Blue Chip Growth Fund 446,423 --
Contra Fund 96,818 --
OTC Fund 6,171 --
Contributions receivable 42,928 412,929
Dividends and interest receivable -- 4,141
---------- ----------
Total assets 9,258,691 6,450,546
---------- ----------
Liabilities:
Participant withdrawals -- 121,764
Administrative expenses -- 3,232
---------- ----------
Total liabilities -- 124,996
---------- ----------
Net assets available
for plan benefits $9,258,691 $6,325,550
---------- ----------
---------- ----------
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
<PAGE>
F-3
W. R. GRACE & CO. HOURLY EMPLOYEES
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Fund D - Employees'
Fixed Income Fund B - Diversified Grace Stock Stock
Fund Equity Fund Fund Fund Ownership Plan
------------ ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Contributions:
Participants $ 1,496,063 $ 51,684 $ 79,254 $ 183,676 $ --
Transfers among funds 104,342 (286,030) (604,275) (93,655) (84,697)
Company -- -- -- -- 818,780
Transfer to Energy Plan -- (4,018) (22,967) -- --
------------ ------------ ------------ ------------ ------------
Total 1,600,405 (238,364) (547,988) 90,021 734,083
------------ ------------ ------------ ------------ ------------
Income (loss) from
investments:
Interest 338,647 248 8,826 998 6,916
Dividends -- 1,815 2,578 17,392 --
Net realized gain -- 71,791 60,363 33,417 101,490
Change in unrealized
appreciation or (depreciation) -- (95,789) (47,054) (27,487) (59,893)
------------ ------------ ------------ ------------ ------------
Total 338,647 (21,935) 24,713 24,320 48,513
------------ ------------ ------------ ------------ ------------
Less:
Participant withdrawals 314,556 488 8,942 25,963 81,913
Administrative expenses 12,643 698 887 698 15,689
------------ ------------ ------------ ------------ ------------
Net (decrease)/increase 1,611,853 (261,485) (533,104) 87,680 684,994
Net assets available
for plan benefits:
Beginning of year 3,320,276 261,485 533,104 449,935 1,760,750
------------ ------------ ------------ ------------ ------------
End of year $ 4,932,129 $ -- $ -- $ 537,615 $ 2,445,744
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
<CAPTION>
Fidelity Fidelity Fidelity Fidelity Fidelity
Balanced Growth & Income Blue Chip Contra OTC
Fund Fund Growth Fund Fund Fund Total
-------- --------------- ----------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 158,646 $ 12,766 $ 132,151 $ 46,256 $ 5,865 $ 2,166,361
Transfers among funds 611,416 2,391 299,208 51,043 257 --
Company -- -- -- -- -- 818,780
Transfer to Energy Plan -- -- -- -- -- (26,985)
------------ ------------ ------------ ------------ ------------ ------------
Total 770,062 15,157 431,359 97,299 6,122 2,958,156
------------ ------------ ------------ ------------ ------------ ------------
Income (loss) from
investments:
Interest -- -- -- -- -- 355,635
Dividends 47,388 313 58,351 6,087 319 134,243
Net realized gain (126) 148 (54) 104 -- 267,133
Change in unrealized
appreciation or (depreciation) (15,218) -- (20,601) (4,649) (146) (270,837)
------------ ------------ ------------ ------------ ------------ ------------
Total 32,044 461 37,696 1,542 173 486,174
------------ ------------ ------------ ------------ ------------ ------------
Less:
Participant withdrawals 27,218 -- 19,523 917 -- 479,520
Administrative expenses 568 34 322 130 -- 31,669
------------ ------------ ------------ ------------ ------------ ------------
Net (decrease)/increase 774,320 15,584 449,210 97,794 6,295 2,933,141
Net assets available
for plan benefits:
Beginning of year -- -- -- -- -- 6,325,550
------------ ------------ ------------ ------------ ------------ ------------
End of year $ 774,320 $ 15,584 $ 449,210 $ 97,794 $ 6,295 $ 9,258,691
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
<PAGE>
F-4
W. R. GRACE & CO. HOURLY EMPLOYEES
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
FUND D - EMPLOYEES'
FIXED INCOME FUND B - DIVERSIFIED GRACE STOCK STOCK
FUND EQUITY FUND FUND FUND OWNERSHIP PLAN TOTAL
------------ ----------- ----------- ----------- -------------- -----
<S> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $894,224 $74,946 $157,239 $123,967 $ 12,284 $1,262,660
Transfers among funds 39,980 50,968 (8,406) (61,184) (21,358) --
Company -- -- -- -- 468,445 468,445
---------- -------- -------- -------- ---------- ----------
Total 934,204 125,914 148,833 62,783 459,371 1,731,105
---------- -------- -------- -------- ---------- ----------
Income (loss) from
investments:
Interest 240,849 798 13,593 16,371 2,214 273,825
Dividends -- 2,432 5,861 11,399 -- 19,692
Net realized gain or (loss) -- (17,278) 17,847 -- 20,865 21,434
Change in unrealized
appreciation or (depreciation) -- 22,885 15,181 6,341 24,672 69,079
---------- -------- -------- -------- ---------- ----------
Total 240,849 8,837 52,482 34,111 47,751 384,030
---------- -------- -------- -------- ---------- ----------
Less:
Participant withdrawals 336,841 25,918 22,169 22,281 105,175 512,384
Administrative expenses 7,334 1,185 2,501 153 1,005 12,178
Net (decrease)/increase 830,878 107,648 176,645 74,460 400,942 1,590,573
Net assets available
for plan benefits:
Beginning of year 2,489,398 153,837 356,459 375,475 1,359,808 4,734,977
End of year $3,320,276 $261,485 $533,104 $449,935 $1,760,750 $6,325,550
---------- -------- -------- -------- ---------- ----------
---------- -------- -------- -------- ---------- ----------
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
<PAGE>
F-5
W. R. GRACE & CO. HOURLY EMPLOYEES
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF THE PLAN:
The following description of the W. R. Grace & Co. Hourly Employees Savings and
Investment Plan ("Plan") provides only general information. Participants should
refer to the text of the Plan and the Summary Plan Description for the Plan for
more complete information.
GENERAL:
The Plan is a defined contribution plan originally adopted effective January 1,
1987, and has been amended from time to time. The Plan is subject to certain
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
Effective July 1, 1993, The Northern Trust Company was succeeded by Fidelity
Management Trust Company as trustee for the Plan. On the same date, Fund B -
Equity Fund was terminated and its balance transferred to the Fidelity Blue Chip
Growth Fund; Fund D - Diversified Fund was terminated and its balance
transferred to the Fidelity Balanced Fund; and three additional Fidelity Funds -
Growth and Income, Contrafund, and OTC Portfolio - were also added as investment
options under the Plan.
ELIGIBILITY AND VESTING:
Within those units of Grace and its subsidiaries (collectively, the "Company")
designated as participating units in the Plan, any hourly employee in an
eligible employment classification who has completed 12 months of employment
(including 1,000 hours of service) is eligible to participate in the Plan,
subject to certain exceptions and special provisions.
A participant's interest in the Plan is always fully vested.
CONTRIBUTIONS TO THE PLAN:
Plan participants may elect to contribute to the Plan from 2% to 16% of their
compensation (which, for purposes of the Plan, consists of regular wages,
incentive compensation, specially granted bonus awards, shift differential and
overtime pay).
<PAGE>
F-6
Participant contributions may be made from before-tax and/or after-tax income,
as provided under Sections 401(k) and 401(m) of the Internal Revenue Code,
subject to an annual dollar limit on before-tax contributions of $8,994 for 1993
($8,728 for 1992), which limit is subject to annual adjustment for inflation. In
addition, federal income tax law limits to $235,840 for 1993 ($228,860 for
1992), subject to annual adjustment for inflation, the annual compensation on
which tax-qualified plan benefits may be based.
A Company contribution equal to 50% of each participant's contribution will be
made to the Plan; however, no Company contribution will be made with respect to
a participant's contribution in excess of 6% of his compensation. Therefore, the
maximum Company contribution will be 3% of each participant's compensation,
subject to the limitation noted above.
Participants may elect to have their contributions invested in any of the
following funds in which the Plan participates:
FIXED INCOME FUND
The Fixed Income Fund (formerly Fund A) is invested in fixed income
securities or obligations, interest-bearing bank accounts or
guaranteed income funds established or maintained by licensed
insurance companies. Excess cash may be invested in short-term fixed
income securities.
GRACE STOCK FUND
The Grace Stock Fund (formerly Fund C) is invested in Grace Common
Stock. Pending such permanent investment of cash credited to this
Fund, this Fund may invest in short-term fixed income securities.
FIDELITY MUTUAL FUNDS. The Plan also offers the following five
Fidelity Mutual Funds to Plan participants.
FIDELITY BALANCED FUND is invested in both fixed income
securities and equity securities at all times.
FIDELITY GROWTH AND INCOME FUND is invested in equity securities
at all times and may be invested in fixed income securities,
depending upon market conditions.
<PAGE>
F-7
FIDELITY BLUE CHIP GROWTH FUND is invested in equity securities
of companies with higher than average earnings growth.
FIDELITY CONTRAFUND is invested in equity securities of companies
generally out of favor with the market that are judged by the
Fund's investment manager to be capable of above average growth
in value.
FIDELITY OTC PORTFOLIO is invested in equity securities of
smaller companies traded in the over-the-counter market.
At December 31, 1993, the number of participants contributing to the Plan
totalled 1,103 as compared with 636 at December 31, 1992. Participants
contributing to the Fixed Income and Grace Stock Funds for the year ended
December 31, 1993, were 926 and 207, respectively, as compared to 394 and 183 at
December 31, 1992. Participants contributing to the Balanced Fund, the Growth
and Income Fund, the Blue Chip Growth Fund, the Contrafund, and the OTC
Portfolio for the year ending December 31, 1993, were 287, 59, 261, 107, and 25,
respectively. Totals are not additive because some participants invest in more
than one Fund. The Plan provides that a statement of each participant's account
be sent to the participant at least once a year. Presently, such statements are
sent at the end of each calendar quarter.
Participants may, on any business day, allocate their future contributions among
the Funds and transfer the amounts related to their prior contributions to any
of the Funds to another Fund. Transfers may be in whole dollar amounts or in
multiples of 5% of the participant's account.
Company contributions made after June 30, 1989 are generally credited to the
Employee Stock Ownership Plan ("ESOP Fund", formerly Fund E). The ESOP Fund is
invested in Grace Common Stock. The ESOP Fund is an Employee Stock Ownership
Plan, within the meaning of the Internal Revenue Code.
Eligible employees (generally those age 50 and older) may elect to transfer all
or a portion of their Company contributions once each year on any business day
from the ESOP Fund to any of the other Funds except the Grace Stock Fund. Such
transfers may be in whole dollar amounts or multiples of 5% of the participant's
account.
<PAGE>
F-8
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Investments in publicly traded securities are valued at the last reported sales
price on the last day of the year. Investments in the Fidelity Mutual Funds are
valued at the market prices quoted at year-end, which represent the net asset
value of securities held. Investments in commercial paper, U.S. Treasury Bills
and U. S. government securities mutual funds are valued at cost, which
approximates market value. Investments in insurance company contracts are stated
at contract value, which represents contributions made under the contract plus
interest at the contract rate, less funds used for withdrawals.
The assets of the Plan are commingled in the Trust Fund of the W. R. Grace & Co.
Profit Sharing and Savings and Investment Plans ("Trust Fund") with the assets
of other tax-qualified profit sharing and savings and investment plans
maintained by the Company. The Trust Fund is administered by The Fidelity
Management Trust Company ("Trustee"). Assets and investment returns are
allocated to the plans based upon the proportion of each plan's daily net asset
balance to the daily total net asset balances of the Funds. Income of each fund
is reinvested in that fund, except that, in the case of the ESOP Fund, the Board
of Directors of Grace has directed that dividends paid on shares of Grace Common
Stock held in the ESOP Fund are to be paid to participants on a quarterly basis
or within 90 days after the end of the calendar year in which the dividends are
received. The Trustee manages the Grace Stock Fund and the ESOP Fund by
purchasing shares of Grace Common Stock and by selling shares to the extent
necessary to obtain cash for disbursements and transfers from the Funds.
Investment management of the Fixed Income Fund and investment oversight of the
Fidelity Mutual Funds is the responsibility of the Investment Committee
appointed by the Grace Board of Directors, except as delegated by that
Committee.
The Plan recognizes a gain or loss on Grace Common Stock distributed to
participants in an amount equal to the difference between the market value at
the distribution date and the average cost of the shares of such Common Stock.
The cost of securities sold is determined on the basis of average cost, and a
gain or loss is recorded equal to the difference between average cost and the
proceeds from the sale.
Amounts transferred to successor trustees are deducted from the Plan's net
assets upon the divestiture of, or discontinuance of participation by, a
participating operating unit.
<PAGE>
F-9
NOTE 3 - INVESTMENTS:
FIXED INCOME FUND:
The investments in the Fixed Income Fund consist primarily of guaranteed fixed
income contracts, as shown below:
<TABLE>
<CAPTION>
Value at December 31,
---------------------------
Issuer & Rate 1993 1992 Repayment Terms
- - --------------------- ------------- ------------- ---------------------
<S> <C> <C> <C>
Metropolitan Life
Insurance Company:
9.55% $ 752,241 $ 332,928 Repayable in three
installments on
12/15/92, 12/15/93
and 12/15/95 or
12/15/96 (at issuer's
option)
10.05% 742,093 279,140 Repayable in two
installments on
10/31/91 and
10/31/94
9.05% 914,749 584,063 Repayable on 10/15/96
7.00% 566,516 58,676 Repayable on 12/15/99
Prudential Insurance
Company:
8.63% -- 169,590 Repaid in two
equal annual
installments com-
mencing 11/15/92
9.75% 991,289 534,157 Repayable on 11/30/97
8.45% 716,415 1,046,251 Repayable in two
equal annual
installments com-
commencing 12/1/98
------------ ------------
$ 4,683,303 $ 3,004,805
------------ ------------
------------ ------------
</TABLE>
<PAGE>
F-10
Other investments in the Fixed Income Fund at December 31, 1993 and 1992
consisted of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1993 1992
----------- -----------
<S> <C> <C>
Commercial paper, at cost, which
approximates market value $ 217,273 $ 165,773
----------- -----------
----------- -----------
</TABLE>
GRACE STOCK FUND:
As of December 31, 1993 and 1992, the Grace Stock Fund under the Plan held
13,068 and 10,462 shares of Grace Common Stock, respectively.
The sales/distributions of Grace Common Stock by/from the Grace Stock Fund
resulted in net realized gains, as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------
1993 1992
----------- -----------
<S> <C> <C>
Proceeds from
sales/distributions
of securities $ 158,395 $ -
Cost of securities
sold/distributed 124,978 -
----------- -----------
Net realized gains $ 33,417 $ -
----------- -----------
----------- -----------
</TABLE>
Other investments in the Grace Stock Fund under the Plan at December 31, 1993
and 1992 consisted of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1993 1992
----------- -----------
<S> <C> <C>
Commercial paper, at cost, which
approximates market value $ 2,854 $ 24,626
----------- -----------
----------- -----------
</TABLE>
ESOP FUND:
As of December 31, 1993 and 1992, this fund held 59,728 and 40,840 shares of
Grace Common Stock, respectively.
<PAGE>
F-11
The sales/distributions of Grace Common Stock by/from the ESOP Fund resulted in
net realized gains as shown below:
<TABLE>
<CAPTION>
December 31,
-------------------------
1993 1992
----------- -----------
<S> <C> <C>
Proceeds from
sales/distributions of
securities $ 269,922 $ 586,730
Cost of securities
sold/distributed 168,432 565,865
----------- -----------
Net realized gains $ 101,490 $ 20,865
----------- -----------
----------- -----------
</TABLE>
Other investments in the ESOP Fund at December 31, 1993 and 1992, consisted of
the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1993 1992
----------- -----------
<S> <C> <C>
Commercial paper, at cost, which
approximates market value $ 19,294 $ 48,924
----------- -----------
----------- -----------
</TABLE>
NOTE 4 - FEDERAL INCOME TAXES:
By letter dated February 13, 1989, the Internal Revenue Service stated that the
Plan, as then in effect, was in compliance with the applicable requirements of
the Internal Revenue Code. The Plan has been amended since receiving this
determination letter. However, the Plan's administrator and the Plan's counsel
believe that the Plan, as currently in effect, is in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, they believe
the Plan continues to be qualified and the related Trust tax-exempt. Subject to
the foregoing, no income taxes are required to be paid by the Plan, and
participants are not taxed on Company contributions, before-tax contributions
and any earnings or gains from investments attributable to their Plan accounts
while such contributions, earnings and gains remain in the Trust Fund.
NOTE 6- PLAN TERMINATION:
Grace anticipates that the Plan will continue indefinitely, but reserves the
right to amend or discontinue the Plan at any time. A participating unit's
participation in the Plan may be terminated with approval of Grace's Board of
Directors.
<PAGE>
F-12
NOTE 7 - DAILY VALUATION:
Effective April 1, 1992, the Plan was amended (a) to provide for the conversion
from monthly valuation to daily valuation and (b) to permit participants to
elect to have their contributions invested in multiples of 5% and to transfer
current account balances on a daily basis in multiples of 5% or in whole dollar
amounts.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this annual report to be signed on its
behalf by the undersigned thereunto duly authorized.
W. R. GRACE & CO.
HOURLY EMPLOYEES
SAVINGS AND INVESTMENT PLAN
By: /s/ R. H. CARL
---------------------
R. H. Carl
Chairman, Administrative
Committee
Date: June 29, 1994
<PAGE>
Exhibit 24(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration Statements on Form S-3 (Nos.
33-51041, 33-50983 and 33-25962) and Form S-8 (Nos. 33-7504, 33-15182, 33-27960,
33-54201 and 33-54203) of W. R. Grace & Co. of (a) our report dated June 27,
1994 appearing on page F-1 of the Annual Report of the W. R. Grace & Co.
Salaried Employees Savings and Investment Plan on Form 11-K for the year ended
December 31, 1993, and (b) our report dated June 27, 1994 appearing on page F-1
of the Annual Report of the W. R. Grace & Co. Hourly Employees Savings and
Investment Plan on Form 11-K for the year ended December 31, 1993.
PRICE WATERHOUSE
/s/ PRICE WATERHOUSE
New York, New York
June 27, 1994
