<PAGE>
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): April 12, 1995
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W. R. GRACE & CO.
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(Exact name of registrant as specified in its charter)
New York 1-3720 13-3461988
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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: 407/362-2000
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Item 5. OTHER EVENTS.
(a) Reference is made to Item 3 of the Annual Report on Form 10-K of
W. R. Grace & Co. ("Company") for the year ended December 31, 1994 ("1994 10-
K"), and to Note 2 to the Consolidated Financial Statements included in the 1994
10-K, for information concerning litigation with an affiliated group of
insurance carriers that had agreed to a settlement with a subsidiary of the
Company, made a series of payments thereunder during 1993, and subsequently
notified the subsidiary that it would not honor the agreement (which had not
been executed) due to a September 1993 decision of the United States Court of
Appeals for the Second Circuit. As reported in the 1994 10-K, the agreement
involved approximately $240.0 million of the asbestos-related receivable of
$512.6 million recorded in the Consolidated Financial Statements at year-end
1994.
On April 12, 1995, a three-judge panel of the United States Court of
Appeals for the Fifth Circuit unanimously affirmed a January 1994 decision of
the United States District Court for the Eastern District of Texas that the
settlement agreement referred to above is binding and enforceable (W. R. GRACE
AND COMPANY-CONN. V. DAYTON INDEPENDENT SCHOOL DISTRICT, ET AL., File No. 1:87-
CV-00507-B). The Company anticipates that the affiliated group of insurance
carriers will seek a rehearing of the Fifth Circuit decision and, if a rehearing
is not granted, will seek to appeal the decision to the United States Supreme
Court.
(b) On April 27, 1995, the Company announced its consolidated results
of operations for the quarter ended March 31, 1995. The Company's April 27,
1995 press
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release and accompanying financial and statistical data are filed as an exhibit
hereto and are incorporated by reference herein.
(c) National Medical Care, Inc. ("NMC"), the Company's principal
health care subsidiary, has received subpoenas from a federal grand jury in the
District of New Jersey investigating whether NMC sold defective products and the
manner in which NMC handled customer complaints. In addition, a subsidiary of
NMC has received a subpoena from a federal grand jury in the Eastern District of
Virginia investigating the contractual relationships between subsidiaries of NMC
that provide dialysis services and third parties that provide medical
directorship and related services to those subsidiaries. NMC has produced
documents to and is cooperating with both investigating authorities. While the
outcome of the investigations cannot be predicted at this time, NMC believes
that neither NMC nor any of its employees committed any violations of law.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The Company's April 27, 1995 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/Robert H. Beber
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Robert H. Beber
Executive Vice President
and General Counsel
Dated: May 1, 1995
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W. R. GRACE & CO.
Current Report on Form 8-K
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press Release dated April 27, 1995 and accompanying
financial and statistical data
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#2595
GRACE FIRST QUARTER OPERATING EARNINGS PER SHARE RISE
56 PERCENT; NET RISES 22 PERCENT AFTER SPECIAL CHARGE
BOCA RATON, FLA., April 27, 1995 -- W. R. Grace & Co. (NYSE:GRA) reported
net operating earnings of 64 cents per share in the first quarter of 1995, an
increase of 56 percent over the 41 cents per share earned in the first quarter
of 1994. Net income in the 1995 quarter was $47.5 million or 50 cents per
share, compared to $38.2 million or 41 cents per share in the 1994 quarter, a
per-share increase of 22 percent. The current quarter includes a $20 million
pre-tax charge for contract termination costs, as well as pension, legal and
other expenses related to corporate governance activities.
Sales for the quarter rose 25 percent to $1.35 billion, compared to $1.08
billion in the year earlier period.
"All of the company's six core businesses and every geographic region
contributed to the excellent results in the quarter," said Thomas A. Holmes,
acting chief executive officer. "The strong earnings momentum that developed in
1994 is clearly continuing in 1995," he said.
Pretax earnings from specialty chemicals rose 97 percent to $79 million in
the first quarter. All core product lines again contributed solidly to the
increase. Packaging earnings rose sharply, reflecting significantly higher
volumes in all regions and resulting in market-share improvements, while
selective price increases compensated for rising raw material costs. Catalysts
and silica products enjoyed an outstanding quarter, with benefits from new fluid
cracking catalyst offerings, robust plastics market demand for
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polyolefin catalysts, overall strength in Europe and increased market
penetration for FCCs and silicas in the Asia Pacific region. Container,
construction and water treatment all registered positive comparisons with the
year ago quarter on the strength of volume increases in all regions.
Pretax earnings from health care rose 23 percent to $54 million. Dialysis
services benefited from continued strong performance in the United States and
from expansion programs in international markets. The homecare division showed
improved results, and the medical products group improved sharply from year ago
levels, which were impacted by higher operating costs incurred to improve
manufacturing processes.
Partly offsetting the increases in operating results were higher interest
and financing costs caused by higher interest rates in the 1995 quarter.
Grace is the world's largest specialty chemicals company and holds a
leadership position in specialized health care.
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W. R. Grace & Co.
Consolidated Statement of Income
QUARTER ENDED MARCH 31
($ Millions Except Per Share)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Sales $1,345.2 $1,076.8
Other income 5.5 32.5
-------- --------
Total $1,350.7 $1,109.3
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Cost of goods sold and operating expenses $797.1 $680.6
Selling, general and administrative expenses 340.4 265.4
Depreciation and amortization 65.0 59.3
Interest expense and related financing costs 35.9 21.1
Research and development expenses 36.9 34.0
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Total $1,275.3 $1,060.4
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Income before income taxes $ 75.4 $ 48.9
Provision for income taxes 27.9 10.7
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Net Income $ 47.5 $ 38.2
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-------- --------
Earnings Per Share $ .50 $ .41
Average Number of Shares (Millions) 94.1 93.8
</TABLE>
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W. R. Grace & Co.
Operating Results
QUARTER ENDED MARCH 31
($ Millions Except Per Share)
<TABLE>
<CAPTION>
Percent
1995 1994 Change
--------- --------- -------
<S> <C> <C> <C>
SALES
Specialty Chemicals $ 853.4 $ 675.4 26.4 %
Health Care 491.8 401.4 22.5
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Total Sales $ 1,345.2 $ 1,076.8 24.9
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OPERATING INCOME
Specialty Chemicals $ 78.9 $ 40.1 96.8
Health Care 53.6 43.7 22.7
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Total Operating Income $ 132.5 $ 83.8 58.1
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OTHER EXPENSES
Interest/Financing $ (35.9) $ (21.1) (70.1)
Other (1.2) (0.8) (50.0)
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Total Other Expenses $ (37.1) $ (21.9) (69.4)
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Pretax Operating Earnings $ 95.4 $ 61.9 54.1
Gain on Sale of Interest in REG -- 27.0 (100.0)
Provision for Environmental/Restructuring -- (40.0) 100.0
Provision for Corporate Governance Expenses (20.0) -- ND
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Pretax Income $ 75.4 $ 48.9 54.2
Provision for Income Taxes 27.9 10.7 (160.7)
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Net Income $ 47.5 $ 38.2 24.3 %
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EARNINGS PER SHARE:
Before Provision for Corporate Governance Expenses $ .64 $ .41 56.1 %
Net Income $ .50 $ .41 22.0 %
Average Number of Shares (Millions) 94.1 93.8
</TABLE>
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W. R. Grace & Co.
Specialty Chemicals Supplemental Data
1995 SALES AND PERCENT CHANGE VERSUS PRIOR PERIOD
(Dollars In Millions)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31
Amount of Inc/(Dec) Due to:
Sales ----------------------------------------------------
----------------------- Price/
1995 (a) 1994 Vol. Mix Exch. Total
-------- ------ ----- ------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Packaging $390.8 $299.0 24 % 3 % 4 % 31 %
Catalysts/Silicas 164.9 132.0 15 5 5 25
Construction 87.2 70.5 22 - 2 24
Container 87.5 69.8 21 (2) 6 25
Water Treatment 93.1 77.4 17 (1) 4 20
Other 29.9 26.7 3 7 2 12
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Total $853.4 $675.4 20 % 2 % 4 % 26 %
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<FN>
(a) Specialty Chemicals reporting calendar was adjusted to a month-end
reporting basis in 1995. This resulted in approximately four more selling
days in the first quarter of 1995 as compared to the year ago quarter.
</TABLE>
W. R. Grace & Co.
GEOGRAPHIC DATA
(Dollars In Millions)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31
Pretax
Sales Operating Income
----------------- ------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
North America $ 877 $ 734 $ 86 $ 66
Europe 299 225 25 9
Latin America 63 46 4 --
Asia Pacific 106 72 17 9
------- ------- ------- ------
Total $ 1,345 $ 1,077 $ 132 $ 84
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------- ------- ------- ------
</TABLE>
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