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 29, 1996
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
<PAGE>
Item 5. Other Events.
On April 29, 1996, the Company announced its consolidated
results of operations for the quarter ended March 31, 1996. The Company's
April 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.
The Company's April 29, 1996 press release and accompanying
financial and statistical data are filed as an exhibit hereto.
- 2 -
<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.
----------------------
(Registrant)
By s/Peter D. Houchin
--------------------------------
Peter D. Houchin
Senior Vice President and
Chief Financial Officer
Dated: May 6, 1996
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<PAGE>
W. R. GRACE & CO.
Current Report on Form 8-K
Exhibit Index
Exhibit No. Description
- ----------- ------------
99.1 Press Release dated April 29, 1996 and accompanying
financial and statistical data
<PAGE>
GRACE REPORTS FIRST QUARTER EARNINGS PER SHARE OF 65 CENTS;
PRE-TAX OPERATING EARNINGS FROM
CONTINUING OPERATIONS UP 23 PERCENT
BOCA RATON, Fla. April 29, 1996--W. R. Grace & Co. (NYSE: GRA) today
reported 1996 first quarter pre-tax operating earnings from continuing
operations of $84 million, an increase of 23 percent over last year's $68
million.
Including results of its discontinued health care operations, net income
for the first quarter of 1996 was $63.6 million, or 65 cents per share,
compared to $47.5 million, or 50 cents per share, in the 1995 first quarter.
The flexible packaging and specialty chemicals businesses contributed $42
million, or 42 cents per share, in the first quarter 1996. The year-ago
quarter included an after-tax special charge of $12.5 million and four
percent fewer average shares outstanding.
"I believe the first quarter results indicate the solid early progress we
are making toward becoming a top quartile packaging and specialty chemicals
company," said Albert J. Costello, chairman, president and chief executive
officer.
Sales in the quarter for the continuing operations were $886 million, up
four percent, compared to the exceptionally strong first quarter in 1995,
when sales increased by more than 20 percent.
"While our sales from continuing operations were up only modestly, I am
especially pleased with our earnings performance," he said. "The underlying
market
<PAGE>
trends are generally healthy for our packaging and specialty chemicals
businesses on a global basis, and the cost management programs we initiated
last summer are beginning to favorably impact our operating margins, which
rose 1.5 percentage points in our ongoing operations.
"As we continue our efforts to enhance productivity and improve cash
management, we remain confident that we will meet our commitment to improve
operating margins by three percentage points and achieve substantial per
share earnings growth for the year," said Costello.
Costello also said the company was on schedule to complete the disposition
of its Dearborn water treatment and Agracetus transgenic plant businesses in
the second quarter and the separation of its health care unit (National
Medical Care) in the third quarter. After-tax proceeds from these
transactions are expected to exceed $3 billion, which will be used to retire
debt, repurchase shares and invest in ongoing operations. The company
initiated its previously announced share repurchase program in April.
Grace's first quarter 1996 performance improvement was driven largely by
reduced overhead expenses and robust performance from the catalysts and
silica products business. Increasing demand for both catalysts and silicas in
Asia Pacific led to strong, double-digit sales and earnings growth in the
region. Earnings increases for this business also came from Europe and
improved operating efficiencies.
Packaging sales were slightly higher and earnings were flat, compared to
an exceptionally strong first quarter in 1995. While European sales were up
modestly, carryover effects from the fourth quarter-- including inventory
management and the French strike--plus British beef problems late in the
first quarter, caused lower margins.
<PAGE>
"Given market conditions, we are satisfied with the performance of our
packaging business in the first quarter, and we remain confident that we will
generate solid sales and earnings growth for the remainder of the year," said
Costello. "We are especially optimistic about increasing acceptance of new
product introductions, geographic expansion and a heightened emphasis on cost
management."
Results of the construction products business improved due to better
margins, achieved from plant consolidations and reduced manufacturing costs.
The water treatment business also contributed to earnings improvements based
on modestly higher volumes and price mix, plus cost reductions. Container
results declined due to lower volumes resulting from weakness in Asia
Pacific.
Excluding the change in government health care reimbursement (OBRA '93)
that did not impact the 1995 first quarter, first quarter 1996 health care
revenues rose 14 percent and operating income increased 39 percent. Dialysis
services and medical products continued strong performance, partly offset by
a decline in the homecare division due to price competition. Pre-tax
operating earnings for health care declined 13 percent in the quarter.
Grace is a leading global supplier of flexible packaging and specialty
chemicals, and a leading provider of specialized health care services.
<PAGE>
W. R. GRACE & CO.
CONSOLIDATED STATEMENT OF OPERATIONS (a)
FOR QUARTER ENDED MARCH 31
($ MILLIONS EXCEPT PER SHARE)
<TABLE>
<CAPTION>
FIRST QUARTER
--------------------
1996 1995
-------- ----------
<S> <C> <C>
Sales .................................................... $886.0 $853.4
Other income ............................................. 3.8 4.3
-------- ----------
Total .................................................. $889.8 $857.7
-------- ----------
Cost of goods sold and operating expenses ................ $531.8 $500.9
Selling, general and administrative expenses ............. 199.3 230.8(b)
Depreciation and amortization ............................ 45.5 38.2
Interest expense and related financing costs ............. 18.4 15.8
Research and development expenses ........................ 28.8 30.5
Corporate expenses previously allocated to the health
care segment ............................................ -- 10.1
-------- ----------
Total .................................................. $823.8 $826.3
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Income before income taxes ............................... $ 66.0 $ 31.4
Provision for income taxes ............................... 24.4 8.5
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Income from continuing operations ........................ $ 41.6 $ 22.9
Income from discontinued operations ...................... 22.0 24.6
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Net Income ............................................. $ 63.6 $ 47.5
======== ==========
EARNINGS PER SHARE
Continuing operations ................................... $ .42 $ .24
Discontinued operations ................................. .23 .26
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Net Income .............................................. $ .65 $ .50
======== ==========
Average number of shares (millions) ...................... 97.9 94.1
</TABLE>
(a) First quarter 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 a $20.0 million pretax charge ($12.5 after-tax) for matters
relating to corporate governance.
<PAGE>
W.R. GRACE & CO.
OPERATING RESULTS
QUARTER ENDED MARCH 31
($ MILLIONS EXCEPT PER SHARE)
<TABLE>
<CAPTION>
PERCENT
1996 1995 CHANGE
-------- --------- ---------
<S> <C> <C> <C>
Sales -- Specialty Chemicals ............................ $886.0 $853.4 3.8%
Operating Income -- Specialty Chemicals ................. $ 83.9 68.4(c) 22.7
Other Expenses/(Income):
Interest/Financing (a) ................................. $ 18.4 15.8 16.5
Other .................................................. (0.5) 1.2 (141.7)
-------- ---------
Total Other Expenses ................................... $ 17.9 $ 17.0 5.3
Pretax Operating Earnings before Special Items ......... $ 66.0 $ 51.4 28.4
Provision for Income Taxes .............................. 24.4 16.0 52.5
-------- ---------
Net Operating Income before Special Items ............... $ 41.6 $ 35.4 17.5%
Special Items -- after-tax -- Chemicals/Corporate:
Provision for Corporate Governance ..................... -- (12.5) ND
-------- ---------
Net Income from Continuing Operations ................... $ 41.6 $ 22.9 81.7
Net Income from Discontinued Operations --
Health Care (b) ........................................ 22.0 24.6 (10.6)
-------- ---------
Net Income .............................................. $ 63.6 $ 47.5 33.9%
======== =========
Earnings Per Share -- Operating Earnings (before special items)
From Operations -- Specialty Chemicals ................. $ .42 $ .38 10.5%
From Discontinued Operations -- Health Care (b) ....... .23 .26 (11.5)
-------- ---------
Operating Earnings ..................................... $ .65 $ .64 1.6%
======== =========
Earnings Per Share
From Continuing Operations ............................. $ .42 $ .24 75.0%
From Discontinued Operations ........................... .23 .26 (11.5)
-------- ---------
Net Income ............................................. $ .65 $ .50 30.0%
======== =========
Average Number of Shares (Millions) ..................... 97.9 94.1
(a) After an allocation of interest/financing expenses to discontinued operations.
(b) Discontinued Operations -- Health Care
Sales ............................................... $539.7 $491.8 9.7%
Operating Income .................................... $ 65.0 $ 64.1 1.4
Interest/Financing Expenses ......................... 26.8 20.1 33.2
-------- ---------
Pretax Operating Earnings ........................... 38.2 44.0 (13.2)
Provision for Income Taxes .......................... 16.2 19.4 (16.5)
-------- ---------
Net Income from Discontinued Operations ............. $ 22.0 $ 24.6 (10.6)%
======== =========
(c) Includes corporate expenses previously allocated to Health Care of $10.1
million.
</TABLE>
<PAGE>
W.R. GRACE & CO.
SPECIALTY CHEMICALS SUPPLEMENTAL DATA
1996 SALES AND PECENT CHANGE VERSUS PRIOR PERIOD
------------------------------------------------
(DOLLARS IN MILLIONS)
QUARTER ENDED MARCH 31
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<TABLE>
<CAPTION>
AMOUNT OF INC/(DEC) DUE TO:
SALES ----------------------------------
------------------ PRICE/
1996 1995 VOL. MIX EXCH. TOTAL
-------- -------- ------ -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Packaging ......... $409.1 $390.8 4% -- 1% 5%
Catalysts/Sillcas 182.2 164.9 6 3 1 10
Construction ...... 84.3 87.2 (4) 1 -- (3)
Container ......... 83.9 87.5 (5) 1 -- (4)
Water Treatment .. 97.7 93.1 2 2 1 5
Other ............. 28.8 29.9 (2) (2) -- (4)
-------- --------
Total ............ $886.0 $853.4 2% 1% 1% 4%
======== ========
</TABLE>
SPECIALTY CHEMICALS
GEOGRAPHIC DATA
---------------
(DOLLARS IN MILLIONS)
QUARTER ENDED MARCH 31
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<TABLE>
<CAPTION>
PRETAX
OPERATING
SALES INCOME
-------------- --------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Specialty Chemicals
- ----------------------------
North America .............. $422 $422 $36 $27
Europe ..................... 285 270 26 23
Latin America .............. 64 58 7 2
Asia Pacific ............... 115 103 16 16
------ ------ ------ ------
Total Specialty Chemicals $886 $853 $84 $68
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</TABLE>
