<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): February 5, 1996
----------------
W. R. GRACE & CO.
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 1-3720 13-3461988
- ----------------- ---------------------- ---------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
One Town Center Road, Boca Raton, Florida 33486-1010
----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 407/362-2000
------------
<PAGE>
Item 5. OTHER EVENTS.
(a) On February 5, 1996, the Company announced its consolidated results of
operations for the quarter and year ended December 31, 1995. The Company's
February 5, 1996 press release and accompanying financial and statistical data
are filed as an exhibit hereto and are incorporated by reference herein.
(b) On February 12, 1996, the Company announced that National Medical
Care, Inc. ("NMC"), the Company's principal health care subsidiary, has
received a letter indicating that NMC is a target of a federal grand jury
investigation. The Company's February 12, 1996 press release is filed as an
exhibit hereto and is incorporated by reference herein.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The Company's February 5, 1996 press release and accompanying
financial and statistical data are filed as an exhibit hereto. The Company's
February 12 press release is 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/ Richard N. Sukenik
------------------------------
Richard N. Sukenik
Vice President and Controller
Dated: February 13, 1996
-3-
<PAGE>
W. R. GRACE & CO.
Current Report on Form 8-K
Exhibit Index
-------------
Exhibit No. Description
- ----------- -----------
99.1 Press Release dated February 5, 1996 and accompanying
financial and statistical data
99.2 Press Release dated February 12, 1996
<PAGE>
EXHIBIT 99.1
#2631
CONTACT: Chuck Suits or Mary Lou Kromer 407/362-2600 or
800/GRACE99
GRACE FULL YEAR OPERATING EARNINGS
PER SHARE RISE 11 PERCENT TO $3.33;
FOURTH QUARTER DECLINES 14 PERCENT TO $.95;
SPECIAL CHARGES IN QUARTER AMOUNT TO $566 MILLION AFTER TAX
BOCA RATON, Fla., February 5, 1996 -- W. R. Grace & Co. (NYSE:GRA) reported
net operating earnings per share of $3.33 for the full year 1995, an 11 percent
increase from the $3.01 per share recorded for 1994. Including special items in
both periods, Grace recorded a loss of $326 million, or $3.40 per share for the
full year 1995, compared with net income of $83 million or 88 cents per share in
1994.
Full year sales of specialty chemicals rose 14 percent to $3.67 billion
compared to $3.22 billion in 1994. In discontinued operations, sales for health
care rose 11 percent to $2.08 billion, compared to $1.88 billion a year ago.
For the fourth quarter of 1995, net operating earnings were $.95 per share,
a decline of 14 percent from the $1.10 per share earned in the 1994 quarter. In
addition, the company recorded special charges of $566 million after tax in the
quarter, related to discontinued operations, restructuring activities, asset
impairments and future spending for asbestos litigation and environmental
remediation. Including the special charges, Grace reported a net loss of $474
million, or $4.87 per share, for the fourth quarter of 1995.
Sales for flexible packaging and specialty chemicals businesses in the
fourth quarter declined one percent to $933 million compared to $944 million a
year ago.
(more)
<PAGE>
-2-
Health care sales rose two percent to $541 million, compared to $529 million in
the year-ago quarter.
"The lower operating results in the recent quarter do not diminish our
expectations for improved earnings and significantly higher shareholder value as
we proceed through the year," said Albert J. Costello, chairman, president and
chief executive officer. "As we noted in January, the shortfall in the fourth
quarter was related to a number of factors, most of which appear to be temporary
in nature. The agreement we announced yesterday to combine Grace's health care
business with the dialysis operations of Fresenius AG will bring substantial
benefits both to NMC and to Grace's packaging and specialty chemicals
businesses. This transaction, anticipated for completion by the third quarter
of 1996, will create the world's largest fully integrated dialysis company, with
exciting prospects for value-driven growth and continued leadership in quality
of patient care," he said.
"This transaction, combined with an expected transaction involving our
Grace Dearborn water treatment business, will result in a significant reduction
of Grace's debt, and more than restore the shareholders' equity impacted by the
special charges taken in the fourth quarter. Execution of the stock repurchase
program will further enhance per share results. In all, we will move
significantly closer to attaining our goal of stronger, more predictable and
sustainable growth in value," Mr. Costello concluded.
In 1995, pretax operating earnings for flexible packaging and specialty
chemicals rose 15 percent to $387 million, representing an all-time record for
the group. This increase was achieved despite a 17 percent decline to $107
million in the fourth quarter. As previously reported, fourth quarter results
included four fewer selling days
(more)
<PAGE>
-3-
than in the year-ago quarter due to a change in the reporting calendar made at
the start of 1995. This had a volume impact of six percent.
- - Packaging had a record year, with sales rising 19 percent to $1.7 billion
versus 1994; operating earnings rose 20 percent.
Packaging earnings for the quarter declined three percent, excluding the
impact of fewer selling days. Underlying product strength was more than
offset by a number of factors, primarily the three-week French strike which
ended in December, temporary weakness in U.S. meat markets, and increased
costs resulting from new line start-up activity and reduction in inventory
levels.
- - Catalyst and silica products also had a record year, with sales of $687
million, up 13 percent versus 1994; operating earnings rose 18 percent.
Results for the quarter were mixed, excluding the change in selling days.
Fluid cracking catalysts were down compared to an exceptionally strong
year-ago quarter, primarily as a result of refineries continuing to process
light crude oils. Silicas and adsorbents also declined due to several
factors, while polyolefin catalysts rose due to strong volume and favorable
costs.
- - The smaller specialty chemicals businesses recorded 8 percent revenue gains
for full year 1995 to $1.3 billion, while their earnings declined 22
percent.
For the fourth quarter, construction products earnings rose modestly versus
the year-ago quarter, primarily due to strength in cement and concrete
products and lower costs. Results for both water treatment and container
products declined, primarily due to continued high operating costs and the
inability to raise prices.
(more)
<PAGE>
-4-
Pretax operating earnings from health care declined eight percent in the
quarter due to the absence of 1994 sales and related earnings associated with
the 1993 federal budget ("OBRA 93") that are no longer being recorded. Absent
the beneficial OBRA 93 impact in the 1994 quarter, current quarter revenues rose
nine percent and operating income increased 27 percent. Strong increases in
dialysis services and medical products were partly offset by a decline in the
homecare division due to price competition in its base infusion business.
During the fourth quarter, the company updated analyses of certain
contingencies. Based on recent trends and reassessment of future plans and
forecasts, provisions aggregating $566 million after tax were made as follows:
- - Discontinued Operations - Health Care - $69 million -
For cumulative adjustments related to changing the method of recording
certain billing adjustments, the recognition of a greater than forecasted
actual experience rate for certain self insurance liabilities and changes
in the amortization rates of certain intangible assets.
- - Other Discontinued Operations - $151 million -
To reflect lower than expected net proceeds from planned disposition of the
remaining discontinued operations, principally Grace Cocoa.
- - Asbestos - $179 million -
Principally for a first-time estimate of future bodily injury claims,
updated estimates of pending property damage and bodily injury cases, and
related insurance recovery estimates.
- - Environmental - $50 million -
For additional future spending for several sites.
(more)
<PAGE>
-5-
- - Restructuring, Asset Impairment and Other Costs - $117 million -
To recognize costs of the previously-announced worldwide restructuring
program along with certain asset impairments (as prescribed under a new
accounting pronouncement - FASB No. 121 - Accounting for the impairment of
long-lived assets) and other special costs, some of which related to
previous divestments.
Grace is a leading global supplier of flexible packaging and specialty
chemicals, and a leading provider of specialized health care services.
-0-
<PAGE>
W. R. Grace & Co.
Consolidated Statement of Operations (a)
For Year Ended December 31
--------------------------
($ Millions Except Per Share)
<TABLE>
<CAPTION>
Fourth Quarter Full Year
---------------------------- ----------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 933.4 $ 944.4 $ 3,665.5 $ 3,218.2
Other income 28.6 4.4 41.9 42.6
------------ ------------ ------------ ------------
Total $ 962.0 $ 948.8 $ 3,707.4 $ 3,260.8
------------ ------------ ------------ ------------
Cost of goods sold and operating expenses $ 629.6 $ 523.5 $ 2,247.2 $ 1,900.8
Selling, general and administrative expenses 243.9 227.2 910.8 773.6
Depreciation and amortization 54.6 51.0 177.6 165.0
Interest expense and related financing costs 19.0 13.1 71.3 49.5
Research and development expenses 30.6 24.0 120.6 106.8
Corporate expenses previously allocated to the
health care segment 7.8 9.7 37.8 37.1
Restructuring costs and asset impairments 135.2 - 179.5 -
Provision relating to asbestos-related liabilities
and insurance coverage 275.0 - 275.0 316.0
------------ ------------ ------------ ------------
Total $ 1,395.7 $ 848.5 $ 4,019.8 $ 3,348.8
------------ ------------ ------------ ------------
(Loss)/Income Before Income Taxes $ (433.7) $ 100.3 $ (312.4) $ (88.0)
(Benefit from)/provision for income taxes (149.4) 35.4 (115.8) (46.6)
------------ ------------ ------------ ------------
(Loss)/income from continuing operations $ (284.3) $ 64.9 $ (196.6) $ (41.4)
(Loss)/income from discontinued operations (189.5) 38.5 (129.3) 124.7
------------ ------------ ------------ ------------
Net (loss)/income $ (473.8) $ 103.4 $ (325.9) $ 83.3
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
(LOSS)/EARNINGS PER SHARE
Continuing operations $ (2.92)(b) $ .69 $ (2.05)(b) $ (.45)(e)
Discontinued operations (1.95)(c) .41 (1.35)(c) 1.33
------------ ------------ ------------ ------------
Net (loss)/income $ (4.87)(d) $ 1.10 $ (3.40)(d) $ .88(e)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Average number of shares (millions) 97.3 94.0 95.8 93.9
</TABLE>
(a) 1994 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 losses from special items of $3.55 per share (or $345.6 after-tax)
and $4.08 per share (or $391.3 after- tax) for the fourth quarter and full
year 1995, respectively.
(c) Includes losses from special items of $2.27 per share (or $220.2 after-
tax) and $2.65 per share (or $253.7 after- tax) for the fourth quarter and
full year 1995, respectively.
(d) Includes losses from special items of $5.82 per share (or $565.8 after-
tax) and $6.73 per share (or $645.0 after- tax) for the fourth quarter and
full year 1995, respectively.
(e) Includes $2.13 per share for the 2nd quarter 1994 provision relating to
asbestos-related insurance coverage.
<PAGE>
W. R. Grace & Co.
Operating Results
Quarter Ended December 31
-------------------------
($ Millions Except Per Share)
<TABLE>
<CAPTION>
PERCENT
1995 1994 CHANGE
-------- -------- ----------
<S> <C> <C> <C>
Sales - Specialty Chemicals $ 933.4 $ 944.4 (1.2)%
Operating Income - Specialty Chemicals $ 107.0 $ 128.1 (16.5)
Other Expenses / (Income):
Interest/Financing (a) $ 19.0 $ 13.1 45.0
Other (13.8) 5.0 (376.0)
-------- --------
Total Other Expenses $ 5.2 $ 18.1 (71.3)
Pretax Operating Earnings $ 101.8 $ 110.0 (7.5)
Corporate Expenses previously allocated
To Health Care 7.8 9.7 (19.6)
-------- --------
Pretax Operating Earnings before Special Items $ 94.0 $ 100.3 (6.3)
Provision for Income Taxes 32.7 35.4 (7.6)
-------- --------
Net Operating Income before Special Items $ 61.3 $ 64.9 (5.5)
Special Items - after-tax - Chemicals /
Corporate:
Restructuring/Other Activities (116.9) - ND
Provision for Environmental Liabilities (50.0) - ND
Provision for Asbestos-related Liabilities (178.7) - ND
-------- --------
Net (Loss)/Income from Continuing Operations $ (284.3) $ 64.9 (538.1)
Net Loss from Disc. Ops. (after-tax
excl. Health Care) (151.3) - ND
Net (Loss)/Income from Discontinued
Operations - Health Care (b) (38.2) 38.5 (199.2)
-------- --------
Net (Loss)/Income $ (473.8) $ 103.4 (558.2)%
-------- --------
-------- --------
- -----------------------------------------------------------------------------------------
EARNINGS PER SHARE - OPERATING EARNINGS
(BEFORE SPECIAL ITEMS)
From Operations - Specialty Chemicals $ .63 $ .69 (8.7)%
From Discontinued Operations -
Health Care (b) .32 .41 (22.0)
-------- --------
Operating Earnings $ .95 $ 1.10 (13.6)%
-------- --------
-------- --------
- -----------------------------------------------------------------------------------------
(LOSS)/EARNINGS PER SHARE
From Continuing Operations $ (2.92) $ .69 (523.5)%
From Discontinued Operations (1.95) .41 (575.6)
-------- --------
Net (Loss)/Income $ (4.87) $ 1.10 (542.7)%
-------- --------
-------- --------
Average Number of Shares (Millions) 97.3 94.0
(a) After an allocation of interest/financing expenses to discontinued
operations.
(b) DISCONTINUED OPERATIONS - HEALTH CARE
Sales $ 540.6 $ 528.5 2.3 %
Operating Income $ 83.6 $ 90.9 (8.0)
Interest/Financing Expenses 28.8 20.9 37.8
-------- --------
Pretax Operating Earnings 54.8 70.0 (21.7)
Provision for Income Taxes 24.1 31.5 (23.5)
-------- --------
Net Income from Discontinued Oper.
before Special Items $ 30.7 $ 38.5 (20.3)%
Special Items - after-tax (68.9) - ND
-------- --------
Net (Loss)/Income from Discontinued
Operations $ (38.2) $ 38.5 (199.2)%
-------- --------
-------- --------
</TABLE>
<PAGE>
W. R. Grace & Co.
Operating Results
Year Ended December 31
----------------------
($ Millions Except Per Share)
<TABLE>
<CAPTION>
PERCENT
1995 1994 CHANGE
-------------- ------------- ---------
<S> <C> <C> <C>
Sales - Specialty Chemicals $ 3,665.5 $ 3,218.2 13.9 %
Operating Income - Specialty Chemicals $ 387.4 $ 336.5 15.1
Other Expenses:
Interest/Financing (a) $ 71.3 $ 49.5 44.0
Other (11.3) 8.9 (227.0)
-------------- -------------
Total Other Expenses $ 60.0 $ 58.4 2.7
Pretax Operating Earnings $ 327.4 $ 278.1 17.7
Corporate Expenses previously allocated to Health Care 37.8 37.1 1.9
-------------- -------------
Pretax Operating Earnings before Special Items $ 289.6 $ 241.0 20.2
Provision for Income Taxes 94.9 83.4 13.8
-------------- -------------
Net Operating Income before Special Items $ 194.7 $ 157.6 23.5
Special Items - after-tax - Chemicals / Corporate:
Provision for Corporate Governance (18.6) - ND
Gain on Sale of Interest in REG - 27.0 (100.0)
Prov. for Environ. Costs/Staffing Reductions - (26.0) 100.0
Restructuring/Other Activities (144.0) - ND
Provision for Environmental Liabilities (50.0) - ND
Provision for Asbestos-related Liabilities (178.7) (200.0) 10.7
-------------- -------------
Net Loss from Continuing Operations $ (196.6) $ (41.4) (375.0)
Net Loss from Disc. Ops. (after-tax excl. Health Care) (151.3) - ND
Net Income from Discontinued Operations - Health Care (b) 22.0 124.7 (82.4)
-------------- -------------
Net (Loss) / Income $ (325.9) $ 83.3 (491.2)%
-------------- -------------
-------------- -------------
- ------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE - OPERATING EARNINGS (BEFORE SPECIAL ITEMS)
From Operations - Specialty Chemicals $ 2.03 $ 1.68 20.8 %
From Discontinued Operations - Health Care (b) 1.30 1.33 (2.3)
-------------- -------------
Operating Earnings $ 3.33 $ 3.01 10.6 %
-------------- -------------
-------------- -------------
- ------------------------------------------------------------------------------------------------------------------------------
(LOSS) / EARNINGS PER SHARE
From Continuing Operations $ (2.05) $ (.45) (355.6)%
From Discontinued Operations (1.35) 1.33 (201.5)
-------------- -------------
Net (Loss) / Income $ (3.40) $ .88 (486.4)%
-------------- -------------
-------------- -------------
Average Number of Shares (Millions) 95.8 93.9
(a) After an allocation of interest/financing expenses to
discontinued operations.
(b) DISCONTINUED OPERATIONS - HEALTH CARE
Sales $ 2,076.8 $ 1,875.1 10.8 %
Operating Income $ 315.6 $ 287.5 9.8
Interest/Financing Expenses 93.5 60.4 54.8
-------------- -------------
Pretax Operating Earnings 222.1 227.1 (2.2)
Provision for Income Taxes 97.7 102.4 (4.6)
-------------- -------------
Net Income from Discontinued Oper. before Special Items $ 124.4 $ 124.7 (0.2)%
Special Items - after-tax (102.4) - ND
-------------- -------------
Net Income from Discontinued Operations $ 22.0 $ 124.7 (82.4)%
-------------- -------------
-------------- -------------
</TABLE>
<PAGE>
W. R. Grace & Co.
Specialty Chemicals Supplemental Data
1995 Sales and Percent Change Versus Prior Period
-------------------------------------------------
(Dollars In Millions)
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31
- --------------------------
Amount of Inc/(Dec) Due to:
---------------------------------------------
Sales
------------------------- Price/
1995 (a) 1994 Vol. Mix Exch. Total
---------- ------------ --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Packaging $ 440.6 $ 436.6 (3)% 3 % 1 % 1 %
Catalysts/Silicas 175.5 175.4 (7) 5 2 -
Construction 101.0 108.6 (7) - - (7)
Container 84.0 88.1 (4) (2) 1 (5)
Water Treatment 98.5 100.7 (5) 1 2 (2)
Other 33.8 35.0 (18) 11 3 (4)
---------- ------------
Total $ 933.4 $ 944.4 (5)% 3 % 1 % (1)%
---------- ------------
---------- ------------
YEAR ENDED DECEMBER 31
- ----------------------
Amount of Inc/(Dec) Due to:
---------------------------------------------
Sales
------------------------- Price/
1995 (a) 1994 Vol. Mix Exch. Total
---------- ------------ --------- -------- -------- -------
Packaging $ 1,692.1 $ 1,417.5 10 % 6 % 3 % 19 %
Catalysts/Silicas 687.3 609.7 4 5 4 13
Construction 397.2 387.1 1 1 1 3
Container 357.4 324.5 5 - 5 10
Water Treatment 398.5 363.4 5 2 3 10
Other 133.0 116.0 4 8 3 15
---------- ------------
Total $ 3,665.5 $ 3,218.2 7 % 4 % 3 % 14 %
---------- ------------
---------- ------------
</TABLE>
(a) Specialty Chemicals' reporting calendar was adjusted to a month-end
reporting basis in 1995. This resulted in approximately four less selling
days in the fourth quarter of 1995 as compared to 1994.
<PAGE>
W. R. Grace & Co.
Specialty Chemicals
Geographic Data
---------------
(Dollars In Millions)
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31
- -------------------------
Pretax
Sales Operating Income
--------------------------- --------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SPECIALTY CHEMICALS
North America $ 459 $ 479 $ 62 $ 69
Europe 291 284 21 33 (a)
Latin America 66 68 7 8
Asia Pacific 118 113 17 18
---------- ---------- ---------- ----------
Total Specialty Chemicals $ 934 $ 944 $ 107 $ 128
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
YEAR ENDED DECEMBER 31
- ----------------------
Pretax
Sales Operating Income
--------------------------- --------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
SPECIALTY CHEMICALS
North America $ 1,821 $ 1,679 $ 208 $ 192
Europe 1,147 955 96 69 (a)
Latin America 253 218 18 20
Asia Pacific 445 366 65 56
---------- ---------- ---------- ----------
Total Specialty Chemicals $ 3,666 $ 3,218 $ 387 $ 337
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
(a) Includes costs of $1 for the quarter and $11 year-to-date associated with
streamlining certain European chemical operations.
<PAGE>
Exhibit 99.2
#2632
CONTACT: Chuck Suits or Mary Lou Kromer 407/362-2600 or
800/GRACE99
GRACE REPORTS NMC IS TARGET OF FEDERAL INVESTIGATION;
WILL HAVE NO IMPACT ON NMC-FRESENIUS TRANSACTION
BOCA RATON, Fla., February 12, 1996- -W. R. Grace & Co. (NYSE: GRA) today
reported that National Medical Care, Inc. (NMC), Grace's principal health care
subsidiary, has received a letter from the United States Attorney for the
District of New Jersey indicating that NMC is a target of a federal grand jury
investigation into possible violations of criminal law in connection with NMC's
efforts to persuade the U.S. Food and Drug Administration to lift a January 1991
import hold issued with respect to NMC's Dublin, Ireland manufacturing facility.
The material element of the import hold was lifted in 1992. The target letter
relates to the previously disclosed investigation of NMC by a federal grand jury
in New Jersey. Grace stated that the target letter will not have an impact on
the recently announced transaction involving NMC and Fresenius AG, and that the
outcome of the investigation will not have a material impact on NMC.
Grace is a leading global supplier of flexible packaging and specialty
chemicals, and a leading provider of specialized health care services.
###
