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): July 25, 1997
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W. R. GRACE & CO.
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(Exact name of registrant as specified in its charter)
Delaware 1-12139 65-0654331
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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.
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On July 25, 1997, W. R. Grace & Co. ("Company") announced its consoli
dated results of operations for the quarter ended June 30, 1997. The Company's
July 25, 1997 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.
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The Company's July 25, 1997 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: August 5, 1997
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W. R. GRACE & CO.
Current Report on Form 8-K
Exhibit Index
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Exhibit No. Description
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99.1 Press Release dated July 25, 1997 and accompanying
financial and statistical data
#2684
GRACE NEWS
Corporate Communications Division
W. R. Grace & Co.
One Town Center Road
Boca Raton, FL 33486-1010
CONTACT: Chuck Suits or Mary Lou Kromer 561/362-2600 or
800/GRACE99
GRACE REPORTS STRONG SECOND QUARTER RESULTS
BASIC EPS FROM CONTINUING OPERATIONS
BEFORE SPECIAL ITEMS UP 46 PERCENT AT $.86
CONSTRUCTION PRODUCTS UNIT REPORTS
RECORD SALES AND EARNINGS
PACKAGING EARNINGS INCREASE 23 PERCENT
BOCA RATON, Fla., July 25, 1997--W. R. Grace & Co. (NYSE: GRA) today
reported its 1997 second quarter basic earnings per share from continuing
operations, excluding special items, were $.86, an increase of 46 percent
compared to $.59 in the year-ago quarter.
Following are highlights of the 1997 second quarter results compared to
the 1996 quarter:
o Pre-tax operating income, excluding divested units for both periods,
increased 15 percent to $117 million compared to $102 million in 1996.
o EBIT margin (earnings before interest and taxes as a percent of sales)
increased to 14.1 percent compared to 11.4 percent in 1996. EBITDA margin
(EBIT plus depreciation and amortization) was 20 percent versus 17.2
percent last year.
o Sales increased nearly five percent to $836 million compared to $799
million a year ago, excluding results from units divested in 1996 and
1997.
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o Excluding impact of currency translation and divested unit results, sales
grew eight percent and pre-tax operating income increased 20 percent.
o Grace reported net income of $117 million, or basic earnings per share of
$1.61, including a gain from the divestment of its specialty polymer
business, offset by restructuring charges primarily related to its
packaging business.
Albert J. Costello, chairman, president and chief executive officer of
Grace said, "Our performance improvements are the result of strong global sales
growth in our packaging and construction products businesses, along with
continued efforts to improve operating efficiencies in all our businesses. I am
particularly pleased with improvement in our EBIT margin to 14 percent and
reduced capital spending."
Costello said that capital expenditures within the continuing
businesses for the first six months were $114 million, compared to $220 million
in the 1996 period.
GRACE PACKAGING
Grace Packaging, a global leader in flexible plastic packaging and
container sealants, reported pre-tax income rose 23 percent to $79 million and
sales increased eight percent to $532 million in the 1997 second quarter
compared to the year-ago quarter. Excluding currency exchange, packaging pretax
income increased more than 27 percent and sales nearly 12 percent.
Sales of packaging for fresh red meat continued to grow in every
region, particularly North America and Latin America. Demand for films for
industrial and consumer applications increased globally, with strong gains in
Asia Pacific
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and Latin America. Sales were further fueled by a growing demand for packaging
for processed and prepared foods in the Americas.
During the quarter, Grace Packaging announced a restructuring of its
management organization to shift from a regional management structure to a
global organization. The restructuring is expected to accelerate sales growth
and improve manufacturing productivity, reduce costs, shorten product
development time and enhance customer service. Grace Packaging expects to
reduce manufacturing costs by $35 million in 1998.
"We are pleased to see packaging sales growth return to more
traditional levels, despite currency translation," said Costello. "Along with
the top-line growth, our aggressive cost management resulted in a two
percentage point EBIT margin improvement to nearly 15 percent," he said.
GRACE DAVISON
Grace Davison, a leading supplier of catalysts and silica products,
posted sales of $175 million for the 1997 second quarter, down eight percent
from the prior year quarter. Pre-tax income was $21 million, up 20 percent from
the first quarter of 1997, but down 12 percent compared to the year-ago
quarter. Currency exchange negatively impacted sales four percent.
Sales of polyolefin catalysts increased, reflecting increased demand
for conventional and high-performance plastics. Silica products sales also
increased, particularly for new products such as those sold to the graphic arts
industry. The gains were offset by a decline in fluid cracking catalyst (FCC)
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sales due to continued significant pricing pressures worldwide and lower
volume, particularly in Asia Pacific.
"Improved manufacturing processes and operational enhancements
contributed to an EBITDA margin of 20.8 percent, up 1.3 percentage points from
the prior year quarter -- quite an achievement considering the significant
impact of currency translation due to the strong US dollar in the European
market, as well as continued pricing pressure in the worldwide FCC
marketplace," said Costello.
GRACE CONSTRUCTION PRODUCTS
Grace Construction Products, a leading global supplier of concrete
additives, cement processing aids, and structural waterproofing and
fireproofing products, reported record sales and earnings. Sales increased 12
percent to $128 million, and pre-tax income rose 28 percent to $15 million.
Sales growth was strong in every region of the world, with
double-digit increases in most product groups. The outstanding performance
improvement was due to increased global sales of new value-added products,
including anti-corrosion and anti-shrinkage concrete admixtures, new
waterproofing products and specialty fireproofing materials.
During the quarter, Grace introduced several new waterproofing
products, including Vycor (TM) Select and Vycor (TM) Ultra roofing underlayment
products; and Procor (TM), a fluid-applied structural waterproofing membrane.
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"We expect our construction products business will continue to drive
top-line growth with new value-added products, geographic expansion and
selected acquisitions," said Costello. "The outstanding sales growth, coupled
with a focus on cost efficiencies, has resulted in significant EBIT margin
improvement," he added.
The construction products business reported an EBIT margin of 12
percent for the 1997 second quarter, up 1.6 percentage points from the
prior-year quarter and 10 percentage points from the 1995 second quarter.
OTHER HIGHLIGHTS
In early May, Grace completed the sale of its specialty polymer
business to National Starch and Chemical Company for $148 million. In June,
Grace announced that it had entered into an agreement to sell its TEC Systems
unit to Sequa Corporation. The company expects to complete the transaction in
the third quarter.
Grace is a leading global supplier of flexible packaging and specialty
chemicals with annual sales of approximately $3.5 billion. The company operates
in more than 100 countries.
W. R. Grace & Co.
Consolidated Statement of Operations
For Period Ended June 30
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($ Millions Except Per Share)
Second Quarter Six Months Ended
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1997 1996 1997 1996
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Sales $842.5 $920.3 $1,627.6 $1,781.9
Other income 18.9 14.3 23.6 18.1
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Total $861.4 $934.6 $1,651.2 $1,800.0
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Cost of goods sold and operating expenses $513.2 $549.2 993.2 $1,061.8
Selling, general and administrative expenses 158.0 201.0 304.6 394.9
Depreciation and amortization 49.2 45.9 97.7 90.8
Interest expense and related financing costs 20.3 18.3 39.4 36.7
Research and development expenses 21.7 26.2 43.6 52.5
Provision for Restructuring 12.4 53.7 12.4 53.7
(Gain) on sale of businesses (103.1) (326.4) (103.1) (326.4)
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Total $671.7 $567.9 $1,387.8 $1,364.0
Income before income taxes $189.7 $366.7 $263.4 $436.0
Prov. for income taxes 72.3 131.7 99.6 157.4
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Income from continuing operations $117.4 $235.0 $163.8 $278.6
Income from discontinued operations - 98.9 - 118.9
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Net Income $117.4 $333.9 $163.8 $397.5
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Basic Earnings Per Share
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Continuing Operations before Special Items $.86 $.59 $1.47 $1.03
Continuing Operations $1.61 $2.43 $2.21 $2.86
Net Income $1.61 $3.45 $2.21 $4.09
Basic Average number of shares (millions) 72.8 96.6 74.0 97.3
Primary Earnings Per Share:
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Continuing Operations before Special Items $.83 $.58 $1.43 $1.01
Continuing Operations $1.57 $2.39 $2.15 $2.80
Net Income $1.57 $3.39 $2.15 $4.00
Average number of shares (millions) 74.8 98.5 76.2 99.3
W. R. Grace & Co.
Operating Results
Quarter Ended June 30
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($ Millions Except Per Share)
Percent
1997 1996 Change
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Sales :
Packaging $531.8 $493.8 7.7 %
Davison 175.5 190.2 (7.7)
Construction Products 127.8 114.2 11.9
Other 7.4 122.1 (93.9)
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Total Sales $842.5 $920.3 (8.5)
Operating Income:
Packaging $78.6 $64.1 22.6
Davison 21.3 24.2 (12.0)
Construction Products 15.3 11.9 28.6
Other 3.3 5.0 (34.0)
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Total Operating Income $118.5 $105.2 12.6
Other Expenses / (Income):
Interest/Financing $20.3 $18.3 (b) 10.9
Other (0.8) (7.0) (88.6)
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Total Other Expenses $19.5 $11.3 72.6
Pretax Operating Earnings
before Special Items $99.0 $93.9 5.4
Provision for Income Taxes 36.6 36.6 0.0
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Income from Continuing Operations
before Special Items $62.4 $57.3 8.9
Special Items - after-tax
Provision for Restructuring (8.0) (32.4) (75.3)
Gain on Sale of Businesses 63.0 (a) 210.1 (c) (70.0)
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Income from Continuing Operations $117.4 $235.0 (50.0)
Income from Discontinued Operations - 98.9 (100.0)
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Net Income $117.4 $333.9 (64.8) %
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Basic Earnings Per Share:
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Continuing Operations
before Special Items $0.86 $0.59 45.8 %
Continuing Operations $1.61 $2.43 (33.7) %
Net Income $1.61 $3.45 (53.3) %
Basic Average number of
shares (millions) 72.8 96.6 (24.6) %
Primary Earnings Per Share:
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Continuing Operations before
Special Items $0.83 $0.58 43.1 %
Continuing Operations $1.57 $2.39 (34.3) %
Net Income $1.57 $3.39 (53.7) %
Average number of shares (millions) 74.8 98.5 (24.1) %
(a) Pretax gain on sale of Specialty Polymers of $103.1.
(b) After an allocation of interest/financing expenses
to discontinued operations.
(c) Includes divestment of Dearborn and Biopesticides.
W. R. Grace & Co.
Operating Results
Six Months Ended June 30
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($ Millions Except Per Share)
Percent
1997 1996 Change
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Sales :
Packaging $1,020.6 $968.4 5.4 %
Davison 350.1 375.8 (6.8)
Construction Products 230.8 198.5 16.3
Other 26.1 239.2 (89.1)
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Total Sales $1,627.6 $1,781.9 (8.7)
Operating Income:
Packaging $145.8 $124.1 17.5
Davison 39.0 52.3 (25.4)
Construction Products 19.1 8.3 130.1
Other 5.9 7.7 (23.4)
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Total Operating Income $209.8 $192.4 9.0
Other Expenses / (Income):
Interest/Financing $39.4 $36.7 (b) 7.4
Other (2.3) (7.5) (69.3)
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Total Other Expenses $37.1 $29.2 27.1
Pretax Operating Earnings before Special Items $172.7 $163.2 5.8
Provision for Income Taxes 63.9 62.3 2.6
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Income from Continuing Operations before Special Items $108.8 $100.9 7.8
Special Items - after-tax
Provision for Restructuring (8.0) (32.4) (75.3)
Gain on Sale of Businesses 63.0 (a) 210.1 (c) (70.0)
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Income from Continuing Operations $163.8 $278.6 (41.2)
Income from Discontinued Operations - 118.9 (100.0)
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Net Income $163.8 $397.5 (58.8) %
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Basic Earnings Per Share:
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Continuing Operations before Special Items $1.47 $1.03 42.7 %
Continuing Operations $2.21 $2.86 (22.7) %
Net Income $2.21 $4.09 (46.0) %
Basic Average number of shares (millions) 74.0 97.3 (23.9) %
Primary Earnings Per Share:
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Continuing Operations before Special Items $1.43 $1.01 41.6 %
Continuing Operations $2.15 $2.80 (23.2) %
Net Income $2.15 $4.00 (46.3) %
Average number of shares (millions) 76.2 99.3 (23.3) %
(a) Pretax gain on sale of Specialty Polymers of $103.1.
(b) After an allocation of interest/financing expenses to
discontinued operations.
(c) Includes divestment of Dearborn and Biopesticides.
W. R. Grace & Co.
Specialty Chemicals
Geographic Data
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(Dollars In Millions)
QUARTER ENDED JUNE 30
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Operating Income
Sales Before Special Items
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1997 1996 1997 1996
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North America $ 437 $ 448 $ 65 $ 59
Europe 244 290 34 23
Latin America 56 68 8 8
Asia Pacific 106 114 11 15
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Total $ 843 $ 920 $ 118 $ 105
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SIX MONTHS ENDED JUNE 30
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Operating Income
Sales Before Special Items
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1997 1996 1997 1996
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North America $ 829 $ 851 $107 $ 97
Europe 477 574 60 50
Latin America 111 132 18 15
Asia Pacific 211 225 25 30
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Total $1,628 $1,782 $210 $ 192
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