<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
                            ------------------------
                                   FORM 10-K
 
(MARK ONE)
 

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

 
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
                                       OR
 

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

 
        FOR THE TRANSITION PERIOD FROM ______________ TO ______________
 
                         COMMISSION FILE NUMBER 1-12139
                            ------------------------
                             SEALED AIR CORPORATION
 
             (Exact name of registrant as specified in its charter)
 

<TABLE>
<S>                                                  <C>
                  DELAWARE                                            65-0654331
        (State or other jurisdiction                    (I.R.S. Employer Identification Number)
      of incorporation or organization)
 
   PARK 80 EAST, SADDLE BROOK, NEW JERSEY                             07663-5291
  (Address of principal executive offices)                            (Zip code)
</TABLE>

 
       Registrant's telephone number, including area code: (201) 791-7600
                            ------------------------
 
    Securities registered pursuant to Section 12(b) of the Act:
 

<TABLE>
<CAPTION>
TITLE OF EACH CLASS                              NAME OF EACH EXCHANGE ON WHICH REGISTERED
-------------------                              -----------------------------------------
<S>                                              <C>
Common Stock, par value $0.10 per share          New York Stock Exchange, Inc.
Series A Convertible Preferred Stock,            New York Stock Exchange, Inc.
par value $0.10 per share
</TABLE>

 
                           --------------------------
 
    Securities registered pursuant to Section 12(g) of the Act: None
 
    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  / /
 
    The aggregate market value of the registrant's Common Stock held by
non-affiliates of the registrant on March 22, 2000 was approximately
$3,952,000,000.
 
    The number of outstanding shares of the registrant's Common Stock as of
March 22, 2000 was 83,821,232.
 
    DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant's 1999
Annual Report to Stockholders are incorporated by reference into Parts I and II
of this Form 10-K. Portions of the registrant's definitive proxy statement for
its 2000 Annual Meeting of Stockholders are incorporated by reference into

Part III of this Form 10-K.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>

                                     PART I
 

ITEM 1. BUSINESS
 
    Sealed Air Corporation and its subsidiaries (collectively referred to as the
"Company" except where the context indicates otherwise) are engaged in the
manufacture and sale of a wide range of protective, food and specialty packaging
materials and systems throughout the world.
 
    On March 31, 1998, the Company (formerly known as W. R. Grace & Co.) and
Sealed Air Corporation (US), a Delaware corporation formerly known as Sealed Air
Corporation ("old Sealed Air"), completed a series of transactions, starting
with the separation of the Cryovac packaging business ("Cryovac"), operated by
subsidiaries of the Company, from its specialty chemicals business, also
operated by subsidiaries. The specialty chemicals business then was spun off to
the Company's stockholders at that time, and that business became a separate
publicly owned corporation called W. R. Grace & Co. ("New Grace"). After
recapitalizing the Company's then-outstanding shares of common stock into new
common and preferred stock, Sealed Air Corporation (US) was merged with a
subsidiary of the Company. As a result of these transactions (collectively
referred to as the "Merger"), the Company now operates the businesses of Sealed
Air and Cryovac and is managed primarily by the former management of old Sealed
Air.
 
    References to "Grace" in this Annual Report on Form 10-K refer to the
Company before the Merger.
 
SEGMENTS
 
    The Company operates in two reportable business segments: (i) food and
specialty packaging products and (ii) protective packaging products, described
more fully below. Information concerning the Company's reportable segments
appears in Note 3 of the Notes to Consolidated Financial Statements in Item 8 of
this Annual Report on Form 10-K, which information is incorporated herein by
reference.
 
FOOD AND SPECIALTY PACKAGING PRODUCTS
 
    The Company's principal food and specialty packaging products are its
flexible materials and related systems marketed primarily under the
Cryovac-Registered Trademark- trademark for a broad range of perishable food
applications. This segment also includes the Company's rigid packaging and
absorbent pads, principally foam trays used by supermarkets and food processors,
absorbent pads used for the retail packaging of meat, fish and poultry, and
rigid plastic containers for dairy and other food products.
 
FLEXIBLE MATERIALS AND RELATED SYSTEMS
 
    The Company produces a variety of high-performance proprietary flexible
films, bags and associated packaging equipment marketed and sold primarily under
the Cryovac-Registered Trademark- trademark that are used to package a broad
range of perishable foods such as fresh red meat, smoked and processed meat,
cheese, poultry, processed and prepared foods (including soups and sauces for
restaurants and institutions) and produce. The Company also offers sterilized
medical bags and films for use with medical products and produce bags with
dispensing systems used by customers in supermarket produce departments.
 
    Cryovac-Registered Trademark- food packaging products include shrink bags,
shrink films and laminated films sold for food packaging applications. Shrink
bags and films are co-extruded, multi-layered, shrinkable plastic bags and films
that, when exposed to heat, mold themselves to the shape of the product.
Laminates are multi-layered, non-shrinkable plastic materials used to package
perishable foods and shelf-stable products such as syrups and toppings. Films
and bags are sold in barrier and permeable forms, depending on the extent to
which it is desirable that oxygen or other gases pass through the material. For
fresh-cut produce, the Company produces films that permit gases to pass through
at various rates, thereby matching the varying respiration rates of different
vegetables and permitting longer shelf life.

<PAGE>
    The Company's food packaging equipment offerings include dispensing and
loading units to package foods in shrink, vacuum or vacuum skin packages using
the Company's films and bags; form, fill and seal units to package foods in
pouches made using the Company's films; shrink tunnels; bagging systems; and
auxiliary equipment. Systems are marketed to the food processing industry under
the Cryovac-Registered Trademark- trademark and other trademarks.
 
RIGID PACKAGING AND ABSORBENT PADS
 
    The Company manufactures and sells Cryovac-Registered Trademark- polystyrene
foam trays that are used by supermarkets and by food processors to protect and
display fresh meat, poultry and produce. The Company also manufactures and sells
absorbent pads used for food packaging, including its
Dri-Loc-Registered Trademark- absorbent pads. The Company's foam trays and
absorbent pads are often used together. The Company's case-ready packaging
customers, principally meat and poultry processors, purchase trays, pads and
specially-designed films and packaging equipment to package centrally meat and
poultry products prior to shipment to the supermarket. Case-ready packages are
virtually ready for the meat case upon arrival at the retail store. During 1999,
the Company began commercial rollout of its peelable lidding films and barrier
foam trays for low oxygen case-ready packaging of ground beef. The Company also
manufactures rigid plastic containers, primarily plastic tubs for dairy products
such as margarine and yogurt, in Australia that are marketed under the
Omicron-TM- trademark.
 
PROTECTIVE PACKAGING PRODUCTS
 
    The Company's protective packaging products include its cushioning and
surface protection products and certain other products. The Company's protective
packaging products and systems are used by a wide variety of end users,
including manufacturing, distribution and retail customers. The products
produced in this segment enable the end users to provide a high degree of
protection in packaging their items, by means of cushioning or surface
protection, or a combination thereof.
 
CUSHIONING AND SURFACE PROTECTION PRODUCTS
 
    The Company manufactures and markets Bubble Wrap-Registered Trademark- and
AirCap-Registered Trademark- air cellular packaging materials and bags, which
consist of air encapsulated between two layers of plastic film, each containing
a barrier layer to retard air loss, that form a pneumatic cushion to protect
products from damage through shock or vibration during shipment.
Cryovac-Registered Trademark- performance films are manufactured and sold by the
Company for non-food product display and merchandising applications. These films
are used to "shrink-wrap" a wide assortment of industrial and consumer products.
The Company's Instapak-Registered Trademark- polyurethane foam packaging systems
(which consist of proprietary blends of polyurethane chemicals, high performance
polylefin films and specially designed dispensing equipment) provide protective
packaging for a wide variety of products. CelluPlank-TM- plank foams and
Stratocell-TM- laminated polyethylene foams are generally sold by the Company to
fabricators and converters. The Company also manufactures thin polyethylene
foams in roll and sheet form under the trademarks
Cell-Aire-Registered Trademark- and Cellu-Cushion-Registered Trademark-.
 
    The Company manufactures and markets Jiffy-TM- protective mailers and other
durable mailers and bags that are made in several standard sizes and are used
for mailing or shipping a wide variety of items. The Company's protective
mailers include lightweight, tear-resistant paper mailers marketed under various
trademarks, including Jiffylite-Registered Trademark- and Mail
Lite-Registered Trademark-, lined with air cellular cushioning material. These
products also include the widely used Jiffy-TM- padded mailers made from
recycled kraft paper padded with macerated recycled newspaper. The Company's
durable mailers and bags are marketed under the ShurTuff-Registered Trademark-,
MailTuff-TM-, Trigon-Registered Trademark-, Lab Pak-Registered Trademark-,
Keepsafe-TM- and Crush-Gard-TM- brand names. The Company also manufactures and
sells Korrvu-Registered Trademark- suspension and retention packaging. The
Company manufactures recycled kraft, tissue and crepe paper for use as a raw
material in the manufacture of the Company's protective mailer and food
packaging products. The Company also
 
                                       2

<PAGE>
manufactures and sells paper packaging products under the trademarks Kushion
Kraft-Registered Trademark-, Custom Wrap-TM-, Jiffy-TM-
Padwrap-Registered Trademark- and Void Kraft-TM-. Subsidiaries of the Company in
certain foreign countries produce loose-fill polystyrene packaging for sale to
customers in those countries.
 
    The Company offers inflatable packaging systems, including its Rapid
Fill-Registered Trademark- system, which consists of a compact, portable
inflator and self-sealing inflatable plastic bags, and its Fill-Air-TM- system,
which converts rolls of polyethylene film into continuous perforated chains of
air-filled cushions. During 1999, the Company began commercial rollout of its
improved Vistaflex-Registered Trademark- inflatable packaging system, which
consists of a microprocessor-controlled inflation system and inflatable
cushions, that produces air-filled cushions designed for each particular
packaging application. The Company produces and markets converting systems that
convert certain of the Company's packaging materials, including air cellular
cushioning materials, thin polyethylene foam and paper packaging materials, into
sheets of a pre-selected size and quantity or, for the Company's recycled kraft
paper, into paper dunnage material. The Company also offers shrink-wrap
equipment for use with the Company's shrink films.
 
OTHER PRODUCTS
 
    The Company manufactures and sells a number of non-packaging products,
including specialty adhesive tapes, solar pool covers and solar heating systems
for swimming pools, recycled kraft, tissue and crepe paper sold to unaffiliated
customers, and certain products related to the elimination and neutralization of
static electricity.
 
FOREIGN OPERATIONS
 
    The Company operates in the United States and in 45 other countries, and its
products are distributed in those countries as well as in other parts of the
world. Since the Merger, the Company has extended its protective packaging
product offerings into countries where Cryovac had established operations prior
to the Merger and where old Sealed Air had not, including several European,
Latin American and Asia/Pacific countries and South Africa, and has also
extended these product offerings into Israel. In maintaining its foreign
operations, the Company runs the risks inherent in such operations, including
those of currency fluctuations. Information on currency exchange risks is
incorporated by reference in Item 7A of this Annual Report on Form 10-K.
Financial information about geographic areas, including net sales and total
long-lived assets, for each of the three years in the period ended December 31,
1999 appears in Note 3 of the Notes to Consolidated Financial Statements
incorporated by reference in Item 8 of this Annual Report on Form 10-K, which
information is incorporated herein by reference.
 
MARKETING, DISTRIBUTION AND CUSTOMERS
 
    The Company employs over 1,300 sales and technical support representatives
in the countries in which it operates who market the Company's products through
a large number of distributors, fabricators and converters as well as directly
to end users. In the United States and certain other countries, the Company has
separate sales and marketing groups for many of its product lines. These groups
often work together to develop market opportunities for the Company's products.
 
    To support the Company's food packaging customers, the Company has food
science laboratories in a number of locations that assist customers in
identifying the appropriate food packaging materials and systems to meet their
needs. The Company also offers customized graphic design services to its food
packaging and mailer customers.
 
    To assist its marketing efforts for its protective packaging products and to
provide specialized customer services, the Company maintains packaging
laboratories in many of its United States and foreign facilities. These
laboratories are staffed by professional packaging engineers and equipped with
 
                                       3

<PAGE>
drop-testing and other equipment used to develop and test cost-effective package
designs to meet the particular protective packaging requirements of each
customer.
 
    The Company has no material long-term contracts for the distribution of its
products. In 1999, no customer or affiliated group of customers accounted for as
much as 10% of the Company's consolidated net sales.
 
    Although net sales of both food and specialty packaging products and
protective packaging tend to be slightly higher in the fourth quarter, the
Company does not consider seasonality to be a material factor.
 
COMPETITION
 
    Competition for most of the Company's packaging products is based primarily
on packaging performance characteristics, service and price. Since competition
is also based upon innovations in packaging technology, the Company's ongoing
research and development programs are intended to enable the Company to maintain
technological leadership. Certain companies producing competing products are
well established and may have greater financial resources than the Company.
 
    There are a number of competing manufacturers of food packaging products,
including companies offering similar products that operate on a global basis as
well as those that operate in a region or single country. Competing
manufacturers produce a wide variety of food packaging based on plastic, paper,
metals and other materials. The Company believes that it is one of the leading
suppliers of flexible food packaging materials and related systems in the
principal geographic areas in which it offers those products and one of the
leading suppliers of absorbent pads for food products to supermarkets and
poultry processors in the United States.
 
    The Company's protective packaging products compete with similar products
made by others and with a number of other packaging materials, all of which are
used to provide protection against damage to the packaged product during its
shipment and storage. Competitive materials include various forms of paper
packaging products, expanded plastics, corrugated die cuts, loosefill packaging
materials, strapping, envelopes, reinforced bags, boxes and other containers and
various corrugated materials. Heavy-duty applications of the Company's
Instapak-Registered Trademark- packaging and its plank and laminated foam
products also compete with various types of molded foam plastics, fabricated
foam plastics and mechanical shock mounts and with wood blocking and bracing
systems. The Company believes that it is one of the leading suppliers of air
cellular cushioning materials containing a barrier layer, shrink films for
industrial and commercial applications, and polyurethane foam packaging systems
in the geographic areas in which it sells these products.
 
    As discussed below under "Environmental Matters," the Company is also
subject to competitive factors affecting packaging materials that are based upon
customers' environmental preferences.
 
RAW MATERIALS
 
    The raw materials utilized in the Company's operations generally have been
readily available on the open market and in most cases are available from
several suppliers. Some materials used in the Company's protective packaging
products are reprocessed from scrap generated in the Company's manufacturing
operations or obtained through participation in recycling programs. The
principal raw materials used in the Company's food and specialty products
include polyolefin and other resins and films, paper and wood pulp products and
blowing agents used in foam products. The principal raw materials used in the
Company's protective packaging products include raw materials similar to those
used in its food and specialty products, as well as polyurethane chemicals. The
Company also offers a wide variety of specialized packaging equipment, some of
which it assembles and some of which it purchases from other suppliers.
 
                                       4

<PAGE>
PRODUCT DEVELOPMENT
 
    The Company maintains a continuing effort to develop new products and
improvements to its existing products and processes as well as new packaging and
non-packaging applications for its products. From time to time the Company also
acquires promising new packaging designs or techniques developed by others and
commercializes them. Since the Merger, the Company has instituted ongoing
programs of joint research and development projects combining the technical
capabilities of Cryovac and old Sealed Air. The Company incurred expenses of
$56,452,000 related to Company-sponsored research and development in 1999
compared with $57,524,000 during 1998 and $40,675,000 during 1997.
 
PATENTS AND LICENSES
 
    The Company is the owner or licensee of a number of United States and
foreign patents and patent applications that relate to certain of its products,
manufacturing processes and equipment. While some of these patents and licenses,
as well as certain trademarks which the Company owns, offer some protection and
competitive advantage for the Company's products and their manufacture, the
Company believes that its success depends primarily on its marketing,
engineering and manufacturing skills and on its ongoing research and development
efforts. Therefore, the Company believes that the expiration or unenforceability
of any of such patents, applications or licenses would not be material to the
Company's business or financial position.
 
ENVIRONMENTAL MATTERS
 
    The Company, like other manufacturers, is subject to various laws, rules and
regulations in the countries, jurisdictions and localities in which it operates
regulating the discharge of materials into the environment or otherwise relating
to the protection of the environment. The Company believes that compliance with
current environmental laws and regulations has not had a material effect on the
Company's capital expenditures or financial position.
 
    In some jurisdictions in which the Company's packaging products are sold or
used, laws and regulations have been adopted or proposed that seek to regulate,
among other things, recycled or reprocessed content, sale and disposal of
packaging materials. In addition, customer demand for packaging materials that
are viewed as being "environmentally responsible" and that minimize the
generation of solid waste continues to evolve. While these issues can be a
competitive factor in the marketplace for packaging materials, the Company
maintains active programs designed to comply with these laws and regulations, to
monitor their evolution, and to meet such customer demand.
 
    The Company believes that its packaging materials offer superior packaging
protection, enabling customers to achieve lower package cube and weight using
the Company's packaging materials than with many alternative packaging methods,
thereby reducing the disposal of damaged products as well as the generation of
packaging waste. Because the Company offers both plastic-based and paper-based
protective packaging materials, customers can select the protective packaging
materials that they consider to best meet their performance and cost needs and
environmental preferences. A number of the Company's protective packaging
product lines incorporate recycled or reprocessed content, and the Company
maintains ongoing efforts to add or increase recycled or reprocessed content in
many of its protective packaging product lines.
 
    The Company also supports its customers' interests in eliminating waste by
offering or participating in collection programs for certain of the Company's
products or product packaging and for materials used in certain of the Company's
products, and, when possible, materials collected through these collection
programs are reprocessed and either reused in the Company's protective packaging
operations or offered to other manufacturers for use in other products.
 
                                       5

<PAGE>
EMPLOYEES
 
    At December 31, 1999, the Company had approximately 15,000 employees
worldwide.
 

I
TEM 2. PROPERTIES
 
    The Company's food and specialty packaging products are produced in 40
manufacturing facilities (15 in North America, 10 in Europe, 5 in Latin America,
9 in the Asia Pacific region, and 1 in South Africa). Protective packaging
products are produced in 69 manufacturing facilities (30 in North America, 20 in
Europe, 6 in Latin America, 11 in the Asia Pacific region, and 2 in South
Africa, including certain small converting facilities). Several of the Company's
manufacturing facilities serve both segments. The Company occupies other
facilities containing fabricating or converting operations or sales,
distribution, technical, warehouse or administrative functions at a number of
locations in the United States and in various foreign countries.
 
    In the United States, the Company's food and specialty products are
manufactured at facilities in California, Indiana, Iowa, Mississippi, Missouri,
New York, North Carolina, Pennsylvania, South Carolina and Texas. Its protective
packaging products are manufactured at facilities in California, Connecticut,
Georgia, Illinois, Massachusetts, Mississippi, New Jersey, New York, North
Carolina, Pennsylvania, South Carolina, Texas and Washington. Because of the
light but voluminous nature of the Company's air cellular, polyethylene foam and
protective mailer products, significant freight savings may be realized by
locating manufacturing facilities for these products near markets. To realize
the benefit of such savings, the Company has facilities for manufacturing these
products in various locations in proximity to major markets.
 
    The Company owns the large majority of its manufacturing facilities, certain
of which are owned subject to mortgages or similar financing arrangements. The
balance of the Company's manufacturing facilities are located in leased
premises. The Company's manufacturing facilities are usually located in general
purpose buildings in which the Company's specialized machinery for the
manufacture of one or more products is contained. The Company believes that its
manufacturing facilities are well maintained, suitable for their purposes, and
adequate for the Company's needs.
 

ITEM 3. LEGAL PROCEEDINGS
 
    The Company is a party to various lawsuits and administrative and other
proceedings incidental to its business, including certain federal or state
governmental environmental proceedings or private environmental claims relating
to the cleanup of Superfund sites or other sites. While it is often difficult to
estimate potential environmental liabilities and the future impact of
environmental matters, based upon the information currently available to the
Company and its experience in dealing with such matters, the Company believes
that its potential liability with respect to such sites is not material. The
Company believes, after consulting with counsel, that the disposition of its
lawsuits and other legal proceedings, including environmental matters, will not
have a material adverse effect on the Company's results of operations or
consolidated financial position.
 
    In connection with the Merger, New Grace retained, and agreed to indemnify
and defend the Company against, all liabilities of Grace, whether accruing or
occurring before or after the Merger, other than liabilities arising from or
relating to Cryovac's operations. As a result, New Grace is obligated to
indemnify and defend the Company in a small number of actions raising
asbestos-related claims in which the Company has been named as a defendant as
the alleged successor to Grace because of the Merger. The Company believes that
such claims are without merit as to the Company and intends to defend vigorously
these actions. Based upon currently available information, the Company believes
that future costs, if any, related to such actions and other indemnified
liabilities will not have a material adverse effect on the Company's results of
operations or consolidated financial position.
 
                                       6

<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    No matters were submitted to a vote of the Company's stockholders during the
fourth quarter of 1999.
 
EXECUTIVE OFFICERS OF THE REGISTRANT
 
    The information appearing in the table below sets forth the current position
or positions held by each executive officer of the Company, his or her age as of
March 15, 2000, the year in which he or she first was elected to the position
currently held with the Company or with old Sealed Air (as indicated in the
footnote to the table), and the year in which he or she first was elected an
officer of the Company or of old Sealed Air (as indicated in the footnote to the
table).
 
    All of the Company's officers serve at the pleasure of the Board of
Directors. All officers have been employed by the Company or its subsidiaries
for more than five years except for Mr. Van Riper, who was elected Senior Vice
President and Chief Financial Officer of the Company effective July 1, 1998.
Previously Mr. Van Riper was a partner in the accounting firm of KPMG LLP, which
was the independent auditor for old Sealed Air for many years prior to the
Merger and has acted as the independent auditor for the Company since the
Merger. There are no family relationships among any of the Company's officers or
directors.
 

<TABLE>
<CAPTION>
                      NAME AND                          AGE AS OF      FIRST ELECTED TO    FIRST ELECTED
                  CURRENT POSITION                    MARCH 15, 2000   CURRENT POSITION*    AN OFFICER*
----------------------------------------------------  --------------   -----------------   -------------
<S>                                                   <C>              <C>                 <C>
William V. Hickey...................................        55               2000                1980
  President, Chief Executive Officer and Director
 
Leonard R. Byrne....................................        58               1999                1998
  Senior Vice President
 
Bruce A. Cruikshank.................................        57               1996                1990
  Senior Vice President
 
Robert A. Pesci.....................................        54               1997                1990
  Senior Vice President
 
Daniel S. Van Riper.................................        59               1998                1998
  Senior Vice President and Chief Financial Officer
 
Jonathan B. Baker...................................        47               1994                1994
  Vice President
 
James A. Bixby......................................        56               1990                1990
  Vice President
 
Mary A. Coventry....................................        46               1994                1994
  Vice President
 
Jean-Luc Debry......................................        54               1992                1992
  Vice President
 
Paul B. Hogan.......................................        60               1995                1995
  Vice President
 
James P. Mix........................................        48               1994                1994
  Vice President
 
Manuel Mondragon....................................        50               1999                1999
  Vice President
</TABLE>

 
                                       7

<PAGE>
 

<TABLE>
<CAPTION>
                      NAME AND                          AGE AS OF      FIRST ELECTED TO    FIRST ELECTED
                  CURRENT POSITION                    MARCH 15, 2000   CURRENT POSITION*    AN OFFICER*
----------------------------------------------------  --------------   -----------------   -------------
<S>                                                   <C>              <C>                 <C>
J. Stuart K. Prosser................................        54               1999                1999
  Vice President
 
Abraham N. Reichental...............................        43               1994                1994
  Vice President
 
Hugh L. Sargant.....................................        51               1999                1999
  Vice President
 
Horst Tebbe.........................................        59               1998                1986
  Vice President
 
Alan S. Weinberg....................................        58               1998                1998
  Vice President
 
Tod S. Christie.....................................        41               1999                1999
  Treasurer
 
Jeffrey S. Warren...................................        46               1996                1996
  Controller
 
H. Katherine White..................................        54               1998                1996
  General Counsel and Secretary
</TABLE>

 
------------------------
 
*   Messrs. Byrne, Christie, Mondragon, Prosser, Sargant, Van Riper and Weinberg
    were first appointed to executive officer positions after the Merger. All
    other persons listed in the table were executive officers of old Sealed Air
    prior to the Merger.
 

                                    PART II
 

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
    The information appearing under the caption "Capital Stock Information" in
the Company's 1999 Annual Report to Stockholders is incorporated herein by
reference.
 

ITEM 6. SELECTED FINANCIAL DATA
 
    The information appearing under the caption "Selected Financial Data" in the
Company's 1999 Annual Report to Stockholders is incorporated herein by
reference.
 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
        FINANCIAL CONDITION
 
    The information appearing under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition" in the Company's 1999
Annual Report to Stockholders is incorporated herein by reference.
 
                                       8

<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
    The information appearing under the caption "Management's Discussion and
Analysis of Results of Operations and Financial Condition--Quantitative and
Qualitative Disclosures about Market Risk" in the Company's 1999 Annual Report
to Stockholders is incorporated herein by reference.
 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    See Index to Consolidated Financial Statements and Schedule on page F-2 of
this Annual Report on Form 10-K.
 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE
 
    Not applicable.
 

                                    PART III
 

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
    Part of the information required in response to this Item is set forth in

Part I of this Annual Report on Form 10-K under the caption "Executive Officers
of the Registrant," and the balance will be set forth in the Company's Proxy
Statement for its 2000 Annual Meeting of Stockholders under the captions
"Information Concerning Nominees" and "Section 16(a) Beneficial Ownership
Reporting Compliance." All such information is incorporated herein by reference.
 

ITEM 11. EXECUTIVE COMPENSATION
 
    The information required in response to this Item will be set forth in the
Company's Proxy Statement for its 2000 Annual Meeting of Stockholders under the
captions "Directors' Compensation," "Summary Compensation Table" and
"Compensation Committee Interlocks and Insider Participation." Such information
is incorporated herein by reference.
 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The information required in response to this Item will be set forth in the
Company's Proxy Statement for its 2000 Annual Meeting of Stockholders under the
caption "Voting Securities." Such information is incorporated herein by
reference.
 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    The information required in response to this Item will be set forth in the
Company's Proxy Statement for its 2000 Annual Meeting of Stockholders under the
caption "Summary Compensation Table." Such information is incorporated herein by
reference.
 

                                    PART IV
 

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
(A) DOCUMENTS FILED AS A PART OF THIS ANNUAL REPORT ON FORM 10-K:
 
    (i) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
 
    See Index to Consolidated Financial Statements and Schedule on page F-2 of
this Annual Report on Form 10-K.
 
                                       9

<PAGE>
    (ii) EXHIBITS
 

<TABLE>
<CAPTION>
EXHIBIT NUMBER                                  DESCRIPTION
--------------          ------------------------------------------------------------
<S>                     <C>
    2.1                 Agreement and Plan of Merger dated as of August 14, 1997 by
                        and among Grace, Packco Acquisition Corp. and Sealed Air
                        Corporation. [Exhibit 2.1 to Grace's Current Report on
                        Form 8-K, Date of Report August 14, 1997, File No. 1-12139,
                        is incorporated herein by reference.]
 
    2.2                 Distribution Agreement dated as of March 30, 1998 among the
                        Company, W. R. Grace & Co.-Conn. ("Grace-Conn."), and New
                        Grace. [Exhibit 2.2 to the Company's Current Report on
                        Form 8-K, Date of Report March 31, 1998, File No. 1-12139,
                        is incorporated herein by reference.]
 
    3.1                 Amended and Restated Certificate of Incorporation of the
                        Company as currently in effect. [Exhibit 3.2 to the
                        Company's Quarterly Report on Form 10-Q for the quarterly
                        period ended June 30, 1999, File No. 1-12139, is
                        incorporated herein by reference.]
 
    3.2                 Amended and Restated By-Laws of the Company as currently in
                        effect.
 
    3.3                 Amendments to the By-Laws of the Company, effective
                        November 3, 1999.
 
   10.1                 Employee Benefits Allocation Agreement dated as of
                        March 30, 1998 among the Company, Grace-Conn. and New Grace.
                        [Exhibit 10.1 to the Company's Current Report on Form 8-K,
                        Date of Report March 31, 1998, File No. 1-12139, is
                        incorporated herein by reference.]
 
   10.2                 Tax Sharing Agreement dated as of March 30, 1998 by and
                        among the Company, Grace-Conn. and New Grace. [Exhibit 10.2
                        to the Company's Current Report on Form 8-K, Date of Report
                        March 31, 1998, File No. 1-12139, is incorporated herein by
                        reference.]
 
   10.3                 Contingent Stock Plan of the Company, as amended.
                        [Exhibit 4.3 to the Company's Registration Statement on
                        Form S-8, Registration No. 333-59197, is incorporated herein
                        by reference.]*
 
   10.4                 Restricted Stock Plan for Non-Employee Directors of the
                        Company. [Annex E to the Company's Proxy Statement for the
                        1998 Annual Meeting of Stockholders is incorporated herein
                        by reference.]*
 
   10.5                 Grace 1996 Stock Incentive Plan, as amended. [Exhibit 10.1
                        to the Quarterly Report on Form 10-Q of Grace for the
                        quarter ended March 31, 1997, File No. 1-12139, is
                        incorporated herein by reference.]*
 
   10.6                 Grace 1994 Stock Incentive Plan, as amended. [Exhibit 10.6
                        to the Current Report on Form 8-K filed October 10, 1996 of
                        Grace, File No. 1-12139, is incorporated herein by
                        reference.]*
 
   10.7                 Grace 1989 Stock Incentive Plan, as amended. [Exhibit 10.5
                        to the Current Report on Form 8-K filed October 10, 1996 of
                        Grace, File No. 1-12139, is incorporated herein by
                        reference.]*
 
   10.8                 Grace 1986 Stock Incentive Plan, as amended. [Exhibit 10.4
                        to the Current Report on Form 8-K filed October 10, 1996 of
                        Grace, File No. 1-12139, is incorporated herein by
                        reference.]*
</TABLE>

 
                                       10

<PAGE>
 

<TABLE>
<CAPTION>
EXHIBIT NUMBER                                  DESCRIPTION
--------------          ------------------------------------------------------------
<S>                     <C>
   10.9                 Information concerning Grace's stock options and deferred
                        payment arrangements for Grace's LTIP awards that were
                        assumed by the Company. [Information under the headings
                        "Stock Options" and "LTIP" on pages 15-16 of the Proxy
                        Statement for the Company's 1999 Annual Meeting of
                        Stockholders is incorporated herein by reference.]*
 
   10.10                Sealed Air Corporation Deferred Compensation Program for
                        Cryovac Employees. [Exhibit 10.10 to the Annual Report on
                        Form 10-K for the year ended December 31, 1998, File
                        No. 1-12139, is incorporated herein by reference.]*
 
   10.11                Form of Contingent Stock Agreement--Officer. [Exhibit 4.5 to
                        the Company's Registration Statement on Form S-8,
                        Registration No. 333-59197, is incorporated herein by
                        reference.]*
 
   10.12                Form of Contingent Stock Agreement--Section 162(m) Officer.
                        [Exhibit 4.6 to the Company's Registration Statement on
                        Form S-8, Registration No. 333-59197, is incorporated herein
                        by reference.]*
 
   10.13                Form of Restricted Stock Purchase Agreement. [Exhibit 4.4 to
                        the Company's Registration Statement on Form S-8,
                        Registration No. 333-59195, is incorporated herein by
                        reference.]*
 
   10.14                Global Revolving Credit Agreement (5-year) dated as of
                        March 30, 1998 among the Company, certain of its
                        subsidiaries including Cryovac, Inc., ABN AMRO Bank N.V.,
                        Bankers Trust Company, Bank of America National Trust and
                        Savings Association, NationsBank, N. A., and the other banks
                        party thereto. [Exhibit 10.3 to the Company's Current Report
                        on Form 8-K, Date of Report March 31, 1998, File
                        No. 1-12139, is incorporated herein by reference.]
 
   10.15                Global Revolving Credit Agreement (364-day) dated as of
                        March 30, 1998 among the Company, certain of its
                        subsidiaries including Cryovac, Inc., ABN AMRO Bank N.V.,
                        Bankers Trust Company, Bank of America National Trust and
                        Savings Association, NationsBank, N. A., and the other banks
                        party thereto. [Exhibit 10.4 to the Company's Current Report
                        on Form 8-K, Date of Report March 31, 1998, File
                        No. 1-12139, is incorporated herein by reference.]
 
   10.16                First Amendment, dated as of March 16, 1999, to Global
                        Revolving Credit Agreement (5-year), among the Company,
                        certain of the Company's subsidiaries as borrowers and
                        guarantors thereunder, ABN AMRO Bank N.V., as Administrative
                        Agent, and certain other banks party thereto. [Exhibit 10.1
                        to the Company's Quarterly Report on Form 10-Q for the
                        quarter ended March 31, 1999, File No. 1-12139, is
                        incorporated herein by reference.]
 
   10.17                First Amendment, dated as of March 16, 1999, to Global
                        Revolving Credit Agreement (364-day), among the Company,
                        certain of the Company's subsidiaries as borrowers and
                        guarantors thereunder, ABN AMRO Bank N.V., as Administrative
                        Agent, and certain other banks party thereto. [Exhibit 10.2
                        to the Company's Quarterly Report on Form 10-Q for the
                        quarter ended March 31, 1999, File No. 1-12139, is
                        incorporated herein by reference.]
</TABLE>

 
                                       11

<PAGE>
 

<TABLE>
<CAPTION>
EXHIBIT NUMBER                                  DESCRIPTION
--------------          ------------------------------------------------------------
<S>                     <C>
   10.18                Second Amendment, dated as of June 2, 1999, to Global
                        Revolving Credit Agreement (5-year), among the Company,
                        certain of the Company's subsidiaries as guarantors and/or
                        borrowers thereunder, ABN AMRO Bank N.V., as Administrative
                        Agent, and certain other banks party thereto. [Exhibit 10.1
                        to the Company's Quarterly Report on Form 10-Q for the
                        quarter ended June 30, 1999, File No. 1-12139, is
                        incorporated herein by reference.]
 
   10.19                Second Amendment, dated as of June 2, 1999, to Global
                        Revolving Credit Agreement (364-day), among the Company,
                        certain of the Company's subsidiaries as guarantors and/or
                        borrowers thereunder, ABN AMRO Bank N.V., as Administrative
                        Agent, and certain other banks party thereto. [Exhibit 10.2
                        to the Company's Quarterly Report on Form 10-Q for the
                        quarter ended June 30, 1999, File No. 1-12139, is
                        incorporated herein by reference.]
 
   10.20                Agreement dated as of April 6, 1999, between the Company and
                        J. Gary Kaenzig, Jr. [Exhibit 10.3 to the Company's
                        Quarterly Report on Form 10-Q for the quarter ended
                        June 30, 1999, File No. 1-12139, is incorporated herein by
                        reference.]*
 
   10.21                Performance-Based Compensation Program of the Company (as
                        adopted effective for the 2000 fiscal year) subject to
                        stockholder approval at the 2000 Annual Meeting.*
 
   13                   Portions of the Company's 1999 Annual Report to Stockholders
                        that are incorporated by reference into this Annual Report
                        on Form 10-K.
 
   21                   Subsidiaries of the Company.
 
   23.1                 Consent of KPMG LLP.
 
   23.2                 Consent of PricewaterhouseCoopers LLP
 
   27                   Financial Data Schedule
</TABLE>

 
------------------------
 
*   Compensatory plan or arrangement of management required to be filed as an
    exhibit to this report on Form 10-K.
 
(B) REPORTS ON FORM 8-K:
 
    The Company did not file any reports on Form 8-K during the fiscal quarter
ended December 31, 1999.
 
                                       12

<PAGE>

                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
 

<TABLE>
<S>                                                    <C>  <C>
                                                       SEALED AIR CORPORATION
                                                       (Registrant)
 
Date: March 27, 2000                                   By             /s/ WILLIAM V. HICKEY
                                                            -----------------------------------------
                                                                        William V. Hickey
                                                                     CHIEF EXECUTIVE OFFICER
</TABLE>

 
    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 

<TABLE>
<CAPTION>
                      SIGNATURE                                   TITLE                    DATE
                      ---------                                   -----                    ----
<C>                                                    <S>                          <C>
                                                       President, Chief Executive
              By /s/ WILLIAM V. HICKEY                   Officer and Director
     -------------------------------------------         (Principal Executive         March 27, 2000
                   William V. Hickey                     Officer)
 
                                                       Senior Vice President and
             By /s/ DANIEL S. VAN RIPER                  Chief Financial Officer
     -------------------------------------------         (Principal Financial         March 27, 2000
                  Daniel S. Van Riper                    Officer)
 
              By /s/ JEFFREY S. WARREN
     -------------------------------------------       Controller (Principal          March 27, 2000
                   Jeffrey S. Warren                     Accounting Officer)
 
             By /s/ T. J. DERMOT DUNPHY
     -------------------------------------------       Chairman of the Board and      March 27, 2000
                  T. J. Dermot Dunphy                    Director
 
                  By /s/ HANK BROWN
     -------------------------------------------       Director                       March 27, 2000
                       Hank Brown
 
                By /s/ JOHN K. CASTLE
     -------------------------------------------       Director                       March 27, 2000
                     John K. Castle
</TABLE>

 
                                       13

<PAGE>
 

<TABLE>
<CAPTION>
                      SIGNATURE                                   TITLE                    DATE
                      ---------                                   -----                    ----
<C>                                                    <S>                          <C>
              By /s/ CHRISTOPHER CHENG
     -------------------------------------------       Director                       March 27, 2000
                   Christopher Cheng
 
              By /s/ LAWRENCE R. CODEY
     -------------------------------------------       Director                       March 27, 2000
                   Lawrence R. Codey
 
           By /s/ CHARLES F. FARRELL, JR.
     -------------------------------------------       Director                       March 27, 2000
                Charles F. Farrell, Jr.
 
                By /s/ DAVID FREEMAN
     -------------------------------------------       Director                       March 27, 2000
                     David Freeman
 
              By /s/ SHIRLEY A. JACKSON
     -------------------------------------------       Director                       March 27, 2000
                   Shirley A. Jackson
 
              By /s/ VIRGINIA A. KAMSKY
     -------------------------------------------       Director                       March 27, 2000
                   Virginia A. Kamsky
 
                By /s/ ALAN H. MILLER
     -------------------------------------------       Director                       March 27, 2000
                     Alan H. Miller
 
                By /s/ JOHN E. PHIPPS
     -------------------------------------------       Director                       March 27, 2000
                     John E. Phipps
</TABLE>

 
                                       14

<PAGE>
                             SEALED AIR CORPORATION
                 CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
                  YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
 
                                      F-1

<PAGE>
                    SEALED AIR CORPORATION AND SUBSIDIARIES
 
            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
 

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Independent Auditors' Reports...............................      *
 
Financial Statements:
  Consolidated Statements of Earnings for the years ended
    December 31, 1999, 1998 and 1997........................      *
  Consolidated Balance Sheets--December 31, 1999 and 1998...      *
  Consolidated Statements of Equity for the years ended
    December 31, 1999, 1998 and 1997........................      *
  Consolidated Statements of Cash Flows for the years ended
    December 31, 1999, 1998, and 1997.......................      *
  Consolidated Statements of Comprehensive Income for the
    years ended December 31, 1999, 1998 and 1997............      *
  Notes to Consolidated Financial Statements................      *
 
Independent Auditors' Reports on Schedule...................    F-3
Consolidated Schedule:
II--Valuation and Qualifying Accounts.......................    F-5
</TABLE>

 
------------------------
 
*   The information required appears on pages 26 through 57 of the Company's
    1999 Annual Report to Stockholders and is incorporated by reference into
    this Annual Report on Form 10-K.
 
    All other schedules are omitted, as the required information is inapplicable
    or the information is presented in the consolidated financial statements or
    related notes.
 
                                      F-2

<PAGE>

                    INDEPENDENT AUDITORS' REPORT ON SCHEDULE
 
The Board of Directors
Sealed Air Corporation:
 
Under date of January 25, 2000, we reported on the consolidated balance sheets
of Sealed Air Corporation and subsidiaries as of December 31, 1999 and 1998, and
the related consolidated statements of earnings, equity, comprehensive income,
and cash flows for the years then ended, as contained in the 1999 Annual Report
to Shareholders of Sealed Air Corporation. These consolidated financial
statements and our report thereon are incorporated by reference in this Annual
Report on Form 10-K. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related 1999 and 1998
consolidated financial statement schedule as listed in the accompanying index.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits.
 
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
 
s/ KPMG LLP
 
KPMG LLP
Short Hills, New Jersey
January 25, 2000

 
                                      F-3

<PAGE>

             REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON
                          FINANCIAL STATEMENT SCHEDULE
 
To the Board of Directors of
Sealed Air Corporation
 
Our audit of the consolidated financial statements referred to in our report
dated February 23, 1998, contained in the 1999 Annual Report to Shareholders of
Sealed Air Corporation (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the Financial Statement Schedule for the year ended December 31, 1997,
listed in the Index to Consolidated Financial Statements and Schedule of this
Form 10-K. In our opinion, the Financial Statement Schedule for the period
referred to above presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related consolidated financial
statements.
 
s/PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
Ft. Lauderdale, Florida
February 23, 1998

 
                                      F-4

<PAGE>
SEALED AIR CORPORATION AND SUBSIDIARIES
SCHEDULE II
Valuation and Qualifying Accounts
Years Ended December 31, 1999, 1998 and 1997
(In thousands of dollars)
 

<TABLE>
<CAPTION>
                                                            ADDITIONS
                                                    -------------------------
                                       BALANCE AT   CHARGED TO     CHARGED                       BALANCE AT
                                       BEGINNING    COSTS AND      TO OTHER                         END
DESCRIPTION                             OF YEAR      EXPENSES    ACCOUNTS (1)   DEDUCTIONS (2)    OF YEAR
-----------                            ----------   ----------   ------------   --------------   ----------
<S>                                    <C>          <C>          <C>            <C>              <C>
Year ended December 31, 1999
  Allowance for doubtful accounts....    17,945        6,662        1,936           (5,147)        21,396
                                         ======       ======        =====           ======         ======
 
Year ended December 31, 1998
  Allowance for doubtful accounts....     7,256       11,300        5,539           (6,150)        17,945
                                         ======       ======        =====           ======         ======
 
Year ended December 31, 1997
  Allowance for doubtful accounts....     5,734        2,695        1,511           (2,684)         7,256
                                         ======       ======        =====           ======         ======
</TABLE>

 
------------------------
 
(1) In 1998, primarily allowance for doubtful accounts of old Sealed Air
    acquired on March 31, 1998.
 
(2) Primarily accounts receivable balances written off.
 
                                      F-5





<PAGE>


                                                                     Exhibit 3.2

 Amended and Restated By-Laws of Sealed Air Corporation as currently in effect.

                          AMENDED AND RESTATED BY-LAWS

                                       OF

                             SEALED AIR CORPORATION

                           AS AMENDED NOVEMBER 3, 1999

                                    ARTICLE 1

OFFICES

         SECTION 1.01. REGISTERED OFFICE. The registered office of the
Corporation shall be in Wilmington, Delaware.

         SECTION 1.02. OTHER OFFICES. The Corporation may also have offices at
such other places within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.

                                    ARTICLE 2

MEETINGS OF STOCKHOLDERS

         SECTION 2.01. PLACE. Meetings of the stockholders shall be held at such
place either within or without the State of Delaware as shall be designated from
time to time by the Board of Directors.

         SECTION 2.02. ANNUAL MEETINGS. Annual meetings of stockholders shall,
unless otherwise provided by the Board of Directors, be held on the third Friday
in May each year if not a legal holiday, and if a legal holiday, then on the
next full business day following, at 11:00 A.M., at which the stockholders shall
elect directors, vote upon the ratification of the selection of the independent
auditors selected for the Corporation for the then current fiscal year of the

Corporation, and transact such other business as may properly be brought before
the meeting.

         SECTION 2.03. NOTICE OF ANNUAL MEETINGS. Written notice of the annual
meeting, stating the place, date and hour thereof, shall be given to each
stockholder entitled to vote thereat not less than ten nor more than sixty days
before the date of the meeting.


<PAGE>


         SECTION 2.04. LIST OF STOCKHOLDERS. The officer who has charge of the
stock ledger of the Corporation shall prepare and make or cause to be prepared
and made, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at said meeting, arranged in
alphabetical order with the address of and the number of voting shares
registered in the name of each. Such list shall be open for ten days prior to
the meeting to the examination of any stockholders, for any purpose germane to
the meeting, during ordinary business hours, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
meeting, or, if not so specified, at the place where the meeting is to be held,
and shall be produced and kept at the time and place of said meeting during the
whole time thereof, and may be inspected by any stockholder who is present.

         SECTION 2.05. SPECIAL MEETINGS. Special meetings of the stockholders
may be called by the chairman of the board, by the chief executive officer or by
resolution of the Board of Directors and, subject to the procedures set forth in
this section, shall be called by the chief executive officer or the secretary at
the request in writing of stockholders owning a majority of the voting power of
the then outstanding Voting Stock. Any such resolution or request shall state
the purpose or purposes of the proposed meeting. Such meeting shall be held at
such time and date as may be fixed by the Board of Directors. The Board of
Directors may postpone fixing the time and date of a special meeting to be held
at the request of stockholders in order to allow the secretary to determine the
validity of such request, PROVIDED, that if such request is determined to be
valid, then the Board of Directors shall fix the date of such special meeting to
be no later than 90 days after such determination. For the purposes of these
By-laws, the term "Voting Stock" shall have the meaning of such term set forth
in the Certificate of Incorporation or, if not defined therein, "Voting Stock"
shall mean the outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors.

         SECTION 2.06. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting of stockholders, stating the place, date, hour and purpose thereof,
shall be given by the secretary to each stockholder entitled to vote thereat,
not less than ten nor more than sixty days before the date fixed for the
meeting.

         SECTION 2.07. BUSINESS TRANSACTED. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.

         SECTION 2.08. QUORUM. The holders of a majority of the voting power of
the then outstanding Voting Stock, present in person or represented by proxy,
shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or the
Certificate of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, so long as the adjournment is not for more than thirty days and a
new 


                                       2

<PAGE>


record date is not fixed for the adjourned meeting, until a quorum shall be
present or represented. If a quorum shall be present or represented at such
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting when specified business is to be voted on by
a class or series of stock voting as a class, the holders of a majority of the
voting power of the shares of such class or series shall constitute a quorum of
such class or series for the transaction of such business.

         SECTION 2.09. VOTE REQUIRED. When a quorum is present at any meeting,
the vote of the holders of a majority of the voting power of the Voting Stock
present in person or represented by proxy shall decide any questions brought
before such meeting, except as otherwise provided by statute or the Certificate
of Incorporation.

         SECTION 2.10. PROXIES, ETC. Except as otherwise provided by statute or
the Certificate of Incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of the
capital stock having voting power held by such stockholder, but no proxy shall
be voted or acted upon after three years from its date, unless the proxy
provides for a longer period. No proxy or power of attorney to vote shall be
used to vote at a meeting of the stockholders unless it shall have been filed
with the secretary of the meeting when required by the inspectors of election.

         SECTION 2.11. INSPECTORS OF ELECTION. In advance of any meeting of the
stockholders, the Board of Directors or the presiding officer of such meeting
shall appoint two or more inspectors of election to act at such meeting or at
any adjournments thereof and make a written report thereof. One or more persons
may also be designated by the Board of Directors or such presiding officer as
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate is able to act at a meeting of stockholders, the presiding officer
of such meeting shall appoint one or more inspectors to act at such meeting. No
director or nominee for the office of director at such meeting shall be
appointed an inspector of election. Each inspector, before entering on the
discharge of the inspector's duties, shall first take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of such person's ability. The inspectors
of election shall, in accordance with the requirements of the Delaware General
Corporation Law, (i) ascertain the number of shares outstanding and the voting
power of each, (ii) determine the shares represented at the meeting and the
validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period and file with the secretary of the
meeting a record of the disposition of any challenges made to any determination
by the inspectors, and (v) make and file with the secretary of the meeting a
certificate of their determination of the number of shares represented at the
meeting and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors.


                                       3

<PAGE>


         SECTION 2.12. NOTICE OF STOCKHOLDER NOMINATION AND STOCKHOLDER
BUSINESS. At an annual meeting of the stockholders, only such persons who are
nominated in accordance with the procedures set forth in this section shall be
eligible to stand for election as directors and only such business shall be
conducted as shall have been brought before the meeting in accordance with the
procedures set forth in these By-laws. Nominations of persons for election to
the Board of Directors of the Corporation and the proposal of business to be
considered by the stockholders at an annual meeting of stockholders may be made
(i) pursuant to the Corporation's notice of meeting, including matters covered
by Rule 14a-8 under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), (ii) by or at the direction of the Board of Directors or (iii)
by any stockholder of the Corporation who was a stockholder of record at the
time of giving of notice by the stockholder as provided in this section, who is
entitled to vote at the meeting, and who complies with the notice provision set
forth in this section. A notice of the intent of a stockholder to make a
nomination or to bring any other matter before an annual meeting must be made in
writing and received by the secretary of the Corporation no earlier than the
119th day and not later than the close of business on the 45th day prior to the
first anniversary of the date of mailing of the Corporation's proxy statement
for the prior year's annual meeting. However, if the date of the annual meeting
has changed by more than 30 days from the date it was held in the prior year or
if the Corporation did not hold an annual meeting in the prior year, then such
notice must be received a reasonable time before the Corporation mails its proxy
statement for the annual meeting. Every such notice by a stockholder shall set
forth (i) the name and address of such stockholder as they appear on the
Corporation's books and the class and number of shares of the Corporation's
Voting Stock that are owned beneficially and of record by such stockholder, (ii)
a representation that the stockholder is a holder of the Corporation's Voting
Stock and intends to appear in person or by proxy at the meeting to make the
nomination or bring up the matter specified in the notice; (iii) with respect to
notice of an intent to make a nomination, a description of all arrangements or
understandings among the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder, and such other information
regarding each nominee proposed by such stockholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had each nominee been nominated by the Board
of Directors of the Corporation; and (iv) with respect to notice of an intent to
bring up any other matter, a description of the matter, the reasons for
conducting such business at the meeting and any material interest of the
stockholder in the matter. Notice of intent to make a nomination shall be
accompanied by the written consent of each nominee to be named in a proxy
statement as a nominee and to serve as director of the Corporation if so
elected. Except as otherwise provided by law or by the Certificate of
Incorporation, the chairman of the meeting shall have the power and authority to
determine whether a nomination or any business proposed to be brought before the
meeting was made or proposed, as the case may be, in accordance with the
procedures set forth in this By-law and whether such matter is an appropriate
subject for stockholder action under applicable law, and, if it was not, to


                                       4

<PAGE>


declare that such proposal or nomination shall be disregarded. Notwithstanding
the foregoing provisions of this section, a stockholder shall also comply with
all applicable requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this section. Nothing in
this section shall be deemed to affect any rights of stockholders to request
inclusion of proposals in the Corporation's proxy statement in accordance with
Rule 14a-8 under the Exchange Act or the holders of any series of preferred
stock to elect directors under circumstances specified in the Certificate of
Incorporation.

                                    ARTICLE 3

DIRECTORS

         SECTION 3.01. NUMBER. Subject to the rights of the holders of any
series or class of stock to elect directors under specified circumstances as
provided by the Certificate of Incorporation, the number of directors which
shall constitute the whole Board of Directors shall be fixed from time to time
by resolution of the Board of Directors, but no decrease in the number of
directors effected by any such resolution shall change the term of any director
in office at the time that any such resolution is adopted. The directors shall
be elected at the annual meeting of the stockholders, except as otherwise
provided by statute, the Certificate of Incorporation or Section 3.02 of these
By-laws, and each director shall hold office until a successor is elected and
qualified or until such director's earlier resignation or removal. Directors
need not be stockholders.

         SECTION 3.02. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and, except as otherwise provided by statute or the
Certificate of Incorporation, each of the directors so chosen shall hold office
until the next annual election and until a successor is elected and qualified or
until such director's earlier resignation or removal.

         SECTION 3.03. AUTHORITY. The business of the Corporation shall be
managed by or under the direction of its Board of Directors, which shall
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute, by the Certificate of Incorporation or by these
By-laws directed or required to be exercised or done by the stockholders or are
not by these By-laws or by resolution of the Board of Directors or a committee
thereof, in either case not inconsistent with the statutes, the Certificate of
Incorporation or these By-laws, authorized or directed to be done by the
officers of the Corporation.

         SECTION 3.04. PLACE OF MEETING. The Board of Directors of the
Corporation or any committee thereof may hold meetings, both regular and
special, either within or without the State of Delaware.


                                       5

<PAGE>


         SECTION 3.05. ANNUAL MEETING. A regular meeting of the Board of
Directors shall be held immediately following the adjournment of the annual
meeting of stockholders. No notice of such meeting shall be necessary to the
directors in order legally to constitute the meeting, provided a quorum be
present. In the event such meeting is not so held, the meeting may be held at
such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the Board of Directors.

         SECTION 3.06. REGULAR MEETINGS. Except as provided in Section 3.05,
regular meetings of the Board of Directors may be held without notice at such
time and at such place as shall from time to time be determined by the Board of
Directors.

         SECTION 3.07. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the chairman of the board, the chief executive
officer or the president and shall be called by the president or the secretary
on the written request of at least two directors. Notice of special meetings of
the Board of Directors shall be given to each director at least three calendar
days before the meeting if by mail or at least the calendar day before the
meeting if given in person or by telephone, facsimile, telegraph, telex or
similar means of electronic transmission. The notice need not specify the
business to be transacted.

         SECTION 3.08. EMERGENCY MEETINGS. In the event of an emergency which in
the judgment of the chairman of the board, the chief executive officer or the
president requires immediate action, a special meeting may be convened without
notice, consisting of those directors who are immediately available in person or
by telephone and can be joined in the meeting in person or by conference
telephone. The actions taken at such a meeting shall be valid if at least a
quorum of the directors participates either personally or by conference
telephone.

         SECTION 3.09. QUORUM; VOTE REQUIRED. At meetings of the Board of
Directors, a majority of the directors at the time in office shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.

         SECTION 3.10. ORGANIZATION. The Board of Directors may elect one of its
members to be chairman of the board and may fill any vacancy in the position of
chairman of the board at such time and in such manner as the Board of Directors
shall determine. The chairman of the board may but need not be an officer of or
employed in an executive or other capacity by the Corporation. The chairman of
the board shall preside at meetings of the Board of Directors and lead the Board
of Directors in fulfilling its responsibilities as defined in Section 3.03. In
the absence of the chairman of the board 


                                       6

<PAGE>


or if there should be no chairman of the board, the chief executive officer
shall preside at meetings of the Board of Directors.

         SECTION 3.11. COMMITTEES. The Board of Directors may, by resolution
adopted by a majority of the whole Board of Directors, designate one or more
committees, each committee to consist of two or more of the directors of the
Corporation. All committees may authorize the seal of the Corporation to be
affixed to all papers which may require it. To the extent provided in any
resolution or by these By-laws, subject to any limitations set forth under the
laws of the State of Delaware and the Certificate of Incorporation, any such
committee shall have and may exercise any of the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation. Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the Board of Directors.
Unless the Board of Directors designates one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee, the members of any such committee present at any
meeting and not disqualified from voting may, whether or not they constitute a
quorum, unanimously appoint another member of the Board of Directors to act at
the meeting in the place of any absent or disqualified member of such committee.
At meetings of any such committee, a majority of the members or alternate
members of such committee shall constitute a quorum for the transaction of
business, and the act of a majority of members or alternate members present at
any meeting at which there is a quorum shall be the act of the committee.

         SECTION 3.12. MINUTES OF COMMITTEE MEETINGS. The committees shall keep
regular minutes of their proceedings and, when requested to do so by the Board
of Directors, shall report the same to the Board of Directors.

         SECTION 3.13. ACTION BY WRITTEN CONSENT. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent thereto is
signed by all members of the Board of Directors or of such committee, as the
case may be, and such written consent is filed with the minutes of proceedings
of the Board of Directors or committee.

         SECTION 3.14. PARTICIPATION BY CONFERENCE TELEPHONE. The members of the
Board of Directors or any committee thereof may participate in a meeting of the
Board of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and such participation shall constitute presence in
person at such meeting.

         SECTION 3.15. COMPENSATION OF DIRECTORS. The directors may be paid
their expenses of attendance at each meeting of the Board of Directors or of any
special or standing committee thereof. The Board of Directors may establish by
resolution from time to time the fees to be paid to each director who is not an
officer or employee of the 


                                       7

<PAGE>


Corporation or any of its subsidiaries for serving as a director of the
Corporation, for serving on any special or standing committee of the Board of
Directors, and for attending meetings of the Board of Directors or of any
special or standing committee thereof. No such payment shall preclude any such
director from serving the Corporation in any other capacity and receiving
compensation therefor.

                                    ARTICLE 4

NOTICES

         SECTION 4.01. GIVING OF NOTICE. Notices to directors and stockholders
mailed to them at their addresses appearing on the books of the Corporation
shall be deemed to be given at the time when deposited in the United States
mail.

         SECTION 4.02. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation or of these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person at
a meeting shall constitute a waiver of notice of such meeting except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.

                                    ARTICLE 5

OFFICERS

         SECTION 5.01. SELECTION OF OFFICERS. The officers of the Corporation
shall be chosen by the Board of Directors at its first meeting after each annual
meeting of stockholders and shall be a chief executive officer, who shall be a
director, a president, one or more vice presidents and a secretary. The Board of
Directors may appoint such other officers, assistant officers and agents as it
may determine. Any number of offices may be held by the same person.

         SECTION 5.02. POWERS AND DUTIES IN GENERAL. The officers, assistant
officers and agents shall each have such powers and perform such duties in the
management of the affairs, property and business of the Corporation, subject to
the control and limitation by the Board of Directors, as is designated by these
By-Laws and as generally pertain to their respective offices, as well as such
powers and duties as may be authorized from time to time by the Board of
Directors.


                                       8

<PAGE>


         SECTION 5.03. TERM OF OFFICE, ETC. The officers of the Corporation
shall hold office at the pleasure of the Board of Directors. Each officer shall
hold office until a successor is elected and qualified or until such officer's
earlier resignation or removal. Any officer may resign at any time upon written
notice to the Corporation. Any officer elected or appointed by the Board of
Directors may be removed at any time by the Board of Directors. Any vacancy
occurring in any office of the Corporation by death, resignation, removal or
otherwise shall be filled by the Board of Directors.

         SECTION 5.04. CHIEF EXECUTIVE OFFICER. The chief executive officer of
the Corporation shall preside at all meetings of the stockholders, shall have
the responsibility for the general and active management and control of the
affairs and business of the Corporation, shall perform all duties and have all
powers which are commonly incident to the office of chief executive or which are
delegated to the chief executive officer by the Board of Directors, and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. The chief executive officer shall have the authority to sign all
certificates of stock, bonds, deeds, contracts and other instruments of the
Corporation that are authorized and shall have general supervision and direction
of all of the other officers and agents of the Corporation.

         SECTION 5.05. PRESIDENT. The president, who may also be the chief
executive officer of the Corporation, shall perform all duties and have all
powers which are commonly incident to the office of president or which are
delegated to the president by the Board of Directors, and shall see that all
orders and resolutions of the Board of Directors are carried into effect. In the
absence or disability of the chief executive officer, the president shall
perform the duties and exercise the powers of the chief executive officer. 
The president shall have the authority to sign all certificates of stock, 
bonds, deeds, contracts and other instruments of the Corporation that are
authorized.

         SECTION 5.06. VICE PRESIDENTS. The vice presidents shall act under the
direction of the chief executive officer and in the absence or disability of
both the chief executive officer and the president shall perform the duties and
exercise the powers of the chief executive officer. They shall perform such
other duties and have such other powers as the chief executive officer or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more executive or senior vice presidents or may otherwise
specify the order of seniority of the vice presidents, and in that event the
duties and powers of the chief executive officer shall descend to the vice
presidents in such specified order of seniority.

         SECTION 5.07. SECRETARY. The secretary shall act under the direction of
the chief executive officer. Subject to the direction of the chief executive
officer, the secretary shall attend all meetings of the Board of Directors and
all meetings of the stockholders and record the proceedings in a book to be kept
for that purpose, and the secretary shall perform like duties for the standing
committees of the Board of Directors when requested 


                                       9

<PAGE>


to do so. The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, shall have
charge of the original stock books, stock transfer books and stock ledgers of
the Corporation, and shall perform such other duties as may be prescribed by the
chief executive officer or the Board of Directors. The secretary shall have
custody of the seal of the Corporation and cause it to be affixed to any
instrument requiring it, and when so affixed, it may be attested by the
secretary's signature. The Board of Directors may give general authority to any
other officer to affix the seal of the Corporation and to attest the affixing by
such officer's signature.

         SECTION 5.08. ASSISTANT SECRETARIES. The assistant secretaries in order
of their seniority, unless otherwise determined by the chief executive officer
or the Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary. They shall perform
such other duties and have such other powers as the chief executive officer or
the Board of Directors may from time to time prescribe.

                                    ARTICLE 6

CERTIFICATES OF STOCK

         SECTION 6.01. ISSUANCE. The stock of the Corporation shall be
represented by certificates, PROVIDED that the Board of Directors may provide by
resolution for any or all of the stock to be uncertificated shares.
Notwithstanding any resolution by the board of directors providing for
uncertificated shares, every holder of stock in the Corporation represented by
certificates and, upon request, every holder of uncertificated shares in the
Corporation shall be entitled to have a certificate signed by, or in the name of
the Corporation by, the chairman of the board (or the vice chairman of the
board, if any), the president or a vice president and the treasurer or an
assistant treasurer or the secretary or an assistant secretary of the
Corporation, certifying the number of shares owned by such holder in the
Corporation.

         SECTION 6.02. FACSIMILE SIGNATURES. If a certificate is countersigned
(a) by a transfer agent other than the Corporation or its employee, or (b) by a
registrar other than the Corporation or its employee, the signatures of the
officers of the Corporation may be facsimiles. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall cease to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued with the same effect as if
he were such officer, transfer agent or registrar at the date of issue. The seal
of the Corporation or a facsimile thereof may, but need not, be affixed to
certificates of stock.

         SECTION 6.03. LOST CERTIFICATES, ETC.. The Corporation may establish
procedures for the issuance of a new certificate of stock in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed and 


                                       10

<PAGE>


may in connection therewith require, among other things, the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed and the giving by such person to the Corporation of a
bond in such sum as may be specified pursuant to such procedures as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.

         SECTION 6.04. TRANSFER. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation, if it shall be satisfied that
all provisions of the Certificate of Incorporation, the By-laws and the laws
regarding the transfer of shares have been duly complied with, to issue a new
certificate to the person entitled thereto or provide other evidence of the
transfer, cancel the old certificate and record the transaction upon its books.

         SECTION 6.05. REGISTERED STOCKHOLDERS. The Corporation shall be
entitled to recognize the person registered on its books as the owner of shares
to be the exclusive owner for all purposes including voting and dividends, and
the Corporation shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.

         SECTION 6.06. RECORD DATE FOR CONSENTS. In order that the Corporation
may determine the stockholders entitled to consent to corporate action in
writing without a meeting, the Board of Directors may fix, in advance, a record
date, which record date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent shall, by written notice to the
secretary, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within ten days after the date on
which such request is received, adopt a resolution fixing the record date. If no
record date has been fixed by the Board of Directors within ten days after the
receipt of such request and no prior action by the Board of Directors is
required by applicable law, then the record date shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation by delivery to its headquarters office to
the attention of the secretary. Delivery shall be by hand or certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
applicable law, the record date for determining stockholders entitled to consent
shall be at the close of business on the date on which the Board of Directors
adopts the resolution taking such prior action. The Board of Directors may
postpone action by written consent in order to allow the secretary to conduct a
reasonable and prompt investigation to ascertain the legal sufficiency of the
consents. The secretary may designate an independent inspector of election to
conduct such investigation.


                                       11

<PAGE>


         SECTION 6.07. RECORD DATES. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty or less than ten days before
the date of such meeting, and not more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
PROVIDED, HOWEVER, that the Board of Directors may fix a new record date for the
adjourned meeting.

                                    ARTICLE 7

MISCELLANEOUS

         SECTION 7.01. DECLARATION OF DIVIDENDS. Dividends upon the shares of
the capital stock of the Corporation may be declared and paid by the Board of
Directors from the funds legally available therefor. Dividends may be paid in
cash, in property, or in shares of the capital stock of the Corporation.

         SECTION 7.02. RESERVES. The directors of the Corporation may set apart
out of any of the funds of the Corporation available for dividends a reserve or
reserves for such purposes as the directors shall think conducive to the
interest of the Corporation, and the directors may modify or abolish any such
reserve.

         SECTION 7.03. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.

         SECTION 7.04. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in any other manner reproduced.

                                    ARTICLE 8

INDEMNIFICATION

         SECTION 8.01. IN GENERAL. Any person who was or is a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he or a person of whom he is the legal representative, is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation or for its benefit as a 


                                       12

<PAGE>


director, officer, employee or agent of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest extent legally permissible under
and pursuant to any procedure specified in or pursuant to the General
Corporation Law of the State of Delaware, as amended from time to time, from and
against any and all expenses, liabilities and losses (including without
limitation attorney's fees, judgments, fines and amounts paid or to be paid in
settlement) actually and reasonably incurred or suffered by such person in
connection therewith. Such right of indemnification shall be a contract right
which may be enforced in any manner desired by such person. Such right of
indemnification shall not be exclusive of any other right which such directors,
officers, employees, agents or representatives may have or hereafter acquire
and, without limiting the generality of the foregoing, they shall be entitled to
their respective rights of indemnification under any by-law, agreement, vote of
stockholders or the Board of Directors, provision of law or otherwise, as well
as their rights under this Article.

         SECTION 8.02. INSURANCE. The Board of Directors may cause the
Corporation to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or as its representative in a partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred in any such capacity, or arising out of such status, whether
or not the Corporation would have the power to indemnify such person against
such liability.

         SECTION 8.03. ADDITIONAL INDEMNIFICATION. The Board of Directors may
from time to time adopt further by-laws with respect to indemnification and may
amend these By-laws and such by-laws to provide at all times the fullest
indemnification permitted by the General Corporation Law of the State of
Delaware, as amended from time to time.

                                    ARTICLE 9

AMENDMENTS

         SECTION 9.01. BY THE STOCKHOLDERS. Except as otherwise provided by
statute or the Certificate of Incorporation, these By-laws may be amended by the
affirmative vote of the holders of at least a majority of the voting power of
the then outstanding Voting Stock, voting together as a single class at any
annual or special meeting of the stockholders, PROVIDED that notice of intention
to amend shall have been contained in the notice of the meeting.

         SECTION 9.02. BY THE BOARD OF DIRECTORS. The Board of Directors by a
majority vote of the whole Board of Directors at any meeting may amend these
By-laws, including by-laws adopted by the stockholders, but the stockholders
may, except as otherwise 


                                       13

<PAGE>


provided by statute or the Certificate of Incorporation, from time to time
specify particular provisions of the By-laws which shall not be amended by the
Board of Directors.



<PAGE>
                                                                     Exhibit 3.3


Amendments to the By-Laws of Sealed Air Corporation, effective
                               November 3, 1999.

                  RESOLVED that Sections 5.01 and 5.02 of the By-Laws of the
         Corporation shall be and are amended to read in their entirety as 
         follows:

                  SECTION 5.01. SELECTION OF OFFICERS. The officers of the 
                  Corporation shall be chosen by the Board of Directors at its
                  first meeting after each annual meeting of stockholders and 
                  shall be a chief executive officer, who shall be a director,
                  a president, one or more vice presidents and a secretary. 
                  The Board of Directors may appoint such other officers, 
                  assistant officers and agents as it may determine. Any
                  number of offices may be held by the same person.

                  SECTION 5.02. POWERS AND DUTIES IN GENERAL. The officers, 
                  assistant officers and agents shall each have such powers 
                  and perform such duties in the management of the affairs,
                  property and business of the Corporation, subject to the 
                  control and limitation by the Board of Directors, as is 
                  designated by these By-Laws and as generally pertain to
                  their respective offices, as well as such powers and duties
                  as may be authorized from time to time by the Board of 
                  Directors.










<PAGE>
                                                                 Exhibit 10.21
 
                             SEALED AIR CORPORATION
                     PERFORMANCE-BASED COMPENSATION PROGRAM
                (AS ADOPTED EFFECTIVE FOR THE 2000 FISCAL YEAR)
 
    In order to entitle Sealed Air Corporation (the "Corporation") to deduct for
U.S. income tax purposes the compensation expense resulting from certain
performance-based compensation provided to certain officers and other eligible
employees (as defined below) pursuant to awards under the Corporation's
Contingent Stock Plan or under annual cash bonus arrangements, the following are
the terms under which such awards may be granted to such eligible employees as
provided in Internal Revenue Code Section 162(m) and the regulations thereunder,
as the same may be amended from time to time ("Section 162(m)"):
 
I. ELIGIBLE EMPLOYEES:
 
    The class of employees eligible for awards under this program ("eligible
employees") consists of the chief executive officer of the Corporation, the
other four most highly compensated executive officers of the Corporation, and
other officers and key employees of the Corporation or any of its subsidiaries
selected by the committee of the Board of Directors (the "Committee") that is
authorized by the Board of Directors to establish and administer performance

goals under this program. The Committee will be comprised of "outside directors"
as that term is defined in Section 162(m).
 
II. PERFORMANCE-BASED AWARDS OF COMMON STOCK:
 
    Performance-based awards of shares of the Corporation's Common Stock under
the Contingent Stock Plan of Sealed Air Corporation can be made based upon
achievement of pre-established objective goals during a performance period
(which may be the calendar year) established by the Committee, consistent with
the requirements of Section 162(m). If such goals are achieved, then an eligible
employee may be granted one or more awards of Common Stock under the Contingent
Stock Plan during the 12-month period following the performance period in an
aggregate amount up to the pre-established award level.
 
    The maximum amount of performance-based awards made in shares of the
Corporation's Common Stock under the Contingent Stock Plan to any eligible
employee under this program during any 12-month period may not exceed two-tenths
of 1% (0.2%) of the issued and outstanding shares of the Corporation's Common
Stock at the beginning of such period. The Committee retains the sole and
exclusive discretion to set pre-established award levels for awards under the
Corporation's Contingent Stock Plan at an amount less than the maximum level
specified in the prior sentence and to reduce (including a reduction to zero)
any award to be made in shares of Common Stock under the Contingent Stock Plan
that is otherwise payable under the program.
 
III. PERFORMANCE-BASED AWARDS OF CASH:
 
    Performance-based awards of cash under the Corporation's annual cash bonus
arrangements can be made to eligible employees based upon achievement of
pre-established objective goals during a calendar year performance period. If
such goals are achieved, the eligible employee may be granted an annual cash
bonus for such year in an amount of up to one percent (1%) of the Corporation's
net earnings for that fiscal year, provided, however, that the Committee in its
sole and exclusive discretion may reduce (including a reduction to zero) any
award to be made in cash to any eligible employee that is otherwise payable
under the program for such year. At the sole and exclusive discretion of the
Committee, an annual cash bonus may be paid although such goals have not been
achieved if the eligible employee dies or becomes disabled during the
performance period or a "change in control" (as defined in the Contingent Stock
Plan) occurs during the performance period.



<PAGE>

IV. PRE-ESTABLISHED OBJECTIVE GOALS:

    Performance-based awards under this program will require attainment of
objective, pre-established goals based on one or more of the following criteria:
growth in net sales, operating profit, net earnings, measures of cash flow,
measures of expense control, earnings before interest and taxes (commonly called
EBIT), earnings before interest, taxes, depreciation and amortization (commonly
called EBITDA), earnings per share, successful completion of strategic
acquisitions, joint ventures or other transactions, or any combination of the
foregoing goals. Pre-established goals and award levels will be established by
the Committee in writing during the first 90 days of the performance period (or
during the first 25% of the performance period if the performance period is less
than a year), provided that the outcome is substantially uncertain at the time
the Committee establishes the goal. Except as specified in this program,
performance goals may not be changed once set. No stock grants or cash payments
will be made until the Committee has certified that the performance goals have
been met.
 
V. ADDITIONAL PROVISIONS:
 
A. The limits on awards made in the Corporation's Common Stock and in cash are
    cumulative, that is, the Corporation may grant to any eligible employee in
    any year awards up to the specified limits both for Common Stock and for
    cash. While the limits are annual, performance-based awards need not be made
    every year, and the Committee shall have the discretion to determine the
    intervals between successive performance-based awards.
 
B.  In the event of any change in the Corporation's capitalization, such as
    through a stock split, stock dividend, recapitalization, merger or
    consolidation, appropriate adjustments will be made by the Board of
    Directors to the maximum amount of performance-based awards that may be made
    in shares of the Corporation's Common Stock during any 12-month period to an
    eligible employee, to the pre-established award level for any award to be
    made in shares of the Corporation's Common Stock, to the amount of any
    performance-based award to be made in shares of the Corporation's Common
    Stock that has been approved by the Committee before such change occurred
    but not yet made as of such change and the purchase price per share for the
    shares subject to such award, and to any pre-established goal that is based
    upon the Corporation's capitalization, such as earnings per share. For the
    purpose of determining whether a goal has been attained, the Committee may
    also disregard any change in accounting standards required by the Financial
    Accounting Standards Board that is adopted after a performance goal has been
    established.
 
C.  The Committee shall be entitled at its discretion to approve awards under
    the Contingent Stock Plan, cash bonuses or compensation under any other
    compensation plan or arrangement that does not meet the requirements of
    Section 162(m) and thus may be partly or fully non-deductible by the
    Corporation for U.S. income tax purposes.
 
D. Except as provided above and subject to the stockholder approval requirements
    of Section 162(m), the Committee shall have complete power and authority to
    amend, suspend or terminate any or all terms of the performance-based
    compensation program, except that it may not alter performance goals or
    increase pre-established award levels once they have been established for a
    performance period. The Committee shall have full authority to administer
    the performance-based compensation program and to interpret the program's
    terms and establish rules for the administration of the program, although
    the Committee may consider recommendations from the Chief Executive Officer
    of the Corporation or from directors who are not members of the Committee.
    The Committee's determinations under the program shall be final.
 
E.  An eligible employee's rights and interests under the program may not be
    assigned or transferred by the eligible employee. To the extent an eligible
    employee acquires a right to receive an award under the program, such right
    shall be no greater than the right of any unsecured general creditor of the
 


<PAGE>
    Corporation. Nothing contained in the program shall be deemed to create a
    trust of any kind or any fiduciary relationship between the Corporation and
    an eligible employee. Designation as an eligible employee under the program
    shall not entitle the employee to continued employment with or, if
    applicable, continuation as an officer of the Corporation or any of its
    subsidiaries.
 
F.  The program shall be construed and governed in all respects under the laws
    of the United States to the extent applicable and, to the extent such laws
    are not applicable, under the laws of the State of New Jersey.
 
    The foregoing terms of the performance-based compensation program shall
become effective as of the Corporation's 2000 fiscal year, subject to the
approval by the affirmative vote of a majority of votes cast by the stockholders
of the Corporation at the 2000 annual meeting of stockholders.
 






<PAGE>

SELECTED FINANCIAL DATA (1)                                           EXHIBIT 13
(In thousands of dollars, except per share data)


<TABLE>
<CAPTION>

                                                        1999              1998           1997            1996            1995
--------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF EARNINGS DATA:
<S>                                               <C>             <C>            <C>            <C>             <C>    
Net sales                                          $ 2,839,636     $   2,506,756  $   1,833,111  $   1,741,602   $   1,705,642
Gross profit                                         1,028,722           868,736        646,002        590,596         627,542
Operating profit (2)                                   452,192           259,332        267,744        173,500         248,062
Earnings before income taxes                           395,653           198,947        263,672        169,822         235,473
Net earnings (2)                                       211,461            73,007        173,732         99,830         140,892
Series A convertible preferred stock
     dividends (3)                                      71,422            53,921
--------------------------------------------------------------------------------------------------------------------------------

Earnings per common share (4)
          Basic                                    $      1.69     $        0.04  $        2.54   $      0.56     $       1.33
          Diluted                                  $      1.68     $        0.02  $        2.39   $      0.55     $       1.30

--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET DATA:
Working capital                                    $    221,130    $     309,624  $      343,741  $     277,583   $     289,605
Total assets                                          3,855,233        4,039,930       1,646,831      1,702,888       1,477,360
Long-term debt, less current installments               665,116          996,526              --             --              --
Series A convertible preferred stock (3)              1,761,662        1,791,093              --             --              --
Total shareholders' equity (5)                          551,030          437,045       1,352,628      1,381,790       1,173,962

--------------------------------------------------------------------------------------------------------------------------------
OTHER DATA:
EBIT (6)                                           $    453,779    $     252,576  $      263,672  $     169,822   $     235,473
Depreciation and amortization                           223,399          195,954         111,080         94,380          80,357
EBITDA (7)                                              677,178          448,530         374,752        264,202         315,830
Capital expenditures                                     75,080           82,408         101,997        294,503         293,272
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>


(1)    The Selected Financial Data include the operations of the Cryovac

       packaging business for all periods presented. The operating results, cash
       flows, assets and liabilities of old Sealed Air are included for all
       periods subsequent to March 31, 1998. See Note 1 to the Consolidated
       Financial Statements.

(2)    Operating profit is presented after giving effect to restructuring and
       asset impairment charges of $110,792, $14,444, $74,947 and $17,745 in
       1998, 1997, 1996 and 1995, respectively. The 1998 restructuring and asset
       impairment charges were partially offset by a special credit of $23,610
       related to the Company's curtailment of a postretirement benefit plan.
       Net earnings in 1998 are presented after giving effect to a special
       income tax charge of $26,000. See Consolidated Statements of Earnings and
       Notes 8, 9 and 11 to the Consolidated Financial Statements.

(3)    The Series A convertible preferred stock pays a cash dividend at an
       annual rate of $2.00 per share, payable quarterly in arrears, and is
       subject to mandatory redemption on March 31, 2018 at $50 per share, plus
       any accrued and unpaid dividends. Dividends of $0.50 per share were
       declared for each of the four quarters of 1999 and the last three
       quarters of 1998 following the issuance of the shares in the transactions
       associated with the Merger.

(4)    Prior to March 31, 1998, the Company did not have a separately
       identifiable capital structure upon which a calculation of earnings per
       common share could be based. In calculating basic and diluted earnings
       per common share for periods prior to the Merger, retroactive recognition
       has been given to the transactions associated with the Merger.
       See Note 16 to the Consolidated Financial Statements.

(5)    Since, prior to the Merger, the Company did not have a separately
       identifiable capital structure, shareholders' equity for 1995 through
       1997 represents the net assets of Cryovac.

(6)    EBIT is defined as earnings before interest expense and provisions for
       income taxes.

(7)    EBITDA is defined as EBIT plus depreciation, goodwill amortization and
       amortization of other intangible assets. EBITDA is a frequently used
       measure of a company's ability to generate cash to service its
       obligations, including debt service obligations, and to finance capital
       and other expenditures. EBITDA does not purport to represent net income
       or net cash provided by operating activities, as those terms are defined
       under generally accepted accounting principles, and should not be
       considered as an alternative to such measurements or as an indicator of
       the Company's performance.



MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL 
CONDITION

On March 31, 1998, the Company (formerly known as W.R. Grace & Co.) and the
former Sealed Air Corporation ("old Sealed Air") completed a series of
transactions as a result of which:

(a) The specialty chemicals business of the Company was separated from its
packaging business, after which the packaging business ("Cryovac") was held by
one group of wholly owned subsidiaries, and the specialty chemicals business
was held by another group of wholly owned subsidiaries ("New Grace"); the
Company and Cryovac borrowed approximately $1.26 billion under two revolving
credit agreements (the "Credit Agreements") (which, as amended, are discussed
below) and transferred substantially all of those funds to New Grace; and the
Company distributed all of the outstanding shares of common stock of New Grace
to its shareholders. As a result, New Grace became a separate publicly owned
corporation that is unrelated to the Company. These transactions are referred to
below as the "Reorganization."

(b) The Company recapitalized its outstanding shares of common stock, par value
$0.01 per share, into a new 


<PAGE>

common stock and Series A convertible preferred stock (the "Series A Preferred 
Stock"), each with a par value of $0.10 per share (the "Recapitalization").

(c) A subsidiary of the Company merged into old Sealed Air (the "Merger"), with
old Sealed Air being the surviving corporation. As a result of the Merger, old
Sealed Air became a subsidiary of the Company. The Company was renamed Sealed
Air Corporation.

References to "Grace" in this Management's Discussion and Analysis refer to the
Company before the Reorganization, the Recapitalization and the Merger.

The Merger was accounted for as a purchase of old Sealed Air by the Company as
of March 31, 1998. Accordingly, the financial statements include the operating
results and cash flows as well as the assets and liabilities of Cryovac for all
periods presented. The operating results, cash flows, assets and liabilities of
old Sealed Air are included from March 31, 1998. For periods prior to the
Merger, the financial statements exclude all of the assets, liabilities
(including contingent liabilities), revenues and expenses of Grace other than
the assets, liabilities, revenues and expenses of Cryovac.

In order to facilitate a review of the factors that affected the Company's 1999
operating results, the Company has included selected unaudited pro forma
financial information in Note 19 to the Consolidated Financial Statements.
References to this information are included below in the discussion of results
of operations to assist in understanding the factors other than the Merger and
its related transactions that affected the Company's operating results in the
periods covered by the Company's Management's Discussion and Analysis.

RESULTS OF OPERATIONS

DISCUSSION AND ANALYSIS OF REPORTED OPERATING RESULTS

The Company's net sales increased 13% in 1999 compared with 1998 and 37% in 1998
compared with 1997.

Most of the increase in net sales in 1999 and 1998 on a consolidated and
geographic basis as well as most of the increase in cost of sales, marketing,
administrative and development expenses and the substantial increase in goodwill
amortization were primarily due to the inclusion of the protective packaging
business of old Sealed Air in the entire 1999 period and in the last three
quarters of 1998, and adjustments arising from the Merger, the Reorganization
and the Recapitalization.

Net sales of the Company's food and specialty packaging segment constituted 62%
of net sales in 1999, 67% in 1998 and 87% in 1997. The balance of the net sales
were of products in the Company's protective packaging segment. The decline in
the proportion of the Company's net sales in the food and specialty packaging
segment was primarily due to the added sales of old Sealed Air's protective
packaging products after the Merger.

Net sales of food and specialty packaging products increased 5% in 1999 and 6%
in 1998. The increase in both periods was due to higher unit volume and the
inclusion of old Sealed Air's absorbent and other food packaging products in
this segment after the Merger, partially offset by the negative effect of
foreign currency translation. The increase in net sales in 1998 was also
partially offset by certain lower average selling prices in certain product
lines and changes in product mix. Among the major classes of products in this
segment, net sales of flexible packaging materials and related equipment
increased 3% in 1999 and 2% in 1998. The increase in both periods was due
primarily to higher unit volume and the addition of old Sealed Air's products,
partially offset by the negative effect of foreign currency translation. Net
sales of rigid packaging and absorbent products increased 22% in 1999 and 71% in
1998. The increase in 1999 was primarily due to higher unit volume, and net
sales in both periods also increased substantially due to the inclusion of old
Sealed Air's absorbent products in this class of products following the Merger.

Net sales of protective packaging products increased 31% in 1999 and 236% in
1998. The increase in 1999 was due to the inclusion of old Sealed Air's
protective packaging products for the full twelve months of 1999 compared to
only the last nine months of 1998, increased unit volume and, to a lesser
extent, the added net sales of several small acquired businesses. The increase
in 1998 reflected higher unit volume but was primarily due to the additional net
sales of old Sealed Air's protective packaging products following the Merger.

Gross profit as a percentage of net sales was 36.2% in 1999, 34.7% in 1998 and
35.2% in 1997. The increase in 1999 was due to the higher level of net sales and
cost reductions arising out of improvements in the Company's operations
partially offset by certain higher raw material prices for certain of the
Company's products. The decrease in 1998 compared to 1997 was due to a non-cash
inventory charge of $8 million during the second quarter of 1998, resulting from
the turnover of certain of the Company's inventories previously stepped up to
fair value in connection with the accounting for the Merger, to higher levels of
depreciation arising from capital expenditures made in prior years, and to
inventory and equipment 


<PAGE>

parts provisions in 1998, partially offset by certain lower raw material costs.

Marketing, administrative and development expenses increased 8% in 1999 and 34%
in 1998. The 1999 and 1998 increases were due primarily to the addition of the
operating costs of old Sealed Air following the Merger and to integration and
information system costs. The substantial majority of the Merger integration
costs incurred in 1998 met the accounting and reporting requirements for
restructuring and asset impairment treatment. These costs are discussed below
and also in the later paragraphs discussing the Company's restructuring program.
In addition, during the first quarter of 1998, Cryovac incurred $18,044,000 of
corporate allocations from Grace. Such allocations ceased upon the Merger.
Marketing, administrative and development expenses as a percentage of net sales
were 18.6% in 1999, 19.4% in 1998 and 19.8% in 1997. The 1999 expense level
reflects continued improvements in the Company's operations.

Goodwill amortization increased in each year primarily due to goodwill resulting
from the Merger.

The Company did not incur restructuring charges in 1999. Restructuring costs 
and asset impairments were $110,792,000 in 1998 and $14,444,000 in 1997. The 
Company's 1998 restructuring and other charges, net, reflect a $23,610,000 
special credit to operations relating to the curtailment of certain 
post-retirement benefits. The 1997 Cryovac restructuring costs include 
$3,616,000 primarily related to a restructuring of Cryovac's European 
operations and asset impairment charges of $10,828,000 for certain long-lived 
assets that were determined to be impaired.

Operating profit increased 74% in 1999 but decreased 3% in 1998. These changes
reflect an increase in net sales and the changes in costs and expenses discussed
above which included in 1998 the restructuring and other charges, net. Before
giving effect to corporate operating expenses, consisting primarily of goodwill
amortization and restructuring and other charges, net, operating profit of the
Company's food and specialty packaging segment constituted 55% and 61% of
operating profit in 1999 and 1998, respectively. The balance of operating profit
arose from the Company's protective packaging segment. The decline in the
proportion of the Company's operating profit in the food and specialty packaging
segment was primarily due to the added operating profit of old Sealed Air's
protective packaging products after the Merger. Due to the Merger, it is not
practicable to provide segmented operating profit information for 1997.
Operating profit as a percentage of net sales was 15.9% in 1999, 10.3% in 1998
and 14.6% in 1997.

Interest expense increased in 1999 and 1998 since the indebtedness incurred
under the Credit Agreements was outstanding for the full twelve months of 1999
but only for the last nine months of 1998. There is no interest expense
reflected in the statement of earnings for 1997 since Grace generally borrowed
on behalf of Cryovac and did not allocate borrowings or their related interest
expense to Cryovac.

The changes in other income (expense), net, in each year primarily reflect the
effects of foreign exchange transactions.

The Company's effective income tax rates were 46.6%, 46.7% and 34.1% in 1999,
1998 and 1997, respectively. The 1999 effective tax rate was higher than
statutory rates due to the non-deductibility of goodwill amortization. The 1998
effective rate noted above excludes the effects of the $87,182,000 of net
restructuring and other charges and a $26,000,000 special income tax charge for
the assumed repatriation to the U.S. of the portion of the accumulated earnings
of the Company's foreign subsidiaries that were not considered to be permanently
invested in their businesses. Including these items, the effective rate for 1998
was 63.3% and was higher than statutory rates primarily due to the charges noted
above and the non-deductibility of goodwill amortization for tax purposes. The
Company expects that its effective tax rate will continue to remain higher than
statutory rates for 2000 due primarily to the non-deductibility of goodwill
amortization for tax purposes. The effective tax rate in 1997 was lower than the
1998 effective tax rate primarily due to the significantly higher levels of
non-deductible goodwill amortization in 1998 and changes in U.S. and foreign
taxes on foreign operations.

Net earnings increased 190% to $211,461,000 in 1999 compared to $73,007,000 in
1998, primarily resulting from the Company's higher operating profit in 1999 and
the absence in 1999 of the special income tax charge incurred in 1998 as
discussed above. Net earnings decreased 58% in 1998 due primarily to the decline
in operating profit as well as the higher levels of interest expense and income
taxes.

Basic earnings per common share were $1.69 for 1999, $0.04 for 1998 and $2.54
for 1997. Diluted earnings per common share were $1.68 for 1999, $0.02 for 1998
and $2.39 for 1997. Earnings per common share were calculated in accordance with
Staff Accounting Bulletin No. 98, "Computation of Earnings Per Share", for the
1998 and 1997 periods, since the Company did not have a separately identifiable
capital structure upon which a calculation of earnings per common share could be
based prior to March 31, 1998. Accordingly, net earnings were reduced for
preferred stock dividends (as if such shares had been outstanding during each
year) to arrive at earnings ascribed to common shareholders.

RESTRUCTURING PROGRAM

Following the Merger, the Company undertook a review of its operations in order
to develop a combined operating plan for the integration of old Sealed Air and
Cryovac. As part of this plan, during the third quarter of 1998, the Company
announced and began to implement a restructuring program and 


<PAGE>

recorded a pre-tax charge of $111,074,000 to recognize the restructuring costs 
and related asset impairments. 

The business operating changes made as result of the Company's combined 
operating plan include the following:

-    Combining or eliminating certain small facilities and administrative
     support functions;

-    Reorganizing sales and marketing to add sales people in the field and
     increase customer access;

-    Integrating Cryovac's industrial and consumer films product line into the
     Company's protective packaging business segment;

-    Leveraging Cryovac's infrastructure in Latin America and Asia to accelerate
     growth of the Company's protective packaging business segment;

-    Eliminating layers of management;

-    Centralizing Cryovac's U.S. research facilities to capitalize more
     efficiently on R & D strengths;

-    Streamlining the Cryovac manufacturing organization; and

-    Identifying impaired and unnecessary facilities and equipment in connection
     with the combined operating plan.

The portion of the 1998 restructuring and asset impairment charge applicable to
the Company's food and specialty packaging segment amounted to $97,064,000, and
the portion applicable to the protective packaging segment amounted to
$14,010,000.

As part of the restructuring, the Company eliminated approximately 750 positions
through December 31, 1999, or 5% of its total workforce. As of December 31,
1999, all restructuring actions including employee severances and asset
dispositions were substantially completed. There remains to be paid in future
periods approximately $5 million of the original $43 million estimate of cash
outlays. Such remaining outlays are principally for employee severances, lease
terminations and other exit costs.

The Company expects to realize approximately $45 million in annual operating
cost savings beginning in the year 2000. The anticipated $45 million savings
include reductions in depreciation and amortization of approximately $8 million
per annum, which began in the fourth quarter of 1998, and reductions in cash
operating expenses of approximately $37 million per annum that relate primarily
to payroll and related payroll tax and benefit expenses. The reductions in cash
operating expenses began upon elimination of the employee positions. The Company
estimates that approximately $30 million of these cash operating expense
reductions were realized in 1999; these reductions were modest in amount for
1998. Of the $45 million anticipated savings, approximately 40% should be
realized from reductions in manufacturing costs and 60% should be realized from
reductions in other operating costs. Additional information is included in Note
9 to the Consolidated Financial Statements.

DISCUSSION AND ANALYSIS OF PRO FORMA OPERATING RESULTS

The following discussion compares the Company's 1999 reported operating results
and the unaudited selected pro forma earnings statement information for 1998 and
1997 that appear in Note 19 to the Consolidated Financial Statements. The 1998
and 1997 pro forma information has been prepared as if the Reorganization, the
Recapitalization and the Merger had occurred on January 1, 1997 and illustrates
the operations of Cryovac and old Sealed Air on a combined basis in 1997 and
1998. However, it is not intended to represent what the Company's actual results
of operations would have been in 1997 or 1998 had these transactions actually
occurred on January 1, 1997.

Net sales increased 4% in 1999 to $2,839,636,000 and increased 2% in 1998 to
$2,719,508,000. The increase in both periods was due primarily to higher unit
volume. In addition, average selling price and product mix changes had a minor
negative effect on net sales in 1998.

Excluding the negative effect of foreign currency translation, net sales in 1999
and 1998 would have increased 6% and 5%, respectively. In 1999, net sales
continued to be affected by the continued weakness of foreign currencies
compared with the U.S. dollar in Latin America and Europe. Net sales were
affected in 1998 by the continued weakness of foreign currencies compared with
the U.S. dollar, particularly in the Asia-Pacific and Latin American regions,
sluggish sales in Asia and other markets, and the spillover effect of the Asian
economic crisis into other markets.

Net sales from North American operations increased 5% in 1999 compared to 1998
and 4% in 1998 compared to 1997 primarily due to increased unit volume. In 1999
and 1998, the net sales in North America represented 57% and in 1997 represented
55% of consolidated net sales, respectively. Substantially all of the North
American net sales for each year represent net sales from the United States.

Net sales from foreign operations, which represented 43% of net sales in 1999
and 1998, and 45% of net sales in 1997, increased 4% in 1999 and decreased 1% in
1998. The increase in 1999 was primarily due to higher unit volume and, to a
lesser extent, the added net sales of several small acquired businesses,
partially offset by the negative effect of foreign currency translation.
Excluding the negative effect of foreign currency translation, net sales would
have increased 8% in 1999. The decrease in 1998 was primarily due to the
negative effect of foreign currency translation. Excluding this negative effect,
foreign net sales would have increased 6% primarily due to increased unit
volume. No country other than the United States accounts for more than 10% of
the Company's total net sales.


<PAGE>

Net sales of the Company's food and specialty products segment increased 3% in
1999 and increased marginally in 1998. The increase in 1999 was due primarily to
higher unit volume partially offset by the negative effect of foreign currency
translation. Excluding the negative effect of foreign currency translation, net
sales of this segment would have increased 6% in 1999. The increase in 1998 was
due primarily to increased unit volume partially offset by the negative effect
of foreign currency translation, certain lower average selling prices in certain
product lines and changes in product mix. Excluding the effect of foreign
currency translation, net sales of this segment would have increased 5% in 1998.

Net sales of the Company's protective packaging segment increased 7% in 1999 and
3% in 1998. The increase in 1999 was primarily due to higher unit volume and, to
a lesser extent, the added net sales of several small acquired businesses
partially offset by the negative effect of foreign currency translation. The
increase in 1998 was primarily due to higher unit volume, which was partially
offset by the negative effect of foreign currency translation, and certain lower
average selling prices in certain product lines. Excluding the effect of foreign
currency translation, net sales in this segment would have increased 8% in 1999
and 5% in 1998.

Gross profit as a percentage of net sales was 36.2% for 1999, 35.2% in 1998, and
35.7% in 1997. The increase in 1999 was due to the higher level of net sales and
cost reductions arising out of improvements in the Company's operations,
partially offset by certain higher raw material prices for certain of the
Company's products. The decrease in 1998 as compared to 1997 was primarily due
to the higher levels of depreciation arising from capital expenditures made in
prior years and to inventory and equipment parts provisions in 1998, partially
offset by certain lower raw material costs. The Company also incurred certain
manufacturing and product introduction costs that affected the first quarter of
1998. Pro forma cost of sales in 1998 excludes the $8 million non-cash inventory
charge that the Company incurred during the second quarter of 1998 discussed
above.

Marketing, administrative and development expenses as a percentage of net sales
was 18.6% in 1999, 19.0% in 1998 and 18.5% in 1997. The decrease in 1999
compared to 1998 reflects the continued improvements in the Company's
operations, partially offset by integration expenses and increases in
information systems costs. The marginal increase in 1998 compared to 1997
resulted primarily from merger integration activities and information system
costs.

Operating profit increased 15% in 1999 but decreased 5% in 1998, before giving
effect to the net restructuring and other charges in 1998 and 1997. The increase
in 1999 was due primarily to the higher level of net sales and the changes in
costs and expenses discussed above. The decrease in 1998 was primarily due to
the changes in gross profit and marketing, administrative and development
expenses discussed above.

Other expense, net, primarily reflects interest expense. The decrease in all
periods was primarily due to a decrease in interest expense resulting from the
lower level of debt outstanding in each period compared to the prior year. In
addition, the 1999 decrease in other expense, net, also reflects lower exchange
losses related to the effects of foreign exchange transactions.

Net earnings increased to $211,461,000 in 1999 primarily due to the higher level
of operating profit but declined to $81,492,000 in 1998 from $184,535,000 in
1997 primarily due to the lower level of operating profit and higher income
taxes.

Basic and diluted earnings per common share amounted to $1.69 and $1.68 for
1999, respectively, and $0.14 and $0.12, respectively, for 1998, on a pro forma
basis, compared with $1.35 basic and diluted earnings per common share for 1997,
on a pro forma basis. The effect of the conversion of the Company's outstanding
convertible preferred stock is not considered in the calculation of diluted
earnings per common share as the effect is anti-dilutive (i.e., would increase
earnings per common share to $1.85 for 1999 compared with $1.43 for 1998 and
$1.51 for 1997, on a pro forma basis and excluding the effects in 1998 and 1997
of the net restructuring and other charges and in 1998 the special income tax
charge discussed above).

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of liquidity are cash flows from operations and
amounts available under the Company's existing lines of credit, including
principally the Credit Agreements described below.

Net cash provided by operating activities amounted to $430,354,000 in 1999,
$411,646,000 in 1998 and $235,314,000 in 1997. The increase in 1999 was due to
net earnings from the inclusion of the operations of old Sealed Air for the full
twelve months of 1999 as well as increased net earnings. This increase was
partially offset by changes in operating assets and liabilities in the ordinary
course of business, which included the timing of cash payments related to the
restructuring and related charges. The increase in cash flow in 1998 was
primarily due to the inclusion of the operations of old Sealed Air from April 1,
1998 and changes in operating assets and liabilities arising in the ordinary
course of business.

Net cash used in investing activities amounted to $97,285,000 in 1999,
$38,316,000 in 1998 and $115,339,000 in 1997. In each year, the net cash used in
investing activities was used primarily for capital expenditures and
acquisitions. The increase in net cash used in 1999 was due primarily to the
absence in 1999 of the cash acquired from old Sealed Air in the Merger, which in
1998 more than offset the cash used for other acquisitions and partially offset
the cash used for capital expenditures. The 1999 period also includes
$25,811,000 of cash used to make various small acquisitions in 1999. 


<PAGE>

Capital expenditures were $75,080,000 in 1999, $82,408,000 in 1998 and 
$101,997,000 in 1997. Capital expenditures for the Company's food and 
specialty packaging segment amounted to $51,307,000 and $48,497,000 in 1999 
and 1998, respectively, and capital expenditures for the protective packaging 
segment amounted to $23,773,000 and $31,487,000 in 1999 and 1998, 
respectively. There were no corporate capital expenditures in 1999 compared to 
$2,424,000 in 1998. Due to the Merger, it is not practicable to provide 
segment information for 1997. The decrease in capital expenditures in 1999 
compared to 1998 was primarily due to the management of capital planning and 
project spending; however, the Company currently anticipates that capital 
expenditures in 2000 will be in the range of $125 million to $150 million. The 
decrease in 1998 reflects the completion in 1997 and early 1998 of several of 
Cryovac's major manufacturing expansion programs. As the assets of old Sealed 
Air were acquired in the Merger through the issuance of common stock, the 
consolidated statement of cash flows for 1998 does not reflect the changes in 
the related balance sheet items caused by the addition of old Sealed Air's 
assets and liabilities, except for old Sealed Air's cash balance. The 
acquisition of such net assets is reflected as supplementary information in 
Note 15 to the Consolidated Financial Statements.

Net cash used in financing activities amounted to $367,183,000 in 1999,
$325,093,000 in 1998 and $119,975,000 in 1997. The net cash used in financing
activities in 1999 and 1998 was used primarily to refinance or repay outstanding
debt, principally under the Credit Agreements, to pay dividends on the Company's
Series A preferred stock and to purchase treasury stock. The 1999 period
reflects the issuance of Senior Notes and Euro Notes, described below, the net
proceeds of which (approximately $500,491,000) were used to refinance debt under
the Credit Agreements. Since the Merger, the Company has reduced its debt by
approximately $501,000,000. Cash flows from financing activities in 1998 also
reflected the proceeds from borrowings under the Credit Agreements, offset by
the transfer of funds to New Grace in connection with the Reorganization. The
net cash used in financing activities in 1997 reflects net cash that was
advanced by Cryovac to Grace as part of Grace's centralized cash management
system, whereby cash received from operations was transferred to, and
disbursements were funded from, Grace's centralized corporate accounts.

At December 31, 1999, the Company had working capital of $221,130,000, or 6% of
total assets, compared to working capital of $309,624,000, or 8% of total
assets, at December 31, 1998. The decline in working capital in 1999 reflects an
increase in short-term borrowings and the improvement in the Company's
operations resulting in lower levels of cash and cash equivalents and
inventories. These changes were partially offset by an increase in notes and
accounts receivable, as well as a reduction in other current liabilities
relating primarily to payments made during 1999 related to restructuring.

The ratio of current assets to current liabilities (current ratio) was 1.4 at
December 31, 1999 compared with 1.6 at December 31, 1998. The ratio of current
assets less inventory to current liabilities (quick ratio) was 1.0 at December
31, 1999 and 1.1 at December 31, 1998. The decreases in these ratios in 1999
resulted primarily from the decreases in working capital discussed above.

At December 31, 1999, the Company's outstanding debt consisted primarily of
borrowings made under the Credit Agreements, the Senior Notes, and the Euro
Notes, described below, and certain other loans incurred by the Company's
subsidiaries. The Company's outstanding debt as of December 31, 1998 primarily
included borrowings under the Credit Agreements and certain other loans incurred
by the Company's subsidiaries.

During 1999, the Company issued euro 200 million (approximately $205 million, at
the then current exchange rate) aggregate principal amount of 7-year 5.625%
notes (the "Euro Notes") and $300 million aggregate principal amount of 10-year
6.95% senior notes (the "Senior Notes"). The net proceeds from these note
issuances of approximately $500,491,000 in the aggregate were used to refinance
outstanding borrowings under the Credit Agreements. As of December 31, 1999, the
Company has entered into certain forward-starting interest rate swap agreements
that have the effect of converting a portion of these fixed rate notes to
variable rate debt at U.S. denominated rates which ranged from 6.2% to 6.5%, and
euro denominated rates which ranged from 3.8% to 4.4% at December 31, 1999.

The Company's two principal Credit Agreements are a 5-year revolving credit
facility that expires on March 30, 2003 (included in long-term debt) and a
364-day revolving credit facility that expires on March 27, 2000 (included in
short-term borrowings). The Company intends to renew the 364-day revolving
credit facility prior to its expiration for an additional 364-day period. During
1999, the Company voluntarily reduced the amounts available under the Credit
Agreements to $1.125 billion in the aggregate and expects further voluntary
reductions totaling $225 million in connection with the renewal of the 364-day
revolving credit facility. As of December 31, 1999 and 1998, outstanding
borrowings were $160,978,000 and $990,000,000, respectively, under the 5-year
revolving credit facility and $38,342,000 and $19,933,000, respectively, under
the 364-day revolving credit facility. The Credit Agreements provide that the
Company and certain of its subsidiaries may borrow for various purposes,
including the refinancing of existing debt, the provision of working capital and
other general corporate needs, including acquisitions and capital expenditures.
Amounts repaid under the Credit Agreements may be reborrowed from time to time.
As of December 31, 1999, facility fees were payable on the total amounts
available under the Credit Agreements and amounted to 0.095% and 0.100% per
annum under the 5-year revolving credit facility and the 364-day revolving
credit facility, respectively.

The Company's obligations under the Credit Agreements bear interest at floating
rates. The weighted average interest rate under the Credit Agreements was
approximately 6.0% at December 31, 1999 and 5.8% at December 31, 1998. The
Company had certain interest rate and currency swaps outstanding at December 31,
1999, 


<PAGE>

and had certain interest rate swap agreements outstanding at December 31, 1998 
related to its obligations under the Credit Agreements. These agreements had 
the effect of fixing or adjusting the interest rates on a portion of such 
debt. The weighted average interest rate at December 31, 1999 and 1998 did not 
change significantly as a result of these derivative financial instruments.

The Credit Agreements provide for changes in borrowing margins based on
financial criteria and the Company's senior unsecured debt ratings. The Credit
Agreements, Senior Notes and Euro Notes impose certain limitations on the
operations of the Company and certain of its subsidiaries. The Company was in
compliance with these requirements as of December 31, 1999.

At December 31, 1999, the Company had available lines of credit, including those
available under the Credit Agreements, of approximately $1.3 billion of which
approximately $1.1 billion were unused.

The Series A Preferred Stock votes with the common stock on an as-converted
basis, pays a cash dividend, as declared by the Company's Board of Directors, at
an annual rate of $2.00 per share, payable quarterly in arrears, becomes
redeemable at the option of the Company beginning March 31, 2001, subject to
certain conditions, and will be subject to mandatory redemption on March 31,
2018 at $50.00 per share, plus any accrued and unpaid dividends. Because it is
subject to mandatory redemption, the Series A Preferred Stock is classified
outside of the shareholders' equity section of the balance sheet.

The Company's shareholders' equity was $551,030,000 at December 31, 1999
compared to $437,045,000 at December 31, 1998. Shareholders' equity increased in
1999 due to the Company's net earnings of $211,461,000, which were partially
offset by preferred stock dividends of $71,422,000 and by an additional foreign
currency translation adjustment of $46,678,000.

OTHER MATTERS

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from changes in interest rates and foreign
currency exchange rates, which may adversely affect its results of operations
and financial condition. The Company seeks to minimize these risks through
regular operating and financing activities and, when deemed appropriate, through
the use of derivative financial instruments. The Company does not purchase, hold
or sell derivative financial instruments for trading purposes.

INTEREST RATES

The Company uses interest rate swaps to manage its exposure to fluctuations in
interest rates. The Company also uses interest rate collars to reduce the
Company's exposure to fluctuations in the rate of interest by limiting interest
rates to a given range. At December 31, 1999, the Company had forward-starting
interest rate swaps, that have the effect of converting a portion of the
Company's fixed rate debt to variable rate debt, and an interest rate collar
agreement, maturing at various dates through November 2004, with a combined
aggregate notional amount of approximately $159,000,000 compared with interest
rate swap and collar agreements with a combined aggregate notional amount of
$265,000,000 at December 31, 1998. The interest rate swap agreements outstanding
at December 31, 1998 had the effect of converting a portion of the Company's
variable rate debt to fixed rate debt. The fair value of these agreements, which
represents the estimated net payment that would be made by the Company to
terminate the agreements as advised by the Company's banks, was $1,260,000 at
December 31, 1999. A hypothetical 10% increase in interest rates would increase
the amount to be paid by the Company to terminate these agreements by
approximately $2,756,000.

The fair value of the Company's fixed rate debt also varies with changes in
interest rates. Generally, the fair value of fixed rate debt will increase as
interest rates fall and decrease as interest rates rise. At December 31, 1999,
the carrying value of the Company's total debt was $824,677,000, of which
$502,244,000 was fixed rate debt. At December 31, 1998, the carrying value of
the Company's total debt was $1,081,657,000 of which $3,477,000 was fixed rate
debt. The estimated fair value of the Company's total debt, which includes the
cost of replacing the Company's fixed rate debt with borrowings at current
market rates, was approximately $787,589,000 at December 31, 1999 compared to
$1,082,392,000 at December 31, 1998. A hypothetical 10% decrease in interest
rates would result in an increase in the fair value of the total debt balance of
approximately $23,138,000.

FOREIGN EXCHANGE CONTRACTS

The Company uses interest rate and currency swaps to limit foreign exchange
exposure and limit or adjust interest rate exposure by swapping certain
borrowings in U.S. dollars for borrowings denominated in foreign currencies. At
December 31, 1999, the Company had interest rate and currency swap agreements,
maturing through March 2002, with an aggregate notional amount of approximately
$5,000,000 compared to an aggregate notional amount of $23,000,000 at December
31, 1998. The estimated fair value of these contracts, which represents the
estimated net payment that would be received by the Company in the event of
termination of these agreements based on the then current interest rates and
foreign exchange rates, was $85,000 at December 31, 1999. A hypothetical 10%
decrease in interest rates would result in an immaterial change in the amount to
be received by the Company to terminate 


<PAGE>

these agreements. A hypothetical 10% adverse change in foreign exchange rates 
at December 31, 1999 would cause the Company to pay approximately $442,000 to 
terminate these contracts. However, since these contracts hedge foreign 
currency denominated transactions, any change in the fair value of the 
contracts would be offset by changes in the underlying value of the 
transaction being hedged.

The Company uses foreign currency forwards to fix the amount payable on certain
transactions denominated in foreign currencies. At December 31, 1999, the
Company did not have any material foreign currency forward contracts outstanding
while at December 31, 1998, an aggregate notional amount of approximately
$12,800,000 was outstanding.

ENVIRONMENTAL MATTERS

The Company is subject to loss contingencies resulting from environmental laws
and regulations, and it accrues for anticipated costs associated with
investigatory and remediation efforts when an assessment has indicated that a
loss is probable and can be reasonably estimated. These accruals do not take
into account any discounting for the time value of money and are not reduced by
potential insurance recoveries, if any. Environmental liabilities are reassessed
whenever circumstances become better defined and/or remediation efforts and
their costs can be better estimated. These liabilities are evaluated
periodically based on available information, including the progress of remedial
investigations at each site, the current status of discussions with regulatory
authorities regarding the methods and extent of remediation and the
apportionment of costs among potentially responsible parties. As some of these
issues are decided (the outcomes of which are subject to uncertainties) and/or
new sites are assessed and costs can be reasonably estimated, the Company
adjusts the recorded accruals, as necessary. However, the Company believes that
it has adequately reserved for all probable and estimable environmental
exposures. In connection with the Reorganization, certain environmental
liabilities of Cryovac were retained by or assumed by New Grace.

YEAR 2000 COMPUTER SYSTEM COMPLIANCE

The Company completed addressing its Year 2000 issues by December 31, 1999. Year
2000 issues arose from computer programs that utilize only the last two digits
of a year to define a particular year rather than the complete four digits. As a
result, there was a concern that certain computer programs would not properly
process certain dates, particularly those that fall into the year 2000 or
subsequent years. Year 2000 issues affected both computer-based information
systems and systems with embedded microcontrollers or microcomputers.

The Company incurred total costs, including an estimate of internally incurred
cost, of approximately $8 million to address Year 2000 issues. The Company did
not experience any significant disruptions to its financial or operating
activities caused by failure of its computers and systems resulting from Year
2000 issues. Additionally, the Company did not defer any significant information
technology projects due to Year 2000 issues. The Company does not expect Year
2000 issues to have a significant effect on the Company's operations or
financial results in the future.

RISKS

Most Year 2000 issues would have occurred on or about January 1, 2000; however,
such issues may still arise in the future. While the Company believes that it
has taken all steps reasonably necessary to assure its ability to conduct
business and to safeguard its assets from the effects of Year 2000 issues, risks
cannot in every case be eliminated.

EURO CONVERSION

On January 1, 1999, eleven of the fifteen members of the European Union (the
"participating countries") established fixed conversion rates between their
existing currencies (the "legacy currencies") and introduced the euro, a single
common non-cash currency. The euro is now traded on currency exchanges and is
being used in business transactions.

At the beginning of 2002, new euro-denominated bills and coins will be issued to
replace the legacy currencies, and the legacy currencies will be withdrawn from
circulation. By 2002, all companies operating in the participating countries are
required to restate their statutory accounting data into euros as their base
currency.

In 1998, the Company established plans to address the systems and business
issues raised by the euro currency conversion. These issues include, among
others, (a) the need to adapt computer, accounting and other business systems
and equipment to accommodate euro-denominated transactions, (b) the need to
modify banking and cash management systems in order to be able to handle
payments between customers and suppliers in legacy currencies and euros between
1999 and 2002, (c) the requirement to change the base statutory and reporting
currency of each subsidiary in the participating countries into euros during the
transition period, (d) the foreign currency exposure changes resulting from the
alignment of the legacy currencies into the euro, and (e) the identification of
material contracts and sales agreements whose contractual stated currency will
need to be converted into euros.

The Company believes that it will be euro compliant by January 1, 2002. The
Company has implemented plans to accommodate euro-denominated transactions and
to handle euro payments with third party customers and suppliers in the
participating countries. The Company plans to meet the requirement to convert
statutory and reporting currencies to the euro by acquiring and installing new
financial software systems. If there are delays in such installation, the
Company plans to pursue alternate means to convert statutory and reporting
currencies to the euro by 2002. The Company expects that its foreign currency
exposures will be reduced as a result of the alignment of legacy currencies, and
the Company believes that all material contracts and sales agreements requiring
conversion will be converted to euros prior to January 1, 2002.

Although additional costs are expected to result from the implementation of the
Company's plans, the Company also 


<PAGE>

expects to achieve benefits in its treasury and procurement areas as a result 
of the elimination of the legacy currencies. Since the Company has operations 
in each of its business segments in the participating countries, each of its 
business segments will be affected by the conversion process. However, the 
Company expects that the total impact of all strategic and operational issues 
related to the euro conversion and the cost of implementing its plans for the 
euro conversion will not have a material adverse impact on its consolidated 
financial condition, results of operations or reportable segments.

RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS

In June 1999, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133." This Statement defers the effective date of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133,
which the Company expects to adopt beginning January 1, 2001, establishes
accounting and operating standards for hedging activities and derivative
instruments, including certain derivative instruments embedded in other
contracts. The Company is reviewing the potential impact, if any, of SFAS No.
133 on its Consolidated Financial Statements.

FORWARD-LOOKING STATEMENTS

Certain statements made by the Company in this report and in future oral and
written statements by management of the Company may be forward-looking. These
statements include comments as to the Company's beliefs and expectations as to
future events and trends affecting the Company's business, its results of
operations and its financial condition. These forward-looking statements are
based upon management's current expectations concerning future events and
discuss, among other things, anticipated future performance and future business
plans. Forward-looking statements are identified by such words and phrases as
"expects," "intends," "believes," "will continue," "plans to," "could be" and
similar expressions. Forward-looking statements are necessarily subject to
uncertainties, many of which are outside the control of the Company, that could
cause actual results to differ materially from such statements.

While the Company is not aware that any of the factors listed below will
adversely affect the future performance of the Company, the Company recognizes
that it is subject to a number of uncertainties, such as business and market
conditions in Asia, Latin America and other geographic areas around the world,
changes in the value of foreign currencies against the U.S. dollar, the ability
of the Company to realize fully the benefits of the restructuring program
relating to the integration of old Sealed Air and Cryovac, the success of
certain information systems projects, general economic, business and market
conditions, conditions in the industries and markets that use the Company's
packaging materials and systems, the development and success of new products,
the Company's success in entering new markets, competitive factors, raw material
availability and pricing, changes in the Company's relationships with customers
and suppliers, future litigation and claims (including environmental matters)
involving the Company, changes in domestic or foreign laws or regulations, or
difficulties related to any remaining Year 2000 issues or the euro conversion.



<PAGE>


SEALED AIR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS 
Years Ended December 31, 1999, 1998 and 1997 
(In thousands of dollars, except per share data)


<TABLE>
<CAPTION>

                                                                               1999                1998             1997
-------------------------------------------------------------------- ---- --------------- --- --------------- -- ----------------
<S>                                                                  <C>                  <C>                 <C>         
Net sales                                                            $      2,839,636     $      2,506,756    $  1,833,111
Cost of sales                                                               1,810,914            1,638,020       1,187,109
-------------------------------------------------------------------- ---- --------------- --- --------------- -- ----------------
     Gross profit                                                           1,028,722              868,736         646,002
Marketing, administrative and development expenses                            527,126              486,160         363,454
Goodwill amortization                                                          49,404               36,062             360
Restructuring and other charges, net                                             --                 87,182          14,444
-------------------------------------------------------------------- ---- --------------- --- --------------- -- ----------------
     Operating profit                                                         452,192              259,332         267,744
Interest expense                                                              (58,126)             (53,629)             --
Other income(expense), net                                                      1,587               (6,756)         (4,072)
-------------------------------------------------------------------- ---- --------------- --- --------------- -- ----------------
     Earnings before income taxes                                             395,653              198,947         263,672
Income taxes                                                                  184,192              125,940          89,940
-------------------------------------------------------------------- ---- --------------- --- --------------- -- ----------------
     NET EARNINGS                                                    $        211,461     $         73,007     $   173,732
=================================================================================================================================
Add:  Excess of book value over repurchase price of
     Series A preferred stock                                                   1,568                1,798
Less:  Series A preferred stock dividends                                      71,422               53,921
Less:  Retroactive recognition of preferred stock dividends                       --                18,011          72,044
-------------------------------------------------------------------- ---- --------------- --- --------------- -- ----------------
     Net earnings ascribed to common shareholders                    $        141,607     $          2,873     $   101,688
=================================================================================================================================
Earnings per common share :
     Basic                                                           $           1.69     $           0.04     $      2.54
     Diluted                                                         $           1.68     $           0.02     $      2.39
=================================================================================================================================
</TABLE>

See accompanying Notes to Consolidated Financial Statements



<PAGE>


SEALED AIR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
(In thousands of dollars, except share data)


<TABLE>
<CAPTION>
                                                                                                 1999               1998

-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>               <C>
ASSETS
Current assets:
    Cash and cash equivalents                                                              $       13,672     $      44,986
    Notes and accounts receivable, net of allowances for doubtful
               accounts of $21,396 in 1999 and $17,945 in 1998                                    470,046           453,124
    Inventories                                                                                   245,934           275,312
    Prepaid expenses                                                                                9,976            11,316
    Deferred income taxes                                                                          63,596            59,876
-------------------------------------------------------------------------------------------------------------------------------
    Total current assets                                                                          803,224           844,614
Property and equipment, net                                                                     1,023,409         1,116,582
Goodwill, less accumulated amortization of $84,699 in 1999 and
              $36,083 in 1998                                                                   1,859,958         1,907,736
Deferred income taxes                                                                               8,494            10,758
Other assets                                                                                      160,148           160,240
-------------------------------------------------------------------------------------------------------------------------------
         Total Assets                                                                      $    3,855,233     $   4,039,930
===============================================================================================================================
LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Current liabilities:
    Short-term borrowings                                                                  $      152,653     $      68,173
    Current portion of long-term debt                                                               6,908            16,958
    Accounts payable                                                                              175,166           176,594
    Other current liabilities                                                                     247,367           273,265
-------------------------------------------------------------------------------------------------------------------------------
    Total current liabilities                                                                     582,094           534,990
Long-term debt, less current portion                                                              665,116           996,526
Deferred income taxes                                                                             214,906           200,699
Other liabilities                                                                                  80,425            79,577
-------------------------------------------------------------------------------------------------------------------------------
         Total liabilities                                                                      1,542,541         1,811,792
-------------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Note 18)
===============================================================================================================================
Authorized 50,000,000 preferred shares. Series A convertible preferred stock,
     $50.00 per share redemption value, authorized 36,021,851 shares in 1999
     and 1998, issued 36,015,645 shares in 1999 and 36,021,851 shares in 1998,                                 
     including 782,400 shares in 1999 and 200,000 shares in 1998 in treasury,
     mandatory redemption in 2018                                                               1,761,662         1,791,093
-------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
     Common stock, $.10 par value per share.  Authorized 400,000,000 shares;
          issued 84,135,255 shares in 1999 and 83,806,361 shares in 1998                            8,413             8,380
     Additional paid-in capital                                                                   632,230           610,505
     Retained earnings (deficit)                                                                  132,073            (7,966)
     Accumulated translation adjustment                                                          (171,521)         (124,843)
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                  601,195           486,076
-------------------------------------------------------------------------------------------------------------------------------
     Less:     Deferred compensation                                                               24,511            28,683
     Less:     Cost of treasury common stock, 535,356 shares in 1999 and
                   494,550 shares in 1998                                                          23,652            17,234
     Less:     Minimum pension liability                                                            2,002             3,114
-------------------------------------------------------------------------------------------------------------------------------
          Total shareholders' equity                                                              551,030           437,045
-------------------------------------------------------------------------------------------------------------------------------
          Total Liabilities, Preferred Stock and Shareholders' Equity                      $    3,855,233     $   4,039,930
===============================================================================================================================
</TABLE>


See accompanying Notes to Consolidated Financial Statements.


<PAGE>

SEALED AIR CORPORATION AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF EQUITY 
Years Ended December 31, 1999, 1998 and 1997
(In thousands of dollars)

<TABLE>
<CAPTION>

                                                Additional        Retained                      Treasury  
                                 Common          Paid-In          Earnings       Deferred        Common   
                                 Stock           Capital         (Deficit)     Compensation      Stock    
<S>                               <C>          <C>              <C>             <C>           <C>         
----------------------------------------------------------------------------------------------------------
Balance at
     December 31, 1996                                                                                    
----------------------------------------------------------------------------------------------------------
Net earnings                                                                                              

Net activity with Grace                                                                                   

Foreign currency translation                                                                              
----------------------------------------------------------------------------------------------------------
Balance at
     December 31, 1997                                                                                    
----------------------------------------------------------------------------------------------------------
Net earnings for quarter
     ended March  31, 1998                                                                                

Net activity with Grace                                                                                   

Reorganization and
     Recapitalization                $4,065    $(1,530,292)      $   --         $   --         $   --     

Issuance of common stock in
     Merger                           4,262      2,106,490           --           (9,649)          --     

Effect of contingent stock
     transactions, net                   52         32,073           --          (19,034)          (182)  

Shares issued for non-cash
     compensation                         1            436           --             --             --     

Purchase of preferred stock            --            1,798           --             --             --     

Purchase of common stock               --             --             --             --          (17,052)  

FAS 87 pension adjustment              --             --             --             --             --     

Foreign currency translation           --             --             --             --             --     

Net earnings-April 1 through
     December 31, 1998                 --             --           45,955           --             --     

Dividends on preferred stock           --             --          (53,921)          --             --     
----------------------------------------------------------------------------------------------------------
Balance at
 December 31, 1998                    8,380        610,505         (7,966)       (28,683)       (17,234)  
----------------------------------------------------------------------------------------------------------
Effect of contingent stock
     transactions, net                   25         12,718           --            4,172            (16)  

Shares issued for non-cash
     compensation                         1          5,107           --             --            7,787   

Exercise of stock options                 6          2,023           --             --             --     

Purchase of preferred stock            --            1,568           --             --             --     

Conversion of preferred stock             1            309           --             --             --     

Purchase of common stock               --             --             --             --          (14,189)  

FAS 87 pension adjustment              --             --             --             --             --     

Foreign currency translation           --             --             --             --             --     

Net earnings                           --             --          211,461           --             --     

Dividends on preferred stock           --             --          (71,422)          --             --     
----------------------------------------------------------------------------------------------------------
Balance at
December 31, 1999                    $8,413       $632,230       $132,073       $(24,511)      $(23,652)  
----------------------------------------------------------------------------------------------------------
</TABLE>


See accompanying Notes to Consolidated Financial Statements.




<TABLE>
<CAPTION>
                                Other Comprehensive Income
                                --------------------------
                                Accumulated      Minimum
                                Translation      Pension        Pre-Merger
                                Adjustment       Liability      Net Assets       Total
<S>                              <C>           <C>             <C>               <C>  
------------------------------------------------------------------------------------------
Balance at
     December 31, 1996           $(47,135)                     $1,428,925     $1,381,790
------------------------------------------------------------------------------------------
Net earnings                                                      173,732        173,732

Net activity with Grace                                          (119,975)      (119,975)

Foreign currency translation      (82,919)                                       (82,919)
------------------------------------------------------------------------------------------
Balance at
     December 31, 1997           (130,054)                      1,482,682      1,352,628
------------------------------------------------------------------------------------------
Net earnings for quarter
     ended March  31, 1998                                         27,052         27,052

Net activity with Grace                                            23,939         23,939

Reorganization and
     Recapitalization               --             --          (1,533,673)    (3,059,900)

Issuance of common stock in
     Merger                         --             --                          2,101,103

Effect of contingent stock
     transactions, net              --             --                             12,909

Shares issued for non-cash
     compensation                   --             --                                437

Purchase of preferred stock         --             --                              1,798

Purchase of common stock            --             --                            (17,052)

FAS 87 pension adjustment           --           (3,114)                          (3,114)

Foreign currency translation       5,211           --                              5,211

Net earnings-April 1 through
     December 31, 1998              --             --                             45,955

Dividends on preferred stock        --             --                            (53,921)
------------------------------------------------------------------------------------------
Balance at
 December 31, 1998              (124,843)        (3,114)                         437,045
------------------------------------------------------------------------------------------
Effect of contingent stock
     transactions, net              --             --                             16,899

Shares issued for non-cash
     compensation                   --             --                             12,895

Exercise of stock options           --             --                              2,029

Purchase of preferred stock         --             --                              1,568

Conversion of preferred stock       --             --                                310

Purchase of common stock            --             --                            (14,189)

FAS 87 pension adjustment           --            1,112                            1,112

Foreign currency translation     (46,678)          --                            (46,678)

Net earnings                        --             --                            211,461

Dividends on preferred stock        --             --                            (71,422)
------------------------------------------------------------------------------------------
Balance at
December 31, 1999              $(171,521)       $(2,002)                        $551,030
------------------------------------------------------------------------------------------
</TABLE>


See accompanying Notes to Consolidated Financial Statements.


<PAGE>


SEALED AIR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1999, 1998 and 1997
(In thousands of dollars)


<TABLE>
<CAPTION>

                                                                    1999          1998         1997
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>          <C>          <C>      
Cash flows from operating activities:
    Net earnings                                                 $ 211,461    $    73,007    $ 173,732
    Adjustments to reconcile net earnings to cash
       provided by operating activities:
          Depreciation and amortization of property and equipment  146,549        141,457      106,563
          Goodwill and other amortization                           76,850         54,497        4,517
          Amortization of bond discount                                169             --           --
          Non-cash portion of restructuring and other charges, net      --         44,175       14,444
          Deferred tax provisions                                   19,358         24,022       14,981
          Net loss on disposals of property and equipment              149          1,980        2,474
          Non-cash compensation                                      9,934            437           --
          Changes in operating assets and liabilities, net of 
           businesses acquired and transfers to/from Grace:
                 Notes and accounts receivable                     (31,984)       (31,560)      (5,236)

                 Inventories                                        21,229         33,110          116
                 Other current assets                                  670           (926)       5,028
                 Other assets                                        1,772        (15,251)     (18,128)
                 Accounts payable                                    1,750          7,685      (23,183)
                 Income taxes payable                              (16,491)        28,302           --
                 Other current liabilities                         (10,299)        45,526      (47,936)
                 Other liabilities                                    (763)         5,185        7,942
------------------------------------------------------------------------------------------------------
                         Net cash provided by operating activities 430,354        411,646      235,314
------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
    Capital expenditures for property and equipment                (75,080)       (82,408)    (101,997)
    Proceeds from sales of property and equipment                    3,606          1,141        1,882
    Businesses acquired in purchase transactions, net of cash
       acquired                                                    (25,811)        42,951      (15,224)
------------------------------------------------------------------------------------------------------
                         Net cash used in investing activities     (97,285)       (38,316)    (115,339)
------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
     Net advances to Grace                                              --        (20,369)    (119,975)
     Proceeds from long-term debt                                  572,831      1,259,221
     Payment of long-term debt                                    (903,941)      (265,606)
     Payment of senior debt issuance costs                          (3,412)            --
     Transfer of funds to New Grace                                     --     (1,258,807)
     Net proceeds on short-term borrowings                          74,848         21,732
     Purchases of treasury common stock                            (14,189)       (17,052)
     Purchases of treasury preferred stock                         (27,552)        (8,202)
     Dividends paid on preferred stock                             (71,616)       (36,010)
     Proceeds from stock option exercises and other                  5,848             --
-------------------------------------------------------------------------------------------------------
                         Net cash used in financing activities    (367,183)      (325,093)    (119,975)
-------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents         2,800         (3,251)          --
-------------------------------------------------------------------------------------------------------
Cash and cash equivalents:
    Net change during the period                                   (31,314)        44,986           --
    Balance, beginning of period                                    44,986             --           --
-------------------------------------------------------------------------------------------------------
Balance, end of period                                            $ 13,672       $ 44,986      $    --
-------------------------------------------------------------------------------------------------------
 See accompanying Notes to Consolidated Financial Statements.

</TABLE>




<PAGE>

SEALED AIR CORPORATION AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
Years Ended December 31, 1999, 1998 and 1997
(In thousands of dollars)


<TABLE>
<CAPTION>
                                                                              1999          1998        1997
----------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>          <C>          <C>      
Net earnings                                                               $ 211,461    $  73,007    $ 173,732
Other comprehensive income:
          Minimum pension liability, net of an income tax charge in 1999
               of $1,020 and an income tax benefit in 1998 of $2,360           1,112       (3,114)        --
          Foreign currency translation adjustments                           (46,678)       5,211      (82,919)
----------------------------------------------------------------------------------------------------------------
Comprehensive income                                                       $ 165,895    $  75,104    $  90,813
----------------------------------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.

</TABLE>




<PAGE>

SEALED AIR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of dollars, except per share data)
--------------------------------------------------------------------------------

NOTE 1 BASIS OF PRESENTATION

GENERAL

On March 31, 1998, the Company (formerly known as W.R. Grace & Co.) and the
former Sealed Air Corporation ("old Sealed Air") completed a series of
transactions as a result of which:

     (a)  The specialty chemicals business of the Company was separated from its
          packaging business, after which the packaging business ("Cryovac") was
          held by one group of wholly owned subsidiaries, and the specialty
          chemicals business was held by another group of wholly owned
          subsidiaries ("New Grace"); the Company and Cryovac borrowed
          approximately $1,260,000 under two revolving credit agreements (the
          "Credit Agreements") (which, as amended, are discussed below) and
          transferred substantially all of those funds to New Grace; and the
          Company distributed all of the outstanding shares of common stock of
          New Grace to its shareholders. As a result, New Grace became a
          separate publicly owned corporation that is unrelated to the Company.
          These transactions are referred to below as the "Reorganization".

     (b)  The Company recapitalized its outstanding shares of common stock, par
          value $0.01 per share ("Grace Common Stock"), into a new common stock
          and Series A convertible preferred stock, each with a par value of
          $0.10 per share (the "Recapitalization").

     (c)  A subsidiary of the Company merged into old Sealed Air (the "Merger"),
          with old Sealed Air being the surviving corporation. As a result of
          the Merger, old Sealed Air became a subsidiary of the Company. The
          Company was renamed Sealed Air Corporation.

As used in these Notes, the term "Company" means the Company and its
subsidiaries after giving effect to the Reorganization, the Recapitalization and
the Merger, and the term "Grace" refers to the Company with respect to periods
prior to such transactions. The agreements pursuant to which the Reorganization,
the Recapitalization and the Merger were carried out are referred to in these
Notes as the "Transaction Agreements".

BASIS OF FINANCIAL STATEMENTS

The Merger was accounted for as a purchase of old Sealed Air by the Company as
of March 31,1998. Accordingly, the financial statements include the operating
results and cash flows as well as the assets and liabilities of Cryovac for all
periods presented. The operating results, cash flows, assets and liabilities of
old Sealed Air are included from March 31, 1998. See Note 19 for unaudited
selected pro forma statement of earnings information for the years ended
December 31, 1998 and 1997. For periods prior to the Merger, the financial
statements exclude all of the assets, liabilities (including contingent
liabilities), revenues and expenses of Grace other than the assets, liabilities,
revenues and expenses of Cryovac.

For periods prior to the Merger, the financial statements were prepared as
special-purpose combined financial statements as provided for in the Transaction
Agreements using Grace's historical basis of accounting. Such financial
statements include the assets, liabilities, revenues, expenses and related taxes
on income of Cryovac previously included in the consolidated financial
statements of Grace, and they include certain assets and liabilities of Cryovac
that were retained by New Grace in connection with the Reorganization, as
contemplated by the Transaction Agreements. In accordance with Securities and
Exchange Commission Staff Accounting Bulletin ("SAB") No. 55, the financial
statements for periods prior to March 31, 1998 include certain expenses incurred
by Grace on Cryovac's behalf. See Note 17 for a discussion of these corporate
allocations.

For periods prior to the Merger, the financial statements do not include an
allocation of Grace's debt and related interest expense (except for interest
capitalized as a component of Cryovac's property and equipment). Therefore, the
financial statements for the periods prior to March 31, 1998 may not necessarily
reflect the financial position and results of operations that would have
occurred had Cryovac been a stand-alone entity on such dates and for the periods
then ended. All transactions between and among subsidiaries and operating units
within Cryovac have been eliminated in consolidation.

The financial statements also exclude dividends paid by Grace to its
shareholders in periods prior to March 31, 1998, as the obligation to pay such
dividends was incurred by Grace and not by Cryovac on a stand-alone basis. See
Note 14 for a discussion of Shareholders' Equity.


<PAGE>

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany transactions and balances have
been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
affecting the reported amounts of assets and liabilities (including contingent
assets and liabilities) at the dates of the financial statements and the
reported revenues and expenses during the periods presented. Actual amounts
could differ from those estimates.

REVENUE RECOGNITION

Revenue is recognized upon shipment of goods to customers.

CASH AND CASH EQUIVALENTS

Investments with original maturities of three months or less are considered to
be cash equivalents. The Company's policy is to invest cash in excess of
short-term operating and debt service requirements in such cash equivalents.
These instruments are stated at cost, which approximates market because of the
short maturity of the instruments.

FINANCIAL INSTRUMENTS

The Company has limited involvement with derivative financial instruments that
have off-balance-sheet risk. These financial instruments generally include cross
currency swaps, interest rate swaps, caps and collars and foreign exchange
forwards and options relating to the Company's borrowing and trade activities.
Such financial instruments are used to manage the Company's exposure to
fluctuations in interest rates and foreign exchange rates. The Company does not
purchase, hold or sell derivative financial instruments for trading or
speculative purposes. The Company is exposed to credit risk in the event of the
inability of the counterparties to perform under their obligations. However, the
Company seeks to minimize such risk by entering into transactions with
counterparties that are major financial institutions with high credit ratings.

The Company records realized and unrealized gains and losses from foreign
exchange hedging instruments (including cross currency swaps, forwards and
options) differently depending on whether the instrument qualifies for hedge
accounting. Gains and losses on those foreign exchange instruments that qualify
as hedges are deferred as part of the cost basis of the asset or liability being
hedged and are recognized in the statement of earnings in the same period as the
underlying transaction. Realized and unrealized gains and losses on instruments
that do not qualify for hedge accounting are recognized currently in the
statement of earnings.

The Company records the net payments or receipts from interest rate swaps, caps,
collars and the interest rate component of cross currency swaps as adjustments
to interest expense on a current basis. If an interest rate hedging instrument
were terminated prior to the maturity date, any gain or loss would be amortized
into earnings over the shorter of the original term of the derivative instrument
and the underlying transaction.

INVENTORIES

Inventories are stated at the lower of cost or market. The cost of most U.S.
inventories is determined on a last-in, first-out ("LIFO") basis, while the cost
of other inventories is determined on a first-in, first-out ("FIFO") basis.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, except for property and equipment
that have been impaired, for which the carrying amount is reduced to estimated
fair value. Significant improvements are capitalized; repairs and maintenance
costs that do not extend the lives of the assets are charged to expense as
incurred. The cost and accumulated depreciation of assets sold or otherwise
disposed of are removed from the accounts, and any resulting gain or loss is
included when the assets are disposed of.

The cost of property and equipment is depreciated over their estimated useful
lives on a straight-line basis as follows: buildings - 20 to 40 years; machinery
and other property and equipment - 3 to 20 years.

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill is amortized on a straight-line basis principally over a 40-year
period. Other intangible assets are included in other assets at cost and consist
primarily of patents, licenses, trademarks and non-compete agreements. They are
amortized over the shorter of their legal lives or their estimated useful lives
on a straight-line basis, generally ranging from 3 to 20 years. Identifiable
intangibles individually and in the aggregate comprise less than 5% of the
Company's consolidated assets.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company periodically reviews the carrying value of its long-lived assets
including property and equipment, goodwill and other intangible assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be fully recoverable. Impairments are
recognized when the expected future undiscounted cash flows derived from such
assets are less 


<PAGE>

than their carrying value. For such cases, losses are recognized
for the difference between the fair value and the carrying amount. The Company
considers various valuation factors, principally discounted cash flows, to
assess the fair values of long-lived assets. Assets to be disposed of by sale or
abandonment, and where management has the current ability to remove such assets
from operations, are recorded at the lower of carrying amount or fair value less
cost of disposition. Depreciation for these assets is suspended during the
disposal period, which is generally less than one year.

STOCK-BASED COMPENSATION

The Company has adopted the disclosure provisions of SFAS No. 123, "Accounting
for Stock-Based Compensation." As permitted by SFAS No. 123, the Company
continues to follow the measurement provisions of Accounting Principles Board
Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees."

FOREIGN CURRENCY TRANSLATION

In non-U.S. locations that are not considered highly inflationary, the balance
sheets are translated at the end of period exchange rates, and statements of
earnings are translated at the average exchange rates during the applicable
period with translation adjustments accumulated in shareholders' equity. Assets
and liabilities of the Company's operations in countries with highly
inflationary economies are translated at the end of period exchange rates,
except that certain financial statement amounts are translated at historical
exchange rates. Items included in statements of earnings of the Company's
operations in countries with highly inflationary economies are translated at
average rates of exchange prevailing during the period, except that certain
financial statement amounts are translated at historical exchange rates.

INCOME TAXES

The Company and its domestic subsidiaries file a consolidated U.S. federal
income tax return. The Company's non-U.S. subsidiaries file income tax returns
in their respective local jurisdictions. During the third quarter of 1998, the
Company began providing for income taxes on that portion of its foreign
subsidiaries' accumulated earnings that management believes are not reinvested
indefinitely in their businesses.

Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. A valuation allowance is provided when it is
more likely than not that all or some portion of the deferred tax asset will not
be realized. Deferred tax liabilities or assets at the end of each period are
determined using the tax rates then in effect.

For periods prior to the Merger, Cryovac's U.S. operations were included in
Grace's U.S. federal and state income tax returns. For these periods, Grace's
consolidated income tax provision was generally allocated to Cryovac as if
Cryovac filed separate income tax returns, and the allocated current provision
was settled with Grace on a current basis. Under the terms of the Transaction
Agreements, New Grace retained the liability for substantially all tax
liabilities of Cryovac attributable to periods ended on and prior to the Merger.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred and amounted to $56,452,
$57,524 and $40,675 in 1999, 1998 and 1997, respectively.

EARNINGS PER COMMON SHARE

Earnings per common share information has been calculated in accordance with
SFAS No. 128, "Earnings Per Share," and SAB No. 98, "Computation of Earnings Per
Share," since Cryovac did not have a separately identifiable capital structure
upon which a calculation of earnings per common share could be based prior to
the Reorganization and the Recapitalization.

ENVIRONMENTAL EXPENDITURES

Except as described in Note 18 with respect to the Reorganization, environmental
expenditures that relate to ongoing business activities are expensed or
capitalized, as appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current or future net
sales, are expensed. Liabilities are recorded when the Company determines that
environmental assessments or remediations are probable and that the cost or a
range of costs to the Company associated therewith can be reasonably estimated.
In connection with the Reorganization, certain environmental liabilities of
Cryovac were retained by or assumed by New Grace.

RECLASSIFICATIONS

Certain prior period amounts have been reclassified to conform to the current
year's presentation.


<PAGE>

NOTE 3 BUSINESS SEGMENT INFORMATION

The Company operates in two reportable business segments: (i) Food and Specialty
Packaging and (ii) Protective Packaging. The Food and Specialty Packaging
segment comprises the Company's Cryovac-Registered Trademark- food and specialty
packaging products. The Protective Packaging segment includes the aggregation of
the Company's packaging products, engineered products and specialty products,
which products are principally for non-food applications.

The Food and Specialty Packaging segment includes flexible materials and 
related systems (shrink film products, laminated films and specialty packaging 
systems marketed primarily under the Cryovac-Registered Trademark- trademark 
for a broad range of perishable foods), and rigid packaging and absorbent pads 
(absorbent pads used for the packaging of meat, fish and poultry, foam trays 
for supermarkets and food processors, and rigid plastic containers for dairy 
and other food products). Net sales of flexible materials and related systems 
were: 1999 -$1,585,073; 1998 - $1,539,817; and 1997 - $1,497,127. Net sales of 
rigid packaging and absorbent pads were: 1999 - $176,057; 1998 - $144,263; and 
1997 -$91,468. Products in this segment are primarily sold to food processors, 
distributors and food service businesses.

The Protective Packaging segment includes cushioning and surface protection
products (including air cellular cushioning materials, films for non-food
applications, polyurethane foam packaging systems sold under the
Instapak-Registered Trademark- trademark, polyethylene foam sheets and planks, a
comprehensive line of protective and durable mailers and bags, certain
paper-based protective packaging materials, suspension and retention packaging,
and packaging systems) and other products (principally specialty adhesive
products). Net sales of cushioning and surface protection products were: 1999 -
$1,043,071; 1998 - $794,593; and 1997 - $244,516. Net sales of other products
for 1999 and 1998 were approximately 1% of consolidated net sales. Cryovac did
not have net sales of other products in 1997. Products in this segment are
primarily sold to distributors and manufacturers.

Subsequent to the Merger, Cryovac's film products for non-food applications were
integrated into the Protective Packaging segment. The restatement of 1997
operating results to reflect this realignment is not practicable (except to
identify the amount of net sales for 1997 provided above) as, prior to the
Merger, Cryovac conducted its operations as one business segment, and comparable
discrete financial information for 1997 is not available.


<TABLE>
<CAPTION>

                                                                                               1999            1998
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>            <C>
Net sales
     Food and Specialty Packaging                                                           $ 1,761,130    $ 1,684,080
     Protective Packaging                                                                     1,078,506        822,676
-----------------------------------------------------------------------------------------   -----------    -----------
     Total segments                                                                         $ 2,839,636    $ 2,506,756
-----------------------------------------------------------------------------------------   -----------    -----------
Operating profit
     Food and Specialty Packaging                                                           $   289,757    $   238,613
     Protective Packaging                                                                       234,659        155,446
-----------------------------------------------------------------------------------------   -----------    -----------
     Total segments                                                                             524,416        394,059
     Restructuring and other charges, net (1)                                                      --          (87,182)
     Corporate operating expenses (including goodwill amortization of $49,404
        and $36,062 in 1999 and 1998, respectively)                                             (72,224)       (47,545)
-----------------------------------------------------------------------------------------   -----------    -----------
     Total                                                                                  $   452,192    $   259,332
-----------------------------------------------------------------------------------------   -----------    -----------
Depreciation and amortization
     Food and Specialty Packaging                                                           $   112,960    $   113,258
     Protective Packaging                                                                        59,351         45,834
-----------------------------------------------------------------------------------------   -----------    -----------
     Total segments                                                                             172,311        159,092
     Corporate (including goodwill and other amortization)                                       51,088         36,862
-----------------------------------------------------------------------------------------   -----------    -----------
     Total                                                                                  $   223,399    $   195,954
-----------------------------------------------------------------------------------------   -----------    -----------
</TABLE>


(1)  Restructuring and other charges, net in 1998 were $73,172 for Food and
     Specialty Packaging (including a net non-cash charge of $46,021) and
     $14,010 for Protective Packaging (including a net non-cash credit of
     $1,846).

<PAGE>

<TABLE>
<CAPTION>
                                                                                               1999            1998
-----------------------------------------------------------------------------------------   -----------    -----------
<S>                                                                                         <C>            <C>
Capital expenditures
     Food and Specialty Packaging                                                           $    51,307    $    48,497
     Protective Packaging                                                                        23,773         31,487
-----------------------------------------------------------------------------------------   -----------    -----------
     Total segments                                                                              75,080         79,984
     Corporate                                                                                     --            2,424
-----------------------------------------------------------------------------------------   -----------    -----------
     Total                                                                                  $    75,080    $    82,408
-----------------------------------------------------------------------------------------   -----------    -----------
Assets (2)
     Food and Specialty Packaging                                                           $ 1,291,959    $ 1,440,091
     Protective Packaging                                                                       688,627        644,539
-----------------------------------------------------------------------------------------   -----------    -----------
     Total segments                                                                           1,980,586      2,084,630
     Corporate (including goodwill, net of $1,859,958 and $1,907,736 in 1999
        and 1998, respectively)                                                               1,874,647      1,955,300
-----------------------------------------------------------------------------------------   -----------    -----------
     Total                                                                                  $ 3,855,233    $ 4,039,930
-----------------------------------------------------------------------------------------   -----------    -----------

</TABLE>


(2)  Plant and equipment facilities and other resources of the Food and
     Specialty Packaging segment are used to manufacture films (non-food
     applications) for the Protective Packaging segment. A proportionate share
     of depreciation and other costs of manufacturing are allocated to the
     Protective Packaging segment.


<TABLE>
<CAPTION>

GEOGRAPHIC INFORMATION
                                                                          1999         1998          1997
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>          <C>          <C>       
Net sales: (3)
     North America                                                    $1,617,762   $1,404,779   $  953,281
     Europe                                                              752,486      692,375      526,829
     Latin America                                                       185,418      173,750      152,047
     Asia Pacific                                                        283,970      235,852      200,954
-------------------------------------------------------------------   ----------   ----------   ----------
     Total                                                            $2,839,636   $2,506,756   $1,833,111
-------------------------------------------------------------------   ----------   ----------   ----------
                                                                         1999         1998         1997
-------------------------------------------------------------------   ----------   ----------   ----------
Total long-lived assets: (3)
     North America (4)                                                $2,569,071   $2,716,288   $  694,136
     Europe                                                              281,951      285,834      224,742
     Latin America                                                        58,638       59,292       66,180
     Asia Pacific                                                        133,855      123,144      134,415
-------------------------------------------------------------------   ----------   ----------   ----------
     Total                                                            $3,043,515   $3,184,558   $1,119,473
-------------------------------------------------------------------   ----------   ----------   ----------

</TABLE>


(3)  Net sales attributed to the geographic areas represent trade sales to
     external customers. Net sales in North America represent primarily net
     sales in the United States. No non-U.S. country has net sales in excess of
     10% of consolidated net sales or long-lived assets in excess of 10% of
     consolidated long-lived assets.

(4)  Includes goodwill, net, of $1,859,958 and $1,907,736 in 1999 and 1998,
     respectively.


<PAGE>

NOTE 4 ACQUISITIONS

In 1999, the Company made several small acquisitions. These transactions, which
were effected in exchange for cash, were accounted for as purchases and were not
material to the Company's consolidated financial statements.

In connection with the Merger in 1998, the Company issued 42,624,246 shares of
common stock at a value of $49.52 per share and incurred costs of approximately
$30,000 for a purchase price of $2,141,000 in exchange for the net assets of old
Sealed Air. The fair value of such net assets included approximately $181,000 of
property and equipment, approximately $95,800 of working capital (including cash
of $51,259), and other long-term net liabilities of approximately $71,500
resulting in principally goodwill of approximately $1,935,700 which is being
amortized over a 40-year period.

During 1998, the Company made certain other small acquisitions. These
transactions, which were effected in exchange for cash, were accounted for as
purchases and were not material to the Company's consolidated financial
statements.

In 1997, Cryovac purchased all the shares of Schurpack, Inc., a U.S.
manufacturer of flexible food packaging, for net cash consideration of $12,137.
This transaction was accounted for as a purchase and resulted in goodwill of
$5,087.

NOTE 5 INVENTORIES


<TABLE>
<CAPTION>

                                                                                December 31,
------------------------------------------------------------------------------------------------------
                                                                            1999            1998
------------------------------------------------------------------------------------------------------
<S>                                                                   <C>           <C>      
Inventories (at FIFO, which approximates current cost):
     Raw materials                                                        $ 60,596      $  63,805
     Work in process                                                        43,021         50,714
     Finished goods                                                        157,341        176,965
------------------------------------------------------------------------------------------------------
                                                                           260,958        291,484
Reduction of certain inventories to LIFO basis                             (15,024)       (16,172)
------------------------------------------------------------------------------------------------------
     Total                                                               $ 245,934       $ 275,312
------------------------------------------------------------------------------------------------------

</TABLE>


Inventories accounted for on a LIFO basis represented approximately 46% and 47%
of total inventories at December 31, 1999 and 1998, respectively.


<PAGE>

NOTE 6 PROPERTY AND EQUIPMENT


<TABLE>
<CAPTION>

                                                                                 December 31,
------------------------------------------------------------------------------------------------------
                                                                             1999            1998
------------------------------------------------------------------------------------------------------
<S>                                                                    <C>             <C>        
Land and improvements                                                  $    29,744     $    28,569
Buildings                                                                  396,716         392,020
Machinery and equipment                                                  1,364,454       1,349,716
Other property and equipment                                               115,111         121,252
Construction-in-progress                                                    40,106          54,538
------------------------------------------------------------------------------------------------------
                                                                         1,946,131       1,946,095
Accumulated depreciation and amortization                                 (922,722)       (829,513)
------------------------------------------------------------------------------------------------------
  Property and equipment, net                                          $ 1,023,409     $ 1,116,582
------------------------------------------------------------------------------------------------------

</TABLE>


Interest cost capitalized during 1999, 1998 and 1997 was $3,000, $4,994 and
$12,775, respectively.

NOTE 7 OTHER LIABILITIES


<TABLE>
<CAPTION>

                                                                               December 31,
------------------------------------------------------------------------------------------------------
                                                                           1999            1998
------------------------------------------------------------------------------------------------------
<S>                                                                       <C>           <C>     
Other current liabilities:
   Accrued salaries, wages and related costs                              $105,811      $ 98,769
   Accrued restructuring costs (Note 9)                                      5,420        28,355
   Accrued operating expenses                                               76,759        80,152
   Accrued dividends and interest                                           28,497        23,056
   Income taxes payable                                                     30,880        42,933
------------------------------------------------------------------------------------------------------
    Total                                                                 $247,367      $273,265
------------------------------------------------------------------------------------------------------

</TABLE>



<TABLE>
<CAPTION>

                                                                                December 31,
-----------------------------------------------------------------------------------------------------
                                                                             1999           1998
-----------------------------------------------------------------------------------------------------
<S>                                                                        <C>           <C>    
Other liabilities:
     Other postretirement benefits                                         $ 4,309       $ 4,916
     Non-U.S. statutory social security and pension obligations             31,625        28,888
     Other various liabilities                                              44,491        45,773
------------------------------------------------------------------------------------------------------
     Total                                                                 $80,425       $79,577
------------------------------------------------------------------------------------------------------

</TABLE>


Non-U.S. statutory social security and pension obligations primarily represent
the present value of the Company's unfunded future obligations for certain
eligible, active non-U.S. employees based on actuarial calculations.



<PAGE>

NOTE 8 INCOME TAXES

The components of earnings before income taxes were as follows:


<TABLE>
<CAPTION>

                                                                      1999              1998            1997
------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>              <C>              <C>
Domestic                                                            $233,493          $132,448        $105,694
Foreign                                                              162,160            66,499         157,978
------------------------------------------------------------------------------------------------------------------
     Total                                                          $395,653          $198,947        $263,672
------------------------------------------------------------------------------------------------------------------

</TABLE>


The components of the provision for income taxes were as follows:


<TABLE>
<CAPTION>

                                                                       1999              1998           1997
------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>               <C>             <C>    
Current tax expense:
    Federal                                                         $ 77,391          $ 54,249        $26,905
    State and local                                                   20,455            11,830          5,233
    Foreign                                                           66,988            35,839         42,821
------------------------------------------------------------------------------------------------------------------
         Total current                                               164,834           101,918         74,959
------------------------------------------------------------------------------------------------------------------
Deferred tax expense:
    Federal                                                           10,371             1,315          6,465
    State and local                                                    2,593               283          1,055
    Foreign                                                            6,394            22,424          7,461
-------------------------------------------------------------------------------------------------------------------
         Total deferred                                               19,358            24,022         14,981
-------------------------------------------------------------------------------------------------------------------
         Total provision                                            $184,192          $125,940        $89,940
-------------------------------------------------------------------------------------------------------------------

</TABLE>


Deferred tax assets (liabilities) consist of the following:


<TABLE>
<CAPTION>

                                                                                              December 31,
---------------------------------------------------------------------------------------------------------------------
                                                                                         1999               1998
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>               <C>     
Accruals not yet deductible for tax purposes                                          $ 26,077          $ 28,431
Research and development                                                                12,401            21,027
Postretirement benefits other than pensions                                              1,732             1,944
Employee benefit items                                                                  20,516            11,864
Inventories                                                                             17,617            23,777
Foreign net operating loss carryforwards and investment tax allowances                  24,946            26,490
Other                                                                                    7,792             6,200
------------------------------------------------------------------------------------------------------------------------
     Gross deferred tax assets                                                         111,081           119,733
Valuation allowance                                                                    (15,412)          (16,281)
------------------------------------------------------------------------------------------------------------------------
     Total deferred tax assets                                                          95,669           103,452
------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization                                                         (122,032)         (128,802)
Intangibles                                                                            (34,055)          (31,698)
Unremitted foreign earnings                                                            (35,750)          (32,204)
Pension                                                                                (21,216)          (18,545)
Capitalized interest                                                                   (14,487)          (12,533)
Other                                                                                  (10,945)           (9,824)
------------------------------------------------------------------------------------------------------------------------
     Total deferred tax liabilities                                                   (238,485)         (233,606)
------------------------------------------------------------------------------------------------------------------------
  Net deferred tax liabilities                                                       $(142,816)        $(130,154)
-----------------------------------------------------------------------------------------------------------------------------

</TABLE>


 
<PAGE>


The U.S. federal statutory corporate tax rate reconciles to the Company's
effective tax rate as follows:


<TABLE>
<CAPTION>

                                                                              1999              1998              1997
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>               <C>               <C>  
Statutory U.S. federal tax rate                                               35.0%             35.0%             35.0%
State income taxes, net of federal tax benefit                                 3.8               4.0               1.5
U.S. and foreign taxes on unremitted earnings                                   .9              14.1               --
Foreign taxes on foreign operations in excess of U.S. tax rates                1.8               2.6              (2.6)
Non-deductible expenses, primarily goodwill amortization                       5.1               7.6               0.2
-----------------------------------------------------------------------------------------------------------------------------
    Effective tax rate                                                        46.6%             63.3%             34.1%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


The Company has concluded that it is more likely than not that the balance of
deferred tax assets, net of the valuation allowance, of $95,669 at December 31,
1999 will be realized based upon anticipated future results. The balance of the
valuation allowance of $15,412 at December 31, 1999 is due to the uncertainty of
the realization of certain foreign deferred tax assets, primarily relating to
foreign investment tax allowances that arose during 1996.

During the third quarter of 1998, the Company began providing for income taxes
on that portion of foreign subsidiaries' accumulated earnings that management
believes are not reinvested indefinitely in their businesses. Such provision
resulted in an income tax charge of $26,000 in respect of such accumulated
earnings. Previously, the Company and Grace treated the accumulated earnings of
the Company's foreign subsidiaries as reinvested indefinitely in their
businesses, and therefore no income taxes were provided in the financial
statements with respect to future repatriation of such accumulated earnings.

As part of the Transaction Agreements, the Company entered into a Tax-Sharing
Agreement with New Grace. This Tax-Sharing Agreement provides, among other
things, that tax liabilities of Cryovac attributable to periods ended on and
prior to the Merger will be substantially the responsibility of New Grace. The
Tax-Sharing Agreement also restricts the Company and New Grace from engaging in
certain transactions prior to March 31, 2000.

At December 31, 1999, there were $44,517 of foreign net operating loss
carryforwards ($14,870 tax effected) and $33,587 of investment tax allowances
($10,076 tax effected), the majority of which originated prior to the Merger,
and have no expiration period. In accordance with the Tax-Sharing Agreement, New
Grace is entitled to receive the tax benefit of such carryforwards and
allowances, as they are realized by the Company.

NOTE 9 RESTRUCTURING COSTS AND OTHER CHARGES, NET

1998 RESTRUCTURING PROGRAM

After the Merger, the Company conducted a review of its operations in order to 
develop a combined operating plan for old Sealed Air and Cryovac. The review 
considered organization and business structures and methods, the nature and 
extent of manufacturing and business operations in each region of the world, 
including assets and resources deployed, and current business and economic 
trends. As a result of such review, during the third quarter of 1998, the 
Company announced and began implementation of a restructuring program. Charges 
to operations arising out of this program amounted to $111,074 and included 
$39,848 of employee termination costs, for approximately 750 positions or 
approximately 5% of its workforce across all functional areas, $3,441 of exit 
costs and $67,785 of asset impairments related to long-lived assets either 
held for use or held for disposition. The portion of the 1998 restructuring 
and asset impairment charge applicable to the Company's food and specialty 
packaging segment amounted to $97,064 and the portion applicable to the 
protective packaging segment amounted to $14,010. The asset impairment amount 
of $67,785 includes write-downs or write-offs of $47,083 for property, plant 
and equipment, $13,008 for goodwill, and $7,694 for certain other long-lived 
intangible assets. The $67,785 asset impairment charge includes $20,021 of 
long-lived assets, primarily machinery and equipment, that have been disposed 
and the remaining amount of $47,764 are long-lived assets held for use. The 
Company expects to incur approximately $43,289 of cash outlays to carry out 
this restructuring program, of which approximately $38,293 was paid through 
December 31, 1999. These cash outlays include primarily severance and other 
personnel related costs, costs of terminating leases and facilities and 
equipment disposition costs. As of December 31, 1999, all restructuring 
actions were substantially completed including the elimination of 744 
positions, and the remaining reserves of $4,996 are related principally to 
outstanding employee serverances and lease termination costs that are expected 
to be completed during 2000 and to a limited extent in later years.


<PAGE>

The components of the 1998 restructuring charges, as well as the spending and
other activity during 1999 and 1998, and the remaining reserve balance at
December 31, 1999 were as follows:

<TABLE>
<CAPTION>
                                                                       Employee                       Contract
                                                                        Termi-         Plant/          Termi-
                                                                        nation         Office          nation
                                                                         Costs        Closures          Costs          Total
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>             <C>             <C>        
Restructuring provision recorded in 1998                          $    39,848      $    2,291      $     1,150     $    43,289
Payments during 1998                                                  (14,486)           (729)          (1,150)        (16,365)
--------------------------------------------------------------------------------------------------------------------------------
Restructuring reserve at December 31, 1998                             25,362           1,562              --           26,924
Payments during 1999                                                  (21,392)           (536)             --          (21,928)
--------------------------------------------------------------------------------------------------------------------------------
Restructuring reserve at December 31, 1999                        $     3,970      $    1,026      $       --      $     4,996
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>


 Restructuring and other charges, net, in the accompanying 1998 consolidated
 statement of earnings include the effect of a special credit to operations
 amounting to $23,610 relating to the curtailment of certain postretirement
 benefits. See Note 11.

PRE-MERGER RESTRUCTURING PROGRAM

Grace began to implement a worldwide program in 1995 focused on streamlining
processes and reducing general and administrative expenses and factory
administration costs. In connection with this program, Grace recorded a
restructuring charge of $3,616 in 1997. This charge primarily related to
headcount reductions in Cryovac and the restructuring of Cryovac's European
operations in areas such as working capital management, manufacturing and sales.

The following table presents the rollforward of the liabilities for the
pre-Merger restructuring from December 31, 1996 to December 31, 1999:

<TABLE>
<CAPTION>

                                                                       Employee
                                                                        Termi-         Plant/
                                                                        nation         Office         Other
                                                                         Costs        Closures        Costs            Total
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>            <C>             <C>
Restructuring reserve at December 31, 1996                        $    33,031      $    5,206     $      684      $    38,921
Restructuring provisions recorded in 1997                               3,200              --            416            3,616
Payments during 1997                                                  (26,074)         (2,420)        (1,100)         (29,594)
---------------------------------------------------------------------------------------------------------------------------------
Restructuring reserve at December 31, 1997                             10,157           2,786             --           12,943
Payments during 1998                                                   (3,516)             --             --           (3,516)
Liability retained by New Grace at March 31, 1998                      (5,015)         (2,699)            --           (7,714)
Reversal of restructuring                                                (282)             --             --             (282)
---------------------------------------------------------------------------------------------------------------------------------
Restructuring reserve at December 31, 1998                              1,344              87             --            1,431
Payments during 1999                                                     (951)            (56)            --           (1,007)
---------------------------------------------------------------------------------------------------------------------------------
Restructuring reserve at December 31, 1999                        $       393      $       31     $       --      $       424
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>


Employee termination costs for this pre-Merger restructuring program at December
31, 1999 primarily represented severance pay and other benefits (including
benefits under long-term incentive programs paid over time) associated with the
elimination of approximately 400 Cryovac positions worldwide. As of December 31,
1999, all of these positions had been eliminated. The remaining reserves at
December 31, 1999 are related to outstanding employee separation costs which are
expected to be completed during 2000.

In connection with the Reorganization and the Merger, certain obligations 
related to Grace's restructuring program were retained by New Grace. As of 
March 31, 1998, the Company's liability with respect to such obligations, 
amounting to approximately $7,714 together with related deferred income 
taxes,was reversed and accounted for as an equity contribution to the Company 
from Grace.

During 1997, Grace determined that, due to certain market demand shifts and
manufacturing capacity strategies, certain property and equipment were impaired.
As a result, in 1997, Grace recorded non-cash pre-tax charges of approximately
$10,828.


<PAGE>

NOTE 10 EMPLOYEE BENEFITS AND INCENTIVE PROGRAMS

PROFIT-SHARING AND RETIREMENT SAVINGS PLANS

The Company has a non-contributory profit-sharing plan covering most of the
Company's U.S. employees. Contributions to this plan, which are made at the
discretion of the Board of Directors, may be made in cash, shares of the
Company's common stock, or in a combination of cash and shares of the Company's
common stock. The Company also maintains contributory thrift and retirement
savings plans in which most U.S. employees of the Company are eligible to
participate. These plans, certain of which were offered by old Sealed Air to
certain of its U.S. employees prior to the Merger, were adopted by the Company
subsequent to the Merger. The contributory thrift and retirement savings plans
generally provide for Company contributions based upon the amount contributed to
the plans by the participants. Company contributions to or provisions for its
profit-sharing and retirement savings plans are charged to operations and
amounted to $31,852 and $22,919 in 1999 and 1998, respectively. Included in
non-cash compensation in 1999 is $8,823 related to the shares of common stock
issued for a portion of the Company's contribution to its profit-sharing plan.

PENSION PLANS

Substantially all of the U.S. and non-U.S. employees who were employed by
Cryovac at the time of the Merger were covered by contributory or
non-contributory defined benefit plans sponsored by Grace. Benefits were
generally based on final average salary and years of service. Grace had funded
its pension plans in accordance with local laws and regulations. Plan assets
consisted primarily of publicly traded common stocks, fixed income securities
and cash equivalents.

Upon the Merger, the participation of most of the Company's U.S. employees in
defined benefit plans formerly sponsored by Grace ceased. The pension
obligations relating to Grace's principal U.S. pension plan (the "Grace Salaried
Plan") were retained by New Grace. As of March 31, 1998, the pension liability
with respect to the Grace Salaried Plan, including related deferred income
taxes, was reversed and accounted for as an equity contribution to the Company
from Grace.

Separate calculations of Cryovac's net pension cost and funded status within
Grace's U.S. pension plans were performed for prior years. Cryovac's total
pension expense for U.S. plans consisted of the following components:

<TABLE>
<CAPTION>

                                                                                  Quarter Ended             Year Ended
----------------------------------------------------------------------------------------------------------------------------
                                                                                 March 31, 1998         December 31, 1997
----------------------------------------------------------------------------------------------------------------------------

<S>                                                                               <C>                          <C> 
Service cost on benefits earned during the year                                   $1,520                       $5,800
Interest cost on benefits earned in prior years                                    3,251                       12,700
Actual return on plan assets                                                      (3,587)                     (13,900)
Deferred gain on plan assets                                                         273                         --
Amortization of net gain and prior service costs                                    (365)                        (900)
----------------------------------------------------------------------------------------------------------------------------

Net pension cost                                                                  $1,092                       $3,700
----------------------------------------------------------------------------------------------------------------------------
</TABLE>


The following significant assumptions were used in calculating the pension cost
presented above:

<TABLE>
<CAPTION>
                                                               1997
-------------------------------------------------------------------------------
<S>                                                            <C> 
Discount rate at December 31                                   7.3%
Expected long-term rate of return                              9.0%
Rate of compensation increase                                  4.5%
-------------------------------------------------------------------------------
</TABLE>


The Company maintains pension plans for certain U.S. employees, including
certain employees who are covered by collective bargaining agreements.
Subsequent to the Merger, the Company established a pension plan for U.S.
employees who were employees of Cryovac at the time of the Merger and who
participated in the Grace Salaried Plan. The new plan is intended to provide
restorative benefits to the extent required, if any, should the Company's
assumed profit-sharing plan benefits be insufficient to provide retiree benefits
at least equivalent in amount to the Grace Salaried Plan. Pension cost for all
U.S. pension plans charged to operations during 1999, and for the 1998 period
subsequent to the Merger amounted to $1,088 and $803, respectively. The balance
sheet as of December 31, 1999 and December 31, 1998 includes the following
related to such plans: an intangible asset of $1,610 and $3,613, respectively;
accumulated other comprehensive income 


<PAGE>

of $572 and $2,922, respectively; and an accrued benefit liability of $599 and 
$2,613, respectively. As of December 31, 1999, the balance sheet also includes 
a prepaid pension asset of $1,964 related to such plans. The aggregate benefit 
obligation at December 31, 1999 and 1998 amounted to $15,369 and $16,700, 
respectively, while the fair value of plan assets at such date amounted to 
$14,170 and $12,400, respectively.

In connection with the Reorganization and the Merger, the Company either assumed
or established pension plans for certain of its non-U.S. Cryovac employees.
Pension assets acquired by the Company from Grace with respect to these plans
were recorded in the accounts with a corresponding credit to shareholders'
equity, net of related deferred income taxes.

Historically, Grace did not calculate net pension cost and funded status
separately for Cryovac within its non-U.S. plans. The Cryovac employees
historically comprised approximately 66% of the total active participants in
Grace's non-U.S. plans. Net pension cost for these plans was allocated annually
to Cryovac by Grace. Total pension (income) cost allocated to Cryovac in
connection with these plans was $(242) for the first quarter of 1998 and $800
for 1997. Prior to the Merger, no portion of Grace's non-U.S. pension assets or
liabilities was allocated to Cryovac, on the basis that Cryovac's non-U.S.
employees were considered to have participated in a multi-employer pension plan
as defined in SFAS No. 87, "Employer's Accounting for Pensions."

The following tables set forth the components of net pension cost of the
non-U.S. Grace-sponsored pension plans for all Grace businesses:

<TABLE>
<CAPTION>
                                                               Quarter Ended                Year Ended
---------------------------------------------------------------------------------------------------------
                                                               March 31, 1998           December 31, 1997
---------------------------------------------------------------------------------------------------------
<S>                                                               <C>                          <C>    
Service cost on benefits earned during the year                   $2,799                       $10,000
Interest cost on benefits earned in prior years                    4,744                        19,400
Actual return on plan assets                                      (8,017)                      (51,100)
Deferred (loss) gain  on plan assets                                (221)                       20,400
Amortization of net gain (loss) and prior service costs              108                          (500)
Net curtailment and settlement loss                                  125                         3,700
---------------------------------------------------------------------------------------------------------

Net pension (gain) cost                                           $ (462)                      $ 1,900
---------------------------------------------------------------------------------------------------------
</TABLE>


The following presents the Company's funded status and pension expense for 1999
and from April 1, 1998 to December 31, 1998 under SFAS No. 132 for its non-U.S.
pension plans:

<TABLE>
<CAPTION>

Change in benefit obligation:                                                    1999                1998
------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>              <C>    
     Benefit obligation at beginning of period                                  $128,581         $    --
     Benefit obligation at April 1, 1998                                            --             119,890
     Service cost                                                                  6,984             4,165
     Interest cost                                                                 7,116             5,819
     Actuarial loss                                                                2,659             1,172
     Benefits paid                                                                (8,899)           (3,833)
     Employee contributions                                                        1,282               954
     Foreign exchange impact                                                      (4,517)              414
------------------------------------------------------------------------------------------------------------
     Benefit obligation at end of period                                        $133,206          $128,581
------------------------------------------------------------------------------------------------------------

Change in plan assets:
------------------------------------------------------------------------------------------------------------
     Fair value of plan assets at beginning of period                           $145,601         $    --
     Fair value of plan assets at April 1, 1998                                     --             151,019
     Actual return on plan assets                                                 19,712               402
     Employer contributions                                                        2,438             2,151
     Benefits paid                                                                (8,899)           (3,833)
     Employee contributions                                                        1,282               954
     Foreign exchange impact                                                         434            (5,092)
------------------------------------------------------------------------------------------------------------
     Fair value of plan assets at end of period                                 $160,568          $145,601
------------------------------------------------------------------------------------------------------------


<PAGE>

Funded status:
------------------------------------------------------------------------------------------------------------
     Plan assets in excess of benefit obligation                                $ 27,362          $ 17,020
     Unrecognized net asset                                                         (212)             (678)
     Unrecognized net prior service cost                                             706               779
     Unrecognized net actuarial loss                                               9,125            17,993
------------------------------------------------------------------------------------------------------------
     Prepaid pension cost at end of period                                      $ 36,981          $ 35,114
------------------------------------------------------------------------------------------------------------


Amount recognized in the consolidated balance sheet consists of:
------------------------------------------------------------------------------------------------------------
     Prepaid benefit cost                                                       $ 57,364          $ 55,242
     Accrued benefit liability                                                   (23,646)          (23,410)
     Intangible asset                                                                493               730
     Accumulated other comprehensive income                                        2,770             2,552
------------------------------------------------------------------------------------------------------------
     Net amount recognized                                                      $ 36,981          $ 35,114
------------------------------------------------------------------------------------------------------------
</TABLE>




<TABLE>
<CAPTION>
                                                                             For period
                                                 Year ended               April 1, 1998 to
Components of net periodic benefit cost:     December 31, 1999           December 31, 1998
-------------------------------------------------------------------------------------------
<S>                                           <C>                           <C>   
Service cost                                  $  6,984                      $  4,165
Interest cost                                    7,116                         5,819
Expected return on plan assets                 (12,169)                       (9,766)
Amortization of asset                             (487)                         (375)
Amortization of prior service cost                 106                            79
Amortization of net loss                         1,096                           234
-------------------------------------------------------------------------------------------
Net periodic pension cost                     $  2,646                      $    156
-------------------------------------------------------------------------------------------
</TABLE>


The projected benefit obligation, accumulated benefit obligation, and fair value
of plan assets for pension plans with accumulated benefit obligations in excess
of plan assets were $31,120, $25,428 and $4,920 as of December 31, 1999,
respectively, and $35,566, $28,169 and $5,031 as of December 31, 1998,
respectively.

The following significant assumptions (weighted averages for 1999 and 1998) were
used in calculating the pension cost and funded status presented above:


<TABLE>
<CAPTION>
                                          1999        1998          1997
--------------------------------------------------------------------------------

<S>                                        <C>         <C>       <C>
Discount rate at December 31               5.7%        6.3%      2.3 -  7.5%
Expected long-term rate of return          8.6%        8.9%      6.0 - 10.5%
Rate of compensation increase              3.7%        4.0%      2.0 -  5.0%
--------------------------------------------------------------------------------
</TABLE>


LONG-TERM INCENTIVE PROGRAM

Grace maintained a Long-Term Incentive Program ("LTIP") in which certain Cryovac
employees were eligible to participate prior to the Reorganization and the
Merger. In conjunction with the Reorganization and the Merger, the eligible
Cryovac employees ceased to participate in the LTIP, and LTIP liabilities
related to Cryovac employees were assumed by New Grace. As of March 31, 1998,
the Company's liability with respect to LTIP obligations retained by New Grace,
including related deferred income taxes, was reversed and accounted for as an
equity contribution to the Company from Grace. LTIP expense related to Cryovac
employees was $5,900 for 1997.


<PAGE>

NOTE 11 OTHER POSTRETIREMENT BENEFIT PLANS

Prior to the Merger, Grace maintained postretirement healthcare and life
insurance benefit plans for its U.S. employees. SFAS No. 106, "Employer's
Accounting for Postretirement Benefits Other Than Pensions", which requires the
accrual method of accounting for the future costs of postretirement health care
and life insurance benefits over the employees' years of service, was applied to
determine the cost of the benefits. Grace paid the cost of post-retirement
benefits as they were incurred.

Subsequent to the Merger, the Company changed the eligibility provisions of the
former Grace postretirement healthcare plan. The changes had the effect of
curtailing benefits for substantially all future retirees other than those for
whom New Grace retained responsibility. In addition, the plan was amended to
increase the amount of future retirees' contributions, thereby further reducing
the Company's postretirement benefit costs. During the fourth quarter of 1998,
the liability eliminated and credited to operations amounted to $23,610. At
December 31, 1999 and December 31,1998, the accrued benefit liability amounted
to $4,309 and $4,916, respectively. For the year ended December 31, 1999, there
was a net postretirement credit to operations of $607. For the nine months ended
December 31, 1998, there was a net postretirement credit of $469. These net
periodic postretirement credits, together with other remaining postretirement
healthcare plan disclosures under SFAS No. 132, are not material to the
consolidated financial statements.

Under the terms of the Transaction Agreements, New Grace retained the
postretirement benefit obligations related to all Cryovac employees who had
retired prior to the Merger and to active Cryovac employees who were eligible to
receive postretirement benefits should they have met the age and service
requirements to retire at any time on or before March 31, 1999. As of March 31,
1998, the liability retained by New Grace ($30.9 million) was reversed and
accounted for as an equity contribution to the Company from Grace, net of
related deferred income taxes.

Net periodic postretirement benefit cost consisted of the following components:

<TABLE>
<CAPTION>
                                                     Quarter Ended
                                                       March 31,       December 31,
                                                          1998             1997
---------------------------------------------------------------------------------
<S>                                                     <C>            <C> 
Service cost                                            $  200         $   800
Interest cost on accumulated benefit obligation          1,000           3,600
Amortization of prior service credit                      (400)         (1,500)
---------------------------------------------------------------------------------

Net postretirement benefit cost                         $  800         $ 2,900
---------------------------------------------------------------------------------
</TABLE>


NOTE 12 DEBT

A summary of long-term debt at December 31, 1999 and 1998 follows:

<TABLE>
<CAPTION>
                                                                       December 31,
                                                                1999                   1998
---------------------------------------------------------------------------------------------
<S>                                                             <C>                <C>     
Credit Agreement due March 2003                                 $160,978           $990,000
5.625% Euro Notes due July 2006,
     less discount of  $1,317 in 1999                            200,858               --
6.95% Senior Notes due May 2009,
     less discount of  $2,071 in 1999                            297,929               --
Other                                                             12,259             23,484
---------------------------------------------------------------------------------------------
   Total                                                         672,024          1,013,484
Less current installments                                         (6,908)           (16,958)
---------------------------------------------------------------------------------------------
   Long-term debt, less current installments                    $665,116           $996,526
---------------------------------------------------------------------------------------------
</TABLE>



<PAGE>

The Company's two principal Credit Agreements are a 5-year revolving credit
facility that expires on March 30, 2003 (included in long-term debt) and a
364-day revolving credit facility that expires on March 27, 2000 (included in
short-term borrowings). During 1999, the Company voluntarily reduced the amounts
available under the Credit Agreements to $1,125,000 in the aggregate. As of
December 31, 1999 and 1998, outstanding borrowings were $160,978 and $990,000,
respectively, under the 5-year revolving credit facility and $38,342 and
$19,933, respectively, under the 364-day revolving credit facility. The Credit
Agreements provide that the Company and certain of its subsidiaries may borrow
for various purposes, including the refinancing of existing debt, the provision
of working capital and other general corporate needs, including acquisitions and
capital expenditures. Amounts repaid under the Credit Agreements may be
reborrowed from time to time. As of December 31, 1999, facility fees were
payable on the total amounts available under the Credit Agreements and amounted
to 0.095% and 0.100% per annum under the 5-year revolving credit facility and
the 364-day revolving credit facility, respectively.

The Company's obligations under the Credit Agreements bear interest at floating
rates. The weighted average interest rate under the Credit Agreements was
approximately 6.0% and 5.8% at December 31, 1999 and 1998, respectively. The
Company had certain interest rate and currency swaps outstanding at December 31,
1999, and had certain interest rate swap agreements outstanding at December 31,
1998 related to its obligations under the Credit Agreements. These agreements
had the effect of fixing or adjusting the interest rates on a portion of such
debt. The weighted average interest rates at December 31, 1999 and 1998 did not
change significantly as a result of these derivative financial instruments.

The Credit Agreements provide for changes in borrowing margins based on 
financial criteria and the Company's senior unsecured debt ratings, and impose 
certain limitations on the operations of the Company and certain of its 
subsidiaries. The limitations include financial covenants relating to interest 
coverage and debt leverage as well as certain restrictions on the incurrence 
of additional indebtedness, the creation of liens, mergers and acquisitions, 
and certain dispositions of property and assets. The Company was in compliance 
with these requirements as of December 31, 1999.

During 1999, the Company issued euro 200,000 (approximately $205,000, at the
then current exchange rate) aggregate principal amount of 7-year 5.625% notes
(the "Euro Notes") and $300,000 aggregate principal amount of 10-year 6.95%
senior notes (the "Senior Notes"). The net proceeds of these note issuances of
approximately $500,491 in the aggregate were used to refinance outstanding
borrowings under the Credit Agreements. Accrued interest on the Euro Notes is
payable annually in cash on July 19 of each year, commencing July 19, 2000, and
accrued interest on the Senior Notes is payable semi-annually in cash on May 15
and November 15 of each year, which payments commenced on November 15, 1999. The
yields to maturity at the date of issuance for the Euro Notes and Senior Notes
were approximately 5.75% and 7.05%, respectively.

The Senior Notes and Euro Notes impose certain limitations on the operations of
the Company and certain of its subsidiaries. The limitations include
restrictions on the creation of liens, merger or consolidation of the Company
and disposition of substantially all of the Company's assets. The Senior Notes
also include restrictions on sale-leaseback transactions. The Company was in
compliance with these requirements as of December 31, 1999.

Debt at December 31, 1999 and 1998 also included $114,311 and $48,240,
respectively, of short-term borrowings by certain of the Company's non-U.S.
subsidiaries under local lines of credit and $12,259 and $23,484, respectively,
of long-term debt incurred by certain of the Company's U.S. and non-U.S.
subsidiaries.

The Company had available lines of credit under the Credit Agreements and other
credit facilities of approximately $1,300,000 and $1,800,000 at December 31,
1999 and 1998, respectively, of which approximately $1,100,000 and $700,000 were
unused at December 31, 1999 and 1998, respectively. The Company is not subject
to any material compensating balance requirements in connection with its lines
of credit.

Scheduled annual maturities of long-term debt, exclusive of debt discounts, for
the five years subsequent to December 31, 1999 are as follows: 2000 - $6,908;
2001 - $1,419; 2002 - $1,142; 2003 - $161,998; 2004 - $809 and thereafter -
$503,136.


<PAGE>

NOTE 13 FINANCIAL INSTRUMENTS

The Company is required by generally accepted accounting principles to disclose
its estimate of the fair value of material financial instruments, including
those recorded as assets or liabilities in its consolidated financial statements
and derivative financial instruments. The fair value of the Company's Senior
Notes, Euro Notes and Series A convertible preferred stock are based on quoted
market prices. The fair value estimates of the Company's various other debt
instruments were derived by evaluating the nature and terms of each instrument,
considering prevailing economic and market conditions, and examining the cost of
similar debt offered at the balance sheet date. Such estimates are subjective
and involve uncertainties and matters of significant judgment and therefore
cannot be determined with precision. Changes in assumptions could significantly
affect the Company's estimates.

All financial instruments inherently expose the holders to market risk,
including changes in currency and interest rates. The Company manages its
exposure to these market risks through its regular operating and financing
activities and when appropriate, through the use of derivative financial
instruments.

The carrying amounts of current assets and liabilities approximate fair value
due to their short-term maturities. The carrying amounts and estimated fair
values of the Company's material financial instruments at December 31, 1999 and
1998 were as follows:


<TABLE>
<CAPTION>

                                                             1999                         1998
                                                    Carrying       Fair         Carrying        Fair
                                                     Amount        Value         Amount         Value
                                                 ------------  ------------   ------------  -----------
<S>                                           <C>           <C>            <C>            <C>
Financial assets:

      Foreign exchange forward contracts         $      --     $      --      $      --     $       415
                                                 ------------  ------------   ------------  -----------
Financial liabilities:
     Debt:
          Credit Agreements                          199,320       199,320      1,009,933     1,009,933
          Derivatives                                   --             (85)          --           3,373
                                                 ------------  ------------   ------------  -----------
          Credit Agreements, net                     199,320       199,235      1,009,933     1,013,306

          Senior Notes                               297,929       273,263           --            --
          Derivatives                                   --             857           --            --
                                                 ------------  ------------   ------------  -----------
          Senior Notes, net                          297,929       274,120           --            --

          Euro Notes                                 200,858       188,545           --            --
          Derivatives                                   --             (20)          --            --
                                                 ------------  ------------   ------------  -----------
          Euro Notes, net                            200,858       188,525           --            --

          Other foreign loans                        123,462       123,853         68,375        68,961
          Derivatives                                   --             423           --           1,658
                                                 ------------  ------------   ------------  -----------
          Foreign loans, net                         123,462       124,276         68,375        70,619

          Other loans                                  3,108         2,609          3,349         3,498
                                                 ------------  ------------   ------------  -----------
          Total debt                             $   824,677   $   788,765    $ 1,081,657   $ 1,087,423
                                                 ============  ============   ============  ===========
          Series A convertible preferred stock   $ 1,761,662   $ 1,779,279    $ 1,791,093   $ 1,858,258
                                                 ============  ============   ============  ===========

</TABLE>


The Company uses derivative financial instruments to manage its exposure to
fluctuations in interest rates and foreign exchange rates. The Company does not
purchase, hold or sell derivative financial instruments for trading purposes.

The Company uses interest rate swaps to manage its exposure to fluctuations in
interest rates. At December 31, 1999, the Company was party to forward-starting
interest rate swaps with an aggregate notional amount of approximately $151,000
with various expiration dates through November 2004 compared to interest rate
swaps with an aggregate notional amount of approximately $257,000 and various
expiration dates through March 2003 at December 31, 1998. The forward-starting
interest rate swaps outstanding at December 31, 1999 have the effect of
converting a portion of the Company's fixed rate debt to variable rate debt at
U.S. denominated rates which ranged from 6.2% to 6.5% and euro denominated rates
which ranged from 3.8% to 4.4% at December 31, 1999. 


<PAGE>

Substantially all of the swaps outstanding at December 31, 1998 fixed the rate 
of interest paid on the notional amount of certain U.S. dollar denominated 
long-term debt at rates which ranged from 5.05% to 5.82% at December 31, 1998.

Interest rate collars are used to reduce the Company's exposure to fluctuations
in interest rates by limiting fluctuations in the rate of interest the Company
pays on a notional amount of debt. At December 31, 1999 and 1998, the Company
was party to interest rate collars with an aggregate notional amount of
approximately $8,000 with expiration dates through June 2001.

The Company uses interest rate and currency swaps to gain access to additional 
sources of international financing while limiting foreign exchange exposure 
and limiting or adjusting interest rate exposure by swapping borrowings in 
U.S. dollars for borrowings denominated in foreign currencies. At December 31, 
1999, the Company was party to interest rate and currency swaps with an 
aggregate notional amount of approximately $5,000 and various expiration dates 
through March 2002 compared with an aggregate notional amount of approximately 
$23,000 and various expiration dates through May 2002 at December 31, 1998.

The Company uses foreign currency forwards to fix the amount payable on
transactions denominated in foreign currencies. The Company was not party to any
material foreign currency forwards at December 31, 1999. The notional principal
amount of foreign currency forwards at December 31, 1998 was approximately
$12,800, which expired through March 1999.

The fair values of the Company's various derivative instruments, as advised by
the Company's bankers, generally reflect the estimated amounts that the Company
would receive or pay to terminate the contracts at the reporting date.

Unrealized and realized gains and losses on the Company's financial instruments
and derivatives were not material to the consolidated financial statements in
1999, 1998 or 1997.

The Company is exposed to credit losses in the event of the inability of the
counterparties to its outstanding derivative contracts to perform their
obligations, but it does not expect any counterparties to fail to perform given
their high credit ratings and financial strength. The Company believes that its
exposure to losses in conjunction with its derivative contracts would not be
material in the case of non-performance on the part of the counterparties to
such agreements.

NOTE 14 SHAREHOLDERS' EQUITY

The Company's shareholders' equity increased to $551,030 at December 31, 1999
from $437,045 at December 31, 1998, primarily as a result of the increase in net
earnings in 1999, which was partially offset by the payment of preferred stock
dividends and additional foreign currency translation adjustments.

In connection with the Reorganization and the Merger, certain assets and
liabilities of Cryovac were retained by New Grace as contemplated by the
Transaction Agreements. Accordingly, as of March 31, 1998, these assets and
liabilities were accounted for as an equity contribution to the Company from
Grace, net of related deferred income taxes. Certain other assets and
liabilities related to non-U.S. pension plans, deferred income tax liabilities
and other items arising directly from the Reorganization have been accounted for
as a contribution to, or distribution from, Cryovac. The following is a summary
of the net activity affecting the Company's equity in connection with the
Reorganization during 1998:


<TABLE>
<CAPTION>
<S>                                                              <C>
Assets transferred to the Company                                $    81,905
Liabilities retained by New Grace                                     51,671
Liabilities transferred to the Company                               (24,926)
Tax adjustment, including deferred taxes                             (64,342)
Net advances to Grace                                                (20,369)
                                                                 ------------
                                                                 $    23,939
                                                                 ============
</TABLE>


The tax adjustment includes the transfer of deferred income tax balances to the
Company relating to the underlying assets and liabilities transferred to the
Company, the elimination of certain deferred income tax assets which represent
pre-Merger accumulated net operating loss benefits not available to the Company,
and certain adjustments relating to the Tax-Sharing Agreement with New Grace.

COMMON STOCK

In connection with the Recapitalization, the Company, among other things,
recapitalized the outstanding shares of Grace 


<PAGE>

Common Stock into 40,647,815 shares of the Company's common stock and 
36,021,851 shares of Series A convertible preferred stock (convertible into 
approximately 31,900,000 shares of the Company's common stock), each with a 
par value of $0.10 per share. In the Merger, the Company issued 42,624,246 
shares of common stock to the shareholders of old Sealed Air.

The following is a summary of changes during 1999 and 1998 in shares of common
stock:


<TABLE>
<CAPTION>

                                                    1999            1998
                                                 ----------     ----------
<S>                                           <C>             <C>
Changes in common stock: 
     Number of shares, beginning of year         83,806,361           --
     Issued in Recapitalization                        --       40,647,815
     Issued in Merger                                  --       42,624,246
     Shares issued for contingent stock             246,300        522,300
     Non-cash compensation                           13,000         12,000
     Conversion of preferred stock                    5,483           --
     Exercise of stock options                       64,111           --
                                                 ----------     ----------
     Number of shares issued, end of year        84,135,255     83,806,361
                                                 ==========     ==========
Changes in common stock in treasury:
     Number of shares held, beginning of year       494,550           --
     Contingent stock forfeited                      15,400          3,550
     Purchase of shares during period               251,000        491,000
     Non-cash compensation                          (50,000)          --
     Profit sharing contribution                   (175,594)          --
                                                 ----------     ----------
     Number of shares held, end of year             535,356        494,550
                                                 ==========     ==========

</TABLE>


CONTINGENT STOCK PLAN AND DIRECTORS STOCK PLAN

The Company's contingent stock plan was adopted following the Merger and
provides for the granting to employees of awards to purchase common stock
(during the succeeding 60-day period) for less than 100% of fair market value at
the date of award. Shares issued under the contingent stock plan ("contingent
stock") are restricted as to disposition by the holders for a period of at least
three years after award. In the event of termination of employment prior to
lapse of the restriction, the shares are subject to an option to repurchase by
the Company at the price at which the shares were issued. Such restriction
lapses prior to the expiration of the vesting period if certain events occur
that affect the existence or control of the Company. The aggregate fair value of
contingent stock issued is credited to common stock and additional paid-in
capital accounts, and the unamortized portion of the compensation is deducted
from shareholders' equity. The excess of fair value over the award price of
contingent stock is charged to operations as compensation over a three-year
period. Such charges amounted to $15,679 and $10,732 in 1999 and 1998,
respectively. Shares issued under the old Sealed Air contingent stock plan that
were forfeited amounted to (1,000) shares and 2,800 shares in 1999 and 1998,
respectively.

Non-cash compensation includes shares issued to non-employee directors in the
form of awards under the Company's restricted stock plan for non-employee
directors (the "Directors Stock Plan"). The Directors Stock Plan was adopted
following the Merger and provides for annual grants of shares to non-employee
directors, and interim grants of shares to eligible directors elected at other
than an annual meeting, at an amount less than 100% of fair value at date of
grant, in lieu of cash payments for certain directors' fees. Shares issued under
this plan are restricted as to disposition by the holders as long as such
holders remain directors of the Company. The excess of fair value over the price
at which shares are issued under this plan is charged to operations at the date
of such grant. Such charges amounted to $842 and $437 in 1999 and 1998,
respectively. Also included in non-cash compensation in 1999 is $269 of
amortization expense related to the issuance of 50,000 shares of the Company's
common stock in exchange for certain non-employee consulting services. Such
shares vest ratably over a five-year period.

The Company has adopted only the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," but applies APB No. 25 and related
interpretations in accounting for these plans.

The compensation cost that has been charged against income for such plans was 
noted above. Since such compensation cost is consistent with the compensation 
cost that would have been recognized for such plans under the provisions of 
SFAS No. 123, the pro forma disclosure requirements under such statement are 
not applicable for these plans.


<PAGE>

A summary of the changes in shares available for the Contingent Stock Plan and
the Directors Stock Plan follows:


<TABLE>
<CAPTION>

                                                                          1999          1998
                                                                      -----------    -----------
<S>                                                                 <C>            <C>
Changes in Contingent Stock Plan shares:
     Number of shares available, beginning of year                     1,978,450          --
     Establishment of plan following the Merger                             --         450,450
     Increase in shares authorized during the year                          --       2,049,550
     Shares issued for new awards                                       (246,300)     (522,300)
     Contingent stock forfeited                                           16,400           750
                                                                      -----------    -----------
     Number of shares available, end of year                           1,748,550     1,978,450
                                                                      -----------    -----------
     Weighted average per share market value of stock on grant date   $    55.19    $    58.37
                                                                      ===========    ===========

Changes in Directors Stock Plan shares:
     Number of shares available, beginning of year                        88,000          --
     Establishment of plan following the Merger                             --         100,000
     Shares issued for new awards                                        (13,000)      (12,000)
                                                                      -----------    -----------
     Number of shares available, end of year                              75,000        88,000
                                                                      -----------    -----------
     Weighted average per share market value of stock on grant date   $    64.88    $    36.33
                                                                      ===========    ===========

</TABLE>


REDEEMABLE PREFERRED STOCK -  SERIES A CONVERTIBLE PREFERRED STOCK

The outstanding preferred stock is convertible at any time into approximately
0.885 share of common stock for each share of preferred stock, votes with the
common stock on an as-converted basis, pays a cash dividend, as declared by the
Board of Directors, at an annual rate of $2.00 per share, payable quarterly in
arrears, becomes redeemable at the option of the Company beginning March 31,
2001, subject to certain conditions, and is subject to mandatory redemption on
March 31, 2018 at $50 per share, plus any accrued and unpaid dividends. Because
it is subject to mandatory redemption, the convertible preferred stock is
classified outside of the shareholders' equity section of the balance sheet. At
its date of issuance, the fair value of the convertible preferred stock exceeded
its mandatory redemption amount primarily due to the common stock conversion
feature of such preferred stock. Accordingly, the carrying amount of the
convertible preferred stock is reflected in the consolidated balance sheet at
its mandatory redemption value.

The following is a summary of changes during 1999 and 1998 in shares of
preferred stock:


<TABLE>
<CAPTION>

                                                      1999           1998
                                                   -----------    ----------
<S>                                              <C>             <C>
Changes in preferred stock:
     Number of shares issued, beginning of year    36,021,851           --
     Conversion of preferred stock                     (6,206)          --
     Issued in Recapitalization                          --       36,021,851
                                                   -----------    ----------
     Number of shares issued, end of year          36,015,645     36,021,851
                                                   ===========    ==========
Changes in preferred stock in treasury:
     Number of shares held, beginning of year         200,000           --
     Purchase of shares during period                 582,400        200,000
                                                   -----------    ----------
     Number of shares held, end of year               782,400        200,000
                                                   ===========    ==========

</TABLE>



<PAGE>

STOCK OPTIONS

Prior to the Reorganization and the Merger, certain of Cryovac's employees 
participated in stock option plans maintained by Grace. Under the terms of 
those plans, options were granted at an exercise price equal to the fair 
market value of Grace Common Stock on the date of grant, became exercisable at 
the time or times determined by a committee of Grace's Board of Directors, and 
had terms of up to ten years and one month. In connection with the 
Reorganization and the Merger, the Company terminated those plans except with 
respect to outstanding options held by Cryovac employees at the time of the 
Merger. Under the Transaction Agreements, such options became options to 
purchase the Company's common stock, and the number of shares covered by and 
exercise price of such options were adjusted at the time of the Merger to 
preserve their economic value. No options have been granted to Cryovac 
employees since 1997.

Options to purchase 490,177 shares of common stock were outstanding at March 31,
1998 at an average exercise price of $37.02 per share after giving effect to the
adjustments provided for in the Transaction Agreements. Such options are
exercisable over terms extending to 2007. None of the options outstanding
following the Merger were exercised during 1998.

During 1999, 64,111 options were exercised with an aggregate exercise price of
$2,029. At December 31, 1999, 426,066 options to purchase shares of common stock
were still outstanding at an average exercise price of $37.83 per share.
Exercise prices relating to such options range from $18.95 to $42.19 per common
share.

The pro forma effect on earnings and earnings per common share of applying SFAS
No. 123 for those options granted during 1997 and 1996 to employees of Cryovac
were as follows:


<TABLE>
<CAPTION>

                                                            Year Ended December 31,
                                                    --------------------------------------
                                                         1999        1998         1997
                                                    ------------    ---------   ----------
<S>                                             <C>             <C>          <C>
Net earnings ascribed to common shareholders:
     As reported                                  $    141,607    $  2,873    $  101,688
     Pro forma (1)                                     140,867       1,673       100,288
                                                    ------------    ---------   ----------
Basic earnings per common share:
     As reported                                  $       1.69    $   0.04    $     2.54
     Pro forma (1)                                        1.69        0.02          2.51
                                                    ------------    ---------   ----------
Diluted earnings per common share:
    As reported                                   $       1.68    $   0.02    $     2.39
    Pro forma (1)                                         1.67        0.00          2.37
                                                    ============    =========   ==========

</TABLE>


(1)  These pro forma amounts calculated in accordance with SFAS No. 123 may not
     be indicative of future net earnings or earnings per common share effects.

The fair value of option grants was estimated using the Black-Scholes option
pricing model with the following historical weighted-average assumptions:


<TABLE>
<CAPTION>

                                                               1997
                                                          -------------
<S>                                                            <C>
Dividend yields                                                 1%
Expected volatility                                            29%
Risk-free interest rates                                        6%
Expected life (in years)                                        4

</TABLE>


Based on the above assumptions, the weighted-average fair value of each option 
granted was $16.00 for 1997 before giving effect to adjustments provided for 
in the Transaction Agreements.


<PAGE>

NOTE 15 SUPPLEMENTARY CASH FLOW INFORMATION


<TABLE>
<CAPTION>

                                                              1999               1998               1997
                                                         ------------       ------------      -------------
<S>                                                    <C>                 <C>             <C>
Interest payments, net of amounts capitalized            $    51,810        $    47,997       $        --
Income tax payments                                          172,980             80,069             74,959

</TABLE>


The consolidated statement of cash flows for the year ended December 31, 1998
excludes the following non-cash transactions that were accounted for as changes
in additional paid-in capital:


<TABLE>
<CAPTION>
<S>                                                                                                   <C>
          Issuance of 36,021,851 shares of Series A convertible preferred stock and 40,647,815
               shares of common stock in connection with the Reorganization and Recapitalization          $      1,801,093
          Net assets acquired in the Merger in exchange for 42,624,246 shares of common stock                    2,110,752
          Liabilities assumed by the Company, net                                                                   (7,363)
          Liabilities retained by New Grace                                                                         51,671

</TABLE>


NOTE 16 EARNINGS PER COMMON SHARE

In calculating basic and diluted earnings per common share for 1998 and 1997,
retroactive recognition has been given to the Recapitalization as if it had
occurred on January 1, 1997 in accordance with SAB No. 98. Accordingly, net
earnings were reduced in such years for preferred stock dividends (as if such
shares had been outstanding during each period) to arrive at earnings ascribed
to common shareholders. The weighted average number of outstanding common shares
used to calculate basic earnings per common share in such years was calculated
on an equivalent share basis using the weighted average number of shares of
common stock outstanding for the first quarter of 1998 and for the 1997 period,
adjusted to reflect the terms of the Recapitalization. The weighted average
number of common shares used to calculate diluted earnings per common share also
considers the exercise of dilutive stock options in each year and repurchased
preferred stock in 1999 and 1998. Except as noted in the table below, the
outstanding preferred stock is not assumed to be converted in the calculation of
diluted earnings per common share for 1999 and 1998 because the treatment of the
preferred stock as the common stock into which it is convertible would be
anti-dilutive (i.e., would increase earnings per common share) in those years.

The following table sets forth the reconciliation of the basic and diluted
earnings per common share computations for the years ended December 31, 1999,
1998 and 1997 (shares in thousands).


<TABLE>
<CAPTION>

                                                                  1999      1998 (a)   1997 (a)
                                                               ---------   ---------  ---------
<S>                                                          <C>         <C>        <C>
Basic EPS:
NUMERATOR
Net earnings                                                    $211,461   $ 73,007   $173,732
Add: Excess of book value over repurchase price of
         preferred stock                                           1,568      1,798       --
Less: Preferred stock dividends                                   71,422     53,921       --
Less: Retroactive recognition of preferred stock dividends          --       18,011     72,044
                                                               ---------   ---------  ---------
Earnings ascribed to common shareholders                        $141,607   $  2,873   $101,688
                                                               =========   =========  =========

DENOMINATOR
Weighted average common shares outstanding - basic                83,553     72,997     40,052
                                                               ---------   ---------  ---------
Basic earnings per common share                                 $   1.69   $   0.04   $   2.54
                                                               =========   =========  =========
</TABLE>



<PAGE>


<TABLE>
<CAPTION>

                                                                  1999      1998 (a)   1997 (a)
                                                               ---------   ---------  ---------
<S>                                                          <C>         <C>        <C>
Diluted EPS:
NUMERATOR
Earnings ascribed to common shareholders                        $141,607   $  2,873   $101,688
Add:  Dividends associated with outstanding preferred stock         --         --       72,044
Add:  Dividends associated with preferred stock repurchased          916        316       --
Less: Excess of book value over repurchase of preferred stock      1,568      1,798       --
                                                               ---------   ---------  ---------
Earnings ascribed to common shareholders-diluted                $140,955   $  1,391   $173,732
                                                               =========   =========  =========

DENOMINATOR
-----------
Weighted average common shares outstanding - basic                83,553     72,997     40,052
Effect of assumed exercise of options                                131        118        917
Effect of assumed conversion of preferred stock                     --         --       31,864
Weighted average of preferred stock purchased                        444        158       --
                                                               ---------   ---------  ---------
Weighted average common shares outstanding - diluted              84,128     73,273     72,833
                                                               ---------   ---------  ---------
Diluted earnings per common share                               $   1.68   $   0.02   $   2.39
                                                               =========   =========  =========

</TABLE>


(a)  Such earnings per common share amounts are not necessarily indicative of
     the results that would have occurred had Cryovac been a stand-alone company
     prior to the Reorganization, the Recapitalization and the Merger.

NOTE 17 CERTAIN TRANSACTIONS WITH GRACE

CASH

Prior to the Merger, Cryovac used Grace's centralized cash management services.
Under such service arrangements, excess domestic cash was invested and
disbursements were funded centrally by Grace on behalf of Cryovac.

SHARED SERVICES AND FACILITIES

Prior to the Merger, Grace allocated a portion of its domestic and overseas
regional corporate expenses to Cryovac. These expenses reflected corporate
overhead; benefit administration; risk management/insurance administration; tax
and treasury/cash management services; environmental services; litigation
administration services; general legal services, including intellectual
property; and other support and executive functions. Allocations and charges
were based on either a direct cost pass-through or a percentage allocation for
services provided, based on factors such as net sales, management effort or
headcount.

Domestic corporate expenses of Grace allocated to Cryovac in accordance with SAB
No. 55 totaled $18,044 and $28,213 for 1998 and 1997, respectively, and were
included in marketing, administrative and development expenses.

Grace management believed that the basis used for allocating corporate services
was reasonable and that the terms of these transactions would not materially
differ from those among unrelated parties.

The statements of earnings for periods prior to the Merger also included
allocations of costs for general and administrative services and maintenance
services for facilities that Cryovac shared with other Grace businesses as well
as data processing services provided by Grace's European central data processing
facility. The allocated costs and expenses related to general and administrative
functions, maintenance, data processing and other facility support functions
were estimated to be approximately $14,000 for the 1998 period and $55,802 for
1997. Of these amounts, $6,181 was included in cost of sales and $49,621 was
included in marketing, administrative and development expenses in 1997. The cost
allocations for these services were determined based on methods that Grace
management considered to be reasonable.

Prior to the Merger, Grace also charged Cryovac for its share of domestic
workers' compensation, automobile and other general business liability insurance
premiums and claims, which were all handled by Grace on a corporate basis. These
charges were based on Cryovac's actual and expected future experience, including
annual payroll expense, and were not significant to Cryovac's results of
operations.

ALLOCATION OF LONG-TERM INCENTIVE PROGRAM EXPENSE

In accordance with SAB No. 55, the financial statements for 1997 reflect an
allocation of $23,710 of LTIP expense related to Grace corporate employees who
performed services on behalf of Cryovac.



<PAGE>


NOTE 18 COMMITMENTS AND CONTINGENCIES

The Company is obligated under the terms of various leases covering many of the
facilities that it occupies. The Company accounts for substantially all of its
leases as operating leases. Net rental expense was $24,667, $20,873, and $9,588
for 1999, 1998 and 1997, respectively. Estimated future minimum annual rental
commitments under non-cancelable real property leases are as follows: 2000 -
$21,604; 2001 - $16,483; 2002 - $10,953; 2003 - $7,383; 2004 - $5,691 and
subsequent years - $13,824.

The Company's worldwide operations are subject to environmental laws and
regulations which, among other things, impose limitations on the discharge of
pollutants into the air and water and establish standards for the treatment,
storage and disposal of solid and hazardous wastes. The Company reviews the
effects of environmental laws and regulations on its operations and believes
that it is in substantial compliance with all material applicable environmental
laws and regulations.

At December 31, 1999, the Company was a party to, or otherwise involved in,
several federal and state government environmental proceedings and private
environmental claims for the cleanup of Superfund or other sites. The Company
may have potential liability for investigation and clean up of certain of such
sites. At most of such sites, numerous companies, including either the Company
or one of its predecessor companies, have been identified as potentially
responsible parties ("PRPs") under Superfund or related laws. It is the
Company's policy to provide for environmental cleanup costs if it is probable
that a liability has been incurred and if an amount which is within the
estimated range of the costs associated with various alternative remediation
strategies is reasonably estimable, without giving effect to any possible future
insurance proceeds. As assessments and cleanups proceed, these liabilities are
reviewed periodically and adjusted as additional information becomes available.
At December 31, 1999 and 1998, such environmental related provisions were not
material. While it is often difficult to estimate potential liabilities and the
future impact of environmental matters, based upon the information currently
available to the Company and its experience in dealing with such matters, the
Company believes that its potential liability with respect to such sites is not
material to the Company's consolidated financial position. Environmental
liabilities may be paid over an extended period, and the timing of such payments
cannot be predicted with certainty.

The Company is also involved in various legal actions incidental to its
business. Company management believes, after consulting with counsel, that the
disposition of its litigation and other legal proceedings and matters, including
environmental matters, will not have a material effect on the Company's
consolidated financial position.

In connection with the Reorganization, certain environmental liabilities of
Cryovac were retained by or assumed by New Grace. As of March 31, 1998, the
Company's liability with respect to such environmental obligations retained by
New Grace, including related deferred income taxes, was reversed and accounted
for as an equity contribution to the Company from Grace.

CONTINGENT LIABILITIES INDEMNIFIED BY NEW GRACE

Pursuant to the Transaction Agreements, New Grace agreed to indemnify the
Company against all liabilities of Grace, whether accruing or occurring before
or after the Merger, other than liabilities arising from or relating to
Cryovac's operations. New Grace also agreed to retain certain liabilities of
Cryovac and to indemnify the Company against such liabilities. The Company may
remain contingently liable with respect to certain of such liabilities if New
Grace fails to fulfill its indemnity obligations to the Company. Based upon
currently available information, the Company believes that future costs related
to such indemnified liabilities will not have a material adverse effect on the
Company's results of operations or consolidated financial position.

GUARANTEE OF NEW GRACE OUTSTANDING PUBLIC DEBT

The Company is the guarantor of certain outstanding public debt that was assumed
by New Grace pursuant to the Transaction Agreements. At December 31, 1999 and
1998, approximately $32,000 of such debt was outstanding. New Grace has
indemnified the Company against any liability arising under such guarantee
pursuant to the Transaction Agreements.


TRANSACTION AGREEMENTS

Pursuant to the Transaction Agreements, final determinations and accountings are
necessary with respect to matters pertaining to the Reorganization and the
Merger. The Company believes that the final outcome of such matters will not
have a material effect on its consolidated financial position.


<PAGE>

NOTE 19 SELECTED PRO FORMA STATEMENT OF EARNINGS INFORMATION (UNAUDITED)

The following table presents selected unaudited pro forma statement of earnings
information for the years ended December 31, 1998 and 1997 that has been
prepared as if the Reorganization, the Recapitalization and the Merger had
occurred on January 1, 1997. Such information reflects pro forma adjustments
made in combining the historical results of old Sealed Air and Cryovac as a
result of such transactions for the years presented. Such amounts include, among
other things, incremental goodwill amortization of approximately $10,300 and
$41,200 and incremental interest expense of approximately $20,400 and $81,600 in
the first quarter of 1998 and full year 1997, respectively. Such amounts exclude
a non-cash inventory charge of approximately $8 million recorded in the second
quarter of 1998 resulting from the turnover of certain of the Company's
inventories previously stepped-up to fair value in connection with the Merger.
This pro forma information is not intended to represent what the Company's
actual results of operations would have been for such years, if such
transactions had occurred on January 1, 1997.


<TABLE>
<CAPTION>

                                                                                       Year-Ended December 31,
                                                                             1999                 1998                 1997
(Amounts in thousands, except for per share data)                          Reported             Pro Forma             Pro Forma
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                 <C>                  <C>
Net sales by segment:
     Food and Specialty Packaging                                  $        1,761,130     $    1,709,428       $    1,691,978
     Protective Packaging                                                   1,078,506          1,010,080              982,686
--------------------------------------------------------------------------------------------------------------------------------
Net sales                                                                   2,839,636          2,719,508            2,674,664
Cost of sales                                                               1,810,914          1,762,957            1,719,246
--------------------------------------------------------------------------------------------------------------------------------
     Gross profit                                                           1,028,722            956,551              955,418
Marketing, administrative and development expenses                            527,126            516,269              495,685
Goodwill amortization                                                          49,404             47,893               48,005
Restructuring and other charges, net                                               --             87,182               14,444
--------------------------------------------------------------------------------------------------------------------------------
     Operating profit                                                         452,192            305,207              397,284
Other expense, net                                                            (56,539)           (82,141)             (89,390)
--------------------------------------------------------------------------------------------------------------------------------
     Earnings before income taxes                                              395,653           223,066              307,894
Income taxes                                                                   184,192           141,574              123,359
--------------------------------------------------------------------------------------------------------------------------------
     Net earnings                                                  $           211,461    $       81,492       $      184,535
--------------------------------------------------------------------------------------------------------------------------------
Less: Preferred stock dividends                                                 71,422            71,932               72,044
Add:  Excess of book value over repurchase price of
      preferred stock                                                            1,568             1,798                   --
--------------------------------------------------------------------------------------------------------------------------------
Net earnings ascribed to common shareholders                       $           141,607    $       11,358       $      112,491
--------------------------------------------------------------------------------------------------------------------------------
Earnings per common share (1)
      Basic                                                        $              1.69    $         0.14       $         1.35
      Diluted                                                      $              1.68    $         0.12       $         1.35
--------------------------------------------------------------------------------------------------------------------------------
Weighted average number of common shares outstanding:
      Basic                                                                     83,553            83,478               83,272
      Diluted                                                                   84,128            83,754               83,381
--------------------------------------------------------------------------------------------------------------------------------


</TABLE>



(1)  For purposes of calculating basic and diluted earnings per common share,
     net earnings for 1998 and 1997 have been reduced by the dividends ($18,011
     in 1998 for the first quarter and $72,044 in 1997) that would have been
     payable on the Company's Series A convertible preferred stock (as if such
     shares had been outstanding during such periods) to arrive at earnings
     ascribed to common shareholders. The weighted average number of outstanding
     common shares used to calculate basic earnings per common share is
     calculated on an equivalent share basis using the weighted average number
     of shares of common stock outstanding for the first quarter of 1998 and for
     1997, adjusted to reflect the terms of the Recapitalizaiton. The assumed
     conversion of the convertible preferred stock is not considered in the
     calculation of diluted earnings per common share in either 1998 or 1997 as
     the effect would be anti-dilutive (i.e., would increase earnings per common
     share) in each year.



<PAGE>

NOTE 20 INTERIM FINANCIAL INFORMATION (UNAUDITED)


<TABLE>
<CAPTION>

                                                               First             Second            Third            Fourth
(Amounts in thousands, except for per share data)             Quarter           Quarter           Quarter          Quarter
--------------------------------------------------------------------------------------------------------------------------------
1999
<S>                                                    <C>               <C>               <C>              <C>           
   Net Sales                                           $     678,937     $     695,121     $     714,755    $      750,823
   Gross profit                                              245,698           253,580           257,204           272,240
   Net Earnings                                               46,614            51,192            53,712            59,943
   Preferred Stock dividends                                  17,910            17,879            17,879            17,754
   Earnings per common share - basic (1)                        0.34              0.40              0.43              0.52
   Earnings per common share - diluted (1)                      0.34              0.40              0.43              0.50

1998

   Net sales                                            $    431,035     $     670,005     $     684,302  $        721,414
   Gross profit                                              140,122           227,060           241,053           260,501
   Net earnings(loss)                                         27,052            35,565           (54,103)           64,493
   Preferred stock dividends                                      --            18,011            17,999            17,911
   Earnings(loss) per common share - basic (2)                  0.22(3)           0.21             (0.85)             0.57
   Earnings(loss) per common share - diluted (2)                0.22(3)           0.21             (0.85)             0.56
                                                          
--------------------------------------------------------------------------------------------------------------------------------

</TABLE>



(1)  The sum of the four quarters earnings per common share may not equal the
     amounts reported for the full year since each period is calculated
     separately.

(2)  Because of the effects of the Recapitalization and the Merger, the sum of
     the four quarters earnings per common share amounts do not necessarily
     equal the amounts reported for the full year.

(3)  Such earnings per common share are not necessarily indicative of the
     results that would have occurred had Cryovac been a stand-alone company
     prior to the Reorganization, Recapitalization and the Merger.



<PAGE>

KPMG

R
EPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders
of Sealed Air Corporation

We have audited the accompanying consolidated balance sheets of Sealed Air
Corporation and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of earnings, equity, comprehensive income, and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sealed Air
Corporation and subsidiaries as of December 31, 1999 and 1998, and the results
of their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.




/s/ KPMG LLP

KPMG LLP
Short Hills, New Jersey
January 25, 2000




<PAGE>

PRICEWATERHOUSECOOPERS


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

February 23, 1998



To the Board of Directors and Shareholders of
Sealed Air Corporation

We have audited the accompanying consolidated statements of earnings, of
comprehensive income, of equity and of cash flows of Sealed Air Corporation (the
"Company") for the year ended December 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit. We have not audited
the consolidated financial statements of Sealed Air Corporation for any period
subsequent to December 31,1997.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statements. We believe that our audit provides a reasonable basis for our
opinion.

The accompanying financial statements were prepared on the basis of presentation
described in Note 1, and are not intended to be a complete presentation of the
consolidated assets, liabilities, revenues and expenses of the Company. Also as
described in Note 1, the Company completed a reorganization, recapitalization
and merger on March 31, 1998. The accompanying financial statements for the year
ended December 31, 1997 do not reflect the effects of such transactions.

As disclosed in Note 17, the Company has engaged in various transactions and
relationships with affiliated entities. The terms of these transactions may
differ from those that would result from transactions among unrelated parties.

In our opinion, the accompanying financial statements audited by us present
fairly, in all material respects, the earnings and cash flows of the Company for
the year ended December 31, 1997 pursuant to the basis of presentation described
in Note 1, in conformity with generally accepted accounting principles.





/s/ PricewaterhouseCoopers LLP


PricewaterhouseCoopers LLP
Fort Lauderdale, Florida



<PAGE>


Capital Stock Information

In connection with the Cryovac merger, the Company issued its Common Stock, par
value $0.10 per share, on March 31, 1998. The Company's Common Stock is listed
on the New York Stock Exchange (trading symbol: SEE). The adjacent table sets
forth the high and low sales prices of the Common Stock for each quarter
beginning April 1, 1998 through December 31, 1999. The adjacent table also sets
forth the high and low sales prices of the Common Stock of old Sealed Air before
the Cryovac transaction for the quarter ended March 31, 1998. No dividends were
paid on Sealed Air's Common Stock in 1999 and 1998. The Company does not
currently intend to begin paying dividends on its Common Stock. As of March 3,
2000, there were approximately 11,188 holders of record of the Company's Common
Stock.

In connection with the Cryovac merger, the Company issued its Series A
Convertible Preferred Stock on March 31, 1998, which is also listed on the New
York Stock Exchange (trading symbol: SEE PrA). The adjacent table sets forth the
high and low sales prices for Sealed Air's Preferred Stock for each quarter
beginning April 1, 1998 through December 31, 1999. Quarterly dividends of $0.50
per share payable as declared on the Preferred Stock commenced on July 1, 1998.
As of March 3, 2000, there were approximately 9,607 holders of record of the
Preferred Stock.



<TABLE>
<CAPTION>

COMMON STOCK

1998                                        High                 Low
<S>                                         <C>                  <C>  
First Quarter                               $  70                $  55-3/16
Second Quarter                              $  66-1/2            $  36-1/16
Third Quarter                               $  44-3/8            $  31-9/16
Fourth Quarter                              $  51-13/16          $  27-3/8
-------------------------------------------------------------------------------
1999                                           High                 Low
First Quarter                               $  56-3/4            $  46-3/4
Second Quarter                              $  68-7/16           $  48-2/16
Third Quarter                               $  65-7/8            $  51-2/16
Fourth Quarter                              $  58-2/16           $  44-9/16
-------------------------------------------------------------------------------
PREFERRED STOCK

1998                                           High                 Low

Second Quarter                              $  63-1/4            $  41-1/2
Third Quarter                               $  46-5/8            $  35-7/8
Fourth Quarter                              $  51-7/8            $  31-7/16
-------------------------------------------------------------------------------
1999                                           High                 Low

First Quarter                               $  55                $  48
Second Quarter                              $  65                $  48-3/4
Third Quarter                               $  62-3/4            $  50
Fourth Quarter                              $  56                $  46-11/16

-------------------------------------------------------------------------------

</TABLE>




<PAGE>
                                   EXHIBIT 21
                          SUBSIDIARIES OF THE COMPANY
 
    The following table sets forth the name and state or other jurisdiction of
incorporation of the Company's subsidiaries. Except as otherwise indicated, each
subsidiary is wholly-owned, directly or indirectly, by the Company and does
business under its corporate name.
 

<TABLE>
<S>                                             <C>
Anpak Limited                                   England
Creative Packaging Corporation*                 Japan
Cryovac AG                                      Switzerland
Cryovac AS                                      Norway
Cryovac Australia Pty. Ltd.                     Australia
Cryovac Belgium N.V.                            Belgium
Cryovac Brazil Ltda.                            Brazil
Cryovac B.V.                                    Netherlands
Cryovac Chile Holdings, LLC.                    Delaware
Cryovac Chile Industrial Ltda.                  Chile
Cryovac China Holdings I, Inc.                  China
Cryovac Embalagens Ltda.                        Brazil
Cryovac Far East Holdings, LLC.                 Delaware
Cryovac (Gaoming) Co., Ltd.**                   China
Cryovac Holdings, LLC                           Delaware
Cryovac Holdings, S.A. de C.V.                  Mexico
Cryovac, Inc.                                   Delaware
Cryovac India Private Limited                   India
Cryovac International Holdings, Inc.            Delaware
Cryovac Japan K.K.                              Japan
Cryovac Korea Inc.                              Korea
Cryovac (Malaysia) Sdn Bhd                      Malaysia
Cryovac Multiflex GmbH                          Germany
Cryovac Oy                                      Finland
Cryovac Packaging Portugal Embalagens,          Portugal
  Lda.
Cryovac (Philippines) Inc.                      Philippines
Cryovac Poland Holdings, Inc.                   Delaware
Cryovac Poland Sp.
 z.o.o.                       Poland
Cryovac Rigid Packaging Pty. Ltd.               Australia
Cryovac (Singapore) Pte. Ltd.                   Singapore
Cryovac S.p.A.                                  Italy
Cryovac Sweden AB                               Sweden
Cryovac Systems Hong Kong Limited               Hong Kong
Cryovac (Thailand) Limited                      Thailand
Cryovac Verpackungen GmbH                       Germany
Limited Liability Company "Sealed Air"          Russia
Omni Supply Inc.**                              North Carolina
PolyMask Corporation*                           Delaware
Polypride, Inc.                                 Delaware
Producembal-Producao de Embalagens, Lda.        Portugal
Sealed Air Africa (Pty) Limited                 South Africa
Sealed Air Argentina S.A.                       Argentina
Sealed Air Australia Pty. Limited               Queensland, Australia
Sealed Air Brasil Ltda.                         Brazil
Sealed Air B.V.                                 Netherlands
Sealed Air (Canada) Inc.                        Canada
Sealed Air Central America, S.A.                Guatemala
</TABLE>

 

<PAGE>

<TABLE>
<S>                                             <C>
Sealed Air Colombia Ltda.                       Colombia
Sealed Air Corporation (US)                     Delaware
Sealed Air Denmark A/S                          Denmark
Sealed Air Embalagens Ltda.**                   Brazil
Sealed Air Finance B.V.                         Netherlands
Sealed Air Finance II B.V.                      Netherlands
Sealed Air (Gaoming) Packaging Co., Ltd.        China
Sealed Air GmbH                                 Germany
Sealed Air Hellas S.A.                          Greece
Sealed Air Holdings (New Zealand) Limited       New Zealand
Sealed Air (Hong Kong) Limited                  Hong Kong
Sealed Air Hungary Ltd.                         Hungary
Sealed Air International LLC                    England
Sealed Air (Israel) Ltd.***                     Israel
Sealed Air Japan Limited                        Nevada
Sealed Air (Korea) Limited                      Korea
Sealed Air Limited                              England
Sealed Air Limited                              Ireland
Sealed Air LLC                                  Delaware
Sealed Air (Malaysia) Sdn. Bhd.                 Malaysia
Sealed Air de Mexico, S.A. de C.V.              Mexico
Sealed Air Norge AS                             Norway
Sealed Air N.V.                                 Belgium
Sealed Air (NZ) Limited                         New Zealand
Sealed Air Oy                                   Finland
Sealed Air Packaging Holdings (Israel)          Israel
  Ltd.
Sealed Air Packaging S.A.**                     France
Sealed Air Packaging, S.A.                      Spain
Sealed Air Packaging (Shanghai) Co., Ltd.       China
Sealed Air Peru S.R.L.                          Peru
Sealed Air S.L.                                 Spain
Sealed Air (Philippines) Inc.                   Philippines
Sealed Air Polska Sp. z.o.o.                    Poland
Sealed Air S.A.                                 France
Sealed Air (Singapore) Pte. Limited             Singapore
Sealed Air Packaging S.p.A.                     Italy
Sealed Air s.r.o                                Czech Republic
Sealed Air Svenska AB                           Sweden
Sealed Air Taiwan Limited                       Taiwan
Sealed Air Thailand Limited                     Thailand
Sealed Air Trucking, Inc.                       Delaware
Sealed Air Uruguay S.A.                         Uruguay
Sealed Air de Venezuela, S.A.                   Venezuela
Soinpar Industrial Ltda.                        Brazil
Tart spol s.r.o.***                             Czech Republic
ZAO Sealed Air Kaustik**                        Russia
</TABLE>

 
------------------------
 
*   The Company directly or indirectly owns 50% of the outstanding shares.
 
**  The Company directly or indirectly owns a majority of the outstanding
    shares.
 
*** The Company directly or indirectly owns less than 50% of the outstanding
    shares.
 
    Certain subsidiaries are omitted from the above table. Such subsidiaries, if
considered in the aggregate as a single subsidiary, would not constitute a
significant subsidiary as of December 31, 1999.



<PAGE>

                                                                    Exhibit 23.1

                          INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Sealed Air Corporation:

We consent to incorporation by reference in Registration Statements on Form S-8
(Nos. 333-50603, 333-59197, and 333-59195) of Sealed Air Corporation of our
reports dated January 25, 2000, relating to the consolidated balance sheets of
Sealed Air Corporation and subsidiaries as of December 31, 1999 and 1998, and
the related consolidated statements of earnings, equity, comprehensive income,
and cash flows for the years then ended, and the related schedule, which reports
appear in or are incorporated by reference in this Annual Report on Form 10-K.


/s/KPMG LLP
KPMG LLP



Short Hills, New Jersey
MARCH 27, 2000





<PAGE>

                                                                    Exhibit 23.2

               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the incorporation by reference in Registration Statements
on Form S-8 (Nos. 333-50603, 333-59197, and 333-59195) of Sealed Air Corporation
of our report dated February 23, 1998 contained in the Annual Report to
Shareholders which is incorporated in this Annual Report on Form 10-K. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedule, contained in this Annual Report on Form 10-K.

/s/PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP



Ft. Lauderdale, Florida
MARCH 27, 2000





<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONSOLIDATED
STATEMENT OF EARNINGS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999 AND THE
CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001012100
<NAME> SEALED AIR CORPORATION
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                      13,672,000
<SECURITIES>                                         0
<RECEIVABLES>                              491,442,000
<ALLOWANCES>                                21,396,000
<INVENTORY>                                245,934,000
<CURRENT-ASSETS>                           803,224,000
<PP&E>                                   1,946,131,000
<DEPRECIATION>                             922,722,000
<TOTAL-ASSETS>                           3,855,233,000
<CURRENT-LIABILITIES>                      582,094,000
<BONDS>                                    665,116,000
<PREFERRED-MANDATORY>                    1,761,662,000
<PREFERRED>                                          0
<COMMON>                                     8,413,000
<OTHER-SE>                                 542,617,000
<TOTAL-LIABILITY-AND-EQUITY>             3,855,233,000
<SALES>                                  2,839,636,000
<TOTAL-REVENUES>                         2,839,636,000
<CGS>                                    1,810,914,000
<TOTAL-COSTS>                            1,810,914,000
<OTHER-EXPENSES>                           569,868,000
<LOSS-PROVISION>                             6,662,000
<INTEREST-EXPENSE>                          58,126,000
<INCOME-PRETAX>                            395,653,000
<INCOME-TAX>                               184,192,000
<INCOME-CONTINUING>                        211,461,000
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                               211,461,000
<EPS-BASIC>                                       1.69
<EPS-DILUTED>                                     1.68
        

</TABLE>