W. R. Grace & Co. (NYSE: GRA) announced fourth quarter net
income of $29.7 million, or $0.38 per diluted share, compared with a net
loss for the prior-year quarter of $184.3 million, or $2.44 per diluted
share. Both quarters included charges related to the company’s
asbestos-related liability and bankruptcy proceedings. Adjusted EPS for
the 2013 fourth quarter was $1.09 per diluted share compared with $1.21
per diluted share for the prior-year quarter.
Net income for the year ended December 31, 2013, was $256.1 million, or
$3.30 per diluted share, compared with $40.0 million, or $0.52 per
diluted share for the prior year. Adjusted EPS for the year was $4.39
per diluted share compared with $4.53 per diluted share for the prior
year.
“Earnings finished as expected with strong results from Materials
Technologies and Construction Products,” said Fred Festa, Grace's
Chairman and Chief Executive Officer. “Catalysts Technologies increased
sales and earnings sequentially and completed the strategically
important UNIPOL acquisition. We settled the remaining appeal in our
Chapter 11 proceedings, secured our exit financing, and emerged from
bankruptcy on February 3. I’m excited about the improved strategic
position of our company and looking forward to solid earnings growth in
2014.”
Fourth Quarter Results
Fourth quarter sales of $776.7 million declined 2.6 percent compared
with the prior-year quarter as acquisition growth (+1.3 percent) and
improved base pricing (+0.4 percent) were offset by lower sales volumes
(-2.5 percent), lower rare earth surcharges (-1.7 percent) and
unfavorable currency translation (-0.1 percent).
Adjusted EBIT of $138.6 million decreased 3.7 percent compared with
$143.9 million in the prior-year quarter. Lower Catalysts Technologies
segment operating income more than offset higher segment operating
income in Materials Technologies and Construction Products and lower
corporate costs. Adjusted EBIT margin decreased to 17.8 percent compared
with 18.0 percent in the prior-year quarter. The UNIPOL® Polypropylene
Process Technology Licensing and Catalysts Business ("UNIPOL") acquired
in December broke even as expected before acquisition costs of
approximately $8 million or approximately 1 percent of sales.
Adjusted EBIT Return On Invested Capital was 27.4 percent on a trailing
four-quarter basis, compared with 38.9 percent for the prior year. The
decrease in Adjusted EBIT Return On Invested Capital was due to lower
segment operating income in Catalysts Technologies and higher invested
capital related to the UNIPOL acquisition.
Full Year Results
Sales for the full year ended December 31, 2013, decreased 3.0 percent
to $3.06 billion as lower rare earth surcharges (-3.1 percent), lower
sales volumes (-0.9 percent) and unfavorable currency translation (-0.8
percent) partially were offset by acquisition growth (+1.1 percent) and
higher base pricing (+0.7 percent).
Adjusted EBIT was $550.8 million, a decrease of 1.3 percent compared
with the prior year. The decline in Adjusted EBIT largely was due to
lower sales in Catalysts Technologies and unfavorable currency
translation. Adjusted EBIT margin of 18.0 percent increased 30 basis
points compared with the prior year.
Catalysts Technologies
Sales down 10.8 percent; segment operating income down 22.9 percent
Fourth quarter sales for the Catalysts Technologies operating segment,
which includes specialty catalysts, additives and technologies for
refinery, plastics and other chemical process applications, were $292.9
million, a decrease of 10.8 percent compared with the prior-year
quarter. The decrease was due to lower sales volumes (-8.9 percent),
lower rare earth surcharges (-4.1 percent) and lower base pricing (-2.0
percent), which more than offset acquisition growth (+1.6 percent) and
favorable currency translation (+2.6 percent).
Sales volumes of FCC catalysts decreased 8.4 percent compared with the
prior-year quarter, and increased 6.2 percent sequentially resulting in
part from sales of new products designed specifically for shale oil
feedstocks, heavy resid feedstocks and propylene maximization.
On December 2, 2013, the company acquired UNIPOL. This acquisition is
complementary to Grace’s specialty catalysts business and significantly
enhances the company’s position as a leading supplier of polyolefin
catalysts and technologies. Integration activities are on track and the
company expects complete integration in the 2014 second quarter.
Sales of specialty catalysts, including the acquired business, increased
2.4 percent compared with the prior year.
Segment gross margin was 38.8 percent compared with 41.0 percent in the
prior-year quarter. The decrease in segment gross margin primarily was
due to lower pricing in FCC catalysts and lower operating leverage due
to the decline in FCC catalyst sales.
Segment operating income was $79.1 million compared with $102.6 million
in the prior-year quarter, a 22.9 percent decrease primarily due to
lower sales and gross margin and approximately $8 million in UNIPOL
acquisition costs. Segment operating margin was 27.0 percent, a decrease
of 430 basis points compared with the prior-year quarter.
Materials Technologies
Sales up 2.2 percent; segment operating income up 15.6 percent
Fourth quarter sales for the Materials Technologies operating segment,
which includes packaging technologies and engineered materials for
consumer, industrial, coatings and pharmaceutical applications, were
$214.8 million compared with $210.1 million in the prior-year quarter.
The 2.2 percent increase was due to improved pricing (+1.8 percent) and
higher sales volumes (+1.2 percent) partially offset by unfavorable
currency translation (-0.8 percent).
Sales of silica-based engineered materials increased 5.2 percent
compared with the prior-year quarter. Sales of packaging technologies
declined 1.6 percent as organic growth of approximately 2 percent was
more than offset by unfavorable currency translation of approximately 4
percent.
Segment gross margin increased to 35.0 percent compared with 34.3
percent in the prior-year quarter, largely due to improved pricing.
Segment operating income increased 15.6 percent to $45.9 million due to
higher sales and gross margin and reduced operating expenses compared
with the prior-year quarter. Segment operating margin was 21.4 percent,
an increase of 250 basis points compared with the prior-year quarter.
Construction Products
Sales up 3.7 percent; segment operating income up 16.9 percent
Fourth quarter sales for the Construction Products operating segment,
which includes specialty construction chemicals and specialty building
materials used in commercial, infrastructure and residential
construction, were $269.0 million, an increase of 3.7 percent compared
with the prior-year quarter. Higher sales volumes (+2.4 percent),
improved pricing (+2.3 percent) and acquisition growth (+2.0 percent)
partially were offset by unfavorable currency translation (-3.0 percent).
Sales of Construction Products in developed regions, which represented
approximately 65 percent of sales, increased 6.5 percent compared with
the prior-year quarter due to a 6.2 percent increase in North America, a
3.7 percent increase in Western Europe and an 11.0 percent increase in
developed Asia and Australia. Sales in emerging regions declined
approximately 1.0 percent as weaker sales in the Middle East and Latin
America offset higher sales in Eastern Europe, China and developing Asia.
Segment gross margin of 35.2 percent decreased 90 basis points compared
with the prior-year quarter as higher raw material costs, less favorable
product mix and higher manufacturing costs offset improved pricing.
Segment operating income of $38.0 million increased 16.9 percent
compared with the prior-year quarter primarily due to higher sales and
lower operating expenses. Segment operating margin improved to 14.1
percent, an increase of 160 basis points compared with the prior-year
quarter.
For the full year, Construction Products segment operating income was
$151.7 million, the segment’s highest earnings since 2008 when segment
operating income was $153.0 million.
Corporate costs and pension
Corporate expenses of $17.4 million decreased $6.0 million compared with
the prior-year quarter due to lower incentive compensation and other
expenses.
Certain pension costs of $7.0 million declined 6.7 percent compared with
the prior year quarter. Certain pension costs include only ongoing costs
recognized quarterly, which include service and interest costs, expected
returns on plan assets and amortization of prior service costs/credits.
As previously announced, the company adopted mark-to-market pension
accounting in the 2013 fourth quarter. The company recognized a
favorable mark-to-market adjustment of $53.1 million in the quarter
compared with an unfavorable adjustment of $117.2 million in the
prior-year quarter. Approximately one-third of the mark-to-market
adjustment is included in costs of goods sold and approximately
two-thirds is included in selling, general and administrative expenses.
The mark-to-market adjustments are excluded from Adjusted EBIT. Grace
filed a Form 8-K on December 11, 2013, that described the impact of this
accounting change on the company’s financial statements.
Interest expense was $11.7 million for the fourth quarter compared with
$12.4 million for the prior-year quarter. The annualized weighted
average interest rate on pre-petition obligations for the fourth quarter
was 3.5 percent.
Income Taxes
Income taxes were recorded at a global effective tax rate of
approximately 33 percent before considering the effects of certain
non-deductible Chapter 11 expenses, the settlement of the amount of
interest payable on prepetition bank debt, changes in uncertain tax
positions and other discrete adjustments, including a reduction in the
valuation allowance on state deferred tax assets.
Grace generally has not had to pay U.S. Federal income taxes in cash in
recent years since available tax deductions and credits have fully
offset U.S. taxable income. Grace generally does pay cash taxes in
foreign jurisdictions and in a limited number of U.S. states. Income
taxes paid in cash, excluding a U.S. Federal income tax refund of $17.6
million and settlements paid of $14.7 million, were $63.3 million during
2013, or approximately 12 percent of adjusted income before income taxes.
At emergence from bankruptcy, Grace generated approximately $670 million
in U.S. Federal net operating losses that will be available to reduce
U.S. Federal taxable income in 2014 and future years. In addition, Grace
expects to receive a U.S. Federal income tax deduction of $490 million
upon settlement of the warrant held by one of the asbestos trusts.
Cash Flow
Net cash provided by operating activities for the year ended December
31, 2013, was $515.9 million compared with $453.6 million in the prior
year. The increased cash flow primarily was due to improved working
capital performance and lower pension contributions.
Adjusted Free Cash Flow was $429.7 million for the year ended December
31, 2013, compared with $421.2 million in the prior year.
2014 Outlook
As of February 5, 2014, Grace expects 2014 Adjusted EBIT to be in the
range of $620 million to $660 million, an increase of 13 to 20 percent
compared with 2013 Adjusted EBIT of $550.8 million. The company expects
2014 Adjusted EBITDA to be in the range of $765 million to $805 million.
The following assumptions are components of Grace’s 2014 outlook:
-
Consolidated sales in the range of $3.3-$3.4 billion with organic
growth of 5-8 percent based on assumed GDP growth of less than 3
percent, acquisition growth of 4 percent, and currency and rare
earth-related headwinds of 1 percent;
-
Segment gross margin in the range of 37-39 percent;
-
Currency and pension headwinds to earnings of approximately $15
million;
-
Cash interest expense of approximately $40 million;
-
Non-cash interest accretion on the deferred payment obligations of $50
million;
-
A book effective tax rate of approximately 35 percent and a cash tax
rate of approximately 10 percent;
-
Adjusted Free Cash Flow greater than $400 million; and
-
Capital expenditures in the range of $160-$180 million.
The company is unable to make an estimate of the amount of the annual
mark-to-market pension adjustment or 2014 net income.
Share Repurchase Authorization
On February 4, 2014, the company announced that its Board of Directors
had authorized a share repurchase program of up to $500 million expected
to be completed over the next 12-24 months at the discretion of
management.
Repurchases under the program may be made through one or more open
market transactions at prevailing market prices; unsolicited or
solicited privately negotiated transactions; accelerated share
repurchase programs; or through any combination of the foregoing, or in
such other manner as determined by management. The timing of the
repurchases and the actual amount repurchased will depend on a variety
of factors, including the market price of Grace’s shares and general
market and economic conditions. Repurchased shares will be held in
treasury. There is no guarantee as to the number of shares that will be
repurchased and the share repurchase program may be extended, suspended
or discontinued at any time without notice.
Chapter 11 Proceedings
On April 2, 2001, Grace and 61 of its United States subsidiaries and
affiliates, including its primary U.S. operating subsidiary, W. R. Grace
& Co.-Conn., filed voluntary petitions for reorganization under Chapter
11 of the United States Bankruptcy Code in the United States Bankruptcy
Court for the District of Delaware in order to resolve Grace’s
asbestos-related liabilities.
On January 31, 2011, the Bankruptcy Court issued an order confirming
Grace’s Joint Plan of Reorganization. On January 31, 2012, the United
States District Court issued an order affirming the Joint Plan, which
was reaffirmed on June 11, 2012 following a motion for reconsideration.
During 2013, five appeals were argued before the Third Circuit Court of
Appeals. During the third quarter, the Court denied four appeals. During
the fourth quarter, the company settled the fifth appeal relating to the
amount of interest payable on its prepetition bank debt and recorded a
$129 million charge. Also in the fourth quarter, Grace recorded net
asbestos and bankruptcy-related charges of $21.9 million, primarily
reflecting the emergence date value of the deferred payment obligations
and certain terms of the Joint Plan.
On February 3, 2014, Grace emerged from Chapter 11 pursuant to the terms
of the Joint Plan. The Joint Plan sets forth how all pre-petition claims
and demands against Grace are resolved. See Grace’s most recent periodic
reports filed with the SEC for a detailed description of the Joint Plan.
Investor Call
Grace will discuss these results during an investor conference call and
webcast today starting at 11:00 a.m. ET. To access the call and webcast,
interested participants should go to the Investor Information - Investor
Presentations portion of the company’s web site, www.grace.com,
and click on the webcast link.
Those without access to the Internet can listen to the investor call by
dialing +1.866.953.6860 (international callers dial +1.617.399.3484) and
entering conference ID 75915576. Investors are advised to access the
call at least ten minutes early in order to register. An audio replay
will be available at 3:00 p.m. ET on February 5 and will be accessible
by dialing +1.888.286.8010 (international callers dial +1.617.801.6888)
and entering conference call ID 55810497. The replay will be available
for one week.
About Grace
Grace is a leading global supplier of catalysts; engineered and
packaging materials; and, specialty construction chemicals and building
materials. The company’s three industry-leading business segments-Grace
Catalysts Technologies, Grace Materials Technologies and Grace
Construction Products-provide innovative products, technologies and
services that enhance the quality of life. Grace employs approximately
6,700 people in over 40 countries and had 2013 net sales of
approximately $3.1 billion. More information about Grace is available at www.grace.com.
This announcement contains forward-looking statements, that is,
information related to future, not past, events. Such statements
generally include the words “believes,” “plans,” “intends,” “targets,”
“will,” “expects,” “suggests,” “anticipates,” “outlook,” “continues” or
similar expressions. Forward-looking statements include, without
limitation, expected financial positions; results of operations; cash
flows; financing plans; business strategy; operating plans; capital and
other expenditures; competitive positions; growth opportunities for
existing products; benefits from new technology and cost reduction
initiatives, plans and objectives; and markets for securities. For
these statements, Grace claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Like other businesses, Grace is
subject to risks and uncertainties that could cause its actual results
to differ materially from its projections or that could cause other
forward-looking statements to prove incorrect. Factors that could
cause actual results to materially differ from those contained in the
forward-looking statements include, without limitation: risks related to
foreign operations, especially in emerging regions, including currency
exchange rate changes, the cost and availability of raw materials and
energy, the effectiveness of its research and development and growth
investments, acquisitions and divestitures of assets and gains and
losses from dispositions, developments affecting Grace's funded and
unfunded pension obligations, its legal and environmental proceedings,
costs of compliance with environmental regulation and those additional
factors set forth in Grace's most recent Annual Report on Form 10-K,
quarterly report on Form 10-Q and current reports on Form 8-K, which
have been filed with the Securities and Exchange Commission and are
readily available on the Internet at www.sec.gov.
Reported results should not be considered as an indication of future
performance. Readers are cautioned not to place undue reliance on
Grace's projections and forward-looking statements, which speak only as
the date thereof. Grace undertakes no obligation to publicly
release any revision to the projections and forward-looking statements
contained in this announcement, or to update them to reflect events or
circumstances occurring after the date of this announcement.
|
|
|
|
|
|
|
W. R. Grace & Co. and Subsidiaries
Consolidated Statements of Operations (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
(In millions, except per share amounts)
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Net sales
|
|
$
|
776.7
|
|
|
$
|
797.8
|
|
|
$
|
3,060.7
|
|
|
$
|
3,155.5
|
|
|
Cost of goods sold
|
|
476.9
|
|
|
539.5
|
|
|
1,918.6
|
|
|
2,041.1
|
|
|
Gross profit
|
|
299.8
|
|
|
258.3
|
|
|
1,142.1
|
|
|
1,114.4
|
|
|
Selling, general and administrative expenses
|
|
100.6
|
|
|
219.0
|
|
|
505.7
|
|
|
635.2
|
|
|
Research and development expenses
|
|
16.7
|
|
|
16.6
|
|
|
65.2
|
|
|
64.5
|
|
|
Interest expense and related financing costs
|
|
11.7
|
|
|
12.4
|
|
|
43.8
|
|
|
46.5
|
|
|
Chapter 11 expenses, net of interest income
|
|
4.3
|
|
|
4.0
|
|
|
15.3
|
|
|
16.6
|
|
|
Default interest settlement
|
|
129.0
|
|
|
—
|
|
|
129.0
|
|
|
—
|
|
|
Asbestos and bankruptcy-related charges, net
|
|
21.9
|
|
|
365.0
|
|
|
21.9
|
|
|
384.6
|
|
|
Equity in earnings of unconsolidated affiliate
|
|
(5.8
|
)
|
|
(4.7
|
)
|
|
(22.9
|
)
|
|
(18.5
|
)
|
|
Other expense, net (E)
|
|
5.7
|
|
|
3.9
|
|
|
23.5
|
|
|
6.1
|
|
|
Total costs and expenses
|
|
284.1
|
|
|
616.2
|
|
|
781.5
|
|
|
1,135.0
|
|
|
Income (loss) before income taxes
|
|
15.7
|
|
|
(357.9
|
)
|
|
360.6
|
|
|
(20.6
|
)
|
|
Benefit from (Provision for) income taxes
|
|
14.5
|
|
|
173.3
|
|
|
(102.9
|
)
|
|
61.6
|
|
|
Net income (loss)
|
|
30.2
|
|
|
(184.6
|
)
|
|
257.7
|
|
|
41.0
|
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
|
(0.5
|
)
|
|
0.3
|
|
|
(1.6
|
)
|
|
(1.0
|
)
|
|
Net income (loss) attributable to W. R. Grace & Co. shareholders
|
|
$
|
29.7
|
|
|
$
|
(184.3
|
)
|
|
$
|
256.1
|
|
|
$
|
40.0
|
|
|
Earnings Per Share Attributable to W. R. Grace & Co. Shareholders
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|
|
|
|
|
|
|
|
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Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
Net income attributable to W. R. Grace & Co. shareholders
|
|
$
|
0.39
|
|
|
$
|
(2.44
|
)
|
|
$
|
3.35
|
|
|
$
|
0.53
|
|
|
Weighted average number of basic shares
|
|
77.0
|
|
|
75.4
|
|
|
76.4
|
|
|
74.9
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
Net income attributable to W. R. Grace & Co. shareholders
|
|
$
|
0.38
|
|
|
$
|
(2.44
|
)
|
|
$
|
3.30
|
|
|
$
|
0.52
|
|
|
Weighted average number of diluted shares
|
|
78.1
|
|
|
75.4
|
|
|
77.7
|
|
|
76.3
|
|
The Notes to the Financial Information are included as part of the
Earnings Release.
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|
|
|
|
|
|
|
W. R. Grace & Co. and Subsidiaries
Analysis of Operations (unaudited)
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|
|
|
|
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|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
|
(In millions, except per share amounts)
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catalysts Technologies
|
|
$
|
292.9
|
|
|
$
|
328.3
|
|
|
(10.8
|
)%
|
|
$
|
1,124.0
|
|
|
$
|
1,268.1
|
|
|
(11.4
|
)%
|
|
Materials Technologies
|
|
214.8
|
|
|
210.1
|
|
|
2.2
|
%
|
|
878.5
|
|
|
862.6
|
|
|
1.8
|
%
|
|
Construction Products
|
|
269.0
|
|
|
259.4
|
|
|
3.7
|
%
|
|
1,058.2
|
|
|
1,024.8
|
|
|
3.3
|
%
|
|
Total Grace net sales
|
|
$
|
776.7
|
|
|
$
|
797.8
|
|
|
(2.6
|
)%
|
|
$
|
3,060.7
|
|
|
$
|
3,155.5
|
|
|
(3.0
|
)%
|
|
Net sales by region:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
237.0
|
|
|
$
|
235.9
|
|
|
0.5
|
%
|
|
$
|
959.7
|
|
|
$
|
967.6
|
|
|
(0.8
|
)%
|
|
Europe Middle East Africa
|
|
271.7
|
|
|
295.8
|
|
|
(8.1
|
)%
|
|
1,087.9
|
|
|
1,175.6
|
|
|
(7.5
|
)%
|
|
Asia Pacific
|
|
175.4
|
|
|
170.2
|
|
|
3.1
|
%
|
|
654.1
|
|
|
660.3
|
|
|
(0.9
|
)%
|
|
Latin America
|
|
92.6
|
|
|
95.9
|
|
|
(3.4
|
)%
|
|
359.0
|
|
|
352.0
|
|
|
2.0
|
%
|
|
Total net sales by region
|
|
$
|
776.7
|
|
|
$
|
797.8
|
|
|
(2.6
|
)%
|
|
$
|
3,060.7
|
|
|
$
|
3,155.5
|
|
|
(3.0
|
)%
|
|
Profitability performance measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBIT(A)(B):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catalysts Technologies segment operating income
|
|
$
|
79.1
|
|
|
$
|
102.6
|
|
|
(22.9
|
)%
|
|
$
|
327.5
|
|
|
$
|
393.8
|
|
|
(16.8
|
)%
|
|
Materials Technologies segment operating income
|
|
45.9
|
|
|
39.7
|
|
|
15.6
|
%
|
|
181.8
|
|
|
162.0
|
|
|
12.2
|
%
|
|
Construction Products segment operating income
|
|
38.0
|
|
|
32.5
|
|
|
16.9
|
%
|
|
151.7
|
|
|
125.2
|
|
|
21.2
|
%
|
|
Corporate costs
|
|
(17.4
|
)
|
|
(23.4
|
)
|
|
25.6
|
%
|
|
(82.8
|
)
|
|
(92.4
|
)
|
|
10.4
|
%
|
|
Certain pension costs (C)
|
|
(7.0
|
)
|
|
(7.5
|
)
|
|
6.7
|
%
|
|
(27.4
|
)
|
|
(30.4
|
)
|
|
9.9
|
%
|
|
Adjusted EBIT
|
|
138.6
|
|
|
143.9
|
|
|
(3.7
|
)%
|
|
550.8
|
|
|
558.2
|
|
|
(1.3
|
)%
|
|
Chapter 11-related costs, net
|
|
(5.4
|
)
|
|
(4.5
|
)
|
|
(20.0
|
)%
|
|
(16.4
|
)
|
|
(15.6
|
)
|
|
(5.1
|
)%
|
|
Asbestos-related costs
|
|
(5.2
|
)
|
|
(2.2
|
)
|
|
NM
|
|
(11.9
|
)
|
|
(7.6
|
)
|
|
NM
|
|
Asbestos and bankruptcy-related charges, net
|
|
(21.9
|
)
|
|
(365.0
|
)
|
|
NM
|
|
(21.9
|
)
|
|
(384.6
|
)
|
|
NM
|
|
Default interest settlement
|
|
(129.0
|
)
|
|
—
|
|
|
NM
|
|
(129.0
|
)
|
|
—
|
|
|
NM
|
|
Pension MTM adjustment and other related costs, net
|
|
53.1
|
|
|
(117.2
|
)
|
|
NM
|
|
50.6
|
|
|
(119.2
|
)
|
|
NM
|
|
Restructuring expenses and related asset impairments
|
|
(3.8
|
)
|
|
(0.5
|
)
|
|
NM
|
|
(12.5
|
)
|
|
(6.9
|
)
|
|
NM
|
|
Loss on sale of product line
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
(1.0
|
)
|
|
(0.2
|
)
|
|
NM
|
|
Income and expense items related to divested businesses
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
(0.2
|
)
|
|
NM
|
|
Interest expense and related financing costs
|
|
(11.7
|
)
|
|
(12.4
|
)
|
|
5.6
|
%
|
|
(43.8
|
)
|
|
(46.5
|
)
|
|
5.8
|
%
|
|
Currency transaction loss on cash in Venezuela
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|
(6.9
|
)
|
|
—
|
|
|
NM
|
|
Interest income of non-Debtor subsidiaries
|
|
0.5
|
|
|
0.3
|
|
|
66.7
|
%
|
|
1.0
|
|
|
1.0
|
|
|
—
|
%
|
|
Benefit from (provision for) income taxes
|
|
14.5
|
|
|
173.3
|
|
|
(91.6
|
)%
|
|
(102.9
|
)
|
|
61.6
|
|
|
NM
|
|
Net income (loss) attributable to W. R. Grace & Co. shareholders
|
|
$
|
29.7
|
|
|
$
|
(184.3
|
)
|
|
116.1
|
%
|
|
$
|
256.1
|
|
|
$
|
40.0
|
|
|
NM
|
|
Diluted EPS (GAAP)
|
|
$
|
0.38
|
|
|
$
|
(2.44
|
)
|
|
115.6
|
%
|
|
$
|
3.30
|
|
|
$
|
0.52
|
|
|
NM
|
|
Adjusted EPS (non-GAAP)
|
|
$
|
1.09
|
|
|
$
|
1.21
|
|
|
(9.9
|
)%
|
|
$
|
4.39
|
|
|
$
|
4.53
|
|
|
(3.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs related to Chapter 11:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chapter 11 expenses, net of interest income
|
|
$
|
4.3
|
|
|
$
|
4.0
|
|
|
|
|
$
|
15.3
|
|
|
$
|
16.6
|
|
|
|
|
D&O insurance costs related to Chapter 11
|
|
—
|
|
|
0.1
|
|
|
|
|
0.2
|
|
|
0.3
|
|
|
|
|
Translation effects—intercompany loans (D)
|
|
(5.3
|
)
|
|
(7.9
|
)
|
|
|
|
(11.9
|
)
|
|
(5.6
|
)
|
|
|
|
Value of currency forward contracts—intercompany loans (D)
|
|
5.2
|
|
|
7.7
|
|
|
|
|
10.9
|
|
|
3.7
|
|
|
|
|
Certain other currency translation costs, net (D)
|
|
1.2
|
|
|
0.6
|
|
|
|
|
1.9
|
|
|
0.6
|
|
|
|
|
Costs related to Chapter 11
|
|
$
|
5.4
|
|
|
$
|
4.5
|
|
|
|
|
$
|
16.4
|
|
|
$
|
15.6
|
|
|
|
The Notes to the Financial Information are included as part of the
Earnings Release.
|
|
|
|
|
|
|
|
|
W. R. Grace & Co. and Subsidiaries
Analysis of Operations (unaudited) (continued)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Twelve Months Ended
December 31,
|
|
|
(In millions)
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
|
Profitability performance measures (A)(B)(C):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catalysts Technologies
|
|
38.8
|
%
|
|
41.0
|
%
|
|
(2.2) pts
|
|
40.1
|
%
|
|
41.0
|
%
|
|
(0.9) pts
|
|
Materials Technologies
|
|
35.0
|
%
|
|
34.3
|
%
|
|
0.7 pts
|
|
34.6
|
%
|
|
33.1
|
%
|
|
1.5 pts
|
|
Construction Products
|
|
35.2
|
%
|
|
36.1
|
%
|
|
(0.9) pts
|
|
36.0
|
%
|
|
35.2
|
%
|
|
0.8 pts
|
|
Segment gross margin
|
|
36.5
|
%
|
|
37.6
|
%
|
|
(1.1) pts
|
|
37.1
|
%
|
|
37.0
|
%
|
|
0.1 pts
|
|
Adjusted profitability performance measures (A)(B)(C):
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBIT:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catalysts Technologies
|
|
$
|
79.1
|
|
|
$
|
102.6
|
|
|
(22.9
|
)%
|
|
$
|
327.5
|
|
|
$
|
393.8
|
|
|
(16.8
|
)%
|
|
Materials Technologies
|
|
45.9
|
|
|
39.7
|
|
|
15.6
|
%
|
|
181.8
|
|
|
162.0
|
|
|
12.2
|
%
|
|
Construction Products
|
|
38.0
|
|
|
32.5
|
|
|
16.9
|
%
|
|
151.7
|
|
|
125.2
|
|
|
21.2
|
%
|
|
Corporate
|
|
(24.4
|
)
|
|
(30.9
|
)
|
|
21.0
|
%
|
|
(110.2
|
)
|
|
(122.8
|
)
|
|
10.3
|
%
|
|
Total Grace
|
|
138.6
|
|
|
143.9
|
|
|
(3.7
|
)%
|
|
550.8
|
|
|
558.2
|
|
|
(1.3
|
)%
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catalysts Technologies
|
|
$
|
14.2
|
|
|
$
|
13.5
|
|
|
5.2
|
%
|
|
$
|
54.2
|
|
|
$
|
54.0
|
|
|
0.4
|
%
|
|
Materials Technologies
|
|
7.8
|
|
|
7.4
|
|
|
5.4
|
%
|
|
31.4
|
|
|
29.5
|
|
|
6.4
|
%
|
|
Construction Products
|
|
7.8
|
|
|
8.7
|
|
|
(10.3
|
)%
|
|
31.8
|
|
|
32.9
|
|
|
(3.3
|
)%
|
|
Corporate
|
|
1.5
|
|
|
0.5
|
|
|
NM
|
|
5.7
|
|
|
2.6
|
|
|
119.2
|
%
|
|
Total Grace
|
|
31.3
|
|
|
30.1
|
|
|
4.0
|
%
|
|
123.1
|
|
|
119.0
|
|
|
3.4
|
%
|
|
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catalysts Technologies
|
|
$
|
93.3
|
|
|
$
|
116.1
|
|
|
(19.6
|
)%
|
|
$
|
381.7
|
|
|
$
|
447.8
|
|
|
(14.8
|
)%
|
|
Materials Technologies
|
|
53.7
|
|
|
47.1
|
|
|
14.0
|
%
|
|
213.2
|
|
|
191.5
|
|
|
11.3
|
%
|
|
Construction Products
|
|
45.8
|
|
|
41.2
|
|
|
11.2
|
%
|
|
183.5
|
|
|
158.1
|
|
|
16.1
|
%
|
|
Corporate
|
|
(22.9
|
)
|
|
(30.4
|
)
|
|
24.7
|
%
|
|
(104.5
|
)
|
|
(120.2
|
)
|
|
13.1
|
%
|
|
Total Grace
|
|
169.9
|
|
|
174.0
|
|
|
(2.4
|
)%
|
|
673.9
|
|
|
677.2
|
|
|
(0.5
|
)%
|
|
Operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catalysts Technologies
|
|
27.0
|
%
|
|
31.3
|
%
|
|
(4.3) pts
|
|
29.1
|
%
|
|
31.1
|
%
|
|
(2.0) pts
|
|
Materials Technologies
|
|
21.4
|
%
|
|
18.9
|
%
|
|
2.5 pts
|
|
20.7
|
%
|
|
18.8
|
%
|
|
1.9 pts
|
|
Construction Products
|
|
14.1
|
%
|
|
12.5
|
%
|
|
1.6 pts
|
|
14.3
|
%
|
|
12.2
|
%
|
|
2.1 pts
|
|
Total Grace
|
|
17.8
|
%
|
|
18.0
|
%
|
|
(0.2) pts
|
|
18.0
|
%
|
|
17.7
|
%
|
|
0.3 pts
|
|
Adjusted EBITDA margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catalysts Technologies
|
|
31.9
|
%
|
|
35.4
|
%
|
|
(3.5) pts
|
|
34.0
|
%
|
|
35.3
|
%
|
|
(1.3) pts
|
|
Materials Technologies
|
|
25.0
|
%
|
|
22.4
|
%
|
|
2.6 pts
|
|
24.3
|
%
|
|
22.2
|
%
|
|
2.1 pts
|
|
Construction Products
|
|
17.0
|
%
|
|
15.9
|
%
|
|
1.1 pts
|
|
17.3
|
%
|
|
15.4
|
%
|
|
1.9 pts
|
|
Total Grace
|
|
21.9
|
%
|
|
21.8
|
%
|
|
0.1 pts
|
|
22.0
|
%
|
|
21.5
|
%
|
|
0.5 pts
|
The Notes to the Financial Information are included as part of the
Earnings Release.
|
|
|
|
|
W. R. Grace & Co. and Subsidiaries
Analysis of Operations (unaudited) (continued)
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31,
|
|
(In millions)
|
|
2013
|
|
2012
|
|
Cash flow measure (A):
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
515.9
|
|
|
$
|
453.6
|
|
|
Capital expenditures
|
|
(156.2
|
)
|
|
(138.5
|
)
|
|
Free Cash Flow
|
|
359.7
|
|
|
315.1
|
|
|
Chapter 11 expenses paid
|
|
15.0
|
|
|
15.5
|
|
|
Accelerated defined benefit pension plan contributions
|
|
50.0
|
|
|
83.4
|
|
|
Expenditures for asbestos-related items
|
|
5.0
|
|
|
7.2
|
|
|
Adjusted Free Cash Flow
|
|
$
|
429.7
|
|
|
$
|
421.2
|
|
|
|
|
|
|
|
|
Four Quarters Ended
December 31,
|
|
(In millions)
|
|
2013
|
|
2012
|
|
Calculation of Adjusted EBIT Return On Invested Capital (trailing
four quarters):
|
|
|
|
|
|
Adjusted EBIT
|
|
$
|
550.8
|
|
|
$
|
558.2
|
|
|
Invested Capital:
|
|
|
|
|
|
Trade accounts receivable
|
|
481.8
|
|
|
490.4
|
|
|
Inventories
|
|
295.3
|
|
|
283.5
|
|
|
Accounts payable
|
|
(262.5
|
)
|
|
(252.0
|
)
|
|
|
|
514.6
|
|
|
521.9
|
|
|
Other current assets (excluding income taxes)
|
|
81.2
|
|
|
62.4
|
|
|
Properties and equipment, net
|
|
829.5
|
|
|
770.5
|
|
|
Goodwill
|
|
461.4
|
|
|
196.7
|
|
|
Technology and other intangible assets, net
|
|
314.3
|
|
|
82.7
|
|
|
Investment in unconsolidated affiliate
|
|
96.2
|
|
|
85.5
|
|
|
Other assets
|
|
40.0
|
|
|
24.5
|
|
|
Other current liabilities (excluding income taxes, Chapter 11, and
restructuring)
|
|
(249.4
|
)
|
|
(252.3
|
)
|
|
Other liabilities (including non-asbestos environmental remediation)
|
|
(79.2
|
)
|
|
(56.5
|
)
|
|
Total invested capital
|
|
$
|
2,008.6
|
|
|
$
|
1,435.4
|
|
|
Adjusted EBIT Return On Invested Capital
|
|
27.4
|
%
|
|
38.9
|
%
|
The Notes to the Financial Information are included as part of the
Earnings Release.
|
|
|
|
|
W. R. Grace & Co. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31,
|
|
(In millions)
|
|
2013
|
|
2012
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
Net income
|
|
$
|
257.7
|
|
|
$
|
41.0
|
|
|
Reconciliation to net cash provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
123.1
|
|
|
119.0
|
|
|
Chapter 11 expenses, net of interest income
|
|
15.3
|
|
|
16.6
|
|
|
Chapter 11 expenses paid
|
|
(15.0
|
)
|
|
(15.5
|
)
|
|
Asbestos and bankruptcy-related charges, net
|
|
21.9
|
|
|
384.6
|
|
|
Provision for (benefit from) income taxes
|
|
102.9
|
|
|
(61.6
|
)
|
|
Income taxes paid, net of refunds
|
|
(60.4
|
)
|
|
(82.6
|
)
|
|
Excess tax benefits from stock-based compensation
|
|
35.4
|
|
|
(36.8
|
)
|
|
Interest accrued on pre-petition liabilities subject to compromise
|
|
38.1
|
|
|
40.4
|
|
|
Default interest settlement
|
|
129.0
|
|
|
—
|
|
|
Defined benefit pension (benefit) expense
|
|
(23.2
|
)
|
|
149.6
|
|
|
Payments under defined benefit pension arrangements
|
|
(68.3
|
)
|
|
(126.8
|
)
|
|
Expenditures for environmental remediation
|
|
(14.0
|
)
|
|
(13.0
|
)
|
|
Changes in assets and liabilities, excluding effect of currency
translation:
|
|
|
|
|
|
Trade accounts receivable
|
|
13.5
|
|
|
(3.0
|
)
|
|
Inventories
|
|
8.6
|
|
|
53.2
|
|
|
Accounts payable
|
|
4.2
|
|
|
(11.7
|
)
|
|
All other items, net
|
|
(52.9
|
)
|
|
0.2
|
|
|
Net cash provided by operating activities
|
|
515.9
|
|
|
453.6
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
Capital expenditures
|
|
(156.2
|
)
|
|
(138.5
|
)
|
|
Businesses acquired, net of cash acquired
|
|
(526.2
|
)
|
|
(80.0
|
)
|
|
Transfer to restricted cash and cash equivalents
|
|
(197.8
|
)
|
|
(61.1
|
)
|
|
Proceeds from sale of business
|
|
1.8
|
|
|
—
|
|
|
Other investing activities
|
|
(2.3
|
)
|
|
(0.7
|
)
|
|
Net cash used for investing activities
|
|
(880.7
|
)
|
|
(280.3
|
)
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
Borrowings under credit arrangements
|
|
52.2
|
|
|
60.7
|
|
|
Repayments under credit arrangements
|
|
(66.9
|
)
|
|
(24.8
|
)
|
|
Proceeds from exercise of stock options
|
|
34.9
|
|
|
32.2
|
|
|
Excess tax benefits from stock-based compensation
|
|
(35.4
|
)
|
|
36.8
|
|
|
Other financing activities
|
|
6.8
|
|
|
5.4
|
|
|
Net cash (used for) provided by financing activities
|
|
(8.4
|
)
|
|
110.3
|
|
|
Effect of currency exchange rate changes on cash and cash equivalents
|
|
1.1
|
|
|
5.0
|
|
|
(Decrease) increase in cash and cash equivalents
|
|
(372.1
|
)
|
|
288.6
|
|
|
Cash and cash equivalents, beginning of period
|
|
1,336.9
|
|
|
1,048.3
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
964.8
|
|
|
$
|
1,336.9
|
|
The Notes to the Financial Information are included as part of the
Earnings Release.
|
|
|
|
|
|
|
W. R. Grace & Co. and Subsidiaries
Consolidated Balance Sheets (unaudited)
|
|
|
|
|
|
|
|
(In millions, except par value and shares)
|
|
December 31,
2013
|
|
December 31,
2012
|
|
ASSETS
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
964.8
|
|
|
$
|
1,336.9
|
|
|
Restricted cash and cash equivalents
|
|
395.4
|
|
|
197.6
|
|
|
Trade accounts receivable, less allowance of $6.0 (2012—$5.2)
|
|
469.5
|
|
|
474.8
|
|
|
Accounts receivable—unconsolidated affiliate
|
|
12.3
|
|
|
15.6
|
|
|
Inventories
|
|
295.3
|
|
|
283.5
|
|
|
Deferred income taxes
|
|
58.1
|
|
|
58.3
|
|
|
Other current assets
|
|
99.0
|
|
|
78.4
|
|
|
Total Current Assets
|
|
2,294.4
|
|
|
2,445.1
|
|
|
Properties and equipment, net of accumulated depreciation and
amortization of $1,876.9 (2012—$1,785.1)
|
|
829.5
|
|
|
770.5
|
|
|
Goodwill
|
|
461.4
|
|
|
196.7
|
|
|
Technology and other intangible assets, net
|
|
314.3
|
|
|
82.7
|
|
|
Deferred income taxes
|
|
867.0
|
|
|
953.2
|
|
|
Asbestos-related insurance
|
|
500.0
|
|
|
500.0
|
|
|
Overfunded defined benefit pension plans
|
|
16.7
|
|
|
32.1
|
|
|
Investment in unconsolidated affiliate
|
|
96.2
|
|
|
85.5
|
|
|
Other assets
|
|
40.0
|
|
|
24.5
|
|
|
Total Assets
|
|
$
|
5,419.5
|
|
|
$
|
5,090.3
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
Liabilities Not Subject to Compromise
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
Debt payable within one year
|
|
$
|
76.6
|
|
|
$
|
83.4
|
|
|
Debt payable—unconsolidated affiliate
|
|
4.5
|
|
|
3.6
|
|
|
Accounts payable
|
|
249.5
|
|
|
249.4
|
|
|
Accounts payable—unconsolidated affiliate
|
|
13.0
|
|
|
2.6
|
|
|
Other current liabilities
|
|
313.9
|
|
|
307.3
|
|
|
Total Current Liabilities
|
|
657.5
|
|
|
646.3
|
|
|
Debt payable after one year
|
|
5.3
|
|
|
13.4
|
|
|
Debt payable—unconsolidated affiliate
|
|
24.3
|
|
|
22.4
|
|
|
Deferred income taxes
|
|
18.2
|
|
|
27.1
|
|
|
Underfunded and unfunded defined benefit pension plans
|
|
299.6
|
|
|
396.5
|
|
|
Other liabilities
|
|
67.3
|
|
|
44.9
|
|
|
Total Liabilities Not Subject to Compromise
|
|
1,072.2
|
|
|
1,150.6
|
|
|
Liabilities Subject to Compromise
|
|
|
|
|
|
Debt plus accrued interest
|
|
1,137.8
|
|
|
973.3
|
|
|
Income tax contingencies
|
|
76.6
|
|
|
87.6
|
|
|
Asbestos-related contingencies
|
|
2,092.4
|
|
|
2,065.0
|
|
|
Environmental contingencies
|
|
134.5
|
|
|
140.5
|
|
|
Postretirement benefits
|
|
176.3
|
|
|
190.9
|
|
|
Other liabilities and accrued interest
|
|
158.5
|
|
|
162.6
|
|
|
Total Liabilities Subject to Compromise
|
|
3,776.1
|
|
|
3,619.9
|
|
|
Total Liabilities
|
|
4,848.3
|
|
|
4,770.5
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Common stock issued, par value $0.01; 300,000,000 shares authorized;
outstanding: 77,046,143 (2012—75,565,409)
|
|
0.8
|
|
|
0.8
|
|
|
Paid-in capital
|
|
533.4
|
|
|
536.5
|
|
|
Retained earnings (accumulated deficit)
|
|
15.8
|
|
|
(240.3
|
)
|
|
Treasury stock, at cost: shares: 0 (2012—1,414,351)
|
|
—
|
|
|
(16.8
|
)
|
|
Accumulated other comprehensive income
|
|
10.6
|
|
|
29.7
|
|
|
Total W. R. Grace & Co. Shareholders' Equity
|
|
560.6
|
|
|
309.9
|
|
|
Noncontrolling interests
|
|
10.6
|
|
|
9.9
|
|
|
Total Equity
|
|
571.2
|
|
|
319.8
|
|
|
Total Liabilities and Equity
|
|
$
|
5,419.5
|
|
|
$
|
5,090.3
|
|
The Notes to the Financial Information are included as part of the
Earnings Release.
|
|
|
|
|
W. R. Grace & Co. and Subsidiaries
Adjusted Earnings Per Share (unaudited)
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
2013
|
|
2012
|
|
(In millions, except per share amounts)
|
|
Pre-
Tax
|
|
Tax at
Actual
Rate
|
|
After-
Tax
|
|
Per
Share
|
|
Pre-
Tax
|
|
Tax at
Actual
Rate
|
|
After-
Tax
|
|
Per
Share
|
|
Diluted Earnings Per Share (GAAP)
|
|
|
|
|
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
$
|
(2.44
|
)
|
|
Anti-dilutive effect of fourth quarter net loss
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
0.05
|
|
|
Costs related to Chapter 11
|
|
$
|
5.4
|
|
|
$
|
3.1
|
|
|
$
|
2.3
|
|
|
0.03
|
|
|
$
|
4.5
|
|
|
$
|
1.3
|
|
|
$
|
3.2
|
|
|
0.04
|
|
|
Asbestos-related costs
|
|
5.2
|
|
|
2.0
|
|
|
3.2
|
|
|
0.04
|
|
|
2.2
|
|
|
0.8
|
|
|
1.4
|
|
|
0.02
|
|
|
Asbestos and bankruptcy-related charges, net
|
|
21.9
|
|
|
8.2
|
|
|
13.7
|
|
|
0.18
|
|
|
365.0
|
|
|
135.3
|
|
|
229.7
|
|
|
3.05
|
|
|
Default interest settlement
|
|
129.0
|
|
|
48.3
|
|
|
80.7
|
|
|
1.03
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Pension MTM adjustment and other related costs, net
|
|
(53.1
|
)
|
|
(21.5
|
)
|
|
(31.6
|
)
|
|
(0.40
|
)
|
|
117.2
|
|
|
43.4
|
|
|
73.8
|
|
|
0.98
|
|
|
Restructuring expenses and related asset impairments
|
|
3.8
|
|
|
1.0
|
|
|
2.8
|
|
|
0.04
|
|
|
0.5
|
|
|
0.1
|
|
|
0.4
|
|
|
0.01
|
|
|
Discrete tax items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release of valuation allowances
|
|
|
|
27.1
|
|
|
(27.1
|
)
|
|
(0.35
|
)
|
|
|
|
44.0
|
|
|
(44.0
|
)
|
|
(0.58
|
)
|
|
Discrete tax items, including adjustments to uncertain tax positions
|
|
|
|
(11.1
|
)
|
|
11.1
|
|
|
0.14
|
|
|
|
|
(5.8
|
)
|
|
5.8
|
|
|
0.08
|
|
|
Adjusted EPS (non-GAAP)
|
|
|
|
|
|
|
|
$
|
1.09
|
|
|
|
|
|
|
|
|
$
|
1.21
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
|
2013
|
|
2012
|
|
(In millions, except per share amounts)
|
|
Pre-
Tax
|
|
Tax at
Actual
Rate
|
|
After-
Tax
|
|
Per
Share
|
|
Pre-
Tax
|
|
Tax at
Actual
Rate
|
|
After-
Tax
|
|
Per
Share
|
|
Diluted Earnings Per Share (GAAP)
|
|
|
|
|
|
|
|
$
|
3.30
|
|
|
|
|
|
|
|
|
$
|
0.52
|
|
|
Costs related to Chapter 11
|
|
$
|
16.4
|
|
|
$
|
6.0
|
|
|
$
|
10.4
|
|
|
0.13
|
|
|
$
|
15.6
|
|
|
$
|
3.8
|
|
|
$
|
11.8
|
|
|
0.15
|
|
|
Asbestos-related costs
|
|
11.9
|
|
|
4.5
|
|
|
7.4
|
|
|
0.10
|
|
|
7.6
|
|
|
2.8
|
|
|
4.8
|
|
|
0.06
|
|
|
Asbestos and bankruptcy-related charges, net
|
|
21.9
|
|
|
8.2
|
|
|
13.7
|
|
|
0.18
|
|
|
384.6
|
|
|
142.3
|
|
|
242.3
|
|
|
3.18
|
|
|
Default interest settlement
|
|
129.0
|
|
|
48.3
|
|
|
80.7
|
|
|
1.04
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Pension MTM adjustment and other related costs, net
|
|
(50.6
|
)
|
|
(20.0
|
)
|
|
(30.6
|
)
|
|
(0.39
|
)
|
|
119.2
|
|
|
37.9
|
|
|
81.3
|
|
|
1.07
|
|
|
Restructuring expenses and related asset impairments
|
|
12.5
|
|
|
3.5
|
|
|
9.0
|
|
|
0.12
|
|
|
6.9
|
|
|
2.0
|
|
|
4.9
|
|
|
0.06
|
|
|
Currency transaction loss on cash in Venezuela
|
|
6.9
|
|
|
—
|
|
|
6.9
|
|
|
0.09
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Loss on sale of divested businesses
|
|
1.0
|
|
|
0.4
|
|
|
0.6
|
|
|
0.01
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
Discrete tax items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Release of valuation allowances
|
|
|
|
27.1
|
|
|
(27.1
|
)
|
|
(0.35
|
)
|
|
|
|
44.0
|
|
|
(44.0
|
)
|
|
(0.58
|
)
|
|
Discrete tax items, including adjustments to uncertain tax positions
|
|
|
|
(12.1
|
)
|
|
12.1
|
|
|
0.16
|
|
|
|
|
(5.3
|
)
|
|
5.3
|
|
|
0.07
|
|
|
Adjusted EPS (non-GAAP)
|
|
|
|
|
|
|
|
$
|
4.39
|
|
|
|
|
|
|
|
|
$
|
4.53
|
|
The Notes to the Financial Information are included as part of the
Earnings Release.
W. R. Grace & Co. and Subsidiaries
Notes to the Financial Information
(A): In the above charts, Grace presents its results of
operations by operating segment and for adjusted operations. Adjusted
EBIT means net income adjusted for interest income and expense, income
taxes, costs related to Chapter 11, asbestos-related costs,
restructuring expenses and related asset impairments, pension costs
other than service and interest costs, expected returns on plan assets,
and amortization of prior service costs/credits, certain income and
expense items related to divested businesses, product lines, and certain
other investments and gains and losses on sales of businesses, product
lines, and certain other investments. In the 2013 first quarter, we also
adjusted for the currency transaction loss incurred on our Venezuelan
cash balances of $6.9 million. Adjusted EBITDA means Adjusted EBIT
adjusted for depreciation and amortization. Grace uses Adjusted EBIT as
a performance measure in significant business decisions. Adjusted Free
Cash Flow means net cash provided by or used for operating activities
minus capital expenditures plus the net cash flow from costs related to
Chapter 11, cash paid to resolve contingencies subject to Chapter 11,
accelerated payments under defined benefit pension arrangements, and
expenditures for asbestos-related items. Grace uses Adjusted Free Cash
Flow as a liquidity measure to evaluate its ability to generate cash to
support its ongoing business operations, to invest in its businesses,
and to provide a return of capital to shareholders. Adjusted EPS means
Diluted EPS adjusted for costs related to Chapter 11, asbestos-related
costs, restructuring expenses and related asset impairments, pension
costs other than service and interest costs, expected returns on plan
assets, and amortization of prior service costs/credits, certain income
and expense items related to divested businesses, product lines, and
certain other investments and gains and losses on sales of businesses,
product lines, and certain other investments, and certain discrete tax
items. Adjusted EBIT Return On Invested Capital means Adjusted EBIT
divided by the sum of net working capital, properties and equipment and
certain other assets and liabilities. Adjusted EBIT, Adjusted EBITDA,
Adjusted Free Cash Flow, Adjusted EPS, and Adjusted EBIT Return On
Invested Capital do not purport to represent income measures as defined
under United States generally accepted accounting principles, and should
not be considered as alternatives to such measures as an indicator of
Grace's performance. These measures are provided to distinguish the
operating results of Grace's current business base from the costs of
Grace's Chapter 11 proceedings, asbestos liabilities, restructuring
activities, and divested businesses.
(B): Grace's segment operating income includes only Grace's share
of income from consolidated and unconsolidated joint ventures.
(C): Certain pension costs include only ongoing costs recognized
quarterly, which include service and interest costs, expected returns on
plan assets, and amortization of prior service costs/credits. Catalysts
Technologies, Materials Technologies, and Construction Products segment
operating income and corporate costs do not include any amounts for
pension expense. Other pension related costs including annual
mark-to-market adjustments and actuarial gains and losses are excluded
from Adjusted EBIT. These amounts are not used by management to evaluate
the performance of Grace's businesses and significantly affect the
peer-to-peer and period-to-period comparability of our financial
results. Mark-to-market adjustments and actuarial gains and losses
relate primarily to changes in financial market values and actuarial
assumptions and are not directly related to the operation of Grace's
businesses.
(D): Due to its bankruptcy, Grace has had significant
intercompany loans between its non-U.S. subsidiaries and its U.S. debtor
subsidiaries that are not related to its operating activities. In
addition, Grace has accumulated significant cash during its bankruptcy.
The intercompany loans are expected to be paid when Grace emerges from
bankruptcy, and excess cash balances are expected to be used to fund a
significant portion of Grace's emergence from bankruptcy. Accordingly,
income and expense items related to the intercompany loans and the cash
balances are categorized as costs related to Chapter 11.
(E): Other expense, net includes amounts previously reported as
restructuring expenses and related asset impairments and provision for
environmental remediation.
NM - Not Meaningful
Copyright Business Wire 2014