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EXHIBIT 99.2
On August 2, 1996, the Company filed with the Securities and Exchange
Commission a Registration Statement on Form S-4 (Registration No. 333-09497),
including a Joint Proxy Statement-Prospectus dated August 2, 1996 ("Joint
Proxy Statement-Prospectus") that was sent to the Company's shareholders in
connection with a Special Meeting of Shareholders to be held on September 16,
1996. The Joint Proxy Statement-Prospectus included special-purpose financial
information of the Company ("Special-Purpose Information"). The following
unaudited financial information is being provided to update the Special-Purpose
Information contained in the Joint Proxy Statement-Prospectus, and should be
read in conjunction with the Special-Purpose, Consolidated Financial Statements
of the Company in the Joint Proxy Statement-Prospectus, as well as the Second
Quarter Financial Statements. The following unaudited special-purpose
financial information does not necessarily indicate the financial position and
results of operations that would have occurred if the NMC Business (as defined
in the Joint Proxy Statement-Prospectus) were a stand-alone entity on the dates
and for the periods indicated. Undefined terms used in the following unaudited
special-purpose financial information have the meanings given those terms in
the Joint Proxy Statement-Prospectus.
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W. R. GRACE & CO.
SPECIAL-PURPOSE, CONSOLIDATED INTERIM STATEMENTS OF EARNINGS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
JUNE 30,
----------------------------
1996 1995
-------- --------
NET REVENUES
Health care services . . . . . . . . . . . . . . . . . . . . . . . . $511,236 $471,825
Medical supplies . . . . . . . . . . . . . . . . . . . . . . . . . . 40,883 36,720
-------- --------
552,119 508,545
-------- --------
EXPENSES
Cost of health care services . . . . . . . . . . . . . . . . . . . . 295,456 260,978
Cost of medical supplies . . . . . . . . . . . . . . . . . . . . . . 27,397 26,192
General and administrative expenses . . . . . . . . . . . . . . . . . 103,691 90,306
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . 21,442 19,742
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 31,533 26,480
Research and development . . . . . . . . . . . . . . . . . . . . . . 622 597
Allocation of Grace Chemicals expenses . . . . . . . . . . . . . . . 1,769 10,101
Interest expense, net, and related financing costs . . . . . . . . . 7,459 5,791
-------- --------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489,369 440,187
-------- --------
EARNINGS BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . 62,750 68,358
PROVISION FOR INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . 28,832 31,253
-------- --------
NET EARNINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,918 $ 37,105
======== ========
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.35 $ 0.39
See accompanying Notes to Special-Purpose, Consolidated Interim Financial
Statements.
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W. R. GRACE & CO.
SPECIAL-PURPOSE, CONSOLIDATED INTERIM STATEMENTS OF EARNINGS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
----------- -----------
NET REVENUES
Health care services . . . . . . . . . . . . . . . . . . . . . . . . $ 999,607 $ 916,305
Medical supplies . . . . . . . . . . . . . . . . . . . . . . . . . . 80,803 70,298
---------- ----------
1,080,410 986,603
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EXPENSES
Cost of health care services . . . . . . . . . . . . . . . . . . . . 582,987 512,766
Cost of medical supplies . . . . . . . . . . . . . . . . . . . . . . 55,299 51,005
General and administrative expenses . . . . . . . . . . . . . . . . . 205,138 182,557
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . 42,928 39,141
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 62,161 52,395
Research and development . . . . . . . . . . . . . . . . . . . . . . 1,308 1,368
Allocation of Grace Chemicals expenses . . . . . . . . . . . . . . . 3,786 19,649
Interest expense, net, and related financing costs . . . . . . . . . 14,463 11,541
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968,070 870,422
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EARNINGS BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . 112,340 116,181
PROVISION FOR INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . 51,977 53,060
---------- ----------
NET EARNINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,363 $ 63,121
========== ==========
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.62 $ 0.66
See accompanying Notes to Special-Purpose, Consolidated Interim Financial
Statements.
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W. R. GRACE & CO.
SPECIAL-PURPOSE, CONSOLIDATED INTERIM BALANCE SHEET
(UNAUDITED)
(DOLLARS IN THOUSANDS)
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,039 $ 33,530
Accounts receivable, less allowances of $124,309 and $119,914 . . . . . . . . 437,079 406,682
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,485 72,491
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,812 81,192
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,345 51,835
---------- ----------
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 708,760 645,730
---------- ----------
Properties and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . 396,828 377,328
---------- ----------
Other Assets:
Excess of cost over the fair value of net assets acquired and other
intangible assets, net of accumulated amortization of $273,778
and $247,644 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 949,732 954,811
Other assets and deferred charges . . . . . . . . . . . . . . . . . . . . . . 19,201 20,275
---------- ----------
Total Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 968,933 975,086
---------- ----------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,074,521 $1,998,144
========== ==========
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt and capitalized lease obligations . . . . $ 155,222 $ 183,488
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,332 104,586
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,980 220,771
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,194 12,555
---------- ----------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 478,728 521,400
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,577 27,903
Capitalized lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . 4,743 7,516
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,778 48,109
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,286 30,441
---------- ----------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592,112 635,369
---------- ----------
Commitments and Contingencies (Note 3) . . . . . . . . . . . . . . . . . . . .
Equity:
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,487,525 1,365,901
Cumulative translation adjustment . . . . . . . . . . . . . . . . . . . . . (5,116) (3,126)
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Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,482,409 1,362,775
---------- ----------
Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . . $2,074,521 $1,998,144
========== ==========
See accompanying Notes to Special-Purpose, Consolidated Interim Financial
Statements.
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W. R. GRACE & CO.
SPECIAL-PURPOSE, CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30,
-------------------
1996 1995
---- ----
Cash Flows Provided by Operating Activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,363 $ 63,121
Adjustments to reconcile net earnings to net cash provided by
Operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 62,161 52,395
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . 42,928 39,141
Provision for deferred income taxes . . . . . . . . . . . . . . . . . . (4,283) (6,367)
Loss on disposal of properties and equipment . . . . . . . . . . . . . 3,194 1,598
Changes in operating assets and liabilities, net of effects of
purchase acquisitions and foreign exchange:
Increase in accounts receivable . . . . . . . . . . . . . . . . . . . . (71,578) (57,017)
Increase in inventories . . . . . . . . . . . . . . . . . . . . . . . . (778) (3,257)
Increase in other current assets . . . . . . . . . . . . . . . . . . . (13,440) (12,319)
Decrease in accounts payable . . . . . . . . . . . . . . . . . . . . . (5,403) (13,547)
Increase in accrued income taxes . . . . . . . . . . . . . . . . . . . 9,971 26,718
Decrease in accrued liabilities . . . . . . . . . . . . . . . . . . . . (10,809) (16,743)
(Decrease)/increase in other long-term liabilities . . . . . . . . . . (8,155) 4,088
Increase in other assets and deferred charges . . . . . . . . . . . . (106) (2,842)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (225) (5,413)
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Net cash provided by operating activities . . . . . . . . . . . . . . . . 63,840 69,556
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Cash Flows from Investing Activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . (58,545) (46,881)
Payments for acquisitions, net of cash acquired . . . . . . . . . . . . (26,190) (63,774)
Payments for physicians' contract agreements . . . . . . . . . . . . . 0 (2,900)
-------- --------
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . (84,735) (113,555)
-------- --------
Cash Flows from Financing Activities:
Advances from Grace Chemicals, net . . . . . . . . . . . . . . . . . . 61,260 28,921
Proceeds on issuance of debt . . . . . . . . . . . . . . . . . . . . . 124,176 9,813
Payments on debt and capitalized leases . . . . . . . . . . . . . . . . (161,540) (5)
-------- --------
Net cash provided by financing activities . . . . . . . . . . . . . . . . 23,896 38,729
-------- --------
Effects of changes in foreign exchange rates . . . . . . . . . . . . . . . 3,508 (5,011)
-------- --------
Increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . 6,509 (10,281)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . 33,530 39,758
-------- --------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . $ 40,039 $ 29,477
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Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,429 $ 10,788
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,340 26,981
See accompanying Notes to Special-Purpose, Consolidated Interim Financial
Statements.
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W. R. GRACE & CO.
NOTES TO SPECIAL-PURPOSE, CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 1. BASIS OF PRESENTATION
The Special-Purpose, Consolidated Interim Financial Statements of
Grace New York and NMC (together with Grace New York, the "Company") have been
prepared by the Company in accordance with the accounting policies stated in
the Special-Purpose, Consolidated Financial Statements in the Joint Proxy
Statement-Prospectus and should be read in conjunction with the Notes to
Special-Purpose, Consolidated Financial Statements appearing therein. In the
opinion of the Company, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation have been included in the
interim financial statements. The results for the six-month period ended June
30, 1996 may not necessarily be indicative of the results for the fiscal year
ending December 31, 1996.
NOTE 2. INVENTORIES
JUNE 30, 1996
-----------------
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,460
Manufactured goods in process . . . . . . . . . . . . . . . . . . . . . . . . . . 3,378
Manufactured and purchased inventory available for sale . . . . . . . . . . . . . 32,608
-----------------
44,446
Health care supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,039
-----------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 73,485
=================
NOTE 3. COMMITMENTS AND CONTINGENCIES
See Note 15 to the Special-Purpose, Consolidated Financial Statements
in the Joint Proxy Statement-Prospectus.
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W. R. GRACE & CO.
SPECIAL-PURPOSE, CONSOLIDATED INTERIM FINANCIAL STATEMENTS
WEIGHTED AVERAGE NUMBER OF SHARES AND
EARNINGS USED IN PER SHARE COMPUTATIONS
(UNAUDITED)
The weighted average number of shares of Common
Stock outstanding were as follows:
(IN THOUSANDS)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------------------------
1996 1995 1996 1995
------ ------ ------ ------
Weighted average number of shares
of common stock outstanding . . . . . . . . . 96,634 95,116 97,259 94,629
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Income used in the computation of
earnings per share was as follows:
(IN THOUSANDS EXCEPT PER SHARE)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------------------------
1996 1995 1996 1995
---- ---- ---- ----
Net income . . . . . . . . . . . . . . . . . $33,918 $37,105 $60,363 $63,121
Dividends paid on preferred stocks . . . . . (130) (131) (261) (261)
------- ------- ------- -------
Income used in per share computation
of earnings . . . . . . . . . . . . . . . . $33,788 $36,974 $60,102 $62,860
======= ======= ======= =======
Earnings per share . . . . . . . . . . . . . $ 0.35 $ 0.39 $ 0.62 $ 0.66
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