SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended
December 31, 1995
Commission File Number 1-3720
W. R. GRACE & CO. SALARIED EMPLOYEES
SAVINGS AND INVESTMENT PLAN
W. R. Grace & Co.
One Town Center Road
Boca Raton, Florida 33486-1010
Financial Statements and Exhibits
(a) Financial Statements. Filed as part of this Report on
Form 11-K are the financial statements of the W. R. Grace & Co.
Salaried Employees Savings and Investment Plan, as required by Form
11-K, together with the report thereon of Price Waterhouse LLP,
independent certified public accountants, dated May 3, 1996.
(b) Exhibits. The Consent of Price Waterhouse LLP is being
filed as an exhibit to this Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrative Committee has duly caused this annual report to be signed on
its behalf by the undersigned thereunto duly authorized.
W. R. GRACE & CO.
SALARIED EMPLOYEES
SAVINGS AND INVESTMENT PLAN
By: /s/ J. A. LONGO
----------------------------
J. A. Longo
Chairman, Administrative
Committee
Date: June 27, 1996
F-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
May 3, 1996
To the Participants and
Administrative Committee of the
W. R. Grace & Co. Salaried Employees
Savings and Investment Plan
In our opinion, the accompanying statement of net assets available for plan
benefits and the related statements of changes in net assets available for
plan benefits appearing on pages F-2 through F-4 of this report present
fairly, in all material respects, the net assets available for plan benefits
of the W. R. Grace & Co. Salaried Employees Savings and Investment Plan at
December 31, 1995 and 1994, and the changes in net assets available for plan
benefits for the years then ended, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the plan administrator and/or other plan fiduciaries (the "Plan
Fiduciaries"); our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements
in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and
significant estimates made by the Plan Fiduciaries, and evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for the opinion expressed above.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Fund Information in the statement
of net assets available for plan benefits and the statement of changes in net
assets available for plan benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits
and changes in net assets available for plan benefits of each fund. The Fund
Information has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PRICE WATERHOUSE LLP
F-2
W. R. GRACE & CO. SALARIED EMPLOYEES SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
DECEMBER 31, 1995 AND 1994
1995 1994
------------ ------------
Assets:
Investments:
Insurance company contracts, at
contract value $ 330,290,254 $ 312,776,263
Other securities, at cost 1,884,947 3,717,356
W. R. Grace & Co.
Common Stock
(cost: 1995, $71,710,197;
1994, $73,689,690) 136,517,615 102,138,946
Fidelity mutual funds
(cost: 1995, $125,005,664;
1994, $100,749,566)
Balanced Fund 32,713,136 36,288,392
Growth & Income Fund 18,334,825 7,439,265
Blue Chip Growth Fund 53,087,838 35,661,705
Contrafund 26,560,934 15,136,486
OTC Fund 6,398,460 2,434,871
Loans receivable 7,530,970 5,972,697
Contributions receivable 2,327,560 2,520,927
------------ ------------
Net assets available
for plan benefits $ 615,646,539 $ 524,086,908
============ ============
The accompanying notes to financial statements
are an integral part of this statement.
F-3
W.R. GRACE & CO. SALARIED EMPLOYEES
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
FIDELITY
FIXED INCOME GRACE STOCK EMPLOYEE STOCK BALANCED
FUND FUND OWNERSHIP PLAN FUND
------------ ------------ -------------- -----------
Contributions:
Participants .............. $ 14,527,789 $ 2,321,545 $ -- $ 3,316,451
Transfers among funds .... 8,384,569 (4,330,932) (14,707,064) (8,956,947)
Company ................... -- -- 9,623,343 --
------------ ------------ -------------- -----------
Total .................... 22,912,358 (2,009,387) (5,083,721) (5,640,496)
------------ ------------ -------------- -----------
Income from
investments:
Interest .................. 27,401,294 48,577 96,485 52,081
Dividends ................. -- --(*) -- 1,467,024
Net realized gain/(loss) . -- 4,832,560 5,578,158 (598,503)
Change in unrealized
appreciation ............. -- 6,416,015(*) 33,731,890 3,876,425
------------ ------------ -------------- -----------
Total .................... 27,401,294 11,297,152 39,406,533 4,797,027
------------ ------------ -------------- -----------
Less:
Participant withdrawals . 34,589,593 2,455,625 6,352,354 2,817,292
Administrative Expenses . 480,362 22,617 133,101 11,720
------------ ------------ -------------- -----------
Net increase/(decrease) .. 15,243,697 6,809,523 27,837,357 (3,672,481)
Net assets available for
plan benefits:
Beginning of year ........ 316,463,004 26,583,729 77,308,836 36,584,585
------------ ------------ -------------- -----------
End of year .............. $331,706,701 $33,393,252 $105,146,193 $32,912,104
============ ============ ============== ===========
(RESTUBBED TABLE CONTINUED FROM ABOVE)
FIDELITY
FIDELITY GROWTH BLUE CHIP FIDELITY FIDELITY LOANS
& INCOME FUND GROWTH FUND CONTRAFUND OTC FUND RECEIVABLE TOTAL
--------------- ----------- ----------- ---------- ---------- -----------
Contributions:
Participants .............. $ 1,637,301 $ 4,793,794 $ 2,774,097 $ 726,788 $ -- $ 30,097,765
Transfers among funds .... 6,210,998 4,522,277 4,685,324 2,223,354 1,968,421 0
Company ................... -- -- -- -- -- 9,623,343
--------------- ----------- ----------- ---------- ---------- -----------
Total .................... 7,848,299 9,316,071 7,459,421 2,950,142 1,968,421 39,721,108
--------------- ----------- ----------- ---------- ---------- -----------
Income from
investments:
Interest .................. 11,946 64,140 30,059 6,236 -- 27,710,818
Dividends ................. 755,020 4,133,831 2,066,717 359,605 -- 8,782,197
Net realized gain/(loss) . 180,851 1,141,490 627,359 151,338 -- 11,913,253
Change in unrealized
appreciation ............. 2,628,500 5,601,287 3,125,396 646,768 -- 56,026,281
--------------- ----------- ----------- ---------- ---------- -----------
Total .................... 3,576,317 10,940,748 5,849,531 1,163,947 -- 104,432,549
--------------- ----------- ----------- ---------- ---------- -----------
Less:
Participant withdrawals . 509,560 2,780,044 1,871,800 134,303 410,148 51,920,719
Administrative Expenses . 3,273 5,789 15,930 515 -- 673,307
--------------- ----------- ----------- ---------- ---------- -----------
Net increase/(decrease) .. 10,911,783 17,470,986 11,421,222 3,979,271 1,558,273 91,559,631
Net assets available for
plan benefits:
Beginning of year ........ 7,517,653 35,893,907 15,301,806 2,460,691 5,972,697 524,086,908
--------------- ----------- ----------- ---------- ---------- -----------
End of year .............. $18,429,436 $53,364,893 $26,723,028 $6,439,962 $7,530,970 $615,646,539
=============== =========== =========== ========== ========== ===========
- ------------
(*) Dividends received are reinvested in shares of Grace Common Stock and
reflected as part of Change in unrealized appreciation
The accompanying notes to financial statements
are an integral part of this statement.
F-4
W.R. GRACE & CO. SALARIED EMPLOYEES
SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1994
FIDELITY
FIXED INCOME GRACE STOCK EMPLOYEE STOCK BALANCED
FUND FUND OWNERSHIP PLAN FUND
------------ ------------ -------------- -----------
Contributions:
Participants .................. $ 15,319,654 $ 2,264,503 $ -- $ 4,903,959
Transfers among funds ......... 683,112 3,676,482 (5,720,077) (8,456,230)
Transfer to other plans ...... -- -- -- --
Company ....................... -- -- 10,764,311 --
------------ ------------ -------------- -----------
Total ........................ 16,002,766 5,940,985 5,044,234 (3,552,271)
------------ ------------ -------------- -----------
Income/(loss) from investments:
Interest ...................... 26,195,455 25,169 41,056 41,665
Dividends ..................... -- -- (*) -- 1,315,369
Net realized gain/(loss) ..... -- 725,180 370,468 (996,891)
Change in unrealized
(depreciation)/appreciation . -- (712,233)(*) (4,061,770) (2,694,545)
------------ ------------ -------------- -----------
Total ........................ 26,195,455 38,116 (3,650,246) (2,334,402)
------------ ------------ -------------- -----------
Less:
Participant withdrawals ...... 24,316,987 2,328,135 5,791,600 3,850,593
Administrative expenses ...... 283,523 22,966 133,871 14,226
------------ ------------ -------------- -----------
Net increase/(decrease) ........ 17,597,711 3,628,000 (4,531,483) (9,751,492)
Net assets available for plan
benefits:
Beginning of year .............. 298,865,293 22,955,729 81,840,319 46,336,077
------------ ------------ -------------- -----------
End of year .................... $316,463,004 $26,583,729 $77,308,836 $36,584,585
============ ============ ============== ===========
(RESTUBBED TABLE CONTINUED FROM ABOVE)
FIDELITY
FIDELITY GROWTH BLUE CHIP FIDELITY FIDELITY LOANS
& INCOME FUND GROWTH FUND CONTRAFUND OTC FUND RECEIVABLE TOTAL
--------------- ----------- ----------- ---------- ---------- -----------
Contributions:
Participants .................. $1,331,052 $ 3,892,689 $ 2,786,158 $ 454,631 $ -- $ 30,952,646
Transfers among funds ......... 682,236 3,076,319 (67,681) 26,760 6,099,079 0
Transfer to other plans ...... -- -- -- -- (9,858) (9,858)
Company ....................... -- -- -- -- -- 10,764,311
--------------- ----------- ----------- ---------- ---------- -----------
Total ........................ 2,013,288 6,969,008 2,718,477 481,391 6,089,221 41,707,099
--------------- ----------- ----------- ---------- ---------- -----------
Income/(loss) from investments:
Interest ...................... 4,387 25,638 14,481 2,011 -- 26,349,862
Dividends ..................... 540,721 766,111 104,873 21,528 -- 2,748,602
Net realized gain/(loss) ..... (37,087) (566) (194,020) (47,720) -- (180,636)
Change in unrealized
(depreciation)/appreciation . (364,578) 2,120,814 (120,532) (30,082) -- (5,862,926)
--------------- ----------- ----------- ---------- ---------- -----------
Total ........................ 143,443 2,911,997 (195,198) (54,263) -- 23,054,902
--------------- ----------- ----------- ---------- ---------- -----------
Less:
Participant withdrawals ...... 462,609 2,146,078 1,091,114 125,732 116,524 40,229,372
Administrative expenses ...... 1,935 5,148 14,459 244 -- 476,372
--------------- ----------- ----------- ---------- ---------- -----------
Net increase/(decrease) ........ 1,692,187 7,729,779 1,417,706 301,152 5,972,697 24,056,257
Net assets available for plan
benefits:
Beginning of year .............. 5,825,466 28,164,128 13,884,100 2,159,539 -- 500,030,651
--------------- ----------- ----------- ---------- ---------- -----------
End of year .................... $7,517,653 $35,893,907 $15,301,806 $2,460,691 $5,972,697 $524,086,908
=============== =========== =========== ========== ========== ===========
<FN>
- ------------
(*) Dividends received are reinvested in shares of Grace Common Stock and
reflected as part of Change in unrealized (depreciation)/appreciation.
The accompanying notes to financial statements
are an integral part of this statement.
F-5
W. R. GRACE & CO. SALARIED EMPLOYEES
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF THE PLAN:
The following description of the W. R. Grace & Co. Salaried Employees
Savings and Investment Plan ("Plan") provides only general information.
Participants should refer to the text of the Plan and the Summary Plan
Description and the Prospectus Supplement for the Plan for more complete
information.
General:
The Plan is a defined contribution plan originally adopted effective September
1, 1976, and has been amended from time to time. The Plan is subject to
certain provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
Eligibility and Vesting:
Within those units of W. R. Grace & Co. ("Grace") and its subsidiaries
(collectively, the "Company") designated as participating units in the Plan,
any salaried employee (or any salesman paid on a commission basis) and any
other employee in an eligible employment classification who has completed 12
months of employment (including 1,000 hours of service) is eligible to
participate in the Plan, subject to certain exceptions and special provisions.
A participant's interest in the Plan is always fully vested.
Contributions to the Plan:
Plan participants may elect to contribute to the Plan from 2% to 16% of their
compensation (which, for purposes of the Plan, consists of salary and/or
commissions, incentive compensation, specially granted bonus awards, shift
differential and overtime pay).
Participant contributions may be made from before-tax and/or after-tax income,
as provided under Sections 401(k) and 401(m) of the Internal Revenue Code,
subject to an annual dollar limit on before-tax contributions of $9,500 for
1995 ($9,240 for 1994), which is in turn subject to annual adjustment for
inflation and to regulations that restrict the contribution percentages of
highly compensated participants in order to prevent discrimination in their
favor. In addition, for both 1995 and 1994, federal income tax law limits to
$150,000 (subject to annual adjustment for inflation) the annual compensation
on which tax-qualified plan benefits may be based.
A Company contribution equal to 50% of each participant's contribution is made
to the Plan; however, no Company contribution is made with respect to a
participant's contribution in excess of 6% of his compensation. Therefore, the
maximum Company contribution is 3% of each participant's compensation, subject
to the annual limitations noted above.
Participants may elect to have their contributions invested in any one or more
of the following funds in which the Plan participates:
F-6
Fixed Income Fund
The Fixed Income Fund is invested in fixed income securities
or obligations, interest-bearing bank accounts or guaranteed
income funds established or maintained by licensed insurance
companies. Excess cash may be invested in short-term fixed
income securities.
Grace Stock Fund
The Grace Stock Fund is invested in Grace Common Stock.
Pending investment of cash credited to this Fund, this Fund
may invest in short-term securities.
Fidelity Mutual Funds. The Plan also offers the following
five Fidelity Mutual Funds to Plan participants:
Fidelity Balanced Fund is invested in both fixed
income securities and equity securities at all
times.
Fidelity Growth and Income Fund is invested in
equity securities at all times and may be invested
in fixed income securities, depending upon market
conditions.
Fidelity Blue Chip Growth Fund is invested in
equity securities of companies with higher than
average earnings growth.
Fidelity Contrafund is invested in equity
securities of companies generally out of favor with
the market that are judged by the Fund's investment
manager to be capable of above average growth in
value.
Fidelity OTC Portfolio is invested in equity
securities of smaller companies traded in the
over-the-counter market.
At December 31, 1995 and 1994, the number of participants contributing to the
Plan was 6,836 and 7,014, respectively, and the number of participants in the
various Funds (including former employees whose funds have not yet been
distributed and who no longer contribute to the Plan) were as follows:
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
Fixed Income 7,632 7,182
Grace Stock 11,281 2,140
Balanced 2,710 3,017
Growth & Income 1,464 1,245
Blue Chip 3,583 3,199
Contra 2,102 1,983
OTC 897 614
The Plan provides that a statement of each participant's account be sent to
the participant at least once a year. Presently, such statements are sent at
the end of each calendar quarter.
On any business day, participants may allocate their future contributions
among the Funds and transfer the amounts related to their prior contributions
in any of the Funds to other Funds. Transfers may be in whole dollar amounts
or in multiples of 5% of the participant's account.
F-7
Company contributions are generally credited to the Employee Stock Ownership
Plan ("ESOP Fund"). The ESOP Fund is invested in Grace Common Stock. The ESOP
Fund is an Employee Stock Ownership Plan, within the meaning of the Internal
Revenue Code.
Eligible employees (generally, those age 50 and older) may elect to transfer
all or a portion of their Company contributions once each year from the ESOP
Fund to any of the other Funds except the Grace Stock Fund. Such transfers may
be in whole dollar amounts or multiples of 5% of the participant's account.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Investments in publicly traded securities are valued at the last reported
sales price on the last day of the year. Investments in Fidelity Mutual Funds
are valued at the market prices quoted at year-end, which represent the net
asset value of securities held. Investments in commercial paper, U.S. Treasury
bills and U.S. government securities mutual funds are valued at cost, which
approximates market value. Investments in insurance company contracts are
stated at contract value, which represents contributions made under the
contract plus interest at the contract rate, less funds used for withdrawals.
Loans receivable are valued at cost, which approximates fair value.
The assets of the Plan are commingled in the Trust Fund of the W. R. Grace &
Co. Profit Sharing and Savings and Investment Plans ("Trust Fund") with the
assets of other tax-qualified profit sharing and savings and investment plans
maintained by the Company. The Trust Fund is administered by The Fidelity
Management Trust Company ("Trustee"). For each Fund, assets and investment
returns are allocated to each plan pro rata, based upon each plan's daily net
asset balance in the Fund and the Trust Fund's daily total net asset balance
attributable to the Fund. Income of each Fund is reinvested in that Fund,
except that dividends paid on shares of Grace Common Stock held in the ESOP
Fund are paid to participants on a quarterly basis or within 90 days after the
end of the calendar year in which the dividends are received. The Trustee
manages the Grace Stock Fund and the ESOP Fund by purchasing shares of Grace
Common Stock and by selling shares to the extent necessary to obtain cash for
disbursements and transfers from the Funds. Investment management of the Fixed
Income Fund and investment oversight of the Fidelity Mutual Funds is the
responsibility of the Investment and Benefits Committee appointed by the Grace
Board of Directors, except as delegated by that Committee.
The Plan recognizes a gain or loss on Grace Common Stock distributed to
participants in an amount equal to the difference between the market value at
the distribution date and the average cost of the shares distributed. The cost
of securities sold is determined on the basis of average cost, and a gain or
loss is recorded equal to the difference between average cost and the proceeds
from the sale.
Amounts transferred to successor trustees are deducted from the Plan's net
assets upon the divestiture of, or discontinuance of participation by, a
participating unit.
NOTE 3 - INVESTMENTS:
Fixed Income Fund:
The investments in the Fixed Income Fund consist primarily of guaranteed fixed
income contracts, as shown on the following page:
F-8
ISSUER & RATE VALUE AT DECEMBER 31, REPAYMENT TERMS
- ------------------------------- ----------------------------- -------------------------------
1995 1994
-------------- -------------
Metropolitan Life Insurance Co:
9.55% $ -- $ 49,842,876 Repaid in installments on
12/15/92, 12/15/93 and 12/15/95
9.05% 65,553,785 60,333,904 Repayable 10/15/96
7.00% 44,925,983 42,140,831 Repayable 12/15/99
Prudential Insurance Company:
9.13% 122,585,478 112,741,591 Repayable 6/1/97
New York Life:
5.91% 19,582,728 -- Repayable 12/15/99
John Hancock Mutual Life
Insurance Company:
7.02% 21,233,779 19,913,689 Repayable 6/30/01
7.85% 36,825,114 27,803,371 Repayable 12/15/00
6.01% 19,583,387 -- Repayable 6/15/98
-------------- ------------- -------------------------------
$330,290,254 $312,776,262
============== =============
Other investments in the Fixed Income Fund at December 31, 1995 and 1994
consisted of the following:
DECEMBER 31,
-----------------------
1995 1994
---------- -----------
Commercial paper, at cost, which
approximates market value $563,653 $2,722,418
========== ===========
Grace Stock Fund:
As of December 31, 1995 and 1994, the Grace Stock Fund held 556,273 and
679,212 shares of Grace Common Stock, respectively.
Sales/distributions of Grace Common Stock by/from the Grace Stock Fund
resulted in net realized gains, as shown below:
DECEMBER 31,
----------------------------
1995 1994
------------- -------------
Proceeds from sales/distributions of
securities $42,517,965 $17,367,689
Cost of securities sold/distributed 37,685,405 16,642,509
------------- -------------
Net realized gain $ 4,832,560 $ 725,180
============= =============
F-9
Other investments in the Grace Stock Fund under the Plan at December 31, 1995
and 1994 consisted of the following:
DECEMBER 31,
---------------------
1995 1994
---------- ---------
Commercial paper, at cost, which
approximates market value $367,685 $205,050
========== =========
ESOP Fund:
As of December 31, 1995 and 1994, this Fund held 1,752,693 and 1,965,142
shares of Grace Common Stock, respectively.
Sales/distributions of Grace Common Stock by/from the ESOP Fund under the Plan
resulted in net realized gains, as follows:
DECEMBER 31,
----------------------------
1995 1994
------------- -------------
Proceeds from sales/distributions of
securities $22,215,533 $11,936,398
Cost of securities sold/distributed 16,637,375 11,565,930
------------- -------------
Net realized gain $ 5,578,158 $ 370,468
============= =============
Other investments in the ESOP Fund at December 31, 1995 and 1994 consisted of
the following:
DECEMBER 31,
---------------------
1995 1994
---------- ---------
Commercial paper, at cost, which
approximates market value $953,609 $789,888
========== =========
NOTE 4 - FEDERAL INCOME TAXES:
On July 13, 1995, the Internal Revenue Service issued a letter stating that
the Plan, as currently in effect, is in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, the Plan continues to be
qualified, and the related Trust is tax exempt. As a result, no income taxes
are required to be paid by the Plan, and participants are not taxed on Company
contributions, before-tax contributions and any earnings or gains from
investments attributable to their Plan accounts while such contributions,
earnings and gains remain in the Trust.
F-10
NOTE 5- PLAN TERMINATION:
Grace anticipates that the Plan will continue indefinitely, but reserves the
right to amend or discontinue the Plan at any time. A participating unit may
terminate its participation in the Plan with the approval of Grace's Board of
Directors.