Grace Reports Third Quarter 2012 Adjusted EPS of $1.04 and Narrows 2012 Earnings Outlook

  Grace Reports Third Quarter 2012 Adjusted EPS of $1.04 and Narrows 2012
  Earnings Outlook

  *Base pricing and sales volumes increased 5.3 percent, offset by lower rare
    earth surcharges and currency translation
  *Sales in emerging regions increased 17 percent
  *2012 outlook for Adjusted EBIT narrowed to the range of $510 to $520
    million

Business Wire

COLUMBIA, Md. -- October 24, 2012

W. R. Grace & Co. (NYSE: GRA) announced third quarter net income of $75.5
million, or $0.99 per diluted share. Net income for the prior-year quarter was
$81.3 million, or $1.07 per diluted share. Adjusted EPS was $1.04 per diluted
share compared with $1.16 per diluted share for the prior-year quarter.

Net income for the nine months ended September 30, 2012, was $205.7 million,
or $2.70 per diluted share, compared with $211.3 million, or $2.80 per diluted
share for the prior-year period. Adjusted EPS was $3.07 per diluted share
compared with $3.06 per diluted share for the prior-year period.

“Our results were in line with our plan,” stated Fred Festa, Grace’s Chairman
and Chief Executive Officer. “All three of our operating segments improved
base pricing and increased sales volumes as strong growth in the emerging
regions offset weaker demand in the advanced economies. Our disciplined
approach to productivity, cost control and working capital improved earnings
and cash flow in the quarter.”

Third Quarter Results

Third quarter sales of $776.6 million declined 10.1 percent compared with the
prior-year quarter as improved base pricing (+3.7 percent) and higher sales
volumes (+1.6 percent) were offset by lower rare earth surcharges (-9.5
percent) and unfavorable currency translation (-5.9 percent). Sales in
emerging regions represented 39.1 percent of sales and grew 16.8 percent
compared with the prior-year quarter. Acquisitions contributed $7.2 million to
sales in the quarter, while divestitures decreased sales by $5.3 million.

Gross profit of $284.8 million declined 10.0 percent compared with the
prior-year quarter as improved base pricing and higher sales volumes were more
than offset by unfavorable currency translation, unfavorable product mix and
the impact of lower rare earth costs and volumes on capitalized inventory
values. Gross margin of 36.7 percent increased 10 basis points compared with
the prior-year quarter, continuing at the top-end of the company’s target
range of 35 to 37 percent.

Adjusted EBIT of $129.1 million decreased 9.0 percent compared with $141.9
million in the prior-year quarter. The decrease primarily was due to lower
segment operating income in Catalysts Technologies and Materials Technologies,
which partially was offset by higher segment operating income in Construction
Products and lower corporate expenses. Adjusted EBIT margin improved to 16.6
percent compared with 16.4 percent in the prior-year quarter.

Adjusted EBIT Return On Invested Capital was 34.6 percent on a trailing
four-quarter basis, compared with 32.6 percent for the prior-year quarter. The
increase in Adjusted EBIT Return On Invested Capital primarily was due to
improved working capital management.

Nine Month Results

Sales for the nine months ended September 30, 2012, decreased 1.2 percent to
$2.36 billion as improved base pricing (+4.8 percent) and higher sales volumes
(+2.0 percent) were offset by unfavorable currency translation (-4.1 percent)
and lower rare earth surcharges (-3.9 percent). Sales in emerging regions
represented 36.3 percent of sales and grew 14.8 percent compared with the
prior-year period.

Gross profit of $866.0 million decreased 0.8 percent compared with the
prior-year period. Gross margin of 36.7 percent increased 10 basis points
compared with the prior-year period.

Adjusted EBIT was $384.0 million, an increase of 3.7 percent compared with the
prior-year period. The improvement in Adjusted EBIT was due to improved
pricing, higher sales volumes and lower expenses.

Catalysts Technologies

Sales down 19.0 percent; segment operating income down 17.9 percent

Third quarter sales for the Catalysts Technologies operating segment, which
includes specialty catalysts and additives for refinery, plastics and other
chemical process applications, were $298.9 million, a decrease of 19.0 percent
compared with the prior-year quarter. The decrease was due to lower rare earth
surcharges (-22.3 percent) and unfavorable currency translation (-4.5
percent), which more than offset improved base pricing (+7.4 percent) and
increased sales volumes (+0.4 percent).

Sales of FCC catalysts decreased during the quarter due to lower rare earth
surcharges and unfavorable currency translation. Base pricing improved
approximately 9 percent and sales volumes increased approximately 4 percent.
Sales volumes were adversely affected by approximately $22 million, or 7
percent, due to the previously announced refinery closures.

Sales of polypropylene catalysts increased double digits compared with the
prior-year quarter. Sales of polyethylene catalysts declined due to inventory
destocking in Europe and Asia.

Segment gross margin was 40.5 percent compared with 40.2 percent in the
prior-year quarter. The increase in gross margin primarily was due to improved
base pricing and lower manufacturing costs.

Segment operating income was $92.0 million compared with $112.1 million in the
prior-year quarter. Segment operating margin was 30.8 percent, an increase of
40 basis points compared with the prior-year quarter.

Materials Technologies

Sales down 3.4 percent; segment operating income down 4.1 percent

Third quarter sales for the Materials Technologies operating segment, which
includes packaging technologies and engineered materials for consumer,
industrial, coatings and pharmaceutical applications, were $214.4 million
compared with $222.0 million in the prior-year quarter. The 3.4 percent
decrease was due to unfavorable currency translation (-8.2 percent) which more
than offset higher sales volumes (+4.2 percent) and improved pricing (+0.6
percent).

Segment gross margin was 32.8 percent compared with 33.3 percent in the
prior-year quarter. The decrease in gross margin was due to higher
manufacturing costs incurred during the quarter.

Segment operating income was $39.8 million, a decrease of 4.1 percent compared
with the prior-year quarter. Segment operating margin was 18.6 percent
compared with 18.7 percent in the prior-year quarter.

Construction Products

Sales down 3.6 percent; segment operating income up 21.5 percent

Third 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 $263.3
million, a decrease of 3.6 percent compared with the prior-year quarter.
Higher sales volumes (+1.1 percent) and improved pricing (+1.1 percent) were
offset by unfavorable currency translation (-5.8 percent). The acquisition of
Rheoset Industria during the quarter contributed $7.2 million to sales, which
more than offset a $5.3 million decrease in sales due to the 2011 divesture of
the vermiculite business.

Sales of Construction Products in emerging regions, which represented 35.2
percent of sales, increased 13.1 percent compared with the prior-year quarter
due to strong sales in emerging Asia, Latin America and the Middle East. Sales
in North America, which represented 39.9 percent of sales, decreased 5.8
percent, primarily due to lower demand for residential reroofing products
resulting from last year’s mild winter. Sales of specialty construction
chemicals in North America increased approximately 4 percent. Sales in Western
Europe, which represented 14.3 percent of sales, decreased 26.9 percent
compared with the prior-year quarter due to unfavorable currency translation,
the continuing weak construction environment and the company’s decision to
exit low-margin business in Southern Europe.

Segment gross margin of 35.4 percent increased 90 basis points compared with
the prior-year quarter primarily due to improved pricing, higher sales volumes
and a favorable sales mix comparison between the acquired and divested or
exited businesses.

Segment operating income of $36.7 million increased 21.5 percent compared with
the prior-year quarter primarily due to improved gross margin. Segment
operating margin improved to 13.9 percent compared with 11.1 percent in the
prior-year quarter.

Other Expenses

Total corporate expenses of $21.8 million decreased 16.2 percent compared with
the prior-year quarter, primarily due to disciplined cost control and
previously announced restructuring actions.

Defined benefit pension expense for the third quarter was $17.6 million
compared with $15.9 million for the prior-year quarter. The 10.7 percent
increase primarily was due to year-over-year changes in actuarial assumptions
including lower discount rates and a lower expected long-term rate of return
on plan assets.

Interest expense was $11.5 million for the third quarter compared with $11.1
million for the prior-year quarter. The annualized weighted average interest
rate on pre-petition obligations for the third quarter was 3.6 percent.

Income Taxes

Income taxes are recorded at a global effective tax rate of approximately 33.0
percent. Income taxes paid in cash, net of refunds, were $41.6 million during
the nine months ended September 30, 2012, or approximately 13.5 percent of
income before income taxes.

Grace 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 expects to generate significant U.S. Federal net operating
losses upon emergence from bankruptcy.

Since Grace will not emerge from bankruptcy this year, the company expects to
use approximately $35 million in carryover tax credits and approximately $18
million in domestic production incentives to reduce U.S. Federal taxable
income in 2012. These credits and deductions would not have been available had
Grace emerged from bankruptcy and generated a U.S. Federal net operating loss
in 2012. Grace expects its 2012 global cash tax rate to increase from 13.5
percent to approximately 22.5 percent for this year only as the company works
to maximize the present value of its current and future tax attributes.

Cash Flow

Net cash provided by operating activities for the nine months ended September
30, 2012, was $282.8 million compared with $54.7 million in the prior-year
period. The improved cash flow primarily was due to lower pension
contributions and improved working capital performance.

Adjusted Free Cash Flow was $286.1 million for the nine months ended September
30, 2012, compared with $155.2 million in the prior-year period.

2012 Outlook

As of October 24, 2012, Grace updated its outlook for 2012 Adjusted EBIT to
the range of $510 million to $520 million, an increase of 6 to 9 percent
compared with 2011 Adjusted EBIT of $478.6 million. The company expects 2012
Adjusted EBITDA in the range of $630 million to $640 million.

The following updated assumptions are components of Grace’s 2012 outlook:

  *Consolidated sales of approximately $3.15 billion. Improved sales volumes
    and base pricing are offset by lower rare earth surcharges and unfavorable
    currency translation of approximately $170 million and $115 million,
    respectively;
  *Consolidated gross margin in the high end of the 35-37 percent target
    range;
  *An average euro exchange rate of $1.28 for the fourth quarter, compared
    with an average of $1.34 for the fourth quarter of 2011;
  *An effective tax rate of 33.0 percent;
  *Capital expenditures of approximately $140 million; and
  *Diluted shares outstanding at year end of approximately 77 million.

Grace is unable to make a reasonable estimate of the income effects of the
consummation of the Joint Plan of Reorganization (the “Plan”) because the
value of certain consideration payable to the asbestos trusts under the Plan
(primarily the deferred payments and the warrant) will not ultimately be
determined until the effective date of the Plan, the timing of which is
uncertain. When the Plan is consummated, Grace expects to reduce its
liabilities subject to compromise, including asbestos-related contingencies,
recognize the value of the deferred payments and the warrant and recognize
expense for the costs of consummating the Plan and the income tax effects of
these items.

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 Plan, which was reaffirmed on June 11,
2012 following a motion for reconsideration. Five parties have appeals pending
before the Third Circuit Court of Appeals.

The timing of Grace’s emergence from Chapter 11 will depend on the
satisfaction or waiver of the remaining conditions set forth in the Plan. The
Plan sets forth how all pre-petition claims and demands against Grace will be
resolved. See Grace’s most recent periodic reports filed with the SEC for a
detailed description of the Plan.

Grace has not recorded accounting adjustments for the Plan because of the
uncertainty of the value of the consideration payable to the asbestos trusts
under the Plan (primarily the deferred payments and the warrant). Grace may
adjust the recorded amount of its asbestos-related liabilities prior to the
effective date of the Plan if it determines that the currently recorded amount
of its asbestos-related liabilities does not represent a reasonable estimate
of the consideration payable to the asbestos trusts. Grace will adjust its
asbestos-related liabilities when material conditions to the Plan are
satisfied and when the consideration payable to the asbestos trusts under the
Plan can be measured. Such adjustment will be made no later than the effective
date of the 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 +1.866.730.5766 (international callers dial +1.857.350.1590) and
entering conference ID 84018437. Investors are advised to access the call at
least ten minutes early in order to register. An audio replay will be
available at 1:00 p.m. ET on October 24 and will be accessible by dialing
+1.888.286.8010 (international callers dial +1.617.801.6888) and entering
conference call ID 14454327. 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 6,000 people in over 40
countries and had 2011 net sales of $3.2 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, all statements
regarding Grace’s Chapter 11 case; expected financial positions; results of
operations; cash flows; financing plans; business strategy; budgets; 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: developments affecting
Grace’s bankruptcy, proposed plan of reorganization and settlements with
certain creditors, the cost and availability of raw materials (including rare
earth) and energy, developments affecting Grace’s underfunded and unfunded
pension obligations, risks related to foreign operations, especially in
emerging regions, acquisitions and divestitures of assets and gains and losses
from dispositions or impairments, the effectiveness of its research and
development and growth investments, its legal and environmental proceedings,
costs of compliance with environmental regulation and those 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 of 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.


Chart 1
W. R. Grace & Co. and Subsidiaries
Consolidated Statements of Operations (unaudited)
                            Three Months Ended     Nine Months Ended
                             September 30,          September 30,
In millions, except per     2012       2011       2012         2011
share amounts
                                                                
Net sales                    $ 776.6     $ 864.2     $ 2,357.7     $ 2,386.3
Cost of goods sold            491.8    547.8    1,491.7    1,512.9 
Gross profit                   284.8       316.4       866.0         873.4
                                                                   
Selling, general and           130.8       148.2       401.2         424.0
administrative expenses
Restructuring expenses and     1.1         0.1         6.4           1.0
related asset impairments
Research and development       15.4        16.8        47.9          49.1
expenses
Defined benefit pension        17.6        15.9        53.2          47.5
expense
Interest expense and           11.5        11.1        34.1          32.5
related financing costs
Provision for                  0.6         1.1         1.8           1.6
environmental remediation
Chapter 11 expenses, net       4.4         4.4         12.6          16.9
of interest income
Libby medical program          0.1         -           19.6          -
settlement
Equity in earnings of          (4.9  )     (5.5  )     (13.8   )     (13.2   )
unconsolidated affiliate
Other (income) expense,       (3.2  )   2.7      (6.0    )   0.8     
net
Total costs and expenses      173.4    194.8    557.0      560.2   
Income before income taxes     111.4       121.6       309.0         313.2
Provision for income taxes    (35.4 )   (40.4 )   (102.0  )   (102.5  )
Net income                     76.0        81.2        207.0         210.7
Less: Net loss (income)
attributable to               (0.5  )   0.1      (1.3    )   0.6     
noncontrolling interests
Net income attributable to
W. R. Grace & Co.           $ 75.5    $ 81.3    $ 205.7     $ 211.3   
shareholders
                                                                   
Basic earnings per share:
Net income attributable to
W. R. Grace & Co.            $ 1.01      $ 1.10      $ 2.75        $ 2.87
shareholders
Weighted average number of     75.0        73.7        74.7          73.5
basic shares
                                                                   
Diluted earnings per
share:
Net income attributable to
W. R. Grace & Co.            $ 0.99      $ 1.07      $ 2.70        $ 2.80
shareholders
Weighted average number of   76.4     75.7     76.2       75.5    
diluted shares
                                                                   
The Notes to the Financial Information are included as part of the Earnings
Release.



Chart 2
W. R. Grace & Co. and Subsidiaries
Analysis of Operations (unaudited)
                  Three Months Ended September 30,   Nine Months Ended September 30,
In millions,
except per share  2012       2011       % Change   2012         2011         % Change
amounts
Net sales:                                                                   
Catalysts          $ 298.9     $ 369.2     (19.0  )%   $ 939.7       $ 979.8       (4.1   )%
Technologies
Materials            214.4       222.0     (3.4   )%     652.6         668.1       (2.3   )%
Technologies
Construction       263.3    273.0   (3.6   )%   765.4      738.4     3.7    %
Products
Total Grace net   $ 776.6   $ 864.2   (10.1  )%  $ 2,357.7   $ 2,386.3   (1.2   )%
sales
Net sales by
region:
North America      $ 245.8     $ 289.9     (15.2  )%   $ 731.7       $ 788.2       (7.2   )%
Europe Middle        276.9       336.9     (17.8  )%     879.8         934.6       (5.9   )%
East Africa
Asia Pacific         160.4       155.1     3.4    %      490.1         435.9       12.4   %
Latin America      93.5     82.3    13.6   %    256.1      227.6     12.5   %
Total net sales   $ 776.6   $ 864.2   (10.1  )%  $ 2,357.7   $ 2,386.3   (1.2   )%
by region
                                                                       
Profitability
performance
measures:
(A)(B)(C)
Adjusted EBIT:
Catalysts
Technologies       $ 92.0      $ 112.1     (17.9  )%   $ 291.2       $ 291.9       (0.2   )%
segment
operating income
Materials
Technologies         39.8        41.5      (4.1   )%     122.3         125.7       (2.7   )%
segment
operating income
Construction
Products segment     36.7        30.2      21.5   %      92.7          76.1        21.8   %
operating income
Corporate
support
functions
(including           (16.0 )     (18.3 )   12.6   %      (50.8   )     (56.3   )   9.8    %
performance
based
compensation)
Other corporate
costs (including
non-asbestos         (5.8  )     (7.7  )   24.7   %      (18.2   )     (19.5   )   6.7    %
environmental
remediation)
Defined benefit
pension expense    (17.6 )   (15.9 )  (10.7  )%   (53.2   )   (47.5   )  (12.0  )%
(C)
Adjusted EBIT        129.1       141.9     (9.0   )%     384.0         370.4       3.7    %
Chapter 11- and
asbestos-related     (5.7  )     (9.3  )   38.7   %      (36.1   )     (24.0   )   (50.4  )%
costs, net
Restructuring
expenses and         (1.1  )     (0.1  )   NM            (6.4    )     (1.0    )   NM
related asset
impairments
Loss on sale of      (0.2  )     -         NM            (0.2    )     -           NM
product line
Divestment           -           -         -      %      (0.2    )     -           NM
expenses
Interest expense
and related          (11.5 )     (11.1 )   (3.6   )%     (34.1   )     (32.5   )   (4.9   )%
financing costs
Interest income
of non-Debtor        0.3         0.3       -      %      0.7           0.9         (22.2  )%
subsidiaries
Provision for      (35.4 )   (40.4 )  12.4   %    (102.0  )   (102.5  )  0.5    %
income taxes
Net income
attributable to    $ 75.5    $ 81.3    (7.1   )%  $ 205.7     $ 211.3     (2.7   )%
W.R. Grace & Co.
shareholders
                                                                                   
Diluted EPS        $ 0.99    $ 1.07    (7.5   )%  $ 2.70      $ 2.80      (3.6   )%
(GAAP)
Adjusted EPS      $ 1.04    $ 1.16    (10.3  )%  $ 3.07      $ 3.06      0.3    %
(non-GAAP)
                                                                       
Chapter 11- and
asbestos-related
costs, net:
Chapter 11
expenses, net of   $ 4.4       $ 4.4       -      %    $ 12.6        $ 16.9        (25.4  )%
interest income
Libby medical
program              0.1         -         NM            19.6          -           NM
settlement
Asbestos
administration       1.3         1.1       18.2   %      4.6           3.4         35.3   %
costs
Provision for
environmental
remediation          0.6         (0.1  )   NM            0.8           0.3         166.7  %
related to
asbestos, net
D&O insurance
cost related to      0.1         0.4       (75.0  )%     0.2           1.2         (83.3  )%
Chapter 11
Chapter 11
financing
related (D):
Translation
effects -            (5.2  )     27.3      (119.0 )%     2.3           -           NM
intercompany
loans
Value of
currency forward
contracts -          4.7         (23.6 )   119.9  %      (4.0    )     0.7         NM
intercompany
loans
Certain other
currency           (0.3  )   (0.2  )  (50.0  )%   -          1.5       (100.0 )%
translation
costs, net
Chapter 11- and
asbestos-related  $ 5.7     $ 9.3     (38.7  )%  $ 36.1      $ 24.0      50.4   %
costs, net
                                                                                   
The Notes to the Financial Information are included as part of the Earnings Release.



Chart 2 (continued)
W. R. Grace & Co. and Subsidiaries
Analysis of Operations (unaudited)
               Three Months Ended September 30,     Nine Months Ended September 30,
In millions    2012       2011       % Change     2012        2011        % Change
Profitability
performance                                                               
measures:
Gross margin:
Catalysts         40.5  %     40.2  %   0.3     pts     41.0   %     40.5   %   0.5    pts
Technologies
Materials         32.8  %     33.3  %   (0.5  ) pts     32.7   %     33.6   %   (0.9 ) pts
Technologies
Construction      35.4  %     34.5  %   0.9     pts     34.9   %     34.1   %   0.8    pts
Products
Total Grace       36.7  %     36.6  %   0.1     pts     36.7   %     36.6   %   0.1    pts
                                                                                       
Operating
margin:
(A)(B)
Catalysts         30.8  %     30.4  %   0.4     pts     31.0   %     29.8   %   1.2    pts
Technologies
Materials         18.6  %     18.7  %   (0.1  ) pts     18.7   %     18.8   %   (0.1 ) pts
Technologies
Construction      13.9  %     11.1  %   2.8     pts     12.1   %     10.3   %   1.8    pts
Products
Total Grace       16.6  %     16.4  %   0.2     pts     16.3   %     15.5   %   0.8    pts
                                                                                       
Adjusted
EBITDA:
Adjusted
EBIT:
Catalysts       $ 92.0      $ 112.1     (17.9 ) %     $ 291.2      $ 291.9      (0.2 ) %
Technologies
Materials         39.8        41.5      (4.1  ) %       122.3        125.7      (2.7 ) %
Technologies
Construction      36.7        30.2      21.5    %       92.7         76.1       21.8   %
Products
Corporate         (39.4 )     (41.9 )   6.0     %       (122.2 )     (123.3 )   0.9    %
Total Grace       129.1       141.9     (9.0  ) %       384.0        370.4      3.7    %
                                                                                       
Depreciation
and
amortization:
Catalysts       $ 13.3      $ 13.6      (2.2  ) %     $ 40.5       $ 39.1       3.6    %
Technologies
Materials         7.3         7.7       (5.2  ) %       22.1         23.6       (6.4 ) %
Technologies
Construction      8.6         8.8       (2.3  ) %       24.2         25.5       (5.1 ) %
Products
Corporate         0.5         0.9       (44.4 ) %       2.1          1.7        23.5   %
Total Grace       29.7        31.0      (4.2  ) %       88.9         89.9       (1.1 ) %
                                                                                       
Adjusted
EBITDA:
Catalysts       $ 105.3     $ 125.7     (16.2 ) %     $ 331.7      $ 331.0      0.2    %
Technologies
Materials         47.1        49.2      (4.3  ) %       144.4        149.3      (3.3 ) %
Technologies
Construction      45.3        39.0      16.2    %       116.9        101.6      15.1   %
Products
Corporate         (38.9 )     (41.0 )   5.1     %       (120.1 )     (121.6 )   1.2    %
Total Grace       158.8       172.9     (8.2  ) %       472.9        460.3      2.7    %
                                                                                       
Adjusted
EBITDA
margin:
(A)(B)
Catalysts         35.2  %     34.0  %   1.2     pts     35.3   %     33.8   %   1.5    pts
Technologies
Materials         22.0  %     22.2  %   (0.2  ) pts     22.1   %     22.3   %   (0.2 ) pts
Technologies
Construction      17.2  %     14.3  %   2.9     pts     15.3   %     13.8   %   1.5    pts
Products
Total Grace     20.4  %   20.0  %  0.4    pts   20.1   %   19.3   %  0.8   pts
                                                                                       
The Notes to the Financial Information are included as part of the Earnings Release.


                                        
Chart 2 (continued)
W. R. Grace & Co. and Subsidiaries
Analysis of Operations (unaudited)       
                                          Nine Months Ended September 30,
In millions                              2012         2011         % Change
Cash flow measure: (A)                                             
Net cash provided by (used for)           $ 282.8       $ 54.7        NM
operating activities
Capital expenditures                       (94.0   )   (97.1   )  3.2   %
Free Cash Flow                              188.8         (42.4   )   NM
Chapter 11 expenses paid                    9.9           15.8        (37.3 )%
Accelerated defined benefit pension         83.4          180.0       (53.7 )%
plan contributions
Expenditures for asbestos-related         4.0        1.8       122.2 %
environmental remediation
Adjusted Free Cash Flow                  $ 286.1     $ 155.2     84.3  %
                                                                      
                                                                      
                                                    
Calculation of Adjusted EBIT Return On
Invested Capital (trailing four
quarters): (A)
Adjusted EBIT                             $ 492.2       $ 450.0
Invested Capital:
Trade accounts receivable                   483.4         480.2
Inventories                                 309.0         355.1
Accounts payable                          (253.2  )   (270.7  )
                                            539.2         564.6
Other current assets (excluding income      78.2          95.4
taxes)
Properties and equipment, net               735.4         719.1
Goodwill                                    170.0         149.0
Investment in unconsolidated affiliate      81.2          69.3
Other assets                                122.5         111.5
Other current liabilities (excluding        (247.4  )     (270.6  )
income taxes and restructuring)
Other liabilities (including              (54.5   )   (57.4   )
non-asbestos environmental remediation)
Total Invested Capital                   $ 1,424.6   $ 1,380.9 
                                                                      
Adjusted EBIT Return On Invested          34.6    %   32.6    %
Capital
                                                                      
Amounts may not add due to rounding.
                                                                      
The Notes to the Financial Information are included as part of the Earnings
Release.



Chart 3
W. R. Grace & Co. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
                                                    Nine Months Ended
                                                     September 30,
In millions                                         2012         2011
Operating Activities                                             
Net income                                           $ 207.0       $ 210.7
Reconciliation to net cash provided by operating
activities:
Depreciation and amortization                          88.9          89.9
Equity in earnings of unconsolidated affiliate         (13.8   )     (13.2   )
Chapter 11 expenses, net of interest income            12.6          16.9
Chapter 11 expenses paid                               (9.9    )     (15.8   )
Libby medical program settlement                       19.6          -
Libby medical program settlement paid                  (19.6   )     -
Provision for income taxes                             102.0         102.5
Income taxes paid, net of refunds                      (41.6   )     (38.3   )
Tax benefits from stock-based compensation             (23.0   )     -
Interest accrued on pre-petition liabilities           30.0          29.0
subject to compromise
Restructuring expenses and related asset               6.4           1.0
impairments
Payments for restructuring expenses and related        (7.2    )     (6.3    )
asset impairments
Defined benefit pension expense                        53.2          47.5
Payments under defined benefit pension                 (122.5  )     (260.0  )
arrangements
Provision for environmental remediation                1.8           1.6
Expenditures for environmental remediation             (8.1    )     (7.7    )
Changes in assets and liabilities, excluding
effect of currency translation:
Trade accounts receivable                              (3.7    )     (86.8   )
Inventories                                            20.6          (89.3   )
Accounts payable                                       (6.0    )     54.8
All other items, net                                 (3.9    )   18.2    
Net cash provided by operating activities            282.8      54.7    
Investing Activities
Capital expenditures                                   (94.0   )     (97.1   )
Businesses acquired, net of cash acquired              (40.5   )     (55.8   )
Transfer to restricted cash and cash equivalents       (24.1   )     (27.7   )
Other investing activities                           0.5        6.8     
Net cash used for investing activities               (158.1  )   (173.8  )
Financing Activities
Net borrowings under credit arrangements               24.6          10.0
Proceeds from exercise of stock options                25.7          10.3
Tax benefits from stock-based compensation             23.0          -
Other financing activities                           5.1        4.7     
Net cash provided by financing activities            78.4       25.0    
Effect of currency exchange rate changes on cash     (0.2    )   2.2     
and cash equivalents
Increase (decrease) in cash and cash equivalents       202.9         (91.9   )
Cash and cash equivalents, beginning of period       1,048.3    1,015.7 
Cash and cash equivalents, end of period            $ 1,251.2   $ 923.8   
                                                                   
The Notes to the Financial Information are included as part of the Earnings
Release.



Chart 4
W. R. Grace & Co. and Subsidiaries
Consolidated Balance Sheets (unaudited)
                                                 September 30,  December 31,
In millions                                      2012           2011
                                                                  
ASSETS
Current Assets
Cash and cash equivalents                         $  1,251.2      $  1,048.3
Restricted cash and cash equivalents                 160.6           136.5
Trade accounts receivable, less allowance of         471.2           461.8
$4.8 (2011- $8.1)
Accounts receivable - unconsolidated affiliate       12.2            11.2
Inventories                                          309.0           329.1
Deferred income taxes                                58.8            66.5
Other current assets                                95.1         93.0    
Total Current Assets                                 2,358.1         2,146.4
                                                                  
Properties and equipment, net                        735.4           723.5
Goodwill                                             170.0           148.2
Patents, licenses and other intangible assets,       84.5            70.6
net
Deferred income taxes                                756.5           759.4
Asbestos-related insurance                           500.0           500.0
Overfunded defined benefit pension plans             32.8            37.1
Investment in unconsolidated affiliate               81.2            70.8
Other assets                                       38.0         38.0    
Total Assets                                     $  4,756.5    $  4,494.0 
                                                                  
LIABILITIES AND EQUITY
Liabilities Not Subject to Compromise
Current Liabilities
Debt payable within one year                      $  72.4         $  57.9
Debt payable - unconsolidated affiliate              3.5             3.4
Accounts payable                                     253.0           257.1
Accounts payable - unconsolidated affiliate          0.2             0.5
Other current liabilities                           305.1        314.0   
Total Current Liabilities                            634.2           632.9
                                                                  
Debt payable after one year                          13.2            3.3
Debt payable - unconsolidated affiliate              22.1            18.3
Deferred income taxes                                24.1            19.8
Underfunded and unfunded defined benefit             380.6           407.4
pension plans
Other liabilities                                   43.6         49.1    
Total Liabilities Not Subject to Compromise          1,117.8         1,130.8
                                                                  
Liabilities Subject to Compromise
Debt plus accrued interest                           965.3           941.8
Income tax contingencies                             80.7            69.3
Asbestos-related contingencies                       1,700.0         1,700.0
Environmental contingencies                          143.3           149.9
Postretirement benefits                              189.6           185.2
Other liabilities and accrued interest              157.6        149.5   
Total Liabilities Subject to Compromise             3,236.5      3,195.7 
Total Liabilities                                   4,354.3      4,326.5 
                                                                  
Equity
Common stock                                         0.8             0.7
Paid-in capital                                      516.5           472.9
Retained earnings                                    506.8           301.1
Treasury stock, at cost                              (20.6    )      (36.8   )
Accumulated other comprehensive loss                (610.7   )    (578.5  )
Total W. R. Grace & Co. Shareholders' Equity        392.8        159.4   
Noncontrolling interests                            9.4          8.1     
Total Equity                                       402.2        167.5   
Total Liabilities and Equity                     $  4,756.5    $  4,494.0 
                                                                  
The Notes to the Financial Information are included as part of the Earnings
Release.


                                                                                        
Chart 5
W. R. Grace & Co. and Subsidiaries
Adjusted Earnings Per Share (unaudited)
In millions,
except per share  Three Months Ended September 30, 2012       Nine Months Ended September 30, 2012
amounts
                             Tax at                                       Tax at
                   Pre-Tax  Actual    After-Tax  Per Share  Pre-Tax  Actual    After-Tax  Per Share
                             Rate                                         Rate
Diluted Earnings                                    $ 0.99                                       $ 2.70
Per Share (GAAP)
                                                                                                 
Restructuring
expenses and       $  1.1    $ 0.3      $  0.8        0.01      $  6.4    $ 1.9      $  4.5        0.06
related asset
impairments
Chapter 11- and
asbestos-related      5.7      1.6         4.1        0.05         36.1     11.8        24.3       0.32
costs, net
                                                                                                 
Discrete tax
items:
Discrete tax
items, including
adjustments to                 0.8         (0.8 )     (0.01 )               0.5         (0.5 )     (0.01 )
uncertain tax
positions
                                                                                 
Adjusted EPS                                 $ 1.04                               $ 3.07  
(non-GAAP) (A)
                                                                                 
In millions,
except per share  Three Months Ended September 30, 2011       Nine Months Ended September 30, 2011
amounts
                             Tax at                                       Tax at
                   Pre-Tax  Actual    After-Tax  Per Share  Pre-Tax  Actual    After-Tax  Per Share
                             Rate                                         Rate
Diluted Earnings                                    $ 1.07                                       $ 2.80
Per Share (GAAP)
                                                                                                 
Restructuring
expenses and       $  0.1    $ -        $  0.1        -         $  1.0    $ 0.3      $  0.7        0.01
related asset
impairments
Chapter 11- and
asbestos-related      9.3      3.0         6.3        0.08         24.0     6.8         17.2       0.23
costs, net
                                                                                                 
Discrete tax
items:
U.S. federal
income tax                     1.8         (1.8 )     (0.02 )               1.8         (1.8 )     (0.02 )
settlement
Discrete tax
items, including
adjustments to                 (2.3 )      2.3        0.03                  (2.7 )      2.7        0.04
uncertain tax
positions
                                                                                 
Adjusted EPS                                 $ 1.16                               $ 3.06  
(non-GAAP) (A)
                                                                                                 
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, Chapter 11- and
asbestos-related costs, net, divestment expenses, restructuring expenses and
related asset impairments and gains and losses on sales of product lines and
other investments. 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 Chapter 11 expenses paid, cash paid to resolve
contingencies subject to Chapter 11, accelerated payments under defined
benefit pension arrangements, and expenditures for asbestos-related
environmental remediation. 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
cash to shareholders. Adjusted EPS means Diluted EPS adjusted for
restructuring expenses and related asset impairments, Chapter 11- and
asbestos-related costs, net, gains or losses on sales of product lines and
related divestment expenses, 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 EPS, Adjusted EBITDA, Adjusted Free Cash
Flow, 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
income and expenses of items related to asbestos and Chapter 11.

(B): Grace's segment operating income includes only Grace's share of income
from consolidated and unconsolidated joint ventures.

(C): Defined benefit pension expense includes all defined benefit pension
expense of Grace. Catalysts Technologies, Materials Technologies, and
Construction Products segment operating income and corporate costs do not
include amounts for defined benefit pension expense.

(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 Chapter 11- and
asbestos-related costs, net.

NM – Not Meaningful


Contact:

W. R. Grace & Co.
Media Relations
Mike Jones, 410.531.8228
mike.jones@grace.com
or
Investor Relations
Mark Sutherland, 410.531.4590
mark.sutherland@grace.com