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GRACE REPORTS FIRST QUARTER EPS OF $0.50
UP 19% FROM CONTINUING OPERATIONS
UP 27% YEAR-TO-DATE

COLUMBIA, Maryland, July 20, 2000 -- W. R. Grace & Co. (NYSE: GRA) today reported 2000 second quarter income from continuing operations of $34.6 million, or $0.50 per diluted share (EPS), compared to $30.4 million or $0.42 in the second quarter of 1999 - a 19.0% increase in EPS. Net income in the second quarter was also $34.6 million compared to $25.7 million in the prior year second quarter, up 34.6% - and up 42.9% on a per share basis. (Net income in 1999 includes a $4.7 million after-tax loss from discontinued operations.)

Sales for the quarter totaled $384.6 million compared to $373.0 million in the prior year quarter, a 3.1% increase. Excluding currency translation impacts, the sales increase was 6.4%. Pretax income from core operations was $58.7 million compared to $52.4 million in the second quarter of 1999, a 12.0% increase. The quarterly operating margin on core operations was 15.3%, up 1.3 percentage points from 1999.

"We are pleased with our second quarter results," said Grace Chairman, President and Chief Executive Officer Paul J. Norris. "We met our earnings growth targets for the quarter and we are confident in doing so for the rest of the year. Davison Chemicals delivered an outstanding quarter with nearly a 20% improvement in their earnings driven by sales growth and productivity. In addition, we recently completed two more bolt-on acquisitions that should add nearly $50 million in new revenue."

Year-to-date, Grace reported net sales of $749.5 million, a 4.3% increase versus 1999. (Excluding currency translation impacts, sales were up 7.6%.) Pretax income from core operations for the six-month period was $98.5 million versus $77.9 million in 1999, a 26.4% increase. The year-to-date operating margin was 13.1%, up 2.3 percentage points from the prior year. Earnings and diluted EPS from continuing operations were $58.8 million and $0.85 compared to $49.2 million and $0.67, respectively, for the first six months of 1999, an increase of 26.9% on a per share basis.


CORE OPERATIONS

Davison Chemicals
Refining Catalysts, Chemical Catalysts and Silica Products
Second quarter sales for the Davison Chemicals segment were $189.0 million, up 5.4% from the prior year. Excluding currency translation impacts, sales were up 10.0%. Operating income of $37.6 million was up 19.7% and operating margin of 19.9% was 2.4 percentage points above the 1999 second quarter. Year-to-date, sales were $374.7 million, up 6.7% from 1999 (excluding currency translation impacts, sales were up 11.5%), with operating income of $70.5 million, up 32.8% versus the year-ago period.

Sales of refining catalysts, which include fluid cracking catalysts (FCC) and additives and hydroprocessing catalysts, were up 8.2% (12.4% excluding currency translation) compared to the 1999 second quarter, reflecting volume gains across all product groups. North American and European FCC and additives volumes continued to be strong in the second quarter. Latin American sales increased due to hydroprocessing volume gains. Hydroprocessing sales were supplemented by the acquisition in January of the Crosfield Group's hydroprocessing catalyst business. Sales of chemical catalysts increased 11.3% over the second quarter of 1999, with solid polyolefin catalysts sales and improved sales in other chemical catalysts. Sales of silica products were up 3.3% before currency impacts, primarily from strong sales into coatings applications. After currency translations, sales were down 2.8% compared with the 1999 second quarter.


Performance Chemicals
Construction Chemicals, Building Materials and Container Products
Second quarter sales for the Performance Chemicals segment were $195.6 million, up 1.0% from the prior year. (Excluding currency translation impacts, sales were up 3.2%.) Operating income was $31.1 million, down 2.8% over the prior year quarter, and operating margin was 15.9%, a 0.6 percentage point decrease from the 1999 second quarter. Quarterly operating income and margins were affected by weather- related project delays in building materials as well as by higher freight and petroleum-based raw material costs. Year-to-date sales were $374.8 million, up 2.1% from 1999, while operating income was $50.2 million, up 2.9% versus the year-ago period.

Sales of specialty construction chemicals, which include concrete admixtures, cement additives and masonry products, were up 7.4% versus the year-ago quarter driven by the penetration of high performance products. Sales of specialty building materials, which include waterproofing and fire protection products, were flat for the quarter. The second quarter was negatively impacted by unusually wet weather, especially in April and May, which has delayed re-roofing and commercial projects. Sales of container products, which include container sealants, closure systems and coatings, were down 6.2% from the second quarter of 1999 (down 2.4% before the effect of currency translation).


NONCORE ACTIVITIES

Expenses of noncore activities netted to $0.6 million for the quarter, compared to net expenses of $1.4 million for the second quarter of 1999. Noncore activities included a number of unusual income and expense items such as pension credits, gains on sales of securities and other noncore assets and income from life insurance assets, offset by costs for certain legal and environmental matters, primarily related to Grace's former operations in Libby, Montana.

Other Highlights

During the quarter Grace announced the acquisition of the Ludox colloidal silicas business of the DuPont Company. Yesterday, Grace announced an agreement with Tyumen Oil Co. of Russia to market hydroprocessing catalysts in Eastern Europe and the former Soviet Union. Earlier today, Grace announced the acquisition of the Hampshire Polymers Business from the Hampshire Chemical Corporation, a subsidiary of The Dow Chemical Company.

In addition, Grace repurchased 800,000 common shares during the quarter and 3.1 million common shares year-to-date. At June 30, 2000 there were approximately 67.0 million shares outstanding.


Grace will be hosting an earnings conference call to discuss second quarter results on July 21, 2000 at 10:00am EDT. The call will be available live on our website at www.grace.com. Anyone interested in listening to a playback recording of the call may do so by calling 1-800-633-8284, reservation #15534988, beginning at 1:00pm on July 21st until 1:00pm on Tuesday, July 25th or by downloading it at www.grace.com.


This announcement contains "forward-looking" information. Future results may differ from those discussed in this announcement. Information concerning some of the factors that could cause such differences can be found under the heading "Projections and Other Forward-Looking Information" in Grace's current Annual Report on Form10-K.







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