W.R. Grace records $38.9 million first-quarter net loss, lower sales

By Caroline Salls

Pittsburgh, April 23 - W.R. Grace & Co. reported a $38.9 million net loss for the quarter ended March 31 on $682.1 million in net sales, according to a company news release.

The figures showed a decline from the $20.6 million net income posted in the quarter ended March 31, 2008 on $759.2 million in net sales.

According to the release, the sales decrease can be primarily attributed to lower volumes and unfavorable currency translation, partially offset by higher selling prices in both of the company's operating segments.

In addition, the company said its 2009 and 2008 net loss results were negatively affected by Chapter 11 expenses, litigation and other matters not related to its core operations.

"Our results this quarter were in line with our expectations," chairman, president and chief executive officer Fred Festa said in the release.

"We planned for a tough operating environment this quarter and implemented the actions needed to better position our business for the future.

"We improved our operational effectiveness, reduced our workforce, and decreased our working capital by almost $90 million. I'm pleased with the progress we have made."

Grace said it recorded a $19.1 million pre-tax charge in the first quarter related to cost reduction and restructuring actions in its manufacturing operations and administrative functions.

The company said these actions are expected to improve earnings and cash flow beginning in the second quarter and are targeted to save about $22 million in operating costs in the current year.

Grace said it expects these actions, together with cost reduction and restructuring actions completed in 2008, to produce more than $40 million of annualized cost savings by 2010.

The company had $553.7 million in cash and cash equivalents at March 31, compared with $460.1 million at Dec. 31 and $460.8 million at March 31, 2008. Grace said it believes that its current liquidity sources are sufficient to support its business operations, strategic initiatives and Chapter 11 proceedings until it emerges from bankruptcy.

Additionally, the company said it is exploring sources of up to $1 billion in new financing to fund its plan of reorganization.

W.R. Grace, a Columbia, Md.-based specialty chemicals company, filed for bankruptcy on April 2, 2001. Its Chapter 11 case number is 01-01139.

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