Grace posts fourth-quarter loss after $51 million cleanup charge

It earned $22.1 million for all of 2002, however

January 30, 2003|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

W.R. Grace & Co. yesterday reported a loss for its fourth quarter after recording a pretax charge of $51 million relating to environmental cleanup costs.

The Columbia chemical maker, which is operating under bankruptcy protection, lost $25.5 million, or 39 cents per diluted share, in the three months that ended Dec. 31. In the fourth quarter of 2001, Grace earned $21.2 million, or 32 cents per share.

For all of 2002, net earnings were $22.1 million, or 34 cents per share, compared with $78.6 million, or $1.20 per share reported for 2001.

Company officials blamed last year's results on continued weakness in the global economy and in U.S. commercial construction activity. The higher cost of doing business was also a factor bringing down earnings.

"We still believe that we're in a difficult economic cycle and that we're going to be faced with challenges - at least through the first half of 2003 - like we saw in the second half of 2002," said Robert M. Tarola, Grace's chief financial officer. "We see a mixed economy. Some segments are strong and strengthening, and some weak and languishing. We're looking at 2003 to be more or less like the economy in 2002."

"Our operating profits were down in the fourth quarter by 7.6 percent, but they were only slightly off for the full year," Tarola said. "The entire cost of doing business in a post-Sept. 11 environment has brought higher insurance costs, medical costs and pension costs.

Sales in the quarter were up 5.7 percent, to $453.4 million compared with $429.1 million in the year-earlier quarter.

Fourth quarter earnings were also negatively affected by an $8.7 million pretax charge for Chapter 11-related expenses, which were partially offset by lower interest expense.

The largest blow to earnings by far was the result of a judgment against Grace in a lawsuit seeking recovery of cleanup costs for the company's old vermiculite mining and processing sites near Libby, Mont. Grace had estimated in December that it would take a pretax charge of at least $20 million, but said yesterday that the original figure was at the "low end of the range."

"With this $51 million charge, we have now reserves of $63 million on our books to address this problem," Tarola said.

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