1045309--2/29/2008--W_R_GRACE_&

related topics

{interest, director, officer}

{cost, operation, labor}

{operation, international, foreign}

{cost, regulation, environmental}

{cost, contract, operation}

{condition, economic, financial}

{debt, indebtedness, cash}

{tax, income, asset}

{property, intellectual, protect}

{gas, price, oil}

{loss, insurance, financial}

{acquisition, growth, future}

{system, service, information}

The outcome of our Chapter 11 cases could result in the substantial dilution or cancellation of Grace s currently outstanding common stock. Our proposed plan of reorganization provides for substantial dilution of the ownership interests of holders of currently outstanding Grace common stock. An alternative plan that has been filed with the bankruptcy court provides for cancellation of these ownership interests with the result that outstanding Grace common stock would likely become worthless. The bankruptcy process may disrupt our business. Chapter 11 limits the flexibility of our management team in running our business. We may not be able to collect all asbestos-related insurance payments that may be due to us. Grace is currently under criminal indictment in connection with our former vermiculite mining and processing activities in Libby, Montana. We are subject to environmental clean-up fines, penalties and damage claims that have been and continue to be costly. Our capital resources are limited and we have limited access to additional financing. We have unfunded and underfunded pension plan liabilities which will likely require us to use current and future operating cash flow to fund the shortfall. We have no assurance that we will generate sufficient cash flow to satisfy these obligations. The international scope of our operations subjects us to the risks of doing business in foreign countries, which could adversely affect our business, financial condition and results of operations. We are exposed to currency exchange rate fluctuations that could impact our profitability. future net operating loss carryovers to reduce future tax payments may be limited if there is a change in ownership of Grace or if Grace does not generate sufficient U.S. taxable income. We may be subject to claims of infringement of the intellectual property rights of others, which could hurt our business. While Grace is in bankruptcy, we are not permitted to pay dividends on Grace common stock. Prices for raw materials and energy are volatile; we may not be able to pass through increases in costs and expenses for raw materials and energy which may hurt our profitability. A substantial portion of our raw materials are commodities whose prices fluctuate as market supply/demand fundamentals change. We spend large amounts of money for environmental compliance in connection with our current and former operations. The length and depth of product and industry business cycles in our markets, particularly in the construction and petroleum refining industries, may result in periods of reduced sales, operating margins and operating losses. Some of our employees are unionized, represented by workers councils or employed subject to local laws that are less favorable to employers than the laws of the United States. We work with dangerous materials that can injure our employees, damage our facilities and disrupt our operations.

Full 10-K form ▸

1045309--2/29/2008--W_R_GRACE_&_CO