Grace emerged from bankruptcy on February 3, 2014. Grace paid approximately $1,900 million in emergence-related claims and other costs. This included payments to the PI Trust and the PD Trust, pre-petition bank debt, drawn letters of credit, environmental settlements, income tax settlements, amounts due to vendors, and other non-asbestos claims, plus accrued interest for certain of these items as well as other emergence costs. Grace will satisfy all other liabilities previously subject to compromise as they become due and payable after emergence.

Grace funded these payments through a combination of approximately $1,360 million of cash on hand and approximately $900 million in exit financing. The exit financing consisted of a $700 million term loan and a €150 million term loan. See Note 8 for a discussion of Grace's exit financing.

Pro forma Information (Unaudited) The below table presents the pro forma consolidated balance sheet of Grace as of December 31, 2013, reflecting the accounting effects of the Joint Plan as if it became effective on that date. The income tax effects of the pro forma adjustments have been computed at a 37.41% U.S. Federal and state income tax rate. Grace is not required to adopt fresh-start accounting at emergence since existing shareholders continue to retain a majority interest in the Company on the Effective Date, and Grace is not balance sheet insolvent. Following is a description of the pro forma adjustments:


1.	Borrowings Under New Credit Agreements—Reflects $900 million of debt borrowed on the Effective Date. Cash proceeds were approximately $873 million after approximately $27 million of origination fees and other costs of the exit financing, including original issue discount.

Consideration to the Asbestos Trusts—Reflects the transfer by Grace to the PI Trust and the PD Trust of (i) cash (including restricted cash) of approximately $512 million, (ii) the PI Deferred Payment Obligations, (iii) the PD Deferred Payment Obligation, (iv) the warrant, and (v) rights to proceeds from Grace's asbestos-related insurance coverage. See Note 2 for a discussion of this consideration. The related deferred income tax assets are reclassified from temporary differences to NOL carryforward.

Grace expects to recognize income tax deductions on the Deferred Payments when cash payments are made. Grace has determined that payments of the U.S. ZAI contingent payments are not probable, and no such payments are included in this pro forma.

Payment of Remaining Pre-Petition Liabilities and Adjustment for Additional Expenses—Reflects the payment of pre-petition bank debt, drawn letters of credit, environmental settlements, income tax settlements, amounts due to vendors and other non-asbestos claims, accrued interest for certain of these items, and other emergence costs on the Effective Date. The related deferred income tax assets are reclassified from temporary differences to NOL carryforward. Also reflects approximately $12 million of emergence costs, which are assumed fully deductible for tax purposes.

NOLs and Future Tax Deductions—Reflects U.S. Federal and state income tax deductions attributable to the payment of certain bankruptcy claims. U.S. Federal and state NOL carryforwards are assumed to increase to approximately $670 million (tax effected at approximately $252 million). In addition, under current U.S. Federal and state income tax law, future deductions are expected in the amount of $1,580 million when the deferred payments are made and $490 million when the warrant is settled.

These future payments are expected to create additional NOL carryforwards in the years paid. It is expected that use of these U.S. Federal tax benefits will be unrestricted and that a valuation allowance will not be established. U.S. state tax benefits associated with these future payments may have some restrictions and a partial valuation allowance may be recorded. The realization of the tax benefits depends on the amount and timing of future U.S. taxable income and the avoidance of limitation events that would apply in the event that Grace undergoes an "ownership change" (as defined by the Internal Revenue Code).

Reclassification of Liabilities Subject to Compromise—Reflects certain items that were classified as Liabilities Subject to Compromise as of December 31, 2013, and were not paid at emergence, which were reclassified to the appropriate liability accounts at emergence. This includes income tax contingencies, postretirement benefits, and environmental contingencies that will be paid as they come due after emergence.

W. R. Grace and Co. and Subsidiaries

Pro forma Consolidated Balance Sheet (unaudited)



			Pro forma Adjustments
(In millions, except par value and shares)	December 31, 2013 Reported		Borrowings Under New Credit Agreements		Consideration to the Asbestos Trusts			Payment of Remaining Pre-Petition Liabilities and Adjustment for Additional Expenses			Reclassifications at Emergence			December 31, 2013 Pro forma
ASSETS
Current Assets
Cash and cash equivalents	$	964.8	$	873.0	$	(269.6	)	$	(1,370.6	)	$	153.2		$	350.8
Restricted cash and cash equivalents	395.4		—		(242.2		)	—			(153.2		)	—
Trade accounts receivable, less allowance of $6.0	469.5		—		—			—			—			469.5
Accounts receivable—unconsolidated affiliate	12.3		—		—			—			—			12.3
Inventories	295.3		—		—			—			—			295.3
Deferred income taxes	58.1		—		—			—			—			58.1
Other current assets	99.0		—		—			—			—			99.0
Total Current Assets	2,294.4		873.0		(511.8		)	(1,370.6		)	—			1,285.0
Properties and equipment, net of accumulated depreciation and amortization of $1,876.8	829.9		—		—			—			—			829.9
Goodwill	457.5		—		—			—			—			457.5
Technology and other intangible assets, net	315.5		—		—			—			—			315.5
Deferred income taxes:
Net operating loss carryforward	—		—		111.0			141.2			—			252.2
Temporary differences	845.9		—		(111.0		)	(134.1		)	—			600.8
Asbestos-related insurance	500.0		—		(500.0		)	—			—			—
Overfunded defined benefit pension plans	16.7		—		—			—			—			16.7
Investment in unconsolidated affiliate	96.2		—		—			—			—			96.2
Other assets	40.0		27.0		—			—			—			67.0
Total Assets	$	5,396.1	$	900.0	$	(1,011.8	)	$	(1,363.5	)	$	—		$	3,920.8
LIABILITIES AND EQUITY
Liabilities Not Subject to Compromise
Current Liabilities
Debt payable within one year	$	76.6	$	9.0	$	—		$	—		$	—		$	85.6
Debt payable—unconsolidated affiliate	4.5		—		—			—			—			4.5
Accounts payable	249.5		—		—			—			—			249.5
Accounts payable—unconsolidated affiliate	13.0		—		—			—			—			13.0
PI warrant liability	—		—		490.0			—			—			490.0
Other current liabilities	292.0		—		—			7.2			38.8			338.0
Total Current Liabilities	635.6		9.0		490.0			7.2			38.8			1,180.6
Debt payable after one year	5.3		891.0		—			—			—			896.3
Debt payable—unconsolidated affiliate	24.3		—		—			—			—			24.3
Deferred payment obligations	—		—		594.5			—			—			594.5
Deferred income taxes	18.2		—		—			—			—			18.2
Income tax contingencies	—		—		—			—			76.6			76.6
Underfunded defined benefit pension plans	66.2		—		—			—			—			66.2
Unfunded pay-as-you-go defined benefit pension plans	233.4		—		—			—			95.9			329.3
Other liabilities	65.8		—		—			—			105.2			171.0
Total Liabilities Not Subject to Compromise	1,048.8		900.0		1,084.5			7.2			316.5			3,357.0
Liabilities Subject to Compromise
Debt plus accrued interest	1,137.8		—		—			(1,135.7		)	(2.1		)	—
Income tax contingencies	76.6		—		—			—			(76.6		)	—
Asbestos-related contingencies	2,092.4		—		(2,084.1		)	—			(8.3		)	—
Environmental contingencies	134.5		—		—			(77.5		)	(57.0		)	—
Postretirement benefits	176.3		—		—			(27.7		)	(148.6		)	—
Other liabilities and accrued interest	158.5		—		(12.2		)	(122.4		)	(23.9		)	—
Total Liabilities Subject to Compromise	3,776.1		—		(2,096.3		)	(1,363.3		)	(316.5		)	—
Total Liabilities	4,824.9		900.0		(1,011.8		)	(1,356.1		)	—			3,357.0
Equity
Common stock issued, par value $0.01; 300,000,000 shares authorized; outstanding: 77,046,143 (2012—75,565,409)	0.8		—		—			—			—			0.8
Paid-in capital	533.4		—		—			—			—			533.4
Retained earnings	15.8		—		—			(7.4		)	—			8.4
Treasury stock, at cost: shares: 0 (2012—1,414,351)	—		—		—			—			—			—
Accumulated other comprehensive loss	10.6		—		—			—			—			10.6
Total W. R. Grace & Co. Shareholders' Equity	560.6		—		—			(7.4		)	—			553.2
Noncontrolling interests	10.6		—		—			—			—			10.6
Total Equity	571.2		—		—			(7.4		)	—			563.8
Total Liabilities and Equity	$	5,396.1	$	900.0	$	(1,011.8	)	$	(1,363.5	)	$	—		$	3,920.8