~

Balancing Growth and Profitability: Managing Today for Tomorrow

CDMA 2004 Spring MeetingMarch 16, 2004

W. R. Grace & Co.

2

~ Business Profile

LA 5%

AP16%

EU34%

NA45%

Net Revenues $1.98B Operating EBIT $227M

Global Mix? Operations on 6 continents in nearly 40 countries? Over 6,000 employees worldwide? Davison

? 16 facilities? Grace Performance Chemicals

? 62 production facilities ? 70 sales offices

Catalysts71%

Silicas29%

Sealants & Coatings

27%

ConstructionChemicals

48%

Building Materials

25%

Davison52%

PerformanceChemicals

48%

Performance Chemicals

48%

Davison52%

Specialty Chemical and Materials Enterprise

3

~ Strategic Themes

? Approaching World Class? Management focus? Cultural integration? Extend safety culture beyond operations? Develop culture of environmental awareness

? Resource for growth? PRISM stage gate process to manage

internal development? High growth segments? Accretive and strategically compelling

acquisitions

? Maintain technology and marketleadership

? Strong business performance? Platforms for future growth

? Six Sigma? Materials management? Energy? Census management? Discretionary expense control? Business model changes

Environmental, Health & Safety Foundation Businesses

Growth Productivity

Strategy for Value Creation

4

~ Productivity

Productivity Targets

Strong Process and Performance

Productivity Performance

2000 2001 2002 2003 2003RR

2004

High Expectations

in 2004

Productivity Benefits in Plan (Amts in millions)

? GPC (150 specific projects) $24

? Davison (150 specific projects) 36

? Savings in Plan 60

? Less Inflation at a Blended 2.0% (35)

? Net Productivity in Plan $25

390 Active Projects in Hopper

1,471 Trained Employees

5

~ Productivity Goal Trees

Driving Accountability

GRACE $60

GPC $24 Davison $36

SCC SBM SSCSilicas Catalysts

ChemicalPolyolefinHydroFCC

6

~ Growth and Investment

Business platforms that support future growth

Fluid Cracking CatalystsSilica Gel, Precipitated, ColloidalNorth America Construction ChemicalsWaterproofingFire ProtectionCan Sealants

Acqu

isitio

nsSegments that

provide high growthFCC Catalyst SolutionsPolyolefin CatalystsDistillate HydroprocessingDigital Media SolutionsSeparationsCoatingsFibersSelf Consolidating ConcreteUnderlaymentsStructural Envelope Systems

($ amounts in millions)% Change '01

vs. '02% Change '02 vs.

'03

Revenue Growth Growth Segments 12.3 % 14.9 %

Foundation Segments 2.7 % 0.1 %2002 2003

Capital Expenditures $99.7 $99.5 Research & Development $51.1 $52.0

Product Initiatives and Investments Weighted Toward Growth Segments

GROWTHSEGMENTS

27% of 2004 Sales54% of R&D Spend

FOUNDATIONSEGMENTS

73% of 2004 Sales46% of R&D Spend

7

~

Foundation

Base

Strategic Growth Process

Existing New

Geographic Expansion

New

Existing

PRISM

Strategic Products

Dispersants STRUX STEALTH Pieri

SEAGULL

Flooring

ORIOLE

EO/PO

Precast

Elevated Deck

Tunneling

Liquid Fiber

Base Optimize

Base Custom

High-Solids TDA for Cement

Customer Service

Architectural precast

HTEM

Avantium

Architectural cast-in-place

GDP + 2.5 - 3.0 x GDP

Technology Platforms

Growth Products

Bolt on Acquisitions

8

~

Strategic Technical Service/ Application Resources

New focus on test marketing

Build a barrier to entry

Test Marketing &

Commercialization

DevelopmentBusiness Planning

PIP Feeding Ideas

Internal Growth Processes

PRISM – Robust Ongoing Process

Express Projects

• Modified product for existing customer

• Produce products in different plant

“NEXT”Process A process to identify

the “NeXt” large growth opportunity

“Express”Initiative

“STAR”Initiative

9

~

IDEAEVALUATION

IDEAEVALUATION

PRODUCT/BUSINESSPLANNING

PRODUCT/BUSINESSPLANNING

TESTMARKETING

TESTMARKETING

COMMERCIAL-IZATION

COMMERCIAL-IZATION

BUSINESS

STAGES

ONGOING

GATES

NO-GOHOLD NO-GO NO-GO NO-GO

EXTERNALDEVELOPMENT

EXTERNALDEVELOPMENT

ACQUISITIONSALLIANCES

DEVELOPMENTDEVELOPMENT

Internal Growth Process

FEASIBILITY REVIEW

MERITREVIEW

READINESSREVIEW

COMPLETE-NESS

REVIEW

WRAP-UPREVIEW

IDEAGENERATION

Strong Marketing/Technical Interface

PRISM

10

~ Upgrading PRISM

Customer Need

Function

Properties

Introduce

Follow-Up

Assess

PIP Rating QFD/KJ DFSS STAR TARGET

Idea Evaluation Development Test Marketing CommercializationBusiness PlanningPIP

Proof of Concept

Scale-up

Transfer

Strong Marketing/Technical Interface

11

~ Average Time (mos) for PRISM Projects per Stage

TOTAL

Stage 5 Commercial

Stage 4 Test Marketing

Stage 3 Develop.

Stage 2 Bus. Plan

Stage 1 Idea Eval.

SUBTOTAL

01/2001

4.5

8

10

6

40

21

11

07/2001

34

6

3

8

8

17

9

11/2001

41

3

7

7

12

22

12

03/2002

39

6

3

7

11

20

12

04/2002

38

6

1.5

7

11

19

12

08/2002MEDIAN

30

6

0

7

7

13

10

05/2003MEDIAN

26

5

0

7

7

12

7

08/2002

38

5

1.4

10

10

16.5

12

10/2003MEDIAN

33

5

0

12

11

16

3

Faster – But Not Fast Enough

12

~

AnnualRoundtable

Technical Training

& Information

StructuredFeedback

Real Influence on

New Products

• Annual roundtable discussions on technology and business developments

• Forum for complex issue resolution

• Survey given at annual roundtable

• Brainstorming at annual roundtable

• Online satisfaction survey

• Six Sigma training and participation on project teams

• Information available from more sources

• Opportunity to provide input to Grace product development efforts

• Opportunity to receive new Grace products before market introduction

Driving Commercialization Faster!

STAR A process to provide Grace with a more differentiated, proactive, and customized service offering

Annual Sessions Optimization of PRISM Process

Six Sigma and Other Technical Training

Utilization of Technology Goals

13

~ Project OverviewTech Building Idea Eval. Prod/Bus Plan. Development

Test Marketing Commercial Plant Relo Outside PRISM

Stat

us

Lead

er

Opp

ortu

nity

'0

6

Op

Plan

'04

$ YT

D

2003 2004

J F M A M J J A S O N D J F M A M J ($MM) ($MM) ($MM)

$0.3 $0.0 $0.0

Leader 2 $12.0 $1.94 $0.1

Leader 1 $2.0 $0.21 $0.06

Leader 1 $3.0 $0.12 $0.01

Leader 3 $35.0 $0.0 $0.0

Leader 2 undefined $0.0 $0.0

Leader 4 $7.8 $0.45 $0.04

Leader 4 $5 $0 $0

J F M A M J J A S O N D J F M A M J Totals $102.8 $2.7 $0.16

Leader 1

2003 2004

Project C

Project D

Project G

Project A

Project H

Project F

Project E

Project B

Y

G

Y

G

G

G

G

G

Comments

North America Sales training completed.

New project initiated at Martech.

Technical approval, goal: line trial this year.

Project charter complete & approved. Resources assigned.

Plans more trials.

Feedback pending.

Test marketing has started.

New project.

Disciplined Process

14

~ Express Projects

Stat

us

Lead

er

Leader 1

Product BLeader 2

Leader 3

Leader 1

J F M A M J J A S O N D J F M A M J Totals

Tech Building Idea Evaluation Prod/Bus Planning Development

Test Marketing Commercial Plant Relo Outside PRISM

Product A

2003 2004

Product C

Product D

G

G

G

G

Work With Selected Customers To Achieve Revenue Quickly

Short Projects which leverage existing know-how

? Reach sales run rate in less than 1 year

? Target opportunities greater than $500M

? Typically existing customers

? Know requirements for process change

15

~

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5Screen & Approach Full Acquire IntegratePrioritize Target Assessment Target Target

StrategicGrowthProcess

??

???

External Growth Process

Investments Accretive Within First 12 months

???

16

? Incremental revenues over $250 million

? Average cash returns of 21%.

? Significant progress on key strategic initiatives

• Geographic expansion in Specialty Construction Chemicals

• Product line expansion in Polyolefin Catalysts and Silica Products

• Technology and market expansion in Separations

RESULTS16 ACQUISITIONS (since 2000)

Completed

?????

???????

?

??

?

????

????

???

???

???

? ???

??

?

?

???

Good Strategic Mix

? Geographic Expansion - 4

? Technology/Material Science - 6

? Product Line/Market Expansion - 5

? Joint Venture - 1

Good Business Mix

? Davison – 8

? Performance Chemicals –8

16

~ Summary

People, Processes, Performance

?Maintain Strong Position in Foundation Businesses

?Balance Resources Between Growth and Productivity

?Strengthen Contemporary Processes

?Drive Accountability through Performance Metrics