UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
(Rule 14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. __)
Filed by
the Registrant
o
Filed by
a Party other than the Registrant þ
Check
appropriate box:
o Preliminary
Proxy Statement
o Confidential,
For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
o Definitive
Proxy Statement
o Definitive
Additional Materials
þ Soliciting
Material under Rule 14a-12
Airgas, Inc.
(Name of
Registrant as Specified in Its Charter)
Air
Products Distribution, Inc.
Air Products and
Chemicals, Inc.
(Name of
Persons Filing Proxy Statement, if Other than Registrant)
Payment
of filing fee (Check the appropriate box):
þ No
fee required.
o Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title
of each class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
(3) Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed
maximum aggregate value of transaction:
(5) Total fee paid:
o Fee
paid previously with preliminary materials.
o Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
(1) Amount
Previously Paid:
(2) Form,
Schedule or Registration Statement No.:
(3) Filing
Party:
(4) Date
Filed:
News
Release7201
Hamilton Boulevard
Allentown,
PA 18195-1501
Air
Products Reports Fiscal 2010 Second Quarter Earnings
Access
the Q2 earnings teleconference scheduled for 10:00 a.m. Eastern Time on April 22
by calling 719-325-4848 and entering passcode
5946463, or listen on
the Web at: www.airproducts.com/Invest/financialnews/Earnings_Releases/Teleconference.htm.
Highlights
|
|
●
|
Sales
increased 15% versus prior year, up 3%
sequentially
|
|
|
●
|
Operating
margin improved to 16.2%*
|
|
|
●
|
Earnings
per share of $1.23, up 38%*
|
|
|
●
|
Raising
full-year guidance to $4.90 to $5.00, representing 21% to 23% EPS
growth*
|
LEHIGH
VALLEY, Pa. (April 22, 2010) – Air Products (NYSE:APD) today reported net income
of $267 million, or diluted earnings per share (EPS) of $1.23, for its fiscal
second quarter ended March 31, 2010. This result excludes an after-tax charge of
$15 million, or $0.07 per share, for costs associated with the tender offer for
the outstanding shares of Airgas, Inc.
The
discussion of second quarter results and guidance in this release is based on
non-GAAP comparisons excluding costs associated with the Airgas offer. A
reconciliation can be found at the end of this release.*
Second
quarter revenues of $2,249 million grew 15 percent primarily on improved volumes
in Tonnage Gases, and Electronics and Performance Materials. Energy and raw
material cost pass-through and favorable currency also contributed to the
increase in sales. Underlying sales grew nine percent. Operating income of $364
million rose 40 percent from the prior year due to higher volumes and lower
costs.
John
McGlade, chairman, president and chief executive officer, said, “We are seeing
improvement across our businesses. Our second quarter had strong underlying
revenue growth, continued margin improvement and significant earnings growth. We
are delivering on our commitments.”
Second Quarter Segment
Performance
|
|
●
|
Merchant
Gases sales of $922 million increased six percent versus the prior
year on favorable currency. Operating income of $178 million rose 14
percent from the prior year on higher volumes and lower
costs.
|
-more-
|
|
●
|
Tonnage Gases sales of
$757 million increased 21 percent on improved volumes from new plant
onstreams and existing steel and chemical customers, favorable currency
and higher raw material cost pass-through. Operating income of $107
million rose nine percent from the prior year on higher volumes and new
plant onstreams.
|
|
|
●
|
Electronics and Performance
Materials sales of $451 million increased 36 percent driven by
improved volumes. Operating income of $57 million was up significantly on
higher volumes and lower costs.
|
|
|
●
|
Equipment and Energy
sales of $119 million were down seven percent on declining ASU
orders. Operating income of $18 million increased 12 percent from the
prior year on higher LNG activity.
|
Outlook
McGlade
said, “I’m particularly pleased with the performance of the Air Products team
over the past year. Looking to the second half of our fiscal year, we are
forecasting earnings growth in excess of 20 percent for 2010. The gradual
economic recovery, combined with the leverage from our existing capacity, new
project onstreams and improving productivity should position us well to meet our
margin target of 17 percent in fiscal 2011. I want to assure our shareholders we
will stay focused on our goals as we pursue the strategic opportunities in front
of us.”
Air
Products now expects third quarter EPS from continuing operations to be between
$1.25 and $1.29 per share and full-year EPS from continuing operations of $4.90
to $5.00 per share.
Air
Products (NYSE:APD) serves customers in industrial, energy, technology and
healthcare markets worldwide with a unique portfolio of atmospheric gases,
process and specialty gases, performance materials, and equipment and services.
Founded in 1940, Air Products has built leading positions in key growth
markets such as semiconductor materials, refinery hydrogen, home healthcare
services, natural gas liquefaction, and advanced coatings and adhesives. The
company is recognized for its innovative culture, operational excellence and
commitment to safety and the environment. In fiscal 2009, Air Products had
revenues of $8.3 billion, operations in over 40 countries, and 18,900 employees
around the globe. For more information, visit www.airproducts.com.
ADDITIONAL
INFORMATION
On
February 11, 2010, Air Products Distribution, Inc., a wholly owned subsidiary of
Air Products and Chemicals, Inc. ("Air Products"), commenced a cash tender offer
for all the outstanding shares of common stock of Airgas, Inc. ("Airgas") not
already owned by Air Products, subject to the terms and conditions set forth in
the Offer to Purchase dated as of February 11, 2010 (the "Offer to Purchase").
The purchase price to be paid upon the successful closing of the cash
tender offer is $60.00 per share in cash, without interest and less any required
withholding tax, subject to the terms and conditions set forth in the Offer to
Purchase, as amended. The offer is scheduled to expire at midnight, New York
City time, on Friday, June 4, 2010, unless further extended in the manner set
forth in the Offer to Purchase.
-more-
Page 2 of 12
This
communication does not constitute an offer to buy or solicitation of an offer to
sell any securities. The tender offer is being made pursuant to a tender offer
statement on Schedule TO (including the Offer to Purchase, a related letter of
transmittal and other offer materials) filed by Air Products with the U.S.
Securities and Exchange Commission ("SEC") on February 11, 2010. INVESTORS AND SECURITY HOLDERS OF
AIRGAS ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY
IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Investors
and security holders can obtain free copies of these documents and other
documents filed with the SEC by Air Products through the web site maintained by
the SEC at http://www.sec.gov. The Offer to Purchase and related materials may
also be obtained for free by contacting the Information Agent for the tender
offer, MacKenzie Partners, Inc., at 212-929-5500 or toll-free at
800-322-2885.
In
connection with the proposed transaction, Air Products may file a proxy
statement with the SEC. Any definitive proxy statement will be mailed to
stockholders of Airgas. INVESTORS AND SECURITY HOLDERS OF
AIRGAS ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY
IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors
and security holders will be able to obtain free copies of these documents (if
and when available) and other documents filed with the SEC by Air Products
through the web site maintained by the SEC at http://www.sec.gov.
CERTAIN INFORMATION REGARDING
PARTICIPANTS
Air
Products and certain of its respective directors and executive officers may be
deemed to be participants in the proposed transaction under the rules of the
SEC. Security holders may obtain information regarding the names, affiliations
and interests of Air Products' directors and executive officers in Air Products'
Annual Report on Form 10-K for the year ended September 30, 2009, which was
filed with the SEC on November 25, 2009, and its proxy statement for the 2010
Annual Meeting, which was filed with the SEC on December 10, 2009. These
documents can be obtained free of charge from the sources indicated above.
Additional information regarding the interests of these participants in the
proxy solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will also be included in any proxy statement and
other relevant materials to be filed with the SEC when they become
available.
NOTE: This
release contains “forward-looking statements” within the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995, including earnings
guidance. These forward-looking statements are based on management’s reasonable
expectations and assumptions as of the date this presentation is made regarding
important risk factors. Actual performance and financial results may differ
materially from projections and estimates expressed in the forward-looking
statements because of many factors not anticipated by management, including,
without limitation, a slowdown in the global economic recovery; renewed
deterioration in economic and business conditions; poor demand for the Company's
products; future financial and operating performance of major customers and
industries served by the Company; inability to collect receivables from or
-more-
Page
3 of 12
recovery
of payments made by customers in bankruptcy proceedings; unanticipated contract
terminations
or customer cancellations or postponement of projects and sales; asset
impairments
due to economic conditions or specific product or customer events; unexpected
costs
associated with the Company’s cash tender offer for Airgas, Inc.; costs of
future restructuring
actions which are not currently planned or anticipated; the impact of
competitive products and pricing; interruption in ordinary sources of supply of
raw materials; the ability to recover unanticipated increased energy and raw
material costs from customers; costs and outcomes of litigation or regulatory
activities; charges related to current portfolio management and cost reduction
actions; the success of implementing cost reduction programs; inability to
achieve anticipated acquisition synergies; the timing, impact, and other
uncertainties of future acquisitions or divestitures; significant fluctuations
in interest rates and foreign currencies from that currently anticipated; the
continued availability of capital funding sources in all of the Company's
foreign operations; the impact of new or changed environmental, healthcare, tax
or other legislation and regulations in jurisdictions in which the Company and
its affiliates operate; the impact of new or changed financial accounting
guidance; the timing and rate at which tax credits can be utilized and other
risk factors described in the Company’s Form 10K for its fiscal year ended
September 30, 2009. The Company disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statements contained
in this document to reflect any change in the Company’s assumptions, beliefs or
expectations or any change in events, conditions, or circumstances upon which
any such forward-looking statements are based.
-more-
Page 4 of 12
*The presentation of non-GAAP measures is intended to enhance the
usefulness of financial information by providing measures which the Company’s management uses
internally to evaluate the Company's baseline performance. Presented below
are reconciliations of reported GAAP results to non-GAAP measures.
| Continuing Operations | ||||||||||||||||||||
| Q2 | Q2 | Q2 | Q3 |
YTD
|
||||||||||||||||
|
Millions
of Dollars
|
Operating
Income
|
Net
Income
|
Diluted
EPS
|
Diluted
EPS
|
Diluted
EPS
|
|||||||||||||||
|
2010
GAAP
|
$ | 340.6 | $ | 1.16 | ||||||||||||||||
|
2009
GAAP
|
260.4 | .89 | ||||||||||||||||||
|
%
Change GAAP
|
31 | % | 30 | % | ||||||||||||||||
|
2010
GAAP
|
$ | 340.6 | $ | 252.0 | $ | 1.16 | ||||||||||||||
|
Acquisition-related
costs
(tax
impact $8.8) (a)
|
23.4 | 14.6 | 0.7 | |||||||||||||||||
|
2010
Non-GAAP Measure
|
$ | 364.0 | $ | 266.6 | $ | 1.23 | ||||||||||||||
|
%
Change Non-GAAP Measure
|
40 | % | 38 | % | ||||||||||||||||
|
2010
Guidance (b)
|
$ | 1.25-$1.29 | $ | 4.90-$5.00 | ||||||||||||||||
|
2009
GAAP
|
$ | 3.00 | ||||||||||||||||||
|
%
Change
|
63%-67 | % | ||||||||||||||||||
|
2009
GAAP
|
$ | 3.00 | ||||||||||||||||||
|
Global
cost reduction plan
|
.94 | |||||||||||||||||||
|
Customer
bankruptcy and asset actions
|
.10 | |||||||||||||||||||
|
Pension
settlement
|
.02 | |||||||||||||||||||
|
2009
Non-GAAP Measure
|
$ | 4.06 | ||||||||||||||||||
|
%
Change Non-GAAP Measure
|
21%-23 | % | ||||||||||||||||||
|
Q2
Sales
|
Q2
Operating
Income
|
Margin
|
||||||||||||||||||
|
2010
GAAP
|
$ | 2,249.0 | $ | 340.6 | 15.1 | % | ||||||||||||||
|
2010
Non-GAAP Measure
|
2,249.0 | 364.0 | 16.2 | % | ||||||||||||||||
(a) Based on statutory tax rate of 37.4%
(b) Guidance excludes the impace of acquisition-related
costs
-more-
Page 5 of 12
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED
INCOME STATEMENTS
(Unaudited)
|
Three Months
Ended
31
March
|
Six Months
Ended
31
March
|
|||||||||||||||
|
(Millions
of dollars, except for share data)
|
20100
|
20099
|
20100
|
2009
|
||||||||||||
|
Sales
|
$ | 2,249.0 | $ | 1,955.4 | $ | 4,422.5 | $ | 4,150.7 | ||||||||
|
Cost
of sales
|
1,628.7 | 1,439.9 | 3,197.3 | 3,069.6 | ||||||||||||
|
Selling
and administrative
|
240.4 | 230.6 | 484.5 | 477.6 | ||||||||||||
|
Research
and development
|
26.3 | 29.6 | 53.5 | 62.8 | ||||||||||||
|
Global
cost reduction plan
|
— | — | — | 174.2 | ||||||||||||
|
Acquisition-related
costs
|
23.4 | — | 23.4 | — | ||||||||||||
|
Other
income, net
|
10.4 | 5.1 | 21.8 | 8.0 | ||||||||||||
|
Operating
Income
|
340.6 | 260.4 | 685.6 | 374.5 | ||||||||||||
|
Equity
affiliates’ income
|
32.2 | 27.0 | 59.1 | 51.5 | ||||||||||||
|
Interest
expense
|
29.5 | 30.0 | 61.1 | 66.5 | ||||||||||||
|
Income
from Continuing Operations before Taxes
|
343.3 | 257.4 | 683.6 | 359.5 | ||||||||||||
|
Income
tax provision
|
84.9 | 66.5 | 168.4 | 73.6 | ||||||||||||
|
Income
from Continuing Operations
|
258.4 | 190.9 | 515.2 | 285.9 | ||||||||||||
|
Income (Loss) from Discontinued
Operations, net of tax
|
— | 16.3 | — | (5.1 | ) | |||||||||||
|
Net
Income
|
258.4 | 207.2 | 515.2 | 280.8 | ||||||||||||
|
Less:
Net Income Attributable to Noncontrolling Interests
|
6.4 | 1.6 | 11.4 | 6.6 | ||||||||||||
|
Net
Income Attributable to Air Products
|
$ | 252.0 | $ | 205.6 | $ | 503.8 | $ | 274.2 | ||||||||
|
Net
Income Attributable to Air Products
|
||||||||||||||||
|
Income
from continuing operations
|
$ | 252.0 | $ | 189.3 | $ | 503.8 | $ | 279.3 | ||||||||
|
Income
(loss) from discontinued operations
|
— | 16.3 | — | (5.1 | ) | |||||||||||
|
Net
Income Attributable to Air Products
|
$ | 252.0 | $ | 205.6 | $ | 503.8 | $ | 274.2 | ||||||||
|
Basic
Earnings per Common Share Attributable to Air Products
|
||||||||||||||||
|
Income
from continuing operations
|
$ | 1.19 | $ | .90 | $ | 2.38 | $ | 1.33 | ||||||||
|
Income
(loss) from discontinued operations
|
— | .08 | — | (.02 | ) | |||||||||||
|
Net
Income Attributable to Air Products
|
$ | 1.19 | $ | .98 | $ | 2.38 | $ | 1.31 | ||||||||
|
Diluted
Earnings per Common Share Attributable to Air Products
|
||||||||||||||||
|
Income
from continuing operations
|
$ | 1.16 | $ | .89 | $ | 2.32 | $ | 1.32 | ||||||||
|
Income
(loss) from discontinued operations
|
— | .08 | — | (.03 | ) | |||||||||||
|
Net
Income Attributable to Air Products
|
$ | 1.16 | $ | .97 | $ | 2.32 | $ | 1.29 | ||||||||
|
Weighted
Average of Common Shares Outstanding
(in millions)
|
212.1 | 209.6 | 211.9 | 209.5 | ||||||||||||
|
Weighted
Average of Common Shares Outstanding
Assuming Dilution (in millions)
|
216.9 | 212.3 | 217.0 | 212.2 | ||||||||||||
|
Dividends Declared per Common
Share – Cash
|
$ | .49 | $ | .45 | $ | .94 | $ | .89 | ||||||||
|
Other
Data from Continuing Operations:
|
||||||||||||||||
|
Depreciation
and amortization
|
$ | 217.3 | $ | 197.1 | $ | 434.4 | $ | 397.7 | ||||||||
|
Capital
expenditures on a non-GAAP Basis
(see page 12 for
reconciliation)
|
354.0 | 352.8 | 699.2 | 685.7 | ||||||||||||
-more-
Page 6 of 12
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
(Millions
of dollars)
|
31
March
2010
|
30
September
2009
|
||||||
|
Assets
|
||||||||
|
Current
Assets
|
||||||||
|
Cash
and cash items
|
$ | 230.9 | $ | 488.2 | ||||
|
Trade
receivables, less allowances for doubtful accounts
|
1,458.8 | 1,363.2 | ||||||
|
Inventories
|
504.7 | 509.6 | ||||||
|
Contracts
in progress, less progress billings
|
111.1 | 132.3 | ||||||
|
Prepaid
expenses
|
109.8 | 99.7 | ||||||
|
Other
receivables and current assets
|
406.7 | 404.8 | ||||||
|
Total
Current Assets
|
2,822.0 | 2,997.8 | ||||||
|
Investment
in Net Assets of and Advances to Equity Affiliates
|
893.6 | 868.1 | ||||||
|
Plant and Equipment, at
cost
|
15,995.2 | 15,751.3 | ||||||
|
Less:
Accumulated depreciation
|
9,053.7 | 8,891.7 | ||||||
|
Plant and Equipment,
net
|
6,941.5 | 6,859.6 | ||||||
|
Goodwill
|
913.9 | 916.0 | ||||||
|
Intangible Assets,
net
|
293.7 | 262.6 | ||||||
|
Noncurrent
Capital Lease Receivables
|
747.5 | 687.0 | ||||||
|
Other
Noncurrent Assets
|
540.4 | 438.0 | ||||||
|
Total
Assets
|
$ | 13,152.6 | $ | 13,029.1 | ||||
|
Liabilities
and Equity
|
||||||||
|
Current
Liabilities
|
||||||||
|
Payables
and accrued liabilities
|
$ | 1,426.9 | $ | 1,674.8 | ||||
|
Accrued
income taxes
|
43.9 | 42.9 | ||||||
|
Short-term
borrowings
|
344.9 | 333.8 | ||||||
|
Current
portion of long-term debt
|
530.0 | 452.1 | ||||||
|
Total
Current Liabilities
|
2,345.7 | 2,503.6 | ||||||
|
Long-Term
Debt
|
3,468.5 | 3,715.6 | ||||||
|
Deferred
Income and Other Noncurrent Liabilities
|
1,480.0 | 1,522.0 | ||||||
|
Deferred
Income Taxes
|
440.1 | 357.9 | ||||||
|
Total
Liabilities
|
7,734.3 | 8,099.1 | ||||||
|
Total
Air Products Shareholders’ Equity
|
5,265.6 | 4,791.9 | ||||||
|
Noncontrolling
Interests
|
152.7 | 138.1 | ||||||
|
Total
Equity
|
5,418.3 | 4,930.0 | ||||||
|
Total
Liabilities and Equity
|
$ | 13,152.6 | $ | 13,029.1 | ||||
-more-
Page
7 of 12
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
Six
Months Ended
31
March
|
||||||||
|
(Millions
of dollars)
|
2010
|
2009
|
||||||
|
Operating
Activities
|
||||||||
|
Net
Income
|
$ | 515.2 | $ | 280.8 | ||||
|
Less:
Net income attributable to noncontrolling interests
|
11.4 | 6.6 | ||||||
|
Net
income attributable to Air Products
|
$ | 503.8 | $ | 274.2 | ||||
|
Adjustments
to reconcile income to cash provided by operating
activities:
|
||||||||
|
Depreciation
and amortization
|
434.4 | 397.7 | ||||||
|
Impairment
of assets of continuing operations
|
.6 | 32.1 | ||||||
|
Impairment
of assets of discontinued operations
|
— | 48.7 | ||||||
|
Deferred
income taxes
|
133.2 | 41.8 | ||||||
|
Undistributed
earnings of unconsolidated affiliates
|
(29.6 | ) | (35.0 | ) | ||||
|
(Gain)
loss on sale of assets and investments
|
(1.4 | ) | 6.6 | |||||
|
Share-based
compensation
|
22.7 | 30.1 | ||||||
|
Noncurrent
capital lease receivables
|
(71.0 | ) | (52.9 | ) | ||||
|
Acquisition-related
costs
|
21.0 | — | ||||||
|
Other
adjustments
|
38.4 | (27.5 | ) | |||||
|
Working
capital changes that provided (used) cash, excluding effects of
acquisitions and divestitures:
|
||||||||
|
Trade
receivables
|
(129.9 | ) | 166.3 | |||||
|
Inventories
|
(3.9 | ) | (41.7 | ) | ||||
|
Contracts
in progress
|
17.3 | 11.0 | ||||||
|
Payables
and accrued liabilities
|
(332.4 | ) | (257.6 | ) | ||||
|
Other
working capital
|
(60.5 | ) | (134.5 | ) | ||||
|
Cash
Provided by Operating Activities
|
542.7 | 459.3 | ||||||
|
Investing
Activities
|
||||||||
|
Additions
to plant and equipment
|
(516.9 | ) | (615.8 | ) | ||||
|
Acquisitions,
less cash acquired
|
(34.9 | ) | (1.6 | ) | ||||
|
Investment
in and advances to unconsolidated affiliates
|
(4.5 | ) | (.1 | ) | ||||
|
Investment
in Airgas stock
|
(69.6 | ) | — | |||||
|
Proceeds
from sale of assets and investments
|
22.0 | 25.0 | ||||||
|
Proceeds
from sale of discontinued operations
|
— | .9 | ||||||
|
Change
in restricted cash
|
25.2 | 40.7 | ||||||
|
Cash
Used for Investing Activities
|
(578.7 | ) | (550.9 | ) | ||||
|
Financing
Activities
|
||||||||
|
Long-term
debt proceeds
|
67.4 | 114.3 | ||||||
|
Payments
on long-term debt
|
(83.0 | ) | (44.2 | ) | ||||
|
Net
(decrease) increase in commercial paper and short-term
borrowings
|
(55.6 | ) | 183.2 | |||||
|
Dividends
paid to shareholders
|
(190.5 | ) | (184.3 | ) | ||||
|
Proceeds
from stock option exercises
|
35.4 | 6.8 | ||||||
|
Excess
tax benefit from share-based compensation
|
9.7 | 2.2 | ||||||
|
Other
financing activities
|
(2.5 | ) | (5.6 | ) | ||||
|
Cash
(Used for) Provided by Financing Activities
|
(219.1 | ) | 72.4 | |||||
-more-
Page
8 of 12
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED
STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
|
Six
Months Ended
31 March
|
||||||||
|
(Millions
of dollars)
|
2010
|
2009
|
||||||
|
Effect
of Exchange Rate Changes on Cash
|
(2.2 | ) | (4.6 | ) | ||||
|
Decrease
in Cash and Cash Items
|
(257.3 | ) | (23.8 | ) | ||||
|
Cash
and Cash Items – Beginning of Year
|
488.2 | 103.5 | ||||||
|
Cash
and Cash Items – End of Period
|
$ | 230.9 | $ | 79.7 | ||||
|
Supplemental
Cash Flow Information
|
||||||||
|
Pension
plan contributions
|
$ | 337.7 | $ | 153.5 | ||||
|
Significant
noncash transaction:
|
||||||||
|
Short-term
borrowings associated with SAGA acquisition
|
60.6 | — | ||||||
-more-
Page
9 of 12
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY
BY BUSINESS SEGMENTS
(Unaudited)
|
Three
Months Ended
31 March
|
Six
Months Ended
31
March
|
|||||||||||||||
|
(Millions
of dollars)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
|
Revenues
from External Customers
|
||||||||||||||||
|
Merchant
Gases
|
$ | 921.7 | $ | 870.4 | $ | 1,855.3 | $ | 1,795.6 | ||||||||
|
Tonnage
Gases
|
756.7 | 624.6 | 1,454.6 | 1,368.6 | ||||||||||||
|
Electronics
and Performance Materials
|
451.2 | 332.2 | 884.6 | 738.8 | ||||||||||||
|
Equipment
and Energy
|
119.4 | 128.2 | 228.0 | 247.7 | ||||||||||||
|
Segment
and Consolidated Totals
|
$ | 2,249.0 | $ | 1,955.4 | $ | 4,422.5 | $ | 4,150.7 | ||||||||
|
Operating
Income
|
||||||||||||||||
|
Merchant
Gases
|
$ | 178.1 | $ | 156.2 | $ | 367.7 | $ | 326.7 | ||||||||
|
Tonnage
Gases
|
107.2 | 98.0 | 207.4 | 206.8 | ||||||||||||
|
Electronics
and Performance Materials
|
57.0 | (11.1 | ) | 105.4 | 13.5 | |||||||||||
|
Equipment
and Energy
|
18.2 | 16.3 | 26.0 | 23.3 | ||||||||||||
|
Segment
Totals
|
$ | 360.5 | $ | 259.4 | $ | 706.5 | $ | 570.3 | ||||||||
|
Global
cost reduction plan
|
— | — | — | (174.2 | ) | |||||||||||
|
Acquisition-related
costs
|
(23.4 | ) | — | (23.4 | ) | — | ||||||||||
|
Other
|
3.5 | 1.0 | 2.5 | (21.6 | ) | |||||||||||
|
Consolidated
Totals
|
$ | 340.6 | $ | 260.4 | $ | 685.6 | $ | 374.5 | ||||||||
|
31
March
|
30
September
|
|||||||
|
(Millions
of dollars)
|
2010
|
2009
|
||||||
|
Identifiable
Assets (a)
|
||||||||
|
Merchant
Gases
|
$ | 4,970.0 | $ | 4,917.0 | ||||
|
Tonnage
Gases
|
3,837.8 | 3,597.8 | ||||||
|
Electronics
and Performance Materials
|
2,237.4 | 2,249.5 | ||||||
|
Equipment
and Energy
|
297.6 | 303.3 | ||||||
|
Segment
Totals
|
$ | 11,342.8 | $ | 11,067.6 | ||||
|
Other
|
916.2 | 1,093.4 | ||||||
|
Consolidated
Totals
|
$ | 12,259.0 | $ | 12,161.0 | ||||
|
(a)
|
Identifiable assets are equal to
total assets less investments in and advances to equity
affiliates.
|
-more-
Page 10 of 12
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions
of dollars, unless otherwise indicated)
|
|
1.
|
AIRGAS
TRANSACTION
|
In
February 2010, the Company commenced a tender offer to acquire all the
outstanding common stock of Airgas, Inc. (Airgas), including the associated
preferred stock purchase rights, for $60.00 per share in cash. Airgas, a
Delaware company, is the largest U.S. distributor of industrial, medical,
specialty gases, and hardgoods. The total value of the transaction would be
approximately $7 billion, including $5.1 billion of equity and $1.9 billion of
assumed debt. The offer and withdrawal rights are scheduled to expire on
4 June 2010, unless further extended.
Prior
to the tender offer, the Company purchased approximately 1.5 million shares of
Airgas stock for $69.6. This amount was recorded as an available-for-sale
investment within other noncurrent assets on the consolidated balance sheet. An
after-tax unrealized holding gain of $16.7 for the period was recorded in other
comprehensive income.
In
connection with this tender offer, the Company has secured committed financing
in the form of a $6.7 billion term loan credit facility. Fees incurred to secure
this credit facility have been deferred and will be amortized over the term of
the arrangement.
For
the second quarter 2010, $23.4 in expense was recognized related to this
transaction and is included within acquisition-related costs on the consolidated
income statement. This includes amortization of the fees related to the term
loan credit facility and other acquisition-related costs.
|
|
2.
|
BUSINESS
COMBINATIONS
|
In
the second quarter of 2010, the Company entered into agreements that will enable
it to acquire 100% of the outstanding shares of the French SAGA group (SAGA)
which consists of SAGA, SAGA Medical, and SAGA Technologies. SAGA is an
independent industrial gas provider in France with packaged gases, liquid bulk,
and medical businesses. SAGA revenues in calendar year 2009 were approximately
€25 million, or $35.
Under
the terms of these agreements, the Company purchased 51.47% of the shares of
SAGA on 1 March 2010 for €34.5 million, or $47.2 ($25.0 net of cash
acquired of $22.2). The remaining shares are expected to be purchased in
November 2010 for a fixed price of €44.8 million, or approximately $61, under a
put and call option structure. This structure has been accounted for
as a financing of the purchase of the remaining shares and reported within
short-term borrowings on the consolidated balance sheet.
-more-
Page
11 of 12
RECONCILIATION
NON-GAAP
MEASURE
The
Company utilizes a non-GAAP measure in the computation of capital expenditures
and includes spending associated with facilities accounted for as capital
leases. Certain contracts associated with facilities that are built to provide
product to a specific customer are required to be accounted for as leases, and
such spending is reflected as a use of cash within cash provided by operating
activities. The presentation of this non-GAAP measure is intended to enhance the
usefulness of information by providing a measure which the Company’s management
uses internally to evaluate and manage the Company’s expenditures.
Below
is a reconciliation of capital expenditures on a GAAP basis to a non-GAAP
measure.
|
Three Months
Ended
31
March
|
Six Months
Ended
31
March
|
|||||||||||||||
|
(Millions
of dollars)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
|
Capital
expenditures – GAAP basis
|
$ | 315.2 | $ | 324.1 | $ | 616.9 | $ | 617.5 | ||||||||
|
Capital
lease expenditures
|
38.8 | 28.7 | 82.3 | 68.2 | ||||||||||||
|
Capital
expenditures – non-GAAP basis
|
$ | 354.0 | $ | 352.8 | $ | 699.2 | $ | 685.7 | ||||||||
# # #
Media
Inquiries:
Robert
Brown, tel: (610) 481-1192; e-mail: brownrf@airproducts.com.
Investor
Inquiries:
Nelson
Squires, tel: (610) 481-7461; e-mail: squirenj@airproducts.com.
Page 12 of
12