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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) 26 July 1995
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Air Products and Chemicals, Inc.
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(Exact name of registrant as specified in charter)
Delaware 1-4534 23-1274455
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(State of other jurisdiction (Commission file number) (IRS Identification
of incorporation) number)
7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 481-4911
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Item 5. Other Events.
The Registrant reported third quarter net income of $100 million, or
89 cents per share, compared to last year's $66 million, or 58 cents per share.
Excluding special items in both quarters, the company earned $93 million, or 83
cents per share, in this year's third quarter versus $83 million, or 72 cents
per share, last year, a per-share increase of 15 percent. Sales rose 13
percent to $982 million compared to $868 million last year.
Net income in the current quarter included an after-tax gain of $7
million, or 6 cents per share, from a plant sale, while last year's income
included a net after-tax loss of $17 million, or 14 cents per share, from three
special items.
Industrial gas sales for the quarter increased 11 percent, and
operating income rose 7 percent, excluding special items in both quarters.
Profits were driven primarily by strong worldwide volume gains. Merchant gas
prices improved in the United States from a year ago, but were down in Europe.
Higher profits from the company's joint ventures in Spain, Taiwan, and Korea
also contributed to the quarter's results.
In chemicals, third-quarter sales and operating income were up 14
percent and 9 percent respectively versus the year-ago quarter. Broad based
volume gains and improved prices offset lower profits related to the conversion
of the company's merchant ammonia capacity in the second quarter.
Profits in the environmental and energy systems segment were down from
last year's third quarter which included a performance bonus associated with a
Florida cogeneration facility. Continued excellent operations at American
Ref-Fuel's waste-to- energy facilities were offset by power curtailments and a
scheduled maintenance outage at the company's cogeneration facility in
California.
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The Equipment and Services segment reported higher sales and
break-even operating income compared to a loss last year due to project
performance.
For the first nine months of fiscal 1995, Air Products reported net
income of $275 million, or $2.45 per share, versus $154 million, or $1.36 per
share, in 1994 before the cumulative effect of required accounting changes.
Excluding special items (an after-tax gain of $7 million, or 6 cents per share,
in the current fiscal year and after-tax losses of $75 million, or 65 cents per
share, in 1994), earnings per share increased 19 percent compared to last year
as sales rose 13 percent to $2.9 billion.
Air Products Chairman H. A. Wagner noted that the company continued
the share repurchase program previously announced. So far this fiscal year,
the company has purchased 2.6 million shares. In fiscal 1994, the company
purchased 1.8 million shares.
Financial tables follow:
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AIR PRODUCTS AND CHEMICALS, INC.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
<TABLE>
<CAPTION>
(In millions, except earnings per share)
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Three Months Ended Nine Months Ended
30 June 30 June
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Sales $982.4 $868.4 $2,886.1 $2,554.3
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Income Before Cumulative
Effect of Accounting
Changes $100.1(a) $ 65.8(b) $ 275.4(a) $ 154.4(c)
Cumulative Effect of
Accounting Changes -- -- -- 14.3(d)
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Net Income $100.1 $ 65.8 $ 275.4 $ 168.7
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Earnings Per Share:
Income Before Cumulative
Effect of Accounting
Changes $ .89(a) $ .58(b) $ 2.45(a) $ 1.36(c)
Cumulative Effect of
Accounting Changes -- -- -- .12(d)
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Net Income $ .89 $ .58 $ 2.45 $ 1.48
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</TABLE>
(a) Includes an after-tax gain of $6.6 million, or $.06 per share, from the
sale of an industrial gas plant.
(b) Includes an after-tax charge of $15.5 million, or $.13 per share, for a
loss on certain interest rate and foreign currency derivative contracts that
were terminated or closed during 1994; an after-tax charge of $7.1 million, or
$.06 per share, for the outsourcing of the distribution function in the United
Kingdom; and a tax benefit of $5.4 million, or $.05 per share, resulting from
changes in certain state income tax regulations.
(c) Includes an after-tax charge of $75.1 million, or $.66 per share, for a
loss on certain derivative contracts that were terminated or closed during
1994; an after-tax charge of $7.1 million, or $.06 per share, for the
outsourcing of the distribution function in the United Kingdom; a tax benefit
of $5.4 million, or $.05 per share, resulting from changes in certain state
income tax regulations; and an after-tax benefit of $2.3 million, or $.02 per
share from the favorable tax treatment, net of expense, of the charitable
contribution of the remaining shares of a stock investment in an insurance
company.
(d) The company adopted Statement of Financial Accounting Standard (SFAS) No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions,"
SFAS No. 109, "Accounting for Income Taxes," and SFAS No. 112, "Employers'
Accounting for Postemployment Benefits," on 1 October l993 and recognized the
cumulative effect of these accounting changes.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED INCOME
<TABLE>
<CAPTION>
(In millions, except per share)
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Three Months Ended Nine Months Ended
30 June 30 June
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
SALES AND OTHER INCOME
Sales $982.4 $868.4 $2,886.1 $2,554.3
Other income (expense), net 16.7 (10.5) 16.3 (7.2)
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999.1 857.9 2,902.4 2,547.1
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COSTS AND EXPENSES
Cost of sales 595.7 516.6 1,730.6 1,533.8
Selling, distribution and
administrative 216.9 205.4 637.4 588.1
Research and development 25.8 24.4 76.0 70.5
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OPERATING INCOME 160.7 111.5 458.4 354.7
Income from equity affiliates,
net of related expenses 15.2 9.5 33.1 21.4
Loss on leveraged interest
rate swaps -- 11.3 -- 107.7
Interest expense 24.2 21.7 74.2 59.4
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INCOME BEFORE TAXES 151.7 88.0 417.3 209.0
Income taxes 51.6 22.2 141.9 54.6
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INCOME BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGES 100.1 65.8 275.4 154.4
Cumulative effect of
accounting changes -- -- -- 14.3
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NET INCOME $100.1 $ 65.8 $ 275.4 $ 168.7
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MONTHLY AVERAGE OF
COMMON SHARES OUTSTANDING -- -- 112.2 113.7
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EARNINGS PER COMMON SHARE:
Income before cumulative
effect of accounting changes $ .89 $ .58 $ 2.45 $ 1.36
Cumulative effect of
accounting changes -- -- -- .12
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NET INCOME $ .89 $ .58 $ 2.45 $ 1.48
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DIVIDENDS DECLARED PER
COMMON SHARE - Cash $ .26 $ .25 $ .75 $ .71
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</TABLE>
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In millions, except per share)
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30 June 30 June
ASSETS 1995 1994
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<S> <C> <C>
CURRENT ASSETS
Cash and cash items $ 122.1 $ 107.2
Trade receivables, less allowances for
doubtful accounts 616.8 531.9
Inventories 311.2 303.4
Contracts in progress, less progress billings 120.2 84.9
Other current assets 145.6 114.9
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TOTAL CURRENT ASSETS 1,315.9 1,142.3
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INVESTMENTS 655.6 619.0
PLANT AND EQUIPMENT, at cost 7,236.2 6,344.6
Less - Accumulated depreciation 3,791.4 3,475.2
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PLANT AND EQUIPMENT, net 3,444.8 2,869.4
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GOODWILL 66.4 67.2
OTHER NONCURRENT ASSETS 237.5 188.5
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TOTAL ASSETS $5,720.2 $4,886.4
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES
Payables, trade and other $ 580.4 $ 403.9
Accrued liabilities 242.7 213.1
Accrued income taxes 59.3 8.7
Short-term borrowings 238.3 179.5
Current portion of long-term debt 36.4 165.6
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TOTAL CURRENT LIABILITIES 1,157.1 970.8
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LONG-TERM DEBT 1,326.1 934.4
DEFERRED INCOME & OTHER NONCURRENT LIABILITIES 420.8 405.3
DEFERRED INCOME TAXES 462.0 428.1
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TOTAL LIABILITIES 3,366.0 2,738.6
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SHAREHOLDERS' EQUITY
Common stock, par value $1 per share 124.7 124.7
Capital in excess of par value 466.6 480.8
Retained earnings 2,326.4 2,083.5
Unrealized gain on investments 40.2 --
Cumulative translation adjustments (7.8) (15.6)
Treasury Stock, at cost (138.4) (68.1)
Shares in trust (457.5) (457.5)
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TOTAL SHAREHOLDERS' EQUITY 2,354.2 2,147.8
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,720.2 $4,886.4
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</TABLE>
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Effective 1 October 1994, the company adopted Statement of Financial Accounting
Standard (SFAS) No.115, "Accounting for Certain Investments in Debt and Equity
Securities." Certain investments are reported at fair value with unrealized
gains and losses on an after-tax basis recorded in a separate component of
shareholders' equity. Prior year's amounts were not restated.
The three and nine months ended 30 June 1995 include a gain of $10.8 million
($6.6 million after tax, or $.06 per share) from the sale of an industrial gas
plant.
The third quarter of fiscal 1994 includes a loss of $25.2 million ($15.5
million after tax, or $.13 per share) from certain derivative contract
settlements. For the nine months ended 30 June 1994, the loss associated with
these contracts totaled $121.6 million ($75.1 million after tax, or $.66 per
share).
The three and nine months ended 30 June 1994 include a charge of $10.7 million
($7.1 million after tax, or $.06 per share) for the outsourcing of the United
Kingdom's distribution function and a tax benefit of $5.4 million, or $.05 per
share, resulting from changes in certain state income tax regulations.
The nine months ended 30 June 1994 include an after-tax benefit of $2.3
million, or $.02 per share, from the favorable tax treatment of the charitable
contribution of the remaining shares of a stock investment in an insurance
company.
Effective 1 October 1993, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," SFAS No. 109,
"Accounting for Income Taxes," and SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." The cumulative effect of these accounting changes on
years prior to fiscal 1994 is included in net income of the nine months ended
30 June 1994. The cumulative effect of each of these standards is as follows:
SFAS No. 106, $31.3 million charge; SFAS No. 109, $55.9 million gain; and SFAS
No. 112, $10.3 million charge. The impact of these accounting changes on income
for the nine months ended 30 June 1994, exclusive of the cumulative effect as
of 1 October 1993, is not material.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY BUSINESS SEGMENTS
<TABLE>
<CAPTION>
(In millions)
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Three Months Ended Nine Months Ended
30 June 30 June
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Sales:
Industrial Gases $542.7 $488.0 $1,613.0 $1,443.6
Chemicals 351.9 308.3 1,027.0 866.3
Environmental/Energy 11.2 17.1 42.2 50.7
Equipment/Services 76.6 55.0 203.9 193.7
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CONSOLIDATED $982.4 $868.4 $2,886.1 $2,554.3
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Operating Income:
Industrial Gases $119.7 $ 90.7 $338.2 $278.7
Chemicals 50.0 45.7 152.0 111.2
Environmental/Energy (2.6) .6 (2.0) 4.3
Equipment/Services -- (1.7) (4.1) 7.4
Corporate and Other (6.4) (23.8) (25.7) (46.9)
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CONSOLIDATED $160.7 $111.5 $458.4 $354.7
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Equity Affiliates' Income:
Industrial Gases $ 8.3 $2.0 $12.5 $ 2.6
Chemicals .1 .3 .2 .1
Environmental/Energy 6.8 7.2 20.4 18.7
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CONSOLIDATED $15.2 $9.5 $33.1 $21.4
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</TABLE>
For the three and nine months ended 30 June 1995, industrial gases includes a
gain of $10.8 million from a plant sale.
For the three and nine months ended 30 June 1994, corporate and other operating
income includes a loss of $12.2 million from the termination of two foreign
currency swap contracts. For these same periods, industrial gases' operating
income is reduced by a charge of $10.7 million for the outsourcing of the
distribution function in the United Kingdom.
For the nine months ended 30 June 1994, corporate and other includes an expense
of $2.3 million for the charitable contribution of the remaining shares of a
stock investment in an insurance company.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY GEOGRAPHIC REGIONS
<TABLE>
<CAPTION>
(In millions)
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Three Months Ended Nine Months Ended
30 June 30 June
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Sales:
United States $732.6 $670.7 $2,160.8 $1,927.6
Europe 216.6 165.1 626.0 537.6
Canada/Latin America 32.8 32.6 97.8 89.1
Other .4 -- 1.5 --
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CONSOLIDATED $982.4 $868.4 $2,886.1 $2,554.3
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Operating Income:
United States $120.1 $ 92.6 $355.7 $286.6
Europe 32.5 12.0 84.3 58.6
Canada/Latin America 8.0 6.9 18.2 9.5
Other .1 -- .2 --
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CONSOLIDATED $160.7 $111.5 $458.4 $354.7
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Equity Affiliates' Income:
United States $ 6.5 $7.3 $19.1 $18.7
Europe 5.4 2.5 10.8 3.2
Canada/Latin America 1.7 .8 (.1) 3.5
Other 1.6 (1.1) 3.3 (4.0)
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CONSOLIDATED $15.2 $9.5 $33.1 $21.4
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</TABLE>
For the three and nine months ended 30 June 1995, operating income of the
United States includes a gain of $10.8 million from the sale of an industrial
gas plant.
For the three months and nine months ended 30 June 1994, operating income of
the United States includes a loss of $12.2 million from the termination of two
foreign currency swap contracts. For these same periods, operating income of
Europe includes a charge of $10.7 million related to the outsourcing of the
distribution function in the United Kingdom.
For the nine months ended 30 June 1994, operating income of the United States
includes an expense of $2.3 million for the charitable contribution of the
remaining shares of a stock investment in an insurance company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Air Products and Chemicals, Inc.
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(Registrant)
Dated: July 26, 1995 By: /s/ Gerald A. White
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Gerald A. White
Senior Vice President - Finance
