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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) 24 October 1995
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Air Products and Chemicals, Inc.
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(Exact name of registrant as specified in charter)
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<S> <C> <C>
Delaware 1-4534 23-1274455
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(State of other jurisdiction of incorporation) (Commission file number) (IRS Identification number)
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<S> <C>
7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (610) 481-4911
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Item 5. Other Events.
On October 24, 1995, the Registrant announced reported net income of
$93 million, or 84 cents per share, for the fourth quarter ended September 30,
1995. These results represent a per-share increase of 20 percent over last
year's net income of $79 million, or 70 cents per share. Sales rose 5 percent
to $979 million versus $931 million in the year-ago quarter.
Industrial gas sales were up 8 percent for the quarter while operating
income increased 5 percent compared to last year. These gains were driven by
higher worldwide merchant and tonnage gas volumes. In the U.S., merchant gas
prices rose from a year ago, while in Europe, prices remained below last year's
levels. Costs related to tight supply/demand conditions in some areas of the
U.S. and major work process changes in the U.S. gas business continued during
the quarter. The company's international joint ventures made significant
contributions to the quarter's results.
Chemical sales were up 5 percent and operating income rose 12 percent
versus the year-ago quarter, driven by volume growth and margin improvements.
Strong results across the group's businesses, particularly polymers and
intermediates, more than offset lower methanol margins and the absence of
merchant ammonia capacity, which was converted to hydrogen production in this
year's second quarter. In last year's fourth quarter, results were adversely
affected by planned shutdowns at the company's polyvinyl alcohol facilities due
to market conditions.
Profits in the environmental and energy systems business were down
from a year ago. Continued good operations at waste-to-energy and cogeneration
facilities were offset by lower landfill gas results and higher development
costs.
Results in the Equipment and Services segment were profitable for the
current quarter, but lower than last year's fourth quarter which contained a
favorable project payment.
The Corporate and Other segment, with an unusually low $4 million of
net costs, reflects a high level of foreign exchange gains during the quarter.
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For fiscal 1995, the Registrant reported net income of $368 million,
or $3.29 per share, compared to last year's $234 million, or $2.06 per share,
before the cumulative effect of required accounting changes. Return on equity
increased to 16.1 percent, and sales of $3.9 billion were up 11 percent from
1994's $3.5 billion. Excluding special items in both years, earnings per share
rose 19 percent based on income of $362 million, or $3.23 per share, versus
$308 million, or $2.71 per share, last year.
Financial tables follow:
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AIR PRODUCTS AND CHEMICALS, INC.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
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<CAPTION>
(In millions, except earnings per share)
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Three Months Ended Twelve Months Ended
30 September 30 September
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Sales $979.2 $931.0 $3,865.3 $3,485.3
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Income Before Cumulative
Effect of Accounting
Changes $92.8 $79.1 $368.2 (a) $233.5 (b)
Cumulative Effect of
Accounting Changes -- -- -- 14.3 (c)
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Net Income $92.8 $79.1 $368.2 $247.8
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Earnings Per Share:
Income Before
Cumulative Effect
of Accounting Changes $.84 $.70 $3.29 (a) $2.06 (b)
Cumulative Effect of
Accounting Changes -- -- -- .12 (c)
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Net Income $.84 $.70 $3.29 $2.18
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(a) includes an after-tax gain of $6.6 million, or $.06 per share, from the
sale of an industrial gas plant.
(b) Includes a net after-tax charge of $74.5 million, or $.65 per share, for
special items. The components of special items are as follows: 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 l994;
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.
(c) 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.
OPERATING RESULTS
(Unaudited)
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<CAPTION>
SUMMARY BY BUSINESS SEGMENTS
(In millions)
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Three Months Ended Twelve Months Ended
30 September 30 September
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Sales:
Industrial Gases $564.5 $524.5 $2,177.5 $1,968.1
Chemicals 331.8 315.9 1,358.8 1,182.2
Environmental/Energy 15.4 16.4 57.6 67.1
Equipment/Services 67.5 74.2 271.4 267.9
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CONSOLIDATED 979.2 931.0 3,865.3 3,485.3
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Operating Income:
Industrial Gases 107.0 101.9 445.2 380.6
Chemicals 40.9 36.7 192.9 147.9
Environmental/Energy (2.9) 1.3 (4.9) 5.6
Equipment/Services 2.5 4.1 (1.6) 11.5
Corporate and Other (4.0) (12.6) (29.7) (59.5)
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CONSOLIDATED 143.5 131.4 601.9 486.1
Equity Affiliates' Income:
Industrial Gases 9.6 1.5 22.1 4.1
Chemicals .3 .1 .5 .2
Environmental/Energy 8.2 5.5 28.6 24.2
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CONSOLIDATED 18.1 7.1 51.2 28.5
Loss on leveraged interest
rate swaps -- -- -- 107.7
Interest expense 26.1 22.2 100.3 81.6
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INCOME BEFORE TAXES 135.5 116.3 552.8 325.3
Income taxes 42.7 37.2 184.6 91.8
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INCOME BEFORE CUMULATIVE
EFFECT OF ACCOUNTING
CHANGES 92.8 79.1 368.2 233.5
Cumulative effect of
accounting changes -- -- -- 14.3
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NET INCOME $ 92.8 $ 79.1 $ 368.2 $ 247.8
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For twelve months ended 30 September 1995, industrial gases includes a gain of
$10.8 million ($6.6 million after tax) from a plant sale.
During 1994 the company terminated three highly leveraged interest rate swap
contracts and closed two other such agreements; terminated two agreements which
hedged currency risk; and terminated a number of smaller interest rate hedge
agreements. For the twelve months ended 30 September 1994, the loss associated
with these contracts totaled $121.6 million ($75.1 million after tax). This
loss is included in the statement of operating results as follows: $107.7
million loss on leveraged interest rate swaps; $12.2 million foreign exchange
loss included in corporate and other; and $1.7 million interest expense.
For the twelve months ended 30 September 1994, industrial gases results are
reduced by a charge of $10.7 million ($7.1 million after tax) for the
outsourcing of the distribution function in the United Kingdom. In addition,
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. The tax benefit associated with this contribution, based on fair
value of the investment, was $4.6 million. For the twelve months ended 30
September 1994, income taxes includes a benefit of $5.4 million resulting from
changes in certain state income tax regulations.
Effective 1 October 1993, the company adopted and recognized the cumulative
effect of the following accounting standards: SFAS 106-Postretirement Benefits
($31.3 million charge); SFAS 109-Income Taxes ($55.9 million gain); and SFAS
112-Postemployment Benefits ($10.3 million charge). The impact of these
accounting changes on income for the three and twelve months ended 30 September
1994, exclusive of the cumulative effect and changes in certain state income
tax regulations, is not material.
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AIR PRODUCTS AND CHEMICALS, INC.
OPERATING RESULTS
(Unaudited)
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<CAPTION>
SUMMARY BY GEOGRAPHIC REGIONS
(In millions)
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Three Months Ended Twelve Months Ended
30 September 30 September
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Sales:
United States $734.5 $704.7 $2,895.3 $2,632.3
Europe 211.1 196.8 837.1 734.4
Canada/Latin America 32.5 29.5 130.3 118.6
Other 1.1 -- 2.6 --
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CONSOLIDATED $979.2 $931.0 $3,865.3 $3,485.3
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Operating Income:
United States $101.1 $ 94.1 $456.8 $380.7
Europe 34.9 29.2 119.2 87.8
Canada/Latin America 7.5 8.1 25.7 17.6
Other -- -- .2 --
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CONSOLIDATED $143.5 $131.4 $601.9 $486.1
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Equity Affiliates' Income:
United States $ 7.7 $4.8 $26.8 $23.5
Europe 4.9 2.3 15.7 5.5
Canada/Latin America 4.6 (.1) 4.5 3.4
Other .9 .1 4.2 (3.9)
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CONSOLIDATED $18.1 $7.1 $51.2 $28.5
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For the twelve months ended 30 September l995, operating income of the United
States includes a gain of $10.8 million from the sale of an industrial gas
plant.
For the twelve months ended 30 September 1994, operating income of the United
States includes a loss of $12.2 million from the termination of two agreements
which hedged currency risk and an expense of $2.3 million for the charitable
contribution of the remaining shares of a stock investment in an insurance
company. For this same period, operating income of Europe includes a charge of
$10.7 million related to the outsourcing of the distribution function in the
United Kingdom.
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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: 24 October 1995 By: /s/ Gerald A. White
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Gerald A. White
Senior Vice President - Finance
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