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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 July 1997
Air Products and Chemicals, Inc.
(Exact name of registrant as specified in charter)
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<S> <C> <C>
Delaware 1-4534 23-1274455
(State of other jurisdiction of incorporation) (Commission file number) (IRS Identification number)
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7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501
(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 record income from operations for the
third quarter ended June 30, 1997. Earnings per share increased 21
percent, on net income of $116 million, or $1.05 per share, versus $98
million, or 87 cents per share in the year ago quarter. Sales of $1.2
billion were up 15 percent from last year. These results include the
consolidated operations of Carburos Metalicos for the entire quarter.
Commenting on the quarter, Air Products Chairman H. A. Wagner
said, "Our core gases and chemicals businesses both posted record sales
and operating income, driven by broad-based volume and productivity
gains in our worldwide gases business and continued solid chemical
operations. Operating margins improved across the company, led by a
gases margin of 20.5 percent that was well above the prior year."
Industrial gas sales for the quarter rose 18 percent and
operating income increased 38 percent, including Carburos Metalicos.
The merchant business was up strongly in both the U.S. and Europe. The
worldwide tonnage gas business also posted solid volume gains, on the
strength of new business and increased customer requirements for our
facilities serving the chemical and refining industries. Gas equity
affiliate results were below last year, partially due to the
consolidation of Carburos Metalicos.
The chemicals business performed strongly in the quarter,
setting records for sales, operating income, and margins. Third quarter
operating income rose 8 percent on a 4 percent increase in sales.
Volume gains were recorded across most businesses, but were partially
offset by customer turnarounds.
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The equipment and services segment reported higher operating
income for the period. A continuing strong level of project activity
across all product lines more than offset a favorable power generation
project buyout in the prior year.
In the corporate and other segment, foreign exchange losses
versus prior period gains were the principal cause of lower results. In
equity affiliates, the company's American Ref-Fuel joint venture
recorded improved operating performance in the quarter.
The quarter's results also reflected higher interest expense
for the Carburos Metalicos acquisition, new capital investments brought
on-stream, and our continuing share repurchase program.
For the three quarters of fiscal 1997, the Registrant reported
income of $322 million, or $2.92 per share, versus $281 million, or
$2.52 per share, up 16 percent on an operating basis. Sales rose 16
percent to $3.4 billion. These results exclude the 1996 gain from the
settlement of certain derivative losses reported in fiscal year 1994.
Financial tables follow:
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AIR PRODUCTS AND CHEMICALS, INC.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
(In millions, except earnings per share)
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<CAPTION>
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Three Months Ended Nine Months Ended
30 June 30 June
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Sales $ 1,150.3 $ 997.3 $ 3,424.3 $ 2,957.3
Net Income $ 116.0 $ 98.0 $ 321.9(a) $ 322.3(b)
Earnings Per Share $ 1.05 $ .87 $ 2.92(a) $ 2.88(b)
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(a) Included an after-tax gain of $5.9 million, or $.05 per share from the sale
of the landfill gas business and an after-tax impairment loss of $6.0 million,
or $.05 per share.
(b) Included an after-tax gain of $41 million, or $.36 per share, from the
settlement with Bankers Trust Company over losses reported in fiscal 1994
associated with leveraged interest rate swap contracts.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED INCOME
(In millions, except per share)
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<CAPTION>
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Three Months Ended Nine Months Ended
30 June 30 June
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
SALES AND OTHER INCOME
Sales $ 1,150.3 $ 997.3 $ 3,424.3 $ 2,957.3
Other income .7 8.7 20.5 16.6
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1,151.0 1,006.0 3,444.8 2,973.9
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COSTS AND EXPENSES
Cost of sales 663.4 594.5 2,042.4 1,763.6
Selling, distribution and
administrative 266.8 228.0 773.0 678.9
Research and development 27.9 28.1 83.1 83.8
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OPERATING INCOME 192.9 155.4 546.3 447.6
Income from equity affiliates,
net of related expenses 17.3 20.4 49.5 54.2
Gain on settlement of leveraged
interest rate swaps -- -- -- 66.8
Interest expense 39.4 33.8 121.8 93.7
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INCOME BEFORE TAXES 170.8 142.0 474.0 474.9
Income taxes 54.8 44.0 152.1 152.6
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NET INCOME $ 116.0 $ 98.0 $ 321.9 $ 322.3
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MONTHLY AVERAGE OF
COMMON SHARES OUTSTANDING -- -- 110.1 111.9
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EARNINGS PER COMMON SHARE $ 1.05 $ .87 $ 2.92 $ 2.88
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DIVIDENDS DECLARED PER
COMMON SHARE - Cash $ .30 $ .275 $ .85 $ .795
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</TABLE>
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In millions, except per share)
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<CAPTION>
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30 June 30 June
ASSETS 1997 1996
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CURRENT ASSETS
Cash and cash items $ 70.6 $ 90.8
Trade receivables, less allowances for
doubtful accounts 841.6 676.2
Inventories 401.4 392.2
Contracts in progress, less progress billings 142.2 114.5
Other current assets 196.7 160.0
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TOTAL CURRENT ASSETS 1,652.5 1,433.7
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INVESTMENTS 590.4 834.9
PLANT AND EQUIPMENT, at cost 8,627.8 7,908.7
Less - Accumulated depreciation 4,243.1 4,056.2
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PLANT AND EQUIPMENT, net 4,384.7 3,852.5
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GOODWILL 253.6 80.0
OTHER NONCURRENT ASSETS 344.9 271.2
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TOTAL ASSETS $7,226.1 $6,472.3
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES
Payables, trade and other $ 631.9 $ 579.5
Accrued liabilities 265.1 223.9
Accrued income taxes 57.5 62.4
Short-term borrowings 325.0 248.7
Current portion of long-term debt 30.6 24.9
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TOTAL CURRENT LIABILITIES 1,310.1 1,139.4
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LONG-TERM DEBT 2,213.4 1,850.3
DEFERRED INCOME & OTHER NONCURRENT LIABILITIES 421.2 356.7
DEFERRED INCOME TAXES 671.5 537.4
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TOTAL LIABILITIES 4,616.2 3,883.8
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SHAREHOLDERS' EQUITY
Common stock, par value $1 per share 124.7 124.7
Capital in excess of par value 453.3 461.8
Retained earnings 2,915.7 2,623.5
Unrealized gain on investments 15.6 41.8
Cumulative translation adjustments (162.5) (67.8)
Treasury Stock, at cost (293.6) (138.0)
Shares in trust (443.3) (457.5)
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TOTAL SHAREHOLDERS' EQUITY 2,609.9 2,588.5
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,226.1 $6,472.3
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The company completed the sale of the landfill gas recovery business, GSF Energy
Inc., during the three months ended 31 December 1996. The gain on sale was
included in the other income line of the income statement.
During the three months ended 31 December 1996, an impairment loss was recorded
in the chemicals segment. The write-down was related to production assets in the
performance chemicals division and the related goodwill. The impairment loss was
calculated based on an offer to purchase these assets and was included in the
other income line of the income statement. The sale of the impaired assets
occurred in February 1997.
On 22 October 1996, the company obtained control of Carburos Metalicos S.A.
(Carburos). Carburos is a leading supplier of industrial gases in Spain. In
October 1996, the company increased its ownership percentage in Carburos from
47.6% to 96.7% of the outstanding shares in Carburos. This transaction was
accounted for as a step acquisition purchase and the results for the nine months
ended 30 June 1997 included the consolidated operating results for Carburos
since mid-November 1996. Previously, the company accounted for its investment
using the equity method. The company has recorded a total of $212.2 million as
cumulative goodwill, which will be amortized on a straight-line basis over forty
years.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY BUSINESS SEGMENTS
(In millions)
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<CAPTION>
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Three Months Ended Nine Months Ended
30 June 30 June
1997 1996 1997 1996
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Sales:
Industrial Gases $ 684.8 $ 577.9 $1,970.3 $1,720.3
Chemicals 366.3 352.5 1,071.0 1,002.2
Equipment/Services 99.2 61.8 381.8 220.0
Corporate/Other -- 5.1 1.2 14.8
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CONSOLIDATED $1,150.3 $ 997.3 $3,424.3 $2,957.3
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Operating Income:
Industrial Gases $ 140.6 $ 102.2 $ 384.4 $ 305.5
Chemicals 59.7 55.2 157.6 156.0
Equipment/Services 8.0 7.4 24.1 19.0
Corporate/Other (15.4) (9.4) (19.8)(a) (32.9)
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CONSOLIDATED $ 192.9 $ 155.4 $ 546.3 $ 447.6
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Equity Affiliates' Income:
Industrial Gases $ 3.5 $ 12.1 $ 24.0 $ 31.2
Chemicals 0.2 0.2 0.4 .1
Equipment/Services 3.2 1.8 10.2 6.1
Corporate/Other 10.4 6.3 14.9 (b) 16.8
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CONSOLIDATED $ 17.3 $ 20.4 $ 49.5 $ 54.2
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The segment results for 1996 have been restated. The business to be divested
(American Ref-Fuel) and the landfill gas business sold in November are included
in the Corporate/Other segment, while the continuing businesses from the
Environmental/Energy segment (power generation and Pure Air(TM)), are now
included in the Equipment/Services segment.
(a) In January 1997, the company sold 2.1 million shares of a cost basis
investment. The partial sale of the company's investment resulted in a gain of
$7.3 million ($4.5 million after-tax or, $.04 per share) and was recorded in the
Corporate/Other segment.
(b) During the nine months ended 30 June 1997, American Ref-Fuel (50% owned
partnership) refinanced its Hempstead Bond offerings to lower the effective
interest rate. This transaction resulted in a charge to the Corporate/Other
segment of $4.8 million ($2.8 million after-tax, or $.03 per share).
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY GEOGRAPHIC REGIONS
(In millions)
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<CAPTION>
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Three Months Ended Nine Months Ended
30 June 30 June
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Sales:
United States $ 809.4 $ 760.7 $2,407.9 $2,223.2
Europe 288.7 191.7 879.6 618.3
Canada/Latin America 45.4 37.5 123.6 106.2
Other 6.8 7.4 13.2 9.6
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CONSOLIDATED $1,150.3 $ 997.3 $3,424.3 $2,957.3
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Operating Income:
United States $ 142.8 $ 123.7 $ 427.4 $ 351.8
Europe 45.2 27.3 104.8 86.0
Canada/Latin America 4.9 4.8 14.5 10.1
Other -- (0.4) (0.4) (0.3)
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CONSOLIDATED $ 192.9 $ 155.4 $ 546.3 $ 447.6
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Equity Affiliates' Income:
United States $ 13.2 $ 7.8 $ 24.2 $ 21.5
Europe 2.3 6.7 11.3 17.6
Canada/Latin America 2.5 2.5 7.9 6.4
Other (.7) 3.4 6.1 8.7
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CONSOLIDATED $ 17.3 $ 20.4 $ 49.5 $ 54.2
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</TABLE>
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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 July 1997 By: /s/ Arnold H. Kaplan
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Arnold H. Kaplan
Vice President - Finance
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