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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 January 1997
_________________
Air Products and Chemicals, Inc.
____________________________________________________
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C> <C>
Delaware 1-4534 23-1274455
______________________________________________ ________________________ ___________________________
(State of other jurisdiction of incorporation) (Commission file number) (IRS Identification number)
</TABLE>
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 net income of $100 million, or 91
cents per share, for the first quarter ended December 31, 1996. This
compares to $89 million, or 80 cents per share in the year ago quarter,
a per-share increase of 14 percent. Sales of $1.1 billion were up 18
percent versus $947 million last year. Results for the quarter included
a 5 cent per share gain from the sale of the company's landfill gas
business and a 5 cent per share loss related to the anticipated sale of
a small product line in performance chemicals. The acquisition of
Carburos Metalicos, a major Spanish industrial gas company, was also
completed in the quarter.
Industrial gas sales for the quarter increased 12 percent,
while operating income rose 14 percent. Performance from industrial gas
operations in the U. S. reflected higher plant loading, more efficient
production and distribution, and tighter controls on related overhead
costs. Excluding the consolidation of Carburos Metalicos, European
results were lower due to a planned tonnage hydrogen customer outage
and general economic softness. Results for gas equity affiliates were
above last year.
In chemicals, first quarter sales increased 12 percent.
Excluding the writedown of a small product line, operating income rose
12 percent, driven by volume gains across all major businesses.
The Equipment and Services segment, which now includes power
generation and air pollution control results on a comparable basis,
recorded significantly higher sales and a modest increase in operating
income for the quarter due to increased commercial activity. The
business carries a record backlog of high-quality projects forward.
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The Corporate/Other segment included a gain on the sale of the
landfill gas business, and also benefited from favorable foreign
exchange.
The quarter's results were also impacted by higher interest
expense related to debt for the acquisition of Carburos Metalicos, new
capital investments brought onstream, and the share repurchase program.
The company also announced that while progress is being made,
its planned divestiture of American Ref-Fuel would take longer than
anticipated given the venture's partnership structure and project
complexities. The objective remains to exit the business while
obtaining its full value. On a related note, the company has completed
$175 million in share repurchases against the program announced
concurrently last April. The remainder of the program will be paced by
the disposition of American Ref-Fuel and ongoing capital investment
requirements.
Financial tables follow:
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AIR PRODUCTS AND CHEMICALS, INC.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
(In millions, except earnings per share)
<TABLE>
<CAPTION>
Three Months Ended
31 December
1996 1995
--------- ---------
<S> <C> <C>
Sales $ 1,120.9 $ 947.5
Net Income $ 99.9(a) $ 89.0
Earnings Per Share $ .91(a) $ .80
--------- ---------
</TABLE>
(a)Includes 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.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED INCOME
(In millions, except per share)
<TABLE>
<CAPTION>
Three Months Ended
31 December
1996 1995
--------- ---------
<S> <C> <C>
SALES AND OTHER INCOME
Sales $ 1,120.9 $ 947.5
Other income, net 9.4 3.8
--------- ---------
1,130.3 951.3
--------- ---------
COSTS AND EXPENSES
Cost of sales 692.7 559.4
Selling, distribution and
administrative 241.5 220.1
Research and development 26.7 27.6
--------- ---------
OPERATING INCOME 169.4 144.2
Income from equity affiliates,
net of related expenses 18.7 15.8
Interest expense 39.9 28.7
--------- ---------
INCOME BEFORE TAXES 148.2 131.3
Income taxes 48.3 42.3
--------- ---------
NET INCOME $ 99.9 $ 89.0
--------- ---------
MONTHLY AVERAGE OF
COMMON SHARES OUTSTANDING 110.3 111.8
--------- ---------
EARNINGS PER COMMON SHARE $ .91 $ .80
--------- ---------
DIVIDENDS DECLARED PER
COMMON SHARE - Cash $ .28 $ .26
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</TABLE>
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In millions, except per share)
<TABLE>
<CAPTION>
31 December 31 December
ASSETS 1996 1995
-------- --------
<S> <C> <C>
CURRENT ASSETS
Cash and cash items $ 160.7 $ 95.0
Trade receivables, less allowances for
doubtful accounts 817.1 628.0
Inventories 405.4 370.6
Contracts in progress, less progress billings 152.0 111.5
Other current assets 185.0 151.3
-------- --------
TOTAL CURRENT ASSETS 1,720.2 1,356.4
-------- --------
INVESTMENTS 624.6 782.6
PLANT AND EQUIPMENT, at cost 8,577.7 7,501.1
Less - Accumulated depreciation 4,186.4 3,926.0
-------- --------
PLANT AND EQUIPMENT, net 4,391.3 3,575.1
-------- --------
GOODWILL 285.8 80.5
OTHER NONCURRENT ASSETS 294.7 239.8
-------- --------
TOTAL ASSETS $7,316.6 $6,034.4
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Payables, trade and other $ 637.8 $ 487.4
Accrued liabilities 246.4 223.1
Accrued income taxes 64.5 68.2
Short-term borrowings 566.3 386.7
Current portion of long-term debt 73.7 167.4
-------- --------
TOTAL CURRENT LIABILITIES 1,588.7 1,332.8
-------- --------
LONG-TERM DEBT 2,101.9 1,314.4
DEFERRED INCOME & OTHER NONCURRENT LIABILITIES 404.2 436.4
DEFERRED INCOME TAXES 643.0 506.2
-------- --------
TOTAL LIABILITIES 4,737.8 3,589.8
-------- --------
SHAREHOLDERS' EQUITY
Common stock, par value $1 per share 124.7 124.7
Capital in excess of par value 457.5 465.0
Retained earnings 2,756.9 2,450.1
Unrealized gain on investments 29.8 46.2
Cumulative translation adjustments (69.8) (50.3)
Treasury Stock, at cost (262.8) (133.6)
Shares in trust (457.5) (457.5)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 2,578.8 2,444.6
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,316.6 $6,034.4
======== ========
</TABLE>
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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. A gain of $9.5 million
($5.9 million after tax, or $.05 per share) was recorded. Sales of the landfill
gas business were $20.3 million in fiscal year 1996 with an operating loss of
$3.0 million and net income of $4.0 million, including the net income benefit
from nonconventional fuel tax credits. The gain on sale is included in the other
income line of the income statement.
During the three months ended 31 December 1996, an impairment loss of $9.3
million ($6.0 million after tax, or $.05 per share) 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 is
calculated based on an offer to purchase these assets and is included in the
other income line of the income statement.
On 22 October 1996, the company obtained control of Carburos Metalicos S.A.
(Carburos). The company now owns 96.7% of the outstanding shares in Carburos.
The acquisition of the additional 70.8% ownership was completed through a series
of planned tender offers over a three year period at a total cost of $408.4
million. The acquisition was funded through the issuance of U.S. dollar debt
effectively converted to Spanish Peseta liabilities through the use of interest
rate and currency swap contracts and foreign exchange contracts.
Carburos is a leading supplier of industrial gases in Spain. This transaction
was accounted for as a step acquisition purchase and the results for the three
months ended 31 December 1996 contained approximately six weeks of consolidated
operating results for Carburos. 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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The following table shows unaudited pro forma consolidated financial information
for the three months ended 31 December 1996 and 1995 and the fiscal year ended
30 September 1996. This information reflects the acquisition as if it had
occurred on 1 October 1995 and includes adjustments for asset valuation
depreciation expense, goodwill amortization, and interest expense from
acquistion debt. This information is not necessarily indicative of future
consolidated results or what actual results would have been had the acquisition
occurred during the periods presented.
PRO FORMA INFORMATION(Unaudited)
(In millions, except earnings per share)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
31 December 30 September
1996 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Sales $ 1,165.8 $ 1,025.0 $ 4,309.7
Net Income $ 100.9 $ 92.9 $ 423.1
Earnings Per Share $ .91 $ .83 $ 3.79
--------- --------- ---------
</TABLE>
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY BUSINESS SEGMENTS
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
31 December
1996 1995
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<S> <C> <C>
Sales:
Industrial Gases $ 614.5 $ 550.9
Chemicals 346.2 309.7
Equipment/Services 159.0 81.9
Corporate/Other 1.2 5.0
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CONSOLIDATED $1,120.9 $ 947.5
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Operating Income:
Industrial Gases $ 118.3 $ 103.7
Chemicals 44.5 48.1
Equipment/Services 5.6 4.6
Corporate/Other 1.0 (12.2)
-------- --------
CONSOLIDATED $ 169.4 $ 144.2
-------- --------
Equity Affiliates' Income:
Industrial Gases $ 12.0 $ 9.2
Chemicals 0.1 (0.2)
Equipment/Services 3.5 2.0
Corporate/Other 3.1 4.8
-------- --------
CONSOLIDATED $ 18.7 $ 15.8
-------- --------
</TABLE>
For the three months ended 31 December 1996, operating income of Corporate/Other
includes a gain of $9.5 million from the sale of the landfill gas recovery
business and operating income of Chemicals includes an impairment loss of $9.3
million.
The segment results for the three months ended 31 December 1995 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.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY GEOGRAPHIC REGIONS
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
31 December
1996 1995
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<S> <C> <C>
Sales:
United States $ 792.1 $ 699.7
Europe 285.7 211.9
Canada/Latin America 39.6 34.9
Other 3.5 1.0
-------- --------
CONSOLIDATED $1,120.9 $ 947.5
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Operating Income:
United States $ 144.2 $ 109.0
Europe 20.1 33.7
Canada/Latin America 5.4 1.5
Other (.3) --
-------- --------
CONSOLIDATED $ 169.4 $ 144.2
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Equity Affiliates' Income:
United States $ 6.2 $ 6.3
Europe 7.1 5.7
Canada/Latin America 2.7 1.3
Other 2.7 2.5
-------- --------
CONSOLIDATED $ 18.7 $ 15.8
-------- --------
</TABLE>
For the three months ended 31 December 1996, operating income of United States
includes a gain of $9.5 million from the sale of the landfill gas recovery
business and operating income of Europe includes an impairment loss of $9.3
million.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
RESTATEMENT BY BUSINESS SEGMENTS
The segment results for the year ended 30 September 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. The following
table summarizes the restatement for each quarter and the year ended 30
September 1996:
<TABLE>
<CAPTION>
(In millions) First Second Third Fourth Total
-------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C>
Sales:
Industrial Gases $ 550.9 $ 591.5 $ 577.9 $ 590.2 $2,310.5
Chemicals 309.7 340.0 352.5 360.1 1,362.3
Environmental/Energy -- -- -- -- --
Equipment/Services 81.9 76.3 61.8 94.6 314.6
Corporate/Other 5.0 4.7 5.1 5.5 20.3
-------- -------- -------- -------- --------
CONSOLIDATED $ 947.5 $1,012.5 $ 997.3 $1,050.4 $4,007.7
-------- -------- -------- -------- --------
Operating Income:
Industrial Gases $ 103.7 $ 99.6 $ 102.2 $ 101.2 $ 406.7
Chemicals 48.1 52.7 55.2 41.5 197.5
Environmental/Energy -- -- -- -- --
Equipment/Services 4.6 7.0 7.4 13.7 32.7
Corporate/Other (12.2) (11.3) (9.4) (12.7) (45.6)
-------- -------- -------- -------- --------
CONSOLIDATED $ 144.2 $ 148.0 $ 155.4 $ 143.7 $ 591.3
-------- -------- -------- -------- --------
Equity Affiliates' Income:
Industrial Gases $ 9.2 $ 9.9 $ 12.1 $ 12.8 $ 44.0
Chemicals (.2) .1 .2 .2 .3
Environmental/Energy -- -- -- -- --
Equipment/Services 2.0 2.3 1.8 2.4 8.5
Corporate/Other 4.8 5.7 6.3 11.1 27.9
-------- -------- -------- -------- --------
CONSOLIDATED $ 15.8 $ 18.0 $ 20.4 $ 26.5 $ 80.7
-------- -------- -------- -------- --------
</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.
_______________________________________
(Registrant)
Dated: 24 January 1997 By: /s/ Arnold H. Kaplan
___________________________________
Arnold H. Kaplan
Vice President - Finance
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