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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One) |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended September 30, 2000
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 1-4534
AIR PRODUCTS AND CHEMICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-1274455
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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Common Stock, par value $1.00 per share New York and Pacific
Preferred Stock Purchase Rights New York and Pacific
8 3/4% Debentures Due 2021 New York
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ X ]
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The aggregate market value of the voting stock held by non-affiliates of
the registrant on November 1, 2000 was $8.47 billion. For purposes of the
foregoing calculation (i) all directors and/or executive officers have been
deemed to be affiliates, but the registrant disclaims that any such director
and/or executive officer is an affiliate and (ii) registrant's Flexible Employee
Benefit Trust, described under Item 12 of this Report, is deemed a
non-affiliate.
The number of shares of Common Stock outstanding as of November 30, 2000
was 229,305,191.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for the fiscal year ended September 30,
2000. With the exception of those portions which are incorporated by reference
into Parts I, II, and IV of this Form 10-K, the Annual Report is not deemed to
be filed.
Proxy Statement for Annual Meeting of Shareholders to be held January 25,
2001 . . . Part III.
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FORWARD-LOOKING STATEMENTS
The forward-looking statements contained in this document are based on current
expectations regarding important risk factors. Actual results may differ
materially from those expressed. In addition to important risk factors and
uncertainties referred to in the Management's Discussion and Analysis which is
included under Item 7 herein, other important risk factors and uncertainties
include overall economic and business conditions; demand for the goods and
services of the Company; competitive factors in the industries in which it
competes; the ability to recover increased energy and raw material costs through
pricing; changes in government regulations; success of implementing cost
reduction programs; the timing, impact, and other uncertainties of future
acquisitions and divestitures; fluctuations in interest rates and foreign
currencies; the impact of tax and other legislation and regulations in the
jurisdictions in which the Company and its affiliates operate; and the timing
and rate at which tax credits can be utilized.
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<TABLE>
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TABLE OF CONTENTS
Page
<S> <C>
PART I ITEM 1. Business......................................................................................................1
GASES.......................................................................................................1
Power Generation and Flue Gas Desulfurization.............................................................2
CHEMICALS...................................................................................................3
Performance Chemicals.....................................................................................3
Chemical Intermediates....................................................................................4
EQUIPMENT...................................................................................................4
GENERAL.....................................................................................................5
Foreign Operations........................................................................................5
Technology Development....................................................................................5
Raw Materials and Energy..................................................................................6
Environmental Controls....................................................................................6
Competition...............................................................................................7
Insurance.................................................................................................8
Employees.................................................................................................8
Executive Officers of the Company.........................................................................9
ITEM 2. Properties...................................................................................................10
Gases......................................................................................................10
Chemicals..................................................................................................10
Equipment..................................................................................................11
ITEM 3. Legal Proceedings............................................................................................11
ITEM 4. Submission of Matters to a Vote of Security Holders..........................................................11
PART II ITEM 5. Market for the Company's Common Stock and Related Stockholder Matters........................................11
ITEM 6. Selected Financial Data......................................................................................11
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations........................12
ITEM 7a. Quantitative and Qualitative Disclosures about Market Risk...................................................12
ITEM 8. Financial Statements.........................................................................................12
ITEM 9. Disagreements on Accounting and Financial Disclosure.........................................................12
PART III ITEM 10. Directors and Executive Officers of the Company..............................................................12
ITEM 11. Executive Compensation.......................................................................................12
ITEM 12. Security Ownership of Certain Beneficial Owners and Management...............................................12
ITEM 13. Certain Relationships and Related Transactions...............................................................12
PART IV ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.............................................13
Signatures...................................................................................................17
</TABLE>
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PART I
ITEM 1. Business.
Through internal development and by acquisitions, Air Products and
Chemicals, Inc. has established an internationally recognized industrial gas and
related industrial process equipment business and developed strong positions as
a producer of certain chemicals.
The gases business segment recovers and distributes industrial gases
such as oxygen, nitrogen, argon, and hydrogen and a variety of medical and
specialty gases. This segment also includes the Company's power generation and
flue gas treatment businesses. The chemicals business segment produces and
markets performance chemicals and chemical intermediates. The equipment business
segment supplies cryogenic and other process equipment and related engineering
services.
Financial information concerning the Company's business segments
appears in Note 21 to the Consolidated Financial Statements included under Item
8 herein, which information is incorporated herein by reference, as are all
other specific references herein to information appearing in such 2000 Financial
Review Section of the Annual Report.
As used in this Report, the term "Air Products" or "Company" includes
subsidiaries and predecessors of the registrant or its subsidiaries, unless the
context indicates otherwise.
GASES
The principal industrial gases sold by the Company are oxygen,
nitrogen, argon (primarily recovered by the cryogenic distillation of air),
hydrogen, carbon monoxide, carbon dioxide (purchased, purified, or recovered
through the processing of natural gas or the by-product streams from process
plants), synthesis gas (combined streams of hydrogen and carbon monoxide), and
helium (purchased or refined from crude helium). Medical and specialty gases are
manufactured or blended by the Company or purchased for resale. The gases
segment also includes the Company's power generation and flue gas treatment
businesses. As discussed below, the Company has decided to pursue divestiture of
its interests in these power generation and flue gas treatment businesses.
The Company's gas business involves two principal modes of supply:
"Tonnage" or "on-site" supply--For large volume or "tonnage" users of
industrial gases, a plant is built adjacent to, on, or near the customer's
facility--hence the term "on-site". Alternatively, the gases are delivered
through a pipeline from nearby locations. Supply is generally made under
contracts having terms in excess of three years. In numerous areas--the Houston
(Texas) Ship Channel including the Port Arthur, Texas, area; "Silicon Valley",
California; Los Angeles, California; Phoenix, Arizona; Decatur, Alabama; Central
Louisiana; Rotterdam, the Netherlands; Korea; Singapore; Malaysia; and Bahia,
Brazil--Air Products' hydrogen, oxygen, carbon monoxide, or nitrogen gas
pipelines serve multiple customers from one or more centrally located plants.
Industrial gas companies in which the Company has less than controlling
interests have pipelines in Thailand, Taiwan, and South Africa.
Merchant supply--Smaller volumes of industrial gas products are
delivered to thousands of customers in liquid or gaseous form by tanker trucks
or tube trailers. These merchant customers use equipment designed and installed
by Air Products to store the product near the point of use, normally in liquid
state, and vaporize the product into gaseous state for their use as needed. Some
customers are also supplied by small on-site generators using noncryogenic
technology based on adsorption and membrane technology, which, in certain
circumstances, the Company sells to its customers. Merchant customers' contract
terms normally are from three to five years. Merchant gases and various
specialty gases are also delivered in cylinders, dewars, and lecture bottle
sizes.
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Oxygen, nitrogen, argon, and hydrogen sold to merchant customers are
usually recovered at large "stand-alone" facilities located near industrial
areas or high-tech centers, or at small noncryogenic generators, or are taken
from tonnage plants used primarily to supply tonnage users. Tonnage plants are
frequently designed to have more capacity than is required by their principal
customer to recover additional product that is liquefied for sale to a merchant
market. Air Products also designs and builds systems for recovering oxygen,
hydrogen, nitrogen, carbon monoxide, and low dew point gases using adsorption
technology.
Tonnage and merchant sales of atmospheric gases--oxygen, nitrogen, and
argon--constituted approximately 26% of Air Products' consolidated sales in
fiscal years 2000 and 1999 and were approximately 25% in fiscal year 1998.
Tonnage and merchant sales of industrial gases--principally oxygen, nitrogen,
and hydrogen--to the chemical process industry and the electronics industry, the
largest consuming industries, were approximately 17% and 10%, respectively, of
Air Products' consolidated sales in fiscal year 2000.
Other important consumers of Air Products' industrial and specialty
gases are the basic steel industry, the oil industry (which uses inert nitrogen
for oil well stimulation and field pressurization and hydrogen and oxygen for
refining), and the food industry (which uses liquid nitrogen for food freezing).
Air Products believes that it is the largest liquefier of hydrogen, which it
supplies to many customers, including the National Aeronautics and Space
Administration for its space shuttle program.
Helium is sold for use in magnetic resonance imaging equipment,
controlled atmospheres processes, and welding. Medical gases are sold in the
merchant market to hospitals and clinics, primarily for inhalation therapy.
Specialty gases include fluorine products, rare gases such as xenon,
krypton, and neon, and more common gases of high purity or gases which are
precisely blended as mixtures. Specialty chemicals for use by the electronics
industry include silane, arsine, silicon tetrafluoride, nitrogen trifluoride,
carbon tetrafluoride, hexafluoromethane, and tungsten hexafluoride. These gases
and chemicals are used in numerous industries and in electronic and laboratory
applications. In certain circumstances, the Company sells equipment related to
the use, handling, and storage of such specialty gases and specialty chemicals.
Sales of industrial gases to merchant customers and/or sales of
specialty products to the electronics industry are made principally through
field sales forces from 120 offices in 37 states in the United States and Puerto
Rico, and from 191 offices in 24 foreign countries. In addition, industrial gas
companies in which the Company has investments operate in more than 30 foreign
countries.
Electricity and hydrocarbons, including natural gas as a feedstock for
producing certain gases, are important to Air Products' gas business. See "Raw
Materials and Energy". The Company's large truck fleet, which delivers products
to merchant customers, requires a readily available supply of gasoline or diesel
fuel. Also, environmental and health laws and regulations will continue to
affect the Company's gas businesses. See "Environmental Controls".
Power Generation and Flue Gas Desulfurization
Air Products operates and has 50% interests in a 49-megawatt
fluidized-bed coal-fired power generation facility in Stockton, California; an
85-megawatt coal waste burning power generation facility in western
Pennsylvania; a 25-megawatt gas-fired combined cycle power generation facility
in Calvert City, Kentucky; a 120-megawatt gas-fired combined cycle power
generation facility in Orlando, Florida; and a 24-megawatt gas-fired combined
cycle power generation facility near Rotterdam, the Netherlands. A 112-megawatt
gas-fueled power generation facility, in which the Company has a 48.8% interest,
operates in Thailand and supplies electricity to a state-owned electricity
generating authority and steam and electricity to an Air Products industrial
gases affiliate. Air Products operates and owns a 50% interest in a facility
utilizing Mitsubishi Heavy Industries, Ltd. flue gas desulfurization (FGD)
technology systems for removing sulfur dioxide from the flue gas of a coal-fired
power generation plant in Indiana.
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The Company is assessing the possible divestiture of its interests in
most of the cogeneration facilities and its FGD facility.
Additional information with respect to the Company's power generation
and flue gas treatment businesses is included in Notes 8 and 16 to the
Consolidated Financial Statements included under Item 8 herein.
CHEMICALS
The Company's chemicals businesses consist of performance chemicals and
chemical intermediates where the Company is able to differentiate itself by the
performance of its products in the customer's application, the technical service
which the Company provides, and the scale of production and the production
technology employed by the Company.
Performance Chemicals
The principal businesses of performance chemicals are emulsions and
specialty, polyurethane, and epoxy additives. Total sales from the performance
chemicals business constituted approximately 21% of Air Products' consolidated
sales in fiscal year 2000, 22% in fiscal year 1999, and 20% in fiscal year 1998.
Additives
Air Products' additives chemicals are differentiated from the
competition based on their performance when used in the customer's products and
the technical service which the Company provides.
Specialty Additives--These products are primarily acetylenic alcohols
and amines which are used as performance additives in coatings, lubricants,
electro-deposition processes, agricultural formulations, and corrosion
inhibitors.
Polyurethane Additives--These products include catalysts and
surfactants which are used as performance control additives and processing aids
in the production of both flexible and rigid polyurethane foam around the world.
The principal end markets for polyurethane foams include furniture cushioning,
insulation, carpet underlay, bedding, and automobile seating.
Epoxy Additives--These products include polyamides, aromatic amines,
cycloaliphatic amines, reactive diluents, and specialty epoxy resins which are
used as performance additives in epoxy formulations by epoxy manufacturers
worldwide. The end markets for epoxies are coatings, flooring, adhesives,
reinforced composites, and electrical laminates.
Emulsions
Air Products' emulsions are water-based and water-soluble products
derived primarily from vinyl acetate monomer.
The Company's major emulsions products are vinyl acetate homopolymer
emulsions and AIRFLEX(R) vinyl acetate-ethylene copolymer emulsions. The Company
also produces emulsions which incorporate vinyl chloride and various acrylates
in the polymer. These products are used in adhesives, nonwoven fabric binders,
paper coatings, paints, inks, and carpet backing binder formulations.
Air Products owns 65% of a worldwide joint venture with Wacker-Chemie
GmbH that produces polymer emulsions and pressure-sensitive adhesives. The
Company also owns 20% of a worldwide joint venture with Wacker-Chemie that
produces redispersible powders made from polymer emulsions.
Pressure-sensitive adhesives are water-based acrylic emulsions which
are used for both permanent and removable pressure-sensitive adhesives primarily
for labels and tapes.
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Chemical Intermediates
The chemical intermediates businesses use the Company's proprietary
technology and scale of production to differentiate themselves from the
competition. The principal intermediates sold by the Company include amines and
polyurethane intermediates. The Company also produces certain industrial
chemicals (ammonia, methanol, and nitric acid) as raw materials for its
differentiated products. Total third-party sales from the chemical intermediates
businesses constituted 12% of Air Products' consolidated sales in fiscal year
2000 and 11% in each of fiscal years 1999 and 1998.
Amines--The Company produces a broad range of amines using ammonia and
methanol, which are both manufactured by Air Products, and other alcohol
feedstocks purchased from various suppliers. Other, more specialized amines, are
produced by the hydrogenation of purchased intermediates. Substantial quantities
of these products are sold under long-term contracts to a small number of
customers. These products are used by the Company's customers as raw materials
in the manufacture of herbicides, pesticides, water treatment chemicals, animal
nutrients, polyurethane coatings, artificial sweeteners, rubber chemicals, and
pharmaceuticals. Ammonia is a feedstock for its alkylamines business, and the
excess over this requirement is converted to ammonium nitrate prills and
solutions which are primarily sold to customers as fertilizers or for other
agricultural applications. Methanol is principally used by Air Products as a
feedstock in methylamine production, and the excess over this requirement is
marketed to the methanol market.
Polyurethane Intermediates--The Company produces dinitrotoluene ("DNT")
and toluene diamine ("TDA") for use as intermediates by the Company's customers
in the manufacture of a major precursor of flexible polyurethane foam. The
principal end markets for flexible polyurethane foams include furniture
cushioning, carpet underlay, bedding, and seating in automobiles. Virtually all
of the Company's production of DNT and TDA is sold under long-term contracts to
a small number of customers.
* * *
During the fourth quarter of fiscal year 2000, the Company completed
the sale of its polyvinyl alcohol business to Celanese AG, Kronberg, Germany.
Included in this sale were facilities in Pasadena, Texas and Calvert City,
Kentucky.
Chemical sales are supported from various locations in the United
States, England, Germany, Brazil, Mexico, the Netherlands, Japan, China,
Singapore, and South Africa, and through sales representatives or distributors
in most industrialized countries. Dry products are delivered in railcars,
trucks, drums, bags, and cartons. Liquid products are delivered by barge, rail
tank cars, tank-trailers, drums and pails, and, at one location, by pipeline.
The chemicals business depends on adequate energy sources, including
natural gas as a feedstock for the production of certain products (see "Raw
Materials and Energy") and will continue to be affected by various environmental
and health laws and regulations (see "Environmental Controls").
EQUIPMENT
The Company designs and manufactures equipment for cryogenic air
separation, gas processing, natural gas liquefaction, and hydrogen purification.
Air Products also designs and builds systems for recovering hydrogen, nitrogen,
carbon monoxide, carbon dioxide, and low dew point gases using membrane
technology. Additionally, a broad range of plant design, engineering,
procurement, and construction management services is provided for the above
areas. Equipment is manufactured for use by the gases segment and for sale in
industrial markets which include the Company's international industrial gas
affiliates.
The backlog of orders (including letters of intent) believed to be firm
from other companies and equity affiliates for equipment was approximately $149
million on September 30, 2000, approximately 34% of which relates to cryogenic
air separation, as compared with a total backlog of approximately $175 million
on September 30, 1999. It is expected that approximately $131 million of the
backlog on September 30, 2000, will be completed during fiscal year 2001.
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GENERAL
Foreign Operations
Air Products, through subsidiaries and affiliates, conducts business in
numerous countries outside the United States. The structure of the Air Products
gas business in Europe mirrors the Company's United States operation. Air
Products' international business is subject to risks customarily encountered in
foreign operations, including fluctuations in foreign currency exchange rates
and controls, import and export controls, and other economic, political, and
regulatory policies of local governments.
Majority and wholly owned industrial gas subsidiaries operate in
Argentina, Brazil, Canada, and throughout Europe and Asia in 14 and eight
countries, respectively. There are 50% industrial gas joint ventures in Africa,
South Africa, Canada, four countries in Europe, and three in Asia, and less than
controlling interests in Canada and Mexico, two countries in Europe, and five in
Asia. The Company has a 50% interest in a power generation facility in the
Netherlands and a 48.8% interest in one in Thailand.
The principal geographic markets for the Company's chemical products
are North America, Europe, Asia, Brazil, and Mexico. Majority and wholly owned
subsidiaries operate in Germany, Italy, the Netherlands, the United Kingdom,
Australia, Singapore, Japan, Korea, and Mexico. The Company also has 50% joint
ventures in Japan for distribution of POLYCAT(R) and manufacture and sale of
DABCO(R) amine catalysts. The polymer emulsions and pressure-sensitive adhesives
joint venture with Wacker-Chemie GmbH has headquarters in the United States and
production facilities in the United States, Germany, Mexico, and Korea, along
with a technical service center in Shanghai, China. Headquarters for the 20%
investment in the redispersible powder venture with Wacker-Chemie are in Germany
with manufacturing facilities in Germany and the United States.
Financial information about Air Products' foreign operations and
investments is included in Notes 8, 10, and 21 to the Consolidated Financial
Statements included under Item 8 herein. Information about foreign currency
translation is included in Note 1 to the Consolidated Financial Statements
included under Item 8 herein, under "Foreign Currency", and information on
Company exposure to currency fluctuations is included in Note 5 to the
Consolidated Financial Statements included under Item 8 herein, under "Foreign
Exchange Contracts". Export sales from operations in the United States to
unconsolidated customers amounted to $558 million, $528 million, and $650
million in 2000, 1999, and 1998, respectively. Total export sales in fiscal year
2000 included $42 million in export sales to affiliated customers. The sales to
affiliated customers were primarily equipment sales.
Technology Development
Air Products conducts research and development principally in its
laboratories located in Trexlertown, Pennsylvania, as well as in Manchester,
England; Utrecht, the Netherlands; and Barcelona, Spain. The Company also funds
and works closely on research and development programs with a number of major
universities and conducts a sizable amount of research work funded by others,
principally the United States Government.
The Company's market-oriented approach to technology development
encompasses research and development and engineering, as well as commercial
development.
The amount expended by the Company on research and development during
fiscal year 2000 was $124 million and was $123 million and $112 million during
fiscal years 1999 and 1998, respectively.
In the gases and equipment segments, technology development is directed
primarily to developing new and improved processes and equipment for the
production and delivery of industrial gases and cryogenic fluids, developing new
products, and developing new and improved applications for industrial gases. It
is through such applications and improvements that the Company has become a
major supplier to the electronics, polymer, petroleum, rubber, plastics, food
processing, and paper industries. Through fundamental research into inorganic
and polymer materials, advanced process engineering, and integrated
manufacturing methods, the Company discovers, develops, and improves the
economics of noncryogenic gas separation technologies. Additionally, technology
development for the equipment business is directed primarily to reducing the
capital and operating costs of its facilities and to commercializing new
technologies in gas production and separation.
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In the chemicals segment, technology development is primarily concerned
with new products and applications to strengthen and extend our present
positions in polymer and performance chemicals. In addition, a major continuing
effort supports the development of new and improved manufacturing technology for
chemical intermediates and various types of polymers.
A corporate research group supports the research efforts of the
Company's various businesses. This group includes the Company's Corporate
Science and Technology Center, which conducts exploratory research in areas
important to the long-term growth of the Company's core businesses, e.g., gas
and fluid separations, polymer science, organic synthesis, electronic chemicals,
and fluorine chemicals.
As of November 7, 2000, Air Products owned 909 United States patents
and 1,561 foreign patents. The Company is also licensed to practice under
patents owned by others. While the patents and licenses are considered
important, Air Products does not consider its business as a whole to be
materially dependent upon any particular patent or patent license, or group of
patents or licenses.
Raw Materials and Energy
The Company manufactures hydrogen, carbon monoxide, synthesis gas,
carbon dioxide, and methanol principally from natural gas. Such products
accounted for approximately 10% of the Company's consolidated sales in fiscal
year 2000. The Company's principal raw material purchases are chemical
intermediates produced by others from basic petrochemical feedstocks such as
olefins and aromatic hydrocarbons. These feedstocks are generally derived from
various crude oil fractions or from liquids extracted from natural gas. The
Company purchases its chemical intermediates from many sources and generally is
not dependent on one supplier. However, with respect to vinyl acetate monomer
which supports the polymer business, the Company is heavily dependent on a
single supplier under a long-term contract which produces vinyl acetate monomer
from several facilities. The Company characterizes the availability of these
chemical intermediates as generally being readily available. The Company uses
such raw materials in the production of emulsions, amines, polyurethane
intermediates, specialty additives, polyurethane additives, and epoxy additives.
Such products accounted for approximately 33% of the Company's consolidated
sales in fiscal year 2000. Natural gas is an energy source at a number of the
Company's facilities. The Company also purchases ammonia under long-term
contracts as a feedstock for several of its chemicals facilities.
The Company's industrial gas facilities use substantial amounts of
electrical power. Any shortage of electrical power or interruption of its supply
or increase in its price which cannot be passed through to customers for
competitive reasons will adversely affect the merchant gas business of the
Company.
In addition, the Company purchases finished and semi-finished materials
and chemical intermediates from many suppliers. During fiscal year 2000 no
significant difficulties were encountered in obtaining adequate supplies of
energy or raw materials.
Environmental Controls
The Company is subject to various environmental laws and regulations in
the United States and foreign countries where it has operations. Compliance with
these laws and regulations results in higher capital expenditures and costs.
Additionally, from time to time, the Company is involved in proceedings under
the Comprehensive Environmental Response, Compensation, and Liability Act (the
federal Superfund law), similar state laws, and the Resource Conservation and
Recovery Act (RCRA) relating to the designation of certain sites for
investigation and possible cleanup. Additional information with respect to these
proceedings is included under Item 3, Legal Proceedings, below. The Company's
accounting policies on environmental expenditures are discussed in Note 1 to the
Consolidated Financial Statements included under Item 8 herein.
The amounts charged to earnings on an after-tax basis related to
environmental protection totaled $30 million in 2000, $27 million in 1999, and
$24 million in 1998. These amounts represent an estimate of expenses for
compliance with environmental laws, as well as remedial activities, and costs
incurred to meet internal Company standards. Such costs are estimated to be
approximately $28 million in 2001 and $25 million in 2002.
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Although precise amounts are difficult to define, the Company estimates
that in fiscal year 2000 it spent approximately $3 million on capital projects
to control pollution versus $7 million in 1999. Capital expenditures to control
pollution in future years are estimated at approximately $5 million in both 2001
and 2002.
To the extent long-term contracts have been entered into for supply of
product, such as for the industrial gas on-site business and for certain
chemical products, the cost of any environmental compliance generally is
contractually passed through to the customer.
It is the Company's policy to accrue environmental investigatory and
noncapital remediation costs for identified sites when it is probable that a
liability has been incurred and the amount of loss can be reasonably estimated.
The potential exposure for such costs is estimated to range from $8 million to a
reasonably possible upper exposure of $21 million. The balance sheet at
September 30, 2000, includes an accrual of $17 million. At September 30, 1999,
the balance sheet accrual was $19 million.
In addition to the environmental exposures discussed in the preceding
paragraph, there will be spending at a Company-owned manufacturing site where
the Company is undertaking RCRA remediation action. The Company estimates
capital costs to implement the anticipated remedial program will range from $24
to $33 million. Spending was $21 million through fiscal year 2000 and is
estimated at $2 million for fiscal year 2001 and $1 million for 2002. Operating
and maintenance expenses associated with continuing the remedial program were
minimal in fiscal year 2000 and are estimated to be approximately $1 million per
year beginning in fiscal year 2001 and continuing for an estimated period of up
to 30 years. A former owner and operator at the site has agreed to reimburse the
Company approximately 20% of the costs incurred in the remediation.
Reimbursement of $1.4 million and $2.2 million was received in fiscal years 2000
and 1999, respectively, and is estimated at $.5 million for fiscal year 2001. In
fiscal year 1999 an insurance recovery related to this environmental site was
received in the amount of $7.7 million. The cost estimates have not been reduced
by the value of such reimbursement.
Actual costs to be incurred in future periods may vary from the
estimates, given inherent uncertainties in evaluating environmental exposures.
Subject to the imprecision in estimating future environmental costs, the Company
does not expect that any sum it may have to pay in connection with environmental
matters in excess of the amounts recorded or disclosed above would have a
materially adverse effect on its financial condition or results of operations in
any one year.
Competition
The Company's businesses face strong competition from others, some of
which are larger and have greater resources than Air Products.
Air Products' gas business competes in the United States with three
major sellers and with several regional sellers. Competition in industrial gas
markets is based primarily on price, reliability of supply, and furnishing or
developing applications for use of such gases by customers, and in some cases
the provisions of other services or products such as power and steam generation.
A similar competitive situation exists in European industrial gas markets in
which the Company competes against one or more larger entrenched competitors in
most countries.
The number of the Company's principal competitors in the chemicals
business varies from product to product, and it is not practical to identify
such competitors because of the broad range of the Company's chemical products
and the markets served, although the Company believes it has a leading or strong
market position in most of its chemical products. For amines the competition is
principally from other large chemical companies that also have the ability to
provide competitive pricing, reliability of supply, technical service
assistance, and quality products and services. The possibility of back
integration by large customers is the major competitive factor for the sale of
polyurethane additives. In its other chemical products, the Company competes
with a large number of chemical companies, some of which are larger, possess
greater financial resources, and are more vertically integrated than the
Company. Competition in these products is principally on the basis of price,
quality, product performance, reliability of product supply, and technical
service assistance.
7
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The Company's equipment business competes in all aspects with a great
number of firms, some of which have greater financial resources than Air
Products. Another important factor in certain export sales is financing provided
by governmental entities in the United States and the United Kingdom as compared
with financing offered by their counterparts in other countries.
Competition is based primarily on technological performance, service,
technical know-how, price, and performance guarantees. Air Products believes
that its comprehensive project development capability, operating experience,
engineering and financing capabilities, and construction management experience
will enable it to compete effectively.
Insurance
The Company's policy is to obtain public liability and property
insurance coverage that is currently available at what management determines to
be a fair and reasonable price. The Company, for itself and its power generation
and flue gas treatment joint venture affiliates for which it assumes operating
responsibility, maintains public liability and property insurance coverage at
amounts which management believes are sufficient, after retention, to meet the
Company's anticipated needs in light of historical experience to cover future
litigation and claims. There is no assurance, however, that the Company will not
incur losses beyond the limits of, or outside the coverage of, its insurance.
Employees
On September 30, 2000, the Company (including majority-owned
subsidiaries) had approximately 17,500 full-time employees, of whom
approximately 7,600 were located outside the United States. The Company has
collective bargaining agreements with unions at numerous locations which expire
on various dates over the next three to four years. The Company considers
relations with its employees to be satisfactory. The Company does not believe
that any expiring collective bargaining agreements will result in a material
adverse impact on the Company.
8
<PAGE>
Executive Officers of the Company
The Company's executive officers and their respective positions and
ages on December 15, 2000, follow. Except where indicated, each of the executive
officers listed below has been employed by the Company in the position indicated
during the past five fiscal years. Information with respect to offices held is
stated in fiscal years.
<TABLE>
<CAPTION>
Name Age Office
---- --- ------
<S> <C> <C>
W. Douglas Brown 54 Vice President, General Counsel, and Secretary
(D) (became Vice President, General Counsel, and
Secretary in 1999; Vice President-Administration,
Gases and Equipment in 1997; Senior Vice President-
Law and Secretary of American Ref-Fuel
Company prior thereto)
Andrew E. Cummins 56 Group Vice President-Chemicals
(D) (became Group Vice President-Chemicals in
1999; Vice President-North America
Gases in 1999; Vice
President-General Industries Group
in 1996; Vice President and General
Manager-General Industries Division
prior thereto)
Leo J. Daley 54 Vice President-Finance and Controller
(D) (became Controller in 2000; Vice President-Finance in 1998;
Vice President and Treasurer prior thereto)
Robert E. Gadomski 53 Executive Vice President-Gases and Equipment
(D) (became Executive Vice President-Gases and Equipment in
1999; Executive Vice
President-Chemicals, Asia, and Latin
America in 1998; Executive Vice
President-Chemicals in 1996; Group
Vice President-Chemicals Group prior
thereto)
John P. Jones III 50 Chairman, President, and Chief Executive Officer
(A)(B)(C)(D) (became Chairman and Chief Executive Officer in 2000;
President and Chief Operating Officer in 1998; Executive
Vice President-Gases and Equipment in 1996; President-Air
Products Europe, Inc. prior thereto)
Joseph J. Kaminski 61 Corporate Executive Vice President
(A)(D) (became Corporate Executive Vice President in 1996;
Executive Vice President-Gases and Equipment prior thereto)
Ronaldo Sullam 59 President-Air Products Europe, Inc.
(D) (became President-Air Products Europe, Inc. in 1996;
Senior Vice President-Strategic Marketing,
Development, and Southern Europe prior thereto)
</TABLE>
---------------
(A) Member, Board of Directors
(B) Member, Executive Committee of the Board of Directors
(C) Member, Finance Committee of the Board of Directors
(D) Member, Corporate Executive Committee
9
<PAGE>
ITEM 2. Properties.
The principal executive offices of Air Products are located at its
headquarters in Trexlertown, near Allentown, Pennsylvania. Additional
administrative offices are located in owned facilities in Hersham, near London,
England; Brampton, near Toronto, Canada; and Hattingen, Germany. Administrative
offices are also located in leased facilities in the Allentown area,
Pennsylvania; Tokyo, Japan; Hong Kong, the People's Republic of China;
Singapore; Brussels, Belgium; Paris, France; Barcelona, Spain; and Sao Paulo,
Brazil. The management considers the Company's manufacturing facilities,
described in more detail below, to be adequate to support the business
efficiently. The following information with respect to properties is as of
September 30, 2000.
Gases
The gases segment has approximately 190 plant facilities in 38 states,
the majority of which recover nitrogen, oxygen, and argon. The Company has eight
facilities which produce specialty gases and 31 facilities which recover
hydrogen throughout the United States. Helium is recovered at two plants in
Kansas and Texas, and acetylene is manufactured at six plants in six states in
the United States. There are 132 sales offices and/or cylinder distribution
centers located in 39 states.
The property on which the above plants are located is owned by Air
Products at approximately one-fourth of the locations, and leased by Air
Products at the remaining locations. However, in virtually all cases, the plant
itself is owned and operated by Air Products. Air Products owns approximately
half of its sales offices and cylinder distribution centers, including related
real estate, and leases the other half.
Air Products' European plant facilities total 64 and include eight
plants which recover hydrogen, seven plants which manufacture dissolved
acetylene, and one which recovers carbon monoxide. The majority of European
plants recover nitrogen, oxygen, and argon. In addition, there are four
specialty gas centers. There is a combined total of 124 sales offices and/or
cylinder distribution centers in Europe, and several additional facilities
located in Brazil, Canada, Japan, the People's Republic of China, Puerto Rico,
Singapore, Indonesia, Taiwan, Korea, Malaysia, and the Middle East.
Representative offices are located in Taiwan, and in Beijing and Shanghai in the
People's Republic of China.
Chemicals
The chemicals segment manufactures amines, nitric acid, methanol,
anhydrous ammonia, and ammonia products at its Pace, Florida facility;
alkylamines at its St. Gabriel, Louisiana facility and its Camacari, Bahia,
Brazil facility; polyvinyl acetate emulsions at its South Brunswick, New Jersey
facility; styrene emulsions, styrene acrylics, polyvinyl acetate acrylics, and
polyvinyl acetate emulsions at its San Juan del Rio facility in Mexico;
polyvinyl acetate emulsions at its Cologne, Germany facility; nitric acid,
dinitrotoluene, and toluene diamine at its Pasadena, Texas facility; polyvinyl
acetate emulsions and acetylenic chemicals at its Calvert City, Kentucky
facility; specialty amines at its Wichita, Kansas facility; methylamines,
dimethyl formamide, choline chloride, and dimethyl amino ethanol at its
Teesside, England facility; and epoxy additives at its facilities in Manchester,
England, Los Angeles, California, and Cumberland, Rhode Island. The chemicals
segment manufactures polyurethane additives and polyurethane specialty products
(AIRTHANE(R)/VERSATHANE(R)) at its Paulsboro, New Jersey facility which is
leased in part and owned in part. The chemicals segment also manufactures
polyvinyl acetate emulsions at five smaller locations.
The chemicals segment has 15 plant facilities, two sales offices, and
one laboratory in the United States and operates three plants, nine sales/
representative offices, and three laboratories in Europe, two laboratories in
Brazil, Korea, China, and Japan, one plant in Mexico, two plants in Korea, one
plant in Brazil, and sales offices in Australia, Brazil, Mexico, Japan, Korea,
and Singapore, and representative offices in Beijing, Shanghai, and Hong Kong in
the People's Republic of China. Substantially all of the chemicals segment's
plants and real estate are owned. Approximately 75% of the offices are leased by
the Company and 25% are owned.
10
<PAGE>
Equipment
The principal facilities utilized by the equipment segment include five
plants and two sales offices in the United States, two plants and two offices in
Europe, one office in Japan, and one sales office in the People's Republic of
China. Air Products owns approximately 50% of the facilities and real estate in
this segment and leases the remaining 50%.
ITEM 3. Legal Proceedings.
In the normal course of business Air Products and its subsidiaries
are involved in legal proceedings including proceedings involving governmental
authorities. With respect to the Kentucky Department of Environmental
Protection's Notice of Violation pertaining to the Company's Calvert City
chemical manufacturing facility referenced in the Company's Form 10-K Report for
the fiscal year ended September 30, 1999, an Agreed Order resolving the alleged
violations was entered on 19 September 2000, whereby the Company paid a civil
penalty of $30,000.
There are also other proceedings under the Comprehensive Environmental
Response, Compensation, and Liability Act (the federal Superfund law), the
Resource Conservation and Recovery Act (RCRA), and similar state environmental
laws relating to the designation of certain sites for investigation or
remediation. Presently there are approximately 45 sites on which a final
settlement has not been reached where the Company, along with others, has been
designated a Potentially Responsible Party by the Environmental Protection
Agency or is otherwise engaged in investigation or remediation. The Company does
not expect that any sums it may have to pay in connection with these matters
would have a materially adverse effect on its consolidated financial position,
nor is there any material additional exposure expected in any one year in excess
of the amounts the Company currently has accrued. Additional information on the
Company's environmental exposure is included under "Environmental Controls".
ITEM 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II
ITEM 5. Market for the Company's Common Stock and Related Stockholder Matters.
The Company's Common Stock, ticker symbol "APD", is listed on the New
York and Pacific Stock Exchanges. Market and dividend information for the
Company's Common Stock appear under "Eleven-Year Summary of Selected Financial
Data" on page 64 of the 2000 Financial Review Section of the Annual Report to
Shareholders which is incorporated herein by reference. In addition, the Company
has authority to issue 25,000,000 shares of preferred stock in series. The Board
of Directors is authorized to designate the series and to fix the relative
voting, dividend, conversion, liquidation, redemption and other rights,
preferences, and limitations as between series. When preferred stock is issued,
holders of Common Stock are subject to the dividend and liquidation preferences
and other prior rights of the preferred stock. There currently is no preferred
stock outstanding. The Company's Transfer Agent and Registrar is First Chicago
Trust Company, a Division of Equiserve, P.O. Box 2506, Jersey City, New Jersey
07303-2506, telephone (800) 519-3111, TDD (201) 222-4955, Internet website
www.equiserve.com, and e-mail address [email protected].
As of November 30, 2000 there were 11,639 record holders of the
Company's Common Stock.
ITEM 6. Selected Financial Data.
The tabular information appearing under "Eleven-Year Summary of
Selected Financial Data" on page 64 of the 2000 Financial Review Section of the
Annual Report to Shareholders is incorporated herein by reference.
11
<PAGE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The textual information appearing under "Management's Discussion and
Analysis" on pages 25 through 33 of the 2000 Financial Review Section of the
Annual Report to Shareholders is incorporated herein by reference.
ITEM 7a. Quantitative and Qualitative Disclosures about Market Risk.
The textual information appearing under "Financial Instruments
Sensitivity Analysis" on pages 32 and 33 of the 2000 Financial Review Section of
the Annual Report to Shareholders is incorporated herein by reference.
ITEM 8. Financial Statements.
The consolidated financial statements and the related notes thereto,
together with the report thereon of Arthur Andersen LLP dated October 27, 2000,
appearing on pages 34 through 65 of the 2000 Financial Review Section of the
Annual Report to Shareholders, are incorporated herein by reference.
ITEM 9. Disagreements on Accounting and Financial Disclosure.
Not applicable.
PART III
ITEM 10. Directors and Executive Officers of the Company.
The biographical information relating to the Company's directors
contained on pages 11 through 14 of the Proxy Statement relating to the
Company's 2001 Annual Meeting of Shareholders is incorporated herein by
reference. Biographical information relating to the Company's executive officers
is set forth in Item 1 of Part I of this Report.
ITEM 11. Executive Compensation.
The information under "Director Compensation", "Report of the
Management Development and Compensation Committee", "Executive Compensation
Tables", "Severance and Other Change In Control Arrangements", and "Stock
Performance Graph", appearing on pages 16 through 23 of the Proxy Statement
relating to the Company's 2001 Annual Meeting of Shareholders is incorporated
herein by reference.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
The information required for this Item is set forth in the sections
headed "Persons Owning More than 5% of Air Products Stock" and "Air Products
Stock Beneficially Owned by Officers and Directors" contained on pages 24
through 25 of the Proxy Statement relating to the Company's 2001 Annual Meeting
of Shareholders and such information is incorporated herein by reference.
ITEM 13. Certain Relationships and Related Transactions.
Not applicable.
12
<PAGE>
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following documents are filed as a part of this Report:
1. The 2000 Financial Review Section of the Company's 2000 Annual Report
to Shareholders. Information contained therein is not deemed filed except as it
is incorporated by reference into this Report. The following financial
information is incorporated herein by reference:
<TABLE>
<CAPTION>
(Page references to 2000 Financial Review Section of the Annual Report)
<S> <C>
Management's Discussion and Analysis........................................................... 25
Report of Independent Public Accountants....................................................... 34
Consolidated Income for the three years ended 30 September 2000................................ 35
Consolidated Balance Sheets at 30 September 2000 and 1999...................................... 36
Consolidated Cash Flows for the three years ended 30 September 2000............................ 37
Consolidated Shareholders' Equity for the three years ended 30 September 2000.................. 38
Notes to Consolidated Financial Statements..................................................... 39
Business Segment and Geographic Information.................................................... 60
Eleven-Year Summary of Selected Financial Data................................................. 64
2. The following additional information should be read in conjunction
with the financial statements in the Company's 2000 Financial Review Section of
the Annual Report to Shareholders:
(Page references to this report)
Report of Independent Public Accountants on Schedule........................................... 19
Consent of Independent Public Accountants...................................................... 19
Consolidated Schedule for the years ended 30 September 2000, 1999, and
1998 as follows:
Schedule
Number
------
VIII Valuation and Qualifying Accounts.................................................... 20
</TABLE>
All other schedules are omitted because the required matter or conditions
are not present or because the information required by the Schedules is
submitted as part of the consolidated financial statements and notes thereto.
3. Exhibits.
Exhibit No. Description
(3) Articles of Incorporation and By-Laws.
3.1 By-Laws of the Company. (Filed as Exhibit 3.1 to the
Company's Form 8-K Report dated September 18, 1997.)*
3.2 Restated Certificate of Incorporation of the Company.
(Filed as Exhibit 3.2 to the Company's Form 10-K Report
for the fiscal year ended September 30, 1987.)*
3.3 Amendment to the Restated Certificate of
Incorporation of the Company dated January 25, 1996.
(Filed as Exhibit 3.3 to the Company's Form 10-K Report
for the fiscal year ended September 30, 1996.)*
(4) Instruments defining the rights of security
holders, including indentures. Upon request of the
Securities and Exchange Commission, the Company hereby
undertakes to furnish copies of the instruments with
respect to its long-term debt.
4.1 Rights Agreement, dated as of March 19, 1998, between
the Company and First Chicago Trust Company of New York.
(Filed as Exhibit 1 to the Company's Form 8-A
Registration Statement dated March 19, 1998, as amended
by Form 8-A/A dated July 16, 1998.)*
13
<PAGE>
4.2 Amended and Restated Credit Agreement dated as of
September 16, 1999 among the Company, Additional
Borrowers parties thereto, Lenders parties thereto, and
The Chase Manhattan Bank (as amended). (Filed as Exhibit
4.2 to the Company's Form 10-K Report for the fiscal
year ended September 30, 1999.)*
(10) Material Contracts.
10.1 1990 Deferred Stock Plan of the Company, as amended
and restated effective October 1, 1989. (Filed as
Exhibit 10.1 to the Company's Form 10-K Report for
the fiscal year ended September 30, 1989.)*
10.2 1997 Long-Term Incentive Plan of the Company effective
October 1, 1996. (Filed as Exhibit 10.2(c) to the
Company's Form 10-K Report for the fiscal year ended
September 30, 1996.)*
10.2(a) Excerpt from resolutions approving amendments to the
1997 Long-Term Incentive Plan of the Company, effective
20 September 2000.
10.3 Amended and Restated 1997 Annual Incentive Plan of
the Company effective 1 January 2000. (Filed as
Exhibit 10.2 to the Company's Form 10-Q Report for the
period ending 31 March 2000.)*
10.3(a) Excerpt from resolutions amending the 1997 Annual
Incentive Plan of the Company, effective 20 September
2000.
10.4 Supplementary Pension Plan of the Company, as amended
effective October 1, 1988. (Filed as Exhibit 10.4 to
the Company's Form 10-K Report for the fiscal year
ended September 30, 1989.)*
10.4(a) Amendment to the Pension Plan for Salaried Employees
and the Pension Plan for Hourly Rated Employees of the
Company, adopted September 20, 1995. (Filed as
Exhibit 10.4(d) to the Company's Form 10-K Report for
the fiscal year ended September 30, 1995.)*
10.4(b) Amendment to Supplementary Pension Plan of the Company,
adopted September 20, 1995. (Filed as Exhibit 10.4(e)
to the Company's Form 10-K Report for the fiscal year
ended September 30, 1995.)*
10.4(c) Amendment to Supplementary Pension Plan of the Company,
adopted November 2, 1995. (Filed as Exhibit 10.4(c)
to the Company's Form 10-K Report for the fiscal year
ended September 30, 1996.)*
10.4(d) Resolutions delegating certain authority to amend the
Supplementary Pension Plan of the Company, effective
January 26, 2000.
10.4(e) Resolutions approving amendments to the Supplementary
Pension Plan of the Company, effective
September 20, 2000.
10.5 Supplementary Savings Plan of the Company as amended
October 1, 1989. (Filed as Exhibit 10.5 to the
Company's Form 10-K Report for the fiscal year ended
September 30, 1989.)*
10.5(a) Amendment to Supplementary Savings Plan of the
Company effective April 1, 1998. (Filed as
Exhibit 10.3(a) to the Company's Form 10-K Report
for the fiscal year ended September 30, 1998.)*
10.5(b) Resolutions approving amendments to the Supplementary
Savings Plan of the Company effective 1 January 2000.
(Filed as Exhibit 10.2 to the Company's Form 10-Q Report
for the period ending 31 March 2000.)*
10.6 Amended and Restated Deferred Compensation Plan for
Directors of the Company, effective May 19, 1998.
(Filed as Exhibit 10.6(a) to the Company's Form 10-K
Report for the fiscal year ended September 30, 1998.)*
10.6(a) Resolutions approving amendments to the Compensation
Program For Directors of the Company effective
1 April 2000.
14
<PAGE>
10.7 Stock Option Plan for Directors of the Company,
effective January 27, 1994, as amended October 21,
1999. (Filed as Exhibit 10.7 to the Company's
Form 10-K Report for the fiscal year ended
September 30, 1999.)*
10.8 Letter dated July 1, 1997 concerning pension for an
executive officer. (Filed as Exhibit 10.7(b) to the
Company's Form 10-K Report for the fiscal year ended
September 30, 1998.)*
10.9 Letter dated July 7, 1997 concerning pension for an
executive officer. (Filed as Exhibit 10.7(c) to the
Company's Form 10-K Report for the fiscal year ended
September 30, 1998.)*
10.10 Letter dated July 1, 1997 concerning pension for an
executive officer. (Filed as Exhibit 10.10 to the
Company's Form 10-K Report for the fiscal year ended
September 30, 1999.)*
10.11 Air Products and Chemicals, Inc. Severance Plan
effective March 15, 1990. (Filed as Exhibit 10.8(a) to
the Company's Form 10-K Report for the fiscal year
ended September 30, 1992.)*
10.12 Air Products and Chemicals, Inc. Change of Control
Severance Plan effective March 15, 1990. (Filed as
Exhibit 10.8(b) to the Company's Form 10-K Report for
the fiscal year ended September 30, 1992.)*
10.13 Amended and Restated Trust Agreement by and between the
Company and PNC Bank, N.A. relating to the Defined
Benefit Pension Plans dated as of August 1, 1999.
(Filed as Exhibit 10.13 to the Company's Form 10-K
Report for the fiscal year ended September 30, 1999.)*
10.13(a) Amendment No. 1 to the Amended and Restated Trust
Agreement by and between the Company and PNC Bank, N.A.
relating to the Defined Benefit Pension Plan, adopted
January 1, 2000.
10.14 Amended and Restated Trust Agreement by and between the
Company and PNC Bank, N.A. relating to the Supplementary
Savings Plan dated as of August 1, 1999. (Filed as
Exhibit 10.14 to the Company's Form 10-K Report for the
fiscal year ended September 30, 1999.)*
10.14(a) Amendment No. 1 to the Amended and Restated Trust
Agreement by and between the Company and PNC Bank, N.A.
relating to the Supplementary Savings Plan, adopted
January 1, 2000.
10.15 Form of Split Employment Contracts for an executive
officer with the Company dated November 6, 1999 and
with an affiliate of the Company dated June 4, 1996,
and amended by letter dated November 6, 1999. (Filed
as Exhibit 10.15 to the Company's Form 10-K Report for
the fiscal year ended September 30, 1999.)*
10.16 Form of Severance Agreements which the Company has with
each of its U.S. Executive Officers and European
Executive Officer. (Filed as Exhibit 10.16 to the
Company's Form 10-K Report for the fiscal year ended
September 30, 1999.)*
10.17 Resolutions authorizing modifications to the
Supplementary Pension Plan and Supplementary Savings
Plan of the Company, effective 15 September 1999.
(11) Earnings per share.
(12) Computation of Ratios of Earnings to Fixed Charges.
(13) 2000 Financial Review Section of the Annual Report to
Shareholders for the fiscal year ended September 30,
2000, which is furnished to the Commission for
information only, and not filed except as expressly
incorporated by reference in this Report.
(21) Subsidiaries of the registrant.
(24) Power of Attorney.
15
<PAGE>
(27) Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only, and not filed.
(b) Reports on Form 8-K filed during the quarter ended September 30, 2000:
Current Reports on Form 8-K dated July 20, 2000, and July 25, 2000, were
filed in which Item 5 of such Form was reported.
-------------------------------
*Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-4534.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: December 18, 2000
AIR PRODUCTS AND CHEMICALS, INC.
(Registrant)
By: /s/ Leo J. Daley
----------------------------------------
Leo J. Daley, Vice President-Finance
and Controller Principal Financial and
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John P. Jones III Director, Chairman, President, and Chief December 18, 2000
-------------------------------------------- Executive Officer
(John P. Jones III) (Principal Executive Officer)
* Director and Corporate Executive Vice December 18, 2000
-------------------------------------------- President
(Joseph J. Kaminski)
* Director December 18, 2000
--------------------------------------------
(Mario L. Baeza)
* Director December 18, 2000
--------------------------------------------
(Tom H. Barrett)
* Director December 18, 2000
--------------------------------------------
(L. Paul Bremer III)
* Director December 18, 2000
--------------------------------------------
(Robert Cizik)
* Director December 18, 2000
--------------------------------------------
(Ursula F. Fairbairn)
* Director December 18, 2000
--------------------------------------------
(Edward E. Hagenlocker)
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director December 18, 2000
-----------------------------------------
(James F. Hardymon)
* Director December 18, 2000
-----------------------------------------
(Terry R. Lautenbach)
* Director December 18, 2000
-----------------------------------------
(Ruud F. M. Lubbers)
* Director December 18, 2000
-----------------------------------------
(Charles H. Noski)
* Director December 18, 2000
-----------------------------------------
(Lawrason D. Thomas)
</TABLE>
*W. Douglas Brown, Vice President, General Counsel, and Secretary, by signing
his name hereto, does sign this document on behalf of the above noted
individuals, pursuant to a power of attorney duly executed by such individuals
which is filed with the Securities and Exchange Commission herewith.
/s/ W. Douglas Brown
---------------------------------
W. Douglas Brown
Attorney-in-Fact
18
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To: Air Products and Chemicals, Inc.
We have audited, in accordance with auditing standards generally
accepted in the United States, the consolidated financial statements included in
Air Products and Chemicals, Inc.'s Annual Report to Shareholders, incorporated
by reference in this Form 10-K, and have issued our report thereon dated
27 October 2000. Our audit was made for the purpose of forming an opinion on
those statements taken as a whole. The schedule referred to in Item 14(a)(2) in
this Form 10-K is the responsibility of the Company's management and is
presented for the purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic consolidated financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic consolidated financial statements taken
as a whole.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
27 October 2000
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To: Air Products and Chemicals, Inc.
As independent public accountants, we hereby consent to the
incorporation of our reports included or incorporated by reference in this
Form 10-K, into the Company's previously filed Registration Statements on
Form S-8 and Form S-3 (File Nos. 333-33851, 333-02461, 33-2068, 33-57023,
33-65117, 333-21145, 333-45239, 333-18955, 333-21147, 333-60147, 333-71405,
333-73105, 333-95317, 333-31578, and 333-90773).
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
15 December 2000
19
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE VIII
CONSOLIDATED
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended 30 September 2000, 1999, and 1998
Classification Other Changes
Additions Increase (Decrease)
------------------------- -----------------------------
Balance at Charged Charged Cumulative Balance
Beginning to to other Translation at End of
of period Expense Accounts Adjustment Other[1] Period
---------------------------------------------------------------------------------------------------------------------------
(in millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
Year Ended 30 September 2000
Provision for global cost reduction
Employee Termination Benefits/
Other People-Related Costs $ 14 $ 48 $ 0 $ 0 $ (38) $ 24
Year Ended 30 September 1999
Provision for global cost reduction
Employee Termination Benefits/
Other People Related Costs $ 0 $ 34 $ 0 $ 0 $ (20) $ 14
Year Ended 30 September 1998
Provision for global cost reduction
Employee Termination Benefits/
Other People Related Costs $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Notes:
[1] Charges to the accrual for
termination payments.
Year Ended 30 September 2000
Allowance for doubtful accounts $ 12 $ 8 $ 2[2] $ (1) $ (8)[3] $ 13
Year Ended 30 September 1999
Allowance for doubtful accounts $ 17 $ 6 $ 1[2] $ (1) $ (11)[3] $ 12
Year Ended 30 September 1998
Allowance for doubtful accounts $ 20 $ 6 $ 3[2] $ 0 $ (12)[3] $ 17
</TABLE>
Notes:
[2] Includes collections on accounts previously written off and additions
applicable to businesses acquired.
[3] Primarily includes write-offs of uncollectible accounts.
20
