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) 25 July 2000
----------------
<TABLE>
<CAPTION>
Air Products and Chemicals, Inc.
--------------------------------------------------
(Exact name of registrant as specified in charter)
<S> <C> <C>
Delaware 1-4534 23-1274455
---------------------------------------------- ------------------------ ---------------------------
(State of other jurisdiction of incorporation) (Commission file number) (IRS Identification number)
7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501
------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (610) 481-4911
---------------
<PAGE>
Item 5. Other Events.
----------------------
AIR PRODUCTS' EARNINGS FROM OPERATIONS UP 33 PERCENT
----------------------------------------------------
LEHIGH VALLEY, Pa. (July 25, 2000) - Air Products and Chemicals, Inc. (NYSE:APD)
today reported its third quarter earnings per share from operations increased 33
percent on strong performance in industrial gases. Broad-based growth across all
regions, and in particular in key markets like electronics and the chemicals and
process industries (CPI), drove results.
The company reported income from operations of $139 million, or diluted earnings
per share of 64 cents, compared with income from operations of $104 million, or
48 cents per share, in the third quarter of 1999. Record sales of $1.4 billion
were 14 percent higher than last year's sales for the June quarter. These
results and the following discussion exclude special items.
"This was an outstanding operating quarter for Air Products. Exceptional growth
in our key markets, combined with our solid execution, produced another
consecutive quarter of record sales and record earnings from operations. I
appreciate the hard work, innovation, and customer focus of our people around
the world. Our employees are delivering the difference--the Air Products
difference--our customers appreciate and have come to expect," Air Products
chairman and chief executive officer H. A. Wagner said.
Industrial gas sales increased 21 percent, operating income was up 37 percent,
and the worldwide gases operating margin increased to 21.2 percent. Sales and
operating income climbed on significant volume gains in electronics. Demand for
Air Products' premier electronics specialty gases and chemicals--including
Schumacher products and nitrogen trifluoride (NF3), a more environmentally-
friendly and productive chamber cleaning gas used by semiconductor
manufacturers--increased substantially. Also contributing to these gains were
2
<PAGE>
strong demand in North America and Europe for hydrogen into the CPI market and
the consolidation of the company's Korean gas affiliate, which principally
serves the CPI and electronics markets and previously had been accounted for as
an equity affiliate.
Gases equity affiliates' income rose more than 60 percent, primarily on higher
volumes in Asia and Mexico and favorable currency impacts.
Chemicals sales increased seven percent compared with last year, driven by
growth in intermediate and performance chemicals volumes. Operating income was
up four percent as cost control and productivity improvements partially offset
significantly higher raw material costs.
Mr. Wagner concluded by saying, "We continue to see momentum in many of our key
markets, and we are taking decisive actions to leverage the growth we expect. We
are selectively expanding our electronics specialty gases and chemicals
manufacturing facilities in response to unprecedented customer demand. Continued
workforce and facility restructuring will further enhance our commitment to
better serve our customers and increase our organizational efficiency. Based on
these actions, and our strong performance in the first three quarters of our
fiscal year, we expect growth in earnings per share from operations to exceed 15
percent this year."
The June 2000 operating results exclude $302 million in after-tax charges, or
$1.39 per share, consisting of costs related to the failed attempt to acquire
BOC. The June 2000 operating results also exclude a $29.5 million after-tax
charge, or 14 cents per share, for a global cost reduction plan. The plan
results in staff reductions and the rationalization of three European
facilities.
The June 1999 operating results exclude an after-tax charge of $9 million, or
four cents per share, for a global cost reduction plan.
***NOTE: The forward-looking statements contained in this release are based on
current expectations regarding important risk factors. Actual results may
3
<PAGE>
differ materially from those expressed. Factors that might cause forward-looking
statements to differ materially from actual results include, among other things,
overall economic and business conditions; demand for the goods and services of
Air Products; competitive factors in the industries in which it competes;
changes in government regulation; success of implementing cost reduction
programs; the timing, impact and other uncertainties of future acquisitions or
combinations within relevant industries; fluctuations in interest rates and
foreign currencies; the impact of tax and other legislation and regulations in
the jurisdictions in which Air Products and its affiliates operate; and the
timing and rate at which tax credits can be utilized.
Financial tables follow:
4
<PAGE>
AIR PRODUCTS AND CHEMICALS, INC.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
<TABLE>
<CAPTION>
(Millions of dollars, except per share)
----------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
30 June 30 June
2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $1,406.4 $1,237.8 $4,018.0 $3,765.7
----------------------------------------------------------------------------------------------------------------------------------
Net Income:
As reported $(192.5) $94.6 $(94.3) $327.9
Exclusive of special items $138.8(a) 103.6(c) $393.2(b) $334.9(d)
----------------------------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share:
As reported $(.90) $.45 $(.44) $1.55
Exclusive of special items $.65 $.49 $1.84 $1.58
----------------------------------------------------------------------------------------------------------------------------------
Diluted Earnings Per Share:(g)
As reported $(.90) $.44 $(.44) $1.52
Exclusive of special items $.64(a) $.48(c) $1.82(b) $1.55(d)
----------------------------------------------------------------------------------------------------------------------------------
Operating Return on Net Assets(e) 10.6% 11.0%
Capital Expenditures $813.2 $868.8(f)
Depreciation $150.4 $125.5 $426.7 $386.8
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Excludes an after-tax charge of $301.8 million, or $1.39 per share, for
costs related to the BOC transaction, and an after-tax charge of $29.5
million, or $.14 per share, for a global cost reduction plan.
(b) Excludes an after-tax charge of $456.5 million, or $2.12 per share, for
costs related to the BOC transaction, an after-tax charge of $35.0 million,
or $.16 per share, for a global cost reduction plan, and an after-tax gain
of $4.0 million, or $.02 per share, on the sale of packaged gas facilities.
(c) Excludes an after-tax charge of $9.0 million, or $.04 per share, for a
global cost reduction plan.
(d) Excludes an after-tax gain of $21.3 million, or $.10 per share,
related to the formation of Air Products Polymers, an after-tax charge
of $21.9 million, or $.10 per share, related to the global cost
reduction plan, and an after-tax charge of $6.4 million, or $.03 per
share, primarily related to Chemicals facility closure costs.
(e) Operating return on net assets (ORONA) is calculated as the rolling four
quarter sum of operating income, divided by the rolling five quarter
average of total assets, less investments in equity affiliates. The ORONA
calculation for the nine months ended 30 June 2000 excludes $55.4 million
in charges related to a global cost reduction plan and $6.3 million in
income related to the sale of packaged gas facilities. The ORONA
calculation for the nine months ended 30 June 1999 excludes $34.2 million
in charges related to a global cost reduction plan and $10.3 million in
charges primarily related to Chemicals facility closure costs.
(f) Excludes the company's contribution of $121.7 million of assets to the
Air Products Polymers venture.
(g) The calculation of diluted earnings per share for fiscal 2000 was based on
the weighted average of common shares outstanding due to the net loss
position. The calculation of diluted earnings per share excluding special
items was based on the weighted average of common shares and common
equivalent shares. The weighted average common shares and common equivalent
shares for the three and nine months ended 30 June 2000 was 216.5 million
and 215.8 million shares, respectively. Additionally, the calculation of
the per share impact of special items on a diluted basis was based on the
weighted average of common shares and common equivalent shares for all
periods presented.
5
<PAGE>
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED INCOME
(Unaudited)
<TABLE>
<CAPTION>
(Millions of dollars, except per share)
----------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
30 June 30 June
2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES AND OTHER INCOME
Sales $1,406.4 $1,237.8 $4,018.0 $3,765.7
Other income(expense),net (4.5) 2.9 9.4 12.3
----------------------------------------------------------------------------------------------------------------------------
1,401.9 1,240.7 4,027.4 3,778.0
----------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of sales 993.7 871.0 2,796.4 2,624.1
Selling and administrative 189.5 172.6 537.2 524.1
Research and development 32.3 29.4 92.3 90.4
----------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 186.4 167.7 601.5 539.4
Income from equity affiliates, net of 20.4 15.2 62.0 39.1
related expenses
Net gain on formation of polymer venture -- -- -- 31.1
Loss on currency hedges related to BOC 482.5 -- 730.4 --
transaction and expenses
Interest expense 52.9 39.3 141.0 120.1
----------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE TAXES AND (328.6) 143.6 (207.9) 489.5
MINORITY INTEREST
Income taxes (benefits) (137.6) 44.4 (120.2) 149.4
Minority interest(a) 1.5 4.6 6.6 12.2
----------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $(192.5) $94.6 $(94.3) $327.9
============================================================================================================================
BASIC EARNINGS (LOSS) PER $(.90) $.45 $(.44) $1.55
COMMON SHARE
----------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS (LOSS) PER $(.90) $.44 $(.44) $1.52
COMMON SHARE
----------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF 213.4 212.5 213.3 211.9
COMMON SHARES (in millions)
----------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF 213.4 217.0 213.3 215.9
COMMON AND COMMON
EQUIVALENT SHARES (in
millions)(b)(c)
----------------------------------------------------------------------------------------------------------------------------
DIVIDENDS DECLARED PER $.19 $.18 $.55 $.52
COMMON SHARE - Cash
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Minority interest primarily includes before-tax amounts.
(b) Common equivalent shares were not considered in fiscal year 2000 due to the
net loss position.
(c) The dilution of earnings per common share in fiscal year 1999 is due mainly
to the impact of unexercised stock options.
6
<PAGE>
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(Millions of dollars)
----------------------------------------------------------------------------------------------------------
30 June
ASSETS 2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash items $113.3 $80.3
Trade receivables, less allowances for doubtful accounts 960.9 922.3
Inventories 445.5 428.8
Contracts in progress, less progress billings 79.0 93.0
Other current assets 349.8 184.3
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,948.5 1,708.7
----------------------------------------------------------------------------------------------------------
INVESTMENTS IN NET ASSETS OF AND ADVANCES TO EQUITY 503.7 479.3
AFFILIATES
OTHER INVESTMENTS AND ADVANCES 28.0 32.5
PLANT AND EQUIPMENT, at cost 10,625.4 9,975.2
Less - Accumulated depreciation 5,211.8 4,901.6
----------------------------------------------------------------------------------------------------------
PLANT AND EQUIPMENT, net 5,413.6 5,073.6
----------------------------------------------------------------------------------------------------------
GOODWILL 326.8 346.4
OTHER NONCURRENT ASSETS 346.2 371.6
----------------------------------------------------------------------------------------------------------
TOTAL ASSETS $8,566.8 $8,012.1
==========================================================================================================
LIABILITIES AND SHAREHOLDER'S EQUITY
----------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Payables, trade and other $557.3 $561.4
Accrued liabilities 325.3 284.1
Accrued income taxes 12.5 18.8
Short-term borrowings 716.2 326.3
Current portion of long-term debt 72.8 258.7
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,684.1 1,449.3
----------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 2,800.2 2,249.7
DEFERRED INCOME & OTHER NONCURRENT LIABILITIES 565.9 603.1
DEFERRED INCOME TAXES 750.9 741.5
----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 5,801.1 5,043.6
----------------------------------------------------------------------------------------------------------
MINORITY INTERESTS IN SUBSIDIARY COMPANIES 122.0 136.2
----------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common stock (par value $1 per share; issued 2000 and 1999 - 249,455,584 249.4 249.4
shares)
Capital in excess of par value 342.3 340.8
Retained earnings 3,490.1 3,617.6
Accumulated other comprehensive income (391.6) (316.3)
Treasury Stock, at cost (2000 - 20,150,393 shares; 1999 - 20,150,722 shares) (681.6) (681.6)
Shares in trust (2000 - 15,993,456 shares; 1999 - 16,374,083 shares) (364.9) (377.6)
----------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 2,643.7 2,832.3
----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $8,566.8 $8,012.1
==========================================================================================================
</TABLE>
7
<PAGE>
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
(Millions of dollars)
-----------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
30 June 30 June
2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET INCOME (LOSS) $(192.5) $94.6 $(94.3) $327.9
-----------------------------------------------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
(LOSS), net of tax
Foreign currency translation adjustments (51.2) (37.6) (114.5) (93.9)
Unrealized gains (losses) on investments:
Unrealized holding gains (losses) arising -- 5.0 (2.7) 9.1
during the period
Less: reclassification adjustment for gains -- -- -- --
included in net income
-----------------------------------------------------------------------------------------------------------------------
Net unrealized gains (losses) on investments -- 5.0 (2.7) 9.1
-----------------------------------------------------------------------------------------------------------------------
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) (51.2) (32.6) (117.2) (84.8)
-----------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME (LOSS) $(243.7) $62.0 $(211.5) $243.1
=======================================================================================================================
</TABLE>
8
<PAGE>
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(Millions of dollars)
---------------------------------------------------------------------------------------------------------------------
Nine Months Ended 30 June
2000 1999
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) $(94.3) $327.9
Adjustments to reconcile income to cash provided by operating
activities:
Depreciation 426.7 386.8
Deferred income taxes 3.4 39.8
Gain on formation of polymer venture -- (31.1)
Loss on BOC transaction 706.1 --
Undistributed (earnings) of unconsolidated affiliates (43.1) (25.2)
(Gain) loss on sale of assets and investments (9.0) 1.4
Other 115.8 89.8
Working capital changes that provided (used) cash, net of effects of
acquisitions:
Trade receivables (89.8) (66.2)
Inventories and contracts in progress (27.1) 13.4
Payables, trade and other 56.1 90.9
Other (167.5) (36.8)
---------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES 877.3 790.7
---------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to plant and equipment (a) (586.2) (671.8)
Acquisitions, less cash acquired (b)(c) (169.7) (75.5)
Investment in and advances to unconsolidated affiliates (15.8) (101.5)
BOC transaction costs (d) (665.8) --
Proceeds from sale of assets and investments 42.0 50.4
Other (2.9) 14.2
---------------------------------------------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (1,398.4) (784.2)
---------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Long-term debt proceeds 534.0 78.1
Payments on long-term debt (426.9) (31.8)
Net increase (decrease) in commercial paper 530.8 62.8
Net increase (decrease) in other short-term borrowings 45.6 (4.7)
Dividends paid to shareholders (115.2) (107.9)
Purchase of Treasury Stock -- (24.6)
Other 5.6 44.2
---------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 573.9 16.1
---------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash (1.1) (3.8)
---------------------------------------------------------------------------------------------------------------------
Increase in Cash and Cash Items 51.7 18.8
Cash and Cash Items - Beginning of Year 61.6 61.5
---------------------------------------------------------------------------------------------------------------------
Cash and Cash Items - End of Period $113.3 $80.3
=====================================================================================================================
</TABLE>
(a) Excludes capital lease additions of $17.2 and $12.6 in fiscal 2000 and
1999, respectively.
(b) Excludes $24.3 of long-term debt assumed in acquisitions in fiscal
2000.
(c) Excludes assumption of $7.4 of former shareholder liability of company
acquired in fiscal 1999.
(d) Impact of BOC transaction is described in the Notes to Consolidated
Financial Statements.
9
<PAGE>
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On 13 July 1999, the Boards of Air Products and Chemicals, Inc., The BOC Group,
and Air Liquide announced that they had agreed to the terms of a recommended
offer for the share capital of BOC at UK(pound)14.60 per BOC share (the
"Offer"). The Offer, which was to be made jointly by Air Products and Air
Liquide, was subject to certain pre-conditions, one of which was the approval of
the U.S. Federal Trade Commission (FTC).
During 10 months of discussions with the FTC, Air Products and Air Liquide made
a number of comprehensive and practical proposals, including divestitures, which
responded to the requirements of the FTC. On 10 May 2000, Air Products and Air
Liquide announced it had recently become clear that the FTC would not approve
the Offer by 12 May 2000, the date on which the period for satisfying the
pre-conditions to the Offer would expire, and the Offer was not extended beyond
12 May 2000.
Since the BOC transaction did not occur, certain costs and financing fees, which
had been deferred, were required to be expensed in the quarter ended 30 June
2000. In addition, the company and Air Liquide were obligated to pay BOC a fee
of $50 million each since the Offer to acquire BOC was not made.
Additionally, the company had entered into various purchased currency options
and forward exchange contracts to hedge the currency exposure related to the
proposed purchase of BOC shares at UK(pound)14.60 per share. Net losses
associated with the change in market value of these contracts were recorded in
earnings. Additional losses through the date of termination of the hedging
instruments were incurred due to the continued decline in the value of the
British Pound. The company purchased British Pound put options subsequent to 31
March 2000 to cap the rate change exposure of the remaining forward exchange
contracts. The cost of these put instruments was $78.5 million.
The charge to earnings in the quarter ended 30 June 2000 was $482.5 million
($301.8 million after-tax). Of this amount, $361.9 million ($226.4 million
after-tax) of charges were recorded on purchased currency option and forward
exchange contracts entered into to hedge the currency exposure of the
transaction. The remaining charge of $120.6 million ($75.4 million after-tax)
consists primarily of the BOC fee paid and previously deferred expenses.
The results for the nine months ended 30 June 2000 include a total charge
related to the proposed BOC transaction of $730.4 million ($456.5 million
after-tax). Of this amount, $594.6 million ($371.6 million after-tax)
of charges were recorded on purchased currency option and forward exchange
contracts entered into to hedge the
10
<PAGE>
currency exposure of the transaction, resulting in a cumulative charge recorded
on the currency hedging instruments of $582.0 million ($363.8 million
after-tax). The remaining charge of $135.8 million ($84.9 million after-tax)
consists of the BOC fee paid and transaction expenses.
The cash impact of the BOC transaction of $690.1 million in fiscal year 2000 was
principally reflected as an investing activity in the statement of Consolidated
Cash Flows. This cash impact ignores the tax benefits associated with this
transaction.
The results for the three months ended 30 June 2000 include a charge of
$46.7 million ($29.5 million after-tax) for a global cost reduction plan. The
plan results in a staff reduction of 347 employees. The charge includes $7.5
million of asset impairment charges related to the rationalization of three
facilities in Europe. The charges to cost of sales, selling and administrative,
research and development, and other expense were $17.3 million, $21.0 million,
$.9 million, and $7.5 million, respectively. The reductions began late in the
fiscal quarter and will be completed by 30 June 2001.
The results for the nine months ended 30 June 2000 include cost reduction
charges of $55.4 million ($35.0 million after-tax). The 2000 plan, initiated in
the quarter ending 31 March 2000, includes 450 staff reductions in total and
three facility impairments. The charges to cost of sales, selling and
administrative, research and development, and other expense were $20.6 million,
$25.4 million, $1.9 million, and $7.5 million, respectively.
The results for the nine months ended 30 June 2000 include a gain of $6.3
million ($4.0 million after-tax) related to the sale of packaged gas facilities.
The current year-to-date consolidated effective tax rate is 56.0 percent, after
minority interest of $6.6 million. This compares to a rate of 31.3 percent in
the prior year. The fiscal 2000 rate is significantly impacted by a higher tax
rate on the BOC transaction, the global cost reduction plan, and the sale of
packaged gas facilities. Excluding these tax impacts, the effective rate for the
nine months is 30.4 percent. The effective rate in the prior year, excluding the
tax rate impact of the gain on the formation of the polymer ventures, a chemical
facility closure and the global cost reduction, was 31.8 percent.
The results for the three and nine months ended 30 June 1999 include a charge of
$13.9 million ($9.0 million after-tax) for a global cost reduction plan. This
plan resulted in a staffing reduction of 142 employees. The charges to cost of
sales and selling and administrative were $5.4 million and $8.5 million,
respectively. The plan was completed in June 2000, essentially as expected.
11
<PAGE>
The results for the nine months ended 30 June 1999 include a charge of $34.2
million ($21.9 million after-tax) for the global cost reduction plan. The total
staff reduction for the 1999 plan was 348 employees. The charges to cost of
sales, selling and administrative, and research and development were $15.3
million, $17.8 million, and $1.1 million, respectively for the nine months ended
30 June 1999.
The results for the nine months ended 30 June 1999 include a net gain of $31.1
million ($21.3 million after-tax) related to the formation of Air Products
Polymers (a 65 percent majority owned venture with Wacker-Chemie GmbH). The gain
was partially offset by costs related to an emulsions facility shutdown not
included in the joint venture and for costs related to indemnities provided by
Air Products to the venture.
The results for the nine months ended 30 June 1999 also include a charge of
$10.3 million ($6.4 million after-tax) primarily related to Chemicals facility
closure costs.
12
<PAGE>
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY BUSINESS SEGMENTS
(Unaudited)
<TABLE>
<CAPTION>
Business segment information is shown below:
--------------------------------------------------------------------------------------------------------------------------
(Millions of dollars) Three Months Ended Nine Months Ended
30 June 30 June
2000 1999 2000 1999
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues from external customers
Gases $894.8 $737.5 $2,517.5 $2,226.0
Equipment 65.0 84.5 169.4 305.2
Chemicals 446.6 415.8 1,331.1 1,234.5
--------------------------------------------------------------------------------------------------------------------------
Segment Totals 1,406.4 1,237.8 4,018.0 3,765.7
--------------------------------------------------------------------------------------------------------------------------
Consolidated Totals $1,406.4 $1,237.8 $4,018.0 $3,765.7
--------------------------------------------------------------------------------------------------------------------------
Operating income
Gases $157.3(a) $127.4(d) $481.6(b)(c) $386.1(e)
Equipment (3.6)(a) .4(d) 3.2(b) 30.1(e)
Chemicals 44.8(a) 47.4(d) 146.4(b) 141.6(e)(f)
--------------------------------------------------------------------------------------------------------------------------
Segment Totals 198.5 175.2 631.2 557.8
--------------------------------------------------------------------------------------------------------------------------
Corporate research and development and other (12.1)(a) (7.5) (29.7)(b) (18.4)(e)
income/(expense)
--------------------------------------------------------------------------------------------------------------------------
Consolidated Totals $186.4 $167.7 $601.5 $539.4
--------------------------------------------------------------------------------------------------------------------------
Operating income (excluding special items)
Gases $189.3 $138.1 $507.3 $413.1
Equipment 3.3 1.2 10.1 32.8
Chemicals 51.7 49.8 162.0 155.9
--------------------------------------------------------------------------------------------------------------------------
Segment Totals 244.3 189.1 679.4 601.8
--------------------------------------------------------------------------------------------------------------------------
Corporate research and development and other (11.2) (7.5) (28.8) (17.9)
income/(expense)
--------------------------------------------------------------------------------------------------------------------------
Consolidated Totals $233.1 $181.6 $650.6 $583.9
--------------------------------------------------------------------------------------------------------------------------
Equity affiliates' income
Gases 18.4 11.3 $52.6 $28.5
Equipment 1.0 .4 1.8 1.1
Chemicals 2.0 3.4 8.7 8.9
Other (1.0) .1 (1.1) .6
--------------------------------------------------------------------------------------------------------------------------
Segment Totals 20.4 15.2 62.0 39.1
--------------------------------------------------------------------------------------------------------------------------
Consolidated Totals $20.4 $15.2 $62.0 $39.1
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
(Millions of dollars)
--------------------------------------------------------------------------------------------------------------------------
Nine Months Ended
30 June
2000 1999
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total assets
Gases $6,264.3 $5,722.4
Equipment 233.9 298.0
Chemicals 1,677.7 1,718.6
--------------------------------------------------------------------------------------------------------------------------
Segment Totals 8,175.9 7,739.0
--------------------------------------------------------------------------------------------------------------------------
Corporate assets 390.9 273.1
--------------------------------------------------------------------------------------------------------------------------
Consolidated Totals $8,566.8 $8,012.1
--------------------------------------------------------------------------------------------------------------------------
ORONA
Gases 11.4% 10.9%
Equipment 5.8% 16.7%
Chemicals 13.1% 13.5%
--------------------------------------------------------------------------------------------------------------------------
Segment Totals 11.6% 11.8%
--------------------------------------------------------------------------------------------------------------------------
Consolidated Totals 10.6% 11.0%
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The results for the three months ended 30 June 2000 include the cost
reduction charge in Gases ($32.0 million), Equipment ($6.9 million),
Chemicals ($6.9 million), and Corporate ($.9 million).
(b) The results for the nine months ended 30 June 2000 include the cost
reduction charge in Gases ($32.0 million), Equipment ($6.9 million),
Chemicals ($15.6 million), and Corporate ($.9 million).
(c) The results for the nine months ended 30 June 2000 include a gain on
the sale of packaged gas facilities of $6.3 million.
(d) The results for the three months ended 30 June 1999 include the cost
reduction charge in Gases ($10.7 million), Equipment ($.8 million), and
Chemicals ($2.4 million).
(e) The results for the nine months ended 30 June 1999 include the cost
reduction charge in Gases ($27.0 million), Equipment ($2.7 million),
Chemicals ($4.0 million), and Corporate ($.5 million).
(f) The results for the nine months ended 30 June 1999 include a charge
of $10.3 million primarily related to Chemicals facility closure costs.
14
<PAGE>
A reconciliation of total segment operating income to consolidated income before
income taxes and minority interest is as follows:
<TABLE>
<CAPTION>
(Millions of dollars)
------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
30 June 30 June
2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total segment operating income $198.5 $175.2 $631.2 $557.8
Corporate research and development and (12.1) (7.5) (29.7) (18.4)
other income/(expense)
------------------------------------------------------------------------------------------------------------------------
Consolidated operating income 186.4 167.7 601.5 539.4
------------------------------------------------------------------------------------------------------------------------
Segment equity affiliates' income 20.4 15.2 62.0 39.1
Gain on Wacker formation -- -- -- 31.1
Loss on currency hedges related to BOC 482.5 -- 730.4 --
transaction and expenses
Interest expense 52.9 39.3 141.0 120.1
------------------------------------------------------------------------------------------------------------------------
Consolidated income (loss) before taxes and $(328.6) $143.6 $(207.9) $489.5
minority interest
========================================================================================================================
</TABLE>
15
<PAGE>
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY GEOGRAPHIC REGIONS
(Unaudited)
<TABLE>
<CAPTION>
(Millions of dollars)
---------------------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
30 June 30 June
2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues from external customers
United States $937.3 $793.5 $2,655.8 $2,403.2
United Kingdom 122.4 152.2 367.9 476.1
Spain 75.5 78.5 231.2 243.4
Other Europe 127.8 138.9 417.7 438.0
---------------------------------------------------------------------------------------------------------------------------------
Total Europe 325.7 369.6 1,016.8 1,157.5
---------------------------------------------------------------------------------------------------------------------------------
Canada/Latin America 60.4 47.8 173.8 151.0
Asia 82.9 26.8 171.3 53.8
All Other .1 .1 .3 .2
---------------------------------------------------------------------------------------------------------------------------------
Total $1,406.4 $1,237.8 $4,018.0 $3,765.7
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Geographic information is based on country of origin. The Other
Europe segment operates principally in France, Germany, Netherlands,
and Belgium.
16
<PAGE>
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: 25 July 2000 By: /s/ Leo J. Daley
--------------------------------
Leo J. Daley
Vice President - Finance
(Chief Financial Officer)
17
