<PAGE>
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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):
November 28, 1995
AIRGAS, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 1-9344 56-0732648
_______________ _______________________ _____________
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification
incorporation) No.)
100 Matsonford Road, Suite 550
Radnor, PA 19087
_______________________________________
(Address of principal executive offices)
Registrant's telephone number, including area code: (610) 687-5253
_______________
<PAGE> 2
Item 5. Other Events.
____________
From April 1, 1995 through September 30, 1995, the Registrant has acquired
twenty-one individually insignificant businesses. The Registrant is filing
this current report on Form 8-K in order to provide audited financial
statements and pro forma information for three individually insignificant
business acquisitions in accordance with the requirements set forth in
Regulation S-X, Rule 3-05(b)(1)(i). The Registrant applied the conditions set
forth in Rule 1-02(w) to determine if the aggregate impact of the acquisitions
exceeds 20% of one of the conditions set forth in the rule.
The aggregate purchase price for the individually insignificant businesses,
including amounts related to non-competition and confidentiality agreements,
amounted to $84.4 million plus the assumption of certain liabilities. The
purchase prices for the businesses were determined by arms-length
negotiations. The Registrant is providing audited financial statements for
three of the individually insignificant businesses described below.
Effective May 1, 1995, Trinity Airgas, Inc. ("Trinity"), a 95 percent owned
subsidiary of US Airgas, Inc., purchased substantially all of the assets of
Trinity Welding Supply, Inc. ("TWS") for $9.5 million plus the assumption of
certain liabilities. Additionally, Trinity paid an aggregate of $650 thousand
to TWS's shareholders in connection with entering into non-competition and
confidentiality agreements. US Airgas, Inc. is a wholly-owned subsidiary of
the Registrant.
Effective June 29, 1995, 1136886 Ontario Inc., a 94 percent owned Canadian
subsidiary of Airgas, Inc. purchased all of the issued and outstanding stock
of Red-D-Arc Limited and Red-D-Arc Leasing, and Airgas Holdings, a wholly-
owned subsidiary of Airgas, Inc. purchased all of the issued and outstanding
stock of Red-D-Arc Inc. (collectively referred to as "Red-D-Arc") for $8.9
million plus the assumption of certain liabilities and issuance of promissory
notes to the seller. Additionally, the Company paid an aggregate of $364
thousand to a Red-D-Arc shareholder in connection with entering into a non-
competition and confidentiality agreement.
Effective August 1, 1995, Delta Airgas, Inc. ("Delta"), a wholly-owned
subsidiary of US Airgas, Inc., purchased substantially all of the assets of
Capital Welding Supply Company ("Capital") for $6.0 million plus the
assumption of certain liabilities. Additionally, Delta paid an aggregate of
$4.0 million to Capital's shareholders in connection with entering into non-
competition and confidentiality agreements.
<PAGE> 3
The acquisitions were financed using the Registrant's revolving credit
facilities with NationsBank of North Carolina, N.A. and Canadian Imperial Bank
of Commerce and by the issuance of promissory notes to the sellers and the
assumption of certain liabilities.
At the time of the acquisitions described above, all of the aforementioned
businesses were engaged in the distribution and marketing of industrial gases
and related welding equipment and supplies. The Registrant intends to continue
to use the acquired assets to operate industrial gas and welding supply
businesses.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
__________________________________________________________________
(a) Financial Statements
1. Audited balance sheet of Trinity Welding Supply, Inc. as of April
30, 1995 and the related consolidated statements of operations,
retained earnings and cash flows for the eleven months then ended.
2. Audited combined balance sheet of Red-D-Arc Limited, Red-D-Arc Inc.
and Red-D-Arc Leasing LTD ("Red-D-Arc") as of December 31, 1994 and
the combined statements of income and retained earnings and cash
flows for the year then ended.
3. Audited balance sheet of Capital Welding Supply Company ("Capital")
as of July 31, 1995 and the related statements of income, retained
earnings and cash flows for the nine months then ended.
(b) Pro Forma Financial Information
The tables on pages five through eleven set forth selected pro forma
operating data of the Registrant for the year ended March 31, 1995 and
the six months ended September 30, 1995 as if the acquisitions of TWS,
Red-D-Arc and Capital, had been consummated on April 1, 1994 and April 1,
1995, respectively.
(c) Exhibits.
23.1 Consent of Cawthron, Wommack & Coker, P.C.
23.2 Consent of Cipolla, Bartens & Monachino, Chartered Accountants
23.3 Consent of Bell & Company
<PAGE> 4
Signatures
__________
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AIRGAS, INC.
BY: /s/Britton H. Murdoch
_____________________
(Britton H. Murdoch)
Vice President-Finance
Chief Financial Officer
DATED: November 28, 1995
<PAGE> 5
<TABLE>
AIRGAS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
<CAPTION>
Year Ended March 31, 1995
____________________________________________
Trinity Welding
Supply, Inc. Red-D-Arc
Airgas, Inc. (Historical) (Historical)
Operating Data (Historical) (Note 1) (Note 2)
________________ ____________ ____________ ____________
<S> <C> <C> <C>
Net Sales $687,983 $ 7,202 $ 10,492
Cost of Products Sold
(Excluding Depreciation
and Amortization) 342,876 3,684 4,877
Selling, Distribution
& Administrative Expenses 235,639 2,548 3,787
Depreciation & Amortization 36,868 283 858
_______ ______ ______
Total Costs & Expenses 615,383 6,515 9,522
_______ ______ ______
Operating Income 72,600 687 970
Interest Expense, Net (17,625) (168) (358)
Other Income, Net 1,067 194 -
Minority Interest (669) - -
_______ ______ ______
Earnings Before Income Taxes 55,373 713 612
Income Taxes 23,894 - 268
_______ ______ ______
Net Earnings $ 31,479 $ 713 $ 344
======= ====== ======
Earnings Per Share (5) $ .96
=======
Weighted Average Shares 32,762
=======
</TABLE>
(Columns Continued On Next Page)
<PAGE> 6
<TABLE>
AIRGAS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
<CAPTION>
Year Ended March 31, 1995
_______________________________________________
Capital
Welding Supply
Company Pro Forma
(Historical) Adjustments Note Pro
Operating Data (Note 3) (Note 4) Ref. Forma
________________ ___________ ________ ____ ______
<S> <C> <C> <C> <C>
Net Sales $ 7,514 $ 700 a $713,891
Cost of Products Sold
(Excluding Depreciation
and Amortization) 4,070 203 a,b,c 355,710
Selling, Distribution
& Administrative Expenses 2,759 408 a,d,e 245,141
Depreciation & Amortization 235 1,241 a,f 39,485
_______ _____ _______
Total Costs & Expenses 7,064 1,852 640,336
_______ _____ _______
Operating Income 450 (1,152) 73,555
Interest Expense, Net (72) (2,152) a (20,375)
Other Income, Net 76 14 a 1,351
Minority Interest - - (669)
_______ _____ _______
Earnings Before Income Taxes 454 (3,290) 53,862
Income Taxes - (812) h 23,350
_______ _____ ______
Net Earnings $ 454 $(2,478) $ 30,512
======= ===== ======
Earnings Per Share (5) $ .93
======
Weighted Average Shares 32,762
======
<FN>
Notes:
(1) Includes audited financial data for the eleven months ended April 30,
1995 less the unaudited one month period ended April 30, 1995 combined
with the unaudited two month period ended May 31, 1994.
(2) Includes audited financial data for the twelve months ended December 31,
1994 less the unaudited three month period ended March 31, 1994 combined
with the unaudited three month period ended March 31, 1995.
(3) Includes unaudited compiled financial data for the twelve months ended
March 31, 1995.
(4) See pages 9 and 10 for explanation of pro forma adjustments.
(5) See earnings per share calculations on page 11.
</TABLE>
<PAGE> 7
<TABLE>
AIRGAS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
<CAPTION>
Six Months Ended September 30, 1995
_________________________________________________
Trinity Welding
Supply, Inc. Red-D-Arc
(Historical) (Historical)
Operating Data Airgas, Inc. (1 Month) (3 Months)
(Historical) (Note 1) (Note 2)
________________ ____________ ____________ ____________
<S> <C> <C> <C>
Net Sales $393,302 $ 643 $ 3,081
Cost of Products Sold
(Excluding Depreciation
& Amortization) 195,374 224 1,606
Selling, Distribution &
Administrative Expenses 132,134 198 955
Depreciation & Amortization 21,613 25 226
_______ ______ ______
Total Costs & Expenses 349,121 447 2,787
_______ ______ ______
Operating Income 44,181 196 294
Interest Expense, Net (11,455) (13) (126)
Other Income, Net 366 9 -
Minority Interest (365) - -
_______ ______ ______
Earnings Before Income Taxes 32,727 192 168
Income Taxes 13,938 - 93
_______ ______ ______
Net Earnings $ 18,789 $ 192 $ 75
======= ====== ======
Earnings Per Share (5) $ .58
=======
Weighted Average Shares 32,606
=======
<FN>
(Columns Continued On Next Page)
</TABLE>
<PAGE> 8
<TABLE>
AIRGAS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
<CAPTION> Six Months Ended September 30, 1994
_______________________________________________
Capital
Welding Supply
Company
(Historical) Pro Forma
(4 Months) Adjustments Note Pro
Operating Data (Note 3) (Note 4) Ref. Forma
______________ ____________ ___________ ____ _____
<S> <C> <C> <C> <C>
Net Sales $ 2,591 $ - $399,617
Cost of Products Sold
(Excluding Depreciation
& Amortization) 1,391 120 a,b 198,715
Selling, Distribution &
Administrative Expenses 986 (7) a,d,e 134,266
Depreciation & Amortization 95 263 a,f 22,222
______ _____ _______
Total Costs & Expenses 2,472 376 355,203
______ _____ _______
Operating Income 119 (376) 44,414
Interest Expense, Net (10) (428) a,g (12,032)
Other Income, Net 5 - 380
Minority Interest - - (365)
______ _____ _______
Earnings Before Income Taxes 114 (804) 32,397
Income Taxes - (210) h 13,821
______ _____ _______
Net Earnings $ 114 $ (594) $ 18,576
====== ===== =======
Earnings Per Share (5) $.57
=======
Weighted Average Shares 32,606
=======
<FN>
Notes:
(1) Includes unaudited financial data for the one month period ended April 30,
1995.
(2) Includes unaudited financial data for the three month period ended
June 30, 1995.
(3) Includes unaudited financial data for the four month period ended July 31,
1995.
(4) See pages 9 and 10 for explanation of pro forma adjustments.
(5) See earnings per share calculations on page 11.
</TABLE>
<PAGE> 9
Airgas, Inc.
Explanation of Pro Forma Adjustments
(Dollars in Thousands)
The following adjustments were made to the historical operating results of the
combined business acquisitions in order to reflect unaudited pro forma results
of operations of the Registrant for the year ended March 31, 1995 and the six
months ended September 30, 1995 as if all of the business acquisitions had
been consummated on April 1, 1994 and April 1, 1995, respectively.
(a) Trinity Welding Supply, Inc. acquired an industrial gas and welding
supply distributor effective March 31, 1995. Accordingly, adjustments
were made to the following captions to reflect this acquisition in the
historical income statement for the year ended March 31, 1995,
(amounts in thousands):
Increase
(Decrease)
________
Sales $700
Cost of Products Sold 351
Selling, Distribution
& Administrative Expenses 369
Depreciation Expense 33
___
Operating Income (53)
Interest Expense 3
Other Income 14
___
Loss before income taxes $(42)
===
(b) Cost of products sold was adjusted to reflect normal book-to-physical
inventory adjustments recorded at April 30, 1995 in connection with
the audit of Trinity Welding Supply, Inc. As these physical inventory
adjustments included the year ended March 31, 1995, cost of products
sold was decreased $120 for the year ended March 31, 1995 and
increased $120 for the six months ended September 30, 1995.
(c) Cost of products sold was adjusted to reflect the Registrant's
existing industrial gas purchasing arrangements which provide for
lower unit costs on gas purchases as compared to costs previously
available to the acquired businesses by $(28) for the year ended
March 31, 1995.
(d) Employee benefit costs were increased to reflect the Registrants'
benefits structure by $334 for the year ended March 31, 1995 and $73
for the six months ended September 30, 1995.
(e) In addition to the adjustments described in (a), (c) and (d), selling,
distribution and administrative expenses related to the business
acquisitions have been adjusted by $(295) for the year ended
March 31, 1995. This adjustment includes the following: an adjustment
to decrease employees salaries by $(249) to reflect the Registrant's
salary structure; an adjustment to increase insurance expense $84 to
reflect the Registrant's insurance rates; the increase in rents on
facilities acquired of $25 and elimination of rents on certain
equipment acquired of $(93), a reduction in professional fees of $(22)
and a decrease in distribution expenses of $(40).
<PAGE> 10
Selling, distribution and administrative expenses related to the
business acquisitions have been adjusted by $(80) for the six
months ended September 30, 1995. The adjustment includes the
following: an adjustment to decrease employees salaries by $(87) to
reflect Registrant's salary structure; an adjustment to reflect the
Registrant's insurance rates of $14 and the increase in rents on
facilities acquired of $19 and elimination of rents on certain
equipment acquired of ($8), a reduction in professional fees of $(5)
and an adjustment for distribution expenses of $(13).
(f) Depreciation and amortization expense has been increased by $1,208,
excluding the adjustment described in (a), for the year ended March
31, 1995 and increased by $263 for the six months ended September 30,
1995 to reflect purchase accounting adjustments related to the
acquired fixed assets, goodwill, non-competition agreements and
estimated capital improvements necessary to operate the acquired
businesses.
(g) The pro forma interest expense adjustment of $2,152 for the year ended
March 31, 1995 and $428 for the six months ended September 30, 1995
reflects the debt incurred in financing the business acquisitions at
the Registrant's effective interest rates.
(h) Income tax adjustments have been based on the effective income tax
rates of the acquired businesses and include a provision for income
taxes for businesses which were previously taxed under Subchapter S of
the Internal Revenue Code.
<PAGE> 11
<TABLE>
AIRGAS, INC.
EARNINGS PER SHARE CALCULATIONS
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
<CAPTION>
Year Ended Six Months Ended
March 31, 1995 September 30, 1995
Adjustment of Weighted Average
Shares Outstanding Historical Pro Forma Historical Pro Forma
______________________________ ___________ _________ __________ _________
<S> <C> <C> <C> <C>
Shares of Common Stock
Outstanding - Weighted 31,074 31,074 31,096 31,096
Net Common Stock Equivalents 1,688 1,688 1,510 1,510
______ ______ ______ ______
Adjusted Shares Outstanding 32,762 32,762 32,606 32,606
====== ====== ====== ======
Net Earnings $31,479 $30,512 $18,789 $18,576
====== ====== ====== ======
Earnings Per Share $ .96 $ .93 $ .58 $ .57
====== ====== ====== ======
<FN>
Earnings per share amounts were determined using the treasury stock method.
This method assumes the exercise of all outstanding options and warrants and
the use of the aggregate proceeds therefrom to acquire the Registrant's
outstanding common stock. Net earnings were divided by the average number of
shares outstanding adjusted for the assumed exercise of the options and
warrants outstanding and repurchase of common stock to calculate per share
amounts.
</TABLE>
<PAGE>
<PAGE> 12
TRINITY WELDING SUPPLY, INC.
Financial Statements
April 30, 1995
Together With Independent Auditors' Report Thereon
<PAGE>
<PAGE> 13
C O N T E N T S
_______________
Page
Independent Auditors' Report 1
Balance Sheet 2
Statement of Operations 3
Statement of Retained Earnings 4
Statement of Cash Flows 5
Notes to Financial Statements 6-9
<PAGE>
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
____________________________
The Stockholders and Board of Directors
Trinity Welding Supply, Inc.
We have audited the accompanying balance sheet of Trinity Welding Supply, Inc.
as of April 30, 1995, and the related statements of operations, retained
earnings and cash flows for the eleven months then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Trinity Welding Supply, Inc.
as of April 30, 1995, and the results of its operations and its cash flows for
the eleven months then ended in conformity with generally accepted accounting
principles.
CAWTHRON, WOMMACK & COKER, P.C.
Waco, Texas
June 6, 1995
<PAGE>
<PAGE> 15
TRINITY WELDING SUPPLY, INC.
Balance Sheet
April 30, 1995
ASSETS
Current Assets
Cash $ 135,188
Trade accounts receivable - less
allowance for doubtful accounts of $ 57,962 901,127
Inventories 993,670
Prepaid expenses 11,555
_________
Total Current Assets 2,041,540
Property and Equipment, net 2,444,436
Intangible Assets, net of accumulated
amortization of $ 42,618 15,448
_________
Total Assets $ 4,501,424
=========
LIABILITIES
Current Liabilities
Current portion of long-term debt $ 2,474,960
Trade accounts payable 447,441
Other accrued liabilities 275,037
_________
Total Current Liabilities 3,197,438
Customer Deposits 10,306
_________
Total Liabilities 3,207,744
STOCKHOLDERS' EQUITY
Common stock - no par, 100,000 shares authorized,
2,000 shares issued and outstanding 500,000
Retained earnings 793,680
_________
Total Stockholders' Equity 1,293,680
_________
Total Liabilities and Stockholders' Equity $ 4,501,424
=========
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE> 16
TRINITY WELDING SUPPLY, INC.
Statement of Operations
For the Eleven Months Ended April 30, 1995
Sales $ 6,606,131
Cost of Goods Sold 3,232,477
_________
Gross Profit 3,373,654
Operating Expenses 2,617,507
_________
Operating Income 756,147
Other Income (Expense)
Miscellaneous income 185,349
Interest expense (158,288)
_________
Total Other Income (Expense) 27,061
________
Net Income $ 783,208
========
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 17
TRINITY WELDING SUPPLY, INC.
Statement of Retained Earnings
For the Eleven Months Ended April 30, 1995
Balance - beginning of period $ 304,472
Net income 783,208
Dividends (294,000)
_________
Balance - end of period $ 793,680
=========
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 18
TRINITY WELDING SUPPLY, INC.
Statement of Cash Flows
For the Eleven Months Ended April 30, 1995
Cash flows provided by operating activities:
Net income $ 783,208
Adjustments to reconcile net income to net cash
provided by operating activities
Bad debt provision 25,715
Depreciation expense 260,106
Gain on sale of property and equipment (8,160)
Amortization expense 10,349
Increase (decrease) in:
Trade accounts receivable (45,315)
Inventories (404,935)
Prepaid expenses 34,803
Other assets (2,000)
Increase (decrease) in:
Trade accounts payable (88,105)
Other accrued liabilities 70,147
Customer deposits (18,321)
_______
Net cash provided by operating activities 617,492
Cash flows used for investing activities:
Purchase of property and equipment (969,741)
Proceeds from sale of property and equipment 14,669
_______
Net cash used for investing activities (955,072)
Cash flows provided by financing activities:
Proceeds from long-term debt 1,092,845
Repayment of debt (486,502)
Payment of dividends (294,000)
_______
Net cash provided by financing activities 312,343
Net decrease in cash (25,237)
Cash at beginning of period 160,425
_______
Cash at end of period $ 135,188
=======
Supplemental disclosures:
Interest paid during the period $ 155,610
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 19
TRINITY WELDING, INC.
Notes to Financial Statements
1. Nature of the Company and Significant Accounting Policies
Financial Statement Presentation
________________________________
Trinity Welding Supply, Inc. (the Company) sells welding products and
industrial specialty and medical gases in the north-central Texas area.
The Company was incorporated in April 1991 and acquired certain assets of
a welding supply company on May 31, 1991.
The following is a summary of certain significant accounting policies
followed in the preparation of these financial statements.
Inventories
___________
Inventories are stated at the lower of cost, determined by the first-in,
first-out (FIFO) method, or market.
Property and Equipment
______________________
Property and equipment are recorded at cost and depreciated using the
straight-line method. When assets are retired or otherwise disposed of,
the cost and related accumulated depreciation are removed from the
accounts, and any resulting gain or loss is recognized in income for the
period. The cost of maintenance and repairs is charged to expense as
incurred; significant renewals and betterments are capitalized.
Intangible Assets
_________________
The Company incurred various organizational costs which have been
capitalized and are being amortized over five years using the
straight-line method.
Income Taxes
____________
The Company, with the consent of its shareholders, has elected under the
Internal Revenue Code to be an S Corporation. In lieu of corporation
income taxes, the shareholders of an S Corporation are taxed on their
proportionate share of the Company's taxable income. Therefore, no
provision or liability for federal income taxes has been included in
these financial statements.
Cash and Cash Equivalents
_________________________
For the purpose of presentation in the statement of cash flows, cash and
cash equivalents are defined as those amounts in the balance sheet
caption "cash" which includes petty cash on hand and demand deposit
checking accounts held at banks.
-6-
<PAGE> 20
TRINITY WELDING SUPPLY, INC.
Notes to Financial Statements (Continued)
2. Inventories
___________
At April 30, 1995, inventories consisted of:
Welding products $ 716,148
Gases 119,146
Cylinders 158,376
_______
Total Inventories $ 993,670
=======
3. Property and Equipment
______________________
At April 30, 1995, property and equipment consisted of the following:
Estimated
Useful Life
___________
Land - $ 131,474
Building and improvements 20 years 630,795
Vehicles 3 years 274,977
Cylinders 10 years 1,612,663
Furniture and fixtures 5 to 10 years 282,529
Gas plant equipment 5 to 10 years 516,547
_________
3,448,985
Accumulated depreciation (1,004,549)
_________
Total Property and Equipment, net $ 2,444,436
=========
Depreciation charged to expense was $ 260,106 for the eleven months
ended April 30, 1995.
4. Long-Term Debt
______________
The Company's long-term debt at April 30, 1995, was comprised of the
following:
Note to a financial institution bearing interest at
prime plus .50% (9.50% at April 30, 1995), due in
monthly principal installments of $ 15,271 with a
balloon payment due August 10, 1995, secured by all
assets of the Company and guaranteed by the
stockholders $ 1,405,058
Note to a financial institution, bearing interest at
prime plus .50% (9.50% at April 30, 1995), due in
monthly principal installments of $ 2,500 with a
balloon payment due August 10, 1995, secured by all
assets of the Company and guaranteed by the
stockholders 262,578
$ 750,000 line of credit with a financial institution,
bearing interest at prime plus .50% (9.50% at
April 30, 1995), maturing August 10, 1995, secured
by all assets of the Company and guaranteed by the
stockholders 234,442
-7-
<PAGE> 21
TRINITY WELDING SUPPLY, INC.
Notes to Financial Statements (Continued)
4. Long-Term Debt (Continued)
_________________________
Note to a financial institution, bearing interest,
at prime plus .50% (9.50% at April 30, 1995), due in
monthly principal installments of $ 3,833 with a
balloon payment due August 10, 1995, secured by all
assets of the Company and guaranteed by the
stockholders $ 80,263
Note to a financial institution, bearing interest at
prime plus .50% (9.50% at April 30, 1995), due in a
single principal and interest payment due
August 10, 1995, unsecured 480,000
Note to a vendor, bearing interest at 8.75%, due in
monthly principal and interest payments of $ 307
through May, 1999, secured by cylinders purchased 12,619
_________
2,474,960
Less: current portion (2,474,960)
_________
Long-term debt $ -0-
=========
The loan agreements with the financial institution place various
restrictions on the Company including, among others, certain limitations
on debt, additions of property and equipment, payment of dividends,
investments in other entities, compensation to stockholders, and
purchase of treasury stock.
In addition, the Company is required to maintain certain financial
ratios and other affirmative covenants. As of April 30, 1995, the
Company was not in compliance with all these ratios and covenants. The
long-term debt has been classified as current in the accompanying
financial statements as it is due within one year and the Company had
not received a waiver from the financial institution.
As described in Note 10, the Company entered into a sale agreement and
was sold to Trinity Airgas, Inc., effective May 1, 1995. In connection
with the agreement, the notes to the financial institution were repaid
by Trinity Airgas, Inc.
5. Profit-Sharing Plan
___________________
The Company has a 401(K) profit-sharing plan for eligible employees.
The plan covers all employees of the Company with one or more years of
service. The Company's contribution to the plan, as determined by the
Board of Directors, is discretionary but may not exceed 15% of the
annual aggregate compensation paid to all participating employees. The
Company made no contribution to the plan for the eleven months ended
April 30, 1995.
-8-
<PAGE> 22
TRINITY WELDING SUPPLY, INC.
Notes to Financial Statements (Continued)
6. Related Party Transactions
__________________________
During the eleven months ended April 30, 1995, the Company purchased
approximately $ 161,500 of inventory from a corporation owned by a
stockholder of the Company and sold approximately $ 44,000 of inventory
to the same corporation. In addition the Company made lease payments of
approximately $ 75,500 to that corporation during the period for autos.
At April 30, 1995, the Company owed this corporation approximately $
160,000.
7. Leases
_______
The Company is leasing various buildings under operating lease
agreements. Rental payments for the eleven months ended April 30, 1995,
totaled approximately $ 79,000. All current leases are from
month-to-month or year-to-year.
8. Concentrations of Credit Risk
_____________________________
The Company sells welding products and industrial specialty and medical
gases to customers primarily in north-central Texas. The customers'
ability to repay is dependent upon the area's economy.
At April 30, 1995, the Company has approximately $ 32,000 deposited in
financial institutions which exceeded the insurance provided by the
Federal Deposit Insurance Corporation.
9. Acquisition
___________
Effective March 31, 1995, the Company purchased the assets of a company
engaged in the business of packaging industrial gases and distributing
and selling industrial gases and welding supplies. The purchase price
for the assets was $ 600,000 plus the assumption of liabilities of
approximately $ 23,500. Accordingly, these financial statement include
one month operating results of the acquired company. Pro forma
operating results have not been disclosed as the operating results of
the acquired company are not material to the operating results of the
Company.
10. Subsequent Event
________________
Subsequent to April 30, 1995, the Company entered into an agreement to
sell the operating assets of the Company to Trinity Airgas, Inc. a
Delaware corporation and majority-owned subsidiary of U.S. Airgas, Inc.,
a Delaware corporation.
-9-
<PAGE> 23
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994
CIPOLLA, BARTENS & MONACHINO
<PAGE> 24
To the Shareholders of
Red-D-Arc Limited
Red-D-Arc Inc.
Red-D-Arc Leasing Ltd.
Grimsby, Ontario
AUDITORS' REPORT
We have audited the combined balance sheet of Red-D-Arc Limited,
Red-D-Arc Inc. and Red-D-Arc Leasing Ltd. as at December 31, 1994 and the
combined statements of income and retained earnings and changes in financial
position for the year then ended. These combined financial statements are the
responsibility of the companies' management. Our responsibility is to express
an opinion on these combined financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the combined financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.
In our opinion, these combined financial statements present fairly, in
all material respects, the combined financial position of the companies as at
December 31, 1994 and the results of their operations and the changes in their
financial position for the year then ended in accordance with generally
accepted accounting principles.
Hamilton, Ontario CIPOLLA, BARTENS & MONACHINO
July 25, 1995 Chartered Accountants
- 1 -
<PAGE> 25
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
COMBINED BALANCE SHEET
DECEMBER 31, 1994
(In Canadian Dollars)
ASSETS
Current assets:
Cash $ 41,621
Accounts receivable 2,568,081
Inventory of welding machine components and
supplies 1,836,800
Prepaid expenses and deposits 168,433
__________
Total current assets 4,614,935
Due from related entities (note 2) 239,338
Property, equipment and leasehold improvements
(note 3) 11,971,533
Cash surrender value of life insurance 69,789
Organization costs 2,089
__________
$16,897,684
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness (note 4) $ 1,047,912
Accounts payable and accrued liabilities 1,785,155
Income taxes payable 39,987
Loans from employees 23,101
Current portion of long-term debt (note 5) 1,333,037
__________
Total current liabilities 4,229,192
Long-term debt (note 5) 4,262,250
Due to shareholders (note 6) 61,941
Deferred income taxes 2,596,579
__________
Contingent liability (note 10) 11,149,962
__________
Shareholders' equity:
Stated capital (note 7) 132,782
Retained earnings 5,614,940
__________
5,747,722
$ 16,897,684
==========
On behalf of the Board:
_____________________________Director _____________________________Director
- 2 -
CIPOLLA, BARTENS & MONACHINO
<PAGE> 26
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
COMBINED STATEMENT OF INCOME AND RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1994
(In Canadian Dollars)
Revenues:
Lease and rental income $ 7,366,098
Machine and service sales and other income 5,886,207
__________
13,252,305
Cost and Expenses: __________
Cost of products sold (excluding depreciation
and amortization) 5,831,826
Selling, distribution and administrative
expenses 4,017,451
Depreciation and amortization 1,169,121
Bad debt expense (note 8) 1,016,686
__________
Total costs and expenses 12,035,084
__________
Operating income 1,217,221
Interest expense 443,646
_________
Income before income taxes 773,575
Income taxes (note 12) 321,210
_________
Net income for the year $ 452,365
=========
- 3 -
CIPOLLA, BARTENS & MONACHINO
<PAGE> 27
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994
(In Canadian Dollars)
Cash flows from Operating activities:
Net income for the year $ 452,365
Add (deduct) items not reqiring an outlay of
cash: 1,169,121
Depreciation and amortization 207,679
Deferred income taxes
Gain on disposal of property, equipment and
leasehold improvements (1,030,511)
Cash surrender value of life insurance (21,358)
Net change in non-cash, current items 155,662
_________
932,958
_________
Cash flows from Financing activities:
Increase in amounts due from related entities (308,391)
Assumption of long-term debt 463,545
Repayment of long-term debt (662,868)
Decrease in amounts due to shareholders (121,662)
Issue of common shares 8,400
________
(620,976)
Cash flows from Investing activities:
Purchase of property, equipment and leasehold
improvements 3,731,460)
Proceeds from disposal of property, equipment
and leasehold improvements 3,418,308
_________
(313,152)
_________
Decrease in cash for the year (1,170)
Cash, beginning of year 42,791
_________
Cash, end of year $ 41,621
=========
- 4 -
CIPOLLA, BARTENS & MONACHINO
<PAGE> 28
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
COMBINED STATEMENT OF SHAREHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1994
(In Canadian Dollars)
Shares of Special
Common Stock Shares
No Stated Common $10 Stated Special Retained
Value Stock Value Shares Earnings
__________ ______ ________ _______ ________
Balance, beginning of year 11,904 $ 84,882 3,950 $ 39,500 $ 5,162,575
Net income for the year - - - - 452,365
Shares issued in connection
with employees' stock
option plan 84 8,400 - - -
______ ______ _____ ______ _________
Balance, end of year 11,988 $ 93,282 3,950 $ 39,500 $ 5,614,940
====== ====== ===== ====== =========
- 5 -
CIPOLLA, BARTENS & MONACHINO
<PAGE>
<PAGE> 29
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(In Canadian Dollars)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of presentation:
These statements which are expressed in Canadian dollars, represent
the combined operating activities and cash flows of Red-D-Arc
Limited, Red-D-Arc Inc. and Red-D-Arc Leasing Ltd. All significant
intercompany balances and transactions have been eliminated on
combination.
(b) Foreign currency translation:
Assets and liabilities in currencies other than Canadian dollars
have been translated into Canadian dollars at the rate of exchange
prevailing at the balance sheet date. Revenue and expenses have
been translated at an average rate for the period. Translation
gains or losses are included in the statement of income.
(c) Inventory:
Inventory is stated at the lower of cost and net realizable value,
with cost being determined principally on a first-in, first-out
basis.
(d) Depreciation and amortization:
Property and equipment are stated at cost; depreciation and
amortization is provided over their estimated useful lives on a
declining balance basis, leasehold improvements are amortized on a
straight-line basis.
(e) Income taxes:
The provision for income taxes includes foreign taxes currently
payable and those deferred because of temporary differences between
the financial statement and tax bases of assets and liabilities.
(f) Organization costs:
Expenses that were incurred with respect to the organization of
Red-D-Arc Inc. are being amortized on a straight-line basis
over five years.
(g) Concentration of credit risk:
Financial instruments which potentially subject the companies to
concentrations of credit risk consist principally of trade
receivable.
- 6 -
CIPOLLA, BARTENS & MONACHINO
<PAGE> 30
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(In Canadian Dollars)
2. DUE FROM RELATED ENTITIES:
The amounts due from related entities bear interest at rates closely
approximating market rates at their date of issuance. The amounts have
no set terms of repayment.
3. PROPERTY AND EQUIPMENT:
Accumulated
Depreciation and Net Book
Cost Amortization Value
____ ________________ ________
Land $ 434,404 - 434,404
Buildings 1,306,431 370,899 935,532
Leasehold improvements 209,785 47,374 162,411
Office equipment 299,682 234,537 65,145
Shop equipment 362,030 222,563 139,467
Welding units 14,570,672 4,827,553 9,743,119
Automotive 1,067,355 682,345 385,010
Computer 330,921 224,476 106,445
__________ _________ __________
$ 18,581,280 6,609,747 11,971,533
========== ========= ==========
Depreciation and amortization of property and equipment charged to
operations amounted to $1,169,121.
4. BANK INDEBTEDNESS:
Revolving line of credit $ 890,000
Cash overdraft 157,912
_________
$ 1,047,912
=========
The bank revolving line of credit bears interest at bank prime plus 1%.
This loan, together with the loans classified as long-term debt, are
secured by a general assignment of accounts receivable, a general
security agreement, a demand debenture of $1,000,000 containing a first
floating charge on all assets, a first fixed charge on specified land
and building and a fixed debenture of $2,000,000 on specified land and
buildings. The cash overdraft is attributable to the float of the
outstanding cheques.
- 7 -
CIPOLLA, BARTENS & MONACHINO
<PAGE> 31
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(In Canadian Dollars)
5. LONG-TERM DEBT:
Prime plus 1.5% bank term loan, repayable $50,000
principal plus interest monthly, secured by
Grimsby property $ 1,853,950
Prime plus 1.5% bank term loan, repayable $8,621
principal plus interest monthly, maturing on
August 31, 1997 835,609
Prime plus 1.5% bank term loan, repayable $16,667
principal plus interest monthly, maturing in
March 1997 449,999
Prime plus .75% bank term loan, repayable $6,007
principal plus interest monthly, maturing in
August 1999 334,145
Prime plus 1.5% bank term loan, repayable $21,000
principal plus interest monthly until September 1995,
then increasing to $36,000 principal plus interest
monthly, maturing in January 1999 1,620,000
9% mortgage payable, repayable $2,160 principal
and interest monthly, maturing on June 15, 1997,
secured by land and building 230,551
6.25% loan, repayable $791 principal and interest
monthly, maturing in August 1996, secured by
the vehicle 14,982
10.9% loan, repayable $559 principal and interest
monthly, maturing in May 1996, secured by the vehicle 8,798
8.5% loan, repayable $657 principal and interest
monthly, maturing in November 1997, secured by
the vehicle 13,928
13.98% loan, repayable $558 principal and interest
monthly, maturing in October 1997, secured by
the vehicle 15,667
- 8 -
CIPOLLA, BARTENS & MONACHINO
<PAGE> 32
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(In Canadian Dollars)
5. LONG-TERM DEBT: (cont'd)
11.25% loan, repayable $520 principal and interest
monthly, maturing in October 1997, secured by
the vehicle 15,120
Prime plus 1% bank loan, repayable $4,625 principal
plus interest monthly, maturing in September 1997,
secured by equipment 152,625
Prime plus 1% bank loan, repayable $833 principal
plus interest monthly, maturing in January 1995,
secured by equipment 20,833
Prime plus 0.25% bank loan, repayable $1,389
principal plus interest monthly, maturing in
May 1995, secured by equipment 6,941
Prime plus 1% bank loan, repayable $973 principal
plus interest monthly, maturing in October 1995,
secured by equipment 9,702
Other loans 12,437
5,595,287
Less current portion due within one year 1,333,037
$ 4,262,250
The approximate principal repayments required over the next five years
are as follows:
1995 $ 1,333,037
1996 1,434,880
1997 1,460,296
1998 596,353
1999 99,632
Thereafter 671,089
$ 5,595,287
The fair value of long-term debt as of December 31, 1994 was
approximately
$5.6 million.
- 9 -
CIPOLLA, BARTENS & MONACHINO
<PAGE> 33
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(n Canadian Dollars)
6. DUE TO SHAREHOLDERS:
This amount is represented by demand loans bearing interest up to bank
prime rate plus 2%. It is not anticipated that these amounts will be
repaid within the next fiscal year.
7. STATED CAPITAL:
Red-D-Arc Limited:
Issued and outstanding:
3,700 special shares $ 37,000
10,948 common shares 91,840
_______
128,840
_______
The company is authorized to issue 40,000 common
shares and up to 38,200 non-voting, preference
shares, redeemable at $10 per share. The holders
of the preference shares are entitled to non-cumulative
dividends at 2% below the previous year-end bank rate.
During the year 84 common shares were issued for a
cash consideration of $8,400.
Red-D-Arc Inc.:
Issued and outstanding:
1,000 common shares 1,402
_____
The company is authorized to issue 2,500 common
shares.
Red-D-Arc Leasing Ltd.:
Issued and outstanding:
250 special shares 2,500
40 common shares 40
_____
2,540
_____
- 10 -
CIPOLLA, BARTENS & MONACHINO
<PAGE> 34
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(In Canadian Dollars)
7. STATED CAPITAL: (cont'd)
The company is authorized to issue 10,000 common
shares and up to 9,000 voting special shares,
redeemable at $10 per share. The holders of the
special shares are entitled to cumulative dividends
at 8% of the redeemable amount. There are dividends
in arrears of $3,200 on the special shares.
$ 132,782
Stock options: ========
An agreement entered into by Red-D-Arc Limited on
December 30, 1988 allows for certain key employees
to purchase common shares up to a 10% equity interest.
At December 31, 1994, 252 shares were available for
purchase at $100 per share.
8. BAD DEBT EXPENSE:
This amount represents unrecoverable receivables from a former customer
that was extended significant credit. The write-off covers amounts that
were substantially recorded as revenues in 1994 by Red-D-Arc Inc.
9. COMMITMENTS:
The company leases certain distribution facilities under long-term
leases having varying terms and renewal options. Future minimum rental
commitments exclusive of real estate taxes, insurance and other expenses
payable under the terms of the leases are approximately as follows for
the next five years:
1995 $ 336,352
1996 366,845
1997 366,845
1998 366,845
1999 321,485
Thereafter 3,392,051
- 11 -
CIPOLLA, BARTENS & MONACHINO
<PAGE> 35
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(In Canadian Dollars)
10. CONTINGENT LIABILITY:
Red-D-Arc Limited has guaranteed a commercial note with the Pikeville
National Bank & Trust Company in the amount of $366,379 US made to a
party related to the majority shareholder.
11. PENSION PLAN:
Red-D-Arc Limited has a defined contribution plan covering substantially
all full-time employees. Under the terms of the plan, the company makes
matching contributions up to two percent of participant's wage. In
addition, the company also contributes to private registered retirement
savings plans of some employees. During 1994, the current service costs
of the defined contribution retirement plan were $23,499. The costs of
the private retirement plans to the company in 1994 were $39,843.
Neither plan has any past service obligation requirements.
12. INCOME TAXES:
Pre-tax earnings were derived from the following sources:
Canada $ 749,130
United States 24,445
_______
$ 773,575
=======
Income tax expense consists of:
Current:
Canadian Federal $ 7,547
Provinces of Canada 86,884
U.S. Federal 15,200
State 3,900
_______
113,531
=======
- 12 -
CIPOLLA, BARTENS & MONACHINO
<PAGE> 36
RED-D-ARC LIMITED
RED-D-ARC INC.
RED-D-ARC LEASING LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(In Canadian Dollars)
12. INCOME TAXES: (cont'd)
Deferred:
Canadian Federal $ 121,179
Provinces of Canada 86,500
_______
207,679
_______
$ 321,210
=======
Significant differences between taxes computed at the U.S. federal
statutory rate and the provision for income taxes were:
Taxes at U.S. federal statutory rate 35.0%
Increase (decrease) in income taxes resulting from:
U.S. State income taxes .1%
Canadian federal and provincial income taxes rates
in excess of U.S. federal rate 8.5%
Reduction in Canadian taxes due to business loss carry-
forward and research and development tax credits (2.1)%
____
41.5%
====
Deferred tax assets and liabilities:
At December 31, 1994 there were no significant cumulative temporary
differences that give rise to deferred tax assets. The deferred income
tax liability is the result of Red-D-Arc Limited claiming depreciation
for income tax purposes in excess of amounts recorded in the financial
statement.
- 13 -
CIPOLLA, BARTENS & MONACHINO
<PAGE> 37
CAPITAL WELDING SUPPLY COMPANY
FINANCIAL STATEMENTS
with Independent Auditors' Report
JULY 31, 1995
LITTLE ROCK, ARKANSAS
<PAGE> 38
TABLE OF CONTENTS
Independent Auditors' Report 1
Balance Sheet 2
Statement of Income 3
Statement of Retained Earnings 4
Statement of Cash Flows 5
Notes to the Financial Statements 8-14
<PAGE> 39
Independent Auditors' Report
To the Board of Directors
of Capital Welding Supply Company
We have audited the accompanying balance sheet of Capital Welding Supply
Company (an S-Corporation) as of July 31, 1995, and the related statements of
income, retained earnings, and cash flows for the nine months then ended.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Capital Welding Supply
Company as of July 31, 1995, and the results of its operations and its cash
flows for the nine months then ended in conformity with generally
accepted accounting principles.
BELL & COMPANY
October 19, 1995
-1-
<PAGE> 40
Capital Welding Supply Company
Balance Sheet
July 31, 1995
Assets
Current assets
Cash $ 342,218
Trade receivables, less allowance
for doubtful accounts of $35,000 778,877
Inventories 837,147
Notes receivable from related party -
current portion 12,231
Prepaid expenses and other
current assets 177
Total current assets 1,970,650
Plant and equipment
Plant and equipment, at cost 5,113,095
Less accumulated depreciation (2,257,532)
Plant and equipment, net 2,855,563
Other non-current assets
Notes receivable from related party,
less current portion 140,936
Other 52,615
Total other non-current assets 193,551
_________
Total Assets $5,019,764
=========
-2-
<PAGE> 41
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term debt $461,016
Accounts payable, trade 317,389
Accrued expenses and other
current liabilities 106,176
Total current liabilities 884,581
Long-term debt, less current portion 370,114
Stockholders' equity
Common stock, no par value;
1,000 shares authorized,
issued and outstanding 10,000
Paid-in capital 73,889
Retained earnings 3,681,180
Total stockholders' equity 3,765,069
_________
Total Liabilities and Stockholders' Equity $5,019,764
=========
-3-
<PAGE> 42
Capital Welding Supply Company
Statement of Income
For the Nine Months Ended July 31, 1995
Sales $5,809,207
Costs and expenses
Cost of products sold 3,060,887
Selling, distribution and administrative
expenses 2,172,380
Depreciation expense 204,405
Total costs and expenses 5,437,672
Operating income 371,535
Other income and expenses
Interest expense (58,729)
Other income, net 44,960
Total other income and expenses (13,769)
_______
Net income $357,766
=======
See accompanying notes
-4-
<PAGE> 43
Capital Welding Supply Company
Statement of Retained Earnings
For the Nine Months Ended July 31, 1995
Balance, November 1, 1994 $3,437,414
Net income 357,766
Dividends paid (114,000)
_________
Balance, July 31, 1995 $3,681,180
=========
See accompanying notes
-5-
<PAGE> 44
Capital Welding Supply Company
Statement of Cash Flows
For the Nine Months Ended July 31, 1995
Cash flows from operating activities
Net income $357,766
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 204,405
Gain on sale of equipment (628)
(Increase) in accounts receivable (3,888)
Decrease in inventories 86,714
(Increase) in other current assets (74)
(Increase) in other assets (9,753)
(Decrease) in accounts payable (79,420)
Increase in accrued expenses 32,467
Net cash provided by operating activities 587,589
Cash flows from investing activities
Collection of notes receivable 8,588
Proceeds from sale of equipment 15,699
Purchases of property and equipment (241,089)
Net cash used by investing activities (216,802)
Cash flows from financing activities
Proceeds from long-term borrowings 128,683
Principal payments on long-term debt (278,240)
Dividends paid (114,000)
Net cash used by financing activities
(263,557)
Net increase in cash 107,230
Cash - beginning of period 234,988
_______
Cash - end of period $342,218
=======
See accompanying notes
-6-
<PAGE> 45
Supplementary Disclosures of Cash Flows Information
Cash paid during the year for interest $ 58,729
=======
See accompanying notes
-7-
<PAGE> 46
Capital Welding Supply Company
Notes to Financial Statements
July 31, 1995
1. Summary of Significant Accounting Policies
a. Description of Operations - Capital Welding Supply Company is a
multi-state distribution company that sells welding and medical supplies
to the public. The company has four locations: Little Rock,
Batesville, and Pine Bluff, Arkansas, and Greenville, Mississippi.
b. Cash and Cash Equivalents - For purposes of the statement of cash flows,
the company considers all highly liquid cash investments with original
maturities of 3 months or less to be cash equivalents.
c. Inventories - Inventories are stated at the lower of cost or market
value by the first-in, first-out (FIFO) method. Inventories consist
primarily of industrial gases, welding supplies and equipment.
d. Plant and Equipment - Plant and equipment are stated at cost.
Depreciation is provided using the straight-line and declining balance
methods for financial statement purposes over the useful lives of the
related assets.
e. Income Taxes - The company, with the consent of its shareholders, has
elected under the Internal Revenue Code and applicable state codes to be
an "S Corporation". In lieu of corporation income taxes, the company's
shareholders are taxed on their proportionate share of the company's
taxable income. Therefore, no provision or liability for income taxes
has been included in these financial statements.
2. Notes Receivable
Notes receivable consists of the following:
7.5% note receivable from a related
corporation, payable in monthly
installments of $1,246, including interest,
through August, 2004, secured by certain
real estate $ 98,305
-8-
<PAGE> 47
Capital Welding Supply Company
Notes to Financial Statements
July 31, 1995
2. Notes Receivable (continued)
7.5% note receivable from a related
corporation, payable in monthly
installments of $696, including interest,
through August 2004, secured by
certain real estate $ 54,862
_______
Total notes receivable 153,167
Less amounts due within one year (12,231)
______
Notes receivable, less current portion $140,936
=======
3. Plant and Equipment
Plant and equipment by major categories are as follows:
Estimated
Category Useful Lives Amount
________ ____________ ______
Land $111,541
Buildings 50 years 209,947
Furniture & fixtures 10 years 45,367
Cylinders 25 years 3,316,200
Equipment 5 years 192,948
Vehicles 5 years 1,237,092
$5,113,095
=========
4. Long-term Debt
Long-term debt consists of the following:
8.25% note payable to Norris Industries
in monthly installments of $1,422,
including interest, secured by cylinders $ 1,299
-9-
<PAGE> 48
Capital Welding Supply Company
Notes to Financial Statements
July 31, 1995
4. Long-term Debt (continued)
8.75% note payable to Norris Industries
in monthly installments of $1,407,
including interest, secured by cylinders $ 31,252
8.75% note payable to Norris Industries
in monthly installments of $890,
including interest, secured by cylinders
and equipment 30,219
Note payable to Taylor Wharton, payable
in aggregate monthly installments of $928,
including interest, secured by cylinders 33,930
6% note payable to a life insurance
company for loan against value of policy 4,000
8.25% note payable to Norris Industries
in monthly installments of $1,365,
including interest, secured by cylinders 27,255
10% note payable to Norris Industries
in monthly installments of $1,380,
including interest, secured by cylinders 37,445
8.25% note payable to Norris Industries
in monthly installments of $1,245,
including interest, secured by cylinders 11,726
8.25% note payable to Norris Industries
in monthly installments of $1,264,
including interest, secured by cylinders 5,871
8.25% note payable to Norris Industries
in monthly installments of $1,271,
including interest, secured by cylinders 13,069
-10-
<PAGE> 49
Capital Welding Supply Company
Notes to Financial Statements
July 31, 1995
4 Long-term Debt (continued)
7.5% note payable to a bank in monthly
installments of $694, including interest,
secured by equipment $ 20,057
11.25% note payable to a finance
company in monthly installments of
$1,093, including interest, secured by
cylinders 1,697
12.25% note payable to a finance
company in monthly installments of
$1,145, including interest, secured by
cylinders 4,672
10% note payable to a bank in monthly
installments of interest only, due May 1,
1996, secured by equipment 225,000
8% note payable to a bank in monthly
installments of $4,565, including interest,
secured by equipment 134,658
7.5% note payable to a bank in monthly
installments of $2,125, including interest,
secured by a trailer 81,471
9.75% note payable to Norris Industries
in monthly installments of $750,
including interest, secured by cylinders 6,275
10.25% note payable to Coyne Cylinder
Co. in monthly installments of $849,
including interest, secured by cylinders 5,513
-11-
<PAGE> 50
Capital Welding Supply Company
Notes to Financial Statements
July 31, 1995
4 Long-term Debt (continued)
9.25% note payable to Coyne Cylinder
Co. in monthly installments of $1,462,
including interest, secured by cylinders $ 15,529
10.8% note payable to a finance
company in monthly installments of
$444, including interest, secured by
cylinders 2,278
7% note payable to a stockholder in
monthly installments of $2,000,
including interest, unsecured 118,479
9% note payable to Norwest Equipment
Finance in monthly installments of
$1,370, including interest, secured by
cylinders 19,435
Total long-term debt 831,130
Less current maturities (461,016)
Long-term debt, less current maturities $ 370,114
========
Annual aggregate maturities of long-term debt are as follows:
1996 $444,796
1997 145,155
1998 97,625
1999 25,075
$712,651
-12-
<PAGE> 51
Capital Welding Supply Company
Notes to Financial Statements
July 31, 1995
5. Commitments and Related Party Transactions
The company leases its facilities and certain equipment and fixtures from
Ray Properties, Inc., a company with substantial common ownership The
amount paid to Ray Properties, Inc. pursuant to those operating lease
agreements for the nine months ended July 31, 1995 was $110,250.
Future minimum lease payments under those lease agreements are as follows:
Year Ending July 31:
1996 $103,250
1997 54,000
The company is contingently liable as guarantor on certain debt of Ray
Properties, Inc. totaling approximately $28,639 at July 31, 1995.
6. Equipment Leases
The company leases substantially all of its rolling stock from Ryder Truck
Rental, Inc. under non-cancelable operating leases.
At July 31, 1995, future minimum rental commitments under those leases were
as follows:
Year ending July 31:
1996 $ 60,954
1997 74,013
1998 67,993
1999 32,684
Thereafter 48,248
_______
$283,892
=======
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<PAGE> 52
Capital Welding Supply Company
Notes to Financial Statements
July 31, 1995
6. Subsequent Events
During August 1995, the company's stockholders agreed to sell the assets of
the company to a national organization for an amount in excess of book
value
-14-
<PAGE>
<PAGE> 53
The Board of Directors
Airgas, Inc.
We consent to the inclusion of our report dated June 6, 1995, with respect to
the balance sheet of Trinity Welding Supply, Inc. as of April 30, 1995, and
the related statements of operations, retained earnings, and cash flows for
the eleven months then ended, which report appears in the Form 8-K of Airgas,
Inc. dated November 28, 1995.
CAWTHRON, WOMMACK & COKER, P.C.
Waco, Texas
November 28, 1995
<PAGE>
<PAGE>
<PAGE> 54
The Board of Directors
Airgas, Inc.
We consent to the inclusion of our report dated July 25, 1995, with respect to
the combined balance sheet of Red-D-Arc Limited, Red-D-Arc Inc. and Red-D-Arc
Leasing Ltd. as of December 31, 1994, and the combined statements of income
and retained earnings and changes in financial position for the year then
ended, which report appears in the Form 8-K of Airgas, Inc. dated November 28,
1995.
CIPOLLA, BARTENS & MONACHINO
Chartered Accountants
Hamilton, Ontario
November 28, 1995
<PAGE>
<PAGE>
<PAGE> 55
The Board of Directors
Airgas, Inc.
We consent to the inclusion of our report dated October 19, 1995, with respect
to the balance sheet of Capital Welding Supply Company (an S-Corporation) as
of July 31, 1995, and the related statements of income, retained earnings and
cash flows for the nine months then ended, which report appears in the Form
8-K of Airgas, Inc. dated November 28, 1995.
BELL & COMPANY
November 28, 1995
<PAGE>
