<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):
October 17, 1996
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, 1996 through September 30, 1996, the Registrant has acquired
sixteen 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 Regulation S-X, Rule 3-05(b)(1)(i), although
such acquisitions, in the aggregate, do not exceed 20% of any of the
conditions set forth in Rule 1-02(w).
Effective April 1, 1996, TriStates Airgas, Inc., a wholly-owned subsidiary of
U.S. Airgas, Inc., a wholly-owned subsidiary of the Registrant, purchased
substantially all of the assets of Randall-Graw Company, Inc. ("Randall-
Graw") for $12.1 million plus the assumption of certain liabilities.
Additionally, a non-competition and confidentiality agreement was entered into
with Randall-Graw's shareholder, for which $500 thousand was paid at closing.
Effective May 6, 1996, Mid America Airgas, Inc., a wholly-owned subsidiary of
U.S. Airgas, Inc., purchased substantially all of the assets of Welders Supply
Company, Inc. ("Welders Supply") for $10.5 million plus the assumption of
certain liabilities. Additionally, a non-competition and confidentiality
agreement was entered into with the Welders Supply shareholder, for which
$154 thousand was paid at closing and $616 thousand will be paid over the term
of the agreement.
Effective September 5, 1996, West Coast Airgas, Inc., a 95% owned subsidiary
of the Registrant, purchased all of the issued and outstanding stock of
Rutland Tool & Supply Company, Inc. ("Rutland"). Rutland was acquired with
the issuance of approximately 3.4 million shares of the Registrant's common
stock and cash of $7.1 million. Additionally, non-competition and
confidentiality agreements were entered into with the Rutland shareholders,
aggregating $7 million and are due in five years.
The acquisitions were financed using the Registrant's revolving credit
facilities with NationsBank of North Carolina, N.A., the issuance of
promissory notes to the sellers, the issuance of the Registrant's common stock
and the assumption of certain liabilities.
At the time of the acquisitions, Randall-Graw and Welders Supply 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.
At the time of the Rutland acquisition, Rutland was engaged in the
distribution of metal working and industrial tools and supplies. The
Registrant intends to continue to use the acquired assets in its recently
formed industrial distribution division which is called Airgas Direct
Industrial.
<PAGE> 3
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
__________________________________________________________________
(a) Financial Statements
1. Audited balance sheet of Randall-Graw Company, Inc. as of March 31,
1996 and the related statements of earnings, stockholder's equity and
cash flows for the year then ended.
2. Audited balance sheet of Welders Supply Company, Inc. as of
December 31, 1995 and the related statements of earnings,
stockholders' equity and cash flows for the year then ended.
3. Audited balance sheet of Rutland Tool & Supply Company, Inc. as of
December 31, 1995 and the related statements of income, shareholders'
equity and cash flows for the year then ended.
(b) Pro Forma Financial Information
The tables on pages five through eleven set forth selected pro forma
balance sheet and operating data of the Registrant for the year ended
March 31, 1996 and the three months ended June 30, 1996 as if the
acquisitions had been consummated on April 1, 1995 and April 1, 1996,
respectively.
(c) Exhibits.
23.1 Consent of Hawkins, Ash, Baptie & Company
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Deloitte & Touche LLP
<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/Jeffrey P. Cornwell
_____________________
Jeffrey P. Cornwell
Vice President Finance
and Corporate Controller
DATED: October 17, 1996
<PAGE>
<PAGE> 5
AIRGAS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
June 30, 1996
________________________________________________________
Airgas, Inc. Rutland Notes Pro
Balance Sheet Data (Historical) Tool Ref. Forma
__________________ ____________ _________ _____ _____
Accounts Receivable,
Net $ 139,228 $ 6,440 (1) $ 145,668
Inventories, net 106,113 17,500 (1) 123,613
Other Current Assets 16,508 2,127 (1) 18,635
_________ _______ _________
261,849 26,067 287,916
Property, Plant &
Equipment, Net 460,619 1,782 (2) 462,401
Goodwill, Net 212,113 64,251 (3) 276,364
Investments and Other
Noncurrent Assets 117,598 7,204 (4) 124,802
_________ _______ _________
$1,052,179 $ 99,304 $1,151,483
========= ======= =========
Current Portion of
Long-Term Debt $ 17,644 $ 15 (1) $ 17,659
Accounts Payable,Trade 57,703 2,584 (1) 60,287
Accrued Expenses and
Other Current
Liabilities 76,149 5,383 (1) 81,532
_________ _______ _________
Current Liabilities 151,496 7,982 159,478
Long Term Debt 522,288 14,412 (5) 536,700
Other Liabilities 37,998 __ 37,998
Deferred Income Taxes 90,233 __ 90,233
Stockholders' Equity 250,164 76,910 (6) 327,074
_________ _______ _________
$1,052,179 $ 99,304 $1,151,483
========= ======= =========
(1) Represents the fair value of current assets acquired and current
liabilities assumed at the acquisition date.
(2) The carrying amount reflects fair market value at the date of
acquisition.
(3) Represents cost in excess of net assets acquired.
(4) Represents the fair market value of a non-competition agreement and other
noncurrent assets of the acquired business.
(5) Represents debt incurred to finance the business acquisition plus
assumption of certain noncurrent liabilities.
(6) Represents the fair value of the registrant's common stock issued at the
acquisition date.
<PAGE>
<PAGE> 6
AIRGAS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
Year Ended March 31, 1996
_______________________________________________
Randall Welders
Graw Supply Rutland Tool
Airgas, Inc. (Historical) (Historical) (Historical)
Operating Data (Historical) (Note 1) (Note 2) (Note 2)
________________ ___________ __________ __________ ________
Net Sales $838,144 $ 18,214 $ 10,208 $ 55,982
Cost of Products Sold
(Excluding Depreciation
and Amortization) 419,491 12,585 6,292 33,923
Selling, Distribution
& Administrative Expenses 279,906 4,269 3,323 16,966
Depreciation & Amortization 45,762 288 369 598
_______ _______ ______ _______
Total Costs & Expenses 745,159 17,142 9,984 51,487
_______ _______ ______ _______
Operating Income 92,985 1,072 224 4,495
Interest Expense, Net (24,862) 69 (18) (469)
Other Income, Net 782 14 185 (3,429)
Minority Interest (663) __ __ __
______ _______ ______ ______
Earnings Before Income
Taxes 68,242 1,155 391 597
Income Taxes 28,522 5 5 245
______ ______ _______ ______
Net Earnings $39,720 $ 1,150 $ 386 $ 352
====== ====== ====== ======
Earnings Per Share (4) $ .60
======
Weighted Average Shares 66,215
======
Notes:
(1) Includes audited financial data for the twelve months ended
March 31, 1996
(2) Includes unaudited financial data for the twelve months ended
March 31, 1996.
(3) See page 10 for explanations of pro forma adjustments.
(4) See earnings per share calculations on page 11.
Columns continued on next page.
<PAGE>
<PAGE> 7
AIRGAS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
CONTINUED FROM PREVIOUS PAGE.
Year Ended March 31, 1996
_______________________________________________
Pro Forma
Adjustments Note Pro
Operating Data (Note 3) Ref. Forma
________________ ___________ ____ _____
Net Sales $ __ $922,548
Cost of Products Sold
(Excluding Depreciation
and Amortization) __ 472,291
Selling, Distribution
& Administrative Expenses 304,464
Depreciation & Amortization 3,467 a 50,484
_______ _______
Total Costs & Expenses 3,467 827,239
_______ _______
Operating Income (3,467) 95,309
Interest Expense, Net (2,185) b (27,465)
Other Income, Net 3,653 c 1,205
Minority Interest (18) d (681)
_______ _______
Earnings Before Income Taxes (2,017) 68,368
Income Taxes 5 e 28,782
_______ _______
Net Earnings $ (2,022) $ 39,586
======= =======
Earnings Per Share (4) $ .56
=======
Weighted Average Shares 69,676
=======
<PAGE>
<PAGE> 8
AIRGAS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
Three Months Ended June 30, 1996
_______________________________________________
Welders
Airgas, Inc. Supply Rutland Tool
(Historical) (Historical) (Historical)
Operating Data (Note 1) (Note 2) (Note 1)
________________ ___________ __________ ________
Net Sales $274,098 $ 857 $ 15,755
Cost of Products Sold
(Excluding Depreciation
and Amortization) 146,352 559 9,548
Selling, Distribution
& Administrative Expenses 86,187 225 4,733
Depreciation & Amortization 14,238 37 151
_______ _____ ______
Total Costs & Expenses 246,777 821 14,432
_______ _____ ______
Operating Income 27,321 36 1,323
Interest Expense, Net (8,281) (2) (102)
Other Income, Net 281 38 (170)
Minority Interest (229) __ __
______ _____ ______
Earnings Before Income Taxes 19,092 72 1,051
Income Taxes 7,942 __ 431
______ _____ ______
Net Earnings $11,150 $ 72 $ 620
====== ===== ======
Earnings Per Share (4) $ .17
======
Weighted Average Shares 67,095
======
Notes:
(1) Includes unaudited financial data for the three months ended
June 30, 1996.
(2) Includes unaudited financial data for the one month ended April 30, 1996.
(3) See page 10 for explanation of pro forma adjustments.
(4) See earnings per share calculations on page 11.
Columns continued on next page.
<PAGE>
<PAGE> 9
AIRGAS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
CONTINUED FROM PREVIOUS PAGE.
Three Months Ended June 30, 1996
_______________________________________________
Pro Forma
Adjustments Note Pro
Operating Data (Note 3) Ref. Forma
________________ ___________ ____ _____
Net Sales $ __ $290,710
Cost of Products Sold
(Excluding Depreciation
and Amortization) __ 156,459
Selling, Distribution
& Administrative Expenses 91,145
Depreciation & Amortization 765 a 15,191
_______ _______
Total Costs & Expenses 765 262,795
_______ _______
Operating Income (765) 27,915
Interest Expense, Net (229) b (8,614)
Other Income, Net __ 149
Minority Interest (4) d (233)
_______ _______
Earnings Before Income Taxes (998) 19,217
Income Taxes (340) e 8,033
_______ _______
Net Earnings $ (658) $ 11,184
======= =======
Earnings Per Share (3) $ .16
=======
Weighted Average Shares 70,556
=======
<PAGE> 10
(a) Depreciation and amortization expense has been increased by $3,467 for the
year ended March 31, 1996 and by $765 for the three months ended June 30,
1996. The adjustments were made to reflect the estimated purchase
accounting adjustments related to the fixed assets, goodwill and other
intangible assets.
(b) The pro forma interest expense adjustments of $2,185 and $229 for the year
ended March 31, 1996 and the three months ended June 30, 1996,
respectively, reflect the debt incurred in financing the acquisitions at
the Registrant's effective interest rate.
(c) Other expense has been decreased by $3,653 for the year ended March 31,
1996 to eliminate the non-recurring compensation expense related to
Rutland's issuance of common stock to certain key employees and the
related cash bonuses paid in connection with the stock bonus.
(d) Minority interest adjustments have been made to reflect a 5% minority
interest in the net earnings of Rutland after the applicable proforma
adjustments described above.
(e) Income tax adjustments have been made to reflect the Registrant's
effective tax rates and include a provision for income taxes for the
businesses which were previously taxed under Subchapter S of the Internal
Revenue Code.
<PAGE>
<PAGE> 11
AIRGAS, INC.
EARNINGS PER SHARE CALCULATIONS
(DOLLARS IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
Year Ended Three Months Ended
March 31, 1996 June 30, 1996
Adjustment of Weighted Average
Shares Outstanding Historical Pro Forma Historical Pro Forma
______________________________ ___________ _________ __________ _________
Shares of Common Stock
Outstanding - Weighted 62,821 66,247 64,239 67,665
Net Common Stock Equivalents 3,394 3,429 2,856 2,891
______ ______ ______ ______
Adjusted Shares Outstanding 66,215 69,676 67,095 70,556
====== ====== ====== ======
Net Earnings $39,720 $39,586 $11,150 $11,184
====== ====== ====== ======
Earnings Per Share $ .60 $ .56 $ .17 $ .16
====== ====== ====== ======
Earnings per share amounts were determined using the treasury stock method.
This method assumes the exercise of all dilutive 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.
<PAGE>
<PAGE> 12
RANDALL-GRAW COMPANY, INC.
FINANCIAL STATEMENTS
WITH INDEPENDENT AUDITORS' REPORT
MARCH 31, 1996
<PAGE>
<PAGE> 13
RANDALL-GRAW COMPANY, INC.
CONTENTS
MARCH 31, 1996
Page
2 Independent Auditors' Report
3 Balance Sheet
4 Statement of Earnings
5 Statement of Stockholder's Equity
6 Statement of Cash Flows
7-10 Notes to Financial Statements
<PAGE>
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors
Randall-Graw Company, Inc.
We have audited the accompanying balance sheet of Randall-Graw Company, Inc.,
as of March 31, 1996, and the related statements of earnings, stockholder's
equity, and cash flows for the year 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 Randall-Graw Company, Inc.,
as of March 31, 1996, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.
HAWKINS, ASH, BAPTIE & COMPANY
La Crosse, Wisconsin
May 24, 1996
<PAGE>
<PAGE> 15
RANDALL-GRAW COMPANY, INC.
BALANCE SHEET
MARCH 31, 1996
ASSETS
CURRENT ASSETS
Cash and cash equivalents $491,503
Trade receivables, less allowance for doubtful accounts of
$20,000 2,308,462
Inventories 1,740,591
Prepaid expenses 56,872
Other current assets 24,762
_________
TOTAL CURRENT ASSETS $4,622,190
PLANT AND EQUIPMENT, at cost $4,826,794
Less accumulated depreciation 3,396,360
_________
PLANT AND EQUIPMENT, net $1,430,434
OTHER ASSETS
Goodwill, net of accumulated amortization of $6,500 $ 19,500
Other non-current assets 11,792
_________
TOTAL OTHER ASSETS $ 31,292
_________
TOTAL ASSETS $6,083,916
=========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable - trade $834,654
Accrued expenses and other current liabilities 849,766
_________
TOTAL CURRENT LIABILITIES $1,684,420
_________
STOCKHOLDER'S EQUITY
Common stock, $2.50 par value, authorized 100,000 shares,
issued 57,195 shares $142,988
Retained earnings 4,256,508
_________
TOTAL STOCKHOLDER'S EQUITY $4,399,496
_________
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $6,083,916
=========
<PAGE>
<PAGE> 16
RANDALL-GRAW COMPANY, INC.
STATEMENT OF EARNINGS
YEAR ENDED MARCH 31, 1996
NET SALES $18,214,133
COST OF SALES 12,585,448
__________
GROSS PROFIT $5,628,685
__________
COSTS AND EXPENSES
Salaries, wages, and benefits $3,228,034
Distribution expense 119,985
Selling, general, and administrative 721,308
Occupancy expense 199,602
Depreciation and amortization 287,977
_________
TOTAL COSTS AND EXPENSES $4,556,906
_________
OPERATING INCOME $1,071,779
OTHER INCOME (EXPENSE)
Interest income, net 69,013
Other income 13,799
_________
EARNINGS BEFORE INCOME TAXES $1,154,591
PROVISION FOR INCOME TAXES 4,732
_________
NET EARNINGS $1,149,859
=========
<PAGE>
<PAGE> 17
RANDALL-GRAW COMPANY, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
COMMON RETAINED
STOCK EARNINGS TOTAL
BALANCE, MARCH 31, 1995 $ 142,988 $ 3,712,149 $3,855,137
Net earnings for the year -- 1,149,859 1,149,859
Distributions to shareholder -- (605,500) (605,500)
_______ ___________ _________
BALANCE, MARCH 31, 1996 $ 142,988 $ 4,256,508 $4,399,496
<PAGE>
<PAGE> 18
RANDALL-GRAW COMPANY, INC.
STATEMENT OF CASH FLOWS
INDIRECT METHOD
YEAR ENDED MARCH 31, 1996
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 1,149,859
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 287,977
(Gain) from sale of assets (5,600)
Bad debt expense 21,227
Changes in assets and liabilities
(Increase) decrease in assets
Receivables (398,882)
Inventories (186,358)
Prepaid expenses and other assets (50,975)
Increase (decrease) in liabilities
Accounts payable 153,317
Accrued expenses (70,413)
Cylinder deposits 62,374
_______
NET CASH PROVIDED BY OPERATING ACTIVITIES $962,526
_______
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures $(425,842)
Decrease in cash surrender value of life insurance 10,709
Proceeds from sale of fixed assets 5,600
________
NET CASH (USED IN) INVESTING ACTIVITIES $(409,533)
________
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments under debt agreements $(21,542)
Distributions to shareholder (605,500)
________
NET CASH (USED IN) FINANCING ACTIVITIES $(627,042)
________
NET (DECREASE) IN CASH AND CASH EQUIVALENTS $(74,049)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR 565,552
________
CASH AND CASH EQUIVALENTS AT THE END OF YEAR $491,503
========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 676
=======
Income taxes $ 4,000
=======
<PAGE>
<PAGE> 19
RANDALL-GRAW COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE 1 - Nature of Organization and Significant Accounting Policies
Information About the Company's Activities - Randall-Graw Company, Inc., is
primarily a wholesaler of welding and industrial supplies. The Company
operates out of facilities located in La Crosse, Eau Claire, and Wisconsin
Rapids in Wisconsin, and Minneapolis, and Winona in Minnesota.
A summary of significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows.
Cash and Cash Equivalents - For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents.
Bad Debt Provision - The provision for credit losses on the customers accounts
is made in amounts required to maintain adequate reserves to cover anticipated
losses.
Inventories - Inventories are valued at cost using the last-in, first-out
(LIFO) method which is not in excess of market. If the FIFO method of
inventory accounting had been used by the Company, merchandise inventories
would have been $96,940 higher at March 31, 1996.
Plant and Equipment - Plant and equipment are stated at cost. Depreciation
and amortization are provided for in amounts sufficient to relate the cost of
depreciable assets to operations over their estimated service lives.
Straight-line and accelerated methods of depreciation are used for both
financial reporting and tax purposes. For the year ended March 31, 1996,
$287,977 of depreciation and amortization was charged to operations.
Income Taxes - On January 1, 1992, the Company converted to S-Corporation
status for income tax purposes with all items of income or loss passed through
to the shareholder. Therefore, no provision or liability for federal income
taxes has been included in the financial statements. A temporary recycling
surcharge and a minimum fee are payable in Wisconsin and Minnesota,
respectively.
Excess of Purchase Price of Company Acquired Over Net Assets at Date of
Acquisition - It is the Company's policy to amortize any excess of purchase
price of companies acquired over book value of net assets at date of
acquisition over a period of 40 years. The Company assesses the
recoverability of this tangible asset by determining whether the amortization
of the goodwill balance over its remaining life can be recovered through
projected undiscounted future cash flow.
Revenue Recognition - Sales are recorded upon shipment to the customer.
<PAGE> 20
RANDALL-GRAW COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
MARCH 31, 1996
NOTE 1 - Nature of Organization and Significant Accounting Policies -
Continued
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
Fair Values of Financial Instruments - The carrying amount of cash
approximates fair value because of the short maturity of those instruments.
The carrying amount of security deposits approximates fair value because of
their demand upon return nature.
NOTE 2 - Concentration of Credit Risk
The Company maintains cash balances at several institutions located in
Wisconsin and Minnesota. Accounts at each institution are insured by the
Federal Deposit Insurance Corporation up to $100,000. At March 31, 1996, the
Company's uninsured bank cash balances total $578,048.
NOTE 3 - Inventories
Inventories consist of:
Hardgoods $1,827,051
Gas 10,480
_________
$1,837,531
Less reduction to LIFO cost (96,940)
_________
TOTAL $1,740,591
NOTE 4 - Plant and Equipment
Estimated
Useful Lives
____________
PLANT AND EQUIPMENT, at cost
Land -- $222,384
Land improvements 15 - 19 59,723
Building and improvements 7 - 40 960,126
Machinery and equipment 5 - 10 398,247
Cylinders 5 - 10 1,988,054
Furniture and fixtures 5 - 10 174,322
Vehicles 3 - 7 530,035
Computers 5
493,903
_________
$4,826,794
Less accumulated depreciation 3,396,360
_________
PLANT AND EQUIPMENT, net $1,430,434
=========
<PAGE>
<PAGE> 21
RANDALL-GRAW COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
MARCH 31, 1996
NOTE 5 - Other Long-Term Assets
Other long-term assets include:
Organizational costs $ 1,100
Notes receivable 10,692
______
TOTAL $11,792
======
NOTE 6 - Accrued Expenses and Other Current Liabilities
Accrued expenses include:
Cylinder deposits $ 612,608
Payroll taxes 18,150
Profit sharing 56,439
Property taxes 53,863
Sales taxes 31,947
Vacation 76,759
_______
TOTAL $ 849,766
=======
NOTE 7 - Profit Sharing Plans
The Company has two profit sharing plans covering most full-time employees who
have completed one year of service with the Company. Contributions to the
plans were $205,099 in 1996.
NOTE 8 - Other Income
Other income includes:
Net gain on sale of assets $ 5,600
Miscellaneous income 8,199
______
TOTAL $13,799
======
NOTE 9 - Interest Income, Net
Interest income, net, consists of:
Interest expense $ (676)
Interest and finance charge income 69,689
______
TOTAL $69,013
======
NOTE 10 - Major Customer
Sales to The Trane Company constituted approximately 12 percent of 1996 sales.
<PAGE>
<PAGE> 22
RANDALL-GRAW COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
MARCH 31, 1996
NOTE 11 - Leases
The Company leases gas cylinders primarily from its welding gas supplier on a
monthly basis. Cylinder lease expense for 1996 was $90,700. The Company also
leased two vehicles under operating leases until March of 1996. Rental
expense under these leases was $14,600 in 1996.
NOTE 12 - Commitments
The Company also has established a $250,000 line of credit with Norwest Bank -
La Crosse to meet short-term cash requirements. At March 31, 1996, the line
of credit was terminated by the Company.
NOTE 13 - Related Party Transactions
The Company leased real estate from the sole stockholder until March of 1996.
Rent expense on these properties was $36,000 for the year ended March 31,
1996. The Company also leased cylinders from the sole stockholder and certain
employees until March of 1996. Rent expense on these leases was $18,186 for
the year ended March 31, 1996.
NOTE 14 - Subsequent Event
In April 1996, the Company's stockholders entered into an agreement to sell
the assets of the Company to Tri-State Airgas, Inc., a Delaware corporation
and subsidiary of U.S. Airgas, Inc., a wholly-owned subsidiary of Airgas,
Inc., a Delaware corporation. It is anticipated that the Company will incur a
built-in gains tax due to the sale of assets.
<PAGE>
<PAGE> 23
WELDERS SUPPLY, INC.
Financial Statements
December 31, 1995
(With Independent Auditors' Report Thereon)<PAGE>
<PAGE> 24
Independent Auditors' Report
___________________________
The Board of Directors
Welders Supply, Inc.:
We have audited the accompanying balance sheet of Welders Supply, Inc. as
of December 31, 1995, and the related statements of earnings, stockholders'
equity, and cash flows for the year 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 Welders Supply,
Inc. as of December 31, 1995, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Nashville, Tennessee
June 5, 1996
<PAGE> 25
WELDERS SUPPLY, INC.
Balance Sheet
December 31, 1995
Assets
______
Current assets:
Cash and cash equivalents $ 318,037
Trade accounts receivable 1,067,363
Inventories (note 2) 980,174
Prepaid expenses 19,385
State income taxes receivable 1,838
_________
Total current assets 2,386,797
Property and equipment, net (note 3) 2,445,040
Cash value of life insurance 55,734
Deposits 3,048
_________
Total assets $4,890,619
=========
Liabilities and Stockholders' Equity
____________________________________
Current liabilities:
Note payable to bank (note 4) $ 189,000
Current portion of long-term debt (note 5) 2,407
Current portion of capital lease obligation (note 6) 12,287
Trade accounts payable and accrued expenses 337,559
Accrued compensation 117,934
_________
Total current liabilities 659,187
Long-term debt, excluding current installments (note 5) 11,312
Capital lease obligation, excluding current installments (note 6) 22,371
_________
Total liabilities 692,870
Stockholders' equity:
Common stock, no par value, authorized 3,000 shares,
2,337 shares issued and outstanding 41,600
Retained earnings 4,156,149
_________
Total stockholders' equity 4,197,749
_________
Commitments and contingencies (notes 6, 7, and 8)
Total liabilities and stockholders' equity $4,890,619
=========
See accompanying notes to financial statements.
<PAGE> 26
WELDERS SUPPLY, INC.
Statement of Earnings
Year ended December 31, 1995
Net sales $10,659,080
Cost of sales 6,675,394
_________
Gross profit 3,983,686
Selling, general and administrative expenses 3,636,452
_________
Earnings from operations 347,234
Other income (expense):
Interest income 18,724
Interest expense (25,648)
Miscellaneous income 144,282
_________
Earnings before state income taxes 484,592
State income tax expense 5,295
_________
Net earnings $ 479,297
=========
See accompanying notes to financial statements.
<PAGE> 27
WELDERS SUPPLY, INC.
Statement of Stockholders' Equity
Year ended December 31, 1995
Common Stock Retained
Shares Amount Earnings Total
______ _______ ________ _____
Balance at December 31, 1994 2,337 $ 41,600 4,092,437 4,134,037
Net earnings - - 479,297 479,297
Dividends - - (415,585) (415,585)
_____ ______ _________ _________
Balance at December 31, 1995 2,337 $ 41,600 4,156,149 4,197,749
===== ====== ========= =========
See accompanying notes to financial statements.
<PAGE> 28
WELDERS SUPPLY, INC.
Statement of Cash Flows
Year ended December 31, 1995
Cash flow from operating activities:
Net earnings $479,297
Adjustments to reconcile net earnings to cash provided by operating
activities:
Depreciation 428,491
Gain on sale of equipment (8,221)
Changes in assets and liabilities affecting cash flows:
Decrease in trade accounts receivable 214,529
Increase in inventories (80,529)
Decrease in prepaid expenses 4,269
Increase in state income taxes receivable (5,242)
Increase in cash value of life insurance (3,099)
Decrease in deposits 10,170
Decrease in trade accounts payable and accrued expenses (73,643)
Increase in accrued compensation 5,066
________
Net cash provided by operating activities 971,088
________
Cash flow from investing activities:
Additions to property and equipment (746,118)
Proceeds from sale of property and equipment 13,120
________
Net cash used by investing activities (732,998)
________
Cash flow from financing activities:
Increase in notes payable to bank, net 5,000
Proceeds from issuance of long-term debt 14,454
Principal payments on long-term debt (735)
Principal payments on capital lease obligations (10,014)
Dividends paid to stockholders (415,585)
________
Net cash used by financing activities (406,880)
________
Net decrease in cash and cash equivalents (168,790)
Cash and cash equivalents - beginning of year 486,827
________
Cash and cash equivalents - end of year $318,037
=======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 17,462
State income taxes 10,537
=======
See accompanying notes to financial statements.
<PAGE> 29
WELDERS SUPPLY, INC.
Notes to Financial Statements
December 31, 1995
(1) Summary of Significant Accounting Policies
_______________________________________
(a)Description of Business
______________________
The Company is engaged in the retail and wholesale sale of welding
supplies, industrial gases and specialty steels. The Company also
manufactures acetylene gas. The Company's products are sold through its sales
locations in Paducah and Hopkinsville, Kentucky, Evansville and Vincennes,
Indiana, and Clarksville, Tennessee. Two of the Company's principal customers
collectively represented eight percent of the Company's accounts receivable
and sales as of and for the year ended December 31, 1995.
(b)Cash and Cash Equivalents
________________________
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments with a maturity of three months or less to be
cash equivalents.
(c)Inventories
__________
Inventories are stated at the lower of cost or market. At December 31,
1995, 98% of the inventories are valued on the last-in, first-out (LIFO)
method, and 2% of the inventories are valued on the first-in, first-out (FIFO)
method.
(d)Property and Equipment
______________________
Property and equipment are stated at cost. It is the Company's policy
to provide depreciation using the rates and methods allowed for federal income
tax purposes which approximate the estimated useful lives of the respective
assets. The following is a summary of the useful lives over which property
and equipment are being depreciated:
Building and improvements 15-40 years
Cylinders 5-7 years
Pumping and warehouse equipment 5-7 years
Autos and trucks 5-7 years
Leasehold improvements 5-10 years
(e)Revenue Recognition
___________________
Sales of welding supplies, industrial gases, and specialty steels are
recorded upon shipment to the customer, and welding equipment rental income is
recorded ratably during the rental term. Retail sales are net of returns and
exclude sales tax.
(f)Advertising Costs
________________
The Company expenses advertising costs as incurred.
<PAGE> 30
WELDERS SUPPLY, INC.
Notes to Financial Statements
December 31, 1995
(g)Income Taxes
____________
The Company is an S corporation for federal income tax purposes.
Accordingly, earnings or losses and tax credits are passed through to the
stockholders of the Company and are the responsibility of the stockholders.
No provision for federal income taxes has been made for the year ended
December 31, 1995. Two of the states in which the Company operates do not
recognize S corporation status. The Company has recorded a provision for
state income taxes for these states. The actual tax rates approximates the
expected tax rates for those states in which the Company is subject to state
income tax.
(h)Use of Estimates
_______________
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(i)Fair Value of Financial Instruments
________________________________
The Company has adopted Statement of Financial Accounting Standards No.
107, Disclosures about Fair Value of Financial Instruments (FAS 107), which
requires disclosure of the fair values of most on-and-off balance sheet
financial instruments for which it is practicable to estimate that value. The
scope of FAS 107 excludes certain financial instruments such as trade
receivables and payables when the carrying value approximates the fair value,
employee benefit obligations, lease contracts, and all nonfinancial
instruments such as land, buildings, and equipment. The fair values of the
financial instruments are estimated based upon current market conditions and
quoted market prices for the same or similar instruments as of December 31,
1995. Book value approximates fair value for substantially all of the
Company's assets and liabilities which fall under the scope of FAS 107.
(2) Inventories
___________
Inventories at December 31, 1995 consisted of the following:
Merchandise purchased for resale $1,304,187
Acetylene gas 13,105
Raw materials 3,836
________
1,321,128
Less LIFO reserve (340,954)
________
Inventories, net $980,174
========
<PAGE> 31
WELDERS SUPPLY, INC.
Notes to Financial Statements
December 31, 1995
(3) Property and Equipment
______________________
A summary of property and equipment at December 31, 1995, is as follows:
Land $ 208,953
Buildings and improvements 1,720,124
Gas cylinders 3,058,961
Pumping and warehouse equipment 732,781
Autos and trucks 1,098,375
Office equipment 496,922
Equipment under capital lease 62,746
_________
7,378,862
Less accumulated depreciation (4,933,822)
_________
Property and equipment, net $2,445,040
=========
(4) Note Payable to Bank
____________________
Note payable to bank at December 31, 1995, consists of an unsecured line
of credit under which the Company may borrow at the prime rate of interest
(8.5% at December 31, 1995) up to $500,000. Interest payments are due monthly
and the principal was paid in full in June 1996, at which time the agreement
was terminated. At December 31, 1995, there was $189,000 outstanding under
the line of credit. The note payable to bank is guaranteed by the Company's
President.
(5) Long-Term Debt
_______________
Long-term debt at December 31 1995, consisted of an obligation under loan
and security agreement used for the purchase of equipment secured by certain
equipment. Monthly payments, including principal and interest of $303, are
due through September 1, 2000.
The long-term debt matures as follows:
December 31,
____________
1996 $ 2,407
1997 2,646
1998 2,908
1999 3,197
2000 2,561
_______
$ 13,719
=======
<PAGE> 32
WELDERS SUPPLY, INC.
Notes to Financial Statements
December 31, 1995
(6) Leases
______
The Company leases certain equipment under noncancelable operating and
capital leases. Equipment under capital lease had a book value of $12,550 at
December 31, 1995. In addition, the Company rents on a month-to-month basis
its Paducah and Hopkinsville, Kentucky offices, warehouse facilities, and
certain industrial cylinders from its principal stockholder and/or a related
corporation on terms which management believes are comparable to those which
could be obtained from unaffiliated third parties. Rent expense in 1995 was
$209,180, of which $145,895 was paid to related parties.
Future minimum lease payments under noncancelable leases as of December
31, 1995, are as follows:
Year ending Capital Operating
December 31, Leases Leases Total
____________ ______ ______ _____
1996 $ 18,200 4,273 22,473
1997 18,200 4,273 22,473
1998 7,000 - 7,000
_______ ______ ______
Total $ 43,400 8,546 51,946
====== ======
Less interest at 20.5% imputed rate 8,742
_______
Obligation under capital lease 34,658
Less current portion 12,287
_______
Capital lease obligation, long-term $22,371
=======
(7) Employee Benefit Plan
____________________
The Company sponsors a non-contributory profit-sharing retirement plan
which includes all employees 21 years of age or older who work a minimum of
1,000 hours a year and who have been employed by the Company for at least one
year. Operating expenses include amounts attributable to the plan of $198,440
in 1995.
(8) Subsequent Event
________________
Effective May 6, 1996, Airgas, Inc. acquired for cash and a non-negotiable
promissory note, certain assets and liabilities of the Company. This purchase
excludes certain real property which will be maintained by the majority
shareholder and leased to Airgas, Inc.
<PAGE>
<PAGE> 33
RUTLAND TOOL & SUPPLY COMPANY, INC.
FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 1995
AND INDEPENDENT AUDITORS' REPORT
<PAGE>
<PAGE> 34
INDEPENDENT AUDITORS' REPORT
To The Board of Directors
Rutland Tool & Supply Company, Inc.:
We have audited the accompanying balance sheet of Rutland Tool & Supply
Company, Inc. as of December 31, 1995 and the related statements of income,
shareholders' equity and cash flows for the year 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, such financial statements present fairly, in all material
respects, the financial position of the Rutland Tool & Supply Company, Inc. as
of December 31, 1995 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
June 3, 1996
<PAGE>
<PAGE> 35
RUTLAND TOOL & SUPPLY COMPANY, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1995
ASSETS
CURRENT ASSETS:
Cash $ 86,033
Trade accounts receivable, net of allowance for
doubtful accounts of $25,000 (Notes 4 and 6) 5,870,594
Related party receivables (Note 2) 446,611
Income tax refund receivable (Note 10) 225,000
Inventories, net of reserves for obsolescence of
$625,700 (Notes 4, 6 and 7) 16,540,728
Prepaid expenses 480,815
Net deferred tax asset (Note 10) 597,000
__________
Total current assets 24,276,781
PROPERTY AND EQUIPMENT, net (Notes 3, 4, 6 and 7) 1,948,718
OTHER ASSETS 70,737
_________
$26,266,236
==========
See accompanying notes to financial statements.
<PAGE>
<PAGE> 36
RUTLAND TOOL & SUPPLY COMPANY, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit (Note 4) $ 2,827,000
Accounts payable 2,942,287
Accrued expenses (Note 5) 2,055,251
Current portion of notes payable (Note 6) 434,640
Current portion of obligations under capital leases
(Note 7) 210,984
_________
Total current liabilities 8,470,162
NOTES PAYABLE, less current portion (Note 6) 1,336,326
OBLIGATIONS UNDER CAPITAL LEASES, less current portion
(Note 7) 190,737
SHAREHOLDER NOTE PAYABLE (Note 8) 1,583,670
COMMITMENTS (Note 7)
SHAREHOLDERS' EQUITY (Notes 9 and 12):
Preferred stock, $100 par value; 100,000 shares
authorized; 60,000 shares issued and outstanding 3,062,273
Common stock, no par value; 50,000 shares
authorized; 11,726 shares issued and outstanding 2,010,000
Retained earnings 9,613,068
_________
Total shareholders' equity 14,685,341
__________
$ 26,266,236
==========
See accompanying notes to financial statements.
<PAGE>
<PAGE> 37
RUTLAND TOOL & SUPPLY COMPANY, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
NET SALES $ 53,586,633
COST OF GOODS SOLD 32,242,808
__________
GROSS PROFIT 21,343,825
OPERATING EXPENSES:
Salaries and related expenses 8,210,240
General and administrative expenses 3,839,514
Selling expenses 2,818,147
Rent expense 1,189,839
Depreciation expense 527,408
__________
Total operating expenses 16,585,148
INCOME FROM OPERATIONS 4,758,677
OTHER INCOME (EXPENSE):
Bonuses (Note 9) (3,652,742)
Interest expense (Notes 6, 7 and 8) (427,306)
Other income 407,310
Net other income (expense) (3,672,738)
INCOME BEFORE INCOME TAX PROVISION 1,085,939
INCOME TAX PROVISION (Note 10) 446,000
_________
NET INCOME $ 639,939
=========
See accompanying notes to financial statements.
<PAGE>
<PAGE> 38
RUTLAND TOOL & SUPPLY COMPANY, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995
Total
Preferred stock Common stock Retained shareholders'
_______________ _____________ earnings equity
Shares Amount Shares Amount
BALANCE,
January 1, 1995 60,000 $3,062,273 10,000 $10,000 $9,018,487 $12,090,760
Stock bonus 1,726 2,000,000 2,000,000
Dividends declared
(Note 9) (45,358) (45,358)
Net income 639,939 639,939
________ ________
BALANCE,
December 31, 1995 60,000 $3,062,273 11,726 $2,010,000 $9,613,068 $14,685,341
====== ========= ====== ========= ========= ==========
See accompanying notes to financial statements.<PAGE>
<PAGE> 39
RUTLAND TOOL & SUPPLY COMPANY, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 639,939
Adjustments to reconcile net income to net cash
used in operating activities:
Compensation related to stock bonus 2,000,000
Depreciation expense 527,408
Deferred income taxes 178,000
Change in operating assets and liabilities:
Trade accounts receivable (681,364)
Income tax refund receivable (725,799)
Inventories (4,011,747)
Prepaid expenses (66,819)
Other assets (42,822)
Accounts payable 603,617
Accrued expenses 855,424
_________
Net cash used in operating activities (724,163)
CASH FLOWS FROM INVESTING ACTIVITIES -
Purchase of property and equipment (868,942)
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans to shareholder (273,764)
Proceeds from line of credit loan payable 4,535,000
Proceeds from notes payable 1,000,000
Payments on line of credit loan payable (3,363,000)
Payments on notes payable (282,386)
Payments on capital lease obligations (185,816)
Payment of common stock dividend declared in current year (42,298)
Payment of common stock dividend declared in prior year (2,222)
_________
Net cash provided by financing activities 1,385,514
_________
NET DECREASE IN CASH (207,591)
CASH, beginning of year 293,624
_________
CASH, end of year $ 86,033
=========
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 403,445
Income taxes paid $ 1,027,328
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING ACTIVITIES:
The Company had accrued $3,060 for common stock dividends at December 31,
1995.
The Company financed the purchase of $78,256 of fixed assets through capital
leases in 1995.
See accompanying notes to financial statements.<PAGE>
<PAGE> 40
RUTLAND TOOL & SUPPLY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Rutland Tool & Supply Company, Inc. (the Company) was
incorporated on May 5, 1959. The Company is engaged in the business of retail
and wholesale sales of machinery, supplies and related hardware. Wholesale
distributions are conducted under the dba name of Washington Wholesale Tools.
The Company's main warehouse and administrative offices are located in the
City of Industry, California. Warehouses and showrooms are also operated in
Santa Ana, California; San Jose, California; Ontario, California; Newark,
California; Canoga Park, California; Phoenix, Arizona; Houston, Texas;
Cleveland, Ohio; Chicago, Illinois; and Greenville, South Carolina.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Revenue Recognition - Revenue is recognized when merchandise is shipped to
a customer.
Concentration of Credit Risk - The Company sells its products primarily to
retailers and consumers. Credit is extended based on an evaluation of the
customer's financial condition, and collateral is generally not required.
Inventories - Inventories are stated at the lower of cost, determined on a
first-in, first-out basis, or market.
Property and Equipment - Property and equipment are stated at cost, net of
accumulated depreciation and amortization. Depreciation is computed using the
straight-line and declining balance methods over the estimated useful lives of
the related assets, generally ranging from five to seven years. Leasehold
improvements are amortized using the straight-line method over the lesser
of the term of the related lease or the useful life.
Income Taxes - Income taxes are recorded in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes.
This statement requires the recognition of deferred tax assets and liabilities
to reflect the future tax consequences of events that have been recognized in
the Company's financial statements or tax returns. Measurement of the
deferred items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting basis and tax basis of
the Company's assets and liabilities result in a deferred tax asset, SFAS No.
109 requires an evaluation of the probability of being able to realize the
future benefits indicated by such asset. A valuation allowance related to a
deferred tax asset is recorded when it is more likely than not that some
portion or all of the deferred tax asset will not be realized.
<PAGE>
<PAGE> 41
RUTLAND TOOL & SUPPLY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995 (Continued)
Fair Value of Financial Instruments - The Company's balance sheet
includes the following financial instruments: cash, trade accounts receivable,
related party receivables, line of credit and accounts payable. The Company
considers the carrying amounts for these financial instruments to
approximate fair value due to the relatively short period of time between
their origination and their expected realization. The carrying value of the
Company's notes payable and capital leases is considered to approximate fair
value based on the current borrowing rates offered to the Company. Based upon
the current borrowing rates available to the Company for similar terms and
maturities, the fair value of the shareholder note payable is approximately
$1,305,000.
2. RELATED PARTY RECEIVABLES
The Company has a note receivable from a shareholder of $446,611 at
December 31, 1995, which is included in related party receivables. The note
is an unsecured demand obligation and bears interest at the applicable federal
rate for short-term obligations (5% at December 31, 1995) and is compounded
semiannually. Interest on the loan is payable annually and amounted to
$12,766 for the year ended December 31, 1995.
3. PROPERTY AND EQUIPMENT
Property consists of the following at December 31, 1995:
Computer equipment $ 1,723,355
Furniture and equipment 1,391,687
Warehouse equipment 758,412
Transportation equipment 85,377
Leasehold improvements 689,634
_________
4,648,465
Less accumulated depreciation and amortization (2,699,747)
_________
Property and equipment, net $ 1,948,718
=========
4. LINE OF CREDIT
At December 31, 1995, the Company has a $3,500,000 line of credit
agreement with a bank which bears interest at the bank's reference rate (8.75%
at December 31, 1995) and expires on August 1, 1996. The line is
collateralized by the Company's trade receivables, inventories and equipment.
Borrowings under the line of credit were $2,827,000 at December 31, 1995.
The Company was in compliance with these covenants as of December 31, 1995.
<PAGE>
<PAGE> 42
RUTLAND TOOL & SUPPLY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995 (Continued)
5. ACCRUED EXPENSES
Accrued expenses consist of the following at December 31, 1995:
Accrued compensation and related expense $ 979,713
Accrued catalog expense 580,541
Accrued retirement plan contributions 75,000
Insurance contract and premiums payable 176,360
Sales tax payable 158,931
Interest payable 63,170
Other liabilities 21,536
_________
$ 2,055,251
=========
6. NOTES PAYABLE
Notes payable consists of the following at December 31, 1995:
Note payable to a bank, bearing interest at the
bank's reference rate (8.75% at December 31, 1995),
collateralized by trade receivables, inventories and
equipment; principal installments of $16,667 plus
interest, due monthly through November 1999 $ 783,333
Note payable to a bank, bearing interest at the bank's
reference rate (8.75% at December 31, 1995),
collateralized by trade receivables, inventories and
equipment; principal installments of $16,667 plus
interest, due monthly through September 2000 949,999
Note payable, bearing interest at 6.75% per annum,
principal installments of $3,010 plus interest,
due monthly through January 1997 37,634
_________
1,770,966
Less current portion of notes payable (434,640)
_________
$ 1,336,326
=========
<PAGE>
<PAGE> 43
RUTLAND TOOL & SUPPLY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995 (Continued)
Notes payable at December 31, 1995, matures as follows:
Year ending:
1996 $ 434,640
1997 402,993
1998 400,000
1999 383,334
2000 149,999
_________
$ 1,770,966
=========
Interest expense related to notes payable was $114,092 for the year ended
December 31, 1995.
7. COMMITMENTS
Leases - The Company leases certain facilities and office equipment under
noncancelable operating leases for a monthly rental of approximately $26,500.
The Company also leases four buildings under noncancelable operating leases
from a related party for an approximate monthly rental of $44,600. In
addition, the Company leases certain equipment under capital lease agreements.
Rent expense was approximately $853,000 for the year ended December 31, 1995,
of which $534,700 was paid to the related party.
A summary of lease commitments as of December 31, 1995 is as follows:
Capital Operating
lease leases
Year ending December 31:
1996 $ 235,846 $ 1,183,125
1997 156,310 1,192,860
1998 20,209 1,064,875
1999 20,210 525,506
2000 9,555 496,385
Thereafter 4,007,748
Total future minimum lease payments 442,130 $ 8,470,499
=========
Less amounts representing interest (40,409)
_______
Present value of future minimum lease payments 401,721
Less current portion (210,984)
_______
Capital lease obligation, net of current
portion $ 190,737
=======
<PAGE> 44
RUTLAND TOOL & SUPPLY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995 (Continued)
Assets financed under capital leases included in the accompanying balance
sheet as of December 31, 1995 are as follows:
Machinery and equipment $ 729,417
Less accumulated depreciation (330,716)
_______
$ 398,701
=======
Letters of Credit - The Company has an agreement with its bank to
facilitate the purchase of goods by issuing letters of credit to various
companies overseas. The letters of credit are collateralized by inventories.
At December 31, 1995, the Company had outstanding letters of credit of
approximately $379,000.
8. SHAREHOLDER NOTE PAYABLE
On September 30, 1993, the Company purchased 100% of the outstanding
common stock in Lorake, Inc. from a related party for $1,683,670. The Company
paid $100,000 in cash and issued two unsecured notes payable totaling
$1,583,670. The notes provide for quarterly interest-only payments of 5% per
annum. Interest expense amounted to $79,184 for the year ended December 31,
1995. The principal balance for both notes is due and payable on September
30, 2003.
9. SHAREHOLDERS' EQUITY
The Company has a phantom stock plan (the Phantom Plan) enabling, at the
discretion of the Board of Directors, the granting of stock units to certain
employees of the Company. The stock units are directly related to the book
value of the Company and vest upon the sale of all of the outstanding common
and preferred stock, assets of the Company or a merger of the Company.
In November 1995, the Board of Directors canceled the Phantom Plan and
approved a stock bonus under which holders of stock units under the Phantom
Plan, and certain other employees of the Company, were issued 1,726 shares of
common stock. Compensation expense of $2,000,000 was recorded at the date of
issuance based on the market value of the shares. In connection with this
stock bonus, the Company paid an additional $1,652,742 cash bonus. The
aggregate bonus of $3,652,742 is shown as a separate component within the
statement of income.
On November 30, 1995, the Board of Directors declared a cash dividend of
$4.44 per share to individuals holding shares for the entire period of January
1, 1995 through December 18, 1995. Additionally, individuals who became
shareholders of the Company between October 1, 1995 and November 20, 1995
received a cash dividend of $0.555 per share.
<PAGE> 45
RUTLAND TOOL & SUPPLY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995 (Continued)
10. INCOME TAXES
The provision for income taxes consists of the following at December 31,
1995:
Current:
Federal $ 184,000
State 84,000
_______
268,000
Deferred federal and state 178,000
_______
Income tax provision $ 446,000
=======
A reconciliation of the income tax provision compared to the federal
statutory rate of 35% for the year ended December 31, 1995 is as follows:
Income taxes at statutory rate $ 380,000
State income taxes, net of federal benefit 68,400
Other (2,400)
_______
Income tax provision $ 446,000
=======
Temporary differences which give rise to deferred tax assets and
liabilities at December 31, 1995 are as follows:
Deferred tax liabilities:
Accelerated depreciation $ (11,500)
Other (13,800)
Deferred tax assets:
Inventories 537,300
State taxes 42,800
Other 42,200
_______
$ 597,000
=======
<PAGE> 46
RUTLAND TOOL & SUPPLY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995 (Continued)
11. PROFIT SHARING PLAN
The Company has a defined contribution retirement plan to which the
Company may elect to make contributions at its discretion. The plan also
provides for the deferral of up to 15% of an employee's qualifying
compensation under Section 401(k) of the Internal Revenue Code. For the
year ended December 31, 1995, Company contributions to the retirement and
401(k) plans were $75,000 and $95,631, respectively.
12. SUBSEQUENT EVENT
In May 1996, the Company converted the 60,000 shares of its preferred
stock in exchange for shares of its common stock. As a result, 1,636 shares
of common stock were issued in exchange for the preferred stock.
<PAGE>
<PAGE>
<PAGE> 47
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated May 24, 1996 on the financial statements of Randall-Graw
Company, Inc. as of March 31, 1996 included in this Form 8-K of Airgas, Inc.,
into Airgas, Inc.'s previously filed Form S-3 Registration Statements File
Nos. 33-39325, 33-39433, 33-48388, 33-57893, 33-61301, 33-61899,
33-63201,33-64633 and 333-08113, and Form S-8 Registration Statements File
Nos. 33-21780, 33-25419, 33-33954, 33-64056, 33-64058, 33-64112 and 33-64114.
HAWKINS, ASH, BAPTIE & COMPANY
La Crosse, Wisconsin
October 16, 1996
<PAGE>
<PAGE>
<PAGE> 48
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
(Nos. 33-39325, 33-39433, 33-48388, 33-57893, 33-61301, 33-61899, 33-63201,
33-64633 and 333-08113) on Form S-3 and (Nos. 33-21780, 33-25419, 33-33954,
33-64056, 33-64058, 33-64112 and 33-64114) on Form S-8 of Airgas, Inc. of our
report dated June 5, 1996, with respect to the balance sheet of Welders Supply
Company, Inc. as of December 31, 1995 and the related statements of earnings,
stockholders' equity and cash flows for the year then ended, which report
appears in the Form 8-K of Airgas, Inc. dated October 16, 1996.
KPMG PEAT MARWICK LLP
Nashville, Tennessee
October 16, 1996
<PAGE>
<PAGE>
<PAGE> 49
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
33-39325, 33-39433, 33-48388, 33-57893, 33-61301, 33-61899, 33-63201, 33-64633
and 333-08113 of Airgas, Inc. on Form S-3 and Registration Statements Nos.
33-39325, 33-39433, 33-48388, 33-57893, 33-61301, 33-61899, 33-63201, 33-64633
and 333-08113 of Airgas, Inc. on Form S-8 of our report dated June 5, 1996 on
the financial statements of Rutland Tool & Supply, Inc. as of December 31,
1995, appearing in this Form 8-K of Airgas, Inc.
DELOITTE & TOUCHE LLP
Costa Mesa, California
October 16, 1996
<PAGE>
