<PAGE>
<PAGE> 1 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
Form 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File No. 1-9344
AIRGAS, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-0732648
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Radnor Corporate Center, Suite 550
100 Matsonford Road, Radnor, Pennsylvania 19087-4579
(Address of principal executive offices) (Zip Code)
(610) 687-5253
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12 (b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
______________________________________ _____________________
Common Stock, par value $.01 per share New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
_________ ________
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the 54,109,515 shares of voting stock held
by non-affiliates of the registrant on May 31, 1996 was $1,129.5 million. For
purposes of this calculation, only executive officers and directors were
deemed to be affiliates.
The number of shares of Common Stock outstanding as of May 31, 1996 was
64,297,662.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Proxy Statement for the Annual Meeting of Stockholders to
be held August 5, 1996 is partially incorporated by reference into Part III.
Those portions of the Proxy Statement included in response to Item 402(k) and
Item 402(l) of Regulation S-K are not incorporated by reference into Part III.
<PAGE> 2
AIRGAS, INC.
TABLE OF CONTENTS
PART I
ITEM PAGE NO.
_____ ________
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . .12
4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . .12
PART II
5. Market for the Company's Common Stock and Related Stockholder Matters . 13
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . 13
7. Management's Discussion and Analysis of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . 25
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 25
PART III
10. Directors and Executive Officers of the Company . . . . . . . . . . . . 25
11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . . 25
12. Security Ownership of Certain Beneficial Owners and Management. . . . . 25
13. Certain Relationships and Related Transactions. . . . . . . . . . . . . 25
PART IV
14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K . . . . 25
<PAGE> 3 PART I
ITEM 1. BUSINESS.
GENERAL
Airgas, Inc. ("Airgas" or the "Company") classifies its operations in two
business segments: distribution and manufacturing. Sales for Airgas were $838,
$688 and $519 million in 1996, 1995, and 1994, respectively. Distribution
sales represented 96% of total sales and 93% of the Company's operating income
in 1996. Financial information by business segment can be found in note 20 to
the Company's consolidated financial statements under Item 8. Financial
Statements and Supplemental Data.
The distribution business is conducted through approximately 520
locations in 38 states, Canada and Mexico. Principal products distributed
include: industrial, medical and specialty gases and a wide selection of
name-brand welding equipment, accessories and industrial protective equipment
("hardgoods"), including electrode holders, welding wire, cable lugs and
connectors, hard hats, welding helmets, hearing protectors, goggles, face
shields, safety glasses, welding machines and electrodes. In connection with
the distribution of gases, the Company rents industrial gas cylinders and bulk
storage tanks to its customers. Additionally, acetylene gas is manufactured
and sold as part of the Company's distribution business. Since its formation,
the Company's strategy has been to expand through the acquisition of
independent distributors. The Company believes that it is the largest
distributor of industrial, medical and specialty gases and related equipment
in North America.
Manufacturing operations include the production of carbon products,
calcium carbide and nitrous oxide.
THE DISTRIBUTION BUSINESS
Industry Background
The industrial gas distribution market is broad and includes customers
from most major industries. The Company sells nitrogen, oxygen, argon, helium,
acetylene, carbon dioxide, nitrous oxide, hydrogen and welding gases and a
variety of medical and specialty gases to a diverse customer base. Gases are
distributed and stored in industrial gas cylinders and bulk storage tanks.
Hardgoods sold through its distribution network include: protective equipment,
such as hard hats, welding helmets, goggles, face shields and protective
glasses; welding machines and welding consumables; and accessories, such as
electrodes, electrode holders and cable connectors.
The United States market for industrial gases is approximately $6.5
billion annually. Sales to major users of industrial gases that have the
capacity to accept large bulk shipments or pipeline deliveries are generally
serviced directly by industrial gas producers and account for approximately
$3.5 billion of such market. Historically, industrial gas producers have
focused on this segment of the market, which is capital intensive. The
remaining $3.0 billion of annual industrial gas sales are made to small bulk
users and cylinder gas customers. These small bulk users and cylinder gas
customers are also believed to purchase approximately $3.5 billion of
hardgoods annually. Small bulk users and cylinder gas customers are served by
a fragmented distribution system of approximately 1,000 distributors, the
majority of which are independently owned. The Company concentrates on the
small bulk, cylinder gas, welding and protective equipment segment of the
<PAGE> 4
market. This segment is less capital intensive, in part, because of the long
useful lives of the fixed assets , principally cylinders.
Company Strategy
Acquisition Program
Since May 1986, the Company has acquired over 210 distributors of
industrial gas and related equipment. These distributors are organized into
five operating divisions with approximately 520 locations in 38 states,
Canada and Mexico. The five operating divisions provide the Company with a
national distribution network that is unique to the industry.
The Company's principal business strategy is to continue to expand its
distribution network through a program of acquiring independent distributors.
The industrial gas distribution industry continues to undergo a consolidation
process which the Company believes will continue to present it with
opportunities to acquire industrial gas distributors. In April 1996, the
Company acquired IPCO Safety Products Company, a $55 million distributor of
industrial safety equipment and supplies, to form the basis for its Industrial
Distribution Division ("IDD"). IPCO utilizes a system of regional warehouses
and telemarketing centers. The Company's strategy is to acquire additional
industrial distribution companies with a focus on increasing same-store sales
of new industrial product lines through both the acquired businesses and its
existing distribution network.
The Company believes that its principal competitive advantages in
acquiring distributors are its extensive distribution network, its
well-organized acquisition program, flexibility in structuring acquisitions to
meet sellers' needs and ability to offer sellers and their employees a
continuing management role in a decentralized entrepreneurial environment.
In seeking to acquire distributors, the Company competes with industrial gas
producers and other independent distributors.
The Company has made investments in industrial gas operations in Poland
and India. At March 31, 1996, the total investment in these foreign
operations was less than 1% of total assets. The Company will continue to
evaluate foreign industrial gas opportunities, although its principal focus
remains on North American expansion.
The Company has financed distributor acquisitions primarily with
internally generated funds and debt. The Company has been able to obtain debt
financing due, in part, to its ability to generate cash flow from operating
activities and the long useful lives and relatively stable market values of
the fixed assets, principally cylinders.
Operating Policies
The Company believes that its operations are best managed at the local
level by entrepreneurial, incentive-driven executives with backgrounds
principally in the industrial gas industry. The president of each distribution
subsidiary is typically a former owner or key employee of the acquired
business or an experienced executive recruited by management. The continuity
afforded by retaining the key employees of an acquired business combined with
local management is essential because the Company's distribution business is
local in nature and is dependent upon satisfied repeat customers.
<PAGE> 5
Customer Base
The majority of the Company's gases are generally stored in bulk tanks at
the Company's cylinder fill plants and are pumped into cylinders for
distribution to customers or, in the case of bulk customers, in tanker trucks
or tube trailers for delivery into bulk tanks at the customer's business
location. The Company emphasizes sales to cylinder and small bulk gas
customers.
The distribution of industrial gases historically has been to customers
engaged in the business of welding and metal fabrication. In order to better
serve these customers, industrial gas distributors have traditionally sold
hardgood items through their distribution branch locations. As certain sectors
of the economy have grown, such as the electronics and chemicals industries,
and as new applications for gases have developed, the customer base of the gas
distribution business has broadened significantly to include businesses in
almost every major industry, from medical and high technology to consumer and
basic industries. For example, the food and beverage industry uses carbon
dioxide and nitrogen; the electronics industry uses oxygen, nitrogen, argon,
and hydrogen; the healthcare industry uses oxygen, nitrogen, and nitrous
oxide; and the chemical and fiber industries use nitrogen.
Specialty gases, which are used in numerous industries and in electronic
and laboratory applications, include rare gases, high- purity gases, and
blended multi-component gas mixtures. The Company helps service its specialty
gas customers through its 22 specialty gas mini-labs which operate in 17
states. The Company anticipates continuing growth in this product area. The
principal drivers for market growth include: (1) environmental regulations,
such as the Clean Air Act, water testing and pollution remediation and testing
and monitoring; (2) quality control services using in-line chromatography and
spectrography to analyze samples; and (3) the growth of environmental,
research and clinical laboratories.
The Company has also concentrated its efforts in the small bulk gas
market. The primary gases that the Company sells in bulk are liquid oxygen,
nitrogen, argon, and carbon dioxide, and gaseous hydrogen, helium and
nitrogen. The Company charges customers rent for the use of bulk tanks and
tube trailers which are placed on the customer's property The Company
believes there are growth opportunities in marketing to these small bulk
customers, which it can serve more effectively than industrial gas producers.
The Company has recently undertaken initiatives to further develop its
industrial gas customer base to selectively include customers which require
large volume supplies of gases, such as nitrogen. For these customers, the
Company will enter into a long-term supply contract and will construct an air
separation plant near the customer's facility or facilities. The Company has
entered into agreements with two customers and is constructing two air
separation plants which will begin production during fiscal 1998. In
addition, terms related to the agreements provide for additional sales of
cylinder gases and supplies.
The Company's same-store sales, a comparison of current period sales to
the prior period's sales, adjusted for acquisitions, has historically followed
the real gross domestic product annual growth rate as published by the
Commerce Department. Management believes the Company's broad customer base and
geographic diversity help to reduce the adverse effects of an economic
downturn on the Company. Also, management believes that the gas portion of
its distribution business is somewhat resistant to economic downturns due to
<PAGE> 6
the following factors: 1) gases frequently represent a fixed cost of
operations that do not necessarily decline with production levels; 2) gases
are required for maintenance and renovation activities which tend to increase
during an economic downturn; 3) industries less subject to the effects of an
economic downturn, such as the medical field, are major purchasers of gases;
and 4) gas purchases often represent a small portion of a typical user's
overall cost of operation and, therefore, do not typically represent a large
cost-cutting item. Management further believes that sales of certain lower
margin non-consumable hardgoods equipment, such as welding machines, are more
adversely impacted during a downturn in the economy and are typically the
fastest to rebound during an economic recovery.
Products
Gases distributed by the Company include oxygen, nitrogen, hydrogen,
argon, helium, acetylene, carbon dioxide, nitrous oxide and specialty gases.
In addition to gases, the Company distributes a wide selection of name-brand
hardgoods, including electrode holders, welding wire, cable lugs and
connectors, hard hats, welding helmets, hearing protectors, goggles, face
shields, safety glasses, welding machines and electrodes. Of the Company's
fiscal 1996 sales from distribution, approximately 51% represent sales of
gases and rentals of cylinders and bulk tanks, and 49% represent hardgood
sales.
The Company intends to strategically broaden its product line in order to
increase sales in existing locations and to take advantage of its distribution
network. Recent product line additions have included returnable containers,
specialty gases (such as refrigerants and sterilizing gases) and additional
hardgoods (such as industrial safety products and coatings). As discussed
above, the Company acquired IPCO in April 1996. The Company believes the
selective addition of complementary product offerings through its distribution
network and IDD will enable it to better serve its diverse, expanding customer
base.
Suppliers
The Company purchases industrial, medical and specialty gases pursuant to
requirements contracts from all four of the major producers of industrial
gases in the United States and three regional producers. The Company believes
that if a contractual arrangement with any supplier of gases were terminated,
it would be able to locate alternative sources of supply without significant
cost increases and with no disruption of service.
The Company purchases hardgoods from name-brand manufacturers and
suppliers. For certain products, the Company has negotiated favorable pricing
based on national purchasing arrangements and is reducing its investment in
hardgood inventories by consolidating vendors.
MANUFACTURING AND RELATED BUSINESSES
Nitrous Oxide
The Company produces nitrous oxide which is used in various medical and
commercial applications. Nitrous oxide is used as an anesthetic in the medical
and dental fields, as a propellant in the packaged food business and is
utilized in the manufacturing process of certain high technology electronic
industries. The Company's nitrous oxide manufacturing facilities are located
in Yazoo City, Mississippi and Donora, Pennsylvania.
<PAGE> 7
Carbon Products
The Company manufactures carbon electrode paste, carbon ramming paste
and electrically calcined anthracite ("ECA") at its manufacturing facility
located in Keokuk, Iowa. The Company is the nation's primary manufacturer of
carbon electrode paste which is used as a consumable electrode in the
production of special alloy steel, nickel and other metals. ECA is used as an
ingredient in carbon mixes used in the aluminum industry and as an additive in
the production of certain metals. Sales of electrode paste and ECA are
conducted through a marketing organization which owns more than five percent
of the Company's outstanding common stock (see Item 13. Certain Relationships
and Related Transactions).
Calcium Carbide
The Company is a partner with Elkem Metals Company ("Elkem") in a joint
venture (Elkem-American Carbide Company) which primarily sells calcium carbide
which is used in the production of acetylene gas. The Company and Elkem
receive certain fees, based on net sales, for acting as agents for the joint
venture. Additionally, as general manager of the joint venture, Elkem receives
a management fee based on net sales. The Company operates a manufacturing
facility in Pryor, Oklahoma which sells calcium carbide to the joint venture.
COMPETITION
Each of the major business areas in which the Company participates is
highly competitive. Some competitors are larger than the Company and have
greater resources.
The Company's industrial gas distribution operations compete with
independent distributors and vertically integrated gas producers such as Air
Products and Chemicals, Inc., Praxair, Inc., Liquid Air Corporation of
America, BOC Gases Group and others, all of which have distribution
operations. The Company also purchases industrial gases pursuant to
requirements contracts from all four of the above major producers of
industrial gases.
Competition in the distribution market is based on customer service,
prompt delivery, price, consistent product quality, attention to safety
procedures, and employee and customer training in the uses of gases and
hardgoods. The Company believes its decentralized system allows competitive
decisions to be made on the local level which results in reduced costs and/or
improved service. In addition, the Company's size allows it to realize
economies of scale in purchasing, training, marketing and information systems.
REGULATORY AND ENVIRONMENTAL MATTERS
The businesses of the Company's subsidiaries are subject to federal and
state laws and regulations adopted for the protection of the environment and
the health and safety of employees and users of the Company's products. The
Company has programs for the operation and design of its facilities to
achieve compliance with applicable environmental rules and regulations. The
Company believes that it is in compliance in all material respects with such
laws and regulations. Expenditures for environmental purposes during 1996
were not material.
<PAGE> 8
INSURANCE
The Company's policy is to obtain liability and property insurance
coverage that is currently available at what management determines to be a
fair and reasonable price. As of March 31, 1996, the Company had a liability
insurance limit of $51 million. The liability insurance is subject to per-
occurrence deductible amounts of $1 million for product liability, general
liability and workers' compensation claims, and approximately $500 thousand
for motor vehicle liability.
The nature of the Company's business may subject it to product and
general liability lawsuits. To the extent that the Company is subject to
claims which exceed its liability insurance coverages, such suits could have a
material adverse effect on the Company's financial position, results of
operations or liquidity. No such material lawsuits are pending against the
Company or any of its subsidiaries (see Item 3. Legal Proceedings).
EMPLOYEES
On March 31, 1996, the Company employed approximately 5,200 people of
whom approximately 7% were covered by collective bargaining agreements. The
Company believes it has good relations with its employees and has not
experienced a strike or work stoppage in the past nine years.
PATENTS, TRADEMARKS AND LICENSES
The Company holds trademark registrations for "Airgas", "Dyna-Switch" and
"Va-Weld", and a patent registration for the purification of acetonitrile.
The Company believes that its businesses as a whole are not materially
dependent upon any single patent, trademark or license.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are listed below:
Name Age Position
____ ___ ________
Peter McCausland (1) 46 Chairman of the Board and Chief
Executive Officer
Hermann Knieling 58 President and Chief Operating Officer
E. Pat Baker 56 Division President - Eastern Division
Alfred B. Crichton 48 Division President - Western Division
Kenneth A. Keeley 55 Division President - Northern Division
Ronald B. Rush 52 Division President - Southern Division
William A. Rice, Jr. 49 Division President -Industrial Distribution
and Purchasing
Britton H. Murdoch 38 Vice President - Finance and Chief
Financial Officer
Gordon L. Keen, Jr. 51 Vice President - Corporate Development
William E. Sanford 36 Executive Vice President - Sales and
Marketing
Thomas Mason 62 Senior Vice President
Scott M. Melman 39 Vice President - Chief Administrative Officer
Rudi G. Endres 52 Vice President - International
_____________
(1) Member of the Board of Directors
<PAGE> 9
Mr. McCausland has been a Director of the Company since June 1986, the
Chairman of the Board and Chief Executive Officer of the Company since May
1987, President from June 1986 to August 1988, and from April 1, 1993 to
November 30, 1995, and Chairman and Chief Executive Officer of US Airgas since
its organization in February 1982. From January 1982 until June 1990, Mr.
McCausland was a partner in the law firm of McCausland, Keen & Buckman,
Radnor, Pennsylvania, which provides legal services to the Company.
Mr. Knieling has been the President and Chief Operating Officer of the
Company since December 1, 1995. Mr. Knieling served as Division President -
Southern Division from April 1, 1995 to November 30, 1995 and as Division
President - Eastern Division from February 3, 1993 to March 1995. Mr.
Knieling served as a Regional Vice President from June 1990 to February 1993
and as President of Gulf States Airgas from June 1989 to February 1993. Mr.
Knieling owned and operated an industrial gas distributor which was sold to
the Company in 1989. Also, Mr. Knieling served in various capacities for
Hoechst AG during a period of 18 years, and, prior to his leaving Hoechst in
1982 was President and Chief Executive Officer of its subsidiary, MG Burdett
Gas Products Company.
Mr. Baker has been the Company's Division President - Eastern Division
since April 1, 1995. Mr. Baker served as a Regional Vice President from May
1991 to February 1993 and President of Southwest Airgas since the acquisition
of Southwest Airgas (formerly West Texas Welders Supply), in October 1988, to
March 1995. Prior to joining Airgas, Mr. Baker was President and owner of
West Texas Welders Supply from August 1981 to October 1988.
Mr. Crichton has been the Company's Division President - Western Division
since February 3, 1993. Mr. Crichton served as a Regional Vice President from
May 1991 to February 1993 and as President of Sierra Airgas since the
acquisition of Sierra Airgas (formerly Moore Bros.) in January 1987. Mr.
Crichton was employed by Union Carbide Industrial Gases (UCIG) from 1969
through 1986, and prior to joining Moore Bros., was President of a subsidiary
of UCIG.
Mr. Keeley has been the Company's Division President - Northern Division
since December 1, 1995. Mr. Keeley served as the Division President - Central
Division from February 3, 1993 to November 30, 1995, as a Regional Vice
President from April 1989 to February 1993 and as President of Michigan Airgas
from March 1984 to March 1989. Prior to 1984, Mr. Keeley owned and operated an
industrial gas distributor which was sold to the Company.
Mr. Rush has been the Company's Division President - Southern Division
since December 1, 1995. Mr. Rush served as President of Sooner Airgas from
June 1, 1991 to November 30, 1995 and as Vice President of Sales for Southwest
Airgas from September 1990 to May 31, 1991.
Mr. Rice has been the Company's Division President - Industrial
Distribution and Purchasing since April 1, 1995 and served as Vice President -
Purchasing from August 1, 1993 to March 1995. Until August 1993, Mr. Rice was
President of Virginia Welding Supply, which was acquired by the Company in
July 1992. Mr. Rice has over 20 years of industry experience and serves on
the boards of various companies.
Mr. Murdoch has been the Vice President - Finance and Chief Financial
Officer of the Company since June 1, 1990 and served as Vice President -
Corporate Development from September 1987 until May 1990. Mr. Murdoch served
as a Vice President of Philadelphia National Bank from 1983 to September 1987.
<PAGE> 10
Mr. Keen has been the Vice President - Corporate Development since
January 1, 1992. From January 1982 until December 1991, Mr. Keen was a partner
in the law firm of McCausland, Keen & Buckman, Radnor, Pennsylvania, which
provides legal services to the Company.
Mr. Sanford has been the Company's Executive Vice President since
December 1, 1995 and Vice President - Sales and Marketing since February
3, 1993. Mr. Sanford served as President of Cascade Airgas from March 1989
to February 1993. From May 1984 to February 1989 Mr. Sanford served as Vice
President -- Sales and Marketing for Midwest Carbide.
Mr. Mason has been Senior Vice President since December 1, 1995. Mr.
Mason served as Assistant to the Chairman from January 1993 to November 1995.
Prior to that, Mr. Mason served as Executive Vice President of the Company
from March 1990 until January 1993 and served as President from August 1988
until February 1990.
Mr. Melman has been Vice President - Chief Administrative Officer since
April 1, 1995. Mr. Melman served as Vice President - Corporate Controller
from August 1994 to March 1995 and Corporate Controller from August 1986 to
July 1994. Prior to joining Airgas, Mr. Melman was the Controller for
Integrated Circuit Systems, Inc. from November 1983 to July 1986, and prior to
joining Integrated Circuit Systems, Inc., was a Tax Manager for KPMG Peat
Marwick LLP.
Mr. Endres has been Vice President - International since January
1993. Mr. Endres served as Vice President - Marketing from July 1991 until
December 1992. From February 1987, Mr. Endres served as General Manager and
Vice President for the western region of Airgas. Prior to joining Airgas, Mr.
Endres served for 18 years in various positions nationally and internationally
for Messer Griesheim, a major producer of industrial gases headquartered in
Germany. His last position was Vice President for Specialty Gases and
Chemicals at MG Industries in Valley Forge, PA.
OTHER OFFICERS OF THE COMPANY OR ITS SUBSIDIARIES
Other officers of the Company are listed below, and include the following:
Ronald W. Beebe - Division Vice President - Eastern and Northern Division
Richard S. Brennan - Division Vice President - Western Division
Donald S. Carlino - Division Vice President - Manufacturing and Industrial
Distribution Division
Lee C. Cherry - Division Vice President - Southern Division
L. James Johnston - Division Vice President - Eastern Division
L. Jay Sullivan - Division Vice President - Southern Division
Todd R. Craun - General Counsel & Secretary
Jeffrey P. Cornwell - Assistant Vice President and Corporate Controller
Andrew R. Cichocki - Assistant Vice President, Corporate Development
Leslie J. Graff - Assistant Vice President, Corporate Development
James N. Borum - Assistant Treasurer and Director of Finance
Carey M. Verger - Assistant Vice President, Corporate Taxes
<PAGE> 11
Subsidiary Presidents
NAME SUBSIDIARY
_____ __________
Wendy D. Swift Airgas Canada
Geoffrey C. Pulford Airgas Ontario
Robert J. Finch Airgas Houston/Specialty Products
Robert B. Beasley Airgas Safety
David P. Engel Airgas Texas
Frank L. Middleton Bay Airgas
Dan L. Tatro Cascade Airgas
Jeff Allen Central States Airgas
Barry W. Himes Cryodyne Technologies
Richard W. Johnson Delta Airgas
Isaac C. Fortenberry Florida Airgas
Patrick M. Visintainer Gateway Airgas
Doug Olsen Great Lakes Airgas
Dale E. Hess Great Western Airgas
Henry B. Coker Gulf States Airgas
Michael J. Grebe IPCO Safety Products Company
David M. Duvall Jimmie Jones/Sooner Airgas
Edward A. Lewis, Jr. Keystone Airgas
Steven L. Clark Michigan Airgas
J. Robert Hilliard Mid America Airgas
John W. Smith Mid States Airgas
Ronald H. Scott Midwest Carbide Corp.
James B. Sparks Mountain Airgas
John Musselman Northeast (includes Connecticut Airgas, Empire
Airgas and Northeast Airgas)
Theodore D. Erkenbrack Northern Gases
Patricia E. Paddock Pacific Airgas
Ronald W. Savage Parsons Airgas
Zenon Kazmierczak Poligaz
Frank B. Sartain Post Airgas
Charles Leggett Potomac Airgas
Joseph P. Featherstone Red-D-Arc Limited
James McCarthy Sierra Airgas
John T. Winn, III Southeast Airgas
Mark A. Straka Southern California Airgas
Charles R. Atkerson Southwest Airgas
Noel E. Breedlove, Jr. Trinity Airgas
Richard B. Graw TriStates Airgas
David J. Bauer Virginia Welding
ITEM 2. PROPERTIES.
The Company has offices, manufacturing and distribution facilities in 38
states, Canada and Mexico. The principal executive offices of Airgas are
located in leased space in Radnor, Pennsylvania.
The Company's manufacturing segment produces carbon products at its
Keokuk, Iowa, facility; calcium carbide at its Pryor, Oklahoma, facility; and
nitrous oxide at its Donora, Pennsylvania and Yazoo City, Mississippi
facilities. Manufacturing facility utilization during 1996, based on market
demand, has ranged from 65% to 100% .
<PAGE> 12
The Keokuk and Pryor facilities are owned by the Company. The Donora
plant is located on property leased through the year 2006. The Yazoo City
property is owned by the Company; however, it will revert to the local
municipality if the plant terminates operations. The Keokuk, Pryor and Donora
facilities are pledged as collateral under Industrial Development Board
revenue bonds (see note 8 to the Company's consolidated financial statements
under Item 8).
The Company's distribution segment conducts business from its 520
locations in 38 states, Canada and Mexico. These locations are either owned
or are leased from third parties or from employees of the Company who were
previous owners of businesses acquired on terms consistent with commercial
rental rates prevailing in the surrounding rental market. Eighteen
distribution locations in 12 states have acetylene manufacturing plants. The
Company's acetylene plants operated at approximately 60 percent of capacity
during 1996.
The Company believes that its facilities are adequate for its present
needs and that its properties are generally in good condition, well maintained
and suitable for their intended use.
ITEM 3. LEGAL PROCEEDINGS.
The Company and its subsidiaries are parties to pending legal proceedings
arising out of their business operations. The proceedings involve claims for
personal injuries, breach of contract, product warranty and product design,
and claims involving employee relations and certain administrative
proceedings. Management does not believe that the eventual outcome of any
litigation to which the Company or its subsidiaries are parties would have a
material adverse effect on the consolidated financial position, results of
operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
<PAGE> 13
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is listed on the New York Stock Exchange
(ticker symbol: ARG). The following table sets forth, for each quarter during
the last two fiscal years, the high and low sales prices as reported by the
New York Stock Exchange.
High Low
---- ---
1996 Fiscal (1)
First Quarter $13.88 $12.50
Second Quarter 15.00 13.31
Third Quarter 16.63 15.69
Fourth Quarter 20.06 19.81
1995 Fiscal (1)
First Quarter $13.82 $10.32
Second Quarter 14.25 11.75
Third Quarter 14.94 10.25
Fourth Quarter 13.25 9.82
________________
(1) Adjusted to reflect a two-for-one stock split effective on April 15, 1996
(See note 9 to the Company's consolidated financial statements under
Item 8).
On May 31, 1996, there were approximately 11,000 holders of record of the
Company's Common Stock.
The present policy of the Company is to retain earnings to provide funds
for the operation and expansion of its business and not to pay cash
dividends on its Common Stock. Any payment of future dividends and the amounts
thereof will depend upon the Company's earnings, financial condition, loan
covenants, capital requirements and other factors deemed relevant by the Board
of Directors (see note 8 to the Company's consolidated financial statements).
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data for the Company is presented in the table below
and should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations included in Item 7 and the
Company's consolidated financial statements included in Item 8 herein.
<PAGE> 14
(amounts in thousands except per share data):
Years Ended March 31, (5)
___________________________________________
1996 1995 1994 1993 1992
____ ____ ____ ____ ____
Operating Results:
Net sales $838,144 $687,983 $519,349 $410,771 $351,491
Depreciation & amortization(2) 45,762 36,868 30,571 28,045 23,670
Operating income 92,985 72,600 48,667 34,367 26,316
Interest expense, net 24,862 17,625 12,486 11,403 12,838
Income taxes(1) 28,522 23,894 16,027 10,811 7,718
Net earnings 39,720 31,479 20,290 12,469 7,292
Earnings Per Share(3):
Primary:
Net earnings $ .60 $ .48 $ .31 $ .20 $ .14
Fully Diluted:
Net earnings $ .60 $ .48 $ .31 $ .19 $ .13
Balance Sheet Data:
Working capital $ 81,588 $ 54,084 $ 47,071 $ 40,253 $ 39,425
Total assets 883,642 645,637 514,897 399,477 338,218
Current portion of long-term
debt 12,179 11,780 10,304 9,923 10,026
Long-term debt 385,832 259,970 205,311 158,629 151,098
Other non-current liabilities 34,490 11,116 6,635 762 675
Stockholders' equity(4) 236,209 189,652 156,867 127,571 104,931
_______________
(1) The Company retroactively adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" as of April 1, 1992.
(2) Effective April 1, 1993, the Company changed its estimate of the useful
lives of its acetylene and high pressure cylinders from 20 to 30 years.
This change was made to better reflect the estimated periods during which
these assets will remain in service. The change had the effect of
reducing depreciation expense in 1994 by approximately $3.1 million and
increasing net earnings by $1.9 million or $.03 per share.
(3) See notes 3 and 9 to the Company's consolidated financial statements for
information regarding earnings per share calculations and adjustment for
the stock split effective April 15, 1996.
(4) The Company has not paid any dividends on its common stock.
(5) During the fiscal years 1992 through 1996, the Company acquired
121 distributors.
<PAGE> 15
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 7.
FINANCIAL REVIEW
OVERVIEW
The Company's financial results for the year ended March 31, 1996 reflect
substantial growth compared to 1995. Net sales of $838 million, net earnings
of $39.7 million and earnings per share of $.60 represent increases over 1995
of 22%, 26% and 25%, respectively. The Company also finished 1996 with a
record year for acquisitions by completing the acquisition of 42 distributors
with aggregate annual sales of approximately $186 million and forming six new
hubs. This follows 25 acquisitions in 1995 with aggregate annual sales of
approximately $108 million.
The Company intends to continue to actively participate in the
consolidation taking place in the fragmented industrial gas distribution
market by acquiring independent gas distributors. In seeking to acquire
distributors, the Company anticipates competition from industrial gas
producers and from certain other independent distributors. The Company
believes that it is well positioned to acquire distributors because of its
extensive distribution network, its well-organized acquisition program,
flexibility in structuring acquisitions to meet Sellers' needs and its ability
to offer sellers and their employees a continuing management role in a
decentralized entrepreneurial environment.
During 1996, same-store sales, a comparison of current period sales to
the prior period's sales, adjusted for acquisitions, increased 2% compared to
the prior year. The Company's same-store sales growth rate has historically
followed the real gross domestic product annual growth rate as published by
the U.S. Department of Commerce. Weaker economic conditions compared to the
prior year, combined with inclement weather, held down same-store sales growth
in 1996. Management believes its same-store sales growth is slightly
understated since it does not reflect the Company's decision to cease
unprofitable sales to certain customers and other sales lost during the
consolidation and integration of acquisitions.
Future same-store sales growth is primarily dependent on the economy and,
to a lesser extent, the Company's ability to expand markets for new and
existing products and to increase prices. Management believes the Company's
broad customer base and geographic diversity help to reduce the adverse
effects of an economic downturn on the Company. Also, management believes
that the gas portion of its distribution business is somewhat resistant to an
economic downturn since: 1) gases frequently represent a fixed cost of
operations that do not necessarily decline with production levels; 2) gases
are required for maintenance and renovation activities which tend to increase
during an economic downturn; 3) industries less subject to the effects of an
economic downturn are major purchasers of gases; and 4) gas purchases often
represent a small portion of typical user's overall cost of operation and,
therefore, do not typically represent a large cost-cutting item. Management
further believes that sales of certain lower margin non-consumable hardgoods
equipment, such as welding machines, are more likely to be adversely impacted
during a downturn in the economy and, conversely, are typically the fastest to
rebound during an economic recovery. The Company is cautiously optimistic
that the economy will improve during fiscal 1997.
<PAGE> 16
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Sales in 1996 related to gases and rent represent 51% or $408.7 million
of total distribution net sales. Bulk and specialty gas sales have increased
due to the success of gas marketing programs. In order to support and grow
its specialty gas business, the Company has established 22 specialty gas
mini-labs which benefit customers by providing them with certain specialty gas
products in their local market. In connection with its hardgoods business,
which accounted for 49% or $392.8 million of total distribution net sales, the
Company is focused on improving profitability by reducing its investment in
inventories through the consolidation of vendors, and the negotiation of
favorable pricing based on national purchasing arrangements.
The Company intends to strategically broaden its product line in order to
increase sales in existing locations and to take advantage of its distribution
network. Recent product line additions have included returnable containers,
specialty gases (such as refrigerants and sterilizing gases) and additional
hardgoods (such as industrial safety products and coatings). In April 1996,
the Company acquired IPCO Safety Products Company, a $55 million distributor
of industrial safety equipment and supplies which utilizes a system of
regional warehouses and telemarketing centers. The Company's strategy is to
acquire additional industrial distribution companies with a focus on
increasing same-store sales of new industrial product lines through both the
acquired businesses and its existing distribution network. The Company
believes the selective addition of complementary product offerings will enable
it to better serve its diverse, expanding customer base. Management believes
the acquisition of certain businesses during fiscal 1996 which have a higher
mix of lower margin hardgoods sales, as well as IPCO, will lower the Company's
distribution operating margins slightly during fiscal 1997, although
management anticipates that these acquisitions will be additive to earnings.
Excluding lower margin hardgoods businesses, management believes distribution
margins should improve during fiscal 1997.
The Company has recently undertaken initiatives to further develop its
industrial gas customer base to selectively include customers which require
large volume supplies of gases, such as nitrogen. For these customers, the
Company will enter into a long-term supply contract and will construct an air
separation plant near the customer's facility or facilities. The Company has
entered into agreements with two customers and is constructing two air
separation plants which will begin production during fiscal 1998. In
addition, terms related to the agreements provide for additional sales of
cylinder gases and supplies.
Airgas remains focused on cash flow growth. Historically, operations have
generated sufficient cash flow to finance the Company's operating requirements
while borrowings have been incurred largely to finance acquisitions. Over the
past three years, cash flow from operations has totaled approximately $230
million. This strong cash flow has helped fund the Company's investment in
acquisitions, excluding debt assumed, and capital expenditures which, for the
past three years totaled $333.3 million and $99.3 million, respectively.
At March 31, 1996, The Company had unused availability of $205.0 million
unsecured lines of credit. The Company's debt-to-equity ratio of 1.69 at
March 31, 1996 increased compared to the prior year's ratio of 1.43 primarily
as a result of acquisitions completed during 1996 combined with the purchase
of treasury stock.
<PAGE> 17
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS: 1996 COMPARED TO 1995
____________________________________________
Net sales increased 22% in 1996 compared to 1995:
<TABLE>
(in thousands)
<CAPTION> 1996 1995 Increase
____ ____ __________
<S> <C> <C> <C>
Distribution $801,552 $654,381 $147,171
Manufacturing 36,592 33,602 2,990
_______ _______ _______
$838,144 $687,983 $150,161
======= ======= =======
</TABLE>
For the year ended March 31, 1996, distribution sales increased
approximately $133 million resulting from the acquisition of 66 distributors
of industrial, medical and specialty gases and related equipment since April
1, 1994 and approximately $14 million from same-store sales growth. The
Company estimates that had all acquisitions during the year ended March 31,
1996 been consummated on April 1, 1995, distribution sales for the year ended
March 31, 1996 would have increased by an additional $100 million. The
increase in same-store sales of approximately 2% was the result of slightly
higher prices based on selected price increases to certain customers and
increased volume within its gas, rental and hardgoods businesses. During 1996,
the Company's same-store sales increased 3% in the first quarter, 2% in the
second and third quarters and 1% in the fourth quarter. Excluding the impact
of the inclement weather, the Company estimates same-store sales growth during
the fourth quarter would have been approximately 2%. The Company estimates
same-store sales based on a comparison of current period sales to the prior
period's sales, adjusted for acquisitions.
Sales for the Company's manufacturing operations increased 9% during the
year ended March 31, 1996 compared to the prior year, primarily as a result of
an increase in the volume of lower margin exports and increased demand for
carbon products and nitrous oxide.
The increase in distribution gross profit of $72.6 million over 1995 was
attributable to increases associated with acquisitions of $62.7 million and
same-store gross profit growth of $9.9 million. The majority of the $9.9
million same-store gross profit growth was derived from volume growth in gas
and increases in cylinder rent. Higher gas volumes were partially
attributable to the success of gas marketing programs, principally small bulk
and specialty gases. On a same-store basis, distribution gross margins
increased an estimated 0.3% compared to 1995 primarily due to improved rent
gross margins combined with slightly higher margins in gases and hardgoods.
Increased volumes of lower margin bulk gases partially offset the gas margin
improvements.
<PAGE> 18
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Selling, distribution and administrative expenses decreased as a
percentage of sales to 33.4% in 1996 compared to 34.3% in 1995. The decrease
was a result of acquisition consolidation efforts and lower operating costs,
such as a reduction in business insurance costs through improved claims
management and reduced incident rates. In addition, certain operating costs,
such as occupancy costs, are relatively fixed and do not increase
proportionately with the increase in same-store sales. Partially offsetting
these improvements were normal salary increases and slightly higher
distribution costs.
Operating income increased 28% in 1996 compared to 1995:
<TABLE>
(in thousands)
<CAPTION> 1996 1995 Increase
____ ____ __________
<S> <C> <C> <C>
Distribution $86,130 $66,521 $19,609
Manufacturing 6,855 6,079 776
______ ______ ______
$92,985 $72,600 $20,385
====== ====== ======
</TABLE>
Distribution operating income as a percentage of net distribution sales
increased to 10.7% for the year ended March 31, 1996 compared to 10.2% in
1995. The increase in distribution operating income in 1996 was the result of
the increase in gross profits from higher same-store sales, improved gross
profit margins and operating income provided by acquisitions.
Manufacturing operating income increased $776 thousand in 1996 compared
to 1995 due to strong demand for carbon products and nitrous oxide, and lower
production and delivery costs related to calcium carbide and nitrous oxide
business, partially offset by an increase in lower margin sales of carbon
products.
Interest expense, net, increased $7.2 million in 1996 compared to 1995
primarily as a result of the increase in average outstanding debt associated
with the acquisition of industrial gas distributors since April 1, 1994,
interest costs associated with the repurchase of Company common stock and
slightly higher interest rates, partially offset by an increase in positive
cash flow. As discussed in "Liquidity and Capital Resources" below, the
Company has hedged floating interest rates under certain borrowings with
interest rate swap agreements.
Income tax expense represented 41.8% of pre-tax earnings in 1996 compared
to 43.2% in 1995. The decrease in the effective income tax rate was primarily
due to an increase in pre-tax earnings relative to permanent differences and
as a result of the implementation of certain tax planning strategies.
<PAGE> 19
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Net earnings increased 26% to $39.7 million or $.60 per share in 1996
from $31.5 million or $.48 per share in 1995. After tax cash flow (net
earnings plus depreciation, amortization and deferred income taxes) increased
21% to $96.4 million from $79.9 million in 1995. After tax cash flow is an
important measurement of the Company's ability to repay debt through
operations and provides the Company with the ability to pursue investment
alternatives such as acquisitions, joint ventures and the repurchase of
Company stock.
RESULTS OF OPERATIONS: 1995 COMPARED TO 1994
Net sales increased 32% in 1995 compared to 1994:
<TABLE>
(in thousands)
<CAPTION> 1995 1994 Increase
____ ____ __________
<S> <C> <C> <C>
Distribution $654,381 $486,836 $167,545
Manufacturing 33,602 32,513 1,089
_______ _______ _______
$687,983 $519,349 $168,634
======= ======= =======
</TABLE>
In 1995, distribution sales increased approximately $136 million
resulting from the acquisition of 40 industrial gas distributors since April
1, 1993 and approximately $32 million from same-store sales. Based on
unaudited historical pro forma data, the Company estimates that had all 1995
acquisitions been consummated on April 1, 1994, distribution sales for 1995
would have been approximately $49 million higher. The increase in same-store
sales of approximately 5% is primarily the result of increased volume of
hardgoods sales and increases in gas and rental businesses. The Company
estimates same-store sales based on a comparison of current period sales to
the prior period's sales, adjusted for acquisitions. Hardgoods and gas
volumes have primarily increased as a result of the general improvement in the
economy and certain gas marketing programs. Same-store sales have also
increased slightly as a result of price increases initiated during
1995 and 1994 The Company believes that sales of hardgoods are adversely
impacted during a recession, and conversely, are typically the fastest to
rebound during an economic recovery.
Sales for the Company's manufacturing operations increased slightly
compared to 1994 primarily as a result of an increase in the volume of lower
margin products.
Compared to 1994, distribution gross profit increases associated with
acquisitions totaled an estimated $69 million. Gross profits associated with
distribution same-store sales growth are estimated to total $16 million. The
same-store gross profit growth is attributable to increased hardgoods volumes
combined with improved gross margins resulting from the Company's national
<PAGE> 20
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
purchasing arrangements, success of gas marketing programs and improved gas
and rental gross margins due to price increases to customers. On a same-store
basis, considering the impact of the change in the Company's sales mix
slightly towards lower margin hardgoods sales, distribution gross margins
increased an estimated .6% compared to 1994.
Selling, distribution and administrative expenses as a percentage of
sales decreased to 34.3% compared to 34.8% in 1994. The decrease is a result
of acquisition consolidation efforts and from controlling
certain operating costs, such as business insurance through improved claims
management and reduced incident rates. Through improved billing and
collection efforts, the Company has also reduced its bad debt expense and
lowered its accounts receivable days sales outstanding to 44 days compared to
49 days at March 31, 1994. In addition, certain operating costs, such as
occupancy costs, are relatively fixed even though the Company's same-store
sales increased over 1994. Partially offsetting these improvements were
normal salary increases.
Operating income increased 49% in 1995 compared to 1994:
<TABLE>
(in thousands)
<CAPTION>
1995 1994 Increase
(Decrease)
____ ____ __________
<S> <C> <C> <C>
Distribution $66,521 $42,399 $24,122
Manufacturing 6,079 6,268 (189)
______ ______ ______
$72,600 $48,667 $23,933
====== ====== ======
</TABLE>
Distribution operating income as a percentage of net distribution sales
increased to 10.2% compared to 8.7% in 1994. The increase in distribution
operating income in 1995 was a result of the increase in gross profits from
higher same-store sales, operating income provided by acquisitions and
improved gross profit margins.
Manufacturing operating income decreased $189 thousand compared to the
prior year due to a product shift towards lower margin export sales of carbon
products, slightly lower profits from the sale of calcium carbide combined
with higher raw material costs, principally ammonium nitrate, for the
Company's nitrous oxide plants.
Interest expense, net, increased $5.1 million compared to 1994 primarily
as a result of the increase in average outstanding debt associated with the
acquisition of industrial gas distributors since April 1, 1993 combined with
slightly higher interest rates. As discussed in "Liquidity and Capital
<PAGE> 21
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Resources" below, the Company has hedged floating interest rates under certain
borrowings with interest rate swap agreements.
Income tax expense represented 43.2% of pre-tax earnings in 1995 compared
to 44.1% in 1994. The decrease in the effective income tax rate is primarily
due to an increase in pre-tax earnings relative to permanent differences.
Net earnings increased 55% to $31.5 million or $.48 per share in 1995
from $20.3 million or $.31 per share in 1994. After tax cash flow (net
earnings plus depreciation, amortization and deferred income taxes) increased
35% to $79.9 million from $59.1 million in 1994. After tax cash flow is an
important measurement of the Company's ability to repay debt through
operations and provides the Company with the ability to pursue investment
alternatives such as acquisitions and the repurchase of Company stock.
LIQUIDITY AND CAPITAL RESOURCES
_______________________________
The Company has primarily financed its operations, capital expenditures,
stock repurchases and acquisitions with borrowings, funds provided by
operating activities and the issuance of common stock.
Cash flows from operating activities totaled $92 million in 1996.
Depreciation and amortization represent $45.8 million of cash flow from
operating activities. Deferred income taxes of $10.9 million principally
resulted from temporary differences originating from property and equipment.
Working capital components of cash flow increased $5.7 million as a result of
an increase in accounts receivable, inventories, prepaid expenses and other
current assets and a decrease in trade accounts payable, offset by an increase
in accrued expenses and other current liabilities. Days-sales outstanding and
days-supply of inventory levels have increased slightly from March 31, 1995
levels, principally due to fiscal 1996 acquisitions. Accounts payable
decreased $1.5 million due to payments to vendors. Other current liabilities
have increased due to increases in accrued interest, income taxes and real
estate taxes.
Cash used by investing activities totaled $190 million in 1996, which was
primarily comprised of $41.2 million for capital expenditures and $153.6
million related to acquisitions.
The Company's use of cash for capital expenditures was partially
attributable to the continued assimilation of acquisitions which required the
Company to make capital expenditures in areas such as combining cylinder fill
plants, improving truck fleets and purchasing cylinders in order to return
cylinders rented from third parties.
Additionally, capital expenditures include the purchase of cylinders and
bulk tanks necessary to facilitate gas sales growth. The Company estimates
that its maintenance capital expenditures are approximately 2% of net sales.
The Company considers the replacement of existing capital assets to be
maintenance capital expenditures. In addition, during 1996, the Company
entered into operating leases for certain transportation equipment, cylinders
and bulk tanks. Had the Company acquired such equipment, capital expenditures
would have been increased by $8.3 million.
<PAGE> 22
AIRGAS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Financing activities provided cash of $97.9 million in 1996 with total
debt outstanding increasing by $126.3 million from March 31, 1995. Debt
incurred in connection with the acquisition of distribution businesses,
including seller notes and assumed notes, totaled $182.4 million.
The Company's Board has approved a four million share common stock
repurchase program. Through March 31, 1996, the Company purchased 2.4 million
shares of the Company's common stock at an aggregate cost of $28.9 million.
The impact of the stock repurchases on earnings per share was immaterial for
1996. The future purchase of common stock is dependent on prevailing market
conditions.
The Company's primary source of borrowing is a $375 million unsecured
revolving credit facility with various commercial banks which matures on
August 10, 2000. At March 31, 1996, the Company had approximately $171
million in borrowings under the facility and approximately $52 million
committed under letters of credit, resulting in unused availability under the
facility of approximately $152 million.
On February 5, 1996, the Company entered into a new $100 million
unsecured revolving credit facility with a group of commercial banks which
matures on July 1, 1997. The facility is intended to provide additional
availability to finance the Company's ongoing acquisition program. The terms
and conditions of this facility are similar to the Company's existing $375
million facility. At March 31, 1996, the Company had $100 million outstanding
under the facility. The Company intends to terminate its $100 million
facility in conjunction with an anticipated increase in the Company's $375
million revolving credit facility in September 1996, which will have terms and
conditions similar to its existing $375 million facility.
The Company has a CDN $50 million Canadian credit facility ($37 million
U.S.) with various commercial banks which matures on November 14, 1998. At
March 31, 1996, the Company had approximately CDN $33 million ($24 million
U.S.) in borrowings outstanding under the facility, resulting in unused
availability under the facility of approximately CDN $17 million ($13 million
U.S.).
The Company also has unsecured line of credit agreements with various
commercial banks. At March 31, 1996, these agreements totaled $60 million,
under which the Company had aggregate outstanding borrowings of $19 million.
At March 31, 1996, the effective interest rate related to outstanding
borrowings under all credit lines was approximately 5.79%. The Company's loan
agreements contain covenants which include the maintenance of a minimum equity
level, maintenance of certain financial ratios, restrictions on additional
borrowings and limitations on dividends.
In managing interest rate exposure, principally under the Company's
floating rate revolving credit facilities, the Company has entered into
18 interest rate swap agreements during the period from June 1992
through March 31, 1996. The swap agreements are with major financial
institutions and aggregate $224 million in notional principal amount at
March 31, 1996. Approximately $205 million of the notional principal
<PAGE> 23
amount of the swap agreements require fixed interest payments based on an
average effective rate of 6.53% for remaining periods ranging between 1 and 8
years. Two swap agreements require floating rates ($19.5 million notional
amount at 5.53% at March 31, 1996). Under the terms of seven of the swap
agreements, the Company has elected to receive the discounted value of the
counterparty's interest payments upfront. At March 31, 1996, approximately
$23 million of such payments were included in other liabilities. The Company
continually monitors its positions and the credit ratings of its
counterparties, and does not anticipate nonperformance by the counterparties.
The Company will continue to look for appropriate acquisitions and
expects to fund such acquisitions, future capital expenditure requirements and
commitments related to foreign investments primarily through the use of cash
flow from operations, debt, common stock for certain stock acquisition
candidates and other available sources. Other funding sources evaluated by
the Company from time-to-time include: leasing and the sale of public debt,
preferred stock and common stock. Subsequent to March 31, 1996 and through
June 5, 1996, the Company has acquired ten distribution businesses with annual
sales of approximately $105 million for an aggregate purchase price of
approximately $96 million.
The Company does not currently pay dividends on its common stock.
OTHER
Environmental
The Company believes that it is in compliance in all material respects
with applicable environmental laws and regulations. In conducting due
diligence for prospective acquisitions, the Company completes Phase I
environmental studies. Expenditures for environmental purposes during 1996
were not material.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables.
Concentrations of credit risk are limited due to the Company's large number of
customers and their dispersion across many industries. Credit terms granted
to customers are generally net 30 days.
Effects of Inflation
Historically, the Company has been able to increase the sales price of
products in response to market demand, cost of products, competitive factors
and other industry trends. Consequently, the impacts of inflation have not
had a materially adverse impact on the Company's financial position, results
of operations, or liquidity.
New Accounting Pronouncements
In the first quarter of fiscal 1997, the Company will adopt SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of." The statement requires the recognition of an impairment
loss for an asset held for use when the estimate of undiscounted future cash
flows expected to be generated by the asset is less than its carrying amount.
Measurement of the impairment loss is based on fair value of the asset.
<PAGE> 24
Management believes that the adoption of this statement will not have a
material impact on earnings, financial condition or liquidity of the Company.
The Company accounts for stock options according to the provisions of
Accounting Principles Board Opinion 25 (APB 25), "Accounting for Stock Issued
to Employees." In October 1995, the Financial Accounting Standards Board
issued FASB Statement No. 123, "Accounting for Stock-Based Compensation." The
new standard defines a fair value method of accounting for stock options and
similar equity instruments. Companies may elect to continue to use existing
accounting rules or adopt the fair value method for expense recognition.
Companies that elect to continue to use existing accounting rules will be
required to provide pro-forma disclosures of net income and earnings per share
assuming the fair value method was adopted. The Company will elect to
continue to use existing accounting rules. The new statement is effective for
fiscal years beginning after December 15, 1995. Accordingly, the Company will
adopt the provisions in the first quarter of fiscal 1997 and present the
required pro-forma disclosure provisions for its fiscal year ending March 31,
1997. As the Company will continue to account for stock-based compensation
using the intrinsic value method, this statement will not have a material
impact on earnings, financial condition or liquidity of the Company.
Forward-Looking Statements
This report contains forward-looking statements. In connection with the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, there are certain important factors that could cause the Company's
actual results to differ materially from those included in such forward-
looking statements. Some of the important factors which could cause actual
results to differ materially from those projected include, but are not limited
to: the Company's ability to continue to identify and complete strategic
acquisitions to enter new markets and expand existing business; continued
availability of financing to provide additional sources of funding for future
acquisitions, capital expenditure requirements and foreign investments; the
effects of competition from independent distributors and vertically integrated
gas producers on products and pricing, growth and acceptance of new product
lines through the Company's sales and marketing programs; changes in product
prices from gas producers and name-brand manufacturers and suppliers of
hardgoods; uncertainties regarding accidents or litigation which may arise in
the ordinary course of business; and the effects of, and changes in the
economy, monetary and fiscal policies, laws and regulations, inflation and
monetary fluctuations and fluctuations in interest rates, both on a national
and international basis.
<PAGE> 25
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements and financial statement schedule of
the Company are set forth at pages F-1 to F-29 of the report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The biographical information relating to the Company's directors
appearing in the Proxy Statement relating to the Company's 1996 Annual Meeting
of Stockholders is incorporated herein by reference. Biographical information
relating to the Company's executive officers is set forth in Item 1 of Part I
of this Report.
ITEM 11. EXECUTIVE COMPENSATION.
The information under "Board of Directors and Committees" and "Certain
Transactions" appearing in the Proxy Statement relating to the Company's 1996
Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is set forth in the section headed
"Security Ownership" appearing in the Company's Proxy Statement relating to
the Company's 1996 Annual Meeting of Stockholders and such information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information under "Certain Transactions" appearing in the Proxy
Statement relating to the Company's 1996 Annual Meeting of Stockholders is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) and (2):
The response to this portion of Item 14 is submitted as a separate section of
this report beginning on page F-1. All other schedules have been omitted as
inapplicable, or not required, or because the required information is included
in the Consolidated Financial Statements or notes thereto.
(a)(3) Exhibits. The exhibits required to be filed as part of this annual
report on Form 10-K are listed in the attached Index to Exhibits.
(b) Reports on Form 8-K.
On March 27, 1996, the Company filed a current report on Form 8-K to
announce, under Item 5, that its Board of Directors approved a two-for-
one split of its common stock, issuable on April 15, 1996, to
stockholders of record on April 1, 1996.
<PAGE> 26
(c) Index to Exhibits and Exhibits filed as a part of this report.
3.1 Amended and Restated Certificate of Incorporation of Airgas, Inc. dated
as of August 7, 1995 (Incorporated by reference to Exhibit 3.1 to the
Company's September 30, 1995 Quarterly Report on Form 10-Q).
3.2 Airgas, Inc. By-Laws Amended and Restated November 29, 1994.
4.1 Seventh Amended and Restated Loan Agreement dated August 10, 1995 between
Airgas, Inc. and certain banks and NationsBank of North Carolina, N.A.
($375,000,000 credit facility). (Incorporated by reference to Exhibit
4.1 to the Company's September 30, 1995 Quarterly Report on Form 10-Q).
4.3 Loan Agreement dated February 5, 1996 between Airgas, Inc. and certain
banks and Nationsbank of North Carolina, N.A. ($100,000,000 credit
facility).
There are no other instruments with respect to long-term debt of the
Company that involve indebtedness or securities authorized thereunder
exceeding 10 percent of the total assets of the Company and its
subsidiaries on a consolidated basis. The Company agrees to file a copy
of any instrument or agreement defining the rights of holders of long-
term debt of the Company upon request of the Securities and Exchange
Commission.
* 10.1 Agreement between the Company and Peter McCausland, dated January 8,
1991, and form of Common Stock Purchase Warrant. (Incorporated by
reference to Exhibit 10.16 to the Company's March 31, 1992 report on
Form 10-K).
* 10.2 Common Stock Purchase Warrant held by Britton H. Murdoch and certain
other employees and other persons (Pursuant to Instruction 2 to Item
601 of Regulation S-K, the Common Stock Purchase Warrants, which are
substantially identical in all material respects except as to the
parties thereto, held by certain employees, including the following
Executive Officers and a Director, and other persons are not being
filed: Hermann Knieling, Kenneth A. Keeley, Alfred B. Crichton, Gordon
L. Keen, Jr., William Sanford, Scott Melman and Ronald Beebe and a
Director, Merril Stott). (Incorporated by reference to Exhibit 10.17
to the Company's March 31, 1993 report on Form 10-K).
* 10.3 Amended and Restated 1984 Stock Option Plan, as amended effective May
22, 1995 (Incorporated by reference to Exhibit 10.1 to the Company's
September 30, 1995 Quarterly Report on Form 10-Q).
* 10.4 1989 Non-Qualified Stock Option Plan for Directors (Non-Employees), as
amended. (Incorporated by reference to Exhibit 10.7 to the Company's
March 31, 1992 report on Form 10-K).
* 10.5 Amendment to the 1989 Non-Qualified Stock Option Plan for Directors
(Non-Employees) as amended through August 7, 1995 (Incorporated by
reference to Exhibit 10.2 to the Company's September 30, 1995
Quarterly Report on Form 10Q.
* 10.6 1994 Employee Stock Purchase Plan. (Incorporated by reference to
exhibit 10.19 to the Company's March 31, 1993 report on Form 10-K).
<PAGE> 27
10.7 Amended and Restated Joint Venture Agreement dated March 31, 1992
between American Carbide and Carbon Corporation and Elkem Metals
Company. (Incorporated by reference to Exhibit 10.5 to the Company's
March 31, 1992 report on Form 10-K).
* 10.8 Airgas, Inc. Management Incentive Plan (Incorporated by reference to
Exhibit 10.3 to the Company's September 30, 1995 Quarterly Report on
Form 10-Q).
(11) Statement re: computation of earnings per share.
(21) Subsidiaries of the Company.
(23.1) Consent of KPMG Peat Marwick LLP.
(23.2) Consent of KPMG Peat Marwick LLP (to be filed by amendment)
(23.3) Consent of KPMG Peat Marwick LLP (to be filed by amendment)
(27) Financial data schedule
(99.1) Form 11-K for the Registrant's 401(K) Plan (to be filed by amendment)
(99.2) Form 11-K for the Registrant's Employee Stock Purchase Plan (to be
filed by amendment)
_____________
* A management contract or compensatory plan required to be filed by Item
14(c) of this Report.
<PAGE> 28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: June 12, 1996
Airgas, Inc.
By: /s/ Peter McCausland
_________________________
Peter McCausland
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
_________ _____ ____
/s/ Peter McCausland Director, Chairman of the June 12, 1996
____________________________ Board and Chief Executive Officer
(Peter McCausland)
/s/ Hermann Knieling President and Chief Operating June 12, 1996
________________________ Officer
(Hermann Knieling)
/s/ Britton H. Murdoch Vice President/Finance and June 12, 1996
____________________________ Chief Financial Officer
(Britton H. Murdoch)
/s/ Jeffrey P. Cornwell Assistant Vice President and
____________________________ Corporate Controller June 12, 1996
(Jeffrey P. Cornwell)
/s/ W. Thacher Brown Director June 12, 1996
____________________________
(W. Thacher Brown)
/s/ Frank B. Foster, III Director June 12, 1996
____________________________
(Frank B. Foster, III)
/s/ Dr. Robert E. Naylor Director June 12, 1996
____________________________
(Dr. Robert E. Naylor)
<PAGE> 29
/s/ James M. Hoak, Jr. Director June 12, 1996
____________________________
(James M. Hoak, Jr.)
/s/ Robert L. Yohe Director June 12, 1996
____________________________
(Robert L. Yohe)
/s/ John A.H. Shober Director June 12, 1996
____________________________
(John A.H. Shober)
/s/ Merril L. Stott Director June 12, 1996
____________________________
(Merril L. Stott)
/s/ Erroll C. Sult Director June 12, 1996
____________________________
(Erroll Sult)
<PAGE> 30
AIRGAS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Page
Reference In
Report on
Form 10-K
_________
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-2
Statement of Management's Financial Responsibility . . . . . . . F-3
Consolidated Balance Sheets at March 31, 1996 and 1995 . . . . . F-4
Consolidated Statements of Earnings for the Years Ended
March 31, 1996, 1995 and 1994. . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Stockholders' Equity for the
Years Ended March 31, 1996, 1995 and 1994. . . . . . . . . . . F-6
Consolidated Statements of Cash Flows for the Years Ended
March 31, 1996, 1995 and 1994. . . . . . . . . .. . . . . . . . F-7
Notes to Consolidated Financial Statements. . . . . . . . . . . . F-8
Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts . . . . . . F-29
All other schedules for which provision is made in the applicable accounting
regulations promulgated by the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore have
been omitted.
F-1
<PAGE> 31
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Airgas, Inc.:
We have audited the consolidated financial statements of Airgas, Inc. and
subsidiaries as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits 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 audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Airgas,
Inc. and subsidiaries as of March 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the years in the three-year period
ended March 31, 1996, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule,
when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the information
set forth thereon.
Philadelphia, Pennsylvania KPMG PEAT MARWICK LLP
May 9, 1996
F-2
<PAGE> 32
STATEMENT OF MANAGEMENT'S FINANCIAL RESPONSIBILITY
Management has prepared and is responsible for the integrity and
objectivity of the consolidated financial statements and related financial
information in this Annual Report. The statements are prepared in conformity
with generally accepted accounting principles. The financial statements
reflect management's informed judgment and estimation as to the effect of
events and transactions that are accounted for or disclosed.
Management maintains a system of internal control at each business unit.
This system, which undergoes periodic evaluation, is designed to provide
reasonable assurance that assets are safeguarded and records are adequate for
the preparation of reliable financial data. In determining the extent of the
system of internal control, management recognizes that the cost should not
exceed the benefits derived. The evaluation of these factors requires
estimates and judgment by management.
The Company's financial statements have been audited by KPMG Peat Marwick
LLP, independent auditors. Their Independent Auditors' Report, which is based
on an audit made in accordance with generally accepted auditing standards is
presented on the previous page. In performing their audit, KPMG Peat Marwick
LLP considers the Company's internal control structure to the extent they deem
necessary in order to plan their audit, determine the nature, timing and
extent of tests to be performed and issue their report on the consolidated
financial statements.
The Audit Committee of the Board of Directors meets with the independent
auditors and management to satisfy itself that they are properly discharging
their responsibilities. The auditors have direct access to the Audit
Committee.
Airgas, Inc.
/s/ Britton H. Murdoch /s/ Hermann Knieling /s/ Peter McCausland
________________________ ____________________ _______________________
Britton H. Murdoch President and Chief Peter McCausland
Vice President and Operating Officer Chairman and
Chief Financial Officer Chief Executive Officer
F-3
<PAGE> 33
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS March 31,
________________
(In thousands, except per share amounts) 1996 1995
________________________________________ ____ ____
ASSETS (Note 8)
Current Assets
Trade receivables, less allowances for doubtful
accounts of $3,396 in 1996 and $4,161 in 1995 . . . . . .$120,811 $ 93,423
Inventories (Note 4) . . . . . . . . . . . . . . . . . . . 86,162 65,947
Prepaid expenses and other current assets. . . . . . . . . 11,601 10,467
_______ _______
Total current assets. . . . . . . . . . . . . . . . . 218,574 169,837
_______ _______
Plant and Equipment, at cost (Note 5). . . . . . . . . . . 586,328 464,983
Less accumulated depreciation. . . . . . . . . . . . . . (147,451) (118,715)
_______ _______
Plant and equipment, net . . . . . . . . . . . . . . . . 438,877 346,268
_______ _______
Other Non-current Assets (Note 6) . . . . . . . . . . . . . 60,948 41,388
Goodwill, net of accumulated amortization
of $19,552 in 1996 and $15,094 in 1995. . . . . . . . . . 165,243 88,144
_______ _______
$883,642 $645,637
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt (Note 8) . . . . . . . .$ 12,179 $ 11,780
Accounts payable, trade. . . . . . . . . . . . . . . . . . 52,528 43,782
Accrued expenses and other current liabilities (Note 7). . 72,279 60,191
_______ ______
Total current liabilities . . . . . . . . . . . . . . 136,986 115,753
_______ _______
Long-Term Debt (Note 8). . . . . . . . . . . . . . . . . . 385,832 259,970
Deferred Income Taxes (Note 13). . . . . . . . . . . . . . 88,400 67,540
Other Non-current Liabilities. . . . . . . . . . . . . . . 34,490 11,116
Minority Interest in Subsidiaries (Note 19). . . . . . . . 1,725 1,606
Commitments and Contingencies (Note 17)
Stockholders' Equity (Note 9)
Common Stock, par value $.01 per share, 200,000 shares
authorized, 66,314 and 63,002 shares issued in
1996 and 1995, respectively . . . . . . . . . . . . . . . 663 630
Capital in Excess of Par Value . . . . . . . . . . . . . . 91,512 61,820
Retained Earnings. . . . . . . . . . . . . . . . . . . . . 173,360 133,640
Cumulative Translation Adjustments . . . . . . . . . . . . (410) (469)
Treasury Stock, 2,355 and 472 common shares at cost
in 1996 and 1995, respectively. . . . . . . . . . . . . . (28,916) (5,969)
_______ _______
Total stockholders' equity. . . . . . . . . . . . . . 236,209 189,652
_______ _______
$883,642 $645,637
======= =======
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 34
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Years Ended March 31,
(In thousands, except per share amounts) ______________________________
_______________________________________ 1996 1995 1994
____ ____ ____
Net Sales
Distribution . . . . . . . . . . . . . . . . $801,552 $654,381 $486,836
Manufacturing . . . . . . . . . . . . . . . 36,592 33,602 32,513
_______ _______ _______
Total net sales . . . . . . . . . . . . 838,144 687,983 519,349
_______ _______ _______
Costs and Expenses
Cost of products sold (excluding depreciation
and amortization)
Distribution . . . . . . . . . . . . . . . 395,370 320,800 238,429
Manufacturing. . . . . . . . . . . . . . . 24,121 22,076 20,741
Selling, distribution and administrative
expenses . . . . . . . . . . . . . . . . . 279,906 235,639 180,941
Depreciation and amortization. . . . . . . . 45,762 36,868 30,571
_______ _______ _______
Total costs and expenses. . . . . . . . 745,159 615,383 470,682
_______ _______ _______
Operating Income
Distribution . . . . . . . . . . . . . . . . 86,130 66,521 42,399
Manufacturing. . . . . . . . . . . . . . . . 6,855 6,079 6,268
_______ _______ _______
Total operating income . . . . . . . . . 92,985 72,600 48,667
Interest expense, net (Note 11). . . . . . . (24,862) (17,625) (12,486)
Other income, net (Note 12). . . . . . . . . 782 1,067 453
Minority interest (Note 19). . . . . . . . . (663) (669) (317)
_______ _______ _______
Earnings before income taxes. . . . . . 68,242 55,373 36,317
Income taxes (Note 13) . . . . . . . . . . . . 28,522 23,894 16,027
_______ _______ _______
Net earnings. . . . . . . . . . . . . $ 39,720 $ 31,479 $ 20,290
======= ======= =======
Earnings Per Share (Notes 3 and 9) . . . . . $ .60 $ .48 $ .31
_______ _______ _______
Weighted average shares. . . . . . . . . . . 66,215 65,525 64,780
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 35
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
Years Ended March 31, 1996, 1995 and 1994
_________________________________________
Shares of Capital in
Common Stock Common Excess of
(In thousands) $.01 Par Value Stock Par Value
______________ ______________ _____ __________
Balance--April 1, 1993 . . . . . . . . . 31,999.6 $320 $46,966
Two-for-one stock split (Note 9) . . . . 31,999.6 320 (320)
Net earnings . . . . . . . . . . . . . .
Foreign currency translation adjustment.
Stock warrants and options exercised . . 1,568.8 16 3,477
Tax benefit associated with exercise
of stock options and warrants (Note 13) 3,590
Shares issued upon acquisition of
minority interests (Note 19). . . . . . 166.7 1 1,739
Shares issued in connection with
Employee Stock Purchase Plan (Note 14). 59.5 1 549
________ ___ ______
Balance--March 31, 1994. . . . . . . . . 65,794.2 $658 $56,001
Net earnings . . . . . . . . . . . . . .
Foreign currency translation adjustment.
Retirement of treasury stock . . . . . . (3,754.4) (37) (1,445)
Purchase of treasury stock (Note 9). . .
Issuance of stock in connection
with acquisitions . . . . . . . . . . . 123.2 1 1,436
Stock warrants and options exercised . . 538.9 5 1,265
Tax benefit associated with exercise
of stock options and warrants (Note 13) 1,859
Shares issued in connection with
Employee Stock Purchase Plan (Note 14). 300.2 3 2,704
________ ___ ______
Balance--March 31, 1995. . . . . . . . . 63,002.1 $630 $61,820
Net earnings . . . . . . . . . . . . . .
Foreign currency translation adjustment.
Purchase of treasury stock (Note 9). . .
Issuance of stock in connection
with acquisitions . . . . . . . . . . . 843.7 9 11,435
Stock warrants and options exercised . . 1,841.6 17 3,705
Tax benefit associated with exercise
of stock options and warrants (Note 13) 7,613
Shares issued upon acquisition of minority
interests (Note 19) 258.1 3 3,547
Shares issued in connection with
Employee Stock Purchase Plan (Note 14). 368.2 4 3,392
________ ___ ______
Balance--March 31, 1996. . . . . . . . . 66,313.7 $663 $91,512
======== === ======
COLUMNS CONTINUED ON NEXT PAGE
F-6
<PAGE> 36 AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY - (Continued)
Years Ended March 31, 1996, 1995 and 1994
_________________________________________
Cumulative
Retained Translation Treasury
(In thousands) Earnings Adjustments Stock
______________ _________ ___________ ________
Balance--April 1, 1993 . . . . . . . . . $81,871 $(104) $(1,482)
Two-for-one stock split (Note 9)
Net earnings. . . . . . . . . . . . . . . 20,290
Foreign currency translation adjustment . (367)
Stock warrants and options exercised. . .
Tax benefit associated with exercise
of stock options and warrants (Note 13).
Shares issued upon acquisition of
minority interests (Note 19) . . . . . .
Shares issued in connection with
Employee Stock Purchase Plan (Note 14) .
_______ ____ _____
Balance--March 31, 1994 . . . . . . . . .$102,161 $(471) $(1,482)
Net earnings. . . . . . . . . . . . . . . 31,479
Foreign currency translation adjustment . 2
Retirement of treasury stock. . . . . . . 1,482
Purchase of treasury stock (Note 9) . . . (5,969)
Issuance of stock in connection
with acquisitions. . . . . . . . . . . .
Stock warrants and options exercised. . .
Tax benefit associated with exercise
of stock options and warrants (Note 13).
Shares issued in connection with
Employee Stock Purchase Plan (Note 14) .
_______ ____ ______
Balance--March 31, 1995 . . . . . . . . .$133,640 $(469) $(5,969)
Net earnings. . . . . . . . . . . . . . . 39,720
Foreign currency translation adjustment . 59
Purchase of treasury stock (Note 9) . . . (22,947)
Issuance of stock in connection
with acquisitions. . . . . . . . . . . .
Stock warrants and options exercised. . .
Tax benefit associated with exercise
of stock options and warrants (Note 13).
Shares issued upon acquisition of minority
interests (Note 19). . . . . . . . . . .
Shares issued in connection with
Employee Stock Purchase Plan (Note 14) .
_______ ____ ______
Balance--March 31, 1996 . . . . . . . . .$173,360 $(410) $(28,916)
======= === ======
See accompanying notes to consolidated financial statements.
F-6, Continued
<PAGE> 37 AIRGAS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) Years Ended March 31,
1996 1995 1994
____ ____ ____
Cash Flows From Operating Activities
Net earnings . . . . . . . . . . . . . . . . . . $39,720 $31,479 $20,290
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization . . . . . . . . 45,762 36,868 30,571
Deferred income taxes . . . . . . . . . . . . 10,868 11,549 8,189
Equity in earnings of unconsolidated affiliates (1,428) (840) (1,258)
Gain on sale of investment in CBI
Industries, Inc. . . . . . . . . . . . . . -- (560) --
(Gain)/Loss on sale of plant and equipment. . (12) 110 (63)
Minority interest in earnings . . . . . . . . 663 669 317
Stock issued for employee benefit plan expense 3,396 2,707 550
Changes in assets and liabilities, excluding
effects of business acquisitions:
Trade receivables, net. . . . . . . . . . . (5,300) (1,179) (5,444)
Inventories . . . . . . . . . . . . . . . . (2,509) (1,874) 1,626
Prepaid expenses and other current assets . (960) 198 (546)
Accounts payable, trade. . . . . . . . . . (1,461) 2,934 3,799
Accrued expenses and other current
liabilities. . . . . . . . . . . . . . . . 4,485 1,332 4,548
Other assets and liabilities, net . . . . . (1,202) (3,441) (4,804)
______ ______ ______
Net cash provided by operating activities. 92,022 79,952 57,775
Cash Flows From Investing Activities ______ ______ _______
Capital expenditures . . . . . . . . . . . . . . (41,236) (36,712) (21,318)
Proceeds from sale of plant and equipment. . . . 3,968 2,563 1,914
Business acquisitions, net of cash acquired. . .(153,605) (86,342) (93,375)
Purchase of investment in CBI Industries, Inc. . -- (17,026) --
Proceeds from sale of investment in CBI
Industries, Inc. . . . . . . . . . . . . . . . -- 17,892 --
Other, net . . . . . . . . . . . . . . . . . . . 860 116 (287)
_______ ______ ______
Net cash used by investing activities. . . .(190,013) (119,509) (113,066)
Cash Flows From Financing Activities _______ _______ ______
Proceeds from borrowings . . . . . . . . . . . . 692,414 394,193 195,292
Repayment of debt. . . . . . . . . . . . . . . .(594,931) (359,253) (150,844)
Financing costs. . . . . . . . . . . . . . . . . (136) (230) (6)
Repurchase of treasury stock . . . . . . . . . . (22,947) (5,969) --
Exercise of options and warrants . . . . . . . . 3,722 1,270 3,493
Net overdraft. . . . . . . . . . . . . . . . . . 4,068 4,591 2,459
Other financing activities . . . . . . . . . . . 15,745 4,960 5,120
_______ ______ ______
Net cash provided by financing activities. . 97,935 39,562 55,514
_______ ______ ______
Effects of discontinued activities, net. . . . . 56 (5) (223)
_______ ______ ______
Cash Increase (Decrease) . . . . . . . . . . . . -- -- --
Cash--beginning of year. . . . . . . . . . . . . -- -- --
______ ______ ______
Cash--End of Year. . . . . . . . . . . . . . . . $ -- $ -- $ --
====== ====== ======
For supplemental cash flow disclosures see Note 18.
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 38
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The consolidated financial statements include the accounts of Airgas, Inc. and
subsidiaries (the "Company"). Unconsolidated affiliates are accounted for on
the equity method and generally consist of 20-50% owned operations where
control does not exist or is considered temporary. The excess of the cost of
these affiliates over the Company's share of their net assets at the
acquisition date is being amortized over 20 to 40 years. Significant
intercompany accounts and transactions are eliminated.
The Company has made estimates and assumptions relating to the reporting
of assets and liabilities and disclosure of contingent assets and liabilities
to prepare these statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(b) Inventories
Inventories are stated at the lower of cost or market with cost for
approximately 81% and 77% percent of the inventories at March 31, 1996 and
1995, respectively, determined by the first-in, first-out (FIFO) method. Cost
for the remainder of inventories was determined using the last-in, first-out
(LIFO) method.
(c) Plant and Equipment
Plant and equipment are stated at cost. Depreciation is provided on the
straight-line basis over the estimated useful lives of the related assets.
Effective April 1, 1993, the Company changed its estimate of the useful
lives of its acetylene and high pressure cylinders from 20 to 30 years. This
change was made to better reflect the estimated periods during which these
assets will remain in service. The change had the effect of reducing
depreciation expense in 1994 by approximately $3.1 million and increasing net
earnings by $1.9 million or $.03 per share.
The Company changed the estimated useful life of cylinders as a result of
thorough studies and analyses. The studies considered technological advances
in cylinders, empirical data obtained from cylinder manufacturers and other
industry experts and experience gained from the Company's maintenance of a
cylinder population of approximately two million cylinders.
In the first quarter of fiscal 1997, the Company will adopt SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of." The statement requires the recognition of an impairment
loss for an asset held for use when the estimate of undiscounted future cash
flows expected to be generated by the asset is less than its carrying amount.
Measurement of the impairment loss is based on fair value of the asset.
Management believes that the adoption of this statement will not have a
material impact on earnings, financial condition or liquidity of the Company.
F-8
<PAGE> 39
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)
(d) Other Assets
Costs related to the acquisition of long-term debt are deferred and
amortized over the term of the related debt. Costs and payments pursuant to
noncompetition arrangements entered into in connection with business
acquisitions are amortized over the terms of the arrangements which are
principally over 5 years. On an ongoing basis, management reviews the
valuation and amortization of intangible assets.
(e) Goodwill
Goodwill represents costs in excess of net assets of businesses acquired
and is amortized on a straight-line basis over the expected periods to be
benefited, which currently ranges from 20 to 40 years. The Company assesses
the recoverability of this intangible asset by determining whether the
amortization of the goodwill balance over its remaining life can be recovered
through projected undiscounted future cash flows.
(f) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes
the enactment date.
(g) Foreign Currency Translation
The functional currency of the Company's foreign operations is the
applicable local currency. The translation of foreign currencies into U.S.
dollars is performed for balance sheet accounts using current exchange rates
in effect at the balance sheet date and for revenue and expense accounts using
average exchange rates during each reporting period. The gains or losses, net
of applicable deferred income taxes, resulting from such translations are
included in stockholders' equity. Gains and losses arising from foreign
currency transactions are reflected in the consolidated statements of earnings
as incurred.
(h) Concentrations of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables.
Concentrations of credit risk are limited due to the Company's large number of
customers and their dispersion across many industries. Credit terms granted to
customers are generally net 30 days.
F-9
<PAGE> 40
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(i) Revenue Recognition
Sales are recorded upon shipment to the customer.
(j) Financial Instruments
In hedging interest rate exposure, the Company enters into interest rate
swap agreements. These instruments are not entered into for trading purposes
and the Company has the ability and intent to hold these instruments to
maturity. The Company only uses non-leveraged instruments. When interest
rates change, the difference to be paid or received is accrued and recognized
as interest expense over the life of the agreement. The fair values of the
Company's financial instruments are estimated based on quoted market prices
for the same or similar issues.
The carrying amounts for accounts receivable, accounts payable and
current portion of long-term debt approximate fair value because of the
short-term maturity of these financial instruments.
(k) Reclassification
Certain reclassifications have been made in previously issued financial
statements to conform to the current presentation.
(2) ACQUISITIONS
The Company has acquired businesses primarily engaged in the distribution
of industrial, medical and specialty gases and related equipment .
Acquisitions have been recorded using the purchase method of accounting, and,
accordingly, results of their operations have been included in the Company's
consolidated financial statements since the effective dates of the respective
acquisitions.
1996 - During 1996, the Company purchased 42 businesses. The largest of
these acquisitions and their effective dates included Tech-Weld, Inc. (April
3, 1995), Trinity Welding Supply, Inc. (May 1, 1995), Red-D-Arc, Limited (June
29, 1995), Capital Welding Supply, Inc. (August 1, 1996), Langdon Oxygen
Company (October 5, 1995), Acetylene Gas Company (January 1, 1996), Iatech
Sales Co. (January 1, 1996), Welders Equipment Company (February 1, 1996) and
Braun Welding Supply, Inc. (March 1, 1996). The aggregate purchase price for
these acquisitions amounted to approximately $164 million. The purchase price
for the remaining 33 businesses amounted to approximately $73 million.
1995--During 1995, the Company purchased 25 businesses. The
largest of these acquisitions and their effective dates included The Jimmie
Jones Company (August 1, 1994) and Post Welding Supply (November 1, 1994).
The aggregate purchase price for these acquisitions amounted to approximately
$83 million. The purchase price for the remaining 23 businesses
amounted to approximately $44 million.
F-10
<PAGE> 41
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(2) ACQUISITIONS - (Continued)
1994--During 1994, the Company purchased 18 businesses. The
largest of these acquisitions and their effective dates included General
Welding Supply Co. (July 1, 1993), PDI Western Distributing Group, Inc. (July
1, 1993), Phoenix Northeast Distributors Group, Inc. (September 1, 1993) and
certain operations of The BOC Group, Inc. (February 1, 1994). The aggregate
purchase price for these acquisitions amounted to approximately $90 million.
The purchase price for the remaining 14 businesses amounted to
approximately $31 million.
In connection with the above business acquisitions, the total purchase
price, fair value of assets acquired, cash paid and liabilities assumed were
as follows:
Years Ended March 31,
___________________________
(In thousands) 1996 1995 1994
______________ ____ ____ ____
Cash paid . . . . . . . . . . . . . . . . . . $141,916 $ 82,258 $ 89,782
Issuance of Airgas common stock . . . . . . . 11,443 775 --
Notes issued to sellers . . . . . . . . . . . 27,820 11,340 5,808
Notes payable assumed and capital leases. . . 4,073 9,067 4,276
Other liabilities assumed and accrued
acquisition costs. . . . . . . . . . . . . . 51,505 23,376 20,806
______ ______ ______
Total purchase price allocated to assets
acquired. . . . . . . . . . . . . . . . . . $236,757 $126,816 $120,672
======= ======= =======
Also, as discussed in note 19, the Company has accounted for the
acquisition of subsidiary minority interests in 1996, 1995 and 1994 using the
purchase method of accounting.
In connection with certain acquisitions, the Company is required to make
future payments to sellers based on future earnings of the acquired business
in excess of predetermined amounts. Such payments, if any, are capitalized as
an additional cost of the acquisition. Amounts payable under contingent
payment terms continue through 1997 and are limited to $2.1 million. To-date,
the Company has made aggregate payments of $1.1 million under these contingent
terms. In addition, certain other acquisitions require the issuance of Airgas
common stock if the Airgas common stock price at certain dates during 1999 is
less than a previously established price.
The purchase price for business acquisitions and minority interests were
allocated to the assets acquired and liabilities assumed based on their
estimated fair values. Costs in excess of net assets acquired (goodwill) for
1996, 1995 and 1994 amounted to $81.3 million, $40.8 million and $9.9 million,
respectively.
F-11
<PAGE> 42
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(2) ACQUISITIONS - (Continued)
The following presents unaudited estimated pro forma operating results as
if the 1996 and 1995 acquisitions had been consummated on April 1, 1994. These
pro forma results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisitions been
made as of April 1, 1994 or of results which may occur in the future.
Years Ended March 31,
_____________________
(In thousands except per share amounts) 1996 1995
_______________________________________ ____ ____
Net sales . . . . . . . . . . . . . . . . . . . $938,877 $911,818
Net earnings. . . . . . . . . . . . . . . . . . 36,229 25,700
Earnings per share: . . . . . . . . . . . . . . .54 .39
Subsequent to March 31, 1996, the Company has acquired ten distribution
businesses with annual sales of approximately $105 million for an aggregate
purchase price of approximately $96 million.
(3) EARNINGS PER SHARE
Primary and fully diluted earnings per share amounts were determined
using the Treasury Stock method.
(4) INVENTORIES
Inventories consist of: March 31,
_______________________
(In thousands) 1996 1995
______________ ____ ____
Finished goods. . . . . . . . . . . . . . . . . . . $85,626 $65,693
Raw materials . . . . . . . . . . . . . . . . . . . 1,879 1,315
______ ______
87,505 67,008
Less reduction to LIFO cost . . . . . . . . . . . . (1,343) (1,061)
______ ______
$86,162 $65,947
====== ======
F-12
<PAGE> 43 AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(5) PLANT AND EQUIPMENT
The major classes of plant and equipment, at cost, are as follows:
March 31,
_______________________
(In thousands) 1996 1995
______________ ____ ____
Land and land improvements . . . . . . . . . . . . $ 20,066 $ 17,571
Buildings and leasehold improvements . . . . . . . 58,153 43,714
Machinery and equipment, including cylinders . . . 472,868 376,284
Transportation equipment . . . . . . . . . . . . . 33,724 25,944
Construction in progress . . . . . . . . . . . . . 1,517 1,470
_______ _______
$586,328 $464,983
======= =======
Depreciation and amortization of plant and equipment charged to operations
amounted to $32.0 million, $26.3 million and $21.1 million in 1996, 1995 and
1994, respectively.
(6) OTHER NONCURRENT ASSETS
Other noncurrent assets include:
March 31,
_______________________
(In thousands) 1996 1995
______________ ____ ____
Investment in unconsolidated affiliates (Note 10). $ 9,332 $ 5,473
Noncompete agreements and other intangible
assets, at cost, net of accumulated
amortization of $46.7 million in 1996
and $37.4 million in 1995 . . . . . . . . . . . . 47,530 31,955
Other assets. . . . . . . . . . . . . . . . . . . . 4,086 3,960
______ ______
$60,948 $41,388
====== ======
(7) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities include:
March 31,
_______________________
(In thousands) 1996 1995
______________ ____ ____
Cash overdraft. . . . . . . . . . . . . . . . . . . $15,706 $11,638
Insurance payable and related reserves. . . . . . . 5,297 6,304
Customer cylinder deposits. . . . . . . . . . . . . 7,058 6,242
Other accrued expenses and current liabilities. . . 44,218 36,007
______ ______
$72,279 $60,191
====== ======
The cash overdraft is attributable to the float of the Company's outstanding
checks.
F-13
<PAGE> 44 AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(8) INDEBTEDNESS
(a) Long-term debt consists of the following:
March 31,
_______________________
(In thousands) 1996 1995
______________ ____ ____
Revolving credit borrowings . . . . . . . . . . . . $314,804 $202,585
Senior subordinated notes . . . . . . . . . . . . . 20,000 27,857
Acquisition notes . . . . . . . . . . . . . . . . . 50,392 26,532
Industrial Development Board revenue bonds. . . . . 2,491 3,450
All other notes, at various rates and maturities. . 10,324 11,326
_______ _______
Total long-term debt. . . . . . . . . . . . . . . . 398,011 271,750
Less current installments . . . . . . . . . . . . . (12,179) (11,780)
_______ _______
Long-term debt, excluding current installments. . . $385,832 $259,970
======= =======
During 1996, the Company amended and increased its unsecured revolving
credit facility with various commercial banks from $250 million to $375
million , and converted the facility to a five-year revolver maturing on
August 10, 2000. The revolving credit facility also provides for the issuance
of letters of credit up to $150 million. Under the terms of the revolving
credit facility, interest is payable quarterly. At March 31, 1996, $66
million of money market based borrowings were outstanding under the revolving
credit facility with effective rates of 5.57%. At March 31, 1996, $105
million of Libor based borrowings were outstanding under the revolving credit
facility with effective rates of 5.98%. At the Company's option, borrowings
under the revolving credit facility may be prime based, Libor based or
Certificate of Deposit based in each case plus an applicable margin.
The Company has an additional $100 million unsecured line of credit with
a group of commercial banks which matures in July 1997 and provides for
borrowings at the Libor rate plus an applicable margin ($100 million
outstanding at 5.76% as of March 31, 1996). The Company intends to terminate
its $100 million facility in conjunction with an anticipated increase in the
Company's $375 million revolving credit facility in September 1996, which will
have terms and conditions similar to its existing $375 million facility.
The Company has a CDN $50 million Canadian credit facility ($37 million
U.S.) with various commercial banks which matures on November 14, 1998. At
March 31, 1996, the Company had approximately CDN $33 million ($24 million
U.S.) in borrowings outstanding under the facility, resulting in unused
availability under the facility of approximately CDN $17 million ($13 million
U.S.).
The Company also has unsecured line of credit agreements with various
commercial banks. At March 31, 1996, these agreements totaled $60 million,
under which the Company had aggregate outstanding borrowings of $19 million,
at 5.61%.
F-14
<PAGE> 45
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(8) INDEBTEDNESS - (Continued)
Senior subordinated notes with an original face value aggregating $55
million require semi-annual interest payments at 11.375%. Equal annual
principal payments of $4.3 million for $12.8 million of the senior
subordinated notes continue through August 1998 and equal annual principal
payments of $3.6 million for $7.2 million of the senior subordinated notes
continue through July 1997.
Acquisition notes represent notes issued to sellers of businesses
acquired and are repayable in periodic installments including interest at an
average rate of 7.5%. Some acquisition notes require balloon payments which
are included in the aggregate maturity schedule.
Industrial development revenue bonds have variable interest rates ranging
from 60% to 75% of the prime rate. The bonds mature at various dates between
1996 and 2006. Certain bonds are redeemable at the option of the issuer. The
bonds are secured by mortgages on certain plant and equipment.
Certain of the Company's credit facility agreements contain restrictive
covenants which include the maintenance of a minimum equity level, maintenance
of certain financial ratios and restrictions on additional borrowings and
dividend payments.
The aggregate maturities of long-term debt for the five years ending
March 31, 2002 and thereafter are as follows (in thousands):
Years Ending March 31, Aggregate Maturity
______________________ __________________
1997 . . . . . . . . . . . . . . . . . . . $ 12,179
1998 . . . . . . . . . . . . . . . . . . . 126,121
1999 . . . . . . . . . . . . . . . . . . . 37,204
2000 . . . . . . . . . . . . . . . . . . . 12,017
2001 . . . . . . . . . . . . . . . . . . . 200,754
2002 and thereafter. . . . . . . . . . . . 9,736
_______
$398,011
=======
The fair value of long term debt as of March 31, 1996 was approximately $400
million based on current rates offered to the Company by financial
institutions for similar type instruments.
(b) Swap Agreements
In managing interest rate exposure, principally under the Company's
floating rate revolving credit facilities, the Company has entered into
18 interest rate swap agreements during the period from June 1992 through
March 31, 1996, including two forward starting swaps. The interest rate swap
agreements are with major financial institutions having a total notional
principal amount of $224 million at March 31, 1996.
F-15
<PAGE> 46
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(8) INDEBTEDNESS - (Continued)
Approximately $205 million of the swap agreements require fixed interest
payments based on an average effective rate of 6.53% for remaining periods
ranging between 1 and 8 years. The remaining $19 million of swap agreements
require floating rates (5.53% at March 31, 1996). The effect of the swap
agreements was to increase interest expense $1.3 million and $1.2 million in
1996 and 1995, respectively. Under the terms of seven of the swap
agreements, the Company has elected to receive the discounted value of the
counterparty's interest payments upfront. At March 31, 1996, approximately
$23 million of such payments were included in other liabilities.
The Company continually monitors its positions and the credit ratings of
its counterparties, and does not anticipate nonperformance by the
counterparties. The fair market value of these swaps was $2.9 million below
their carry value at March 31, 1996.
The aggregate maturities of the Company's interest rate swaps by type of
swap for the five years ending March 31, 2001 and thereafter are as follows
(in thousands):
Notional Principal Amounts
__________________________
Years Ending March 31, Pay-Fixed Receive-Fixed
______________________ _________ _____________
1997 . . . . . . . . . . . . . $ 0 $ 0
1998 . . . . . . . . . . . . . 30,000 0
1999 . . . . . . . . . . . . . 12,500 7,500
2000 . . . . . . . . . . . . . 26,179 12,000
2001 . . . . . . . . . . . . . 66,178 0
2002 and thereafter. . . . . . 70,000 0
_______ ______
$204,857 $19,500
======= ======
(9) STOCKHOLDERS' EQUITY
(a) Common Stock
On March 22, 1996, the Company's Board of Directors declared a two-for-
one stock split to stockholders of record on April 1, 1996, payable on April
15, 1996. Stock options and other rights to acquire the Company's common
stock reflect the split. The Statements of Stockholders' Equity have been
restated to account for the stock split as if it had occurred on April 1,
1993. All references to the number of shares, except shares authorized,
reflect the stock split.
(b) Preferred Stock and Redeemable Preferred Stock
The Company is authorized to issue 20 million shares of preferred stock.
At March 31, 1996 and 1995, no shares were outstanding. The preferred stock
may be issued from time to time by the Board of Directors in one or more
series, and the Board of Directors is authorized to fix the dividend rights
and terms, conversion rights, voting rights, rights and terms of redemption,
liquidation preferences, and any other rights, preferences, privileges and
restrictions of any series of Preferred Stock, and the number of shares
constituting each such series and designation thereof.
F-16
<PAGE> 47
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(9) STOCKHOLDERS' EQUITY - (Continued)
Additionally, the Company is authorized to issue 30,000 shares of
redeemable preferred stock. At March 31, 1996 and 1995, no shares were
outstanding.
(c) Treasury Stock
The Company's Board has approved a four million share common stock
repurchase program. Through March 31, 1996, the Company purchased 2.4 million
shares of the Company's common stock at an aggregate cost of $28.9 million.
The impact of the stock repurchases on earnings per share amounts was
immaterial for 1996. The future purchase of common stock is dependent on
prevailing market conditions.
(d) Stock Options
The Company has a stock option plan for officers and key employees and
has reserved 14,080,000 shares under this plan. Options are granted on terms
and conditions determined by a committee of the Board of Directors. At March
31, 1996, 3,774,546 options were available for issuance.
The following table summarizes the activity of the plan during the three
years ended March 31, 1996: Number Price Per
of Shares Share
__________ _________
March 31, 1994
Outstanding, beginning of year . . . . . . . . 5,033,292 $1.46 - $3.49
Granted. . . . . . . . . . . . . . . . . . . . 1,339,320 6.32 - 8.57
Exercised. . . . . . . . . . . . . . . . . . . (1,055,408) 1.46 - 3.49
Expired. . . . . . . . . . . . . . . . . . . . (66,304) 1.83 - 6.32
March 31, 1995
Outstanding, beginning of year . . . . . . . . 5,250,900 1.46 - 8.57
Granted. . . . . . . . . . . . . . . . . . . . 1,004,600 11.32 - 14.71
Exercised. . . . . . . . . . . . . . . . . . . (424,060) 1.46 - 7.89
Expired. . . . . . . . . . . . . . . . . . . . (2,500) 3.30 - 6.32
March 31, 1996
Outstanding, beginning of year . . . . . . . . 5,828,940 1.83 - 14.71
Granted. . . . . . . . . . . . . . . . . . . . 974,020 11.44 - 17.31
Exercised. . . . . . . . . . . . . . . . . . . (589,010) 1.83 - 11.32
Expired. . . . . . . . . . . . . . . . . . . . (14,490) 3.30 - 13.32
Outstanding, end of year . . . . . . . . . . . 6,199,460 $ 1.83 -$17.31
The Company maintains a stock option plan covering Directors who are not
employees which has 800,000 shares reserved. At March 31, 1996, 400,000
options were available for issuance.
F-17
<PAGE> 48
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(9) STOCKHOLDERS' EQUITY - (Continued)
The following table summarizes the activity of the plan during the three
years ended March 31, 1996:
Number Price Per
of Shares Share
__________ _________
March 31, 1994
Outstanding, beginning of year . . . . . . . . 248,000 $2.10 - $4.16
Granted. . . . . . . . . . . . . . . . . . . . 56,000 8.57
Exercised. . . . . . . . . . . . . . . . . . . (32,000) 2.10 - 2.21
March 31, 1995
Outstanding, beginning of year . . . . . . . . 272,000 2.10 - 8.57
Granted. . . . . . . . . . . . . . . . . . . . 40,000 13.82
March 31, 1996
Outstanding, beginning of year . . . . . . . . 312,000 2.10 - 13.82
Granted. . . . . . . . . . . . . . . . . . . . 40,000 13.50
Outstanding, end of year . . . . . . . . . . . 352,000 $2.10 - $13.82
(e) Stock Purchase Warrants
The Company and the Chairman of the Company were parties to a Stock and
Warrant Issuance Agreement, as amended (the "Warrant Agreement"), which was
entered into in connection with the Company's acquisition of US Airgas, Inc.,
of which the Chairman was the majority shareholder, in May 1986. Pursuant to
the Warrant Agreement, the Chairman received warrants to purchase a total of
14,127,432 shares of the Company's common stock. Subsequent to the grant
dates, the Chairman transferred warrants to purchase 2,976,800 shares of
common stock to employees of the Company and to certain other individuals.
As of May 1, 1996, all warrants had been exercised or had expired.
F-18
<PAGE> 49
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(9) STOCKHOLDERS' EQUITY - (Continued)
The following table summarizes the activity of the stock purchase
warrants during the three years ended March 31, 1996.
Number Price Per
of Shares Share
__________ _________
March 31, 1994
Outstanding, beginning of year . . . . . . . . 2,105,680 $1.68 - $2.19
Exercised. . . . . . . . . . . . . . . . . . . (481,400) 1.76 - 2.19
March 31, 1995
Outstanding, beginning of year . . . . . . . . 1,624,280 1.68 - 2.19
Exercised. . . . . . . . . . . . . . . . . . . (114,800) 1.76 - 2.19
March 31, 1996
Outstanding, beginning of year . . . . . . . . 1,509,480 1.76 - 2.19
Exercised. . . . . . . . . . . . . . . . . . . (1,252,568) 1.76 - 2.19
Cancelled. . . . . . . . . . . . . . . . . . . (12,712)
Outstanding, end of year . . . . . . . . . . . 244,200 $1.76 - $2.19
(f) Shareholder Rights Plan
Under the terms of a Shareholder Rights Plan, preferred share purchase
rights were distributed during 1988 as a dividend at the rate of one right for
each common share. The number of rights outstanding is subject to adjustment
under certain circumstances and all rights expire on August 1, 1998. The
rights are not exercisable until a person or entity acquires twenty percent of
the Company's common stock. Each right will entitle the holder to buy $16.25
worth of the Company's common stock at an exercise price of $8.13.
(g) Stock-Based Compensation
The Company accounts for stock options according to the provisions of
Accounting Principles Board Opinion 25 (APB 25), "Accounting for Stock Issued
to Employees." In October 1995, the Financial Accounting Standards Board
issued FASB Statement No. 123, "Accounting for Stock-Based Compensation." The
new standard defines a fair value method of accounting for stock options and
similar equity instruments. Companies may elect to continue to use existing
accounting rules or adopt the fair value method for expense recognition.
Companies that elect to continue to use existing accounting rules will be
required to provide pro-forma disclosures of net income and earnings per share
assuming the fair value method was adopted. The Company will elect to
continue to use existing accounting rules. The new statement is effective for
fiscal years beginning after December 15, 1995. Accordingly, the Company will
adopt the provisions in the first quarter of fiscal 1997 and present the
required pro-forma disclosure provisions for its fiscal year ending March 31,
1997. As the Company will continue to account for stock-based compensation
using the intrinsic value method, this statement will not have a material
impact on earnings, financial condition or liquidity of the Company.
F-19
<PAGE> 50
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(10) INVESTMENT IN UNCONSOLIDATED AFFILIATES
At March 31, 1996, the Company's investment in unconsolidated affiliates
totaled $9.3 million and includes Elkem-American Carbide Company (U.S.),
Poligaz SA (Poland) and Bhoruka Gases, Ltd. (India). The Company's share of
earnings from unconsolidated affiliates was $1.4 million, $840 thousand and
$1.3 million for the years ended March 31, 1996, 1995 and 1994, respectively.
(11) INTEREST EXPENSE, NET
Interest expense, net, consists of:
Years Ended March 31,
___________________________
(In thousands) 1996 1995 1994
______________ ____ ____ ____
Interest expense. . . . . . . . . . . . . . . $25,854 $18,476 $13,189
Interest and finance charge income. . . . . . (992) (851) (703)
______ ______ ______
$24,862 $17,625 $12,486
====== ====== ======
(12) OTHER INCOME, NET
Other income, net, consists of:
Years Ended March 31,
___________________________
(In thousands) 1995 1994 1993
______________ ____ ____ ____
Gain on sale of investment in CBI
Industries, Inc. . . . . . . . . . . . . . . $ -- $ 560 $ --
Other income,net . . . . . . . . . . . . . . 782 507 453
_____ _____ ___
$ 782 $1,067 $453
===== ===== ===
(13) INCOME TAXES
Pre-tax earnings were derived from the following sources:
Years Ended March 31,
___________________________
(In thousands) 1996 1995 1994
______________ ____ ____ ____
United States . . . . . . . . . . . . . . . . $66,810 $54,239 $35,621
Foreign . . . . . . . . . . . . . . . . . . . 1,432 1,134 696
______ ______ ______
$68,242 $55,373 $36,317
====== ====== ======
F-20
<PAGE> 51
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(13) INCOME TAXES - (Continued)
Income tax expense consisted of:
Years Ended March 31,
___________________________
(In thousands) 1996 1995 1994
______________ ____ ____ ____
Current:
Federal . . . . . . . . . . . . . . . . . $14,657 $ 9,997 $ 6,515
Foreign . . . . . . . . . . . . . . . . . 699 573 326
State . . . . . . . . . . . . . . . . . . 2,298 1,775 997
______ ______ ______
17,654 12,345 7,838
______ ______ ______
Deferred:
Federal . . . . . . . . . . . . . . . . . . 9,660 9,829 6,827
Foreign . . . . . . . . . . . . . . . . . . 34 47 61
State . . . . . . . . . . . . . . . . . . . 1,174 1,673 1,301
______ ______ ______
10,868 11,549 8,189
______ ______ ______
$28,522 $23,894 $16,027
====== ====== ======
Significant differences between taxes computed at the federal statutory
rate and the provision for income taxes were:
Years Ended March 31,
___________________________
1996 1995 1994
____ ____ ____
Taxes at U.S. federal statutory rate . . . . . . 35.0% 35.0% 35.0%
Increase in income taxes resulting from:
State income taxes, net of federal benefit . . . 3.3 4.0 4.1
Increase in statutory rate on deferred tax items -- -- 4.5
Amortization of non-deductible goodwill. . . . . 1.8 1.8 2.3
Adjustment of federal and state accruals . . . . -- -- (4.5)
Other, net . . . . . . . . . . . . . . . . . . . 1.7 2.4 2.7
____ ____ ____
41.8% 43.2% 44.1%
==== ==== ====
F-21
<PAGE> 52
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(13) INCOME TAXES - (Continued)
The significant components of deferred income tax expense attributable to
earnings for the years ended March 31, 1996, 1995 and 1994 are as follows:
Years Ended March 31,
___________________________
(In thousands) 1996 1995 1994
______________ ____ ____ ____
Deferred tax expense (exclusive of the
effects of other components listed below). . $10,868 $11,549 $ 8,189
Adjustments to deferred tax assets and
liabilities for enacted changes in tax laws
and rates. . . . . . . . . . . . . . . . . . -- -- 663
Adjustment of federal and state accruals. . . -- -- (663)
______ _____ _____
$10,868 11,549 $ 8,189
====== ====== =====
The tax effects of cumulative temporary differences that gave rise to the
significant portions of the deferred tax liability and deferred tax asset were
as follows:
March 31,
_______________________
(In thousands) 1996 1995
______________ ____ ____
Deferred Tax Assets:
____________________
Inventories . . . . . . . . . . . . . . . . . . $ 1,396 $ 1,368
Accounts Receivable . . . . . . . . . . . . . . 553 885
Deferred Rental Income. . . . . . . . . . . . . 809 880
Insurance Reserves. . . . . . . . . . . . . . . 1,339 1,791
Other Reserves. . . . . . . . . . . . . . . . . 2,487 2,296
AMT Credit Carryforwards. . . . . . . . . . . . 2,184 3,079
Other . . . . . . . . . . . . . . . . . . . . . 1,151 1,185
______ ______
9,919 11,484
______ ______
Deferred Tax Liabilities:
_________________________
Property and equipment. . . . . . . . . . . . . (91,371) (70,787)
Intangible Assets . . . . . . . . . . . . . . . (605) (2,734)
Other . . . . . . . . . . . . . . . . . . . . . (3,412) (286)
______ ______
(95,388) (73,807)
______ ______
Net Deferred Tax Liability . . . . . . . . . . . $(85,469) $(62,323)
====== ======
The Company has recorded tax benefits amounting to $7.6 million, $1.9
million and $3.6 million in 1996, 1995 and 1994, respectively, resulting from
the exercise of stock options and warrants. This benefit has been recorded in
capital in excess of par value.
F-22
<PAGE> 53
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(13) INCOME TAXES - (Continued)
The Internal Revenue Service is currently conducting an examination of
the Company's federal income tax returns for the years ended March 31, 1993
and 1994. Management believes that the results of this examination will not
have a material effect on the Company's earnings, financial condition, or
liquidity.
(14) BENEFIT PLANS
(a) Pension and Profit Sharing Plans
The Company has a defined contribution 401(k) plan covering substantially
all full-time employees. Under the terms of the plan, the Company makes
matching contributions up to two percent of participants' wages plus
additional discretionary profit sharing contributions based upon the
profitability of the Company. Amounts expensed under the plan for 1996, 1995
and 1994 were $5.1 million, $4.7 million and $3.3 million, respectively.
During 1993, the Company authorized termination of two defined benefit
pension plans effective December 31, 1992. At December 31, 1995, the plans'
projected benefit obligations approximate the plans' net assets available for
benefits. The settlement of the vested benefit obligations by the purchase of
nonparticipating annuity contracts or lump-sum payments for covered employees
is not expected to result in a significant gain or loss.
Certain subsidiaries of the Company participate in multi-employer
pension plans which provide defined benefits to union employees. Contributions
are made to the plans in accordance with negotiated labor contracts. The
Company has not taken any action to terminate or withdraw from these plans.
Management believes that the Company's liability, if any, for multi-employer
plan withdrawal liability will not have a material effect on the Company's
financial position, results of operations, or liquidity. Amounts expensed
under these plans for 1996, 1995 and 1994 were $482 thousand, $418 thousand
and $227 thousand, respectively.
(b) Employee Stock Purchase Plan
, The Company has established an employee stock purchase plan (the
"Plan") to encourage and assist employees to acquire an equity interest in the
Company. The Plan is authorized to issue 2 million shares of common stock.
Generally, employees may elect to have 1 to 15 percent of their gross pay
withheld to buy Airgas, Inc. common stock at 85 to 95 percent of the market
value depending upon base salary levels. Market value under the Plan is
either the employees' enrollment date market value or the quarterly purchase
date market value, whichever is lower. An employee may lock-in a purchase
price for up to 27 months. The Plan is designed to comply with the
requirements of section 423 of the Internal Revenue Code.
F-23
<PAGE> 54
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(14) BENEFIT PLANS - (Continued)
Under the Plan, 368,194, 300,204 and 59,470 shares were issued at an
average purchase price of $9.22, $9.02 and $9.00 per share during 1996, 1995
and 1994, respectively.
(c) Other Employee Benefits
The Company sponsors a multi-employer postretirement medical benefit plan
for certain employees of one subsidiary under a collective bargaining
agreement. In accordance with SFAS 106 "Employers Accounting for
Postretirement Benefits Other Than Pensions" and APB Opinion No. 16 "Business
Combinations", the postretirement benefit obligation was recorded at the
acquisition date.
The net postretirement benefit expense was $98 thousand and $88 thousand
for the years ended March 31, 1996 and 1995 , respectively. The Company's
unfunded accumulated postretirement benefit obligation was $896 thousand and
$837 thousand at March 31, 1996, and 1995, respectively.
In determining the accumulated postretirement benefit obligation, the
discount rate used to estimate the actuarial present value of other
postretirement benefits was 7.50% and 8.25% at March 31, 1996 and 1995,
respectively. The assumed rate of increase in the health care cost trend rate
for employees less than age 65 was 8.25% and 9.75% for March 31, 1996 and
1995, declining gradually to 5.25% and 6.0%, respectively, over the next four
years. For employees 65 and older, the assumed rate of increase was 6.16% and
6.62% for March 31, 1996 and 1995, declining gradually to 5.25% and 5.5%,
respectively, over the next four years. A 1% increase in the healthcare cost
trend rate would have increased net postretirement benefit expense
approximately $18 thousand and the APBO approximately $139 thousand at March
31, 1996.
(15) RELATED PARTIES
The Chairman and Vice President -- Corporate Development, were partners
in the law firm which provides legal services to the Company. During the years
ended March 31, 1996, 1995 and 1994, fees paid to the law firm totaled $754
thousand, $525 thousand, and $551 thousand, respectively.
The Company is a party to a sales agency agreement for the sale of
carbon products with a company which is a greater than five percent
stockholder and a director of that company is also a former director of the
Company. The sales agency agreement expires in October 2003. During the years
ended March 31, 1996, 1995 and 1994, the Company paid $685 thousand, $543
thousand and $515 thousand, respectively, under this agreement.
F-24
<PAGE> 55
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(15) RELATED PARTIES - (Continued)
A member of the Company's board of directors is the president of a
regional producer and distributor of industrial gases and related equipment
in the Southeastern United States. During the years ended March 31, 1996,
1995 and 1994, this company paid $987 thousand, $914 thousand and $1.1
million, respectively, to a joint venture of the Company for the purchase of
calcium carbide. In addition, this company paid $604 thousand and $546
thousand to the Company for other gas purchases in 1996 and 1995,
respectively.
(16) LEASES
The Company leases certain distribution facilities and equipment under
long-term operating leases with varying terms. Most leases contain renewal
options and in some instances, purchase options. Rentals under these long-term
leases (exclusive of real estate taxes, insurance, and other expenses payable
under the terms of the leases) for the years ended March 31, 1996, 1995 and
1994, amounted to $17.8 million, $14.5 million and $9.7 million, respectively.
Additionally, the Company leases certain operating facilities from employees
of the Company who were previous owners of businesses acquired at market
rates.
The Company entered into certain operating leases for real estate with a
trust established by a commercial bank. The trust is committed to purchase
real estate properties up to an aggregate amount of $25 million. The trust
holds title to the properties and leases the properties to the Company. The
rental payments are based on Libor plus an applicable margin and the cost of
the property acquired by the trust. The Company has entered into interest
rate swap agreements in a notional principal amount of $10 million to hedge
the effects of fluctuations in the Libor based rental rate. At the expiration
of the leases in 1999, the Company has the option to purchase the real
properties at fair value or assist in the sale of the properties to a third
party. The Company has guaranteed a portion of the debt outstanding against
these properties in the event the proceeds of a sale are not sufficient to
cover the trust's investment in the properties. At March 31, 1996, the
Company had a contingent guarantee of approximately $7.6 million related to
leased facilities.
The Company has also entered into certain operating leases for cylinders
and bulk tanks. At the expiration of the leases in 1998, the Company has the
option to purchase equipment at a fixed price, assist in the sale of the
equipment to third parties, or renew the lease for a period of one year. The
Company has guaranteed a portion of the cost of the equipment in the event the
proceeds of a sale are not sufficient to cover the lessor's investment in the
equipment. At March 31, 1996, the Company had a contingent guarantee of $2.8
million related to equipment under such leases.
F-25
<PAGE> 56
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
At March 31, 1996, future minimum lease payments under noncancellable
operating leases are as follows: (in thousands)
____________
1997 . . . . . . . . . . . . . . . . . . $17,248
1998 . . . . . . . . . . . . . . . . . . 15,264
1999 . . . . . . . . . . . . . . . . . . 12,845
2000 . . . . . . . . . . . . . . . . . . 10,319
2001 . . . . . . . . . . . . . . . . . . 7,424
2002 and thereafter. . . . . . . . . . . 16,435
______
$79,535
======
(17) COMMITMENTS AND CONTINGENCIES
The Company is involved in various legal and regulatory proceedings which
have arisen in the ordinary course of its business and have not been finally
adjudicated. These actions, when ultimately concluded and determined, will
not, in the opinion of management, have a material adverse effect upon the
Company's consolidated financial position, results of operations or liquidity.
(18) CASH FLOWS
Cash paid for interest expense and income taxes was as follows:
Years Ended March 31,
___________________________
(In thousands) 1996 1995 1994
______________ ____ ____ ____
Interest . . . . . . . . . . . . . . . . . . . $25,107 $19,011 $13,502
Income taxes (net of refunds). . . . . . . . . 10,325 11,411 5,333
====== ====== ======
The total purchase price, fair value of assets acquired, cash paid and
liabilities assumed for business acquisitions is described in note 2.
During 1996 and 1995, the Company entered into capital lease obligations
for approximately $912 thousand and $3.7 million, respectively.
During 1995, the Company retired 3.8 million shares of treasury stock.
(19) MINORITY INTEREST IN SUBSIDIARIES
Minority interests in subsidiaries represent the minority shareholders'
proportionate share of the equity and the results of operations of certain
subsidiaries. Under the terms of exchange rights agreements between the
Company and minority shareholders, the Company, under certain circumstances,
may require or permit exchange of the minority interests of a subsidiary
for common stock of the Company. The agreements provide the minority
shareholders with the right to exchange their subsidiary shares for common
stock of the Company at certain exchange dates designated by the Board of
Directors. Each exchange will be based on the fair value of the subsidiary's
shares and the market price of the Company's common stock as of a valuation
date designated by the Board of Directors.
On August 31, 1995 and February 28, 1994 , in connection with optional
exchanges, certain minority shareholders elected to exchange
F-26
<PAGE> 57
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
their minority interests for an aggregate of 258,116 and 166,732 shares of
common stock, respectively. The market price of the Company's common stock on
August 31, 1995 and February 28, 1994 was $13.75 and $10.438 per share,
respectively . The acquisition of the minority interests has been recorded
using the purchase method of accounting.
During 1996, 1995 and 1994, the Company sold minority interests in
certain of its subsidiaries to employees based on the estimated fair market
value of the subsidiary shares. These sales of subsidiary shares were
accounted for as capital transactions and, therefore, no gain or loss was
recorded.
(20) SUMMARY BY BUSINESS SEGMENT
The Company, through its subsidiaries, is principally engaged in two
related businesses: 1) the distribution of industrial, medical and specialty
gases, and related equipment and 2) the manufacture of products for the
industrial gas and metals industries.
Industrial, medical and specialty gases are distributed through the
Company's subsidiaries which operate in five divisions with locations in 38
states, Canada and Mexico. The industrial gas distribution market is broad and
includes most major industries.
Products manufactured by the Company include nitrous oxide, a gas with
applications in the medical, food packaging and certain high technology
electronic industries and calcium carbide and carbon products for the
production of acetylene gas and for the non-ferrous metal industry.
(In thousands) Distribution Manufacturing Total
______________ ____________ _____________ _____
1996
Net sales . . . . . . . . . . . . . . . $801,552 $ 36,592 $838,144
Operating income . . . . . . . . . . . . 86,130 6,855 92,985
Assets . . . . . . . . . . . . . . . . . 846,129 37,513 883,642
Depreciation and amortization. . . . . . 44,386 1,376 45,762
Additions to plant and equipment
excluding business acquisitions. . . . . 39,755 1,481 41,236
1995
Net sales. . . . . . . . . . . . . . . . 654,381 33,602 687,983
Operating income . . . . . . . . . . . . 66,521 6,079 72,600
Assets . . . . . . . . . . . . . . . . . 613,320 32,317 645,637
Depreciation and amortization. . . . . . 35,548 1,320 36,868
Additions to plant and equipment
excluding business acquisitions. . . . . 35,961 751 36,712
1994
Net sales . . . . . . . . . . . . . . . 486,836 32,513 519,349
Operating income . . . . . . . . . . . . 42,399 6,268 48,667
Assets . . . . . . . . . . . . . . . . . 487,701 27,196 514,897
Depreciation and amortization. . . . . . 29,101 1,470 30,571
Additions to plant and equipment
excluding business acquisitions. . . . . 20,515 803 21,318
F-27
<PAGE> 58
AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(20) SUMMARY BY BUSINESS SEGMENT - (continued)
Corporate operating expenses are allocated between the Company's
distribution and manufacturing business segments based on relative sales
dollars.
(21) SUPPLEMENTARY INFORMATION (UNAUDITED)
Summary By Quarter
This table summarizes the unaudited results of operations for each
quarter of 1996 and 1995:
(In thousands, except per share data) First Second Third Fourth
_____________________________________ _____ ______ _____ ______
1996
Net sales . . . . . . . . . . . . . . . $194,272 $199,030 $208,549 $236,293
Operating income. . . . . . . . . . . . 22,037 22,144 22,984 25,820
Net earnings. . . . . . . . . . . . . . 9,454 9,335 9,817 11,114
Net earnings per share (1), (2):. . . . $ .15 $ .14 $ .15 $ .17
1995
Net sales . . . . . . . . . . . . . . . $159,462 $164,986 $174,112 $189,423
Operating income. . . . . . . . . . . . 15,701 17,115 18,577 21,207
Net earnings. . . . . . . . . . . . . . 6,789 7,460 7,790 9,440
Net earnings per share (1), (2):. . . . $ .10 $ .11 $ .12 $ .14
__________________
(1) Earnings per share calculations for each of the quarters are based on the
weighted average number of shares outstanding in each period. Therefore,
the sum of the quarters do not necessarily equal the full year earnings
per share.
(2) See notes 3 and 9 to the Company's consolidated financial statements for
information regarding earnings per share calculations and adjustment for
the stock split effective April 15, 1996.
F-28
<PAGE> 59
SCHEDULE II
CONSOLIDATED
AIRGAS, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended March 31, 1996, 1995 and 1994
(In thousands of dollars)
Column A Column B Column C
________ ________ ________
Additions
_________
Charged
Balance at Charged to (Credited)
Beginning Cost and to Other
Description of Period Expense Accounts
____________ _________ __________ ____________
1996 Accounts Receivable --
Allowance for doubtful accounts . . $ 4,161 $ 2,719 $ 1,313 (1)
LIFO cost reserve . . . . . . . . . 1,061 282 --
Insurance reserves. . . . . . . . . 6,304 19,510 262
1995 Accounts Receivable --
Allowance for doubtful accounts . . $ 4,207 $ 3,102 $ 1,033 (1)
LIFO cost reserve . . . . . . . . . 659 402 --
Insurance reserves. . . . . . . . . 5,341 17,038 132
1994 Accounts Receivable --
Allowance for doubtful accounts . . $ 3,392 $ 2,884 $ 1,155 (1)
LIFO cost reserve . . . . . . . . . 465 194 --
Insurance reserves. . . . . . . . . 7,046 13,031 165
(COLUMNS CONTINUED ON NEXT PAGE)
F-29
<PAGE> 60
SCHEDULE II
CONSOLIDATED
AIRGAS, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended March 31, 1996, 1995 and 1994
(In thousands of dollars)
(Columns Continued)
Column A Column D Column E
________ ________ ________
Balance
at End of
Description Deductions Period
____________ ______________ ________
1996 Accounts Receivable --
Allowance for doubtful accounts . . . $ (4,797) (2) $ 3,396
LIFO cost reserve . . . . . . . . . . -- 1,343
Insurance reserves. . . . . . . . . . (20,779) 5,297
1995 Accounts Receivable --
Allowance for doubtful accounts . . . $ (4,181) (2) $ 4,161
LIFO cost reserve . . . . . . . . . . -- 1,061
Insurance reserves. . . . . . . . . . (16,207) 6,304
1994 Accounts Receivable --
Allowance for doubtful accounts . . . $ (3,224) (2) $ 4,207
LIFO cost reserve . . . . . . . . . . -- 659
Insurance reserves. . . . . . . . . . (14,901) 5,341
________
(1) Includes collections on accounts previously written-off and allowances for
doubtful accounts of businesses acquired less the allowance for doubtful
accounts of businesses sold.
(2) Write-off of uncollectible accounts.
F-29, Continued
<PAGE>
<PAGE> EX-1
Exhibit 11
AIRGAS, INC. AND SUBSIDIARIES
EARNINGS PER SHARE CALCULATIONS
For the Years Ended March 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Years Ended March 31,
____________________________________________
1996 1995 1994
Primary/ Primary/ Primary/
Fully Fully Fully
Diluted Diluted Diluted
_______ _______ _______
<S> <C> <C> <C>
Adjustments of Shares Outstanding
_________________________________
Shares of common stock
outstanding-weighted 62,819,908 62,147,928 61,348,146
Net common stock equivalents 3,394,640 3,376,920 3,431,422
__________ __________ __________
Adjusted shares outstanding 66,214,548 65,524,848 64,779,568
========== ========== ==========
Actual Net Earnings
___________________
Actual net earnings $39,720,000 $31,479,000 $20,290,000
========== ========== ==========
Net Earnings Per Share $ .60 $ .48 $ .31
========== ========== ==========
</TABLE>
Earnings per share amounts for 1996, 1995 and 1994 were determined using the
treasury stock method.
<PAGE>
<PAGE> EX-2 Exhibit 21
AIRGAS, INC. AND SUBSIDIARIES
Airgas, Inc. (Parent)
Airgas Breathing Air Systems, Inc.
Airgas Canada, Inc.
Airgas Holdings Canada Limited
Airgas Houston
Airgas International, Inc.
Airgas Management, Inc.
Airgas New England Real Estate, Inc.
Airgas Ontario, Inc.
Airgas Realty, Inc.
Airgas Safety, Inc.
Airgas Texas, Inc. (d/b/a WECO)
American Carbide and Carbon Corporation (d/b/a Midwest Carbide)
Bay Airgas, Inc.
Cascade Airgas, Inc.
Connecticut Airgas, Inc.
Cryodyne Technologies, Inc.
Cylinder Leasing Corp.
Delta Airgas, Inc.
Empire Airgas, Inc.
Florida Airgas,Inc.
Gateway Airgas, Inc.
Great Lakes Airgas, Inc.
Great Western Airgas, Inc.
Gulf States Airgas, Inc.
Keystone Airgas, Inc.
Lone Star Airgas, Inc.
Maritius Industrial Gases, Inc.
Bhoruka Gases, Limited
Michigan Airgas, Inc.
ATNL, Inc.
Mid America Airgas, Inc.
Mid America Airgas Holdings
Midwest Airgas, Inc. (includes Central States and
Midstates Airgas reporting entities)
Mountain Airgas, Inc.
Nitrous Oxide Corp.
Northeast Airgas, Inc.
Northern Gases, Inc.
Pacific Airgas, Inc.
G.S. Parsons Company
Post Airgas, Inc.
Potomac Airgas, Inc.
Red-D-Arc Limited
Red-D-Arc, Inc.
Sierra Airgas, Inc.
Sooner Airgas, Inc.
Southeast Airgas, Inc.
Southern California Airgas, Inc.
Specialty Products and Equipment, Inc.
Trinity Airgas, Inc.
TriStates Airgas, Inc. (d/b/a Randall-Graw)
U.S. Airgas, Inc.
Westwind Company
Virginia Welding Supply
Airgas Polska, SP.ZO.O.
Poligaz, S.A.
<PAGE>
<PAGE> EX-3
Exhibit 23.1
Consent of Independent Auditors'
The Board of Directors
Airgas, Inc.:
We consent to incorporation by reference in the Registration Statements (Nos.
33-39433, 33-39325, 33-48388, 33-57893, 33-61301, 33-63201, 33-64633 and
33-61899) on Form S-3 and (Nos. 33-25419, 33-21780, 33-33954, 33-64056,
33-64058, 33-64112 and 33-64114) on Form S-8 of Airgas, Inc. of our report
dated May 9, 1996, relating to the consolidated balance sheets of Airgas, Inc.
and subsidiaries as of March 31, 1996 and 1995, and the related consolidated
statements of earnings, stockholders' equity, and cash flows and related
schedule for each of the years in the three-year period ended March 31, 1996,
which report is included in the March 31, 1996 Annual Report on Form 10-K of
Airgas, Inc.
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
June 10, 1996
<PAGE>
<PAGE>
<PAGE> EX-4
AIRGAS, INC.
BY-LAWS
(AMENDED AND RESTATED NOVEMBER 29, 1994)
______________________________
ARTICLE I
OFFICES
Section 1.
The registered office of the Corporation in the State of Delaware shall
be in the City of Wilmington, County of New Castle, State of Delaware.
The Corporation shall have offices at such other places as the Board of
Directors may from time to time determine.
ARTICLE II
STOCKHOLDERS
Section 1: Annual Meeting
The annual meeting of the stockholders for the election of Directors and
for the transaction of such other business as may properly come before the
meeting shall be held on such date within five (5) months after the end of the
fiscal year of the Corporation as the Board of Directors shall each year fix.
Each such annual meeting shall be held at such place, within or without the
State of Delaware, and hour as shall be determined by the Board of Directors.
The day, place and hour of each annual meeting shall be specified in the
notice of annual meeting.
The meeting may be adjourned from time to time and place to place until
its business is completed.
At the annual meeting of the stockholders, only such business shall be
conducted as shall have been specified in the notice of meeting. To be
properly brought before an annual meeting, business must (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board of Directors, (b) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (c) otherwise properly
brought before the meeting by a stockholder. For business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation, not less than
sixty days nor more than ninety days prior to the meeting; provided, however,
that in the event that less than seventy days' notice or prior public
disclosure of the date of the meeting is given or made to stockholder, notice
by the stockholder to be timely must be so received not later than the close
of business on the tenth day following the date on which such notice of the
date of the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall be set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting,
<PAGE> EX-5
(b) the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business, (c) the class and number of shares of
the Corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding
anything in the By-Laws to the contrary, no business shall be conducted at an
annual meeting except in accordance with the procedures set forth in this
Section I. The presiding officer of an annual meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting and in accordance with the provisions of this
Section I, and if he should so determine, he shall so declare to the meeting
that any such business not properly brought before the meeting shall not be
transacted.
Section 2. Special Meetings.
Except as otherwise required by law and subject to the rights of the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or on liquidation, special meeting of the stockholders
may be called only by the Chairman of the Board, the President, the Board of
Directors pursuant to a resolution approved by a majority of the entire
Board of Directors, or pursuant to the request of holders of 33% of the
combined voting power of the then outstanding shares of stock entitled to vote
generally in the election of Directors, voting together as a single class.
Section 3. Stockholder Action.
Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of
such holders and may not be effected by any consent in writing by such
holders.
Section 4. Notice of Meeting.
Except as otherwise provided by statute, written or printed notice
stating the place, day and hour of the meeting and, in case of a special
meeting, stating the purpose or purposes for which the meeting is called,
shall be delivered not less than 10 nor more than 60 days before the date of
the meeting, either personally or by mail, by or at the direction of the
Secretary, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail in a sealed envelope addressed to the stockholder at his
last known post office address as it appears on the stock record books
of the corporation, with postage thereon prepaid.
Attendance of a person at a meeting of stockholders, in person or by
proxy, constitutes a waiver of notice of the meeting, except when the
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because
the meeting is not lawfully called or convened.
Section 5. Quorum.
Except as otherwise required by law, the Certificate of Incorporation or
these By-Laws, the holders of a majority of the shares entitled to vote at any
meeting of the stockholders, present, in person or by proxy, shall constitute
a quorum and the act of the majority of such quorum shall be deemed the act of
the stockholders.
<PAGE> EX-6
If a quorum shall fail to attend any meeting, the chairman of the meeting
may adjourn the meeting to another place, date or time.
If a notice of any adjourned special meeting of stockholders is sent to
all stockholders entitled to vote thereat, stating that it will be held with
those present constituting a quorum, then, except as otherwise required by
law, those present at such adjourned meeting shall constitute a quorum and all
matters shall be determined by a majority of votes cast at such meeting.
Section 6. Qualification of Voters.
The Board of Directors (hereinafter sometimes referred to as the "Board")
may fix a day and hour not more than sixty nor less then ten days prior to the
day of holding any meeting of the stockholders at the time of which the
stockholders entitled to notice of and to vote at such meeting shall be
determined. Only those persons who were holders of record of voting stock
at such time shall be entitled to notice of and to vote at such meeting.
Section 7. Procedure.
The order of business and all other matters of procedure at every meeting
of the stockholders may be determined by the presiding officer.
Section 8. Voting Lists.
The officer or agent having charge of the transfer book for shares of the
Corporation shall prepare and make, at least 10 days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall be produced and kept at the time and
place of the meeting during the whole time thereof and may be inspected by any
stockholder present. The original share or stock ledger or transfer book or a
duplicate thereof, shall be the only evidence as to who are the stockholders
entitled to examine such list or share ledger or transfer book or to vote
at any meeting of stockholders.
Section 9. Voting and Proxies.
Each holder of Common Stock shall be entitled to one vote per share held
of record upon each matter on which stockholders generally are entitled to
vote.
At all meetings of stockholders, a stockholder entitled to vote may vote
in person or by proxy executed in writing by the stockholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of
the Corporation before or at the time of the meeting. Unless otherwise
provided by law, all questions touching the validity or sufficiency of the
proxies shall be decided by the Secretary.
Directors shall be elected by a plurality of the votes cast at an
election.
<PAGE> EX-7
All other action (unless a greater plurality is required by law or by the
Certificates of Incorporation or by these By-Laws) shall be authorized by a
majority of the votes cast by the holders of shares entitled to vote thereon,
present in person or represented by proxy, and where a separate vote by class
is required, by a majority of the votes cast by the stockholders of such
class, present in person or presented by proxy.
SECTION 10. Notification of Nomination of Directors.
Nominations for election to the Board of Directors of the Corporation at
a meeting of stockholders may be made by the Board of Directors or by any
stockholder of the Corporation entitled to vote for the election of directors
at such meeting who complies with the notice procedures set forth in this
Section 10. Such nominations, other than those made by or on behalf of the
Board of Directors, may be made only if notice in writing is personally
delivered to, or mailed by first class United States mail, postage prepaid,
and received by, the Secretary of the Corporation not less than sixty days nor
more than ninety days prior to such meeting; provided, however, that if less
than seventy days notice or prior public disclosure of the date of the
meeting is given to stockholders, such nomination shall have been mailed by
first class United States mail, postage prepaid, and received by, or
personally delivered to, the Secretary of the Corporation not later than the
close of business on the tenth day following the day on which notice of the
date of the meeting was mailed or such public disclosure was made, whichever
occurs first. Such notice shall set forth (a) as to each proposed nominee (i)
the name, age, business address and, if known, residence address of each such
nominee, (ii) the principal occupation or employment of each such nominee,
(iii) the number of shares, if any, of stock of the Corporation that are
beneficially owned by each such nominee and (iv) any other information
concerning the nominee that must be disclosed in proxy solicitations pursuant
to the proxy rules of the Securities and Exchange Commission if such person
had been nominated, or intended to be nominated, by the Board of Directors
(including such person's written consent to be named as a nominee and to serve
as a director if elected); and (b) as to the stockholder giving the notice
(i) the name and address, as they appear on the Corporation's books, of such
stockholder (ii) a representation that such stockholder is a holder of record
of shares of stock of the Corporation entitled to vote at the meeting and the
class and number of shares of the Corporation which are beneficially owned by
such stockholder, (iii) a representation that such stockholder intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice and (iv) a description of all arrangements or
understandings between such stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by such stockholder. The Corporation also may
require any proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the eligibility of
such proposed nominee to serve as a director of the Corporation. The
presiding officer of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
<PAGE> EX-8
ARTICLE III
DIRECTORS
Section 1. Number, Election and Terms.
Except as otherwise fixed pursuant to the provisions of Article 4 of the
Certificate of Incorporation relating to the rights of the holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect additional directors under specified
circumstances, the number of Directors shall consist of no less than
seven and no more than thirteen members, as shall be specifically determined
from time to time by resolution of the Board of Directors. The Directors,
other than those who may be elected by the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation, shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible, one class to hold office initially for a term expiring at the annual
meeting of stockholders to be held in 1987, another class to hold office
initially for a term expiring at the annual meeting of stockholders to be held
in 1988, and a third class to hold office initially for a term expiring at the
annual meeting of stockholders to be held in 1989, with the members of each
class to hold office until their successors are elected and qualified. At
each annual meeting of stockholders, the successors or the class of Directors
whose term expires at the meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in third year following
the year of their election.
The term "entire Board" as used in these By-Laws means the total number
of Directors which the Corporation would have if there were no vacancies.
Subject to the rights of holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation,
nominations for the election of Directors may be made by the Board of
Directors or a committee appointed by the Board of Directors or by any
stockholder entitled to vote in the election of Directors generally.
Section 2. Powers.
The business, property and affairs of the Corporation shall be managed by
or under the direction on its Board of Directors, which shall have and may
exercise all the powers of the Corporation of Incorporation, or by these
By-Laws, directed or required to be exercised or done by the stockholders.
Section 3. Vacancies.
Except as otherwise fixed pursuant to the provisions of Article 4 of the
Certificate of Incorporation relating to the rights of the holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect Directors under specified
circumstances, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be fill solely by
the affirmative vote of a majority of the remaining Directors then in office,
even though less than a quorum of the Board of Directors. Any director
elected in accordance with the preceding sentence shall hold office until the
next annual meeting of stockholders. No decrease in the number of Directors
constituting the Board of Directors shall shorten the term of any incumbent
Director.
<PAGE> EX-9
Section 4. Removal.
Subject to the rights of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation to elect Directors
under specified circumstances, any Director may be removed from office,
without cause only by the affirmative vote of the holders of 67% of the
combined voting power of the then outstanding shares of stock entitled to vote
generally in the election of Directors, voting together as a single class.
Section 5. Regular Meetings.
Regular meetings of the Board shall be held at such times and places as
the Board may from time to time determine.
Section 6. Special Meetings.
Special meetings of the Board may be called at any time, at any place and
for any purpose by the Chairman of the Executive Committee, the Chairman of
the Board, or the President, or by any officer of the Corporation upon the
request of a majority of the entire Board.
Section 7. Notice of Meeting.
Notice of regular meetings of the Board need not be given.
Notice of every special meeting of the Board shall be given to each
Director at his usual place of business, or at such other address as shall
have been furnished by him for the purpose. Such notice shall be given at
least twenty-four hours before the meeting by telephone or by being personally
delivered, mailed, or telegraphed. Such notice need not include a statement
of the business to be transacted at, or the purpose of, any such meeting.
Section 8. Quorum.
Except as may be otherwise provided by law or in these By-Laws, the
presence of a majority of the entire Board shall be necessary and sufficient
to constitute a quorum for the transaction of business at any meeting of the
Board, and the act of a majority of such quorum shall be deemed the act of the
Board.
Section 9. Powers.
Members of the Board, or of any committee thereof, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and such participation shall constitute presence
in person at such meeting.
Section 10. Action Without a Meeting.
Action required or permitted to be taken pursuant to authorization voted
at a meeting of the Board, or a committee thereof, may be taken without a
meeting if, before or after the action, all members of the Board or of the
Committee consent thereto in writing. The written consents shall be filed
with the minutes of the proceedings of the Board or Committee. The consent
shall have the same effect as a vote of the Board or Committee thereof for all
purposes.
<PAGE> EX-10
Section 11. Compensation of Directors.
Directors shall receive such compensation for their services as shall be
determined by a majority of the entire Board provided that Directors who are
serving the Corporation as officers or employees and who receive compensation
for their services as such officers or employers shall not receive any salary
or other compensation for their services as Directors.
ARTICLE IV
OFFICERS
Section 1. Number.
The officers of the Corporation shall be a Chairman of the Board, a
President, such number of vice presidents as the Board may from time to time
determine, a Secretary and a Treasurer. The Chairman of the Board shall be
the chief executive officer unless the Board shall otherwise determine. The
Chairman of the Board or, in his absence, or if such office be vacant the
President, shall preside at all meetings of the stockholders and of the Board.
Any person may hold two or more offices at the same time. The Chairman of the
Board and the President shall be members of the Board of Directors, but the
other officers need not be members of the Board.
Section 2. Election and Term of Office.
The officers of the Corporation shall be elected annually by the Board at
this first meeting of the Board held after the annual meeting of stockholders.
If the election of officers shall not be held at such meeting, such election
shall be held as soon thereafter as the same can conveniently be held. Each
officer, except such officers may be elected or appointed in accordance with
the provisions of Section 3 of Article IV, shall hold his office until his
successor shall have been duly elected and shall have qualified or until his
death, resignation or removal.
All officer, agents and employees of the Corporation shall hold their
respective offices or positions at the pleasure of the Board of Directors and
may be removed at any time by the Board of Directors with or without cause.
Section 3. Duties.
The officers, agents and employees shall perform the duties and exercise
the powers actually incident to the offices or positions held by them
respectively, and/or such other duties and powers as may be assigned to them
from time to time by the Board of Directors.
ARTICLE V
EXECUTIVE COMMITTEE
Section 1. Election.
At any meeting of the Board, an Executive Committee, composed of the
Chairman of the Board, the President, and not less than two other members, may
be elected by a majority vote of the entire Board to serve until the Board
shall otherwise determine. Either the Chairman of the Board or the President,
whichever is the chief executive officer, shall be the Chairman of the
Executive Committee, and the other shall be the Vice Chairman thereof, unless
<PAGE> EX-11
the Board shall otherwise determine. Members of the Executive Committee shall
be members of the Board.
Section 2. Powers.
The Executive Committee shall have and may exercise all of the powers of
the Board of Directors when the board is not in session, except that it shall
have no power to (a) elect directors or officers; (b) alter, amend or repeal
these By-Laws or any resolution or resolutions of the Board of Directors
relating to the Executive Committee; (c) declare any dividend or make any
other distribution to the stockholders of the Corporation; (d) appoint any
member of the Executive Committee, (e) take any other action which legally
may be taken only by the Board or (f) approve the acquisition of
substantially all the assets or capital stock of a corporation or business
entity which has annual sales in excess of twenty percent (20%) of the annual
sales of the Corporation as of the date of such approval.
Section 3. Vacancies.
Vacancies in the Executive Committee may be filled at any time by a
majority vote of the entire Board.
Section 4. Other Committees.
The Board may designate one or more other committees, each consisting of
one or more directors of the Corporation as members and one or more directors
as alternate members, with such power and authority as prescribed in the
By-Laws or as provided in a resolution adopted by a majority of the entire
Board. Each Committee, and each member thereof, shall serve at the pleasure
of the Board.
ARTICLE VI
LIABILITY OF DIRECTORS
A Director of the Corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (i) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the Director derived
any improper personal benefit. If the Delaware General Corporation Law is
hereafter amended to authorize the further elimination or limitation of the
liability of a Director, then the liability of a Director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the amended
Delaware General Corporation Law.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
Director of the Corporation existing at the time of such repeal or
modification.
<PAGE> EX-12
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
Section 1.
The Corporation shall indemnify to the full extent permitted by, and in
the manner permissible under, the laws of the State of Delaware any person
made, or threatened to be made, a party to an action or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that
he, his testator or intestate is or was a director or officer of the
Corporation or any predecessor of the Corporation, or served any other
enterprise as a director or officer at the request of the Corporation or any
predecessor of the Corporation.
Section 2. General.
The foregoing provisions of this Article VI shall be deemed to be a
contract between the Corporation and each director and officer who serves in
such capacity at any time while this By-Law is in effect, and any repeal or
modification thereof shall not affect any rights or obligations then existing
with respect to any state of facts then or theretofore existing or any action,
suit or proceeding theretofore or thereafter brought based in whole or in part
upon any such state of facts.
The foregoing rights of indemnification shall not be deemed exclusive of
any other rights to which any director or officer may be entitled apart from
the provisions of this Article.
The Board of Directors in its discretion shall have the power on behalf
of the Corporation to indemnify any person, other than a director or officer,
made a party to any action, suit or proceeding by reason of the fact that he,
his testator or intestate, is or was an employee of the Corporation.
ARTICLE VIII
CAPITAL STOCK
Section 1. Certificates of Stock.
The certificates for shares of the capital stock of the Corporation shall
be in such form as shall be approved by the Board. The certificates shall be
signed by the Chairman of the Board, the President, and also the Treasurer or
the Secretary, and may be sealed with the seal of the Corporation, or a
facsimile thereof.
The signatures of the aforesaid officers may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a registrar
other than the Corporation or its employee. The validity of any stock
certificate of the Corporation signed and executed by or in the name of duly
qualified officers of the Corporation shall not be affected by the subsequent
death, resignation, or the ceasing for any other reason of any such officer to
hold such office, whether before or after the date borne by or the actual
delivery of such certificate.
<PAGE> EX-13
The name of the person owning the shares represented thereby, with the
number of such shares and the date of issue, shall be entered on the
Corporation's capital stock records.
All certificates surrendered to the Corporation shall be cancelled, and
no new certificates shall be issued until the former certificate for the same
number of shares shall have been surrendered and canceled except in case of a
lost or destroyed certificate.
The Corporation may treat the holder of record or any share or shares of
stock as the holder in fact thereof, and shall not be bound to recognize any
equitable or other claim to interest in any such share or shares on the part
of any other person, whether or not it shall express or other notice thereof,
save as expressly provided by law.
Section 2. Lost, Stolen or Destroyed Certificates.
The Corporation may issue a new certificate for shares in place of a
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Board may require the owner of the lost or destroyed
certificate, or his legal representative, to give the Corporation a bond in
form satisfactory to the Corporation sufficient to indemnify the Corporation,
its transfer agents and registrars against any claim that may be made against
them on account of the alleged lost or destroyed certificate or the issuance
of such a new certificate.
Section 3. Transfer of Shares.
Shares of the capital stock of the Corporation shall be transferable by
the owner thereof in person or by duly authorized attorney, upon surrender of
the certificates therefore properly endorsed. The Board, at its option, may
appoint a transfer agent and registrar, or one or more transfer agents and one
or more registrars, or either, for the stock of the Corporation.
Section 4. Regulations.
The Board shall have power and authority to make all such rules and
regulations as they may deem expedient concerning the issue, transfer and
registration of certificates for shares of the capital stock of the
Corporation.
ARTICLE IX
AMENDMENTS
Section 1. Amendments of By-Laws.
Subject to the provisions of the Certificate of Incorporation, these
By-Laws may be altered, amended or repealed at any regular meeting of the
stockholders (or at any special meeting thereof duly called for that purpose)
by a majority vote of the shares represented and entitled to vote at such
meeting; provided that in the notice of such special meeting notice of
such purpose shall be given. Subject to the laws of the State of Delaware,
the Certificate of Incorporation and these By-Laws, the Board of Directors may
by majority vote of those present at any meeting at which a quorum is present
amend these By-Laws, or enact such other By-Laws as in their judgment may be
advisable for the regulation of the conduct of the affairs of the Corporation.
<PAGE> EX-14
ARTICLE X
CORPORATE SEAL
The corporate seal of the Corporation shall have inscribed thereon the
name of the Corporation and the words "Corporate Seal 1986-Delaware." Said
seal may be used by causing it or a facsimile or equivalent thereof to be
impressed or affixed or reproduced, and shall be in the custody of the
Secretary. If and when so directed by the Board, a duplicate of the seal may
be kept and used by the Treasurer, or by any Assistant Treasurer or Assistant
Secretary.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 1. Dividends.
Dividends upon the outstanding shares of the Corporation may be paid from
any source permitted by law. Dividends may be declared at any regular or
special meeting of the Board and may be paid in cash or other property or in
the form of a stock dividend.
Section 2. Fiscal Year.
The fiscal year of the Corporation shall end on the 31st day of March of
each year, unless otherwise provided by resolution of the Board.
Section 3. Stock in Other Corporation.
Any shares of stock in any other corporation which may from time to time
be held by the Corporation may be represented and voted at any meeting of
stockholders of such corporation by the Chairman or the President of the
Corporation or by any other person or persons thereunto authorized by the
Board, or by any proxy designated by written instrument of appointment
executed in the name of the Corporation either by the Chairman, the President,
or a Vice President, and attested by the Secretary or an Assistant Secretary.
Shares of stock in any other corporation which shares are owned by the
Corporation need not stand in its name, but may be held for its benefit in the
individual name of the Chairman or of any other nominee designated for the
purpose by the Board. Certificates for shares so held for the benefit of the
Corporation shall be endorsed in blank, or have proper stock powers attached
so that said certificates are at all times in due form for transfer, and shall
be held for safekeeping in such manner as shall be determined from time to
time by the Board.
Section 4. Election of Auditors.
The directors shall select independent auditors to audit the books and
records of the Corporation for the current fiscal year, subject to the
approval of the stockholders at the annual meeting. Should the auditors so
elected resign, be removed for good cause shown, or otherwise fail to serve
during or with respect to said year, a majority of the directors shall select
a substitute firm of auditors to serve with respect to said year.
<PAGE>
<PAGE> EX-15
[EXECUTION COPY]
LOAN AGREEMENT
DATED AS OF FEBRUARY 5, 1996
BY AND AMONG
AIRGAS, INC.,
AS THE BORROWER,
THE BANKS NAMED HEREIN
AND
NATIONSBANK, N.A.,
AS AGENT<PAGE>
<PAGE> EX-16
Table of Contents
Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . 1
1.01 Definitions. . . . . . . . . . . . . . . . . . . . . 1
1.02 Incorporated Definitions.. . . . . . . . . . . . . . 5
1.03 Accounting Terms.. . . . . . . . . . . . . . . . . . 5
ARTICLE II REVOLVING LOANS . . . . . . . . . . . . . . . . 6
2.01 Loans. . . . . . . . . . . . . . . . . . . . . . . . 6
2.02 Borrowing Procedures . . . . . . . . . . . . . . . . 6
(a) Minimum Amounts.. . . . . . . . . . . . . . . . 6
(b) Types of Loans. . . . . . . . . . . . . . . . . 6
(c) Notice of Borrowing.. . . . . . . . . . . . . . 6
(d) Limitation on Numbers of Eurodollar Loans.. . . 7
(e) Interest Periods During Syndication . . . . . . 7
2.03 Notes. . . . . . . . . . . . . . . . . . . . . . . . 7
2.04 Interest.. . . . . . . . . . . . . . . . . . . . . . 8
2.05 Commitment Fee; Commitment Reductions. . . . . . . . 8
(a) Commitment Fee. . . . . . . . . . . . . . . . . 8
(b) Commitment Reductions. . . . . . . . . . . 9
ARTICLE III ADDITIONAL PROVISIONS REGARDING LOANS . . . . . 9
3.01 Additional Interest Rate Provisions. . . . . . . . . 9
(a) Default Rate. . . . . . . . . . . . . . . . . . 9
(b) LIBOR Base Rate Unascertainable.. . . . . . . . 9
3.02 Conversion and Continuation of Loans.. . . . . . . 10
3.03 Prepayments. . . . . . . . . . . . . . . . . . . . 12
3.04 Additional Costs.. . . . . . . . . . . . . . . . . 12
3.05 Change in Circumstances. . . . . . . . . . . . . . 15
3.06 Indemnity. . . . . . . . . . . . . . . . . . . . . 15
3.07 Payments.. . . . . . . . . . . . . . . . . . . . . 15
3.08 Capital Adequacy.. . . . . . . . . . . . . . . . . 16
ARTICLE IV CONDITIONS PRECEDENT AS OF CLOSING DATE . . . 17
4.01 Conditions Precedent to Initial Loans. . . . . . . 17
ARTICLE V CONDITIONS OF LENDING . . . . . . . . . . . . 18
5.01 Conditions of Lending. . . . . . . . . . . . . . . 18
5.02 Commitment Limitation; Reaffirmation.. . . . . . . 18
ARTICLE VI REPRESENTATIONS AND WARRANTIES. . . . . . . . 19
6.01 Representations and Warranties.. . . . . . . . . . 19
(a) Corporate Organization. . . . . . . . . . . . 19
(b) Corporate Power and Authority to Own
Properties, etc.. . . . . . . . . . . . . . . 19
(c) Corporate Power and Authority to Execute,
Deliver and Perform the Loan Documents. . . . 19
(d) Validity of Loan Documents. . . . . . . . . . 19
(e) Execution, Delivery and Performance of Loan
Documents.. . . . . . . . . . . . . . . . . . 19
(f) Subsidiaries. . . . . . . . . . . . . . . . . 20
(g) Interest in Other Persons.. . . . . . . . . . 20
(h) Financial Statements. . . . . . . . . . . . . 20
(i) Governmental Regulations, etc.. . . . . . . . 20
(j) Governmental Consent. . . . . . . . . . . . . 20
6.02 Incorporated Representations and Warranties. . . . 21
<PAGE> EX-17
ARTICLE VII COVENANTS . . . . . . . . . . . . . . . . . . 21
7.01 Covenants. . . . . . . . . . . . . . . . . . . . . 21
(a) Use of Loan Proceeds. . . . . . . . . . . . . 21
(b) Indemnification.. . . . . . . . . . . . . . . 21
(c) Notice of Event of Default. . . . . . . . . . 22
(d) Further Assurances. . . . . . . . . . . . . . 22
7.02 Incorporated Covenants.. . . . . . . . . . . . . . 22
7.03 Incorporation of Subordinated Debt Covenants.. . . 23
ARTICLE VIII EVENTS OF DEFAULT AND ACCELERATION. . . . . . 23
8.01 Events of Default; Acceleration. . . . . . . . . . 23
ARTICLE IX THE AGENT . . . . . . . . . . . . . . . . . . 25
9.01 Appointment and Authorization. . . . . . . . . . . 25
9.02 Use of Agents, etc.. . . . . . . . . . . . . . . . 25
9.03 General Immunity.. . . . . . . . . . . . . . . . . 25
9.04 Reliance, etc. . . . . . . . . . . . . . . . . . . 26
9.05 Event of Default.. . . . . . . . . . . . . . . . . 26
9.06 No Representations.. . . . . . . . . . . . . . . . 26
9.07 Indemnification of Agent.. . . . . . . . . . . . . 27
9.08 Dealings with the Borrower.. . . . . . . . . . . . 27
9.09 Resignation and Removal. . . . . . . . . . . . . . 27
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . 28
10.01 Notices.. . . . . . . . . . . . . . . . . . . 28
10.02 No Waiver; Remedies Cumulative. . . . . . . . 29
10.03 Survival of Certain Provisions, etc.. . . . . 29
10.04 Costs.. . . . . . . . . . . . . . . . . . . . 29
10.05 Amendments, Waivers and Consents. . . . . . . 30
10.06 Computations. . . . . . . . . . . . . . . . . 30
10.07 Right of Set-Off. . . . . . . . . . . . . . . 30
10.08 Interim Interest. . . . . . . . . . . . . . . 31
10.09 Counterparts. . . . . . . . . . . . . . . . . 31
10.10 Assignments, Participations, etc. . . . . . . 31
10.11 Term. . . . . . . . . . . . . . . . . . . . . 32
10.12 Governing Law; Severability; Merger.. . . . . 32
10.13 Priority of Loans.. . . . . . . . . . . . . . 33
10.14 Dealings by Banks with the Borrower.. . . . . 33
10.15 Net Payments. . . . . . . . . . . . . . . . . 33
10.16 Headings. . . . . . . . . . . . . . . . . . . 33
<PAGE>
<PAGE> EX-18
Exhibits
Exhibit A Bank Commitments
Exhibit B Form of Note
Exhibit C Form of Legal Opinion of Counsel to the Borrower
Exhibit D Subsidiaries
Exhibit E Interests in Other Persons
Exhibit F Existing Indebtedness
<PAGE>
<PAGE> EX-19
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of February 5, 1996 (the "Loan
Agreement"), is made by and among
AIRGAS, INC., a Delaware corporation (the "Borrower"); and
NATIONSBANK, N.A., ("NationsBank");
CIBC INC., ("CIBC");
PNC BANK, NATIONAL ASSOCIATION, ("PNC" - hereinafter, NationsBank, CIBC
and PNC, together with their successors and assigns, may be referred
individually as a "Bank" and collectively as the "Banks"); and
NATIONSBANK, N.A., as agent for the Banks (the "Agent").
RECITALS:
A. The Borrower has requested that the Banks provide the
Borrower with a $100,000,000.00 credit facility for the purposes
of (i) financing the acquisition of new Subsidiaries, (ii)
financing other investments permitted under this Loan Agreement
and (iii) satisfying capital expenditure and working capital
needs of the Borrower and its Subsidiaries.
B. The Banks have agreed to provide the requested credit
facility to the Borrower on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, the Borrower, the Agent and the Banks agree
as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. For the purposes hereof:
"Applicable Margin" means, with respect to any Eurodollar
Loan, (i) for each day of the Interest Period for such Eurodollar
Loan occurring during the period from and including the Closing
Date through but not including September 30, 1996, 45 basis
points, and (ii) for each day of the Interest Period for such
Eurodollar Loan occurring on and after September 30, 1996, 70
basis points;
"Base Rate" means, for any day, the rate per annum (rounded,
if necessary, to the nearest whole multiple of 1/100 of 1%) equal
to the greater of (a) the Federal Funds Rate in effect on such
day plus 50 basis points or (b) the Prime Rate in effect on such
day. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that it
is unable after due inquiry to ascertain the Federal Funds Rate
for any reason, including the inability or failure of the Agent
to obtain sufficient quotations in accordance with the terms
<PAGE> EX-20
hereof, the Base Rate shall be determined without regard to
clause (a) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any
change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of
such change in the Prime Rate or the Federal Funds Rate,
respectively.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Business Day" means any day not a Saturday, Sunday or legal
holiday on which each of the Banks is open for business;
provided, however, that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any
day on which banks are not open for dealings in dollar deposits
in the London Interbank Market;
"Closing Date" means the date as of which this Loan
Agreement is executed by the Borrower, the Banks and the Agent
and all of the conditions precedent set forth in Article IV
hereof have been satisfied;
"Commitment", for each Bank, means the commitment of such
Bank to make Loans in a maximum principal amount equal to the
amount set forth beside the name of such Bank on Exhibit A
hereto, as the same may be reduced from time to time in
accordance with the terms of Section 2.05(b) hereof;
"Commitment Fee" has the meaning assigned to such term in
Section 2.05(a) hereof;
"Eurodollar Loan" means a Loan bearing interest based on the
LIBOR Base Rate;
"Event of Default" has the meaning given to said term in
Section 8.01 hereof;
"Existing Loan Agreement" means that certain Seventh Amended
and Restated Loan Agreement dated as of August 10, 1995, as
amended as of the date hereof, by and among the Borrower, the
banks parties thereto and NationsBank, as agent for such banks;
"Federal Funds Rate" means, for any day, the weighted
average of the rates on overnight Federal funds transactions,
with members of the Federal Reserve System only, arranged by
Federal funds brokers, as published for such day by the Federal
Reserve Bank of New York (or, in the absence of such publication,
as reasonably determined by the Agent);
"Incorporated Covenants" has the meaning assigned to such
term in Section 7.02 hereof;
"Incorporated Definitions" has the meaning assigned to such
term in Section 1.02 hereof;
"Incorporated Events of Default" has the meaning assigned to
such term in Section 8.01(e) hereof;
<PAGE> EX-21
"Incorporated Representations" has the meaning assigned to
such term in Section 6.02 hereof;
"Interbank Offered Rate" means, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the
rate appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in U.S. dollars at
approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to
such Interest Period. If, for any reason, such rate is not
available, the term "Interbank Offered Rate" shall mean, with
respect to any Eurodollar Loan for the Interest Period applicable
thereto, the rate per annum appearing on Reuters Screen LIBO Page
as the London interbank offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall
be the arithmetic mean of all such rates.
"Interest Payment Date" means, (i) as to any Eurodollar Loan
having an Interest Period of 1 week, the last day of March, June,
September and December in each year, (ii) as to any Eurodollar
Loan having an Interest Period of 1, 2 or 3 months, the last day
of such Interest Period, (iii) as to any Eurodollar Loan having
an Interest Period longer than 3 months, the last day of June,
September, December and March in each year and the last day of
such Interest Period, and (iv) as to any Base Rate Loan, the last
day of March, June, September and December in each year. If any
Interest Payment Date falls on a day which is not a Business Day,
such Interest Payment Date shall be deemed to be the next
succeeding Business Day (unless the same would fall in a
succeeding month, in which case such Interest Payment Date shall
be deemed to be the first preceding Business Day);
"Interest Period" means, as to any Eurodollar Loan, prior to
February 23, 1996, a period of one (1) week commencing on the
date of such Eurodollar Loan and, on and after February 23, 1996
the period commencing on the date of such Eurodollar Loan and
ending on the numerically corresponding day (or if there is no
corresponding day, the last day) in the calendar month that is 1,
2, 3 or 6 months thereafter, as the Borrower may elect; provided,
however, that (i) if any Interest Period would end on a day which
shall not be a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding
Business Day, and (ii) no Interest Period shall end later than
the Termination Date;
"LIBOR Base Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined by the Agent pursuant to the following formula:
LIBOR Base Rate = Interbank Offered Rate
1 - LIBOR Base Rate Reserve Percentage
<PAGE> EX-22
"LIBOR Base Rate Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time
to time under Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as such regulation may
be amended from time to time or any successor regulation, as the
maximum reserve requirement (including, without limitation, any
basic, supplemental, emergency, special, or marginal reserves)
applicable with respect to Eurocurrency liabilities as that term
is defined in Regulation D (or against any other category of
liabilities that includes deposits by reference to which the
interest rate of Eurodollar Loans is determined), whether or not
any Bank has any Eurocurrency liabilities subject to such reserve
requirement at that time. Eurodollar Loans shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed
subject to reserve requirements without benefits of credits for
proration, exceptions or offsets that may be available from time
to time to a Bank. The LIBOR Base Rate shall be adjusted
automatically on and as of the effective date of any change in
the LIBOR Base Rate Reserve Percentage.
"Loan" means a loan made pursuant to Sections 2.01 and 2.02
hereof;
"Loan Documents" means this Loan Agreement and the Notes;
"Majority Banks" means, at any time, (i) the holders of at
least 51% of the aggregate unpaid principal amount of the Notes
at such time, or (ii) if no amounts are outstanding under any of
the Notes, Banks having at least 51% of the aggregate amount of
the Commitments at such time;
"Note" or "Notes" means a promissory note or promissory
notes, as the case may be, of the Borrower, executed and
delivered as provided in Section 2.03 hereof;
"Prime Rate" means the rate of interest per annum as
announced publicly in Charlotte, North Carolina by NationsBank as
its prime commercial lending rate in effect from time to time,
which is not necessarily the best or lowest rate of interest
offered by NationsBank to its customers;
"Subordinated Debt" means (i) the indebtedness of up to
$55,000,000.00 incurred by the Borrower pursuant to the terms of
the Senior Subordinated Note Purchase Agreements, the repayment
of which is subordinated to the repayment of the indebtedness of
the Borrower to the Banks hereunder on terms described in the
Senior Subordinated Note Purchase Agreements, and (ii)
additional subordinated indebtedness incurred by the Borrower
provided that (A) no Event of Default specified in Article VIII
hereof, nor any event which upon notice or lapse of time or both,
would constitute such an Event of Default, exists immediately
prior to or would exist immediately after such additional
subordinated indebtedness is incurred and (B) all of the terms
and conditions of such additional subordinated indebtedness
(including the terms relating to the subordination of such
indebtedness to the indebtedness of the Borrower hereunder) are
consented to by the Majority Banks prior to the time such
indebtedness is incurred.
<PAGE> EX-23
"Termination Date" means July 1, 1997;
"Unutilized Commitments" means, at any time, the excess of
(i) the aggregate Commitments at such time over (ii) the
aggregate outstanding principal balance of the Loans at such
time.
1.02 Incorporated Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings
assigned to such terms in the Existing Loan Agreement, as in
effect as of the date hereof (the "Incorporated Definitions").
The incorporation by reference to the Existing Loan Agreement of
the Incorporated Definitions pursuant to this Section 1.02 shall
survive the termination of the Existing Loan Agreement. For
purposes of the incorporation of the Incorporated Definitions
pursuant to this Section 1.02, all references in the Incorporated
Definitions to the "Agent" shall be deemed to refer to the Agent
hereunder, all references in the Incorporated Definitions to a
"Bank" or the "Banks" shall be deemed to refer to one or more of
the Banks hereunder, all references in the Incorporated
Definitions to the "Majority Banks" shall be deemed to refer to
the Majority Banks hereunder, all references in the Incorporated
Definitions to the "Loan Agreement," or any similar references,
shall be deemed to refer to this Loan Agreement, all references
in the Incorporated Definitions to a "Note" or the "Notes" shall
be deemed to refer to one or more of the Notes issued pursuant to
Section 2.03 hereof and all references in the Incorporated
Definitions to a "Loan Document" or the "Loan Documents," or any
similar references, shall be deemed to refer to one or more of
the Loan Documents as defined in Section 1.01 hereof.
1.03 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
Generally Accepted Accounting Principles applied on a Consistent
Basis.
ARTICLE II
REVOLVING LOANS
2.01 Loans. Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, each
Bank, severally and not jointly, agrees to make Loans to the
Borrower, at any time or from time to time on or after the date
hereof and until the Termination Date, in an aggregate principal
amount at any time outstanding not exceeding the amount of its
then applicable Commitment; provided that, at no time shall the
aggregate principal balance of all outstanding Loans made by all
of the Banks exceed the aggregate Commitments of all of the
Banks. The Borrower may borrow, repay and reborrow hereunder on
or after the date hereof and prior to the Termination Date,
subject to the terms, provisions and limitations set forth
herein.
<PAGE> EX-24
2.02 Borrowing Procedures.
(a) Minimum Amounts. The Loans made by the Banks on
any one date shall be in a minimum aggregate principal
amount of $1,500,000.00 or in an integral multiple of
$100,000.00 in excess thereof. Loans shall be made ratably
from the Banks in accordance with their respective
Commitments; provided, however, that the failure of any Bank
to make its Loan shall not in itself relieve any other Bank
of its obligation to lend hereunder. The initial Loan by
each Bank shall be made against delivery to such Bank of an
appropriate Note, payable to the order of such Bank, as
referred to in Section 2.03 hereof. In the event any Bank
shall fail to make a Loan to the Borrower in accordance with
the terms hereof, any other Bank may, but shall not be
obligated to, make such Loan to the Borrower.
(b) Types of Loans. Each Loan shall be either a
Eurodollar Loan or a Base Rate Loan (or a combination
thereof) as the Borrower may request subject to and in
accordance with this Section. Subject to other provisions
of this Section and the provisions of Section 3.02 hereof,
Loans of more than one type may be outstanding at the same
time.
(c) Notice of Borrowing. The Borrower shall give the
Agent prior written, telefax or telephonic notice, no later
than the Business Day of the proposed borrowing in the case
of a Base Rate Loan, and no later than three Business Days
prior to the Business Day of the proposed borrowing in the
case of a Eurodollar Loan, of each borrowing under Section
2.01 hereof. In each case, such notice shall be irrevocable
and shall specify the aggregate amount of the proposed
borrowing and the date thereof (which shall be a Business
Day). Such notice, to be effective, must be received by the
Agent not later than 10:00 a.m. (or 1:00 p.m. with respect
to a Eurodollar Loan), Charlotte, North Carolina time, on
the Business Day specified for a borrowing consisting of a
Base Rate Loan and on the third Business Day prior to the
date specified for a borrowing consisting of a Eurodollar
Loan. Such notice shall specify whether the Loan then being
requested is to be (or what portion or portions thereof are
to be) a Base Rate Loan or a Eurodollar Loan and, if such
Loan or any portion or portions thereof is to be a
Eurodollar Loan, the Interest Period with respect thereto.
If no election is specified in such notice, such Loan (or
the portion thereof as to which no election is specified)
shall be a Base Rate Loan. The Agent shall promptly on the
same day provide the Banks notice that it has received
notice from the Borrower pursuant to this paragraph. On the
borrowing date specified in such notice, each Bank shall
make its ratable share of the borrowing available to the
Borrower at Account No. 001-641-844 maintained at the
offices of NationsBank, no later than 5:00 p.m., Charlotte,
North Carolina time, in Federal or other immediately
available funds.
<PAGE> EX-25
(d) Limitation on Numbers of Eurodollar Loans.
Notwithstanding any provision to the contrary in this Loan
Agreement, the Borrower shall not in any notice of borrowing
under this Section 2.02 request any Eurodollar Loan which,
if made, would result in an aggregate of more than nine (9)
separate Eurodollar Loans of any Bank being outstanding
hereunder at any one time. For purposes of the foregoing,
(i) Eurodollar Loans made ratably by the Banks pursuant to a
discrete borrowing, conversion or continuation request shall
be considered a single Loan and (ii) Eurodollar Loans having
different Interest Periods, regardless of whether they
commence or expire on the same date, shall be considered
separate Loans. The Borrower may continue any Eurodollar
Loan, or convert all or any part of any Base Rate Loans or
Eurodollar Loans into Loans of another type, in accordance
with Section 3.02 hereof and subject to the limitations set
forth therein.
(e) Interest Periods During Syndication.
Notwithstanding any provision hereof to the contrary, until
February 23, 1996, the Borrower shall be permitted to
request an Interest Period of one (1) week only for any
Eurodollar Loan hereunder.
2.03 Notes. The Loans by each Bank shall be evidenced by a
Note duly executed on behalf of the Borrower, dated the date
hereof, in substantially the form of Exhibit B attached hereto,
payable to the order of such Bank in a principal amount equal to
the Commitment of such Bank. Each Note shall bear interest from
its date on the outstanding principal balance thereof as set
forth in Section 2.04 hereof. The aggregate unpaid principal
amount of the Loans of each Bank at any time shall be the
principal amount owing on the Note of such Bank at such time.
The principal amount of each Loan, as evidenced by a Note, shall
be due and payable on the Termination Date. All accrued and
unpaid interest on the outstanding principal balance of each Note
shall be payable as provided in Section 2.04 and Section 3.03(c)
hereof; provided that, if any such day is not a Business Day,
such interest shall be payable on the next succeeding Business
Day (unless, in case of a Eurodollar Loan, the same would fall in
a succeeding month, in which case such principal shall be payable
on the first preceding Business Day). All payments under the
Notes shall be made in accordance with Section 3.07 hereof.
2.04 Interest.
(a) Subject to the provisions of Section 3.01 hereof,
each Base Rate Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed
over a year of 365 days) equal to the Base Rate. Interest
shall be payable on each Base Rate Loan quarterly on each
Interest Payment Date, commencing with the first of such
dates to occur after the date of such Base Rate Loan, and on
the Termination Date or the date of conversion of such Base
Rate Loan to a Eurodollar Loan.
<PAGE> EX-26
(b) Subject to the provisions of Section 3.01 hereof,
each Eurodollar Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the LIBOR Base Rate plus
the Applicable Margin. Interest shall be payable on each
Eurodollar Loan on each applicable Interest Payment Date,
and on the Termination Date, the date of conversion of such
Eurodollar Loan to a Base Rate Loan or the date of
continuation of such Eurodollar Loan for a subsequent
Interest Period. The Agent shall determine the applicable
LIBOR Base Rate for each Interest Period at 11:00 a.m.,
London time, or as soon as practicable thereafter, on the
date when such determination is to be made in respect of
such Interest Period and shall promptly and on the same day
notify the Borrower and the Banks of the LIBOR Base Rate so
determined. Such determination shall be conclusive absent
manifest error.
2.05 Commitment Fee; Commitment Reductions.
(a) Commitment Fee. The Borrower agrees to pay in
immediately available funds to the Agent (without offset or
counterclaim), for the account of the Banks, in
consideration of the Commitments hereunder, on the last day
of each June, September, December and March, commencing with
the first such date after the date hereof, and on the date
of any reduction or termination of the Commitments of the
Banks hereunder, a commitment fee (hereinafter called for
the purpose of this Section 2.05(a) the "Commitment Fee") of
3/16 of 1% per annum (computed on the basis of the actual
number of days elapsed in a year of 365 days) on the average
daily Unutilized Commitments during the preceding period or
quarter. The Commitment Fee shall commence to accrue as of
the date hereof and shall cease to accrue on the earlier of
the Termination Date or the date of termination of the
Commitments of the Banks hereunder.
(b) Commitment Reductions.
(i) The Borrower may in full permanently
terminate, or from time to time in part permanently
reduce, the Commitments, in each case upon at least
three Business Days' prior written, telefax or
telephonic notice to the Agent. Each partial reduction
of the Commitments shall be in an aggregate principal
amount of $5,000,000.00 or in an integral multiple of
$1,000,000.00 in excess thereof. The Agent shall
promptly on the same day provide the Banks notice that
it has received notice from the Borrower pursuant to
this subparagraph.
(ii) In the case of any termination or reduction
of the Commitments pursuant to subparagraph (i) above,
immediately after giving effect to such termination or
reduction the aggregate principal balance of all
outstanding Loans made by all of the Banks shall not
exceed the aggregate Commitments of all of the Banks.
Each reduction in the aggregate Commitments pursuant to
<PAGE> EX-27
subparagraph (i) above shall be made ratably among the
Banks in accordance with each Bank's Commitment.
ARTICLE III
ADDITIONAL PROVISIONS REGARDING LOANS
3.01 Additional Interest Rate Provisions.
(a) Default Rate. Upon the occurrence and during the
continuance of any Event of Default, the Borrower shall on
demand from time to time pay interest on the principal
balance of the Loans and, to the extent permitted by law, on
overdue payments of interest and any other amounts payable
hereunder or under any of the other Loan Documents up to the
date of actual payment (after as well as before judgment):
(i) in the case of principal of or interest on a
Loan, at a rate determined by the Agent to be 2% per
annum plus the rate which would otherwise be payable
under Section 2.04 hereof; and
(ii) in the case of any other amount payable
hereunder or under any of the other Loan Documents
(other than amounts referred to in clause (i) above),
at a rate equal to 2% per annum plus the Base Rate.
(b) LIBOR Base Rate Unascertainable. In the event,
and on each occasion, that on the day two Business Days
prior to the commencement of any Interest Period for a
Eurodollar Loan, any Bank shall have determined that dollar
deposits in the amount of the principal amount of and/or for
the Interest Period for such Eurodollar Loan are not
generally available to such Bank in the London Interbank
Market, or that the rate at which such dollar deposits are
being offered will not adequately and fairly reflect the
cost to such Bank of making or maintaining the principal
amount of such Eurodollar Loan during such Interest Period,
or reasonable means do not exist for ascertaining the LIBOR
Base Rate for such Eurodollar Loan for such Interest Period,
such Bank shall, as soon as practicable thereafter, give
written, telefax or telephonic notice of such determination
to the Borrower and to the Agent and each other Bank, and,
until the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Loan or
for conversion to or continuation of a Eurodollar Loan
pursuant to Section 2.02 or 3.02 hereof shall be deemed a
request for a Base Rate Loan. Each determination by any of
the Banks hereunder shall be conclusive absent manifest error.
3.02 Conversion and Continuation of Loans. The Borrower
shall have the right, at any time, upon prior written, telefax or
telephonic notice to the Agent (which notice shall be irrevocable
and, to be effective, must be received by the Agent not later
than 11:00 a.m., Charlotte, North Carolina time, in the case of
Base Rate Loans, on the Business Day of any conversion, and in
the case of Eurodollar Loans, on the third Business Day preceding
<PAGE> EX-28
the date of any continuation or conversion), (i) to continue any
Eurodollar Loan or portion thereof into a subsequent Interest
Period and (ii) to convert any Loan or portion thereof into a
Loan of a different type, subject to the following:
(a) no Event of Default shall have occurred and
be continuing at the time of such continuation or
conversion, and the representations and warranties set
forth in Article VI hereof shall be true and correct in
all material respects on and as of the date of such
continuation or conversion with the same effect as
though such representations and warranties had been
made on and as of such date, except to the extent that
such representations and warranties expressly relate to
an earlier date;
(b) if less than all Loans at the time outstand-
ing shall be continued or converted, such continuation
or conversion shall be made pro rata among the Banks in
accordance with the respective principal amounts of the
Loans held by the Banks immediately prior to such
continuation or conversion and the notice given to the
Banks by the Borrower shall specify the aggregate
amount of Loans to be continued or converted;
(c) in the case of a continuation or conversion
of less than all Loans, the aggregate principal amount
of Loans continued or converted shall not be less than
$1,500,000.00 or shall be in an integral multiple of
$100,000.00 in excess thereof;
(d) each conversion or continuation shall be
effected by each Bank by applying the proceeds of the
new Base Rate Loan or Eurodollar Loan, as the case may
be, to the Loan (or portion thereof) being converted or
continued, and accrued interest on the Loan (or portion
thereof) being converted or continued shall be paid by
the Borrower at the time of conversion or continuation,
as the case may be;
(e) if the new Loan made in respect of a conver-
sion or continuation shall be a Eurodollar Loan, the
first Interest Period with respect thereto shall
commence on the date of conversion or continuation, as
the case may be;
(f) no Interest Period shall be selected by the
Borrower for a Loan converted to or continued as a
Eurodollar Loan if such Interest Period is not
available to the Borrower pursuant to the terms of the
definition of "Interest Period" set forth in Section
1.01 and/or pursuant to the terms of Section 3.01(b) or
3.05 hereof;
(g) a Eurodollar Loan may be converted to a Base
Rate Loan or continued as a Eurodollar Loan for a
subsequent Interest Period only on the last day of the
Interest Period therefor;
<PAGE> EX-29
(h) each request for a conversion to or
continuation of a Eurodollar Loan which shall fail to
state an applicable Interest Period shall be deemed to
be a request for a Eurodollar Loan having an Interest
Period of one (1) month duration;
(i) no more than nine (9) separate Eurodollar Loans
shall be outstanding hereunder at any one time (it being
understood that, for purposes of the foregoing,
(i) Eurodollar Loans made ratably by the Banks pursuant to a
discrete borrowing, conversion or continuation request shall
be considered a single Loan and (ii) Eurodollar Loans having
different Interest Periods, regardless of whether they
commence or expire on the same date, shall be considered
separate Loans); and
(j) notwithstanding any provision hereof to the
contrary, until February 23, 1996, the Borrower shall be
permitted to request an Interest Period of one (1) week only
for any Eurodollar Loan hereunder.
In the event that the Borrower shall not give notice to continue
any Eurodollar Loan into a subsequent Interest Period or convert
any such Loan into a Base Rate Loan, such Eurodollar Loan (unless
repaid) shall automatically become a Base Rate Loan at the
expiration of the then current Interest Period therefor.
3.03 Prepayments.
(a) The Borrower shall have the right at any time and
from time to time to prepay any Base Rate Loan, in whole or
in part, without premium or penalty, upon prior written,
telefax or telephonic notice to the Agent no later than
10:00 a.m., Charlotte, North Carolina time, on the Business
Day of the proposed prepayment; provided, however, that each
such partial prepayment shall be in the aggregate principal
amount of at least $1,500,000.00 (or in an integral multiple
of $100,000.00 in excess thereof) or the balance of such
Loan, if less.
(b) The Borrower shall have the right to prepay any
Eurodollar Loan, in whole or in part, upon at least three
Business Days' prior written or telephonic notice to the
Agent; provided, however, that (i) each such partial
prepayment shall be in the aggregate principal amount of at
least $1,500,000.00 or in an integral multiple of
$100,000.00 in excess thereof or the balance of such Loan,
if less and (ii) no such prepayment made before the last day
of the Interest Period in effect for such Eurodollar Loan
shall be permitted unless accompanied by payment of amounts
specified in Section 3.06 hereof.
(c) Each notice of prepayment shall specify the
prepayment date and the principal amount to be prepaid,
shall be irrevocable and shall commit the Borrower to prepay
such Loan by the amount stated therein. All prepayments
under this Section shall be shared pro rata by the Banks and
shall be accompanied by accrued interest on the principal
<PAGE> EX-30
amount being prepaid to the date of prepayment. Amounts
prepaid under the Notes pursuant to this Section prior to
the Termination Date shall be available to be reborrowed
from the Banks under this Loan Agreement in accordance with
the terms hereof.
3.04 Additional Costs.
(a) The cost to any Bank of making or maintaining any
Eurodollar Loans or of maintaining its Commitment may
fluctuate as a result of imposition hereafter of, or changes
hereafter in, the reserve requirements promulgated by the
Board of Governors of the Federal Reserve System of the
United States. Accordingly, the Borrower shall pay to each
Bank such additional amount or amounts as will compensate it
for the effect of such reserve requirements applicable to
it, which determination shall be conclusive absent manifest
error. For purposes hereof, the aforesaid reserve
requirements shall include any reserve on Eurocurrency
Liabilities as defined by Regulation D of said Board at the
ratios provided in such Regulation D from time to time. It
is hereby agreed that Eurodollar Loans made hereunder shall
be deemed to constitute Eurocurrency Liabilities (as defined
in such Regulation D). Such Bank shall promptly refund any
amounts received by it pursuant to this Section 3.04(a) that
were erroneously billed to the Borrower together with
interest thereon at the Federal Funds Rate. The provisions
of this subsection shall survive termination of this Loan
Agreement.
(b) In the event that after the date hereof any change
in applicable law or regulations or in the interpretation or
administration thereof (including, without limitation, any
request, guideline or policy not having the force of law) by
any authority charged with the administration or
interpretation thereof shall occur which shall:
(i) subject any Bank to any tax with respect to
any Eurodollar Loan (other than any tax on the overall
net income of such Bank imposed by the United States of
America or by the jurisdiction in which such Bank has
its principal office or political subdivision or taxing
authority therein); or
(ii) change the basis of taxation of any payment
to any Bank of principal of or interest on any
Eurodollar Loan or fees and other amounts payable
hereunder, or any combination of the foregoing; or
(iii) impose, modify or deem applicable any
reserve, deposit or similar requirement against
any assets held by, deposits with or for the
account of or loans or commitments by an office of
such Bank as it relates to Eurodollar Loans or the
Commitment of such Bank; or
<PAGE> EX-31
(iv) impose upon such Bank any other condi-
tion with respect to this Loan Agreement as it
relates to Eurodollar Loans or the Commitment of
such Bank;
and the result of any of the foregoing shall be to increase
the cost to such Bank of making or maintaining any
Eurodollar Loan or of maintaining its Commitment or to
reduce the amount of any payment (whether of principal,
interest or otherwise) received or receivable by such Bank,
or to require such Bank to make any payment in connection
with any Eurodollar Loan by or in an amount which such Bank
in its sole reasonable judgment shall deem material, then
and in each such case the Borrower agrees to pay to such
Bank, as provided in paragraph (c) below (but without
duplication of the payments required under paragraph (a)
above), such amounts as shall be necessary to compensate
such Bank for such cost, reduction or payment; provided,
however, that if any Bank shall request compensation under
this Section 3.04(b) with respect to any Eurodollar Loan,
the Borrower may, at its option and upon written notice to
the Banks, elect to convert such Eurodollar Loan of such
Bank into a Base Rate Loan upon the payment by the Borrower
of the increased costs described above incurred prior to
such conversion and any amount owing in respect of Section
3.06 hereof, it being understood that (A) for purposes of
Sections 3.02 and 3.03 hereof, such Base Rate Loan, until
the expiration of the Interest Period of the Eurodollar Loan
so converted into a Base Rate Loan, shall be subject to
prepayment or conversion or continuation only at such times
and on such conditions as the Eurodollar Loan from which it
was converted and (B) upon such increased costs being
eliminated, or reduced by an amount deemed sufficient by the
Borrower, such Base Rate Loan may be reconverted into a
Eurodollar Loan having an Interest Period expiring on the
same date as the Eurodollar Loan previously converted into
such Base Rate Loan; provided further, however, that if the
result of any the foregoing shall be to decrease the cost to
any Bank of making or maintaining any Eurodollar Loan
hereunder by a material amount, then such Bank will credit
to the Borrower an amount equal to such decreased costs.
Promptly after actual notice to any Bank that a change
referred to in this paragraph has occurred, such Bank will
give notice of such occurrence to the Borrower and the
Agent. Each Bank agrees that it will promptly refund any
amounts received by it pursuant to this Section 3.04(b) that
were erroneously billed to the Borrower together with
interest thereon at the Federal Funds Rate. The provisions
of this subsection shall survive termination of this Loan
Agreement.
(c) Each Bank shall promptly deliver to the Borrower
from time to time one or more certificates setting forth the
amounts due to such Bank under paragraph (a) or (b) above,
the reserve requirements or changes as a result of which
such amounts are due and the manner of computing such
amounts. Each such certificate shall be conclusive in the
absence of manifest error. The Borrower shall pay to each
<PAGE> EX-32
Bank the amounts shown as due on any such certificate within
10 days after its receipt of the same. No failure on the
part of any Bank to demand compensation under paragraph (a)
or (b) above on any one occasion shall constitute a waiver
of its right to demand such compensation on any other
occasion with respect to any other event. The protection of
this Section shall be available to each Bank regardless of
any possible contention of the invalidity or inapplicability
of any law, regulation or other condition which shall give
rise to any demand by such Bank for compensation hereunder;
provided, however, if such law, regulation or other
condition giving rise to such demand is determined to be
invalid or inapplicable, such Bank will promptly refund any
amount erroneously billed to the Borrower together with
interest thereon at the Federal Funds Rate.
3.05 Change in Circumstances.
(a) Notwithstanding anything to the contrary contained
elsewhere in this Loan Agreement, if any change after the
date hereof in any law or regulation or in the
interpretation thereof by any governmental authority charged
with the administration thereof shall make it unlawful for a
Bank to make or maintain a Eurodollar Loan or to effect to
its obligations as contemplated hereby with respect to a
Eurodollar Loan, then, by prior written notice to the
Borrower, such Bank may:
(i) declare that Eurodollar Loans will not
thereafter be made by such Bank hereunder,
whereupon the Borrower shall be prohibited from
requesting Eurodollar Loans from such Bank
hereunder unless such declaration is subsequently
withdrawn; and
(ii) require that all outstanding Eurodollar
Loans made by it be converted to Base Rate Loans,
whereupon all of such Eurodollar Loans shall be
automatically converted to Base Rate Loans as of
the effective date of such notice as provided in
paragraph (b) below (notwithstanding the
provisions of Section 3.07 hereof but subject to
the provisions of Section 3.06 hereof).
(b) For purposes of this Section 3.05, a notice to the
Borrower by any Bank pursuant to paragraph (a) above shall
be effective with respect to outstanding Eurodollar Loans,
if lawful, on the last day of the then current Interest
Period; in all other cases, such notice shall be effective
on the date of receipt by the Borrower.
3.06 Indemnity. The Borrower shall reimburse each Bank on
demand for any actual out-of-pocket loss incurred by it in the
reemployment of the funds released by any prepayment or
conversion of any Eurodollar Loan required or permitted by any
other provision of this Loan Agreement if such Eurodollar Loan is
prepaid or converted other than on the last day of any Interest
Period for such Eurodollar Loan or upon any failure by the
<PAGE> EX-33
Borrower to borrow or convert or continue any Eurodollar Loan.
Each Bank shall promptly deliver to the Borrower from time to
time one or more certificates setting forth the amounts due to
such Bank under this paragraph and the manner of computing such
amounts. Determinations by any Bank under this Section 3.06
shall be conclusive absent manifest error. The provisions of
this Section shall remain operative and in full force and effect
regardless of the expiration of this Loan Agreement.
3.07 Payments. All payments and prepayments of principal,
interest and fees (other than the fees payable to the Agent
pursuant to Section 7.01(d) hereof), subject to distinctions in
the interest rates applicable to any Loans as a consequence of
the application of Section 3.04(b) or Section 3.05 hereof, shall
be made pro rata among the Banks in accordance with the then
outstanding principal amount of the Notes (or in accordance with
the Commitments if there are no amounts then outstanding under
the Notes). All payments by the Borrower hereunder and under the
Notes shall be made to the Agent at its offices at Charlotte,
North Carolina time, for the account of each Bank in dollars in
Federal or other immediately available funds by 11:00 a.m.
Charlotte, North Carolina time, on the date on which such payment
shall be due. All payments received by the Agent for the account
of a Bank shall be promptly on the same day remitted by the Agent
to such Bank. Upon receipt by a Bank of more than its pro rata
share of any such payment, whether voluntary or involuntary, it
is hereby agreed among the Banks and the Borrower that the Bank
receiving such excess payment (the "Receiving Bank") shall be
obligated to pay to the other Banks for application to the
obligations owing to such Bank hereunder, under such Bank's Note
and under the other Loan Documents an amount necessary to reduce
the outstanding balances on such obligations owing to such Bank
to the balances that would be outstanding on such obligations
owing to such Bank if the Receiving Bank had not received more
than its pro rata share of such payment; provided, however, that
in the event any amount paid by any Receiving Bank to any other
Bank pursuant to the immediately preceding sentence is rescinded
or must otherwise be returned by the Receiving Bank, each other
Bank shall, upon request of the Receiving Bank, repay to the
Receiving Bank the amount so paid by the Receiving Bank to such
Bank, with interbank compensation representing interest and
adjustment penalty for the period commencing on date such payment
is returned by the Receiving Bank until the date the Receiving
Bank receives such repayment at the Federal Funds Rate. Interest
in respect of any Loan hereunder shall accrue from and including
the date of such Loan to but excluding the date on which such
Loan is paid in full.
3.08 Capital Adequacy. In the event that any Bank shall
have determined that the adoption hereafter of or any change
hereafter in any applicable law, rule, regulation or guideline
regarding capital adequacy, or any change in the interpretation
or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof or by any court, or compliance by such
Bank (or any lending office of such Bank) with any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable
<PAGE> EX-34
agency, has or would have the effect of reducing the rate of
return on such Bank's capital or on the capital of such Bank's
holding company as a consequence of its obligations hereunder to
a level below that which such Bank or such Bank's holding company
could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies or the policies
of such Bank's holding company, as the case may be, with respect
to capital adequacy) by an amount deemed by such Bank in its sole
reasonable judgment to be material, then from time to time the
Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank or such Bank's holding company for
any such reduction suffered. Within a reasonable time after
making a request for such additional amount hereunder, such Bank
will furnish to the Borrower a statement certifying the amount of
such reduction and describing the event giving rise to such
reduction, which determination shall be conclusive absent
manifest error. Failure on the part of such Bank to demand
compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with
respect to any period shall not constitute a waiver of such
Bank's rights to demand compensation for any increased costs or
reduction in amounts received or receivable or reduction in
return on capital in such period or in any other period. The
protection of this Section 3.08 shall be available to the Bank
regardless of any possible conflict or invalidity or inappli-
cability of the law, regulation or condition which shall have
been impaired. The provisions of this Section 3.08 shall remain
operative and in full force and effect regardless of the
expiration of this Loan Agreement.
ARTICLE IV
CONDITIONS PRECEDENT AS OF CLOSING DATE
4.01 Conditions Precedent to Initial Loans. The obligations
as of the Closing Date of the Banks to make any Loans are subject
to the conditions precedent that the Agent shall have received on
or before such day the following, in form and substance
satisfactory to the Agent:
(a) fully executed copies of this Loan Agreement
(including exhibits) and the Notes;
(b) resolutions of the directors of the Borrower
certified by an officer of the Borrower as of the Closing
Date, approving and adopting the documents described in
subparagraph (a) above and authorizing the execution,
delivery and performance thereof;
(c) a certificate of the corporate secretary or an
assistant secretary of the Borrower certifying the names and
true signatures of the officers of the Borrower authorized
to sign the documents described in subparagraph (a) above on
behalf of the Borrower and the other documents to be
delivered hereunder;
<PAGE> EX-35
(d) a certificate of the corporate secretary or an
assistant secretary of the Borrower, certifying that the
charter documents and bylaws of the Borrower previously
delivered to NationsBank in its capacity as agent under the
Existing Loan Agreement (and/or any prior agreement restated
by the Existing Loan Agreement) have not been amended since
August 10, 1995 and through the Closing Date except as
provided therein;
(e) a copy of the certificate of good standing,
existence or its equivalent with respect to the Borrower
certified as of a recent date by the State of Delaware;
(f) the favorable opinion of McCausland, Keen &
Buckman, counsel to the Borrower, substantially in the form
of Exhibit C hereto; and
(g) a certificate of the corporate secretary or an
assistant secretary of the Borrower, certifying that the
Senior Subordinated Note Purchase Agreements previously
delivered to NationsBank in its capacity as agent under the
Existing Loan Agreement (and/or any prior agreement restated
by the Existing Loan Agreement) have not been amended since
August 10, 1995 and through the Closing Date except as
provided therein;
(h) such other information and documents as the Agent
may reasonably request.
ARTICLE V
CONDITIONS OF LENDING
5.01 Conditions of Lending. The obligations of the Banks to
make any Loans are subject to the satisfaction of the conditions
precedent set forth in Article IV hereof on the Closing Date and
to the satisfaction of the following further conditions:
(a) proper notice of such Loan shall have been
given in accordance with Section 2.02(c) hereof;
(b) the representations and warranties of the
Borrower set forth in Article VI hereof and in the
other Loan Documents shall be true and correct in all
material respects on and as of the date of such Loan
with the same effect as though such representations and
warranties had been made on and as of such date, except
to the extent that such representations and warranties
expressly relate to an earlier date;
(c) at the time of and immediately after giving
effect to each such Loan, no Event of Default, or any
event which upon notice or lapse of time or both would
constitute an Event of Default, shall have occurred and
be continuing; and
<PAGE> EX-36
(d) at the time of and immediately after giving effect
to such Loan, the aggregate principal balance of all
outstanding Loans made by all of the Banks shall not exceed
the aggregate Commitments of all of the Banks.
5.02 Commitment Limitation; Reaffirmation. Each borrowing
hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such borrowing as to the matters
specified in Sections 5.01(b), (c) and (d) hereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties. The Borrower
represents and warrants that:
(a) Corporate Organization. Each of the Borrower and
its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the state of
its incorporation and is duly authorized and qualified to
carry on its business in the manner now being conducted by
it in states in which failure to so qualify would or might
have a material adverse effect on the business or operations
of such Person;
(b) Corporate Power and Authority to Own Properties,
etc. Each of the Borrower and its Subsidiaries has the
legal power and authority to own its properties and assets
and to carry on its businesses as now being conducted and as
contemplated by this Loan Agreement and the other Loan
Documents;
(c) Corporate Power and Authority to Execute, Deliver
and Perform the Loan Documents. The Borrower has the power
and authority to execute, deliver and perform the Loan
Documents;
(d) Validity of Loan Documents. When executed and
delivered, the Loan Documents will be legal, valid and
binding obligations of the Borrower and will be enforceable
against the Borrower in accordance with their respective
terms;
(e) Execution, Delivery and Performance of Loan
Documents. The execution, delivery and performance of the
Loan Documents:
(i) have been duly authorized by all
requisite corporate action of the Borrower
required for the lawful creation and issuance
thereof;
(ii) do not violate any material provision of
law, any order of any court or other agency of
government or the corporate charter, certificate
of incorporation or by-laws of the Borrower, or
any provisions of any indenture, agreement or
<PAGE> EX-37
other instrument to which the Borrower or its
properties or assets are or will become bound;
(iii) will not be in conflict with, result in
a breach of or constitute an event of default or
an event which, upon notice or lapse of time, or
both, would constitute such an event of default
under any indenture, agreement or other instrument
to which the Borrower is a party; and
(iv) do not and will not result in the
creation of any lien on any assets of the
Borrower;
(f) Subsidiaries. All of the direct and indirect
Subsidiaries of the Borrower as of the Closing Date are set
forth in Exhibit D attached hereto;
(g) Interest in Other Persons. Except as set forth in
Exhibit E attached hereto, as of the Closing Date neither
the Borrower nor any of its Subsidiaries owns any interest
in any Person;
(h) Financial Statements. The audited consolidated
balance sheet, income statement and statement of cash flows
of the Borrower and its Subsidiaries prepared as of March
31, 1995, copies of each of which have been furnished to
each Bank, fairly present the assets, liabilities and
financial condition of the Borrower and its Subsidiaries as
at the date thereof, all in accordance with Generally
Accepted Accounting Principles, and since such date to and
including the date of this Loan Agreement there has been no
material adverse change in such condition or in the
operations of the Borrower and its Subsidiaries taken as a
whole;
(i) Governmental Regulations, etc. None of the
Borrower or its Subsidiaries is engaged in the business of
extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U issued by
the Board of Governors of the Federal Reserve System), and
no part of the proceeds of any Loan will be used whether
directly or indirectly, incidentally or ultimately (i) to
purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin
stock, or to refund indebtedness incurred for such purpose,
or (ii) for any purpose which entails a violation of, or
which is inconsistent with, the provisions of the
regulations of the Board of Governors of the Federal Reserve
System, including without limitation Regulation G, U, T or X
thereof. If requested by the Agent, the Borrower agrees
that it will (and will cause each of its Subsidiaries to)
furnish to the Banks a statement in conformity with the
requirements of Federal Reserve Form U-1 referred to in said
Regulation U; and
<PAGE> EX-38
(j) Governmental Consent. No consent, approval or
authorization of, or filing, registration or qualification
with, any governmental agency, authority, instrumentality or
regulatory body on the part of the Borrower is required in
conjunction with the execution, delivery or performance by
the Borrower, or for the validity or enforceability, of the
Loan Documents.
6.02 Incorporated Representations and Warranties. The
Borrower hereby agrees that the representations and warranties
contained in Article VIII (other than any of the representations
and warranties set forth in Section 8(a), (b), (c), (d), (e),
(g), (h), (i), (m) or (u)) of the Existing Loan Agreement, as in
effect as of the date hereof (the "Incorporated
Representations"), are hereby incorporated by reference and shall
be as binding on the Borrower as if set forth fully herein. The
incorporation by reference to the Existing Loan Agreement of the
Incorporated Representations pursuant to this Section 6.02 shall
survive the termination of the Existing Loan Agreement. For
purposes of the incorporation of the Incorporated Representations
pursuant to this Section 6.02, all references in the Incorporated
Representations to the "Agent" shall be deemed to refer to the
Agent hereunder, all references in the Incorporated
Representations to a "Bank" or the "Banks" shall be deemed to
refer to one or more of the Banks hereunder, all references in
the Incorporated Representations to the "Majority Banks" shall be
deemed to refer to the Majority Banks hereunder, all references
in the Incorporated Representations to the "Loan Agreement," or
any similar references, shall be deemed to refer to this Loan
Agreement, all references in the Incorporated Representations to
a "Note" or the "Notes" shall be deemed to refer to one or more
of the Notes issued pursuant to Section 2.03 hereof and all
references in the Incorporated Representations to a "Loan
Document" or the "Loan Documents," or any similar references,
shall be deemed to refer to one or more of the Loan Documents as
defined in Section 1.01 hereof.
ARTICLE VII
COVENANTS
7.01 Covenants. The Borrower covenants and agrees with the
Banks and the Agent that, so long as this Loan Agreement shall
remain in effect or the principal of or interest on any Note or
any other expense or amount payable hereunder remains unpaid, and
until the Commitments are terminated, unless the Majority Banks
shall otherwise consent in writing, it will and will cause each
of its Subsidiaries to:
(a) Use of Loan Proceeds. Use the proceeds of the
Loans for the purposes set forth in RECITAL A hereof;
(b) Indemnification. Defend, indemnify and hold
harmless the Banks, the Agent, their employees, agents,
officers, affiliates and directors, from and against any and
all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses (including without
<PAGE> EX-39
limitation attorney and consultant fees, court costs and
litigation expenses) of whatever kind or nature, known or
unknown, contingent or otherwise, arising out of or in any
way related to any acquisition permitted by, and/or financed
with the proceeds of any borrowings made pursuant to, this
Loan Agreement, including, without limitation, all claims of
the seller or sellers of any acquired company;
(c) Notice of Event of Default. Deliver to the Banks
forthwith, upon any Executive Officer of the Borrower
obtaining knowledge of an Event of Default or an event which
would constitute an Event of Default but for the requirement
that notice be given or time elapse or both, a certificate
of the chief financial officer or other Executive Officer of
the Borrower specifying the nature and period of existence
thereof and what action the Borrower proposes to take with
respect thereto; and
(d) Further Assurances. Execute any and all further
documents, agreements and instruments, and take all further
actions which may be required under applicable law, or which
the Majority Banks may reasonably request, in order to
effectuate the transactions contemplated by this Loan
Agreement.
The provisions of subsection (b) of this Section 7.01 shall
remain operative and in full force and effect regardless of the
expiration of this Loan Agreement, notwithstanding anything to
the contrary set forth in this Loan Agreement or any other of the
Loan Documents.
7.02 Incorporated Covenants. The Borrower hereby agrees
that the affirmative and negative covenants contained in Articles
IX and X of the Existing Loan Agreement, as in effect as of the
date hereof (the "Incorporated Covenants"), are hereby
incorporated by reference and shall be as binding on the Borrower
as if set forth fully herein, except that, for purposes hereof,
Exhibit L to the Existing Loan Agreement referred to in Section
10.01(a)(ii) of the Existing Loan Agreement shall be deemed to
refer to Exhibit F attached hereto. The incorporation by
reference to the Existing Loan Agreement of the Incorporated
Covenants pursuant to this Section 7.02 shall survive the
termination of the Existing Loan Agreement. For purposes of the
incorporation of the Incorporated Covenants pursuant to this
Section 7.02, all references in the Incorporated Covenants to the
"Agent" shall be deemed to refer to the Agent hereunder, all
references in the Incorporated Covenants to a "Bank" or the
"Banks" shall be deemed to refer to one or more of the Banks
hereunder, all references in the Incorporated Covenants to the
"Majority Banks" shall be deemed to refer to the Majority Banks
hereunder, all references in the Incorporated Covenants to the
"Loan Agreement," or any similar reference, shall be deemed to
refer to this Loan Agreement, all references in the Incorporated
Covenants to a "Note" or the "Notes" shall be deemed to refer to
one or more of the Notes issued pursuant to Section 2.03 hereof
and all references in the Incorporated Covenants to a "Loan Document" or the
"Loan Documents," or any similar reference, shall be deemed to refer to one or
more of the Loan Documents as defined in Section 1.01 hereof.
<PAGE> EX-40
7.03 Incorporation of Subordinated Debt Covenants. The
covenants of the Borrower (i) contained in Section 10 of each of
the Senior Subordinated Note Purchase Agreements, as such
covenants may be amended or modified from time to time, and (ii)
contained in any documentation evidencing or executed in
connection with any other Subordinated Debt as such documents may
be amended or modified from time to time, are (until termination
of the applicable Subordinated Note Purchase Agreement or the
applicable documentation evidencing or executed in connection
with such other Subordinated Debt, as the case may be) hereby
incorporated herein by reference and shall be as binding on the
Borrower as if set forth fully herein.
ARTICLE VIII
EVENTS OF DEFAULT AND ACCELERATION
8.01 Events of Default; Acceleration. If any of the
following events (the "Events of Default") shall occur and be
continuing:
(a) (i) the failure of the Borrower to make when due
any payment of interest, fees or other amounts required by
this Loan Agreement and/or any of the other Loan Documents
(other than a payment of principal) and the continuation of
such failure for five (5) days; or (ii) the failure of the
Borrower to make when due any payment of principal required
by this Loan Agreement and/or any of the Notes;
(b) the failure of the Borrower to comply with any
other terms and conditions in this Loan Agreement (including
without limitation any covenant incorporated herein by
reference pursuant to Section 7.02 or Section 7.03 hereof)
or the other Loan Documents within 30 days after the earlier
to occur of (i) written notice from the Agent specifying the
default and requesting that it be remedied; or (ii) an
Executive Officer of the Borrower becomes aware of such
violation;
(c) any representation or warranty made by the
Borrower herein (including without limitation any
representation or warranty incorporated herein by reference
pursuant to Section 6.02 hereof) or in any of the other Loan
Documents or in any certificate, statement or report
heretofore or hereafter made (or deemed made pursuant to
Article V hereof) shall be untrue in any material respect
when made (or deemed made);
(d) an event of default shall occur under any of the
other Loan Documents; or
(e) the occurrence of an "Event of Default" under and
as defined in the Existing Loan Agreement, as in effect as
of the date hereof, which "Events of Default" (the
"Incorporated Events of Default"), are hereby incorporated
herein by reference and shall be as binding on the Borrower
as if set forth fully herein, such incorporation by
<PAGE> EX-41
reference to survive termination of the Existing Loan
Agreement. For purposes of the incorporation of the
Incorporated Events of Default pursuant to this Section
8.01(e), all references in the Incorporated Events of
Default to the "Agent" shall be deemed to refer to the Agent
hereunder, all references in the Incorporated Events of
Default to a "Bank" or the "Banks" shall be deemed to refer
to one or more of the Banks hereunder, all references in the
Incorporated Events of Default to the "Majority Banks" shall
be deemed to refer to the Majority Banks hereunder, all
references in the Incorporated Events of Default to the
"Loan Agreement," or any similar references, shall be deemed
to refer to this Loan Agreement, all references in the
Incorporated Events of Default to a "Note" or the "Notes"
shall be deemed to refer to one or more of the Notes issued
pursuant to Section 2.03 hereof and all references in the
Incorporated Events of Default to a "Loan Document" or the
"Loan Documents," or any similar references, shall be deemed
to refer to one or more of the Loan Documents as defined in
Section 1.01 hereof;
then, during the continuance of any such event (other than an
event described in Section 11.01(d) of the Incorporated Events of
Default), the Agent may and shall upon request of any Bank with
respect to an event described in subparagraph (a) above or upon
the request of the Majority Banks with respect to any other Event
of Default (other than an event described in Section 11.01(d) of
the Incorporated Events of Default), by written notice to the
Borrower, take any or all of the following actions, at the same
or different times: (i) terminate forthwith the Commitments of
all the Banks hereunder; (ii) declare the Notes and all fees and
other amounts payable hereunder to be forthwith due and payable,
whereupon the Notes, both as to principal and interest, and all
fees and other amounts payable hereunder, shall become forthwith
due and payable without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by
the Borrower, anything contained herein or in the Notes to the
contrary notwithstanding; and (iii) pursue any other remedy under
this Loan Agreement or any other Loan Document or otherwise; and,
in any event described in Section 11.01(d) of the Incorporated
Events of Default, the Commitments of all the Banks hereunder
shall automatically terminate and the Notes, both as to principal
and interest, and all fees and other amounts payable hereunder,
shall automatically become due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained
herein or in the Notes to the contrary notwithstanding, and the
Agent may pursue any other remedy under this Loan Agreement or
any other Loan Document or otherwise.
ARTICLE IX
THE AGENT
9.01 Appointment and Authorization. Each Bank hereby
irrevocably designates and appoints the Agent as the agent of
such Bank under this Loan Agreement and the other Loan Documents,
<PAGE> EX-42
and each Bank hereby irrevocably authorizes the Agent, as the
agent for such Bank, to take such action on its behalf under the
provisions of this Loan Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Loan
Agreement and the other Loan Documents, together with such other
powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Loan Agreement, or
any of the other Loan Documents, the Agent shall not have any
duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Bank,
and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Loan Agreement
or the other Loan Documents or otherwise exist against the Agent.
9.02 Use of Agents, etc. The Agent may execute any of its
duties under this Loan Agreement or the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
9.03 General Immunity. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection
with any of the Loan Documents (except for its or such Person's
own gross negligence or willful misconduct), or (ii) responsible
in any manner to any of the Banks for any recitals, statements,
representations or warranties made by the Borrower contained in
any of the Loan Documents or in any certificate, report,
statement or other document referred to or provided for in, or
received by the Agent under or in connection with, the Loan
Documents or the enforceability or sufficiency of any of the Loan
Documents, or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be
under any obligation to any Bank to ascertain or to inquire as to
the observance or performance of any of the agreements contained
in, or conditions of, any of the Loan Documents or to inspect the
properties, books or records of the Borrower or any of its
Subsidiaries.
9.04 Reliance, etc. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it
to be genuine and correct and to have been given, signed, sent or
made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation,
counsel to the Borrower), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the
payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof
shall have been filed with the Agent. The Agent shall be fully
justified in failing or refusing to take any action under any of
the Loan Documents unless it shall first receive such advice or
<PAGE> EX-43
concurrence of the Banks as it deems appropriate or it shall
first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in
refraining from acting, under any of the Loan Documents in
accordance with a request of the Banks, and such request and any
action taken or failure to act pursuant thereto shall be binding
upon all the Banks and all future holders of the Notes.
9.05 Event of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Event of
Default (or of any event or condition which, upon notice or lapse
of time, or both, would constitute such an Event of Default)
unless the Agent has received notice from a Bank or the Borrower
referring to the applicable Loan Document and describing such
Event of Default (or other such event or condition). In the
event that the Agent receives such a notice, the Agent shall give
notice thereof to the Banks. The Agent shall take such action
with respect to such Event of Default (or other event or
condition) as shall be directed in accordance with Section 8.01
or Section 10.05 hereof; provided that, unless and until the
Agent shall have received such directions, the Agent may (but
shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default (or
other event or condition) as it shall deem advisable in the best
interests of the Banks.
9.06 No Representations. Each Bank expressly acknowledges
that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent
or any affiliate thereof hereafter taken, including any review of
the affairs of the Borrower and its Subsidiaries, shall be deemed
to constitute any representation or warranty by the Agent to any
Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation
into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own
decision to make its Loans hereunder and enter into this Loan
Agreement. Each Bank also represents that it will, independently
and without reliance upon the Agent or the other Banks, and based
on such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Loan
Agreement, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning
the business, operations, property, financial and other condition
or creditworthiness of the Borrower which may come into the
possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
<PAGE> EX-44
9.07 Indemnification of Agent. The Banks agree to indemnify
the Agent in its capacity as such (to the extent not reimbursed
by the Borrower, and without limiting the obligation of the
Borrower to do so), ratably according to the respective amounts
outstanding to the Borrower, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at
any time following the payment of the Notes) be imposed on,
incurred by or asserted against the Agent in any way relating to
or arising out of the Loan Documents or any documents
contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the
foregoing; provided that no Bank shall be liable for the payment
of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or
willful misconduct; provided, further, no Bank shall be obligated
for the ratable share of such indemnity obligations of any other
Bank. The agreements in this subsection shall survive the
payment of the Notes and all other amounts payable hereunder.
9.08 Dealings with the Borrower. NationsBank and its
affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower or any of its
Subsidiaries as though NationsBank were not the Agent hereunder.
With respect to its Loans made or renewed by it and the Note
issued to it, NationsBank shall have the same rights and powers
under this Loan Agreement as any Bank and may exercise the same
as though it were not the Agent.
9.09 Resignation and Removal. The Agent may resign at any
time by giving written notice thereof to the Banks and the
Borrower and may be removed at any time with or without cause by
the Majority Banks. Upon any such resignation or removal, the
Majority Banks shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the
Majority Banks, and shall have accepted such appointment, within
30 days after the retiring Agent's giving of notice of
resignation or the Majority Banks' removal of the retiring Agent,
then the retiring Agent shall select a successor Agent provided
such successor Agent is a commercial bank organized under the
laws of the United States of America or of any State thereof and
has a combined capital and surplus of at least $400,000,000.00.
Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Loan
Agreement and the other Loan Documents. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions
of this Article IX shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this
Loan Agreement and the other Loan Documents.
<PAGE> EX-45
ARTICLE X
MISCELLANEOUS
10.01 Notices. All notices, requests and demands to or
upon the respective parties hereto shall be conclusively deemed
to have been received by such party hereto and be effective on
the day on which delivered to such party at the address set forth
below or to such other address as such party shall specify to the
other parties hereto in writing, or, if sent prepaid by
registered mail, on the third day after the day on which mailed,
addressed to such party at such address:
(a) if to the Borrower:
Airgas, Inc.
Five Radnor Corporate Center, Suite 550
100 Matsonford Road
Radnor, Pennsylvania 19087
Attention: Britton H. Murdoch
(Facsimile No.: 610-687-1052)
[Courtesy Copy to:
McCausland, Keen & Buckman
Five Radnor Corporate Center, Suite 500
100 Matsonford Road
Radnor, Pennsylvania 19087
Attention: Melvin J. Buckman, Esq.]
(Facsimile No. 610-341-1099)
(b) if to the Agent:
NationsBank, N.A.
NationsBank Corporate Center, 8th Floor
Charlotte, North Carolina 28255
Attention: M. Gregory Seaton
Eastern Corporate Group
(Facsimile No. 704-386-3271)
(c) if to a Bank, to it at its address (or telecopy
number) set forth on Exhibit A or in the
assignment agreement pursuant to which such Bank
became a party hereto.
10.02 No Waiver; Remedies Cumulative. No failure or
delay on the part of any of the Banks or the Agent in the
exercise of any right, power or privilege hereunder or under any
other Loan Document shall operate as a waiver of any such right,
power or privilege nor shall any such failure or delay preclude
any other or further exercise thereof. The rights and remedies
herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
10.03 Survival of Certain Provisions, etc. All
covenants, agreements, representations and warranties made herein
and in the other Loan Documents shall survive the making by the
Banks of the Loans and the execution and delivery to the Banks of
the Loan Documents and shall continue in full force and effect so
<PAGE> EX-46
long as any of the indebtedness of the Borrower to the Banks or
any obligations of the Banks under the Commitments remain out-
standing. Whenever in this Loan Agreement any of the parties
hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party and all covenants,
provisions and agreements by or on behalf of the Borrower which
are contained in the Loan Documents shall inure to the benefit of
the successors and assigns of the Banks.
10.04 Costs. The Borrower agrees to pay all reasonable
out-of-pocket costs and expenses of the Agent in connection with
the preparation, execution and delivery of the Loan Documents,
including, without limitation, the reasonable fees and
out-of-pocket expenses of Moore & Van Allen, PLLC, special
counsel to the Agent, and out-of-pocket costs and expenses of the
Banks in connection with the enforcement of this Loan Agreement
and the other Loan Documents and to hold the Banks harmless from
any and all such costs, expenses and liabilities. In addition,
the Borrower agrees to pay to each Bank an amendment fee of not
less than $3,000.00 on the effective date of each agreement
hereafter entered into among the Borrower and the Banks (or the
Agent on behalf of the Banks) effecting any material amendment,
modification or waiver of the terms of this Loan Agreement,
including without limitation any such agreement relating to any
provision set forth in Article V, Article VI, Article VII or
Article VIII hereof. The provisions of this Section shall
survive the termination of this Loan Agreement.
10.05 Amendments, Waivers and Consents. With the
written consent of the Majority Banks, the Agent and the Borrower
may, from time to time, enter into written amendments,
supplements or modifications hereto for the purpose of adding any
provisions to this Loan Agreement, the Notes or any of the other
Loan Documents or changing in any manner the rights of the Banks
or of the Borrower hereunder or thereunder, and with the consent
of the Majority Banks the Agent on behalf of the Banks may
execute and deliver to the Borrower a written instrument waiving,
on such terms and conditions as the Agent or Majority Banks may
specify in such instrument, any of the requirements of this Loan
Agreement or any other Loan Document or any Event of Default and
its consequences; provided, however, that no such waiver and no
such amendment, supplement or modification shall (a) extend the
maturity of any Note, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount
thereof, or change the amount or term of any Commitment, or
change the amount or time for payment of the Commitment Fee, or
amend, modify or waive any provision of this Section 10.05 or
reduce the percentage specified in the definition of "Majority
Banks" set forth in Section 1.01 hereof, or amend, modify or
waive any provision of any Loan Document requiring action or
approval by all of the Banks, or waive an Event of Default
specified in Section 8.01(a) hereof, or consent to the assignment
or transfer by the Borrower of any of its rights and obligations
under this Loan Agreement, or release the Borrower from its
obligations under this Loan Agreement, or amend, modify or waive
any provision of the Loan Documents if such amendment,
modification or waiver would have the effect of releasing the
obligations to the Agent and the Banks of the parties thereof, in
<PAGE> EX-47
each case without the written consent of all the Banks, or (b)
amend, modify or waive any provision of Article IX hereof without
the written consent of the then Agent. Any such waiver and any
such amendment, supplement or modification shall apply equally to
each of the Banks and shall be binding upon the Borrower, the
Banks, the Agent and all future holders of the Notes. In the
case of any waiver of the requirements of this Loan Agreement,
any other Loan Document or the Notes, the parties thereto shall
be restored to their former position and rights thereunder, and
any Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or
other Event of Default, or impair any right consequent thereon.
10.06 Computations. Except as otherwise provided for
hereunder, interest, fees and premiums hereunder shall be
computed on the basis of a three hundred sixty-five (365) day
year for the actual number of days in the billing period.
10.07 Right of Set-Off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the
making of the request or the granting of the consent specified by
Section 8.01 hereof to authorize the Agent to declare the Notes
and all other obligations owing to the Banks and the Agent
hereunder and under the other Loan Documents due and payable
pursuant to the provisions of Section 8.01 hereof, each Bank is
hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
at such Bank to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or
hereafter existing under this Loan Agreement, the Notes and the
other Loan Documents and although such obligations may be
unmatured.
10.08 Interim Interest. Except as otherwise provided
for hereunder, should any installment or other payment of the
principal of or interest on the Notes become due and payable on
other than a Business Day, the maturity thereof shall be extended
to the next succeeding Business Day thereafter and in the case of
an installment of principal, interest shall be payable thereon at
the rate per annum herein specified during such extension.
10.09 Counterparts. This Loan Agreement may be executed
in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and it shall not be
necessary in making proof of this Loan Agreement to produce or
account for more than one such counterpart.
10.10 Assignments, Participations, etc.
(a) Any Bank may, at any time upon written notice
thereof to the Agent and the Borrower, transfer or assign
all or any portion of the indebtedness evidenced by the Note
held by such Bank and the Commitment of such Bank hereunder
and all of the other rights and obligations of such Bank
hereunder and under the other Loan Documents and the terms
hereof shall extend to any subsequent holder of the Note;
<PAGE> EX-48
provided, however, that any assignment by a Bank hereunder
shall (i) be subject to the prior written consent of the
Borrower and the Agent (in any case not to be unreasonably
withheld) and (ii) be in a minimum principal amount of
$5,000,000.00 or in an integral multiple of $1,000,000.00 in
excess thereof. On the effective date of any assignment,
Exhibit A is deemed amended to reflect such assignment.
(b) Any Bank may at any time sell participations to
one or more banks or other entities in all or a portion of
its rights and obligations under this Loan Agreement and the
other Loan Documents; provided, however, that (1) such
Bank's obligations under this Loan Agreement shall remain
unchanged, (2) such Bank shall remain solely responsible to
the other parties hereto for the performance of such
obligations, (3) each participating bank or other entity
shall be entitled to the benefit of the cost protection
provisions contained in Sections 3.04, 3.05, 3.06, and 3.08
hereof, except that all claims and petitions for payment and
payments made pursuant to such Sections shall be made
through such selling Bank and except that a participant
shall not be entitled to receive pursuant to such provisions
an amount larger than its share of the amount to which the
selling Bank would have been entitled had no such sale been
made, and (iv) the Borrower, the Agent and the other Banks
shall continue to deal solely and directly with such selling
Bank in connection with such Bank's rights and obligations
under this Loan Agreement and the other Loan Documents, and
such Bank shall retain the sole right (and participating
banks or other entities shall have no right) to enforce the
obligations of the Borrower under the Loan Documents and to
approve any amendment, modification or waiver of any provi-
sion of this Loan Agreement or any of the other Loan
Documents (other than amendments, modifications or waivers
requiring, pursuant to the terms of Section 10.05 hereof,
unanimous consent of the Bank).
(c) Any Bank may pledge all or any portion of its
rights under this Loan Agreement and/or its Note to a
Federal Reserve Bank. No such pledge shall release any Bank
from its obligations hereunder or substitute any such
Federal Reserve Bank for such Bank as a party hereto.
10.11 Term. The term of this Loan Agreement shall be
until the Commitments of the Banks hereunder shall have
terminated and the Banks have received payment in full of the
unpaid principal and interest of the Notes and all other amounts
payable hereunder.
10.12 Governing Law; Severability; Merger.
(a) All documents executed pursuant to the
transactions contemplated herein including without
limitation this Loan Agreement, the Notes and the other Loan
Documents shall be deemed to be contracts made under, and
for all purposes shall be construed in accordance with, the
internal laws and judicial decisions of the State of North
Carolina. The Borrower hereby submits to the nonexclusive
<PAGE> EX-49
jurisdiction and venue of the state and federal courts of
North Carolina for the purpose of resolving disputes
hereunder or under the other Loan Documents or for the
purposes of collection. The Borrower hereby agrees that
both the federal and state courts in Mecklenburg County,
North Carolina are a convenient forum and agrees not to
raise as a defense that such courts are not a convenient
forum.
(b) In the event any one or more of the provisions
contained in this Loan Agreement should be held invalid,
illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or
impaired thereby.
(c) This Loan Agreement and the other Loan Documents
constitute the entire contract among the parties relative to
the subject matter hereof and thereof. Any previous
agreement among the parties with respect to the subject
matter hereof is superseded by this Loan Agreement.
10.13 Priority of Loans. The payment of the
indebtedness of the Borrower to the Banks hereunder and under the
Notes is senior to the payment of the indebtedness of the
Borrower under the Senior Subordinated Note Purchase Agreements
in accordance with the terms thereof.
10.14 Dealings by Banks with the Borrower. Nothing
contained herein shall be deemed to limit the right of any Bank
(or any of its affiliates) to make loans to, accept deposits from
and generally engage in any kind of business with the Borrower or
any of its Subsidiaries.
10.15 Net Payments. The Borrower hereby agrees that all
payments and prepayments of principal, interest and fees required
to be made hereunder or under any of the other Loan Documents
shall be without deduction for or on account of any present or
future taxes, duties or other charges levied or imposed by any
foreign nation or any political subdivision or taxing authority
thereof.
10.16 Headings. The headings of the sections and
subsections hereof are provided for convenience only and shall
not in any way affect the meaning or construction of any
provision of this Loan Agreement.
[The remainder of this page has been left blank intentionally.]<PAGE>
<PAGE> EX-50
IN WITNESS WHEREOF, each of the parties hereto has caused
this Loan Agreement to be duly executed by their duly authorized
officers, all as of the day and year first above written.
AIRGAS, INC.
By /s/ Britton H. Murdoch
_____________________________________
Britton H. Murdoch
Vice President
NATIONSBANK, N.A.
By /s/ M. Gregory Seaton
_________________________________
M. Gregory Seaton
Senior Vice President
CIBC, INC.
By_________________________________
Title______________________________
PNC BANK, NATIONAL ASSOCIATION
By_________________________________
Title______________________________
NATIONSBANK, N.A., as Agent for the Banks
By /s/ M. Gregory Seaton
_________________________________
M. Gregory Seaton
Senior Vice President
<PAGE>
<PAGE> EX-51
EXHIBIT A
BANKS' COMMITMENT LEVELS
DOLLAR AMOUNT
% OF TOTAL OF
NAME AND ADDRESS OF BANK COMMITMENTS COMMITMENT
NationsBank, N.A. 80% $80,000,000.00
NationsBank Corporate Center
8th Floor
Charlotte, North Carolina 28255
Attn: M. Gregory Seaton
Facsimile No.: (704) 386-3271
CIBC Inc. 10% $10,000,000.00
425 Lexington Avenue
New York, New York 10017
Attn: Cheryl Root
Facsimile No.: (212)856-3991
PNC Bank, National Association 10% $10,000,000.00
Land Title Building
Broad & Chestnut Streets
Philadelphia, Pennsylvania 19101
Attn: H. Todd Dissinger
Facsimile No.: (215)585-6037
100% $100,000,000.00
<PAGE>
<PAGE> EX-52
EXHIBIT B
PROMISSORY NOTE
$____________________ February 5, 1996
FOR VALUE RECEIVED, AIRGAS, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of _____________________, a
________________________, in its individual capacity (the "Bank"), at the
office of NationsBank, N.A., as Agent (the "Agent"), at NationsBank Corporate
Center, 100 North Tryon Street, Charlotte, North Carolina 28255 (or at
such other place or places as the holder hereof may designate), at the times
set forth in the Loan Agreement dated as of February 5, 1996 among the
Borrower, the Agent, the Bank and certain other banks (as amended from time to
time, the "Loan Agreement"; all capitalized terms not otherwise defined herein
shall have the meanings set forth in the Loan Agreement), but in no event
later than the Termination Date, in lawful money of the United States of
America, in immediately available funds, the principal amount of
___________________________________ ($____________) or, if less than such
principal amount, the aggregate unpaid principal amount of all Loans made by
the Bank to the Borrower pursuant to the Loan Agreement, and to pay
interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates selected in accordance
with Article II and Section 3.03(c) of the Loan Agreement.
Upon the occurrence and during the continuance of an Event of Default the
then remaining principal amount and accrued but unpaid interest shall bear
interest at a per annum rate equal to two percent (2%) plus the rate that
would otherwise be payable under Section 2.04 of the Loan Agreement until such
principal and interest have been paid in full. Further, in the event that
payment of all sums due hereunder is accelerated under the terms of the Loan
Agreement, this Note and all other indebtedness of the Borrower to the Bank
shall become immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and
interest, all costs of collection, including reasonable attorneys' fees.
All borrowings evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof may
be endorsed by the holder hereof on Schedule A attached hereto and
incorporated herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that any failure to
endorse such information on such schedule or continuation thereof shall not in
any manner affect the obligation of the Borrower hereunder or under the Loan
Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer, all as of the day and year first above
written.
AIRGAS, INC.
By_____________________
Title__________________
<PAGE> EX-53
SCHEDULE A TO THE ____________
PROMISSORY NOTE DATED FEBRUARY 5, 1996
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
____ ____ ________ _________ ________ _________ _________
<PAGE>
<PAGE> EX-54
EXHIBIT C
FORM OF LEGAL OPINION<PAGE>
<PAGE> EX-55
EXHIBIT D
SUBSIDIARIES
<PAGE>
<PAGE> EX-56
EXHIBIT E
INTERESTS IN OTHER PERSONS<PAGE>
<PAGE> EX-57
EXHIBIT F
EXISTING INDEBTEDNESS
<PAGE>
<PAGE> EX-58
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 120,811
<ALLOWANCES> 3,396
<INVENTORY> 86,162
<CURRENT-ASSETS> 218,574
<PP&E> 586,328
<DEPRECIATION> 147,451
<TOTAL-ASSETS> 883,642
<CURRENT-LIABILITIES> 136,986
<BONDS> 0
<COMMON> 663
0
0
<OTHER-SE> 235,546
<TOTAL-LIABILITY-AND-EQUITY> 883,642
<SALES> 838,144
<TOTAL-REVENUES> 838,144
<CGS> 419,491
<TOTAL-COSTS> 419,491
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,862
<INCOME-PRETAX> 68,242
<INCOME-TAX> 28,522
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<NET-INCOME> 39,720
<EPS-PRIMARY> .60
<EPS-DILUTED> .60
</TABLE>
