<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[ x ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _______
Commission file numbers: 33-25419 and 33-64058
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Airgas, Inc. 401(k) Plan
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Airgas, Inc.
259 North Radnor-Chester Road, Suite 100
Radnor, PA 19087-5283
<PAGE> 2
REQUIRED INFORMATION
(1) Financial Statements:
The following financial statements, including Independent Auditors'
Report thereon of Airgas, Inc. 401(k) Plan, are submitted herewith:
Statements of Net Assets Available for
Benefits as of December 31, 1998 and 1997
Statements of Changes in Net Assets Available for
Benefits for the years ended December 31, 1998 and 1997
Notes to Financial Statements
Item 27(a) - Schedule of Assets Held for Investment Purposes
Item 27(d) - Schedule of Reportable Transactions
The schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are included in the
aforementioned financial statements of the Airgas, Inc. 401(k) Plan.
(2) Exhibits:
23.1 Consent of KPMG LLP
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan Administrator has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
AIRGAS, INC. 401(k) PLAN
(Name of Plan)
BY:/s/ 401(k) Plan Committee
_____________________________
BY:/s/ Scott M. Melman
_____________________________
Scott M. Melman
Senior Vice President and
Chief Financial Officer
BY:/s/ Todd R. Craun
_____________________________
Todd R. Craun
General Counsel and Secretary
DATED: June 18, 1999
<PAGE> 4
AIRGAS, INC. 401(k) PLAN
Financial Statements and
Supplementary Schedules
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
<PAGE> 5
AIRGAS, INC. 401(k) PLAN
December 31, 1998 and 1997
INDEX
______________________________________________________________________________
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . 6
Financial Statements:
Statement of Net Assets Available for Benefits
as of December 31, 1998 . . . . . . . . . . . . . . . . . . . . . . 7
Statement of Net Assets Available for Benefits
as of December 31, 1997 . . . . . . . . . . . . . . . . . . . . . . 9
Statement of Changes in Net Assets Available for
Benefits for the years ended December 31, 1998. . . . . . . . . . . 11
Statement of Changes in Net Assets Available for
Benefits for the years ended December 31, 1997. . . . . . . . . . . 14
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 17
Schedule
1 Item 27(a) - Schedule of Assets Held for Investment Purposes . . . . 26
2 Item 27(d) - Schedule of Reportable Transactions . . . . . . . . . . 27
<PAGE> 6
INDEPENDENT AUDITORS' REPORT
The Plan Administrator
Airgas, Inc. 401(k) Plan:
We have audited the accompanying statements of net assets available for
benefits of the Airgas, Inc. 401(k) Plan as of December 31, 1998 and 1997, and
the related statements of changes in net assets available for benefits for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements 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 financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Airgas,
Inc. 401(k) Plan at December 31, 1998 and 1997 and the changes in net assets
available for benefits for the years then ended, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions as of and for the
year ended December 31, 1998, are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements,
and in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole. The Fund Information in the
statement of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in net assets available for plan benefits of each fund. The
supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
KPMG LLP
Philadelphia, Pennsylvania
May 7, 1999
<PAGE> 7
<TABLE>
AIRGAS, INC. 401(k) PLAN
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
<CAPTION>
Fund Information
___________________________________________________________________________________________________
Vanguard
Airgas Vanguard Vanguard Vanguard LifeStrategy
Common Vanguard International U.S. Vanguard Vanguard LifeStrategy Moderate
Stock Explorer Growth Growth 500 Index Wellington Growth Growth
Fund Fund Fund Fund Fund Fund Fund Fund
_______________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments $20,933,219 1,248,175 1,473,454 31,307,598 8,693,400 16,088,469 2,282,700 1,901,235
Receivables:
Employee
contributions 214,814 25,939 25,161 194,331 111,643 121,499 43,792 23,455
Employer
contributions 70,602 5,785 5,873 54,255 27,551 36,144 11,266 5,912
_______________________________________________________________________________________________________________________________
Total receivables 285,416 31,724 31,034 248,586 139,194 157,643 55,058 29,367
_______________________________________________________________________________________________________________________________
Employee loans -- -- -- -- -- -- -- --
_______________________________________________________________________________________________________________________________
Net assets available
for benefits $21,218,635 1,279,899 1,504,488 31,556,184 8,832,594 16,246,112 2,337,758 1,930,602
_______________________________________________________________________________________________________________________________
<FN>
See accompanying notes to financial statements. (Continued on next page)
</FN>
</TABLE>
<PAGE> 8
<TABLE>
AIRGAS, INC. 401(k) PLAN
Statement of Net Assets Available for Benefits, with Fund Information (Continued from previous page)
December 31, 1998
<CAPTION>
Fund Information
____________________________________________________________________________
Vanguard
LifeStrategy Vanguard Vanguard
Conservative LifeStrategy Total Bond Investment Participant
Growth Income Market Index Contract Loan
Fund Fund Fund Fund Fund Total
_______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments $ 765,504 596,726 1,548,271 21,720,307 -- 108,559,058
Receivables:
Employee
contributions 9,805 5,983 13,620 109,822 -- 899,864
Employer
contributions 2,741 1,633 3,185 38,439 -- 263,386
_______________________________________________________________________________________________________________
Total receivables 12,546 7,616 16,805 148,261 -- 1,163,250
_______________________________________________________________________________________________________________
Employee loans -- -- -- -- 5,052,738 5,052,738
_______________________________________________________________________________________________________________
Net assets available
for benefits $ 778,050 604,342 1,565,076 21,868,568 5,052,738 114,775,046
_______________________________________________________________________________________________________________
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE> 9
<TABLE>
AIRGAS, INC. 401(k) PLAN
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
<CAPTION>
Fund Information
_____________________________________________________________________________________________________
Vanguard
Airgas Vanguard Vanguard Vanguard LifeStrategy
Common Vanguard International U.S. Vanguard Vanguard LifeStrategy Moderate
Stock Explorer Growth Growth 500 Index Wellington Growth Growth
Fund Fund Fund Fund Fund Fund Fund Fund
___________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments $31,094,350 712,579 833,923 19,564,818 3,429,706 12,285,732 641,028 617,754
Receivables:
Employee
contributions 328,786 18,837 18,029 181,007 55,313 122,093 22,906 10,446
Employer
contributions 82,762 3,997 3,467 43,855 12,108 31,007 5,518 2,513
_______________________________________________________________________________________________________________________________
Total receivables 411,548 22,834 21,496 224,862 67,421 153,100 28,424 12,959
_______________________________________________________________________________________________________________________________
Employee loans -- -- -- -- -- -- -- --
_______________________________________________________________________________________________________________________________
Net assets available
for benefits $31,505,898 735,413 855,419 19,789,680 3,497,127 12,438,832 669,452 630,713
_______________________________________________________________________________________________________________________________
<FN>
See accompanying notes to financial statements. (Continued on next page)
</FN>
</TABLE>
<PAGE> 10
<TABLE>
AIRGAS, INC. 401(k) PLAN
Statement of Net Assets Available for Benefits, with Fund Information (Continued from previous page)
December 31, 1997
<CAPTION>
Fund Information
_____________________________________________________________________
Vanguard
LifeStrategy Vanguard Vanguard
Conservative LifeStrategy Total Bond Investment Participant
Growth Income Market Index Contract Loan
Fund Fund Fund Fund Fund Total
_______________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments $ 509,496 205,599 346,319 19,590,497 -- 89,831,801
Receivables:
Employee
contributions 4,115 3,076 4,735 136,654 -- 905,997
Employer
contributions 1,022 613 1,088 38,377 -- 226,327
________________________________________________________________________________________________________________
Total receivables 5,137 3,689 5,823 175,031 -- 1,132,324
________________________________________________________________________________________________________________
Employee loans -- -- -- -- 4,445,300 4,445,300
________________________________________________________________________________________________________________
Net assets available
for benefits $ 514,633 209,288 352,142 19,765,528 4,445,300 95,409,425
________________________________________________________________________________________________________________
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE> 11
<TABLE>
AIRGAS, INC. 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year ended December 31, 1998
<CAPTION>
Fund Information
______________________________________________________________________________
Airgas Vanguard Vanguard
Common Vanguard International U.S. Vanguard Vanguard
Stock Explorer Growth Growth 500 Index Wellington
Fund Fund Fund Fund Fund Fund
__________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Net appreciation (depreciation)
in fair value of investments $(11,569,119) 44,928 144,286 6,434,186 1,422,550 (184,810)
Interest and dividends 1,610 11,811 29,553 1,956,012 117,902 1,762,734
__________________________________________________________________________________________________________________
Total investment income (loss) (11,567,509) 56,739 173,839 8,390,198 1,540,452 1,577,924
__________________________________________________________________________________________________________________
Contributions:
Employee 3,310,048 396,997 425,813 2,857,403 1,767,183 1,900,573
Employer 2,070,071 96,295 95,847 1,193,763 455,702 843,591
__________________________________________________________________________________________________________________
Total contributions 5,380,119 493,292 521,660 4,051,166 2,222,885 2,744,164
__________________________________________________________________________________________________________________
Disbursements:
Benefits paid to participants (2,259,771) (52,416) (110,781) (1,823,074) (290,880) (894,136)
Administrative fees (26,897) (1,555) (1,603) (17,199) (5,874) (13,674)
__________________________________________________________________________________________________________________
Total disbursements (2,286,668) (53,971) (112,384) (1,840,273) (296,754) (907,810)
__________________________________________________________________________________________________________________
Transfers from other benefit plans 441,538 157,827 245,312 864,220 1,056,626 724,398
__________________________________________________________________________________________________________________
Interfund transfers, including loans
granted, net of loan repayments (2,254,743) (109,401) (179,358) 301,193 812,258 (331,396)
__________________________________________________________________________________________________________________
Net change to plan (10,287,263) 544,486 649,069 11,766,504 5,335,467 3,807,280
Net assets available for benefits:
Beginning of year 31,505,898 735,413 855,419 19,789,680 3,497,127 12,438,832
__________________________________________________________________________________________________________________
End of year $ 21,218,635 1,279,899 1,504,488 31,556,184 8,832,594 16,246,112
__________________________________________________________________________________________________________________
<FN>
See accompanying notes to financial statements. (Continued on next page)
</FN>
</TABLE>
<PAGE> 12
<TABLE>
AIRGAS, INC. 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information (Continued from previous page)
Year ended December 31, 1998
<CAPTION>
Fund Information
______________________________________________________________________________
Vanguard Vanguard Vanguard
Vanguard LifeStrategy LifeStrategy Life Vanguard
LifeStrategy Moderate Conservative Strategy Total Bond Investment
Growth Growth Growth Income Market Index Contract
Fund Fund Fund Fund Fund Fund
__________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Net appreciation (depreciation)
in fair value of investments $ 210,352 141,263 57,705 24,835 11,706 29
Interest and dividends 77,209 76,935 37,008 32,733 55,138 1,167,091
__________________________________________________________________________________________________________________
Total investment income (loss) 287,561 218,198 94,713 57,568 66,844 1,167,120
__________________________________________________________________________________________________________________
Contributions:
Employee 729,906 592,218 176,715 112,840 232,359 1,405,025
Employer 171,049 87,414 35,656 29,364 41,752 1,367,171
__________________________________________________________________________________________________________________
Total contributions 900,955 679,632 212,371 142,204 274,111 2,772,196
__________________________________________________________________________________________________________________
Disbursements:
Benefits paid to participants (111,739) (59,127) (196,023) (2,974) (72,239) (2,028,616)
Administrative fees (2,918) (1,787) (827) (450) (877) (22,687)
__________________________________________________________________________________________________________________
Total disbursements (114,657) (60,914) (196,850) (3,424) (73,116) (2,051,303)
__________________________________________________________________________________________________________________
Transfers from other benefit plans 328,249 194,480 214,297 33,258 137,991 558,197
__________________________________________________________________________________________________________________
Interfund transfers, including loans
granted, net of loan repayment 266,198 268,493 (61,114) 165,448 807,104 (343,170)
__________________________________________________________________________________________________________________
Net change to plan 1,668,306 1,299,889 263,417 395,054 1,212,934 2,103,040
Net assets available for benefits:
Beginning of year 669,452 630,713 514,633 209,288 352,142 19,765,528
__________________________________________________________________________________________________________________
End of year $2,337,758 1,930,602 778,050 604,342 1,565,076 21,868,568
__________________________________________________________________________________________________________________
<FN>
See accompanying notes to financial statements. (Continued on next page)
</FN>
</TABLE>
<PAGE> 13
<TABLE>
AIRGAS, INC. 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information (Continued from previous page)
Year ended December 31, 1998
<CAPTION>
Fund Information
________________
Participant
Loan
Fund Total
______________________________________________________________________
<S> <C> <C>
Investment income (loss):
Net appreciation (depreciation)
in fair value of investments -- (3,262,089)
Interest and dividends $ 434,368 5,760,104
______________________________________________________________________
Total investment income (loss) 434,368 2,498,015
______________________________________________________________________
Contributions:
Employee -- 13,907,080
Employer -- 6,487,675
______________________________________________________________________
Total contributions -- 20,394,755
______________________________________________________________________
Disbursements:
Benefits paid to participants (569,121) (8,470,897)
Administrative fees -- (96,348)
______________________________________________________________________
Total disbursements (569,121) (8,567,245)
______________________________________________________________________
Transfers from other benefit plans 83,703 5,040,096
______________________________________________________________________
Interfund transfers, including loans
granted, net of loan repayment 658,488 --
______________________________________________________________________
Net change to plan 607,438 19,365,621
Net assets available for benefits:
Beginning of year 4,445,300 95,409,425
______________________________________________________________________
End of year $5,052,738 114,775,046
______________________________________________________________________
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE> 14
<TABLE>
AIRGAS, INC. 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year ended December 31, 1997
<CAPTION>
Fund Information
___________________________________________________________________________
Airgas Vanguard Vanguard
Common Vanguard International U.S. Vanguard Vanguard
Stock Explorer Growth Growth 500 Index Wellington
Fund Fund Fund Fund Fund Fund
______________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Net appreciation (depreciation)
in fair value of investments $(12,303,912) (67,801) (93,873) 2,033,531 164,617 724,808
Interest and dividends 33,148 73,646 37,953 796,130 54,698 1,017,846
______________________________________________________________________________________________________________
Total investment income (loss) (12,270,764) 5,845 (55,920) 2,829,661 219,315 1,742,654
______________________________________________________________________________________________________________
Contributions:
Employee 4,861,545 131,461 282,565 2,346,444 921,431 1,778,333
Employer 2,657,573 26,018 27,245 1,095,611 90,052 783,713
______________________________________________________________________________________________________________
Total contributions 7,519,118 157,479 309,810 3,442,055 1,011,483 2,562,046
______________________________________________________________________________________________________________
Disbursements:
Benefits paid to participants (2,420,554) (11,852) (3,793) (894,762) (70,972) (727,142)
Administrative fees (142,602) (6,539) (364) (45,805) (1,229) (48,773)
______________________________________________________________________________________________________________
Total disbursements (2,563,156) (18,391) (4,157) (940,567) (72,201) (775,915)
______________________________________________________________________________________________________________
Transfer from other benefit plans 34,506 - - - - -
______________________________________________________________________________________________________________
Interfund transfers, including loans
granted, net of loan repayment (6,606,292) 590,480 605,686 14,458,531 2,338,530 8,910,047
______________________________________________________________________________________________________________
Net change to plan (13,886,588) 735,413 855,419 19,789,680 3,497,127 12,438,832
Net assets available for benefits:
Beginning of year 45,392,486 - - - - -
______________________________________________________________________________________________________________
End of year $31,505,898 735,413 855,419 19,789,680 3,497,127 12,438,832
______________________________________________________________________________________________________________
<FN>
See accompanying notes to financial statements. (Continued on next page)
</FN>
</TABLE>
<PAGE> 15
<TABLE>
AIRGAS, INC. 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information (Continued from previous page)
Year ended December 31, 1997
<CAPTION>
Fund Information
_____________________________________________________________________________
Vanguard Vanguard Vanguard
Vanguard LifeStrategy LifeStrategy Life Vanguard
LifeStrategy Moderate Conservative Strategy Total Bond Investment
Growth Growth Growth Income Market Index Contract
Fund Fund Fund Fund Fund Fund
_________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Net appreciation (depreciation)
in fair value of investments $ 6,289 3,355 72 2,070 5,356 --
Interest and dividends 23,108 24,520 19,133 6,391 8,957 1,649,915
_________________________________________________________________________________________________________________
Total investment income (loss) 29,397 27,875 19,205 8,461 14,313 1,649,915
_________________________________________________________________________________________________________________
Contributions:
Employee 332,167 351,387 75,911 128,586 93,400 1,871,166
Employer 40,324 17,056 6,868 8,079 9,410 1,453,325
_________________________________________________________________________________________________________________
Total contributions 372,491 368,443 82,779 136,665 102,810 3,324,491
_________________________________________________________________________________________________________________
Disbursements:
Benefits paid to participants (1,800) (3,405) (5,802) (3,349) (42,508) (1,684,112)
Administrative fees (501) (299) (161) (85) (151) (88,111)
_________________________________________________________________________________________________________________
Total disbursements (2,301) (3,704) (5,963) (3,434) (42,659) (1,772,223)
_________________________________________________________________________________________________________________
Transfer from other benefit plans - - - - - 508,388
_________________________________________________________________________________________________________________
Interfund transfers, including loans
granted, net of loan repayment 269,865 238,099 418,612 67,596 277,678 (368,412)
_________________________________________________________________________________________________________________
Net change to plan 669,452 630,713 514,633 209,288 352,142 3,342,159
Net assets available for benefits:
Beginning of year - - - - - 16,423,369
_________________________________________________________________________________________________________________
End of year $669,452 630,713 514,633 209,288 352,142 19,765,528
_________________________________________________________________________________________________________________
<FN>
See accompanying notes to financial statements. (Continued on next page)
</FN>
</TABLE>
<PAGE> 16
<TABLE>
AIRGAS, INC. 401(k) PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information (Continued from previous page)
Year ended December 31, 1997
<CAPTION>
Fund Information
_________________________________________________
Vanguard
Fidelity Fidelity Money Participant
Magellan Puritan Market Loan
Fund Fund Account Fund Total
______________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Investment income (loss):
Net appreciation (depreciation)
in fair value of investments $ 372,572 163,522 - - (8,989,394)
Interest and dividends 4,831 2,113 - 355,986 4,108,375
______________________________________________________________________________________________________
Total investment income (loss) 377,403 165,635 - 355,986 (4,881,019)
______________________________________________________________________________________________________
Contributions:
Employee - - - - 13,174,396
Employer - - - - 6,215,274
______________________________________________________________________________________________________
Total contributions - - - - 19,389,670
______________________________________________________________________________________________________
Disbursements:
Benefits paid to participants - - - (152,574) (6,022,625)
Administrative fees - - - (2,792) (337,412)
______________________________________________________________________________________________________
Total disbursements - - - (155,366) (6,360,037)
______________________________________________________________________________________________________
Transfer from other benefit plans 462,559 99,941 - 24,715 1,130,109
______________________________________________________________________________________________________
Interfund transfers, including loans
granted, net of loan repayment (13,015,346) (7,746,253) (1,774,642) 1,335,821 -
______________________________________________________________________________________________________
Net change to plan (12,175,384) (7,480,677) (1,774,642) 1,561,156 9,278,723
Net assets available for benefits:
Beginning of year 12,175,384 7,480,677 1,774,642 2,884,144 86,130,702
______________________________________________________________________________________________________
End of year $ - - - 4,445,300 95,409,425
______________________________________________________________________________________________________
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE> 17
AIRGAS, INC. 401(k) PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(1)Description of the Plan
The following description of the Airgas, Inc. 401(k) Plan (the Plan)
provides general information only. Participants should refer to the plan
agreement for more complete information.
(a)General
The Plan is a defined contribution plan covering substantially all
employees of Airgas, Inc. and subsidiaries (the Company). Included in
the assets of the Plan are contribution rollovers from benefit plans of
acquired companies, where applicable. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
(b)Contributions
Employee:
The Plan permits a participant to defer up to 15% of eligible
compensation. The amount of deferred compensation is treated as a
salary reduction and is not subject to federal income tax until
withdrawn from the Plan. In no event will the contribution exceed
maximum allowable contributions as prescribed by the Internal Revenue
Service.
Employer:
Contributions to the Plan by the Company are made on a matched basis
and at a rate of 50% of participant deferred compensation. The
employer match is applied on employee contributions of up to 4% of
eligible compensation (i.e., maximum employer match is 2% of eligible
compensation). Plan participants are eligible for Company matching
contributions upon completing a consecutive twelve-month period of
employment in which an employee is credited with at least 1,000 hours
of service.
In addition to the required Company match, the Company may elect to
make discretionary contributions as determined by the Board of
Directors. The Company made profit sharing discretionary contributions
of $3,409,641 and $3,331,831 for the years ended December 31, 1998 and
1997, respectively. The Company determines its discretionary
contribution based on the overall profitability of the Company. Of
that amount, the Company allocates a portion to each subsidiary based
on that subsidiary's profitability. Each subsidiary then allocates its
profit sharing to individual participants based on their proportionate
earnings.
<PAGE> 18
(1) Continued
(c)Participant Accounts
Contributions are invested as directed by each participant in 12
separate investment funds. Each participant may designate, by written
notice to the plan administrator, how the contributions to his or her
account are to be allocated among the 12 funds. Participants are
required to allocate contributions to the funds in increments of 1% of
total contributions. In the event a participant fails to submit a
written notice of allocation, contributions will be invested in the
Investment Contract Fund. In addition to the above initial election,
participants may elect, by calling The Vanguard Group (Vanguard), to
transfer, in 1% increments of the total funds credited to their
account, monies among the investment funds. Interest, dividends, and
other income earned by the investment funds, net of administrative
fees, are reinvested in the same fund. Such amounts are allocated to
participants based upon the proportion of a participant's balance to
the total fund balance.
(d)Participant Loans
The plan administrator may, upon the application of a participant,
direct the Trustee to make a loan to such participant. The maximum the
participant may borrow is limited to the lesser of 50% of the
participant's plan balance or $50,000. The minimum loan amount is
$1,000. The loan will bear interest at a rate equal to prime plus 2%
and shall provide for periodic repayment over a reasonable period of
time not to exceed five years for general purpose loans and 30 years
for principal residence loans. Prime rate at December 31, 1998 was
7.75%.
(e)Vesting
Participants are immediately vested in all contributions. In addition,
all earnings on such investments are fully vested.
(f)Payment of Benefits
Upon retirement, death, or termination of service, participants or
beneficiaries are entitled to a distribution equal to the total value
of their accounts. Such distributions are generally payable in cash.
Participants experiencing serious financial hardships may be entitled
to a distribution upon approval by the plan administrator.
(g)Administrative Expenses
All administrative expenses have been paid by the Plan participants.
<PAGE> 19
(2)Recent Events
During the plan years ended December 31, 1998 and 1997, the Company amended
the Plan for the following items:
(a)Merger of 401(k) Plans
Effective January 1, 1997, the Keokuk Bargaining Unit 401(k) Plan, an
employee benefit plan of a subsidiary of the Company, was merged with
and into the Plan.
During 1998, in connection with acquisitions completed by the Company,
there were transfers in from certain 401(k) plans.
(b)Change of Trustee and Investment Options
Effective January 31, 1997, the Plan changed its trustee to Vanguard.
Prior to January 31, 1997, the Plan's investments were maintained by
the Plan's trustee, CoreStates Bank. The Plan also changed its
investment options, keeping only the Airgas Common Stock Fund and the
GIC Fund (renamed the Investment Contract Fund) and adding ten Vanguard
funds. Plan assets were fully transferred to the new investments by
April 1997.
(3)Summary of Significant Accounting Policies
(a)Basis of Accounting
The accompanying financial statements of the Plan have been prepared on
the accrual basis of accounting and present net assets available for
benefits and changes in those assets.
(b)Investments
The fair values of the ten Vanguard funds are based on the net asset
values per share at year-end. The Investment Contract Fund is valued
at year-end contract values. Contract value represents contributions
made under the contract, plus interest at the contract rate, less funds
used to pay administrative expenses charged by the insurance company.
Purchases and sales of investments are recorded on a trade-date basis.
Interest income is accrued when earned. Dividend income is recorded on
the ex-dividend date. Capital gain distributions are included in
dividend income.
Investments in the Airgas Common Stock Fund are valued at market value
based upon closing prices at the plan year-end. At December 31, 1998,
3,690 plan participants were invested in the Airgas Common Stock Fund.
The value per share was $8.94 at December 31, 1998.
The Vanguard Explorer Fund seeks to provide long-term growth of capital
by investing in a diversified group of small-company stocks with
prospect for above-average growth. At December 31, 1998 the Vanguard
Explorer Fund had 580 plan participants invested in the fund. The value
per share was $56.71 at December 31, 1998.
The Vanguard International Growth Fund seeks to provide long-term
growth of capital by investing in stock of high-quality, seasoned
companies based outside the United States. Stocks are selected from
more than 15 countries. At December 31, 1998, the Vanguard
International Growth Fund had 630 plan participants invested in the
fund. The value per share was $18.77 at December 31, 1998.
<PAGE> 20
(3) Continued
Vanguard U.S. Growth Fund seeks to provide long-term growth of capital
by investing in large, high-quality, seasoned U.S. companies with
records of exceptional growth and above-average prospects for future
growth. At December 31, 1998, the Vanguard U.S. Growth Fund had 3,075
plan participants invested in the fund. The value per share was $37.49
at December 31, 1998.
The Vanguard 500 Index Fund seeks to provide long-term growth of
capital and income from dividends by holding each of the 500 stocks
that make up the unmanaged Standard & Poor's 500 Composite Stock Price
Index, a widely recognized benchmark of U.S. market performance. At
December 31, 1998 the Vanguard 500 Index Fund had 1,476 plan
participants invested in the fund. The value per share was $113.95 at
December 31, 1998.
The Vanguard Wellington Fund seeks to provide income and long-term
growth of capital, without undue risk to capital, by investing
approximately 65% of its assets in stocks and the remaining 35% in
bonds. At December 31, 1998, the Vanguard Wellington Fund had 2,485
plan participants invested in the fund. The value per share was $29.35
at December 31, 1998.
The Vanguard LifeStrategy Growth Fund seeks to provide long-term growth
of capital and income by investing in four Vanguard funds: a domestic
stock fund; an international stock fund; a bond fund; and an asset
allocation fund. At December 31, 1998, the Vanguard LifeStrategy
Growth Fund has 725 plan participants invested in the fund. The value
per share was $18.79 at December 31, 1998.
The Vanguard LifeStrategy Moderate Growth Fund seeks to provide income
and long-term growth of capital and income by investing in four
Vanguard funds: a domestic stock fund; an international stock fund; a
bond fund; and an asset allocation fund. The Portfolio's asset
allocation ranges are expected to be 45%-70% stocks, 30%-55% bonds, and
0%-25% cash investments. At December 31, 1998, the Vanguard
LifeStrategy Moderate Growth Fund had 480 plan participants invested in
the fund. The value per share was $16.86 at December 31, 1998.
The Vanguard LifeStrategy Conservative Growth Fund seeks to provide
income and moderate long-term growth of capital and income by investing
in five Vanguard funds: a domestic stock fund; international stock
fund; two bond funds; and an asset allocation fund. The portfolio's
asset allocation ranges are expected to be 25%-50% stocks, 50%-75%
bonds, and 0%-25% cash investments. At December 31, 1998 the Vanguard
LifeStrategy Conservative Growth Fund had 257 plan participants
invested in the fund. The value per share was $14.71 at December 31,
1998.
The Vanguard LifeStrategy Income Fund seeks to provide a high level of
income by investing in four Vanguard funds: a stock fund; two bond
funds; and an asset allocation fund. The Portfolio's asset allocation
ranges are expected to be 5%-30% stocks, 70%-95% bonds, and 0%-25% cash
investments. At December 31, 1998, the Vanguard LifeStrategy Income
Fund had 164 plan participants invested in the fund. The value per
share was $13.22 at December 31, 1998.
<PAGE> 21
(3) Continued
The Vanguard Total Bond Market Index Fund seeks to provide a high level
of interest income by attempting to match the performance of the
unmanaged Lehman Brothers Aggregate Bond Index, a widely recognized
measure of the entire taxable U.S. bond market. At December 31, 1998,
the Vanguard Total Bond Market Index Fund had 339 plan participants
invested in the fund. The value per share was $10.27 at December 31,
1998.
The Investment Contract Fund seeks to preserve the value of the
participants' original investment and provide an attractive level of
interest by investing primarily in investment contracts issued by
insurance companies and banks, and other similar types of fixed-
principal investments. It is designed to maintain a constant $1.00
share value. At December 31, 1998, 3,390 plan participants invested in
Airgas Investment Contract Fund.
(c)Use of Estimates
The preparation of the financial statements in accordance with
generally accepted accounting principles requires the plan
administrator to make estimates that affect the reported amounts of
assets and liabilities at the date of the financial statements and the
reported amounts included in the statement of changes in net assets
available for plan benefits. Actual results could differ from those
estimates.
<PAGE> 22
<TABLE>
(4)Investments
The following presents fair value of investments and the contract value of
the guaranteed investment contracts fund held at
December 31, 1998 and 1997:
<CAPTION>
December 31, 1998
______________________________________________________________________________________________
Fair/Contract
Number of Shares Investments Cost Value
______________________________________________________________________________________________
<S> <C> <C> <C>
Common Stock:
2,342,178 Airgas Common Stock Fund $ 29,637,729 20,933,219
______________________________________________________________________________________________
Mutual Funds:
22,010 Vanguard Explorer Fund 1,248,829 1,248,175
78,500 Vanguard International Growth Fund 1,415,149 1,473,454
835,092 Vanguard U.S. Growth Fund 23,658,731 31,307,598
76,291 Vanguard 500 Index Fund 7,273,372 8,693,400
548,159 Vanguard Wellington Fund 15,818,508 16,088,469
121,485 Vanguard LifeStrategy Growth Fund 2,079,762 2,282,700
112,766 Vanguard LifeStrategy Moderate Growth Fund 1,763,158 1,901,235
52,040 Vanguard LifeStrategy Conservative Growth Fund 720,101 765,504
45,138 Vanguard LifeStrategy Income Fund 571,866 596,726
150,757 Vanguard Total Bond Market Index Fund 1,536,187 1,548,271
______________________________________________________________________________________________
56,085,663 65,905,532
______________________________________________________________________________________________
Guaranteed Investment Contracts:
American International Life Assurance Co.
Guaranteed Investment Contract, 5.06%,
due 1/99 3,018,818 3,018,818
John Hancock Guaranteed Investment Contract,
7.02%, due 5/99 2,187,126 2,187,126
Retirement Savings Trust, 5.89% 16,514,363 16,514,363
______________________________________________________________________________________________
21,720,307 21,720,307
______________________________________________________________________________________________
$107,443,699 108,559,058
______________________________________________________________________________________________
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
December 31, 1997
______________________________________________________________________________________________
Fair/Contract
Number of Shares Investments Cost Value
______________________________________________________________________________________________
<S> <C> <C> <C>
Common Stock:
2,221,025 Airgas Common Stock Fund $28,117,347 31,094,350
______________________________________________________________________________________________
Mutual Funds:
12,886 Vanguard Explorer Fund 782,408 712,579
50,880 Vanguard International Growth Fund 924,657 833,923
681,701 Vanguard U.S. Growth Fund 17,726,029 19,564,818
38,078 Vanguard 500 Index Fund 3,278,787 3,429,706
417,173 Vanguard Wellington Fund 11,666,266 12,285,732
39,964 Vanguard LifeStrategy Growth Fund 634,829 641,028
41,712 Vanguard LifeStrategy Moderate Growth Fund 614,460 617,754
38,022 Vanguard LifeStrategy Conservative Growth Fund 510,404 509,496
16,541 Vanguard LifeStrategy Income Fund 203,787 205,599
34,323 Vanguard Total Bond Market Index Fund 342,119 346,319
______________________________________________________________________________________________
36,683,746 39,146,954
______________________________________________________________________________________________
Guaranteed Investment Contracts:
American International Life Assurance Co.
Guaranteed Investment Contract, 5.06%,
due 1/99 3,039,105 3,039,105
John Hancock Guaranteed Investment Contracts,
5.31% to 7.02%, due 5/98 to 5/99 3,046,510 3,046,510
Continental Assurance Co. Guaranteed Investment
Contract, 6.64%, due 5/98 2,956,124 2,956,124
Retirement Savings Trust, 6.17%, due 8/00 10,548,758 10,548,758
______________________________________________________________________________________________
19,590,497 19,590,497
______________________________________________________________________________________________
$84,391,590 89,831,801
______________________________________________________________________________________________
The average cost method is followed in determining the cost of investments sold. Purchases and
sales of securities are recorded on a trade date basis.
</TABLE>
<PAGE> 24
(4) Continued
The average yield earned on the Investment Contract Funds was
approximately 5.78% and 8.9% for the years ended December 31, 1998 and
1997, respectively. As of December 31, 1998 and December 31, 1997,
interest rates ranged from 5.06% to 7.02%. The average yield earned on
the Investment Contract Funds for the year ended December 31, 1997
includes the impact of the receipt of $364,000 for settlement of the
Confederation Life Fund. Exclusive of this item, the average yield
earned on the Investment Contract Fund for the Plan year ended
December 31, 1997 was approximately 6.9%. In August 1994 the assets of
Confederation Life Insurance Company were placed under the regulatory
supervision of the Michigan Commissioner of Insurance. The
Confederation Life Guaranteed Investment Contract (GIC) was subject to
certain regulatory restrictions, and thus the plan management ceased
accruing interest on the funds. In March 1997 the rehabilitation plan
of the assets was finalized. The rehabilitation plan provided for
receipt of 100% of the August 1994 value into the Plan plus interest
earned between the liquidation plan's asset valuation date and the
actual distribution date. The rehabilitation plan also provides for
the distribution of certain contingent assets, such as litigation
proceeds, to GIC investors in the future as they may become available.
The following investments represent 5% or more of the net assets
available for benefits at December 31, 1998 and 1997:
1998 1997
____ ____
Airgas Common Stock Fund $ 20,933,129 31,094,350
Vanguard U.S. Growth Fund 31,307,598 19,564,818
Vanguard 500 Index Fund 8,693,400 --
Vanguard Wellington Fund 16,088,469 12,285,732
Retirement Savings Trust 16,514,363 10,548,758
(5)Tax Status
The Internal Revenue Service has determined and informed the Company by
a letter dated January 23, 1996, that the Plan is designed in
accordance with applicable sections of the Internal Revenue Code (IRC)
and is therefore exempt from federal income taxes. The Plan has been
amended since receiving the determination letter. However, the plan
administrator believes that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC and
continues to be exempt from federal income taxes.
<PAGE> 25
(6)Related Party Transactions
The Plan invests in shares of mutual funds managed by an affiliate of
Vanguard Fiduciary Trust Company (VFTC). VFTC acts as trustee for only
those investments as defined by the Plan. Transactions in such
investments qualify as party-in-interest transactions which are exempt
from the prohibited transaction rules.
(7)Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. Upon
termination of the Plan, participants would remain fully vested in all
amounts credited to their accounts under the Plan.
(8)Defaulted Loans
During the year ended December 31, 1998, there were 121 participants
who were in default of their loans. Those participants were terminated
employees who were deemed to receive a distribution of $397,017 in
1998. As of December 31, 1998, there are 47 participants who are
active employees that are in default of their loans. Loans in the
amount of $172,103 are in default and included in participant loans as
of December 31, 1998.
<PAGE> 26
<TABLE>
Schedule 1
AIRGAS, INC. 401(k) PLAN
Item 27 (a) - Schedule of Assets Held for Investment Purposes
December 31, 1998
Number of Shares Investments Cost Value
____________________________________________________________________________________________
<S> <C> <C> <C>
Common Stock:
2,342,178 Airgas Common Stock Fund $ 29,637,729 20,933,219
____________________________________________________________________________________________
Mutual Funds:
22,010 Vanguard Explorer Fund 1,248,829 1,248,175
78,500 Vanguard International Growth Fund 1,415,149 1,473,454
835,092 Vanguard U.S. Growth Fund 23,658,731 31,307,598
76,291 Vanguard 500 Index Fund 7,273,372 8,693,400
548,159 Vanguard Wellington Fund 15,818,508 16,088,469
121,485 Vanguard LifeStrategy Growth Fund 2,079,762 2,282,700
112,766 Vanguard LifeStrategy Moderate Growth Fund 1,763,158 1,901,235
52,040 Vanguard LifeStrategy Conservative Growth Fund 720,101 765,504
45,138 Vanguard LifeStrategy Income Fund 571,866 596,726
150,757 Vanguard Total Bond Market Index Fund 1,536,187 1,548,271
____________________________________________________________________________________________
56,085,663 65,905,532
____________________________________________________________________________________________
Guaranteed Investment Contracts:
American International Life Assurance Co.
Guaranteed Investment Contract, 5.06%,
due 1/99 3,018,818 3,018,818
John Hancock Guaranteed Investment Contracts,
7.02%, due 5/99 2,187,126 2,187,126
Retirement Savings Trust, 5.89% 16,514,363 16,514,363
____________________________________________________________________________________________
21,720,307 21,720,307
____________________________________________________________________________________________
Employee loans 5,052,738 5,052,738
____________________________________________________________________________________________
$ 112,496,437 113,611,796
____________________________________________________________________________________________
</TABLE>
<PAGE> 27
<TABLE>
Schedule 2
AIRGAS, INC. 401(k) PLAN
Item 27(d) - Schedule of Reportable Transactions
Year ended December 31, 1998
<CAPTION>:
During the year ended December 31, 1998, the Plan had the following reportable transactions by issue:
__________________________________________________________________________________________________________________
Identity of Transaction Purchase Selling Cost of Net
party involved Description of asset type price price asset gain (loss)
__________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
The Vanguard Group Vanguard 500 Index Fund Purchase $ 5,459,234 -- -- --
Sale -- 1,618,089 1,464,828 153,261
The Vanguard Group Vanguard U.S. Growth Fund Purchase 9,305,836 -- -- --
Sale -- 3,997,242 3,376,247 620,995
The Vanguard Group Vanguard Wellington Fund Purchase 6,612,300 -- -- --
Sale -- 2,624,753 2,461,362 163,391
The Vanguard Group Retirement Savings Trust Purchase 10,241,771 -- -- --
Sale -- 4,328,042 4,328,042 --
N/A Airgas Common Stock Fund Purchase 7,949,378 -- -- --
Sale -- 6,541,389 6,430,206 111,183
___________________________________________________________________________________________________________________
</TABLE>
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
The Board of Directors
Airgas, Inc.
We consent to incorporation by reference in the Registration Statements (Nos.
33-25419 and 33-64058) on Form S-8 of Airgas, Inc. of our report dated May 7,
1999 relating to the statements of net assets available for benefits of
Airgas, Inc. 401(k) Plan as of December 31, 1998 and 1997, the related
statements of changes in net assets available for benefits for the years ended
December 31, 1998 and 1997, and the related supplemental schedule of assets
held for investment purposes and schedule of reportable transactions as of
December 31, 1998, which report is included in the December 31, 1998, annual
report on Form 11-K of Airgas, Inc. 401(k) Plan.
KPMG LLP
Philadelphia, Pennsylvania
June 15, 1999
