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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
January 28, 1999
AIRGAS, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 1-9344 56-0732648
_______________ _______________________ _____________
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
259 North Radnor-Chester Road, Suite 100
Radnor, PA 19087-5283
_________________________________________
(Address of principal executive offices)
Registrant's telephone number, including area code: (610) 687-5253
_____________
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Item 5. Other Events.
____________
On January 28, 1999, Airgas, Inc. reported its earnings for the third
quarter and nine months ended December 31, 1998, as described in the press
release attached as Exhibit 99 and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
__________________________________________________________________
(a) None
(b) None
(c) Exhibits.
99 Press Release dated January 28, 1999
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Signatures
__________
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AIRGAS, INC.
(Registrant)
BY: /s/ Scott M. Melman
Scott M. Melman
Vice President &
Chief Financial Officer
DATED: January 29, 1999
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EXHIBIT 99.1
For More Information:
Jim Rapp
(610) 902-6224
AIRGAS, INC. REPORTS THIRD QUARTER RESULTS
SAME-STORE SALES AND OPERATING EARNINGS DECLINE
AFTER-TAX CASH FLOW $.44 PER SHARE VS. $.48 PER SHARE
$14 MILLION AFTER-TAX GAIN ON DIVESTITURE OF CALCIUM CARBIDE AND
CARBON PRODUCTS OPERATIONS
RADNOR, Pennsylvania, January 28, l999 -- Airgas, Inc. (NYSE-ARG) today
reported sales of $380 million for the quarter ended December 31, 1998, an
increase of 3% from $368 million in the third quarter last year. After-tax
cash flow (net earnings plus depreciation, amortization and deferred income
taxes) was $31.7 million (excluding non-recurring gains), or $.44 per diluted
share, compared to $34.4 million, or $.48 per diluted share, for the same
quarter last year. Net earnings (excluding non-recurring gains) were $6.1
million, or $.09 per diluted share, compared to $11.8 million, or $.17 per
diluted share, a year ago. Including non-recurring gains, net earnings for
the three months ended December 31, 1998, were $22.1 million, or $.31 per
diluted share. Non-recurring gains in the third quarter included the
previously announced divestiture of the calcium carbide and carbon products
manufacturing operations. The sale resulted in an after-tax gain of $14.1
million, or $.20 per diluted share. In addition, a non-recurring gain from
insurance proceeds of $.02 per diluted share was recognized in equity earnings
of unconsolidated affiliates.
For the nine months ended December 31, 1998, sales increased 11% to $1.18
billion compared to sales of $1.06 billion in the same period last year.
After-tax cash flow (excluding non-recurring gains) increased to $101.6
million, or $1.42 per diluted share, compared to $99.2 million, or $1.41 per
diluted share, in the same period last year. Net earnings (excluding non-
recurring gains) were $27.3 million, or $.38 per diluted share, compared to
net earnings of $35.3 million, or $.50 per diluted share, in the prior year.
Including non-recurring gains, net earnings were $43.8 million, or $.61 per
diluted share, compared to $45.7 million, or $.65 per diluted share last year.
Peter McCausland, Airgas' chairman and chief executive officer, said, "I
am disappointed with our performance. Many markets weakened, resulting in
same-store sales declines in both the Distribution Group (0.4%) and Airgas
Direct Industrial (5%). The combined impact of lower revenues and a high
level of expenses, including expenses associated with our Repositioning
program, resulted in a significant decrease in earnings. It is noteworthy
that after-tax cash flow from operations, which is the performance measurement
we use to manage the business, is slightly up year-to-date.
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"In response to the weaker market environment, we are taking actions to
reduce the investment in, and accelerate the benefits from, the ADI
infrastructure-build. We are implementing a company-wide cost improvement
program. We accelerated our search for a chief operating officer and selected
Bill Rice, who brings enormous talents and energy to this role. We are
aggressively managing cash and capital expenditures. We continue to monetize
non-core assets and we are restricting acquisitions to reasonably priced, gas
distribution businesses. While we do not expect these actions to show
immediate results, we do expect cost reductions in excess of $15 million in
the coming fiscal year.
"My disappointment with our results is partially offset by my pride in
the response of our more than 8,000 Airgas associates to our call to action.
We are fortunate to have dedicated employees who share my confidence in our
strategy to build a world-class distribution infrastructure which will result
in Airgas becoming a more valuable supplier to our customers and a more
valuable investment for our shareholders."
Airgas, Inc. is the largest distributor of industrial, medical and
specialty gases and related equipment, and the third largest distributor of
safety supplies, in the United States. Airgas' integrated distributor network
consists of more than 700 locations, including branch locations, distribution
centers, catalog and inbound and outbound telemarketing operations. Airgas
can be visited on the internet at http://www.airgas.com.
Forward-Looking Statements
This press release may contain statements that are forward-looking, as
that term is defined by the Private Securities Litigation Reform Act of 1995
or by the Securities and Exchange Commission in its rules, regulations and
releases. Airgas intends that such forward-looking statements be subject to
the safe harbors created thereby. All forward-looking statements are based on
current expectations regarding important risk factors, and the making of such
statements should not be regarded as a representation by the Company or any
other person that the results expressed therein will be achieved. Important
factors that could cause actual results to differ materially from those
contained in any forward-looking statement include underlying market
conditions, growth in same-store sales, costs and potential disruptive effects
of the "Repositioning for Growth" initiative, the Company's ability to reduce
costs, implementation of information technology projects, any potential
problems relating to Year 2000 matters, the success and timing of intended
divestitures and other factors described in the Company's reports, including
Form 10-Q dated September 30, 1998, filed by the Company with the Securities
and Exchange Commission.
Consolidated statements of earnings and consolidated condensed balance
sheets follow on pages 3, 4 and 5.
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AIRGAS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
1998 1997 1998 1997
Net sales:
Distribution $279,669 $272,958 $860,628 $812,395
Direct Industrial 59,954 61,372 193,756 159,433
Manufacturing 40,700 33,480 123,304 87,750
Total net sales 380,323 367,810 1,177,688 1,059,578
Costs and expenses:
Cost of products sold (excluding
depreciation, depletion and
amortization)
Distribution 140,085 136,309 431,487 408,783
Direct Industrial 43,837 43,795 142,575 114,766
Manufacturing 15,755 15,847 49,963 41,537
Selling, distribution and
administrative expenses 132,969 118,939 398,421 338,481
Depreciation, depletion and
amortization 22,504 20,218 65,849 56,809
Special items (a),(b) - - (1,000) (14,500)
Total costs and expenses 355,150 335,108 1,087,295 945,876
Operating income:
Distribution 20,282 26,902 73,081 82,778
Direct Industrial 352 2,463 2,165 4,911
Manufacturing 4,539 3,337 14,147 11,513
Special items (a),(b) - - 1,000 14,500
Total operating income 25,173 32,702 90,393 113,702
Interest expense, net (15,701) (13,456) (46,227) (39,234)
Other income, net (c) 24,370 442 25,240 2,488
Equity in earnings of
unconsolidated affiliates (d) 2,862 943 4,838 1,262
Minority interest (12) (219) (51) (837)
Earnings before income taxes 36,692 20,412 74,193 77,381
Income tax expense 14,604 8,586 30,350 31,654
Net earnings $ 22,088 $ 11,826 $ 43,843 $ 45,727
Net earnings
(excluding non-recurring gains)(e) $ 6,143 $ 11,826 $ 27,323 $ 35,320
Per share data:
Basic earnings per share $ .32 $ .17 $ .63 $ .67
Diluted earnings per share $ .31 $ .17 $ .61 $ .65
Per share data:
(excluding non-recurring gains)(e)
Basic earnings per share $ .09 $ .17 $ .39 $ .52
Diluted earnings per share $ .09 $ .17 $ .38 $ .50
Weighted average shares outstanding:
Basic 69,700 69,600 70,000 68,200
Diluted 71,600 71,500 71,700 70,500
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(a)The results for the nine months ended December 31, 1997 include a $14.5
million ($9.4 million after-tax) gain from a partial recovery of refrigerant
losses.
(b)The results for the nine months ended December 31, 1998 include the reversal
of $1 million of accruals that were established at March 31, 1998 in
connection with the divestiture of two non-core businesses.
(c)The results for the three and nine months ended December 31, 1998 include a
$24 million ($14.1 million after-tax) non-recurring gain from the
divestiture of the Company's calcium carbide and carbon products
manufacturing operations.
The results for the nine months ended December 31, 1997 include a $1.5
million ($980 thousand after-tax) non-recurring gain related to the
divestiture of a non-core business.
(d)The results for the three and nine months ended December 31, 1998 include a
$1.8 million non-recurring gain from insurance proceeds received by an
equity affiliate.
(e)The results for the three and nine months ended December 31, 1998 exclude
the effect of the $24 million ($14.1 million after-tax) non-recurring gain
from the divestiture of the Company's calcium carbide and carbon products
manufacturing operations, and a $1.8 million non-recurring gain from
insurance proceeds received by an equity affiliate.
The results for the nine months ended December 31, 1998 also exclude the
effect of the $1 million ($570 thousand after-tax) reversal of accruals no
longer required related to the first quarter divestiture of two non-core
businesses.
The results for the nine months ended December 31, 1997, exclude the
after-tax effect of the gain from partial recovery of refrigerant losses of
$9.4 million and the after-tax gain of $980 thousand related to the
divestiture of a non-core business (see footnotes (a) and (c)).
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AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
December 31, March 31,
1998 1998
ASSETS
Trade accounts receivable, net $ 192,129 $ 186,342
Inventories 164,471 154,937
Prepaids and other current assets 31,185 25,555
TOTAL CURRENT ASSETS 387,785 366,834
Property, plant and equipment, net 716,562 687,304
Goodwill, net 431,849 410,753
Other non-current assets, net 174,676 176,583
TOTAL ASSETS $1,710,872 $1,641,474
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 16,138 $ 12,150
Accounts payable, trade 74,395 84,602
Accrued expenses and
other current liabilities 133,608 128,806
TOTAL CURRENT LIABILITIES 224,141 225,558
Long-term debt 861,554 830,845
Deferred income taxes 132,452 121,356
Other non-current liabilities 29,640 36,842
Stockholders' equity 463,085 426,873
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,710,872 $1,641,474
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