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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 21, 2000
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 27, 2000, Airgas, Inc. reported its earnings for the
third quarter and nine months ended December 31, 1999, as described in
the press release attached as Exhibit 99.1 and incorporated herein by
reference.
On January 21, 2000, Airgas, Inc. announced that it completed the
acquisition of Mallinckrodt Inc.'s Puritan-Bennett medical gas
business, as described in the press release attached as Exhibit 99.2
and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
__________________________________________________________________
(a) None
(b) None
(c) Exhibits.
99.1 Press Release dated January 27, 2000
99.2 Press Release dated January 21, 2000
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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/ Roger F. Millay
Roger F. Millay
Senior Vice President &
Chief Financial Officer
DATED: January 28, 2000
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Exhibit 99.1
For More Information:
Chris Close
(610) 902-6257
[email protected]
AIRGAS REPORTS STRONG FISCAL THIRD QUARTER RESULTS
RADNOR, Pennsylvania, January 27, 2000 - Airgas, Inc. (NYSE -
ARG) today reported results for the quarter and nine-month period
ended December 31, 1999. Net earnings, excluding certain gains and
charges, increased 68% to $.15 per diluted share in the current
quarter versus a year ago, driven by improved gross margins and lower
expenses. Same-store sales were essentially flat. After-tax cash
flow improved 13% to $.50 per diluted share.
Peter McCausland, chairman and chief executive officer,
commented, "Our significant growth in earnings and cash flow are
impressive given the ongoing weakness in several important customer
segments. The improved gross margin reflects benefits from our new
hardgoods distribution infrastructure, higher gas margins and a shift
in product mix. Our people in the field are working hard to control
expenses and capital spending while continuing to build our
infrastructure. As a result, our business is generating solid cash
flow, which has allowed us to make acquisitions, buy back stock and
pay down debt.
"We are beginning to sense some growing optimism from our
operating management regarding prospects of improved demand in our
core business. While we've been experiencing growth in national
accounts and certain strategic product areas, the eventual
strengthening of our core customer segments must, to a large degree,
drive earnings and cash flow growth in the future. I'm pleased that
we've been able to meet our earnings targets for three consecutive
quarters. Achieving our plan for the fourth quarter, however, may
require an improvement in our daily sales rate."
Comparing the quarter ended December 31, 1999 with the same
period last year, after-tax cash flow (net earnings, excluding certain
gains and charges, plus depreciation, amortization and deferred income
taxes) was $35.7 million, or $.50 per diluted share, compared to $31.7
million, or $.44 per diluted share. Excluding certain gains and
charges netting to less than $.01 per diluted share, net earnings were
$10.3 million, or $.15 per diluted share, versus net earnings in last
year's quarter, also excluding non-recurring gains, of $6.1 million,
or $.09 per diluted share. Sales were $369 million this quarter
compared to $380 million last year. Net divestitures and acquisitions
accounted for more than $10 million of the sales decline.
For the nine-month period, after-tax cash flow increased to
$108.5 million, or $1.53 per diluted share, compared to $101.6
million, or $1.42 per diluted share, during the same period last year.
Net earnings, excluding certain gains and charges in both the current
and prior years, were $31.3 million, or $.44 per diluted share,
compared to $27.3 million, or $.38 per diluted share. Sales were
$1.14 billion compared to $1.18 billion in the prior year.
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During the quarter ended December 31, 1999, cost of products sold
for the Gas Operations segment included a $3.8 million ($2.2 million
after-tax) charge related to certain specialty gases inventories.
Also in the current quarter, the Company recorded a $2.8 million ($1.7
million after-tax) gain primarily related to an insurance settlement
pertaining to a fiscal 1997 loss.
Total same-store sales were flat in the fiscal third quarter
versus the same period a year ago. Sales in the Distribution segment
were down 1.3% reflecting an increase of 1.6% for gas and rent offset
by a 3.3% decline in hardgoods sales. Same-store sales for the Gas
Operations segment were 15% higher.
Total capital expenditures for the quarter were $17 million
versus $26 million in last year's quarter. Capital spending year-to-
date was $48 million versus $82 million last year.
During the quarter, the Company purchased 1.1 million shares of
its common stock at a total cost of $10.5 million. For the first nine
months of the fiscal year, the Company purchased 2.3 million shares at
a total cost of $24.8 million. There are approximately 4.8 million
shares remaining under the current share repurchase authorization.
The slides to be presented during the Company's earnings
teleconference, along with the teleconference replay instructions are
available on the Company's Internet site www.airgas.com. The replay
will be accessible for one week starting at approximately 11:00 a.m.
Eastern Time on Friday, January 28, 2000.
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 approximately 700
locations, including branches, packaged gas fill plants, distribution
centers, and inbound and outbound telemarketing operations.
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 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,
improved demand, growth in national accounts and certain strategic
product areas, net earnings and cash flow growth, the Company's
ability to improve its daily sales rate and gross margins, meet
earnings targets, and control expenses and capital spending, and other
factors described in the Company's reports, including Form 10-Q dated
September 30, 1999, filed by the Company with the Securities and
Exchange Commission.
Consolidated statements of earnings and consolidated
condensed balance sheets follow.
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<TABLE>
<CAPTION>
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
1999 1998 (a) 1999 1998(a)
<S> <C> <C> <C> <C>
Net sales:
Distribution $339,761 $339,623 $1,032,701 $1,054,384
Gas Operations 29,673 40,700 103,515 123,304
Total net sales 369,434 380,323 1,136,216 1,177,688
Costs and expenses:
Cost of products sold (excluding
depreciation and amortization)
Distribution 180,126 183,922 555,205 574,062
Gas Operations (b) 15,471 17,792 44,506 55,299
Selling, distribution and
administrative expenses 125,676 130,932 381,822 393,085
Depreciation and amortization 21,986 22,504 67,105 65,849
Special charges (c) (2,829) - (2,829) (1,000)
Total costs and expenses 340,430 355,150 1,045,809 1,087,295
Operating income:
Distribution 26,622 20,634 79,290 75,246
Gas Operations (447) 4,539 8,288 14,147
Special charges (c) 2,829 - 2,829 1,000
Total operating income 29,004 25,173 90,407 90,393
Interest expense, net (13,949) (15,701) (42,167) (46,227)
Other income, net (d) 1,234 24,358 16,639 25,189
Equity in earnings of unconsolidated
affiliates (e) 663 2,862 2,388 4,838
Earnings before income taxes and
the cumulative effect of an
accounting change 16,952 36,692 67,267 74,193
Income tax expense 7,192 14,604 28,920 30,350
Earnings before the cumulative
effect of an accounting change 9,760 22,088 38,347 43,843
Cumulative effect of an accounting
change, net of taxes (f) - - (590) -
Net earnings $ 9,760 $ 22,088 $ 37,757 $ 43,843
Net earnings (excluding gains/charges)(g) $ 10,291 $ 6,143 $ 31,319 $ 27,323
Per share data:
Basic earnings per share $ .14 $ .32 $ .54 $ .63
Diluted earnings per share $ .14 $ .31 $ .53 $ .61
Per share data
(excluding gains/charges)(g):
Basic earnings per share $ .15 $ .09 $ .45 $ .39
Diluted earnings per share $ .15 $ .09 $ .44 $ .38
Weighted average shares outstanding:
Basic 69,200 69,700 69,600 70,000
Diluted 70,800 71,600 71,000 71,700
See notes to consolidated financial statements.
</TABLE>
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Notes to consolidated statements of earnings:
(a) Certain reclassifications have been made to previously issued
financial statements to conform to the current presentation.
(b) Gas Operations' cost of products sold for the three and nine
months ended December 31, 1999 includes an inventory write-down of
$3.8 million ($2.2 million after-tax) related to certain specialty gas
inventories.
(c) Special charges of $2.8 million ($1.7 million after-tax) for the
three and nine months ended December 31, 1999 primarily include an
insurance settlement related to a fiscal 1997 loss.
Special charges of $1 million ($575 thousand after-tax) for the nine
months ended December 31, 1998 represents reserve adjustments related
to the divestiture of two non-core businesses.
(d) Other income, net, for the nine months ended December 31, 1999
includes a $14.9 million ($7.8 million after-tax) gain resulting from
the divestiture of the Company's operations in Poland and Thailand.
The operations of the divested companies were previously reported in
the Gas Operations segment.
Other income, net, for the three and nine months ended December 31, 1998
includes a $24 million ($14.1 million after-tax) gain from the
divestiture of the Company's calcium carbide and carbon products
manufacturing operations. The operations of this business were
previously reported in the Gas Operations segment.
(e) Equity in earnings of unconsolidated affiliates for the three and nine
months ended December 31, 1998 includes a $1.8 million non-recurring
gain from insurance proceeds received by an equity affiliate.
(f) Effective April 1, 1999, the Company adopted Statement of Position 98-5,
"Reporting on the Costs of Start-up Activities." The nine months ended
December 31, 1999 include a first quarter after-tax charge of
$590 thousand for the cumulative effect of an accounting change related
to previously capitalized costs from start-up activities.
(g) Net earnings and per share amounts, adjusted to exclude the items
described in notes (b) through (f).
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<TABLE>
<CAPTION>
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
December 31, March 31,
1999 1999
<S> <C> <C>
ASSETS
Trade accounts receivable, net $ 193,287 $ 195,708
Inventories, net 158,095 154,424
Deferred income tax asset, net 7,937 7,549
Prepaids and other current assets 23,393 21,161
TOTAL CURRENT ASSETS 382,712 378,842
Property, plant and equipment, net 709,444 717,859
Goodwill, net 424,700 428,349
Other non-current assets, net 133,200 173,422
TOTAL ASSETS $1,650,056 $1,698,472
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 69,103 $ 85,486
Accrued expenses and other current liabilities 101,492 108,295
Current portion of long-term debt 2,434 19,645
TOTAL CURRENT LIABILITIES 173,029 213,426
Long-term debt 801,022 847,841
Deferred income taxes 152,653 142,675
Other non-current liabilities 31,830 23,585
Stockholders' equity 491,522 470,945
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,650,056 $1,698,472
</TABLE>
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Exhibit 99.2
AIRGAS COMPLETES ACQUISITION OF GAS DISTRIBUTION BUSINESS
FROM MALLINCKRODT
RADNOR, Pennsylvania, January 21, 2000 - Airgas, Inc. (NYSE -
ARG) announced today that it closed the acquisition of Mallinckrodt
Inc.'s (NYSE - MKG) Puritan-Bennett medical gas business. The
agreement to acquire the business was previously announced by Airgas
on January 10, 2000. So far during its current fiscal year, Airgas
has completed five distributor acquisitions with total annual sales of
approximately $97 million.
"The associates from Puritan-Bennett have a premier reputation in the
healthcare industry," commented Peter McCausland, Airgas' chairman and
chief executive officer. "This business, along with the people who
have built it, will be a tremendous addition to our core medical gases
business and a complement to the dynamic culture we've built here at
Airgas."
The Puritan-Bennett medical gas business is a leading distributor of
medical gases in North America with annual sales of approximately $70
million. Gas and cylinder rent represent approximately 90% of sales.
Puritan-Bennett has positioned itself as a niche player in the gas
industry by specializing in the growing healthcare segment. Its
network of 36 locations and approximately 390 employees in the United
States and Canada provides gas service primarily to hospitals,
companies providing home healthcare services, elderly care facilities
and other suppliers to the healthcare industry. The acquired business
will more than double the size of Airgas' existing medical gases
business, which currently generates annual sales of approximately $50
million.
Based in St. Louis, Missouri, Mallinckrodt Inc. is a global
manufacturer and marketer of specialty medical products designed to
sustain breathing, diagnose disease and relieve pain. The company
does business in more than 100 countries; operates Respiratory,
Imaging and Pharmaceuticals product groups, and had fiscal 1999 net
sales of $2.6 billion. The Mallinckrodt website address is www.
mallinckrodt.com.
Airgas 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 approximately 700 locations including branches,
packaged gas fill plants, distribution centers and inbound and
outbound telemarketing operations. Airgas can be visited on the
Internet at www.airgas.com.
Contacts: Mallinckrodt - Barbara Abbett (314) 654-5230 or
[email protected]
Airgas - Chris Close (610) 902-6257 or
[email protected]
