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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):
May 11, 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 May 11, 2000, Airgas, Inc. reported its earnings for the fourth
quarter and fiscal year ended March 31, 2000, as described in the press
release attached as Exhibit 99.1 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 May 11, 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: May 12, 2000
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Exhibit 99.1
For More Information:
Chris Close
(610) 902-6257
[email protected]
AIRGAS REPORTS FOURTH QUARTER
AND FISCAL 2000 RESULTS
RADNOR, Pennsylvania, May 11, 2000 - Airgas, Inc. (NYSE - ARG) today
reported results for the quarter and fiscal year ended March 31, 2000.
After-tax cash flow (net earnings, excluding certain gains and charges,
plus depreciation, amortization and deferred income taxes) for the quarter
was $33.1 million, or $.48 per diluted share, compared to $36.7 million, or
$.51 per diluted share last year. Net earnings, excluding certain gains
and charges, were $5.6 million, or $.08 per diluted share, versus net
earnings of $7.2 million, or $.10 per diluted share. Sales increased to
$406 million compared to $384 million last year. Including all gains and
charges, net earnings for the quarter ended March 31, 2000 were $0.5
million, or $.01 per diluted share, compared to $8.1 million, or $.11 per
diluted share a year ago. The current year's quarter included an after-tax
litigation charge of $4.8 million, or $.07 per diluted share.
Peter McCausland, chairman and chief executive officer, commented, "It
was encouraging to see the quarterly sales comparison turn positive for the
first time in six quarters. Customer demand appears to be showing signs of
improvement and our investments in growth initiatives like national
accounts and strategic products are beginning to bear fruit. Of course, we
were disappointed that the sales growth this quarter did not translate into
higher earnings and cash flow. Rising expenses related to wages and
benefits, insurance and fuel, along with certain unexpected charges at two
of our regional companies, put pressure on profits this quarter.
"Going forward, we believe that the customer demand situation should
continue to improve and we are implementing price increases to address the
rising cost environment," added Mr. McCausland. "The ultimate yield
resulting from price increases is difficult to predict given the
challenging economic conditions. Therefore, we are evaluating all expense
budgets and are implementing strict cost controls where appropriate. We do
not want to inhibit our ability to take advantage of strength in the U.S.
industrial economy or to execute on our strategic initiatives, including
national accounts and eCommerce."
For the year ended March 31, 2000, after-tax cash flow increased to
$141.7 million, or $2.01 per diluted share, compared to $138.3 million, or
$1.93 per diluted share, last year. Net earnings, excluding certain gains
and charges in both the current and prior years, were $36.9 million, or
$.52 per diluted share, compared to $34.5 million, or $.48 per diluted
share. Sales were $1.54 billion compared to $1.56 billion in the prior
year. Including all gains and charges, net earnings were $38.3 million, or
$.54 per diluted share for the current year versus $51.9 million, or $.72
per diluted share last year.
Total same-store sales increased by 1.8% in the fiscal fourth quarter
versus the same period a year ago. Same-store sales in the Distribution
segment were up 1.2%, reflecting an increase of 3.5% for gases and rent and
a 0.5% decline for hardgoods. Same-store sales for the Gas Operations
segment were 10.4% higher.
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Capital expenditures in the fourth quarter were $18 million versus $20
million in last year's quarter. Capital spending for the year was $65
million versus $102 million last year.
The Company has substantially completed the repurchase of its shares
under its existing share repurchase authorization.
Regarding the litigation charge, Airgas is a defendant in related
class-action lawsuits in four states in which the Company has been falsely
accused of misleading customers into believing that its hazardous materials
charges were required by government laws or regulations. The Company has
denied the allegations and believes that the hazardous materials charges
are lawful and have been properly disclosed. In one suit, an Oklahoma
State court certified a nationwide class. In another, in California, the
Company is in the midst of a trial. In view of the uncertainties of
litigation, the costs to defend lawsuits in multiple jurisdictions and the
Company's desire to focus on its business, the Company has preliminarily
settled all of the lawsuits. The charge recorded represents an estimate of
the overall costs associated with the defense and settlement of these
claims.
The slides to be presented during the Company's earnings
teleconference, along with the teleconference replay instructions, are
available in the `Investor Info' section 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, May 12, 2000.
Airgas, Inc. is the largest distributor of industrial, medical and s
pecialty 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. These statements include, but are not
limited to, statements regarding: the Company's expectations regarding
improved customer demand, increased sales and the expanding U.S.
industrial economy; controlling costs and increasing prices; and the
Company's strategic initiatives. 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 an insufficient yield from price
increases, lack of improvement in customer demand, the inability to
implement strict cost controls, the ability to implement its strategic
initiatives, an economic downturn, increased competition, the outcome
and costs associated with the defense and settlement of lawsuits
related to hazardous materials charges, and other factors described in
the Company's reports, including Form 10-Q dated December 31, 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 Twelve Months Ended
March 31, March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net sales:
Distribution $377,248 $351,800 $1,409,949 $1,406,184
Gas Operations 28,870 31,730 132,385 155,034
Total net sales 406,118 383,530 1,542,334 1,561,218
Costs and expenses:
Cost of products sold (excluding
depreciation and amortization)
Distribution 204,917 194,506 760,122 768,568
Gas Operations (a) 11,969 14,188 56,475 69,487
Selling, distribution and
administrative expenses (b) 150,705 130,156 532,527 523,241
Depreciation and amortization 22,203 22,077 89,308 87,926
Special charges (c) - - (2,829) (1,000)
Total costs and expenses 389,794 360,927 1,435,603 1,448,222
Operating income (loss):
Distribution 15,381 23,201 94,671 98,447
Gas Operations 943 (598) 9,231 13,549
Special charges (c) - - 2,829 1,000
Total operating income 16,324 22,603 106,731 112,996
Interest expense, net (15,393) (14,071) (57,560) (60,298)
Other income, net (d) 1,223 1,432 17,862 26,621
Equity in earnings of unconsolidated
affiliates (e) 1,003 2,204 3,391 7,042
Earnings before income taxes and the
cumulative effect of an accounting
change 3,157 12,168 70,424 86,361
Income tax expense 2,631 4,087 31,551 34,437
Earnings before the cumulative effect
of an accounting change 526 8,081 38,873 51,924
Cumulative effect of an accounting
change, net of taxes (f) - - (590) -
Net earnings $ 526 $ 8,081 $ 38,283 $ 51,924
Net earnings (excluding gains/charges)(g)$ 5,578 $ 7,159 $ 36,897 $ 34,482
Per share data:
Basic earnings per share $ .01 $ .12 $ .55 $ .74
Diluted earnings per share $ .01 $ .11 $ .54 $ .72
Per share data (excluding gains/charges)(g):
Basic earnings per share $ .08 $ .10 $ .53 $ .49
Diluted earnings per share $ .08 $ .10 $ .52 $ .48
Weighted average shares outstanding:
Basic 68,000 70,100 69,200 70,000
Diluted 69,500 71,700 70,600 71,700
See notes to consolidated financial statements.
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Notes to consolidated statements of earnings:
(a) Gas Operations' cost of products sold for the year ended March 31,
2000 includes a third quarter inventory write-down of $3.8 million ($2.2
million after-tax) related to certain specialty gas inventories.
(b) Selling, distribution and administrative expenses for the fourth
quarter and year ended March 31, 2000 include a litigation charge of $7.5
million ($4.8 million after-tax) that represents an estimate of the
Company's overall costs associated with the defense and settlement of
certain lawsuits.
(c) Special charges of $2.8 million ($1.7 million after-tax) for the year
ended March 31, 2000 primarily include income in connection with an
insurance settlement related to a fiscal 1997 loss.
Special charges for the year ended March 31, 1999 includes $1
million of income ($575 thousand after-tax) for reserve
adjustments that relate to the divestiture of two non-core
businesses.
(d) Other income, net, for the quarter ended March 31, 2000 includes a
gain of $1.2 million consisting of a gain on the divestiture of a non-core
business, partially offset by losses on disposals of assets. For the year
ended March 31, 2000, other income, net, also 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 year ended March 31, 1999 includes
a $25.5 million ($15 million after-tax) gain from the
divestiture of the Company's calcium carbide and carbon
products operations. The operations of this business were
previously reported in the Gas Operations segment. Included
in the divestiture gain is $1.5 million ($922 thousand after-
tax) recognized in the fourth quarter resulting from the
settlement of certain matters pertaining to the divestiture.
(e) Equity in earnings of unconsolidated affiliates for the year ended
March 31, 1999 includes a $1.8 million after-tax 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 year ended March
31, 2000 includes 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 (a) through (f).
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<TABLE>
<CAPTION>
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
March 31, March 31,
2000 1999
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ASSETS
Trade accounts receivable, net $ 211,989 $ 195,708
Inventories, net 159,438 154,424
Deferred income tax asset, net 11,357 7,549
Prepaids and other current assets 23,611 21,161
TOTAL CURRENT ASSETS 406,395 378,842
Property, plant and equipment, net 753,768 717,859
Goodwill, net 445,498 428,349
Other non-current assets, net 131,275 173,422
TOTAL ASSETS $1,736,936 $1,698,472
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 78,276 $ 85,486
Accrued expenses and other current liabilities 121,249 108,295
Current portion of long-term debt 20,071 19,645
TOTAL CURRENT LIABILITIES 219,596 213,426
Long-term debt 857,422 847,841
Deferred income taxes 158,413 142,675
Other non-current liabilities 28,998 23,585
Stockholders' equity 472,507 470,945
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,736,936 $1,698,472
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