UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-11037
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Praxair, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1249050
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
39 Old Ridgebury Road, Danbury, CT 06810-5113
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(203) 837-2000
--------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
At September 30, 1997, 157,657,373 shares of common stock ($.01 par value) of
the Registrant were outstanding.
<PAGE>
FORWARD-LOOKING STATEMENTS
The forward-looking statements contained in this document concerning, among
other things, projected capital spending, continuation of acquisition
activities in the packaged gases and surface technologies businesses, tax
planning initiatives and effective tax rates, and the timing, proceeds and
other terms of the disposition of assets held for sale, involve risks and
uncertainties, and are subject to change based on various factors, including
the impact of changes in worldwide and national economies, pricing fluctuations
in foreign currencies, changes in interest rates, the continued timely
development and acceptance of new products and processes, the impact of
competitive products and pricing, the ability to continue to develop potential
acquisition opportunities, and the impact of tax and other legislation and
regulation in the jurisdictions in which the Company operates.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income - Praxair, Inc. and Subsidiaries
Quarter and Nine Months Ended September 30, 1997 and 1996 (Unaudited)
Condensed Consolidated Balance Sheet - Praxair, Inc. and Subsidiaries
September 30, 1997 (Unaudited) and December 31, 1996
Condensed Consolidated Statement of Cash Flows - Praxair, Inc. and
Subsidiaries Nine Months Ended September 30, 1997 and 1996 (Unaudited)
Notes to Condensed Consolidated Financial Statements - Praxair, Inc.
and Subsidiaries (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signature
Exhibit Index
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRAXAIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Millions of dollars, except per share)
Quarter Ended Nine Months Ended
September 30, September 30,
---------------- -----------------
1997 1996 1997 1996
------- ------- ------- -------
SALES $1,190 $1,115 $3,526 $3,298
Cost of sales, exclusive of
depreciation and amortization ....... 699 637 2,045 1,897
Selling, general and administrative ... 162 170 494 518
Depreciation and amortization ......... 111 107 331 313
Research and development .............. 19 18 58 53
CBI integration charges ............... - - - 85
Other income-net ...................... 12 7 33 17
------- ------- ------- -------
OPERATING PROFIT ...................... 211 190 631 449
Interest expense ...................... 54 47 157 146
------- ------- ------- -------
INCOME BEFORE INCOME TAXES ............ 157 143 474 303
Income taxes .......................... 39 36 118 73
------- ------- ------- -------
INCOME OF CONSOLIDATED ENTITIES ....... 118 107 356 230
Minority interests .................... (15) (22) (49) (51)
Income from equity investments ........ 4 3 9 7
------- ------- ------- -------
NET INCOME ............................ $ 107 $ 88 $ 316 $ 186
PER SHARE:
Net Income ............................ $ 0.65 $ 0.54 $ 1.92 $ 1.18
Cash dividends ........................ $ 0.11 $ 0.095 $ 0.33 $ 0.285
The accompanying notes are an integral part of these financial statements.
<PAGE>
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Millions of dollars)
September 30,
1997 December 31,
(Unaudited) 1996
----------- ------------
ASSETS
Cash and cash equivalents ....................... $ 53 $ 63
Accounts receivable ............................. 988 914
Inventories ..................................... 306 312
Prepaid and other ............................... 174 377
-------- --------
TOTAL CURRENT ASSETS ....................... 1,521 1,666
Property, plant and equipment-net ............... 4,531 4,269
Other assets .................................... 1,688 1,603
-------- --------
TOTAL ASSETS ............................... $ 7,740 $ 7,538
LIABILITIES AND EQUITY
Accounts payable ................................ $ 358 $ 408
Short-term debt ................................. 1,234 1,520
Current portion of long-term debt ............... 37 42
Other current liabilities ....................... 528 580
-------- --------
TOTAL CURRENT LIABILITIES .................. 2,157 2,550
Long-term debt .................................. 2,024 1,703
Other long-term obligations ..................... 882 793
-------- --------
TOTAL LIABILITIES .......................... 5,063 5,046
Minority interests .............................. 508 493
Preferred stock ................................. 75 75
Shareholders' equity ............................ 2,094 1,924
-------- --------
TOTAL LIABILITIES AND EQUITY ............... $ 7,740 $ 7,538
The accompanying notes are an integral part of these financial statements.
<PAGE>
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions of dollars)
Nine Months Ended
September 30,
---------------------
1997 1996
------- -------
OPERATIONS
Net income .......................................... $ 316 $ 186
Adjustments:
Depreciation and amortization ...................... 331 313
CBI integration charges ............................ (19) 60
Deferred income taxes .............................. 51 (6)
Gain on sale of fixed assets ....................... (12) (5)
Working capital .................................... (174) (120)
Long-term assets and liabilities ................... (57) ( 68)
Other non-cash charges ............................. 22 31
------- -------
Net cash provided by operating activities........... 458 391
------- -------
INVESTING
Capital expenditures ................................. (635) (652)
Investments .......................................... (89) (1,594)
Divestitures and asset sales ......................... 316 27
------- -------
Net cash used for investing activities .............. (408) (2,219)
------- -------
FINANCING
Short-term borrowings (repayments)-net ............... (36) 1,548
Long-term borrowings ................................. 174 304
Long-term debt repayments ............................ (97) (480)
Minority transactions and other ...................... (24) 6
Issuances of common stock ............................ 88 568
Purchases of common stock ............................ (112) (7)
Cash dividends ....................................... (52) (43)
------- -------
Net cash (used for) provided by financing activities. (59) 1,896
------- -------
Effect of exchange rate changes on cash and
cash equivalents ..................................... (1) (1)
------- -------
Change in cash and cash equivalents .................... (10) 67
Cash and cash equivalents beginning-of-year............. 63 15
------- -------
Cash and cash equivalents end-of-period ................ $ 53 $ 82
The accompanying notes are an integral part of these financial statements.
<PAGE>
PRAXAIR INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Presentation of Condensed Consolidated Financial Statements
In the opinion of Praxair, Inc. (Praxair) management, the accompanying
condensed consolidated financial statements include all adjustments
necessary for a fair presentation of the results for the interim periods
presented. These adjustments consisted of only normal recurring
adjustments. The accompanying condensed consolidated financial statements
should be read in conjunction with the Notes to the Financial Statements
of Praxair, Inc. and subsidiaries in Praxair's 1996 Annual Report.
Certain prior years' amounts have been reclassified to conform to the
current years' presentation.
2. 1996 Acquisition of CBI Industries, Inc. (CBI)
ACQUISITION - On January 12, 1996, Praxair acquired approximately 94% of
the outstanding shares of CBI common stock and on March 13, 1996 Praxair
acquired the remaining common stock outstanding. The total purchase price
for CBI's common stock was $2.2 billion including assumed debt of $735
million. The results of CBI's operations have been included in the
consolidated financial statements effective January 1, 1996. (See Note 2
to Praxair's 1996 consolidated financial statements.)
ASSETS HELD FOR SALE - In connection with the acquisition, Praxair
determined that certain CBI businesses were not strategic to the combined
company and has sold or has taken actions to sell these businesses.
During the nine months ended September 30, 1997, Praxair sold 96% of
Chicago Bridge & Iron Company N.V. in an initial public offering
transaction, and five other small businesses. Assets held for sale - net
is included in the caption Prepaid and other on Praxair's Condensed
Consolidated Balance Sheet. Balances at September 30, 1997 and December
31, 1996 were $18 million and $287 million, respectively. The after-tax
proceeds from these sales were used by Praxair to repay outstanding
short-term debt.
3. CBI Integration Charges
In March 1996, Praxair recorded a charge of $85 million pre-tax ($53
million after tax benefits of $30 million and minority interests of $2
million) for severance-related, lease termination and other exit costs
associated with the integration of the industrial gases businesses of CBI
and Praxair. (See Note 3 to Praxair's 1996 consolidated financial
statements.)
At September 30, 1997, most employee separations were completed and the
remaining accrual balance related to other exit costs was $28 million.
<PAGE>
4. Inventories
The following is a summary of Praxair's consolidated inventories:
(Millions of dollars)
September 30,
1997 December 31,
(Unaudited) 1996
------------- ------------
Raw materials and supplies...... $ 122 $ 118
Work in process................. 33 40
Finished goods.................. 151 154
------ ------
$ 306 $ 312
5. Shareholders' Equity
Changes in Shareholders' Equity were as follows:
(Thousands of shares)
Common Treasury
Stock Issued Stock
------------ ---------
Balance, January 1, 1997................ 157,501 12
Common stock activity (a) .............. 2,198 2,030
--------- ---------
Balance, September 30, 1997 ............ 159,699 2,042
(Millions of dollars) Additional Cumulative
Common Paid-In Retained Translation Treasury
Stock Capital Earnings Adjustment Stock Total
------ --------- -------- ----------- ------ -------
Balance, January 1, 1997... $ 2 $1,350 $ 698 $(126) $ - $1,924
Net income................. 316 316
Dividends - common stock... (52) (52)
Common stock activity (a).. 80 (104) (24)
Translation adjustments.... (70) (70)
--- ------ ----- ----- ------ -------
Balance, September 30,1997. $ 2 $1,430 $ 962 $(196) $(104) $2,094
=== ====== ===== ===== ====== =======
(a) Relates to issuances of common stock for the Dividend Reinvestment and
Stock Purchase Plan, and employee savings and incentive plans, and
purchases of common stock.
During the quarter and nine months ended September 30, 1997, Praxair
granted options for 520,250 and 1,181,400 shares, respectively, of common
stock having option prices ranging from $43.88 to $56.13 per share, the
closing market price of Praxair's common stock on the day of the grants.
At September 30, 1997 there were 11,026,314 shares under option at prices
ranging from $9.80 to $56.13 per share (weighted average of $24.97) of
which options for 7,270,894 shares were exercisable at prices ranging from
$9.80 to $34.13 per share (weighted average of $15.38). During the quarter
and nine months ended September 30, 1997, 346,270 and 1,583,526 options
were exercised, respectively.
<PAGE>
6. Earnings Per Share
Earnings per share is computed by dividing net income for the period by
the weighted average number of common shares outstanding and common stock
equivalents (see Exhibit 11). Weighted average common shares and common
stock equivalents used to compute earnings per share amounts were as
follows:
Quarter ended September 30,1997.................. 164,383,819
Quarter ended September 30,1996.................. 162,315,717
Nine-months ended September 30, 1997............. 164,448,036
Nine-months ended September 30, 1996............. 157,499,700
RECENTLY ISSUED ACCOUNTING STANDARD ON EARNINGS PER SHARE
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," issued in February 1997, establishes new standards for computing
and presenting earnings per share (EPS) effective for December 31, 1997
reporting. At that time, all previous EPS disclosures will be restated to
comply with the new standard. SFAS No. 128 requires a dual presentation
of basic and diluted EPS and a reconciliation of the numerator and
denominator amounts used in the computations. Basic EPS is new for
Praxair and is essentially net income divided by the weighted average
common shares outstanding during the period. Diluted EPS is consistent
with Praxair's current EPS disclosures which reflects the potential
dilution of outstanding stock options and other common stock equivalents.
The basic and diluted EPS, using the new standard are as follows:
Quarter Ended September 30, Nine Months Ended September 30,
-------------------------- ------------------------------
1997 1996 1997 1996
------ ------ ------ ------
Basic EPS $0.68 $0.56 $2.00 $1.23
Diluted EPS $0.65 $0.54 $1.92 $1.18
7. Debt and Financial Instruments
Debt - The following is a summary of Praxair's outstanding debt at
September 30,1997 and December 31, 1996:
(Millions of dollars) September 30,
1997 December 31,
(Unaudited) 1996
----------- ------------
Short-term:
Commercial paper....................... $ 525 $ 880
Other U.S. bank borrowings............. 296 318
Canadian borrowings.................... 93 167
South American borrowings.............. 229 106
Other International borrowings......... 91 49
------- -------
Total Short-term Debt.................... 1,234 1,520
<PAGE>
Long-term:
U.S.:
6.75% Notes due 2003................... 300 300
8.70% Debentures due 2022.............. 300 300
6.70% Notes due 2001................... 250 250
6.90% Notes due 2006................... 250 250
6.85% Notes due 2005................... 150 150
6.25% Notes due 2000................... 75 75
6.625% Notes due 2003................... 75 75
Commercial Paper (See Note Below)....... 250 -
Other borrowings........................ 54 67
Canadian subsidiary borrowings............ 163 90
South American subsidiary borrowings...... 132 109
Other International borrowings............ 62 79
------ -------
2,061 1,745
Less: Current portion of long-term debt .. 37 42
------- -------
Total Long-term Debt...................... 2,024 1,703
------- -------
Total Debt................................ $3,295 $3,265
On October 15, 1997, Praxair issued $250 million of 6.625% non-redeemable
Notes due 2007 with interest payable semi-annually. The proceeds from the
Notes were used to repay outstanding commercial paper and for other
general corporate purposes. Accordingly, at September 30, 1997, $250
million of Praxair's commercial paper has been classified as long-term in
the consolidated balance sheet.
Financial Instruments - The following table is a summary of the notional
amount of interest rate swap and cap agreements at September 30, 1997 and
December 31, 1996:
(Millions of dollars) September 30,
1997 December 31,
(Unaudited) 1996
------------- -------------
Maturing within one year:
Fixed Rate Swaps . . . . . . $500 $950*
Floating Rate Swaps . . . . $150 $ 15
Caps . . . . . . . . . . . . $ - $200
Maturing between 1-5 years:
Fixed Rate Swaps . . . . . . $700* $100
Floating Rate Swaps . . . . $ - $150
Forward Starting Fixed Rate Swaps $100 $ -
*At September 30, 1997, the expiration dates for $600 million of these
swaps ($600 million at December 31, 1996) have effectively been extended
beyond one year through the use of forward starting fixed rate swaps.
At September 30, 1997, Praxair had $277 million of currency exchange
forward contracts outstanding ($262 million at December 31, 1996),
primarily to hedge balance sheet exposures. These contracts generally
mature within a year.
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Consolidated Results
The following provides summary data for the quarter and nine months ended
September 30, 1997 and 1996.
(Millions of dollars, except percent)
Percent
Quarter Ended September 30, 1997 1996 Change
- --------------------------- ------ -------- ---------
Sales................................. $1,190 $1,115 + 7%
Selling, general and administrative... $ 162 $ 170 - 5%
Operating profit...................... $ 211 $ 190 + 11%
Interest expense...................... $ 54 $ 47 + 15%
Effective tax rate.................... 25% 25% -
Net income............................ $ 107 $ 88 + 22%
Percent
Nine Months Ended September 30, 1997 1996(a) Change
- ------------------------------- ------ -------- --------
Sales................................. $3,526 $3,298 + 7%
Selling, general and administrative... $ 494 $ 518 - 5%
Operating profit...................... $ 631 $ 449
Operating profit, excluding the 1996
CBI integration charges............. $ 631 $ 534 + 18%
Interest expense...................... $ 157 $ 146 + 8%
Effective tax rate.................... 25% 24%
Effective tax rate, excluding the 1996
CBI integration charges............. 25% 26% - 1%
Net income............................ $ 316 $ 186
Net income, excluding the 1996
CBI integration charges............. $ 316 $ 239 + 32%
(a) During the first quarter of 1996, Praxair recorded a charge of $85 million
pre-tax ($53 million after tax) to cover CBI integration costs (see Note 3
to Praxair's 1996 consolidated financial statements).
The sales growth of 7% for both the quarter and nine months ended September 30,
1997 was predominately due to increased sales volumes and the effect of newly
acquired packaged gases' and Surface Technologies' subsidiaries. This increase
was partly offset by modest pricing decreases and unfavorable currency
translation effects. Surface Technologies posted record sales, increasing
approximately 27% for the quarter and 23% for the nine month period primarily
due to volume growth and acquisitions.
The operating profit growth of 11% for the quarter ended September 30, 1997 and
18% for the nine months ended September 30, 1997 (excluding the 1996 CBI
integration charges), was primarily due to the sales growth and productivity
gains associated with the integration of the Liquid Carbonic business.
Increased depreciation and amortization reflected new projects coming
on-stream, as well as packaged gases' and Surface Technologies' acquisitions.
Selling, general and administrative expenses decreased primarily due to
productivity improvements and cost synergies associated with the integration of
the Liquid Carbonic business and favorable currency effects partly offset by
increases associated with new acquisitions.
Interest expense increased for both the quarter and nine month periods due to
higher international interest rates and higher debt levels (excluding debt
incurred to finance assets held for sale - see Note 2 to the financial
statements in Praxair's 1996 Annual Report). The effective tax rate for the
quarter ended September 30, 1997 was 25% which is flat as compared to the 1996
period. The effective tax rate for the nine months ended September 30, 1997
was 25%, a 1% decrease from the nine months ended September 30, 1996 effective
tax rate (excluding the tax benefit associated with the CBI integration
charges). This decrease is due primarily to planned tax synergies.
Net Income for the quarter and nine months ended September 30, 1997 increased
over the 1996 amounts (excluding the CBI integration charges) due principally
to higher operating profit and improved income from equity investments,
partially offset by higher interest expense and negative currency translation
effects. Net income for the nine months ended September 30,1997 was also
improved by the lower effective tax rate.
The number of employees at September 30, 1997 was approximately 25,500 which,
when adjusted for acquisitions, reflects a decrease of approximately 300 from
December 31, 1996. The decrease is principally the result of the integration
of the Liquid Carbonic business and other cost improvement efforts partially
offset by the addition of employees to support volume growth.
Segment Discussion
This summary of Sales, Operating profit and Operating profit excluding the 1996
CBI integration charges by geographic segment provides a basis for the
discussion that follows:
(Millions of dollars) Quarter Ended Nine Months Ended
September 30, September 30,
---------------- -----------------
1997 1996 1997 1996
------- ------- ------- -------
SALES
United States....... $ 607 $ 543 $1,786 $1,594
South America....... 257 253 754 737
Europe.............. 141 148 446 456
Canada, Mexico,
Asia and Other... 185 171 540 511
------- ------- ------- -------
$1,190 $1,115 $3,526 $3,298
OPERATING PROFIT
United States....... $ 122 $ 92 $ 351 $ 224
South America....... 44 57 146 138
Europe.............. 25 25 83 82
Canada, Mexico,
Asia and Other... 26 22 68 29
Corporate........... (6) (6) (17) (24)
------- ------- ------- -------
$ 211 $ 190 $ 631 $ 449
OPERATING PROFIT EXCLUDING
1996 CBI INTEGRATION CHARGES
United States....... $ 122 $ 92 $ 351 $ 261
South America....... 44 57 146 151
Europe.............. 25 25 83 86
Canada, Mexico,
Asia and Other... 26 22 68 57
Corporate........... (6) (6) (17) (21)
------- ------- ------- -------
$ 211 $ 190 $ 631 $ 534
<PAGE>
United States
Volume growth and the effect of newly acquired packaged gases' and Surface
Technologies' subsidiaries accounted for the sales increase for the quarter and
nine months ended September 30, 1997 as compared to the 1996 periods. For the
quarter and nine month periods, U.S. industrial gases volumes increased 6% and
7%, respectively.
Operating profit improved 33% for the quarter and 35% for the nine month period
(excluding the 1996 CBI integration charges) as compared to the 1996 periods.
Operating margin for the quarter increased to 20.0% from 16.9% in 1996. The
improvement in both periods is due primarily to the increased sales, cost
synergies associated with the integration of the Liquid Carbonic business,
higher profitability in the Surface Technologies' business and other cost
improvements.
South America
Sales for the quarter and nine months ended September 30, 1997 increased 2%, as
compared to the 1996 periods, primarily due to sales volume growth of
approximately 10% for the quarter and 9% for the nine month period, mostly
offset by price declines and unfavorable currency translation effects. The
price declines are attributable to the ongoing effects of the Brazilian
government economic plan which has resulted in industrial commodity pricing
deflation across a wide range of industries, and an increased competitive
environment in Brazil. Excluding the currency translation effects, sales
increased by 7% for both the quarter and nine months ended September 30, 1997
as compared to the 1996 periods.
Operating profit for the quarter and nine months ended September 30, 1997
decreased 23% and 3%, respectively, compared to the 1996 periods (excluding the
CBI integration charges). This was due to unfavorable currency translation
effects, the price declines, and higher energy and distribution costs partly
offset by the sales volume growth and productivity improvements. Excluding the
currency translation effects, operating profit decreased 12% for the quarter
and increased 5% for the nine month period.
Europe
Sales for the quarter and nine months ended September 30, 1997 decreased 5% and
2%, respectively, as compared to the 1996 periods. The decrease for both
periods was due primarily to unfavorable currency translation effects partly
offset by volume increases and increased sales associated with Surface
Technologies' acquisitions. Excluding the currency translation effects for the
quarter and nine months ended September 30, 1997, sales increased by 11% and
9%, respectively.
Operating profit for the quarter ended September 30, 1997 was flat and
decreased 3% for the nine months ended September 30, 1997 as compared to the
1996 periods (excluding the CBI integration charges). Excluding the currency
translation effects for the quarter and nine months ended September 30, 1997,
operating profit increased 20% and 12%, respectively, primarily due to
increased volumes and Surface Technologies' acquisitions.
Canada, Mexico, Asia and Other
Sales for the quarter and nine months ended September 30, 1997 increased 8% and
6%, respectively, as compared to the 1996 periods, due to volume growth in
Mexico and Asia and pricing improvement in Mexico partly offset by unfavorable
currency translation effects.
Operating Profit for the quarter and nine months ended September 30, 1997
increased 18% and 19%, respectively, as compared to the 1996 periods (excluding
the CBI integration charges), primarily due to the sales growth and synergies
realized from the integration of the Liquid Carbonic business in Canada. This
was partly offset by increased business development costs in Asia.
<PAGE>
Liquidity, Capital Resources and Other Financial Data
Cash Flow From Operations
Cash flow from operations in the first nine months of 1997, as compared to the
same period in 1996, increased from $391 million to $458 million, primarily due
to increased net income partly offset by payments related to the CBI
integration and prior years' incentive compensation programs. Excluding the
incentive compensation payments, working capital remained consistent with the
first nine months of 1996.
Investing
Cash flow used for investing in the first nine months of 1997 totaled $408
million versus $2,219 million in 1996. This decrease was due primarily to the
1996 acquisition of CBI and the proceeds received in the second quarter of 1997
on the initial public offering of Chicago Bridge & Iron Company, N.V. (see Note
2 to the condensed consolidated financial statements). Construction
expenditures for the first nine months of 1997 totaled $635 million, down
slightly from the corresponding period in 1996, largely due to the timing of
cash payments.
Investment expenditures for the first nine months of 1997 totaled $89 million
primarily relating to investments in India, Surface Technologies' acquisitions
in the United Kingdom and Brazil, and the continuation of packaged gases'
acquisitions in North America.
On a worldwide basis, construction and investment expenditures for the full
year 1997 are expected to be approximately $1 billion primarily from industrial
gases growth opportunities worldwide and the continuation of Praxair's packaged
gases and Surface Technologies acquisition strategies.
Financing
At September 30, 1997, Praxair's total debt outstanding was $3,295 million, an
increase of $30 million versus December 31, 1996. During the second quarter of
1997 a Canadian subsidiary of Praxair refinanced $74 million of short-term debt
on a long-term basis.
On October 15, 1997, Praxair issued $250 million of 6.625% non-redeemable Notes
due 2007 with interest payable semi-annually. The proceeds from the Notes were
used to repay outstanding commercial paper and for general corporate purposes.
Accordingly, at September 30, 1997, $250 million of Praxair's commercial paper
has been classified as long-term in the consolidated balance sheet.
Praxair's debt-to-capital ratio was reduced from 56.7% at December 31, 1996 to
55.2% at the end of the current quarter. As of September 30, 1997, there were
no borrowings under Praxair's $1.5 billion U. S. bank credit facility.
Recently Issued Accounting Standard on Earnings per Share
See Note 6 to the condensed consolidated financial statements.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits
11. Computation of Earnings per Share
27. Financial Data Schedule
Reports on Form 8-K
None
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRAXAIR, INC.
-------------
(Registrant)
Date: October 29, 1997 By: J. ROBERT VIPOND
------------------------ -----------------------------
J. ROBERT VIPOND
Vice President and Controller
(On behalf of the Registrant
and as Chief Accounting Officer)
<PAGE>
Exhibit Index
-------------
Exhibit No.
- -----------------------------------------------------------------------------
11. Computation of Earnings per Share
27. Financial Data Schedule
Exhibit 11
PRAXAIR, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Millions of dollars except share and per share amounts)
Quarter ended Nine Months ended
September 30, September 30,
------------------------ -------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
Net income $ 107 $ 88 $ 316 $ 186
Weighted average common
shares and common
stock equivalents:
Weighted average common
shares outstanding 158,195,745 156,084,145 158,190,676 151,184,188
Dilutive effect of
convertible debt 154,378 154,378 154,378 154,378
Dilutive effect of
stock options 6,033,697 6,077,194 6,102,982 6,161,135
----------- ----------- ----------- -----------
164,383,819 162,315,717 164,448,036 157,499,700
Earnings per share $ 0.65 $ 0.54 $ 1.92 $ 1.18
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 53
<SECURITIES> 0
<RECEIVABLES> 1018
<ALLOWANCES> 30
<INVENTORY> 306
<CURRENT-ASSETS> 1521
<PP&E> 8066
<DEPRECIATION> 3535
<TOTAL-ASSETS> 7740
<CURRENT-LIABILITIES> 2157
<BONDS> 2024
75
0
<COMMON> 2
<OTHER-SE> 2092
<TOTAL-LIABILITY-AND-EQUITY> 7740
<SALES> 3526
<TOTAL-REVENUES> 3526
<CGS> 2045<F1>
<TOTAL-COSTS> 2045<F1>
<OTHER-EXPENSES> 331<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 157
<INCOME-PRETAX> 474
<INCOME-TAX> 118
<INCOME-CONTINUING> 356
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 316
<EPS-PRIMARY> 1.92
<EPS-DILUTED> 0
<FN>
<F1>Cost of Goods Sold and Total Costs are exclusive of depreciation and
amortization which is shown on the Other Expense line in the Financial Data
Schedule.
</FN>
</TABLE>
