Airgas Specialty Gases 8-K Results of Operations and Financial Condition

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):
June 30, 2006

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

TABLE OF CONTENTS

Annual Report Line Graph

Item 2.02 Results of Operations and Financial Condition

On or about June 30, 2006, Airgas, Inc. (the “Company”) began mailing its annual report (the “Annual Report”) and definitive proxy statement to its stockholders. The Letter to Shareholders section of the Annual Report includes a line graph (on page 11) depicting Sales, Adjusted EBITDA, Interest Expense, and Stockholders Equity from fiscal 1989 through fiscal 2006. The line graph is attached as Exhibit 99.1 under Item 9.01 and is incorporated herein by reference. The Sales, Interest Expense and Stockholders Equity data used to derive the line graph were previously disclosed in the Company’s Form 10-K filings for the respective years presented. The current presentation of the Adjusted EBITDA measure had not been previously disseminated to the public and is furnished in this Form 8-K.

Adjusted EBITDA is a financial measure that is not defined under generally accepted accounting principles (“GAAP”). The Company believes adjusted EBITDA provides investors meaningful insight into the Company’s ability to generate cash from operations to support required working capital, capital expenditures and financial obligations. A reconciliation of Adjusted EBITDA to the most comparable measure under generally accepted accounting principles appears on page 69 of the Annual Report and is also included below:

Eighteen Year Reconciliation of Operating Income to Adjusted EBITDA to Cash from Operations

(In thousands)
Years ended March 31,	1989			1990			1991			1992			1993			1994			1995			1996			1997			1998			1999			2000			2001			2002			2003			2004			2005			2006
Operating income		15,958			23,221			17,286			26,316			34,367			48,667			72,600			92,987			80,480			111,709			112,607			105,461			106,728			124,938			156,336			168,544			202,454			268,758
Add:
Depreciation & amortization		11,147			17,387			21,158			23,420			28,042			30,571			36,868			45,762			64,428			82,227			83,839			85,262			82,796			71,757			79,279			87,447			111,078			127,542
Adjusted EBITDA		27,105			40,608			38,444			49,736			62,409			79,238			109,468			138,749			144,908			193,936			196,446			190,723			189,524			196,695			235,615			255,991			313,532			396,300
(Uses)/sources of cash excluded from Adjusted EBITDA, included in Cash from Operations:
Interest expense, net		(12,245	)		(16,198	)		(15,179	)		(12,838	)		(11,403	)		(12,486	)		(17,625	)		(24,862	)		(39,367	)		(52,603	)		(59,677	)		(56,879	)		(59,550	)		(46,775	)		(46,374	)		(42,357	)		(51,245	)		(53,812	)
Discount on securitization of receivables		—			—			—			—			—			—			—			—			—			—			—			—			(1,303	)		(4,846	)		(3,326	)		(3,264	)		(4,711	)		(9,371	)
Current income taxes		404			1,700			(599	)		(3,591	)		(5,653	)		(7,838	)		(12,345	)		(17,654	)		(20,012	)		(16,502	)		(17,244	)		(16,902	)		(13,402	)		4,546			(33,174	)		(24,623	)		(22,622	)		(30,718	)
Other income (expense)		215			157			870			214			546			453			1,607			781			1,695			9,811			29,491			18,625			1,324			5,987			2,132			1,472			1,129			2,462
Equity in earnings of Elkem joint venture		1,415			1,435			2,009			2,019			(897	)		(1,258	)		(840	)		(1,428	)		(1,356	)		(1,478	)		(869	)		—			—			—			—			—			—			—
(Gains)/losses on divestitures		—			—			—			—			—			—			(560	)		—			—			(1,452	)		(25,468	)		(17,712	)		(1,173	)		(5,548	)		241			—			(360	)		1,900
(Gain)/losses on sale of PP&E		(32	)		2			(715	)		(76	)		(292	)		(63	)		110			(12	)		616			(504	)		(222	)		(915	)		502			405			(257	)		(837	)		(321	)		(1,330	)
Stock issued for employee benefits		—			—			—			—			—			—			2,707			3,396			5,156			5,953			5,750			5,715			5,630			7,369			8,951			6,889			9,907			10,534
Income(loss) on discontinued operations		—			—			—			—			—			—			—			—			478			(635	)		(871	)		(335	)		(400	)		(3,529	)		(1,776	)		(457	)		464			(1,424	)
Other non-cash charges		260			308			252			250			—			—			—			—			3,930			11,422			—			458			2,281			1,068			—			—			—			—
Cash provided (used) by working capital		4,379			702			6,712			15,968			13,608			6,752			(2,030	)		(6,948	)		(14,801	)		(13,548	)		(25,273	)		(22,686	)		78,329			95,691			33,931			17,865			(23,456	)		47,628
Net Cash Provided by Operating Activities		21,501			28,714			31,794			51,682			58,318			64,798			80,492			92,022			81,247			134,400			102,063			100,092			201,762			251,063			195,963			210,679			222,317			362,169

The Company’s Annual Report also includes a Financial Highlights section (on page 17) that contains Return on Capital financial information relating to fiscal years 2002 through 2006. Return on Capital is a financial measure that is not defined under GAAP. The Company believes that the Return on Capital computation helps investors assess how effectively the Company uses the capital invested in its operations. A reconciliation of Return on Capital appears on page 69 of the Annual Report and is also included below:

Reconciliation and Computation of Return on Capital

(In thousands)
Years Ended March 31,	2002			2003			2004			2005			2006
Operating Income	$	124,938		$	156,336		$	168,544		$	202,454		$	268,758
Plus (Less):
Restructuring/special charges (recoveries), net		—			2,694			(776	)		—			—
Litigation settlements/charges		8,501			—			—			—			—
Adjusted Operating Income	$	133,439		$	159,030		$	167,768		$	202,454		$	268,758
Five Quarter Average of Total Assets		1,528,101			1,705,114			1,776,185			2,112,504			2,378,324
Five Quarter Average of Securitized Trade Receivables		124,400			147,680			157,400			183,300			216,360
Five Quarter Average of Current Liabilities (exclusive of debt)		(214,179	)		(219,153	)		(216,081	)		(269,975	)		(326,618	)
Five Quarter Average of Investment in Unconsolidated Affiliates		(63,886	)		(65,416	)		(39,793	)		—			—
Five Quarter Average Capital Employed	$	1,374,436		$	1,568,225		$	1,677,711		$	2,025,829		$	2,268,066
Return on Capital		9.7	%		10.1	%		10.0	%		10.0	%		11.8	%

The Company’s intent is to provide non-GAAP financial information to enhance investors’ understanding of the Company’s consolidated financial statements and should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP.

The information contained in this Form 8-K report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference in any filing under the Securities Exchange Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

(a) None

(b) None

(c) Exhibits.

99.1 — Annual Report line graph included in the Letter to Shareholders on page 11 of the Company’s 2006 Annual Report (furnished pursuant to Item 2.02 of Form 8-K).

Signatures

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant and Co-Registrants have duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AIRGAS, INC.		AIRGAS EAST, INC.
(Registrant)		AIRGAS GREAT LAKES, INC.
		AIRGAS MID AMERICA, INC.
		AIRGAS NORTH CENTRAL, INC.
BY:	/s/ Robert M. McLaughlin	AIRGAS SOUTH, INC.
	Robert M. McLaughlin	AIRGAS GULF STATES, INC.
	Vice President & Controller	AIRGAS MID SOUTH, INC.
		AIRGAS INTERMOUNTAIN, INC.
		AIRGAS NORPAC, INC.
		AIRGAS NORTHERN CALIFORNIA & NEVADA, INC.
		AIRGAS SOUTHWEST, INC.
		AIRGAS WEST, INC.
		AIRGAS SAFETY, INC.
		AIRGAS CARBONIC, INC.
		AIRGAS SPECIALTY GASES, INC.
		NITROUS OXIDE CORP.
		RED-D-ARC, INC.
		AIRGAS DATA, LLC

(Co-Registrants)
BY:	/s/ Robert M. McLaughlin
	Robert M. McLaughlin
	Vice President
ATNL, INC.
(Co-Registrant)
BY:	/s/ Melanie Andrews
	Melanie Andrews
	President

DATED: July 7, 2006