Exhibit 99:
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AIRGAS News Release Airgas, Inc.
259 N. Radnor-Chester Road
Suite 100
Radnor, PA 19087-5283
www.airgas.com
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Investor Contact: Media Contact:
Melissa Nigro (610) 902-6206 James Ely (610) 902-6010
melissa.nigro@airgas.com jim.ely@airgas.com
For release: Immediately
AIRGAS REPORTS EPS OF $0.21 FOR FISCAL SECOND QUARTER
RADNOR, PA - October 25, 2001 -- Airgas, Inc., (NYSE: ARG) today
reported results for its second quarter ended September 30, 2001. Net
earnings for the quarter were $14.6 million, or $0.21 per diluted share,
compared to $13.9 million, or $0.21 per diluted share in the same period
a year ago, on a pro forma basis. Results for the current quarter
include Project One costs of $0.02 per diluted share. Net earnings for
the six months ended September 30, 2001, excluding the cumulative effect
of a change in accounting principle, were flat with the prior year
period at $0.41 per diluted share on a pro forma basis. Year to date
results include Project One costs of $0.05 per diluted share. Free
cash flow per diluted share for the six-month period increased 90% to
$0.40 from $0.21 in the prior year, driving debt reduction of $27
million.
Fiscal second quarter sales were $412 million, up from $410 million last
year. Total same-store sales increased 1% compared to the same quarter
a year ago. Same-store sales in the Distribution segment were up
slightly, reflecting an increase of 7% for gases and rent and a 5%
decline in hardgoods. Same-store sales for the Gas Operations segment
increased 6%. For the six-month period, sales increased 1% to $828
million from $819 million last year. Year to date capital spending was
$28 million versus $31 million last year.
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"I am pleased that we again reported solid quarterly earnings despite
the continuing difficult economic environment," commented Airgas
Chairman and Chief Executive Officer Peter McCausland. "The benefits
associated with higher gas sales and strategic sales initiatives
helped offset weakened demand in many regions. The events of
September 11, combined with the economic uncertainty, will
undoubtedly make it a more challenging environment through the
balance of the year. However, our cash flow has always held up
remarkably well in weak economic periods because of the strength of
our gas business and we expect that trend to continue."
"We continue to see growth in our strategic accounts, cross-selling
and private label programs," added McCausland. "Additionally, our
Project One value programs are delivering the expected benefits on
time. Our second quarter results certainly underscore our focus and
commitment to our strategic initiatives. We have a great team and we
are meeting the challenges of this difficult economic environment."
Pro forma results and the cumulative effect of a change in accounting
principle relate to the Company's adoption of SFAS 142, "Goodwill and
Other Intangible Assets."
The Company will conduct an earnings teleconference on Friday, October
26, 2001, beginning at 8:30 a.m. Eastern Time. Slides to be presented
during the Company's teleconference, information about how to access a
live webcast of the teleconference, and 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, October 26, 2001.
ABOUT AIRGAS, INC.
Airgas, Inc. is the largest U.S. distributor of industrial, medical and
specialty gases, welding, safety and related products. Its integrated
network of 700 locations includes branches, retail stores, gas fill
plants, specialty gas labs, production facilities and distribution
centers. Airgas also distributes its products and services through
eBusiness, catalog and telemarketing channels. Its national scale and
strong local presence offer a competitive edge to its diversified
customer base. For more information, please visit www.airgas.com.
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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 expectation that cash flow will
hold up in weak economic periods due to the strength of the gas
business; the Company's commitment to its strategic initiatives; and,
growth in strategic accounts, cross-selling and private label programs.
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 the success of marketing
initiatives, cross-selling and strategic product sales in growing sales
and market share; increased cost pressures and the inability to control
costs; an economic downturn (including adverse changes in the specific
markets for our products); the inability of the Company to successfully
execute its operating strategy, including the Project One initiative;
increased competition; customer acceptance of the Company's products;
adverse changes in customer buying patterns; the inability to identify
attractive acquisition candidates and consummate acquisitions; adverse
changes in general economic conditions; political and economic
uncertainties associated with current world events and other factors
described in the Company's reports, including Form 10-K dated March 31,
2001 and Form 10-Q dated June 30, 2001 filed by the Company with the
Securities and Exchange Commission.
Consolidated statements of earnings and consolidated condensed
balance sheets follow.
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AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
2001 2000 (a) 2001 2000 (a)
------------------- --------------------
Net sales: (Pro forma) (Pro forma)
Distribution $372,345 $371,059 $750,659 $745,798
Gas Operations 39,637 39,038 76,998 73,297
-------- -------- -------- --------
Total net sales 411,982 410,097 827,657 819,095
-------- -------- -------- --------
Costs and expenses:
Cost of products sold (excluding
depreciation and amortization)
Distribution 193,850 198,650 392,753 401,399
Gas Operations 14,210 14,437 27,530 26,884
Selling, distribution and
administrative expenses 151,235 141,653 303,954 281,668
Depreciation 15,774 15,990 31,446 32,314
Amortization 2,074 2,755 4,351 5,557
------- ------- ------- -------
Total costs and expenses 377,143 373,485 760,034 747,822
------- ------- ------- -------
Operating income:
Distribution 28,161 29,832 54,732 59,264
Gas Operations 6,678 6,780 12,891 12,009
------- ------- ------- -------
Total operating income 34,839 36,612 67,623 71,273
Interest expense, net (11,850) (16,306) (22,763) (32,071)
Discount on securitization of
trade receivables (1,492) - (2,984) -
Other income (expense), net 15 405 (178) 457
Equity in earnings of unconsolidated
affiliates 1,317 913 2,230 2,703
------- ------- ------- -------
Earnings before income taxes and
the cumulative effect of a change
in accounting principle 22,829 21,624 43,928 42,362
Income tax expense 8,276 7,677 15,924 15,039
------- ------- ------- -------
Earnings before the cumulative
effect of a change in accounting
principle 14,553 13,947 28,004 27,323
Cumulative effect of a change in
accounting principle (b) - - (59,000) -
------- ------- ------- -------
Net earnings (loss) $ 14,553 $ 13,947 $(30,996) $ 27,323
======= ======= ======= =======
Per share data:
Basic earnings (loss) per share $ .21 $ .21 $ (.46) $ .42
Diluted earnings (loss) per share $ .21 $ .21 $ (.45) $ .41
Per share data (excluding cumulative
effect of a change in accounting
principle)(b):
Basic earnings per share $ .21 $ .21 $ .41 $ .42
Diluted earnings per share $ .21 $ .21 $ .41 $ .41
Weighted average shares outstanding:
Basic 67,900 65,400 67,600 65,200
Diluted 69,500 66,600 68,900 66,900
(a) Pro forma amounts reflect prior year periods adjusted to exclude goodwill
amortization of $4 million and $8 million for the three and six months ended
September 30, 2000, respectively.
See attached notes.
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AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
September 30, March 31,
2001 2001
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ASSETS
Trade accounts receivable, net (c) $ 82,949 $ 143,129
Inventories, net 148,766 155,024
Deferred income tax asset, net 10,394 10,143
Prepaids and other current assets 18,933 25,549
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TOTAL CURRENT ASSETS 261,042 333,845
Property, plant and equipment, net 702,283 704,646
Goodwill, net 387,767 440,057
Other non-current assets, net 119,521 102,742
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TOTAL ASSETS $1,470,613 $1,581,290
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 70,441 $ 76,337
Accrued expenses and
other current liabilities 114,058 130,873
Current portion of long-term debt 8,023 72,945
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TOTAL CURRENT LIABILITIES 192,522 280,155
Long-term debt (c) 603,111 620,664
Deferred income taxes 164,422 161,176
Other non-current liabilities 42,754 22,446
Stockholders' equity 467,804 496,849
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,470,613 $1,581,290
========= =========
See attached notes.
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Notes:
(a) On July 20, 2001, the Financial Accounting Standards Board issued
Statement No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142").
SFAS 142 requires that goodwill and other intangible assets with
indefinite useful lives no longer be amortized, but instead be tested for
impairment at least annually. On August 13, 2001, the Company announced
that it adopted SFAS 142 retroactive to April 1, 2001, as permitted under
the Statement. Accordingly, results for the three and six month periods
ended September 30, 2001 do not include goodwill amortization. For
comparability to the current fiscal year, pro forma results reflect the
three and six months ended September 30, 2000 adjusted to exclude the
amortization of goodwill. The following represents the results as
reported for the three and six months ended September 30, 2000:
Three Months Ended Six Months Ended
September 30, 2000 September 30, 2000
------------------ ------------------
Operating income:
Distribution $26,598 $52,723
Gas Operations 6,448 11,366
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Total Operating income 33,046 64,089
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Net earnings $10,403 $20,219
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Basic earnings per share $ .16 $ .31
Diluted earnings per share $ .16 $ .30
(b) In connection with the adoption of SFAS 142, the Company performed an
evaluation of goodwill, which indicated that goodwill of one business
unit, Rutland Tool, was impaired. Accordingly, the Company recognized
a $59 million non-cash charge recorded retroactive to April 1, 2001 as
the cumulative effect of a change in accounting principle for the
write-down of goodwill to its fair value. The impaired goodwill was not
deductible for taxes, and consequently, no tax benefit was recorded in
relation to the $59 million charge.
(c) In April 2001, the Company completed the second and final tranche of its
$150 million trade receivables securitization program. Net proceeds from
the second tranche of approximately $64 million were used to reduce
borrowings under the Company's revolving credit facilities. As of
September 30, 2001, the Company has approximately $139 million
outstanding under the securitization program.
(d) Free cash flow, as referenced in this press release, is defined as net
earnings, excluding the cumulative effect of a change in accounting
principle, plus depreciation, amortization and deferred income taxes,
minus capital spending, plus/minus the change in working capital,
excluding the impact of the accounts receivable securitization.
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