EXHIBIT 99
Airgas, Inc.
259 N. Radnor-Chester Road
Suite 100
Radnor, PA 19087-5283
www.airgas.com
AIRGAS [Logo] News Release
_____________________________________________________________________________
Investor Contact: Media Contact:
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Melissa Nigro (610) 902-6206 James Ely (610) 902-6010
melissa.nigro@airgas.com jim.ely@airgas.com
For release: Immediately
AIRGAS REPORTS 18% EPS GROWTH
FOR FISCAL FOURTH QUARTER, EXCLUDING CERTAIN GAINS AND CHARGES
RADNOR, PA - May 8, 2002 -- Airgas, Inc., (NYSE: ARG) today reported
earnings for its fourth quarter and fiscal year ended March 31, 2002.
Net earnings for the quarter, excluding certain gains and losses, were
$14.4 million or $0.20 per diluted share compared to pro forma net
earnings of $11.2 million or $0.17 per diluted share in the same period
a year ago. Net earnings for the year ended March 31, 2002, excluding
certain gains and charges, were $54.2 million or $0.78 per diluted share
versus $48.5 million or $0.72 per diluted share in the prior year
period. Free cash flow per diluted share for fiscal 2002 increased to
$1.47 from $0.94 in the prior year, contributing to debt reduction of
$118 million before acquisition and divestiture activity.
As disclosed in the notes to the attached financial statements, the
results reported above exclude certain gains and charges related to
accounting for goodwill, certain litigation matters, divestitures, and
severance and facility exit costs. To conform with the current year's
presentation, the prior year's results are presented on a pro forma
basis, which excludes goodwill amortization.
The reported net earnings per diluted share for the quarter ended March
31, 2002 were $0.12 versus pro forma results of $0.07 for the comparable
prior year quarter. The reported and pro forma results per diluted
share for the fiscal years ended March 31, 2002 and 2001 were a net loss
of $0.15 and pro forma net earnings of $0.62, respectively.
While fiscal fourth quarter sales of $416 million were up slightly
compared to last year, total same-store sales declined 3% compared to
the same quarter a year ago, partially as a result of one less billing
day in the quarter this year. Same-store sales in the Distribution
segment were down 3%, reflecting an increase of 4% for gases and rent
and a 9% decline in hardgoods. Same-store sales for the Gas Operations
segment decreased 3%. For fiscal 2002, sales increased slightly to
$1.64 billion from $1.63 billion last year. Year-to-date capital
spending was $58 million versus $66 million last year.
"Growing earnings per share by 18% in a soft economy is a solid
result," commented Airgas Chairman and Chief Executive Officer Peter
McCausland. "Successful execution of our strategic initiatives
contributed to improved process and cost management. Our free cash
flow increased dramatically during fiscal 2002 and was directed to
debt reduction. As a result, we were able to finance the Air
Products cylinder gas acquisition entirely with senior bank debt at
the end of February. Strong free cash flow generation has always
been and continues to be a powerful attribute of our business."
On February 28, 2002, Airgas announced it had completed the
acquisition of the majority of Air Products' U.S. packaged gas
business, excluding its electronic gases and magnetic resonance
imaging related helium operations.
McCausland added, "The integration of the Air Products business is on
track and we are pleased with the efforts of our associates and the
smooth transition for our customers, but there is still much work
ahead. Despite the positive momentum and the fact that several of
our regional companies are seeing some hopeful signs, the near term
economic outlook remains uncertain. While we wait for an economic
recovery, we remain focused on improving operational efficiency,
growing market share and integrating our acquired assets -- all of
which should drive long-term growth and shareholder value."
Free cash flow is defined as net earnings, excluding certain gains and
charges, 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 and
certain gains and charges.
The Company will conduct an earnings teleconference on Thursday, May 9,
2002, beginning at 8:30 a.m. Eastern Time. Access the teleconference by
calling 712-271-0927 and entering passcode "051002". 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.
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 about 800 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.
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 integration of the Air
Products cylinder gas business; several regional companies seeing
some hopeful signs; an uncertain near-term economic outlook;
improving operational efficiency, growing market share and
integrating the acquired assets to drive long-term growth and
shareholder value. 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 the Company's
integration of the acquired Air Products cylinder gas business; the
success of the Company's strategic initiatives in improving
operational efficiency, and growing sales and market share; an
economic downturn (including adverse changes in the specific markets
for our products); increased competition; customer acceptance of the
Company's products; adverse changes in customer buying patterns;
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 Forms 10-Q dated June 30, 2001, September
30, 2001 and December 31, 2001 filed by the Company with the
Securities and Exchange Commission.
Consolidated statements of earnings and consolidated condensed
balance sheets follow.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Year Ended
March 31, March 31,
2002 2001 (a) 2002 2001 (a)
---------------------- ----------------------
(*Pro forma) (*Proforma)
Net sales:
Distribution $385,839 $381,903 $1,494,267 $1,487,422
Gas Operations 30,118 32,933 141,780 141,479
------- ------- --------- ---------
Total net sales 415,957 414,836 1,636,047 1,628,901
Costs and expenses:
Cost of products sold (excl. deprec.)
Distribution 195,517 205,705 770,094 797,423
Gas Operations 9,163 10,435 48,659 49,777
Selling, distribution and
administrative expenses (b) 165,833 156,575 619,316 583,355
Depreciation 17,288 14,938 64,785 62,938
Amortization 1,940 2,317 8,160 9,379
Special charges (c) -- 3,643 -- 3,643
------- ------- --------- ---------
Total costs and expenses 389,741 393,613 1,511,014 1,506,515
Operating income:
Distribution 23,361 20,518 103,430 104,506
Gas Operations 2,855 4,348 21,603 21,523
Special charges (c) -- (3,643) -- (3,643)
------- ------- --------- ---------
Total operating income 26,216 21,223 125,033 122,386
Interest expense, net (11,802) (12,539) (47,013) (60,207)
Discount on securitization of
trade receivables (799) (1,166) (4,846) (1,303)
Other income (expense), net (d) (411) (567) 1,382 242
Equity in earnings of
unconsolidated affiliates (e) 960 380 3,835 3,964
------- ------- --------- ---------
Earnings before income taxes and the
cumulative effect of a change in
accounting principle 14,164 7,331 78,391 65,082
Income tax expense 5,428 2,617 29,806 23,119
------- ------- --------- ---------
Earnings before the cumulative effect
of a change in accounting principle 8,736 4,714 48,585 41,963
Cumulative effect of a change in
accounting principle (f) -- -- (59,000) --
------- ------- --------- ---------
Net earnings (loss) $ 8,736 $ 4,714 $ (10,415) $ 41,963
======= ======= ========= =========
Per share data:
Basic earnings (loss) per share $ .13 $ .07 $ (.15) $ .64
Diluted earnings (loss) per share $ .12 $ .07 $ (.15) $ .62
Net earnings (excluding certain gains &
charges and the cumulative effect of a
change in accounting principle) (g) $14,367 $11,230 $ 54,216 $ 48,479
======= ======= ========= =========
Per share data (excluding certain gains &
charges and the cumulative effect of a
change in accounting principle) (g):
Basic earnings per share $ .21 $ .17 $ .80 $ .73
Diluted earnings per share $ .20 $ .17 $ .78 $ .72
Weighted average shares outstanding:
Basic 68,900 66,900 68,100 66,000
Diluted 71,400 67,700 69,900 67,200
* Pro forma amounts reflect prior year periods adjusted to exclude goodwill amortization of
$4 million and $16 million for the three months and year ended March 31, 2001, respectively.
See note (a) for further description.
See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
March 31, March 31,
2002 2001
--------- ---------
ASSETS
Trade accounts receivable, net (h) $ 88,634 $ 143,129
Inventories, net 154,045 155,024
Deferred income tax asset, net 13,210 10,143
Prepaids and other current assets 47,654 25,549
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TOTAL CURRENT ASSETS 303,543 333,845
Property, plant and equipment, net 893,015 704,646
Goodwill (a)(i) 406,548 440,057
Other non-current assets, net 113,951 102,742
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TOTAL ASSETS $1,717,057 $1,581,290
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 82,485 $ 76,337
Accrued expenses and other current liabilities 136,390 130,873
Current portion of long-term debt 2,456 72,945
--------- ---------
TOTAL CURRENT LIABILITIES 221,331 280,155
Long-term debt (h) 764,124 620,664
Deferred income taxes 198,173 161,176
Other non-current liabilities 30,343 22,446
Stockholders' equity 503,086 496,849
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,717,057 $1,581,290
========= =========
See attached notes.
Notes:
(a) In July 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. In August 2001, the Company announced that it adopted SFAS 142
retroactive to April 1, 2001, as permitted under the Statement.
Accordingly, results for the three months and year ended March 31, 2002 do
not include goodwill amortization. For comparability to the current fiscal
year, the pro forma results reflect the three months and year ended
March 31, 2001 adjusted to exclude the amortization of goodwill. The
following represents the results as reported for the three months and year
ended March 31, 2001:
(Unaudited)
Three Months Ended Year Ended
March 31, 2001 March 31, 2001
------------------ --------------
Operating income:
Distribution $17,425 $ 92,186
Gas Operations 3,836 19,406
Special charges (3,643) (3,643)
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Total Operating income 17,618 107,949
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Equity in earnings (losses)
of unconsolidated affiliates (46) 2,260
------ -------
Net earnings $ 1,328 $ 28,223
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Basic earnings per share $ .02 $ .43
Diluted earnings per share $ .02 $ .42
(b) Selling, distribution and administrative expenses for the three months
and year ended March 31, 2002 reflect the settlement of litigation, net of
previously established reserves, of $8.5 million ($5.7 million after-tax)
related to litigation brought by Praxair, Inc. against the Company in July
1996.
Selling, distribution and administrative expenses for the three months
and year ended March 31, 2001 include a net litigation charge of $5.8
million ($3.7 million after-tax). The net litigation charge consists of a
$6.9 million charge associated with the defense of the lawsuit brought
against the Company by Praxair, Inc. The charge was partially offset by
the final settlement and reversal of $1.1 million of liabilities previously
established in connection with the defense and settlement of class-action
lawsuits related to hazardous materials charges.
(c) Special charges of $3.6 million ($2.3 million after-tax) for the three
months and year ended March 31, 2001 primarily include a charge of $8.5
million related to a cost reduction plan implemented by the Company to
improve operating results at certain business units and mitigate rising
operating expenses. The cost reduction charge was partially offset by
$4.9 million of special charge recoveries primarily consisting of a gain
from an insurance settlement associated with a loss incurred in connection
with a fiscal 1997 special charge.
(d) Other income (expense), net, for the year ended March 31, 2002 includes a
net non-recurring gain of approximately $1.9 million ($120 thousand after-
tax)recorded in the third quarter. The net non-recurring gain consisted of
a $7.4 million gain on the divestiture of two nitrous oxide plants
partially offset by a $1.9 million loss resulting from an indemnity claim
against a prior period divestiture and a $3.6 million charge to write down
a business unit held for sale to its net realizable value.
Other income, net, for the three months and year ended March 31, 2001
includes a $200 thousand after-tax gain from the divestiture of the
Company's Jackson Dome carbon dioxide business.
(e) Equity in earnings of unconsolidated affiliates for the three months and
year ended March 31, 2001 includes after-tax charges of $700 thousand
associated with losses from two equity affiliates.
(f) In connection with the adoption of SFAS 142, the Company performed an
evaluation of goodwill, which indicated that goodwill of one reporting
unit, the tool business, 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.
(g) Net earnings, adjusted to exclude the items described in the above notes:
Three Months Ended Year Ended
March 31, March 31,
(Amounts in millions) 2002 2001 2002 2001
------------------ ---------------
Net earnings as reported $ 8.7 $ 1.3 $(10.4) $ 28.2
Pro forma add-back of goodwill
amortization (after tax) (a) -- 3.4 -- 13.8
Certain gains and charges (after-tax):
- -------------------------------------
Net litigation charges (b) 5.7 3.7 5.7 3.7
Net special charges (c) -- 2.3 -- 2.3
Other income, net gain (d) -- (0.2) (0.1) (0.2)
Equity affiliates charges (e) -- 0.7 -- 0.7
Accounting change (f) -- -- 59.0 --
------ ------ ------ ------
Net earnings (excluding certain gains
and charges and the accounting change) $ 14.4 $ 11.2 $ 54.2 $ 48.5
====== ====== ====== ======
(h) The Company participates in a securitization agreement with two
commercial banks to sell up to $175 million of qualified trade receivables.
Net proceeds from the securitization were used to reduce borrowings under
the Company's revolving credit facilities. The amount of outstanding
receivables under the agreement was $134 million and $73 million at
March 31, 2002 and March 31, 2001, respectively.
(i) On February 28, 2002, the Company completed its acquisition of the
majority of the U.S. packaged gas business of Air Products and Chemicals,
Inc. The Company is in the process of obtaining third-party valuations of
assets acquired in the business combination, and thus, the allocation of
the purchase price and determination of the amount of related goodwill is
subject to adjustment and refinement.