4 For More Information: Chris Close (610) 902-6257 chris.close@airgas.com AIRGAS REPORTS RECORD AFTER-TAX CASH FLOW IN FISCAL SECOND QUARTER - After-tax Cash Flow Per Share Up 8% to $.53 - EPS Up 7% to $.16 - Same-store Sales Down 2.5% RADNOR, Pennsylvania, October 28, 1999 - Airgas Inc. (NYSE - ARG) today reported results for the quarter and six-month period ended September 30, 1999. Peter McCausland, chairman and chief executive officer, commented, "Our record cash flow and solid earnings performance are especially noteworthy given the continued weakness in many of our customer segments. Although overall the U.S. economy has been healthy, manufacturing activity, excluding certain `high-tech' sectors, has been weak over the past year. Many of our competitors and vendors are reporting soft sales as well. "We were encouraged to see that sales in September improved relative to July and August levels, although it's certainly too early to say that this is the beginning of an upward trend. We continue to aggressively pursue our long-term strategies and remain focused on completing our infrastructure build-out and controlling expenses and capital spending. Our results are a tribute to the hard work and dedication of our people in the field." After-tax cash flow (net earnings, excluding special items, plus depreciation, amortization and deferred income taxes) for the quarter was a record $37.7 million, or $.53 per diluted share, compared to $35 million, or $.49 per diluted share, last year. Net earnings were $11.4 million, or $.16 per diluted share, which excludes an after-tax gain of $7.6 million, or $.11 per diluted share, related to the divestiture of operations in Poland and Thailand, versus $10.5 million, or $.15 per diluted share, a year ago. Sales were $387 million compared to $397 million last year. After-tax cash flow for the six-month period increased to $72.9 million, or $1.02 per diluted share, compared to $69.9 million, or $.97 per diluted share, last year. Net earnings were $21 million, or $.30 per diluted share, which excludes a net benefit of $.10 per diluted share primarily consisting of the divestiture gain. Net earnings in the prior year, excluding a non-recurring benefit of $.01 per diluted share, were $21.2 million, or $.29 per diluted share. Sales were $767 million compared to $797 million in the prior year. Total same-store sales were down 2.5% in the second quarter versus the same period a year ago. Sales in the Distribution segment were down 3.2% reflecting an increase of .4% for gas and rent offset by a 5.7% decline in hardgoods sales. Same-store sales for the Gas Operations segment were up 4.5% for the quarter. 5 Total capital expenditures for the quarter were $16 million versus $35 million in the prior year. Capital spending year-to-date was $31 million versus $57 million last year. During the quarter, the Company purchased 536 thousand shares of its common stock at a total cost of $6.8 million. For the first six months of the fiscal year, the company purchased 1.2 million shares at a total cost of $14.3 million. There are approximately six million shares remaining under the current share repurchase authorization. The slides to be presented during the Company's earnings teleconference, along with the teleconference replay instructions are available on the Company's Internet site www.airgas.com. The replay will be accessible for one week starting at approximately 11:00AM Eastern Time on Friday, October 29, 1999. Airgas, Inc. is the largest distributor of industrial, medical and specialty 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. 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 underlying market conditions, sales trends, the Company's ability to control expenses and capital spending, any potential problems relating to Year 2000 matters, and other factors described in the Company's reports, including Form 10-Q dated June 30, 1999, filed by the Company with the Securities and Exchange Commission. Consolidated statements of earnings and consolidated condensed balance sheets follow. 6 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, 1999 1998(a) 1999 1998(a) Net sales: Distribution $346,973 $354,208 $692,940 $714,761 Gas Operations 40,316 42,384 73,842 82,604 Total net sales 387,289 396,592 766,782 797,365 Costs and expenses: Cost of products sold (excluding depreciation and amortization) Distribution 186,647 192,789 375,079 390,140 Gas Operations 16,200 17,755 29,035 37,507 Selling, distribution and administrative expenses 129,185 132,509 256,146 262,153 Depreciation and amortization 22,953 21,748 45,119 43,345 Special charge (b) - - - (1,000) Total costs and expenses 354,985 364,801 705,379 732,145 Operating income: Distribution 26,408 26,072 52,668 54,612 Gas Operations 5,896 5,719 8,735 9,608 Special charge (b) - - - 1,000 Total operating income 32,304 31,791 61,403 65,220 Interest expense, net (14,435) (15,720) (28,218) (30,526) Other income, net (c) 15,183 709 15,405 831 Equity in earnings of unconsolidated affiliates 725 1,222 1,725 1,976 Earnings before income taxes and the cumulative effect of an accounting change 33,777 18,002 50,315 37,501 Income tax expense 14,865 7,522 21,728 15,746 Earnings before the cumulative effect of an accounting change 18,912 10,480 28,587 21,755 Cumulative effect of an accounting change, net of taxes (d) - - (590) - Net earnings $ 18,912 $ 10,480 $ 27,997 $ 21,755 Net earnings (excluding special items)(e) $ 11,353 $ 10,480 $ 21,028 $ 21,180 Per share data: Basic earnings per share $ .27 $ .15 $ .40 $ .31 Diluted earnings per share $ .27 $ .15 $ .39 $ .30 Per share data (excluding special items)(e): Basic earnings per share $ .16 $ .15 $ .30 $ .30 Diluted earnings per share $ .16 $ .15 $ .30 $ .29 Weighted average shares outstanding: Basic 69,700 70,000 69,800 70,100 Diluted 71,200 71,700 71,200 71,800 See notes to consolidated financial statements. 7 Notes to consolidated financial statements: (a) Certain reclassifications have been made to previously issued financial statements to conform to the current presentation. (b) Special charges of $1 million ($575 thousand after-tax) for the six months ended September 30, 1998 represent reserve adjustments related to the divestiture of two non-core businesses. (c) Other income, net, for the three and six months ended September 30, 1999 includes a $14.4 million ($7.6 million after-tax) non- recurring gain resulting from the divestiture of the Company's operations in Poland and Thailand. (d) Effective April 1, 1999, the Company adopted Statement of Position 98-5, "Reporting on the Costs of Start-up Activities." The six months ended September 30, 1999 include 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. (e) Net earnings for the three and six months ended September 30, 1999 excluding the first quarter after-tax charge of $590 thousand ($.01 per diluted share) and the second quarter after-tax gain of $7.6 million ($.11 per diluted share). See notes (c) and (d). Net earnings for the six months ended September 30, 1998 excluding the effect of reserve adjustments of $575 thousand after-tax ($.01 per diluted share). See note (b). 8 AIRGAS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Amounts in thousands) (Unaudited) September 30, March 31, 1999 1999 ASSETS Trade accounts receivable, net $ 199,796 $ 195,708 Inventories, net 157,418 154,424 Deferred income tax asset, net 7,783 7,549 Prepaids and other current assets 21,326 21,161 TOTAL CURRENT ASSETS 386,323 378,842 Property, plant and equipment, net 729,811 717,859 Goodwill, net 427,846 428,349 Other non-current assets, net 136,309 173,422 TOTAL ASSETS $1,680,289 $1,698,472 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable, trade $ 71,698 $ 85,486 Accrued expenses and other current liabilities 106,454 108,295 Current portion of long-term debt 8,875 19,645 TOTAL CURRENT LIABILITIES 187,027 213,426 Long-term debt 835,015 847,841 Deferred income taxes 148,586 142,675 Other non-current liabilities 20,366 23,585 Stockholders' equity 489,295 470,945 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,680,289 $1,698,472