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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-4534
AIR PRODUCTS AND CHEMICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-1274455
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7201 Hamilton Boulevard
Allentown, Pennsylvania 18195-1501
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 481-4911
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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Common Stock, par value $1.00 per share New York and Pacific
Preferred Stock Purchase Rights New York and Pacific
11 1/2% Notes Due 1995 New York
8 3/4% Debentures Due 2021 New York
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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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. / X /
The aggregate market value of the voting stock held by non-affiliates of
the registrant on November 1, 1994 was $5.8 billion. For purposes of the
foregoing calculation (i) all directors and/or executive officers have been
deemed to be affiliates, but the Registrant disclaims that any such director
and/or executive officer is an affiliate and (ii) Registrant's Flexible
Employee Benefit Trust, described under Item 12 of this Report, is deemed a
non-affiliate.
The number of shares of Common Stock outstanding as of November 30, 1994
was 123,389,852.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for the fiscal year ended September 30,
1994. With the exception of those portions which are incorporated by reference
into Parts I, II and IV of this Form 10-K, the Annual Report is not deemed to
be filed.
Proxy Statement for Annual Meeting of Shareholders to be held
January 26, 1995. . . Part III.
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TABLE OF CONTENTS
Page
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PART I
ITEM 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Industrial Gases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Specialty Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Chemical Intermediates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Environmental and Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Equipment and Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Foreign Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Technology Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Raw Materials and Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Environmental Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Executive Officers of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ITEM 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Industrial Gases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Chemicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Environmental and Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Equipment and Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ITEM 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ITEM 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . 10
PART II
ITEM 5. Market for the Company's Common Stock and Related Stockholders Matters . . . . . . . . . . 10
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 8. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 9. Disagreements on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . 11
PART III
ITEM 10. Directors and Executive Officers of the Company . . . . . . . . . . . . . . . . . . . . . . 11
ITEM 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ITEM 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . 11
ITEM 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . 11
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . 11
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PART I
ITEM 1. Business.
Through internal development and by acquisitions, Air Products and
Chemicals, Inc. has established an internationally recognized industrial gas
and related industrial process equipment business, and developed strong
positions as a producer of certain chemicals. In addition, the Company has
developed an environmental and energy business principally through joint
ventures.
The industrial gases business segment recovers and distributes industrial
gases such as oxygen, nitrogen, argon and hydrogen and a variety of medical and
specialty gases. The chemicals business segment produces and markets specialty
chemicals and chemical intermediates. The environmental and energy business is
principally composed of joint ventures in waste-to-energy, cogeneration and
flue-gas desulfurization. The equipment and technology business segment
supplies cryogenic and other process equipment and related engineering
services.
Financial information concerning the Company's business segments appears
in Note 20 to the Consolidated Financial Statements included under Item 8
herein, which information is incorporated herein by reference, as are all other
specific references herein to information appearing in such 1994 Financial
Review Section of the Annual Report.
As used in this Report, the term "Air Products" or "Company" includes
subsidiaries and predecessors of the registrant or its subsidiaries, unless the
context indicates otherwise.
INDUSTRIAL GASES
The principal industrial gases sold by the Company are oxygen, nitrogen,
argon (primarily recovered by the cryogenic distillation of air), hydrogen,
carbon monoxide, carbon dioxide (purchased, purified or recovered through the
processing of natural gas or the by-product streams from process plants),
synthesis gas (combined streams of hydrogen and carbon monoxide) and helium
(purchased or refined from crude helium). Medical and specialty gases are
manufactured or blended by the Company, or purchased for resale.
The Company's industrial gas business involves two principal modes of
supply:
"Tonnage" or "on-site" supply -- For large volume or "tonnage" users of
industrial gases, a plant is built adjacent to or near the customer's
facility--hence the term "on-site". Alternatively, the gases are delivered
through a pipeline from nearby locations. Supply is generally made under
contracts having terms in excess of three years. In at least six areas--the
Houston (Texas) Ship Channel including the Port Arthur, Texas, area; "Silicon
Valley", California; Phoenix, Arizona; Central Louisiana; Rotterdam, the
Netherlands; and Corpus Christi, Texas--Air Products' hydrogen, oxygen, carbon
monoxide or nitrogen gas pipelines serve multiple customers from one or more
centrally located plants. Affiliates have pipelines in Korea, Thailand and
Malaysia.
Merchant supply -- Smaller volumes of industrial gas products are
delivered to thousands of customers in liquid or gaseous form by tanker trucks
or tube trailers. These merchant customers use equipment designed and installed
by Air Products to store the product near the point of use, normally in liquid
state, and vaporize the product into gaseous state for their use as needed.
Increasingly some customers are being supplied by small on-site generators
using noncryogenic technology based on adsorption and membrane technology.
Merchant customers' contract terms normally are from three to five years.
Merchant gases and various specialty gases are also delivered in cylinders,
dewars and lecture bottle sizes.
Oxygen, nitrogen, argon and hydrogen sold to merchant customers are
usually recovered at large "stand-alone" facilities located near industrial
areas or high-tech centers, small noncryogenic generators, or are taken from
tonnage plants used primarily to supply tonnage users. Tonnage plants are
frequently designed to have more capacity than is required by their principal
customer to recover additional product that is liquefied for sale to a merchant
market. Air Products also designs and builds systems for recovering oxygen,
hydrogen, nitrogen, carbon monoxide and low dew point gases using adsorption
technology.
Tonnage and merchant sales of atmospheric gases--oxygen, nitrogen and
argon--constituted approximately 31% of Air Products' consolidated sales in
fiscal 1994 and 1993 and 33% in fiscal 1992. Tonnage and merchant sales of
industrial gases--principally oxygen, nitrogen and hydrogen--to the chemical
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process industry and the basic steel industry, the largest consuming
industries, were approximately 12% and 6%, respectively, of Air Products'
consolidated sales in fiscal 1994.
The electronics industries are other important consumers of Air Products'
industrial and specialty gases, as are the oil industry (which uses inert
nitrogen for oil well stimulation and field pressurization and hydrogen and
oxygen for refining) and the food industry (which uses liquid nitrogen for food
freezing). Air Products believes that it is the largest liquefier of hydrogen,
which it supplies to many customers including the National Aeronautics and
Space Administration for its space shuttle program.
Helium is sold for use in magnetic resonance imaging equipment, controlled
atmospheres processes, welding and superconductivity research. Medical gases
are sold in the merchant market to hospitals and clinics, primarily for
inhalation therapy.
Specialty gases include fluorine products, rare gases such as xenon,
krypton and neon and more common gases of high-purity or gases which are
precisely blended as mixtures. These gases are used in numerous industries and
in electronic and laboratory applications.
Sales of industrial gases to merchant customers and sales of specialty
products to the electronics industries are made principally through field sales
forces from 97 offices in 37 states in the United States and Puerto Rico, and
from 109 offices in 16 foreign countries. In addition, industrial gas companies
in which the Company has investments operate in 14 foreign countries. See
"Foreign Operations" on pages 4 and 5 of this report.
Electricity and hydrocarbons, including natural gas as a feedstock for
producing certain gases, are important to Air Products' industrial gas
business. See "Raw Materials and Energy". The Company's large truck fleet,
which delivers products to merchant customers, requires a readily available
supply of gasoline or diesel fuel. Also, environmental and health laws and
regulations will continue to affect the Company's industrial gas businesses.
See "Environmental Controls".
CHEMICALS
The Company's chemicals businesses consist of specialty chemicals and
chemical intermediates where the Company is able to differentiate itself by the
performance of its products in the customer's application, the technical
service which the Company provides, the production technology employed by the
Company or the scale of production practiced by the Company.
SPECIALTY CHEMICALS
Air Products' specialty chemicals are differentiated from the competition
based on their performance when used in the customer's products and the
technical service which the Company provides. The principal products of these
businesses are polymer emulsions, polyvinyl alcohol, pressure sensitive
adhesives, specialty additives, polyurethane additives and epoxy additives.
Total sales from these businesses constituted approximately 20% of Air
Products' consolidated sales in fiscal years 1994 and 1993 and 19% in fiscal
year 1992.
Polymer Emulsions -- The Company's major emulsion products are vinyl
acetate homopolymer emulsions and Airflex(w) vinyl acetate-ethylene copolymer
emulsions. The Company also produces emulsions which incorporate vinyl chloride
and various acrylates in the polymer. These products are used in adhesives,
nonwoven fabric binders, paper coatings, paints, inks and carpet backing binder
formulations.
Polyvinyl Alcohol -- These polymer products are water-soluble synthetic
resins which are used in textile warp sizes, surface sizes for paper,
adhesives, safety glass laminates and as emulsifying agents in polymerization.
Pressure Sensitive Adhesives -- These products are water-based acrylic
emulsions which are used for both permanent and removable pressure sensitive
adhesives primarily for labels and tapes.
Specialty Additives -- These products are primarily acetylenic alcohols
and amines which are used as performance additives in coatings, lubricants,
electro-deposition processes, agricultural formulations and corrosion
inhibitors.
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Polyurethane Additives -- These products include catalysts, surfactants
and release agents which are used as performance control additives and
processing aids in the production of both flexible and rigid polyurethane foam
around the world. The principal end markets for polyurethane foams include
furniture cushioning, insulation, carpet underlay, bedding and automobile
seating.
Epoxy Additives -- These products include polyamides, aromatic amines,
cycloaliphatic amines, reactive diluents and specialty epoxy resins which are
used as performance additives in epoxy formulations by epoxy manufacturers
worldwide. The end markets for epoxies are coatings, flooring, adhesives,
reinforced composites and electrical laminates.
CHEMICAL INTERMEDIATES
The chemical intermediates businesses use the Company's proprietary
technology and scale of production to differentiate themselves from the
competition. The principal chemical intermediates sold by the Company include
amines and polyurethane intermediates. The Company also produces certain
industrial chemicals (acetic acid, ammonia, methanol and nitric acid), as raw
materials for or coproducts of its differentiated products. Total third-party
sales from these businesses constituted 14% of Air Products' consolidated sales
in fiscal year 1994 and 13% in fiscal years 1993 and 1992.
Amines -- The Company produces a broad range of amines using ammonia and
methanol, both manufactured by Air Products, and other alcohol feedstocks
purchased from various suppliers. Other, more specialized amines are produced
by the hydrogenation of purchased intermediates. Substantial quantities of
these products are sold under long-term contracts to a small number of
customers. These products are used by the Company's customers as raw materials
in the manufacture of herbicides, pesticides, water treatment chemicals, animal
nutrients, polyurethane coatings, artificial sweeteners, rubber chemicals and
pharmaceuticals.
Polyurethane Intermediates -- The Company produces dinitrotoluene ("DNT")
and toluene diamine ("TDA") for use as intermediates by the Company's customers
in the manufacture of a major precursor of flexible polyurethane foam. The
principal end markets for flexible polyurethane foams include furniture
cushioning, carpet underlay, bedding and seating in automobiles. Virtually all
of the Company's production of DNT and TDA is sold under long-term contracts to
a small number of customers.
Industrial Chemicals -- The Company produces acetic acid as a coproduct
with polyvinyl alcohol. Air Products sells acetic acid as a merchant product to
a variety of markets including textiles, pharmaceuticals and electronics. The
Company also produces anhydrous ammonia, ammonium nitrate prills and solutions,
and urea-ammonium nitrate solutions which are primarily used by customers as
fertilizers, or in other agricultural applications. Ammonia is also used as a
feedstock for alkylamines and polyurethane intermediates. Methanol is
principally used by Air Products as a feedstock in methylamine production. It
is also sold to others for use as an intermediate in the production of
formaldehyde, antifreeze, and as an additive to improve the octane rating of
gasoline.
* * *
Chemical sales are supported from various locations in the United States,
England, Germany, Hong Kong, Mexico, the Netherlands, Japan and Singapore and
through sales representatives or distributors in most industrialized countries.
Dry products are delivered in railcars, trucks, drums, bags and cartons. Liquid
products are delivered by barge, rail tank cars, tank-trailers, drums and
pails, and, at one location, by pipeline.
The chemicals business depends on adequate energy sources, including
natural gas as a feedstock for the production of certain products (see "Raw
Materials and Energy"), and will continue to be affected by various
environmental and health laws and regulations (see "Environmental Controls").
ENVIRONMENTAL AND ENERGY
The Company's environmental and energy business includes the Company's
interest in American Ref-Fuel Company's waste-to-energy business, fluidized-bed
coal and coal waste burning and natural gas fired cogeneration facilities and
Pure Air's business of removal of sulfur dioxide from flue gases. Construction,
management and operating services, and equipment sales by Air Products to the
cogeneration and Pure Air project companies are included in the Environmental
and Energy segment. The landfill gas business, which
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is also included in the segment, recovers and processes methane gas generated
by landfills. The recovered gas is sold as a fuel or used to generate electric
power that is then sold to utilities.
American Ref-Fuel -- The Company's marketing partnership with
Browning-Ferris Industries, Inc.--one of the world's largest waste services
firms--designs, constructs, owns and operates plants through affiliates to
combust solid waste, generate steam and convert the steam to electricity. This
venture, American Ref-Fuel, combines Air Products' strengths in engineering and
operation of large industrial gas and chemical plants; Browning-Ferris'
knowledge of the waste market; and the proven technology of a European firm
that has built numerous waste-to-energy plants. American Ref-Fuel partnerships
owned equally by subsidiaries of Air Products and Browning-Ferris operate
waste-to-energy facilities in Hempstead (Long Island), New York, and Essex
County, New Jersey, which each combust approximately 900,000 tons per year of
solid waste and generate electricity. A smaller waste-to-energy facility which
combusts approximately 250,000 tons per year of solid waste is located in
Preston, Connecticut. An American Ref-Fuel partnership also operates a
waste-to-energy facility near Niagara Falls which processes about 700,000 tons
per year of municipal waste, which is currently being expanded to process about
800,000 tons per year.
Cogeneration -- Air Products constructed, operates and has a 50% interest
in a 49-megawatt fluidized-bed coal-fired power facility in Stockton,
California; an 85-megawatt coal waste burning cogeneration facility in western
Pennsylvania; and a 120-megawatt gas-fired combine cycle cogeneration facility
in Orlando, Florida.
Pure Air -- Pure Air, the Company's venture with Mitsubishi Heavy
Industries America, Inc., is marketing the Pure Air(TM) process in the United
States. Air Products operates and owns a 50% interest in a facility utilizing
the Pure Air process for removing sulfur dioxide from the flue gas of a
coal-fired power plant in Indiana. Air Products is developing a similar
facility utilizing the Pure Air(TM) process for removing sulfur dioxide from the
flue gas of an electric plant in Florida to be powered by Orimulsion(R) fuel.
Additional information with respect to the Company's environmental and
energy business is included in Notes 10 and 17 to the Consolidated Financial
Statements included under Item 8 herein.
EQUIPMENT AND TECHNOLOGY
The equipment business of Air Products designs, manufactures and supplies
cryogenic and other process equipment. Specifically, equipment is manufactured
for cryogenic air separation, gas processing, natural gas liquefaction,
hydrogen purification, and nitrogen rejection. Air Products also designs and
builds systems for recovering hydrogen, nitrogen, carbon monoxide, carbon
dioxide and low dew point gases using membrane technology. Additionally, a
broad range of plant design, engineering, procurement, and construction
management services is provided for the above areas. Equipment is manufactured
for use by the industrial gases segment and for sale in industrial markets. The
technology areas include certain research and commercial activities in
technical diversification that are not directly related to the Company's other
business segments.
The backlog of orders (including letters of intent) believed to be firm
from other companies and equity affiliates for equipment was approximately $183
million on September 30, 1994, approximately 11% of which relates to natural
gas liquefaction, as compared with a total backlog of approximately $193
million on September 30, 1993. It is expected that approximately $143 million
of the backlog on September 30, 1994, will be completed during fiscal 1995.
GENERAL
FOREIGN OPERATIONS
Air Products through subsidiaries and affiliates conducts business in
numerous countries outside the United States. The structure of the Air Products
industrial gas business in Europe mirrors the Company's United States
operation. Air Products' international business is subject to risks customarily
encountered in foreign operations, including fluctuations in foreign currency
exchange rates and controls, import and export controls, and other economic,
political and regulatory policies of local governments.
Wholly owned subsidiaries operate in Australia, Austria, Belgium, Brazil,
Canada, the Czech Republic, Dubai of the United Arab Emirates, France, Germany,
Ireland, Italy, Japan, Mexico, the Netherlands,
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Norway, Poland, Singapore and the United Kingdom. The Company also has less
than controlling interests in industrial gas companies in China, Germany, Hong
Kong, Indonesia, Italy, Japan, Malaysia, Mexico, Portugal, the Republic of
Korea, Spain, Taiwan, Thailand and the United Kingdom. Air Products also has a
65% owned subsidiary engaged in the specialty gas and helium business in China,
a 58% owned subsidiary engaged principally in cryogenic equipment manufacturing
in the Czech Republic and 50% owned affiliates in France and South Africa
(industrial gases) and the Republic of Korea (polymers).
The Company and a French industrial gas company have a joint venture in
Algeria with the national oil company to construct, own and operate a helium
purification and liquefaction plant which will provide helium to Air Products
and the French industrial gas company. The helium facility is scheduled to
commence production in early 1995.
In October 1994, the Company formed a majority-owned corporate joint
venture in Mexico which acquired the polymer emulsions assets of a Mexican
company including its manufacturing facility in Queretaro, north of Mexico
City.
In October 1994, the Company announced a plan to acquire over the next two
years up to 100% of the outstanding shares of the Sociedad Espanola de Carburos
Metalicos, S.A., a major industrial gas company in Spain in which a minority
interest is currently owned. See Note 18 to the Consolidated Financial
Statements included under Item 8 herein.
Financial information about Air Products' foreign operations and
investments is included in Notes 10, 12 and 20 to the Consolidated Financial
Statements included under Item 8 herein. Information about foreign currency
translation is included in Note 1 to the Consolidated Financial Statements
included under Item 8 herein, under "Foreign Currency" and information on
Company exposure to currency fluctuations is included in Note 7 to the
Consolidated Financial Statements included under Item 8 herein, under "Foreign
Exchange Contracts". Export sales from operations in the United States to
unconsolidated customers amounted to $336 million, $342 million and $380
million in 1994, 1993 and 1992, respectively. Less than 15% of the total export
sales are to affiliated customers.
TECHNOLOGY DEVELOPMENT
Air Products conducts research and development principally in its
laboratories located in Trexlertown, Pennsylvania, as well as in Manchester and
Basingstoke, England, Utrecht, Netherlands and Hamburg, Germany. The Company
also works closely on research and development programs with a number of major
universities and conducts a sizeable amount of research work funded by others,
principally the United States Government.
The Company's market-oriented approach to technology development
encompasses research and development, and engineering as well as commercial
development.
The amount expended by the Company on research and development during
fiscal 1994 was $97 million compared with $92 million and $85 million during
fiscal 1993 and 1992, respectively. In addition, the Company estimates
approximately $9 million was spent in fiscal year 1994, and approximately $9
million and $8 million was spent in fiscal years 1993 and 1992, respectively,
on customer-sponsored research activities relating to the development or
improvement of products, services or techniques.
In the industrial gases and equipment and technology segments, technology
development is directed primarily to developing new and improved processes and
equipment for the production and delivery of industrial gases and cryogenic
fluids, developing new products, and developing new and improved applications
for industrial gases. It is through such applications and improvements that the
Company has become a major supplier to the electronics, polymer, petroleum,
rubber, plastics, food processing and paper industries. Through fundamental
research into sieve and polymer materials, advanced process engineering and
integrated manufacturing methods, the Company discovers, develops and improves
the economics of noncryogenic gas separation technologies.
In the chemicals segment, technology development is primarily concerned
with new products and applications to strengthen and extend our present
positions in specialty chemicals. In addition, a major continuing effort
supports the development of new and improved manufacturing technology for
chemical intermediates and various types of polymers.
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Technology development for the environmental and energy businesses is
directed primarily to reduce the capital and operating costs of its facilities
and to commercialize new technologies in power production, air pollution
control and nonhazardous waste disposal systems.
A corporate research group supports the research efforts of the Company's
various businesses. This group includes the Company's Corporate Science and
Technology Center, which conducts exploratory research in areas important to
the long-term growth of the Company's core businesses, e.g., fluorine
chemicals, gas and fluid separations, polymer science and organic synthesis.
As of November 1, 1994, Air Products owned 1,139 United States patents and
1,723 foreign patents. The Company is also licensed to practice under patents
owned by others. While the patents and licenses are considered important, Air
Products does not consider its business as a whole to be materially dependent
upon any particular patent or patent license, or group of patents or licenses.
RAW MATERIALS AND ENERGY
The Company manufactures anhydrous ammonia, hydrogen, carbon monoxide,
carbon dioxide and methanol principally from natural gas. Such
products accounted for approximately 6% of the Company's consolidated sales in
fiscal 1994. The Company's principal raw material purchases are chemical
intermediates produced by others from basic petrochemical feedstocks such as
olefins and aromatic hydrocarbons. These feedstocks are generally derived from
various crude oil fractions or from liquids extracted from natural gas. The
Company purchases its chemical intermediates from many sources and generally is
not dependent on one supplier. However, with respect to vinyl acetate monomer,
which supports the polymer business, the Company is heavily dependent on a
single supplier under a long-term contract, which produces vinyl acetate
monomer from several facilities. The Company characterizes the availability of
these chemical intermediates as generally being readily available. The Company
uses such raw materials in the production of emulsions, polyvinyl alcohol,
amines, polyurethane intermediates, specialty additives, polyurethane additives
and epoxy additives. Such products accounted for approximately 32% of the
Company's consolidated sales in fiscal 1994. Natural gas is an energy source at
a number of the Company's facilities.
The Company's industrial gas facilities use substantial amounts of
electrical power. Any shortage of electrical power or interruption of its
supply or increase in its price which cannot be passed through to customers for
competitive reasons will adversely affect the merchant industrial gas business
of the Company.
In addition, the Company purchases finished and semifinished materials and
chemical intermediates from many suppliers. During fiscal 1994 no significant
difficulties were encountered in obtaining adequate supplies of energy or raw
materials.
The Company's Environmental and Energy Systems ventures use substantial
amounts of natural gas, coal, coal waste and limestone which generally are
supplied under long-term contracts.
ENVIRONMENTAL CONTROLS
The Company is subject to various environmental laws and regulations in
the United States and foreign countries where it has operations. Compliance
with these laws and regulations results in higher capital expenditures and
costs. Additionally, from time to time the Company is involved in proceedings
under the Comprehensive Environmental Response, Compensation, and Liability Act
(the federal Superfund law), similar state laws, and the Resource Conservation
and Recovery Act (RCRA) relating to the designation of certain sites for
investigation and possible cleanup. Additional information with respect to
these proceedings is included under Item 3, Legal Proceedings, below. The
Company's accounting policies on environmental expenditures are discussed in
Note 1 to the Consolidated Financial Statements included under Item 8 herein.
The amounts charged to earnings on an after-tax basis related to
environmental protection totaled $27.9 million, $31.9 million, and $28.5
million for 1994, 1993, and 1992, respectively. These amounts represent
expenses for compliance with environmental laws, as well as remedial
activities, and costs incurred to meet internal Company standards. Such costs
are estimated to be approximately $30 million in both 1995 and 1996.
Although precise amounts are difficult to define, the Company estimates
that in fiscal 1994 it spent approximately $21 million on capital projects to
control pollution (including expenditures associated with new plants) versus
$19 million in 1993. Capital expenditures to control pollution in future years
are estimated at $38 million in 1995 and $28 million in 1996. In addition, the
Company's joint ventures in the environmental
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and energy businesses include in the capital costs of their projects the costs
of equipment and systems to control pollution. For example, it is estimated
that in fiscal 1994 the ventures of the Company in Ref-Fuel and cogeneration
projects spent approximately $4 million on equipment and systems within their
facilities to control pollution, and it is estimated that approximately $20
million and $18 million will be expended in fiscal 1995 and 1996, respectively.
With respect to certain of the Company's ventures, such as Pure Air, legal
requirements for environmental controls are viewed as a business opportunity.
For example, the Company estimates that in fiscal 1994 it spent approximately
$1 million on a capital project relating to a Pure Air venture in Florida and
capital expenditures for future years are estimated at $2 million in 1995 and
$55 million in 1996. Additional information with respect to these ventures is
included on pages 3 and 4 of this report.
The exact amount to be expended by the Company and its environmental and
energy business joint ventures on equipment to control pollution will depend
upon the timing of the capital projects and timing and content of regulations
promulgated by environmental regulatory bodies during the life of any capital
investment. Efforts are made to pass these costs through to customers. For
example, with respect to most Ref-Fuel ventures, to the extent subsequent law
changes require additional environmental equipment to control pollution, the
costs generally are passed through to the municipality under long-term waste
disposal contracts. To the extent long-term contracts have been entered into
for supply of product such as for the industrial gas on-site business and for
certain chemical products, the cost of any environmental compliance generally
is contractually passed through to the customer.
It is the Company's policy to accrue environmental investigatory and
noncapital remediation costs for identified sites when it is probable that a
liability has been incurred and the amount of loss can be reasonably estimated.
The potential exposure for such costs is estimated to range from $24 million to
a reasonably possible upper exposure of $55 million. The balance sheet at 30
September 1994 includes an accrual of $29.6 million. At 30 September 1993, the
balance sheet accrual was $29.5 million.
In addition to the environmental exposures discussed in the preceding
paragraph, there will be additional spending at a Company-owned manufacturing
site where the Company is expected to undertake RCRA corrective action
remediation. The Company estimates capital costs to implement the anticipated
remedial program will range from $13-$20 million, with spending to commence
during fiscal 1997. Operating and maintenance expenses associated with
continuing the remedial program are estimated to reach $1 million per year by
fiscal 2000 and could continue for an estimated period of up to 30 years.
Actual costs to be incurred in future periods may vary from the estimates,
given inherent uncertainties in evaluating environmental exposures and factors
beyond the Company's control such as: lack of knowledge or scarcity of reliable
data pertaining to identified sites; method and extent of remediation
ultimately required; years of remedial activity required; number of parties
involved; final determination of the Company's liability in proportion to that
of other parties; identification of new sites; evolving environmental laws and
regulations and their application; and advances in technology.
The Company's domestic competitors face similar requirements, which are
not shared by most foreign competitors.
COMPETITION
The Company's businesses face strong competition from others, some of
which are larger and have greater resources than Air Products.
Air Products' industrial gas business competes in the United States with
three major sellers and with several regional sellers. Competition in
industrial gas markets is based primarily on price, reliability of supply, and
furnishing or developing applications for use of such gases by customers. A
similar competitive situation exists in European industrial gas markets in
which the Company competes against one or more larger entrenched competitors in
each country.
The number of the Company's principal competitors in the chemicals
business varies from product to product, and it is not practical to identify
such competitors because of the broad range of the Company's chemical products
and the markets served, although the Company believes it has a leading or
strong market position in most of its chemical products. For amines the
competition is principally from other large chemical companies that also have
the ability to provide competitive pricing, reliability of supply, technical
service assistance and quality products and services. The possibility of back
integration by large customers is the
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major competitive factor for the sale of polyurethane intermediates. In its
other chemical products, the Company competes with a large number of chemical
companies some of which are larger, possess greater financial resources, and
are more vertically integrated than the Company. Competition in these products
is principally on the basis of price, quality, product performance, reliability
of product supply and technical service assistance.
The Company's environmental and energy businesses compete in all aspects
with a great number of firms, some of which have greater technical and
financial resources than Air Products' ventures. Competition is based
primarily on technological performance, service, technical know-how, price and
performance guarantees. Competing for selection as a project developer may
require commitment of substantial resources over a long period of time, without
any certainty of being ultimately selected. Competition for attractive
development opportunities is intense, as there are a number of competitors in
the industries interested in such opportunities. Air Products believes that its
and its joint ventures' comprehensive project development capability, operating
experience, engineering and financing capabilities and construction management
experience will enable it to compete effectively.
Price, delivery, technological advantage and reputation for performance
are generally the important factors in competing for sales of cryogenic
equipment, other equipment and process engineering services. Another important
factor in certain export sales is financing provided by governmental entities
in the United States and the United Kingdom as compared with financing offered
by their counterparts in other countries.
INSURANCE
The Company's policy is to obtain public liability and property insurance
coverage that is currently available at what management determines to be a fair
and reasonable price. The Company, for itself and its Environmental and Energy
joint venture affiliates for which it assumes turnkey construction or operating
responsibility, maintains public liability and property insurance coverage at
amounts which management believes are sufficient, after retention, to meet the
company's anticipated needs in light of historical experience to cover future
litigation and claims. There is no assurance, however, that the Company will
not incur losses beyond the limits of, or outside the coverage of, its
insurance.
EMPLOYEES
On September 30, 1994, the Company had approximately 13,300 full-time
employees of whom approximately 3,600 were located outside the United States.
The Company has collective bargaining agreements with unions at numerous
locations, which expire on various dates over the next three years including an
agreement with the Oil, Chemical and Atomic Workers Union (O.C.A.W.) relating
to the facility which produces polyvinyl acetate emulsions, polyvinyl alcohol,
acetic acid and acetylenic chemicals in Calvert City, Kentucky which agreement
expires in February 1995. The Company considers relations with its employees to
be satisfactory. The Company does not believe that any expiring collective
bargaining agreements will result in a material adverse impact on the Company.
EXECUTIVE OFFICERS OF THE COMPANY
The Company's executive officers, their respective positions and their
respective ages on December 15, 1994 follow. Except where indicated, each of
the executive officers listed below has been employed by the Company in the
position indicated during the past five fiscal years. Information with respect
to offices held is stated in fiscal years.
NAME AGE OFFICE
---- --- ------
James H. Agger ................... 58 Vice President, General Counsel and Secretary
(D) (became Secretary in 1990)
Robert E. Gadomski ................ 47 Group Vice President--Chemicals Group (became Group
(D) Vice President--Chemicals Group in 1992; Group Vice
President--Process Systems Group 1990-1992; Vice President
and General Manager--Process Systems Group 1988-1990)
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Joseph J. Kaminski ................ 55 Executive Vice President--Gases and Equipment
(D) (became Executive Vice President--Gases and Equipment in
1993; President--Air Products Europe, Inc. 1990-1993; Vice
President--Corporate Planning 1988-1990)
Arnold H. Kaplan .................. 55 Vice President--Energy and Materials
(D)
J. Robert Lovett ................. 63 Executive Vice President--Strategic Planning and Technology
(D) (became Executive Vice President--Strategic Planning and
Technology in 1993; Executive Vice President--Gases and
Equipment 1992-1993; Group Vice President--Chemicals
Group 1988-1992)
Harold A. Wagner ................. 59 Chairman of the Board, President and Chief Executive Officer
(A) (B) (C) (D) (became Chairman of the Board and Chief Executive Officer
in 1992; President in 1991; Executive Vice President--Gases
and Equipment 1990-1991; President--Air Products Europe,
Inc. 1988-1990)
Gerald A. White ................... 60 Senior Vice President--Finance (became Senior Vice President
(D) President--Finance in 1992; Vice President--Finance 1982-1992)
- - - - ----------------
(A) Member, Board of Directors.
(B) Member, Executive Committee of the Board of Directors.
(C) Member, Finance Committee of the Board of Directors.
(D) Member, Management Committee.
ITEM 2. PROPERTIES.
The principal executive offices of Air Products are located at its
headquarters in Trexlertown, near Allentown, Pennsylvania. Additional
administrative offices are located in owned facilities in Hersham, Surrey,
England, near London, and Brampton, near Toronto, Canada, and in leased
facilities in Fogelsville, Pennsylvania, Tokyo, Japan, and Sao Paulo, Brazil.
The management considers the Company's facilities, described in more detail
below, to be adequate to support the business efficiently. The following
information with respect to properties is as of September 30, 1994.
INDUSTRIAL GASES
The industrial gases segment has approximately 147 plant facilities in 37
states, the majority of which recover nitrogen, oxygen and argon. The Company
has six facilities which produce specialty gases and 23 facilities which
recover hydrogen throughout the United States. Helium is recovered at two
plants in Kansas and Texas, and acetylene is manufactured at six plants in six
states in the United States. There are 104 sales offices and/or cylinder
distribution centers located in 39 states.
The land on which the above plants are located is owned by Air Products at
approximately one-third of the locations, and leased by Air Products at the
remaining locations. However, in all cases, the plant itself is owned and
operated by Air Products. Air Products owns approximately half of its sales
offices and cylinder distribution centers, including related real estate, and
leases the other half. A few industrial gas facilities of the Company are
pledged as collateral under loans.
Air Products' European plant facilities total 39, and include six plants
which recover hydrogen, three plants which manufacture dissolved acetylene, and
one which recovers carbon monoxide. The majority of European plants recover
nitrogen, oxygen and argon. In addition, there are three specialty gas centers.
There is a combined total of 83 sales offices and/or cylinder distribution
centers in Europe, and several additional facilities located in Brazil, Canada,
Japan, Puerto Rico and the Middle East.
CHEMICALS
The chemicals segment manufactures amines, nitric acid, methanol,
anhydrous ammonia and ammonia products at its Pace, Florida, facility;
anhydrous ammonia at its New Orleans, Louisiana, facility; alkylamines at its
St. Gabriel, Louisiana, facility; polyvinyl acetate emulsions at its South
Brunswick, New
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Jersey facility; nitric acid, dinitrotoluene, toluene diamine, polyvinyl
alcohol and acetic acid at its Pasadena, Texas, facility; and polyvinyl acetate
emulsions, polyvinyl alcohol, acetic acid and acetylenic chemicals at its
Calvert City, Kentucky, facility; specialty amines at its Wichita, Kansas,
facility; polyurethane additives release agents at its Hamburg, Germany,
facility; and epoxy additives at its facilities in Manchester, England; Los
Angeles, California and Cumberland, Rhode Island. The chemicals segment
manufactures polyurethane additives at its Paulsboro, New Jersey, facility
which is leased in part and owned in part. The chemicals segment also
manufactures polyvinyl acetate emulsions at a number of smaller locations.
The chemicals segment has 17 plant facilities and six sales offices in the
United States and operates two plants, six sales/representative offices and
three laboratories in Europe, one laboratory in Brazil and sales offices in
Australia, Brazil, Japan, Mexico and Singapore and sales/representative offices
in Hong Kong. Substantially all of the chemicals segment's plants and real
estate thereunder are owned. Approximately 75% of the offices are leased by the
Company and 25% are owned.
ENVIRONMENTAL AND ENERGY
In addition to the joint venture facilities, described in the
Environmental and Energy business on pages 3 and 4 of this report, the
environmental and energy business has eight landfill gas-gathering facilities.
Most of the Environmental and Energy projects are pledged as collateral under
financing agreements.
EQUIPMENT AND TECHNOLOGY
The principal facilities utilized by the equipment and technology segment
include five plants and two offices in the United States, three plants and
three offices in Europe and one office in Japan. Air Products owns
approximately 50% of the facilities and real estate in this segment and leases
the remaining 50%.
ITEM 3. LEGAL PROCEEDINGS.
In the normal course of business Air Products and its subsidiaries are
involved in legal proceedings including proceedings involving governmental
authorities. Included in these claims and actions are proceedings under the
Comprehensive Environmental Response, Compensation, and Liability Act (the
federal superfund law), the Resource Conservation and Recovery Act and similar
state environmental laws relating to the designation of certain sites for
investigation or remediation. There are presently approximately 60 sites on
which a final settlement has not been reached where the Company, along with
others, has been designated a Potentially Responsible Party by the
Environmental Protection Agency or is otherwise engaged in investigation or
remediation. The Company does not expect that any sums it may have to pay in
connection with these matters would have a materially adverse effect on its
consolidated financial position nor is there any material additional exposure
expected in any one year in excess of the amounts the Company currently has
accrued. Additional information on the Company's environmental exposure is
included under Environmental Controls on pages 6 and 7 of this report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDERS
MATTERS.
Market and dividend information for the Company's Common Stock appears
under "Eleven-Year Summary of Selected Financial Data" on pages 28 and 29 of
the 1994 Financial Review Section of the Annual Report to Shareholders which is
incorporated herein by reference. In addition, the Company has authority to
issue 25,000,000 shares of preferred stock in series. The Board of Directors is
authorized to designate the series and to fix the relative voting, dividend,
conversion, liquidation, redemption and other rights, preferences and
limitations as between series. When preferred stock is issued, holders of
Common Stock are subject to the dividend and liquidation preferences and other
prior rights of the preferred stock. There currently is no preferred stock
outstanding.
As of November 30, 1994, there were 11,765 record holders of the Company's
Common Stock.
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ITEM 6. SELECTED FINANCIAL DATA.
The tabular information appearing under "Eleven-Year Summary of Selected
Financial Data" on pages 28 and 29 of the 1994 Financial Review Section of the
Annual Report to Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The textual information appearing under "Management's Discussion and
Analysis" on pages 1 through 6 of the 1994 Financial Review Section of the
Annual Report to Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS.
The consolidated financial statements and the related notes thereto
together with the report thereon of Arthur Andersen LLP dated 3 November 1994,
appearing on pages 7 through 27 of the 1994 Financial Review Section of the
Annual Report to Shareholders, are incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The biographical information relating to the Company's directors contained
on pages 2 through 5 of the Proxy Statement relating to the Company's 1995
Annual Meeting of Shareholders is incorporated herein by reference.
Biographical information relating to the Company's executive officers is set
forth in Item 1 of Part I of this Report.
ITEM 11. EXECUTIVE COMPENSATION.
The information under "Other Relationships and Transactions",
"Remuneration of Directors", "Report of the Management Development and
Compensation Committee", "Compensation and Option Tables", "Stock Performance
Information", "Pension Plans", and "Certain Agreements with Executive Officers"
appearing on pages 7 through 18 of the Proxy Statement relating to the
Company's 1995 Annual Meeting of Shareholders is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required for this Item is set forth in the section headed
"Security Ownership of Certain Beneficial Owners and Management" contained on
pages 18 through 20 of the Proxy Statement relating to the Company's 1995
Annual Meeting of Shareholders and such information is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information under "Other Relationships and Transactions" appearing on
page 7 of the Proxy Statement relating to the Company's 1995 Annual Meeting of
Shareholders is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this Report:
1. The 1994 Financial Review Section of the Company's 1994 Annual
Report to Shareholders. Information contained therein is not deemed filed
except as it is incorporated by reference into this Report. The following
financial information is incorporated herein by reference:
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(PAGE REFERENCES TO 1994 FINANCIAL REVIEW SECTION OF THE ANNUAL REPORT)
Management's Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Consolidated Income for the three years ended 30 September 1994 . . . . . . . . . . . . . . . . . . . . 8
Consolidated Balance Sheets at 30 September 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . 9
Consolidated Cash Flows for the three years ended 30 September 1994 . . . . . . . . . . . . . . . . . 10
Consolidated Shareholders' Equity for the three years ended 30 September 1994 . . . . . . . . . . . 11
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Business Segment and Geographic Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Eleven-Year Summary of Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2. The following additional information should be read in conjunction
with the financial statements in the Company's 1994 Financial Review
Section of the Annual Report to Shareholders:
(PAGE REFERENCES TO THIS REPORT)
Report of Independent Public Accountants on Schedules . . . . . . . . . . . . . . . . . . . . . . . . 17
Consent of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Consolidated Schedules for the years ended 30 September 1994, 1993
and 1992 as follows:
SCHEDULE
NUMBER
------
V Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
VI Accumulated Depreciation of Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . 19
VIII Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
All other schedules are omitted because the required matter or
conditions are not present or because the information required by the
Schedules is submitted as part of the consolidated financial statements
and notes thereto.
3. EXHIBITS.
(3) Articles of Incorporation and By-Laws.
3.1 By-Laws of the Company. (Filed as Exhibit 3.1 to the
Company's Form 10-K Report for the fiscal year ended September 30,
1993.)*
3.2 Restated Certificate of Incorporation of the Company. (Filed
as Exhibit 3.2 to the Company's Form 10-K Report for the fiscal year
ended September 30, 1987.)*
(4) Instruments defining the rights of security holders, including
indentures. Upon request of the Securities and Exchange Commission, the
Company hereby undertakes to furnish copies of the instruments with
respect to its long-term debt.
4.1 Rights Agreement, dated as of March 23, 1988, between the
Company and The Chase Manhattan Bank, N.A. (Filed as Exhibit 1, 2 to
the Company's Form 8-A Registration Statement dated March 28, 1988.)*
(10) Material Contracts.
10.1 1990 Deferred Stock Plan of the Company, as amended and
restated effective October 1, 1989. (Filed as Exhibit 10.1 to the
Company's Form 10-K Report for the fiscal year ended September 30,
1989.)*
10.2(a) Long-Term Incentive Plan of the Company, as amended.
(Filed as Exhibit 10.2 to the Company's Form 10-K Reports for each of
the fiscal years ended September 30, 1986, September 30, 1987 and
September 30, 1988.)*
10.2(b) 1990 Long-Term Incentive Plan of the Company. (Filed as
Exhibit 10.2(b) to the Company's Form 10-K Report for the fiscal year
ended September 30, 1989.)*
10.2(b)(1) Amendment to 1990 Long-Term Incentive Plan of the
Company, effective July 16, 1992. (Filed as Exhibit 10.2(b)(1) to the
Company's Form 10-K Report for the fiscal year ended September 30,
1993.)*
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10.3 1990 Annual Incentive Plan of the Company, as amended and
restated effective October 1, 1989. (Filed as Exhibit 10.3 to the
Company's Form 10-K Report for the fiscal year ended September 30,
1989.)*
10.4 Supplementary Pension Plan of the Company, as amended
effective October 1, 1988. (Filed as Exhibit 10.4 to the Company's
Form 10-K Report for the fiscal year ended September 30, 1989.)*
(a) Amendment to Supplementary Pension Plan of the Company,
effective October 1, 1993 through September 30, 1994. (Filed as
Exhibit 10.4(a) to the Company's Form 10-K Report for the fiscal
year ended September 30, 1993.)*
(b) Amendment to Supplementary Pension Plan of the Company,
effective October 1, 1993 through September 30, 1995.
(c) Amended and Restated Trust Agreement by and between the
Company and Provident National Bank dated as of October 31,
1989. (Filed as Exhibit 10.4(a) to the Company's Form 10-K
Report for the fiscal year ended September 30, 1989.)*
10.5 Supplementary Savings Plan of the Company as amended
October 1, 1989. (Filed as Exhibit 10.5 to the Company's Form 10-K
Report for the fiscal year ended September 30, 1989.)*
(a) Trust Agreement by and between the Company and
Provident National Bank dated as of October 31, 1989. (Filed as
Exhibit 10.5(a) to the Company's Form 10-K Report for the fiscal
year ended September 30, 1989.)*
10.6(a) Deferred Compensation Plan for Directors of the Company,
effective January 1, 1980, as amended effective January 25, 1990 and
October 15, 1992. (Filed as Exhibit 10.6(a) to the Company's Form
10-K Report for the fiscal year ended September 30, 1993.)*
10.6(b) Amended and Restated Pension Plan for Directors of the
Company, effective January 1, 1983, as amended effective January 1,
1990 and January 1, 1994. (Filed as Exhibit 10.6(b) to the Company's
Form 10-K Report for the fiscal year ended September 30, 1993.)*
10.6(c) Stock Plan for Directors of the Company, effective
January 25, 1990, as amended effective October 15, 1992. (Filed as
Exhibit 10.6(c) to the Company's Form 10-K Report for the fiscal year
ended September 30, 1993.)*
10.6(d) Stock Option Plan for Directors of the Company,
effective January 27, 1994. (Filed as Exhibit 10.6(d) to the
Company's Form 10-K Report for the fiscal year ended September 30,
1993.)*
10.7 Agreements with executives.
(a) Form of Employment Agreement dated July 30, 1987, which
the Company has with each of its executive officers. (Filed as
Exhibit 10.7(a) to the Company's Form 10-K Report for the fiscal
year ended September 30, 1987.)*
(b) Annuity Agreement dated December 8, 1980, between the
Company and an executive officer of the Company, as amended May
21, 1985, and March 5, 1990. (Filed as Exhibit 10.6(a) to the
Company's Form 10-K Report for the fiscal year ended September
30, 1980, as Exhibit 10.7(b)3 to the Company's Form 10-K Report
for the fiscal year ended September 30, 1985, and as Exhibit
10.7(d)1 to the Company's Form 10-K Report for the fiscal year
ended September 30, 1990, respectively.)*
(c) Consulting Agreement dated November 4, 1993, between
the Company and an executive officer and director of the
Company. (Filed as Exhibit 10.7(c) to the Company's Form 10-K
Report for the fiscal year ended September 30, 1993.)*
10.8 Employee Severance Plans.
(a) Air Products and Chemicals, Inc. Severance Plan
effective March 15, 1990. (Filed as Exhibit 10.8(a) to the
Company's Form 10-K Report for the fiscal year ended September
30, 1992.)*
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(b) Air Products and Chemicals, Inc. Change of Control
Severance Plan effective March 15, 1990. (Filed as Exhibit
10.8(b) to the Company's Form 10-K Report for the fiscal year
ended September 30, 1992.)*
(11) Earnings per share.
(12) Computation of Ratios of Earnings to Fixed Charges.
(13) 1994 Financial Review Section of the Annual Report to
Shareholders for the fiscal year ended September 30, 1994, which is
furnished to the Commission for information only, and not filed except as
expressly incorporated by reference in this Report.
(21) Subsidiaries of the registrant.
(24) Power of Attorney.
(27) Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for information only and not filed.
(b) Reports on Form 8-K filed during the quarter ended September 30, 1994.
Current Reports on Form 8-K dated July 22, 1994, and September 20,
1994, were filed in which Item 5 of such Form was reported.
- - - - --------------
*Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference should be located in SEC File No. 1-4534.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: December 8, 1994
AIR PRODUCTS AND CHEMICALS, INC.
(Registrant)
By: /s/ GERALD A. WHITE
----------------------------------------------------------
Gerald A. White, Senior Vice President--Finance
Principal Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
---------- ------- ------
/s/ HAROLD A. WAGNER Director, Chairman of the Board December 8, 1994
- - - - ------------------------------------------- and President (Principal
(Harold A. Wagner) Executive Officer)
/s/ PAUL E. HUCK Corporate Controller December 8, 1994
- - - - ------------------------------------------- (Principal Accounting Officer)
(Paul E. Huck)
* Director December 8, 1994
- - - - -------------------------------------------
(Dexter F. Baker)
* Director December 8, 1994
- - - - -------------------------------------------
(Tom H. Barrett)
* Director December 8, 1994
- - - - -------------------------------------------
(L. Paul Bremer)
* Director December 8, 1994
- - - - -------------------------------------------
(Will M. Caldwell)
* Director December 8, 1994
- - - - -------------------------------------------
(Robert Cizik)
* Director December 8, 1994
- - - - -------------------------------------------
(Ruth M. Davis)
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SIGNATURE TITLE DATE
---------- ------- ------
* Director December 8, 1994
- - - - -------------------------------------------
(Robert F. Dee)
* Director December 8, 1994
- - - - -------------------------------------------
(Terry R. Lautenbach)
* Director December 8, 1994
- - - - -------------------------------------------
(Walter F. Raab)
* Director December 8, 1994
- - - - -------------------------------------------
(Judith Rodin)
* Director December 8, 1994
- - - - -------------------------------------------
(Takeo Shiina)
* Director December 8, 1994
- - - - -------------------------------------------
(Lawrason D. Thomas)
- - - - -----------------
* James H. Agger, Vice President, General Counsel and Secretary, by signing
his name hereto, does sign this document on behalf of the above noted
individuals, pursuant to a power of attorney duly executed by such
individuals which is filed with the Securities and Exchange Commission
herewith.
/s/ JAMES H. AGGER
---------------------------------------
James H. Agger
Attorney-in-Fact
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19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To: Air Products and Chemicals, Inc.
We have audited in accordance with generally accepted auditing standards
the consolidated financial statements included in the 1994 Air Products and
Chemicals, Inc. Annual Report to Shareholders incorporated by reference in this
Form 10-K, and have issued our Report thereon, dated 3 November 1994. We have
also audited the consolidated schedules referred to in Item 14(a) (2) in this
Form 10-K. Our audits of the consolidated financial statements were made for
the purpose of forming an opinion on those statements taken as a whole. The
schedules are the responsibility of the Company's management and are presented
for the purposes of complying with the Securities and Exchange Commission's
rules and are not part of the basic consolidated financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic consolidated financial statements and, in our opinion, fairly
state in all material respects the financial data required to be set forth
therein in relation to the basic consolidated financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
3 November 1994
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To: Air Products and Chemicals, Inc.
As independent public accountants, we hereby consent to the incorporation
by reference of our reports dated 3 November 1994 included or incorporated by
reference in this Annual Report on Form 10-K, into the Company's previously
filed Registration Statements on Form S-8 and Form S-3 (File Nos. 33-2068,
33-45354, 33-66006 and 33-49981).
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
8 December 1994
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SCHEDULE V
CONSOLIDATED
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
SCHEDULE V--PLANT AND EQUIPMENT
FOR THE YEARS ENDED 30 SEPTEMBER 1994, 1993 AND 1992
- - - - ------------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - - - ------------------------------------------------------------------------------------------------------------------------------------
OTHER CHANGES
INCREASE (DECREASE)
ADDITIONS --------------------------
BALANCE AT AT COST SALES AND CUMULATIVE BALANCE
BEGINNING (NET OF RETIRE- TRANSLATION AT END OF
CLASSIFICATION OF PERIOD TRANSFERS) MENTS ADJUSTMENTS OTHER PERIOD
- - - - ------------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS OF DOLLARS)
YEAR ENDED 30 SEPTEMBER 1994
Land . . . . . . . . . . . . . . $ 79.0 $ .7 $ .5 $ 1.2 $ -- $ 80.4
Buildings . . . . . . . . . . . . 437.4 23.5 2.8 3.7 -- 461.8
Gas generating and chemical
facilities, machinery and
equipment . . . . . . . . . . . 5,167.1 498.1 130.0 77.8 (.7) 5,612.3
Construction in progress . . . . 269.3 92.1 .5 4.1 -- 365.0
-------- ------ ------ ------- ------ --------
$5,952.8 $614.4 $133.8 $ 86.8 $ (.7) $6,519.5
======== ====== ====== ======= ====== ========
YEAR ENDED 30 SEPTEMBER 1993
Land . . . . . . . . . . . . . . $ 78.5 $ 4.6 $ .2 $ (3.9) $ -- $ 79.0
Buildings . . . . . . . . . . . . 429.3 22.8 3.1 (11.6) -- 437.4
Gas generating and chemical
facilities, machinery and
equipment . . . . . . . . . . . 5,086.6 381.0 87.7 (213.1) .3 5,167.1
Construction in progress . . . . 190.1 86.1 -- (7.0) .1 269.3
-------- ------ ------ ------- ------ --------
$5,784.5 $494.5 $ 91.0 $(235.6) $ .4 $5,952.8
======== ====== ====== ======= ====== ========
YEAR ENDED 30 SEPTEMBER 1992
Land . . . . . . . . . . . . . . $ 73.9 $ 3.1 $ -- $ 1.5 $ -- $ 78.5
Buildings . . . . . . . . . . . . 410.4 16.0 1.8 4.5 .2 429.3
Gas generating and chemical
facilities, machinery and
equipment . . . . . . . . . . . 4,700.4 363.9 99.5 126.1 (4.3) 5,086.6
Construction in progress . . . . 147.5 50.6 9.9 2.7 (.8) 190.1
-------- ------ ------ ------- ------ --------
$5,332.2 $433.6 $111.2 $ 134.8 $ (4.9) $5,784.5
======== ====== ====== ======= ====== ========
NOTE:
(1) Reference is made to Note 5 to the consolidated financial statements
for information with respect to restrictions on creating property
liens.
18
21
SCHEDULE VI
CONSOLIDATED
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
SCHEDULE VI--ACCUMULATED DEPRECIATION OF PLANT AND EQUIPMENT
FOR THE YEARS ENDED 30 SEPTEMBER 1994, 1993 AND 1992
- - - - ------------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - - - ------------------------------------------------------------------------------------------------------------------------------------
OTHER CHANGES
INCREASE (DECREASE)
ADDITIONS --------------------------
BALANCE AT CHARGED TO SALES AND CUMULATIVE BALANCE
BEGINNING EXPENSE - RETIRE- TRANSLATION AT END OF
CLASSIFICATION OF PERIOD DEPRECIATION MENTS ADJUSTMENTS OTHER PERIOD
- - - - ------------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS OF DOLLARS)
YEAR ENDED 30 SEPTEMBER 1994
Buildings . . . . . . . . . . . . $ 187.6 $ 19.9 $ 2.3 $ 1.8 $ (.2) $ 206.8
Gas generating and chemical
facilities, machinery and
equipment . . . . . . . . . . . 3,059.6 332.9 114.2 41.6 .2 3,320.1
-------- ------ ------ ------- ----- --------
$3,247.2 $352.8 $116.5 $ 43.4 $ -- $3,526.9
======== ====== ====== ======= ===== ========
YEAR ENDED 30 SEPTEMBER 1993
Buildings . . . . . . . . . . . . $ 168.9 $ 24.9 $ 2.1 $ (4.1) $ -- $ 187.6
Gas generating and chemical
facilities, machinery and
equipment . . . . . . . . . . . 2,869.9 377.5 78.2 (110.7) 1.1 3,059.6
-------- ------ ------ ------- ----- --------
$3,038.8 $402.4(1) $ 80.3 $(114.8) $ 1.1 $3,247.2
======== ====== ====== ======= ===== ========
YEAR ENDED 30 SEPTEMBER 1992
Buildings . . . . . . . . . . . . $ 148.5 $ 18.8 $ 1.0 $ 2.5 $ .1 $ 168.9
Gas generating and chemical
facilities, machinery and
equipment . . . . . . . . . . . 2,561.1 321.4 76.7 61.9 2.2 2,869.9
-------- ------ ------ ------- ----- --------
$2,709.6 $340.2 $ 77.7 $ 64.4 $ 2.3 $3,038.8
======== ====== ====== ======= ===== ========
NOTE:
(1) Depreciation expense in 1993 includes $56.7 million associated with
asset write-downs.
19
22
SCHEDULE VIII
CONSOLIDATED
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED 30 SEPTEMBER 1994, 1993 AND 1992
- - - - ------------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- - - - ------------------------------------------------------------------------------------------------------------------------------------
OTHER CHANGES
ADDITIONS INCREASE (DECREASE)
--------------------------- --------------------------
BALANCE AT CHARGED CUMULATIVE BALANCE
BEGINNING CHARGED TO TO OTHER TRANSLATION AT END OF
CLASSIFICATION OF PERIOD EXPENSE ACCOUNTS(1) ADJUSTMENTS OTHER(2) PERIOD
- - - - ------------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS OF DOLLARS)
Amounts deducted in the consoli-
dated balance sheet from the
asset to which it applies:
YEAR ENDED 30 SEPTEMBER 1994
Allowance for doubtful accounts $12.4 $6.8 $ .1 $ .1 $(6.0) $13.4
===== ==== ==== ===== ===== =====
YEAR ENDED 30 SEPTEMBER 1993
Allowance for doubtful accounts $12.5 $5.1 $1.3 $(1.3) $(5.2) $12.4
===== ==== ==== ===== ===== =====
YEAR ENDED 30 SEPTEMBER 1992
Allowance for doubtful accounts $11.5 $3.6 $ .7 $ .2 $(3.5) $12.5
===== ==== ==== ===== ===== =====
NOTES:
(1) Includes collections on accounts previously written off and additions
applicable to businesses acquired.
(2) Primarily includes write-offs of uncollectible accounts.
20
23
EXHIBIT INDEX
--------------
EX.NO. DESCRIPTION
------ ------------
(3) Articles of Incorporation and By-Laws.
3.1 By-Laws of the Company. (Filed as Exhibit 3.1 to the
Company's Form 10-K Report for the fiscal year ended September 30,
1993.)*
3.2 Restated Certificate of Incorporation of the Company. (Filed
as Exhibit 3.2 to the Company's Form 10-K Report for the fiscal year
ended September 30, 1987.)*
(4) Instruments defining the rights of security holders, including
indentures. Upon request of the Securities and Exchange Commission,
the Company hereby undertakes to furnish copies of the instruments
with respect to its long-term debt.
4.1 Rights Agreement, dated as of March 23, 1988, between the
Company and The Chase Manhattan Bank, N.A. (Filed as Exhibit 1, 2 to
the Company's Form 8-A Registration Statement dated March 28, 1988.)*
(10) Material Contracts.
10.1 1990 Deferred Stock Plan of the Company, as amended and
restated effective October 1, 1989. (Filed as Exhibit 10.1 to the
Company's Form 10-K Report for the fiscal year ended September 30,
1989.)*
10.2(a) Long-Term Incentive Plan of the Company, as amended.
(Filed as Exhibit 10.2 to the Company's Form 10-K Reports for each of
the fiscal years ended September 30, 1986, September 30, 1987 and
September 30, 1988.)*
10.2(b) 1990 Long-Term Incentive Plan of the Company. (Filed as
Exhibit 10.2(b) to the Company's Form 10-K Report for the fiscal year
ended September 30, 1989.)*
10.2(b)(1) Amendment to 1990 Long-Term Incentive Plan of the
Company, effective July 16, 1992. (Filed as Exhibit 10.2(b)(1) to the
Company's Form 10-K Report for the fiscal year ended September 30,
1993.)*
10.3 1990 Annual Incentive Plan of the Company, as amended and
restated effective October 1, 1989. (Filed as Exhibit 10.3 to the
Company's Form 10-K Report for the fiscal year ended September 30,
1989.)*
10.4 Supplementary Pension Plan of the Company, as amended
effective October 1, 1988. (Filed as Exhibit 10.4 to the Company's
Form 10-K Report for the fiscal year ended September 30, 1989.)*
(a) Amendment to Supplementary Pension Plan of the Company,
effective October 1, 1993 through September 30, 1994. (Filed as
Exhibit 10.4(a) to the Company's Form 10-K Report for the fiscal
year ended September 30, 1993.)*
(b) Amendment to Supplementary Pension Plan of the Company,
effective October 1, 1993 through September 30, 1995.
(c) Amended and Restated Trust Agreement by and between the
Company and Provident National Bank dated as of October 31,
1989. (Filed as Exhibit 10.4(a) to the Company's Form 10-K
Report for the fiscal year ended September 30, 1989.)*
10.5 Supplementary Savings Plan of the Company as amended
October 1, 1989. (Filed as Exhibit 10.5 to the Company's Form 10-K
Report for the fiscal year ended September 30, 1989.)*
(a) Trust Agreement by and between the Company and
Provident National Bank dated as of October 31, 1989. (Filed as
Exhibit 10.5(a) to the Company's Form 10-K Report for the fiscal
year ended September 30, 1989.)*
10.6(a) Deferred Compensation Plan for Directors of the Company,
effective January 1, 1980, as amended effective January 25, 1990 and
October 15, 1992. (Filed as Exhibit 10.6(a) to the Company's Form
10-K Report for the fiscal year ended September 30, 1993.)*
10.6(b) Amended and Restated Pension Plan for Directors of the
Company, effective January 1, 1983, as amended effective January 1,
1990 and January 1, 1994. (Filed as Exhibit 10.6(b) to the Company's
Form 10-K Report for the fiscal year ended September 30, 1993.)*
10.6(c) Stock Plan for Directors of the Company, effective
January 25, 1990, as amended effective October 15, 1992. (Filed as
Exhibit 10.6(c) to the Company's Form 10-K Report for the fiscal year
ended September 30, 1993.)*
10.6(d) Stock Option Plan for Directors of the Company,
effective January 27, 1994. (Filed as Exhibit 10.6(d) to the
Company's Form 10-K Report for the fiscal year ended September 30,
1993.)*
10.7 Agreements with executives.
(a) Form of Employment Agreement dated July 30, 1987, which
the Company has with each of its executive officers. (Filed as
Exhibit 10.7(a) to the Company's Form 10-K Report for the fiscal
year ended September 30, 1987.)*
(b) Annuity Agreement dated December 8, 1980, between the
Company and an executive officer of the Company, as amended May
21, 1985, and March 5, 1990. (Filed as Exhibit 10.6(a) to the
Company's Form 10-K Report for the fiscal year ended September
30, 1980, as Exhibit 10.7(b)3 to the Company's Form 10-K Report
for the fiscal year ended September 30, 1985, and as Exhibit
10.7(d)1 to the Company's Form 10-K Report for the fiscal year
ended September 30, 1990, respectively.)*
(c) Consulting Agreement dated November 4, 1993, between
the Company and an executive officer and director of the
Company. (Filed as Exhibit 10.7(c) to the Company's Form 10-K
Report for the fiscal year ended September 30, 1993.)*
10.8 Employee Severance Plans.
(a) Air Products and Chemicals, Inc. Severance Plan
effective March 15, 1990. (Filed as Exhibit 10.8(a) to the
Company's Form 10-K Report for the fiscal year ended September
30, 1992.)*
(b) Air Products and Chemicals, Inc. Change of Control
Severance Plan effective March 15, 1990. (Filed as Exhibit
10.8(b) to the Company's Form 10-K Report for the fiscal year
ended September 30, 1992.)*
(11) Earnings per share.
(12) Computation of Ratios of Earnings to Fixed Charges.
(13) 1994 Financial Review Section of the Annual Report to
Shareholders for the fiscal year ended September 30, 1994, which is
furnished to the Commission for information only, and not filed
except as expressly incorporated by reference in this Report.
(21) Subsidiaries of the registrant.
(24) Power of Attorney.
(27) Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for information only and not filed.
- - - - --------------
*Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference should be located in SEC File No. 1-4534.