LEHIGH VALLEY, Pa.,
April 22 /PRNewswire-FirstCall/
--
Access the Q2 earnings teleconference scheduled for
10:00 a.m. Eastern Time on
April 22 by calling 719-325-4848
and entering passcode 5946463, or listen on the Web at:
www.airproducts.com/Invest/financialnews/Earnings_Releases/Teleconference.htm.
Highlights
- Sales increased 15% versus prior year, up 3% sequentially
- Operating margin improved to 16.2%*
- Earnings per share of $1.23, up
38%*
- Raising full-year guidance to $4.90 to
$5.00, representing 21% to 23% EPS growth*
Air Products (NYSE: APD) today reported net income of
$267 million, or diluted earnings per
share (EPS) of $1.23, for its fiscal
second quarter ended March 31, 2010.
This result excludes an after-tax charge of $15 million, or $0.07 per share, for costs associated with the
tender offer for the outstanding shares of Airgas, Inc.
The discussion of second quarter results and guidance in this
release is based on non-GAAP comparisons excluding costs associated
with the Airgas offer. A reconciliation can be found at the end of
this release.*
Second quarter revenues of $2,249
million grew 15 percent primarily on improved volumes in
Tonnage Gases, and Electronics and Performance Materials. Energy
and raw material cost pass-through and favorable currency also
contributed to the increase in sales. Underlying sales grew nine
percent. Operating income of $364
million rose 40 percent from the prior year due to higher
volumes and lower costs.
John McGlade, chairman, president
and chief executive officer, said, "We are seeing improvement
across our businesses. Our second quarter had strong underlying
revenue growth, continued margin improvement and significant
earnings growth. We are delivering on our commitments."
Second Quarter Segment Performance
- Merchant Gases sales of $922
million increased six percent versus the prior year on
favorable currency. Operating income of $178
million rose 14 percent from the prior year on higher
volumes and lower costs.
- Tonnage Gases sales of $757
million increased 21 percent on improved volumes from new
plant onstreams and existing steel and chemical customers,
favorable currency and higher raw material cost pass-through.
Operating income of $107 million rose
nine percent from the prior year on higher volumes and new plant
onstreams.
- Electronics and Performance Materials sales of $451 million increased 36 percent driven by
improved volumes. Operating income of $57
million was up significantly on higher volumes and lower
costs.
- Equipment and Energy sales of $119
million were down seven percent on declining ASU orders.
Operating income of $18 million
increased 12 percent from the prior year on higher LNG
activity.
Outlook
McGlade said, "I'm particularly pleased with the performance of
the Air Products team over the past year. Looking to the second
half of our fiscal year, we are forecasting earnings growth in
excess of 20 percent for 2010. The gradual economic recovery,
combined with the leverage from our existing capacity, new project
onstreams and improving productivity should position us well to
meet our margin target of 17 percent in fiscal 2011. I want to
assure our shareholders we will stay focused on our goals as we
pursue the strategic opportunities in front of us."
Air Products now expects third quarter EPS from continuing
operations to be between $1.25 and
$1.29 per share and full-year EPS from continuing operations
of $4.90 to $5.00 per share.
Air Products (NYSE: APD) serves customers in industrial, energy,
technology and healthcare markets worldwide with a unique portfolio
of atmospheric gases, process and specialty gases, performance
materials, and equipment and services. Founded in 1940,
Air Products has built leading positions in key growth markets
such as semiconductor materials, refinery hydrogen, home healthcare
services, natural gas liquefaction, and advanced coatings and
adhesives. The company is recognized for its innovative culture,
operational excellence and commitment to safety and the
environment. In fiscal 2009, Air Products had revenues of
$8.3 billion, operations in over 40
countries, and 18,900 employees around the globe. For more
information, visit www.airproducts.com.
ADDITIONAL INFORMATION
On February 11, 2010, Air Products
Distribution, Inc., a wholly owned subsidiary of Air Products and
Chemicals, Inc. ("Air Products"), commenced a cash tender offer for
all the outstanding shares of common stock of Airgas, Inc.
("Airgas") not already owned by Air Products, subject to the terms
and conditions set forth in the Offer to Purchase dated as of
February 11, 2010 (the "Offer to
Purchase"). The purchase price to be paid upon the successful
closing of the cash tender offer is $60.00 per share in cash, without interest and
less any required withholding tax, subject to the terms and
conditions set forth in the Offer to Purchase, as amended. The
offer is scheduled to expire at midnight, New York City time, on Friday, June 4, 2010, unless further extended in
the manner set forth in the Offer to Purchase.
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities. The tender offer
is being made pursuant to a tender offer statement on Schedule TO
(including the Offer to Purchase, a related letter of transmittal
and other offer materials) filed by Air Products with the U.S.
Securities and Exchange Commission ("SEC") on February 11, 2010. INVESTORS AND SECURITY
HOLDERS OF AIRGAS ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED
WITH THE SEC CAREFULLY IN THEIR ENTIRETY BECAUSE THEY CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors
and security holders can obtain free copies of these documents and
other documents filed with the SEC by Air Products through the web
site maintained by the SEC at http://www.sec.gov. The Offer to
Purchase and related materials may also be obtained for free by
contacting the Information Agent for the tender offer, MacKenzie
Partners, Inc., at 212-929-5500 or toll-free at 800-322-2885.
In connection with the proposed transaction, Air Products may
file a proxy statement with the SEC. Any definitive proxy statement
will be mailed to stockholders of Airgas. INVESTORS AND SECURITY
HOLDERS OF AIRGAS ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED
WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Investors and security holders will be able to
obtain free copies of these documents (if and when available) and
other documents filed with the SEC by Air Products through the web
site maintained by the SEC at http://www.sec.gov.
CERTAIN INFORMATION REGARDING PARTICIPANTS
Air Products and certain of its respective directors and
executive officers may be deemed to be participants in the proposed
transaction under the rules of the SEC. Security holders may obtain
information regarding the names, affiliations and interests of Air
Products' directors and executive officers in Air Products' Annual
Report on Form 10-K for the year ended September 30, 2009, which was filed with the SEC
on November 25, 2009, and its proxy
statement for the 2010 Annual Meeting, which was filed with the SEC
on December 10, 2009. These documents
can be obtained free of charge from the sources indicated above.
Additional information regarding the interests of these
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will also be included in any proxy statement and other relevant
materials to be filed with the SEC when they become available.
NOTE: This release contains "forward-looking statements"
within the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, including earnings guidance. These
forward-looking statements are based on management's reasonable
expectations and assumptions as of the date this presentation is
made regarding important risk factors. Actual performance and
financial results may differ materially from projections and
estimates expressed in the forward-looking statements because of
many factors not anticipated by management, including, without
limitation, a slowdown in the global economic recovery; renewed
deterioration in economic and business conditions; poor demand for
the Company's products; future financial and operating performance
of major customers and industries served by the Company; inability
to collect receivables from or recovery of payments made by
customers in bankruptcy proceedings; unanticipated contract
terminations or customer cancellations or postponement of projects
and sales; asset impairments due to economic conditions or specific
product or customer events; unexpected costs associated with the
Company's cash tender offer for Airgas, Inc.; costs of future
restructuring actions which are not currently planned or
anticipated; the impact of competitive products and pricing;
interruption in ordinary sources of supply of raw materials; the
ability to recover unanticipated increased energy and raw material
costs from customers; costs and outcomes of litigation or
regulatory activities; charges related to current portfolio
management and cost reduction actions; the success of implementing
cost reduction programs; inability to achieve anticipated
acquisition synergies; the timing, impact, and other uncertainties
of future acquisitions or divestitures; significant fluctuations in
interest rates and foreign currencies from that currently
anticipated; the continued availability of capital funding sources
in all of the Company's foreign operations; the impact of new or
changed environmental, healthcare, tax or other legislation and
regulations in jurisdictions in which the Company and its
affiliates operate; the impact of new or changed financial
accounting guidance; the timing and rate at which tax credits can
be utilized and other risk factors described in the Company's Form
10K for its fiscal year ended September 30,
2009. The Company disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking
statements contained in this document to reflect any change in the
Company's assumptions, beliefs or expectations or any change in
events, conditions, or circumstances upon which any such
forward-looking statements are based.
*The presentation of non-GAAP measures is intended to enhance
the usefulness of financial information by providing measures which
the Company's management uses internally to evaluate the Company's
baseline performance. Presented below are reconciliations of
reported GAAP results to non-GAAP measures.
CONSOLIDATED RESULTS
|
|
|
|
Continuing
Operations
|
|
|
Q2
|
Q2
|
Q2
|
Q3
|
YTD
|
|
Millions of Dollars
|
Operating
Income
|
Net
Income
|
Diluted
EPS
|
Diluted
EPS
|
Diluted
EPS
|
|
2010 GAAP
|
$340.6
|
|
$1.16
|
|
|
|
2009 GAAP
|
260.4
|
|
.89
|
|
|
|
% Change GAAP
|
31%
|
|
30%
|
|
|
|
|
|
|
|
|
|
|
2010 GAAP
|
$340.6
|
$252.0
|
$1.16
|
|
|
|
Acquisition-related costs (tax impact
$8.8) (a)
|
23.4
|
14.6
|
.07
|
|
|
|
2010 Non-GAAP Measure
|
$364.0
|
$266.6
|
$1.23
|
|
|
|
|
|
|
|
|
|
|
% Change Non-GAAP Measure
|
40%
|
|
38%
|
|
|
|
|
|
|
|
|
|
|
2010 Guidance (b)
|
|
|
|
$1.25-$1.29
|
$4.90-$5.00
|
|
2009 GAAP
|
|
|
|
|
$3.00
|
|
% Change
|
|
|
|
|
63%-67%
|
|
|
|
|
|
|
|
|
2009 GAAP
|
|
|
|
|
$3.00
|
|
Global
cost reduction plan
|
|
|
|
|
.94
|
|
Customer bankruptcy and asset
actions
|
|
|
|
|
.10
|
|
Pension settlement
|
|
|
|
|
.02
|
|
2009 Non-GAAP Measure
|
|
|
|
|
$4.06
|
|
|
|
|
|
|
|
|
% Change Non-GAAP Measure
|
|
|
|
|
21%-23%
|
|
|
|
|
|
|
|
|
|
|
|
Q2
Sales
|
Q2
Operating
Income
|
Margin
|
|
2010 GAAP
|
|
|
$2,249.0
|
$340.6
|
15.1%
|
|
2010 Non-GAAP Measure
|
|
|
2,249.0
|
364.0
|
16.2%
|
|
(a) Based on statutory tax rate of
37.4%
(b) Guidance
excludes the impact of
acquisition-related costs
|
|
|
|
|
|
|
|
|
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and
Subsidiaries
CONSOLIDATED
INCOME STATEMENTS
(Unaudited)
|
|
|
|
|
Three Months
Ended
31
March
|
Six Months
Ended
31
March
|
|
(Millions of dollars, except for share
data)
|
2010
|
2009
|
2010
|
2009
|
|
Sales
|
$2,249.0
|
$
1,955.4
|
$4,422.5
|
$
4,150.7
|
|
Cost of sales
|
1,628.7
|
1,439.9
|
3,197.3
|
3,069.6
|
|
Selling and administrative
|
240.4
|
230.6
|
484.5
|
477.6
|
|
Research and development
|
26.3
|
29.6
|
53.5
|
62.8
|
|
Global cost reduction plan
|
—
|
—
|
—
|
174.2
|
|
Acquisition-related costs
|
23.4
|
—
|
23.4
|
—
|
|
Other income, net
|
10.4
|
5.1
|
21.8
|
8.0
|
|
Operating Income
|
340.6
|
260.4
|
685.6
|
374.5
|
|
Equity affiliates' income
|
32.2
|
27.0
|
59.1
|
51.5
|
|
Interest expense
|
29.5
|
30.0
|
61.1
|
66.5
|
|
Income from Continuing Operations
before Taxes
|
343.3
|
257.4
|
683.6
|
359.5
|
|
Income tax provision
|
84.9
|
66.5
|
168.4
|
73.6
|
|
Income from Continuing
Operations
|
258.4
|
190.9
|
515.2
|
285.9
|
|
Income (Loss) from Discontinued
Operations, net of tax
|
—
|
16.3
|
—
|
(5.1)
|
|
Net Income
|
258.4
|
207.2
|
515.2
|
280.8
|
|
Less: Net Income Attributable to
Noncontrolling Interests
|
6.4
|
1.6
|
11.4
|
6.6
|
|
Net Income Attributable to Air
Products
|
$252.0
|
$205.6
|
$503.8
|
$274.2
|
|
|
|
|
|
|
|
Net Income Attributable to Air
Products
|
|
|
|
|
|
Income from
continuing operations
|
$252.0
|
$189.3
|
$503.8
|
$279.3
|
|
Income (loss) from
discontinued operations
|
—
|
16.3
|
—
|
(5.1)
|
|
Net Income
Attributable to Air Products
|
$252.0
|
$205.6
|
$503.8
|
$274.2
|
|
|
|
|
|
|
|
Basic Earnings per
Common Share Attributable to Air Products
|
|
|
|
|
|
Income from
continuing operations
|
$1.19
|
$.90
|
$2.38
|
$1.33
|
|
Income (loss) from
discontinued operations
|
—
|
.08
|
—
|
(.02)
|
|
Net Income
Attributable to Air Products
|
$1.19
|
$.98
|
$2.38
|
$1.31
|
|
Diluted Earnings
per Common Share Attributable to Air Products
|
|
|
|
|
|
Income from
continuing operations
|
$1.16
|
$.89
|
$2.32
|
$1.32
|
|
Income (loss) from
discontinued operations
|
—
|
.08
|
—
|
(.03)
|
|
Net Income
Attributable to Air Products
|
$1.16
|
$.97
|
$2.32
|
$1.29
|
|
Weighted Average
of Common Shares Outstanding (in millions)
|
212.1
|
209.6
|
211.9
|
209.5
|
|
Weighted Average
of Common Shares Outstanding Assuming Dilution
(in
millions)
|
216.9
|
212.3
|
217.0
|
212.2
|
|
Dividends Declared
per Common Share – Cash
|
$.49
|
$.45
|
$.94
|
$.89
|
|
Other Data from Continuing
Operations:
|
|
|
|
|
|
Depreciation and
amortization
|
$217.3
|
$197.1
|
$434.4
|
$397.7
|
|
Capital
expenditures on a non-GAAP Basis (see reconciliation at end
of announcement)
|
354.0
|
352.8
|
699.2
|
685.7
|
|
|
|
|
|
|
|
|
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
|
(Millions of dollars)
|
31
March
2010
|
30
September
2009
|
|
Assets
|
|
|
|
Current Assets
|
|
|
|
Cash and cash items
|
$230.9
|
$488.2
|
|
Trade receivables, less allowances for
doubtful accounts
|
1,458.8
|
1,363.2
|
|
Inventories
|
504.7
|
509.6
|
|
Contracts in progress, less progress
billings
|
111.1
|
132.3
|
|
Prepaid expenses
|
109.8
|
99.7
|
|
Other receivables and current
assets
|
406.7
|
404.8
|
|
Total Current Assets
|
2,822.0
|
2,997.8
|
|
Investment in Net Assets of and
Advances to Equity Affiliates
|
893.6
|
868.1
|
|
Plant and Equipment,
at
cost
|
15,995.2
|
15,751.3
|
|
Less: Accumulated
depreciation
|
9,053.7
|
8,891.7
|
|
Plant and
Equipment, net
|
6,941.5
|
6,859.6
|
|
Goodwill
|
913.9
|
916.0
|
|
Intangible Assets,
net
|
293.7
|
262.6
|
|
Noncurrent Capital Lease
Receivables
|
747.5
|
687.0
|
|
Other Noncurrent Assets
|
540.4
|
438.0
|
|
Total Assets
|
$13,152.6
|
$13,029.1
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
Current Liabilities
|
|
|
|
Payables and accrued
liabilities
|
$1,426.9
|
$1,674.8
|
|
Accrued income taxes
|
43.9
|
42.9
|
|
Short-term borrowings
|
344.9
|
333.8
|
|
Current portion of long-term
debt
|
530.0
|
452.1
|
|
Total Current
Liabilities
|
2,345.7
|
2,503.6
|
|
Long-Term
Debt
|
3,468.5
|
3,715.6
|
|
Deferred Income
and Other Noncurrent Liabilities
|
1,480.0
|
1,522.0
|
|
Deferred Income
Taxes
|
440.1
|
357.9
|
|
Total
Liabilities
|
7,734.3
|
8,099.1
|
|
Total Air Products
Shareholders' Equity
|
5,265.6
|
4,791.9
|
|
Noncontrolling
Interests
|
152.7
|
138.1
|
|
Total
Equity
|
5,418.3
|
4,930.0
|
|
Total Liabilities
and Equity
|
$13,152.6
|
$
13,029.1
|
|
|
|
|
|
|
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and
Subsidiaries
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
Six Months
Ended
|
|
|
31
March
|
|
(Millions of dollars)
|
2010
|
2009
|
|
Operating Activities
|
|
|
|
Net
Income
|
$515.2
|
$280.8
|
|
Less: Net income
attributable to noncontrolling interests
|
11.4
|
6.6
|
|
Net income
attributable to Air Products
|
$503.8
|
$274.2
|
|
Adjustments to
reconcile income to cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
434.4
|
397.7
|
|
Impairment of
assets of continuing operations
|
.6
|
32.1
|
|
Impairment of
assets of discontinued operations
|
—
|
48.7
|
|
Deferred income
taxes
|
133.2
|
41.8
|
|
Undistributed
earnings of unconsolidated affiliates
|
(29.6)
|
(35.0)
|
|
(Gain) loss on
sale of assets and investments
|
(1.4)
|
6.6
|
|
Share-based
compensation
|
22.7
|
30.1
|
|
Noncurrent capital lease
receivables
|
(71.0)
|
(52.9)
|
|
Acquisition-related costs
|
21.0
|
—
|
|
Other
adjustments
|
38.4
|
(27.5)
|
|
Working capital
changes that provided (used) cash, excluding effects of
acquisitions and divestitures:
|
|
|
|
Trade
receivables
|
(129.9)
|
166.3
|
|
Inventories
|
(3.9)
|
(41.7)
|
|
Contracts in
progress
|
17.3
|
11.0
|
|
Payables and
accrued liabilities
|
(332.4)
|
(257.6)
|
|
Other working
capital
|
(60.5)
|
(134.5)
|
|
Cash Provided by Operating
Activities
|
542.7
|
459.3
|
|
Investing Activities
|
|
|
|
Additions to plant
and equipment
|
(516.9)
|
(615.8)
|
|
Acquisitions, less
cash acquired
|
(34.9)
|
(1.6)
|
|
Investment in and
advances to unconsolidated affiliates
|
(4.5)
|
(.1)
|
|
Investment in
Airgas stock
|
(69.6)
|
—
|
|
Proceeds from sale
of assets and investments
|
22.0
|
25.0
|
|
Proceeds from sale
of discontinued operations
|
—
|
.9
|
|
Change in
restricted cash
|
25.2
|
40.7
|
|
Cash Used for
Investing Activities
|
(578.7)
|
(550.9)
|
|
Financing
Activities
|
|
|
|
Long-term debt
proceeds
|
67.4
|
114.3
|
|
Payments on
long-term debt
|
(83.0)
|
(44.2)
|
|
Net (decrease)
increase in commercial paper and short-term borrowings
|
(55.6)
|
183.2
|
|
Dividends paid to
shareholders
|
(190.5)
|
(184.3)
|
|
Proceeds from
stock option exercises
|
35.4
|
6.8
|
|
Excess tax benefit
from share-based compensation
|
9.7
|
2.2
|
|
Other financing
activities
|
(2.5)
|
(5.6)
|
|
Cash (Used for) Provided by Financing
Activities
|
(219.1)
|
72.4
|
|
|
|
|
|
|
|
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AIR
PRODUCTS AND CHEMICALS, INC. and
Subsidiaries
CONSOLIDATED
STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
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Six Months
Ended
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31
March
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(Millions of dollars)
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2010
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2009
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Effect of Exchange Rate Changes on
Cash
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(2.2)
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(4.6)
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Decrease in Cash and Cash
Items
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(257.3)
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(23.8)
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Cash and Cash Items – Beginning of
Year
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488.2
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103.5
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Cash and Cash Items – End of
Period
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$230.9
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$79.7
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Supplemental Cash Flow
Information
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Pension plan
contributions
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$337.7
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$153.5
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Significant
noncash transaction:
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Short-term
borrowings associated with SAGA acquisition
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60.6
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—
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AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
SUMMARY
BY BUSINESS SEGMENTS
(Unaudited)
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Three Months
Ended
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Six Months
Ended
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|
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31
March
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31
March
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(Millions of dollars)
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2010
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2009
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2010
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2009
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Revenues from External
Customers
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Merchant
Gases
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$921.7
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$870.4
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$1,855.3
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$1,795.6
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Tonnage
Gases
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756.7
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624.6
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1,454.6
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1,368.6
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Electronics and
Performance Materials
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451.2
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332.2
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884.6
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738.8
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Equipment and
Energy
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119.4
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128.2
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228.0
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247.7
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Segment and Consolidated
Totals
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$2,249.0
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$1,955.4
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$4,422.5
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$4,150.7
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Operating Income
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Merchant
Gases
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$178.1
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$156.2
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$367.7
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$326.7
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Tonnage
Gases
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107.2
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98.0
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207.4
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206.8
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Electronics and
Performance Materials
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57.0
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(11.1)
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105.4
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13.5
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Equipment and
Energy
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18.2
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16.3
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26.0
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23.3
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Segment Totals
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$360.5
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$259.4
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$706.5
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$570.3
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Global cost
reduction plan
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—
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—
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—
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(174.2)
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Acquisition-related costs
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(23.4)
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—
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(23.4)
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—
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Other
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3.5
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1.0
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2.5
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(21.6)
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Consolidated Totals
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$340.6
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$260.4
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$685.6
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$374.5
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31
March
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30
September
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(Millions of dollars)
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2010
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2009
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Identifiable Assets (a)
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Merchant
Gases
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$4,970.0
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$4,917.0
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Tonnage
Gases
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3,837.8
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3,597.8
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Electronics and
Performance Materials
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2,237.4
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2,249.5
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Equipment and
Energy
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297.6
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303.3
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Segment Totals
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$11,342.8
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$11,067.6
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Other
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916.2
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1,093.4
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Consolidated Totals
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$12,259.0
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$12,161.0
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(a) Identifiable assets are
equal to total assets less investments in and advances to equity
affiliates.
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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of dollars, unless otherwise indicated)
1. AIRGAS TRANSACTION
In February 2010, the Company
commenced a tender offer to acquire all the outstanding common
stock of Airgas, Inc. (Airgas), including the associated preferred
stock purchase rights, for $60.00 per
share in cash. Airgas, a Delaware
company, is the largest U.S. distributor of industrial, medical,
specialty gases, and hardgoods. The total value of the transaction
would be approximately $7 billion,
including $5.1 billion of equity and
$1.9 billion of assumed debt. The
offer and withdrawal rights are scheduled to expire on 4 June
2010, unless further extended.
Prior to the tender offer, the Company purchased approximately
1.5 million shares of Airgas stock for $69.6. This amount was recorded as an
available-for-sale investment within other noncurrent assets on the
consolidated balance sheet. An after-tax unrealized holding gain of
$16.7 for the period was recorded in
other comprehensive income.
In connection with this tender offer, the Company has secured
committed financing in the form of a $6.7
billion term loan credit facility. Fees incurred to secure
this credit facility have been deferred and will be amortized over
the term of the arrangement.
For the second quarter 2010, $23.4
in expense was recognized related to this transaction and is
included within acquisition-related costs on the consolidated
income statement. This includes amortization of the fees related to
the term loan credit facility and other acquisition-related
costs.
2. BUSINESS COMBINATIONS
In the second quarter of 2010, the Company entered into
agreements that will enable it to acquire 100% of the outstanding
shares of the French SAGA group (SAGA) which consists of SAGA, SAGA
Medical, and SAGA Technologies. SAGA is an independent industrial
gas provider in France with
packaged gases, liquid bulk, and medical businesses. SAGA revenues
in calendar year 2009 were approximately euro 25 million, or $35.
Under the terms of these agreements, the Company purchased
51.47% of the shares of SAGA on 1 March 2010 for
euro 34.5 million, or $47.2 ($25.0 net of
cash acquired of $22.2). The
remaining shares are expected to be purchased in November 2010 for a fixed price of euro 44.8 million, or approximately $61, under a put and call option structure.
This structure has been accounted for as a financing of the
purchase of the remaining shares and reported within short-term
borrowings on the consolidated balance sheet.
RECONCILIATION
NON-GAAP MEASURE
The Company utilizes a non-GAAP measure in the computation of
capital expenditures and includes spending associated with
facilities accounted for as capital leases. Certain contracts
associated with facilities that are built to provide product to a
specific customer are required to be accounted for as leases, and
such spending is reflected as a use of cash within cash provided by
operating activities. The presentation of this non-GAAP measure is
intended to enhance the usefulness of information by providing a
measure which the Company's management uses internally to evaluate
and manage the Company's expenditures.
Below is a reconciliation of capital expenditures on a GAAP
basis to a non-GAAP measure.
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Three Months
Ended
31
March
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Six Months
Ended
31
March
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(Millions of dollars)
|
2010
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2009
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2010
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2009
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Capital expenditures – GAAP
basis
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$315.2
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$324.1
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$616.9
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$617.5
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Capital lease expenditures
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38.8
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28.7
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82.3
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68.2
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Capital expenditures – non-GAAP
basis
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$354.0
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$352.8
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$699.2
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$685.7
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SOURCE Air Products