-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GJA8yZyuC13zwN389rK51rp/ku4ur6fxdXPcnS89X33ZQtaJTogmK4WTdNsgnHNU Tn5+pTR50AjgPB5cOj58KA== 0000002969-99-000006.txt : 19990127 0000002969-99-000006.hdr.sgml : 19990127 ACCESSION NUMBER: 0000002969-99-000006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 ITEM INFORMATION: FILED AS OF DATE: 19990126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIR PRODUCTS & CHEMICALS INC /DE/ CENTRAL INDEX KEY: 0000002969 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 231274455 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-04534 FILM NUMBER: 99512888 BUSINESS ADDRESS: STREET 1: 7201 HAMILTON BLVD CITY: ALLENTOWN STATE: PA ZIP: 18195-1501 BUSINESS PHONE: 6104814911 MAIL ADDRESS: STREET 1: 7201 HAMILTON BLVD CITY: ALLENTOWN STATE: PA ZIP: 18195-1501 8-K 1 CURRENT REPORT DATED 26 JANUARY 1999 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) 26 January 1999 ----------------
Air Products and Chemicals, Inc. -------------------------------------------------- (Exact name of registrant as specified in charter) Delaware 1-4534 23-1274455 ---------------------------------------------- ------------------------ --------------------------- (State of other jurisdiction of incorporation) (Commission file number) (IRS Identification number) 7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501 ------------------------------------------------ ---------- (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 481-4911 --------------- Item 5. Other Events. - ------- ------------- Additional financial information for the quarter ended 31 December 1998 and the affect of reclassification of certain expense items for prior periods follow: 2 AIR PRODUCTS AND CHEMICALS, INC. SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION (Unaudited)
(Millions of dollars, except per share) - ------------------------------------------------------------------------------- Three Months Ended 31 December 1998 1997 - ------------------------------------------------------------------------------- Sales $1,274.6 $1,234.8 Net Income $ 126.4(a) $ 160.5(b) Basic Earnings Per Share $ .60(a) $ .74(b)(c) Diluted Earnings Per Share $ .59(a) $ .72(b)(c) - ------------------------------------------------------------------------------- Operating Return on Net Assets(d) 12.0% 11.5% Capital Expenditures(e) $ 245.4(f) $ 186.9 Depreciation $ 127.8 $ 117.6 - -------------------------------------------------------------------------------
(a) Includes an after-tax gain of $21.4 million, or $.10 per share related to the formation of Air Products Polymers and an after-tax charge of $12.9 million or $.06 per share related to a global cost reduction plan. Excluding the impact of these special items, net income was $117.9 million, basic earnings per share was $.56 and diluted earnings per share was $.55. (b) Includes an after-tax gain of $35.1 million, or $.16 per share from the sale of the Company's 50% interest in American Ref-Fuel Company and a gain of $7.6 million, or $.03 per share from a cogeneration project contract settlement. Excluding the impact of these special items, net income was $118.0 million, basic earnings per share was $.54 and diluted earnings per share was $.53. (c) The earnings per share amounts for the prior year have been restated to reflect a two-for-one stock split during the third quarter of fiscal 1998. (d) Operating return on net assets (ORONA) is calculated as the rolling four quarter sum of operating income divided by the rolling five quarter average of total assets less investments in equity affiliates. The ORONA calculation for the three months ended 31 December 1998 excludes $20.3 million in charges related to a global cost reduction plan. (e) Capital expenditures include additions to plant and equipment, investments in and advances to unconsolidated affiliates, acquisitions, and capital lease additions. (f) Excludes the Company's contribution of $121.4 million of assets to the Air Products Polymers venture. 3 AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES CONSOLIDATED INCOME (Unaudited)
(Millions of dollars, except per share) - -------------------------------------------------------------------------------- Three Months Ended 31 December 1998 1997 - -------------------------------------------------------------------------------- SALES AND OTHER INCOME Sales $1,274.6 $1,234.8 Other income(expense),net 4.9 (4.9)(a) - -------------------------------------------------------------------------------- 1,279.5 1,229.9 - -------------------------------------------------------------------------------- COSTS AND EXPENSES Cost of sales 875.6 831.0(b) Selling and administrative 183.2 159.6(b) Research and development 31.7 26.3 - -------------------------------------------------------------------------------- OPERATING INCOME 189.0 213.0 Income from equity affiliates, net of related expenses 9.8 5.7 Gain on American Ref-Fuel Sale and contract settlements -- 75.2 Net gain on formation of polymer venture 31.2 -- Interest expense 40.4 40.2 - -------------------------------------------------------------------------------- INCOME BEFORE TAXES AND MINORITY INTEREST 189.6 253.7 Income taxes 59.9 92.8 Minority interest 3.3 .4 (a) - -------------------------------------------------------------------------------- NET INCOME $ 126.4 $ 160.5 ================================================================================ BASIC EARNINGS PER COMMON SHARE $.60 $.74 - -------------------------------------------------------------------------------- DILUTED EARNINGS PER COMMON SHARE $.59 $.72 - -------------------------------------------------------------------------------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES (in millions) 211.4 218.1 - -------------------------------------------------------------------------------- WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES (in millions)(c) 215.4 222.6 - -------------------------------------------------------------------------------- DIVIDENDS DECLARED PER COMMON SHARE - Cash $.17 $.15 - --------------------------------------------------------------------------------
(a) The results for the three months ended 31 December 1997 have been restated to reflect the current year presentation of minority interest in a separate line item between income taxes and net income. (b) The results for the three months ended 31 December 1997 have been restated to reflect the current year presentation of distribution expense in cost of sales. (c) The dilution of earnings per common share is due mainly to the impact of unexercised stock options. 4 AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
(Millions of dollars) - -------------------------------------------------------------------------------- 31 December 31 December ASSETS 1998 1997 - -------------------------------------------------------------------------------- CURRENT ASSETS Cash and cash items $ 57.8 $ 85.9 Trade receivables, less allowances for doubtful accounts 886.1 860.8 Inventories 452.1 406.0 Contracts in progress, less progress billings 136.6 93.9 Other current assets 129.2 229.1 - -------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 1,661.8 1,675.7 - -------------------------------------------------------------------------------- INVESTMENTS IN NET ASSETS OF AND ADVANCES TO EQUITY AFFILIATES 440.8 311.3 OTHER INVESTMENTS AND ADVANCES 24.5 17.3 PLANT AND EQUIPMENT, at cost 9,687.2 8,847.7 Less - Accumulated depreciation 4,793.5 4,372.5 - -------------------------------------------------------------------------------- PLANT AND EQUIPMENT, net 4,893.7 4,475.2 - -------------------------------------------------------------------------------- GOODWILL 346.4 258.7 OTHER NONCURRENT ASSETS 351.7 336.3 - -------------------------------------------------------------------------------- TOTAL ASSETS $7,718.9 $7,074.5 ================================================================================ LIABILITIES AND SHAREHOLDERS' EQUITY - -------------------------------------------------------------------------------- CURRENT LIABILITIES Payables, trade and other $ 480.4 $ 612.9 Accrued liabilities 269.6 239.4 Accrued income taxes 54.3 195.4 Short-term borrowings 252.7 64.8 Current portion of long-term debt 310.1 47.8 - -------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 1,367.1 1,160.3 - -------------------------------------------------------------------------------- LONG-TERM DEBT 2,123.2 2,234.7 DEFERRED INCOME & OTHER NONCURRENT LIABILITIES 605.2 450.5 DEFERRED INCOME TAXES 733.9 616.3 - -------------------------------------------------------------------------------- TOTAL LIABILITIES 4,829.4 4,461.8 - -------------------------------------------------------------------------------- MINORITY INTERESTS IN SUBSIDIARY COMPANIES 117.0 17.3 - -------------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Common stock, par value $1 per share 249.5 124.7 Capital in excess of par value 331.1 452.1 Retained earnings 3,490.5 3,118.3 Accumulated other comprehensive income (203.3) (214.4) Treasury Stock, at cost (681.7) (442.0) Shares in trust (413.6) (443.3) - -------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 2,772.5 2,595.4 - -------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,718.9 $7,074.5 ================================================================================
5 AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
(Millions of dollars) - -------------------------------------------------------------------------------- Three Months Ended 31 December 1998 1997 - -------------------------------------------------------------------------------- NET INCOME $ 126.4 $ 160.5 - -------------------------------------------------------------------------------- OTHER COMPREHENSIVE INCOME, net of tax Foreign currency translation adjustments 24.3 (32.8) Unrealized gains on investments: Unrealized holding gains arising during the period 3.9 (2.4) Less: reclassification adjustment for gains included in net income -- -- - -------------------------------------------------------------------------------- Net unrealized gains on investments 3.9 (2.4) - -------------------------------------------------------------------------------- TOTAL OTHER COMPREHENSIVE INCOME 28.2 (35.2) - -------------------------------------------------------------------------------- COMPREHENSIVE INCOME $ 154.6 $ 125.3 ================================================================================
6 AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES CONSOLIDATED CASH FLOWS (Unaudited)
(Millions of dollars) ---------------------------------------------------------------------------------------------------------------------- Three Months Ended 31 December 1998 1997 ---------------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net Income $126.4 $160.5 Adjustments to reconcile income to cash provided by operating activities: Depreciation 127.8 117.6 Deferred income taxes 21.4 17.5 Ref-Fuel divestiture deferred income taxes -- (80.3) Gain on formation of polymer venture (31.2) -- Undistributed (earnings) of unconsolidated affiliates 6.7 34.0 (Gain) loss on sale of assets and investments .5 (82.9) Other 58.5 30.2 Working capital changes that provided (used) cash, net of effects of acquisitions: Trade receivables 6.7 53.6 Other receivables 45.5 (17.4) Inventories and contracts in progress (47.5) 6.0 Payables, trade and other 2.1 (4.4) Accrued liabilities (73.5) (86.2) Accrued income taxes 23.7 151.8 Other 6.0 (20.6) Cash provided by (used for) discontinued operations -- (3.2) ------------------------------------------------------------------------------ ----------------- ------------------ CASH PROVIDED BY OPERATING ACTIVITIES 273.1 276.2 ------------------------------------------------------------------------------ ----------------- ------------------ INVESTING ACTIVITIES Additions to plant and equipment (189.5) (154.9) Acquisitions, less cash acquired (4.6) (16.6) Investment in and advances to unconsolidated affiliates (50.4) (4.5) Proceeds from sale of assets and investments 17.3 248.3 Other 14.7 (.9) ------------------------------------------------------------------------------ ----------------- ------------------ CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES (212.5) 71.4 ------------------------------------------------------------------------------ ----------------- ------------------ FINANCING ACTIVITIES Long-term debt proceeds .8 2.0 Payments on long-term debt 4.2 (43.5) Net increase (decrease) in commercial paper (16.1) (65.5) Net increase (decrease) in other short-term borrowings (1.2) (24.6) Dividends paid to shareholders (36.0) (33.0) Purchase of Treasury Stock (24.6) (150.0) Other 7.6 1.4 ------------------------------------------------------------------------------ ----------------- ------------------ CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (65.3) (313.2) ------------------------------------------------------------------------------ ----------------- ------------------ Effect of Exchange Rate Changes on Cash 1.0 (1.0) Increase in Cash and Cash Items (3.7) 33.4 Cash and Cash Items - Beginning of Year 61.5 52.5 ============================================================================== ================= ================== Cash and Cash Items - End of Period $57.8 $ 85.9 ============================================================================== ================= ==================
7 AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The results for the three months ended 31 December 1998 include a net gain of $31.2 million ($21.4 million after-tax or $.10 per share) related to the formation of Air Products Polymers (a 65% majority owned venture with Wacker Chemicals). The gain is a result of using fair value to value the assets acquired to form the venture. The gain was partially offset by costs related to an emulsions facility shutdown not included in the joint venture and for costs related to indemnities provided by Air Products to the venture. On 21 December 1998, the Company committed to a global cost reduction plan. The plan results in a staffing reduction of approximately 200 employees in the areas of manufacturing, distribution, and overhead. The plan will be completed by 31 December 1999. $20.3 million ($12.9 million after-tax or $.06 per share) related to employee termination benefits was charged to expense in the fiscal quarter of which $4.8 has been incurred and the balance is included in accrued liabilities. The charges to cost of sales, selling and administrative and research and development were $9.9 million, $9.3 million and $1.1 million respectively. In December 1997, the Company sold its 50% interest in American Ref-Fuel Company, its former waste-to-energy joint venture with Browning-Ferris Industries, Inc.(BFI), to Duke Energy Power Services and United American Energy Corporation. This transaction provided for the sale of Air Products' interest in American Ref-Fuel's five waste-to-energy facilities for $237 million, and the assumption of various parental support agreements by Duke Energy Capital Corporation, the parent company of Duke Energy Power Services. The income statement for the three months ended 31 December 1997 includes a gain of $62.6 million from this sale, ($35.1 million after-tax or $.16 per share). The results for the three months ended 31 December 1997 also include a gain of $12.6 million from a cogeneration project contract settlement($7.6 million after-tax or $.03 per share). 8 AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES SUMMARY BY BUSINESS SEGMENTS (Unaudited)
(Millions of dollars) - -------------------------------------------------------------------------------- Three Months Ended 31 December 1998 1997 - -------------------------------------------------------------------------------- Sales: Industrial Gases $ 740.8 $ 727.0 Chemicals 401.8 380.9 Equipment/Services 132.0 126.9 Corporate/Other -- -- - -------------------------------------------------------------------------------- CONSOLIDATED $1,274.6 $1,234.8 - -------------------------------------------------------------------------------- Operating Income: Industrial Gases $ 122.2 (a) $ 147.2 Chemicals 52.6 (a) 68.4 Equipment/Services 28.8 (a) 12.6 Corporate/Other (14.6)(a) (15.2)(b) - -------------------------------------------------------------------------------- CONSOLIDATED $ 189.0 $ 213.0 - -------------------------------------------------------------------------------- Equity Affiliates' Income: Industrial Gases $ 6.1 $ .4 Chemicals 2.1 -- Equipment/Services 1.1 4.4 Corporate/Other .5 .9 - -------------------------------------------------------------------------------- CONSOLIDATED $ 9.8 $ 5.7 - -------------------------------------------------------------------------------- Operating Return on Net Assets: Industrial Gases 11.3% 11.4% Chemicals 16.2 18.1 Equipment/Services 32.7 11.3 Corporate/Other N/A N/A - -------------------------------------------------------------------------------- CONSOLIDATED 12.0% 11.5% - --------------------------------------------------------------------------------
(a) The results for the three months ended 31 December 1998 include the cost reduction charge in Industrial Gases ($16.3 million), Chemicals ($1.6 million), Equipment/Services ($1.9 million), and Corporate/Other ($.5 million). (b) The results for the three months ended 31 December 1997 have been restated to reflect the current year presentation of minority interest in a separate line item between income taxes and net income. 9 AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES SUMMARY BY GEOGRAPHIC REGIONS (Unaudited)
(Millions of dollars) - -------------------------------------------------------------------------------- Three Months Ended 31 December 1998 1997 - -------------------------------------------------------------------------------- Sales: United States $ 807.9 $ 876.0 Europe 399.3 299.4 Canada/Latin America 58.0 51.3 Other 9.4 8.1 - -------------------------------------------------------------------------------- CONSOLIDATED $1,274.6 $1,234.8 - -------------------------------------------------------------------------------- Operating Income: United States $ 143.3(a) $ 169.2 (b) Europe 41.0(a) 41.2 (b) Canada/Latin America 5.4 3.5 Other (.7) (.9)(b) - -------------------------------------------------------------------------------- CONSOLIDATED $ 189.0 $ 213.0 - -------------------------------------------------------------------------------- Equity Affiliates' Income: United States $ 1.9 $ 5.5 Europe 2.9 2.7 Canada/Latin America 4.5 2.9 Other .5 (5.4) - -------------------------------------------------------------------------------- CONSOLIDATED $ 9.8 $ 5.7 - --------------------------------------------------------------------------------
(a) The results for the three months ended 31 December 1998 include the cost reduction charge in the United States ($10.5 million) and Europe ($9.8 million). (b) The results for the three months ended 31 December 1997 have been restated to reflect the current year presentation of minority interest in a separate line item between income taxes and net income. 10 AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES Restatement of Cost of Sales and Selling Administration Beginning with the fiscal quarter ending 31 December 1998, the Company is reporting distribution expense as part of "Cost of sales." Distribution expense was previously reported as part of "Selling, distribution, and administrative." The following table discloses the impact of this change for the fiscal quarters of 1998 and 1997 and fiscal years 1996 through 1988. Fiscal Years 1998 and 1997 by Quarter
(In millions) Fiscal Year 1998 Fiscal Year 1997 Reported Restated Reported Restated - -------------------------------------------------------------------------------- Cost of sales: Quarter 1 $ 720.7 $ 831.0 $ 692.7 $ 791.4 Quarter 2 701.9 816.1 686.3 793.8 Quarter 3 708.7 824.1 663.4 771.1 Quarter 4 725.2 845.6 729.2 839.1 - -------------------------------------------------------------------------------- Total $2,856.5 $3,316.8 $2,771.6 $3,195.4 - -------------------------------------------------------------------------------- Selling and administrative: Quarter 1 $ 269.9 $ 159.6 $ 241.5 $ 142.8 Quarter 2 277.3 163.1 264.7 157.2 Quarter 3 287.4 172.0 266.8 159.1 Quarter 4 285.7 165.3 278.3 168.4 - -------------------------------------------------------------------------------- Total $1,120.3 $ 660.0 $1,051.3 627.5 - --------------------------------------------------------------------------------
Fiscal Years 1996 through 1988
Selling and Cost of sales administrative Reported Restated Reported Restated - -------------------------------------------------------------------------------- Fiscal Year 1996 $ 2,408 $ 2,780 $ 920 $ 548 Fiscal Year 1995 $ 2,317 $ 2,678 $ 869 $ 508 Fiscal Year 1994 $ 2,112 $ 2,455 $ 789 $ 446 Fiscal Year 1993 $ 2,030 $ 2,340 $ 744 $ 434 Fiscal Year 1992 $ 1,937 $ 2,233 $ 724 $ 428 Fiscal Year 1991 $ 1,755 $ 2,030 $ 686 $ 411 Fiscal Year 1990 $ 1,775 $ 2,042 $ 659 $ 392 Fiscal Year 1989 $ 1,601 $ 1,843 $ 610 $ 368 Fiscal Year 1988 $ 1,452 $ 1,666 $ 545 $ 331
11 SIGNATURES Pursuant to the requirements 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. Air Products and Chemicals, Inc. -------------------------------- (Registrant) Dated: 26 January 1999 By: /s/ Leo J. Daley ---------------------------------------- Leo J. Daley Vice President - Finance (Chief Financial Officer) -----END PRIVACY-ENHANCED MESSAGE-----