-----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, F822PwRfvhXk2LqNdy7YsTkp8dW2d8IR+6IKUfGpwXn3mIJPRihlcmtCjqS6Qje+ weTE4b90/6g5nNzcvOQksw== 0000002969-99-000032.txt : 19991208 0000002969-99-000032.hdr.sgml : 19991208 ACCESSION NUMBER: 0000002969-99-000032 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991207 ITEM INFORMATION: FILED AS OF DATE: 19991207 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: 99769837 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 07 DECEMBER 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) 07 December 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. - --------------------- AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES RESTATED SEGMENT DISCLOSURE Effective for the fiscal year ended 30 September 1999, the Company adopted SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information." This standard redefines the disclosure requirements for operating segments. The disclosures for fiscal years 1999, 1998, and 1997 have been restated to conform to SFAS 131 requirements. Tables summarizing the restatement of each quarter for fiscal years 1999, 1998, and 1997 are provided. The segment disclosures reflect how the Company assesses operating performance and allocates resources. The gases segment now includes the Company's power generation and flue gas treatment business, aligning the internal management and reporting structure. These businesses were previously reported in the equipment and services segment. The other segment now only consists of the American Ref-Fuel business and the landfill gas recovery business, which were divested during fiscal year 1997. Unallocated corporate expenses previously reported in the corporate and other segment are now allocated to the operating business segments, reflecting internal operating income performance measurement. The corporate long range research activity, previously allocated to operating segments, is managed centrally and is now the primary reconciling item between total segment operating income and consolidated operating income. The resulting net lower unallocated corporate expenses causes a decrease in segment operating income. 2
Restatement of Fiscal Year 1999 Segment Disclosure by Quarter (millions of dollars) Gases Equipment Chemicals Other Total Unallocated Consolidated Segments Expenses (1) Totals Quarter 1 Revenue from external customers 753.3 119.5 401.8 0.0 1274.6 1274.6 Operating income 121.5 (A) 22.8 (A) 50.8 (A) 0.0 195.1 (6.1) (A) 189.0 Operating income (ex special 137.8 24.7 52.4 0.0 214.9 (5.6) 209.3 items) Equity Affiliates' income 6.7 0.5 2.1 0.5 9.8 9.8 (A) Includes a charge to operating income for the global cost reduction program of $16.3 million(gases), $1.9 million (equipment), $1.6 million(chemicals), and $.5 million(corporate). Quarter 2 Revenue from external customers 735.2 101.3 416.9 0.0 1253.4 1253.4 Operating income 137.2 6.9 43.4 (B) 0.2 187.7 (5.0) 182.7 Operating income (ex special 137.2 6.9 53.7 0.2 198.0 (5.0) 193.0 items) Equity Affiliates' income 10.5 0.2 3.4 0.0 14.1 14.1 (B) Includes a charge of $10.3 million for a chemicals facility closure . Quarter 3 Revenue from external customers 737.5 84.5 415.8 0.0 1237.8 1237.8 Operating income 127.4 (C) 0.4 (C) 47.4 (C) 0.0 175.2 (7.5) 167.7 Operating income (ex special 138.1 1.2 49.8 0.0 189.1 (7.5) 181.6 items) Equity Affiliates' income 11.3 0.4 3.4 0.1 15.2 15.2 (C) Includes a charge to operating income for the global cost reduction program of $10.7 million(gases), $.8 million(equipment), and $2.4 million (chemicals) Quarter 4 Revenue from external customers 770.4 61.0 422.9 0.0 1254.3 1254.3 Operating income 135.8 4.6 52.1 0.3 192.8 (7.5) 85.3 Equity Affiliates' income 18.3 0.5 3.5 0.1 22.4 22.4 TOTAL YEAR Revenue from external customers 2996.4 366.3 1657.4 0.0 5020.1 0.0 5020.1 Operating income 521.9 34.7 193.7 0.5 750.8 (26.1) 724.7 Operating income (ex special items) 548.9 37.4 208.0 0.5 794.8 (25.6) 769.2 Equity Affiliates' income 46.8 1.6 12.4 0.7 61.5 0.0 61.5
(1) Unallocated expenses are primarily corporate research and development. 3
Restatement of Fiscal Year 1998 Segment Disclosure by Quarter (millions of dollars) Gases Equipment Chemicals Other Total Unallocated Consolidated Segments Expenses (1) Totals Quarter 1 Revenue from external customers 737.7 116.3 380.8 0.0 1234.8 1234.8 Operating income 142.6 9.6 66.9 0.5 219.6 (6.6) 213.0 Equity Affiliates' income 4.5 0.2 0.1 1.0 5.8 5.8 Quarter 2 Revenue from external customers 726.2 103.9 378.5 0.0 1208.6 1208.6 Operating income 141.0 14.5 54.8 0.0 210.3 (3.9) 206.4 Equity Affiliates' income 6.3 0.6 0.3 0.7 7.9 7.9 Quarter 3 Revenue from external customers 735.2 96.5 393.6 0.0 1225.3 1225.3 Operating income 134.4 18.9 64.5 0.0 217.8 (6.3) 211.5 Equity Affiliates' income 9.5 0.6 0.0 0.8 10.9 10.9 Quarter 4 Revenue from external customers 751.0 113.0 386.3 0.0 1250.3 1250.3 Operating income 147.0 16.2 61.0 0.2 224.4 (9.6) 214.8 Equity Affiliates' income 13.0 0.5 0.2 (0.3) 13.4 13.4 TOTAL YEAR Revenue from external customers 2950.1 429.7 1539.2 0.0 4919.0 4919.0 Operating income 565.0 59.2 247.2 0.7 872.1 (26.4) 845.7 Equity Affiliates' income 33.3 1.9 0.6 2.2 38.0 38.0
(1) Unallocated expenses are primarily corporate research and development. 4
Restatement of Fiscal Year 1997 Segment Disclosure by Quarter (millions of dollars) Gases Equipment Chemicals Other Total Unallocated Consolidated Segments Expenses (1) Totals Quarter 1 Revenue from external customers 624.3 149.2 346.2 1.2 1120.9 1120.9 Operating income 113.4 3.7 42.9 (A) 8.8 (B) 168.8 0.4 169.2 Operating income (ex special 113.4 3.7 52.2 (0.7) 168.6 0.4 169.0 items) Equity Affiliates' income 15.6 0.0 0.1 3.0 18.7 18.7 (A) Includes an impairment loss of $9.3 million related to the release agent business. (B) Includes a gain of $9.5 million on the sale of the landfill gas business. Quarter 2 Revenue from external customers 683.2 111.4 358.5 0.0 1153.1 1153.1 Operating income 130.5 (C) 7.5 54.0 0.6 192.6 (8.6) 184.0 Operating income (ex special 123.2 7.5 54.0 0.6 185.3 (8.6) 176.7 items) Equity Affiliates' income 12.1 (0.1) 0.1 1.4 (D) 13.5 13.5 Equity Affiliates' (ex special 12.1 (0.1) 0.1 6.2 18.3 18.3 items) (C) Includes a gain of $7.3 million from the sale of shares in a cost based investment. (D) Includes $4.8 million loss from debt refinancing of an equity affiliate. Quarter 3 Revenue from external customers 694.5 89.6 366.2 0.0 1150.3 1150.3 Operating income 134.5 6.9 58.2 0.0 199.6 (6.6) 193.0 Equity Affiliates' income 6.5 0.4 0.2 10.3 17.4 17.4 Quarter 4 Revenue from external customers 717.4 118.9 377.2 0.0 1213.5 1213.5 Operating income 121.7 11.9 43.2 0.3 177.1 2.8 179.9 Equity Affiliates' income 7.6 0.5 0.0 8.6 16.7 16.7 TOTAL YEAR Revenue from external customers 2719.4 469.1 1448.1 1.2 4637.8 4637.8 Operating income 500.1 30.0 198.3 9.7 738.1 (12.0) 726.1 Operating income (ex special items) 492.8 30.0 207.6 0.2 730.6 (12.0) 718.6 Equity Affiliates' income 41.8 0.8 0.4 23.3 66.3 66.3 Equity Affiliates' (ex special items) 41.8 0.8 0.4 28.1 71.1 71.1
(1) Unallocated expenses are primarily corporate research and development. 5
Reconciliation of Segment Profit and Loss to Consolidated Income before Income Taxes Quarter 1 Quarter 2 Quarter 3 Quarter 4 FY FY 1999 Segment operating income 195.1 187.7 175.2 192.8 750.8 Corporate R&D and other 6.1 5.0 7.5 7.5 26.1 Consolidated operating income 189.0 182.7 167.7 185.3 724.7 Segment equity affiliates' income 9.8 14.1 15.2 22.4 61.5 Gain on Wacker formation 31.2 -0.1 0.0 3.8 34.9 Income related to BOC acquisition 0.0 0.0 0.0 7.0 7.0 Interest expense 40.4 40.4 39.4 38.9 159.1 Consolidated income before taxes 189.6 156.3 143.5 179.6 669.0 FY 1998 Segment operating income 219.6 210.3 217.8 224.4 872.1 Corporate R&D and other 6.6 3.9 6.3 9.6 26.4 Consolidated operating income 213.0 206.4 211.5 214.8 845.7 Segment equity affiliates' income 5.8 7.9 10.9 13.4 38.0 Gain on sale of American Ref-Fuel 62.6 0.0 0.0 0.0 62.6 Gains on power contract settlements 12.6 0.0 28.3 0.0 40.9 Interest expense 40.2 39.0 41.9 41.7 162.8 Consolidated income before taxes 253.8 175.3 208.8 186.5 824.4 FY 1997 Segment operating income 168.8 192.6 199.6 177.1 738.1 Corporate R&D and other -0.4 8.6 6.6 -2.8 12.0 Consolidated operating income 169.2 184.0 193.0 179.9 726.1 Segment equity affiliates' income 18.7 13.5 17.4 16.7 66.3 Interest expense 39.8 42.6 39.4 39.5 161.3 Consolidated income before taxes 148.1 154.9 171.0 157.1 631.1
6 Business Segment and Geographic Information Effective in 1999, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related Information." This Statement defines the disclosure requirements for operating segments. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Statement also establishes standards for related disclosure requirements about products and services, geographic areas, and major customers. Prior year amounts have been restated to conform with the current year presentation. The Company's segments are organized based on differences in products. The Company has three operating segments consisting of gases, chemicals, and equipment. The Company's divested environmental and energy systems (American Ref-Fuel and landfill gas) businesses are included in other. The Company's gases segment includes its industrial gases, power generation, and flue gas treatment businesses. The Company is a leading international supplier of industrial and specialty gas products. Principal products of the industrial gases business are oxygen, nitrogen, argon, hydrogen, carbon monoxide, synthesis gas, and helium. The largest market segments are chemical processing, refining, metal production, electronics, food processing, and medical gases. The Company has its strongest industrial gas market positions in the United States and Europe. The gases segment also includes the Company's power generation and flue gas treatment businesses. The Company constructed, operates, and has a 50% interest in power generation facilities in California, Pennsylvania, Florida, Rotterdam, and Thailand. The chemical businesses consist of polymer chemicals, performance chemicals, and chemical intermediates. Polymer chemicals include polymer emulsions, redispersible powders, and polyvinyl alcohol. Principal products of performance chemicals are specialty additives, polyurethane additives, and epoxy additives. Principal chemical intermediates are amines and polyurethane intermediates. The Company also produces certain industrial chemicals. The end markets for the Company's chemical products are extensive, including adhesive, textile, paper, building products, agriculture, and furniture. Principal geographic markets for the Company's chemical products are North America, Europe, Asia, Brazil, and Mexico. The equipment segment designs and manufactures cryogenic and gas processing equipment for air separation, gas processing, natural gas liquefaction, and hydrogen purification. The segment also designs and builds systems for recovering gases using membrane technology. Equipment is sold worldwide to companies involved in chemical and petrochemical manufacturing, oil and gas recovery and processing, power generation, and steel and primary metal production. Equipment is also manufactured for the Company's industrial gas business. Another important market, particularly for air separation equipment, is the Company's international industrial gas joint ventures. The accounting policies of the segments are the same as those used for consolidated reporting. The Company allocates resources to segments and evaluates the performance of segments based upon reported segment operating income. Operating income of the business segments includes general corporate expenses. Corporate expenses not allocated to the segments (primarily long-term research and development and interest expense) are 7 included in the reconciliation of the reportable segments' operating income to the Company's consolidated income before income taxes. Intersegment sales are not material and are recorded at selling prices that approximate market prices. Equipment manufactured for the Company's industrial gas business is generally transferred at cost and not reflected as an intersegment sale. Corporate assets are primarily cash, corporate facilities, fair value of currency options related to the BOC transaction, deferred financial expense, and other nonallocated assets. Long-lived assets include investment in net assets of and advances to equity affiliates, net plant and equipment and goodwill. 8
Business segment information is shown below: All Segment Consolidated (millions of dollars) Gases Chemicals Equipment Other Totals Totals - ---------------------------------------------------------------------------------------------------------------------------------- 1999 - ---------------------------------------------------------------------------------------------------------------------------------- Revenues from external customers $2,996.4 $1,657.4 $366.3 $-- $5,020.1 $5,020.1 - ---------------------------------------------------------------------------------------------------------------------------------- Operating income 521.9 193.7 34.7 .5 750.8 724.7 - ---------------------------------------------------------------------------------------------------------------------------------- Operating income - excluding special items 548.9 208.0 37.4 .5 794.8 769.2 - ---------------------------------------------------------------------------------------------------------------------------------- Depreciation and amortization 405.4 125.2 9.4 -- 540.0 540.0 - ---------------------------------------------------------------------------------------------------------------------------------- Equity affiliates' income 46.8 12.4 1.6 .7 61.5 61.5 - ---------------------------------------------------------------------------------------------------------------------------------- Net gain on formation of polymer venture -- 34.9 -- -- 34.9 34.9 - ---------------------------------------------------------------------------------------------------------------------------------- Segment assets: - ---------------------------------------------------------------------------------------------------------------------------------- Identifiable assets 5,436.1 1,626.2 265.0 -- 7,327.3 7,714.1 - ---------------------------------------------------------------------------------------------------------------------------------- Investment in and advances to equity affiliates 458.6 61.3 .8 -- 520.7 521.4 - ---------------------------------------------------------------------------------------------------------------------------------- Total segment assets 5,894.7 1,687.5 265.8 -- 7,848.0 8,235.5 - ---------------------------------------------------------------------------------------------------------------------------------- Expenditures for long-lived assets 913.8 158.8 14.6 -- 1,087.2 1,114.6 - ---------------------------------------------------------------------------------------------------------------------------------- 1998 - ---------------------------------------------------------------------------------------------------------------------------------- Revenues from external customers $2,950.1 $1,539.2 $429.7 $-- $4,919.0 $4,919.0 - ---------------------------------------------------------------------------------------------------------------------------------- Operating income 565.0 247.2 59.2 .7 872.1 845.7 - ---------------------------------------------------------------------------------------------------------------------------------- Operating income - excluding special items 565.0 247.2 59.2 .7 872.1 845.7 - ---------------------------------------------------------------------------------------------------------------------------------- Depreciation and amortization 382.4 107.7 7.8 -- 497.9 499.3 - ---------------------------------------------------------------------------------------------------------------------------------- Equity affiliates' income 33.3 .6 1.9 2.2 38.0 38.0 - ---------------------------------------------------------------------------------------------------------------------------------- Gain on American Ref-Fuel sale and contract settlements 12.6 -- -- 90.9 103.5 103.5 - ---------------------------------------------------------------------------------------------------------------------------------- Segment assets: - ---------------------------------------------------------------------------------------------------------------------------------- Identifiable assets 5,108.1 1,527.3 279.3 -- 6,914.7 7,127.6 - ---------------------------------------------------------------------------------------------------------------------------------- Investment in and advances to equity affiliates 354.0 2.4 .2 -- 356.6 362.0 - ---------------------------------------------------------------------------------------------------------------------------------- Total segment assets 5,462.1 1,529.7 279.5 -- 7,271.3 7,489.6 - ---------------------------------------------------------------------------------------------------------------------------------- Expenditures for long-lived assets 639.3 329.3 16.5 -- 985.1 1,000.7 1997 - ---------------------------------------------------------------------------------------------------------------------------------- Revenues from external customers $2,719.4 $1,448.1 $469.1 $1.2 $4,637.8 $4,637.8 - ---------------------------------------------------------------------------------------------------------------------------------- Operating income 500.1 198.3 30.0 9.7 738.1 726.1 - ---------------------------------------------------------------------------------------------------------------------------------- Operating income - excluding special items 492.8 207.6 30.0 .2 730.6 718.6 - ---------------------------------------------------------------------------------------------------------------------------------- Depreciation and amortization 353.2 104.5 7.4 -- 465.1 467.3 - ---------------------------------------------------------------------------------------------------------------------------------- Equity affiliates' income 41.8 .4 .8 23.3 66.3 66.3 - ---------------------------------------------------------------------------------------------------------------------------------- Segment assets: - ---------------------------------------------------------------------------------------------------------------------------------- Identifiable assets 4,833.0 1,267.7 330.3 .8 6,431.8 6,688.4 - ---------------------------------------------------------------------------------------------------------------------------------- Investment in and advances to equity affiliates 339.7 2.4 -- 212.7 554.8 555.7 - ---------------------------------------------------------------------------------------------------------------------------------- Total segment assets 5,172.7 1,270.1 330.3 213.5 6,986.6 7,244.1 - ---------------------------------------------------------------------------------------------------------------------------------- Expenditures for long-lived assets 1,024.0 165.6 1.7 -- 1,191.3 1,221.6 - ----------------------------------------------------------------------------------------------------------------------------------
9
A reconciliation of the totals reported for the operating segments to the applicable line items on the consolidated financial statements is as follows: (millions of dollars) 1999 1998 1997 - ---------------------------------------------------------------------------------------------------------------------------------- Operating Income to Consolidated Income Before Income Taxes and Minority Interest - ---------------------------------------------------------------------------------------------------------------------------------- Total segment operating income $ 750.8 $ 872.1 $ 738.1 - ---------------------------------------------------------------------------------------------------------------------------------- Corporate research and development (29.4) (25.8) (22.3) - ---------------------------------------------------------------------------------------------------------------------------------- Other corporate income (expense) 3.3 (.6) 10.3 - ---------------------------------------------------------------------------------------------------------------------------------- Consolidated operating income 724.7 845.7 726.1 Equity affiliates' income 61.5 38.0 66.3 - ---------------------------------------------------------------------------------------------------------------------------------- Gain on American Ref-Fuel sale and contract settlements -- 103.5 -- - ---------------------------------------------------------------------------------------------------------------------------------- Gain on formation of polymer venture 34.9 -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Gain on currency options related to BOC transaction, net of preacquisition expenses 7.0 -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Interest expense (159.1) (162.8) (161.3) - ---------------------------------------------------------------------------------------------------------------------------------- Consolidated income before income taxes and minority interest $ 669.0 $ 824.4 $ 631.1 Segment Assets to Total Assets - ---------------------------------------------------------------------------------------------------------------------------------- Total segment assets $7,848.0 $7,271.3 $6,986.6 - ---------------------------------------------------------------------------------------------------------------------------------- Corporate assets 387.5 218.3 257.5 - ---------------------------------------------------------------------------------------------------------------------------------- Total assets $8,235.5 $7,489.6 $7,244.1
10
Geographic information is presented below: (millions of dollars) 1999 1998 1997 - --------------------------------------------------------------------------------------------- Revenues from External Customers - --------------------------------------------------------------------------------------------- United States $3,226.9 $3,381.5 $3,269.7 - --------------------------------------------------------------------------------------------- United Kingdom 620.4 583.6 547.7 - --------------------------------------------------------------------------------------------- Spain 319.0 322.0 241.8 - --------------------------------------------------------------------------------------------- Other Europe 564.3 387.7 388.8 - --------------------------------------------------------------------------------------------- Total Europe 1,503.7 1,293.3 1,178.3 Canada/Latin America 202.4 216.6 171.7 - --------------------------------------------------------------------------------------------- Asia 86.8 27.3 17.7 - --------------------------------------------------------------------------------------------- All Other .3 .3 .4 - --------------------------------------------------------------------------------------------- Total $5,020.1 $4,919.0 $4,637.8 Long-lived Assets - --------------------------------------------------------------------------------------------- United States $3,482.1 $3,160.2 $3,188.2 - --------------------------------------------------------------------------------------------- United Kingdom 513.1 466.4 376.4 - --------------------------------------------------------------------------------------------- Spain 412.2 455.9 439.6 - --------------------------------------------------------------------------------------------- Other Europe 873.4 796.2 692.8 - --------------------------------------------------------------------------------------------- Total Europe 1,798.7 1,718.5 1,508.8 Canada/Latin America 327.0 342.4 308.5 - --------------------------------------------------------------------------------------------- Asia 442.6 243.3 231.5 - --------------------------------------------------------------------------------------------- All Other 14.3 8.6 8.4 - --------------------------------------------------------------------------------------------- Total $6,064.7 $5,473.0 $5,245.4
Note: Geographic information is based on country of origin. Included in United States revenues are export sales to unconsolidated customers of $528.4 million in 1999, $649.6 million in 1998, and $570.7 million in 1997. The other Europe segment operates principally in France, Germany, Netherlands, and Belgium. 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: 07 December 1999 By: /s/ Leo J. Daley --------------------------------- Leo J. Daley Vice President - Finance (Chief Financial Officer) 12 -----END PRIVACY-ENHANCED MESSAGE-----