-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, MK+sSWogi4cfqKv7p0Ba877ibJ5tjO/lPBqsY/C86UsK4yAYxkzV0oepjhRjIISq TkXAx/k2QUIlNcLzQnjzqw== 0000804212-95-000001.txt : 19950501 0000804212-95-000001.hdr.sgml : 19950501 ACCESSION NUMBER: 0000804212-95-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950207 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRGAS INC CENTRAL INDEX KEY: 0000804212 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-INDUSTRIAL MACHINERY & EQUIPMENT [5084] IRS NUMBER: 560732648 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09344 FILM NUMBER: 95505997 BUSINESS ADDRESS: STREET 1: 100 MATSONFORD RD STE 550 STREET 2: 5 RADNOR CORPORATE CENTER CITY: RADNOR STATE: PA ZIP: 19087 BUSINESS PHONE: 2156875253 MAIL ADDRESS: STREET 1: 5 RADNOR CORPORATE CENTER, STE 550 STREET 2: 100 MATSONFORD ROAD CITY: RADNOR STATE: PA ZIP: 19087 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: December 31, 1994 _____________________________ Commission file number: 1-9344 _____________________________ AIRGAS, INC. ______________________________________________________________________________ (Exact name of Registrant as specified in its charter) Delaware 56-0732648 _______________________________ __________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5 Radnor Corporate Center, Suite 550 100 Matsonford Road Radnor, PA 19087-4579 _______________________________________ ________________ (Address of principal executive offices) (ZIP code) (610) 687-5253 __________________________________________________ (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 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 ______ ______ Common Stock outstanding at December 31, 1994: 31,349,811 shares 2 AIRGAS, INC. FORM 10-Q December 31, 1994 INDEX PART I - FINANCIAL INFORMATION ______________________________ Consolidated Balance Sheets as of December 31, 1994 and March 31,1994.....................................................3 Consolidated Statements of Earnings for the Three Months Ended December 31, 1994 and 1993.................5 Consolidated Statements of Earnings for the Nine Months Ended December 31, 1994 and 1993..................6 Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 1994 and 1993..................7 Notes to Consolidated Financial Statements.................................8 Management's Discussion and Analysis of Financial Condition and Results of Operations..................................12 PART II - OTHER INFORMATION ___________________________ Exhibits and Reports on Form 8-K..........................................18 Signatures................................................................19 3 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements. AIRGAS, INC. CONSOLIDATED BALANCE SHEETS (In thousands)
December 31, March 31, 1994 1994 (Unaudited) _____________ ________ ASSETS Current Assets Accounts receivable, less allowance for doubtful accounts of $4,968 at December 31, 1994 and $4,207 at March 31, 1994 $ 92,203 $ 79,034 Inventories 65,877 51,721 Prepaid expenses and other current assets 11,649 8,367 _______ _______ Total current assets 169,729 139,122 _______ _______ Plant and equipment, at cost 453,776 390,832 Less accumulated depreciation and amortization (113,949) (96,201) _______ _______ Net plant and equipment 339,827 294,631 Other noncurrent assets 57,772 30,421 Goodwill, net of accumulated amortization of $14,117 at December 31, 1994 and $11,875 at March 31, 1994 76,827 50,723 _______ _______ Total assets $644,155 $514,897 ======= ======= See accompanying notes to consolidated financial statements.
4 AIRGAS, INC. CONSOLIDATED BALANCE SHEETS (CONTINUED) (In thousands, except per share amounts)
December 31, March 31, 1994 1994 (Unaudited) ___________ ________ LIABILITIES AND STOCKHOLDERS' EQUITY ____________________________________ Current Liabilities Current portion of long-term debt $ 12,864 $ 10,304 Accounts payable, trade 36,192 34,644 Accrued expenses and other current liabilities 54,071 47,103 _______ _______ Total current liabilities 103,127 92,051 _______ _______ Long-term debt 287,645 205,311 Deferred income taxes 60,537 53,096 Other non-current liabilities 7,652 6,635 Minority interest in subsidiaries 1,349 937 Stockholders' equity Common stock $.01 par value, 200,000 shares authorized, 31,350 and 32,897 shares issued at December 31, 1994 and March 31, 1994, respectively 314 329 Capital in excess of par value 59,696 56,330 Retained earnings 124,200 102,161 Cumulative translation adjustment (365) (471) Less treasury stock, 1,877 common shares at cost at March 31, 1994. -0- (1,482) _______ _______ Total stockholders' equity 183,845 156,867 _______ _______ Total liabilities and stockholders' equity $644,155 $ 514,897 ======= ======= See accompanying notes to consolidated financial statements.
5 AIRGAS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In thousands, except per share amounts)
Three Months Ended Three Months Ended December 31, 1994 December 31, 1993 __________________ __________________ Net sales: Distribution $165,582 $121,292 Manufacturing 8,530 8,789 _______ _______ Total net sales 174,112 130,081 _______ _______ Costs and expenses: Cost of products sold (excluding depreciation and amortization) Distribution 80,809 59,109 Manufacturing 5,716 5,576 Selling, distribution and administrative expenses 59,276 45,597 Depreciation and amortization 9,734 7,758 _______ _______ Total costs and expenses 155,535 118,040 _______ _______ Operating income: Distribution 17,101 10,232 Manufacturing 1,476 1,809 _______ _______ 18,577 12,041 Interest expense, net (4,869) (3,002) Other income, net 189 146 Minority interest (159) (78) _______ _______ Earnings before income taxes 13,738 9,107 Income taxes 5,948 4,052 _______ _______ Net earnings $ 7,790 $ 5,055 ======= ======= Earnings per share $ .24 $ .16 ======= ======= Weighted average shares 33,047 32,468 ======= ======= See accompanying notes to consolidated financial statements.
6 AIRGAS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (In thousands, except per share amounts)
Nine Months Ended Nine Months Ended December 31, 1994 December 31, 1993 __________________ __________________ Net sales: Distribution $474,019 $348,339 Manufacturing 24,541 24,439 _______ _______ Total net sales 498,560 372,778 _______ _______ Costs and expenses: Cost of products sold (excluding depreciation and amortization) Distribution 232,886 171,242 Manufacturing 15,984 15,282 Selling, distribution and administrative expenses 171,042 129,557 Depreciation and amortization 27,255 22,778 _______ _______ Total costs and expenses 447,167 338,859 _______ _______ Operating income: Distribution 46,867 28,974 Manufacturing 4,526 4,945 _______ _______ 51,393 33,919 Interest expense, net (12,521) (9,261) Other income, net 409 327 Minority interest (412) (203) _______ _______ Earnings before income taxes 38,869 24,782 Income taxes 16,830 10,902 _______ _______ Net earnings $ 22,039 $ 13,880 ======= ======= Earnings per share $ .67 $ .43 ======= ======= Weighted average shares 32,991 32,635 ======= ======= See accompanying notes to consolidated financial statements.
7 AIRGAS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Nine Months Ended Nine Months Ended December 31, 1994 December 31, 1993 __________________ __________________ CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 22,039 $ 13,880 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 27,255 22,778 Deferred income taxes 7,573 4,361 Equity in earnings of joint venture (543) (935) (Gain) loss on sale of plant and equipment 26 (114) Minority interest in earnings 412 203 Changes in assets and liabilities, excluding effects of business acquisitions: Trade receivables, net (1,772) (1,878) Inventories (3,068) (32) Prepaid expenses and other current assets (991) (168) Accounts payable, trade (4,366) (366) Accrued expenses and other current liabilities 184 2,408 Other assets and liabilities, net (1,506) (59) _______ _______ Net cash provided by operating activities 45,243 40,078 _______ _______ CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (25,185) (14,240) Proceeds from sale of plant and equipment 1,641 1,962 Business acquisitions, net of cash acquired (76,975) (47,618) Purchase of temporary investment (16,904) -0- Other, net 300 205 _______ _______ Net cash used by investing activities (117,123) (59,691) _______ _______ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings 87,284 32,552 Repayment of debt (19,272) (16,607) Exercise of options and warrants 922 2,587 Cash overdraft 2,948 1,288 _______ _______ Net cash provided by financing activities 71,882 19,820 _______ _______ EFFECTS OF DISCONTINUED ACTIVITIES, NET (2) (207) _______ _______ CHANGE IN CASH $ -0- $ -0- Cash - beginning of period -0- -0- _______ _______ Cash - end of period $ -0- $ -0- ======= ======= See accompanying notes to consolidated financial statements.
8 AIRGAS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation _____________________ The consolidated financial statements include the accounts of Airgas, Inc. and its subsidiaries (the "Company"). The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to interim financial statements. These statements do not include all disclosures required for annual financial statements. These financial statements should be read in conjunction with the more complete disclosures contained in the Company's audited consolidated financial statements for the year ended March 31, 1994. The financial statements reflect, in the opinion of management, all adjustments necessary to present fairly the Company's consolidated balance sheets at December 31, 1994 and March 31, 1994; the consolidated statements of earnings for the three and nine months ended December 31, 1994 and 1993; and the consolidated statements of cash flows for the nine months ended December 31, 1994 and 1993. The interim operating results are not necessarily indicative of the results to be expected for an entire year. Certain reclassifications have been made to prior year balances to conform to the current year presentation. 2. Acquisitions ____________ From April 1, 1994 to December 31, 1994, the Company has acquired twelve businesses engaged in the distribution of industrial, medical and specialty gases and welding supplies with annual sales of approximately $96 million. The aggregate purchase price, including amounts related to non-competition and confidentiality agreements, amounted to approximately $76 million plus the assumption of certain liabilities. Acquisitions have been recorded using the purchase method of accounting, and, accordingly, results of their operations have been included in the Company's consolidated financial statements since the effective dates of the respective acquisitions. On February 1, 1995, the Company signed a letter agreement to acquire Tech-Weld, Inc. of Houston, Texas, a distributor of industrial, medical and specialty gases and related equipment which operates out of three locations in the Houston area. The company has annual sales of approximately $10 million. Closing is anticipated in March 1995. 9 AIRGAS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (Unaudited) 3. Inventories ___________ Inventories consist of: (In thousands)
December 31, March 31, 1994 1994 ________ ________ Finished goods $ 65,244 $ 51,263 Raw materials 1,367 1,117 _______ _______ 66,611 52,380 Less reduction to LIFO cost (734) (659) _______ _______ $ 65,877 $ 51,721 ======= =======
4. Plant and Equipment ___________________ The major classes of plant and equipment are as follows: (In thousands)
December 31, March 31, 1994 1994 _____________ _________ Land and land improvements $ 18,104 $ 15,879 Building and leasehold improvements 41,170 30,494 Machinery and equipment, including cylinders 364,984 322,336 Transportation equipment 27,043 20,830 Construction in progress 2,475 1,293 _______ _______ $453,776 $390,832 ======= =======
10 AIRGAS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (Unaudited) 5. Other Noncurrent Assets _______________________ Other noncurrent assets include: (In thousands)
December 31, March 31, 1994 1994 _____________ _________ Investment in a joint venture $ 1,300 $ 1,308 Noncompete agreements and other intangible assets, at cost, net of accumulated amortization of 35.4 million at December 31, 1994 and $30.0 million at March 31, 1994 31,682 26,673 Temporary investment, at cost 16,904 -0- Other assets 7,886 2,440 _______ _______ $ 57,772 $ 30,421 ======= ======= Temporary investment includes 740,000 shares of CBI Industries, Inc. ("CBI") common stock which were purchased during the Company's third quarter. The shares were purchased in contemplation of a transaction with CBI or CBI's Liquid Carbonic Industries subsidiary. During January 1995, as a result of the Company's decision not to make a bid for CBI, the Company sold its shares of CBI common stock for $17.5 million, net of expenses. At December 31, 1994, the Company has classified its investment in the CBI shares as a noncurrent asset since the net proceeds from the sale were used to repay borrowings under the Company's long-term revolving credit facilities. A gain of approximately $600,000 will be recorded as "other income" during the quarter ending March 31, 1995.
11 AIRGAS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (Unaudited) 6. Accrued Expenses and Other Current Liabilities ______________________________________________ Accrued expenses and other current liabilities include: (In thousands)
December 31, March 31, 1994 1994 _____________ _________ Cash overdraft $ 9,995 $ 7,047 Insurance payable and related reserves 7,112 5,341 Customer cylinder deposits 6,070 3,325 Other accrued expenses and current liabilities 30,894 31,390 _______ _______ $ 54,071 $ 47,103 ======= =======
7. Earnings Per Share __________________ Earnings per share amounts were determined using the treasury stock method. 8. Commitments and Contingencies _____________________________ The Company is involved in various legal proceedings which have arisen in the ordinary course of its business and have not been finally adjudicated. These actions, when ultimately concluded and determined will not, in the opinion of management, have a material adverse effect upon the Company's financial condition, results of operations or liquidity. 9. Stockholders' Equity ____________________ On January 16, 1995, the Company announced that it had instituted a stock repurchase program and that the Board of Directors approved the repurchase of up to one million shares of Airgas common stock. During January, the Company purchased 50,000 shares. The purchase of additional shares is dependent on prevailing market conditions. In April 1994, the Company retired 1,877,000 shares of treasury stock. 12 Item 2. AIRGAS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations _____________________ Three Months Ended December 31, 1994 Compared to the Three Months Ended December 31, 1993. Net earnings increased 54% to $7,790,000 or $.24 per share during the third quarter ended December 31, 1994, from $5,055,000 or $.16 per share in the same quarter of the prior year. The increase in net earnings was primarily due to an increase in gross profits from higher same-store distribution sales, earnings generated by industrial gas distribution businesses acquired since October 1, 1993 and an increase in distribution gross profit margins. The Company's program to acquire businesses engaged in the distribution of industrial, medical and specialty gases and related equipment continued during the quarter ended December 31, 1994 with the acquisition of four distributors having aggregate annual sales of approximately $36 million. Since its formation, the Company has acquired over 150 distributors. Net sales increased 34% during the quarter ended December 31, 1994 compared to the same quarter in the prior year: (in thousands)
Increase 1994 1993 (Decrease) ____ ____ __________ Distribution $165,582 $121,292 $ 44,290 Manufacturing 8,530 8,789 (259) _______ _______ _______ $174,112 $130,081 $ 44,031 ======= ======= =======
During the quarter ended December 31, 1994, distribution sales increased approximately $44.3 million due to an estimated $37.4 million increase resulting from the acquisition of 21 industrial gas distributors since October 1, 1993 and a $6.9 million increase in same-store sales (an approximate 5% same-store sales increase from the quarter ended December 31, 1993). The Company estimates same-store sales based upon a comparison of current period sales to the prior period's sales, adjusted for acquisitions and dispositions. The increase in same-store sales is primarily a result of increased volume in hardgoods sales with increases also reflected in gas business. Hardgoods and gas volumes have primarily increased as a result of the general improvement in the economy and certain gas marketing programs. Same-store sales have also increased slightly as a result of price increases initiated during previous periods. Future same-store sales improvement is dependent on continued growth in the economy. 13 Item 2. AIRGAS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Compared to the same quarter in the prior year, distribution gross profit increases associated with acquisitions are estimated to total $18.9 million. Gross profits associated with distribution same-store sales improvement are estimated to total $3.7 million. These improvements were caused by improved hardgoods gross profit margins resulting from the Company's national purchasing program as well as improved gas and rental gross margins due to price increases to customers. Operating income increased 54% during the quarter ended December 31, 1994 compared to the same quarter in the prior year: (in thousands)
Increase 1994 1993 (Decrease) ____ ____ _________ Distribution $17,101 $10,232 $ 6,869 Manufacturing 1,476 1,809 (333) ______ ______ ______ $18,577 $12,041 $ 6,536 ====== ====== ======
Distribution operating income as a percentage of net sales increased to 10.3% during the quarter ended December 31, 1994 compared to 8.4% from the year earlier period. Distribution operating income increased as a result of the operating income provided by acquisitions, an increase in gross profits from higher same-store sales and improved gross profit margins. Selling, distribution and administrative expenses, relative to sales, have declined as a result of acquisition consolidation efforts during the past year and controlling expenses such as business insurance through better claims management and reduced incident rates. Also, many operating costs are relatively fixed even though the Company's same-store sales continue to improve. Partially offsetting these improvements were normal salary increases. Manufacturing operating income decreased $333,000 compared to the prior year period due to a product shift towards lower margin export sales of carbon products, slightly lower profits from the sale of calcium carbide combined with higher raw material costs, principally ammonium nitrate, for the Company's nitrous oxide plants. Interest expense, net, increased approximately $1.9 million during the quarter ended December 31, 1994 from the year earlier period primarily as a result of the increase in average outstanding debt associated with the acquisition of industrial gas distributors since October 1, 1993 combined with slightly higher interest rates. As discussed in "Liquidity and Capital Resources" below, the Company has hedged floating interest rates under certain borrowings with interest rate swap agreements. 14 Item 2. AIRGAS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) After tax cash flow (net earnings plus depreciation, amortization and deferred income taxes) increased 37% during the quarter ended December 31, 1994 to approximately $20.2 million from $14.8 million during the prior period. After tax cash flow, exclusive of capital expenditures and working capital changes, is important since it measures the Company's ability to repay debt through operations and provides the Company with the ability to pursue investment alternatives such as acquisitions. Results of Operations _____________________ Nine Months Ended December 31, 1994 Compared to the Nine Months Ended December 31, 1993. Net earnings increased 59% to $22,039,000 or $.67 per share during the nine months ended December 31, 1994, from $13,880,000 or $.43 per share in the prior year. The increase in net earnings was primarily due to an increase in gross profits from higher same-store distribution sales, earnings generated by industrial gas distribution businesses acquired since April 1, 1993 and an increase in gross profit margins. Net sales increased 34% during the nine months ended December 31, 1994 compared to the same period in the prior year: (in thousands)
1994 1993 Increase ____ ____ __________ Distribution $474,019 $348,339 $125,680 Manufacturing 24,541 24,439 102 _______ _______ _______ $489,560 $372,778 $125,782 ======= ======= =======
During the nine months ended December 31, 1994, distribution sales increased approximately $125.7 million due to an estimated $103.2 million increase resulting from the acquisition of 29 industrial gas distributors since April 1, 1993 and a $22.5 million increase in same-store sales (an approximate 5% same-store sales increase from the nine months ended December 31, 1993). The Company estimates same-store sales based upon a comparison of current period sales to the prior period's sales, adjusted for acquisitions and dispositions. The increase in same-store sales is primarily a result of increased volume in hardgoods sales with increases also reflected in gas business. Hardgoods and gas volumes have primarily increased as a result of the general improvement in the economy and certain gas marketing programs. Same-store sales have also increased slightly as a result of price increases initiated during previous periods. Future same-store sales improvement is dependent on continued growth in the economy. 15 Item 2. AIRGAS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Compared to the same period in the prior year, distribution gross profit increases associated with acquisitions are estimated to total $53 million. Gross profits associated with distribution same-store sales improvement are estimated to total $11 million. These improvements were caused by improved hardgoods gross profit margins resulting from the Company's national purchasing program as well as improved gas and rental gross margins due to price increases to customers. Operating income increased 52% during the nine months ended December 31, 1994 compared to the same period in the prior year: (in thousands)
1994 1993 Increase (Decrease) ____ ____ __________ Distribution $46,867 $28,974 $17,893 Manufacturing 4,526 4,945 (419) ______ ______ ______ $51,393 $33,919 $17,474 ====== ====== ======
Distribution operating income as a percentage of net sales increased to 9.9% in 1994 from 8.3% in 1993. Distribution operating income increased as a result of the operating income provided by acquisitions, an increase in gross profits from higher distribution same-store sales and improved gross profit margins. Selling, distribution and administrative expenses, relative to sales, have declined as a result of acquisition consolidation efforts during the past year and controlling expenses such as business insurance through better claims management and reduced incident rates. Also, many operating costs are relatively fixed even though the Company's same-store sales continue to improve. Partially offsetting these improvements were normal salary increases. Manufacturing operating income decreased $419,000 compared to the prior year period due to a product shift towards lower margin export sales of carbon products, slightly lower profits from the sale of calcium carbide combined with higher raw material costs, principally ammonium nitrate, for the Company's nitrous oxide plants. Interest expense, net, increased $3.3 million during the nine months ended December 31, 1994 from the year earlier period primarily as a result of the increase in average outstanding debt associated with the acquisition of industrial gas distributors since April 1, 1993 combined with slightly higher interest rates. As discussed in "Liquidity and Capital Resources" below, the Company has hedged floating interest rates under certain borrowings with interest rate swap agreements. 16 Item 2. AIRGAS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) After tax cash flow (net earnings plus depreciation, amortization and deferred income taxes) increased 39% during the nine months ended December 31, 1994 to $56.9 million from $41.0 million during the prior period. After tax cash flow, exclusive of capital expenditures and working capital changes, is important since it measures the Company's ability to repay debt through operations and provides the Company with the ability to pursue investment alternatives such as acquisitions. Liquidity and Capital Resources _______________________________ The Company has financed its operations, capital expenditures and acquisitions with borrowings, issuance of common stock and funds provided by operating activities. Cash flows from operating activities totaled $45.2 million for the nine months ended December 31, 1994. Increased earnings were offset by an increase in working capital of $10 million. Working capital increased primarily as a result of an increase in accounts receivable based on higher sales, building inventory levels to meet increased hardgoods sales volumes and the payment of trade accounts payable. Although accounts receivable and inventory levels have increased, days-sales outstanding and days-supply of inventory levels have improved since March 31, 1994. Cash used by investing activities totaled $117.1 million for the nine months ended December 31, 1994 which was primarily comprised of $25.2 million for capital expenditures, $77 million related to acquisitions and $16.9 million related to the purchase of 740,000 shares of CBI Industries, Inc. ("CBI") common stock during the third quarter. The shares were purchased in contemplation of a transaction with CBI or CBI's Liquid Carbonic Industries subsidiary. During January 1995, as a result of the Company's decision not to make a bid for CBI, the Company sold its shares of CBI common stock for $17.5 million, net of expenses. At December 31, 1994, the Company has classified its investment in the CBI shares as a noncurrent asset since the net proceeds from the sale were used to repay borrowings under the Company's long-term revolving credit facilities. A gain of approximately $600,000 will be recorded as "other income" during the quarter ending March 31, 1995. The Company's use of cash for capital expenditures is partially attributable to the continued assimilation of certain fiscal 1994 and 1995 acquisitions which require capital expenditures in areas such as the combining of cylinder fill plants, improving truck fleets, purchase of cylinders in order to return cylinders rented from third parties and computer conversions. Additionally, capital expenditure costs have increased during fiscal 1995 as a result of the purchase of equipment necessary to facilitate gas sales growth. Costs incurred for the nine months ended December 31, 1994 which represent maintenance capital expenditures are estimated to total $7.5 million ($4.5 million for the nine months ended December 31, 1993). Compared to the first two quarters, capital expenditures were down approximately $2 million during the third quarter of fiscal 1995. The Company anticipates that the level of capital expenditures will continue to decline during the fourth quarter of fiscal 1995. 17 Item 2. AIRGAS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Financing activities provided cash of $71.9 million for the nine months ended December 31, 1994 with total debt outstanding increasing by $84.9 million from March 31, 1994. As discussed above, excluding debt associated with the purchase of CBI shares, debt increased by $68 million. Debt incurred in connection with the acquisition of industrial gas distribution businesses, including seller notes and assumed notes, totaled $93.9 million. One of the Company's primary sources of borrowings is an unsecured revolving credit facility with various commercial banks. At December 31, 1994, the facility provided for borrowings up to $250 million, with sub-limits for money market loans, bankers acceptances and the issuance of letters of credit. On December 31, 1994, the Company had approximately $139 million in borrowings under the facility and $28 million committed under letters of credit, resulting in availability under the facility of approximately $83 million. The facility provides for quarterly interest payments payable currently with equal quarterly principal payments beginning in September 1996 and continuing through June 2001. In November 1994, the Company entered into a new $100 million unsecured revolving credit facility with various commercial banks to provide additional availability for the Company's ongoing acquisition and investment programs. The facility currently bears interest at the Libor rate plus 1/2% and matures on July 1, 1996. On December 31, 1994, the Company had approximately $75 million in borrowings under the facility resulting in availability under the facility of approximately $25 million. The Company also has unsecured line of credit agreements which provide for borrowings aggregating $25 million. At December 31, 1994, $15 million was outstanding under these agreements. At December 31, 1994, the effective interest rate related to the $229 million of outstanding borrowings under the above credit lines was approximately 6.7%. The Company had $27.9 million outstanding at December 31, 1994 related to senior subordinated notes which bear interest at a fixed rate of 11.375% and require principal payments through August 1998. The Company's loan agreements contain restrictive covenants which include the maintenance of a minimum equity level, maintenance of certain financial ratios and restrictions on additional borrowings and the level of dividend payments. In managing interest rate exposure, principally under the Company's floating rate revolving credit facilities, the Company has entered into nine interest rate swap agreements during the period from June 1992 through November 1994. The swap agreements are with major financial institutions and have a total notional principal amount of $107.5 million at December 31, 1994. Approximately $100 million of the swap agreements require fixed interest payments based on an average effective rate of 6.9% for remaining periods ranging between 3 and 8 years. One swap agreement requires floating rates ($7.5 million notional amount with an interest rate of 5.4% at December 31, 1994). The Company continually monitors its positions and the credit ratings of its counterparties, and does not anticipate nonperformance by the counterparties. 18 AIRGAS, INC. The Company will continue to look for appropriate acquisitions and will fund such acquisitions through cash flow from operations and with debt and other available sources. The Company does not currently pay dividends. PART II - OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits ________ 11. Calculation of earnings per share. b. Reports on Form 8-K ___________________ On December 30, 1994, the Company filed a current report on Form 8-K which provided, under Item 5, audited financial statements and pro forma information for a substantial majority of individually insignificant businesses acquired through November 1, 1994 in accordance with Regulation S-X, Rule 3-05 (b)(1)(i). 19 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. February 7, 1995 /s/Britton H. Murdoch ________________ _______________________ Date Britton H. Murdoch Vice President and Chief Financial Officer EX-11 2 EXHIBIT 11 20 EXHIBIT 11 AIRGAS, INC. EARNINGS PER SHARE CALCULATIONS
Three Months Ended Nine Months Ended December 31, December 31, 1994 1993 1994 1993 ____ ____ ____ ____ Adjustment of Weighted Average Shares Outstanding: Shares of common stock outstanding - - weighted 31,346,559 30,731,709 31,283,009 30,945,311 Net common stock equivalents 1,700,825 1,736,628 1,707,808 1,689,324 __________ __________ __________ __________ Adjusted shares outstanding 33,047,384 32,468,337 32,990,817 32,634,635 ========== ========== ========== ========== Net earnings $ 7,790,000 $ 5,055,000 $22,039,000 $13,880,000 ========== ========== ========== ========== Primary Earnings Per Share $ .24 $ .16 $ .67 $ .43 ========== ========== ========== ==========
Earnings per share amounts were determined using the treasury stock method. This method assumes the exercise of all dilutive outstanding options and warrants and the use of the aggregate proceeds therefrom to acquire the Company's outstanding common stock. Net earnings were divided by the weighted average number of shares outstanding adjusted for the assumed exercise of the options and warrants outstanding and repurchase of common stock to calculate per share amounts. EX-27 3 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1000 9-MOS MAR-31-1994 DEC-31-1994 0 0 92,203 4,968 65,877 169,729 453,776 113,949 644,155 103,127 0 314 0 0 183,531 644,155 498,560 498,560 248,870 248,870 0 0 12,521 38,869 16,830 22,039 0 0 0 22,039 .67 .67
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