EX-99 3 exh99pr.txt EXHIBIT 99 - EARNINGS PRESS RELEASE Exhibit 99: ----------- AIRGAS News Release Airgas, Inc. 259 N. Radnor-Chester Road Suite 100 Radnor, PA 19087-5283 www.airgas.com ------------------------------------------------------------------------ Investor Contact: Media Contact: Melissa Nigro (610) 902-6206 James Ely (610) 902-6010 melissa.nigro@airgas.com jim.ely@airgas.com For release: Immediately AIRGAS REPORTS EPS OF $0.21 FOR FISCAL SECOND QUARTER RADNOR, PA - October 25, 2001 -- Airgas, Inc., (NYSE: ARG) today reported results for its second quarter ended September 30, 2001. Net earnings for the quarter were $14.6 million, or $0.21 per diluted share, compared to $13.9 million, or $0.21 per diluted share in the same period a year ago, on a pro forma basis. Results for the current quarter include Project One costs of $0.02 per diluted share. Net earnings for the six months ended September 30, 2001, excluding the cumulative effect of a change in accounting principle, were flat with the prior year period at $0.41 per diluted share on a pro forma basis. Year to date results include Project One costs of $0.05 per diluted share. Free cash flow per diluted share for the six-month period increased 90% to $0.40 from $0.21 in the prior year, driving debt reduction of $27 million. Fiscal second quarter sales were $412 million, up from $410 million last year. Total same-store sales increased 1% compared to the same quarter a year ago. Same-store sales in the Distribution segment were up slightly, reflecting an increase of 7% for gases and rent and a 5% decline in hardgoods. Same-store sales for the Gas Operations segment increased 6%. For the six-month period, sales increased 1% to $828 million from $819 million last year. Year to date capital spending was $28 million versus $31 million last year. 1 "I am pleased that we again reported solid quarterly earnings despite the continuing difficult economic environment," commented Airgas Chairman and Chief Executive Officer Peter McCausland. "The benefits associated with higher gas sales and strategic sales initiatives helped offset weakened demand in many regions. The events of September 11, combined with the economic uncertainty, will undoubtedly make it a more challenging environment through the balance of the year. However, our cash flow has always held up remarkably well in weak economic periods because of the strength of our gas business and we expect that trend to continue." "We continue to see growth in our strategic accounts, cross-selling and private label programs," added McCausland. "Additionally, our Project One value programs are delivering the expected benefits on time. Our second quarter results certainly underscore our focus and commitment to our strategic initiatives. We have a great team and we are meeting the challenges of this difficult economic environment." Pro forma results and the cumulative effect of a change in accounting principle relate to the Company's adoption of SFAS 142, "Goodwill and Other Intangible Assets." The Company will conduct an earnings teleconference on Friday, October 26, 2001, beginning at 8:30 a.m. Eastern Time. Slides to be presented during the Company's teleconference, information about how to access a live webcast of the teleconference, and replay instructions are available in the 'Investor Info' section on the Company's Internet site www.airgas.com. The replay will be accessible for one week starting at approximately 11:00 a.m. Eastern Time on Friday, October 26, 2001. ABOUT AIRGAS, INC. Airgas, Inc. is the largest U.S. distributor of industrial, medical and specialty gases, welding, safety and related products. Its integrated network of 700 locations includes branches, retail stores, gas fill plants, specialty gas labs, production facilities and distribution centers. Airgas also distributes its products and services through eBusiness, catalog and telemarketing channels. Its national scale and strong local presence offer a competitive edge to its diversified customer base. For more information, please visit www.airgas.com. 2 FORWARD-LOOKING STATEMENTS This press release may contain statements that are forward-looking, as that term is defined by the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases. These statements include, but are not limited to, statements regarding: the Company's expectation that cash flow will hold up in weak economic periods due to the strength of the gas business; the Company's commitment to its strategic initiatives; and, growth in strategic accounts, cross-selling and private label programs. Airgas intends that such forward-looking statements be subject to the safe harbors created thereby. All forward-looking statements are based on current expectations regarding important risk factors and should not be regarded as a representation by the Company or any other person that the results expressed therein will be achieved. Important factors that could cause actual results to differ materially from those contained in any forward-looking statement include the success of marketing initiatives, cross-selling and strategic product sales in growing sales and market share; increased cost pressures and the inability to control costs; an economic downturn (including adverse changes in the specific markets for our products); the inability of the Company to successfully execute its operating strategy, including the Project One initiative; increased competition; customer acceptance of the Company's products; adverse changes in customer buying patterns; the inability to identify attractive acquisition candidates and consummate acquisitions; adverse changes in general economic conditions; political and economic uncertainties associated with current world events and other factors described in the Company's reports, including Form 10-K dated March 31, 2001 and Form 10-Q dated June 30, 2001 filed by the Company with the Securities and Exchange Commission. Consolidated statements of earnings and consolidated condensed balance sheets follow. 3
AIRGAS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended September 30, September 30, 2001 2000 (a) 2001 2000 (a) ------------------- -------------------- Net sales: (Pro forma) (Pro forma) Distribution $372,345 $371,059 $750,659 $745,798 Gas Operations 39,637 39,038 76,998 73,297 -------- -------- -------- -------- Total net sales 411,982 410,097 827,657 819,095 -------- -------- -------- -------- Costs and expenses: Cost of products sold (excluding depreciation and amortization) Distribution 193,850 198,650 392,753 401,399 Gas Operations 14,210 14,437 27,530 26,884 Selling, distribution and administrative expenses 151,235 141,653 303,954 281,668 Depreciation 15,774 15,990 31,446 32,314 Amortization 2,074 2,755 4,351 5,557 ------- ------- ------- ------- Total costs and expenses 377,143 373,485 760,034 747,822 ------- ------- ------- ------- Operating income: Distribution 28,161 29,832 54,732 59,264 Gas Operations 6,678 6,780 12,891 12,009 ------- ------- ------- ------- Total operating income 34,839 36,612 67,623 71,273 Interest expense, net (11,850) (16,306) (22,763) (32,071) Discount on securitization of trade receivables (1,492) - (2,984) - Other income (expense), net 15 405 (178) 457 Equity in earnings of unconsolidated affiliates 1,317 913 2,230 2,703 ------- ------- ------- ------- Earnings before income taxes and the cumulative effect of a change in accounting principle 22,829 21,624 43,928 42,362 Income tax expense 8,276 7,677 15,924 15,039 ------- ------- ------- ------- Earnings before the cumulative effect of a change in accounting principle 14,553 13,947 28,004 27,323 Cumulative effect of a change in accounting principle (b) - - (59,000) - ------- ------- ------- ------- Net earnings (loss) $ 14,553 $ 13,947 $(30,996) $ 27,323 ======= ======= ======= ======= Per share data: Basic earnings (loss) per share $ .21 $ .21 $ (.46) $ .42 Diluted earnings (loss) per share $ .21 $ .21 $ (.45) $ .41 Per share data (excluding cumulative effect of a change in accounting principle)(b): Basic earnings per share $ .21 $ .21 $ .41 $ .42 Diluted earnings per share $ .21 $ .21 $ .41 $ .41 Weighted average shares outstanding: Basic 67,900 65,400 67,600 65,200 Diluted 69,500 66,600 68,900 66,900 (a) Pro forma amounts reflect prior year periods adjusted to exclude goodwill amortization of $4 million and $8 million for the three and six months ended September 30, 2000, respectively. See attached notes.
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AIRGAS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Amounts in thousands) (Unaudited) September 30, March 31, 2001 2001 ------------ ---------- ASSETS Trade accounts receivable, net (c) $ 82,949 $ 143,129 Inventories, net 148,766 155,024 Deferred income tax asset, net 10,394 10,143 Prepaids and other current assets 18,933 25,549 --------- --------- TOTAL CURRENT ASSETS 261,042 333,845 Property, plant and equipment, net 702,283 704,646 Goodwill, net 387,767 440,057 Other non-current assets, net 119,521 102,742 --------- --------- TOTAL ASSETS $1,470,613 $1,581,290 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable, trade $ 70,441 $ 76,337 Accrued expenses and other current liabilities 114,058 130,873 Current portion of long-term debt 8,023 72,945 --------- --------- TOTAL CURRENT LIABILITIES 192,522 280,155 Long-term debt (c) 603,111 620,664 Deferred income taxes 164,422 161,176 Other non-current liabilities 42,754 22,446 Stockholders' equity 467,804 496,849 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,470,613 $1,581,290 ========= ========= See attached notes.
5 Notes: (a) On July 20, 2001, the Financial Accounting Standards Board issued Statement No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 142 requires that goodwill and other intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. On August 13, 2001, the Company announced that it adopted SFAS 142 retroactive to April 1, 2001, as permitted under the Statement. Accordingly, results for the three and six month periods ended September 30, 2001 do not include goodwill amortization. For comparability to the current fiscal year, pro forma results reflect the three and six months ended September 30, 2000 adjusted to exclude the amortization of goodwill. The following represents the results as reported for the three and six months ended September 30, 2000: Three Months Ended Six Months Ended September 30, 2000 September 30, 2000 ------------------ ------------------ Operating income: Distribution $26,598 $52,723 Gas Operations 6,448 11,366 ------ ------ Total Operating income 33,046 64,089 ------ ------ Net earnings $10,403 $20,219 ====== ====== Basic earnings per share $ .16 $ .31 Diluted earnings per share $ .16 $ .30 (b) In connection with the adoption of SFAS 142, the Company performed an evaluation of goodwill, which indicated that goodwill of one business unit, Rutland Tool, was impaired. Accordingly, the Company recognized a $59 million non-cash charge recorded retroactive to April 1, 2001 as the cumulative effect of a change in accounting principle for the write-down of goodwill to its fair value. The impaired goodwill was not deductible for taxes, and consequently, no tax benefit was recorded in relation to the $59 million charge. (c) In April 2001, the Company completed the second and final tranche of its $150 million trade receivables securitization program. Net proceeds from the second tranche of approximately $64 million were used to reduce borrowings under the Company's revolving credit facilities. As of September 30, 2001, the Company has approximately $139 million outstanding under the securitization program. (d) Free cash flow, as referenced in this press release, is defined as net earnings, excluding the cumulative effect of a change in accounting principle, plus depreciation, amortization and deferred income taxes, minus capital spending, plus/minus the change in working capital, excluding the impact of the accounts receivable securitization. 6