Airgas Reports 18% EPS Growth for Fiscal Fourth Quarter, Excluding Certain Gains and Charges.Business Editors RADNOR Radnor may refer to:
Airgas Airgas, Inc. (NYSE: ARG), headquartered in Radnor Township, Pennsylvania, through its subsidiaries, is the largest U.S. distributor of industrial, medical and specialty gases (delivered in packaged or cylinder form), and hardgoods (welding, safety and related products). , Inc., (NYSE NYSE See: New York Stock Exchange :ARG See argument. arg - argument ) today reported earnings for its fourth quarter and fiscal year ended March 31, 2002. Net earnings for the quarter, excluding certain gains and losses, were $14.4 million or $0.20 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared to pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net earnings of $11.2 million or $0.17 per diluted share in the same period a year ago. Net earnings for the year ended March 31, 2002, excluding certain gains and charges, were $54.2 million or $0.78 per diluted share versus $48.5 million or $0.72 per diluted share in the prior year period. Free cash flow per diluted share for fiscal 2002 increased to $1.47 from $0.94 in the prior year, contributing to debt reduction of $118 million before acquisition and divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). activity. As disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in the notes to the attached financial statements, the results reported above exclude certain gains and charges related to accounting for goodwill, certain litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. matters, divestitures, and severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and facility exit costs. To conform with the current year's presentation, the prior year's results are presented on a pro forma basis, which excludes goodwill amortization. The reported net earnings per diluted share for the quarter ended March 31, 2002 were $0.12 versus pro forma results of $0.07 for the comparable prior year quarter. The reported and pro forma results per diluted share for the fiscal years ended March 31, 2002 and 2001 were a net loss of $0.15 and pro forma net earnings of $0.62, respectively. While fiscal fourth quarter sales of $416 million were up slightly compared to last year, total same-store sales Same-store sales is a business term which refers to the revenue generated by one of a retail chain's specific outlets during a certain period of time (often a fiscal quarter or a particular shopping season), compared to an identical period in the past, usually in the previous year. declined 3% compared to the same quarter a year ago, partially as a result of one less billing day in the quarter this year. Same-store sales in the Distribution segment were down 3%, reflecting an increase of 4% for gases and rent and a 9% decline in hardgoods. Same-store sales for the Gas Operations segment decreased 3%. For fiscal 2002, sales increased slightly to $1.64 billion from $1.63 billion last year. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. was $58 million versus $66 million last year. "Growing earnings per share by 18% in a soft economy is a solid result," commented Airgas Chairman and Chief Executive Officer Peter McCausland. "Successful execution of our strategic initiatives contributed to improved process and cost management. Our free cash flow increased dramatically during fiscal 2002 and was directed to debt reduction. As a result, we were able to finance the Air Products cylinder cylinder, in mathematics, surface generated by a line moving parallel to a given fixed line and continually intersecting a given fixed curve called the directrix; each line of the family of lines forming the cylinder is called a ruling, or generator. gas acquisition entirely with senior bank debt at the end of February February: see month. . Strong free cash flow generation has always been and continues to be a powerful attribute (1) In relational database management, a field within a record. (2) In object technology, a single element of data. See instance attribute and static attribute. of our business." On February 28, 2002, Airgas announced it had completed the acquisition of the majority of Air Products' U.S. packaged gas business, excluding its electronic gases and magnetic resonance imaging magnetic resonance imaging (MRI), noninvasive diagnostic technique that uses nuclear magnetic resonance to produce cross-sectional images of organs and other internal body structures. related helium helium (hē`lēəm), gaseous chemical element; symbol He; at. no. 2; at. wt. 4.0026; m.p. below −272°C; at 26 atmospheres pressure; b.p. −268.934°C; at 1 atmosphere pressure; density 0. operations. McCausland added, "The integration of the Air Products business is on track and we are pleased with the efforts of our associates and the smooth transition for our customers, but there is still much work ahead. Despite the positive momentum and the fact that several of our regional companies are seeing some hopeful signs, the near term economic outlook remains uncertain. While we wait for an economic recovery, we remain focused on improving operational efficiency, growing market share and integrating our acquired assets -- all of which should drive long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth and shareholder value." Free cash flow is defined as net earnings, excluding certain gains and charges, plus depreciation, amortization and deferred income taxes, minus capital spending, plus/minus
Plus/minus is an ice hockey statistic that measures the team goal differential when a specific player is on the ice. the change in working capital, excluding the impact of the accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. and certain gains and charges. The Company will conduct an earnings teleconference on Thursday Thursday: see week. , May 9, 2002, beginning at 8:30 a.m. Eastern Time. Access the teleconference by calling 712/271-0927 and entering passcode "051002". 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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the site www.airgas.com. The replay will be accessible for one week starting at approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 11:00 a.m. Eastern Time. About Airgas, Inc. Airgas, Inc. is the largest U.S. distributor of industrial, medical and specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. gases, welding welding, process for joining separate pieces of metal in a continuous metallic bond. Cold-pressure welding is accomplished by the application of high pressure at room temperature; forge welding (forging) is done by means of hammering, with the addition of heat. , safety and related products. Its integrated network A network that supports both data and voice and/or different networking protocols. See converged network and new public network. of about 800 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 See e-business. , catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. and telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. channels. Its national scale and strong local presence offer a competitive edge to its diversified diversified (di·verˑ·s customer base. For more information, please visit www.airgas.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release may contain statements that are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , as that term is defined by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 integration of the Air Products cylinder gas business; several regional companies seeing some hopeful signs; an uncertain near-term near-term adj. Of, for, or involving a short period of time in the near future. economic outlook; improving operational efficiency, growing market share and integrating the acquired assets to drive long-term growth and shareholder value. Airgas intends that such forward-looking statements be subject to the safe harbors Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. 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 the Company's integration of the acquired Air Products cylinder gas business; the success of the Company's strategic initiatives in improving operational efficiency, and growing sales and market share; an economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. (including adverse changes in the specific markets for our products); increased competition; customer acceptance of the Company's products; adverse changes in customer buying patterns; 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. dated March 31, 2001 and Forms 10-Q dated June June: see month. 30, 2001, September September: see month. 30, 2001 and December December: see month. 31, 2001 filed by the Company with the Securities and Exchange Commission. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of earnings and consolidated condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. balance sheets follow.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Year Ended
March 31, March 31,
2002 2001 (a) 2002 2001 (a)
---- ---- ---- ----
Net sales: (Pro forma) (Pro forma)
Distribution $385,839 $381,903 $1,494,267 $1,487,422
Gas
Operations 30,118 32,933 141,780 141,479
----------- ----------- ----------- -----------
Total net
sales 415,957 414,836 1,636,047 1,628,901
----------- ----------- ----------- -----------
Costs and
expenses:
Cost of
products sold
(excl. deprec.)
Distribution 195,517 205,705 770,094 797,423
Gas Operations 9,163 10,435 48,659 49,777
Selling,
distribution
and
administrative
expenses (b) 165,833 156,575 619,316 583,355
Depreciation 17,288 14,938 64,785 62,938
Amortization 1,940 2,317 8,160 9,379
Special
charges (c) -- 3,643 -- 3,643
----------- ----------- ----------- -----------
Total costs
and expenses 389,741 393,613 1,511,014 1,506,515
----------- ----------- ----------- -----------
Operating income:
Distribution 23,361 20,518 103,430 104,506
Gas Operations 2,855 4,348 21,603 21,523
Special
charges (c) -- (3,643) -- (3,643)
----------- ----------- ----------- -----------
Total
operating
income 26,216 21,223 125,033 122,386
Interest expense,
net (11,802) (12,539) (47,013) (60,207)
Discount on
securitization
of trade
receivables (799) (1,166) (4,846) (1,303)
Other income
(expense),
net (d) (411) (567) 1,382 242
Equity in
earnings of
unconsolidated
affiliates (e) 960 380 3,835 3,964
----------- ----------- ----------- -----------
Earnings before
income taxes
and the
cumulative
effect of a
change in
accounting
principle 14,164 7,331 78,391 65,082
Income tax
expense 5,428 2,617 29,806 23,119
----------- ----------- ----------- -----------
Earnings before
the cumulative
effect of a
change in
accounting
principle 8,736 4,714 48,585 41,963
Cumulative effect
of a change in
accounting
principle (f) -- -- (59,000) --
----------- ----------- ----------- -----------
Net earnings
(loss) $8,736 $4,714 $(10,415) $41,963
=========== =========== =========== ===========
Per share data:
Basic earnings
(loss) per
share $.13 $.07 $(.15) $.64
Diluted
earnings
(loss) per
share $.12 $.07 $(.15) $.62
Net earnings
(excluding
certain gains &
charges and the
cumulative
effect of a
change in
accounting
principle) (g) $14,367 $11,230 $54,216 $48,479
=========== =========== =========== ===========
Per share data
(excluding
certain gains &
charges and the
cumulative
effect of a
change in
accounting
principle) (g):
Basic earnings
per share $.21 $.17 $.80 $.73
Diluted
earnings per
share $.20 $.17 $.78 $.72
Weighted average
shares
outstanding:
Basic 68,900 66,900 68,100 66,000
Diluted 71,400 67,700 69,900 67,200
Pro forma amounts reflect prior year periods adjusted to
exclude goodwill amortization of $4 million and $16 million
for the three months and year ended March 31, 2001,
respectively. See note (a) for further description.
See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
March 31, March 31,
2002 2001
---------- ----------
ASSETS
Trade accounts receivable, net (h) $ 88,634 $ 143,129
Inventories, net 154,045 155,024
Deferred income tax asset, net 13,210 10,143
Prepaids and other current assets 47,654 25,549
---------- ----------
TOTAL CURRENT ASSETS 303,543 333,845
Property, plant and equipment, net 893,015 704,646
Goodwill (a)(i) 406,548 440,057
Other non-current assets, net 113,951 102,742
---------- ----------
TOTAL ASSETS $1,717,057 $1,581,290
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 82,485 $ 76,337
Accrued expenses and other current
liabilities 136,390 130,873
Current portion of long-term debt 2,456 72,945
---------- ----------
TOTAL CURRENT LIABILITIES 221,331 280,155
Long-term debt (h) 764,124 620,664
Deferred income taxes 198,173 161,176
Other non-current liabilities 30,343 22,446
Stockholders' equity 503,086 496,849
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,717,057 $1,581,290
========== ==========
See attached notes.
Notes:
(a) In July 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. In August 2001, the
Company announced that it adopted SFAS 142 retroactive to April 1,
2001, as permitted under the Statement. Accordingly, results for
the three months and year ended March 31, 2002 do not include
goodwill amortization. For comparability to the current fiscal
year, the pro forma results reflect the three months and year
ended March 31, 2001 adjusted to exclude the amortization of
goodwill. The following represents the results as reported for the
three months and year ended March 31, 2001:
(Unaudited)
Three Months Ended Year Ended
March 31, 2001 March 31, 2001
-------------- --------------
Operating income:
Distribution $17,425 $92,186
Gas Operations 3,836 19,406
Special charges (3,643) (3,643)
------- -------
Total Operating income 17,618 107,949
------- -------
Equity in earnings (losses)
of unconsolidated affiliates (46) 2,260
------- -------
Net earnings $ 1,328 $28,223
======= =======
Basic earnings per share $ .02 $ .43
Diluted earnings per share $ .02 $ .42
(b) Selling, distribution and administrative expenses for the three
months and year ended March 31, 2002 reflect the settlement of
litigation, net of previously established reserves, of $8.5
million ($5.7 million after-tax) related to litigation brought by
Praxair, Inc. against the Company in July 1996.
Selling, distribution and administrative expenses for the three
months and year ended March 31, 2001 include a net litigation
charge of $5.8 million ($3.7 million after-tax). The net
litigation charge consists of a $6.9 million charge associated
with the defense of the lawsuit brought against the Company by
Praxair, Inc. The charge was partially offset by the final
settlement and reversal of $1.1 million of liabilities previously
established in connection with the defense and settlement of
class-action lawsuits related to hazardous materials charges.
(c) Special charges of $3.6 million ($2.3 million after-tax) for the
three months and year ended March 31, 2001 primarily include a
charge of $8.5 million related to a cost reduction plan
implemented by the Company to improve operating results at certain
business units and mitigate rising operating expenses. The cost
reduction charge was partially offset by $4.9 million of special
charge recoveries primarily consisting of a gain from an insurance
settlement associated with a loss incurred in connection with a
fiscal 1997 special charge.
(d) Other income (expense), net, for the year ended March 31, 2002
includes a net non-recurring gain of approximately $1.9 million
($120 thousand after-tax)recorded in the third quarter. The net
non-recurring gain consisted of a $7.4 million gain on the
divestiture of two nitrous oxide plants partially offset by a $1.9
million loss resulting from an indemnity claim against a prior
period divestiture and a $3.6 million charge to write down a
business unit held for sale to its net realizable value.
Other income, net, for the three months and year ended March 31,
2001 includes a $200 thousand after-tax gain from the divestiture
of the Company's Jackson Dome carbon dioxide business.
(e) Equity in earnings of unconsolidated affiliates for the three
months and year ended March 31, 2001 includes after-tax charges of
$700 thousand associated with losses from two equity affiliates.
(f) In connection with the adoption of SFAS 142, the Company performed
an evaluation of goodwill, which indicated that goodwill of one
reporting unit, the tool business, 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.
(g) Net earnings, adjusted to exclude the items described in the above
notes:
Three Months Ended Year Ended
March 31, March 31,
(Amounts in millions) 2002 2001 2002 2001
------ ------ ------ ------
Net earnings as reported $ 8.7 $ 1.3 $(10.4) $ 28.2
Pro forma add-back of
goodwill amortization
(after tax) (a) -- 3.4 -- 13.8
Certain gains and charges
(after-tax):
Net litigation
charges (b) 5.7 3.7 5.7 3.7
Net special
charges (c) -- 2.3 -- 2.3
Other income, net
gain (d) -- (0.2) (0.1) (0.2)
Equity affiliates
charges (e) -- 0.7 -- 0.7
Accounting change (f) -- -- 59.0 --
------ ------ ------ ------
Net earnings (excluding
certain gains and
charges and the
accounting change) $ 14.4 $ 11.2 $ 54.2 $ 48.5
====== ====== ====== ======
(h) The Company participates in a securitization agreement with
two commercial banks to sell up to $175 million of
qualified trade receivables. Net proceeds from the
securitization were used to reduce borrowings under the
Company's revolving credit facilities. The amount of
outstanding receivables under the agreement was $134
million and $73 million at March 31, 2002 and March 31,
2001, respectively.
(i) On February 28, 2002, the Company completed its acquisition
of the majority of the U.S. packaged gas business of Air
Products and Chemicals, Inc. The Company is in the process
of obtaining third-party valuations of assets acquired in
the business combination, and thus, the allocation of the
purchase price and determination of the amount of related
goodwill is subject to adjustment and refinement.
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion