Airgas Reports EPS of $0.21 for Fiscal Second Quarter.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 results for its second quarter ended September September: see month. 30, 2001. Net earnings for the quarter were $14.6 million, or $0.21 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 $13.9 million, or $0.21 per diluted share in the same period a year ago, on a 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 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 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. 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 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 $28 million versus $31 million last year. "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 weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. 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 Cross-selling is the term used to describe the sale of additional products or services to a customer. Less frequently it is used to describe the sale of services to additional business units at an account or to different geographic units of a customer. 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 The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. 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 SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ." The Company will conduct an earnings teleconference on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , October October: see month. 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 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 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 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 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 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 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 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 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 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); 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 To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. 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 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 Form 10-Q Form 10-Q See 10-Q. dated June June: see month. 30, 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 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.
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.
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, September 30,
2000 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.
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