1 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) 24 January 1996 Air Products and Chemicals, Inc. ------------------------------------------------------------ (Exact name of registrant as specified in charter) 7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501 - -------------------------------------------------- -------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (610)-481-4911
Delaware 1-4534 23-1274455 - ---------------------------------------------- ------------------------ --------------------------- (State of other jurisdiction of incorporation) (Commission file number) (IRS Identification number) 2 Item 5. Other Events. On January 24, 1996, the Registrant announced it has reached a $67 million settlement with Bankers Trust Company over $107 million in losses Air Products reported in fiscal 1994 associated with leveraged interest rate swap contracts it entered into between October and December 1993. The settlement includes the termination of two previously closed contracts with Bankers Trust. Under a confidentiality agreement between the two parties, other terms and conditions of the settlement were not made public. The settlement will result in a gain of approximately $40 million after taxes and will be reflected in the company's second fiscal quarter ending March 31, 1996. The Registrant reported net income of $89 million, or 80 cents per share, for the first quarter ended December 31, 1995, compared to last year's $87 million, or 77 cents per share, a per-share increase of 4 percent. Sales of $947 million were up 3 percent versus $921 million last year. Commenting on the first quarter's results, Air Products Chairman H. A. Wagner said, "Our first quarter proved to be a difficult one. We are pleased that our chemicals business could replace the ammonia profits made last year prior to exiting the merchant market. In addition, our equipment business returned to profitability, capitalizing upon the active sales efforts undertaken over the past few years. Slower volume growth and higher costs in our U. S. gases business, however, impacted overall results." Industrial gas sales for the quarter increased 5 percent, while operating income was down 5 percent. Worldwide merchant and tonnage volumes were up from a year ago, despite unexpected U.S. tonnage customer outages. However, the rate of growth has slowed from previous quarters. Merchant prices in the U.S. continued to improve. Operating costs--while lower than the previous quarter--were still higher than last year. Prices across Europe were mixed, but have improved in the United Kingdom during the last three quarters. Strong performance from our joint ventures in southern Europe and 2 3 Asia contributed to the quarter's results. The prior year results also included a loss related to the peso devaluation in our Mexican investment. In chemicals, first quarter sales decreased 4 percent, and operating income equaled last year's results. Margin improvements across the businesses offset the loss of profits from exiting merchant ammonia in last year's second quarter and a decline in methanol pricing. Profits for the environmental and energy systems business were down slightly from a year ago. The equipment and services segment reported significantly higher sales and operating income for the quarter due to increased business activity, including additional liquefied natural gas heat exchanger orders. Looking ahead, Mr. Wagner said, "We are currently enjoying a firm pricing environment in both gases and chemicals, but given the outlook for moderating economic growth rates in 1996, we remain cautious in the near term. We are confident, however, we will continue to deliver earnings growth, although at rates below recent trends." Financial tables follow: 3 4 AIR PRODUCTS AND CHEMICALS, INC. SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION (Unaudited) (In millions, except earnings per share) 4
- -------------------------------------------------------------------------------- Three Months Ended 31 December 1995 1994 - -------------------------------------------------------------------------------- Sales $947 $921 Net Income $ 89 $ 87 Earnings Per Share $.80 $.77 - -------------------------------------------------------------------------------- 5 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries CONSOLIDATED INCOME 5
(In millions, except per share) - -------------------------------------------------------------------------------- Three Months Ended 31 December 1995 1994 - -------------------------------------------------------------------------------- SALES AND OTHER INCOME Sales $947 $921 Other income (expense), net 4 (1) - -------------------------------------------------------------------------------- 951 920 - -------------------------------------------------------------------------------- COSTS AND EXPENSES Cost of sales 560 544 Selling, distribution and administrative 220 206 Research and development 27 24 - -------------------------------------------------------------------------------- OPERATING INCOME 144 146 Income from equity affiliates, net of related expenses 16 9 Interest expense 29 24 - -------------------------------------------------------------------------------- INCOME BEFORE TAXES 131 131 - -------------------------------------------------------------------------------- Income taxes 42 44 - -------------------------------------------------------------------------------- NET INCOME $ 89 $ 87 - -------------------------------------------------------------------------------- MONTHLY AVERAGE OF COMMON SHARES OUTSTANDING 112 113 - -------------------------------------------------------------------------------- EARNINGS PER COMMON SHARE $.80 $.77 - -------------------------------------------------------------------------------- DIVIDENDS DECLARED PER COMMON SHARE - Cash $.26 $.24 - -------------------------------------------------------------------------------- 6 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries CONSOLIDATED BALANCE SHEETS (In millions, except per share) 6
- -------------------------------------------------------------------------------- 31 December 31 December ASSETS 1995 1994 - -------------------------------------------------------------------------------- CURRENT ASSETS Cash and cash items $ 95 $ 104 Trade receivables, less allowances for doubtful accounts 628 578 Inventories 371 305 Contracts in progress, less progress billings 111 99 Other current assets 151 127 - -------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 1,356 1,213 - -------------------------------------------------------------------------------- INVESTMENTS 783 656 PLANT AND EQUIPMENT, at cost 7,501 6,681 Less - Accumulated depreciation 3,926 3,606 - -------------------------------------------------------------------------------- PLANT AND EQUIPMENT, net 3,575 3,075 - -------------------------------------------------------------------------------- GOODWILL 80 66 OTHER NONCURRENT ASSETS 240 176 - -------------------------------------------------------------------------------- TOTAL ASSETS $ 6,034 $ 5,186 - -------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY - -------------------------------------------------------------------------------- CURRENT LIABILITIES Payables, trade and other $ 487 $ 468 Accrued liabilities 223 216 Accrued income taxes 68 60 Short-term borrowings 387 268 Current portion of long-term debt 168 145 - -------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 1,333 1,157 - -------------------------------------------------------------------------------- LONG-TERM DEBT 1,314 998 DEFERRED INCOME & OTHER NONCURRENT LIABILITIES 436 408 DEFERRED INCOME TAXES 506 436 - -------------------------------------------------------------------------------- TOTAL LIABILITIES 3,589 2,999 - -------------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Common stock, par value $1 per share 125 125 Capital in excess of par value 465 475 Retained earnings 2,450 2,194 Unrealized gain on investments 46 41 Cumulative translation adjustments (50) (50) Treasury Stock, at cost (133) (140) Shares in trust (458) (458) - -------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 2,445 2,187 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,034 $ 5,186 - -------------------------------------------------------------------------------- 7 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries SUMMARY BY BUSINESS SEGMENTS 7
(In millions) - -------------------------------------------------------------------------------- Three Months Ended 31 December 1995 1994 - -------------------------------------------------------------------------------- Sales: Industrial Gases $ 551 $525 Chemicals 310 324 Environmental/Energy 14 14 Equipment/Services 72 58 - -------------------------------------------------------------------------------- CONSOLIDATED $ 947 $921 - -------------------------------------------------------------------------------- Operating Income: Industrial Gases $ 103 $109 Chemicals 49 49 Environmental/Energy (1) -- Equipment/Services 4 (1) Corporate and Other (11) (11) - -------------------------------------------------------------------------------- CONSOLIDATED $ 144 $146 - -------------------------------------------------------------------------------- Equity Affiliates' Income: Industrial Gases $ 9 $ 2 Environmental/Energy 7 7 - -------------------------------------------------------------------------------- CONSOLIDATED $ 16 $ 9 - -------------------------------------------------------------------------------- 8 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries SUMMARY BY GEOGRAPHIC REGIONS 8
(In millions) - -------------------------------------------------------------------------------- Three Months Ended 31 December 1995 1994 - -------------------------------------------------------------------------------- Sales: United States $699 $689 Europe 212 199 Canada/Latin America 35 32 Other 1 1 - -------------------------------------------------------------------------------- CONSOLIDATED $947 $921 - -------------------------------------------------------------------------------- Operating Income: United States $109 $117 Europe 34 26 Canada/Latin America 1 3 - -------------------------------------------------------------------------------- CONSOLIDATED $144 $146 - -------------------------------------------------------------------------------- Equity Affiliates' Income: United States $ 6 $ 6 Europe 6 3 Canada/Latin America 1 (1) Other 3 1 - -------------------------------------------------------------------------------- CONSOLIDATED $ 16 $ 9 - -------------------------------------------------------------------------------- 9 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: January 24, 1996 By: /s/ Arnold H. Kaplan ---------------------------- Arnold H. Kaplan Vice President - Finance 9