1 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) 23 April 1996 ------------- Air Products and Chemicals, Inc. -------------------------------------------------- (Exact name of registrant as specified in charter) Delaware 1-4534 23-1274455 - ---------------------------- ------------------------ ------------------- (State of other jurisdiction (Commission file number) (IRS Identification of incorporation) number) 7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501 - ------------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (610) 481-4911 -------------- 2 Item 5. Other Events. The Registrant reported record income from operations of $94 million, or 85 cents per share, for the second quarter ended March 31, 1996. This compares to last year's net income of $88 million, or 79 cents per share, a per-share increase of 8 percent. Sales of $1 billion were up 3 percent versus $983 million last year. These results exclude an after-tax gain in the current quarter of $41 million, or 36 cents per share, from the settlement of certain derivative-related claims. Industrial gas sales for the quarter rose 8 percent. Both merchant and tonnage volumes increased as new capacity came onstream. While operating income was down 9 percent, the company's gas equity affiliate income was $8 million higher in the quarter. Strong results from the company's Spanish, Mexican, and Asian joint ventures were offset by margin pressures in the U.S. and northern Europe. In chemicals, second quarter operating income equaled last year's record results on a 3 percent decline in sales. Despite some weakness in volumes, improved performance across all the major businesses offset the loss of profits from exiting merchant ammonia and a significant decline in methanol pricing. Profits for the environmental and energy systems business were up slightly from a year ago. The company announced earlier this month its intent to sell its 50 percent share in American Ref-Fuel. This waste-to-energy joint venture with Browning-Ferris Industries typically represents a large portion of equity affiliate income for this business segment. The equipment and services segment reported significantly higher operating income and a record backlog for the quarter despite lower sales. For the first half of fiscal 1996, Air Products reported income of $183 million, or $1.65 per share, versus $175 million, or $1.56 per share, up 6 percent on an operating basis. Sales rose 3 percent to $2 billion. These results exclude the 1996 gain from the settlement for certain derivative losses reported in fiscal year 1994. Financial tables follow: 2 3 AIR PRODUCTS AND CHEMICALS, INC. SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION (Unaudited) (a) Includes an after-tax gain of $41 million, or $.36 per share, from the settlement with Bankers Trust Company over losses reported in fiscal 1994 associated with leveraged interest rate swap contracts. 3
(In millions, except earnings per share) - ------------------------------------------------------------------ Three Months Ended Six Months Ended 31 March 31 March 1996 1995 1996 1995 - ------------------------------------------------------------------ Sales $1,013 $983 $1,960 $1,904 Net Income $ 135(a) $ 88 $ 224(a) $ 175 Earnings Per Share $ 1.21(a) $.79 $ 2.01(a) $ 1.56 4 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries CONSOLIDATED INCOME 4
(In millions, except per share) - -------------------------------------------------------------------- Three Months Ended Six Months Ended 31 March 31 March 1996 1995 1996 1995 - -------------------------------------------------------------------- SALES AND OTHER INCOME Sales $1,013 $983 $1,960 $1,904 Other income (expense), net 4 1 8 -- - -------------------------------------------------------------------- 1,017 984 1,968 1,904 - -------------------------------------------------------------------- COSTS AND EXPENSES Cost of sales 609 591 1,169 1,135 Selling, distribution and administrative 231 215 451 421 Research and development 29 26 56 50 - -------------------------------------------------------------------- OPERATING INCOME 148 152 292 298 Income from equity affiliates, net of related expenses 18 8 34 17 Gain on settlement of leveraged interest rate swaps 67 -- 67 -- Interest expense 31 26 60 50 - -------------------------------------------------------------------- INCOME BEFORE TAXES 202 134 333 265 - -------------------------------------------------------------------- Income taxes 67 46 109 90 - -------------------------------------------------------------------- NET INCOME $ 135 $ 88 $ 224 $ 175 - -------------------------------------------------------------------- MONTHLY AVERAGE OF COMMON SHARES OUTSTANDING -- -- 112 112 - -------------------------------------------------------------------- EARNINGS PER COMMON SHARE $ 1.21 $.79 $ 2.01 $ 1.56 - -------------------------------------------------------------------- DIVIDENDS DECLARED PER COMMON SHARE - Cash $.26 $.25 $ .52 $ .49 - -------------------------------------------------------------------- 5 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries CONSOLIDATED BALANCE SHEETS 5
(In millions, except per share) - -------------------------------------------------------------------- 31 March 31 March ASSETS 1996 1995 - -------------------------------------------------------------------- CURRENT ASSETS Cash and cash items $ 82 $ 94 Trade receivables, less allowances for doubtful accounts 649 626 Inventories 383 304 Contracts in progress, less progress billings 114 108 Other current assets 144 127 - -------------------------------------------------------------------- TOTAL CURRENT ASSETS 1,372 1,259 - -------------------------------------------------------------------- INVESTMENTS 795 641 PLANT AND EQUIPMENT, at cost 7,691 7,014 Less - Accumulated depreciation 3,982 3,755 - -------------------------------------------------------------------- PLANT AND EQUIPMENT, net 3,709 3,259 - -------------------------------------------------------------------- GOODWILL 80 67 OTHER NONCURRENT ASSETS 268 187 - -------------------------------------------------------------------- TOTAL ASSETS $6,224 $5,413 - -------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY - -------------------------------------------------------------------- CURRENT LIABILITIES Payables, trade and other $ 491 $ 503 Accrued liabilities 235 241 Accrued income taxes 94 53 Short-term borrowings 423 211 Current portion of long-term debt 25 146 - -------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 1,268 1,154 - -------------------------------------------------------------------- LONG-TERM DEBT 1,495 1,103 DEFERRED INCOME & OTHER NONCURRENT LIABILITIES 398 433 DEFERRED INCOME TAXES 510 442 - -------------------------------------------------------------------- TOTAL LIABILITIES 3,671 3,132 - -------------------------------------------------------------------- SHAREHOLDERS' EQUITY Common stock, par value $1 per share 125 125 Capital in excess of par value 463 471 Retained earnings 2,556 2,255 Unrealized gain on investments 41 40 Cumulative translation adjustments (48) (19) Treasury Stock, at cost (126) (133) Shares in trust (458) (458) - -------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 2,553 2,281 - -------------------------------------------------------------------- - -------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,224 $5,413 - -------------------------------------------------------------------- 6 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During the second quarter of 1996, the Company reached a $67 million settlement with Bankers Trust Company over $107 million in losses the Company reported in fiscal 1994 associated with leveraged interest rate swap contracts. The settlement included the termination of two previously closed contracts with Bankers Trust. Prior to the settlement there was an outstanding liability of $62 million associated with these closed contracts. The results for the three and six months ended 31 March 1996 include a gain of $67 million ($41 million after tax, or $.36 per share) from the settlement. In April 1996, the Company announced its plan to divest its joint venture interest in a waste-to-energy business and commence a share repurchase program designed to acquire approximately 10 percent of its 112 million shares outstanding for financial reporting purposes. 6 7 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries SUMMARY BY BUSINESS SEGMENTS 7
(In millions) - ------------------------------------------------------------------- Three Months Ended Six Months Ended 31 March 31 March 1996 1995 1996 1995 - ------------------------------------------------------------------- Sales: Industrial Gases $ 591 $546 $1,142 $1,071 Chemicals 340 351 650 675 Environmental/Energy 16 17 30 31 Equipment/Services 66 69 138 127 - ------------------------------------------------------------------- CONSOLIDATED $1,013 $983 $1,960 $1,904 - ------------------------------------------------------------------- Operating Income: Industrial Gases $ 100 $110 $ 203 $ 219 Chemicals 53 53 102 102 Environmental/Energy -- -- (1) -- Equipment/Services 5 (3) 9 (4) Corporate and Other (10) (8) (21) (19) - ------------------------------------------------------------------- CONSOLIDATED $ 148 $152 $ 292 $ 298 - ------------------------------------------------------------------- Equity Affiliates' Income: Industrial Gases $ 10 $ 2 $ 19 $ 4 Chemicals -- -- -- -- Environmental/Energy 8 6 15 13 - ------------------------------------------------------------------- CONSOLIDATED $ 18 $ 8 $ 34 $ 17 - ------------------------------------------------------------------- 8 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries SUMMARY BY GEOGRAPHIC REGIONS 8
(In millions) - ------------------------------------------------------------------- Three Months Ended Six Months Ended 31 March 31 March 1996 1995 1996 1995 - ------------------------------------------------------------------- Sales: United States $ 763 $739 $1,462 $1,428 Europe 215 211 427 410 Canada/Latin America 34 33 69 65 Other 1 -- 2 1 - ------------------------------------------------------------------- CONSOLIDATED $1,013 $983 $1,960 $1,904 - ------------------------------------------------------------------- Operating Income: United States $ 119 $119 $ 228 $ 236 Europe 25 26 59 52 Canada/Latin America 4 7 5 10 Other -- -- -- -- - ------------------------------------------------------------------- CONSOLIDATED $ 148 $152 $ 292 $ 298 - ------------------------------------------------------------------- Equity Affiliates' Income: United States $ 8 $ 6 $ 14 $ 12 Europe 5 2 11 5 Canada/Latin America 3 (1) 4 (2) Other 2 1 5 2 - ------------------------------------------------------------------- CONSOLIDATED $ 18 $ 8 $ 34 $ 17 - ------------------------------------------------------------------- 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: 23 April 1996 By: /s/ Arnold H. Kaplan -------------------------------- Arnold H. Kaplan Vice President - Finance 9