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 July 1996 Air Products and Chemicals, Inc. (Exact name of registrant as specified in charter) Delaware 23-1274455 (State of other jurisdiction of incorporation) (IRS Identification number) 1-4534 (Commission file 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 $98 million, or 87 cents per share, up 5 percent from $94 million, or 83 cents per share, in the year-ago quarter. The comparison excludes an after-tax gain of $6 million, or 6 cents per share, from the sale of an idle asset last year. Sales of $997 million were up 2 percent versus $982 million last year. Industrial gas sales for the quarter rose 6 percent, reflecting continued progress in loading new U.S. plants, particularly hydrogen capacity for the chemicals processing and refinery industry. Operating income was down 6 percent from the year-ago quarter, as stronger U.S. results helped to partially offset weaker business conditions in northern Europe. Gas equity affiliate income continued to grow, up $3 million for the quarter. Chemicals operating income increased by $5 million, or 11 percent, on flat sales. Though volumes were mixed, strong plant operations and improved performance across most major businesses resulted in higher profits. Profits for the environmental and energy systems segment were up from a year ago, benefiting from better operations and a project buy-out. The equipment and services segment continued to demonstrate excellent performance. Operating income was up $4 million, with a near-record backlog of high-quality projects. For the quarter, higher interest expense was somewhat offset by lower taxes. For the first nine months of fiscal 1996, Air Products reported net income of $322 million, or $2.88 per share, versus $275 million, or $2.45 per share, for the same period last year. Excluding special items in both years (an after-tax gain of $41 million, or 36 cents per share, in the current fiscal year and an after-tax gain of $6 million, 6 cents per share, in 1995) earnings per share increased 5 percent compared to last year as sales rose 2 percent to $3 billion. Financial tables follow: 2 3 AIR PRODUCTS AND CHEMICALS, INC. SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION (Unaudited) - -------------------------------------------------------------------------------- (a)Includes an after-tax gain of $6 million, or $.06 per share, from the sale of an industrial gas plant. (b)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 Nine Months Ended 30 June 30 June 1996 1995 1996 1995 - -------------------------------------------------------------------------------- Sales $997 $982 $2,957 $2,886 Net Income $ 98 $100(a) $ 322(b) $ 275(a) Earnings Per Share $.87 $.89(a) $ 2.88(b) $ 2.45(a) 4 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries CONSOLIDATED INCOME 4
(In millions, except per share) - ----------------------------------------------------------------------------------- Three Months Ended Nine Months Ended 30 June 30 June 1996 1995 1996 1995 - ------------------------------------------------------------------------------------ SALES AND OTHER INCOME Sales $ 997 $ 982 $2,957 $2,886 Other income, net 9 17 17 17 - ------------------------------------------------------------------------------------ 1,006 999 2,974 2,903 - ------------------------------------------------------------------------------------ COSTS AND EXPENSES Cost of sales 594 595 1,763 1,730 Selling, distribution and administrative 228 217 679 638 Research and development 28 26 84 76 - ------------------------------------------------------------------------------------ OPERATING INCOME 156 161 448 459 Income from equity affiliates, net of related expenses 20 16 54 33 Gain on settlement of leveraged interest rate swaps -- -- 67 -- Interest expense 34 25 94 75 - ------------------------------------------------------------------------------------ INCOME BEFORE TAXES 142 152 475 417 Income taxes 44 52 153 142 - ------------------------------------------------------------------------------------ NET INCOME $ 98 $ 100 $ 322 $ 275 - ------------------------------------------------------------------------------------ MONTHLY AVERAGE OF COMMON SHARES OUTSTANDING -- -- 112 112 - ------------------------------------------------------------------------------------ EARNINGS PER COMMON SHARE $ .87 $ .89 $ 2.88 $ 2.45 - ------------------------------------------------------------------------------------ DIVIDENDS DECLARED PER COMMON SHARE - Cash $ .27 $ .26 $ .79 $ .75 - ------------------------------------------------------------------------------------ 5 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries CONSOLIDATED BALANCE SHEETS (In millions, except per share) 5
- ------------------------------------------------------------------------------------ 30 June 30 June ASSETS 1996 1995 - ------------------------------------------------------------------------------------ CURRENT ASSETS Cash and cash items $ 91 $ 122 Trade receivables, less allowances for doubtful accounts 676 617 Inventories 392 311 Contracts in progress, less progress billings 114 120 Other current assets 160 146 - ------------------------------------------------------------------------------------ TOTAL CURRENT ASSETS 1,433 1,316 - ------------------------------------------------------------------------------------ INVESTMENTS 835 656 PLANT AND EQUIPMENT, at cost 7,909 7,236 Less - Accumulated depreciation 4,056 3,791 - ------------------------------------------------------------------------------------ PLANT AND EQUIPMENT, net 3,853 3,445 - ------------------------------------------------------------------------------------ GOODWILL 80 66 OTHER NONCURRENT ASSETS 271 237 - ------------------------------------------------------------------------------------ TOTAL ASSETS $ 6,472 $ 5,720 ==================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------------------------------------------------------ CURRENT LIABILITIES Payables, trade and other $ 579 $ 580 Accrued liabilities 224 243 Accrued income taxes 62 59 Short-term borrowings 249 238 Current portion of long-term debt 25 37 - ------------------------------------------------------------------------------------ TOTAL CURRENT LIABILITIES 1,139 1,157 - ------------------------------------------------------------------------------------ LONG-TERM DEBT 1,850 1,326 DEFERRED INCOME & OTHER NONCURRENT LIABILITIES 357 421 DEFERRED INCOME TAXES 537 462 - ------------------------------------------------------------------------------------ TOTAL LIABILITIES 3,883 3,366 - ------------------------------------------------------------------------------------ SHAREHOLDERS' EQUITY Common stock, par value $1 per share 125 125 Capital in excess of par value 462 467 Retained earnings 2,624 2,326 Unrealized gain on investments 42 40 Cumulative translation adjustments (68) (8) Treasury Stock, at cost (138) (138) Shares in trust (458) (458) - ------------------------------------------------------------------------------------ TOTAL SHAREHOLDERS' EQUITY 2,589 2,354 - ------------------------------------------------------------------------------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,472 $ 5,720 ==================================================================================== 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 nine months ended 30 June 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 oustanding for financial reporting purposes. The three and nine months ended 30 June 1995 include a gain of $11 million ($6 million after tax, or $.06 per share) from the sale of an industrial gas plant. 6 7 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries SUMMARY BY BUSINESS SEGMENTS For the three and nine months ended 30 June 1995, operating income of industrial gases includes a gain of $11 million from a plant sale. 7
(In millions) - ------------------------------------------------------------------------------------ Three Months Ended Nine Months Ended 30 June 30 June 1996 1995 1996 1995 - ------------------------------------------------------------------------------------ Sales: Industrial Gases $578 $542 $1,720 $1,613 Chemicals 352 352 1,002 1,027 Environmental/Energy 13 11 43 42 Equipment/Services 54 77 192 204 - ------------------------------------------------------------------------------------ CONSOLIDATED $997 $982 $2,957 $2,886 - ------------------------------------------------------------------------------------ Operating Income: Industrial Gases $102 $119 $ 305 $ 338 Chemicals 55 50 157 152 Environmental/Energy 3 (2) 2 (2) Equipment/Services 4 -- 13 (4) Corporate and Other (8) (6) (29) (25) - ------------------------------------------------------------------------------------ CONSOLIDATED $156 $161 $ 448 $ 459 - ------------------------------------------------------------------------------------ Equity Affiliates' Income: Industrial Gases $ 12 $ 9 $ 31 $ 13 Chemicals -- -- -- -- Environmental/Energy 8 7 23 20 - ------------------------------------------------------------------------------------ CONSOLIDATED $ 20 $ 16 $ 54 $ 33 - ------------------------------------------------------------------------------------ 8 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries SUMMARY BY GEOGRAPHIC REGIONS For the three and nine months ended 30 June 1995, operating income of the United States includes a gain of $11 million from the sale of an industrial gas plant. 8
(In millions) - ------------------------------------------------------------------------------------ Three Months Ended Nine Months Ended 30 June 30 June 1996 1995 1996 1995 - ------------------------------------------------------------------------------------ Sales: United States $761 $732 $2,223 $2,160 Europe 191 216 618 626 Canada/Latin America 37 33 106 98 Other 8 1 10 2 - ------------------------------------------------------------------------------------ CONSOLIDATED $997 $982 $2,957 $2,886 - ------------------------------------------------------------------------------------ Operating Income: United States $124 $120 $ 352 $ 356 Europe 27 33 86 85 Canada/Latin America 5 8 10 18 Other -- -- -- -- - ------------------------------------------------------------------------------------ CONSOLIDATED $156 $161 $ 448 $ 459 - ------------------------------------------------------------------------------------ Equity Affiliates' Income: United States $ 7 $ 7 $ 21 $ 19 Europe 7 6 18 11 Canada/Latin America 2 2 6 -- Other 4 1 9 3 - ------------------------------------------------------------------------------------ CONSOLIDATED $ 20 $ 16 $ 54 $ 33 - ------------------------------------------------------------------------------------ 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 July 1996 By: /s/ Arnold H. Kaplan --------------------------- Arnold H. Kaplan Vice President - Finance 9