UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended 30 June 2002
-------------
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _____________
Commission file number 1-4534
------
AIR PRODUCTS AND CHEMICALS, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 23-1274455
- ---------------------------------------------------------------------------------------------------------
(State of Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 610-481-4911
--------------------
Indicate by check |X| whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No | |
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at 8 August 2002
- --------------------------- ------------------------------------
Common Stock, $1 par value 227,219,388
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
INDEX
Page No.
--------
Part I. Financial Information
Consolidated Balance Sheets -
30 June 2002 and 30 September 2001 .................................. 3
Consolidated Income -
Three Months and Nine Months Ended 30 June 2002 and 2001 ............ 4
Consolidated Statement of Comprehensive Income -
Three Months and Nine Months Ended 30 June 2002 and 2001 ............ 5
Consolidated Cash Flows -
Nine Months Ended 30 June 2002 and 2001 ............................. 6
Summary by Business Segments -
Three Months and Nine Months Ended 30 June 2002 and 2001 ............ 7
Summary by Geographic Regions -
Three Months and Nine Months Ended 30 June 2002 and 2001 ............ 9
Notes to Consolidated Financial Statements ........................... 10
Management's Discussion and Analysis ................................. 14
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K ............................ 20
Signatures ........................................................... 21
BASIS OF PRESENTATION:
The consolidated financial statements of Air Products and Chemicals, Inc. and
its subsidiaries (the "company" or "registrant") included herein have been
prepared by the company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of the company, the
accompanying statements reflect all adjustments necessary to present fairly the
financial position, results of operations and cash flows for those periods
indicated, and contain adequate disclosure to make the information presented not
misleading. Such adjustments are of a normal, recurring nature unless otherwise
disclosed in the notes to consolidated financial statements. However, the
interim results for the periods indicated herein do not reflect certain
adjustments, such as the valuation of inventories on the LIFO cost basis, which
can only be finally determined on an annual basis. It is suggested that these
consolidated condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the company's latest annual
report on Form 10-K.
Results of operations for any three or nine month period are not necessarily
indicative of the results of operations for a full year.
2
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Millions of dollars, except per share)
- ----------------------------------------------------------------------------------------------------------------------
30 June 2002 30 September 2001
ASSETS (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and cash items $185.8 $66.2
Trade receivables, less allowances for doubtful accounts 933.4 913.4
Inventories 366.4 410.5
Contracts in progress, less progress billings 84.7 67.9
Other current assets 210.7 226.8
- ----------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 1,781.0 1,684.8
- ----------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN NET ASSETS OF AND ADVANCES TO EQUITY AFFILIATES 568.5 499.5
PLANT AND EQUIPMENT, at cost 10,562.1 10,226.5
Less - Accumulated depreciation 5,413.8 5,108.0
- ----------------------------------------------------------------------------------------------------------------------
PLANT AND EQUIPMENT, net 5,148.3 5,118.5
- ----------------------------------------------------------------------------------------------------------------------
GOODWILL 381.9 384.7
OTHER NONCURRENT ASSETS 356.8 396.6
- ----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $8,236.5 $8,084.1
======================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Payables, trade and other $486.7 $512.2
Accrued liabilities 352.5 341.6
Accrued income taxes 64.7 48.4
Short-term borrowings 33.4 255.7
Current portion of long-term debt 173.2 194.5
- ----------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,110.5 1,352.4
- ----------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT 2,007.4 2,027.5
DEFERRED INCOME & OTHER NONCURRENT LIABILITIES 689.2 702.0
DEFERRED INCOME TAXES 779.2 778.4
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 4,586.3 4,860.3
- ----------------------------------------------------------------------------------------------------------------------
MINORITY INTEREST IN SUBSIDIARY COMPANIES 126.5 118.0
- ----------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common stock (par value $1 per share, issued 2002 and 2001-249,455,584 249.4 249.4
shares)
Capital in excess of par value 429.1 384.9
Retained earnings 4,214.5 3,965.9
Accumulated other comprehensive income (loss) (392.0) (452.5)
Treasury Stock, at cost (2002 - 22,236,196 shares; 2001 - 22,269,244 (767.8) (768.8)
shares)
Shares in trust (2002 - 8,917,158 shares; 2001 - 11,723,720 shares) (209.5) (273.1)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 3,523.7 3,105.8
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $8,236.5 $8,084.1
=====================================================================================================================
The accompanying notes are an integral part of these statements.
3
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED INCOME
(Unaudited)
(Millions of dollars, except per share)
- --------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
30 June 30 June
2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------
SALES $1,374.0 $1,450.9 $4,003.2 $4,461.2
COSTS AND EXPENSES
Cost of sales 976.7 1,039.3 2,856.1 3,239.9
Selling and administrative 172.9 173.3 531.3 536.3
Research and development 31.9 31.0 90.4 90.3
Other (income) expense, net (22.6) (8.1) (28.7) (12.4)
- --------------------------------------------------------------------------------------------------------------
OPERATING INCOME 215.1 215.4 554.1 607.1
Income from equity affiliates, net of 17.7 21.8 56.4 59.6
related expenses
Gain on sale of packaged gas business -- -- 55.7 --
Interest expense 27.5 48.7 93.6 147.4
- --------------------------------------------------------------------------------------------------------------
INCOME BEFORE TAXES AND MINORITY INTEREST 205.3 188.5 572.6 519.3
Income taxes 60.6 53.8 179.0 152.1
Minority interest (a) 3.4 2.4 12.5 4.7
- --------------------------------------------------------------------------------------------------------------
NET INCOME $141.3 $132.3 $381.1 $362.5
=============================================================================================================
BASIC EARNINGS PER $.65 $.62 $1.76 $1.69
COMMON SHARE
- --------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER $.63 $.60 $1.71 $1.65
COMMON SHARE
- --------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE 218.0 214.9 216.8 214.7
NUMBER OF COMMON
SHARES (in millions)
- --------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE 224.7 220.5 222.7 219.1
NUMBER OF COMMON AND
COMMON EQUIVALENT
SHARES (in millions)
- --------------------------------------------------------------------------------------------------------------
DIVIDENDS DECLARED PER $.21 $.20 $.61 $.58
COMMON SHARE - Cash
- --------------------------------------------------------------------------------------------------------------
(a) Minority interest primarily includes before-tax amounts.
The accompanying notes are an integral part of these statements.
4
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited)
(Millions of dollars)
- -----------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
30 June 30 June
2002 2001 2002 2001
- -----------------------------------------------------------------------------------------------------------------
NET INCOME $141.3 $132.3 $381.1 $362.5
- -----------------------------------------------------------------------------------------------------------------
OTHER COMPREHENSIVE INCOME
(LOSS), net of tax
Unrealized gains (losses) on investments:
Unrealized holding gains (losses) arising 3.3 9.7 .8 9.4
during the period
Less: reclassification adjustment for gains (2.9) -- (4.6) --
included in net income
- -----------------------------------------------------------------------------------------------------------------
Net unrealized holding gains (losses) on .4 9.7 (3.8) 9.4
investments
Net gain (loss) on derivatives (.2) 3.8 .2 5.1
Translation adjustments 105.9 (10.2) 64.1 (87.5)
- -----------------------------------------------------------------------------------------------------------------
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), net of 106.1 3.3 60.5 (73.0)
tax
- -----------------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME $247.4 $135.6 $441.6 $289.5
- -----------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
5
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED CASH FLOWS
(Unaudited)
(Millions of dollars)
- ------------------------------------------------------------------------------------------------------------------------
Nine Months Ended
30 June
2002 2001
- ------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net Income $381.1 $362.5
Adjustments to reconcile income to cash provided by operating
activities:
Depreciation 423.9 433.6
Deferred income taxes 30.8 26.5
Undistributed earnings of unconsolidated affiliates (33.2) (45.2)
(Gain) loss on sale of assets and investments (66.6) 1.2
Other 12.1 (19.0)
Working capital changes that provided (used) cash, excluding effects of
acquisitions and divestitures:
Trade receivables (16.8) 8.5
Inventories and contracts in progress 15.9 (33.2)
Payables, trade and other (39.2) (38.1)
Other 16.7 (8.4)
- ------------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES 724.7 688.4
- ------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to plant and equipment (a) (459.8) (510.1)
Investment in and advances to unconsolidated affiliates (35.2) (27.8)
Acquisitions, less cash acquired (10.3) --
Proceeds from sale of assets and investments 283.7 42.4
Other 6.3 30.1
- ------------------------------------------------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (215.3) (465.4)
- ------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Long-term debt proceeds 43.6 120.5
Payments on long-term debt (174.1) (42.1)
Net decrease in commercial paper and other short-term borrowings (229.6) (157.4)
Purchase of treasury stock -- (75.0)
Dividends paid to shareholders (129.8) (122.2)
Issuance of stock for options and award plans 96.4 77.6
- ------------------------------------------------------------------------------------------------------------------------
CASH USED FOR FINANCING ACTIVITIES (393.5) (198.6)
- ------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash 3.7 (2.4)
- ------------------------------------------------------------------------------------------------------------------------
Increase in Cash and Cash Items 119.6 22.0
Cash and Cash Items - Beginning of Year 66.2 94.1
- ------------------------------------------------------------------------------------------------------------------------
Cash and Cash Items - End of Period $185.8 $116.1
========================================================================================================================
(a) Excludes capital lease additions of $2.7 and $.6 in 2002 and 2001,
respectively.
The accompanying notes are an integral part of these statements.
6
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY BUSINESS SEGMENTS
(Unaudited)
Business segment information is shown below:
(Millions of dollars)
- -----------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
30 June 30 June
2002 2001 2002 2001
- ---------------------------------------------------------------------------------------------------------------------
Revenues from external customers
Gases $915.7 $1,018.9 $2,706.6 $3,125.0
Chemicals 385.4 374.7 1,092.5 1,158.3
Equipment 72.9 57.3 204.1 177.9
- ----------------------------------------------------------------- --------------------------------------------------
Segment Totals 1,374.0 1,450.9 4,003.2 4,461.2
- ----------------------------------------------------------------- --------------------------------------------------
Consolidated Totals $1,374.0 $1,450.9 $4,003.2 $4,461.2
- --------------------------------------------------------------------------------------------------------------------
Operating income
Gases $166.7 $175.2 $441.2 $523.4
Chemicals 47.9 39.7 130.4 95.2
Equipment 5.7 2.7 11.7 7.3
- ---------------------------------------------------------------------------------------------------------------------
Segment Totals 220.3 217.6 583.3 625.9
- ---------------------------------------------------------------------------------------------------------------------
Corporate research and development and (5.2) (2.2) (29.2) (18.8)
other income (expense)
- ---------------------------------------------------------------------------------------------------------------------
Consolidated Totals $215.1 $215.4 $554.1 $607.1
- ---------------------------------------------------------------------------------------------------------------------
Operating income (excluding special items)
Gases $166.7 $175.2 $467.4(a) $549.7(c)
Chemicals 47.9 39.7 135.0(b) 99.8(d)
Equipment 5.7 2.7 11.7 7.3
- ---------------------------------------------------------------------------------------------------------------------
Segment Totals 220.3 217.6 614.1 656.8
- ---------------------------------------------------------------------------------------------------------------------
Corporate research and development and (5.2) (2.2) (29.2) (12.8)(e)
other income (expense)
- ---------------------------------------------------------------------------------------------------------------------
Consolidated Totals $215.1 $215.4 $584.9 $644.0
- ---------------------------------------------------------------------------------------------------------------------
Equity affiliates' income
Gases $14.4 $17.8 $46.5 $53.1
Chemicals 3.4 3.7 8.5 5.2
Equipment (.1) .4 1.4 1.3
- ---------------------------------------------------------------------------------------------------------------------
Segment Totals 17.7 21.9 56.4 59.6
- ---------------------------------------------------------------------------------------------------------------------
Other -- (.1) -- --
- ---------------------------------------------------------------------------------------------------------------------
Consolidated Totals $17.7 $21.8 $56.4 $59.6
- ---------------------------------------------------------------------------------------------------------------------
7
(Millions of dollars)
- --------------------------------------------------------------------------------------------------------------
30 June
2002 2001
- --------------------------------------------------------------------------------------------------------------
Identifiable assets (f)
Gases $5,771.1 $5,926.0
Chemicals 1,399.3 1,404.5
Equipment 202.4 206.8
- --------------------------------------------------------------------------------------------------------------
Segment Totals 7,372.8 7,537.3
- --------------------------------------------------------------------------------------------------------------
Corporate assets 295.2 169.6
- --------------------------------------------------------------------------------------------------------------
Consolidated Totals $7,668.0 $7,706.9
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Twelve Months Ended
30 June
2002 2001
- --------------------------------------------------------------------------------------------------------------
ORONA (f)
Gases 11.1% 12.6%
Chemicals 12.7% 9.1%
Equipment 8.1% 6.2%
- --------------------------------------------------------------------------------------------------------------
Segment Totals 11.3% 11.7%
- --------------------------------------------------------------------------------------------------------------
Consolidated Totals 10.6% 11.1%
- --------------------------------------------------------------------------------------------------------------
(a) The results for the nine months ended 30 June 2002 excluded a cost
reduction charge of $26.2.
(b) The results for the nine months ended 30 June 2002 excluded a cost
reduction charge of $4.6.
(c) The results for the nine months ended 30 June 2001 excluded a cost
reduction charge of $26.3.
(d) The results for the nine months ended 30 June 2001 excluded a cost
reduction charge of $4.6.
(e) The results for the nine months ended 30 June 2001 excluded a litigation
settlement charge of $6.0.
(f) Operating return on net assets (ORONA) is calculated as the rolling four
quarter sum of operating income divided by the rolling five quarter average
of total assets less investments in equity affiliates (identifiable
assets). The ORONA calculation excluded all special items impacting
operating income.
8
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY GEOGRAPHIC REGIONS
(Unaudited)
(Millions of dollars)
- ---------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
30 June 30 June
2002 2001 2002 2001
- ---------------------------------------------------------------------------------------------------------
Revenues from external customers
United States $845.8 $958.0 $2,503.6 $2,970.1
Canada 28.5 31.2 80.6 90.5
- ---------------------------------------------------------------------------------------------------------
Total North America 874.3 989.2 2,584.2 3,060.6
- ---------------------------------------------------------------------------------------------------------
United Kingdom 122.4 115.7 341.3 353.8
Spain 89.2 79.5 250.9 236.6
Other Europe 173.8 151.0 506.2 458.5
- ---------------------------------------------------------------------------------------------------------
Total Europe 385.4 346.2 1,098.4 1,048.9
- ---------------------------------------------------------------------------------------------------------
Asia 88.1 84.0 240.1 253.7
Latin America 26.1 31.4 80.3 97.8
All Other .1 .1 .2 .2
- ---------------------------------------------------------------------------------------------------------
Total $1,374.0 $1,450.9 $4,003.2 $4,461.2
- ---------------------------------------------------------------------------------------------------------
Note: Geographic information is based on country of origin. The other Europe
segment operates principally in France, Germany, Netherlands, and Belgium.
9
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of dollars, except per share)
Goodwill
- --------
The company adopted Statement of Financial Accounting Standards (SFAS) No. 142,
"Goodwill and Other Intangible Assets," on 1 October 2001. As required by SFAS
No. 142, the company performed an impairment test on goodwill as of 1 October
2001, which indicated no impairment of goodwill. As of 1 October 2001, the
company is no longer amortizing goodwill, including goodwill associated with
investments in equity affiliates. Goodwill amortization in 2001 was $14.8 on an
after-tax basis, or $.07 per share. Goodwill amortization for the three and nine
months ended 30 June 2001 was $3.6 and $11.0, on an after-tax basis, or $.02 and
$.05 per share, respectively.
Changes to the carrying amount of consolidated goodwill by segment for the nine
months ended 30 June 2002, are as follows:
Gases Chemicals Equipment Total
-----------------------------------------------------------
Balance as of 30 September 2001 $289.2 $87.1 $8.4 $384.7
Acquisitions and adjustments 13.1 -- -- 13.1
Currency translation and other 17.2 2.3 .9 20.4
Goodwill related to the sale of (36.3) -- -- (36.3)
U.S. packaged gas business
-----------------------------------------------------------
Balance as of 30 June 2002 $283.2 $89.4 $9.3 $381.9
-----------------------------------------------------------
Goodwill associated with the divested U.S. packaged gas business was included in
the carrying amount of the business in determining the gain on disposal. The
amount of goodwill included in the carrying amount of the divested business was
based on the relative fair value of the divested business to the total reporting
unit. The fair values were determined using the expected present value of future
cash flows.
Acquisition
- -----------
In July 2002, the company increased its ownership in San Fu Chemical Company,
Ltd. (San Fu) from 48% to 70%. Since 1987, the company has had a joint venture
arrangement with San Fu, the largest industrial gas company in Taiwan. San Fu is
a full service industrial gas and chemical company with a broad product
portfolio supplying specialty gases, electronic piping and equipment, liquid/
bulk gases, pipeline/on-site gases and chemicals to the Taiwan marketplace.
For the nine months ended 30 June 2002, San Fu had revenues of approximately
$153. This investment is consistent with the company's strategy of investing in
growth markets (Asia) and industries (electronics) and will provide a stronger
foundation for growth in both Taiwan and China.
As of 30 June 2002, the company accounted for its investment in San Fu using the
equity method. In July 2002, the company obtained control through the
acquisition of an additional 22% of the outstanding shares. As part of this
transaction, put options have been issued which give other shareholders the
right to sell San Fu stock to the company at market price when exercised. The
options are effective from January 2005 thru January 2015 and allow for the sale
of all stock owned by other shareholders to the company.
10
Divestiture
- -----------
On 28 February 2002, the company completed the sale of the majority of its U.S.
packaged gas business, excluding the electronic gases and magnetic resonance
imaging related helium operations, to Airgas, Inc. (Airgas). This sale included
approximately 100 facilities in 30 states associated with the filling and
distribution of cylinders, liquid dewars, tube trailers, and other containers of
industrial gases and non-electronic specialty gases, and the retail selling of
welding hardgoods, including customer service centers, warehouses, and other
related assets. The company also sold its packaged gas operations in the
Carolinas and in Southern Virginia to National Welders Supply Company, Inc., a
joint venture between Airgas and the Turner family of Charlotte, N.C. The assets
sold generated approximately $240 in revenues in 2001 with a modest contribution
to operating income. For the five months ended 28 February 2002, the revenues
were approximately $100 also with a modest contribution to operating income.
These facilities employed 1,200 people. The cash proceeds from these
transactions were $254.5. The results for the nine months ended 30 June 2002
included a gain of $55.7 ($25.7 after-tax, or $.12 per share).
Earnings Per Share
- ------------------
The following table sets forth the computation of basic and diluted earnings per
share:
- --------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
30 June 30 June
2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------
Numerator for basic EPS
and diluted EPS-net income $141.3 $132.3 $381.1 $362.5
Denominator for basic EPS
-weighted average shares (in 218.0 214.9 216.8 214.7
millions)
Effect of diluted securities
Employee stock options (in millions) 5.9 4.7 5.2 3.5
Other award plans (in millions) .8 .9 .7 .9
- --------------------------------------------------------------------------------------------------
6.7 5.6 5.9 4.4
- --------------------------------------------------------------------------------------------------
Denominator for diluted EPS
-weighted average shares and
assumed conversions (in 224.7 220.5 222.7 219.1
millions)
- --------------------------------------------------------------------------------------------------
Basic EPS $.65 $.62 $1.76 $1.69
- --------------------------------------------------------------------------------------------------
Diluted EPS $.63 $.60 $1.71 $1.65
- --------------------------------------------------------------------------------------------------
11
Equity Affiliates' Income
- -------------------------
Income from equity affiliates contributed $.08 and $.09 to diluted earnings per
share for the three months ended 30 June 2002 and 2001, respectively. Income
from equity affiliates contributed $.24 and $.25 to diluted earnings per share
for the nine months ended 30 June 2002 and 2001, respectively.
Cost Reduction Programs
- -----------------------
The results for the nine months ended 30 June 2002 included a charge of $30.8
($18.9 after-tax, or $.09 per share) for a global cost reduction plan (2002
Plan) including packaged gas divestiture related reductions. This charge
included $27.1 for severance and pension related benefits and $3.7 for asset
impairments related to the planned sale or closure of two small chemical
facilities. The company will eliminate 333 positions in areas of manufacturing,
engineering, distribution, and overheads. The restructuring charges included in
cost of sales, selling and administrative, research and development, and other
expense were $13.4, $14.1, $.4, and $2.9, respectively.
The results for the nine months ended 30 June 2001 included a charge of $30.9
($20.0 after-tax, or $.09 per share) for a global cost reduction plan. The plan
included 311 position eliminations, resulting in a charge of $22.4 for severance
and termination benefits. A charge of $8.5 was recognized for asset impairments
and other related restructuring costs. The restructuring charges included in
cost of sales, selling and administrative, and other expense were $14.4, $9.4,
and $7.1, respectively. The results for the nine months ended 30 June 2001 also
included a charge of $6.0 ($3.7 after-tax, or $.02 per share) related to a
litigation settlement.
The following table summarizes changes to the carrying amount of the accrual for
cost reduction plans for the nine months ended 30 June 2002:
Severance Pension Other (1) Total
----------------------------------------------
Balance at 30 September 2001 $49.1 $ -- $1.5 $50.6
Provision 16.4 10.7 3.7 30.8
Noncash charges -- (10.7) (3.7) (14.4)
Cash expenditures (29.1) -- -- (29.1)
Adjustments 2001 Plan (2.4) -- (.6) (3.0)
- ------------------------------------------------------------------------------
Balance at 30 June 2002 $34.0 $ -- $.9 $34.9
- ------------------------------------------------------------------------------
(1) Asset impairments and related expenses are included in the other category.
New Accounting Standards
- ------------------------
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
143, "Accounting for Asset Retirement Obligations." The Statement addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and associated asset retirement costs.
The Statement requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred. The
asset retirement obligations will be capitalized as part of the carrying amount
of the long-lived asset. The Statement applies to legal obligations associated
with the retirement of long-lived assets that result from the acquisition,
construction, development, and normal operation of long-lived assets. The
company will adopt the Statement effective 1 October 2002 and is currently
evaluating its impact.
12
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." The Statement supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of." The Statement also supersedes Accounting Principles Board
Opinion (APB) No. 30 provisions related to the accounting and reporting for the
disposal of a segment of a business. This Statement establishes a single
accounting model, based on the framework established in SFAS No. 121, for
long-lived assets to be disposed of by sale. The Statement retains most of the
requirements in SFAS No. 121 related to the recognition of impairment of
long-lived assets to be held and used. Additionally, SFAS No. 144 broadens the
definition of businesses that qualify for reporting as discontinued operations
and changes the timing of recognizing losses on such operations. The company
will adopt the Statement effective 1 October 2002. The company does not believe
this Statement will have a material effect on the company's financial
statements.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This Statement rescinds SFAS No. 4, "Reporting Gains and Losses
from Extinguishment of Debt," and SFAS No. 64, "Extinguishments of Debt Made to
Satisfy Sinking-Fund Requirements." The Statement requires gains and losses from
debt extinguishments that are used as part of the company's risk management
strategy to be classified as income from operations rather than as extraordinary
items, net of tax. The company adopted this Statement as of 1 July 2002. The
impact on the company will be to reclassify the extraordinary item recorded in
the fourth quarter of the prior year to other (income) expense.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." This Statement addresses the accounting for
costs associated with disposal activities covered by SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets," and with exit
(restructuring) activities previously covered by Emerging Issues Task Force
(EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity." This Statement nullifies EITF
94-3 in its entirety and requires that a liability for all costs be recognized
when the liability is incurred. This Statement also establishes a fair value
objective for initial measurement of the liability. The Statement will be
applied prospectively to exit or disposal activities initiated after 31 December
2002. The company is currently evaluating the impact of adopting this Statement.
Reclassification
- ----------------
As of 1 October 2001, the company changed its reporting of the demurrage/
cylinder income to include it in revenues. Previously, it was included
as an offset to cost of sales. The consolidated income statements of the
prior periods have been adjusted to reflect this reclassification.
13
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS
THIRD QUARTER FISCAL 2002 VS. THIRD QUARTER FISCAL 2001
- -------------------------------------------------------------------------------
(Millions of dollars, except per share)
RESULTS OF OPERATIONS
Consolidated - Sales in the third quarter of 2002 of $1,374.0 declined 5%, or
$76.9, mainly due to the lower contractual natural gas cost pass-through
compared with the same quarter in the prior year. Operating income of $215.1
remained relatively flat compared with $215.4. Income from equity affiliates was
down $4.1 to $17.7. Net income was $141.3, or $.63 diluted earnings per share,
compared to net income of $132.3, or $.60 diluted earnings per share.
There were no special items impacting the quarter's results of operations. All
comparisons in the discussion are to the corresponding period in the prior year
unless otherwise stated.
Gases - Sales declined $103.2, or 10%, to $915.7 in the third quarter of 2002.
Excluding natural gas cost pass-through, acquisitions, divestitures, and
currency effects, sales declined 1%. This decline of 1% was principally due to
the recessionary impact on merchant gases demand.
Operating income of $166.7 declined $8.5, or 5%. This decline was principally
due to higher maintenance spending in Chemicals and Process Industries (CPI) and
the first full quarter effect of the U.S. packaged gas divestiture. Favorable
currency and exchange, modest improvements in electronics demand, and continued
margin improvement in the worldwide liquid bulk business partially offset the
operating income decline. Operating margin of 18.2% was up 1% compared to 17.2%.
This operating margin improvement resulted from lower natural gas cost
pass-through.
The electronics business showed improvement with sales increasing 2%. Worldwide
CPI tonnage volume increased 9% overall with hydrogen and carbon monoxide (HYCO)
experiencing 5% growth. CPI posted record HYCO volumes and experienced a
recovery in gaseous oxygen and nitrogen (GOX/GAN) volumes due to higher
petrochemical demand. Liquid bulk volume declined 4% in North America,
reflecting continued softness in demand across a number of end markets. Average
liquid oxygen and nitrogen (LOX/LIN) prices decreased 2% as a direct result of
the removal of national surcharges. Excluding the negative surcharge removal
effect of 5%, the underlying average LOX/LIN price increased 3%.
In the European liquid bulk business, a 2% increase in the European LOX/LIN
price index and lower operating costs were offset by a 2% decline in European
liquid bulk volumes due to weakness in United Kingdom and Southern Europe
manufacturing. The Asian liquid bulk volume increased 11% primarily due to rapid
volume growth in Southern and Eastern China.
Gases equity affiliates' income was $14.4 down $3.4 from $17.8. This decline
resulted from the absence of income from two cogeneration facilities that were
divested in the fourth quarter of 2001 and lower results of electronics equity
affiliates.
14
Chemicals - Sales in the third quarter of 2002 of $385.4 increased $10.7, or 3%.
Excluding the effects of natural gas cost pass-through and currency impacts,
sales were up 4%. This increase was a result of an 8% volume increase offset by
an unfavorable price/mix variance of 4%. In the performance chemicals division,
volumes were up 11% led by emulsions with its improved U.S. demand in the
adhesives, non-wovens, and coatings end markets. Chemical intermediates volumes
increased 4%. Higher polyurethane intermediate shipments were partially offset
by lower shipments of amines primarily due to continued weakness in the
herbicide end market.
Operating income of $47.9 increased $8.2, or 21%, due primarily to higher
chemical volumes. The operating margin of 12.4% improved from prior year's
10.6%.
Equipment - Sales of $72.9 were up $15.6, or 27%, and operating income increased
$3.0, to $5.7, primarily due to higher liquid natural gas (LNG) exchanger
activity coupled with higher shipments of helium containers. The sales backlog
for the equipment segment at 30 June 2002 was $145.7 compared to $132.4 at 30
June 2001 and $227.2 at 30 September 2001.
INTEREST
Interest expense of $27.5 decreased $21.2, or 44%. A third of this decline
resulted from lower average interest rates with the remainder driven by lower
average debt outstanding.
INCOME TAXES
The effective tax rate for the third quarter of 2002 was 30.0%, after minority
interest of $3.4. The comparable rate in the prior year was 28.9%. Excluding
the impact of special items, the effective tax rate for the nine months ended
30 June 2002 and 2001 was 30.0%, respectively.
15
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS
NINE MONTHS FISCAL 2002 VS. NINE MONTHS FISCAL 2001
- -------------------------------------------------------------------------------
(Millions of dollars, except per share)
RESULTS OF OPERATIONS
Consolidated - Sales for the nine months ended 30 June 2002 of $4,003.2 were 10%
lower than the $4,461.2 reported in the prior year. Operating income of $554.1
declined $53.0, or 9%. Income from equity affiliates was $56.4 compared with
$59.6. Net income was $381.1, or $1.71 diluted earnings per share, compared to
net income of $362.5, or $1.65 diluted earnings per share. The results for the
nine months ended 30 June 2002 were impacted by two special items: an after-tax
gain of $25.7, or $.12 per share, on the sale of the U.S. packaged gas business;
and an after-tax charge of $18.9, or $.09 per share, for a global cost reduction
plan. The results for the nine months ended 30 June 2001 included an after-tax
charge of $20.0 million, or $.09 per share, for a cost reduction program and an
after-tax charge of $3.7 million, or $.02 per share, related to a litigation
settlement. Excluding these special items, net income for the nine months ended
30 June 2002 of $374.3 declined $11.9, or 3%, from the prior year. Excluding
special items, diluted earnings per share of $1.68 declined $.08, or 5%, from
prior year.
Operating income benefited from global cost reduction plans initiated in 2002
and prior years. See Note 3 to the consolidated financial statements in the 2001
annual report on Form 10-K for details of the 2001, 2000, and 1999 plans.
Benefits generated from the plans of $58 for fiscal year 2001 resulted primarily
from reduced personnel costs. Benefits of $87 are expected for fiscal year 2002
and $110 for fiscal year 2003.
The remaining discussion and analysis of the results of operations excludes the
impact of special items. The exclusion of special items focuses the discussion
of the results on the ongoing operations of the company and its segments. See
Summary of Business Segments for details of special items by segment. All
comparisons in the discussion are to the corresponding period in the prior year
unless otherwise stated.
Gases - Sales in the first nine months of 2002 were $2,706.6 compared to
$3,125.0, down $418.4 or 13%. Excluding natural gas cost pass-through,
acquisitions, divestitures, and currency effects, sales declined 3% due
principally to lower shipments to the electronics industry. The decline in sales
was partially offset by higher prices for merchant gases and volume growth in
CPI.
Operating income of $467.4 declined $82.3, or 15%, due principally to the
depressed conditions in the global electronics market. North American operating
results included a write-off of $7.3 million in receivables associated with
three bankrupt steel customers. Higher maintenance spending in CPI and the
effect of the U.S. packaged gas divestiture also contributed to the decline in
operating income. Higher merchant gases pricing partially offset the operating
income decline. Currency and exchange related effects had minimal impact on
operating income. Operating margin of 17.3% was down 0.3% compared to 17.6%.
Electronics volume decline resulted from continued depressed conditions in the
global electronics market. Electronics was affected by a sharp reduction in
customers' global silicon wafer processing due to soft demand. Overall CPI
tonnage volume grew 6% as significantly increased HYCO demand was coupled with
modest recovery in GOX/GAN. Liquid bulk volume declined 7% in North America,
reflecting continued soft demand across a number of end markets. Improved
pricing, lower operating costs, and lower overheads in liquid bulk were able to
more than offset the volume decline. Average LOX/LIN prices increased 3% as a
direct result of pricing and surcharge initiatives. The surcharges were
discontinued in the third quarter of 2002.
A 4% increase in the European LOX/LIN price was tempered by a 4% decline in
European liquid bulk volumes due to weakness in United Kingdom and Southern
Europe manufacturing. The Asian liquid bulk volume increase
16
of 2% due to growth in Southern and Eastern China and Thailand was partially
offset by lower demand by northern Chinese steel makers.
Gases equity affiliates' income was down $6.6, or 12%, mainly due to the absence
of income from two cogeneration facilities that were divested in the fourth
quarter of 2001 which more than offset a $5.0 one-time tax benefit related to an
asset revaluation in an Italian affiliate.
Chemicals - Sales in the first nine months of 2002 were $1,092.5 compared to
$1,158.3, down 6%. Excluding the effects of natural gas cost pass-through and
some prior year polyvinyl alcohol (PVOH) post-sale export revenues, sales
declined 2%. Unfavorable currency impacts had minimal effect on revenues. The
overall volume index increase was 1%, excluding the impact of PVOH.
Performance chemicals experienced a volume increase of 3%, while chemical
intermediates volume declined 3%. This decline in chemicals intermediates volume
resulted primarily from weaker demand in specialty and higher amines.
Operating income of $135.0 increased 35%, or $35.2. Improved margins resulting
from lower natural gas and feedstock costs, and reduced overhead costs drove the
significant increase in operating income. Currency and exchange related effects
had minimal impact on operating income. The operating margin of 12.4% was
significantly improved from 8.6%.
Equity affiliates' income increased $3.3 primarily due to the improved
profitability of the global polymers joint venture.
A long-term supplier of sulfuric acid, which is used in the production of
dinitrotoluene (DNT), has been operating under Chapter 11 bankruptcy protection
since 8 May 2001. The company's DNT operation and supply to its customers have
not been materially impacted. The company expects this supplier to be successful
in its reorganization. In the unlikely event of unsuccessful reorganization, the
profitability of the chemicals segment could be materially impacted on an annual
basis. The company extended an $8.0 line of credit to this supplier, of which
$5.6 was drawn at 30 June 2002. The company also entered into a product
prepayment agreement with this supplier. At 30 June 2002, the unamortized
balance was $5.4. The company expects to fully recover these advances.
Equipment - Sales of $204.1 grew $26.2 while operating income of $11.7 increased
$4.4. The improved results reflected increased activity across several product
lines.
INTEREST
Interest expense of $93.6 decreased $53.8, or 36%. The decrease resulted from a
combination of lower average debt outstanding and lower interest rates.
INCOME TAXES
The effective tax rate for the first nine months of 2002 was 32.0%, after
minority interest of $12.5. The effective rate excluding the impact of special
items was 30.0% for both 2002 and 2001.
LIQUIDITY, CAPITAL RESOURCES, AND OTHER FINANCIAL DATA
Capital expenditures during the first nine months of 2002 totaled $508.0
compared to $538.5. Additions to plant and equipment were $459.8 during the
first nine months of 2002 compared to $510.1. Investments in and advances to
unconsolidated affiliates were $35.2 during the current period versus $27.8.
Capital expenditures for new plant and equipment are expected to be between $650
and $700 in 2002. In addition, the company intends to
17
continue to pursue acquisition opportunities and investments in affiliated
entities. It is anticipated these expenditures will be funded with cash from
operations and proceeds from asset sales.
Total debt at 30 June 2002 and 30 September 2001, expressed as a percentage of
the sum of total debt, shareholders' equity, and minority interest, was 38% and
43%, respectively. Total debt decreased from $2,477.7 at 30 September 2001 to
$2,214.0 at 30 June 2002.
There was no commercial paper outstanding at 30 June 2002. The company's total
revolving credit commitments amounted to $600.0 at 30 June 2002. No borrowings
were outstanding under these commitments. Additional commitments totaling $63.4
are maintained by the company's foreign subsidiaries, of which $27.2 was
utilized at 30 June 2002.
The estimated fair value of the company's long-term debt, including current
portion, as of 30 June 2002 is $2,253.1 compared to a book value of $2,180.6.
There have been no material changes to the company's commitments for future
payments of long-term debt, leases, and unconditional purchase obligations.
The company's off-balance sheet arrangements include the sale and leaseback of
cryogenic vessel equipment with a third party and the debt of its equity
affiliates. In September 2001, the company sold and leased back certain
cryogenic vessel equipment for $301.9. This operating lease has a five-year term
with purchase and renewal options. This lease includes a residual value
guarantee by the company not to exceed $256. The probability of incurring a
material loss under this guarantee is remote. Summarized financial information
of equity affiliates was provided in Note 7 to the consolidated financial
statements in the company's 2001 annual report on Form 10-K.
The company has not entered into any off-balance sheet arrangements with a
limited or special purpose entity. Liquidity and availability of capital
resources are not dependent on the use of off-balance sheet arrangements. The
company has no material obligations to provide funding for lines of credit,
take-or-pay contracts, throughput agreements, or similar types of arrangements.
As discussed in Note 16 to the consolidated financial statements in the
company's 2001 annual report on Form 10-K, the company has guaranteed repayment
of borrowings of certain foreign affiliates and has equity support agreements
related to the financing by equity affiliates for cogeneration projects. The
company does not expect that any sum it may have to pay in connection with these
matters will have a materially adverse effect on its consolidated financial
position or results of operations.
The company's principal related parties are equity affiliates operating in
industrial gas and chemicals businesses. During 2001 and the nine months ended
30 June 2002, the company did not engage in any material transactions involving
related parties that included terms or other aspects that differ from those
which would be negotiated with clearly independent parties.
FINANCIAL INSTRUMENTS
The net financial instrument position of the company was reduced from $2,300.5
at 30 September 2001 to $2,243.1 at 30 June 2002 primarily due to scheduled
repayments of outstanding long-term debt partially offset by the impact of a
weaker U.S. Dollar on the translation of foreign currency debt. All financial
instruments are entered into for other than trading purposes and there was no
material change to market risk sensitivity since 30 September 2001.
CRITICAL ACCOUNTING POLICIES
The consolidated financial statements are prepared in conformity with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and
18
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The significant accounting policies of the company are described in the notes to
the consolidated financial statements included in the annual report on Form
10-K. Judgments and estimates of uncertainties are required in applying the
company's accounting policies in many areas. Following are some of the areas
requiring significant judgments and estimates: useful lives of plant and
equipment; cash flow and valuation assumptions in performing asset impairment
tests of long-lived assets and goodwill; and estimated costs to be incurred for
environmental matters, contract disputes, and settlement of litigation.
NEW ACCOUNTING STANDARDS
In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset
Retirement Obligations." In August 2001, the FASB issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." In April 2002,
the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections." In June 2002,
the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities." See the notes to the consolidated financial statements for
information concerning the company's implementation and impact of these new
standards.
FORWARD-LOOKING STATEMENTS
The forward-looking statements contained in this document are based on current
expectations regarding important risk factors. Actual results may differ
materially from those expressed. Factors that might cause forward-looking
statements to differ materially from actual results include those specifically
referenced as future events of outcomes that the company anticipates, as well
as, among other things, overall economic and business conditions and demand for
Air Products' goods and services during that time; competitive factors in the
industries in which it competes; the ability to recover increased energy and raw
material costs from customers; spikes in the pricing of natural gas; changes in
government regulations; consequences of acts of terrorism impacting the United
States' and other markets; the success of implementing cost reduction programs;
the timing, impact, and other uncertainties of future acquisitions or
divestitures; significant fluctuations in interest rates and foreign currencies;
the impact of tax and other legislation and regulations in jurisdictions in
which Air Products and its affiliates operate; and the timing and rate at which
tax credits can be utilized.
19
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a)(10.1) Confidential Transition and Retirement
Agreement and General Release
(a)(10.2) Employment Agreement
(a)(12) Computation of Ratios of Earnings to Fixed
Charges
(a)99.1 Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
(a)99.2 Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) During the quarter ended 30 June 2002, the
Registrant filed Current Reports on Form 8-K
dated 23 April 2002, 10 May 2002 and 4 June
2002 in which Item 5 of such form was reported,
and 23 April 2002 in which Item 5 and Item 9 of
such form were reported.
20
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)
Date: August 13, 2002 By: /s/John R. Owings
----------------------------------------
John R. Owings
Vice President and Chief Financial Officer
21
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
EXHIBITS
To
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended 30 June 2002
Commission File No. 1-4534
-------------------
AIR PRODUCTS AND CHEMICALS, INC.
(Exact name of registrant as specified in its charter)
===============================================================================
INDEX TO EXHIBITS
(a)(10.1) Confidential Transition and Retirement Agreement
and General Release
(a)(10.2) Employment Agreement
(a)(12) Computation of Ratios of Earnings to Fixed Charges
(a)99.1 Certification Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
(a)99.2 Certification Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Exhibit (a)10.1
CONFIDENTIAL TRANSITION AND RETIREMENT AGREEMENT
AND GENERAL RELEASE
THIS AGREEMENT, made and entered into on this 19th day of April 2002,
by and between Air Products and Chemicals, Inc., a Delaware corporation
(hereinafter "Air Products" or the "Company"), with its principal office
in Allentown, Pennsylvania, and Leo J. Daley, an individual residing at
4535 Belmont Drive, Emmaus, Pennsylvania, 18049 ("Executive"), reads as follows:
I. RECITALS
A. The Company currently employs Executive as its CFO. The Company and
Executive have mutually agreed that Executive's employment by the Company will
be continued until October 4, 2002 (the "Retirement Date"), except as provided
below, but during that period, Executive will transition out of his duties and
employment and assist the Company in the identification and recruitment of a
successor, with Executive retiring from employment on the Retirement Date. In
the event that Executive's successor is fully engaged in services to the Company
prior to the Retirement Date, as determined in the discretion of the Company's
Chairman, President and CEO (the "CEO") and as provided herein, Executive shall
cease to perform the duties of his office on the date specified by the CEO
without any effect on the terms of this Agreement except as specifically
provided herein.
B. The Company and Executive wish to enter into an agreement, effective
as of the date hereof, to (i) provide for transitional services to be rendered
by Executive in a manner reasonably requested by the CEO prior to the Retirement
Date, (ii) provide a release of the Company by Executive as to any claims
including, without limitation, claims that might be asserted by Executive under
the Age Discrimination in Employment Act, as further described herein, and
(iii) assuming that Executive performs the services required by this Agreement,
retires on the Retirement Date and executes and does not rescind the Second
Release, as defined herein, provide Executive with the benefits and entitlements
described in Section 2.
II. SUBSTANTIVE PROVISIONS
In consideration of the mutual promises contained in this Agreement, the
Company and Executive, intending to be legally bound, agree as follows:
1. The Company and Executive agree that Executive shall continue in
employment and perform such duties for the Company as are related typically to
the office of CFO and to the identification, recruitment and transitioning of
his successor, in the manner reasonably directed by the CEO, in his sole
discretion, beginning on the date hereof, and shall end his employment and
resign all offices with the Company and all affiliates on the Retirement Date;
provided, however, that, if Executive's successor has been hired prior to the
Retirement Date and the successor is fully engaged in rendering services to the
Company, (a) Executive's performance of the duties of his office shall end on
any earlier date specified by the CEO which shall be not later than that date
which is six weeks after the date such successor begins working as a full-time
employee at the Company (the "Earlier Date"), (b) Executive shall make himself
available to the CEO from time to time to consult by telephone through the
Retirement Date with regard to the transition of his duties and related matters,
and (c) Executive's compensation and benefits will continue until October 4,
2002 at the levels in effect as of the date hereof (except as otherwise provided
in subparagraphs (b) and (c) of Section 2 hereof). Until the Retirement Date or
Earlier Date, Executive shall report to the CEO, perform his duties faithfully
and assist in the identification and recruitment of, and transition to, his
successor. On the Retirement Date or Earlier Date Executive agrees to return to
the Company his office keys, Company credit cards and all other Company
property. If Executive complies with the provisions of this Section 1, he shall
continue to have office space appropriate for his current position and
reasonable secretarial assistance through the Retirement Date.
2. In consideration of and subject to the performance of the obligations
undertaken by Executive under Sections 4 and 7, the releases provided by
Executive under Section 6 and, as contemplated by Section 1, Executive's
provision to the Company of reasonable transition and other services through the
Retirement Date and Executive's retirement on the Retirement Date, the Company
shall pay or cause to be paid or provided to Executive, subject to applicable
employment and income tax withholdings and deductions, the following amounts and
benefits:
(a) Promptly following the Retirement Date or, if later, promptly
following the eighth day after the date of execution of the Second Release, as
defined below, without revocation (the "Payment Date"), a lump sum payment
before taxes) of $577,500 and an additional payment on the Payment Date
representing 5 weeks vacation.
(b) On the regular date for payments under the Company's Annual
Incentive Plan, but no earlier than the Payment Date, a bonus for the Company's
fiscal year ended September 30, 2002 ("FY02") if a bonus is determined to be
due under the terms of the plan for other executives of the Company in
accordance with the terms of the plan in the amounts currently contemplated to
be paid to Executive; provided, however, that if Executive leaves employment
prior to September 30, 2002 after the transition has been completed to the
satisfaction obtains another full-time position and begins work at such position
prior to of the CEO and September 30, 2002, then any payment under this
subparagraph shall be proportionately reduced for the portion of FY02 in which
Executive is working at such position.
(c) Earnout of the Performance Shares granted to Executive under the
Company's Long Term Incentive Plan with performance periods ending on September
30, 2002, (i.e., Cycles 1B and 2) to the same extent as determined by the
Management Development and Compensation Committee of the Board of Directors of
the Company (the "MD&CC") for other officers of the Company, to be paid
following the deferral period applicable to such awards as provided in the
applicable award agreements; provided, however, that if Executive leaves
employment prior to September 30, 2002 after the transition has been completed
to the satisfaction of the CEO and obtains another full-time position and begins
working at such other position prior to September 30, 2002, then the number of
any Performance Shares earned out in accordance with this subparagraph shall be
proportionately reduced for the portion of FY02 in
2
which Executive is working at such position. Also, (i) consistent with that
certain letter agreement dated December 4, 2001 and the exhibits thereto (the
"LTIP Grant Letter"), the Non-Statutory Stock Options granted pursuant to the
LTIP Grant Letter shall vest in accordance with their terms on October 1, 2002
and be or become exercisable on and after each of October 1, 2002, 2003, and
2004, and (ii) for purposes of Exhibits B and C of the LTIP Grant Letter and all
existing stock option and deferred stock unit (i.e., known as Performance Share
and Career Share) award agreements between the Company and Executive (together,
the "Incentive Award Agreements"), Executive's termination of employment shall
be deemed a retirement.
(d) Payment of supplemental pension benefits equal to the difference
between (i) Executive's accrued vested pension benefits under the Company's
Pension Plan for Salaried Employees and Supplementary Pension Plan (together,
the "Pension Plans") as of the Retirement Date and (ii) those pension benefits
calculated by adding five years of service to the actual service credited under
the Pension Plans for benefit accrual purposes, assuming that Executive's final
average compensation under the Pension Plans is $577,500, unless Executive's
actual final average compensation is higher, and that Executive had satisfied as
of the Retirement Date the age and service requirements for any early retirement
subsidy available under the Pension Plans. Supplemental pension benefits payable
as a result of this subparagraph calculated in all cases reflecting service to
October 4, 2002 shall be payable solely from the Company's general assets and
shall be paid in the same form, and at the same time, as is elected by Executive
for the payment of his benefit under the Supplementary Pension Plan.
(e) $40,000 for transition support provided by Right Management
Consultants or such other firm as Executive shall select, as well as for all
other costs related to the transition.
All payments and benefits under this Section 2 shall be made to
Executive (or his estate or designated beneficiary) regardless of whether he
dies or becomes disabled during the period in which payments are to be made;
however, that that the payment under subparagraph (d) of this Section 2 shall be
provided, paid in the same form, and at the same time, as provided for under the
Supplementary Pension Plan.
3. Executive agrees and acknowledges that the Company, on a timely
basis, has paid, or agreed to pay, to Executive all other amounts due and owing
based on his prior services and that the Company has no obligation, contractual
or otherwise to Executive, except as provided herein, nor does it have any
obligation to hire, rehire or re-employ Executive in the future. Executive also
acknowledges that the Company is not required to enter into this Agreement and
that a continuation of his employment by the Company through the Retirement Date
will provide Executive with compensation and benefits that are substantially in
excess of that to which Executive would have been entitled.
4(a) Executive further agrees and acknowledges that by reason of his
employment by and service to the Company, he has had access to confidential
information of the Company and its affiliates, and, therefore, hereby reaffirms
his obligations under, and agrees that
3
he shall continue to be subject to, the Employee Patent and Confidential
Information Agreement entered into by Executive on May 14, 1979.
(b) Executive acknowledges that the Company is generally engaged in
business throughout the world. During Executive's employment by the Company and
for two years after the Retirement Date, Executive agrees that he will not,
unless acting with the prior written consent of Air Products, directly or
indirectly, own, manage, control, or participate in the ownership, management or
control of, or be employed or engaged by, or otherwise affiliated or associated
with, as an officer, director, employee, consultant, independent contractor or
otherwise, any other corporation, partnership, proprietorship, firm, association
or other business entity, or otherwise engage in any business, which is engaged
in any manner anywhere (i) in one or more of the following businesses engaged in
by the Company, determined as of the Retirement Date or the Earlier Date, if
applicable: the industrial gas and/or the chemicals business, involving in the
latter case alkyl amines, polymer emulsions, DNT and TDA, and/or specialty
chemicals products, and/or services related to any of the foregoing; and/or
(ii) in any business under development to be owned or managed by the Company as
of the Retirement Date or the Earlier Date, if applicable, and/or in any
business divested by the Company but as to which the Company, on the Retirement
Date or the Earlier Date, if applicable, has an obligation to refrain from
involvement, but only for so long as such restriction applies to the Company.
Notwithstanding the foregoing, the ownership of not more than 5% of the equity
of a publicly traded entity shall not be deemed to be a violation of this
subparagraph.
(c) Executive also agrees that he will not, directly or indirectly,
during the period described in subparagraph (b), induce any person who is an
employee, officer, director, or agent of the Company, or any subsidiary or
affiliate, to terminate such relationship, or employ, assist in employing, or
otherwise be associated in a business referred to in subparagraph (b) with, any
present employee or officer of the Company or of any subsidiary or affiliate of
the Company, including without limitation those who commence such positions with
the Company or any such subsidiary or affiliate after the Retirement Date or the
Earlier Date, if applicable.
(d) For the purposes of this subparagraphs (a), (b), and (c) of this
Section 4, the term "Company" shall be deemed to include Air Products and the
controlled subsidiaries and affiliates of Air Products.
5(a) Executive acknowledges and agrees that the restrictions contained
in Section 4 are reasonable including as to duration, scope and geography and
are necessary to protect and preserve the legitimate interests, properties,
goodwill and business of the Company and its subsidiaries and affiliates, that
the Company would not have entered into this Agreement in the absence of such
restrictions and that irreparable injury will be suffered by the Company should
Executive breach the provisions of that Section. Executive represents and
acknowledges that (i) Executive has been advised by the Company to consult
Executive's own legal counsel in respect of this Agreement, and (ii) that
Executive has had full opportunity, prior to execution of this Agreement, to
review thoroughly this Agreement with Executive's counsel.
4
(b) Executive further acknowledges and agrees that a breach of the
restrictions in Section 4 cannot be adequately compensated by monetary damages.
Executive agrees that, the Company shall be entitled to (i) preliminary and/or
permanent injunctive relief, without the necessity of proving actual damages, or
posting of a bond, provided that the Company meets the relevant burdens of proof
with respect to any preliminary and/or permanent injunctive proceedings other
than as set forth above in this subparagraph (b), (ii) an equitable accounting
of all earnings, profits and other benefits arising from any violation of
Section 4, and (iii) enforce the terms, including requiring forfeitures, under
other plans, programs and agreements under which Executive has been granted a
benefit contingent on a covenant similar to those contained in Section 4, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Company may be entitled including without limitation under the
Incentive Award Agreements as modified by clause (ii) of Section 11 of this
Agreement. In the event that the provisions of Section 4 should ever be
adjudicated to exceed the limitations permitted by applicable law in any
jurisdiction, it is the intention of the parties that the provision shall be
amended to the extent of the maximum limitations permitted by applicable law,
that such amendment shall apply only within the jurisdiction of the court (or
other body to which the dispute was submitted for resolution) that made such
adjudication, and that the provision otherwise be enforced to the maximum extent
permitted by law.
(c) If Executive breaches his obligations under Section 4, he agrees
that suit may be brought, and that he consents to personal jurisdiction, in the
United States District Court for the Eastern District of Pennsylvania, or if
such court does not have jurisdiction or will not accept jurisdiction, in any
court of general jurisdiction in Allentown, Pennsylvania, consents to the
non-exclusive jurisdiction of any such court in any such suit, action or
proceeding, and waives any objection which he may have to the laying of venue of
any such suit, action or proceeding in any such court. Executive also
irrevocably and unconditionally consents to the service of any process,
pleadings, notices or other papers.
6. For and in consideration of the benefits to be paid to Executive
under this Agreement, Executive does hereby REMISE, RELEASE, AND FOREVER
DISCHARGE the Company, and each of its past or present subsidiaries and
affiliates, its and their past or present officers, directors, shareholders,
partners, employees and agents, their respective successors and assigns, heirs,
executors and administrators, the pension and employee benefit plans of the
Company, or of its past or present subsidiaries or affiliates, and the past or
present trustees, administrators, agents, or employees of the pension and
employee benefit plans (hereinafter collectively referred to as the "Company"),
acting in any capacity whatsoever, of and from any and all manner of actions and
causes of actions, suits, debts, claims and demands whatsoever in law or in
equity, which he ever had, now has, or hereafter may have, or which his heirs,
executors or administrators hereafter may have, by reason of any matter, cause
or thing whatsoever from the beginning of his employment with the Company to the
date of these presents and particularly, but including without limitation, any
claims arising from or relating in any way to his employment relationship and
the termination of that employment relationship with the Company, including but
not limited to, any claims which have been asserted, could have been asserted,
or could be asserted now or in the future under any federal, state or local
laws,
5
including any claims under the Age Discrimination in Employment Act ("ADEA"),
29 U.S.C. Section 621 et seq., Title VII of the Civil Rights Act of 1964,
-- ---
42 U.S.C. Section 2000e et seq., the Pennsylvania Human Relations Act, any
-- ---
contracts between the Company and Executive and any common law claims now or
hereafter recognized and all claims for counsel fees and costs; provided,
however, that this release shall not apply to any entitlements under the terms
of the Agreement or under any other plans or programs of the Company in which
Executive participated and under which Executive has accrued and become entitled
to a benefit other than under any Company separation or severance plan or
program (except as provided under this Agreement or under the CIC Agreement as
defined and provided in Section 11 hereof). Executive expressly waives all
rights afforded by any statute which expressly limits the effect of a release
with respect to unknown claims. Executive acknowledges the significance of this
release of unknown claims and the waiver of any protection against a release of
unknown claims. Notwithstanding the foregoing, Executive shall be indemnified by
the Company as to any liability, cost or expense for which Executive would have
been indemnified during employment, in accordance with the Company's certificate
of incorporation or insurance coverages to the extent in force for executives of
the Company serving in similar capacities generally, for actions taken on behalf
of the Company within the scope of his employment by the Company. The payments
and benefits provided by Section 2 shall be also be conditioned upon Executive
executing, and not revoking as provided therein, another written release
containing substantially the same provisions as described in this Section 6, in
the form attached hereto as Annex 1, prior to the 22nd day following the
Retirement Date (the "Second Release"). In consideration of Executive's release
in favor of the Company, the Company shall execute a release in favor of
Executive on the date the Second Release becomes irrevocable, in the form
attached hereto as Annex 2.
7. Executive further agrees, covenants and promises that he will not in
any way communicate the terms of this Agreement to any person other than his
immediate family and his attorney and financial consultant or when necessary to
enforce this Agreement or to advise a third party of his obligations under this
Agreement. Notwithstanding the foregoing, the Company and Executive also agree
that for a period of two years following the Retirement Date, Executive will
provide and that at all times after the date hereof the Company may similarly
provide, with prior written notice to Executive, a copy of Section 4 to any
business or enterprise (i) which Executive may directly or indirectly own,
manage, operate, finance, join, control or of which he may participate in the
ownership, management, operation, financing, or control, or (ii) with which
Executive may be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise, or in connection with
which Executive may use or permit to be used Executive's name. Executive agrees
not to disparage the name, business reputation or business practices of the
Company or its subsidiaries or affiliates, or its or their officers, employees,
or directors, and the Company agrees not to disparage the name or business
reputation of Executive.
8. Executive hereby certifies that he has read the terms of the General
Release contained herein, that he has had the opportunity to discuss it with his
attorney, and that he understands its terms and effects. Executive acknowledges,
further, that he is executing this
6
Agreement and General Release of his own volition with a full understanding of
its terms and effects and with the intention of releasing all claims recited
herein in exchange for the consideration described above, which he acknowledges
is adequate and satisfactory to him. None of the above-named parties, nor their
agents, representatives, or attorneys have made any representations to Executive
concerning the terms or effects of the General Release contained herein other
than those contained herein.
9. Executive hereby acknowledges that he has the right to consider this
Agreement for a period of 21 days prior to execution. Executive also understands
that he has the right to revoke this General Release for a period of seven days
following execution by giving written notice to the Company at 720l Hamilton
Boulevard, Allentown, Pennsylvania, 18195-1501, in which event the provisions of
this Agreement shall be null and void, and the parties shall have the rights,
duties, obligations and remedies afforded by applicable law.
10. This Agreement may be assigned to any subsidiary, affiliate or
successor of the Company and shall inure to the benefit of and be binding upon
the Company and Executive and the successors and assigns of each; provided,
however, that any assignment by the Company shall not relieve it of its
obligation to ensure the satisfaction of its obligations to Executive as
required by Section 2. Executive may not assign any of his personal undertakings
hereunder.
11. This Agreement supersedes all prior agreements and sets forth the
entire understanding among the parties hereto with respect to the subject matter
hereof and cannot be changed, modified, extended or terminated except upon
written amendment approved and executed by the CEO; provided, however, that
Executive agrees that, notwithstanding this Agreement, (i) the provisions of the
Employee Patent and Confidential Information Agreement entered into by Executive
on May 14, 1979, shall continue to apply in accordance with their terms
notwithstanding this Agreement, and (ii) the provisions of the Incentive Award
Agreements shall continue to apply in accordance with their terms except as
otherwise provided in subparagraph (c) of Section 2 hereof as to Performance
Shares and except that, for purposes of interpreting the provisions of the
first indented clause of Section 2 of the "Conditions"(as defined in, and as
set forth in Exhibit A to, each of the Incentive Award Agreements), "in
Competition with the Company" shall mean a violation or breach of subparagraph
(b) of Section 4 of this Agreement; and provided further, however, that should a
Change in Control of the Company, as defined in that certain agreement between
Executive and the Company dated September 16, 1999 (the "CIC Agreement"), occur
on or before the Retirement Date, the CIC Agreement shall continue in full force
and effect and the Retirement Date under this Agreement shall be treated under
the CIC Agreement as Executive's "Termination Date" for other than death,
"Disability" or "Cause", as such terms appearing in quotations are defined in
the CIC Agreement, and this Agreement shall be null and void.
12. The Company and Executive mutually consent to the resolution by
arbitration, in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association, to be held in
Philadelphia, Pennsylvania, of all claims
7
or controversies, other than a request for equitable relief such as an
injunction, arising out of the Executive's employment (or its termination) that
the Company may have against the Executive or that the Executive may have
against the Company or against its officers, directors, shareholders, employees
or agents in their capacity as such other than a claim which is primarily for an
injunction or other equitable relief. The parties shall share the fees and costs
of the arbitrator and all other costs in connection with any arbitration and
each party shall bear its legal fee and expenses. Any such arbitration
proceedings must be instituted by the party requesting a resolution within
twelve months of the time that party knew, or should have known, of the events
or facts giving rise to the dispute requiring resolution. The failure to
institute arbitration proceedings within such period shall constitute an
absolute bar to the institution of any proceedings and a waiver of all claims.
13. This Agreement shall be interpreted and enforced under the laws of
the Commonwealth of Pennsylvania.
14. The Company and Executive mutually agree that all public statements
made by or on behalf of either of them with respect to Executive's transition
from employment with and retirement from the Company in accordance with this
Agreement shall be subject to the prior written consent of the other which
consent will not be unreasonably delayed or denied.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
ATTEST: AIR PRODUCTS AND CHEMICALS, INC.
/s/ W. D. Brown /s/ John P. Jones III
- ------------------------------ By:------------------------------
Secretary Chairman, President and CEO
/s/ Leo J. Daley /s/ Paula E. Buchvalt
- ------------------------------ ---------------------------------
Executive Witness
8
ANNEX 1
GENERAL RELEASE
---------------
1. I, Executive, for and in consideration of certain payments to be
made and the benefits to be provided to me under the Confidential Transition and
Retirement Agreement and Mutual Release, dated as of April 19, 2002 (the
"Agreement") with Air Products and Chemicals, Inc. (the "Company"), and
conditioned upon such payments and provisions, do hereby REMISE, RELEASE, AND
FOREVER DISCHARGE the Company and each of its past or present subsidiaries and
affiliates, its and their past or present officers, directors, shareholders,
partners, employees and agents, their respective successors and assigns, heirs,
executors and administrators, the pension and employee benefit plans of the
Company, or of its past or present subsidiaries or affiliates, and the past or
present trustees, administrators, agents, or employees of the pension and
employee benefit plans (hereinafter collectively included within the term the
"Company"), acting in any capacity whatsoever, of and from any and all manner of
actions and causes of actions, suits, debts, claims and demands whatsoever in
law or in equity, which I ever had, now have, or hereafter may have, or which my
heirs, executors or administrators hereafter may have, by reason of any matter,
cause or thing whatsoever from the beginning of my employment with the Company
to the date of these presents and particularly, but including without
limitation, any claims arising from or relating in any way to my employment
relationship and the termination of, and my retirement from, my employment
relationship with the Company, including but not limited to, any claims which
have been asserted, could have been asserted, or could be asserted now or in the
future under any federal, state or local laws, including any claims under the
Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. Section 621 et seq.,
-- ---
Title VII of the Civil Rights Act of 1964, 42 U.S.C. Section 2000e et seq., the
-- ---
Pennsylvania Human Relations Act, any contracts between the Company and me and
any common law claims now or hereafter recognized and all claims for counsel
fees and costs; provided, however, that this Release shall not apply to any
entitlements under the terms of the Agreement or under any other plans or
programs of the Company in which I participated and under which I have accrued
and become entitled to a benefit other than under any Company separation or
severance plan or program (other than as provided for under the Agreement or
under the CIC Agreement as defined and provided in Section 11 of the Agreement).
Notwithstanding the foregoing, I understand that I shall be indemnified by the
Company as to any liability, cost or expense for which I would have been
indemnified during employment, in accordance with the Company's certificate of
incorporation or insurance coverages to the extent in force for executives of
the Company serving in similar capacities generally, for actions taken on behalf
of the Company within the scope of my employment by the Company.
2. Subject to the limitations of paragraph 1 above, I expressly waive
all rights afforded by any statute which expressly limits the effect of a
release with respect to unknown claims. I understand the significance of this
release of unknown claims and the waiver of statutory protection against a
release of unknown claims.
9
3. I hereby agree and recognize that my employment by the Company was
permanently and irrevocably severed on June 30, 2002 and the Company has no
obligation, contractual or otherwise to me to hire, rehire or re-employ me in
the future. I acknowledge that the terms of the Agreement provide me with
payments and benefits which are in addition to any amounts to which I otherwise
would have been entitled.
4. I hereby agree and acknowledge that the payments and benefits
provided by the Company are to bring about an amicable resolution of my
employment arrangements and are not to be construed as an admission of any
violation of any federal, state or local statute or regulation, or of any duty
owed by the Company and that the Agreement was, and this Release is, executed
voluntarily to provide an amicable resolution of my employment relationship with
the Company through retirement.
5. I hereby certify that I have read the terms of this Release, that I
have been advised by the Company to discuss it with my attorney, and that I
understand its terms and effects. I acknowledge, further, that I am executing
this Release of my own volition with a full understanding of its terms and
effects and with the intention of releasing all claims recited herein in
exchange for the consideration described in the Agreement, which I acknowledge
is adequate and satisfactory to me. None of the above-named parties, nor their
agents, representatives, or attorneys have made any representations to me
concerning the terms or effects of this Release other than those contained
herein.
6. I hereby acknowledge that I have been informed that I have the right
to consider this Release for a period of 21 days prior to execution. I also
understand that I have the right to revoke this General Release for a period of
seven days following execution by giving written notice to the Company at Air
Products and Chemicals, Inc., 7201 Hamilton Boulevard, Allentown, Pennsylvania
18195-1501, Attention: General Counsel.
7. I hereby further acknowledge that the terms of Section 4 of the
Agreement continue to apply for the balance of the time periods provided therein
and that I will abide by and fully perform such obligations.
Intending to be legally bound hereby, I execute the foregoing Release this
20 day of May 2002.
/s/ Paula Buchvalt /s/ Leo J. Daley
- ------------------ ---------------------
Witness Executive
10
ANNEX 2
RELEASE
-------
1. Air Products and Chemicals, Inc., on its behalf and on behalf of its
subsidiaries and affiliates, their officers, directors, partners, employees and
agents, their respective successors and assigns, heirs, executors and
administrators (hereinafter collectively included within the term "Air
Products"), for and in consideration of the release of Leo J. Daley
("Executive") executed in connection with the Agreement dated as of April 19,
2002 between Air Products and Executive (hereinafter the "Agreement"), and other
good and valuable consideration, does hereby REMISE, RELEASE, AND FOREVER
DISCHARGE Executive, his assigns, heirs, executors and administrators
(hereinafter collectively included within the term "Executive"), acting in any
capacity whatsoever, of and from any and all manner of actions and causes of
actions, suits, debts, claims and demands whatsoever in law or in equity, which
it ever had, now have, or hereafter may have, by reason of any matter, cause or
thing whatsoever from the beginning of Executive's employment with Air Products
to the date of this Release arising from or relating in any way to Executive's
employment relationship and the termination of his employment relationship with
Air Products, including but not limited to, any claims which have been asserted,
could have been asserted, or could be asserted now or in the future under any
federal, state or local laws, any contracts between Air Products and Executive,
other than the Agreement and the Employee Patent and Confidential Information
Agreement entered into by Executive on May 14, 1979, and any common law claims
now or hereafter recognized and all claims for counsel fees and costs, but in no
event shall this release apply to an any action attributable to a criminal act
or to an action outside the scope of Executive's employment.
2. Subject to the limitations of paragraph 1 above, Air Products
expressly waives all rights afforded by any statute which expressly limits the
effect of a release with respect to unknown claims. Air Products understands the
significance of this release of unknown claims and the waiver of statutory
protection against a release of unknown claims.
3. Air Products hereby certifies that it has been advised by counsel in
the preparation and review of this Release.
Intending to be legally bound hereby, Air Products executes the
foregoing Release this 28th day of May 2002.
/s/ Nancy Bickert /s/ John P. Jones III
- ----------------- ---------------------------
Witness Chairman, President and CEO
11
Exhibit (a)10.2
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT by and between Air Products and Chemicals, Inc., a Delaware
corporation (hereinafter "Air Products" or the "Company"), with its principal
office in Allentown, Pennsylvania, and John R. Owings (the "Executive"), an
individual residing at 5851 Teal Lane, Long Grove, Illinois 60047, dated and
effective as of April 18, 2002.
WHEREAS, the Board of Directors of the Company (the "Board"), upon the
recommendation of the Management Development and Compensation Committee of the
Board (the "Committee"), has determined that it is in the best interests of the
Company and its shareholders to employ the Executive as the Chief Financial
Officer of the Company, and the Executive desires to serve in that capacity;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. The Company shall employ the Executive, and the
-----------------
Executive shall serve the Company, on the terms and conditions set forth in this
Agreement, for the period beginning on or before June 1, 2002 (the "Employment
Date") and ending on May 31, 2007 (the "Employment Period"). The Employment
Period shall automatically renew beginning on June 1, 2007, for periods of one
year unless one party gives written notice to the other, at least 60 days prior
to the end of the initial or any one-year renewal period, that the Agreement
shall not be further extended. In addition, the Executive's employment may be
terminated as provided below in Section 4.
2. Position and Duties.
-------------------
(a) During the Employment Period, the Executive shall be employed as the
Chief Financial Officer of the Company. The Executive shall report to the Chief
Executive Officer of the Company (the "CEO") and perform such duties for the
Company as are related typically to the office of chief financial officer in the
manner reasonably directed by the CEO, in his sole discretion.
(b) During the Employment Period, and excluding any periods of vacation
and absence due to intermittent illness to which the Executive is entitled, and
services on corporate, civic or charitable boards or committees not
significantly interfering with the performance of his responsibilities to the
Company, the Executive shall devote his full time and attention during normal
business hours to the business and affairs of the Company and the Executive
shall use reasonable efforts to carry out all duties and responsibilities
assigned to him faithfully and efficiently.
1
3. Compensation.
------------
(a) Base Salary. During the Employment Period, the Executive shall
-----------
receive an annual base salary of $450,000, payable in accordance with the
regular payroll practices of the Company. The Executive's base salary shall be
reviewed on October 1, 2003.
(b) Initial Bonus and Stock Awards. The Executive shall be paid an
------------------------------
initial bonus of $150,000 which will be included in Executive's first regular
pay cycle after employment, subject to normal withholding and employment taxes;
and shall be granted non-statutory stock options and deferred stock units under
the Company's Long-Term Incentive Plan in accordance with and subject to the
terms and conditions set forth in the form of awards agreement appended hereto
as Exhibit A. In addition, the Executive shall be eligible to receive, for the
portion of the Employment Period ending with the Company's fiscal year 2002 on
30 September 2002, a minimum bonus of $100,000 pursuant to the Company's Annual
Incentive Plan.
(c) Other Benefits. During the Employment Period: (i) the Executive
--------------
shall be entitled to participate in all incentive, savings and retirement plans,
practices, policies and programs of the Company to at least the same extent as
other senior executives of the Company holding positions at the salary grade
applicable to Executive's position; (ii) the Executive and/or the Executive's
family, as the case may be, shall be eligible for participation, and shall
receive all benefits under, all welfare benefit plans, practices, policies and
programs provided by the Company (including, without limitation, medical,
prescription, dental, disability, salary continuation, employee life insurance,
group life insurance, accidental death and travel accident insurance plans and
programs) to at least the same extent as other senior executives of the Company;
and (iii) the Executive shall be entitled to, and the Company shall provide the
Executive with, five weeks of paid vacation during each calendar year, the
annual stipend for financial counseling, estate planning and tax preparation
provided for other senior executives, currently $8,000 annually, and the
Company's change in control arrangements applicable to other senior executives
as in effect from time to time.
(d) Expenses. During the Employment Period, the Executive shall be
--------
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in carrying out the Executive's duties under this Agreement,
provided that the Executive complies with the generally applicable policies,
practices and procedures of the Company for submission of expense reports,
receipts, or similar documentation of such expenses.
(e) (i) Special Retirement Benefit. In addition to benefits earned
--------------------------
under any qualified or nonqualified retirement plan or arrangement maintained by
the Company, the Executive shall earn a supplemental normal retirement benefit,
payable from the Company's general assets, equal to (1) minus the sum of (2) and
(3) (the "Pension Enhancement"), where:
2
(1) is the normal retirement benefit that the Executive would have
received under the Air Products and Chemicals, Inc. Pension Plan for
Salaried Employees and Supplementary Pension Plan as each may be
amended from time to time (together, the "Pension Plans"), if the
Credited Service as defined in the Pension Plans included Executive's
service while employed by Motorola, Inc. ("Motorola") beginning on
May 1, 1973.
(2) is the normal retirement benefit earned by the Executive under
the Pension Plans; and
(3) is the normal retirement benefit earned by the Executive under
any qualified and/or nonqualified defined benefit plan(s) sponsored by
Motorola. Any benefit payable in the form of a lump sum will be
converted to an annuity based on an interest rate of 6% and the 1983
Unisex Group Annuity Mortality Tables.
The Executive shall earn a nonforfeitable right to the Pension Enhancement on
the fifth anniversary of the Employment Date or on an earlier Date of
Termination to the extent and as provided in Section 5. When the Executive earns
a nonforfeitable right to all or some of the Pension Enhancement under the terms
of this Agreement, Vesting Service as defined in the Pension Plans shall include
Executive's service while employed by Motorola.
(ii) Notwithstanding the provisions of subsection (i), the
Pension Enhancement calculated under subsection (i) shall be paid in the form,
and at the time, elected by the Executive with respect to his benefit and/or as
provided for under the Supplementary Pension Plan; provided, however, that any
such Pension Enhancement benefit payment(s) shall be actuarially equivalent,
determined using the actuarial assumptions set forth in the Supplementary
Pension Plans for the corresponding calculations of the retirement benefit due
under the Supplementary Pension Plan, to the supplemental normal retirement
benefit calculated under subsection (i).
(iii) In the event Executive dies before the commencement of
benefits under this paragraph but after earning a nonforfeitable right to the
Pension Enhancement his surviving spouse shall receive the pre-retirement
spousal benefit associated with the Pension Enhancement, calculated and payable
in the same manner as the pre-retirement spousal benefit under the Supplementary
Pension Plan and with the corresponding pre-retirement spousal benefit offsets
for the calculation in subsection (i).
(iv) For purposes of subsections (i) and (ii), "normal retirement
benefit" shall mean a monthly benefit payable in the form of a single life
3
annuity commencing on the first day of the month coincident with or next
following the date on which the Executive attains age 65.
(f) Temporary Living and Moving Expenses. The Company shall provide
------------------------------------
temporary housing for the Executive in a suitable residence in the vicinity of
its offices and shall pay the cost of the Executive commuting between such
residence and his current residence in Long Grove, Illinois until the Executive
relocates his residence to the vicinity of the Company's corporate headquarters
located in Allentown, Pennsylvania, on or before September 1, 2003. The Company
shall also reimburse Executive for moving and home seeking and buying expenses
incurred by Executive in accordance with its relocation policy for other senior
executives including the Full Home Sale Assistance Program as to which the
Company agrees that the stated limitations as to property value are waived for
the Executive.
4. Termination of Employment.
-------------------------
(a) Death or Disability. The Executive's employment and the Employment
-------------------
Period shall terminate automatically upon the Executive's death or long term
disability during the Employment Period. "Disability" shall be as defined under
the Company's Long Term Disability Plan.
(b) By the Company. The Company may terminate the Executive's
--------------
employment during the Employment Period for Cause or without Cause. "Cause"
means
(i) the willful and continued failure by the Executive to
substantially perform his duties with the Company (other than any such failure
resulting from his incapacity due to physical or mental illness or injury or any
such actual or anticipated failure after the issuance by the Executive of a
Notice of Termination for Good Reason) over a period of not less than thirty
days after a demand for substantial performance is delivered to the Executive by
the Board which identifies the manner in which the Board believes that the
Executive has not substantially performed his duties; or
(ii) the willful misconduct of the Executive materially and
demonstrably injurious to the Company (including, without limitation, any breach
by the Executive of Section 8 of this Agreement); provided that no act or
failure to act on the Executive's part will be considered willful if done, or
omitted to be done, by him in good faith and with reasonable belief that his
action or omission was in the best interest of the Company.
(c) Good Reason. The Executive may terminate employment for Good Reason
-----------
or without Good Reason. "Good Reason" means:
(i) the assignment to the Executive of any duties inconsistent in
any material respect with paragraph (a) of Section 2 of this Agreement; or
4
(ii) material failure by the Company to comply with any provision
of Section 3 of this Agreement, other than an isolated, insubstantial or
inadvertent failure that is not taken in bad faith and is remedied by the
Company within 30 days after receipt of written notice thereof from the
Executive.
A termination of employment by the Executive for Good Reason shall
be effectuated by giving the Company written notice ("Notice of Termination for
Good Reason") of the termination, setting forth in reasonable detail the
specific conduct of the Company that constitutes Good Reason and the specific
provision(s) of this Agreement on which the Executive relies. A termination of
employment by the Executive for Good Reason shall be effective on the fifth
business day following the date when the Notice of Termination for Good Reason
is given, unless the notice sets forth a later date (which date shall in no
event be later than 30 days after the notice is given). A termination of the
Executive's employment by the Executive without Good Reason shall be effected by
giving the Company at least 30 days' advance written notice of the termination.
(d) Date of Termination. The "Date of Termination" means the date of the
-------------------
Executive's death, the date of the Executive's Disability, the date the
termination of the Executive's employment by the Company for Cause or without
Cause or by the Executive for Good Reason or without Good Reason, as the case
may be, is effective. The Employment Period shall end on the Date of
Termination.
5. Obligations of the Company upon Termination.
-------------------------------------------
(a) By the Company Other Than for Cause; or By the Executive for Good
-----------------------------------------------------------------
Reason. If, during the Employment Period, the Company terminates the Executive's
- ------
employment (other than for Cause) or the Executive terminates employment for
Good Reason, the Executive's right to the accrued Pension Enhancement calculated
based on the Executive's service to the Date of Termination shall become
nonforfeitable; and the Executive shall be entitled to a lump sum payment
(before taxes) equal to one year's current base salary, plus a 100% target bonus
for Executive's salary grade (currently 55% of base salary). The Company shall
also pay to the Executive, in a lump sum in cash within 30 days after the Date
of Termination, the Executive's accrued but unpaid cash compensation (the
"Accrued Obligations"), which shall include but not be limited to, (1) the
Executive's base salary through the Date of Termination that has not yet been
paid and an amount representing a 100% target bonus for the Executive's salary
grade for the year of termination, multiplied by a fraction, the numerator of
which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 (the "Annual Bonus Amount"),
(2) any accrued but unpaid vacation pay, and (3) similar unpaid items that have
accrued or to which the Executive has become entitled as of the Date of
Termination, including declared but unpaid bonuses and unreimbursed employee
business expenses; provided, however, that the Company's obligation to make any
payments under this paragraph(a) to the extent any such payment shall not have
accrued as of the day before the Date of Termination shall also be
5
conditioned upon the Executive's execution, and non-revocation, of a written
release, substantially in the form attached hereto as Annex 1 (the "Release"),
of any and all claims against the Company and all related parties with respect
to all matters arising out of the Executive's employment by the Company or the
termination thereof (other than any entitlements under the terms of this
Agreement to indemnification or under any other plans or programs of the Company
in which the Executive participated and under which the Executive has accrued
and is due a benefit). As further consideration for the Executive's Release, the
Company shall execute a release in favor of Executive, on the date the Release
becomes irrevocable, substantially in the form attached hereto as Annex 2.
(b) Death or Disability. If the Executive's employment is terminated by
-------------------
reason of the Executive's death or Disability during the Employment Period, the
Company shall pay the Accrued Obligations to the Executive or the Executive's
estate or legal representative, as applicable, in a lump sum in cash within
30 days after the Date of Termination. In such event, the Company shall have no
further obligations under this Agreement or otherwise to or with respect to the
Executive other than with respect to the accrued Pension Enhancement, which,
subject to and conditioned upon the execution and non-revocation of a Release,
shall become nonforfeitable and shall be calculated on the basis of the
Executive's service to the Date of Termination and as provided under Section
3(e) of this Agreement; and for any entitlements under the terms of any other
plans or programs of the Company in which the Executive participated and under
which the Executive has accrued and is due a benefit.
(c) By the Company for Cause; By the Executive Other than for Good
--------------------------------------------------------------
Reason. If the Executive's employment is terminated by the Company for Cause
- ------
during the Employment Period, or the Executive voluntarily terminates employment
during the Employment Period, other than for Good Reason, the Company shall pay
the Executive the Executive's base salary through the Date of Termination that
has not been paid and the amount of any declared but unpaid bonuses, accrued but
unpaid vacation pay, and unreimbursed employee business expenses, and the
Company shall have no further obligations under this Agreement or otherwise to
or with respect to the Executive other than for any entitlements under the terms
of any other plans or programs of the Company in which the Executive
participated and under which the Executive has accrued or become entitled to a
benefit; provided however, that, in the event of such voluntary termination by
the Executive where the Date of Termination occurs on or after the third
anniversary of the Employment Date, and subject to and conditioned on the
execution and non-revocation of the Release, the Executive shall have a
nonforfeitable right to 50% of the Pension Enhancement calculated on the basis
of the Executive's service to the Date of Termination.
6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
-------------------------
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
for which the Executive may qualify. Vested benefits and other amounts that the
Executive is
6
otherwise entitled to receive on or after the Date of Termination under any
plan, policy, practice or program of, or any contract or agreement with, the
Company or any of its affiliated companies shall be payable in accordance with
such plan, policy, practice, program, contract or agreement, as the case may be,
except as explicitly modified by this Agreement.
7. No Mitigation. In no event shall the Executive be obligated to seek
-------------
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced, regardless of whether the Executive obtains other
employment.
8. Confidential Information; Non-solicitation; Non-competition.
-----------------------------------------------------------
(a) The Executive agrees and acknowledges that by reason of his
employment by and service to the Company, he will have access to confidential
information of the Company and its affiliates, and, therefore, he agrees to be
subject to the Employee Patent, Copyright and Confidential Information Agreement
of the Company appended hereto as Exhibit B.
(b) The Executive acknowledges that the Company is generally engaged in
business throughout the world. During the Executive's employment by the Company
and for two years after the Date of Termination or the expiration of the final
Employment Period, the Executive agrees that he will not, unless acting with the
prior written consent of the Company, directly or indirectly, own, manage,
control, or participate in the ownership, management or control of, or be
employed or engaged by, or otherwise affiliated or associated with, as an
officer, director, employee, consultant, independent contractor or otherwise,
any other corporation, partnership, proprietorship, firm, association or other
business entity, or otherwise engage in any business, which is engaged in any
manner anywhere in any business which , as of the Date of Termination or
expiration of the final Employment Period, as applicable, is engaged in by the
Company, has been reviewed with the CEO for development to be owned or managed
by the Company, and/or has been divested by the Company but as to which the
Company has an obligation to refrain from involvement, but only for so long as
such restriction applies to the Company; provided, however, that the ownership
of not more than 5% of the equity of a publicly traded entity shall not be
deemed to be a violation of this paragraph.
(c) The Executive also agrees that he will not, directly or indirectly,
during the period described in paragraph (b), induce any person who is an
employee, officer, director, or agent of the Company, or any subsidiary or
affiliate, to terminate such relationship, or employ, assist in employing or
otherwise be associated in business with any present or former employee or
officer of the Company or of any subsidiary or affiliate of the Company,
including without limitation those who commence such positions with the Company
or any such subsidiary or affiliate after the Date of Termination.
7
(d) For the purposes of this Section 8, the term "Company" shall be
deemed to include Air Products and the subsidiaries and affiliates of Air
Products.
(e) The Executive acknowledges and agrees that the restrictions
contained in this Section 8 are reasonable and necessary to protect and preserve
the legitimate interests, properties, goodwill and business of the Company and
its subsidiaries and affiliates, that the Company would not have entered into
this Agreement in the absence of such restrictions and that irreparable injury
will be suffered by the Company should the Executive breach the provisions of
this Section. The Executive represents and acknowledges that (i) the Executive
has been advised by the Company to consult the Executive's own legal counsel in
respect of this Agreement, and (ii) that the Executive has had full opportunity,
prior to execution of this Agreement, to review thoroughly this Agreement with
the Executive's counsel.
(f) The Executive further acknowledges and agrees that a breach of the
restrictions in this Section 8 will not be adequately compensated by monetary
damages. The Executive agrees that the Company shall be entitled to
(i) preliminary and permanent injunctive relief, without the necessity of
proving actual damages, or posting of a bond, (ii) an equitable accounting of
all earnings, profits and other benefits arising from any violation of this
Section 8, and (iii) enforce the terms, including requiring forfeitures, under
other plans, programs and agreements under which the Executive has been granted
a benefit contingent on a covenant similar to those contained in this Section 8,
which rights shall be cumulative and in addition to any other rights or remedies
to which the Company may be entitled. In the event that the provisions of this
Section 8 should ever be adjudicated to exceed the limitations permitted by
applicable law in any jurisdiction, it is the intention of the parties that the
provision shall be amended to the extent of the maximum limitations permitted by
applicable law, that such amendment shall apply only within the jurisdiction of
the court that made such adjudication and that the provision otherwise be
enforced to the maximum extent permitted by law.
(g) If the Executive breaches his obligations under this Section 8, he
agrees that suit may be brought, and that he consents to personal jurisdiction,
in the United States District Court for the Eastern District of Pennsylvania, or
if such court does not have jurisdiction or will not accept jurisdiction, in any
court of general jurisdiction in Allentown, Pennsylvania; consents to the
non-exclusive jurisdiction of any such court in any such suit, action or
proceeding; and waives any objection which he may have to the laying of venue of
any such suit, action or proceeding in any such court. The Executive also
irrevocably and unconditionally consents to the service of any process,
pleadings, notices or other papers.
8
9. Successors.
----------
(a) This Agreement is personal to the Executive and, without the prior
written consent of the Company, shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would have been required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean both the Company as
defined above and any such successor that assumes and agrees to perform this
Agreement, by operation of law or otherwise.
10. Arbitration. The Company and the Executive mutually consent to the
-----------
resolution by arbitration, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association, to be
held in Allentown, Pennsylvania, of all claims or controversies, other than a
claim which is primarily for equitable relief or an injunction to enforce a
right or remedy under Section 8 of this Agreement, arising out of the
Executive's employment (or its termination) that the Company may have against
the Executive or that the Executive may have against the Company or against its
officers, directors, shareholders, employees or agents in their capacity as
such. The parties shall share the fees and costs of the arbitrator and all other
costs in connection with any arbitration and each party shall bear its legal
fees and expenses. Any such arbitration proceedings must be instituted by the
party requesting a resolution within twelve months of the time that party knew,
or should have known, of the events or facts giving rise to the dispute
requiring resolution. The failure to institute arbitration proceedings within
such period shall constitute an absolute bar to the institution of any
proceedings and a waiver of all claims.
11. Legal Fees. The Company agrees to pay all legal fees incurred by the
----------
Executive in connection with the negotiation and preparation of this Agreement
up to $7,500.
12. Miscellaneous.
-------------
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Pennsylvania, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended
9
or modified except by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
(b) All notices and other communications under this Agreement shall be
in writing and shall be given by hand to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
-------------------
Mr. John R. Owings
5851 Teal Lane
Long Grove, Illinois 60047
With a required copy to:
-----------------------
Gardner, Carton & Douglas
-------------------------
321 North Clark Street, Suite 3400
----------------------------------
Chicago, Illinois 60610-4795
----------------------------
Attention: Gregory K. Brown
---------------------------
If to the Company:
-----------------
Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
Attention: General Counsel
With a required copy to:
-----------------------
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attention: Robert J. Lichtenstein
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 12. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
10
(d) Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
(including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to paragraph (c) of Section 5 of this
Agreement) shall not be deemed to be a waiver of such provision or right or of
any other provision of or right under this Agreement.
(f) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.
13. The respective rights and obligations of the parties hereunder shall
survive any termination of the Executive's employment to the extent necessary to
the intended preservation of such rights and obligations, including, but not by
way of limitation, those rights and obligations set forth in Sections 3, 5, 6, 8
and 10.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of the Committee, the Company has caused this
Agreement to be executed in its name on its behalf, all as of the day and year
first above written.
AIR PRODUCTS AND CHEMICALS, INC.
By
----------------------- -------------------------
Chairman, President and EXECUTIVE
Chief Executive Officer
11
ANNEX 1
GENERAL RELEASE
---------------
1. I, Executive, for and in consideration of certain payments to be made and the
benefits to be provided to me under the Employment Agreement, dated as of
April 18, 2002 (the "Agreement") with Air Products and Chemicals, Inc. (the
"Company"), and conditioned upon such payments and provisions, do hereby REMISE,
RELEASE, AND FOREVER DISCHARGE the Company and each of its past or present
subsidiaries and affiliates, its and their past or present officers, directors,
shareholders, partners, employees and agents, their respective successors and
assigns, heirs, executors and administrators, the pension and employee benefit
plans of the Company, or of its past or present subsidiaries or affiliates, and
the past or present trustees, administrators, agents, or employees of the
pension and employee benefit plans (hereinafter collectively included within the
term the "Company"), acting in any capacity whatsoever, of and from any and all
manner of actions and causes of actions, suits, debts, claims and demands
whatsoever in law or in equity, which I ever had, now have, or hereafter may
have, or which my heirs, executors or administrators hereafter may have, by
reason of any matter, cause or thing whatsoever from the beginning of my
employment with the Company to the date of these presents and particularly, but
without limitation of the foregoing general terms, any claims arising from or
relating in any way to my employment relationship and the termination of, and my
retirement from, my employment relationship with the Company, including but not
limited to, any claims which have been asserted, could have been asserted, or
could be asserted now or in the future under any federal, state or local laws,
including any claims under the Age Discrimination in Employment Act ("ADEA"), 29
U.S.C. Section 621 et seq., Title VII of the Civil Rights Act of 1964, 42 U.S.C.
Section 2000e et seq., the Pennsylvania Human Relations Act, any contracts
between the Company and me and any common law claims now or hereafter recognized
and all claims for counsel fees and costs; provided, however, that this Release
shall not apply to any entitlements under the terms of the Agreement or under
any other plans or programs of the Company in which I participated and under
which I have accrued and become entitled to a benefit other than under any
Company separation or severance plan or programs. Notwithstanding the foregoing,
I understand that I shall be indemnified by the Company as to any liability,
cost or expense for which I would have been indemnified during employment, in
accordance with the Company's certificate of incorporation or insurance
coverages to the extent in force for executives of the Company serving in
similar capacities generally, for actions taken on behalf of the Company within
the scope of his employment by the Company.
2. Subject to the limitations of paragraph 1 above, I expressly waive
all rights afforded by any statute which expressly limits the effect of a
release with respect to unknown claims. I understand the significance of this
release of unknown claims and the waiver of statutory protection against a
release of unknown claims.
12
3. I hereby agree and recognize that my employment by the Company was
permanently and irrevocably severed on , 20 and the Company
------------------- --
has no obligation, contractual or otherwise to me to hire, rehire or re-employ
me in the future. I acknowledge that the terms of the Agreement provide me with
payments and benefits which are in addition to any amounts to which I otherwise
would have been entitled.
4. I hereby agree and acknowledge that the payments and benefits
provided by the Company are to bring about an amicable resolution of my
employment arrangements and are not to be construed as an admission of any
violation of any federal, state or local statute or regulation, or of any duty
owed by the Company and that the Agreement was, and this Release is, executed
voluntarily to provide an amicable resolution of my employment relationship with
the Company.
5. I hereby certify that I have read the terms of this Release, that I
have been advised by the Company to discuss it with my attorney, and that I
understand its terms and effects. I acknowledge, further, that I am executing
this Release of my own volition with a full understanding of its terms and
effects and with the intention of releasing all claims recited herein in
exchange for the consideration described in the Agreement, which I acknowledge
is adequate and satisfactory to me. None of the above-named parties, nor their
agents, representatives, or attorneys have made any representations to me
concerning the terms or effects of this Release other than those contained
herein.
6. I hereby acknowledge that I have been informed that I have the right
to consider this Release for a period of 21 days prior to execution. I also
understand that I have the right to revoke this General Release for a period of
seven days following execution by giving written notice to the Company at
, Attention: General Counsel.
- ---------------------------
7. I hereby further acknowledge that the terms of Section 8 of the
Agreement continue to apply for the balance of the time periods provided therein
and that I will abide by and fully perform such obligations.
Intending to be legally bound hereby, I execute the foregoing
Release this day of 20 .
--- ------------- ---
- ------------------------ --------------------
Witness Executive
13
ANNEX 2
RELEASE
-------
1. Air Products and Chemicals, Inc., on its behalf and on behalf of its
subsidiaries and affiliates, their officers, directors, partners, employees and
agents, their respective successors and assigns, heirs, executors and
administrators (hereinafter collectively included within the term "Air
Products"), for and in consideration of the release of ("Executive")
-----------
executed in connection with the Agreement dated as of 18 April, 2002 between
Air Products and Executive (hereinafter the "Agreement"), and other good and
valuable consideration, does hereby REMISE, RELEASE, AND FOREVER DISCHARGE
Executive , his assigns, heirs, executors and administrators (hereinafter
collectively included within the term "Executive"), acting in any capacity
whatsoever, of and from any and all manner of actions and causes of actions,
suits, debts, claims and demands whatsoever in law or in equity, which it ever
had, now have, or hereafter may have, by reason of any matter, cause of thing
whatsoever from the beginning of Executive's employment with Air Products to the
date of this Release arising from or relating in any way to Executive's
employment relationship and the termination of his employment relationship with
Air Products, including but not limited to, any claims which have been asserted,
could have been asserted, or could be asserted now or in the future under any
federal, state or local laws, any contracts between Air Products and Executive,
other than the Agreement and the Employee Patent, Copyright and Confidential
Information Agreement entered into by Executive on , and any common law
------
claims now or hereafter recognized and all claims for counsel fees and costs,
but in no event shall this release apply to any action attributable to a
criminal act or to an action outside the scope of Executive's' employment.
2. Subject to the limitations of paragraph 1 above, Air Products
expressly waives all rights afforded by any statute which expressly limits the
effect of a release with respect to unknown claims. Air Products understands the
significance of this release of unknown claims and the waiver of statutory
protection against a release of unknown claims.
3. Air Products hereby certifies that it has been advised by counsel in
the preparation and review of this Release.
Intending to be legally bound hereby, Air Products executes the
foregoing Release this day of 20 .
---- ------------ --
Air Products and Chemicals, Inc.
By:
- ---------------------------- ----------------------------
Witness
14
Exhibit A
16 May 2002
Subject: 2002 Long-Term Incentive Plan Awards
Dear Executive:
In consideration of your decision to join the Air Products team, and to
recognize your potential contributions to our business, align your
accountabilities and goals with our global strategy, and provide you with a
competitive pay and wealth accumulation opportunity, you are hereby granted the
following 2002 Awards under the Air Products Long-Term Incentive Plan:
o A Nonstatutory Stock Option to purchase 100,000 shares of Air Products
Common Stock at a purchase price of $52.19 per share, which is 100%
of the 15 May 2002 Fair Market Value of a share of Common Stock;
o 3,000 Cycle 1B and 6,000 Cycle 2 Performance Share Deferred Stock
Units for performance periods ending with fiscal year 2002, each Unit
being equivalent in value to one share of Common Stock; and
o 4,000 Special Deferred Stock Units with a three-year deferral
period, each Unit being equivalent in value to one share of Common
Stock.
Your 2002 Awards have been approved by authority of the Management Development
and Compensation Committee of the Board of Directors (the "Committee"), subject
to and contingent upon your agreement to the conditions described in Schedule A
(the "Conditions"). Please countersign this letter, make a copy for your
records, and return the original of the letter to Jim Bell by 31 May 2002 in
acknowledgement of your receipt of a copy of the text of the Long-Term Incentive
Plan (the "Plan"), and your agreement to be bound by the provisions of the Plan,
the Conditions and by any determinations made by the Committee with respect to
your 2002 Awards as contemplated or permitted by the Plan and/or the Conditions.
This letter, together with Schedules A, B, C, and D appended hereto, constitutes
the agreement governing your 2002 Awards (this "Awards Agreement"). Your 2002
Awards are also at all times subject to the applicable provisions of the Plan.
Neither your 2002 Awards, this Awards Agreement or the Plan constitute a
contract of employment, nor do
15
they guarantee your continued employment for any period required for all or any
of your 2002 Awards to vest or become exercisable, or to be earned or paid out.
Except as indicated in this Awards Agreement, all capitalized words used herein
have the meanings described in the Plan.
WITNESSETH the due execution of this Awards Agreement at Allentown, Pennsylvania
effective as of the 15th day of May 2002 intending to be legally bound hereby.
AIR PRODUCTS AND CHEMICALS, INC.
By: /s/ John P. Jones III
-----------------------------
John P. Jones III
ACKNOWLEDGED AND AGREED this 20th day of May 2002.
EXECUTIVE
/s/ John R. Ownings
-----------------------------
Schedules
16
SCHEDULE A
2002 AWARDS UNDER THE PLAN ARE SUBJECT TO THE FOLLOWING CONDITIONS:
1. You continue to comply with the terms of your employee patent and trade
secret agreement and with all other agreements with, and obligations and
duties to, the Company and any of its subsidiaries and affiliates
(together, the "Company"), and refrain from conducting yourself in a manner
adversely affecting the Company;
2. Without limiting the generality of the foregoing, while employed by the
Company and for two years following your separation from service with the
Company for any reason, you
Refrain from engaging in any activity in competition with the Company,
whether as an officer, director, employee, consultant, advisor, agent,
broker, independent contractor, partner, shareholder, or principal of any
corporations, partnership, proprietorship, firm, association, person or
other entity;
Refrain from undertaking any employment or activity wherein the fulfillment
of your duties would call upon you to reveal, to make judgments on, or
otherwise to use any "confidential information" of the Company;
Refrain from directly or indirectly, either for yourself or for any other
person, diverting or taking away or attempting to divert or take away (or
calling on or soliciting or attempting to call on or solicit) any of the
Company's customers or patrons, including but not limited to those upon
whom you called or whom you solicited or with whom you became acquainted
while employed by the Company; and
Refrain from directly or indirectly or by action in concert with others,
inducing or influencing (or seeking to induce or influence) any person who
is engaged (as an employee, agent, independent contractor, or otherwise) by
the Company to terminate his or her employment or engagement.
If, in the Committee's sole discretion, it is determined that you have breached
any of the foregoing Conditions, after notice by registered mail directed to
your last known address, all of your outstanding awards under the Plan will be
completely terminated. Notwithstanding any other provisions hereof, following or
in connection with a Change in Control, the foregoing Conditions shall lapse and
be of no further force or effect.
17
SCHEDULE B
NONSTATUTORY STOCK OPTIONS
Vesting and Expiration. You can first purchase shares of Common Stock ("Shares")
- ----------------------
as follows: (i) up to one-third of the Shares may be purchased on or after
15 May 2005 and (ii) up to an additional one-third of such Shares may be
purchased on or after 15 May 2006 and 2007, respectively. The Options cannot be
exercised with respect to fractional Shares, and accordingly, the number of
Shares will be rounded down to the nearest Share on the first two of the
foregoing dates and up to the nearest Share on the third such date to eliminate
fractional Shares. The Options were granted on 15 May 2002 and will continue for
a period of ten (10) years and one day from such grant date and will expire and
no longer be exercisable on 16 May 2012.
How to Exercise. You may purchase Shares by delivering to the Company at its
- ---------------
principal offices in Allentown, Pennsylvania, written notice of exercise of the
Option on forms to be provided by the Company and the full purchase price of the
Shares. Payment of the purchase price may be made in cash; by the delivery of an
irrevocable exercise notice coupled with irrevocable instructions to a
designated broker to simultaneously sell the Shares and deliver to the Company
on the settlement date the portion of the proceeds representing the purchase
price and any taxes to be withheld; or by delivery or attestation of ownership
of other shares of Common Stock owned by you. Payment of any taxes required to
be withheld at the time of exercise may be made in cash (including from a broker
on the settlement date) or by having the number of Shares acquired in the
exercise reduced by an amount equal in value to the amount of such taxes
required to be withheld.
In the event of a Change in Control, Options become exercisable earlier than
described above. You would be able to purchase all of the Shares following the
later of a Change in Control or the first date more than six months from 15 May
2002 following a Change in Control. Further, during the 30-day period following
a Change in Control, Options may be surrendered for payment of 100% of the
"spread" between the value of the Shares (as said value is defined in Section
10(a)(A) of the Plan), and the purchase price.
Termination of Stock Options at End of Employment. Options terminate as of the
- -------------------------------------------------
close of business on the last day of your employment with the Company (or a
Subsidiary), unless your employment ends due to your death, Disability, or
Retirement on or after 15 May 2005, in which case the Options will be extended
for the remaining term of the award (that is, will become vested and be
exercisable) as if you had continued to be an active employee of the Company.
18
Assignment and Transfer. Options are nonassignable and nontransferable except to
- -----------------------
your Designated Beneficiary; by will or by the laws of descent and distribution;
or by gift to family members or to trusts of which only family members are
beneficiaries (but only on and after the date upon which, and to the extent,
such Option has become exercisable and subject to such administrative procedures
and to such restrictions and conditions as the officers of the Company shall
determine to be consistent with the purposes of the Plan and the interests of
the Company and/or to be necessary or appropriate for compliance with all
applicable tax and other legal requirements). Subject to the foregoing, you may
so transfer Options by gift only by delivering to the Company at its principal
offices in Allentown, Pennsylvania, written notice of the intent to transfer the
Options on forms to be provided by the Company.
19
SCHEDULE C
DEFERRED STOCK UNITS
PERFORMANCE SHARES. Deferred Stock Units known as Performance Shares will earn
- ------------------
out at the end of Fiscal Year 2002 and entitle you to receive from the Company
at the end of the Deferral Period a Share of Common Stock (and related Dividend
Equivalents) but only if and to the extent the following Operating Return on Net
Assets (ORONA) objectives ("Performance Objectives") are attained by the Company
for the respective periods specified.
Performance Objectives
CYCLE 1B CYCLE 2
--------------------------------- --------------------------------
FY01/02
AVERAGE Earnout FY02 Earnout
ORONA* Factor ORONA Factor
----- ------ ----- ------
12.0% 150% 12.0% 200%
11.75% 100% 11.0% 100%
11.0% 50% 10.9% 75%
10.9% or below 0% 10.8% 50%
*The ORONA achieved for FY01 was 11.1%.
ORONA calculations will be based upon the Company's Consolidated Operating
Income divided by the average (5 point) net segment assets for the appropriate
fiscal period. Upon the Committee's determination of the extent to which
Performance Objectives have been attained, any Performance Shares (and related
Dividend Equivalents) not earned out will be completely forfeited in their
entirety.
Performance Share Deferral Period
The Deferral Period which applies to one-half of the Cycle 1B and all of the
Cycle 2 Performance Shares ends on the earlier of (i) the date two years
following your Retirement or Disability, and (ii) your death, but in no event
earlier than 15 May 2003. The Deferral Period which applies to the other half
of the Cycle 1B Performance Shares ends on 15 May 2003.
SPECIAL DEFERRED STOCK UNITS. Special Deferred Stock Units will entitle you to
- ----------------------------
receive from the Company at the end of the Deferral Period a Share of Common
Stock (and related Dividend Equivalents) for each Unit. The Deferral Period
which applies to the Special Deferred Stock Units ends on 15 May 2005.
PAYMENT OF DEFERRED STOCK UNITS. Except as provided in the next paragraph,
- -------------------------------
payment in respect of Deferred Stock Units, together with related Dividend
20
Equivalents, will be made only following the end of the applicable Deferral
Period. Payment of Deferred Stock Units will be delivered net of appropriate
taxes and may be made in Shares, cash or both, as determined by the Committee.
Following or in connection with a Change in Control, the Committee may in its
sole discretion determine to pay in full any or all outstanding Deferred Stock
Units, together with any Dividend Equivalents, for the period for which such
Units have been outstanding, notwithstanding that the Performance Objectives
have not yet been achieved or that the Deferral Periods as to such Deferred
Stock Units have not been completed. Such payment may be in cash or in Shares,
or a combination thereof, as determined by the Committee, and will be due and
payable to you following the Committee's determination to pay said Deferred
Stock Units, but in no event earlier than the occurrence of a Change in Control.
If paid in cash, you will receive payment of an amount in respect of each
Deferred Stock Unit equal to a Share of Common Stock valued as prescribed by the
formula set forth in Plan Section 10(e).
TERMINATION OF DEFERRED STOCK UNITS AT END OF EMPLOYMENT. Your Performance Share
- --------------------------------------------------------
Deferred Stock Units terminate automatically as of the close of business on the
last day of your employment with the Company (or a Subsidiary), unless your
employment ends due to your death, Disability or Retirement on or after 15 May
2003. Your Special Deferred Stock Units terminate automatically as of the close
of business on the last day of your employment with the Company (or a
Subsidiary), unless your employment ends due to your death, Disability or
Retirement on or after 15 May 2003.
21
SCHEDULE D
CERTAIN DEFINITIONS
"Retirement" as used in Schedules B and C means separating from service with the
Company or a Subsidiary with the right to begin receiving immediate payment(s)
of all or some of the Pension Enhancement as defined and as provided in the
Employment Agreement between Executive and the Company dated and effective as of
18 April 2002.
"Disability" means permanent and total disability of an employee as determined
by, or under delegation of authority to management from, the Committee in
accordance with uniform principles consistently applied, upon the basis of such
evidence as the Committee (or its delegate) deems necessary and desirable.
22
Exhibit B
AIR PRODUCTS AND CHEMICALS, INC.
STYLIZED LOGO
- --------------------------------------------------------------------------------
EMPLOYEE PATENT, COPYRIGHT, AND CONFIDENTIAL INFORMATION AGREEMENT
In consideration of my employment by Air Products and Chemicals, Inc., its
divisions, affiliates and subsidiaries (all, collectively, referred to
hereinafter as the Company), I agree that I will:
A. Communicate to the Company promptly and fully in writing, in such format as
the Company may deem appropriate, all inventions made or conceived by me
whether alone or jointly with others from my time of entering the Company's
employ until I leave, and as requested, to assign to the Company those of
such inventions which (1) relate to a field of business, research or
investigation in which the Company has an interest, or (2) result from, or
are suggested by, any work which I may do for or on behalf of the Company;
B. Make and maintain adequate permanent records of all such inventions, in the
form of memoranda, notebook entries, drawings, print-outs or reports
relating thereto, in keeping with then current Company procedures. I agree
that these records, as well as the inventions themselves, shall be and
remain the property of the Company at all times;
C. Cooperate with and assist the Company and its nominees, at their sole
expense, during my employment and thereafter, in securing and protecting
patent rights in which I am a named inventor or other similar rights in the
United States and foreign countries. In this connection, I specifically
agree to execute all papers which the Company deems necessary to protect
its interests including the execution of assignments of invention and to
give evidence and testimony, as may be necessary, to secure and enforce the
Company's rights;
D. Except as the Company may otherwise authorize in writing, not use or
disclose to others, reproduce or copy at any time, except as my Company
duties may require, either during or subsequent to my employment, any
private information of the Company or of others as to whom the Company has
an obligation of confidentiality which may come to my attention or be
developed by me during the course of my employment other than information
which is or becomes public knowledge in a lawful manner;
E. Upon termination of my employment with the Company, deliver to it all
records, data and memoranda of any nature which are in my possession or
control and which relate to my employment or the activities of the Company,
including, for example, notebooks, diaries, reports, photographs, films,
manuals and computer software media.
F. Following termination of my employment, honor and abide by my continuing
obligation of confidentiality. I agree that, in any situation which arises
and involves a question of my freedom to disclose particular information to
a subsequent employer or anyone else, I will contact the Company in writing
and elicit its opinion on my freedom to make such a disclosure.
It is also agreed that:
G. All creative works which I produce during my employment and which relate to
the Company's business or technology shall be considered to have been
prepared for the Company as a part of and in the course of my employment.
Any such work shall be owned by the Company regardless of whether it would
otherwise be considered a work made for hire. Such works shall include,
among other things, computer programs and documentation, non-dramatic
literary works (e.g. professional papers and journal articles), visual arts
(e.g. pictorial, graphic and three dimensional), sound recordings, motion
pictures and other audiovisual works.
H. Nothing in this agreement shall bind me or the Company to any specific
period of service or employment, nor shall the termination of such
employment in any way affect the obligations assumed by me herein. Further,
this agreement replaces any and all prior agreements or understandings
between me and the Company concerning these subjects;
I. This agreement shall bind my heirs, executors, and administrators, and
shall inure to the benefit of the successors and assigns of the Company.
J. I will not disclose to any other employee of the Company any information as
to which I owe a continuing obligation of confidentiality to a previous
employer or client. Any inventions, patented or unpatented, which were made
or conceived by me prior to my employment are excluded from the operation
of this agreement, and I warrant that there are no such inventions, other
than those listed by me in the space provided on the attached Prior
Invention(s) List.
(L.S.)
--------------------------------------
Signature of Employee
WITNESS: --------------------------
DATED: ----------------------------
(List invention information on the attached Prior Invention(s) List.)
Exhibit B
PRIOR INVENTION(S) LIST
ATTACHMENT TO EMPLOYEE PATENT, COPYRIGHT AND CONFIDENTIAL INFORMATION
AGREEMENT
Dated: --------------------------------------
-------------------------------------------------------------
Employee Name
--------------------------------------------
Date
Description of Patent Numbers or Assignment or disposition
Invention Application Numbers employee has made or will make
(if any) of invention
- ----------------------------------------- -------------------------------------- -----------------------------------------
- ----------------------------------------- -------------------------------------- -----------------------------------------
- ----------------------------------------- -------------------------------------- -----------------------------------------
- ----------------------------------------- -------------------------------------- -----------------------------------------
- ----------------------------------------- -------------------------------------- -----------------------------------------
- ----------------------------------------- -------------------------------------- -----------------------------------------
- ----------------------------------------- -------------------------------------- -----------------------------------------
- ----------------------------------------- -------------------------------------- -----------------------------------------
- ----------------------------------------- -------------------------------------- -----------------------------------------
- ----------------------------------------- -------------------------------------- -----------------------------------------
- ----------------------------------------- -------------------------------------- -----------------------------------------
---------------------------------------------------------
Employee Signature
---------------------------------------------------------
Date
WITNESS:
------------------------------------------------
DATED:
---------------------------------------------------
Page ------- of -------
Exhibit (a)(12)
AIR PRODUCTS AND CHEMICALS, INC., AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Unaudited)
Nine
Months
Ended
Year Ended 30 September 30 June
------------------------------------------------------------------- --------
1997 1998 1999 2000 2001 2002
-------- -------- -------- -------- -------- --------
Earnings:
Income before extraordinary item and the
cumulative effect of accounting changes:
$429.3 $546.8 $450.5 $124.2 $512.9 $381.1
Add (deduct):
Provision for income taxes 203.4 280.9 209.5 (7.5) 224.8 183.7
Fixed charges, excluding capitalized
interest 233.0 202.8 194.4 232.6 217.4 113.0
Capitalized interest amortized during the period 8.3 7.4 6.1 6.6 7.1 5.4
Undistributed earnings of
less-than-fifty-percent-owned affiliates (31.1) (25.3) (44.5) (32.1) (34.3) (41.2)
-------- -------- -------- -------- -------- --------
Earnings, as adjusted $842.9 $1,012.6 $816.0 $323.8 $927.9 $642.0
======== ======== ======== ======== ======== ========
Fixed Charges:
Interest on indebtedness, including capital lease
obligations $217.8 $186.7 $175.4 $210.3 $201.6 $96.5
Capitalized interest 20.9 18.4 24.7 19.7 8.8 7.4
Amortization of debt discount premium
and expense 1.8 1.9 1.3 3.1 (3.6) (0.0)
Portion of rents under operating leases
representative of the interest factor 13.4 14.2 17.7 19.3 19.3 16.5
-------- -------- -------- -------- -------- --------
Fixed charges $253.9 $221.2 $219.1 $252.4 $226.1 $120.4
======== ======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges: 3.3 4.6 3.7 1.3 4.1 5.3
======== ======== ======== ======== ======== ========
Exhibit (a) 99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Air Products and Chemicals,
Inc. (the "Company") on Form 10-Q for the period ending 30 June 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, John P. Jones III, Chief Executive Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Dated: 13 August 2002 /s/ John P. Jones III
---------------------------------------------
John P. Jones III
Chief Executive Officer
Exhibit (a)99.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Air Products and Chemicals, Inc.
(the "Company") on Form 10-Q for the period ending 30 June 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), John
R. Owings, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Dated: 13 August 2002 /s/ John R. Owings
---------------------------------------------
John R. Owings
Chief Financial Officer