LEHIGH VALLEY, Pa., Oct. 21 /PRNewswire-FirstCall/ -- Access the Q4
earnings teleconference scheduled for 10:00 a.m. Eastern Daylight
Savings Time on October 21 by calling (719) 325-4755 and entering
passcode 2295468, or listen on the Web at
http://www.airproducts.com/Invest/financialnews/Earnings_Releases/Teleconference.htm.
Highlights: -- Sales grew eight percent sequentially on volume
growth in all businesses -- Signed three significant Tonnage
contracts in the quarter -- Completed U.S. Healthcare business
divestiture -- Fiscal 2010 outlook: 15 to 21 percent earnings
growth on a continuing operations basis Air Products (NYSE:APD)
today reported income from continuing operations of $246 million,
or diluted earnings per share (EPS) of $1.14, for its fiscal 2009
fourth quarter versus $273 million and $1.26, respectively, for the
fourth quarter of fiscal 2008. Fourth quarter revenues of $2,129
million declined 22 percent versus prior year. Lower energy and raw
material cost pass-throughs and unfavorable currency impacted sales
by 12 percent and three percent, respectively. Underlying sales
declined seven percent on lower volumes in the Merchant Gases, and
Electronic and Performance Materials segments, and lower pricing in
Electronics and Performance Materials. Sequentially, sales were up
eight percent, seven percent on an underlying basis. Operating
income of $328 million declined 12 percent on lower volumes and
unfavorable currency, partially offset by cost reduction actions.
Sequentially, operating income increased seven percent, primarily
on improved volumes. The following discussion of full year results
and guidance in this release is based on non-GAAP comparisons. A
reconciliation can be found at the end of this release. For fiscal
2009, sales of $8,256 million declined 21 percent on lower volumes,
lower energy and raw material cost pass-throughs and unfavorable
currency. Underlying sales declined eight percent. Operating income
of $1,185 million was down 22 percent, and diluted EPS of $4.06
declined 20 percent from the prior year. John McGlade, chairman,
president and chief executive officer, said, "The beginning of our
fiscal 2009 coincided with the start of the global financial
crisis, driving the recession that resulted in unprecedented
declines in demand for our products worldwide. While this affected
our fiscal year results, we were able to offset some of the decline
with aggressive cost controls. Sequentially, we are seeing volume
improvement in all our businesses, and our actions to move to a
sustainable, low-cost structure have positioned us to capitalize on
growth as our markets recover." Fourth Quarter Segment Performance
-- Merchant Gases sales of $932 million declined 15 percent from
the prior year on weaker volumes across manufacturing end-markets
globally and unfavorable currency, partially offset by favorable
pricing. Sequentially, sales increased six percent on three percent
higher volumes from improved demand in most geographies. Operating
income of $166 million declined 16 percent from the prior year on
lower volumes and unfavorable currency, partially offset by
favorable pricing. -- Tonnage Gases sales of $640 million were down
32 percent from the prior year on lower energy and raw material
cost pass-throughs. Sales and volumes were up 13 percent
sequentially on stronger demand from chemical, refinery and steel
customers. Operating income of $105 million decreased 22 percent
from the prior year on lower operating efficiencies and unfavorable
currency. -- Electronics and Performance Materials sales of $434
million declined 22 percent, primarily on lower volumes and
Electronics pricing. Operating income of $49 million increased 17
percent from the prior year as favorable cost performance offset
volume declines and lower Electronics pricing. While year-on-year
Electronics sales were down 27 percent, sales increased three
percent sequentially due to improved customer operating rates.
Performance Materials volumes improved nine percent sequentially,
reflecting seasonal improvement and stronger Asia sales, but
declined 10 percent from the prior year on weaker demand from
coatings, autos, housing and other end markets. -- Equipment and
Energy sales of $123 million declined three percent from the prior
year. Operating income of $6 million decreased from the prior year
on lower sales and higher Energy development costs. Outlook Looking
forward, McGlade said, "We have implemented the difficult but
necessary actions to take advantage of our strong global market
positions. Additionally, we see significant future opportunities in
the evolving energy, environment and emerging market sectors. We
also continue to drive to a low-cost structure to enable us to grow
faster than our competition. While the pace of the recovery is
unknown, our people remain committed to achieving our margin,
return and growth goals." The company today announced initial
guidance for fiscal year 2010 EPS in the range of $4.65 to $4.90
per share, representing year-over-year earnings growth on a
continuing operations basis of 15 to 21 percent. For the first
quarter of fiscal 2010 ending December 31, 2009, EPS is expected to
be between $1.07 and $1.15 per share. The company also announced
that it expects capital spending in fiscal 2010 to be between $1.3
and $1.5 billion, approximately equal to fiscal 2009. Air Products
(NYSE:APD) serves customers in industrial, energy, technology and
healthcare markets worldwide with a unique portfolio of atmospheric
gases, process and specialty gases, performance materials, and
equipment and services. Founded in 1940, Air Products has built
leading positions in key growth markets such as semiconductor
materials, refinery hydrogen, home healthcare services, natural gas
liquefaction, and advanced coatings and adhesives. The company is
recognized for its innovative culture, operational excellence and
commitment to safety and the environment. In fiscal 2009, Air
Products had revenues of $8.3 billion, operations in over 40
countries, and 18,900 employees around the globe. For more
information, visit http://www.airproducts.com/. NOTE: The
information above contains "forward-looking statements," within the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995, including earnings guidance. These forward-looking
statements are based on management's reasonable expectations and
assumptions as of the date of this press release. Actual
performance and financial results may differ materially from
projections and estimates expressed in the forward-looking
statements because of many factors, including, without limitation,
longer than anticipated delay in global economic recovery; renewed
deterioration in economic and business conditions; weakening demand
for the Company's products, future financial and operating
performance of major customers and industries served by the
Company; unanticipated contract terminations or customer
cancellations or postponement of projects and sales; asset
impairments due to economic conditions or specific product or
customer events; the impact of competitive products and pricing;
interruption in ordinary sources of supply of raw materials; the
ability to recover unanticipated increased energy and raw material
costs from customers; costs and outcomes of litigation or
regulatory activities; consequences of acts of war or terrorism
impacting the United States' and other markets; the effects of a
pandemic or epidemic or a natural disaster; charges related to
current portfolio management and cost reduction actions; the
success of implementing cost reduction programs and achieving
anticipated acquisition synergies; the timing, impact, and other
uncertainties of future acquisitions or divestitures; significant
fluctuations in interest rates and foreign currencies from that
currently anticipated; the continued availability of capital
funding sources in all of the Company's foreign operations; the
impact of new or changed environmental, healthcare, tax or other
legislation and regulations in jurisdictions in which the Company
and its affiliates operate; the impact of new or changed financial
accounting standards; and the timing and rate at which tax credits
can be utilized and other risk factors described in the Company's
Form 10K for its fiscal year ended September 30, 2008 and Form 10-Q
for the quarter ended December 31, 2008. The Company disclaims any
obligation or undertaking to disseminate any updates or revisions
to any forward-looking statements contained in this document to
reflect any change in the Company's assumptions, beliefs or
expectations or any change in events, conditions or circumstances
upon which any such forward-looking statements are based. The
presentation of non-GAAP measures is intended to enhance the
usefulness of financial information by providing measures which the
Company's management uses internally to evaluate the Company's
baseline performance. Presented below is a reconciliation of
reported GAAP results to non-GAAP measures. (Millions of dollars,
YTD except for share data)
------------------------------------------ Continuing Operations
--------------------- Operating Income Income Diluted EPS
------------------------------------------ 2009 GAAP $846.3 $639.9
$3.00 2008 GAAP 1,495.8 1,090.5 4.97 --------- ------- ------- ----
% Change GAAP (43)% (41)% (40)% ============= === === === 2009 GAAP
$846.3 $639.9 $3.00 Global cost reduction plan 298.2 200.3 .94
Customer bankruptcy and asset actions 32.1 21.0 .10 Pension
settlement 8.0 5.0 .02 ------------------ --- --- --- 2009 Non-GAAP
Measure $1,184.6 $866.2 $4.06 ===================== ======== ======
===== 2008 GAAP $1,495.8 $1,090.5 $4.97 Pension settlement 26.3
16.5 .08 ------------------ ---- ---- --- 2008 Non-GAAP Measure
$1,522.1 $1,107.0 $5.05 ===================== ======== ========
===== ------------------------- --- --- --- % Change Non-GAAP
Measure (22)% (22)% (20)% ========================= === === ===
2010 Forecast $4.65-$4.90 2009 GAAP $3.00 --------- ----- % Change
GAAP 55% - 63% ============= ======== 2010 Forecast $4.65-$4.90
2009 Non-GAAP Measure $4.06 --------------------- ----- % Change
Non-GAAP Measure 15% - 21% ========================== ======== QTR
Operating Income ---------------- 2009 Q4 GAAP $328.0 2009 Q3 GAAP
143.8 ------------ ----- % Change GAAP 128% ============= === 2009
Q3 GAAP $143.8 Global cost reduction plan 124.0 Customer bankruptcy
and asset actions 32.1 Pension settlement 8.0 ------------------
--- 2009 Q3 Non-GAAP Measure $307.9 ======================== ======
------------------------- --- % Change Non-GAAP Measure 7%
------------------------- --- The Company utilizes a non-GAAP
measure in the computation of capital expenditures and includes
spending associated with facilities accounted for as capital
leases. Certain facilities that are built to service a specific
customer are required to be accounted for as capital leases and
such spending is reflected as a use of cash within cash provided by
operating activities. YTD 2009 Actual YTD 2010 Forecast
--------------- ----------------- Capital expenditures - GAAP basis
$1,236 $1,000 to $1,200 Capital lease expenditures 239 300
-------------------------- --- --- Capital Expenditures - Non-GAAP
basis $1,475 $1,300 to $1,500 ===============================
====== ================ AIR PRODUCTS AND CHEMICALS, INC. and
Subsidiaries CONSOLIDATED INCOME STATEMENTS (Unaudited) Three
Months Twelve Months Ended Ended (Millions of dollars, 30 September
30 September except for share data) 2009 2008 2009 2008
---------------------- ---- ---- ---- ---- SALES $2,129.3 $2,714.7
$8,256.2 $10,414.5 Cost of sales 1,545.0 2,026.8 6,042.1 7,693.1
Selling and administrative 233.5 275.4 943.4 1,090.4 Research and
development 29.4 33.0 116.3 130.7 Global cost reduction plan - -
298.2 Customer bankruptcy - - 22.2 - Pension settlement 2.7 1.6
10.7 30.3 Other (income) expense, net (9.3) 4.8 (23.0) (25.8)
--------------------------- ---- --- ----- ----- OPERATING INCOME
328.0 373.1 846.3 1,495.8 Equity affiliates' income 32.2 30.8 112.2
145.0 Interest expense 27.9 42.8 121.9 162.0 ---------------- ----
---- ----- ----- INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND
MINORITY INTEREST 332.3 361.1 836.6 1,478.8 Income tax provision
86.3 82.9 185.3 365.3 Minority interest in earnings of subsidiary
companies - 4.8 11.4 23.0 ----------------------------- --- ---
---- ---- INCOME FROM CONTINUING OPERATIONS 246.0 273.4 639.9
1,090.5 LOSS FROM DISCONTINUED OPERATIONS, net of tax (2.1) (11.8)
(8.6) (180.8) NET INCOME $243.9 $261.6 $631.3 $909.7 ==========
====== ====== ====== ====== BASIC EARNINGS PER COMMON SHARE Income
from continuing operations $1.17 $1.30 $3.05 $5.14 Loss from
discontinued operations (.01) (.06) (.04) (.85)
---------------------- ---- ---- ---- ---- Net Income $1.16 $1.24
$3.01 $4.29 ---------- ----- ----- ----- ----- DILUTED EARNINGS PER
COMMON SHARE Income from continuing operations $1.14 $1.26 $3.00
$4.97 Loss from discontinued operations (.01) (.05) (.04) (.82)
---------------------- ---- ---- ---- ---- Net Income $1.13 $1.21
$2.96 $4.15 ---------- ----- ----- ----- ----- WEIGHTED AVERAGE OF
COMMON SHARES OUTSTANDING (in millions) 210.6 210.6 209.9 212.2
-------------------------- ----- ----- ----- ----- WEIGHTED AVERAGE
OF COMMON SHARES OUTSTANDING ASSUMING DILUTION (in millions) 215.7
216.9 213.5 219.2 ---------------------------- ----- ----- -----
----- DIVIDENDS DECLARED PER COMMON SHARE - Cash $.45 $.44 $1.79
$1.70 ---------------------- ---- ---- ----- ----- Other Data from
Continuing Operations: Depreciation and amortization $225.5 $221.2
$840.3 $869.0 Capital expenditures on a non-GAAP Basis (a) 433.1
406.7 1,474.9 1,355.0 (a) See page 14 for reconciliation AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited) 30 September 30 September
(Millions of dollars) 2009 2008 -------------------- ---- ----
ASSETS ------ CURRENT ASSETS Cash and cash items $488.2 $103.5
Trade receivables, less allowances for doubtful accounts 1,363.2
1,575.2 Inventories 509.6 503.7 Contracts in progress, less
progress billings 132.3 152.0 Prepaid expenses 115.1 107.7 Other
receivables and current assets 422.8 349.4 Current assets of
discontinued operations 5.0 56.6
----------------------------------------- --- ---- TOTAL CURRENT
ASSETS 3,036.2 2,848.1 -------------------- ------- -------
INVESTMENT IN NET ASSETS OF AND ADVANCES TO EQUITY AFFILIATES 868.1
822.6 PLANT AND EQUIPMENT, at cost 15,751.3 14,988.6 Less
accumulated depreciation 8,891.7 8,373.8
----------------------------- ------- ------- PLANT AND EQUIPMENT,
net 6,859.6 6,614.8 ------------------------ ------- -------
GOODWILL 916.0 928.1 INTANGIBLE ASSETS, net 262.6 289.6 NONCURRENT
CAPITAL LEASE RECEIVABLES 687.0 505.3 OTHER NONCURRENT ASSETS 450.0
504.1 NONCURRENT ASSETS OF DISCONTINUED OPERATIONS - 58.7
-------------------------------------------- --- ---- TOTAL ASSETS
$13,079.5 $12,571.3 ============ ========= ========= LIABILITIES
AND SHAREHOLDERS' EQUITY ------------------------------------
CURRENT LIABILITIES Payables and accrued liabilities $1,608.2
$1,665.6 Accrued income taxes 42.9 87.0 Short-term borrowings 333.8
419.3 Current portion of long-term debt 452.1 32.1 Current
liabilities of discontinued operations 14.4 8.0
----------------------------------- ---- --- TOTAL CURRENT
LIABILITIES 2,451.4 2,212.0 ------------------------- -------
------- LONG-TERM DEBT 3,715.6 3,515.4 DEFERRED INCOME & OTHER
NONCURRENT LIABILITIES 1,574.2 1,049.2 DEFERRED INCOME TAXES 408.3
626.6 NONCURRENT LIABILITIES OF DISCONTINUED OPERATIONS - 1.2
-------------------------------------- --- --- TOTAL LIABILITIES
8,149.5 7,404.4 ----------------- ------- ------- MINORITY INTEREST
IN SUBSIDIARY COMPANIES 138.1 136.2
----------------------------------------- ----- ----- TOTAL
SHAREHOLDERS' EQUITY 4,791.9 5,030.7 --------------------------
------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$13,079.5 $12,571.3 ==========================================
========= ========= AIR PRODUCTS AND CHEMICALS, INC. and
Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Twelve Months Ended 30 September (Millions of dollars) 2009 2008
-------------------- ---- ---- OPERATING ACTIVITIES Net income
$631.3 $909.7 Adjustments to reconcile income to cash provided by
operating activities: Depreciation and amortization 840.3 869.0
Impairment of assets of continuing operations 69.2 - Impairment of
assets of discontinued operations 49.5 314.8 Gain on sale of
discontinued operations (2.1) (105.9) Deferred income taxes (37.0)
36.9 Customer bankruptcy 22.2 - Undistributed earnings of
unconsolidated affiliates (58.0) (77.8) Loss on sale of assets and
investments 3.6 .3 Share-based compensation 60.4 61.4 Noncurrent
capital lease receivables (186.7) (192.6) Other adjustments (7.8)
2.9 Working capital changes that provided (used) cash, excluding
effects of acquisitions and divestitures: Trade receivables 159.0
(97.4) Inventories (17.7) (34.9) Contracts in progress 12.5 95.2
Other receivables (11.9) (120.6) Payables and accrued liabilities
(282.8) 36.2 Other working capital 78.9 (17.6)
--------------------- ---- ----- CASH PROVIDED BY OPERATING
ACTIVITIES (a) 1,322.9 1,679.6
---------------------------------------- ------- ------- INVESTING
ACTIVITIES Additions to plant and equipment (1,179.1) (1,085.1)
Acquisitions, less cash acquired (32.7) (72.0) Investment in and
advances to unconsolidated affiliates (24.5) (2.2) Proceeds from
sale of assets and investments 57.9 19.6 Proceeds from sale of
discontinued operations 51.0 423.0 Change in restricted cash 87.0
(183.6) Other investing activities - (19.5)
-------------------------- --- ----- CASH USED FOR INVESTING
ACTIVITIES (1,040.4) (919.8) ----------------------------------
-------- ------ FINANCING ACTIVITIES Long-term debt proceeds 610.5
580.1 Payments on long-term debt (82.9) (95.7) Net decrease in
commercial paper and short-term borrowings (122.7) (178.9)
Dividends paid to shareholders (373.3) (349.3) Purchase of treasury
stock -- (793.4) Proceeds from stock option exercises 54.4 87.4
Excess tax benefit from share-based compensation/other 15.5 51.3
----------------------------------- ---- ---- CASH PROVIDED BY
(USED FOR) FINANCING ACTIVITIES 101.5 (698.5)
------------------------------------- ----- ------ Effect of
Exchange Rate Changes on Cash .7 1.7
--------------------------------------- -- --- Increase in Cash and
Cash Items 384.7 63.0 Cash and Cash Items - Beginning of Year 103.5
40.5 --------------------------------------- ----- ---- Cash and
Cash Items - End of Period $488.2 $103.5
=================================== ====== ====== (a) Pension plan
contributions $182.5 $234.0 AIR PRODUCTS AND CHEMICALS, INC. and
Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Millions of dollars) 1. GLOBAL COST REDUCTION PLAN The 2009
results from continuing operations included a total charge of
$298.2 ($200.3 after-tax, or $.94 per share) for the global cost
reduction plan. In the first quarter 2009, the Company announced
the global cost reduction plan designed to lower its cost structure
and better align its businesses to reflect rapidly declining
economic conditions around the world. The first quarter results
included a charge of $174.2 ($116.1 after-tax, or $.55 per share).
In the third quarter 2009, due to the continuing slow economic
recovery, the Company committed to additional actions associated
with its global cost reduction plan which resulted in a charge of
$124.0 ($84.2 after-tax, or $.39 per share). The total 2009 charge
included $210.0 for severance and other benefits, including
pension-related costs, associated with the elimination of
approximately 2,550 positions from its global workforce. The
reductions are targeted at reducing overhead and infrastructure
costs, reducing and refocusing elements of the Company's technology
and business development spending, lowering its plant operating
costs, and the closure of certain manufacturing facilities. The
remainder of this charge, $88.2, was for business exits and asset
management actions. Assets held for sale were written down to net
realizable value and an environmental liability of $16.0 was
recognized. This environmental liability resulted from a decision
to sell a production facility. The planned actions associated with
the global cost reduction plan are expected to be substantially
completed within one year of when the related charges were
recognized. 2. DISCONTINUED OPERATIONS The U.S. Healthcare
business, Polymer Emulsions business, and the High Purity Process
Chemicals (HPPC) business have been accounted for as discontinued
operations. The results of operations of these businesses have been
removed from the results of continuing operations for all periods
presented. For additional historical information on these
discontinued operations, refer to the Company's 2008 annual report
on Form 10-K. U.S. Healthcare In July 2008, the Board of Directors
authorized management to pursue the sale of the U.S. Healthcare
business. In 2008, the Company recorded a total charge of $329.2
($246.2 after-tax, or $1.12 per share) related to the
impairment/write-down of the net carrying value of the U.S.
Healthcare business. In the first quarter of 2009, based on
additional facts, the Company recorded an impairment charge of
$48.7 ($30.9 after-tax, or $.15 per share) reflecting a revision in
the estimated net realizable value of the U.S. Healthcare business.
Also, a tax benefit of $8.8, or $.04 per share, was recorded to
revise the estimated tax benefit related to previously recognized
impairment charges. As a result of events which occurred during the
second quarter of 2009, which increased the Company's ability to
realize tax benefits associated with the impairment charges
recorded in 2008, the Company recognized a one-time tax benefit of
$16.7, or $.08 per share. During the third quarter of 2009, the
Company sold more than half of its remaining U.S. Healthcare
business to OptionCare Enterprises, Inc., a subsidiary of Walgreen
Co., and Landauer-Metropolitan, Inc. (LMI) for cash proceeds of
$38.1. The Company recognized an after-tax gain of $.3 resulting
from these sales combined with adjustments to the net realizable
value of the remaining businesses. During the fourth quarter of
2009, through a series of transactions with Rotech Healthcare, Inc.
and with LMI, the Company sold its remaining U.S. Healthcare
business for cash proceeds of $12.1. A net after-tax loss of $.7
was recognized. These transactions completed the disposal of the
U.S. Healthcare business. The operating results of the U.S.
Healthcare business have been classified as discontinued operations
and are summarized below: Three Months Twelve Months Ended Ended 30
September 30 September 2009 2008 2009 2008 ---- ---- ---- ----
Sales $7.9 $52.7 $125.2 $239.8 Loss before taxes $(2.3) $(5.2)
$(5.5) $(350.6) Income tax benefit (.9) (1.9) (2.1) (91.2)
------------------ --- ---- ---- ----- Loss from operations of
discontinued operations $(1.4) $(3.3) $(3.4) $(259.4) Loss on sale
of businesses and impairment/write-down to estimated net realizable
value, net of tax --------------------------------------- (.7)
(8.7) (5.5) (8.7) --- ---- ---- ---- Loss from discontinued
operations, net of tax $(2.1) $(12.0) $(8.9) $(268.1)
====================================== ===== ====== ===== =======
Polymer Emulsions Business On 31 January 2008, the Company closed
on the sale of its interest in its vinyl acetate ethylene (VAE)
polymers joint ventures to Wacker Chemie AG, its long-time joint
venture partner. As part of that agreement, the Company received
Wacker Chemie AG's interest in the Elkton, Md. and Piedmont, S.C.
production facilities. The Company recognized a gain on the sale of
$89.5 ($57.7 after-tax). On 30 June 2008, the Company sold its
Elkton, Md. and Piedmont, S.C. production facilities and the
related North American atmospheric emulsions and global pressure
sensitive adhesives businesses to Ashland Inc. The Company recorded
a gain of $30.5 ($18.5 after-tax) in connection with the sale,
which included the recording of a retained environmental obligation
associated with the Piedmont site. The sale of the Elkton and
Piedmont facilities completed the disposal of the Company's Polymer
Emulsions business. The operating results of the Polymer Emulsions
business have been classified as discontinued operations and are
summarized below: Three Months Twelve Months Ended Ended 30
September 30 September 2009 2008 2009 2008 ---- ---- ---- ----
Sales $- $- $- $261.4 Income before taxes $- $.2 $- $17.7 Income
tax provision -- .1 -- 6.4 -------------------- -- --- Income from
operations of discontinued operations $- $.1 $- $11.3 Gain on sale
of business, net of tax - - .3 76.2
-------------------------------- -- -- -- ---- Income from
discontinued operations, net of tax $- $.1 $.3 $87.5
======================== == === === ===== 3. CUSTOMER BANKRUPTCY
AND ASSET ACTIONS As a result of events which occurred during the
third quarter of 2009, the Company recognized a $22.2 charge
primarily for the write-off of certain receivables due to a
customer bankruptcy. This customer, who principally receives
product from the Tonnage Gases segment, began operating under
Chapter 11 bankruptcy protection on 6 January 2009. Sales and
operating income associated with this customer are not material to
the Tonnage Gases segment's results. At 30 September 2009, the
Company had remaining outstanding receivables with the customer of
$16.3. At the present time, the Company does not expect to
recognize additional charges related to this customer.
Additionally, during the third quarter of 2009, the Company
recorded a charge of $9.9 for other asset actions which consisted
of the closure of certain manufacturing facilities. This charge was
reflected in cost of sales on the consolidated income statement.
The customer bankruptcy charge combined with this asset write-down
resulted in a total charge of $32.1 ($21.0 after-tax, or $.10 per
share). 4. PENSION SETTLEMENT The Company's supplemental pension
plan provides for a lump sum benefit payment option at the time of
retirement, or for corporate officers six months after the
participant's retirement date. The Company recognizes pension
settlements when payments exceed the sum of service and interest
cost components of net periodic pension cost of the plan for the
fiscal year. A settlement loss is recognized when the pension
obligation is settled. Based on the timing of when cash payments
were made, the Company recognized $2.7 and $10.7 ($6.7 after-tax,
or $.03 per share) of settlement charges for the three and twelve
months ended 30 September 2009, respectively. For the three and
twelve months ended 30 September 2008, the Company recognized $1.6
and $30.3 ($18.9 after-tax, or $.09 per share) of settlement
charges, respectively. 5. LOSS FROM PROPERTY DAMAGE In the fourth
quarter of 2008, a fire at the Company's Ulsan, Korea nitrogen
trifluoride (NF3) production facility required the plant to be shut
down. Other income (expense) for the three and twelve months ended
30 September 2008 included a net loss of $14.7 ($10.7 after-tax, or
$.05 per share) related to property damage. The net book value of
the damaged property was written off and a receivable was recorded
for expected property damage insurance recoveries. During fiscal
2009, the Company received the expected insurance recoveries for
property damage of $3.7. Additionally, the Company recorded other
income of $4.9 ($3.1 after-tax, or $.01 per share) comprised of
$2.3 for the receipt of additional proceeds from a business
interruption claim and a $2.6 adjustment to the book value of the
damaged property. 6. HURRICANES During the fourth quarter of 2008,
Hurricanes Gustav and Ike reduced short-term demand from the U.S.
Gulf Coast customers and drove temporary decreases in operational
costs. The net impact on fourth quarter diluted earnings per share
was $.05. 7. SUMMARY BY BUSINESS SEGMENT Three Months Twelve Months
Ended Ended 30 September 30 September 2009 2008 2009 2008 ---- ----
---- ---- Revenues from External Customers Merchant Gases $932.4
$1,095.0 $3,610.6 $4,192.7 Tonnage Gases 640.0 940.3 2,573.6
3,574.4 Electronics and Performance Materials 434.2 553.2 1,582.2
2,209.3 Equipment and Energy 122.7 126.2 489.8 438.1
-------------------- ----- ----- ----- ----- Segment and
Consolidated Totals $2,129.3 $2,714.7 $8,256.2 $10,414.5
------------------------------- -------- -------- --------
--------- Operating Income Merchant Gases $165.7 $196.2 $661.2
$789.5 Tonnage Gases 105.2 134.9 399.6 482.6 Electronics and
Performance Materials 49.1 41.9 101.6 245.9 Equipment and Energy
5.8 15.6 42.2 38.9 -------------------- --- ---- ---- ---- Segment
Totals $325.8 $388.6 $1,204.6 $1,556.9 Global cost reduction plan -
- (298.2) - Customer bankruptcy and asset actions - - (32.1) -
Pension settlement (2.7) (1.6) (10.7) (30.3) Other 4.9 (13.9)
(17.3) (30.8) ----- --- ----- ----- ----- Consolidated Total $328.0
$373.1 $846.3 $1,495.8 ------------------ ------ ------ ------
-------- 30 September 30 September 2009 2008 ---- ---- Identifiable
Assets (a) Merchant Gases $4,917.0 $4,881.6 Tonnage Gases 3,597.8
3,335.4 Electronics and Performance Materials 2,249.5 2,341.0
Equipment and Energy 303.3 300.2 -------------------- ----- -----
Segment Totals $11,067.6 $10,858.2 Other 1,138.8 775.2 Discontinued
Operations 5.0 115.3 ----------------------- --- ----- Consolidated
Total $12,211.4 $11,748.7 ------------------ --------- ---------
(a) Identifiable assets are equal to total assets less investments
in and advances to equity affiliates. RECONCILIATION NON-GAAP
MEASURE The Company utilizes a non-GAAP measure in the computation
of capital expenditures and includes spending associated with
facilities accounted for as capital leases. Certain facilities that
are built to service a specific customer are required to be
accounted for as capital leases and such spending is reflected as a
use of cash within cash provided by operating activities. The
presentation of this non-GAAP measure is intended to enhance the
usefulness of information by providing a measure which the
Company's management uses internally to evaluate and manage the
Company's capital expenditures. Below is a reconciliation of
capital expenditures on a GAAP basis to a non-GAAP measure. Three
Months Twelve Months Ended Ended 30 September 30 September
(Millions of dollars) 2009 2008 2009 2008 -------------------- ----
---- ---- ---- Capital expenditures - GAAP basis $306.1 $364.1
$1,236.3 $1,159.3 Capital lease expenditures 127.0 42.6 238.6 195.7
-------------------------- ----- ---- ----- ----- Capital
expenditures - non-GAAP basis $433.1 $406.7 $1,474.9 $1,355.0
------------------------------- ------ ------ -------- --------
DATASOURCE: Air Products CONTACT: Media Inquiries, Robert Brown,
+1-610-481-1192, ; Investors, Nelson Squires, +1-610-481-7461, Web
Site: http://www.airproducts.com/
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