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Air Products & Chemicals, Inc. Annual Report (Amendment), Year Ended Sep 30, 1994

Filing Date
Filed December 8, 1994
Period End
September 30, 1994
Security
APD
In the record · 2016–202610-K1010-Q338-K123

APD filed 10 annual reports (10-K), 33 quarterly reports (10-Q) and 123 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Jan ’17Jan ’17
  2. FY2018 annual report10-K · Nov ’18Nov ’18
  3. Leadership change8-K · Sep ’21Sep ’21
  4. Leadership change8-K · Aug ’25Aug ’25

01—Abstract

Summary

Summary of the 10-K/A filed December 8, 1994. Cited figures are marked; the original filing is the authoritative source.

Air Products and Chemicals' fiscal 1994 (year ended September 30, 1994) showed a rebound in underlying profitability, but reported results were held down by a large non-operating charge.

Sales rose 5% to $3,485.3 milliona and operating income excluding nonoperating items climbed 9% to $511.3 million. Reported net income was $247.8 million, or $2.18 per share, which includes a $107.7 million pre-tax loss on leveraged interest rate swaps (about $75.1 million after tax, or $.66 per share) and a $14.3 million net benefit from accounting changes. Excluding nonoperating items, EPS was $2.71, up from $2.32 in 1993.

The gains came from higher worldwide gas shipments, record chemicals results driven by ammonia and methanol margins, and savings from the 1993 workforce reduction program. The balance sheet remained solid, with shareholders' equity of $2,206.4 millionb, total debt at 36% of total capitalization, and A+/A1 senior debt ratings. Operating cash flow rose to $751.0 million from $584.4 million.

Management guided to $700c-$800 million of 1995 capital spending and disclosed a planned acquisition of Carburos Metalicos in Spain, expected to cost about $400 million in total over two years. Segment performance was led by industrial gases, which generated $1,968.1 million in sales and $380.6 million in operating income. Equipment and technology weakened as its backlog declined to $183 million from $193 million.

For investors, the key questions are whether the underlying earnings momentum persists, how the Carburos purchase will be financed and affect leverage, and whether the derivative losses and environmental exposures, with a reserve of $29.6 milliond against a potential range of $24-55 million, will weigh on future results. The filing also notes that about 60 Superfund-type sites remain unresolved, but management does not expect a materially adverse effect.

02—Key points

Key Highlights

  1. Sales rose 5% to $3,485.3 million in fiscal 1994, and operating income excluding nonoperating items grew 9% to $511.3 million.
  2. Reported EPS was $2.18, but EPS excluding nonoperating items was $2.71, up from $2.32 in fiscal 1993. The main drag was a $107.7 million loss on leveraged interest rate swaps ($.66 per share after tax).
  3. Industrial gases was the largest segment, with $1,968.1 million in sales and $380.6 million in reported operating income, driven by higher merchant and on-site volumes.
  4. Chemicals reported record results, with operating income of $147.9 million, up 16%, helped by stronger ammonia and methanol margins and offset by weaker polyvinyl alcohol margins.
  5. Operating cash flow increased to $751.0 million from $584.4 million, and total debt fell by $7.5 million, leaving debt at 36% of total capitalization.
  6. The company plans roughly $700-$800 million in 1995 capital spending and a Carburos Metalicos acquisition in Spain, with the remaining 74.2% stake expected to cost about $400 million over 1995-1996.
  7. Environmental exposure is estimated at $24-55 million, with a $29.6 million accrual on the balance sheet, and about 60 Superfund-type sites remain open.

03—Questions

Frequently Asked Questions

  1. Why did reported earnings fall short of underlying operating performance in fiscal 1994?

    Reported net income of $247.8 million ($2.18 per share) included a $107.7 million pre-tax loss on leveraged interest rate swaps that the company closed or terminated in 1994. Excluding this and other nonoperating items, EPS was $2.71, up 17% from $2.32 in 1993.

  2. What drove the improvement in operating results?

    Higher worldwide shipments of merchant and on-site gases, record chemicals results from better ammonia and methanol pricing and lower natural gas costs, and roughly $43 million of savings from the 1993 workforce reduction and asset write-downs program. Equipment and technology results declined as manufacturing activity slowed.

  3. How will the planned Carburos Metalicos acquisition affect the company?

    Air Products made a tender offer for 74.2% of Carburos, the Spanish industrial gas company it does not already own, with additional offers planned for September 1995 and 1996. The remaining shares are expected to cost about $400 million using forecasted exchange rates, to be funded with borrowings. Management says this should not materially affect overall liquidity, though it will add debt.

  4. How strong is the balance sheet and liquidity position?

    The company's senior debt is rated A+/A1 and its commercial paper A1/P1. Shareholders' equity was $2,206.4 million. Total debt as a percentage of total debt plus equity was 36%. The company had a $400 million U.S. revolving credit commitment, with no borrowings outstanding at year end.

  5. What environmental and legal risks should investors watch?

    The company accrued $29.6 million for investigatory and noncapital remediation costs, with a potential exposure range of $24-55 million. It is involved in about 60 sites where it is a potentially responsible party. Management does not expect a materially adverse effect on its financial position. Environmental spending is expected to be about $30 million per year in after-tax expense in 1995 and 1996.

04—Continue

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