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Air Products & Chemicals, Inc. Annual Report, Year Ended Sep 30, 2001

Filing Date
Filed December 14, 2001
Period End
September 30, 2001
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 filed December 14, 2001. Cited figures are marked; the original filing is the authoritative source.

Air Products and Chemicals (APD) closed fiscal 2001 (year ended September 30, 2001) with sales of $5.72 billiona, up 5%, and reported net income of $465.6 million, or $2.12 diluted EPS.

Excluding extraordinary and special items, net income was $519.3 millionb, or $2.37 diluted EPS, down from $2.46 in fiscal 2000. Operating income excluding special items declined 2% to $860.6 million. Growth came from the gases segment, where sales rose 14% and operating income rose 4%, partly on natural gas cost pass-through and strong electronics demand in the first half of the year.

Chemicals was the weak spot: segment operating income fell 29% on lower volumes, higher raw material and energy costs, and market share loss from price increases. Equipment sales rose 9%, and its backlog grew to $227 millionc from $149 million. Management responded to the slowdown with cost reduction plans covering 1,468 positions, a $109.2 million charge in 2001, and targeted asset write-downs.

It also sold its interests in two cogeneration facilities for a $101.6 milliond pre-tax gain, repurchased $541.1 million of higher-coupon debt at a $47.3 million after-tax extraordinary loss, and sold and leased back U.S. cryogenic vessel equipment for $301.9 million. Total debt fell to $2.5 billion from $3.0 billion, and shareholders' equity rose to $3.1 billion. Cash from operations was $1.08 billion, capital spending was $806 million, and the quarterly dividend was raised 5% to $0.20.

Key risks for investors include the continued electronics slowdown in the second half of 2001, the ability to pass through energy and raw material costs, natural gas price spikes, and foreign currency exposure, since roughly 44% of debt is in U.S. dollars and 36% in euros. Share repurchases were suspended in the fourth quarter. The 2001 results also include the effects of the failed BOC acquisition in fiscal 2000, which produced a $730 million charge that depressed that year's earnings to $0.57 per diluted share.

02—Key points

Key Highlights

  1. Fiscal 2001 sales rose 5% to $5.72 billion; gases sales grew 14% while chemicals sales fell 14% (4% excluding the divested PVOH business).
  2. Reported diluted EPS was $2.12 (net income $465.6M), versus $0.57 in fiscal 2000; excluding special items and extraordinary charges, diluted EPS was $2.37 versus $2.46.
  3. Chemicals segment operating income fell 29% to $112.3M (9.3% margin, down from 11.2%) on lower volumes and higher raw material and energy costs.
  4. Gases segment operating income rose 4% to $654.9M, with operating income excluding special items of $724.0M, supported by North American and European pricing and higher HyCO volumes.
  5. Debt was reduced from $3.0B to $2.5B after a $541M early repurchase of high-coupon debt and a $302M sale-leaseback; the quarterly dividend was raised 5% to $0.20.
  6. A $109.2M global cost reduction charge covers 670 planned position eliminations, with about $100M of total annual benefits expected after completion in 2002.
  7. Equipment backlog rose to $227M from $149M, though the segment's operating income declined $4.8M on unfavorable project mix; share repurchases were suspended in Q4 2001.

03—Questions

Frequently Asked Questions

  1. How did Air Products perform financially in fiscal 2001?

    Sales grew 5% to $5.72 billion and net income was $465.6 million ($2.12 diluted EPS). Excluding special items and the extraordinary debt-retirement charge, earnings were $2.37 per diluted share, down from $2.46 in fiscal 2000, reflecting a weaker chemicals business and higher raw material and energy costs partly offset by gases growth.

  2. Why did the chemicals segment decline so sharply?

    Chemicals operating income fell 29% to $112.3 million because of lower volumes from the slowing economy, market share losses after price increases, customer plant outages, and sharply higher raw material and energy costs. Price increases were only partly successful in recovering those costs.

  3. What is the company doing to improve its cost structure and balance sheet?

    Management launched a 2001 global cost reduction plan eliminating 670 positions, and it expects total annual benefits of about $100 million after completion in 2002. It also divested two cogeneration facilities, repurchased $541 million of debt, completed a sale-leaseback worth $302 million, and cut total debt from $3.0 billion to $2.5 billion.

  4. What are the main risks to the outlook?

    The filing highlights a slow recovery in electronics demand, the ability to pass energy and raw material costs through to customers, natural gas price spikes, currency and interest rate fluctuations, and the timing of tax credit use. The company also has ongoing environmental remediation exposure, estimated at $9 million to $19 million with a $14 million accrual at year-end.

04—Continue

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