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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
June 30, 2006
AIRGAS, INC.
(Exact name of registrant as specified in its charter)
         
Delaware   1-9344   56-0732648
         
(State or other   (Commission File Number)   (I.R.S. Employer
jurisdiction of       Identification No.)
incorporation)        
259 North Radnor-Chester Road, Suite 100
Radnor, PA 19087-5283
(Address of principal executive offices)
Registrant’s telephone number, including area code: (610) 687-5253
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).
o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).
o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).
o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).
 
 

 

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Item 2.02 Results of Operations and Financial Condition
Item 9.01 Financial Statements and Exhibits
Signatures
Annual Report Line Graph

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Item 2.02 Results of Operations and Financial Condition
On or about June 30, 2006, Airgas, Inc. (the “Company”) began mailing its annual report (the “Annual Report”) and definitive proxy statement to its stockholders. The Letter to Shareholders section of the Annual Report includes a line graph (on page 11) depicting Sales, Adjusted EBITDA, Interest Expense, and Stockholders Equity from fiscal 1989 through fiscal 2006. The line graph is attached as Exhibit 99.1 under Item 9.01 and is incorporated herein by reference. The Sales, Interest Expense and Stockholders Equity data used to derive the line graph were previously disclosed in the Company’s Form 10-K filings for the respective years presented. The current presentation of the Adjusted EBITDA measure had not been previously disseminated to the public and is furnished in this Form 8-K.
Adjusted EBITDA is a financial measure that is not defined under generally accepted accounting principles (“GAAP”). The Company believes adjusted EBITDA provides investors meaningful insight into the Company’s ability to generate cash from operations to support required working capital, capital expenditures and financial obligations. A reconciliation of Adjusted EBITDA to the most comparable measure under generally accepted accounting principles appears on page 69 of the Annual Report and is also included below:
Eighteen Year Reconciliation of Operating Income to Adjusted EBITDA to Cash from Operations
                                                                                                                                                 
(In thousands)                                                                        
Years ended March 31,   1989   1990   1991   1992   1993   1994   1995   1996   1997   1998   1999   2000   2001   2002   2003   2004   2005   2006
     
Operating income
     15,958       23,221       17,286       26,316       34,367       48,667       72,600       92,987       80,480       111,709       112,607       105,461       106,728       124,938       156,336       168,544       202,454       268,758  
Add:
                                                                                                                                                
Depreciation & amortization
     11,147       17,387       21,158       23,420       28,042       30,571       36,868       45,762       64,428       82,227       83,839       85,262       82,796       71,757       79,279       87,447       111,078       127,542  
     
Adjusted EBITDA
     27,105       40,608       38,444       49,736       62,409       79,238       109,468       138,749       144,908       193,936       196,446       190,723       189,524       196,695       235,615       255,991       313,532       396,300  
 
                                                                                                                                                
(Uses)/sources of cash excluded from Adjusted EBITDA, included in Cash from Operations:
                                                                                                                                                
Interest expense, net
     (12,245 )     (16,198 )     (15,179 )     (12,838 )     (11,403 )     (12,486 )     (17,625 )     (24,862 )     (39,367 )     (52,603 )     (59,677 )     (56,879 )     (59,550 )     (46,775 )     (46,374 )     (42,357 )     (51,245 )     (53,812 )
Discount on securitization of receivables
     —       —       —       —       —       —       —       —       —       —       —       —       (1,303 )     (4,846 )     (3,326 )     (3,264 )     (4,711 )     (9,371 )
Current income taxes
     404       1,700       (599 )     (3,591 )     (5,653 )     (7,838 )     (12,345 )     (17,654 )     (20,012 )     (16,502 )     (17,244 )     (16,902 )     (13,402 )     4,546       (33,174 )     (24,623 )     (22,622 )     (30,718 )
Other income (expense)
     215       157       870       214       546       453       1,607       781       1,695       9,811       29,491       18,625       1,324       5,987       2,132       1,472       1,129       2,462  
Equity in earnings of Elkem joint venture
     1,415       1,435       2,009       2,019       (897 )     (1,258 )     (840 )     (1,428 )     (1,356 )     (1,478 )     (869 )     —       —       —       —       —       —       —  
(Gains)/losses on divestitures
     —       —       —       —       —       —       (560 )     —       —       (1,452 )     (25,468 )     (17,712 )     (1,173 )     (5,548 )     241       —       (360 )     1,900  
(Gain)/losses on sale of PP&E
     (32 )     2       (715 )     (76 )     (292 )     (63 )     110       (12 )     616       (504 )     (222 )     (915 )     502       405       (257 )     (837 )     (321 )     (1,330 )
Stock issued for employee benefits
     —       —       —       —       —       —       2,707       3,396       5,156       5,953       5,750       5,715       5,630       7,369       8,951       6,889       9,907       10,534  
Income(loss) on discontinued operations
     —       —       —       —       —       —       —       —       478       (635 )     (871 )     (335 )     (400 )     (3,529 )     (1,776 )     (457 )     464       (1,424 )
Other non-cash charges
     260       308       252       250       —       —       —       —       3,930       11,422       —       458       2,281       1,068       —       —       —       —  
Cash provided (used) by working capital
     4,379       702       6,712       15,968       13,608       6,752       (2,030 )     (6,948 )     (14,801 )     (13,548 )     (25,273 )     (22,686 )     78,329       95,691       33,931       17,865       (23,456 )     47,628  
     
 
                                                                                                                                                
Net Cash Provided by Operating Activities
     21,501       28,714       31,794       51,682       58,318       64,798       80,492       92,022       81,247       134,400       102,063       100,092       201,762       251,063       195,963       210,679       222,317       362,169  
     

 

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The Company’s Annual Report also includes a Financial Highlights section (on page 17) that contains Return on Capital financial information relating to fiscal years 2002 through 2006. Return on Capital is a financial measure that is not defined under GAAP. The Company believes that the Return on Capital computation helps investors assess how effectively the Company uses the capital invested in its operations. A reconciliation of Return on Capital appears on page 69 of the Annual Report and is also included below:
Reconciliation and Computation of Return on Capital
                                         
(In thousands)                    
Years Ended March 31,   2002   2003   2004   2005   2006
 
Operating Income
   $ 124,938     $ 156,336     $ 168,544     $ 202,454     $ 268,758  
Plus (Less):
                                        
Restructuring/special charges (recoveries), net
     —       2,694       (776 )     —       —  
Litigation settlements/charges
     8,501       —       —       —       —  
 
Adjusted Operating Income
   $ 133,439     $ 159,030     $ 167,768     $ 202,454     $ 268,758  
 
 
                                        
Five Quarter Average of Total Assets
     1,528,101       1,705,114       1,776,185       2,112,504       2,378,324  
Five Quarter Average of Securitized Trade Receivables
     124,400       147,680       157,400       183,300       216,360  
Five Quarter Average of Current Liabilities (exclusive of debt)
     (214,179 )     (219,153 )     (216,081 )     (269,975 )     (326,618 )
Five Quarter Average of Investment in Unconsolidated Affiliates
     (63,886 )     (65,416 )     (39,793 )     —       —  
 
Five Quarter Average Capital Employed
   $ 1,374,436     $ 1,568,225     $ 1,677,711     $ 2,025,829     $ 2,268,066  
 
 
                                        
Return on Capital
     9.7 %     10.1 %     10.0 %     10.0 %     11.8 %
     

 

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The Company’s intent is to provide non-GAAP financial information to enhance investors’ understanding of the Company’s consolidated financial statements and should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP.
The information contained in this Form 8-K report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference in any filing under the Securities Exchange Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(a) None
(b) None
(c) Exhibits.
                 
 
    99.1     —   Annual Report line graph included in the Letter to Shareholders on page 11 of the Company’s 2006 Annual Report (furnished pursuant to Item 2.02 of Form 8-K).

 

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Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant and Co-Registrants have duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
                 
AIRGAS, INC.       AIRGAS EAST, INC.    
     (Registrant)       AIRGAS GREAT LAKES, INC.    
 
          AIRGAS MID AMERICA, INC.    
 
          AIRGAS NORTH CENTRAL, INC.    
BY:
  /s/ Robert M. McLaughlin       AIRGAS SOUTH, INC.    
 
  Robert M. McLaughlin       AIRGAS GULF STATES, INC.    
 
  Vice President & Controller       AIRGAS MID SOUTH, INC.    
 
          AIRGAS INTERMOUNTAIN, INC.    
 
          AIRGAS NORPAC, INC.    
 
          AIRGAS NORTHERN CALIFORNIA & NEVADA, INC.    
 
          AIRGAS SOUTHWEST, INC.    
 
          AIRGAS WEST, INC.    
 
          AIRGAS SAFETY, INC.    
 
          AIRGAS CARBONIC, INC.    
 
          AIRGAS SPECIALTY GASES, INC.    
 
          NITROUS OXIDE CORP.    
 
          RED-D-ARC, INC.    
 
          AIRGAS DATA, LLC    
             
         
    (Co-Registrants)
    
 
            
 
  BY:   /s/ Robert M. McLaughlin    
 
           
 
      Robert M. McLaughlin    
 
      Vice President    
 
            
    ATNL, INC.
 
            
         
    (Co-Registrant)
    
 
            
 
  BY:   /s/ Melanie Andrews    
 
           
 
      Melanie Andrews    
 
      President    
DATED: July 7, 2006