[Air Products Logo]
Law Group
Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
Telephone (610) 481-7351
Tax : Law (610) 481-8223
Patent (610) 481-7083
December 14, 2001
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-1004
RE: Air Products and Chemicals, Inc. (the "Company")
Annual Report on Form 10-K - File No. 1-4534
Ladies and Gentlemen:
Filed herewith, in electronic format, on behalf of Air Products and
Chemicals, Inc., is the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 2001.
The financial statements in the Annual Report do not reflect any material
changes from the preceding year in accounting principles or practices or in the
method of applying such principles or practices.
Sincerely,
/s/ Robert F. Gerkens
Robert F. Gerkens
Assistant Corporate Secretary and
Assistant General Counsel
Enclosure
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
-------------------------------
Washington, D.C. 20549
FORM 10-K
(Mark One) |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended September 30, 2001
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
7201 Hamilton Boulevard
Allentown, Pennsylvania 18195-1501
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 481-4911
- -------------------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ----------------
Common Stock, par value $1.00 per share New York and Pacific
Preferred Stock Purchase Rights New York and Pacific
8 3/4% Debentures Due 2021 New York
-----------------------
Indicate by check mark 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the registrant on November 1, 2001, was $8.63 billion. For purposes of the
foregoing calculation (i) all directors and/or executive officers have been
deemed to be affiliates, but the registrant disclaims that any such director
and/or executive officer is an affiliate and (ii) registrant's Flexible Employee
Benefit Trust, described under Item 12 of this Report, is deemed a
non-affiliate.
The number of shares of Common Stock outstanding as of November 30, 2001
was 227,200,340.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for the fiscal year ended September 30, 2001.
With the exception of those portions which are incorporated by reference into
Parts I, II, and IV of this Form 10-K, the Annual Report is not deemed to be
filed.
Proxy Statement for Annual Meeting of Shareholders to be held January 24,
2002 . . . Part III.
===============================================================================
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. In addition to important risk factors and
uncertainties referred to in the Management's Discussion and Analysis which is
included under Item 7 herein, other important risk factors and uncertainties
include overall economic and business conditions; demand and timing of the
placing of orders for the goods and services of Air Products, including the
success of recovery in the Air Products markets in the electronics industry;
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.
ii
TABLE OF CONTENTS
Page
PART I.............................................................................................................1
ITEM 1. Business.............................................................................................1
GASES...................................................................................................1
Power Generation and Flue Gas Desulfurization..........................................................2
CHEMICALS...............................................................................................2
Performance Chemicals..................................................................................3
Chemical Intermediates.................................................................................3
EQUIPMENT...............................................................................................4
GENERAL.................................................................................................4
Foreign Operations.....................................................................................4
Technology Development.................................................................................5
Raw Materials and Energy...............................................................................6
Environmental Controls.................................................................................6
Competition............................................................................................7
Insurance..............................................................................................8
Employees..............................................................................................8
Executive Officers of the Company......................................................................9
ITEM 2. Properties..........................................................................................10
Gases.................................................................................................10
Chemicals.............................................................................................10
Equipment.............................................................................................11
ITEM 3. Legal Proceedings...................................................................................11
ITEM 4. Submission of Matters to a Vote of Security Holders.................................................11
PART II...........................................................................................................11
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters...............................11
ITEM 6. Selected Financial Data.............................................................................12
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations...............12
ITEM 7a. Quantitative and Qualitative Disclosures about Market Risk..........................................12
ITEM 8. Financial Statements................................................................................12
ITEM 9. Disagreements on Accounting and Financial Disclosure................................................12
PART III..........................................................................................................12
ITEM 10. Directors and Executive Officers of the Company.....................................................12
ITEM 11. Executive Compensation..............................................................................12
ITEM 12. Security Ownership of Certain Beneficial Owners and Management......................................12
ITEM 13. Certain Relationships and Related Transactions......................................................13
PART IV...........................................................................................................13
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K....................................13
SIGNATURES............................................................................................17
iii
PART I
ITEM 1. Business.
Through internal development and by acquisitions, Air Products and
Chemicals, Inc. has established an internationally recognized industrial gas and
related industrial process equipment business and developed strong positions as
a producer of certain chemicals.
The gases business segment recovers and distributes industrial gases
such as oxygen, nitrogen, argon, and hydrogen and a variety of medical and
specialty gases. The chemicals business segment produces and markets performance
chemicals and chemical intermediates. The equipment business segment supplies
cryogenic and other process equipment and related engineering services.
Financial information concerning the Company's business segments
appears in Note 18 to the Consolidated Financial Statements included under Item
8 herein, which information is incorporated herein by reference, as are all
other specific references herein to information appearing in such 2001 Financial
Review Section of the Annual Report.
As used in this Report, the term "Air Products" or "Company" includes
subsidiaries and predecessors of the registrant or its subsidiaries, unless the
context indicates otherwise.
GASES
The principal industrial gases sold by the Company are oxygen,
nitrogen, argon (primarily recovered by the cryogenic distillation of air),
hydrogen, carbon monoxide, carbon dioxide (purchased, purified, or recovered
through the processing of natural gas or the by-product streams from process
plants), synthesis gas (combined streams of hydrogen and carbon monoxide), and
helium (purchased or refined from crude helium). Medical and specialty gases are
manufactured or blended by the Company or purchased for resale. The gases
segment also includes the Company's power generation and flue gas treatment
businesses.
The Company's gas business involves two principal modes of supply:
"Tonnage" or "on-site" supply--For large volume or "tonnage" users of
industrial gases, a plant is built adjacent to, on, or near the customer's
facility--hence the term "on-site". Alternatively, the gases are delivered
through a pipeline from nearby locations. Supply is generally made under
contracts having terms in excess of three years. In numerous areas--the Houston
(Texas) Ship Channel including the Port Arthur, Texas, area; "Silicon Valley",
California; Los Angeles, California; Phoenix, Arizona; Decatur, Alabama; Central
Louisiana; Rotterdam, the Netherlands; Korea; Singapore; Malaysia; and Bahia,
Brazil--Air Products' hydrogen, oxygen, carbon monoxide, or nitrogen gas
pipelines serve multiple customers from one or more centrally located plants.
Industrial gas companies in which the Company has less than controlling
interests have pipelines in Thailand, Taiwan, and South Africa.
Merchant supply--Smaller volumes of industrial gas products are
delivered to thousands of customers in liquid or gaseous form by tanker trucks
or tube trailers. These merchant customers use equipment designed and installed
by Air Products to store the product near the point of use, normally in liquid
state, and vaporize the product into gaseous state for their use as needed. Some
customers are also supplied by small on-site generators using noncryogenic
technology based on adsorption and membrane technology which, in certain
circumstances, the Company sells to its customers. Merchant customers' contract
terms normally are from three to five years. Merchant gases and various
specialty gases are also delivered in cylinders, dewars, and lecture bottle
sizes.
Oxygen, nitrogen, argon, and hydrogen sold to merchant customers are
usually recovered at large "stand-alone" facilities located near industrial
areas or high-tech centers, or at small noncryogenic generators, or are taken
from tonnage plants used primarily to supply tonnage users. Tonnage plants are
frequently designed to have more capacity than is required by their principal
customer to recover additional product that is liquefied for sale to a merchant
market. Air Products also designs and builds systems for recovering oxygen,
hydrogen, nitrogen, carbon monoxide, and low dew point gases using adsorption
technology.
1
Tonnage and merchant sales of atmospheric gases--oxygen, nitrogen, and
argon--constituted approximately 25% of Air Products' consolidated sales in
fiscal year 2001 and 26% in fiscal years 2000 and 1999. Tonnage and merchant
sales of industrial gases--principally oxygen, nitrogen, and hydrogen--to the
chemical process industry and the electronics industry, the largest consuming
industries, were approximately 21% and 14%, respectively, of Air Products'
consolidated sales in fiscal year 2001.
Other important consumers of Air Products' industrial and specialty
gases are the basic steel industry, the oil industry (which uses inert nitrogen
for oil well stimulation and field pressurization and hydrogen and oxygen for
refining), and the food industry (which uses liquid nitrogen for food freezing).
Air Products believes that it is the largest liquefier of hydrogen, which it
supplies to many customers, including the National Aeronautics and Space
Administration for its space shuttle program.
Helium is sold for use in magnetic resonance imaging equipment,
controlled atmospheres processes, and welding. Medical gases and equipment,
primarily for inhalation therapy, are supplied to hospitals and clinics, as well
as in Europe to the home care market.
Specialty gases include fluorine products, rare gases such as xenon,
krypton, and neon, and more common gases of high purity or gases which are
precisely blended as mixtures. Specialty chemicals for use by the electronics
industry include silane, arsine, silicon tetrafluoride, nitrogen trifluoride,
carbon tetrafluoride, hexafluoromethane, and tungsten hexafluoride. These gases
and chemicals are used in numerous industries and in electronic and laboratory
applications. In certain circumstances, the Company sells equipment related to
the use, handling, and storage of such specialty gases and specialty chemicals.
Sales of industrial gases to merchant customers and/or sales of
specialty products to the electronics industry are made principally through
field sales forces from 108 offices in 38 states in the United States and Puerto
Rico, and from 198 offices in 24 foreign countries. In addition, industrial gas
companies in which the Company has investments operate in more than 30 foreign
countries.
Electricity and hydrocarbons, including natural gas as a feedstock for
producing certain gases, are important to Air Products' gas business. See "Raw
Materials and Energy". The Company's large truck fleet, which delivers products
to merchant customers, requires a readily available supply of gasoline or diesel
fuel. Also, environmental and health laws and regulations will continue to
affect the Company's gas businesses. See "Environmental Controls".
Power Generation and Flue Gas Desulfurization
Air Products operates and has 50% interests in a 49-megawatt
fluidized-bed coal-fired power generation facility in Stockton, California and a
24-megawatt gas-fired combined cycle power generation facility near Rotterdam,
the Netherlands, and a 100% interest in a 25-megawatt gas-fired combined cycle
power generation facility principally supplying the Company's chemical complex
in Calvert City, Kentucky. A 112-megawatt gas-fueled power generation facility,
in which the Company has a 48.8% interest, operates in Thailand and supplies
electricity to a state-owned electricity generating authority and steam and
electricity to an Air Products industrial gases affiliate. In the fourth quarter
of fiscal year 2001, the Company sold its ownership and operating interests in
two cogeneration facilities: an 88-megawatt facility in western Pennsylvania and
a 115-megawatt facility in Orlando, Florida. The Company continues to assess the
possibility of divestiture of its interest in the flue gas desulfurization
facility in Porter County, Indiana.
Additional information with respect to the Company's power generation
and flue gas treatment businesses is included in Notes 3, 7 and 16 to the
Consolidated Financial Statements included under Item 8 herein.
CHEMICALS
The Company's chemicals businesses consist of performance chemicals
and chemical intermediates, where the Company is able to differentiate itself by
the performance of its products in the customer's application, the technical
service which the Company provides, and the scale of production and the
production technology employed by the Company.
2
Performance Chemicals
The principal businesses of performance chemicals are emulsions and
specialty, polyurethane, and epoxy additives. Total sales from the performance
chemicals business constituted approximately 16% of Air Products' consolidated
sales in fiscal year 2001, 21% in fiscal year 2000, and 22% in fiscal year 1999.
Additives
---------
Air Products' additives chemicals are differentiated from the
competition based on their performance when used in the customer's products and
the technical service which the Company provides.
Specialty Additives-These products are primarily acetylenic alcohols
and amines which are used as performance additives in coatings, lubricants,
electro-deposition processes, agricultural formulations, and corrosion
inhibitors.
Polyurethane Additives-These products include catalysts and
surfactants which are used as performance control additives and processing aids
in the production of both flexible and rigid polyurethane foam around the world.
The principal end markets for polyurethane foams include furniture cushioning,
insulation, carpet underlay, bedding, and automobile seating.
Epoxy Additives-These products include polyamides, aromatic amines,
cycloaliphatic amines, reactive diluents, and specialty epoxy resins which are
used as performance additives in epoxy formulations by epoxy manufacturers
worldwide. The end markets for epoxies are coatings, flooring, adhesives,
reinforced composites, and electrical laminates.
Emulsions
---------
Air Products' emulsions are water-based and water-soluble products
derived primarily from vinyl acetate monomer.
The Company's major emulsions products are vinyl acetate homopolymer
emulsions and AIRFLEX(R) vinyl acetate-ethylene copolymer emulsions. The Company
also produces emulsions which incorporate vinyl chloride and various acrylates
in the polymer. These products are used in adhesives, nonwoven fabric binders,
paper coatings, paints, inks, and carpet backing binder formulations.
Air Products owns 65% of a worldwide joint venture with Wacker-Chemie
GmbH that produces polymer emulsions and pressure-sensitive adhesives. The
Company also owns 20% of a worldwide joint venture with Wacker-Chemie that
produces redispersible powders made from polymer emulsions.
Pressure-sensitive adhesives are water-based acrylic emulsions which
are used for both permanent and removable pressure-sensitive adhesives primarily
for labels and tapes.
Chemical Intermediates
The chemical intermediates businesses use the Company's proprietary
technology and scale of production to differentiate themselves from the
competition. The principal intermediates sold by the Company include amines and
polyurethane intermediates. The Company also produces certain industrial
chemicals (ammonia, methanol, and nitric acid) as raw materials for its
differentiated products. Total third-party sales from the chemical intermediates
businesses constituted 11% of Air Products' consolidated sales in fiscal year
2001, 12% in fiscal year 2000, and 11% in fiscal year 1999.
Amines-The Company produces a broad range of amines using ammonia and
methanol, which are both manufactured by Air Products, and other alcohol
feedstocks purchased from various suppliers. Other, more specialized amines, are
produced by the hydrogenation of purchased intermediates. Substantial quantities
of these products are sold under long-term contracts to a small number of
customers. These products are used by the Company's customers as raw materials
in the manufacture of herbicides, pesticides, water treatment chemicals, animal
nutrients, polyurethane coatings, rubber chemicals, and pharmaceuticals. Ammonia
is produced as a feedstock for its alkylamines business, supplemented by
external purchases. Additional ammonia is purchased and converted to ammonium
nitrate prills and solutions which are primarily sold to customers as
fertilizers or for other chemical applications. Methanol is produced by Air
Products as a feedstock in methylamine production, and the excess over this
requirement is sold to a third party.
3
Polyurethane Intermediates-The Company produces dinitrotoluene ("DNT")
and toluene diamine ("TDA") for use as intermediates by the Company's customers
in the manufacture of a major precursor of flexible polyurethane foam. The
principal end markets for flexible polyurethane foams include furniture
cushioning, carpet underlay, bedding, and seating in automobiles. Virtually all
of the Company's production of DNT and TDA is sold under long-term contracts to
a small number of customers.
* * *
Chemical sales are supported from various locations in the United
States, England, Germany, Brazil, Mexico, the Netherlands, Japan, China,
Singapore, and South Africa, and through sales representatives or distributors
in most industrialized countries. Dry products are delivered in railcars,
trucks, drums, bags, and cartons. Liquid products are delivered by barge, rail
tank cars, tank-trailers, drums and pails, and, at one location, by pipeline.
The chemicals business depends on adequate energy sources, including
natural gas as a feedstock for the production of certain products (see "Raw
Materials and Energy") and will continue to be affected by various environmental
and health laws and regulations (see "Environmental Controls").
EQUIPMENT
The Company designs and manufactures equipment for cryogenic air
separation, gas processing, natural gas liquefaction, and hydrogen purification.
Air Products also designs and builds systems for recovering hydrogen, nitrogen,
carbon monoxide, carbon dioxide, and low dew point gases using membrane
technology. Additionally, a broad range of plant design, engineering,
procurement, and construction management services is provided for the above
areas. Equipment is manufactured for use by the gases segment and for sale in
industrial markets which include the Company's international industrial gas
affiliates.
The backlog of orders (including letters of intent) believed to be
firm from other companies and equity affiliates for equipment was approximately
$227 million on September 30, 2001, approximately 34% of which relates to
cryogenic air separation, as compared with a total backlog of approximately $149
million on September 30, 2000. It is expected that approximately $187 million of
the backlog on September 30, 2001, will be completed during fiscal year 2002.
GENERAL
Foreign Operations
Air Products, through subsidiaries and affiliates, conducts business
in numerous countries outside the United States. The structure of the Air
Products gas business in Europe mirrors the Company's United States operation.
Air Products' international business is subject to risks customarily encountered
in foreign operations, including fluctuations in foreign currency exchange rates
and controls, import and export controls, and other economic, political, and
regulatory policies of local governments.
Majority and wholly owned industrial gas subsidiaries operate in
Argentina, Brazil, Canada, and throughout Europe and Asia in 14 and nine
countries, respectively. There are 50% industrial gas joint ventures in Africa,
South Africa, Canada, seven countries in Europe, and five in Asia, and less than
controlling interests in Canada and Mexico, four countries in Europe, and six in
Asia. The Company has a 50% interest in a power generation facility in the
Netherlands and a 48.8% interest in one in Thailand.
4
The principal geographic markets for the Company's chemical products
are North America, Europe, Asia, Brazil, and Mexico. Majority and wholly owned
subsidiaries operate in Germany, Italy, the Netherlands, the United Kingdom,
Australia, Singapore, Japan, Korea, China, and Mexico. The Company also has 50%
joint ventures in Japan for distribution of POLYCAT(R) and manufacture and sale
of DABCO(R) amine catalysts and a 50% joint venture in the U.K which is
developing products relating to silicon wafer polishing, chemical mechanical
planarization processes, and hard disk polishing. The polymer emulsions and
pressure-sensitive adhesives joint venture with Wacker-Chemie GmbH has
headquarters in the United States and production facilities in the United
States, Germany, Mexico, and Korea, along with a technical service center in
Shanghai, China. Headquarters for the 20% investment in the redispersible powder
venture with Wacker-Chemie are in Germany with manufacturing facilities in
Germany and the United States. The Company also has less than controlling
interests in Japan and Ireland, which sell chemicals to the electronics
industry.
Financial information about Air Products' foreign operations and
investments is included in Notes 7, 14, and 18 to the Consolidated Financial
Statements included under Item 8 herein. Information about foreign currency
translation is included in Note 1 to the Consolidated Financial Statements
included under Item 8 herein, under "Foreign Currency", and information on
Company exposure to currency fluctuations is included in Note 5 to the
Consolidated Financial Statements included under Item 8 herein, under "Financial
Instruments". Export sales from operations in the United States to
unconsolidated customers amounted to $602 million, $558 million, and $528
million in 2001, 2000, and 1999, respectively.
Total export sales in fiscal year 2001 included $46 million in export sales to
affiliated customers. The sales to affiliated customers were primarily equipment
sales.
Technology Development
Air Products conducts research and development principally in its
laboratories located in Trexlertown, Pennsylvania, as well as in Basingstoke,
London, and Crewe in the U.K.; Burghausen, Germany; Utrecht, the Netherlands;
San Juan del Rio, Mexico; and Barcelona, Spain. The Company also funds and works
closely on research and development programs with a number of major universities
and conducts a sizable amount of research work funded by others, principally the
United States Government.
The Company's market-oriented approach to technology development
encompasses research and development and engineering, as well as commercial
development.
The amount expended by the Company on research and development during
fiscal year 2001 was $123 million, $124 million in fiscal year 2000, and $123
million in fiscal year 1999.
In the gases and equipment segments, technology development is
directed primarily to developing new and improved processes and equipment for
the production and delivery of industrial gases and cryogenic fluids, developing
new products, and developing new and improved applications for industrial gases.
It is through such applications and improvements that the Company has become a
major supplier to the electronics and chemical process industries including
gases from air separation, specialty gases and hydrogen. Additionally,
technology development for the equipment business is directed primarily to
reducing the capital and operating costs of its facilities and to
commercializing new technologies in gas production and separation.
In the chemicals segment, technology development is primarily
concerned with new products and applications to strengthen and extend our
present positions in polymer and performance chemicals. In addition, a major
continuing effort supports the development of new and improved process and
manufacturing technology for chemical intermediates and polymers.
A corporate research group supports the research efforts of the
Company's various businesses. This group includes the Company's Corporate
Science and Technology Center, which conducts research in areas important to the
long-term growth of the Company, with focus on performance materials.
As of November 14, 2001, Air Products owned 935 United States patents
and 1,630 foreign patents. The Company is also licensed to practice under
patents owned by others. While the patents and licenses are considered
important, Air Products does not consider its business as a whole to be
materially dependent upon any particular patent or patent license, or group of
patents or licenses.
5
Raw Materials and Energy
The Company manufactures hydrogen, carbon monoxide, synthesis gas,
carbon dioxide, and methanol principally from natural gas. Such products
accounted for approximately 13% of the Company's consolidated sales in fiscal
year 2001. The Company's principal raw material purchases are chemical
intermediates produced by others from basic petrochemical feedstocks such as
olefins and aromatic hydrocarbons. These feedstocks are generally derived from
various crude oil fractions or from liquids extracted from natural gas. The
Company purchases its chemical intermediates from many sources and generally is
not dependent on one supplier. However, with respect to vinyl acetate monomer
which supports the polymer business, the Company is heavily dependent on a
single supplier under a long-term contract which produces vinyl acetate monomer
from several facilities. The Company characterizes the availability of these
chemical intermediates as generally being readily available. The Company uses
such raw materials in the production of emulsions, amines, polyurethane
intermediates, specialty additives, polyurethane additives, and epoxy additives.
Such products accounted for approximately 28% of the Company's consolidated
sales in fiscal year 2001. Natural gas is an energy source at a number of the
Company's facilities. The Company also purchases ammonia under long-term
contracts as a feedstock for several of its chemicals facilities.
The Company's industrial gas facilities use substantial amounts of
electrical power. Any shortage of electrical power or interruption of its supply
or increase in its price which cannot be passed through to customers for
competitive reasons will adversely affect the merchant gas business of the
Company.
In addition, the Company purchases finished and semi-finished
materials and chemical intermediates from many suppliers. During fiscal year
2001 no significant difficulties were encountered in obtaining adequate supplies
of energy or raw materials.
Environmental Controls
The Company is subject to various environmental laws and regulations
in the United States and foreign countries where it has operations. Compliance
with these laws and regulations results in higher capital expenditures and
costs. Additionally, from time to time, the Company is involved in proceedings
under the Comprehensive Environmental Response, Compensation, and Liability Act
(the federal Superfund law), similar state laws, and the Resource Conservation
and Recovery Act (RCRA) relating to the designation of certain sites for
investigation and possible cleanup. Additional information with respect to these
proceedings is included under Item 3, Legal Proceedings, below. The Company's
accounting policies on environmental expenditures are discussed in Note 1 to the
Consolidated Financial Statements included under Item 8 herein.
The amounts charged to earnings on an after-tax basis related to
environmental protection totaled $21 million in 2001, $30 million in 2000, and
$27 million in 1999. These amounts represent an estimate of expenses for
compliance with environmental laws, as well as remedial activities, and costs
incurred to meet internal Company standards. Such costs are estimated to be
$24 million in 2002 and 2003.
Although precise amounts are difficult to define, the Company
estimates that in fiscal year 2001 it spent approximately $11 million on capital
projects to control pollution versus $3 million in 2000. Capital expenditures to
control pollution in future years are estimated at approximately $16 million in
2002 and $13 million in 2003.
To the extent long-term contracts have been entered into for supply of
product, such as for the industrial gas on-site business and for certain
chemical products, the cost of any environmental compliance generally is
contractually passed through to the customer.
It is the Company's policy to accrue environmental investigatory and
noncapital remediation costs for identified sites when it is probable that a
liability has been incurred and the amount of loss can be reasonably estimated.
The potential exposure for such costs is estimated to range from $9 million to a
reasonably possible upper exposure of $19 million. The balance sheet at
September 30, 2001, includes an accrual of $14 million. At September 30, 2000,
the balance sheet accrual was $17 million.
6
In addition to the environmental exposures discussed in the preceding
paragraph, there will be spending at a Company-owned manufacturing site where
the Company is undertaking RCRA remediation action. The Company estimates
capital costs to implement the anticipated remedial program should not exceed
$33 million. Spending was $28 million through fiscal year 2001 and is estimated
at $.3 million for fiscal year 2002 and $2 million for fiscal year 2003.
Operating and maintenance expenses associated with continuing the remedial
program were minimal in fiscal year 2001 and are estimated to be
approximately $1 million per year for an estimated period of up to 30 years. A
former owner and operator at the site has agreed to reimburse the Company
approximately 20% of the costs incurred in the remediation. Reimbursement of
$.3 million and $1.4 million was received in fiscal years 2001 and 2000,
respectively, and the reimbursement is estimated at $.2 million for fiscal year
2002. In fiscal year 1999, an insurance recovery related to this environmental
site was received in the amount of $7.7 million. The cost estimates have not
been reduced by the value of such reimbursements and insurance recovery.
Actual costs to be incurred in future periods may vary from the
estimates, given inherent uncertainties in evaluating environmental exposures.
Subject to the imprecision in estimating future environmental costs, the Company
does not expect that any sum it may have to pay in connection with environmental
matters in excess of the amounts recorded or disclosed above would have a
materially adverse effect on its financial condition or results of operations in
any one year.
Competition
The Company's businesses face strong competition from others, some of
which are larger and have greater resources than Air Products.
Air Products' gas business competes in the United States with three
major sellers and with several regional sellers. Competition in industrial gas
markets is based primarily on price, reliability of supply, and furnishing or
developing applications for use of such gases by customers, and in some cases
the provisions of other services or products such as power and steam generation.
A similar competitive situation exists in European industrial gas markets in
which the Company competes against one or more larger entrenched competitors in
most countries.
The number of the Company's principal competitors in the chemicals
business varies from product to product, and it is not practical to identify
such competitors because of the broad range of the Company's chemical products
and the markets served, although the Company believes it has a leading or strong
market position in most of its chemical products. For amines the competition is
principally from other large chemical companies that also have the ability to
provide competitive pricing, reliability of supply, technical service
assistance, and quality products and services. The possibility of back
integration by large customers is the major competitive factor for the sale of
polyurethane additives. In its other chemical products, the Company competes
with a large number of chemical companies, some of which are larger, possess
greater financial resources, and are more vertically integrated than the
Company. Competition in these products is principally on the basis of price,
quality, product performance, reliability of product supply, and technical
service assistance.
The Company's equipment business competes in all aspects with a great
number of firms, some of which have greater financial resources than Air
Products. Another important factor in certain export sales is financing provided
by governmental entities in the United States and the United Kingdom as compared
with financing offered by their counterparts in other countries.
Competition is based primarily on technological performance, service,
technical know-how, price, and performance guarantees. Air Products believes
that its comprehensive project development capability, operating experience,
engineering and financing capabilities, and construction management experience
will enable it to compete effectively.
7
Insurance
The Company's policy is to obtain public liability and property
insurance coverage that is currently available at what management determines to
be a fair and reasonable price. The Company, for itself and its power generation
and flue gas treatment joint venture affiliates for which it assumes operating
responsibility, maintains public liability and property insurance coverage at
amounts which management believes are sufficient, after retention, to meet the
Company's anticipated needs in light of historical experience to cover future
litigation and claims. There is no assurance, however, that the Company will not
incur losses beyond the limits of, or outside the coverage of, its insurance.
Employees
On September 30, 2001, the Company (including majority-owned subsidiaries) had
approximately 17,800 full-time employees, of whom approximately 7,700 were
located outside the United States. The Company has collective bargaining
agreements with unions at numerous locations which expire on various dates over
the next three to four years. The Company considers relations with its employees
to be satisfactory. The Company does not believe that any expiring collective
bargaining agreements will result in a material adverse impact on the Company.
Executive Officers of the Company
8
The Company's executive officers and their respective positions and
ages on December 15, 2001, follow. Except where indicated, each of the executive
officers listed below has been employed by the Company in the position indicated
during the past five fiscal years. Information with respect to offices held is
stated in fiscal years.
Name Age Office
---- --- ------
Leonard V. Broese van Groenou 54 Vice President - Human Resources (became Vice President-
(D) Human Resources in 2001; Vice President-Human Resources
and Procurement of Air Products Europe prior thereto)
W. Douglas Brown 55 Vice President, General Counsel, and Secretary
(D) (became Vice President, General Counsel, and Secretary in
1999; Vice President-Administration, Gases and Equipment in
1997; Senior Vice President-Law and Secretary of American
Ref-Fuel Company prior thereto)
Andrew E. Cummins 57 Group Vice President-Chemicals
(D) (became Group Vice President-Chemicals in 1999; Vice
President-North America Gases in 1999; Vice
President-General Industries Group in 1996)
Leo J. Daley 55 Vice President-Finance and Controller
(D) (became Controller in 2000; Vice President-Finance in 1998;
Vice President and Treasurer prior thereto)
Robert E. Gadomski 54 Executive Vice President-Gases and Equipment
(D) (became Executive Vice President-Gases and Equipment in
1999; Executive Vice President-Chemicals, Asia, and Latin
America in 1998; Executive Vice President-Chemicals in 1996)
John P. Jones III 51 Chairman, President, and Chief Executive Officer
(A)(B)(C)(D) (became Chairman and Chief Executive Officer in 2000;
President and Chief Operating Officer in 1998; Executive
Vice President-Gases and Equipment in 1996)
Ronaldo Sullam 60 President-Air Products Europe, Inc.
(D) (became President-Air Products Europe, Inc. in 1996)
- ----------
(A) Member, Board of Directors
(B) Member, Executive Committee of the Board of Directors
(C) Member, Finance Committee of the Board of Directors
(D) Member, Corporate Executive Committee
9
ITEM 2. Properties.
The principal executive offices of Air Products are located at its
headquarters in Trexlertown, near Allentown, Pennsylvania. Additional
administrative offices are located in owned facilities in Hersham, near London,
England; Brampton, near Toronto, Canada; and Hattingen, Germany. Administrative
offices are also located in leased facilities in the Allentown area,
Pennsylvania; Tokyo, Japan; Hong Kong, the People's Republic of China;
Singapore; Brussels, Belgium; Paris, France; Barcelona, Spain; and Sao Paulo,
Brazil. The management considers the Company's manufacturing facilities,
described in more detail below, to be adequate to support the business
efficiently. The following information with respect to properties is as of
September 30, 2001.
Gases
The gases segment has approximately 190 plant facilities in 38 states,
the majority of which recover nitrogen, oxygen, and argon. The Company has eight
facilities which produce specialty gases and 31 facilities which recover
hydrogen throughout the United States. Helium is recovered at two plants in
Kansas and Texas, and acetylene is manufactured at six plants in six states in
the United States. There are 110 sales offices and/or cylinder distribution
centers located in 38 states.
The property on which the above plants are located is owned by Air
Products at approximately one-fourth of the locations, and leased by Air
Products at the remaining locations. However, in virtually all cases, the plant
itself is owned and operated by Air Products. Air Products owns approximately
half of its sales offices and cylinder distribution centers, including related
real estate, and leases the other half.
Air Products' European plant facilities total 73 and include nine
plants which recover hydrogen, seven plants which manufacture dissolved
acetylene, and four which recover carbon monoxide. The majority of European
plants recover nitrogen, oxygen, and argon. In addition, there are four
specialty gas centers. There is a combined total of 163 sales offices and/or
cylinder distribution centers in Europe, and several additional facilities
located in Brazil, Canada, Japan, the People's Republic of China, Puerto Rico,
Singapore, Indonesia, Taiwan, Korea, Malaysia, and the Middle East.
Representative offices are located in Hong Kong, Taiwan, and in Beijing and
Shanghai in the People's Republic of China.
Chemicals
The chemicals segment manufactures amines, nitric acid, methanol,
anhydrous ammonia, and ammonia products at its Pace, Florida facility;
alkylamines at its St. Gabriel, Louisiana facility and its Camacari, Bahia,
Brazil facility; polyvinyl acetate emulsions at its South Brunswick, New Jersey
facility; styrene emulsions, styrene acrylics, polyvinyl acetate acrylics, and
polyvinyl acetate emulsions at its San Juan del Rio facility in Mexico;
polyvinyl acetate emulsions at its Cologne, Germany facility; nitric acid,
dinitrotoluene, and toluene diamine at its Pasadena, Texas facility; polyvinyl
acetate emulsions and acetylenic chemicals at its Calvert City, Kentucky
facility; specialty amines at its Wichita, Kansas facility; methylamines,
dimethyl formamide, choline chloride, and dimethyl amino ethanol at its
Teesside, England facility; and epoxy additives at its facilities in Manchester,
England, Los Angeles, California, and Cumberland, Rhode Island. The chemicals
segment manufactures polyurethane additives and polyurethane specialty products
(AIRTHANE(R)/VERSATHANE(R)) at its Paulsboro, New Jersey facility which is
leased in part and owned in part. The chemicals segment also manufactures
polyvinyl acetate emulsions at five smaller locations.
The chemicals segment has 15 plant facilities, two sales offices, and
one laboratory in the United States and operates three plants, nine
sales/representative offices, and three laboratories in Europe, two laboratories
in Brazil, Korea, China, and Japan, one plant in Mexico, two plants in Korea,
one plant in Brazil, and sales offices in Australia, Brazil, Mexico, Japan,
Korea, and Singapore, and representative offices in Beijing, Shanghai, and Hong
Kong in the People's Republic of China. Substantially all of the chemicals
segment's plants and real estate are owned. Approximately 75% of the offices are
leased by the Company and 25% are owned.
10
Equipment
The principal facilities utilized by the equipment segment include
five plants and two sales offices in the United States, two plants and one
office in Europe, one office in Japan, and one sales office in the People's
Republic of China. Air Products owns approximately 50% of the facilities and
real estate in this segment and leases the remaining 50%.
ITEM 3. Legal Proceedings.
In the normal course of business Air Products and its subsidiaries are
involved in legal proceedings including proceedings involving governmental
authorities under the Comprehensive Environmental Response, Compensation, and
Liability Act (the federal Superfund law), the Resource Conservation and
Recovery Act (RCRA), and similar state environmental laws relating to the
designation of certain sites for investigation or remediation. Presently there
are approximately 45 sites on which a final settlement has not been reached
where the Company, along with others, has been designated a Potentially
Responsible Party by the Environmental Protection Agency or is otherwise engaged
in investigation or remediation. The Company does not expect that any sums it
may have to pay in connection with these matters would have a materially adverse
effect on its consolidated financial position, nor is there any material
additional exposure expected in any one year in excess of the amounts the
Company currently has accrued. Additional information on the Company's
environmental exposure is included under "Environmental Controls".
ITEM 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The Company's Common Stock, ticker symbol "APD", is listed on the New
York and Pacific Stock Exchanges. Quarterly stock prices, as reported on the New
York Stock Exchange composite tape of transactions, and dividend information for
the last two fiscal years appear below.
Quarterly Stock Information
---------------------------------------------------------
2001 High Low Close Dividend
---------------------------------------------------------
First $42.25 $30.50 $41.00 $.19
---------------------------------------------------------
Second 43.45 35.00 38.40 .19
---------------------------------------------------------
Third 48.70 37.98 45.75 .20
---------------------------------------------------------
Fourth 49.00 32.25 38.58 .20
---------------------------------------------------------
$.78
2000 High Low Close Dividend
---------------------------------------------------------
First $33.88 $25.69 $33.56 $.18
---------------------------------------------------------
Second 37.00 23.00 28.44 .18
---------------------------------------------------------
Third 39.06 27.56 30.81 .19
---------------------------------------------------------
Fourth 39.13 29.25 36.00 .19
---------------------------------------------------------
$.74
11
The Company has authority to issue 25,000,000 shares of preferred
stock in series. The Board of Directors is authorized to designate the series
and to fix the relative voting, dividend, conversion, liquidation, redemption
and other rights, preferences, and limitations as between series. When preferred
stock is issued, holders of Common Stock are subject to the dividend and
liquidation preferences and other prior rights of the preferred stock. There
currently is no preferred stock outstanding. The Company's Transfer Agent and
Registrar is American Stock Transfer and Trust Company, 59 Maiden Lane, New
York, New York, 10038, telephone (800) 937-5449, Internet website
www.amstock.com, and e-mail address info@amstock.com.
As of November 30, 2001 there were 11,621 record holders of
the Company's Common Stock.
ITEM 6. Selected Financial Data.
The tabular information appearing under "Eleven-Year Summary of
Selected Financial Data" on pages 48 and 49 of the 2001 Financial Review
Section of the Annual Report to Shareholders is incorporated herein by
reference.
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The textual information appearing under "Management's Discussion and
Analysis" on pages 17 through 23 of the 2001 Financial Review Section of the
Annual Report to Shareholders is incorporated herein by reference.
ITEM 7a. Quantitative and Qualitative Disclosures about Market Risk.
The textual information appearing under "Market Risks and Sensitivity
Analysis" on pages 22 and 23 of the 2001 Financial Review Section of the Annual
Report to Shareholders is incorporated herein by reference.
ITEM 8. Financial Statements.
The consolidated financial statements and the related notes thereto,
together with the report thereon of Arthur Andersen LLP dated 26 October 2001,
appearing on pages 24 through 49 of the 2001 Financial Review Section of the
Annual Report to Shareholders, are incorporated herein by reference.
ITEM 9. Disagreements on Accounting and Financial Disclosure.
Not applicable.
PART III
ITEM 10. Directors and Executive Officers of the Company.
The biographical information relating to the Company's directors
contained on pages 7 through 10 of the Proxy Statement relating to the
Company's 2002 Annual Meeting of Shareholders is incorporated herein by
reference. Biographical information relating to the Company's executive officers
is set forth in Item 1 of Part I of this Report.
ITEM 11. Executive Compensation.
The information under "Director Compensation", "Report of the
Management Development and Compensation Committee", "Executive Compensation
Tables", "Severance and Other Change In Control Arrangements", and "Stock
Performance Graph", appearing on pages 12 through 20 of the Proxy Statement
relating to the Company's 2002 Annual Meeting of Shareholders is incorporated
herein by reference.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
The information required for this Item is set forth in the sections
headed "Persons Owning More than 5% of Air Products Stock" and "Air Products
Stock Beneficially Owned by Officers and Directors" contained on pages 21
through 22 of the Proxy Statement relating to the Company's 2002 Annual Meeting
of Shareholders and such information is incorporated herein by reference.
12
ITEM 13. Certain Relationships and Related Transactions.
Not applicable.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following documents are filed as a part of this Report:
1. The 2001 Financial Review Section of the Company's 2001 Annual Report to
Shareholders. Information contained therein is not deemed filed except as it is
incorporated by reference into this Report. The following financial information
is incorporated herein by reference:
(Page references to 2001 Financial Review Section of the Annual Report)
Management's Discussion and Analysis......................................................... 17
Report of Independent Public Accountants..................................................... 24
Consolidated Income for the three years ended 30 September 2001.............................. 25
Consolidated Balance Sheets at 30 September 2001 and 2000.................................... 26
Consolidated Cash Flows for the three years ended 30 September 2001.......................... 27
Consolidated Shareholders' Equity for the three years ended 30 September 2001................ 28
Notes to Consolidated Financial Statements................................................... 29
Business Segment and Geographic Information.................................................. 45
Eleven-Year Summary of Selected Financial Data............................................... 48
2. The following additional information should be read in conjunction with
the financial statements in the Company's 2001 Financial Review Section of the
Annual Report to Shareholders:
(Page references to this report)
Report of Independent Public Accountants on Schedule........................................... 19
Consent of Independent Public Accountants...................................................... 19
Consolidated Schedule for the years ended 30 September 2001, 2000, and 1999
as follows:
Schedule
Number
------
VIII Valuation and Qualifying Accounts................................................... 20
All other schedules are omitted because the required matter or conditions
are not present or because the information required by the Schedules is
submitted as part of the consolidated financial statements and notes thereto.
3. Exhibits.
Exhibit No. Description
(3) Articles of Incorporation and By-Laws.
3.1 By-Laws of the Company. (Filed as Exhibit 3.1 to the
Company's Form 8-K Report dated September 18, 1997.)*
3.2 Restated Certificate of Incorporation of the Company.
(Filed as Exhibit 3.2 to the Company's Form 10-K Report
or the fiscal year ended September 30, 1987.)*
3.3 Amendment to the Restated Certificate of Incorporation
of the Company dated January 25, 1996. (Filed as
Exhibit 3.3 to the Company's Form 10-K Report for the
fiscal year ended September 30, 1996.)*
(4) Instruments defining the rights of security holders,
including indentures. Upon request of the Securities and
Exchange Commission, the Company hereby undertakes to
furnish copies of the instruments with respect to its
long-term debt.
13
4.1 Rights Agreement, dated as of March 19, 1998, between
the Company and First Chicago Trust Company of New York.
(Filed as Exhibit 1 to the Company's Form 8-A
Registration Statement dated March 19, 1998, as amended
by Form 8-A/A dated July 16, 1998.)*
4.2 Amended and Restated Credit Agreement dated as of
September 16, 1999 among the Company, Additional Borrowers
parties thereto, Lenders parties thereto, and The Chase
Manhattan Bank (as amended). (Filed as Exhibit 4.2 to
the Company's Form 10-K Report for the fiscal year
ended September 30, 1999.)*
(10) Material Contracts.
10.1 1990 Deferred Stock Plan of the Company, as amended and
restated effective October 1, 1989. (Filed as
Exhibit 10.1 to the Company's Form 10-K Report for the
fiscal year ended September 30, 1989.)*
10.2 1997 Long-Term Incentive Plan of the Company effective
October 1, 1996. (Filed as Exhibit 10.2(c) to the
Company's Form 10-K Report for the fiscal year ended
September 30, 1996.)*
10.2(a) Excerpt from resolutions approving amendments to the 1997
Long-Term Incentive Plan of the Company, effective
20 September 2000. (Filed as Exhibit 10.2(a) to the
Company's Form 10-K Report for the fiscal year ended
September 30, 2000.)*
10.3 Amended and Restated 1997 Annual Incentive Plan of the
Company effective 1 January 2000. (Filed as
Exhibit 10.2 to the Company's Form 10-Q Report for the
period ending 31 March 2000.)*
10.3(a) Excerpt from resolutions amending the 1997 Annual
Incentive Plan of the Company, effective 20 September
2000. (Filed as Exhibit 10.3(a) to the Company's
Form 10-K Report for the fiscal year ended
September 30, 2000.)*
10.4 Supplementary Pension Plan of the Company, as amended
effective October 1, 1988. (Filed as Exhibit 10.4 to
the Company's Form 10-K Report for the fiscal year ended
September 30, 1989.)*
10.4(a) Amendment to the Pension Plan for Salaried Employees and
the Pension Plan for Hourly Rated Employees of the
Company, adopted September 20, 1995. (Filed as
Exhibit 10.4(d) to the Company's Form 10-K Report for the
fiscal year ended September 30, 1995.)*
10.4(b) Amendment to Supplementary Pension Plan of the Company,
adopted September 20, 1995. (Filed as Exhibit 10.4(e)
to the Company's Form 10-K Report for the fiscal year
ended September 30, 1995.)*
10.4(c) Amendment to Supplementary Pension Plan of the Company,
adopted November 2, 1995. (Filed as Exhibit 10.4(c) to
the Company's Form 10-K Report for the fiscal year ended
September 30, 1996.)*
10.4(d) Resolutions delegating certain authority to amend the
Supplementary Pension Plan of the Company, effective
January 26, 2000. (Filed as Exhibit 10.4(d) to the
Company's Form 10-K Report for the fiscal year ended
September 30, 2000.)*
10.4(e) Resolutions approving amendments to the Supplementary
Pension Plan of the Company, effective September 20,
2000. (Filed as Exhibit 10.4(e) to the Company's
Form 10-K Report for the fiscal year ended
September 30, 2000.)*
10.5 Supplementary Savings Plan of the Company as amended
October 1, 1989. (Filed asExhibit 10.5 to the Company's
Form 10-K Report for the fiscal year ended September 30,
1989.)*
10.5(a) Amendment to Supplementary Savings Plan of the Company
effective April 1, 1998. (Filed as Exhibit 10.3(a) to the
Company's Form 10-K Report for the fisca year ended
September 30, 1998.)*
14
10.5(b) Resolutions approving amendments to the Supplementary
Savings Plan of the Company effective 1 January 2000.
(Filed as Exhibit 10.2 to the Company's Form 10-Q Report
for the period ending 31 March 2000.)*
10.6 Amended and Restated Deferred Compensation Plan for
Directors of the Company, effective May 19, 1998.
(Filed as Exhibit 10.6(a) to the Company's Form 10-K
Report for the fiscal year ended September 30, 1998.)*
10.6(a) Resolutions approving amendments to the Compensation
Program For Directors of the Company effective 1 April
2000. (Filed as Exhibit 10.6(a) to the Company's Form 10-K
Report for the fiscal year ended September 30, 2000.)*
10.6(b) Resolutions approving an Amendment to the Deferred
Compensation Plan for Directors of the Company effective
20 September 2001.
10.7 Stock Option Plan for Directors of the Company, effective
January 27, 1994, as amended October 21, 1999. (Filed
as Exhibit 10.7 to the Company's Form 10-K Report for
the fiscal year ended September 30, 1999.)*
10.8 Letter dated July 1, 1997 concerning pension for an
executive officer. (Filed as Exhibit 10.7(b) to the
Company's Form 10-K Report for the fiscal year ended
September 30, 1998.)*
10.9 Letter dated July 7, 1997 concerning pension for an
executive officer. (Filed as Exhibit 10.7(c) to the
Company's Form 10-K Report for the fiscal year ended
September 30, 1998.)*
10.10 Letter dated July 1, 1997 concerning pension for an
executive officer. (Filed as Exhibit 10.10 to the
Company's Form 10-K Report for the fiscal year ended
September 30, 1999.)*
10.11 Air Products and Chemicals, Inc. Severance Plan effective
March 15, 1990. (Filed as Exhibit 10.8(a) to the
Company's Form 10-K Report for the fiscal year ended
September 30, 1992.)*
10.12 Air Products and Chemicals, Inc. Change of Control
Severance Plan effective March 15, 1990. (Filed as
Exhibit 10.8(b) to the Company's Form 10-K Report for
the fiscal year ended September 30, 1992.)*
10.13 Amended and Restated Trust Agreement by and between the
Company and PNC Bank, N.A. relating to the Defined
Benefit Pension Plans dated as of August 1, 1999.
(Filed as Exhibit 10.13 to the Company's Form 10-K Report
for the fiscal year ended September 30, 1999.)*
10.13(a) Amendment No.1 to the Amended and Restated Trust Agreement
by and between the Company and PNC Bank, N.A. relating to
the Defined Benefit Pension Plan, adopted January 1, 2000.
(Filed as Exhibit 10.13(a) to the Company's Form 10-K
Report for the fiscal year ended September 30, 2000.)*
10.14 Amended and Restated Trust Agreement by and between the
Company and PNC Bank, N.A. relating to the Supplementary
Savings Plan dated as of August 1, 1999. (Filed as
Exhibit 10.14 to the Company's Form 10-K Report for the
fiscal year ended September 30, 1999.)*
10.14(a) Amendment No.1 to the Amended and Restated Trust
Agreement by and between the Company and PNC Bank, N.A.
relating to the Supplementary Savings Plan, adopted
January 1, 2000. (Filed as Exhibit 10.14(a) to the
Company's Form 10-K Report for the fiscal year ended
September 30, 2000.)*
10.15 Form of Split Employment Contracts for an executive
officer with the Company dated November 6, 1999 and with
an affiliate of the Company dated June 4, 1996, and
amended by letter dated November 6, 1999. (Filed as
Exhibit 10.15 to the Company's Form 10-K Report for the
fiscal year ended September 30, 1999.)*
15
10.16 Form of Severance Agreements which the Company has with
each of its U.S. Executive Officers and European Executive
Officer. (Filed as Exhibit 10.16 to the Company's
Form 10-K Report for the fiscal year ended September 30,
1999.)*
10.17 Resolutions authorizing modifications to the
Supplementary Pension Plan and Supplementary Savings Plan
of the Company, effective 15 September 1999. (Filed as
Exhibit 10.17 to the Company's Form 10-K Report for the
fiscal year ended September 30, 2000.)*
(11) Earnings per share.
(12) Computation of Ratios of Earnings to Fixed Charges.
(13) 2001 Financial Review Section of the Annual Report to
Shareholders for the fiscal year ended September 30, 2001,
which is furnished to the Commission for information only,
and not filed except as expressly incorporated by
reference in this Report.
(21) Subsidiaries of the registrant.
(24) Power of Attorney.
(b) Reports on Form 8-K filed during the quarter ended September 30, 2001:
Current Reports on Form 8-K dated July 20, 2001, August 16, 2001, and
August 30, 2001, were filed in which Items 5 and 9 of such Form were reported.
- -------------------------------
*Previously filed as indicated and incorporated herein by reference.
Exhibits incorporated by reference are located in SEC File No. 1-4534.
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: December 14, 2001
AIR PRODUCTS AND CHEMICALS, INC.
(Registrant)
By: /s/ Leo. J. Daley
--------------------------------
Leo J. Daley, Vice President-
Finance and Controller
Principal Financial and
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ John P. Jones Director, Chairman, President, and December 14, 2001
- -------------------------------------- Chief Executive Officer
(John P. Jones III) (Principal Executive Officer)
* Director December 14, 2001
- --------------------------------------
(Mario L. Baeza)
* Director December 14, 2001
- --------------------------------------
(L. Paul Bremer III)
* Director December 14, 2001
- --------------------------------------
(Robert Cizik)
* Director December 14, 2001
- --------------------------------------
(Michael J. Donahue)
* Director December 14, 2001
- --------------------------------------
(Ursula F. Fairbairn)
* Director December 14, 2001
- --------------------------------------
(Edward E. Hagenlocker)
* Director December 14, 2001
- --------------------------------------
(James F. Hardymon)
17
Signature Title Date
--------- ----- ----
* Director December 14, 2001
- --------------------------------------
(Terry R. Lautenbach)
* Director December 14, 2001
- --------------------------------------
(Charles H. Noski)
* Director December 14, 2001
- --------------------------------------
(Paula G. Rosput)
* Director December 14, 2001
- --------------------------------------
(Lawrason D. Thomas)
*W. Douglas Brown, Vice President, General Counsel, and Secretary, by
signing his name hereto, does sign this document on behalf of the
above noted individuals, pursuant to a power of attorney duly executed
by such individuals which is filed with the Securities and Exchange
Commission herewith.
/s/ W. Douglas Brown
--------------------------------------------
W. Douglas Brown
Attorney-in-Fact
18
Report of Independent Public Accountants on Schedule
To: Air Products and Chemicals, Inc.
We have audited, in accordance with auditing standards generally
accepted in the United States, the consolidated financial statements included in
Air Products and Chemicals, Inc.'s Annual Report to Shareholders, incorporated
by reference in this Form 10-K, and have issued our report thereon dated
26 October 2001. Our audit was made for the purpose of forming an opinion on
those statements taken as a whole. The schedule referred to in Item 14(a)(2) in
this Form 10-K is the responsibility of the Company's management and is
presented for the purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic consolidated financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic consolidated financial statements taken
as a whole.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
26 October 2001
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To: Air Products and Chemicals, Inc.
As independent public accountants, we hereby consent to the
incorporation of our reports included or incorporated by reference in this Form
10-K, into the Company's previously filed Registration Statements on Form S-8
and Form S-3 (File Nos. 333-33851, 333-02461, 33-2068, 33-65117, 333-21145,
333-45239, 333-18955, 333-21147, 333-60147, 333-71405, 333-73105, 333-95317,
333-31578, 333-90773, 333-54224, and 333-56292).
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
13 December 2001
19
SCHEDULE VIII
CONSOLIDATED
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended 30 September 2001, 2000, and 1999
Classification Other Changes
Additions Increase(Decrease)
------------------------- -------------------------
Balance at Charged Charged Cumulative Balance
Beginning to to other Translation at End of
of period Expense Accounts[1] Adjustment Other[2] Period
- --------------------------------------------------------------------------------------------------------------------
(in millions of dollars)
Year Ended 30 September 2001
Allowance for doubtful accounts $ 13 $ 10 $ 0 $ 0 $(13) $ 10
Year Ended 30 September 2000
Allowance for doubtful accounts $ 12 $ 8 $ 2 $[1] $ (8) $ 13
Year Ended 30 September 1999
Allowance for doubtful accounts $ 17 $ 6 $ 1 $[1] $(11) $ 12
Notes:
[1] Includes primarily collections on accounts previously written off.
[2] Primarily includes write-offs of uncollectible accounts.
20