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UNITED STATES
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 FOR THE FISCAL YEAR ENDED
30 SEPTEMBER 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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
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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]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). YES[X] NO[ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant on 31 March 2003 was $9.3 billion. For purposes of the foregoing
calculations (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 grantor trust, described under
Item 12 of this Report, is deemed a non-affiliate.
The number of shares of Common Stock outstanding as of 4 December 2003 was
227,265,870.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for the fiscal year ended 30 September 2003.
With the exception of those portions that 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 22 January
2004 . . . Part III.
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FORWARD-LOOKING STATEMENTS
The forward-looking statements contained in this document are based on current
expectations at the time the document was originally prepared regarding
important risk factors. Management does not anticipate publicly updating any of
its expectations except as part of the quarterly earnings announcement process.
Actual results may differ materially from those forward-looking statements
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, factors that might cause forward-looking statements to differ materially
from actual results include those specifically referenced as future events or
outcomes that the Company anticipates, as well as, among other things, overall
economic and business conditions different than those currently anticipated and
demand for the Company's goods and services during that time; competitive
factors in the industries in which it competes; interruption in ordinary sources
of supply; 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 war or 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 the Company and its affiliates operate; and the timing and rate at which
tax credits can be utilized.
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TABLE OF CONTENTS
Page
PART I........................................................................... 1
ITEM 1. Business............................................................. 1
GASES.............................................................. 1
CHEMICALS.......................................................... 2
Performance Materials............................................. 3
Chemical Intermediates............................................ 3
EQUIPMENT.......................................................... 3
GENERAL............................................................ 4
Foreign Operations................................................ 4
Technology Development............................................ 4
Raw Materials and Energy.......................................... 5
Environmental Controls............................................ 6
Competition....................................................... 6
Insurance......................................................... 7
Employees......................................................... 7
Available Information............................................. 7
Executive Officers of the Company................................. 8
ITEM 2. Properties........................................................... 9
Gases............................................................. 9
Chemicals......................................................... 9
Equipment......................................................... 10
ITEM 3. Legal Proceedings.................................................... 10
ITEM 4. Submission of Matters to a Vote of Security Holders.................. 10
PART II.......................................................................... 10
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters 10
ITEM 6. Selected Financial Data.............................................. 11
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation................................................. 11
ITEM 7a. Quantitative and Qualitative Disclosures about Market Risk........... 11
ITEM 8. Financial Statements and Supplementary Data.......................... 11
ITEM 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure................................................. 11
ITEM 9A. Controls and Procedures.............................................. 12
PART III......................................................................... 12
ITEM 10. Directors and Executive Officers of the Registrant................... 12
ITEM 11. Executive Compensation............................................... 12
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters...................................... 12
ITEM 13. Certain Relationships and Related Transactions....................... 15
ITEM 14. Principal Accountant Fees and Services............................... 15
PART IV.......................................................................... 15
ITEM 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K..... 15
SIGNATURES....................................................................... 16
REPORT OF INDEPENDENT AUDITORS ON SCHEDULE....................................... 18
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE............................. 19
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS.................................. 20
INDEX TO EXHIBITS................................................................ 21
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 materials
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 20 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 2003 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 global healthcare, power generation, and
flue gas treatment businesses.
The Company's gas business involves three principal modes of supply:
"On-site/pipeline" 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
long-term contracts, typically five to twenty years in duration. 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; Taiwan; Malaysia; and 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, Singapore, and South
Africa.
Liquid bulk 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 liquid bulk 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. Liquid bulk
customers' contract terms normally are from three to five years.
Packaged gases supply -- Industrial and various specialty and medical
gases are also delivered in cylinders, dewars, and lecture bottle sizes. During
fiscal year 2002, the Company divested its U.S. packaged gas business except for
electronics gases and helium used in magnetic resonance imaging. During fiscal
year 2003, the Company divested similar businesses in Canada and Puerto Rico.
The Company continues to operate packaged gas businesses in Europe, Asia, and
Brazil.
Oxygen, nitrogen, argon, and hydrogen sold to liquid bulk customers are
usually recovered or generated at large "stand-alone" facilities located near
industrial areas or high-tech centers, or at small noncryogenic generators, or
are taken from on-site plants used primarily to supply tonnage users. On-site
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
liquid bulk market. Air Products also designs and builds systems for recovering
oxygen, hydrogen, nitrogen, carbon monoxide, and low dew point gases using
adsorption technology.
1
Sales of atmospheric gases -- oxygen, nitrogen, and argon -- constituted
approximately 25 percent of Air Products' consolidated sales in fiscal year
2003, 26 percent in fiscal year 2002, and 24 percent in fiscal year 2001. Sales
of industrial gases -- principally oxygen, nitrogen, and hydrogen -- to the
chemical process industry and the electronics industry, the largest consuming
industries, were approximately 22 percent and 13 percent, respectively, of Air
Products' consolidated sales in fiscal year 2003.
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.
The global healthcare business of Air Products is directed at two main
markets: institutional and homecare. The institutional market uses medical gases
in hospitals, clinics, and nursing homes, as well as helium for use in magnetic
resonance imaging. The homecare business involves the delivery of respiratory
therapy services, infusion services, and home medical equipment to patients in
their homes in Europe, South America, and principally in the eastern United
States.
Specialty gases include fluorine products, rare gases such as xenon,
krypton, and neon, and more common gases of high purity or gases that 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 and sales of specialty products to the
electronics industry and others are made principally through regional offices in
the United States, Europe, South America, Africa, and Asia.
During the year Air Products expanded its role in the electronics
chemicals business through the acquisition of the Electronic Materials and
Services Business of Ashland, Inc. Electronic materials are used in the
semiconductor manufacturing and the photolithography process.
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 liquid bulk 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."
Air Products operates and has 50 percent interests in a 49-megawatt
fluidized-bed coal-fired power generation facility in Stockton, California and
in a 24-megawatt gas-fired combined cycle power generation facility near
Rotterdam, the Netherlands. A 112-megawatt gas-fueled power generation facility,
in which the Company has a 48.8 percent 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. Additional
information with respect to the Company's power generation and flue gas
treatment businesses is included in Notes 5, 8, and 18 to the Consolidated
Financial Statements included under Item 8 herein.
CHEMICALS
The Company's chemicals businesses consist of performance materials 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
that the Company provides, and the scale of production and the production
technology employed by the Company.
Chemical sales are supported from various locations in the United States,
Europe, Asia, and 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").
2
PERFORMANCE MATERIALS
The principal businesses of performance materials are Performance
Polymers, Performance Solutions, and Performance Products. Total sales from the
performance materials business constituted approximately 15 percent of Air
Products' consolidated sales in fiscal year 2003, 17 percent in fiscal year
2002, and 15 percent in fiscal year 2001. Air Products' performance materials
are differentiated from the competition based on their functionality when used
in the customer's products and applications, and by the technical service the
Company provides.
Performance Polymers -- Air Products' polymers are water-based and
water-soluble emulsion 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 that 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 percent of a worldwide joint venture with
Wacker-Chemie GmbH that produces polymer emulsions and pressure-sensitive
adhesives. The Company also owns 20 percent of a worldwide joint venture with
Wacker-Chemie GmbH that produces redispersible powders made from polymer
emulsions.
Performance Solutions -- These products are primarily acetylenic alcohols
and amines that are used as performance additives in coatings, lubricants,
electro-deposition processes, agricultural formulations, and corrosion
inhibitors.
Performance Products -- These products include polyurethane catalysts and
surfactants that 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.
These products also include epoxy additives such as polyamides, aromatic
amines, cycloaliphatic amines, reactive diluents, and specialty epoxy resins
that 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.
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 nitric acid as a raw
material for its differentiated products. Total third-party sales from the
chemical intermediates businesses constituted 10 percent of Air Products'
consolidated sales in fiscal year 2003, 10 percent in fiscal year 2002, and 10
percent in fiscal year 2001.
Amines -- The Company produces a broad range of amines using ammonia,
methanol, and other alcohol feedstocks purchased from various suppliers.
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. Additional ammonia is purchased and converted to ammonium
nitrate prills and solutions that are primarily sold to customers as fertilizers
or for other chemical applications. In 2004 the Company will shut down its
methanol and ammonia production facilities and begin purchasing all of its
methanol and ammonia requirements. During the third fiscal quarter, the Company
announced its plan to sell the European methylamines and derivatives business.
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.
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. This segment further designs and builds cryogenic transportation
containers for liquid helium and hydrogen. Customers include companies involved
in chemical and petrochemical manufacturing, oil and gas recovery and
processing, power generation, and steel and primary
3
metal production. 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 that include the Company's international industrial gas joint
ventures.
The backlog of orders (including letters of intent) believed to be firm
from other companies and equity affiliates for equipment was approximately $259
million on 30 September 2003, approximately 66 percent of which relates to
cryogenic air separation, as compared with a total backlog of approximately $114
million on 30 September 2002. It is expected that approximately $200 million of
the backlog on 30 September 2003 will be completed during fiscal year 2004.
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 is comparable to the Company's United States operation,
except in Europe, where the Company is also engaged in the packaged gas
business. 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.
The Company's industrial gas segment, through investments ranging from
wholly owned subsidiaries to minority ownership interests, does business in
approximately 35 countries outside the United States. Majority and wholly owned
industrial gas subsidiaries operate in Argentina, Brazil, Canada, and Mexico,
and throughout Europe and Asia in 15 and ten countries, respectively. There are
50 percent industrial gas joint ventures in Canada and Trinidad and Tobago,
seven countries in Europe, four in Asia, and two in Africa, and less than
controlling interests in Africa, Canada, and Mexico, four countries in Europe,
and five in Asia. The Company has a 50 percent joint venture in the U.K. that is
developing products relating to silicon wafer polishing, chemical mechanical
planarization processes, and hard disk polishing. The Company also has a 50
percent interest in a power generation facility in the Netherlands and a 48.8
percent interest in one in Thailand.
The principal geographic markets for the Company's chemical products are
in 12 countries, with operations in North America, Europe, Asia, Brazil, and
Mexico. Majority and wholly owned subsidiaries operate in Germany, Italy, the
Netherlands, the United Kingdom, Australia, Japan, Korea, China, Taiwan, and
Mexico. 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 percent
investment in the redispersible powder venture with Wacker-Chemie GmbH are in
Germany with manufacturing facilities in Germany and the United States. The
Company also has controlling interests in Korea and Taiwan and less than
controlling interests in Japan and Ireland that sell chemicals to the
electronics industry.
Financial information about Air Products' foreign operations and
investments is included in Notes 8, 16, and 20 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 6 to the
Consolidated Financial Statements included under Item 8 herein. Export sales
from operations in the United States to unconsolidated customers amounted to
$497 million, $533 million, and $602 million in fiscal years 2003, 2002, and
2001, respectively. Total export sales in fiscal year 2003 included $181 million
in export sales to affiliated customers. The sales to affiliated customers were
primarily equipment sales and electronic specialty materials sales.
TECHNOLOGY DEVELOPMENT
Air Products conducts research and development principally in its
laboratories located in Trexlertown, Pennsylvania, as well as in Carlsbad,
California; Dublin, Ohio; and Easton, Pennsylvania in the U.S.; 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 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.
4
The amount expended by the Company on research and development during
fiscal year 2003 was $121 million, $120 million in fiscal year 2002, and $122
million in fiscal year 2001. The amount expended by the Company on
customer-sponsored research activities during fiscal year 2003 was $15 million,
$18 million in fiscal year 2002, and $19 million in fiscal year 2001.
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, liquefaction, 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 materials. 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 1 November 2003, Air Products owned 1,041 United States patents and
1,889 foreign patents. The Company is also licensed under certain 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.
RAW MATERIALS AND ENERGY
The Company manufactures hydrogen, carbon monoxide, synthesis gas, and
carbon dioxide, principally from natural gas. Such products accounted for
approximately 13 percent of the Company's consolidated sales in fiscal year
2003. 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 that
supports the polymer business, the Company is heavily dependent on a single
supplier under a long-term contract that 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 26 percent of the
Company's consolidated sales in fiscal year 2003. 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.
A long-term supplier of sulfuric acid, used in the production of
dinitrotoluene (DNT), emerged from Chapter 11 bankruptcy protection in June
2003. To facilitate the supplier's ability to emerge from bankruptcy and to
continue supplying product to the Company, the Company agreed to participate in
the supplier's financing and has continued to supply additional financing. Total
loans to the supplier at 30 November 2003 were $45.1 million. If the supplier
does not continue to operate, the sales and profitability of the chemicals
segment could be materially impacted on an annual basis because of the Company's
inability to supply all of its customers' base requirements. The Company does
not expect a material loss related to this supplier.
The Company's industrial gas facilities use substantial amounts of
electrical power. Electricity is the largest cost input for the production of
atmospheric gases. Any shortage of electrical power or interruption of its
supply or increase in its price that cannot be passed through to customers for
competitive reasons will adversely affect the liquid bulk gas business of the
Company.
5
In addition, the Company purchases finished and semi-finished materials
and chemical intermediates from many suppliers. During fiscal year 2003, 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 matters totaled $30 million in 2003, $24 million in 2002, and $22
million in 2001. 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 $30 million in
2004 and $31 million in 2005.
Although precise amounts are difficult to define, the Company estimates
that in fiscal year 2003 it spent approximately $16 million on capital projects
to control pollution versus $14 million in 2002. Capital expenditures to control
pollution in future years are estimated at approximately $17 million in 2004 and
$14 million in 2005.
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 $21 million. The accrual on the balance
sheet for both 30 September 2003 and 30 September 2002 was $15 million. 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' industrial 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.
Similar competitive situations exist in European and Asian industrial gas
markets in which the Company competes against one or more larger entrenched
competitors in most countries.
The division of the Company's gas business that serves the electronics
industry offers electronic specialty gases, chemicals, services, and equipment.
These products face competition from competitors who vary from product to
product, ranging from niche suppliers having only a single product, to larger
and more vertically integrated chemical companies with greater financial
resources than the Company. Competition in these products is principally on the
basis of price, quality, product performance, and reliability of product supply.
Competition in the institutional market of the global healthcare business
is principally from other large, established industrial gas companies using
business models (long-term product supply agreements) that are similar to those
the companies utilize for other industrial gas supply relationships. Competition
in this market is principally based on price, quality, service, and reliability
of supply. Homecare is served by national and local providers, and in the U.S.
there are over 2,000 regional and local providers. The homecare market is highly
competitive. In the United States reimbursement levels are established by fee
schedules regulated by Medicare and
6
Medicaid, or by the levels determined by insurance companies. Accordingly, in
the United States, homecare companies compete primarily on the basis of service.
Maintaining competitiveness requires efficient logistics, reimbursement, and
accounts receivable systems. Although the Company intends to acquire additional
homecare companies, there is no guarantee that suitable candidates can be
acquired or that the necessary managed care contracts will be on favorable
terms.
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. Competition is based primarily on technological performance, service,
technical know-how, price, and performance guarantees.
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 maintains public liability and property
insurance coverage at amounts that management believes are sufficient 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 30 September 2003, the Company (including majority-owned subsidiaries)
had approximately 18,500 full-time employees, of whom approximately 8,700 were
located outside the United States. The Company has collective bargaining
agreements with unions at various locations that expire on assorted dates over
the next three to four years. In late November 2003, the contract at the
Wilkes-Barre manufacturing facility where hourly employees are represented by
the International Association of Machinists and Aerospace Workers (I.A.M.A.W.)
expired and the workforce went on strike. Contract negotiations had been
conducted with the union's negotiating team, but the union membership rejected
the agreement its leadership had unanimously recommended. The Wilkes-Barre
facility principally manufactures heat exchangers for natural gas liquefaction
and equipment for cryogenic air separation. The Company is negotiating two new
contracts with the Teamsters in Easton, Pennsylvania and with the PACE Union in
Dallas, Texas, as a result of the recent Ashland acquisition. Although there are
no firm dates associated with these later two contracts, the Company hopes to
resolve them sometime in the second fiscal quarter. The Company considers
relations with its employees to be satisfactory, with the exception of the
current strike. The Company does not believe that the impact of any expiring or
expired collective bargaining agreements will result in a material adverse
impact on the Company.
AVAILABLE INFORMATION
All periodic and current reports, registration statements, and other
filings that the Company is required to file with the Securities and Exchange
Commission ("SEC"), including the Company's annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to
those reports filed or furnished pursuant to Section 13(a) of the Exchange Act
(the "1934 Act Reports"), are available free of charge through the Company's
Internet website at www.airproducts.com. Such documents are available as soon as
reasonably practicable after electronic filing of the material with the SEC. All
1934 Act Reports filed during the period covered by this Report were available
on the Company's website on the same day as filing.
The public may also read and copy any materials filed by the Company with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington,
DC 20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC; the address
of that site is www.sec.gov.
7
EXECUTIVE OFFICERS OF THE COMPANY
The Company's executive officers and their respective positions and ages
on 15 December 2003 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 56 Vice President - Human Resources
(D) (became Vice President - Human
Resources in 2001; Vice President -
Human Resources and Procurement of Air
Products Europe prior thereto)
W. Douglas Brown 57 Vice President, General Counsel, and
Secretary
(D) (became Vice President, General
Counsel, and Secretary in 1999; Vice
President - Administration, Gases and
Equipment prior thereto)
Mark L. Bye 47 Group Vice President, Gases and
Equipment
(D) (became Group Vice President, Gases
and Equipment in 2003; President, Air
Products Asia in 2001; and Vice
President, Performance Chemicals
Division in 1998)
Robert E. Gadomski 56 Executive Vice President - Gases and
Equipment
(D) (will retire 1 February 2004) (became
Executive Vice President - Gases and
Equipment in 1999; Executive Vice President
- Chemicals, Asia, and Latin America in
1998)
Paul E. Huck 53 Vice President and Corporate Controller
(became Vice President and Corporate
Controller in 2002; Vice President -
Project Management Office in 2000;
Vice President and Corporate
Controller prior thereto)
John P. Jones III 53 Chairman, President, and Chief Executive
(A)(B)(C)(D) Officer (became Chairman and Chief Executive
Officer in 2000; President and Chief
Operating Officer in 1998)
Arthur T. Katsaros 56 Group Vice President - Engineered
Systems and Development
(D) (became Group Vice President -
Engineered Systems and Development in
2001; Group Vice President, Engineered
Systems and Operations Group prior
thereto)
John F. McGlade 49 Group Vice President, Chemicals
(D) (became Group Vice President,
Chemicals in 2003; Vice President, Chemicals
Group Business Divisions in 2003; Vice
President and General Manager, Performance
Chemicals Division in 2001; and Vice
President and General Manager, Chemical and
Process Industries and Energy Systems prior
thereto)
John R. Owings 54 Vice President and Chief Financial Officer
(D) (became Vice President and Chief
Financial Officer in 2002; Senior Vice
President of Finance, Personal
Communications Segment ($10.5 billion
in net sales), in 2000 for Motorola,
Inc., which provides integrated
communications solutions and embedded
electronic solutions; Senior Vice
President, Director of Finance, Global
Telecom Solutions Segment ($6.5
billion in net sales), in 1998 for
Motorola, Inc.)
8
(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
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 and Philadelphia
areas in Pennsylvania; Dublin, Ohio; 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 30 September 2003.
GASES
In the United States, the gases segment has approximately 200 plant
facilities in 45 states, the majority of which recover nitrogen, oxygen, and
argon. The Company has three facilities that produce specialty gases, three
facilities that clean electronic parts, three facilities that produce electronic
chemicals, and 29 facilities that produce and/or recover hydrogen throughout the
United States. Helium is recovered at two plants in Kansas and Texas. There are
19 sales offices located in 10 states. The property on which these 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 industrial gas sales offices and cylinder distribution
centers, including related real estate, and leases the other half.
Air Products' European plant facilities total 74 and include nine
facilities that recover hydrogen, four facilities that manufacture dissolved
acetylene, two facilities that recover carbon monoxide, and two facilities that
produce electronic chemicals. The majority of European plants recover nitrogen,
oxygen, and argon. In addition, there are five specialty gas centers. There are
114 sales offices and/or cylinder distribution centers in Europe, and several
additional facilities located in Brazil, Canada, Puerto Rico, and the Middle
East.
In Asia the gases segment has approximately 79 plant facilities in eight
countries, including two equipment manufacturing facilities, an electronic
chemicals facility, and seven facilities that produce and/or recover hydrogen.
The property on which these plants are located is owned by Air Products at
approximately one-fifth of the locations, and leased by Air Products at the
remaining locations. There are approximately 40 sales offices and distribution
centers located throughout the region, half of which are owned sites and the
remainder leased. Representative offices are located in Taiwan and in Hong Kong,
Beijing, and Shanghai in the People's Republic of China.
Global healthcare has 152 facilities in the United States, Argentina,
Brazil, Mexico, South Africa, and seven countries in Europe. The majority of the
facilities for global healthcare are leased.
CHEMICALS
The chemicals segment manufactures amines, nitric acid, 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, and Los Angeles, California.
The chemicals segment manufactures polyurethane additives and polyurethane
specialty products (AIRTHANE(R)/VERSATHANE(R)) at its Paulsboro, New Jersey
facility that is leased in part and owned in part. The chemicals segment also
manufactures polyvinyl acetate emulsions at four smaller locations.
The chemicals segment has 12 plant facilities, one sales office, and one
laboratory in the United States, and operates four plants, three
sales/representative offices, and two laboratories in Europe, two laboratories
in Brazil and Japan,
9
one laboratory in Korea, one plant in each of Mexico and Brazil, two plants in
Korea, and sales offices in Australia, Brazil, Mexico, the People's Republic of
China, 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. The Company leases
approximately 75 percent of the offices and 25 percent are owned.
EQUIPMENT
The principal facilities utilized by the equipment segment include six
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 percent of the facilities and real
estate in this segment and leases the remaining 50 percent.
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 40 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. As previously reported, the Company received
several notices between June 2001 and September 2002 of civil administrative
penalties from the New Jersey Department of Environmental Protection (NJDEP)
alleging various exceedances and discrepancies relating to the air emissions
from the thermal oxidizer at the Company's Paulsboro, New Jersey chemical
production facility. In October 2003, the Company executed a Settlement
Agreement with NJDEP and paid a penalty amount of $111,200 for these notices and
subsequent exceedances.
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. Cash dividends on Air Products' common stock
are paid quarterly. The Company's objective is to pay dividends consistent with
the reinvestment of earnings necessary for long-term growth. It is the Company's
expectation that comparable cash dividends will continue to be paid in the
future.
Quarterly Stock Information
----------------------------------------------------
2003 High Low Close Dividend
---- ---- --- ----- --------
First $46.50 $40.34 $42.75 $.21
------ ------ ------ ----
Second 44.20 36.97 41.43 .21
------ ------ ------ ----
Third 44.25 40.72 41.60 .23
------ ------ ------ ----
Fourth 48.78 40.50 45.10 .23
------ ------ ------ ----
$.88
10
2002 High Low Close Dividend
---- ---- --- ----- --------
First $48.09 $36.15 $46.91 $.20
------ ------ ------ ----
Second 53.52 43.30 51.65 .20
------ ------ ------ ----
Third 52.58 45.59 50.47 .21
------ ------ ------ ----
Fourth 51.66 40.00 42.01 .21
------ ------ ------ ----
$.82
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 28 November 2003, there were 11,038 record holders of the Company's
Common Stock.
ITEM 6. SELECTED FINANCIAL DATA.
The tabular information appearing under "Five-Year Summary of Selected
Financial Data" on page 74 of the 2003 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 OPERATION.
The textual information appearing under "Management's Discussion and
Analysis" on pages 25 through 42 of the 2003 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 38 and 39 of the 2003 Financial Review Section of the Annual
Report to Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements and the related notes thereto,
together with the report thereon of KPMG LLP dated 24 October 2003, and the
previously issued Arthur Andersen LLP report dated 26 October 2001, appearing on
pages 44 through 74 of the 2003 Financial Review Section of the Annual Report to
Shareholders, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
On 10 May 2002, the Company terminated its engagement of Arthur Andersen
LLP of Philadelphia, Pennsylvania ("Andersen") as independent auditors and
appointed KPMG LLP as its new independent auditors for the fiscal year ending 30
September 2002. This determination followed the Company's decision to seek
proposals from independent public accounting firms to audit the Company's
financial statements and was approved by the Board of Directors upon the
recommendation of the Audit Committee.
Andersen's report on the Company's audited financial statements for each
of the years ended 30 September 2000 and 30 September 2001 did not contain an
adverse opinion or a disclaimer of opinion and was not qualified or modified as
to uncertainty, audit scope, or accounting principles.
During the years ended 30 September 2000 and 30 September 2001, and the
interim period between 30 September 2001 and 10 May 2002, there were no
disagreements between the Company and Andersen on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to Andersen's
11
satisfaction, would have caused it to make reference to the subject matter in
connection with its report on the Company's financial statements for those
years. Also, during those two years and interim period, there were no reportable
events as listed in Item 304(a)(1)(v) of Regulation S-K.
Air Products provided Andersen with a copy of the foregoing disclosure.
Andersen's letter dated 10 May 2002, stating its agreement with such statements,
was filed as Exhibit 16 to the Company's Form 8-K filed 10 May 2002, which is
incorporated herein by reference.
During the years ended 30 September 2000 and 30 September 2001, and the
interim period between 30 September 2001 and 10 May 2002, the Company did not
consult with KPMG regarding application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's consolidated financial statements, or any
other matter or reportable event listed in Items 304(a)(2)(i) and (ii) of
Regulation S-K.
ITEM 9A. CONTROLS AND PROCEDURES.
Under the supervision of the Chief Executive Officer and Chief Financial
Officer, the Company's management conducted an evaluation of the effectiveness
of the design and operation of the Company's disclosure controls and procedures
as of 30 September 2003. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the design and operation of its
disclosure controls and procedures have been effective. There have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of such
evaluation.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The biographical information relating to the Company's directors,
appearing on pages 6 through 8 of the Proxy Statement relating to the Company's
2004 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.
Information on Section 16(a) Beneficial Ownership Reporting Compliance,
appearing on page 26 of the Proxy Statement relating to the Company's 2004
Annual Meeting of Shareholders, is incorporated herein by reference.
The Company's existing Code of Conduct, which has applied to all
employees, was recently updated to comply with the requirements of
Sarbanes-Oxley and the New York Stock Exchange, including by clarifying its
application to its principal executive officer, principal financial officer,
principal accounting officer, and directors. The text of the Code of Conduct is
attached as Exhibit 14 to this Annual Report on Form 10-K. The Code of Conduct
can also be found at the Company's Internet website at
www.airproducts.com/responsibility/governance/codeofconduct.htm.
ITEM 11. EXECUTIVE COMPENSATION.
The information under "Director Compensation," "Report of the Management
Development and Compensation Committee," "Executive Compensation Tables,"
"Severance and Employment Arrangements," "Change in Control Arrangements," and
"Stock Performance Graph," appearing on pages 13 through 23 of the Proxy
Statement relating to the Company's 2004 Annual Meeting of Shareholders, is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of 30 September 2003, about
Company Stock that may be issued upon the exercise of options, warrants, and
rights granted to employees or members of the Board of Directors under the
Company's
12
existing equity compensation plans, including plans approved by shareholders and
plans that have not been approved by shareholders in reliance on the New York
Stock Exchange's traditional treasury stock or other applicable exception to the
Exchange's listing requirements.
Number of
securities
Number of remaining available
securities to be for future issuance
issued upon Weighted-average under equity
exercise of exercise price of compensation plans
outstanding outstanding (excluding
options, warrants, options, warrants, securities
Plan Category and rights and rights reflected in column (a))
------------- ------------------ ------------------ ------------------------
Equity compensation
plans approved by
security holders 21,623,096(1) $35.75 10,022,747(2)
Equity compensation
plans not approved
by security holders 6,829,945(3) $35.07 1,500,000(4)
Total 28,453,041 $35.58 11,522,747
(1) Represents Long-Term Incentive Plan outstanding options and deferred stock
units ("DSUs") that have been granted. DSUs entitle the recipient to one
share of Company common stock upon earn out, which is conditioned on
continued employment during the deferral period and may also be
conditioned on meeting certain performance targets. The deferral period
generally ends upon death, disability, or retirement.
(2) Represents authorized shares that were available for future grants as of
30 September 2003. These shares may be used for options, DSUs, restricted
stock, and other stock based awards to officers, directors, and key
employees.
(3) Represents outstanding options under Global Employee Stock Awards
(3,494,371), the Stock Incentive Plan (2,326,200), the Stock Option Plan
for Directors (112,000), and the U.K. Savings-Related Share Option Schemes
(705,903). This number also includes DSUs under the Deferred Compensation
Plan for Directors (118,865), the Annual Incentive Plan (36,516), and the
Supplementary Savings Plan (36,090). DSUs issued under these plans are
purchased for the fair market value of the underlying shares of stock with
eligible deferred compensation, except for that portion of directors fees
that is paid in DSUs as described above.
(4) The number also includes a reserve of (1,000,000) shares available for
stock option awards under the U.K. Savings-Related Share Option Schemes, a
(250,000) reserve for the Annual Incentive Plan and Supplementary Savings
Plan and (250,000) reserve for the Deferred Compensation Plan for
Directors.
Global Employee Stock Option Awards and Stock Incentive Program - All
stock options under these plans were granted at fair market value on the date of
grant, first become exercisable three years after grant, and terminate ten years
after the date of grant or upon the earlier termination of employment for
reasons other than retirement, disability, death, or involuntary termination due
to Company action necessitated by business conditions. No further awards will be
made under these plans.
Stock Option Plan for Directors - All stock options under this plan were
granted at fair market value on the date of grant. The options become
exercisable in six months after grant and remain exercisable for nine and
one-half years unless the director resigns from our Board after serving for less
than six years (other than because of disability or death). No further awards
will be made under this plan.
The Air Products PLC U.K. Savings-Related Share Option Scheme and the Air
Products Group Limited U.K. Savings-Related Share Option Scheme (together, the
"U.K. Plan") are employee benefit plans for employees of Air Products PLC (and
certain of its U.K. subsidiaries) and Air Products Group Limited (and certain of
its U.K. subsidiaries), respectively
13
(together, the "U.K. Companies"). Employees participate in the U.K. Plan by
electing to do so during a brief invitation period. An employee who elects to
participate elects a five- or seven-year option period and has amounts of salary
automatically withheld and contributed to a savings account at a bank not
affiliated with the Company. At the end of the five-year savings period, a
tax-free bonus is added to the employee's account. An employee who elects a
seven-year option and retains his savings account for seven years receives a
further bonus at the end of the seventh year. At the end of the option period,
the participant may use his savings to purchase shares of Company Stock at the
fixed option price or receive in cash the amount of his savings and bonus(es).
His election must be made within six months of the close of the option period.
The option price is an amount determined by the directors of the U.K. Company on
the date the option is granted, which may not be less than 90 percent of Market
Value (as defined in the U.K. Plan) on the date of grant.
Deferred Compensation Plan for Directors - Our compensation plan for
non-employee directors mandates that one-half of each director's quarterly
retainer is paid in DSUs. Directors have the opportunity to purchase more DSUs
with up to all of the rest of their retainers and meeting fees. Retainer and
meeting fee dollars (plus dividend equivalents earned on the director's existing
DSU account during the quarter) are converted to DSUs based on the market value
of a share of Company Stock on the second business day preceding the date the
dollars would have been paid to the director. (Retainers and meeting fees are
paid quarterly in arrears.) New directors and directors continuing in office
after our annual meetings were awarded 1,000 DSUs. Each DSU also accrues
dividend equivalents which are equal to the dividends that would have been paid
on a share of stock during the period the DSUs are outstanding. Accumulated
dividend equivalents are converted to DSUs on a quarterly basis. DSUs provide
our directors with the financial equivalent of owning Company Stock
participating in quarterly dividend reinvestment, which they cannot sell until
after they leave our Board, except that DSUs have no voting rights. Directors
may transfer DSUs by gift to family members.
The Annual Incentive Plan is the annual cash bonus plan for executives and
key salaried employees of the Company and its subsidiaries. Terms applicable to
the Plan were approved by shareholders in order to permit the continued
exclusion of compensation payable under it from the deduction limitations
imposed by Section 162(m) of the Internal Revenue Code. The Plan is administered
by the Management Development and Compensation Committee of the Board of
Directors (the "Compensation Committee"). All or a portion of bonuses granted to
a participant may be deferred at the election of the participant or at the
discretion of the Compensation Committee ("Deferred Awards").
The dollar amount of Deferred Awards granted to a participant is initially
credited to an unfunded account that earns interest credits. Participants with
Deferred Awards are periodically permitted while employed by the Company to
irrevocably convert all or a portion of their accounts to an account deemed to
be invested in Company Stock. Upon conversion, the Company Stock account is
credited with deferred stock units ("DSUs") based on the fair market value of a
share of Company Stock on the date of crediting. Dividend equivalents
corresponding to the number of DSUs are credited quarterly to the
interest-bearing account. DSUs are paid after, but no later than ten years
after, termination of employment in shares of Company Stock, unless the
Compensation Committee determines otherwise. Upon a change in control of the
Company, DSUs become payable immediately in cash.
The Company's Supplementary Savings Plan is an unfunded employee
retirement benefit plan available to certain of the Company's U.S.-based
management and other highly compensated employees (and those of its
subsidiaries) whose participation in the Company's Retirement Savings and Stock
Ownership Plan (the "RSSOP") is limited by federal tax laws. Participants may
defer a portion of base salary which cannot be contributed to the RSSOP because
of tax limitations ("Elective Deferrals") and earn matching contributions from
the Company they would have received if their Elective Deferrals had been
contributed to the RSSOP ("Matching Credits"). The dollar amount of Elective
Deferrals and Matching Credits is initially credited to an unfunded account,
which earns interest credits. Participants are periodically permitted while
employed by the Company to irrevocably convert all or a portion of their
interest bearing account to DSUs in a Company Stock account. Conversion and
crediting of earnings to, and payments from, the Company Stock account is the
same as described above as to Deferred Awards granted under the Annual Incentive
Plan.
The information set forth in the sections headed "Persons Owning More than
5% of Air Products Stock as of September 30, 2003," and "Air Products Stock
Beneficially Owned by Officers and Directors as of November 1, 2003," appearing
on pages 24 through 25 of the Proxy Statement relating to the Company's 2004
Annual Meeting of Shareholders, is incorporated herein by reference.
14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information presented on page 11 of the Proxy Statement relating to
the Company's 2004 Annual Meeting of Shareholders is incorporated herein by
reference.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this Report to the
extent below noted:
1. The 2003 Financial Review Section of the Company's 2003 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 2003 FINANCIAL REVIEW SECTION OF THE ANNUAL REPORT)
Management's Discussion and Analysis.................................... 25
Reports of Independent Auditors......................................... 44
Consolidated Income Statements for the three years ended 30 September
2003................................................................... 46
Consolidated Balance Sheets at 30 September 2003 and 2002............... 47
Consolidated Statements of Cash Flows for the three years ended 30
September 2003......................................................... 48
Consolidated Statements of Shareholders' Equity for the three years
ended 30 September 2003................................................ 49
Notes to the Financial Statements....................................... 50
Business Segment and Geographic Information............................. 71
Five-Year Summary of Selected Financial Data............................ 74
2. The following additional information should be read in conjunction with
the consolidated financial statements in the Company's 2003 Financial Review
Section of the Annual Report to Shareholders:
(PAGE REFERENCES TO THIS REPORT)
Report of Independent Auditors on Schedule (KPMG LLP)................ 18
Report of Independent Public Accountants on Schedule (Arthur Andersen
LLP) ............................................................... 19
Consolidated Schedule for the years ended 30 September 2003, 2002, and 2001
as follows:
SCHEDULE
NUMBER
------
II 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.
Exhibits filed as a part of this Annual Report on Form 10-K are listed in
the Index to Exhibits located on page 21 of this Report.
(b) Reports on Form 8-K filed during the quarter ended 30 September
2003:
Current Reports on Form 8-K dated 1 July 2003 (Item 5) and 28 July 2003
(Items 9 and 12) were filed.
15
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: 12 December 2003
AIR PRODUCTS AND CHEMICALS, INC.
(Registrant)
By: /s/ John R. Owings
-----------------------------------
John R. Owings
Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: 12 December 2003
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 AND TITLE DATE
------------------- ----
/s/ John P. Jones III 12 December 2003
- --------------------------------
(John P. Jones III)
Director, Chairman, President, and
Chief Executive Officer
(Principal Executive Officer)
/s/ Paul E. Huck 12 December 2003
- --------------------------------
(Paul E. Huck)
Vice President and Corporate Controller
(Principal Accounting Officer)
* 12 December 2003
------------------------------
(Mario L. Baeza)
Director
* 12 December 2003
------------------------------
(Michael J. Donahue)
Director
* 12 December 2003
------------------------------
(Ursula F. Fairbairn)
Director
16
* 12 December 2003
------------------------------
W. Douglas Ford
Director
* 12 December 2003
------------------------------
(Edward E. Hagenlocker)
Director
* 12 December 2003
------------------------------
(James F. Hardymon)
Director
* 12 December 2003
- --------------------------------
(Terrence Murray)
Director
* 12 December 2003
------------------------------
(Charles H. Noski)
Director
* 12 December 2003
------------------------------
(Paula G. Rosput)
Director
* 12 December 2003
------------------------------
(Lawrason D. Thomas)
Director
* 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
Date: 12 December 2003
17
REPORT OF INDEPENDENT AUDITORS ON SCHEDULE
To the Shareholders and Board of Directors of Air Products and Chemicals,
Inc.:
Under date of 24 October 2003, we reported on the consolidated balance
sheets of Air Products and Chemicals, Inc. and subsidiaries as of 30 September
2003 and 2002, and the related consolidated statements of income, cash flows,
and shareholders' equity for the years then ended as contained in the Annual
Report to Shareholders. These consolidated financial statements and our report
thereon are incorporated by reference in this Form 10-K. In connection with our
audits of the aforementioned consolidated financial statements, we also audited
the related consolidated financial statement schedule referred to in Item
15(a)(2) in this Form 10-K. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audit.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
Our report contains an explanatory paragraph relating to the fact that the
financial statements of Air Products and Chemicals, Inc. and subsidiaries for
the year ended 30 September 2001 were audited by other auditors who have ceased
operations. As described in Note 1 to the financial statements, those financial
statements have been revised. We audited the adjustments described in Note 1
that were applied to revise the 2001 financial statements. In addition, as
described in Note 10, the financial statements have been revised to include the
transitional disclosures required by Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets," which was adopted as of 1
October 2001. However, we were not engaged to audit, review, or apply any
procedures to the 2001 financial statements of Air Products and Chemicals, Inc.
and subsidiaries other than with respect to such adjustments and disclosures,
and, accordingly, we do not express any opinion or any other form of assurance
on the 2001 financial statements taken as a whole.
KPMG LLP
Philadelphia, Pennsylvania
24 October 2003
18
The following report is a copy of a previously issued Arthur Andersen LLP
("Andersen") report, and the report has not been reissued by Andersen. The
report of Andersen is included in this annual report on Form 10-K pursuant to
Rule 2-02(e) of Regulation S-X. After reasonable efforts the Company has not
been able to obtain a reissued report from Andersen. Andersen has not consented
to the inclusion of its report in this annual report on Form 10-K. Because
Andersen has not consented to the inclusion of its report in the annual report,
it may be difficult for shareholders to seek remedies against Andersen and
shareholders' ability to seek relief against Andersen may be impaired. See
Exhibit 23.1 for further discussion.
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
19
SCHEDULE II
CONSOLIDATED
AIR PRODUCTS AND CHEMICALS, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended 30 September 2003, 2002, and 2001
Description 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(3)
--------- ------- ----------- ---------- -------- ---------
(in millions of dollars)
Year Ended 30 September 2003
Allowance for doubtful accounts $ 12 $ 12 $ 4 $ 1 $ (7) $ 22
Year Ended 30 September 2002
Allowance for doubtful accounts $ 10 $ 14 $ 1 $ 0 $ (13) $ 12
Year Ended 30 September 2001
Allowance for doubtful accounts $ 13 $ 10 $ 0 $ 0 $ (13) $ 10
Notes:
[1] Includes primarily collections on accounts previously written off.
[2] Primarily includes write-offs of uncollectible accounts.
[3] Increase in account balance at 30 September 2003 primarily attributed to
the acquisition of American Homecare Supply, LLC.
20
INDEX TO 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 18 September 1997.)*
3.2 Restated Certificate of Incorporation of the Company. (Filed as
Exhibit 3.2 to the Company's Form 10-K Report for the fiscal year
ended 30 September 1987.)*
3.3 Amendment to the Restated Certificate of Incorporation of the
Company dated 25 January 1996. (Filed as Exhibit 3.3 to the
Company's Form 10-K Report for the fiscal year ended 30 September
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.
4.1 Rights Agreement, dated as of 19 March 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 19 March
1998, as amended by Form 8-A/A dated 16 July 1998.)*
4.2 Amended and Restated Credit Agreement dated as of 16 September
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 30 September 1999.)*
(10) Material Contracts.
10.1 1990 Deferred Stock Plan of the Company, as amended and restated
effective 1 October 1989. (Filed as Exhibit 10.1 to the Company's
Form 10-K Report for the fiscal year ended 30 September 1989.)*
10.2 The Rules of the United Kingdom Savings-Related Share Option
Scheme of the Company as adopted on 24 October 1997, as amended
on 1 October 1999 and 5 November 1999. (Filed as Exhibit 10.2 to
the Company's Form 10-K Report for the fiscal year ended 30
September 2002.)*
10.3 Amended and Restated Supplementary Savings Plan of the Company
effective 1 April 1998, reflecting amendments through 30
September 2002. (Filed as Exhibit 10.3 to the Company's 10-Q
Report for the quarter ending 31 March 2003.)*
10.4 Amended and Restated Supplementary Pension Plan of the Company
effective 1 May 2003. (Filed as Exhibit 10.2 to the Company's
10-Q Report for the quarter ending 31 March 2003.)*
10.5 Stock Option Plan for Directors of the Company, effective 27
January 1994, as amended 21 October 1999. (Filed as Exhibit 10.7
to the Company's Form 10-K Report for the fiscal year ended 30
September 1999.)*
10.6 Letter dated 7 July 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 30 September 1998.)*
10.7 Air Products and Chemicals, Inc. Severance Plan effective 15
March 1990. (Filed as Exhibit 10.8(a) to the Company's Form 10-K
Report for the fiscal year ended 30 September 1992.)*
10.8 Air Products and Chemicals, Inc. Change of Control Severance Plan
effective 15 March 1990. (Filed as Exhibit 10.8(b) to the
Company's Form 10-K Report for the fiscal year ended 30 September
1992.)*
21
10.9 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 1 August 1999. (Filed as Exhibit 10.13 to the
Company's Form 10-K Report for the fiscal year ended 30 September
1999.)*
10.9(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 1 January 2000. (Filed as
Exhibit 10.13(a) to the Company's Form 10-K Report for the fiscal
year ended 30 September 2000.)*
10.10 Amended and Restated Trust Agreement by and between the Company
and PNC Bank, N.A. relating to the Supplementary Savings Plan
dated as of 1 August 1999. (Filed as Exhibit 10.14 to the
Company's Form 10-K Report for the fiscal year ended 30 September
1999.)*
10.10(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 1 January 2000. (Filed as
Exhibit 10.14(a) to the Company's Form 10-K Report for the fiscal
year ended 30 September 2000.)*
10.11 Form of Severance Agreements that the Company has with each of
its U.S. Executive Officers. (Filed as Exhibit 10.16 to the
Company's Form 10-K Report for the fiscal year ended 30 September
1999.)*
10.12 Form of Severance Agreement that the Company has with one
European Executive Officer dated 16 September 1999. (Filed as
Exhibit 10.1 to the Company's Form 10-Q Report for the quarter
ending 31 March 2001.)*
10.13 Amendment to form of Severance Agreement with one European
Executive Officer dated 26 February 2001. (Filed as Exhibit 10.2
to the Company's Form 10-Q Report for the quarter ending 31 March
2001.)*
10.14 Letter dated 19 April 2000, covering pension for a European
Executive Officer. (Filed as Exhibit 10.3 to the Company's Form
10-Q Report for the quarter ending 31 March 2001.)*
10.15 Amended and Restated Long Term Incentive Plan of the Company,
effective 23 January 2003. (Filed as Exhibit 10.2 to the
Company's Form 10-Q Report for the quarter ending 31 March
2003.)*
10.16 Amended and Restated Annual Incentive Plan of the Company,
effective 1 October 2001. (Filed as Exhibit 10.2 to the Company's
Form 10-Q Report for the quarter ending 31 March 2002.)*
10.17 Resolutions approving an amendment to the Compensation Program
for Directors of the Company, effective 1 October 2002. (Filed as
Exhibit 10.2 to the Company's Form 10-Q Report for the quarter
ending 31 December 2002.)*
10.18 Amended and Restated Deferred Compensation Plan for Directors of
the Company, effective 20 September 2001. (Filed as Exhibit 10.4
to the Company's Form 10-Q Report for the quarter ending 31 March
2002.)*
10.18(a) Resolutions approving an amendment to the Deferred Compensation
Plan for Directors of the Company, effective 30 September 2002.
(Filed as Exhibit 10.1 to the Company's Form 10-Q Report for the
quarter ending 31 December 2002.)*
10.19 Employment Agreement. (Filed as Exhibit 10.2 to the Company's
Form 10-Q Report for the quarter ending 30 June 2002.)*
10.20 Stock Incentive Program of the Company effective 1 October 1996.
(Filed as Exhibit 10.21 to the Company's Form 10-K Report for the
fiscal year ended 30 September 2002.)*
10.21 Terms and Conditions of the Global Employee Stock Option Awards
of the Company effective 1 October 1995, 1997, and 1999. (Filed
as Exhibit 10.22 to the Company's Form 10-K Report for the fiscal
year ended 30 September 2002.)*
10.22 Air Products and Chemicals, Inc. Corporate Executive Committee
Retention/Separation Program, effective July 17, 2003.
22
10.23 Letter dated 16 September 2003, concerning separation benefits of
a retired executive officer under the Air Products and Chemicals,
Inc. Corporate Executive Committee Retention/Separation Program.
10.24 Letter dated 16 September 2003, concerning separation benefits of
a retiring executive officer under the Air Products and
Chemicals, Inc. Corporate Executive Committee
Retention/Separation Program.
10.25 Form of Severance Agreement that the Company has with one U.S.
Executive Officer, effective 20 November 2003.
12 Computation of Ratios of Earnings to Fixed Charges.
13 2003 Financial Review Section of the Annual Report to
Shareholders for the fiscal year ended 30 September 2003, which
is furnished to the Commission for information only and not filed
except as portions are expressly incorporated by reference in
this Report.
14 Code of Ethics.
18 Letter re Change in Accounting Principles.
21 Subsidiaries of the registrant.
(23) Consents of Experts and Counsel.
23.1 Notice Regarding Consent of Arthur Andersen LLP.
23.2 Independent Auditors' Consent.
24 Power of Attorney.
(31) Rule 13a-14(a)/15d-14(a) Certifications.
31.1 Certification by the Principal Executive Officer pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
31.2 Certification by the Principal Financial Officer pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32 Certification by the Principal Executive Officer and Principal
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*Previously filed as indicated and incorporated herein by reference.
Exhibits incorporated by reference are located in SEC File No. 1-4534.
23