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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended March 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 1-9344
 AIRGAS, INC.
  Delaware
    
    56-0732648(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)259 North Radnor-Chester Road, Suite 100Radnor, Pennsylvania
    
    19087-5283(Address of principal executive offices)
    
    (Zip Code)
 (610) 687-5253
  Name of Each ExchangeTitle of Each Class
    
    on Which RegisteredCommon Stock, par value $0.01 per share
    
    New York Stock Exchange
  þ o
 o þ
 þ o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



AIRGAS, INC.
  ITEM NO.
    
    PAGEPART I1. Business
    
    
    31A. Risk Factors
    
    
    121B. Unresolved Staff Comments
    
    
    162. Properties
    
    
    163. Legal Proceedings
    
    
    164. Submission of Matters to a Vote of Security Holders
    
    
    17PART II5. Market for Registrants Common Equity and Related Stockholder Matters
and Issuer Purchases of Equity Securities
    
    
    176. Selected Financial Data
    
    
    207. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    227A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    488. Financial Statements and Supplementary Data
    
    
    509. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    509A. Controls and Procedures
    
    
    509B. Other Information
    
    
    50PART III10.
Directors, Executive Officers and Corporate Governance of the Company
    
    
    5111. Executive Compensation
    
    
    5112. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    5213. Certain Relationships and Related Transactions, and Director Independence
    
    
    5314. Principal Accountant Fees and Services
    
    
    53PART IV15. Exhibits and Financial Statement Schedules
    
    
    53Signatures
    
    
    57Statement re: computation of the ratio of earnings to fixed chargesSubsidiaries of the CompanyConsent of Independent Registered Public Accounting FirmCertification of Peter McCausland as Chairman and Chief Executive Officer of Airgas, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Certification of Robert M. McLaughlin as Senior Vice President and Chief Financial Officer of Airgas, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002Certification of Peter McCausland as Chairman and Chief Executive Officer of Airgas, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002Certification of Robert M. McLaughlin as Senior Vice President and Chief Financial Officer of Airgas, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
  2




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PART I
 
 ITEM 1. BUSINESS.
      3




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Principal Products and Services
  Principal Markets and Methods of Distribution
   4




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Customer Base
  
    
    Industrial Manufacturing (27%)
 
    
    Repair & Maintenance (25%)
 
    
    Non-Residential Construction (13%)
 
    
    Medical (9%)
 
    
    Petrochemical (7%)
 
    
    Food Products (6%)
 
    
    Wholesale Trade (4%)
 
    
    Analytical (2%)
 
    
    Utilities and Mining (2%)
 
    
    Transportation (2%)
 
    
    Other (3%).
 Suppliers
   5




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Gas Operations Division
  Airgas Merchant Gases
  6




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National Welders Supply Company, Inc.
  Suppliers
    
    
    high potential growth markets such as energy and infrastructure construction;
 
    
    less cyclical markets such as, medical, environmental, research, life sciences and
food products;
 
    
    strategic product offerings expected to grow faster than the overall economy, e.g.,
bulk gases, specialty gases, medical products, carbon dioxide and safety products;
 
    
    continued account penetration;
 
    
    improved training, tools and resources for front line associates;
 
    
    reducing costs associated with production, cylinder maintenance and distribution
logistics; and
 
    
    acquisitions to complement and expand our business.
   7




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2 2 2
   Name
    
    Age
    
    PositionPeter McCausland
    
    
    58
    
    
    Chairman of the Board, President and Chief Executive OfficerMichael L. Molinini
    
    
    57
    
    
    Executive Vice President and Chief Operating OfficerRobert M. McLaughlin
    
    
    51
    
    
    Senior Vice President and Chief Financial OfficerRobert A. Dougherty
    
    
    50
    
    
    Senior Vice President and Chief Information OfficerPatrick M. Visintainer
    
    
    44
    
    
    Senior Vice President  SalesDwight T. Wilson
    
    
    52
    
    
    Senior Vice President  Human ResourcesLeslie J. Graff
    
    
    47
    
    
    Senior Vice President  Corporate DevelopmentRobert H. Young, Jr.
    
    
    57
    
    
    Senior Vice President and General CounselMax D. Hooper
    
    
    48
    
    
    Division President  WestB. Shaun Powers
    
    
    56
    
    
    Division President  EastTed R. Schulte
    
    
    57
    
    
    Division President  Gas OperationsThomas
M. Smyth (1)
    
    
    54
    
    
    Vice President and Controller
 
 (1)
    
    Mr. Smyth serves as the Companys Principal Accounting
Officer, but he is not an executive officer. 8




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9




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www.airgas.com
 Code of Ethics and Business Conduct
  
 10




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Corporate Governance Guidelines
  Certifications
   11




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ITEM 1A. RISK FACTORS.
  We have significant debt and our debt service obligations are substantial, which could
diminish our ability to raise additional capital and limit our ability to engage in certain
transactions.
   
    
    increasing our vulnerability to general adverse economic and industry conditions;
 
    
    limiting our ability to obtain additional financing for working capital, capital
expenditures, acquisitions and other purposes;
 
    
    requiring the dedication of a significant portion of our expected cash flow from
operations to service our indebtedness, thereby reducing the amount of our expected cash
flow available for working capital, capital expenditures, acquisitions and other
purposes;
 
    
    limiting our flexibility in planning for, or reacting to, changes in our business and
industry;
 
    
    placing us at a possible competitive disadvantage relative to less leveraged
competitors;
 
    
    increasing the amount of our interest expense, because some of our borrowings are at
variable rates of interest, which would result in higher interest expense if interest
rates increase (at current debt levels and ratio of fixed to floating rate debt, we
estimate that for every 25 basis point increase in the London Interbank Offered Rate,
annual interest expense would increase by $3 million); and
 
    
    limiting, through the financial and other restrictive covenants in our indebtedness,
among other things, our ability to borrow additional funds, dispose of assets or make
investments.
  Despite currently expected levels of indebtedness, we and our subsidiaries will be able to
incur substantially more debt, which would increase the risk associated with our significant
debt levels.
  12




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Demand for our products is affected by general economic conditions and by the cyclical nature
of many of the industries we serve, which can cause significant fluctuations in our sales and
results.
  We may not be successful in generating market leading sales growth and in controlling
expenses, which could limit our ability to achieve our expected growth.
  
    
    competition from independent distributors and vertically integrated gas producers;
 
    
    price increases from gas producers and manufacturers of hardgoods; and
 
    
    general economic conditions in the industrial markets which we serve.
  Increases in product and energy costs could reduce our profitability.
  Our financial results may be adversely affected by gas supply disruptions/constraints
  13




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We may not be successful in completing acquisitions, which may adversely affect our growth
and operating results.
  We may not be successful in integrating our past and future acquisitions and achieving
intended benefits and synergies.
  
    
    difficulty with the assimilation of acquired operations, information systems and
products;
 
    
    failure to achieve targeted synergies;
 
    
    inability to retain key employees, customers and business relationships of acquired
companies; and
 
    
    diversion of the attention and resources of our management team.
  Acquisitions may have a material adverse effect on our business if we are required to assume
debt and other liabilities of the acquired business.
  We depend on our key personnel to manage our business effectively and they may be difficult
to replace.
  14




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We are subject to litigation risk as a result of the nature of our business, which may have a
material adverse effect on our business.
  We have established insurance programs with significant deductibles and maximum coverage
limits which could result in the recognition of significant losses.
  Catastrophic events may disrupt our business and adversely affect our operating results.
  We are subject to environmental, health and safety regulations which could subject us to
liability and we will have ongoing environmental costs.
  We operate in a highly competitive environment and such competition could negatively impact
us.
  15




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Although the current trend is for increasing prices, the industrial gas industry has
experienced periods of falling prices, and if such a trend were to return, we could
experience reduced revenues and/or cash flows.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS.
  
 ITEM 2. PROPERTIES.
      
 ITEM 3. LEGAL PROCEEDINGS.
  16




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  
 PART II
 
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
  Dividends PerHigh
    
    Low
    
    ShareFiscal 2008First Quarter
    
    $
    48.23
    
    
    $
    41.49
    
    
    $
    0.09Second Quarter
    
    
    52.05
    
    
    
    42.31
    
    
    $
    0.09Third Quarter
    
    
    55.27
    
    
    
    45.85
    
    
    $
    0.09Fourth Quarter
    
    
    51.01
    
    
    
    40.24
    
    
    $
    0.12Fiscal 2007First Quarter
    
    $
    41.41
    
    
    $
    33.79
    
    
    $
    0.07Second Quarter
    
    
    38.12
    
    
    
    34.11
    
    
    $
    0.07Third Quarter
    
    
    42.91
    
    
    
    36.05
    
    
    $
    0.07Fourth Quarter
    
    
    42.72
    
    
    
    39.31
    
    
    $
    0.07
   17




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Stockholder Return Performance Presentation
   
 18




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Stock Repurchase Plan
  (a)
    
    
    (b)
    
    
    (c)
    
    
    (d)Total Number
    
    
    Maximumof Shares
    
    
    Dollar Value ofTotal Number
    
    
    
    
    
    
    Purchased as
    
    
    Shares that Mayof Shares
    
    
    Average Price
    
    
    Part of Publicly
    
    
    Yet Be PurchasedPeriod
    
    Purchased
    
    
    Paid Per Share
    
    
    Announced Plan
    
    
    Under the Plan (1)(2)1/1/08-1/31/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2/1/08-2/29/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3/1/08-3/31/08
    
    
    495,700
    
    
    $
    43.62
    
    
    
    495,700
    
    
    $
    115,606,346Total
    
    
    495,700
    
    
    $
    43.62
    
    
    
    495,700
    
    
    $
    115,606,346
 
 (1)
    
    On November 15, 2005, the Company announced plans to purchase up to $150 million
of Airgas, Inc. common stock under a stock repurchase plan approved by the Companys
Board of Directors.(2)
    
    For the quarter ended March 31, 2008, the Company expended $17 million in cash
for the repurchase of shares. In addition, $4.6 million was recorded as an accrued
liability on the March 31, 2008 consolidated balance sheet for a stock purchase executed
in March 2008 that settled in April 2008. 19




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ITEM 6. SELECTED FINANCIAL DATA.
  Years Ended March 31,(In thousands, except per share amounts):
    
    2008(1)
    
    2007(2)
    
    2006(3)
    
    2005(4)
    
    2004(5)Operating Results:Net sales
    
    $
    4,017,024
    
    
    $
    3,205,051
    
    
    $
    2,829,610
    
    
    $
    2,367,782
    
    
    $
    1,855,360Depreciation and amortization
    
    
    189,775
    
    
    
    147,343
    
    
    
    127,542
    
    
    
    111,078
    
    
    
    87,447Special charge (recovery), net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (776
    )Operating income
    
    
    476,146
    
    
    
    341,452
    
    
    
    268,758
    
    
    
    202,454
    
    
    
    168,544Interest expense, net
    
    
    89,860
    
    
    
    60,180
    
    
    
    53,812
    
    
    
    51,245
    
    
    
    42,357Discount on securitization of trade receivables
    
    
    17,031
    
    
    
    13,630
    
    
    
    9,371
    
    
    
    4,711
    
    
    
    3,264Loss on debt extinguishment
    
    
    
    
    
    
    12,099
    
    
    
    
    
    
    
    
    
    
    
    Other income, net
    
    
    1,507
    
    
    
    1,601
    
    
    
    2,462
    
    
    
    1,129
    
    
    
    1,472Income taxes
    
    
    144,184
    
    
    
    99,883
    
    
    
    77,866
    
    
    
    54,261
    
    
    
    47,659Minority interest in earnings of consolidated
affiliate
    
    
    (3,230
    )
    
    
    (2,845
    )
    
    
    (2,656
    )
    
    
    (1,808
    )
    
    
    (452
    )Equity in earnings of unconsolidated affiliate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,365Income from continuing operations
    
    
    223,348
    
    
    
    154,416
    
    
    
    127,515
    
    
    
    91,558
    
    
    
    80,649Income (loss) from discontinued operations,
net of tax
    
    
    
    
    
    
    
    
    
    
    (1,424
    )
    
    
    464
    
    
    
    (457
    )Cumulative effect of a change in accounting
principle, net of tax
    
    
    
    
    
    
    
    
    
    
    (2,540
    )
    
    
    
    
    
    
    Net earnings
    
    $
    223,348
    
    
    $
    154,416
    
    
    $
    123,551
    
    
    $
    92,022
    
    
    $
    80,192NET EARNINGS PER COMMON SHAREBASICEarnings from continuing operations
    
    $
    2.74
    
    
    $
    1.98
    
    
    $
    1.66
    
    
    $
    1.22
    
    
    $
    1.11Earnings (loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.02
    )
    
    
    0.01
    
    
    
    (0.01
    )Cumulative effect of a change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    (0.03
    )
    
    
    
    
    
    
    Net earnings per share
    
    $
    2.74
    
    
    $
    1.98
    
    
    $
    1.61
    
    
    $
    1.23
    
    
    $
    1.10DILUTEDEarnings from continuing operations
    
    $
    2.66
    
    
    $
    1.92
    
    
    $
    1.62
    
    
    $
    1.19
    
    
    $
    1.08Earnings (loss) from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.02
    )
    
    
    0.01
    
    
    
    (0.01
    )Cumulative effect of a change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    (0.03
    )
    
    
    
    
    
    
    Net earnings per share
    
    $
    2.66
    
    
    $
    1.92
    
    
    $
    1.57
    
    
    $
    1.20
    
    
    $
    1.07Dividends per common share declared and paid
(6)
    
    $
    0.39
    
    
    $
    0.28
    
    
    $
    0.24
    
    
    $
    0.18
    
    
    $
    0.16Balance Sheet Data at March 31:Working capital
    
    $
    132,323
    
    
    $
    121,543
    
    
    $
    (17,138
    )
    
    $
    132,969
    
    
    $
    88,826Total assets
    
    
    3,979,261
    
    
    
    3,333,457
    
    
    
    2,474,412
    
    
    
    2,291,863
    
    
    
    1,960,606Current portion of long-term debt
    
    
    40,400
    
    
    
    40,296
    
    
    
    131,901
    
    
    
    6,948
    
    
    
    6,140Long-term debt
    
    
    1,539,648
    
    
    
    1,309,719
    
    
    
    635,726
    
    
    
    801,635
    
    
    
    682,698Deferred income tax liability, net
    
    
    439,782
    
    
    
    373,246
    
    
    
    327,818
    
    
    
    282,186
    
    
    
    253,529Other non-current liabilities
    
    
    80,104
    
    
    
    39,963
    
    
    
    30,864
    
    
    
    24,391
    
    
    
    28,756Minority interest in affiliate
    
    
    
    
    
    
    57,191
    
    
    
    57,191
    
    
    
    36,191
    
    
    
    36,191Stockholders equity
    
    
    1,413,336
    
    
    
    1,125,382
    
    
    
    947,159
    
    
    
    814,172
    
    
    
    691,901Capital expenditures for years ended March 31,
    
    
    267,378
    
    
    
    238,274
    
    
    
    208,603
    
    
    
    167,977
    
    
    
    93,749
 20




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(1)
    
    As discussed in Item 7, Managements Discussion and Analysis of Financial Condition
and Results of Operations and in the notes to the Companys Consolidated Financial
Statements included in Item 8, Financial Statements and Supplementary Data, the
results for fiscal 2008 include a one time, non-cash charge of $2.5 million, or $0.03
per diluted share, related to the National Welders Exchange Transaction through which
the joint venture became a 100% owned subsidiary. Also included in the results for
fiscal 2008 is a tax benefit of $1.3 million, or $0.01 per diluted share, due to a
change in Texas state income tax law. Fiscal 2008 acquisition integration costs,
principally related to the Linde Bulk Gas and Linde Package Gas acquisitions, were
$10.1 million ($6.2 million after tax).(2)
    
    As discussed in Item 7, Managements Discussion and Analysis of Financial
Condition and Results of Operations and in the notes to the Companys Consolidated
Financial Statements included in Item 8, Financial Statements and Supplementary Data,
the results for fiscal 2007 include a charge of $12.1 million ($7.9 million after tax),
or approximately $0.10 per diluted share, for the early extinguishment of debt and a tax
benefit of $0.02 per diluted share related to a change in Texas state income tax law.
The Company also adopted Statement of Financial Accounting Standards No. 123R, Share-Based Payment,
utilizing the modified prospective method in fiscal 2007. Under the modified
prospective method, no stock-based compensation expense was reflected in periods prior
to fiscal 2007. Stock-based compensation expense in fiscal 2007 was $15.4 million
($10.9 million after tax), or $0.13 per diluted share.(3)
    
    The results for fiscal 2006 include an after-tax charge of $2.5 million as a
result of the adoption of Financial Accounting Standards Board Interpretation No. 47,
Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB
Statement No. 143,which was recorded as a cumulative effect of a change in accounting
principle, an after-tax loss of $1.9 million on the divestiture of Rutland Tool, which
was reported as a discontinued operation, and an estimated loss of $2.2 million ($1.4
million after tax) related to hurricanes Katrina and Rita. Working capital decreased in
fiscal 2006 compared to 2005 primarily due to an increase in the current portion of
long-term debt.(4)
    
    The results for fiscal 2005 include integration costs related to the acquisition
of the U.S. packaged gas business of The BOC Group, Inc. and employee separation costs
of $6.4 million ($4 million after tax). Fiscal 2005 also reflected a full year of
National Welders as a consolidated affiliate. See Note 13 to the Consolidated Financial
Statements included under Item 8, Financial Statements and Supplementary Data.(5)
    
    The results for fiscal 2004 include a fourth quarter special charge recovery of
$776 thousand ($480 thousand after tax) reflecting lower estimates of the ultimate cost
of prior years restructuring activities. Fiscal 2004 results also include the fourth
quarter consolidation of the National Welders joint venture in accordance with Financial
Accounting Standards Board Interpretation No. 46R, Consolidation of Variable Interest
Entities, (FIN 46R). See Note 13 to the Consolidated Financial Statements included
under Item 8, Financial Statements and Supplementary Data. Prior to the adoption of
FIN 46R, the Company used the equity method of accounting for its investment in National
Welders. Accordingly, the consolidation of National Welders under FIN 46R did not have
an impact on the Companys net earnings.(6)
    
    In the fourth quarter of fiscal 2008, the Company paid a regular quarterly cash
dividend of $0.12 per share. During the first three quarters of fiscal 2008, fiscal 2007, fiscal 2006, fiscal 2005 and fiscal 2004, the Company paid its
stockholders regular quarterly cash dividends of $0.09, $0.07, $0.06, $0.045 and $0.04
per share, respectively. In addition, on May 20, 2008, the Companys Board of Directors
declared a regular quarterly cash dividend of $0.12 per share payable June 30, 2008 to
stockholders of record as of June 12, 2008. Future dividend declarations and associated
amounts paid will depend upon the Companys earnings, financial condition, loan
covenants, capital requirements and other factors deemed relevant by management and the
Companys Board of Directors. 21




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
 RESULTS OF OPERATIONS: 2008 COMPARED TO 2007
 OVERVIEW
   Acquisitions
   22




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National Welders Exchange Transaction
  Strategic Products
  Supply Constraints
   23




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Reinstated Stock Repurchase Plan
  24




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INCOME STATEMENT COMMENTARY
 Net Sales
   (In thousands)
    
    2008
    
    
    2007
    
    
    IncreaseDistribution
    
    $
    3,344,064
    
    
    $
    2,691,814
    
    
    $
    652,250
    
    
    
    24
    %All Other Operations
    
    
    839,757
    
    
    
    579,671
    
    
    
    260,086
    
    
    
    45
    %Intercompany
eliminations
    
    
    (166,797
    )
    
    
    (66,434
    )
    
    
    (100,363
    )$
    4,017,024
    
    
    $
    3,205,051
    
    
    $
    811,973
    
    
    
    25
    %
   ®
 25




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®
   26




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Gross Profits
    (In thousands)
    
    2008
    
    
    2007
    
    
    IncreaseDistribution
    
    $
    1,671,883
    
    
    $
    1,336,447
    
    
    $
    335,436
    
    
    
    25
    %All Other Operations
    
    
    418,715
    
    
    
    301,514
    
    
    
    117,201
    
    
    
    39
    %$
    2,090,598
    
    
    $
    1,637,961
    
    
    $
    452,637
    
    
    
    28
    %
   Operating Expenses
   27




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Operating Income
   (In thousands)
    
    2008
    
    
    2007
    
    
    IncreaseDistribution
    
    $
    388,100
    
    
    $
    266,708
    
    
    $
    121,392
    
    
    
    46
    %All Other Operations
    
    
    88,046
    
    
    
    74,744
    
    
    
    13,302
    
    
    
    18
    %$
    476,146
    
    
    $
    341,452
    
    
    $
    134,694
    
    
    
    39
    %
   Interest Expense and Discount on Securitization of Trade Receivables
 Loss on Debt Extinguishment
 28




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Loss on Debt Extinguishment
  Income Tax Expense
  Net Earnings
  29




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RESULTS OF OPERATIONS: 2007 COMPARED TO 2006
 OVERVIEW
  Accounting Change
 Share-Based Payment Accounting for Stock Issued to Employees
 Acquisitions
  30




---



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Financing
   31




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INCOME STATEMENT COMMENTARY
 Net Sales
   (In thousands)
    
    2007
    
    
    2006
    
    
    IncreaseDistribution
    
    $
    2,691,814
    
    
    $
    2,395,938
    
    
    $
    295,876
    
    
    
    12
    %All Other Operations
    
    
    579,671
    
    
    
    493,430
    
    
    
    86,241
    
    
    
    17
    %Intercompany
eliminations
    
    
    (66,434
    )
    
    
    (59,758
    )
    
    
    (6,676
    )$
    3,205,051
    
    
    $
    2,829,610
    
    
    $
    375,441
    
    
    
    13
    %
  ®
 ®
  32




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##### Table of Contents



Gross Profits
   (In thousands)
    
    2007
    
    
    2006
    
    
    IncreaseDistribution
    
    $
    1,336,447
    
    
    $
    1,172,503
    
    
    $
    163,944
    
    
    
    14
    %All Other Operations
    
    
    301,514
    
    
    
    255,129
    
    
    
    46,385
    
    
    
    18
    %$
    1,637,961
    
    
    $
    1,427,632
    
    
    $
    210,329
    
    
    
    15
    %
   Operating Expenses
  33




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##### Table of Contents



Operating Income
   (In thousands)
    
    2007
    
    
    2006
    
    
    IncreaseDistribution
    
    $
    266,708
    
    
    $
    208,466
    
    
    $
    58,242
    
    
    
    28
    %All Other Operations
    
    
    74,744
    
    
    
    60,292
    
    
    
    14,452
    
    
    
    24
    %$
    341,452
    
    
    $
    268,758
    
    
    $
    72,694
    
    
    
    27
    %
   Interest Expense and Discount on Securitization of Trade Receivables
   34




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##### Table of Contents



Loss on Debt Extinguishment
  Income Tax Expense
  Income from Continuing Operations
  Loss from Discontinued Operations
  Cumulative Effect of a Change in Accounting Principle
 Accounting for Conditional Asset Retirement Obligations, an
interpretation of FASB Statement No. 143
 Net Earnings
  35




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Fiscal 2008 Cash Flows
   Financial
Instruments
 Dividends
  36




---



##### Table of Contents



Financial Instruments
 Senior Credit Facility
   Total Borrowing Capacity
    37




---



##### Table of Contents



Money Market Loans
  .
 Senior Subordinated Notes
   Acquisition and Other Notes
  Refinancing of National Welders Debt
  38




---



##### Table of Contents



Trade Receivables Securitization
  Interest Rate Swap Agreements
   OTHER
 Critical Accounting Estimates
  39




---



##### Table of Contents



Trade Receivables
  Inventories
  Goodwill and Other Intangible Assets
 Goodwill and Other Intangible Assets
 40




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##### Table of Contents



Business Insurance Reserves
  41




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##### Table of Contents



Contractual Obligations
  Payments Due by Period(In thousands)
    
    
    
    
    
Less than
    
    
    
    
    
    
    
    
    
    More than 5Contractual Obligations:
    
    Total
    
    1 Years (a)
    

    1 to 3 Years (a)
    


    3 to 5 Years (a)
    

    Years (a)Long-term debt (1)
    
    $
    1,580,048
    
    
    $
    40,400
    
    
    $
    341,696
    
    
    $
    1,046,695
    
    
    $
    151,257Estimated interest payments on
long-term debt (2)
    
    
    208,150
    
    
    
    59,605
    
    
    
    106,293
    
    
    
    30,020
    
    
    
    12,232Estimated payments on
interest rate swap
agreements (3)
    
    
    20,850
    
    
    
    13,635
    
    
    
    5,851
    
    
    
    1,364
    
    
    
    Non-compete agreements (4)
    
    
    17,144
    
    
    
    3,712
    
    
    
    5,758
    
    
    
    3,533
    
    
    
    4,141Letters of credit (5)
    
    
    35,099
    
    
    
    35,099
    
    
    
    
    
    
    
    
    
    
    
    Operating leases (6)
    
    
    292,799
    
    
    
    76,530
    
    
    
    129,127
    
    
    
    62,747
    
    
    
    24,395Purchase
obligations:Liquid bulk gas supply
agreements (7)
    
    
    862,164
    
    
    
    115,916
    
    
    
    188,938
    
    
    
    174,048
    
    
    
    383,262Liquid carbon dioxide supply
agreements (8)
    
    
    202,092
    
    
    
    17,184
    
    
    
    29,027
    
    
    
    24,224
    
    
    
    131,657Ammonia supply agreements (9)
    
    
    21,706
    
    
    
    21,706
    
    
    
    
    
    
    
    
    
    
    
    Other purchase commitments
(10)
    
    
    11,754
    
    
    
    11,754
    
    
    
    
    
    
    
    
    
    
    
    Construction commitments (11)
    
    
    46,854
    
    
    
    46,854
    
    
    
    
    
    
    
    
    
    
    
    Total Contractual Obligations
    
    $
    3,298,660
    
    
    $
    442,395
    
    
    $
    806,690
    
    
    $
    1,342,631
    
    
    $
    706,944
 
 (a)
    
    The less than one year relates to obligations due in fiscal 2009. The 1 to 3 years
column relates to obligations due in fiscal years ending March 31, 2010 and 2011. The 3
to 5 years column relates to obligations due in fiscal years ending March 31, 2012 and
2013. The more than 5 years column relates to obligations due in fiscal years ending
March 31, 2014 and beyond.(1)
    
    Aggregate long-term debt instruments are reflected in the Consolidated Balance Sheet
as of March 31, 2008. Long-term debt includes capital lease obligations, which were not
material and, therefore, did not warrant separate disclosure. Principal payments on the
term loan under the Credit Facility are not reflected in the Less than 1 year column
above due to the Companys ability and intention to refinance the payments with borrowings
under its long-term revolving credit line. See Note 10 to the Consolidated Financial
Statements for more information regarding long-term debt instruments.(2)
    
    The future interest payments on the Companys long-term debt obligations were
estimated based on the current outstanding principal reduced by scheduled maturities in
each period presented and interest rates as of March 31, 2008. The estimated interest
payments may differ materially from those presented above based on actual amounts of
long-term debt outstanding and actual interest rates in future periods.(3)
    
    Payments or receipts under interest rate swap agreements result from changes in
market interest rates
compared to contractual rates and payments to be exchanged between the parties to the
agreements. The estimated receipts in future periods were determined based on forward
LIBOR rates as of March 31, 2008. Actual receipts or payments may differ materially from
those presented above based on actual interest rates in future periods. At March 31, 2008,
the net liability associated with the portfolio of interest rate swap agreements will
increase or decrease between $4.2 million and $4.5 million for every 50 basis point
increase or decrease in LIBOR. 42




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##### Table of Contents



(4)
    
    Non-compete agreements are obligations of the Company to make scheduled future
payments, generally to former owners of acquired businesses, contingent upon their
compliance with the covenants of the non-compete agreement.(5)
    
    Letters of credit are guarantees of payment to third parties. The Companys letters
of credit principally back obligations associated with the Companys self-insured
retention on workers compensation, automobile and general liability claims. The letters
of credit are supported by the Companys Credit Facility.(6)
    
    The Companys operating leases at March 31, 2008 include approximately $168 million
in fleet vehicles under long-term operating leases. The Company guarantees a residual
value of $29 million related to its leased vehicles.(7)
    
    In addition to the gas volumes supplied by the recently acquired Airgas Merchant
Gases (formerly Linde Gas LLC), the Company purchases industrial, medical and
specialty gases pursuant to requirements contracts from national and regional
producers of industrial gases. The Company has a long-term take-or-pay supply
agreement, in effect through August 31, 2017, with Air Products and Chemicals, Inc.
(Air Products) to supply the Company with bulk liquid nitrogen, oxygen and argon.
Additionally, the Company purchases helium and hydrogen gases from Air Products under
long-term supply agreements. Based on the volume of fiscal 2008 purchases, the Air
Products supply agreements represent approximately $50 million annually in liquid bulk
gas purchases.The Company also has long-term take-or-pay supply agreements with Linde to purchase
oxygen, nitrogen, argon, helium and acetylene. The agreements expire at various
dates through July 2019 and represent almost $50 million in annual bulk gas
purchases. Additionally, the Company has long-term take-or-pay supply agreements
to purchase oxygen, nitrogen and argon from other major producers. Annual
purchases under these contracts are approximately $16 million and they expire at
various dates through 2024.The purchase commitments for future periods contained in the table above reflect
estimates based on fiscal 2008 purchases. The supply agreements noted above contain
periodic adjustments based on certain economic indices and market analysis. The
Company believes the minimum product purchases under the agreements are well within
the Companys normal product purchases. Actual purchases in future periods under
the supply agreements could differ materially from those presented in the table due
to fluctuations in demand requirements related to varying sales levels as well as
changes in economic conditions.(8)
    
    The Company is a party to long-term take-or-pay supply agreements for the
purchase of liquid carbon dioxide with approximately 15 suppliers that expire at
various dates through 2044. The purchase commitments for future periods contained
in the table above reflect estimates based on fiscal 2008 purchases. The Company
believes the minimum product purchases under the agreements are well within the
Companys normal product purchases. Actual purchases in future periods under the
carbon dioxide supply agreements could differ materially from those presented in
the table due to fluctuations in demand requirements
related to varying sales levels as well as changes in economic conditions. Certain
of the liquid carbon dioxide supply agreements contain market pricing subject to
certain economic indices.(9)
    
    The Company purchases ammonia from a variety of sources. With one of those
sources, the Company has minimum purchase commitments under a supply agreement. The
term of the agreement is through December 31, 2008 and automatically renews for
successive one-year terms unless terminated by either party upon 180 days written
notice. 43




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##### Table of Contents



(10)
    
    Other purchase commitments primarily include property, plant and equipment
expenditures.(11)
    
    Construction commitments represent outstanding commitments to customers to build and
operate air separation plants in New Carlisle, IN and Carrollton, KY, and construct a
beverage grade liquid carbon dioxide plant in Deer Park, TX, which is expected to be
completed in early calendar year 2009. Off-Balance Sheet Arrangements
   (In thousands)
    
    
    
    
    
    
    
    
    

    Payments Due by PeriodOff-balance sheet obligations as of
    
    
    
    
    
    Less than 1
    
    
    
    
    
    
    
    
    
    More than 5March 31, 2008:
    
    Total
    
    Year
    

    1 to 3 Years
    


    3 to 5 Years
    

    YearsTrade receivables
securitization
    
    $
    360,000
    
    
    $
    
    
    
    $
    360,000
    
    
    $
    
    
    
    $
    Estimated discount on
securitization
    
    
    21,600
    
    
    
    10,800
    
    
    
    10,800
    
    
    
    
    
    
    
    Total off-balance
sheet obligations
    
    $
    381,600
    
    
    $
    10,800
    
    
    $
    370,800
    
    
    $
    
    
    
    $
    
 44




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##### Table of Contents



Accounting PronouNcements Issued But Not Yet Adopted
 Business Combinations
 Business Combinations
 Fair Value Measurements
 Fair Value Measurements, Effective Date of FASB
Statement No. 157
 Fair Value Option
 The Fair Value Option for
Financial Assets and Financial Liabilities,
 Non-controlling Interests in Consolidated Financial Statements
 Non-controlling Interests in
Consolidated Financial Statements
 45




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##### Table of Contents



Disclosures about Derivative Instruments and Hedging Activities
 Disclosures about Derivatives and
Hedging Activities Accounting
for Derivatives and Hedging Activities
 Forward-looking Statements
   46




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47




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
   Fiscal Year of MaturityFair(In millions)
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total
    
    ValueFixed Rate Debt:Acquisition and
other notes
    
    $
    11
    
    
    $
    10
    
    
    $
    5
    
    
    $
    1
    
    
    $
    1
    
    
    $
    1
    
    
    $
    29
    
    
    $
    30Interest expense
    
    
    1.5
    
    
    
    0.8
    
    
    
    0.4
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    3.1Average interest rate
    
    
    6.12
    %
    
    
    6.12
    %
    
    
    6.21
    %
    
    
    6.28
    %
    
    
    5.81
    %
    
    
    5.82
    %Senior subordinated
notes due 2014
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    150
    
    
    $
    150
    
    
    $
    148Interest expense
    
    
    9.4
    
    
    
    9.4
    
    
    
    9.4
    
    
    
    9.4
    
    
    
    9.4
    
    
    
    12.0
    
    
    
    59.0Interest rate
    
    
    6.25
    %
    
    
    6.25
    %
    
    
    6.25
    %
    
    
    6.25
    %
    
    
    6.25
    %
    
    
    6.25
    %
 Fiscal Year of MaturityFair(In millions)
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total
    
    ValueVariable Rate Debt:Revolving credit facilities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    883
    
    
    $
    
    
    
    $
    
    
    
    $
    883
    
    
    $
    883Interest expense
    
    
    32.6
    
    
    
    32.6
    
    
    
    32.6
    
    
    
    10.5
    
    
    
    
    
    
    
    
    
    
    
    108.3Interest rate (a)
    
    
    3.65
    %
    
    
    3.65
    %
    
    
    3.65
    %
    
    
    3.65
    %Term loans (c)
    
    $
    
    
    
    $
    90
    
    
    $
    236
    
    
    $
    162
    
    
    $
    
    
    
    $
    
    
    
    $
    488
    
    
    $
    488Interest expense
    
    
    15.9
    
    
    
    12.7
    
    
    
    8.3
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    37.5Interest rate (a) (c)
    
    
    3.45
    %
    
    
    3.45
    %
    
    
    3.45
    %
    
    
    3.45
    %Money market loan
    
    $
    30
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    30
    
    
    $
    30Interest expense
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2Interest rate (a)
    
    
    3.32
    %
 48




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##### Table of Contents



Fiscal Year of MaturityFair(In millions)
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total
    
    ValueInterest Rate Swaps:19 swaps receive Variable/Pay FixedNotional amounts
    
    $
    100
    
    
    $
    377
    
    
    $
    125
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    602
    
    
    $
    21Swap payments
    
    
    13.6
    
    
    
    5.9
    
    
    
    1.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20.9$602 million notional amountVariable forward receive rate = 2.28%Weighted average pay rate = 4.94%Other Off-Balance SheetLIBOR-based Agreement (b):Trade receivables securitization
    
    $
    
    
    
    $
    360
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    360
    
    
    $
    360Discount on securitization
    
    
    10.8
    
    
    
    10.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.6Based on one-month LIBOR of 2.70%
 
 (a)
    
    The interest rate on the revolving credit facilities is the weighted
average of the variable interest rates on the U.S. dollar revolving credit line
and the Canadian dollar portion of the credit line. The variable interest rates
on the U.S. dollar revolving credit line are based on a spread over LIBOR
applicable to each tranche under the U.S. credit line. The average of the
variable interest rates on the Canadian dollar portion of the Credit Facility is
based on a spread over Canadian Bankers Acceptances applicable to each tranche
under the Canadian credit line.(b)
    
    The trade receivables securitization agreement expires in March 2010, but may be
renewed subject to renewal provisions contained in the agreement.(c)
    
    The notes to the Consolidated Financial Statements reflect the term
loans principal payments due through March 31, 2009 as long-term based on the
Companys ability and intention to refinance those principal payments with its
revolving credit line. Estimated interest payments on the term loans reflect
the amortization of the term loans principal for each period presented. Limitations of the Tabular Presentation
  Foreign Currency Rate Risk
  49




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
  ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
   ITEM 9A. CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
 Internal Control  Integrated Framework.
  Changes in Internal Control
   ITEM 9B. OTHER INFORMATION.
  50




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE COMPANY.
  Item 401 Information
  Item 405 Information
  Item 406 Information
  Item 407(c)(3) Information
  Item 407(d)(4) and 407(d)(5) Information
  
 ITEM 11. EXECUTIVE COMPENSATION.
  51




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##### Table of Contents



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
 Item 201(d) Information
  Equity Compensation Plan Information
  (a)
    
    
    (b)
    
    
    (c)Number of securitiesremaining available forNumber of securities to be
    
    
    Weighted-average
    
    
    future issuance underissued upon exercise of
    
    
    exercise price of
    
    
    equity compensation plansoutstanding options,
    
    
    outstanding options,
    
    
    (excluding securitiesPlan Category
    
    warrants and rights
    
    
    warrants and rights
    
    
    reflected in column (a))Equity compensation
plans approved by security holders(1)
    
    
    108,634
    
    
    $
    36.21
    
    
    
    1,297,425
    
    

ESPP shares (2)6,632,703
    
    
    $
    23.52
    
    
    
    3,508,399
    
    
    stock option plansEquity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total:
    
    
    6,741,337
    
    
    $
    23.72
    
    
    
    4,805,824
 
 (1)
    
    At the Companys August 2006 Annual Meeting of Stockholders, the
stockholders approved the 2006 Equity Incentive Plan (the 2006 Equity Plan). The
2006 Equity Plan replaced both the 1997 Stock Option Plan for Employees and the 1997
Directors Stock Option Plan. Shares subject to outstanding stock options that
terminate, expire or are canceled without having been exercised and stock options
available for grant under the prior stock option plans were carried forward to the
2006 Equity Plan. Future grants of stock options to employees and directors will be
issued from the 2006 Equity Plan to the extent there are options available for grant.
As of March 31, 2008, only stock option awards have been granted under the 2006 Equity
Plan and predecessor stock option plans.(2)
    
    The Amended and Restated 2003 Employee Stock Purchase Plan (ESPP) was
approved by the Companys stockholders in August 2006. The ESPP encourages and assists
employees in acquiring an equity interest in the Company by allowing eligible employees to
purchase common stock at a discount. 52




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##### Table of Contents



Item 403 Information
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
    Exhibit No.
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation of Airgas,
Inc. dated as of August 7, 1995. (Incorporated by reference to Exhibit 3.1 to the
Companys September 30, 1995 Quarterly Report on Form 10-Q).
 53




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##### Table of Contents



Exhibit No.
    
    Description3.2
    
    Airgas, Inc. By-Laws Amended October 9, 2007. (Incorporated by reference to
Exhibit 3.1 to the Companys September 30, 2007 Quarterly Report on Form 10-Q).4.1
    
    The Eleventh Amended and Restated Credit Agreement, dated as of January 14, 2005,
among Airgas, Inc., Airgas Canada, Inc., Red-D-Arc Limited, Bank of America, N.A., as
U.S. Administrative Agent and The Bank of Nova Scotia as Canadian Administrative Agent.
(Incorporated by reference to Exhibit 4 to the Companys December 31, 2004 Quarterly
Report on Form 10-Q).4.2
    
    The Twelfth Amended and Restated Credit Agreement, dated as of July 25, 2006,
among Airgas, Inc., Airgas Canada, Inc., Red-D-Arc Limited, Bank of America, N.A., as
U.S. Administrative Agent and The Bank of Nova Scotia as Canadian Agent. (Incorporated
by reference to Exhibit 4 to the Companys September 30, 2006 Quarterly Report on Form
10-Q).4.3
    
    The First Amendment to the Twelfth Amended and Restated Credit Agreement, dated
as of July 3, 2007, among Airgas, Inc., Airgas Canada, Inc., Red-D-Arc Limited, Bank of
America, N.A., as U.S. Administrative Agent and The Bank of Nova Scotia as Canadian
Administrative Agent. (Incorporated by reference to Exhibit 4.1 to the Companys June
30, 2007 Quarterly Report on Form 10-Q).4.4
    
    Indenture dated as of August 1, 1996 of Airgas, Inc. to Bank of New York,
Trustee. (Incorporated by reference to Exhibit 4.5 to the Companys Registration
Statement on Form S-4 No. 333-23651 dated March 20, 1997).4.5
    
    Form of Airgas, Inc. Medium-Term Note. (Incorporated by reference to Exhibit
4(f) to the Companys Registration Statement on Form S-4 No. 333-08113 dated July 15,
1996).4.6
    
    Indenture, dated as of July 30, 2001, among Airgas, Inc., the subsidiary
guarantors of Airgas, Inc. and The Bank of New York, as Trustee, related to the 9.125%
Senior Subordinated Notes due 2011 (including exhibits). (Incorporated by reference to
Exhibit 4.7 to the Companys Registration Statement on Form S-4 No. 333-68722 dated
August 30, 2001 and as amended September 14, 2001).4.7
    
    Exchange and Registration Rights Agreement, dated as of July 30, 2001, among
Airgas, Inc., the subsidiary guarantors of Airgas, Inc. and the initial purchasers of
the 9.125% Senior Subordinated Notes due 2011. (Incorporated by reference to Exhibit
4.8 to the Companys Registration Statement on Form S-4 No. 333-68722 dated August 30,
2001 and as amended September 14, 2001).4.8
    
    Indenture, dated as of March 8, 2004, among Airgas, Inc., the subsidiary
guarantors of Airgas, Inc. and The Bank of New York, as Trustee, relating to the 6.25%
Senior Subordinated Notes due 2014. (Incorporated by reference to Exhibit 4.14 to the
Companys Registration Statement on Form S-4 No. 333-114499 dated April 15, 2004).
 54




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##### Table of Contents



Exhibit No.
    
    Description4.9
    
    Exchange and Registration Rights Agreement, dated as of March 8, 2004, among
Airgas, Inc., the subsidiary guarantors of Airgas, Inc. and the initial purchasers of
the 6.25% Senior Subordinated Notes due 2014. (Incorporated by reference to Exhibit
4.15 to the Companys Registration Statement on Form S-4 No. 333-114499 dated April 15,
2004).4.10
    
    Rights Agreement, dated as of May 8, 2007, between Airgas, Inc. and The Bank of
New York, as Rights Agent, which includes as Exhibits thereto the Form of Certificate of
Designation, the Form of Right Certificate and the Summary of Rights attached thereto as
Exhibits A, B and C, respectively. (Incorporated by reference to Exhibit 4.1 to the
Companys May 10, 2007 Current Report on Form 8-K).There are no other instruments with respect to long-term debt of the Company
that involve indebtedness or securities exceeding ten percent of the total
assets of the Company and its subsidiaries on a consolidated basis. The
Company agrees to file a copy of any instrument or agreement defining the
rights of holders of long-term debt of the Company upon request of the
Securities and Exchange Commission*10.1
    
    Amended and Restated 1984 Stock Option Plan, as amended effective May 28,
1995. (Incorporated by reference to Exhibit 10.1 to the Companys September 30, 1995
Quarterly Report on Form 10-Q).*10.2
    
    1989 Non-Qualified Stock Option Plan for Directors (Non-Employees) as
amended through August 7, 1995. (Incorporated by reference to Exhibit 10.2 to the
Companys September 30, 1995 Quarterly Report on Form 10-Q).*10.3
    
    Amended and Restated 2003 Employee Stock Purchase Plan dated June 21, 2006,
and approved by the Companys stockholders on August 9, 2006. (Incorporated by
reference to the Definitive Proxy Statement on Form DEF14A dated June 30, 2006).*10.4
    
    Joint Venture Agreement dated June 28, 1996 between Airgas, Inc. and
National Welders Supply Company, Inc. and J.A. Turner, III, and Linerieux B. Turner and
Molo Limited Partnership, Turner (1996) Limited Partnership, Charitable Remainder
Unitrust for James A. Turner, Jr. and Foundation for the Carolinas. (Incorporated by
reference to Exhibit 2.1 to the Companys June 28, 1996 Current Report on Form 8-K).*10.5
    
    Letter dated July 24, 1992 between Airgas, Inc. (on behalf of the Nominating
and Compensation Committee) and Peter McCausland regarding the severance agreement
between the Company and Peter McCausland. (Incorporated by reference to Exhibit 10.9 to
the Companys March 31, 1997 Current Report on Form 10-K).*10.6
    
    1997 Stock Option Plan, as amended through May 7, 2002, and approved by the
Companys stockholders on July 31, 2002. (Incorporated by reference to Exhibit 10.1 to
the Companys June 30, 2002 Quarterly Report on Form 10-Q).*10.7
    
    1997 Directors Stock Option Plan as amended on May 25, 2004, and approved
by the Companys stockholders on August 4, 2004. (Incorporated by reference to the
Definitive Proxy Statement on Form DEF14A dated June 28, 2004).
 55




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##### Table of Contents



Exhibit No.
    
    Description*10.8
    
    2006 Equity Incentive Plan dated June 21, 2006, and approved by the
Companys stockholders on August 9, 2006. (Incorporated by reference to Exhibit 10.1 to
the Companys August 9, 2006 Current Report on Form 8-K).*10.9
    
    Airgas, Inc. Deferred Compensation Plan dated December 17, 2001.
(Incorporated by reference to Exhibit 4 to the Companys Registration Statement on Form
S-8 No. 333-75258 dated December 17, 2001).*10.10
    
    Airgas, Inc. Deferred Comp Plan II dated May 23, 2006. (Incorporated by
reference to Exhibit 4 to the Companys Registration Statement on Form S-8 No.
333-136463 dated August 9, 2006).*10.11
    
    Change of Control Agreement between Airgas, Inc. and Peter McCausland dated
March 17, 1999. (Incorporated by reference to Exhibit 10.12 to the Companys March 31,
2005 Annual Report on Form 10-K). Ten other executive officers are parties to
substantially identical agreements.*10.12
    
    Airgas, Inc. 2004 Executive Bonus Plan. (Incorporated by reference to Exhibit 10.14
to the Companys March 31, 2005 Annual Report on Form 10-K).*10.13
    
    Bulk Gas Business Equity Purchase Agreement, dated November 22, 2006, by
and among Holox (USA) B.V., Holox Inc., Linde AG and Airgas, Inc. (Incorporated by
reference to Exhibit 10.1 to the Companys December 31, 2006 Quarterly Report on Form
10-Q).*10.14
    
    Packaged Gas Business Equity Purchase Agreement, dated March 29, 2007, by
and among Linde Gas Inc., Linde Aktiengesellschaft, and Airgas, Inc. (Incorporated
by reference to Exhibit 10.14 to the Companys March 31, 2007 Annual Report on Form
10-K).12
    
    Statement re: computation of the ratio of earnings to fixed charges.21
    
    Subsidiaries of the Company.23
    
    Consent of Independent Registered Public Accounting Firm.31.1
    
    Certification of Peter McCausland as Chairman and Chief Executive Officer of
Airgas, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Robert M. McLaughlin as Senior Vice President and Chief
Financial Officer of Airgas, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    Certification of Peter McCausland as Chairman and Chief Executive Officer of
Airgas, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Robert M. McLaughlin as Senior Vice President and Chief
Financial Officer of Airgas, Inc. pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    A management contract or compensatory plan required to be filed by Item 13 of this Report. 56




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##### Table of Contents



SIGNATURES
   Airgas, Inc.
(Registrant)By:
    /s/ Peter McCauslandPeter McCauslandChairman, President and Chief Executive Officer  Signature
    
    Title
    
    Date/s/ Peter McCausland
    
    Director, Chairman of the Board,
    
    May 29, 2008(Peter McCausland)
    
    President
and Chief Executive Officer/s/ Robert M. McLaughlin
    
    Senior Vice President and Chief
Financial Officer
    
    May 29, 2008(Robert M. McLaughlin)
    
    (Principal Financial Officer)/s/ Thomas M. Smyth
    
    Vice President and Controller
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Accounting Officer)/s/ William O. Albertini

(William O. Albertini)
    
    Director
    
    May 28, 2008/s/ W. Thacher Brown

(W. Thacher Brown)
    
    Director
    
    May 28, 2008/s/ James W. Hovey

(James W. Hovey)
    
    Director
    
    May 28, 2008/s/ Richard C. Ill

(Richard C. Ill)
    
    Director
    
    May 28, 2008
 57




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##### Table of Contents



Signature
    
    Title
    
    Date/s/ Paula A. Sneed

(Paula A. Sneed)
    
    Director
    
    May 28, 2008/s/ David M. Stout

(David M. Stout)
    
    Director
    
    May 28, 2008/s/ Lee M. Thomas

(Lee M. Thomas)
    
    Director
    
    May 28, 2008/s/ John C. van Roden, Jr.

(John C. van Roden, Jr.)
    
    Director
    
    May 28, 2008
 58




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##### Table of Contents



SIGNATURES
   Airgas East, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Fred Manley
    
    President and Director
    
    May 29, 2008(Fred Manley)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ B. Shaun Powers

(B. Shaun Powers)
    
    Director
    
    May 29, 2008
 59




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##### Table of Contents



SIGNATURES
   Airgas Great Lakes, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Kevin McBride
    
    President and Director
    
    May 29, 2008(Kevin McBride)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ B. Shaun Powers

(B. Shaun Powers)
    
    Director
    
    May 29, 2008
 60




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##### Table of Contents



SIGNATURES
   Airgas Mid America, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ J. Robert Hilliard
    
    President and Director
    
    May 29, 2008(J. Robert Hilliard)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ B. Shaun Powers

(B. Shaun Powers)
    
    Director
    
    May 29, 2008
 61




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##### Table of Contents



SIGNATURES
   Airgas North Central, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Ronald Stark
    
    President and Director
    
    May 29, 2008(Ronald Stark)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ B. Shaun Powers

(B. Shaun Powers)
    
    Director
    
    May 29, 2008
 62




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##### Table of Contents



SIGNATURES
   Airgas South, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ L. Jay Sullivan
    
    President and Director
    
    May 29, 2008(L. Jay Sullivan)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ B. Shaun Powers

(B. Shaun Powers)
    
    Director
    
    May 29, 2008
 63




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##### Table of Contents



SIGNATURES
   Airgas Gulf States, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Henry B. Coker, III
    
    President and Director
    
    May 29, 2008(Henry B. Coker, III)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ B. Shaun Powers

(B. Shaun Powers)
    
    Director
    
    May 29, 2008
 64




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##### Table of Contents



SIGNATURES
   Airgas Mid South, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Terry Lodge
    
    President and Director
    
    May 29, 2008(Terry Lodge)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ Max D. Hooper

(Max D. Hooper)
    
    Director
    
    May 29, 2008
 65




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##### Table of Contents



SIGNATURES
   Airgas Intermountain, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Douglas L. Jones
    
    President and Director
    
    May 29, 2008(Douglas L. Jones)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ Max D. Hooper

(Max D. Hooper)
    
    Director
    
    May 29, 2008
 66




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##### Table of Contents



SIGNATURES
   Airgas Nor Pac, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Daniel L. Tatro
    
    President and Director
    
    May 29, 2008(Daniel L. Tatro)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ Max D. Hooper

(Max D. Hooper)
    
    Director
    
    May 29, 2008
 67




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##### Table of Contents



SIGNATURES
   Airgas Northern California & Nevada, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ James D. McCarthy
    
    President and Director
    
    May 29, 2008(James D. McCarthy)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ Max D. Hooper

(Max D. Hooper)
    
    Director
    
    May 29, 2008
 68




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##### Table of Contents



SIGNATURES
   Airgas Southwest, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ J. Brent Sparks
    
    President and Director
    
    May 29, 2008(J. Brent Sparks)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ Max D. Hooper

(Max D. Hooper)
    
    Director
    
    May 29, 2008
 69




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##### Table of Contents



SIGNATURES
   Airgas West, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Glen Irving
    
    President and Director
    
    May 29, 2008(Glen Irving)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ Max D. Hooper

(Max D. Hooper)
    
    Director
    
    May 29, 2008
 70




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##### Table of Contents



SIGNATURES
   Airgas Safety, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Don Carlino
    
    President
    
    May 29, 2008(Don Carlino)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ Michael L. Molinini

(Michael L. Molinini)
    
    Director
    
    May 29, 2008
 71




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##### Table of Contents



SIGNATURES
   Airgas Carbonic, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Philip J. Filer
    
    President and Director
    
    May 29, 2008(Philip J. Filer)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ Peter McCausland

(Peter McCausland)
    
    Director
    
    May 29, 2008
 72




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##### Table of Contents



SIGNATURES
   Airgas Specialty Gases, Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ William Russo
    
    President and Director
    
    May 29, 2008(William Russo)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ Ted Schulte

(Ted Schulte)
    
    Director
    
    May 29, 2008
 73




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##### Table of Contents



SIGNATURES
   Nitrous Oxide Corp.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Martin Tupman
    
    President and Director
    
    May 29, 2008(Martin Tupman)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ Ted Schulte

(Ted Schulte)
    
    Director
    
    May 29, 2008
 74




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##### Table of Contents



SIGNATURES
   Red-D-Arc Inc.
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Mitch M. Imielinski
    
    President and Director
    
    May 29, 2008(Mitch M. Imielinski)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)/s/ B. Shaun Powers

(B. Shaun Powers)
    
    Director
    
    May 29, 2008
 75




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##### Table of Contents



SIGNATURES
   Airgas Data, LLC
(Registrant)By:
    /s/ Thomas M. SmythThomas M. SmythVice President and Director  Signature
    
    Title
    
    Date/s/ Carey M. Verger
    
    President and Director
    
    May 29, 2008(Carey M. Verger)
    
    (Principal
Executive Officer)/s/ Thomas M. Smyth
    
    Vice President and Director
    
    May 29, 2008(Thomas M. Smyth)
    
    (Principal
Financial Officer/Principal
Accounting Officer)
 76




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
 PageReference InAnnual ReportOn Form 10-KFinancial Statements:Statement of Managements Financial Responsibility
    
    
    F-2Managements Report on Internal Control Over Financial Reporting
    
    
    F-3Report of Independent Registered Public Accounting Firm
    
    
    F-4Consolidated Statements of Earnings for the Years Ended
March 31, 2008, 2007 and 2006
    
    
    F-6Consolidated Balance Sheets as of March 31, 2008 and 2007
    
    
    F-7Consolidated Statements of Stockholders Equity for the
Years Ended March 31, 2008, 2007 and 2006
    
    
    F-8Consolidated Statements of Cash Flows for the Years Ended
March 31, 2008, 2007 and 2006
    
    
    F-9Notes to Consolidated Financial Statements
    
    
    F-10Financial Statement Schedule:Schedule II  Valuation and Qualifying Accounts
    
    
    F-60
  F-1




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##### Table of Contents



Internal
Control  Integrated Framework
   /s/ Peter McCausland
    
    
    
    /s/ Robert M. McLaughlinPeter McCausland
    
    
    
    Robert M. McLaughlinChairman, President and
    
    
    
    Senior Vice President andChief Executive Officer
    
    
    
    Chief Financial OfficerMay 29, 2008
 F-2




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##### Table of Contents



Internal Control  Integrated Framework
  /s/ Peter McCausland

Peter McCausland
    
    
    
    /s/ Robert M. McLaughlin

Robert M. McLaughlinChairman, President and
    
    
    
    Senior Vice President andChief Executive Officer
    
    
    
    Chief Financial OfficerMay 29, 2008
 F-3




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control-Integrated
Framework
    F-4




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##### Table of Contents



Internal Control-Integrated Framework
 Accounting for Uncertainty in Income
Taxes, Share-Based Payment, Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements
  
 F-5




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF EARNINGS
 Years Ended March 31,(In thousands, except per share amounts)
    
    2008
    
    2007
    
    2006Net Sales
    
    $
    4,017,024
    
    
    $
    3,205,051
    
    
    $
    2,829,610Cost and ExpensesCost of products sold (excluding depreciation expense)
    
    
    1,926,426
    
    
    
    1,567,090
    
    
    
    1,401,978Selling, distribution and administrative expenses
    
    
    1,424,677
    
    
    
    1,149,166
    
    
    
    1,031,332Depreciation
    
    
    175,802
    
    
    
    138,818
    
    
    
    122,396Amortization (Note 8)
    
    
    13,973
    
    
    
    8,525
    
    
    
    5,146Total costs and expenses
    
    
    3,540,878
    
    
    
    2,863,599
    
    
    
    2,560,852Operating Income
    
    
    476,146
    
    
    
    341,452
    
    
    
    268,758Interest expense, net (Note 16)
    
    
    (89,860
    )
    
    
    (60,180
    )
    
    
    (53,812
    )Discount on securitization of trade receivables (Note 4)
    
    
    (17,031
    )
    
    
    (13,630
    )
    
    
    (9,371
    )Loss on the extinguishment of debt (Note 10)
    
    
    
    
    
    
    (12,099
    )
    
    
    Other income, net
    
    
    1,507
    
    
    
    1,601
    
    
    
    2,462Earnings from continuing operations before income taxes,
minority interest and change in accounting principle
    
    
    370,762
    
    
    
    257,144
    
    
    
    208,037Income taxes (Note 6)
    
    
    (144,184
    )
    
    
    (99,883
    )
    
    
    (77,866
    )Minority interest in earnings of consolidated affiliate (Note 13)
    
    
    (3,230
    )
    
    
    (2,845
    )
    
    
    (2,656
    )Income from continuing operations before the cumulative effect of
a change in accounting principle
    
    
    223,348
    
    
    
    154,416
    
    
    
    127,515Loss from discontinued operations, net of tax (Note 3)
    
    
    
    
    
    
    
    
    
    
    (1,424
    )Cumulative effect of a change in accounting principle, net of tax (Note 2)
    
    
    
    
    
    
    
    
    
    
    (2,540
    )Net Earnings
    
    $
    223,348
    
    
    $
    154,416
    
    
    $
    123,551NET EARNINGS PER COMMON SHARE (NOTE 17)BASICEarnings from continuing operations before the cumulative effect of
a change in accounting principle
    
    $
    2.74
    
    
    $
    1.98
    
    
    $
    1.66Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.02
    )Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.03
    )Net earnings per share
    
    $
    2.74
    
    
    $
    1.98
    
    
    $
    1.61DILUTEDEarnings from continuing operations before the cumulative effect of
a change in accounting principle
    
    $
    2.66
    
    
    $
    1.92
    
    
    $
    1.62Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (0.02
    )Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.03
    )Net earnings per share
    
    $
    2.66
    
    
    $
    1.92
    
    
    $
    1.57Weighted average shares outstanding:Basic
    
    
    81,402
    
    
    
    78,025
    
    
    
    76,624Diluted
    
    
    84,235
    
    
    
    82,566
    
    
    
    81,152Comprehensive Income
    
    $
    214,452
    
    
    $
    153,848
    
    
    $
    125,693
  F-6




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 March 31,(In thousands, except per share amounts)
    
    2008
    
    
    2007ASSETSCurrent AssetsCash
    
    $
    43,048
    
    
    $
    25,931Trade receivables, less allowances for doubtful accounts of $22,624 in 2008
and $15,692 in 2007 (Note 4)
    
    
    183,569
    
    
    
    193,664Inventories, net (Note 5)
    
    
    330,732
    
    
    
    250,308Deferred income tax asset, net (Note 6)
    
    
    22,258
    
    
    
    31,004Prepaid expenses and other current assets
    
    
    59,107
    
    
    
    48,592Total current assets
    
    
    638,714
    
    
    
    549,499Plant and equipment at cost (Note 7)
    
    
    3,232,673
    
    
    
    2,755,747Less accumulated depreciation
    
    
    (1,037,803
    )
    
    
    (890,329
    )Plant and equipment, net
    
    
    2,194,870
    
    
    
    1,865,418Goodwill (Note 8)
    
    
    969,059
    
    
    
    832,162Other intangible assets, net (Note 8)
    
    
    148,998
    
    
    
    62,935Other non-current assets
    
    
    27,620
    
    
    
    23,443Total assets
    
    $
    3,979,261
    
    
    $
    3,333,457LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable, trade
    
    $
    185,111
    
    
    $
    146,385Accrued expenses and other current liabilities (Note 9)
    
    
    280,880
    
    
    
    241,275Current portion of long-term debt (Note 10)
    
    
    40,400
    
    
    
    40,296Total current liabilities
    
    
    506,391
    
    
    
    427,956Long-term debt, excluding current portion (Note 10)
    
    
    1,539,648
    
    
    
    1,309,719Deferred income tax liability, net (Note 6)
    
    
    439,782
    
    
    
    373,246Other non-current liabilities
    
    
    80,104
    
    
    
    39,963Minority interest in affiliate (Note 13)
    
    
    
    
    
    
    57,191Commitments and contingencies (Note 19)Stockholders Equity(Note 14)Preferred stock, no par value, 20,000 shares authorized, no shares issued or
outstanding in 2008 and 2007
    
    
    
    
    
    
    Common stock, par value $0.01 per share, 200,000 shares authorized,
84,076 and 79,960 shares issued at 2008 and 2007, respectively
    
    
    841
    
    
    
    799Capital in excess of par value
    
    
    468,302
    
    
    
    341,101Retained earnings
    
    
    983,663
    
    
    
    792,433Accumulated other comprehensive income (loss)
    
    
    (4,713
    )
    
    
    4,183Treasury stock, 1,788 and 1,292 common shares at cost at 2008 and 2007, respectively
    
    
    (34,757
    )
    
    
    (13,134
    )Total stockholders equity
    
    
    1,413,336
    
    
    
    1,125,382Total liabilities and stockholders equity
    
    $
    3,979,261
    
    
    $
    3,333,457
  F-7




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Years Ended March 31, 2008, 2007, and 2006Shares of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedCommon
    
    
    
    
    
    
    Capital in
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    EmployeeStock $0.01
    
    
    Common
    
    
    Excess of
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    Benefits
    
    
    Comprehensive(In thousands)
    
    Par Value
    
    
    Stock
    
    
    Par Value
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    Trust
    
    
    IncomeBalance  March 31, 2005
    
    
    77,467
    
    
    $
    775
    
    
    $
    257,042
    
    
    $
    560,056
    
    
    $
    2,609
    
    
    $
    (3,765
    )
    
    $
    (2,545
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,551
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,551Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,012
    
    
    
    
    
    
    
    
    
    
    
    1,012Shares issued in connection with
stock options exercised (Note 15)
    
    
    570
    
    
    
    6
    
    
    
    14,136
    
    
    
    
    
    
    
    
    
    
    
    3,402
    
    
    
    2,545Purchase of treasury stock (Note 14)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,771
    )Dividends paid on common stock
($0.24 per share) (Note 14)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,449
    )Tax benefit associated with the exercise
of stock options
    
    
    
    
    
    
    
    
    
    
    7,891Shares issued in connection with the
Employee Stock Purchase Plan (Note 15)
    
    
    532
    
    
    
    5
    
    
    
    10,529Net change in fair value of interest rate swap
agreements (Note 12)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    867
    
    
    
    
    
    
    
    
    
    
    
    867Net change in fair value of National Welders
interest rate swap agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    885
    
    
    
    
    
    
    
    
    
    
    
    885Net tax expense of comprehensive income items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (622
    )
    
    
    
    
    
    
    
    
    
    
    (622
    )Balance  March 31, 2006
    
    
    78,569
    
    
    $
    786
    
    
    $
    289,598
    
    
    $
    665,158
    
    
    $
    4,751
    
    
    $
    (13,134
    )
    
    $
    
    
    
    $
    125,693Cumulative adjustment to retained earnings for
adoption of SAB 108, net of tax (Note 2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,161
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154,416
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154,416Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Shares issued in connection with
stock options exercised (Note 15)
    
    
    960
    
    
    
    10
    
    
    
    15,097Dividends paid on common stock
($0.28 per share) (Note 14)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,980
    )Tax benefit associated with the exercise
of stock options
    
    
    
    
    
    
    
    
    
    
    9,013Shares issued in connection with the
Employee Stock Purchase Plan (Note 15)
    
    
    431
    
    
    
    3
    
    
    
    11,948Expense related to stock-based compensation (Note 15)
    
    
    
    
    
    
    
    
    
    
    15,445Net change in fair value of interest rate swap
agreements (Note 12)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,222
    )
    
    
    
    
    
    
    
    
    
    
    (1,222
    )Net change in fair value of National Welders
interest rate swap agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    372
    
    
    
    
    
    
    
    
    
    
    
    372Net tax benefit of comprehensive income items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    280
    
    
    
    
    
    
    
    
    
    
    
    280Balance  March 31, 2007
    
    
    79,960
    
    
    $
    799
    
    
    $
    341,101
    
    
    $
    792,433
    
    
    $
    4,183
    
    
    $
    (13,134
    )
    
    $
    
    
    
    $
    153,848Cumulative adjustment to retained earnings for
adoption of FIN 48 (Note 6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (290
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    223,348
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    223,348Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,738
    
    
    
    
    
    
    
    
    
    
    
    4,738Shares issued in connection with
stock options exercised (Note 15)
    
    
    1,238
    
    
    
    13
    
    
    
    20,368Dividends paid on common stock
($0.39 per share) (Note 14)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,828
    )Tax benefit associated with the exercise
of stock options
    
    
    
    
    
    
    
    
    
    
    13,327Shares issued in connection with the
Employee Stock Purchase Plan (Note 15)
    
    
    407
    
    
    
    4
    
    
    
    14,087Expense related to stock-based compensation (Note 15)
    
    
    
    
    
    
    
    
    
    
    15,587Purchase of treasury stock (Note 14)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,623
    )Net change in fair value of interest rate swap
agreements (Note 12)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,956
    )
    
    
    
    
    
    
    
    
    
    
    (20,956
    )National Welders exchange transaction (Note 13)
    
    
    2,471
    
    
    
    25
    
    
    
    63,832Net tax benefit of comprehensive income items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,322
    
    
    
    
    
    
    
    
    
    
    
    7,322Balance  March 31, 2008
    
    
    84,076
    
    
    $
    841
    
    
    $
    468,302
    
    
    $
    983,663
    
    
    $
    (4,713
    )
    
    $
    (34,757
    )
    
    $
    
    
    
    $
    214,452
  F-8




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended March 31,(In thousands)
    
    2008
    
    2007
    
    2006CASH FLOWS FROM OPERATING ACTIVITIESNet earnings
    
    $
    223,348
    
    
    $
    154,416
    
    
    $
    123,551Adjustments to reconcile net earnings to net cash provided by
operating activities:Depreciation
    
    
    175,802
    
    
    
    138,818
    
    
    
    122,396Amortization
    
    
    13,973
    
    
    
    8,525
    
    
    
    5,146Deferred income taxes
    
    
    74,725
    
    
    
    51,911
    
    
    
    47,148Loss on divestiture
    
    
    
    
    
    
    
    
    
    
    1,900Loss (gain) on sales of plant and equipment
    
    
    714
    
    
    
    39
    
    
    
    (1,330
    )Minority interest in earnings
    
    
    3,230
    
    
    
    2,845
    
    
    
    2,656Stock-based compensation expense
    
    
    16,629
    
    
    
    15,445
    
    
    
    Loss on debt extinguishment
    
    
    
    
    
    
    12,099
    
    
    
    Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    2,540Changes in assets and liabilities, excluding effects of business
acquisitions and divestitures:Securitization of trade receivables
    
    
    95,600
    
    
    
    20,200
    
    
    
    54,300Trade receivables, net
    
    
    (23,308
    )
    
    
    (37,687
    )
    
    
    (17,021
    )Inventories, net
    
    
    (37,079
    )
    
    
    (1,491
    )
    
    
    (14,087
    )Prepaid expenses and other current assets
    
    
    1,693
    
    
    
    (23,326
    )
    
    
    12,603Accounts payable, trade
    
    
    8,053
    
    
    
    (15,163
    )
    
    
    (4,057
    )Accrued expenses and other current liabilities
    
    
    (749
    )
    
    
    266
    
    
    
    9,323Other non-current assets
    
    
    (81
    )
    
    
    1,809
    
    
    
    3,340Other non-current liabilities
    
    
    (2,624
    )
    
    
    (2,363
    )
    
    
    (2,363
    )Net cash provided by operating activities
    
    
    549,926
    
    
    
    326,343
    
    
    
    346,045CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
    
    
    (267,378
    )
    
    
    (238,274
    )
    
    
    (208,603
    )Proceeds from sales of plant and equipment
    
    
    9,345
    
    
    
    8,685
    
    
    
    8,202Proceeds from divestitures
    
    
    
    
    
    
    
    
    
    
    14,562Business acquisitions and holdback settlements
    
    
    (480,096
    )
    
    
    (687,892
    )
    
    
    (153,428
    )Other, net
    
    
    (1,316
    )
    
    
    (474
    )
    
    
    170Net cash used in investing activities
    
    
    (739,445
    )
    
    
    (917,955
    )
    
    
    (339,097
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from borrowings
    
    
    1,162,452
    
    
    
    1,577,967
    
    
    
    568,379Repayment of debt
    
    
    (953,749
    )
    
    
    (1,008,186
    )
    
    
    (606,532
    )Purchase of treasury stock
    
    
    (17,010
    )
    
    
    
    
    
    
    (12,771
    )Financing costs
    
    
    
    
    
    
    (5,103
    )
    
    
    Premium paid on call of senior subordinated notes
    
    
    
    
    
    
    (10,267
    )
    
    
    Minority interest in earnings
    
    
    (711
    )
    
    
    (2,845
    )
    
    
    (2,656
    )Minority stockholder note prepayment
    
    
    
    
    
    
    
    
    
    
    21,000Proceeds from the exercise of stock options
    
    
    20,381
    
    
    
    15,107
    
    
    
    19,707Stock issued for the employee stock purchase plan
    
    
    14,091
    
    
    
    11,951
    
    
    
    10,534Tax benefit realized from the exercise of stock options
    
    
    13,327
    
    
    
    9,013
    
    
    
    Dividends paid to stockholders
    
    
    (31,828
    )
    
    
    (21,980
    )
    
    
    (18,449
    )Change in cash overdraft
    
    
    (317
    )
    
    
    16,901
    
    
    
    16,185Net cash provided by (used in) financing activities
    
    
    206,636
    
    
    
    582,558
    
    
    
    (4,603
    )CHANGE IN CASH
    
    $
    17,117
    
    
    $
    (9,054
    )
    
    $
    2,345Cash  Beginning of year
    
    
    25,931
    
    
    
    34,985
    
    
    
    32,640Cash  End of year
    
    $
    43,048
    
    
    $
    25,931
    
    
    $
    34,985
 
 F-9




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  ( ) Description of the Business
  Basis of Presentation
   Reclassifications and Prior Period Adjustments
  ) Cash and Cash Overdraft
  F-10




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Allowance for Doubtful Accounts
  Inventories
  Plant and Equipment
  Goodwill, Other Intangible Assets and Deferred Financing Costs
   F-11




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Asset Retirement Obligations
  Commitments and Contingencies
    Income Taxes
   F-12




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Foreign Currency Translation
  Concentrations of Credit Risk
  Financial Instruments
 Accounting for Derivative Instruments and Certain Hedging Activities,
  Revenue Recognition
  F-13




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Cost of Products Sold
   Selling, Distribution and Administrative Expenses
  Depreciation
  Shipping and Handling Fees and Distribution Costs
  F-14




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (a) Accounting pronouncements adopted in fiscal 2008
 SFAS 155
 Accounting for Certain Hybrid Financial Instruments,
 SFAS 156
 Accounting for Servicing of
Financial Assets,
 EITF 06-3
 How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented
in the Income Statement,
 FIN 48
 Accounting for
Uncertainty in Income Taxes,
 SAB 108
 Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current
Year Financial Statements,
 F-15




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Accounting for Leases
   BeginningDeferred Cylinder
    
    
    Straight-Line
    
    
    Retained EarningsRent
    
    
    Real Estate Leases
    
    
    Balance(In thousands)
    
    Dr (Cr)
    
    
    Dr (Cr)
    
    
    Dr (Cr)Beginning retained earnings as of April 1, 2006
    
    
    
    
    
    
    
    
    
    $
    (665,158
    )Deferred tax asset
    
    $
    5,581
    
    
    $
    
    
    
    
    (5,581
    )Goodwill
    
    
    5,351
    
    
    
    
    
    
    
    (5,351
    )Accrued real estate leases
    
    
    
    
    
    
    (3,269
    )
    
    
    3,269Deferred cylinder rental income
    
    
    (14,091
    )
    
    
    
    
    
    
    14,091Long-term
portion of deferred tax liability
    
    
    
    
    
    
    1,267
    
    
    
    (1,267
    )Cumulative adjustment to beginning retained
earnings
    
    
    
    
    
    
    
    
    
    
    5,161Adjusted beginning retained earnings
as of April 1, 2006
    
    
    
    
    
    
    
    
    
    $
    (659,997
    )
 F-16




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  FASB Financial Interpretation No. 47
 Accounting for
Conditional Asset Retirement Obligations, conditional
asset retirement obligation Accounting for Asset Retirement Obligations,
  (b) Accounting pronouncements issued but not yet adopted
 SFAS 141R
 Business combinations
 SFAS 157
 Fair Value Measurements, Effective Date of FASB Statement No. 157
 F-17




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  SFAS 159
 The Fair Value Option for Financial Assets and
Financial Liabilities,
 SFAS 160
 Non-controlling Interests in Consolidated
Financial Statements
 SFAS 161
 Disclosures about Derivatives and Hedging
Activities Accounting for
Derivatives and Hedging Activities
  (a) Acquisitions
  Fiscal 2008
  F-18




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Purchase Price Allocation
   Linde
    
    
    RemainingAcquisitions
    
    
    AcquisitionsAll Other
    
    
    
    
    
    
    All OtherDistribution
    
    
    Operations
    
    
    Distribution
    
    
    Operations(In
thousands)
    
    Segment
    
    
    Segment
    
    
    Segment
    
    
    Segment
    
    
    TotalCurrent assets, net
    
    $
    69,041
    
    
    $
    16,186
    
    
    $
    31,171
    
    
    $
    1,341
    
    
    $
    117,739Property and equipment
    
    
    160,940
    
    
    
    (7,184
    )
    
    
    68,132
    
    
    
    4,723
    
    
    
    226,611Goodwill
    
    
    88,330
    
    
    
    (33,616
    )
    
    
    78,444
    
    
    
    1,049
    
    
    
    134,207Other intangible assets
    
    
    61,584
    
    
    
    12,025
    
    
    
    23,123
    
    
    
    3,768
    
    
    
    100,500Current liabilities
    
    
    (40,344
    )
    
    
    (6,969
    )
    
    
    (15,582
    )
    
    
    (2,214
    )
    
    
    (65,109
    )Long-term liabilities
    
    
    (7,336
    )
    
    
    (2,667
    )
    
    
    (22,903
    )
    
    
    (946
    )
    
    
    (33,852
    )Inter-segment transfers
    
    
    (78,707
    )
    
    
    78,707
    
    
    
    
    
    
    
    
    
    
    
    Total cash consideration
    
    $
    253,508
    
    
    $
    56,482
    
    
    $
    162,385
    
    
    $
    7,721
    
    
    $
    480,096
  F-19




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  All OtherDistribution
    
    
    Operations(In thousands)
    
    Segment
    
    
    Segment
    
    
    TotalCurrent assets, net
    
    $
    87,261
    
    
    $
    24,890
    
    
    $
    112,151Property and equipment
    
    
    240,411
    
    
    
    215,733
    
    
    
    456,144Goodwill
    
    
    175,035
    
    
    
    46,599
    
    
    
    221,634Other intangible assets
    
    
    74,299
    
    
    
    16,010
    
    
    
    90,309Current liabilities
    
    
    (40,414
    )
    
    
    (23,153
    )
    
    
    (63,567
    )Long-term liabilities
    
    
    (8,827
    )
    
    
    (3,044
    )
    
    
    (11,871
    )Total cash consideration
    
    $
    527,765
    
    
    $
    277,035
    
    
    $
    804,800
  Severence
    
    
    Facility Exit
    
    
    Other Integration
    
    
    Total Integration(In thousands)
    
    Accruals
    
    
    Accruals
    
    
    Accruals
    
    
    AccrualsAmounts orginally included in
purchase accounting
    
    $
    5,265
    
    
    $
    5,700
    
    
    $
    
    
    
    $
    10,965Payments
    
    
    (2,781
    )
    
    
    (873
    )
    
    
    (962
    )
    
    
    (4,616
    )Adjustments
    
    
    892
    
    
    
    369
    
    
    
    6,213
    
    
    
    7,474March 31, 2008 Balance
    
    $
    3,376
    
    
    $
    5,196
    
    
    $
    5,251
    
    
    $
    13,823
  F-20




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Pro Forma Operating Results
  Unaudited 
Year Ended March 31,(In thousands, except per share amounts)
    
    2008
    
    2007Net sales
    
    $
    4,205,464
    
    
    $
    3,950,425Net earnings
    
    
    224,303
    
    
    
    160,283Diluted earnings per share
    
    $
    2.67
    
    
    $
    1.99
 Fiscal 2007
  F-21




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Purchase Price Allocation
  Linde Bulk Gas
    
    
    RemainingAcquisition
    
    
    AcquisitionsAll Other
    
    
    
    
    
    
    All OtherDistribution
    
    
    Operations
    
    
    Distribution
    
    
    Operations(In thousands)
    
    Segment
    
    
    Segment
    
    
    Segment
    
    
    Segment
    
    
    TotalCurrent assets, net
    
    $
    18,220
    
    
    $
    8,704
    
    
    $
    26,694
    
    
    $
    9,745
    
    
    $
    63,363Property and equipment
    
    
    79,471
    
    
    
    222,917
    
    
    
    66,572
    
    
    
    1,653
    
    
    
    370,613Goodwill
    
    
    86,705
    
    
    
    80,215
    
    
    
    70,194
    
    
    
    23,480
    
    
    
    260,594Other intangible assets
    
    
    12,715
    
    
    
    3,985
    
    
    
    20,400
    
    
    
    7,442
    
    
    
    44,542Current liabilities
    
    
    (70
    )
    
    
    (16,184
    )
    
    
    (23,303
    )
    
    
    264
    
    
    
    (39,293
    )Long-term liabilities
    
    
    (1,491
    )
    
    
    (377
    )
    
    
    (5,682
    )
    
    
    (4,377
    )
    
    
    (11,927
    )Total cash consideration
    
    $
    195,550
    
    
    $
    299,260
    
    
    $
    154,875
    
    
    $
    38,207
    
    
    $
    687,892
 Pro Forma Operating Results
  UnauditedYears Ended March 31,(In thousands, except per share amounts)
    
    2007
    
    2006Net sales
    
    $
    3,449,150
    
    
    $
    3,188,787Net earnings
    
    
    162,029
    
    
    
    128,302Diluted earnings per share
    
    $
    2.01
    
    
    $
    1.63
 F-22




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Fiscal 2006
  Purchase Price Allocation
  All OtherDistribution
    
    
    Operations(In thousands)
    
    Segment
    
    
    Segment
    
    
    TotalCurrent assets, net
    
    $
    13,146
    
    
    $
    17,045
    
    
    $
    30,191Property and equipment
    
    
    23,668
    
    
    
    23,757
    
    
    
    47,425Goodwill
    
    
    21,409
    
    
    
    32,723
    
    
    
    54,132Other intangible assets
    
    
    7,328
    
    
    
    7,519
    
    
    
    14,847Current liabilities
    
    
    (4,817
    )
    
    
    (6,926
    )
    
    
    (11,743
    )Contingent consideration
    
    
    (6,286
    )
    
    
    (266
    )
    
    
    (6,552
    )Total cash consideration
    
    $
    54,448
    
    
    $
    73,852
    
    
    $
    128,300
  F-23




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (b) Divestitures
 Fiscal 2006
     ,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
  F-24




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   March 31,(In thousands)
    
    2008
    
    2007Hardgoods
    
    $
    275,611
    
    
    $
    218,348Gases
    
    
    55,121
    
    
    
    31,960$
    330,732
    
    
    $
    250,308
    Years Ended March 31,(In thousands)
    
    2008
    
    2007
    
    2006United States
    
    $
    358,381
    
    
    $
    246,699
    
    
    $
    200,039Foreign
    
    
    12,381
    
    
    
    10,445
    
    
    
    7,998$
    370,762
    
    
    $
    257,144
    
    
    $
    208,037
  Years Ended March 31,(In thousands)
    
    2008
    
    2007
    
    2006Current:Federal
    
    $
    60,221
    
    
    $
    41,760
    
    
    $
    26,551Foreign
    
    
    3,718
    
    
    
    2,725
    
    
    
    2,673State
    
    
    5,520
    
    
    
    3,487
    
    
    
    1,49469,459
    
    
    
    47,972
    
    
    
    30,718Deferred:Federal
    
    
    62,351
    
    
    
    46,440
    
    
    
    43,672Foreign
    
    
    484
    
    
    
    491
    
    
    
    98State
    
    
    11,890
    
    
    
    4,980
    
    
    
    3,37874,725
    
    
    
    51,911
    
    
    
    47,148$
    144,184
    
    
    $
    99,883
    
    
    $
    77,866
 F-25




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Years Ended March 31,2008
    
    2007
    
    2006Taxes at U.S. federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Increase (decrease) in income taxes resulting from:State income taxes, net of federal benefit
    
    
    3.3
    %
    
    
    2.9
    %
    
    
    2.2
    %Stock-based compensation expense
    
    
    0.3
    %
    
    
    0.5
    %
    
    
    Change in state tax law
    
    
    (0.3
    %)
    
    
    (0.8
    %)
    
    
    Other, net
    
    
    0.6
    %
    
    
    1.2
    %
    
    
    0.2
    %38.9
    %
    
    
    38.8
    %
    
    
    37.4
    %
  March 31,(In thousands)
    
    2008
    
    2007Deferred Tax Assets:Inventories
    
    $
    10,881
    
    
    $
    9,177Deferred rental income
    
    
    14,480
    
    
    
    12,468Insurance reserves
    
    
    9,864
    
    
    
    10,466Litigation settlement and other reserves
    
    
    1,634
    
    
    
    2,745Asset retirement obligations
    
    
    3,513
    
    
    
    792Net operating loss carryforwards
    
    
    20,424
    
    
    
    20,217Stock-based compensation
    
    
    8,801
    
    
    
    4,263Other
    
    
    16,011
    
    
    
    10,204Valuation allowance
    
    
    (5,098
    )
    
    
    (5,432
    )80,510
    
    
    
    64,900Deferred Tax Liabilities:Accounts receivable
    
    
    (1,379
    )
    
    
    (2,683
    )Plant and equipment
    
    
    (414,961
    )
    
    
    (338,431
    )Intangible assets
    
    
    (66,211
    )
    
    
    (49,323
    )Other
    
    
    (15,483
    )
    
    
    (16,705
    )(498,034
    )
    
    
    (407,142
    )Net deferred tax liability
    
    $
    (417,524
    )
    
    $
    (342,242
    )
 F-26




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   March 31,(In thousands)
    
    2008
    
    
    2007Current deferred tax asset, net
    
    $
    22,258
    
    
    $
    31,004Non-current deferred tax liability, net
    
    
    (439,782
    )
    
    
    (373,246
    )Net deferred tax liability
    
    $
    (417,524
    )
    
    $
    (342,242
    )
       F-27




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (In thousands)Unrecognized income tax benefits as of April 1, 2007
    
    $
    7,040Additions for tax positions of prior years
    
    
    276Additions for current year tax positions
    
    
    402Reductions for settlements with taxing authorities
    
    
    (399
    )Reductions as a result of expirations of applicable statutes of limitations
    
    
    (356
    )Unrecognized income tax benefits as of March 31, 2008
    
    $
    6,963
     Depreciable

    
    March 31,(In thousands)
    
    Lives (Yrs)

    
    2008
    
    
    2007Land and land improvements
    
    
    
    
    
    $
    118,019
    
    
    $
    89,522Buildings and leasehold
improvements
    
    
    25
    
    
    
    306,308
    
    
    
    265,146Cylinders
    
    
    30
    
    
    
    1,218,959
    
    
    
    972,487Bulk tank stations
    
    
    10 to 30
    (Average 21)
    
    
    402,352
    
    
    
    365,630Rental equipment
    
    
    3 to 10
    
    
    
    199,794
    
    
    
    154,240Machinery and equipment
    
    
    7 to 10
    
    
    
    593,758
    
    
    
    581,805Computers, furniture and
fixtures
    
    
    3 to 10
    
    
    
    146,387
    
    
    
    130,755Transportation equipment
    
    
    3 to 15
    
    
    
    200,892
    
    
    
    178,152Construction in progress
    
    
    
    
    
    
    46,204
    
    
    
    18,010$
    3,232,673
    
    
    $
    2,755,747
 F-28




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   All OtherDistribution
    
    Operations(In thousands)
    
    Segment
    
    Segment
    
    TotalBalance at March 31, 2006
    
    $
    402,582
    
    
    $
    163,492
    
    
    $
    566,074Acquisitions
    
    
    156,899
    
    
    
    103,695
    
    
    
    260,594Other adjustments
    
    
    (157
    )
    
    
    300
    
    
    
    143SAB 108 adjustments
    
    
    5,351
    
    
    
    
    
    
    
    5,351Balance at March 31, 2007
    
    $
    564,675
    
    
    $
    267,487
    
    
    $
    832,162Acquisitions
    
    
    171,274
    
    
    
    (37,090
    )
    
    
    134,184Other adjustments
    
    
    2,602
    
    
    
    111
    
    
    
    2,713Balance at March 31, 2008
    
    $
    738,551
    
    
    $
    230,508
    
    
    $
    969,059
  Goodwill and Other Intangible Assets
  F-29




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   March 31,(In thousands)
    
    2008
    
    
    2007Accrued payroll and employee benefits
    
    $
    86,490
    
    
    $
    71,685Business insurance reserves
    
    
    29,430
    
    
    
    26,390Deferred rental revenue
    
    
    22,641
    
    
    
    19,797Taxes other than income taxes
    
    
    22,628
    
    
    
    14,771Cash overdraft
    
    
    56,739
    
    
    
    57,056Other accrued expenses and current liabilities
    
    
    62,952
    
    
    
    51,576$
    280,880
    
    
    $
    241,275
   March 31,(In thousands)
    
    2008
    
    
    2007Revolving credit borrowings
    
    $
    883,291
    
    
    $
    489,398Term loans
    
    
    487,500
    
    
    
    577,500Money market loans
    
    
    30,000
    
    
    
    30,000Senior subordinated notes
    
    
    150,000
    
    
    
    150,000Acquisition and other notes
    
    
    29,257
    
    
    
    17,440National Welders debt
    
    
    
    
    
    
    85,677Total long-term debt
    
    
    1,580,048
    
    
    
    1,350,015Less current portion of long-term debt
    
    
    (40,400
    )
    
    
    (40,296
    )Long-term debt, excluding current portion
    
    $
    1,539,648
    
    
    $
    1,309,719
 Senior Credit Facility
  F-30




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     Money Market Loans
  .
 F-31




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Senior Subordinated Notes
    Acquisition and Other Notes
  Refinancing of National Welders Debt
  F-32




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Aggregate Long-term Debt Maturities
  (In thousands)Years Ending March 31,2009 (1)
    
    $
    40,4002010
    
    
    100,1372011
    
    
    241,5592012
    
    
    1,045,9772013
    
    
    718Thereafter
    
    
    151,257$
    1,580,048
 
 (1)
    
    The Company has the ability and intention of refinancing current maturities
related to the term loans under its Credit Facility with its long-term revolving
credit line. Therefore, principal payments due in fiscal 2009 on the term loans have
been reflected as long term in the aggregate maturity schedule.    2008
    
    2008
    
    2007
    
    2007Carrying
    
    Fair
    
    Carrying
    
    Fair(In thousands)
    
    Value
    
    Value
    
    Value
    
    ValueFinancial Instruments:Revolving credit borrowings
    
    $
    883,291
    
    
    $
    883,291
    
    
    $
    489,398
    
    
    $
    489,398Term loans
    
    
    487,500
    
    
    
    487,500
    
    
    
    577,500
    
    
    
    577,500Money market loans
    
    
    30,000
    
    
    
    30,000
    
    
    
    30,000
    
    
    
    30,000Senior subordinated notes
    
    
    150,000
    
    
    
    148,125
    
    
    
    150,000
    
    
    
    146,250Acquisition and other notes
    
    
    29,257
    
    
    
    29,662
    
    
    
    17,440
    
    
    
    17,440National Welders debt
    
    
    
    
    
    
    
    
    
    
    85,677
    
    
    
    85,677Interest rate swap agreements:- Cash flow hedge  (asset) liability
    
    
    20,850
    
    
    
    20,850
    
    
    
    (106
    )
    
    
    (106
    )
 F-33




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
       Consolidation of
Variable Interest Entities
 F-34




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Common Stock
  Preferred Stock and Redeemable Preferred Stock
 Stockholder Rights Plan
  Dividends
  F-35




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Stockholder Rights Plan
   Stock Repurchase Plan
  Employee Benefits Trust
  F-36




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Share-Based Payment,
 (In thousands)
    
    Fiscal Years Ended March 31,Stock-based compensation expense related to:
    
    2008
    
    
    2007Stock option plans
    
    $
    12,660
    
    
    $
    12,164Employee Stock Purchase Plan  options to purchase stock
    
    
    3,969
    
    
    
    3,28116,629
    
    
    
    15,445Tax benefit
    
    
    (5,282
    )
    
    
    (4,589
    )Stock-based compensation expense, net of tax
    
    $
    11,347
    
    
    $
    10,856
 Prior Period Pro Forma Earnings
 Accounting for
Stock-Based Compensation,
 Year EndedMarch 31,(In thousands, except per share amounts)
    
    2006Net earnings, as reported
    
    $
    123,551Deduct: Total stock-based employee compensation expense determined under fair
value based methods for all awards, net of related tax effects
    
    
    (8,035
    )Pro forma net earnings
    
    $
    115,516Earnings per share:Basic  as reported
    
    $
    1.61Basic  pro forma
    
    $
    1.51Diluted  as reported
    
    $
    1.57Diluted  pro forma
    
    $
    1.47
 F-37




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  2006 Equity Incentive Plan
   Fair Value
  Fiscal 2008
    
    Fiscal 2007
    
    Fiscal 2006Expected volatility
    
    
    30.8
    %
    
    
    36.2
    %
    
    
    35.3
    %Expected dividend yield
    
    
    0.82
    %
    
    
    0.80
    %
    
    
    0.83
    %Expected term
    
    5.6 years
    
    5.4 years
    
    6.4 yearsRisk-free interest rate
    
    
    4.7
    %
    
    
    5.0
    %
    
    
    3.9
    %
  F-38




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Summary of Stock Option Activity
  Weighted-Average
    
    
    AggregateNumber of
    
    
    Exercise Price
    
    
    Intrinsic ValueStock Options
    
    
    Per Share
    
    
    (In thousands)Outstanding at March 31, 2005
    
    
    7,363,301
    
    
    $
    14.95Granted
    
    
    1,063,200
    
    
    $
    24.30Exercised
    
    
    (1,337,944
    )
    
    $
    14.73Forfeited
    
    
    (94,739
    )
    
    $
    17.86Outstanding at March 31, 2006
    
    
    6,993,818
    
    
    $
    16.37
    
    
    $
    158,900Granted
    
    
    991,440
    
    
    $
    36.19Exercised
    
    
    (967,590
    )(1)
    
    $
    15.91Forfeited
    
    
    (134,694
    )
    
    $
    26.09Outstanding at March 31, 2007
    
    
    6,882,974
    
    
    $
    19.12
    
    
    $
    158,515Granted
    
    
    1,082,550
    
    
    $
    43.94Exercised
    
    
    (1,238,457
    )
    
    $
    16.46Forfeited
    
    
    (94,364
    )
    
    $
    32.18Outstanding at March 31, 2008
    
    
    6,632,703
    
    
    $
    23.52
    
    
    $
    145,588Vested or expected to vest as of
March 31, 2008
    
    
    6,062,291
    
    
    $
    23.52
    
    
    $
    133,067Exercisable
as of March 31, 2008
    
    
    4,325,724
    
    
    $
    17.17
    
    
    $
    122,418
 
 (1)
    
    Actual shares issued associated with stock option exercises was 960 thousand due to a net share issue exercise.   F-39




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Employee Stock Purchase Plan
    ESPP Purchase Option Assumptions:
 Fiscal 2008
    
    Fiscal 2007
    
    Fiscal 2006Expected volatility
    
    
    23.6
    %
    
    
    30.8
    %
    
    
    27.1
    %Expected dividend yield
    
    
    0.86
    %
    
    
    0.73
    %
    
    
    0.90
    %Expected term
    
    
    3 to 12 months
    
    
    
    2 to 8 months
    
    
    
    3 to 12 monthsRisk-free interest rate
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    3.1
    %
 F-40




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Weighted-Average
    
    
    AggregateNumber of
    
    
    Exercise Price
    
    
    Intrinsic ValuePurchase Options
    
    
    Per Share
    
    
    (In thousands)Outstanding at March 31, 2005
    
    
    136,358
    
    
    $
    18.45Granted
    
    
    533,245
    
    
    $
    20.33Exercised
    
    
    (531,916
    )
    
    $
    19.80Outstanding at March 31, 2006
    
    
    137,687
    
    
    $
    20.50
    
    
    $
    2,560Granted
    
    
    395,587
    
    
    $
    31.10Exercised
    
    
    (430,519
    )
    
    $
    27.76Outstanding at March 31, 2007
    
    
    102,755
    
    
    $
    30.86
    
    
    $
    1,160Granted
    
    
    412,917
    
    
    $
    36.00Exercised
    
    
    (407,038
    )
    
    $
    34.62Outstanding at March 31, 2008
    
    
    108,634
    
    
    $
    36.21
    
    
    $
    1,006
   Years Ended March 31,(In thousands)
    
    2008
    
    2007
    
    2006Interest expense
    
    $
    92,584
    
    
    $
    62,095
    
    
    $
    55,740Interest and finance charge (income)
    
    
    (2,724
    )
    
    
    (1,915
    )
    
    
    (1,928
    )$
    89,860
    
    
    $
    60,180
    
    
    $
    53,812
   F-41




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   (In thousands, except per share amounts)

    
    Years Ended March 31,2008
    
    
    2007
    
    
    2006Basic Earnings per Share ComputationNumerator:Income from continuing operation
    
    $
    223,348
    
    
    $
    154,416
    
    
    $
    127,515Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (1,424
    )Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (2,540
    )Net earnings
    
    $
    223,348
    
    
    $
    154,416
    
    
    $
    123,551Denominator:Basic shares outstanding
    
    
    81,402
    
    
    
    78,025
    
    
    
    76,624Basic earnings per share from continuing operations
    
    $
    2.74
    
    
    $
    1.98
    
    
    $
    1.66Basic loss per share from discontinued
operations
    
    
    
    
    
    
    
    
    
    
    (0.02
    )Basic loss from the cumulative effect of a change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.03
    )Basic net earnings per share
    
    $
    2.74
    
    
    $
    1.98
    
    
    $
    1.61
 Years Ended March 31,2008 (2)
    
    
    2007 (1)
    
    
    2006 (1)Diluted Earnings per Share ComputationNumerator:Income from continuing operations
    
    $
    223,348
    
    
    $
    154,416
    
    
    $
    127,515Plus: Preferred stock dividends
    
    
    711
    
    
    
    2,845
    
    
    
    2,845Plus: Income taxes on earnings of National Welders
    
    
    245
    
    
    
    1,166
    
    
    
    730Income from continuing operations assuming preferred
stock conversion
    
    
    224,304
    
    
    
    158,427
    
    
    
    131,090Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (1,424
    )Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (2,540
    )Net earnings assuming preferred stock conversion
    
    $
    224,304
    
    
    $
    158,427
    
    
    $
    127,126Denominator:Basic shares outstanding
    
    
    81,402
    
    
    
    78,025
    
    
    
    76,624Incremental shares from assumed conversions:Stock options
    
    
    2,242
    
    
    
    2,214
    
    
    
    2,201Preferred stock of National Welders
    
    
    591
    
    
    
    2,327
    
    
    
    2,327Diluted shares outstanding
    
    
    84,235
    
    
    
    82,566
    
    
    
    81,152Diluted earnings per share from continuing operations
    
    $
    2.66
    
    
    $
    1.92
    
    
    $
    1.62Diluted loss per share from discontinued
operations
    
    
    
    
    
    
    
    
    
    
    (0.02
    )Diluted loss from the cumulative effect of a change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.03
    )Diluted net earnings per share
    
    $
    2.66
    
    
    $
    1.92
    
    
    $
    1.57
 F-42




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (1)
    
    Prior to the July 3, 2007 National Welders Exchange Transaction, the preferred
stockholders of National Welders had the option to exchange their 3.2 million preferred
shares of National Welders either for cash at a price of $17.78 per share or for
approximately 2.3 million shares of Airgas common stock. If Airgas common stock had a
market value of $24.45 per share or greater, exchange of the preferred stock was assumed
because it provided greater value to the preferred stockholders. Based on the assumed
exchange of the preferred stock for Airgas common stock, the 2.3 million shares were
included in the diluted shares outstanding.The National Welders preferred stockholders earned a 5% dividend, recognized as Minority
interest in earnings of consolidated affiliate. Upon the exchange of the preferred stock
for Airgas common stock, the dividend would no longer be paid to the preferred stockholders,
resulting in additional net earnings for Airgas. For the periods in which the exchange was
assumed, the 5% preferred stock dividend was added back to net earnings in the diluted
earnings per share computation.For periods prior to the National Welders Exchange Transaction, the earnings of National
Welders for tax purposes were treated as a deemed dividend to Airgas, net of an 80% dividend
exclusion. Upon the exchange of National Welders preferred stock for Airgas common stock,
National Welders would become a 100% owned subsidiary of Airgas. As a 100% owned
subsidiary, the net earnings of National Welders would not be subject to additional tax at
the Airgas level. For periods in which the exchange was assumed, the additional tax was
added back to net earnings in the diluted earnings per share computation.(2)
    
    The diluted earnings per share computation for the year ended March 31, 2008 includes the
effect of the items described in (1) above, weighted to reflect the impact of the National
Welders Exchange Transaction.
  F-43




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (In thousands)Years Ending March 31,2009
    
    $
    76,5302010
    
    
    62,9502011
    
    
    66,1772012
    
    
    39,3032013
    
    
    23,444Thereafter
    
    
    24,395$
    292,799
  Legal
  Insurance Coverage
  F-44




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Supply Agreements
    Construction Commitments
  F-45




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Letters of Credit
       Minority stockholder note prepayment
  F-46




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Cash Paid for Interest and Taxes
  Years Ended March 31,(In thousands)
    
    2008
    
    2007
    
    2006Interest paid
    
    $
    93,450
    
    
    $
    72,418
    
    
    $
    56,361Discount on securitization
    
    
    17,031
    
    
    
    13,630
    
    
    
    9,371Income
taxes (net of refunds)
    
    
    52,254
    
    
    
    50,021
    
    
    
    21,641
 Significant Non-cash Investing and Financing Transactions
       F-47




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      All Other(In thousands)
    
    Distribution
    
    
    Operations
    
    
    Eliminations
    
    
    CombinedFiscal 2008Gas and rent
    
    $
    1,807,663
    
    
    $
    724,059
    
    
    $
    (159,293
    )
    
    $
    2,372,429Hardgoods
    
    
    1,536,401
    
    
    
    115,698
    
    
    
    (7,504
    )
    
    
    1,644,595Total net sales
    
    
    3,344,064
    
    
    
    839,757
    
    
    
    (166,797
    )
    
    
    4,017,024Cost of products
sold, excluding
deprec. expense
    
    
    1,672,181
    
    
    
    421,042
    
    
    
    (166,797
    )
    
    
    1,926,426Selling, distribution
and administrative
expenses
    
    
    1,141,032
    
    
    
    283,645
    
    
    
    
    
    
    
    1,424,677Depreciation
    
    
    132,300
    
    
    
    43,502
    
    
    
    
    
    
    
    175,802Amortization
    
    
    10,451
    
    
    
    3,522
    
    
    
    
    
    
    
    13,973Operating income
    
    $
    388,100
    
    
    $
    88,046
    
    
    $
    
    
    
    $
    476,146Assets
    
    $
    2,992,018
    
    
    $
    987,243
    
    
    
    
    
    
    $
    3,979,261Capital expenditures
    
    $
    186,445
    
    
    $
    80,933
    
    
    
    
    
    
    $
    267,378
 F-48




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  All Other(In thousands)
    
    Distribution
    
    
    Operations
    
    
    Eliminations
    
    
    CombinedFiscal 2007Gas and rent
    
    $
    1,399,186
    
    
    $
    485,209
    
    
    $
    (60,934
    )
    
    $
    1,823,461Hardgoods
    
    
    1,292,628
    
    
    
    94,462
    
    
    
    (5,500
    )
    
    
    1,381,590Total net sales
    
    
    2,691,814
    
    
    
    579,671
    
    
    
    (66,434
    )
    
    
    3,205,051Cost of products
sold, excluding
deprec. expense
    
    
    1,355,367
    
    
    
    278,157
    
    
    
    (66,434
    )
    
    
    1,567,090Selling, distribution
and administrative
expenses
    
    
    953,858
    
    
    
    195,308
    
    
    
    
    
    
    
    1,149,166Depreciation
    
    
    109,455
    
    
    
    29,363
    
    
    
    
    
    
    
    138,818Amortization
    
    
    6,426
    
    
    
    2,099
    
    
    
    
    
    
    
    8,525Operating income
    
    $
    266,708
    
    
    $
    74,744
    
    
    $
    
    
    
    $
    341,452Assets
    
    $
    2,401,500
    
    
    $
    931,957
    
    
    
    
    
    
    $
    3,333,457Capital expenditures
    
    $
    191,260
    
    
    $
    47,014
    
    
    
    
    
    
    $
    238,274
 All Other(In thousands)
    
    Distribution
    
    
    Operations
    
    
    Eliminations
    
    
    CombinedFiscal 2006Gas and rent
    
    $
    1,238,612
    
    
    $
    415,560
    
    
    $
    (54,242
    )
    
    $
    1,599,930Hardgoods
    
    
    1,157,326
    
    
    
    77,870
    
    
    
    (5,516
    )
    
    
    1,229,680Total net sales
    
    
    2,395,938
    
    
    
    493,430
    
    
    
    (59,758
    )
    
    
    2,829,610Cost of products
sold, excluding
deprec. expense
    
    
    1,223,435
    
    
    
    238,301
    
    
    
    (59,758
    )
    
    
    1,401,978Selling, distribution
and administrative
expenses
    
    
    864,192
    
    
    
    167,140
    
    
    
    
    
    
    
    1,031,332Depreciation
    
    
    95,615
    
    
    
    26,781
    
    
    
    
    
    
    
    122,396Amortization
    
    
    4,230
    
    
    
    916
    
    
    
    
    
    
    
    5,146Operating income
    
    $
    208,466
    
    
    $
    60,292
    
    
    $
    
    
    
    $
    268,758Assets
    
    $
    1,931,205
    
    
    $
    543,207
    
    
    
    
    
    
    $
    2,474,412Capital expenditures
    
    $
    170,429
    
    
    $
    38,174
    
    
    
    
    
    
    $
    208,603
 F-49




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   (In thousands, except per share amounts)
    
    First
    
    Second
    
    Third
    
    Fourth2008Net sales
    
    $
    915,099
    
    
    $
    1,007,283
    
    
    $
    1,008,045
    
    
    $
    1,086,597Operating income
    
    
    111,237
    
    
    
    115,389
    
    
    
    118,475
    
    
    
    131,045Net earnings (b)
    
    
    51,720
    
    
    
    50,609
    
    
    
    56,806
    
    
    
    64,213Basic earnings per share (a),(b)
    
    $
    0.65
    
    
    $
    0.62
    
    
    $
    0.69
    
    
    $
    0.78Diluted earnings per share (a),(b)
    
    $
    0.63
    
    
    $
    0.60
    
    
    $
    0.67
    
    
    $
    0.762007Net sales
    
    $
    773,036
    
    
    $
    790,747
    
    
    $
    787,407
    
    
    $
    853,861Operating income
    
    
    78,906
    
    
    
    84,263
    
    
    
    85,330
    
    
    
    92,953Net earnings (c)
    
    
    38,652
    
    
    
    39,547
    
    
    
    32,483
    
    
    
    43,734Basic earnings per share (a),(c)
    
    $
    0.50
    
    
    $
    0.51
    
    
    $
    0.42
    
    
    $
    0.56Diluted earnings per share (a),(c)
    
    $
    0.48
    
    
    $
    0.49
    
    
    $
    0.40
    
    
    $
    0.54
 
 a)
    
    Earnings per share calculations for each of the quarters are based on the weighted average
number of shares outstanding in each quarter. Therefore, the sum of the quarterly earnings
per share does not necessarily equal the full year earnings per share disclosed on the
Consolidated Statement of Earnings.b)
    
    The quarterly results for fiscal 2008 include a one-time, non-cash expense in the second
fiscal quarter of $2.5 million, or $0.03 per diluted share, related to the National Welders
Exchange Transaction through which the joint venture became a 100% owned subsidiary and a tax
benefit in the third fiscal quarter of $1.3 million, or $0.01 per diluted share, related to a
change in Texas state income tax law.c)
    
    The quarterly results for fiscal 2007 include a tax benefit in the first fiscal quarter of
$1.8 million, or $0.02 per diluted share, related to a change in the Texas state income tax
law and a charge of $12.1 million ($7.9 million after tax), or approximately $0.10 per diluted
share, in the fiscal third quarter for the early extinguishment of debt.   F-50




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    F-51




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Condensed Consolidating Balance Sheet
March 31, 2008
 Non-
    
    
    Elimination(In thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Entries
    
    
    ConsolidatedASSETSCurrent AssetsCash
    
    $
    
    
    
    $
    40,396
    
    
    $
    2,652
    
    
    $
    
    
    
    $
    43,048Trade receivables, net
    
    
    
    
    
    
    11,405
    
    
    
    172,164
    
    
    
    
    
    
    
    183,569Intercompany
receivable (payable)
    
    
    
    
    
    
    (2,385
    )
    
    
    2,385
    
    
    
    
    
    
    
    Inventories, net
    
    
    
    
    
    
    322,090
    
    
    
    8,642
    
    
    
    
    
    
    
    330,732Deferred income tax asset, net
    
    
    11,399
    
    
    
    12,995
    
    
    
    (2,136
    )
    
    
    
    
    
    
    22,258Prepaid expenses and other
current assets
    
    
    17,092
    
    
    
    40,409
    
    
    
    1,606
    
    
    
    
    
    
    
    59,107Total current assets
    
    
    28,491
    
    
    
    424,910
    
    
    
    185,313
    
    
    
    
    
    
    
    638,714Plant and equipment, net
    
    
    15,213
    
    
    
    2,135,949
    
    
    
    43,708
    
    
    
    
    
    
    
    2,194,870Goodwill
    
    
    
    
    
    
    951,650
    
    
    
    17,409
    
    
    
    
    
    
    
    969,059Other intangible assets, net
    
    
    
    
    
    
    148,105
    
    
    
    893
    
    
    
    
    
    
    
    148,998Investments in subsidiaries
    
    
    2,992,576
    
    
    
    
    
    
    
    
    
    
    
    (2,992,576
    )
    
    
    Other non-current assets
    
    
    16,121
    
    
    
    9,181
    
    
    
    2,318
    
    
    
    
    
    
    
    27,620Total assets
    
    $
    3,052,401
    
    
    $
    3,669,795
    
    
    $
    249,641
    
    
    $
    (2,992,576
    )
    
    $
    3,979,261LIABILITIES AND
STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable, trade
    
    $
    5,740
    
    
    $
    174,498
    
    
    $
    4,873
    
    
    $
    
    
    
    $
    185,111Accrued expenses and other
current liabilities
    
    
    103,533
    
    
    
    174,813
    
    
    
    2,534
    
    
    
    
    
    
    
    280,880Current portion of long-term debt
    
    
    30,000
    
    
    
    9,162
    
    
    
    1,238
    
    
    
    
    
    
    
    40,400Total current liabilities
    
    
    139,273
    
    
    
    358,473
    
    
    
    8,645
    
    
    
    
    
    
    
    506,391Long-term debt, excluding
current portion
    
    
    1,497,000
    
    
    
    16,953
    
    
    
    25,695
    
    
    
    
    
    
    
    1,539,648Deferred income tax liability, net
    
    
    (33,481
    )
    
    
    462,857
    
    
    
    10,406
    
    
    
    
    
    
    
    439,782Intercompany
(receivable) payable
    
    
    450
    
    
    
    106,971
    
    
    
    (107,421
    )
    
    
    
    
    
    
    Other non-current liabilities
    
    
    35,823
    
    
    
    39,400
    
    
    
    4,881
    
    
    
    
    
    
    
    80,104Commitments and contingenciesStockholders EquityPreferred stock, no par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, par value $0.01
per share
    
    
    841
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    841Capital in excess of par value
    
    
    468,302
    
    
    
    1,502,919
    
    
    
    8,224
    
    
    
    (1,511,143
    )
    
    
    468,302Retained earnings
    
    
    983,663
    
    
    
    1,180,816
    
    
    
    292,065
    
    
    
    (1,472,881
    )
    
    
    983,663Accumulated other
comprehensive income (loss)
    
    
    (4,713
    )
    
    
    1,776
    
    
    
    7,146
    
    
    
    (8,922
    )
    
    
    (4,713
    )Treasury stock
    
    
    (34,757
    )
    
    
    (370
    )
    
    
    
    
    
    
    370
    
    
    
    (34,757
    )Total stockholders equity
    
    
    1,413,336
    
    
    
    2,685,141
    
    
    
    307,435
    
    
    
    (2,992,576
    )
    
    
    1,413,336Total liabilities and
stockholders equity
    
    $
    3,052,401
    
    
    $
    3,669,795
    
    
    $
    249,641
    
    
    $
    (2,992,576
    )
    
    $
    3,979,261
 F-52




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##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Condensed Consolidating Balance Sheet
March 31, 2007
 Non-
    
    
    Elimination(In thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Entries
    
    
    ConsolidatedASSETSCurrent AssetsCash
    
    $
    
    
    
    $
    25,249
    
    
    $
    682
    
    
    $
    
    
    
    $
    25,931Trade receivables, net
    
    
    
    
    
    
    35,799
    
    
    
    157,865
    
    
    
    
    
    
    
    193,664Intercompany
receivable (payable)
    
    
    
    
    
    
    1,177
    
    
    
    (1,177
    )
    
    
    
    
    
    
    Inventories, net
    
    
    
    
    
    
    243,222
    
    
    
    7,086
    
    
    
    
    
    
    
    250,308Deferred income tax asset, net
    
    
    22,342
    
    
    
    12,621
    
    
    
    (3,959
    )
    
    
    
    
    
    
    31,004Prepaid expenses and other
current assets
    
    
    17,878
    
    
    
    30,876
    
    
    
    (162
    )
    
    
    
    
    
    
    48,592Total current assets
    
    
    40,220
    
    
    
    348,944
    
    
    
    160,335
    
    
    
    
    
    
    
    549,499Plant and equipment, net
    
    
    15,990
    
    
    
    1,817,558
    
    
    
    31,870
    
    
    
    
    
    
    
    1,865,418Goodwill
    
    
    
    
    
    
    818,117
    
    
    
    14,045
    
    
    
    
    
    
    
    832,162Other intangible assets, net
    
    
    
    
    
    
    62,664
    
    
    
    271
    
    
    
    
    
    
    
    62,935Investments in subsidiaries
    
    
    2,558,871
    
    
    
    
    
    
    
    
    
    
    
    (2,558,871
    )
    
    
    Other non-current assets
    
    
    8,408
    
    
    
    14,962
    
    
    
    73
    
    
    
    
    
    
    
    23,443Total assets
    
    $
    2,623,489
    
    
    $
    3,062,245
    
    
    $
    206,594
    
    
    $
    (2,558,871
    )
    
    $
    3,333,457LIABILITIES AND
STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable, trade
    
    $
    849
    
    
    $
    141,361
    
    
    $
    4,175
    
    
    $
    
    
    
    $
    146,385Accrued expenses and other
current liabilities
    
    
    89,651
    
    
    
    145,671
    
    
    
    5,953
    
    
    
    
    
    
    
    241,275Current portion of long-term debt
    
    
    30,000
    
    
    
    9,567
    
    
    
    729
    
    
    
    
    
    
    
    40,296Total current liabilities
    
    
    120,500
    
    
    
    296,599
    
    
    
    10,857
    
    
    
    
    
    
    
    427,956Long-term debt, excluding
current portion
    
    
    1,198,400
    
    
    
    91,935
    
    
    
    19,384
    
    
    
    
    
    
    
    1,309,719Deferred income tax liability, net
    
    
    (3,704
    )
    
    
    370,212
    
    
    
    6,738
    
    
    
    
    
    
    
    373,246Intercompany
(receivable) payable
    
    
    176,448
    
    
    
    (93,268
    )
    
    
    (83,180
    )
    
    
    
    
    
    
    Other non-current liabilities
    
    
    6,463
    
    
    
    29,966
    
    
    
    3,534
    
    
    
    
    
    
    
    39,963Minority interest in affiliate
    
    
    
    
    
    
    57,191
    
    
    
    
    
    
    
    
    
    
    
    57,191Commitments and contingenciesStockholders EquityPreferred stock, no par value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common stock, par value $0.01
per share
    
    
    799
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    799Capital in excess of par value
    
    
    341,101
    
    
    
    1,358,547
    
    
    
    8,221
    
    
    
    (1,366,768
    )
    
    
    341,101Retained earnings
    
    
    792,433
    
    
    
    950,992
    
    
    
    237,466
    
    
    
    (1,188,458
    )
    
    
    792,433Accumulated other
comprehensive income
    
    
    4,183
    
    
    
    441
    
    
    
    3,574
    
    
    
    (4,015
    )
    
    
    4,183Treasury stock
    
    
    (13,134
    )
    
    
    (370
    )
    
    
    
    
    
    
    370
    
    
    
    (13,134
    )Total stockholders equity
    
    
    1,125,382
    
    
    
    2,309,610
    
    
    
    249,261
    
    
    
    (2,558,871
    )
    
    
    1,125,382Total liabilities and
stockholders equity
    
    $
    2,623,489
    
    
    $
    3,062,245
    
    
    $
    206,594
    
    
    $
    (2,558,871
    )
    
    $
    3,333,457
 F-53




---



##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Condensed Consolidating Statement of Earnings
Year Ended
March 31, 2008
 Non-
    
    
    Elimination(In thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Entries
    
    
    ConsolidatedNet Sales
    
    $
    
    
    
    $
    3,972,305
    
    
    $
    44,719
    
    
    $
    
    
    
    $
    4,017,024Costs and Expenses:Cost of products sold
(excluding depreciation)
    
    
    
    
    
    
    1,914,414
    
    
    
    12,012
    
    
    
    
    
    
    
    1,926,426Selling, distribution and
administrative expenses
    
    
    271
    
    
    
    1,391,594
    
    
    
    32,812
    
    
    
    
    
    
    
    1,424,677Depreciation
    
    
    4,685
    
    
    
    167,196
    
    
    
    3,921
    
    
    
    
    
    
    
    175,802Amortization
    
    
    16
    
    
    
    13,927
    
    
    
    30
    
    
    
    
    
    
    
    13,973Operating Income (Loss)
    
    
    (4,972
    )
    
    
    485,174
    
    
    
    (4,056
    )
    
    
    
    
    
    
    476,146Interest expense, net
    
    
    (88,363
    )
    
    
    (332
    )
    
    
    (1,165
    )
    
    
    
    
    
    
    (89,860
    )(Discount) gain on
securitization of trade
receivables
    
    
    
    
    
    
    (104,174
    )
    
    
    87,143
    
    
    
    
    
    
    
    (17,031
    )Other income (expense), net
    
    
    (380
    )
    
    
    (120
    )
    
    
    2,007
    
    
    
    
    
    
    
    1,507Earnings (loss) before income
taxes and minority interest
    
    
    (93,715
    )
    
    
    380,548
    
    
    
    83,929
    
    
    
    
    
    
    
    370,762Income tax benefit (expense)
    
    
    35,195
    
    
    
    (150,051
    )
    
    
    (29,328
    )
    
    
    
    
    
    
    (144,184
    )Minority interest in earnings of
consolidated affiliate
    
    
    (2,519
    )
    
    
    (711
    )
    
    
    
    
    
    
    
    
    
    
    (3,230
    )Equity in earnings of
subsidiaries
    
    
    284,387
    
    
    
    
    
    
    
    
    
    
    
    (284,387
    )
    
    
    Net Earnings
    
    $
    223,348
    
    
    $
    229,786
    
    
    $
    54,601
    
    
    $
    (284,387
    )
    
    $
    223,348
 F-54




---



##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Condensed Consolidating Statement of Earnings
Year Ended
March 31, 2007
 Non-
    
    
    Elimination(In thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Entries
    
    
    ConsolidatedNet Sales
    
    $
    
    
    
    $
    3,168,232
    
    
    $
    36,819
    
    
    $
    
    
    
    $
    3,205,051Costs and Expenses:Cost of products sold
(excluding depreciation)
    
    
    
    
    
    
    1,556,110
    
    
    
    10,980
    
    
    
    
    
    
    
    1,567,090Selling, distribution and
administrative expenses
    
    
    6,593
    
    
    
    1,117,928
    
    
    
    24,645
    
    
    
    
    
    
    
    1,149,166Depreciation
    
    
    6,074
    
    
    
    129,656
    
    
    
    3,088
    
    
    
    
    
    
    
    138,818Amortization
    
    
    
    
    
    
    8,525
    
    
    
    
    
    
    
    
    
    
    
    8,525Operating Income (Loss)
    
    
    (12,667
    )
    
    
    356,013
    
    
    
    (1,894
    )
    
    
    
    
    
    
    341,452Interest (expense) income, net
    
    
    (74,369
    )
    
    
    15,315
    
    
    
    (1,126
    )
    
    
    
    
    
    
    (60,180
    )(Discount) gain on
securitization of trade
receivables
    
    
    
    
    
    
    (81,487
    )
    
    
    67,857
    
    
    
    
    
    
    
    (13,630
    )Loss on the extinguishment of debt
    
    
    (12,099
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,099
    )Other income (expense), net
    
    
    (82
    )
    
    
    (688
    )
    
    
    2,371
    
    
    
    
    
    
    
    1,601Earnings (loss) before income
taxes and minority interest
    
    
    (99,217
    )
    
    
    289,153
    
    
    
    67,208
    
    
    
    
    
    
    
    257,144Income tax benefit (expense)
    
    
    34,555
    
    
    
    (110,978
    )
    
    
    (23,460
    )
    
    
    
    
    
    
    (99,883
    )Minority interest in earnings of
consolidated affiliate
    
    
    
    
    
    
    (2,845
    )
    
    
    
    
    
    
    
    
    
    
    (2,845
    )Equity in earnings of
subsidiaries
    
    
    219,078
    
    
    
    
    
    
    
    
    
    
    
    (219,078
    )
    
    
    Net Earnings
    
    $
    154,416
    
    
    $
    175,330
    
    
    $
    43,748
    
    
    $
    (219,078
    )
    
    $
    154,416
 F-55




---



##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Condensed Consolidating Statement of Earnings
Year Ended
March 31, 2006
 (In thousands)
    
    Parent
    
    
    Guarantors
    
    
    Non-Guarantors
    
    
    Elimination Entries
    
    
    ConsolidatedNet Sales
    
    $
    
    
    
    $
    2,796,460
    
    
    $
    33,150
    
    
    $
    
    
    
    $
    2,829,610Costs and Expenses:Cost of products sold
(excluding depreciation)
    
    
    
    
    
    
    1,392,632
    
    
    
    9,346
    
    
    
    
    
    
    
    1,401,978Selling, distribution and
administrative expenses
    
    
    24,135
    
    
    
    980,187
    
    
    
    27,010
    
    
    
    
    
    
    
    1,031,332Depreciation
    
    
    7,518
    
    
    
    111,904
    
    
    
    2,974
    
    
    
    
    
    
    
    122,396Amortization
    
    
    
    
    
    
    5,146
    
    
    
    
    
    
    
    
    
    
    
    5,146Operating Income (Loss)
    
    
    (31,653
    )
    
    
    306,591
    
    
    
    (6,180
    )
    
    
    
    
    
    
    268,758Interest (expense) income, net
    
    
    (72,767
    )
    
    
    19,749
    
    
    
    (794
    )
    
    
    
    
    
    
    (53,812
    )(Discount) gain on
securitization of trade
receivables
    
    
    
    
    
    
    (73,990
    )
    
    
    64,619
    
    
    
    
    
    
    
    (9,371
    )Other income (expense), net
    
    
    19,784
    
    
    
    (17,101
    )
    
    
    (221
    )
    
    
    
    
    
    
    2,462Earnings (loss) before income
taxes and minority interest
    
    
    (84,636
    )
    
    
    235,249
    
    
    
    57,424
    
    
    
    
    
    
    
    208,037Income tax benefit (expense)
    
    
    29,623
    
    
    
    (87,390
    )
    
    
    (20,099
    )
    
    
    
    
    
    
    (77,866
    )Minority interest in earnings of
consolidated affiliate
    
    
    
    
    
    
    (2,656
    )
    
    
    
    
    
    
    
    
    
    
    (2,656
    )Equity in earnings of
subsidiaries
    
    
    178,564
    
    
    
    
    
    
    
    
    
    
    
    (178,564
    )
    
    
    Loss from discontinued
operations,net of tax
    
    
    
    
    
    
    (1,424
    )
    
    
    
    
    
    
    
    
    
    
    (1,424
    )Cumulative effect of a change in
accounting principle, net of tax
    
    
    
    
    
    
    (2,540
    )
    
    
    
    
    
    
    
    
    
    
    (2,540
    )Net Earnings
    
    $
    123,551
    
    
    $
    141,239
    
    
    $
    37,325
    
    
    $
    (178,564
    )
    
    $
    123,551
 F-56




---



##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Condensed Consolidating Statement of Cash Flows
Year Ended
March 31, 2008
 Non-
    
    
    Elimination(In thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Entries
    
    
    ConsolidatedNet cash provided by (used in)
operating activities
    
    $
    (33,482
    )
    
    $
    547,867
    
    
    $
    35,541
    
    
    $
    
    
    
    $
    549,926CASH FLOWS FROM
INVESTING ACTIVITIESCapital expenditures
    
    
    (3,910
    )
    
    
    (255,264
    )
    
    
    (8,204
    )
    
    
    
    
    
    
    (267,378
    )Proceeds from sales of plant
and equipment
    
    
    6
    
    
    
    8,592
    
    
    
    747
    
    
    
    
    
    
    
    9,345Business acquisitions and holdback
settlements
    
    
    
    
    
    
    (480,096
    )
    
    
    
    
    
    
    
    
    
    
    (480,096
    )Other, net
    
    
    (18
    )
    
    
    7,398
    
    
    
    (8,696
    )
    
    
    
    
    
    
    (1,316
    )Advances to
subsidiaries, net
    
    
    (262,684
    )
    
    
    
    
    
    
    
    
    
    
    262,684
    
    
    
    Net cash used in investing
activities
    
    
    (266,606
    )
    
    
    (719,370
    )
    
    
    (16,153
    )
    
    
    262,684
    
    
    
    (739,445
    )CASH FLOWS FROM
FINANCING ACTIVITIESProceeds from borrowings
    
    
    1,132,610
    
    
    
    19,565
    
    
    
    10,277
    
    
    
    
    
    
    
    1,162,452Repayment of debt
    
    
    (831,166
    )
    
    
    (119,127
    )
    
    
    (3,456
    )
    
    
    
    
    
    
    (953,749
    )Purchase of treasury stock
    
    
    (17,010
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,010
    )Minority interest in earnings
    
    
    
    
    
    
    (711
    )
    
    
    
    
    
    
    
    
    
    
    (711
    )Proceeds from the exercise of stock
options
    
    
    20,381
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,381Stock issued for the employee stock
purchase plan
    
    
    14,091
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,091Tax benefit realized from
the exercise of stock options
    
    
    13,327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,327Dividends paid to stockholders
    
    
    (31,828
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,828
    )Change in cash overdraft
    
    
    (317
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (317
    )Changes in
due to/from parent
    
    
    
    
    
    
    286,923
    
    
    
    (24,239
    )
    
    
    (262,684
    )
    
    
    Net cash provided by (used in)
financing activities
    
    
    300,088
    
    
    
    186,650
    
    
    
    (17,418
    )
    
    
    (262,684
    )
    
    
    206,636CHANGE IN CASH
    
    $
    
    
    
    $
    15,147
    
    
    $
    1,970
    
    
    $
    
    
    
    $
    17,117Cash  Beginning of period
    
    
    
    
    
    
    25,249
    
    
    
    682
    
    
    
    
    
    
    
    25,931Cash  End of period
    
    $
    
    
    
    $
    40,396
    
    
    $
    2,652
    
    
    $
    
    
    
    $
    43,048
 F-57




---



##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Condensed Consolidating Statement of Cash Flows
Year Ended
March 31, 2007
 Non-
    
    
    Elimination(In thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Entries
    
    
    ConsolidatedNet cash provided by (used in)
operating activities
    
    $
    (102,808
    )
    
    $
    432,677
    
    
    $
    (3,526
    )
    
    $
    
    
    
    $
    326,343CASH FLOWS FROM
INVESTING ACTIVITIESCapital expenditures
    
    
    (4,012
    )
    
    
    (228,672
    )
    
    
    (5,590
    )
    
    
    
    
    
    
    (238,274
    )Proceeds from sales of plant
and equipment
    
    
    177
    
    
    
    8,349
    
    
    
    159
    
    
    
    
    
    
    
    8,685Business acquisitions and holdback
settlements
    
    
    
    
    
    
    (687,892
    )
    
    
    
    
    
    
    
    
    
    
    (687,892
    )Other, net
    
    
    (572
    )
    
    
    58
    
    
    
    40
    
    
    
    
    
    
    
    (474
    )Advances to
subsidiaries, net
    
    
    (462,564
    )
    
    
    
    
    
    
    
    
    
    
    462,564
    
    
    
    Net cash used in investing
activities
    
    
    (466,971
    )
    
    
    (908,157
    )
    
    
    (5,391
    )
    
    
    462,564
    
    
    
    (917,955
    )CASH FLOWS FROM
FINANCING ACTIVITIESProceeds from borrowings
    
    
    1,480,984
    
    
    
    95,149
    
    
    
    1,834
    
    
    
    
    
    
    
    1,577,967Repayment of debt
    
    
    (926,827
    )
    
    
    (79,215
    )
    
    
    (2,144
    )
    
    
    
    
    
    
    (1,008,186
    )Financing costs
    
    
    (5,103
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,103
    )Premium paid on call of senior
subordinated notes
    
    
    (10,267
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,267
    )Minority interest in earnings
    
    
    
    
    
    
    (2,845
    )
    
    
    
    
    
    
    
    
    
    
    (2,845
    )Proceeds from the exercise of stock
options
    
    
    15,107
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,107Stock issued for the employee stock
purchase plan
    
    
    11,951
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,951Tax benefit realized from
the exercise of stock options
    
    
    9,013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,013Dividends paid to stockholders
    
    
    (21,980
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,980
    )Change in cash overdraft
    
    
    16,901
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,901Changes in
due to/from parent
    
    
    
    
    
    
    457,458
    
    
    
    5,106
    
    
    
    (462,564
    )
    
    
    Net cash provided by
financing activities
    
    
    569,779
    
    
    
    470,547
    
    
    
    4,796
    
    
    
    (462,564
    )
    
    
    582,558CHANGE IN CASH
    
    $
    
    
    
    $
    (4,933
    )
    
    $
    (4,121
    )
    
    $
    
    
    
    $
    (9,054
    )Cash  Beginning of period
    
    
    
    
    
    
    30,183
    
    
    
    4,802
    
    
    
    
    
    
    
    34,985Cash  End of period
    
    $
    
    
    
    $
    25,250
    
    
    $
    681
    
    
    $
    
    
    
    $
    25,931
 F-58




---



##### Table of Contents



AIRGAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Condensed Consolidating Statement of Cash Flows
Year Ended
March 31, 2006
 Non-
    
    
    Elimination(In thousands)
    
    Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Entries
    
    
    ConsolidatedNet cash provided by (used in)
operating activities
    
    $
    (13,484
    )
    
    $
    279,525
    
    
    $
    80,004
    
    
    $
    
    
    
    $
    346,045CASH FLOWS FROM
INVESTING ACTIVITIESCapital expenditures
    
    
    (3,161
    )
    
    
    (199,423
    )
    
    
    (6,019
    )
    
    
    
    
    
    
    (208,603
    )Proceeds from sales of plant
and equipment
    
    
    104
    
    
    
    5,671
    
    
    
    2,427
    
    
    
    
    
    
    
    8,202Proceeds from divestiture
    
    
    
    
    
    
    14,562
    
    
    
    
    
    
    
    
    
    
    
    14,562Business acquisitions and holdback
settlements
    
    
    
    
    
    
    (153,428
    )
    
    
    
    
    
    
    
    
    
    
    (153,428
    )Other, net
    
    
    749
    
    
    
    (498
    )
    
    
    (81
    )
    
    
    
    
    
    
    170Advances to
subsidiaries, net
    
    
    34,111
    
    
    
    
    
    
    
    
    
    
    
    (34,111
    )
    
    
    Net cash used in investing
activities
    
    
    31,803
    
    
    
    (333,116
    )
    
    
    (3,673
    )
    
    
    (34,111
    )
    
    
    (339,097
    )CASH FLOWS FROM
FINANCING ACTIVITIESProceeds from borrowings
    
    
    478,848
    
    
    
    87,991
    
    
    
    1,540
    
    
    
    
    
    
    
    568,379Repayment of debt
    
    
    (512,718
    )
    
    
    (88,706
    )
    
    
    (5,108
    )
    
    
    
    
    
    
    (606,532
    )Purchase of treasury stock
    
    
    (12,771
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,771
    )Minority interest in earnings
    
    
    
    
    
    
    (2,656
    )
    
    
    
    
    
    
    
    
    
    
    (2,656
    )Minority stockholder note repayment
    
    
    
    
    
    
    21,000
    
    
    
    
    
    
    
    
    
    
    
    21,000Proceeds from exercise of stock
options
    
    
    19,707
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,707Stock issued for the employee stock
purchase plan
    
    
    10,534
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,534Dividends paid to stockholders
    
    
    (18,449
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,449
    )Change in cash overdraft
    
    
    16,530
    
    
    
    (345
    )
    
    
    
    
    
    
    
    
    
    
    16,185Changes in
due to/from parent
    
    
    
    
    
    
    36,206
    
    
    
    (70,317
    )
    
    
    34,111
    
    
    
    Net cash provided by (used in)
financing activities
    
    
    (18,319
    )
    
    
    53,490
    
    
    
    (73,885
    )
    
    
    34,111
    
    
    
    (4,603
    )CHANGE IN CASH
    
    $
    
    
    
    $
    (101
    )
    
    $
    2,446
    
    
    $
    
    
    
    $
    2,345Cash  Beginning of period
    
    
    
    
    
    
    30,284
    
    
    
    2,356
    
    
    
    
    
    
    
    32,640Cash  End of period
    
    $
    
    
    
    $
    30,183
    
    
    $
    4,802
    
    
    $
    
    
    
    $
    34,985
 F-59




---



##### Table of Contents



SCHEDULE II
 AIRGAS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
 Column A
    
    Column B
    
    Column C
    
    Column D
    
    Column EAdditionsBalance at
    
    Charged to
    
    Charged
    
    
    
    
    
    BalanceBeginning
    
    Costs and
    
    to Other
    
    
    
    
    
    at End ofDescription
    
    of Period
    
    Expenses
    
    Accounts
    
    Deductions
    
    Period2008Accounts receivable  allowances
for doubtful accounts
    
    $
    15,692
    
    
    $
    13,360
    
    
    $
    4,457
    (1)
    
    $
    (10,885)
    (2)
    
    $
    22,624Insurance reserves
    
    
    34,846
    
    
    
    95,792
    
    
    
    
    
    
    
    (92,848)
    (3)
    
    
    37,790Deferred tax asset valuation
allowance
    
    
    5,432
    
    
    
    
    
    
    
    
    
    
    
    (334)
    (4)
    
    
    5,0982007Accounts receivable  allowances
for doubtful accounts
    
    $
    14,782
    
    
    $
    11,150
    
    
    $
    1,938
    (1)
    
    $
    (12,178)
    (2)
    
    $
    15,692Insurance reserves
    
    
    30,664
    
    
    
    87,357
    
    
    
    
    
    
    
    (83,175)
    (3)
    
    
    34,846Deferred tax asset valuation
allowance
    
    
    6,347
    
    
    
    
    
    
    
    
    
    
    
    (915)
    (4)
    
    
    5,4322006Accounts receivable  allowances
for doubtful accounts
    
    $
    11,108
    
    
    $
    12,747
    
    
    $
    1,496
    (1)
    
    $
    (10,569)
    (2)
    
    $
    14,782Insurance reserves
    
    
    30,924
    
    
    
    73,529
    
    
    
    
    
    
    
    (73,789)
    (3)
    
    
    30,664Deferred tax asset valuation
allowance
    
    
    8,437
    
    
    
    
    
    
    
    
    
    
    
    (2,090)
    (4)
    
    
    6,347
 
 (1)
    
    Principally reflects subsequent collections of accounts previously written-off less the
allowance for doubtful accounts of businesses sold.(2)
    
    Write-off of uncollectible accounts.(3)
    
    Payments of insurance premiums and claims.(4)
    
    Represents revised estimates of the realizability of certain tax benefits associated with
state net operating loss carryforwards along with changes due to the utilization and
expiration of net operating loss carryforwards. F-60