| þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| • | Statements of Net Assets Available for Benefits as of December 31, 2008 and 2007 | ||
| • | Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 2008 and 2007 | ||
| • | Notes to the Financial Statements | ||
| • | Supplemental Schedule 1 — Schedule H, Line 4i — Schedule of Assets (Held at End of Year) as of December 31, 2008 |
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Supplemental Schedule: |
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| 2008 | 2007 | |||||||
Investments, at fair value |
$ | 340,811,937 | $ | 378,851,282 | ||||
Receivables: |
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Employee contributions |
1,199,888 | 1,103,289 | ||||||
Employer contributions |
213,982 | 289,942 | ||||||
Total receivables |
1,413,870 | 1,393,231 | ||||||
Refunds due to participants |
(1,911 | ) | — | |||||
Net assets available for benefits, at fair value |
342,223,896 | 380,244,513 | ||||||
Participant loans, at cost |
14,334,918 | 11,737,344 | ||||||
Adjustment from fair value to contract value for
fully benefit-responsive investment contracts |
851,138 | (347,348 | ) | |||||
Net assets available for benefits |
$ | 357,409,952 | $ | 391,634,509 | ||||
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| 2008 | 2007 | |||||||
Additions
(Reductions): |
||||||||
Additions
(reductions) to net assets attributable to: |
||||||||
Investment income (loss): |
||||||||
Net appreciation (depreciation) in
fair value of investments |
$ | (110,716,623 | ) | $ | 27,734,269 | |||
Interest and dividends |
11,523,441 | 14,430,353 | ||||||
Total investment income (loss), net |
(99,193,182 | ) | 42,164,622 | |||||
Contributions: |
||||||||
Employee |
31,371,211 | 25,303,750 | ||||||
Employer |
8,096,526 | 6,361,518 | ||||||
Rollovers |
8,676,093 | 20,062,587 | ||||||
Total contributions |
48,143,830 | 51,727,855 | ||||||
Transfers from other plans |
45,223,464 | 2,465,801 | ||||||
Total
additions (reductions) |
(5,825,888 | ) | 96,358,278 | |||||
Deductions: |
||||||||
Benefits paid to participants |
(28,068,699 | ) | (22,784,433 | ) | ||||
Administrative fees |
(328,059 | ) | (328,484 | ) | ||||
Refund of excess contributions |
(1,911 | ) | — | |||||
Total deductions |
(28,398,669 | ) | (23,112,917 | ) | ||||
Net additions (deductions) |
(34,224,557 | ) | 73,245,361 | |||||
Net assets available for benefits: |
||||||||
Beginning of year |
391,634,509 | 318,389,148 | ||||||
End of year |
$ | 357,409,952 | $ | 391,634,509 | ||||
3
| (1) | Description of the Plan | |
| The following description of the Airgas, Inc. 401(k) Plan (the “Plan”) provides general information only. Participants should refer to the Plan document for more complete information. |
| (a) | General | ||
| The Plan is a defined contribution plan covering substantially all employees of Airgas, Inc. and subsidiaries (“Airgas” or the “Company”). Included in the assets of the Plan are rollovers and transfers from other plans of acquired companies, where applicable. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). The Vanguard Fiduciary Trust Company serves as the trustee for the Plan. | |||
| (b) | Contributions | ||
| Employee | |||
| The Plan permits a participant to defer up to 50% of eligible compensation, subject to the maximum dollar limitation in the calendar year as prescribed by the Internal Revenue Service (“IRS”). The Plan previously only allowed 401(k) contributions which are made from pre-tax earnings and are fully taxable as ordinary income at the time of distribution. Effective April 1, 2007, the Plan also allows participants to make Roth 401(k) contributions. Under the Roth 401(k) contribution election, participants’ contributions are made from after-tax earnings that will be tax-free at the time of distribution. Participants are allowed to elect both 401(k) and Roth 401(k) contributions into the Plan. | |||
| The employee contribution receivables at December 31, 2008 and 2007 represent payroll withholdings withheld through the end of each calendar year, which were received by the Plan in the subsequent year. | |||
| Employer | |||
| Contributions to the Plan by the Company are made on a matched basis at a rate of 50% of participant deferred compensation. The employer match is applied on employee contributions of up to 4% of eligible compensation (i.e., maximum employer match is 2% of eligible compensation). Although employees may participate in the Plan immediately upon joining the Company, Plan participants are not eligible for Company matching contributions until they have completed one year of service with the Company. The employer contribution receivables at December 31, 2008 and 2007 represent Company matching contributions through the end of each calendar year, which were received by the Plan in the subsequent year. | |||
| Rollovers | |||
| Contributions in 2008 and 2007 reflect approximately $8.7 million and $20.1 million, respectively, of rollover contributions from newly hired employees and employees associated with businesses acquired by the Company. Rollover contributions for 2007 were higher primarily due to the Company’s acquisitions of the U.S. bulk and packaged gas operations of Linde AG. Rollovers reflect an employee’s election to rollover funds from their former plan into the Plan. |
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| Refund of Excess Contributions |
| (c) | Participant Accounts | ||
| Contributions are invested as directed by each participant in 14 separate investment funds. Each participant may designate, by electronic monitoring, how the contributions to his or her account are to be allocated among the 14 funds. Participants are required to allocate contributions to the funds in increments of 1% of total contributions. In the event a participant fails to submit an allocation, contributions will be invested in the Vanguard LifeStrategy Conservative Growth Fund. In addition to the above initial election, participants may elect, by contacting the trustee, to transfer monies among the investment funds in 1% increments of the total funds credited to their account. Interest, dividends and other income (losses) earned by the investment funds, net of administrative fees, are reinvested in the same fund. Such amounts are allocated to participants based upon the proportion of a participant’s balance to the total fund balance. | |||
| (d) | Participant Loans | ||
| The Plan administrator may, upon the application of a participant, direct the trustee to make a loan to such a participant. The maximum the participant may borrow is limited to the lesser of 50% of the participant’s Plan account balance or $50,000. The minimum loan amount is $1,000 and loans are secured by 50% of the participant’s Plan account balance. Participant loans bear interest at a rate equal to prime (as of the date of the loan) plus 2% and provide for periodic repayment over a reasonable period of time not to exceed five years for general-purpose loans and 30 years for principal residence loans. The prime rate was 3.25% and 7.25% at December 31, 2008 and 2007, respectively. Interest rates on outstanding participant loans at December 31, 2008 and 2007 ranged from 4.0% to 11.0%, with an average interest rate of 8.5%. | |||
| When a participant defaults on a loan obtained from the Plan, the Plan administrator will report the amount of default to the IRS as a distribution from the Plan. The Plan participant may then be subject to taxes and penalties related to the distribution. | |||
| (e) | Vesting | ||
| Participants are immediately vested in all contributions. In addition, all earnings (losses) on such investments are fully vested. |
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| (f) | Payment of Benefits | ||
| Upon retirement, death or termination of service, participants or beneficiaries are entitled to a distribution equal to the total value of their accounts. Such distributions are generally payable in cash. | |||
| Participants experiencing serious financial hardships may be entitled to a distribution upon approval by the Plan administrator. | |||
| (g) | Administrative Expenses | ||
| Recordkeeping and loan fees are paid by the Plan. Stock administration, compliance testing, audit, legal, hardship withdrawal processing and company acquisition processing fees are paid by Airgas. | |||
| (h) | Reclassifications | ||
| Certain prior year balances and amounts were reclassified to conform to current year presentation. The statements of net assets available for benefits reflect a line item reconciling the fair value of the investments in the Vanguard Retirement Savings Trust (the “Trust”) (a common collective trust) to contract value, which represents the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan (see Note 2). The statements of changes in net assets available for benefits reflect a split between rollovers and transfers from other plans in order to provide additional information on these types of transactions (see Note 1 (b) and Note 9). | |||
| (2) Summary of Significant Accounting Policies | |||
| (a) | Basis of Accounting | ||
| The accompanying financial statements of the Plan have been prepared on the accrual basis of accounting and present net assets available for benefits and changes in those net assets. | |||
| (b) | New Accounting Pronouncements | ||
| In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS 157”), effective for financial statements issued for fiscal years beginning after November 15, 2007. SFAS 157 did not require any new fair value measurements, but rather replaces multiple existing definitions of fair value with a single definition, establishes a consistent framework for measuring fair value and expands financial statement disclosures regarding fair value measurements. The Plan adopted SFAS 157 for financial assets and liabilities on January 1, 2008 (see Note 4). The adoption of SFAS 157 for financial assets and liabilities did not have a material impact on the Plan’s financial statements. | |||
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| (c) | Investments | ||
| Units of the Airgas Common Stock Fund are valued based on the combined quoted market prices of the underlying shares of Airgas common stock and a money market component. Investments in shares of registered investment companies (or mutual funds) are valued at quoted market prices, which represent the net asset values of shares held by the Plan at year-end. Units of the common collective trust are valued at the net asset value at year-end (discussed below). Participant loans are valued at amortized cost. | |||
| FASB Staff Position AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the “FSP”), defines the circumstances in which an investment contract is considered fully benefit-responsive and provides certain reporting and disclosure requirements for fully benefit-responsive investment contracts in employee benefit plans. The Plan invests in investment contracts through a common collective trust (the Trust). As required by the FSP, the statements of net assets available for benefits present the fair value of the Trust and the adjustment from fair value to contract value. The fair value of the Plan’s interest in the Trust is based on information reported by the issuer of the common collective trust at year-end. Depending on the mix of investments, fair value is determined based on the expected future cash flows for each contract discounted to present value, and the aggregate market values of the underlying investments in mutual funds, bond trusts and other investments. The contract value of the Trust represents contributions plus earnings, less participant withdrawals and administrative expenses. | |||
| Purchases and sales of investments are recorded on a trade-date basis. The average cost method is followed in determining the cost of investments sold. Interest income is accrued when earned. Dividend income is recorded on the ex-dividend date. Capital gain distributions are included in dividend income. | |||
| Investment options as of December 31, 2008 and 2007 were as follows: | |||
| The Airgas Common Stock Fund invests in Airgas common stock to provide for the possibility of long-term growth through increases in the value of the stock, although a portion of the fund may be invested in cash or cash equivalents to maintain liquidity and avoid excessive turnover of Airgas common stock held in the fund. The fund value per unit was $19.33 and $25.80 at December 31, 2008 and 2007, respectively. The value per share of Airgas common stock was $38.99 and $52.11 at December 31, 2008 and 2007, respectively. At December 31, 2008, 7,840 Plan participants were invested in the fund. | |||
| The Vanguard Explorer Fund Investor Shares seeks to provide long-term growth of capital
by investing in a diversified group of small-company stocks with prospects for
above-average growth. The value per share was $42.13 and $71.19 at December 31, 2008
and 2007, respectively. At December 31, 2008, 3,853 Plan participants were invested in
the fund. The Vanguard International Growth Fund Investor Shares seeks to provide long-term growth of capital by investing in stocks of high-quality, seasoned companies based outside the United States. Stocks are selected from more than 15 countries. The value per share was $12.20 and $24.82 at December 31, 2008 and 2007, respectively. At December 31, 2008, 4,467 Plan participants were invested in the fund. |
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8
| (d) | Use of Estimates | ||
| The preparation of the financial statements in accordance with U.S. generally accepted accounting principles requires the Plan administrator to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts included in the statement of changes in net assets available for benefits. Actual results could differ from those estimates. | |||
| (e) | Risks and Uncertainties | ||
| The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits. |
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| (3) | Investments | |
| The following investments represent 5% or more of the net assets available for benefits at December 31, 2008 and 2007: |
| 2008 | 2007 | |||||||
Airgas Common Stock Fund |
$ | 80,382,622 | $ | 104,960,058 | ||||
Vanguard 500 Index Fund Investor Shares |
25,627,776 | 37,921,287 | ||||||
Vanguard Explorer Fund Investor Shares |
12,511,105 | (2) | 20,564,623 | |||||
Vanguard International Growth Fund Investor Shares |
14,781,294 | (2) | 24,470,993 | |||||
Vanguard LifeStrategy Conservative Growth Fund |
27,727,294 | (1) | 9,541,021 | |||||
Vanguard LifeStrategy Growth Fund |
15,659,635 | (2) | 21,755,573 | |||||
Vanguard Retirement Savings Trust |
65,956,393 | (3) | 45,558,872 | |||||
Vanguard Total Bond Market Index Fund Investor Shares |
20,723,055 | (1) | 13,818,821 | |||||
Vanguard U.S. Growth Fund Investor Shares |
17,125,637 | (2) | 27,031,088 | |||||
Vanguard Wellington Fund Investor Shares |
35,018,415 | 44,516,919 | ||||||
| (1) | Represents 5% or more of net assets available for benefits at December 31, 2008 and less than 5% of net assets available for benefits at December 31, 2007. | |
| (2) | Represents 5% or more of net assets available for benefits at December 31, 2007 and less than 5% of net assets available for benefits at December 31, 2008. | |
| (3) | Stated at contract value. |
| 2008 | 2007 | |||||||
Airgas Common Stock Fund |
$ | (25,334,488 | ) | $ | 23,548,304 | |||
Mutual funds |
(85,382,135 | ) | 4,185,965 | |||||
Net appreciation (depreciation) in fair value of investments |
$ | (110,716,623 | ) | $ | 27,734,269 | |||
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| 2008 | 2008 | 2007 | 2007 | |||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Participant loans |
$ | 14,334,918 | $ | 15,436,965 | $ | 11,737,344 | $ | 11,500,494 | ||||||||
Vanguard Retirement
Savings Trust |
$ | 65,956,393 | $ | 65,105,255 | $ | 45,558,872 | $ | 45,906,220 | ||||||||
| (4) | Fair Value Measurements | |
| Effective January 1, 2008, the Company adopted SFAS 157. SFAS 157 does not require any new fair value measurements, but rather replaces multiple existing definitions of fair value with a single definition, establishes a consistent framework for measuring fair value and expands financial statement disclosures regarding fair value measurements. | ||
| SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value in accordance with SFAS 157 are classified based upon the level of judgment associated with the inputs used to measure their fair value. The hierarchical levels related to the subjectivity of the valuation inputs are defined by SFAS 157 as follows: |
| • | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date. | ||
| • | Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable, directly or indirectly through corroboration with observable market data at the measurement date. | ||
| • | Level 3 inputs are unobservable inputs that reflect management’s best estimate of the assumptions (including assumptions about risk) that market participants would use in pricing the asset or liability at the measurement date. |
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| Quoted prices in | Significant other | Significant | ||||||||||||||
| Balance at | active markets | observable inputs | unobservable inputs | |||||||||||||
| December 31, 2008 | Level 1 | Level 2 | Level 3 | |||||||||||||
Airgas Common Stock Fund |
$ | 80,382,622 | $ | 80,382,622 | $ | — | $ | — | ||||||||
Mutual funds |
195,324,060 | 195,324,060 | — | — | ||||||||||||
Vanguard Retirement Savings Trust |
65,105,255 | — | 65,105,255 | — | ||||||||||||
Total assets measured at fair value |
$ | 340,811,937 | $ | 275,706,682 | $ | 65,105,255 | $ | — | ||||||||
| (5) | Tax Status | |
| The Plan document has been restated for recent law changes. The Plan sponsor adopted the restated version of a volume submitter plan as of January 1, 2007. In prior years, the Plan was filed as a non-standardized prototype plan document. The IRS has determined and informed the volume submitter Plan sponsor, by a letter dated September 4, 2001, that the Plan and related trust are designed in accordance with applicable sections of the IRC. The IRS determined that the Plan is qualified under IRC Section 401, by a letter dated December 31, 2002. | ||
| The Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. |
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| (6) | Related Party Transactions | |
| The Plan investments are managed by an affiliate of Vanguard Fiduciary Trust Company, who acts as trustee for the Plan. The Airgas Common Stock Fund invests in common stock of the Company. Investment transactions of the Plan, therefore, qualify as party-in-interest transactions, but are not prohibited transactions. | ||
| (7) | Plan Termination | |
| Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. Upon termination of the Plan, participants would remain fully vested in all amounts credited to their accounts under the Plan. | ||
| (8) | Defaulted Loans | |
| During the year ended December 31, 2008, there were 179 participants who were in default of their loans, 12 of which were active employees. Loans in the amount of $892,584 were in default and were included in participant loans as of December 31, 2008. | ||
| During the year ended December 31, 2007, there were 221 participants who were in default of their loans, 20 of which were active employees. Loans in the amount of $1,100,999 were in default and were included in participant loans as of December 31, 2007. | ||
| Subsequent to a remedy period that provides for the repayment of defaulted loans, uncollectible defaulted loans are treated as taxable distributions from the Plan to the respective participants. | ||
| (9) | Acquisitions and Transfers from Other Plans | |
| Transfers from other plans reflect the assumption by the Plan of an entire benefit plan of companies acquired by Airgas. The increase in transfers from other plans in the 2008 statement of changes in net assets available for benefits was primarily due to the conversion of a joint venture into a 100% owned subsidiary of the Company, and the resulting transfer of the benefit plan assets of the former joint venture to the Airgas, Inc. 401(k) Plan. | ||
| (10) | Difference between Financial Statements and Form 5500 | |
| The following is a reconciliation of assets available for benefits per the financial statements to the Plan’s Form 5500: |
| 2008 | 2007 | |||||||
Net assets available for benefits per the financial statements |
$ | 357,409,952 | $ | 391,634,509 | ||||
Deemed loan activity |
(28,069 | ) | (50,877 | ) | ||||
Refunds due to particiapants |
1,911 | — | ||||||
Net assets available for benefits per Form 5500 |
$ | 357,383,794 | $ | 391,583,632 | ||||
13
| 2008 | 2007 | |||||||
Net additions (deductions) per the financial statements |
$ | (34,224,557 | ) | $ | 73,245,361 | |||
Change in deemed loan activity |
22,808 | 1,427 | ||||||
Refunds due to particiapants |
1,911 | — | ||||||
Net income (loss) per Form 5500 (including plan transfers) |
$ | (34,199,838 | ) | $ | 73,246,788 | |||
14
| Identity of Issue | Description of Investment | Current Value | ||||||
* Airgas Common Stock Fund |
Company Stock Fund | $ | 80,382,622 | |||||
* Vanguard 500 Index Fund Investor Shares |
Registered Investment Company | 25,627,776 | ||||||
* Vanguard Explorer Fund Investor Shares |
Registered Investment Company | 12,511,105 | ||||||
* Vanguard International Growth Fund Investor Shares |
Registered Investment Company | 14,781,294 | ||||||
* Vanguard LifeStrategy Conservative Growth Fund |
Registered Investment Company | 27,727,294 | ||||||
* Vanguard LifeStrategy Growth Fund |
Registered Investment Company | 15,659,635 | ||||||
* Vanguard LifeStrategy Income Fund |
Registered Investment Company | 5,189,951 | ||||||
* Vanguard LifeStrategy Moderate Growth Fund |
Registered Investment Company | 13,995,051 | ||||||
* Vanguard Morgan Growth Fund Investor Shares |
Registered Investment Company | 2,563,761 | ||||||
* Vanguard Total Bond Market Index Fund Investor
Shares |
Registered Investment Company | 20,723,055 | ||||||
* Vanguard U.S. Growth Fund Investor Shares |
Registered Investment Company | 17,125,637 | ||||||
* Vanguard Wellington Fund Investor Shares |
Registered Investment Company | 35,018,415 | ||||||
* Vanguard Windsor II Fund Investor Shares |
Registered Investment Company | 4,401,086 | ||||||
* Vanguard Retirement Savings Trust** |
Common Collective Trust | 65,956,393 | ||||||
* Loan Fund |
Interest ranging from 4% to 11%, maturing through October 2038 | 14,334,918 | ||||||
Total assets held for investment purposes |
$ | 355,997,993 | ||||||
| * | Party-in-interest | |
| ** | Contract value |
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| AIRGAS, INC. 401(k) PLAN (Name of Plan) |
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| BY: | /s/ Robert M. McLaughlin
|
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| Senior Vice President and Chief Financial Officer |
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| BY: | /s/ Dwight T. Wilson
|
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| Senior Vice President — Human Resources | ||||||