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

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

AIRGAS, INC.

(Exact name of registrant as specified in its charter)

Delaware		56-0732648
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
259 North Radnor-Chester Road, Suite 100
Radnor, Pennsylvania		19087-5283
(Address of principal executive offices)		(Zip Code)

(610) 687-5253
(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12 (b) of the Act:

		Name of Each Exchange
Title of Each Class		on Which Registered
Common Stock, par value $0.01 per share		New York Stock Exchange

     Securities registered pursuant to Section 12 (g) of the Act: None.

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES þ     NO o

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o     NO þ

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ     NO o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
		(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).

YES o                 NO þ

     The aggregate market value of the 74,517,174 shares of voting stock held by non-affiliates of the registrant was approximately $3.8 billion computed by reference to the closing price of such stock on the New York Stock Exchange as of the last day of the registrant’s most recently completed second quarter, September 30, 2007. For purposes of this calculation, only executive officers and directors were deemed to be affiliates.

     The number of shares of common stock outstanding as of May 22, 2008 was 82,800,437.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Company’s Proxy Statement for the Annual Meeting of Stockholders to be held August 5, 2008 have been incorporated by reference into Part III hereof.

 

 

AIRGAS, INC.

TABLE OF CONTENTS

ITEM NO.		PAGE
PART I
1. Business			3
1A. Risk Factors			12
1B. Unresolved Staff Comments			16
2. Properties			16
3. Legal Proceedings			16
4. Submission of Matters to a Vote of Security Holders			17
PART II
5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities			17
6. Selected Financial Data			20
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
7A. Quantitative and Qualitative Disclosures About Market Risk			48
8. Financial Statements and Supplementary Data			50
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			50
9A. Controls and Procedures			50
9B. Other Information			50
PART III
10. Directors, Executive Officers and Corporate Governance of the Company			51
11. Executive Compensation			51
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			52
13. Certain Relationships and Related Transactions, and Director Independence			53
14. Principal Accountant Fees and Services			53
PART IV
15. Exhibits and Financial Statement Schedules			53
Signatures			57
Statement re: computation of the ratio of earnings to fixed charges
Subsidiaries of the Company
Consent of Independent Registered Public Accounting Firm
Certification of Peter McCausland as Chairman and Chief Executive Officer of Airgas, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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
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
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

PART I

ITEM 1. BUSINESS.

GENERAL

     Airgas, Inc. and subsidiaries (“Airgas” or the “Company”) became a publicly traded company in 1986 and, through its subsidiaries, is the largest U.S. distributor of industrial, medical, and specialty gases (delivered in “packaged” or cylinder form), and hardgoods, such as welding equipment and supplies. Airgas is also one of the largest U.S. distributors of safety products, the largest U.S. producer of nitrous oxide and dry ice, the largest liquid carbon dioxide producer in the Southeast, the fifth largest producer of atmospheric merchant gases in North America and a leading distributor of process chemicals, refrigerants, and ammonia products. The Company markets these products to its diversified customer base through multiple sales channels including branch-based sales representatives, retail stores, strategic customer account programs, telesales, catalogs, e-business and independent distributors. Products reach customers through an integrated network of more than 14,500 employees and over 1,100 locations including branches, retail stores, packaged gas fill plants, specialty gas labs, production facilities, and distribution centers. The Company’s national scale and strong local presence offer a competitive edge to its diversified customer base.

     The Company’s consolidated sales were $4.02 billion, $3.21 billion, and $2.83 billion in fiscal years ended March 31, 2008, 2007, and 2006, respectively. The Company’s operations are predominantly in the United States. However, the Company does conduct operations outside of the United States, principally in Canada and to a lesser extent, Mexico, Russia and Dubai. Revenues derived from foreign countries are based on the point of sale and were $63 million, $51 million and $45 million in the fiscal years ended March 31, 2008, 2007 and 2006, respectively. Long-lived assets attributable to the Company’s foreign operations represent less than 2.5% of the consolidated total long-lived assets and were $74 million, $56 million, and $49 million at March 31, 2008, 2007 and 2006, respectively.

     Since its inception, the Company has made close to 375 acquisitions. During fiscal 2008, the Company acquired 18 businesses with aggregate annualized sales in excess of $500 million. The largest acquisition was the U.S. packaged gas operations of Linde A.G. (“Linde Packaged Gas”), which closed on June 30, 2007. The annualized sales of Linde Packaged Gas were $346 million. The operations were principally merged into the Company’s Distribution business segment, while 17 out of 130 branch locations were acquired by the Company’s National Welders operation, which was a consolidated joint venture at that time, and is reflected in the All Other Operations business segment. See Note 3 to the Company’s Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data” for a description of current and prior year acquisition activity. On July 3, 2007, the preferred stockholders of National Welders exchanged their preferred stock for common stock of Airgas (the “National Welders Exchange Transaction”), which resulted in a one-time net after-tax charge of $2.5 million, or $0.03 per diluted share. Upon the exchange, National Welders became a 100% owned subsidiary of Airgas. Although National Welders distributes industrial medical and specialty gases and hardgoods like companies in the Distribution business segment, it is due to the significant production capabilities of National Welders consisting of four air separation plants, two acetylene plants and two specialty gas labs that led the Company to conclude that National Welders is most appropriately reflected in the All Other Operations business segment. See Note 13 to the Company’s Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data” for a description of the National Welders Exchange Transaction.

     The Company has two reporting segments, Distribution and All Other Operations. The Distribution business segment primarily engages in the distribution of industrial, medical, and specialty gases and hardgoods. The All Other Operations business segment principally consists of business units that produce gases for sale to third parties and to the business units in the Distribution business segment.

Companies in the All Other Operations business segment operate 13 air separation plants that produce nitrogen, oxygen and argon (one small air separation plant in Hawaii is managed by a Distribution business segment company). These companies are also constructing two additional air separation plants and a liquid CO2 production facility. Other products produced or distributed by companies in the All Other Operations business segment primarily include carbon dioxide, dry ice, nitrous oxide, specialty gases, refrigerants and anhydrous ammonia. Financial information by business segment can be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”), and in Note 23 to the Company’s Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data.” A more detailed description of the Company’s business segments follows:

DISTRIBUTION BUSINESS SEGMENT

     The Distribution business segment accounted for approximately 84% of consolidated sales in each of the fiscal years 2008, 2007 and 2006.

Principal Products and Services

     The Distribution business segment’s principal products include industrial, medical and specialty gases sold in packaged and bulk quantities. Business units in the Distribution business segment also recognize rental revenue and distribute hardgoods. Gas sales include nitrogen, oxygen, argon, helium, hydrogen, welding and fuel gases such as acetylene, propylene and propane, carbon dioxide, nitrous oxide, ultra high purity grades, special application blends and process chemicals. Rent is derived from gas cylinders, cryogenic liquid containers, bulk storage tanks, tube trailers and through the rental of welding and welding related equipment. Gas and rent represented 54%, 52% and 52% of the Distribution business segment’s sales in each of the fiscal years 2008, 2007 and 2006, respectively. Hardgoods consist of welding consumables and equipment, safety products, and maintenance, repair and operating supplies. Hardgoods sales represented 46%, 48% and 48%, of the Distribution business segment’s sales in each of the fiscal years 2008, 2007, and 2006, respectively.

Principal Markets and Methods of Distribution

     The industry has three principal modes of gas distribution: on-site supply, bulk or merchant supply, and cylinder or packaged gas supply. Airgas’ market focus has been on packaged gas distribution supplying customers with gases in cylinders and in less than truck load bulk quantities. Generally, packaged gas distributors also sell welding hardgoods. The Company believes the U.S. market for packaged gases and welding hardgoods to be approximately $12.5 billion in annual revenue. Packaged gases and welding hardgoods are generally delivered to customers on Company-owned trucks, although third-party carriers are also used in the delivery of welding and safety products and customers can purchase products at retail branch stores and through catalogs and eBusiness.

     Airgas is the largest distributor of packaged gases and welding hardgoods in the United States, with approximately 24% to 26% market share. The Company’s competitors in this market include local and regional independent distributors that serve about half of the market, and large independent distributors and vertically integrated gas producers such as Praxair, Inc. (“Praxair”), Matheson Tri-Gas, Inc., and Liquid Air Corporation of America (“Air Liquide”), which serve the remaining market. Packaged gas distribution is a regional business because it is generally not economical to transport gas cylinders more than 50 to 100 miles. The regionalized nature of the business makes these markets highly competitive. Competition is generally based on reliable product delivery, product availability, quality, and price. The Company also sells safety equipment. The Company believes the U.S. market for safety equipment is greater than $6 billion annually, of which Airgas’ share is approximately 10%.

Customer Base

     The Company’s operations are predominantly in the United States. The customer base is diverse and sales are not dependent on a single or small group of customers. No single customer accounts for more than 0.5% of total net sales. The Company estimates the following industry segments account for the indicated percentages of its total net sales:

•

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

     In addition to the gas volumes supplied by the recently acquired Airgas Merchant Gases, the Company purchases industrial, medical and specialty gases pursuant to contracts with national and regional producers of industrial gases. The Company is a party to a long-term take-or-pay supply agreement, in effect through August 2017, under which Air Products and Chemicals, Inc. (“Air Products”) will supply the Company with bulk nitrogen, oxygen and argon. Additionally, the Company has commitments to purchase helium and hydrogen from Air Products under the terms of the take-or-pay supply agreement. The Company is committed to purchase approximately $50 million annually in bulk gases under the Air Products supply agreement. 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 annual purchase commitments above reflect estimates based on fiscal 2008 purchases.

     The supply agreements noted above contain periodic pricing adjustments based on certain economic indices and market analyses. 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 above due to fluctuations in demand requirements related to varying sales levels as well as changes in economic conditions. The Company believes that, if a long-term supply agreement with a major supplier of gases or other raw materials was terminated, it would look to utilize available internal production capacity and to locate alternative sources of supply to meet customer requirements. The Company purchases hardgoods from major manufacturers and suppliers. For certain products, the Company has negotiated national purchasing arrangements. The Company believes that if an arrangement with any supplier of hardgoods was terminated, it would be able to negotiate comparable alternative supply arrangements.

ALL OTHER OPERATIONS

     The All Other Operations business segment consists of the Company’s Gas Operations Division, the newly formed Airgas Merchant Gases and National Welders. The Gas Operations Division produces and/or distributes certain gas products, principally carbon dioxide, dry ice, nitrous oxide, anhydrous ammonia, refrigerants, and specialty gases. Airgas Merchant Gases produces oxygen, nitrogen, and argon, most of which is supplied to business units in the Distribution business segment. National Welders produces and distributes industrial, medical and specialty gases and hardgoods primarily throughout North and South Carolina.

Gas Operations Division

     The Gas Operations Division produces and distributes carbon dioxide and dry ice (solid form of carbon dioxide). Customers include food processors, food service businesses, pharmaceutical and biotech industries, wholesale trade and grocery outlets. Food and beverage applications account for approximately 70% of the market. The dry ice business generally experiences a higher level of sales during the warmer months. The Gas Operations Division also operates 8 national specialty gas labs, a research and development center and two specialty gas equipment shops. These labs generally provide quality management and technical support to approximately 65 regional labs operated by the Distribution business segment. Specialty gas mixtures are predominantly used in research, which account for 40% of the market. Emissions monitoring, food, laser and environmental applications are also major uses of specialty gases. The Gas Operations Division is the largest manufacturer of nitrous oxide gas in North America. Nitrous oxide is used as an anesthetic in the medical and dental fields, as a propellant in the packaged food business and is utilized in the manufacturing process of certain electronics industries. Airgas Specialty Products is also a business unit in the Gas Operations Division. Airgas Specialty Products is a distributor of anhydrous and aqua ammonia, reclaims and distributes refrigerant gases and manages the Company’s process chemicals product offerings. Anhydrous and aqua ammonia are used for the abatement of nitrogen oxide compounds in the utilities industry. Ammonia is also used in metal finishing, water treatment, chemical processing and refrigeration. Refrigerants are used in a wide variety of commercial and consumer freezing and cooling applications. Process chemicals are reactive compounds used in a wide variety of industrial applications and are distributed through the Company’s Distribution business segment. The Gas Operations Division’s market focus includes bulk customers as well as sales to the Distribution business segment.

Airgas Merchant Gases

     On March 9, 2007, the Company acquired an entity that held the divested U.S. bulk gas assets of Linde AG (“Linde Bulk Gas”) with eight air separation plants (“ASUs”) and about 300 employees. The acquired entity was renamed, “Airgas Merchant Gases,” and now manages production, distribution and sourcing of bulk gases to support the business units in the Distribution business segment as well as its own on-site and direct customers. Airgas now has 14 ASUs, and two more plants under construction, to augment its gas supply sources from other producers. Airgas Merchant Gases directly manages most of these plants, with four ASUs managed by National Welders, and one small ASU in Hawaii managed by Airgas West, a regional company within the Distribution business segment. The air separation plants produce and distribute oxygen, nitrogen and argon. In aggregate, the Company estimates that its atmospheric gas production accounts for approximately 10% of the North American merchant gas production capacity.

National Welders Supply Company, Inc.

     National Welders’ product requirements are principally met through its significant production capabilities consisting of four air separation plants, two acetylene plants and two specialty gas labs. Its significant production capabilities are the primary factor that led the Company to conclude that National Welders is most appropriately reflected in the All Other Operations business segment. National Welders employs over 1,100 associates and primarily delivers its products to a diverse customer base using Company-owned and leased trucks. It also distributes packaged gases and welding products through approximately 65 branch stores.

Suppliers

     The companies in the All Other Operations business segment have significant production capacity. Together, the Gas Operations Division, Airgas Merchant Gases and National Welders operate 13 air separation plants that produce oxygen, nitrogen and argon, which are sold to on-site customers, bulk customers and to the Distribution business segment companies. The Gas Operations Division also operates 4 carbon dioxide production facilities. With 11 dry ice plants (converting liquid carbon dioxide into dry ice), the Gas Operations Division has the largest network of dry ice conversion plants in the United States. These internal sources of carbon dioxide are supplemented by long-term take-or-pay supply contracts. The 4 nitrous oxide production facilities operated by the Gas Operations Division supply both the Gas Operations Division and the Distribution business segment. The raw materials utilized in nitrous oxide production are purchased under contracts with major manufacturers and suppliers. Airgas Specialty Products purchases ammonia from suppliers under agreements, the largest of which requires a 180-day notice to terminate. The open minimum purchase commitment under this agreement is $22 million. Airgas Specialty Products also purchases refrigerant gases from major manufactures.

AIRGAS GROWTH STRATEGIES

     The Company’s primary objective is to maximize shareholder value by driving market-leading sales growth through core and strategic product offerings that leverage the Company’s infrastructure and customer base, by pursuing acquisitions in the Company’s core business and in adjacent businesses, by providing outstanding customer service and by improving operational efficiencies. To meet this objective, the Company is focusing on:

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high potential growth markets such as energy and infrastructure construction;

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less cyclical markets such as, medical, environmental, research, life sciences and food products;

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strategic product offerings expected to grow faster than the overall economy, e.g., bulk gases, specialty gases, medical products, carbon dioxide and safety products;

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continued account penetration;

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improved training, tools and resources for front line associates;

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reducing costs associated with production, cylinder maintenance and distribution logistics; and

•

acquisitions to complement and expand our business.

REGULATORY AND ENVIRONMENTAL MATTERS

     The Company’s subsidiaries are subject to federal and state laws and regulations adopted for the protection of the environment and the health and safety of employees and users of the Company’s products. The Company has programs for the operation and design of its facilities to achieve compliance with applicable environmental regulations. The Company believes that it is in compliance, in all-material respects, with such laws and regulations. Expenditures for environmental compliance purposes during fiscal 2008 were not material.

INSURANCE

     The Company has established insurance programs to cover workers’ compensation, business automobile, and general liability claims. During fiscal 2008 and 2007, these programs had self-insured retention of $1 million per occurrence. During fiscal 2006, the Company’s self-insured retention was $500 thousand per occurrence with an additional aggregate retention of $2.2 million for claims in excess of $500 thousand. For fiscal 2009, the self-insured retention will remain $1 million per occurrence. The Company accrues estimated losses using actuarial methods and assumptions based on the Company’s historical loss experience.

EMPLOYEES

     On March 31, 2008, the Company employed more than 14,500 associates. Approximately 5% of the Company’s associates were covered by collective bargaining agreements. The Company believes it has good relations with its employees and has not experienced a significant strike or work stoppage in over ten years.

PATENTS, TRADEMARKS AND LICENSES

     The Company holds the following registered trademarks: “Airgas,” “RADNOR,” “Gold Gas,” “SteelMIX,” “StainMIX,” “AluMIX,” “Outlook,” “Ny-Trous+,” “Powersource,” “Red-D-Arc,” “RED-D-ARC WELDERENTALS,” “SightSense,” “Aspen,” “Gaspro,” “GAIN,” “SoundSense,” “Walk-O2-Bout,” “Airgas Puritan Medical,” “AcuGrav,” “Penguin Brand Dry Ice,” “Kangaroo Kart,” “National Farm and Shop,” “National/HEF,” “UNAMIX,” “UNAMIG Xtra,” “UNAMIG Six,” and “UNATIG.” The Company also holds trademarks for “Freshblend,” “Aspen Refrigerants,” “CO₂Direct,” “CO₂Direct Refreshingly Easy,” “CO₂Direct Rent Plus,” “National Carbonation,” “Mastercut,” “PerfectPour,” “Reklaim,” “Reklam,” Safe-T-Cyl,” “When You’re Ready To Weld,” and “Your Total Ammonia Solution” and a service mark for “You’ll find it with us.” The Company believes that its businesses as a whole are not materially dependent upon any single patent, trademark or license.

EXECUTIVE OFFICERS OF THE COMPANY

     The executive officers of the Company are as follows:

Name		Age				Position
Peter McCausland			58			Chairman of the Board, President and Chief Executive Officer
Michael L. Molinini			57			Executive Vice President and Chief Operating Officer
Robert M. McLaughlin			51			Senior Vice President and Chief Financial Officer
Robert A. Dougherty			50			Senior Vice President and Chief Information Officer
Patrick M. Visintainer			44			Senior Vice President — Sales
Dwight T. Wilson			52			Senior Vice President — Human Resources
Leslie J. Graff			47			Senior Vice President — Corporate Development
Robert H. Young, Jr.			57			Senior Vice President and General Counsel
Max D. Hooper			48			Division President — West
B. Shaun Powers			56			Division President — East
Ted R. Schulte			57			Division President — Gas Operations
Thomas M. Smyth (1)			54			Vice President and Controller

     Mr. McCausland has been Chairman of the Board and Chief Executive Officer of the Company since May 1987. Mr. McCausland has also served as President from June 1986 to August 1988, from April 1993 to November 1995, from April 1997 to January 1999, and from January 2005 to present. Mr. McCausland also serves as a board member for the Fox Chase Cancer Center, the Independence Seaport Museum, The International Oxygen Manufacturers Association, Inc. and as a member of the Board of Trustees of the Eisenhower Exchange Fellowships, Inc.

     Mr. Molinini has been Executive Vice President and Chief Operating Officer since January 2005. Prior to that time, Mr. Molinini served as Senior Vice President — Hardgoods Operations from August 1999 to January 2005 and as Vice President — Airgas Direct Industrial from April 1997 to July 1999. Prior to joining Airgas, Mr. Molinini served as Vice President of Marketing of National Welders Supply Company, Inc. from 1991.

     Mr. McLaughlin has been Senior Vice President and Chief Financial Officer since October 2006 and served as Vice President and Controller since joining Airgas in June 2001. Prior to joining Airgas, Mr. McLaughlin served as Vice President Finance for Asbury Automotive Group from 1999 to 2001, and was a Vice President and held various senior financial positions at Unisource Worldwide, Inc. from 1992 to 1999.

     Mr. Dougherty has been Senior Vice President and Chief Information Officer since joining Airgas in January 2001. Prior to joining Airgas, Mr. Dougherty served as Vice President and Chief Information Officer from August 1998 to December 2000 and as Director of Information Systems from November 1993 to July 1998 of Subaru of America, Inc.

     Mr. Visintainer has been Senior Vice President — Sales since January 1999. Prior to that time, Mr. Visintainer served as Vice President — Sales and Marketing from February 1998 to December 1998 and as President of one of the Company’s subsidiaries from April 1996 to January 1998. Until March 1996, he was employed by BOC Gases and served in various field positions including National Sales Manager — Industrial/Specialty Gases and National Accounts Manager.

     Mr. Wilson was appointed Senior Vice President — Human Resources in January 2004. Prior to joining Airgas, Mr. Wilson served as Senior Vice President, Corporate Resources at DecisionOne Corporation from October 1995 to December 2003.

     Mr. Graff was appointed Senior Vice President — Corporate Development in August 2006. Prior to that, Mr. Graff held various positions since joining the Company in 1989, including Director of Corporate Finance, Director of Corporate Development, Assistant Vice President - Corporate Development, and Vice President — Corporate Development. He has directed the in-house acquisition department since 2001. Prior to joining Airgas, Mr. Graff served with KPMG LLP from 1983 to 1989.

     Mr. Young was appointed Senior Vice President and General Counsel in October 2007. Prior to joining Airgas, Mr. Young was a shareholder of McCausland Keen & Buckman, which he joined in 1985, and served as outside counsel for the Company on many acquisitions and other corporate legal matters. At McCausland Keen & Buckman, Mr. Young focused his practice on general corporate law for both public and private corporations, mergers and acquisitions, and venture capital financing. Mr. Young first joined the law firm in 1985 after beginning his legal career as an attorney at Drinker Biddle & Reath in Philadelphia. Mr. Young is a graduate of Georgetown University Law Center and Williams College.

     Mr. Hooper was appointed Division President — West in December 2005. Prior to this role, Mr. Hooper had been President of Airgas West since 1996. Prior to joining Airgas, Mr. Hooper served for three years as General Manager and President of an independent distributor, Arizona Welding Equipment Company, in Phoenix, AZ and nine years with BOC Gases in various sales and management roles. Mr. Hooper began his career with AG Pond Welding Supply in San Jose, CA in 1983.

     Mr. Powers has been Division President — East since joining Airgas in April 2001. Prior to joining Airgas, Mr. Powers served as Senior Vice President of Industrial Gases at AGA from October 1995 to March 2001. Mr. Powers has more than 25 years of experience in the industrial gas industry.

     Mr. Schulte has been Division President — Gas Operations since February 2003. Prior to that time, Mr. Schulte served as Senior Vice President — Gas Operations from August 2000 to January 2003, as Vice President — Gas Operations from November 1998 to July 2000 and as President of Airgas Carbonic from November 1997 to October 1998. Prior to joining Airgas, Mr. Schulte served as Senior Vice President of Energetic Solutions, the U.S. subsidiary of ICI Explosives, from June 1997 to October 1997, and as Vice President Industrial Gas Sales of Arcadian Corporation from 1992 through June 1997.

     Mr. Smyth has been Vice President and Controller since November 2006. Prior to that, Mr. Smyth served as Director of Internal Audit since joining Airgas in February 2001 and became Vice President in August 2004. Prior to joining Airgas, Mr. Smyth served in internal audit, controller and chief accounting roles at Philadelphia Gas Works from 1997 to 2001. Prior to that, Mr. Smyth spent 12 years with Bell Atlantic, now Verizon, in a variety of internal audit and general management roles and in similar positions during eight years at Amtrak.

COMPANY INFORMATION

     The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed with or furnished to the Securities and Exchange Commission (“SEC”) are available free of charge on the Company’s website (www.airgas.com) under the “Investors” section. The Company makes these documents available as soon as reasonably practicable after they are filed with or furnished to the SEC, but no later than the end of the day in which they are filed or furnished to the SEC.

Code of Ethics and Business Conduct

     The Company has adopted a Code of Ethics and Business Conduct applicable to its employees, officers and directors. The Code of Ethics and Business Conduct is available on the Company’s website, under the web pages “Company Information,” “About Airgas,” “Corporate Governance.” Amendments to and waivers from the Code of Ethics and Business Conduct will also be disclosed promptly on the website. In addition, stockholders may request a printed copy of the Code of Ethics and Business Conduct, free of charge, by contacting the Company’s Investor Relations department at:

Airgas, Inc.
Attention: Investor Relations
259 N. Radnor-Chester Rd.
Radnor, PA 19087-5283
Telephone: 610.902.6206

Corporate Governance Guidelines

     The Company adopted Corporate Governance Guidelines as well as charters for its Audit Committee and Governance & Compensation Committee. These documents are available on the Company’s website, noted above. Stockholders may also request a copy of these documents, free of charge, by contacting the Company’s Investor Relations department at the address and phone number noted above.

Certifications

     The certification of the Company’s Chief Executive Officer required by Section 303A.12(a) of The New York Stock Exchange Listed Company Manual relating to the Company’s compliance with The New York Stock Exchange’s Corporate Governance Listing Standards was submitted to The New York Stock Exchange on September 4, 2007.

     The Company also filed certifications of its Chairman and Chief Executive Officer and Senior Vice President and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as exhibits to its annual report on Form 10-K for each of the years ended March 31, 2008, 2007 and 2006.

ITEM 1A. RISK FACTORS.

      In addition to risk factors discussed elsewhere in this report, the Company believes the following, which have not been sequenced in any particular order, are the most significant risks related to our business that could cause actual results to differ materially from those contained in any forward looking statements.

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.

     We have substantial amounts of outstanding indebtedness. As of March 31, 2008, we had total consolidated debt of approximately $1.6 billion, of which $40 million matures within the next 12 months. We also participate in a trade receivables securitization agreement with three commercial banks to sell up to $360 million in qualified trade receivables. At March 31, 2008, the amount of outstanding trade receivables under the program was $360 million. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7.

     Our substantial indebtedness could have significant negative consequences, including:

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increasing our vulnerability to general adverse economic and industry conditions;

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limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions and other purposes;

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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.

     Our ability to meet our expenses and debt obligations will depend on our future performance, which will be affected by financial, business, economic and other factors. We will not be able to control many of these factors, such as economic conditions, governmental regulation, the availability of gas products we distribute and the cost of energy. We cannot be certain that our earnings will be sufficient to allow us to pay the principal and interest on our debt and meet our other obligations. If we do not have enough money, we may be required to refinance all or part of our existing debt, sell assets, borrow more money or sell equity. We cannot assure you that we will be able to accomplish any of these alternatives on terms acceptable to us, if at all.

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.

     We and our subsidiaries will be able to incur substantial additional indebtedness in the future. Although our credit facility and indentures governing our subordinated notes contain limitations on the incurrence of additional indebtedness, those limitations are subject to a number of qualifications and exceptions that, depending on the circumstances at the time, would allow us to incur a substantial amount of additional indebtedness. As of March 31, 2008, we had additional borrowing capacity of approximately $847 million of which $186 million could be drawn under our bank credit facility. To the extent new debt and other obligations are added to our and our subsidiaries’ current debt levels, the substantial risks described in the immediately preceding risk factor would increase.

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.

     Demand for our products is affected by general economic conditions. A decline in general economic or business conditions in the industries served by our customers can have a material adverse effect on our business. Although we continue to grow in non-cyclical industry segments such as medical, life sciences and environmental (analytical) and food products, many of our customers are in businesses that are cyclical in nature, such as the industrial manufacturing, non-residential construction, petrochemical and transportation industries, which accounted for approximately 47% of our sales in fiscal 2008. Downturns in these industries, even during periods of strong general economic conditions, can adversely affect our sales and our financial results by affecting demand for and pricing of our products.

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.

     Although one of our principal business strategies is to drive market leading sales growth, the achievement of this objective may be adversely affected by:

•

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.

     In addition, we may not be able to adequately control expenses due to inflation and potentially higher costs of our distribution infrastructure.

Increases in product and energy costs could reduce our profitability.

     The cost of industrial gases represented a significant percentage of our operating costs in fiscal 2008. Because the production of industrial gases requires significant amounts of electric energy, industrial gas prices have historically increased as the cost of electric energy increases. Recent price increases in oil and natural gas have resulted in electric energy surcharges. Energy prices may continue to rise and, as a result, increase the cost of industrial gases. In addition, a significant portion of our distribution costs is comprised of diesel fuel costs, which have increased significantly during fiscal 2008. While we have historically been able to pass increases in the cost of our products and operating expenses on to our customers, we cannot guarantee our ability to do so in the future, which could negatively impact our operations, financial results or liquidity.

Our financial results may be adversely affected by gas supply disruptions/constraints.

     We are the largest U.S. distributor of industrial, medical and specialty gases in packaged form and have long-term supply contracts with the major gas producers. Additionally, we operate 14 air separation plants which provides us with substantial production capacity. Both long-term supply contracts and our own production capacity mitigate supply disruptions to various degrees. However, natural disasters, plant shut downs, labor strikes, and other supply disruptions occur within our industry. Regional supply disruptions may create shortages of certain products. Consequently, we may not be able to obtain the products required to meet our customers’ demands or may incur significant cost to ship product from other regions of the country to meet customer requirements. Such additional costs may adversely impact operating results in those regions until product sourcing can be restored. In the past, we successfully met customer demand by arranging for alternative supplies and transporting product into an affected region, but we cannot guarantee that we will be as successful in arranging alternative product supplies or passing the additional transportation or other costs on to customers in the event of future supply disruptions, which could negatively impact our operations, financial results or liquidity.

We may not be successful in completing acquisitions, which may adversely affect our growth and operating results.

     We have historically expanded our business primarily through acquisitions. A part of our business strategy is to continue to grow through acquisitions that complement and expand our distribution network. During fiscal 2008, we completed 18 acquisitions. We are continuously evaluating acquisition opportunities, some of which are large and complex, and we are currently in various stages of due diligence or preliminary discussions with respect to a number of potential transactions. We cannot guarantee that we will continue to be able to identify acquisition candidates, or that we will be able to complete acquisitions on terms acceptable to us. In addition, there is no assurance that we will be able to obtain financing on terms acceptable to us for future acquisitions and, in any event, such financing may be restricted by the terms of our credit facility or indentures related to our senior subordinated notes.

We may not be successful in integrating our past and future acquisitions and achieving intended benefits and synergies.

     The process of integrating acquired businesses into our operations and achieving targeted synergies may result in unexpected operating difficulties and may require significant financial and other resources that would otherwise be available for the ongoing development or expansion of the existing operations. Additionally, the failure to achieve targeted synergies or planned operating results could require us to recognize an impairment charge related to goodwill associated with an acquisition. Acquisitions involve numerous risks, including:

•

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.

     Additionally, the acquired company may not have an internal control structure appropriate for a larger public company resulting in a need for significant remediation.

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 may be required to incur additional debt in order to consummate acquisitions in the future, which may be substantial. In addition, acquisitions may result in the assumption of the outstanding indebtedness of the acquired company, as well as the incurrence of contingent liabilities and other expenses. All of the foregoing could materially adversely affect our financial condition and operating results.

We depend on our key personnel to manage our business effectively and they may be difficult to replace.

     Our performance substantially depends on the efforts and abilities of our senior management team, including our Chairman and Chief Executive Officer and other executive officers and key employees. Furthermore, much of our competitive advantage is based on the expertise, experience and know-how of our key personnel regarding our distribution infrastructure, systems and products. The loss of key employees could have a negative effect on our business, revenues, results of operations and financial condition.

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.

     From time to time, we are involved in lawsuits that arise from our business transactions. Litigation may, for example, relate to product liability claims, vehicle accidents, contractual disputes, or employment matters. The defense and ultimate outcome of lawsuits against us may result in higher operating expenses. Those higher operating expenses could have a material adverse effect on our business, results of operations or financial condition.

We have established insurance programs with significant deductibles and maximum coverage limits which could result in the recognition of significant losses.

     We maintain insurance coverage for workers compensation, auto and general liability claims with significant per claim deductibles and in some policy years aggregate per claim retentions above those deductibles. In the past, we have incurred significant workers compensation, auto, and general liability losses. Such losses could result in not achieving profitability goals. Additionally, claims in excess of our insurance limits could have a material adverse effect on our financial condition, results of operations or liquidity.

Catastrophic events may disrupt our business and adversely affect our operating results.

     Although our operations are widely distributed across the U.S., a catastrophic event such as a fire or explosion at one of the Company’s fill plants or natural disasters, such as hurricanes, tornados and earthquakes, could result in significant property losses, employee injuries and third-party damage claims. Additionally, such events may severely impact our regional customer base and supply sources resulting in lost revenues, higher product costs, and increased bad debts.

We are subject to environmental, health and safety regulations which could subject us to liability and we will have ongoing environmental costs.

     We are subject to laws and regulations relating to the protection of the environment and natural resources. These include, among other things, the management of hazardous substances and wastes, air emissions and water discharges. Violations of some of these laws can result in substantial penalties, temporary or permanent plant closures and criminal convictions. Moreover, the nature of our existing and historical operations exposes us to the risk of liabilities to third parties. These potential claims include property damage, personal injuries and cleanup obligations. See Item 1, “Business— Regulatory and Environmental Matters” above.

We operate in a highly competitive environment and such competition could negatively impact us.

     The U.S. industrial gas industry is comprised of a small number of major producers. Additionally, there are hundreds of smaller, local distributors, some of whom operate on a low-cost basis, primarily in the packaged gas segment. Some of our competitors may have greater financial resources than we do. If we are unable to compete effectively with our competitors, we will suffer lower revenue and a loss of market share.

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.

     Previously, our major competitors and we have had to reduce prices in order to maintain our market share. Although prices are now increasing, in part due to increased energy and raw materials costs, we cannot guarantee that the prices of our products will not fall in the future, which could adversely affect our revenues and cash flows, or that we will be able to maintain current levels of profitability.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

     None.

ITEM 2. PROPERTIES.

     The Company operates in 48 states, Canada and to a lesser extent Mexico, Russia and Dubai. The principal executive offices of the Company are located in leased space in Radnor, Pennsylvania.

     The Company’s Distribution business segment operates a network of multiple use facilities consisting of approximately 770 branches, over 300 cylinder fill plants, including approximately 65 regional specialty gas laboratories, 17 acetylene plants and one small ASU, as well as 6 regional distribution centers, various customer call centers, buying centers and administrative offices. The Distribution business segment conducts business in 46 states. National Welders, reflected in the All Other Operations business segment, distributes industrial, medical and specialty gases and hardgoods for the Company primarily in North and South Carolina. The Company owns approximately 39% of these facilities. The remaining facilities are primarily leased from third parties. A limited number of facilities are leased from employees and are on terms consistent with commercial rental rates prevailing in the surrounding rental market.

     The Company’s All Other Operations business segment consists of businesses, located throughout the United States, which operate multiple use facilities consisting of approximately 120 branch/distribution locations, 2 acetylene plants, 4 liquid carbon dioxide and 11 dry ice production facilities, 13 air separation plants, 25 fill plants, 8 national specialty gas laboratories, 1 research and development center, 2 specialty gas equipment centers, and 4 nitrous oxide production facilities. The Company owns 47% of these facilities. The remaining facilities are leased from third parties.

     During fiscal 2008, the Company’s production facilities operated at approximately 80% of capacity based on an average daily production period of 16 hours. If required, additional shifts could be run to expand production capacity.

     The Company believes that its facilities are adequate for its present needs and that its properties are generally in good condition, well maintained and suitable for their intended use.

ITEM 3. LEGAL PROCEEDINGS.

     The Company is involved in various legal and regulatory proceedings that have arisen in the ordinary course of its business and have not been fully adjudicated. These actions, when ultimately concluded and determined, will not, in the opinion of management, have a material adverse effect upon the Company’s consolidated financial condition, results of operations or liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended March 31, 2008.

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

     The Company’s common stock is listed on the New York Stock Exchange (ticker symbol: ARG). The following table sets forth, for each quarter during the last two fiscal years, the high and low closing price per share for the common stock as reported by the New York Stock Exchange and cash dividends per share for the period from April 1, 2006 to March 31, 2008:

										Dividends Per
		High				Low				Share
Fiscal 2008
First Quarter		$	48.23			$	41.49			$	0.09
Second Quarter			52.05				42.31			$	0.09
Third Quarter			55.27				45.85			$	0.09
Fourth Quarter			51.01				40.24			$	0.12
Fiscal 2007
First Quarter		$	41.41			$	33.79			$	0.07
Second Quarter			38.12				34.11			$	0.07
Third Quarter			42.91				36.05			$	0.07
Fourth Quarter			42.72				39.31			$	0.07

     The closing sale price of the Company’s common stock as reported by the New York Stock Exchange on May 28, 2008, was $59.18 per share. As of May 28, 2008, there were approximately 15,200 beneficial stockholders of the Company’s common stock, of which approximately 1,200 were stockholders of record.

     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.

Stockholder Return Performance Presentation

     Below is a graph comparing the yearly change in the cumulative total stockholder return on the Company’s common stock against the cumulative total return of the S&P MidCap 400 Chemicals Index and the S&P MidCap 400 Index for the five-year period that began April 1, 2003 and ended March 31, 2008.

     The Company believes the use of the S&P MidCap 400 Chemicals Index and S&P MidCap 400 Index for purposes of this performance comparison is appropriate because Airgas is a component of the indices and they include companies of similar size as Airgas.

Stock Repurchase Plan

     On March 10, 2008, the Company announced the reinstatement of its existing stock repurchase plan and 495,700 shares of Company common stock were repurchased during fiscal 2008. Since inception of the plan, 865,300 shares have been repurchased under the plan and $116 million of the original $150 million authorization remains available for repurchase. The plan had been suspended while the Company consummated and integrated its acquisitions of Linde AG’s U.S. bulk and packaged gas assets.

		(a)				(b)				(c)				(d)
										Total Number				Maximum
										of Shares				Dollar Value of
		Total Number								Purchased as				Shares that May
		of Shares				Average Price				Part of Publicly				Yet Be Purchased
Period		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			$	115,606,346
Total			495,700			$	43.62				495,700			$	115,606,346

     Selected financial data for the Company are presented in the table below and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 and the Company’s consolidated financial statements and notes thereto included in Item 8 herein.

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

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

RESULTS OF OPERATIONS: 2008 COMPARED TO 2007

OVERVIEW

     Airgas, Inc. and its subsidiaries (“Airgas” or the “Company”) had net sales for the fiscal year ended March 31, 2008 (“fiscal 2008” or “current year”) of $4 billion compared to $3.2 billion for the fiscal year ended March 31, 2007 (“fiscal 2007” or “prior year”). Net sales increased by 25% in fiscal 2008 driven by the impact of current and prior year acquisitions and strong same-store sales growth. Acquisitions accounted for 18% of overall sales growth, primarily driven by the two Linde AG acquisitions, described below. Same-store sales growth contributed 7% to the increase in total sales, driven equally by pricing and higher sales volumes. Sales growth related to pricing reflected price increases, which were designed to offset rising product, operating and distribution costs. Higher sales volumes resulted from continued strength in the following: energy and infrastructure construction, medical, food products, environmental, analytical and life sciences customer segments, as well as modest growth of other industrial markets served by the Company. The Company’s strategic products and related growth initiatives, described below, also contributed significantly to overall sales growth in fiscal 2008.

     Strong operating leverage on sales growth resulted in a 120 basis point expansion in the operating income margin to 11.9% in fiscal 2008 compared to 10.7% in the prior year. Net earnings per diluted share grew 39% to $2.66 in fiscal 2008 versus $1.92 in the prior year. Fiscal 2008 included a one-time, non-cash charge of $0.03 per diluted share related to the conversion of National Welders Supply Company, Inc. (“National Welders”) from a joint venture to a 100% owned subsidiary, and $0.01 per diluted share tax benefit related to a change in state tax law. Fiscal 2007 included a charge of approximately $0.10 per diluted share from the redemption of the Company’s 9.125% senior subordinated notes and a $0.02 per diluted share tax benefit from a change in state income tax law.

Acquisitions

     Fiscal 2008 was a landmark acquisition year for the Company with a total of 18 businesses acquired that generate aggregate annual revenues of more than $500 million. The largest of these acquisitions was the June 30, 2007 acquisition of the U.S. packaged gas operations of Linde AG (“Linde Packaged Gas”) for $310 million in cash. The acquisition of Linde Packaged Gas included 130 locations in 18 states, with more than 1,400 employees. The acquired business is involved in the distribution of packaged gases and related hardgoods. Linde Packaged Gas generated $346 million in annual revenues during calendar year 2006. Of the 130 locations acquired, 113 locations were merged into the operations of seven regional companies in the Distribution business segment while 17 branches were merged into the operations of National Welders, included in the All Other Operations business segment. In addition, during fiscal 2008, the Company acquired 17 other businesses and settled acquisition holdback liabilities for cash consideration of $170 million. These other acquired businesses generated aggregate annual revenues of more than $160 million.

     Fiscal 2008 financial results also reflect the impact of prior year acquisitions. The most significant of these was the March 9, 2007 acquisition of the divested U.S. bulk gas assets of Linde AG (“Linde Bulk Gas”) for $495 million in cash. The Linde Bulk Gas acquisition included eight air separation plants and related bulk gas business with about 300 employees. The acquired business produces and distributes oxygen, nitrogen and argon and generated $176 million in annual revenues during calendar year 2006.

The acquired business was renamed “Airgas Merchant Gases” and now manages production, distribution and administrative functions for seven of the air separation plants. One air separation plant and its aligned sales were transferred to National Welders. Airgas Merchant Gases is reflected in the Company’s All Other Operations business segment. Most of the acquired Linde Bulk Gas customers and related service equipment were transferred to existing Distribution business units. Airgas Merchant Gases principally operates as an internal supplier of bulk oxygen, nitrogen and argon to the business units in the Distribution business segment.

National Welders Exchange Transaction

     On July 3, 2007, the preferred stockholders of National Welders exchanged their preferred shares of National Welders for 2.47 million shares of Airgas common stock (the “National Welders Exchange Transaction”). Upon the exchange, National Welders, formerly a consolidated joint venture, became a 100% owned subsidiary of Airgas. As part of the negotiated exchange, in addition to the shares of Airgas common stock the preferred stockholders had the option to acquire, the Company issued an additional 144 thousand Airgas shares (included in the 2.47 million shares) to the preferred stockholders, which resulted in a one-time net after-tax charge of $2.5 million, or $0.03 per diluted share. In connection with the National Welders Exchange Transaction, the Company amended its senior credit facility to increase the size of its U.S. dollar revolving credit line by $100 million to refinance National Welders’ debt assumed in the transaction. See Note 13 to the Company’s Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data” for a description of the National Welders Exchange Transaction.

Strategic Products

     Sales of strategic products generated strong growth of 10% in fiscal 2008. Strategic products include safety products, medical, specialty and bulk gases as well as carbon dioxide and dry ice. The Company has focused on these products over the last decade to broaden its product portfolio and diversify against traditional industrial cyclicality. Many of the strategic products are sold to customers in non-cyclical sectors of the economy, including medical, life sciences, food processing and environmental markets. In addition, some of these products represent a strong cross-selling opportunity within our broad base of existing customers. The Company believes its focus on these strategic products and markets will help to mitigate the impact of a slowing economic environment.

Supply Constraints

     The industrial gas industry is working through supply constraints related to certain gases, such as helium, argon and carbon dioxide. Throughout fiscal 2008, there has been an industry-wide helium shortage resulting in a significant increase in helium costs and reduced volumes available for sale. More recently, the Company’s helium supply constraints have been mitigated through new supply agreements and relaxed allocations. The Company’s position in argon is also constrained, but has improved recently, as new sources have eased some of the supply issues and gas production capacity is at its highest during the winter months due to lower ambient air temperatures. The Company believes that it will continue to be able to keep its customers supplied by constantly evaluating and improving product sourcing strategies.

     In some areas of the country, carbon dioxide is also under pressure, as old supply sources have been depleted without being replaced. In October 2007, the Company announced an agreement with Shell Oil to build a 450 ton-per-day plant in Deer Park, Texas, to better serve the Houston and South Texas areas. The Deer Park plant is expected to begin operating by January 2009. The Company also announced a joint marketing alliance with Renew Energy, LLC, Wisconsin’s newest and largest ethanol plant, which will enable Airgas’ carbon dioxide subsidiary to market beverage-grade liquid carbon dioxide co-product from the plant. The Company began distributing carbon dioxide under the marketing alliance in March 2008. The Company will continue to search for new supply sources of carbon dioxide in areas in which supply is limited.

Reinstated Stock Repurchase Plan

     In November 2005, the Company’s Board of Directors approved a stock repurchase plan (the “Repurchase Plan”) that provided the Company with the authorization to repurchase up to $150 million of its common stock. The Repurchase Plan was suspended in July 2006 while the Company consummated its acquisitions of Linde AG’s U.S. bulk and packaged gas assets. In March 2008, the Company reinstated its Repurchase Plan and repurchased 496 thousand shares for $21.6 million. As of March 31, 2008, the Company has the remaining authorization to spend up to $116 million on future purchases of its common stock under the Repurchase Plan.

INCOME STATEMENT COMMENTARY

Net Sales

     Net sales increased 25% in fiscal 2008 compared to fiscal 2007 driven by acquisition growth of 18% and strong same-store sales growth of 7%. Pricing and volume sales gains contributed equally to same-store sales growth. The Company estimates same-store sales based on a comparison of current period sales to prior period sales, adjusted for acquisitions and divestitures. The pro forma adjustments consist of adding acquired sales to, or subtracting sales of divested operations from, sales reported in the prior period. The table below reflects actual sales and does not include the pro forma adjustments used in calculating the same-store sales metric. The intercompany eliminations represent sales from the All Other Operations business segment to the Distribution business segment.

Net Sales

(In thousands)		2008				2007				Increase
Distribution		$	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	%

     The Distribution business segment’s principal products include industrial, medical specialty gases, and process chemicals; cylinder and equipment rental; and hardgoods. Industrial, medical and specialty gases are distributed in cylinders and bulk containers. Equipment rental fees are generally charged on cylinders, cryogenic liquid containers, bulk and micro-bulk tanks, tube trailers and welding equipment. Hardgoods consist of welding consumables and equipment, safety products, and maintenance, repair and operating (“MRO”) supplies.

     Distribution business segment sales increased 24% compared to the prior year driven by sales contributed by both current and prior year acquisitions of $431 million and same-store sales growth of $221 million (7%). Sales growth from acquired businesses was principally attributable to the acquisitions of Linde Bulk Gas and Linde Packaged Gas customers that are now served by the Distribution business segment. The increase in Distribution same-store sales resulted from gas and rent same-store sales growth of $135 million (8%) and higher hardgoods sales of $86 million (6%). Strong same-store sales growth in the Company’s core gas and welding hardgoods business reflected broad-based demand from industrial markets as well as strong demand in the energy and infrastructure construction sectors, which include projects such as power plants, refineries, pipelines, water treatment plants, bridges and airports. The Distribution business segment’s sales were also driven by strong sales growth of strategic products. Fiscal 2008 acquisitions are expected to contribute more than $180 million to the Distribution business segment sales growth in fiscal 2009.

     The Distribution segment’s gas and rent same-store sales growth of 8% reflects both price increases and volume growth, which contributed equally to sales growth. Sales of strategic gas products increased 12% driven by bulk, medical and specialty gas sales gains. Bulk gas sales volumes were up 14% reflecting volume growth from enhanced production capabilities and expanded geographic market coverage associated with the Linde Bulk Gas acquisition. The Company’s strong position as a bulk gas distributor also helped increase the number of new bulk customer contracts signed during the year. Medical gas sales grew 9% attributable to continued success with the hospital, physician and dental care markets, all of which have strong future growth prospects. The Walk-O2-Bout^® medical cylinder program tailored for the respiratory therapy market also contributed to medical gas sales. Strong specialty gas sales growth of 12% was driven by demand from key customers in bio-tech, life sciences, research, and environmental monitoring markets. The Company expects these specialty gas markets to continue to propel

specialty gas sales growth in the future. Rental revenues benefited from the Company’s rental welder business that generated 24% same-store sales growth in the current year. The Company’s rental welder business was helped by its sales concentration in energy and infrastructure construction.

     Hardgoods same-store sales growth of 6% reflects both volume and price gains, which contributed about equally to growth. The Company’s successful RADNOR^® private label brand of products generated sales growth of 24% in the current year, reaching a total of $159 million. Sales of Radnor brand products were helped by the stocking of these products in the branch stores obtained from the Linde Packaged Gas acquisition. Same-store sales of safety products increased 8% resulting from the success of the telemarketing operations (telesales) and effective cross-selling of safety products to new and existing customers. Hardgoods same-store sales growth slowed to 4% in the fourth quarter driven by lower volumes reflecting the recent slowness in certain industrial markets.

     The All Other Operations business segment consists of the Company’s Gas Operations Division, Airgas Merchant Gases and National Welders. The Gas Operations Division produces and/or distributes certain gas products, principally carbon dioxide, dry ice, nitrous oxide, specialty gases, anhydrous ammonia, refrigerants and related supplies, services and equipment. The Linde Bulk Gas business acquired in March 2007 and renamed “Airgas Merchant Gases” manages production, distribution and administrative functions for the acquired air separation plants. Airgas Merchant Gases principally acts as an internal wholesale supplier to the Distribution business segment. The business units in the Distribution business segment manage the customer relationships and bill the bulk gas customers. Accordingly, the majority of the operating profits related to bulk gas sales are reported in the Distribution business segment. National Welders is a producer and distributor of industrial, medical and specialty gases and hardgoods principally in North Carolina and South Carolina.

     Fiscal 2008 sales of the All Other Operations’ business segment increased $260 million (45%) compared to the prior year resulting from acquisitions and same-store sales growth. Acquisitions contributed 36% to the segment’s sales growth, which was primarily driven by sales of $109 million of acquired sales from Airgas Merchant Gases. Sales of Airgas Merchant Gases to the Distribution business segment also drove much of the increase in intercompany sales, which are eliminated in consolidation. The addition of National Welders’ portion of the acquired Linde Packaged Gas business contributed $44 million to acquired sales. Other acquisitions in this segment included refrigerant businesses, which contributed $37 million to acquired sales. Same-store sales growth of 9% was driven by sales gains of anhydrous ammonia, refrigerant and carbon dioxide products. Sales volume gains of ammonia resulted from strong demand from customers in the chemical production industry. Sales growth of refrigerants was driven by higher volumes, particularly in the fourth quarter of fiscal 2008, as customers sourced product in advance of the warmer summer months. Sales growth of carbon dioxide and dry ice reflected continued success in the food processing, food and beverage service, pharmaceutical and biotech industries.

Gross Profits

     Gross profits do not reflect depreciation expense and distribution costs. As disclosed in Note 1 to the Company’s Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data,” the Company reflects distribution costs as an element of Selling, Distribution and Administrative Expenses and recognizes depreciation on all its plant and equipment in the Consolidated Statement of Earnings line “Depreciation.” Other companies may report certain or all of these costs as elements of their Cost of Products Sold and, as such, the Company’s gross profits discussed below may not be comparable to those of other entities.

     Gross profits increased 28% principally from acquisitions and sales growth. The gross margin in the current year increased 90 basis points to 52.0% compared to 51.1% in the prior year, with the increase driven primarily by a favorable shift in product mix towards higher-margin gas as well as the impact of pricing.

Gross Profit

(In thousands)		2008				2007				Increase
Distribution		$	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	%

     The Distribution business segment’s gross profits increased 25% compared to the prior year. The Distribution business segment’s gross margin was 50% versus 49.6% in the prior year. The 40 basis point increase in the gross margin reflected the favorable shift in product mix toward gas and rent as well as the impact of price increases. Gas and rent as a percentage of the Distribution business segment’s sales was 54.1% in the current year as compared to 52.0% in the prior year.

     The All Other Operations business segment’s gross profits increased 39% primarily from acquisitions. Gross profit growth of 30% from acquisitions was principally due to Airgas Merchant Gases, the addition of National Welders’ portion of the Linde Packaged Gas acquisition and the acquired refrigerant businesses. The remaining gross profit growth of 9% was primarily driven by strong sales growth of anhydrous ammonia, refrigerant and carbon dioxide products. The segment’s gross margin decreased 210 basis points to 49.9% versus 52.0% in the prior year driven by the addition of Airgas Merchant Gases, which has lower gross margins than the other businesses in the All Other Operations business segment. Airgas Merchant Gases acts as an internal wholesale supplier of bulk gases to business units in the Distribution business segment.

Operating Expenses

     Selling, distribution and administrative (“SD&A”) expenses consist of labor and overhead associated with the purchasing, marketing and distribution of the Company’s products, as well as costs associated with a variety of administrative functions such as legal, treasury, accounting, tax and facility-related expenses.

     As a percentage of net sales, SD&A expense decreased 40 basis points to 35.5% compared to 35.9% in the prior year reflecting improved cost leverage and effective cost management. SD&A expenses increased $276 million (24%) primarily from operating costs of acquired businesses and higher variable expenses associated with the growth in sales volumes. Acquisitions contributed estimated incremental SD&A expenses of approximately $186 million in the current year, including integration expenses of $10 million principally related to the Linde Packaged Gas acquisition. The increase in SD&A expense attributable to factors other than acquisitions was approximately $90 million, or an increase of 7%, primarily due to salaries and wages and distribution-related expenses.

The increase in salaries and wages reflected increased operational headcounts, wage inflation, and overtime to fill cylinders, deliver products and operate facilities to meet increased customer demand. The increase in distribution expenses was attributable to higher fuel and vehicle repair and maintenance costs. Higher fuel and vehicle maintenance costs were related to the increase in miles driven to support sales growth. Average diesel fuel prices were also higher versus the prior year.

     Depreciation expense of $176 million increased $37 million (27%) compared to the prior year. Acquired businesses added approximately $28 million to depreciation expense. The remainder of the increase primarily reflects the current and prior year’s capital investments in revenue generating assets to support customer demand, primarily cylinders, bulk tanks and rental welders, as well as the addition of new fill plants and branch stores. Amortization expense of $14 million was $5 million (64%) higher than the prior year driven by the amortization of customer lists and non-compete agreements associated with acquisitions.

Operating Income

     Operating income increased 39% in the current year driven by higher sales levels and margin improvement. Improved cost leverage on sales growth was the primary contributor to a 120 basis point increase in the operating income margin to 11.9% compared to 10.7% in the prior year. Acquisition integration costs principally associated with the Linde Packaged Gas acquisition reduced the operating income margin by approximately 25 basis points.

Operating Income

(In thousands)		2008				2007				Increase
Distribution		$	388,100			$	266,708			$	121,392				46	%
All Other Operations			88,046				74,744				13,302				18	%
		$	476,146			$	341,452			$	134,694				39	%

     Operating income in the Distribution business segment increased 46% in the current year. The Distribution business segment’s operating income margin increased 170 basis points to 11.6% compared to 9.9% in the prior year. The significant margin improvement was driven by continued operating profit leverage on sales growth, effective management of costs and pricing and the addition of the distribution customers from the Linde Bulk Gas business, which contributed approximately 80 basis points of the operating margin increase. Acquisition integration costs primarily related to the Linde Packaged Gas acquisition reduced the Distribution business segment’s operating income margin by approximately 25 basis points.

     Operating income in the All Other Operations business segment increased 18% compared to the prior year, principally driven by acquisitions. The segment’s operating income margin of 10.5% was 240 basis points lower than 12.9% in the prior year. Airgas Merchant Gases’ internal transfer pricing on sales to the Distribution business segment was responsible for 150 basis points of the operating income margin decline. Another factor contributing to the decline in the operating income margin was the addition of National Welders’ portion of the Linde Packaged Gas acquisition and its related integration costs.

Interest Expense and Discount on Securitization of Trade Receivables

     Interest expense, net, and the discount on securitization of trade receivables totaled $107 million representing an increase of 45% compared to the prior year. The increase primarily resulted from higher average debt levels associated with acquisitions and a larger securitization program, partially offset by lower weighted-average interest rates related to the Company’s variable rate debt instruments and the refinancing of the 9.125% senior subordinated notes in the prior year. See the discussion of the refinancing of the senior subordinated notes under the section Loss on Debt Extinguishment, below.

     The Company participates in a securitization agreement with three commercial banks to sell up to $360 million of qualifying trade receivables. The amount of outstanding receivables under the agreement was $360 million at March 31, 2008 versus $264 million at March 31, 2007. Net proceeds from the sale of trade receivables were used to reduce borrowings under the Company’s revolving credit facilities. The discount on the securitization of trade receivables represents the difference between the carrying value of the receivables and the proceeds from their sale. The amount of the discount varies on a monthly basis depending on the amount of receivables sold and market rates.

     As discussed in “Liquidity and Capital Resources” and in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” the Company manages its exposure to interest rate risk through participation in interest rate swap agreements. Including the effect of the interest rate swap agreements and the trade receivables securitization, the Company’s ratio of fixed to variable rate debt at March 31, 2008 was 40% fixed to 60% variable. A majority of the Company’s variable rate debt is based on a spread over the London Interbank Offered Rate (“LIBOR”). Based on the Company’s fixed to variable interest rate ratio, for every 25 basis point increase in LIBOR, the Company estimates that its annual interest expense would increase approximately $3 million.

Loss on Debt Extinguishment

     On October 27, 2006, the Company redeemed its $225 million 9.125% senior subordinated notes at a premium of 104.563% with borrowings under the Company’s revolving credit facility. In conjunction with the redemption, the Company recognized a charge on the early extinguishment of debt of $12.1 million ($7.9 million after tax), or approximately $0.10 per diluted share. The charge related to the redemption premium and the write-off of unamortized debt issuance costs.

Income Tax Expense

     The effective income tax rate was 38.9% of pre-tax earnings in the current year compared to 38.8% in the prior year. The current and prior year periods include tax benefits associated with a change in the Texas state income tax law, which reduced the effective tax rate by 0.3% and 0.7%, respectively. The prior year tax benefit resulted from the initial change in the law and the current year tax benefit was based on additional guidance issued by the state of Texas. These tax benefits reflect the reduction of deferred tax liabilities previously established for temporary differences under the prior state tax law. The fiscal 2007 tax rate also reflects the absence of state tax benefits associated with the loss on the extinguishment of debt.

Net Earnings

     Net earnings were $223 million, or $2.66 per diluted share, compared to $154 million, or $1.92 per diluted share, in the prior year. The current year included a one-time, non-cash charge of $0.03 per diluted share related to the conversion of National Welders from a joint venture to a 100% owned subsidiary, and $0.01 per diluted share tax benefit related to a change in Texas state income tax law. The prior year period included a charge of approximately $0.10 per diluted share from the early extinguishment of debt and a $0.02 per diluted share tax benefit from a change in Texas state income tax law.

RESULTS OF OPERATIONS: 2007 COMPARED TO 2006

OVERVIEW

     The Company had net sales for the fiscal year ended March 31, 2007 (“fiscal 2007”) of $3.20 billion compared to $2.83 billion for the fiscal year ended March 31, 2006 (“fiscal 2006”). Net sales increased by 13% driven by strong same-store sales growth and the impact of acquisitions. Same-store sales growth contributed 8% to the increase in total sales. Same-store sales growth was driven equally by pricing initiatives and higher sales volumes. Price increases were initiated in response to rising product, operating and distribution costs. Higher sales volumes resulted from the continued strength of the industrial economy, the non-residential construction environment, and the continued success of the Company’s growth initiatives. Acquisitions continue to be an important component of the Company’s growth contributing 5% to the overall increase in net sales. Operating income margin expanded 120 basis points in fiscal 2007 to 10.7% compared to 9.5% in fiscal 2006 reflecting continued operating leverage. Solid sales growth and operating expense discipline resulted in income from continuing operations of $154 million, or $1.92 per diluted share, compared to $128 million, or $1.62 per diluted share, in fiscal 2006.

Accounting Change

     Effective April 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123R, Share-Based Payment, (“SFAS 123R”), using the modified prospective method. The standard requires the Company to estimate the value of stock options issued to employees, including options to purchase shares under its Employee Stock Purchase Plan, and recognize stock-based compensation expense over the period in which the options vest. Prior to the adoption of SFAS 123R, the Company used the intrinsic value method outlined in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, to account for stock-based compensation. In fiscal 2007, the Company recognized stock-based compensation expense of $15.4 million ($10.9 million after tax), or $0.13 per diluted share. Since the Company adopted SFAS 123R using the modified prospective method, no stock-based compensation expense was reflected in earnings prior to April 1, 2006.

Acquisitions

     During fiscal 2007, the Company completed 13 acquisitions with combined annual sales of approximately $336 million. These acquisitions included the September 2006 purchase of Houston, Texas-based Aeriform Corporation, a distributor of industrial gases and related hardgoods. Aeriform, with 29 locations and 240 employees in Texas, Louisiana, Oklahoma and Kansas, generated annual revenue of $65 million. In November 2006, the Company purchased the Union Industrial Gas Group, a distributor of industrial gases and related hardgoods. The Union Industrial Gas Group, with 14 locations and 100 employees in New Mexico, Texas and Louisiana, had annual revenue of $38 million. In January 2007, the Company purchased CFC Refimax, a leading full-service refrigerant supplier and reclamation company. CFC Refimax, based in Atlanta, Georgia with 50 employees, generated annual revenue of $19 million. In March 2007, the Company completed the Linde Bulk Gas acquisition. The Linde Bulk Gas acquisition, consisting of eight air separation units (ASUs) and 300 employees, produced annual revenue of $176 million for the year ended December 31, 2006. The total aggregate purchase price for the fiscal 2007 acquisitions was $688 million, of which $495 million was paid for the Linde Bulk Gas acquisition.

Financing

     In July 2006, the Company amended and restated its senior credit facility with a syndicate of lenders. The increased borrowing capacity under the senior credit facility provided the Company with financing to close the March 2007 Linde Bulk Gas acquisition, refinance $100 million of its 7.75% medium-term notes in September 2006, and redeem its $225 million 9.125% senior subordinated notes (the “Notes”).

     The Notes, which would have matured on October 1, 2011, were redeemed at a premium of 104.563% of the principal amount with borrowings under the Company’s credit facility. In conjunction with the redemption of the Notes, the Company recognized a charge on the early extinguishment of debt of $12.1 million ($7.9 million after tax), or approximately $0.10 per diluted share. The charge related to the redemption premium and the write-off of unamortized debt issuance costs.

INCOME STATEMENT COMMENTARY

Net Sales

     Net sales increased 13% in fiscal 2007 compared to fiscal 2006 driven by strong same-store sales growth of 8% and acquisition growth of 5%. Same-store sales growth reflected pricing initiatives, volume growth, and strategic product sales gains, driven by the continued strength of the industrial production, energy and infrastructure construction markets served by the Company. The Company estimates same-store sales based on a comparison of current period sales to prior period sales, adjusted for acquisitions and divestitures. The pro forma adjustments consist of adding acquired sales to, or subtracting sales of divested operations from, sales reported in the prior period. The table below reflects actual sales and does not include the pro forma adjustments used in calculating the same-store sales metric. The intercompany eliminations represent sales from All Other Operations to the Distribution business segment.

Net Sales

(In thousands)		2007				2006				Increase
Distribution		$	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	%

     Distribution business segment sales increased 12% compared to fiscal 2006 driven by same-store sales growth of $200 million (8%) and sales contributed by acquisitions of $96 million (4%). The increase in Distribution same-store sales resulted from higher hardgoods sales of $95 million (8%) and gas and rent sales growth of $105 million (8%). Broad demand from industrial, energy, and infrastructure construction sectors helped the Company’s core gas and welding hardgoods business. Several of the Company’s business units reported double-digit growth. Sales growth was also driven by double digit growth of strategic products sales. Fiscal 2007 acquisitions attributable to the Distribution business segment historically generated annual revenue of approximately $300 million. The largest of the fiscal 2007 acquisitions closed in the second half of the fiscal year, with the Linde Bulk Gas acquisition closing in March 2007.

     The Distribution business segment’s gas and rent same-store sales increase of 8% reflects both price increases and volume growth. Sales of industrial gases during fiscal 2007 remained strong reflecting demand from the Company’s core industrial markets. Sales of strategic gas products increased 11% in fiscal 2007 driven by bulk, medical and specialty gas sales gains. Bulk gas sales volumes were up related to growth in micro-bulk and the signing of new bulk customer contracts. Medical gas sales growth was attributable to higher demand from the hospital sector as well as success of the Walk-O2-Bout^® medical cylinder program. Rental revenues benefited from the Company’s rental welder business that generated 33% same-store sales growth in fiscal 2007. The rebuilding effort in the Gulf Coast area, power plant construction projects and the strong infrastructure construction market contributed to the increase in demand for welding machines, gases and consumables.

     Hardgoods same-store sales growth reflects continued volume and pricing gains. The Company’s successful RADNOR^® private label brand of products generated sales growth of 11% in fiscal 2007, reaching a total of $128 million. Same-store sales of safety products increased 10% reflecting the success of the telemarketing operations (telesales) and effective cross-selling of safety products to new and existing customers.

     All Other Operations business segment’s sales increased $86 million (17%) compared to fiscal

2006 resulting from same-store sales growth and acquisitions. Same-store sales growth of 8% was driven by continued sales gains of National Welders and growth in carbon dioxide products. Sales of dry ice and liquid carbon dioxide were strong contributors to sales growth in fiscal 2007 reflecting success in the food processing and industrial carbon dioxide markets and the Company’s nationwide network of Penguin dry ice retail locations. Sales growth from acquisitions primarily reflects a fiscal 2006 acquisition of a packaged gas distributor by National Welders. Fiscal 2007 acquisitions reflected in the All Other Operations business segment include CFC Refimax, and the Linde Bulk Gas business. Fiscal 2007 acquisitions did not significantly impact the fiscal years’ sales growth as they closed in the fourth quarter.

Gross Profits

     Gross profits increased 15% principally from sales growth and acquisitions. The gross margin was 51.1% compared to 50.5% in fiscal 2006.

Gross Profit

(In thousands)		2007				2006				Increase
Distribution		$	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	%

     The Distribution business segment’s gross profits increased $164 million (14%) compared to fiscal 2006. The Distribution segment’s gross margin was 49.6% versus 48.9% in fiscal 2006. The increase in the gross margin of 70 basis points reflected the impact of price increases as well as a favorable shift in product mix toward and within gas and rent. Gas and rent as a percentage of the Distribution business segment’s sales was 52.0% compared to 51.7% in fiscal 2006.

     The All Other Operations business segment’s gross profits increased $46 million (18%) primarily from strong sales growth at National Welders and sales volume growth of carbon dioxide products. The segment’s gross margin increased 30 basis points to 52.0% versus 51.7% in fiscal 2006 driven by improvement in pricing and margin expansion, particularly with respect to the anhydrous ammonia product line acquired in June 2005.

Operating Expenses

     As a percentage of net sales, SD&A expense decreased 50 basis points to 35.9% compared to 36.4% in fiscal 2006 reflecting improved cost leverage and effective cost management. The decrease in SD&A expense as a percentage of sales occurred despite $15.4 million, or approximately 50 basis points, of stock-based compensation expense in fiscal 2007 (as described in the Overview section above). There was no stock-based compensation expense in fiscal 2006. SD&A expenses increased $118 million (11%) primarily from higher variable expenses associated with the growth in sales volumes and the operating costs of acquired businesses. Acquisitions contributed estimated incremental SD&A expenses of approximately $30 million in fiscal 2007. The increase in SD&A expense attributable to factors other than stock-based compensation and acquisitions was approximately $72 million, or an increase of 7%, primarily attributable to salaries and wages and distribution-related expenses. The increase in salaries and wages reflected increased operational headcounts and overtime to fill cylinders, deliver products and operate facilities to meet increased customer demand. The increase in distribution expenses was attributable to higher fuel and vehicle repair and maintenance costs, which were up approximately $12 million versus fiscal 2006. Higher fuel costs were directly related to the rise in diesel fuel prices and the increase in miles driven to support related sales growth. Operating expenses in fiscal 2006 included $2.2 million associated with hurricanes Katrina and Rita.

     Depreciation expense of $139 million increased $16 million (13%) compared to fiscal 2006. Acquired businesses added approximately $3 million of depreciation expense. The remainder of the increase primarily reflects fiscal 2007 and 2006 capital investments in revenue generating assets to support customer demand, primarily cylinders, bulk tanks and rental welders, as well as the addition of new fill plants and branch stores. Amortization expense of $9 million was $3 million higher than fiscal 2006 driven by the amortization of customer lists and non-compete agreements associated with acquisitions.

Operating Income

     Operating income increased 27% in fiscal 2007 driven by higher sales levels and margin improvement. Improved cost leverage on sales growth was the primary contributor to a 120 basis point increase in the operating income margin to 10.7% compared to 9.5% in fiscal 2006.

Operating Income

(In thousands)		2007				2006				Increase
Distribution		$	266,708			$	208,466			$	58,242				28	%
All Other Operations			74,744				60,292				14,452				24	%
		$	341,452			$	268,758			$	72,694				27	%

     Operating income in the Distribution business segment increased 28% in fiscal 2007. The Distribution business segment’s operating margin increased 120 basis points to 9.9% compared to 8.7% in fiscal 2006. The significant margin improvement was driven by continued operating profit leverage on sales growth and effective management of costs and pricing.

     Operating income in the All Other Operations business segment increased 24% compared to fiscal 2006. The segment’s operating income margin of 12.9% was 70 basis points higher than 12.2% in fiscal 2006. The increases in operating income and operating margin were driven by the strong business momentum of National Welders and the improved anhydrous ammonia business.

Interest Expense and Discount on Securitization of Trade Receivables

     Interest expense, net, and the discount on securitization of trade receivables totaled $74 million representing an increase of 17% compared to fiscal 2006. The increase primarily resulted from higher average debt levels associated with acquisitions, a larger securitization program and higher weighted-average interest rates related to the Company’s variable rate debt instruments, partially offset by the refinancing of higher fixed rate debt, as discussed in the Overview section.

     The Company participates in a securitization agreement with three commercial banks to sell qualifying trade receivables. The amount of outstanding receivables under the agreement was $264 million at March 31, 2007 versus $244 million at March 31, 2006. Net proceeds from the sale of trade receivables were used to reduce borrowings under the Company’s revolving credit facilities. The discount on the securitization of trade receivables represents the difference between the carrying value of the receivables and the proceeds from their sale. The amount of the discount varies on a monthly basis depending on the amount of receivables sold and market rates.

Loss on Debt Extinguishment

     On October 27, 2006, the Company redeemed its $225 million 9.125% senior subordinated notes at a premium of 104.563% with borrowings under the Company’s revolving credit facility. In conjunction with the redemption, the Company recognized a charge on the early extinguishment of debt of $12.1 million ($7.9 million after tax), or approximately $0.10 per diluted share. The charge related to the redemption premium and the write-off of unamortized debt issuance costs.

Income Tax Expense

     The effective income tax rate was 38.8% of pre-tax earnings in fiscal 2007 compared to 37.4% in fiscal 2006. The fiscal 2007 effective income tax rate reflects a tax benefit associated with changes in state income tax law in Texas, which reduced the effective tax rate by 0.7%. Additionally, the fiscal 2007 tax rate reflects the limited deductibility of stock-based compensation associated with the Company’s Employee Stock Purchase Plan and the absence of state tax benefits associated with the loss on the extinguishment of debt. The lower tax rate in fiscal 2006 reflected favorable changes in valuation allowances associated with state tax net operating loss carryforwards and a favorable adjustment to previously recorded tax liabilities.

Income from Continuing Operations

     Income from continuing operations in fiscal 2007 was $154 million, or $1.92 per diluted share, which reflects an after-tax loss of $7.9 million from the early extinguishment of debt, or $0.10 per diluted share, stock-based compensation expense of $10.9 million after tax, or $0.13 per diluted share, and $1.8 million, or $0.02 per diluted share, tax benefit associated with changes in state income tax law. Income from continuing operations in fiscal 2006 was $128 million, or $1.62 per diluted share. Stock-based compensation expense was not recognized in fiscal 2006.

Loss from Discontinued Operations

     In December 2005, the Company divested its business unit Rutland Tool & Supply Co., Inc. (“Rutland Tool”). Consequently, the operating results of Rutland Tool for fiscal 2006 are reflected as discontinued operations. For fiscal 2006, the loss from discontinued operations, net of tax, was $1.4 million, which principally represented a loss on the sale of the business.

Cumulative Effect of a Change in Accounting Principle

     Effective March 31, 2006, the Company adopted Financial Accounting Standards Board Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143, (“FIN 47”), and recorded a $2.5 million after-tax charge ($0.03 per diluted share) as a cumulative effect of a change in accounting principle.

Net Earnings

     Fiscal 2007 net earnings were $154 million, or $1.92 per diluted share, compared to $124 million, or $1.57 per diluted share, in fiscal 2006.

LIQUIDITY AND CAPITAL RESOURCES

Fiscal 2008 Cash Flows

     Net cash provided by operating activities was $550 million in fiscal 2008 compared to $326 million in fiscal 2007. Net earnings adjusted for non-cash and non-operating items provided cash of $508 million versus $384 million in the prior year. Working capital resulted in a use of cash of $51 million versus a use of $77 million in the prior year. The use of cash for working capital in fiscal 2008 principally reflects a higher level of inventory and trade receivables associated with sales growth. In connection with an amendment in fiscal 2008 that expanded the size of the trade receivables securitization program, the Company increased the amount of receivables sold under the program, which provided cash of $96 million. The cash provided by the securitization program was used to reduce borrowings under the Company’s revolving credit line. Consolidated cash flows provided by operating activities were used to repay debt incurred through the acquisition of businesses, as well as to fund investing activities such as capital expenditures.

     Net cash used in investing activities in fiscal 2008 totaled $739 million and primarily consisted of cash used for acquisitions and capital expenditures. Cash of $480 million was paid in the current year for 18 acquisitions, including the Linde Packaged Gas acquisition, and acquisition holdback settlements. Capital expenditures of $267 million reflected investments to support the Company’s sales growth initiatives, such as air separation plants being constructed in Carrollton, Kentucky and New Carlisle, Indiana. The Company has also continued to invest in its core business through purchasing cylinders and bulk tanks.

     Financing activities provided net cash of $207 million primarily from net borrowings under the Company’s portfolio of debt funding sources (see Financial Instruments discussed below). Other sources of cash effectively offset the uses of cash within financing activities.

Dividends

     At the end of June, September and December 2007, the Company paid its stockholders regular quarterly cash dividends of $0.09 per share. In January 2008, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share, representing a 33% increase from the previous quarterly dividend. The dividend declared in January 2008 was paid at the end of March 2008. On May 20, 2008, the Company’s Board of Directors declared a regular quarterly cash dividend of $0.12 per share, which is payable on June 30, 2008 to stockholders of record as of June 12, 2008. During fiscal 2007 and 2006, the Company paid its stockholders regular quarterly cash dividends of $0.07 and $0.06 per share, respectively. 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.

Financial Instruments

Senior Credit Facility

     The Company maintains a senior credit facility with a syndicate of lenders. The $1.7 billion senior unsecured credit facility (the “Credit Facility”) permits the Company to borrow up to $1,066 million under a U.S. dollar revolving credit line, up to C$40 million (U.S. $39 million) under a Canadian dollar revolving credit line and up to $600 million under two or more term loans. The Company used borrowings under the term loan provision of the Credit Facility to finance the $100 million maturity of its 7.75% medium-term notes on September 15, 2006. The remaining $500 million term loan was used to finance the Linde Bulk Gas acquisition that closed on March 9, 2007. The Credit Facility will mature on July 25, 2011.

     As of March 31, 2008, the Company had approximately $1,371 million of borrowings under the Credit Facility: $859 million under the U.S. dollar revolver, C$25 million (U.S. $24 million) under the Canadian dollar revolver and $488 million under the term loans. The term loans are repayable in quarterly installments of $22.5 million through June 30, 2010. The quarterly installments then increase to $71.2 million from September 30, 2010 to June 30, 2011. Principal payments due in fiscal 2009 on the term loans are classified as “Long-term debt” in the Company’s Consolidated Balance Sheets, included under Item 8, “Financial Statements and Supplementary Data,” based on the Company’s ability and intention to refinance the payments with borrowings under its long-term revolving credit facilities. The Company also had outstanding letters of credit of $35 million issued under the Credit Facility. The U.S. dollar borrowings and the term loans bear interest at LIBOR plus 75 basis points and the Canadian dollar borrowings bear interest at the Canadian Bankers’ Acceptance Rate plus 75 basis points. As of March 31, 2008, the average effective interest rates on the U.S. dollar borrowings, the rate on the term loans and the average Canadian dollar borrowings were 3.62%, 3.45% and 4.50%, respectively.

Total Borrowing Capacity

     As of March 31, 2008, approximately $171 million remained unused under the U.S. dollar revolving credit line and approximately C$15 million (U.S. $15 million) remained unused under the Canadian dollar revolving credit line. As of March 31, 2008, the financial covenants of the Credit Facility permitted the Company to increase its total borrowings under the Credit Facility or through other debt instruments by approximately $847 million. The Credit Facility contains customary events of default, including nonpayment and breach covenants. In the event of default, repayment of borrowings under the Credit Facility may be accelerated.

     The Company’s domestic subsidiaries, exclusive of a bankruptcy remote special purpose entity (the “domestic subsidiaries”), guarantee the U.S. and Canadian borrowings. The Canadian borrowings are also guaranteed by the Company’s foreign subsidiaries. The guarantees are full and unconditional and are made on a joint and several basis. The Company has pledged 100% of the stock of its domestic subsidiaries and 65% of the stock of its foreign subsidiaries as surety for its obligations under the Credit Facility. The Credit Facility provides for the release of the guarantees and collateral if the Company attains an investment grade credit rating and a similar release on all other debt.

     The Company continues to look for acquisition candidates. The financial covenant calculations of the Credit Facility include the pro forma results of acquired businesses. Therefore, total borrowing capacity is not reduced dollar-for-dollar with acquisition financing.

     The Company continually evaluates alternative financing and believes that it could obtain financing on reasonable terms. The terms of any future financing arrangements depend on market conditions and the Company’s financial position at that time.

Money Market Loans

     The Company has an agreement with a financial institution that provides access to short-term advances not to exceed $30 million for a maximum term of three months. The agreement expires on June 30, 2008, but is expected to be extended subject to renewal provisions contained in the agreement. The amount, term and interest rate of an advance are established through mutual agreement with the financial institution when the Company requests such an advance. At March 31, 2008, the Company had an outstanding advance under the agreement of $30 million, which bears interest at 3.32%.

     The Company also entered into an agreement with another financial institution that provides access to short-term advances not to exceed $35 million. The advances are generally for overnight or up to seven days. The amount, term and interest rate of an advance are established through mutual agreement with the financial institution when the Company requests such an advance. At March 31, 2008, there were no short-term advances outstanding under this agreement.

Senior Subordinated Notes

     At March 31, 2008, the Company had $150 million of senior subordinated notes (the “2004 Notes”) outstanding with a maturity date of July 15, 2014. The 2004 Notes bear interest at a fixed annual rate of 6.25%, payable semi-annually on January 15 and July 15 of each year. The 2004 Notes have an optional redemption provision, which permits the Company, at its option, to call the 2004 Notes at scheduled dates and prices. The first scheduled optional redemption date is July 15, 2009 at a price of 103.125% of the principal amount.

     The 2004 Notes contain covenants that could restrict the payment of dividends, the repurchase of common stock, the issuance of preferred stock, and the incurrence of additional indebtedness and liens. The 2004 Notes are fully and unconditionally guaranteed jointly and severally, on a subordinated basis, by each of the wholly owned domestic guarantors under the Credit Facility.

Acquisition and Other Notes

     The Company’s long-term debt also included acquisition and other notes principally consisting of notes issued to sellers of businesses acquired and are repayable in periodic installments. At March 31, 2008, acquisition and other notes totaled $29.3 million and had an average interest rate of approximately 6%, and an average life maturity of approximately two years.

Refinancing of National Welders’ Debt

     Effective July 3, 2007, the Company amended its Credit Facility to increase the size of its U.S. dollar revolving credit line by $100 million to $1,066 million. As discussed in Note 13 to the Company’s Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data,” National Welders became a 100% owned subsidiary of the Company on July 3, 2007. Concurrently, National Welders’ debt of $87.5 million was refinanced by the Company under the expanded U.S. dollar revolving credit line.

Trade Receivables Securitization

     The Company participates in a securitization agreement with three commercial banks to which it sells qualifying trade receivables on a revolving basis. In December 2007, the Company amended the agreement adding its 100% owned subsidiaries, National Welders and Airgas Merchant Gases, LLC, as originators of trade receivables and expanded the size of the facility to $360 million. The agreement will expire in March 2010, but may be renewed subject to renewal provisions contained in the agreement. During the year ended March 31, 2008, the Company sold $3.75 billion of trade receivables and remitted to bank conduits, pursuant to a servicing agreement, $3.65 billion in collections on those receivables. The amount of receivables sold under the agreement was $360 million at March 31, 2008 and $264 million at March 31, 2007.

Interest Rate Swap Agreements

     The Company manages its exposure to changes in market interest rates. The Company’s involvement with derivative instruments is limited to highly effective fixed interest rate swap agreements used to manage well-defined interest rate risk exposures. At March 31, 2008, the Company had nineteen fixed interest rate swap agreements with a notional amount of $602 million. These swaps effectively convert $602 million of variable interest rate debt associated with the Company’s Credit Facility to fixed rate debt. At March 31, 2008, these swap agreements required the Company to make fixed interest payments based on a weighted average effective rate of 4.94% and receive variable interest payments from the counterparties based on a weighted average variable rate of 2.90%. The remaining terms of each of these swap agreements range from 2 to 30 months. The Company monitors its positions and the credit ratings of its counterparties and does not anticipate non-performance by the counterparties.

     As of March 31, 2008, the Company’s ratio of fixed to variable rate debt was 40% fixed to 60% variable, including the effect of the interest rate swap agreements and the trade receivables securitization. A majority of the Company’s variable rate debt is based on a spread over LIBOR. Based on the Company’s fixed to variable interest rate ratio at March 31, 2008, for every 25 basis point increase in LIBOR, the Company estimates that its annual interest expense would increase by approximately $3 million.

OTHER

Critical Accounting Estimates

     The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires management to make judgments, assumptions and estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Note 1 to the Consolidated Financial Statements included under Item 8, “Financial Statements and Supplementary Data” describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. Estimates are used for, but not limited to, determining the net carrying value of trade receivables, inventories, goodwill, other intangible assets and business insurance reserves. Uncertainties about future events make these estimates susceptible to change. Management evaluates these estimates regularly and believes they are the best estimates, appropriately made, given the known facts and circumstances. For the three years ended March 31, 2008, there were no material changes in the valuation methods or assumptions used by management. However, actual results could differ from these estimates under different assumptions and circumstances. The Company believes the following accounting estimates are critical due to the subjectivity and judgment necessary to account for these matters, their susceptibility to change and the potential impact that different assumptions could have on operating performance.

Trade Receivables

     The Company maintains an allowance for doubtful accounts, which includes sales returns, sales allowances, and bad debts. The allowance adjusts the carrying value of trade receivables to fair value based on estimates of accounts that will not ultimately be collected. An allowance for doubtful accounts is generally established as trade receivables age beyond their due date. As past due balances age, higher valuation allowances are established lowering the net carrying value of receivables. The amount of valuation allowance established for each past due period reflects the Company’s historical collections experience and current economic conditions and trends. The Company also establishes valuation allowances for specific problem accounts and bankruptcies. The amounts ultimately collected on past due trade receivables are subject to numerous factors including general economic conditions, the condition of the receivable portfolio assumed in acquisitions, the financial condition of individual customers, and the terms of reorganization for accounts emerging from bankruptcy. Changes in these conditions impact the Company’s collection experience and may result in the recognition of higher or lower valuation allowances. Management evaluates the allowance for doubtful accounts monthly. The Company has a low concentration of credit risk due to its broad and diversified customer base across multiple industries and geographic locations, and its relatively low average order size. No individual customer accounts for more than 0.5% of the Company’s annual sales. Historically, the Company’s sales returns, sales allowances, and bad debts have been in the range of 1.4% to 1.7% of sales.

Inventories

     The Company’s inventories are stated at the lower of cost or market. The majority of the products the Company carries in inventory have long shelf lives and are not subject to technological obsolescence. The Company writes its inventory down to its estimated market value when it believes the market value is below cost. The Company estimates its ability to recover the costs of items in inventory by product type based on its age, the rate at which that product line is turning in inventory, its physical condition as well as assumptions about future demand and market conditions. The ability of the Company to recover its cost for products in inventory can be affected by factors such as future customer demand, general market conditions and the relationship with significant suppliers. Management evaluates the recoverability of its inventory at least quarterly. In aggregate, inventory turns at just over four times per year.

Goodwill and Other Intangible Assets

     The Company accounts for goodwill and other intangible assets in accordance with SFAS No. 142, Goodwill and Other Intangible Assets, (“SFAS 142”). Under SFAS 142, goodwill and other intangible assets with indefinite useful lives are not amortized, but are instead tested for impairment at least annually. The Company has elected to perform its annual tests for indications of goodwill impairment as of October 31 of each year or whenever indicators of impairment exist. Goodwill impairment is recognized when the carrying value of a reporting unit exceeds its “implied fair value.” Implied fair value is estimated based on a discounted cash flow analysis for each reporting unit. The discounted cash flow analysis requires estimates, assumptions and judgments about future events. The Company’s analysis uses internally generated budgets and long-range forecasts, which are the same budgets and forecasts used for managing operations, awarding management bonuses and seeking alternative or additional financing. The Company’s discounted cash flow analysis uses the assumptions in these budgets and forecasts about sales trends, inflation, working capital needs, and forecasted capital expenditures along with an estimate of the reporting unit’s terminal value (the value of the reporting unit at the end of the forecast period) to determine the implied fair value of each reporting unit. The Company’s assumptions about working capital needs and capital expenditures are based on historical

experience. Terminal values reflect an assumed perpetual growth rate consistent with long-term expectations for inflation. The discount rate used to determine the present value of the estimated future cash flows is a risk adjusted rate consistent with the weighted average cost of capital of peer group companies for a term equal to the forecast period.

     The Company believes the assumptions used in its discounted cash flow analysis are appropriate and result in reasonable estimates of the implied fair value of each reporting unit. However, the Company may not meet its sales growth and profitability targets, working capital needs and capital expenditures may be higher than forecast, changes in credit markets may result in changes to the Company’s discount rate and general business conditions may result in changes to the Company’s terminal value assumptions for its reporting units. Based on the October 31, 2007 assessment, the Company does not expect that such changes would result in the recognition of goodwill impairment in the Company’s reporting units.

Business Insurance Reserves

     The Company has established insurance programs to cover workers’ compensation, business automobile, and general liability claims. During fiscal 2008 and 2007, these programs had self-insured retention of $1 million per occurrence. During fiscal 2006, the Company’s self-insured retention was $500 thousand per occurrence with an additional aggregate retention of $2.2 million for claims in excess of $500 thousand. For fiscal 2009, the self-insured retention will remain $1 million per occurrence with no additional aggregate retention. The Company reserves for its self-insured retention based on individual claim evaluations establishing loss estimates for known claims based on the current facts and circumstances. These known claims are then “developed” through actuarial computations, to reflect the expected ultimate loss for the known claims, as well as incurred but not reported claims. Actuarial computations use the Company’s specific loss history, payment patterns, insurance coverage, plus industry trends and other factors to estimate the required reserve for all open claims by policy year and loss type. Reserves for the Company’s self-insurance retention are evaluated monthly. Semi-annually, the Company obtains a third-party actuarial report to validate that the computations and assumptions used are consistent with actuarial standards. Certain assumptions used in the actuarial computations are susceptible to change. Loss development factors are influenced by items such as medical inflation, changes in workers’ compensation laws, and changes in the Company’s loss payment patterns, all of which can have a significant influence on the estimated ultimate loss related to the Company’s self-insured retention. Accordingly, the ultimate resolution of open claims may be for amounts more or less than the reserve balances. The Company’s operations are spread across a significant number of locations, which helps to mitigate the potential impact of any given event that could give rise to an insurance-related loss. Over the last three years, business insurance expense has generally been in the range of 0.6% to 0.9% of sales.

Contractual Obligations

     The following table presents the Company’s contractual obligations as of March 31, 2008:

										Payments Due by Period
(In thousands)						Less than												More than 5
Contractual 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			$	151,257
Estimated interest payments on long-term debt (2)			208,150				59,605				106,293				30,020				12,232
Estimated 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				4,141
Letters of credit (5)			35,099				35,099				—				—				—
Operating leases (6)			292,799				76,530				129,127				62,747				24,395
Purchase obligations:
Liquid bulk gas supply agreements (7)			862,164				115,916				188,938				174,048				383,262
Liquid carbon dioxide supply agreements (8)			202,092				17,184				29,027				24,224				131,657
Ammonia 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

Off-Balance Sheet Arrangements

     As disclosed in Note 4 to the Company’s consolidated financial statements under Item 8, “Financial Statements and Supplementary Data”, the Company participates in a securitization agreement with three commercial banks to sell, on a revolving basis, up to $360 million of qualifying trade receivables. The agreement expires in March 2010, but may be renewed subject to provisions contained in the agreement. Under the securitization agreement, on a monthly basis, trade receivables are sold to three commercial banks through a bankruptcy-remote special purpose entity. The Company retains a subordinated interest in the receivables sold, which is included in “trade receivables” on the accompanying consolidated balance sheet. At March 31, 2008, the amount of retained interest in the receivables sold was approximately $165 million, net of an allowance for doubtful accounts of $22 million.

     The securitization agreement is a form of off-balance sheet financing. The discount taken by the commercial banks reduces the proceeds from the sale of trade receivables and is generally at a lower cost than the Company can borrow under its Credit Facility. The table below reflects the amount of trade receivables sold at March 31, 2008 and the amount of the anticipated discount to be taken, based on market rates at March 31, 2008, on the sale of that quantity of receivables each month through the expiration date of the securitization agreement. The Company is not aware of any existing circumstances that are reasonably likely to result in the termination or material reduction in the availability of this program prior to its expiration date.

(In thousands)										Payments Due by Period
Off-balance sheet obligations as of						Less than 1												More than 5
March 31, 2008:		Total				Year					1 to 3 Years				3 to 5 Years			Years
Trade 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			$	—			$	—

Accounting PronouNcements Issued But Not Yet Adopted

Business Combinations

     In December 2007, the Financial Accounting Standards Board (“FASB”) issued the Statement of Financial Accounting Standards (“SFAS”) No. 141R, Business Combinations, (“SFAS 141R”), which replaces SFAS 141. SFAS 141R will significantly change the way the Company accounts for business combinations. The more significant changes under SFAS 141R included the treatment of contingent consideration, preacquisition contingencies, transaction costs, in-process research and development and restructuring costs. The standard also require more assets acquired and liabilities assumed to be measured at fair value as of the acquisition date and contingent liabilities assumed will be measured at fair value in each subsequent reporting period. The Company will be required to adopt SFAS 141R for acquisitions completed after April 1, 2009 and is currently assessing the impact of SFAS 141R on the consolidated financial statements.

Fair Value Measurements

     In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (“SFAS 157”). This standard defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America, and expands disclosure about fair value measurements. This pronouncement applies to the fair value requirements as applicable in other accounting standards that require or permit fair value measurements. Accordingly, this statement does not require any new fair value measurement. In February 2008, the FASB issued FASB Staff Position No. 157-2, Effective Date of FASB Statement No. 157, which delays the effective date of SFAS 157 until January 1, 2009 for all non-financial assets and liabilities, except those that are recognized and disclosed at fair value in the financial statements on a recurring basis. SFAS 157 is effective for fiscal years beginning after November 15, 2007 for financial assets and liabilities as well as non-financial assets and liabilities excluded from the deferral above. The Company is currently evaluating the requirements of SFAS 157 and has not yet determined the impact on the consolidated financial statements.

Fair Value Option

     In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, (“SFAS 159”), which provides companies with an option to report selected financial assets and liabilities at fair value in an attempt to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. The Company is currently evaluating the requirements of SFAS 159 and has not yet determined the impact on the consolidated financial statements.

Non-controlling Interests in Consolidated Financial Statements

     In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements, (“SFAS 160”), which amends Accounting Research Bulletin No. 51. SFAS 160 establishes accounting and reporting standards that require 1) non-controlling interests held by non-parent parties be clearly identified and presented in the consolidated statement of financial position within equity, separate from the parent’s equity and 2) the amount of consolidated net income attributable to the parent and to the non-controlling interest be clearly presented on the face of the consolidated statement of income. SFAS 160 also requires consistent reporting of any changes to the parent’s ownership while retaining a controlling financial interest, as well as specific guidelines over how to treat the deconsolidation of controlling interests and any applicable gains or loses. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008; earlier adoption is prohibited. The Company is currently assessing the impact of this statement on the consolidated financial statements.

Disclosures about Derivative Instruments and Hedging Activities

     In March 2008, the FASB issued the SFAS No. 161, Disclosures about Derivatives and Hedging Activities, (“SFAS 161”), which enhances the requirements under SFAS 133, Accounting for Derivatives and Hedging Activities. SFAS 161 requires enhanced disclosures about an entity’s derivatives and hedging activities and how they affect an entity’s financial position, financial performance, and cash flows. This Statement will be effective for fiscal years and interim periods beginning after November 15, 2008. The Company is currently assessing the impact to our consolidated financial statements.

Forward-looking Statements

     This report contains statements that are forward looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding: the Company’s focus on strategic products to diversify against traditional industrial cyclicality; the Company’s belief that its focus on marketing and selling strategic products will help to mitigate the impact of a slowing economic environment; the Company’s belief that strategic products will grow at a faster rate than the overall industrial economy; the Company’s belief that it will continue to keep its customers supplied by constantly evaluating and improving product sourcing strategies and utilizing internal production capacity and alternative supplies in the event of a termination of a major supply agreement; production at the Deer Park plant beginning by January 2009; future purchases under the Company’s stock repurchase plan; the Company’s continued success with the hospital, physician and dental care markets and the expectation that all have strong future growth prospects; the Company’s expectation that the bio-tech, life sciences, research, and environmental monitoring markets will continue to propel specialty gas sales growth in the future; the Company’s estimate that for every 25 basis point increase in LIBOR, annual interest expense will increase approximately $3 million; the future declaration and payment of dividends; the Company’s ability and intention to refinance principal payments under the term loan with borrowings under its long-term revolving credit line; the Company’s ability to identify acquisition opportunities and expand its business; the Company’s expectation as to the contribution to fiscal 2009 sales growth by fiscal 2008 acquisitions; the Company’s belief that it could obtain financing at reasonable terms if its requirements exceed amounts available under the Credit Facility; the ability of the Company to manage its exposure to interest rate risk through participation in interest rate swap agreements; the performance of counterparties under interest rate swap agreements; the Company’s belief that future goodwill impairment would not result from changes in the assumptions utilized in the annual impairment analysis; the estimated ultimate loss related to the Company’s self-insured retention; the estimate of future interest and principal payments for financial instruments contained in “Contractual Obligations”; and the Company’s estimates of purchase commitments associated with product supply agreements and the belief that the minimum product purchases under the agreements are well within the Company’s normal product purchases.

     These forward-looking statements involve risks and uncertainties. Factors that could cause actual results to differ materially from those predicted in any forward-looking statement include, but are not limited to: the Company’s inability to diversify against economic cyclicality; construction delays with regard to the Deer Park plant; a lack of cash flow available to fund the Company’s stock repurchase plan; the inability to identify acquisition candidates and consummate and successfully integrate acquisitions; a downturn in the hospital, physician and dental care markets and its effect on the Company’s sales growth; the inability of the Company to raise prices to keep pace with cost increases; higher than estimated interest expense resulting from increases in LIBOR and/or changes in the Company’s credit rating; the loss of customers, acquisition integration problems and higher than expected expenses; an economic downturn (including adverse changes in the specific markets for the Company’s products, including strategic products); adverse customer response to the Company’s products and/or the inability to identify products that will grow at a faster rate than the overall economy; rising product costs and the inability to pass those costs on to customers; customer acceptance of price increases; the inability to obtain alternate supply sources of hardgoods products; the inability to obtain alternative supply sources to adequately meet customer demand and the effect on sales and customer relationships; the Company’s inability to control operating expenses and the potential impact of higher operating expenses in future periods; adverse changes in customer buying patterns; a lack of available cash flow and financing necessary to

pay future dividends and/or refinance term loan principal payments; changes in the Company’s debt levels and/or credit rating, which prevent the Company from arranging additional financing; the inability to manage interest rate exposure; defaults by counterparties under interest rate swap agreements; the effects of competition from independent distributors and vertically integrated gas producers on products, pricing and sales growth; future goodwill impairment due to changes in assumptions used in the annual impairment analysis; changes in actuarial assumptions and their impact on the ultimate loss related to the Company’s self-insured retention; changes in customer demand and the impact on the Company’s ability to meet minimum purchases under take-or-pay supply agreements; uncertainties regarding accidents or litigation which may arise in the ordinary course of business; and the effects of, and changes in, the economy, monetary and fiscal policies, laws and regulations, inflation and monetary fluctuations and fluctuations in interest rates, both on a national and international basis. The Company does not undertake to update any forward-looking statement made herein or that may be made from time to time by or on behalf of the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

     The Company manages its exposure to changes in market interest rates. The interest rate exposure arises primarily from the interest payment terms of the Company’s borrowing agreements. Interest rate swap agreements are used to adjust the interest rate risk exposures that are inherent in its portfolio of funding sources. The Company has not established, and will not establish, any interest risk positions for purposes other than managing the risk associated with its portfolio of funding sources. Counterparties to interest rate swap agreements are major financial institutions. The Company has established counterparty credit guidelines and only enters into transactions with financial institutions with long-term credit ratings of ‘A’ or better. In addition, the Company monitors its position and the credit ratings of its counterparties, thereby minimizing the risk of non-performance by the counterparties.

     The table below summarizes the Company’s market risks associated with long-term debt obligations, interest rate swaps and LIBOR-based agreements as of March 31, 2008. For debt obligations and trade receivables securitization, the table presents cash flows related to payments of principal and interest by fiscal year of maturity. For interest rate swaps, the table presents the notional amounts underlying the agreements by year of maturity. The notional amounts are used to calculate contractual payments to be exchanged and are not actually paid or received. Fair values were computed using market quotes, if available, or based on discounted cash flows using market interest rates as of the end of the period.

		Fiscal Year of Maturity
																														Fair
(In millions)		2009				2010				2011				2012				2013				Thereafter				Total				Value
Fixed Rate Debt:
Acquisition and other notes		$	11			$	10			$	5			$	1			$	1			$	1			$	29			$	30
Interest expense			1.5				0.8				0.4				0.2				0.1				0.1				3.1
Average interest rate			6.12	%			6.12	%			6.21	%			6.28	%			5.81	%			5.82	%
Senior subordinated notes due 2014		$	—			$	—			$	—			$	—			$	—			$	150			$	150			$	148
Interest expense			9.4				9.4				9.4				9.4				9.4				12.0				59.0
Interest rate			6.25	%			6.25	%			6.25	%			6.25	%			6.25	%			6.25	%

		Fiscal Year of Maturity
																														Fair
(In millions)		2009				2010				2011				2012				2013				Thereafter				Total				Value
Variable Rate Debt:
Revolving credit facilities		$	—			$	—			$	—			$	883			$	—			$	—			$	883			$	883
Interest expense			32.6				32.6				32.6				10.5				—				—				108.3
Interest rate (a)			3.65	%			3.65	%			3.65	%			3.65	%
Term loans (c)		$	—			$	90			$	236			$	162			$	—			$	—			$	488			$	488
Interest expense			15.9				12.7				8.3				0.6				—				—				37.5
Interest rate (a) (c)			3.45	%			3.45	%			3.45	%			3.45	%
Money market loan		$	30			$	—			$	—			$	—			$	—			$	—			$	30			$	30
Interest expense			0.2				—				—				—				—				—				0.2
Interest rate (a)			3.32	%

		Fiscal Year of Maturity
																														Fair
(In millions)		2009				2010				2011				2012				2013				Thereafter				Total				Value
Interest Rate Swaps:
19 swaps receive Variable/Pay Fixed
Notional amounts		$	100			$	377			$	125			$	—			$	—			$	—			$	602			$	21
Swap payments			13.6				5.9				1.4				—				—				—				20.9
$602 million notional amount
Variable forward receive rate = 2.28%
Weighted average pay rate = 4.94%
Other Off-Balance Sheet
LIBOR-based Agreement (b):
Trade receivables securitization		$	—			$	360			$	—			$	—			$	—			$	—			$	360			$	360
Discount on securitization			10.8				10.8				—				—				—				—				21.6
Based on one-month LIBOR of 2.70%

     As the table incorporates only those interest rate risk exposures that exist as of March 31, 2008, it does not consider those exposures or positions that could arise after that date. In addition, actual cash flows of financial instruments in future periods may differ materially from prospective cash flows presented in the table due to future fluctuations in variable interest rates, debt levels and the Company’s credit rating.

     Canadian subsidiaries of the Company are funded with local currency debt. The Company does not otherwise hedge its exposure to translation gains and losses relating to foreign currency net asset exposures. The Company considers its exposure to foreign currency exchange fluctuations to be immaterial to its consolidated financial position and results of operations.

     The consolidated financial statements, supplementary information and financial statement schedule of the Company are set forth at
pages F-1 to F-60 of the report.

     None.

(a) Evaluation of Disclosure Controls and Procedures

     The Company carried out an assessment, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of March 31, 2008. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of such date, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Management’s Report on Internal Control over Financial Reporting

     The Company’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s management conducted an assessment of the Company’s internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework. Based on this assessment, management concluded that, as of March 31, 2008, the Company’s internal control over financial reporting was effective. See Management’s Report on Internal Control Over Financial Reporting preceding the Consolidated Financial Statements under Item 8, “Financial Statements and Supplementary Data,” herein.

     KPMG LLP, an independent registered public accounting firm, issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of March 31, 2008, included under Item 8, “Financial Statements and Supplementary Data,” herein.

(c) Changes in Internal Control

     There were no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2008 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE COMPANY.

     Certain information from the Company’s 2008 Definitive Proxy Statement (“Proxy Statement”) is incorporated herein by reference as specified by the Item number of Regulation S-K below.

Item 401 Information

     The biographical information for the directors including the names, ages, terms of office, directorships in other companies and business experience is included in the Proxy Statement section “Election of Directors” and is incorporated herein by reference. The biographical information relating to the Company’s executive officers set forth in Item 1 of Part I of this Form 10-K report is incorporated herein by reference.

Item 405 Information

     Disclosure of the failure by any director, officer, or beneficial owner of more than ten percent of a class of the Company’s equity securities to file Forms 3, 4, or 5 reporting their ownership and changes in ownership in the Company is included in the Proxy Statement section “Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated herein by reference.

Item 406 Information

     Disclosure of the Company’s adoption of a code of ethics and the employees to which it applies is included in the Proxy Statement section “Governance of the Company” under subsection “Charters and Code of Ethics and Business Conduct” and is incorporated herein by reference.

Item 407(c)(3) Information

     The procedure followed to nominate persons to the Company’s board of directors is included in the Proxy Statement section “Governance of the Company” under subsection “Director Nomination Process” and is incorporated herein by reference.

Item 407(d)(4) and 407(d)(5) Information

     The identification of each audit committee member, their independence with regard to the Company, and the Company’s audit committee financial expert are contained in the Proxy Statement section “Election of Directors” under subsection “Audit Committee.” The information in these sections is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION.

     The information required by Items 402, 407(e)(4) and 407(e)(5) of Regulation S-K is included in Proxy Statement sections “Compensation Discussion and Analysis,” “Report of the Governance and Compensation Committee,” and “Executive Compensation.” The information in these sections is incorporated herein by reference, provided that the Report of the Governance and Compensation Committee will be deemed to be furnished and will not be deemed incorporated by reference into any other filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Item 201(d) Information

     The information required by Item 201(d) of Regulation S-K regarding the number of securities issuable under equity compensation plans is presented below.

Equity Compensation Plan Information

     The following table sets forth information as of March 31, 2008 with respect to the shares of the Company’s common stock that may be issued upon the exercise of options, warrants and rights under the Company’s equity compensation plans, which were approved by the stockholders.

(a)

(b)

(c)

Number of securities

remaining available for

Number of securities to be

Weighted-average

future issuance under

issued upon exercise of

exercise price of

equity compensation plans

outstanding options,

outstanding options,

(excluding securities

Plan 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 plans

Equity compensation plans not approved by security holders

—

—

—

Total:

6,741,337

$

23.72

4,805,824

Item 403 Information

     The information required by Item 403 of Regulation S-K regarding the disclosure of the amount of the Company’s voting securities beneficially owned by each director individually, by all directors and officers as a group, and by any owner of 5% or more of the securities is set forth in the Proxy Statement section “Security Ownership.” The information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

     Information required by Item 404 of Regulation S-K regarding material transactions and relationships between the Company and the Company’s directors, executive officers, nominees for election as directors, major shareholders, and business and professional entities affiliated with them is included in the Proxy Statement sections “Governance of the Company” and “Certain Relationships and Related Transactions.” These sections of the Proxy Statement are incorporated herein by reference. The information required by Item 407(a) of Regulation S-K regarding the disclosure of the independence of directors and committee members is also included in Proxy Statement section “Governance of the Company” and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     The information required by this Item is set forth in the Proxy Statement under the section “Proposal to Ratify Independent Registered Public Accounting Firm” and such information is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)(1) and (2):

     The response to this portion of Item 15 is submitted as a separate section of this report beginning on page F-1. All other schedules have been omitted as inapplicable, or are not required, or because the required information is included in the Consolidated Financial Statements or notes thereto.

(b) Index to Exhibits and Exhibits filed as a part of this report.

Exhibit No.		Description
3.1		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).

Exhibit No.		Description
3.2		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).

Exhibit No.		Description
4.9		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).

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.

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 29, 2008

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ 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

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

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 29, 2008

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ 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

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 29, 2008

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ 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

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 29, 2008

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ 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

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 29, 2008

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ 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

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 29, 2008

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ 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