Glenn Fischer:
We operate from a position of strength as the largest distributor of packaged gases and related hardgoods, with a national footprint, a broad range of products and services, multiple channels of distribution, and most important, tremendous knowledge capital in our people. Since joining the company in November 2000, I have been truly impressed by the commitment and experience of our people.

Roger Millay:
Our people are definitely a strength. Even as Airgas has grown as a major presence in the industry, we have done a good job of keeping the entrepreneurial spirit alive in our regional companies. Going forward, it's important to retain that close connection to the customer. Yet, we can do more to leverage our national size and scale by standardizing the support functions that help our regional companies go to market and serve our customers.

Jim Muller:
At the regional level, we have tremendous competitive advantages, especially when we sell to national customers. Independent distributors are clearly at a disadvantage, because they don't have our national scope and depth of service. And the major gas producers don't have our national footprint of local capabilities, all owned and operated by Airgas.

Andy Platt:
Absolutely. Local execution is very important to our Strategic Accounts customers. Another way we distinguish ourselves is the range of gases, hardgoods and safety products we offer, which allows our customers to reduce vendors and thereby reduce their supply chain costs. Our success in adding Strategic Accounts is evidence that customers see that, too.

Bob Dougherty:
Operational excellence will set Airgas apart. Airgas is a company that has grown through acquisition, with more than 300 companies acquired since 1982. Now it's time to tap the synergies as we focus on improving operating efficiencies and building a scalable infrastructure to accommodate future growth.

Fischer:
First, we set a vision for the company – a company that consistently exceeds customer expectations – and that's where we are all focusing. To help us achieve that vision and our strategic goal of $2 billion in sales, with at least a 10% operating margin by fiscal year 2005, we have mapped out five strategic initiatives. We will increase market penetration, migrate customers to the appropriate channels, improve supply-chain efficiencies, redesign key business processes, and focus on attracting, developing, and retaining good people. This is our path to success, "The Way Forward" for Airgas.

Millay:
There is tremendous power in our 7,600 associates, but we must be aligned and focused on one common vision and goal. We have established key financial measures that will help align the organization on what drives shareholder value. We want every employee to understand how their contribution drives value for Airgas.

Fischer:
After mapping out the strategy, we also translated that strategy into a structure, to ensure our organization is best positioned to succeed. We are using a matrix approach that augments our traditional regional company structure, which remains focused on our customers, with a new dimension to provide functional leadership and expertise in the most critical areas of our business.

Muller:
Our regional companies have been decentralized and close to the customer. Yet, it's unlikely that our 12 regional companies are managing all of their business functions equally well. We all do some things better than others. The functional leaders will support the regional leadership by providing the necessary level of expertise and focus in all our products, channels, markets, and disciplines. The net benefit will be stronger regions with the resources to achieve faster, more profitable growth.

Fischer:
The functional leaders are the focal point for knowledge transfer by identifying and sharing best practices, identifying the talent required and selecting and developing that talent. Roger, for instance, will help each regional company identify the kind of financial leadership they need to support their business goals and how to develop their professional skills.

Millay:
A big part of this is to leave the regional structure in place for functions that directly touch the customer. We can concentrate on standardizing or centralizing those administrative processes that don't directly touch the customer and actually enhance the ability of the regions to exceed our customers' sales and service expectations.

Dougherty:
Having functional leadership for Information Technology, for instance, is key to optimizing our supply chain management systems, driving down costs, and making the right products available at the right time. We have 700 locations, 4 million cylinders, five distribution centers, and nearly 200,000 different stocked items. We can't afford to manage business processes and systems 20 different ways. Standardizing our systems and the way we use them is key to improving our supply chain.

Muller:
Our focus at the local level should be on going to market more effectively. When we identify the business activities that add value at the local level, they are only those activities that directly touch the customer – professional account management, customer service, specialist support, and cylinder production and distribution – are all key strengths of our regional companies. Back-office, administrative and financial functions can readily be standardized or centralized. If we free the regional companies to concentrate more on our customers, it will go a long way toward retaining the entrepreneurial spirit and more effectively growing the business.

Millay:
It's important to create an environment where associates can have an impact and excel at their jobs. This is what we envision at Airgas – a performance culture where every person makes a difference. Through training, incentives, tools, and other support, we can provide the basics to nurture the entrepreneurial spirit and a culture of performance.

Fischer:
Our strategies to increase market penetration and migrate customers to the appropriate channel will help us grow, and outpace overall market growth. For instance, all of our gas customers use some type of safety equipment and all of our welding hardgoods customers use gas. This is a unique strength of Airgas – by cross-selling the wide range of products we offer to our current customers, we can take market share and achieve our targets for profitable growth.

Platt:
Our Strategic Accounts model also allows us to sell more to existing customers. Many of our Strategic Accounts have grown from a local relationship at a specific plant. They liked what we were doing for them, and they asked us to provide the same products and services consistently across their national locations. Yet, the real value in our Strategic Accounts approach is helping these large customers reduce the number of vendors they use nationally and to drive costs out of their supply chain. We have a track record of helping them find these savings.

Fischer:
We can also grow by migrating customers to the channel that best meets their needs. Our smaller customers typically prefer the easy access and convenient sales process available in our walk-in retail outlets. Branch-based field sales are more appropriate for our medium-size or larger customers. For our largest customers, we have our Strategic Accounts program. These direct channels are complemented by our catalog, telesales, and eBusiness capabilities, which appeal to a wide range of customers, and give us the flexibility to grow in different ways with different customers.

Dougherty:
Our eBusiness channel is becoming a powerful tool. Our new capabilities allow customers to review our extensive product catalog, build a personalized catalog, and place orders and check status in real-time. Most customers think eBusiness is one of the answers for the future, even if they don't know what questions to ask right now. What they do know is they want to deal with a company that can simplify the procurement process and reduce their transactional costs.

Fischer:
Project One is our way to kick-start the implementation of our strategies. We have formed six teams, with more than 40 full-time Airgas associates, who are supported by dedicated project management resources. The teams have identified projects that will yield short-term opportunities to create "value" – there is a lot of low-hanging fruit that we can harvest within the first 12 months, with benefits sufficient to break even in the first year. Other projects will help us build the scalable "infrastructure" that will enable us to support future growth more effectively and profitably.

Millay:
We really have a unique opportunity through Project One. What will set us apart from the competition and help us achieve our goals is not a new R&D project, or a new geographic market, but rather solid execution of our current strategies. The "value" and "infrastructure" projects will improve our execution and drive value for our shareholders and our customers.

Dougherty:
From a starting point of aligning the IT plans with business plans, we take a “best-of-breed“ approach to upgrading systems. We can buy the best warehouse management system, for example, and integrate it with legacy systems in a manageable, cost-effective way. In doing so, we avoid the risk, disruption, and major cost of installing enterprise-wide systems. Our objective is to build a scalable systems platform that can accommodate continued growth.

Fischer:
I have three messages, really: One, the key to success will be leveraging the power of Airgas across the entire organization by sharing best practices. Two, we have an unmatched ability to serve a diverse set of customers, with a wide range of products through multiple channels of distribution. And three, we are fully committed to the packaged gases and related hardgoods business. This is our business, not a sideline, and we intend to be the best.