We continue to build Airgas for the long term, confident in our ability to weather any economic season. By focusing on customer service enhancement and operating efficiency gains, we are emerging as a great company that can reach its long-term goals.

Just look at what we were able to accomplish in fiscal 2008: record earnings, record free cash flow and record acquisitions. Earnings were $2.66 per diluted share compared to $1.92 in the prior year. Free cash flow more than doubled to $225 million compared to $107 million last year. And in terms of acquired revenues, fiscal 2008 was our second record year in a row, with 18 acquisitions adding more than $500 million in annual revenues.

The largest was the Linde U.S. packaged gas business, which added $346 million in annual revenue. We also completed 17 other acquisitions that added another $160 million in annual revenue. Most were in our core business, with $30 million added to our safety products, ammonia and refrigerants businesses. These 18 acquisitions don’t include the mid-year conversion of our joint venture into our newest regional company, Airgas National Welders, which added to a busy year for corporate development.

Even as we invested in acquisition growth, our operating culture grew even stronger, which helped us achieve strong organic performance in a slow economic environment.

Overall sales grew 25% to $4 billion, with same-store sales growth of 7%.

We continued to generate double-digit growth in our five strategic product categories — bulk, specialty and medical gas, carbon dioxide and dry ice, and safety products, which make up about 40% of our total revenue. These strategic product categories generated an average 11% organic growth for the year by focusing on non-cyclical customer segments, such as healthcare, life sciences, research, food and beverage, and environmental.

To help sustain future growth of these strategic products, we continued to build two new air separation units (ASUs) in Indiana and Kentucky to augment the 14 ASUs we operate today, and we began construction on a new carbon dioxide plant in Texas.

In addition, our strategic accounts business grew 13% as our national infrastructure, broad product offering and expanding expertise in engineering supply chain solutions continue to create real value for customers with multiple locations or complex needs.

One of our newest growth platforms, Airgas Specialty Products, grew same-store sales more than 25% by providing ammonia products and services, refrigerants and reclamation services to utilities, petrochemical companies and other customers.

In the past year, Airgas also launched some major initiatives to improve our efficiency, like more effective routing of delivery trucks, our ultrasonic cylinder testing program and plant efficiency studies. These programs, plus our ongoing efforts to streamline all our internal processes and integrate newly acquired operations, enabled us to meet the goals we established for operating cost savings.

Letter Continued >