Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended 30 June 2015

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

For the transition period from to

Commission file number 1-4534

AIR PRODUCTS AND CHEMICALS, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		23-1274455
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

7201 Hamilton Boulevard, Allentown, Pennsylvania		18195-1501
(Address of Principal Executive Offices)		(Zip Code)

610-481-4911

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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 ü No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ü No

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer ü	Accelerated filer	Non-accelerated filer	Smaller reporting company
	(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 Exchange Act). YES NO ü

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class				Outstanding at 30 June 2015
Common Stock, $1 par value				214,982,451

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

INDEX


		Page No.
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements
Consolidated Income Statements – Three and Nine Months Ended 30 June 2015 and 2014			3
Consolidated Comprehensive Income Statements – Three and Nine Months Ended 30 June 2015 and 2014			4
Consolidated Balance Sheets – 30 June 2015 and 30 September 2014			5
Consolidated Statements of Cash Flows – Nine Months Ended 30 June 2015 and 2014			6
Notes to Consolidated Financial Statements			7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		49
Item 4.	Controls and Procedures		50

PART II.	OTHER INFORMATION

Item 6.	Exhibits		50
Signatures			51
Exhibit Index			52

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

CONSOLIDATED INCOME STATEMENTS

(Unaudited)


	Three Months Ended 30 June						Nine Months Ended 30 June
(Millions of dollars, except for share data)	2015			2014			2015			2014
Sales		$	2,470.2		$	2,634.6		$	7,445.5		$	7,762.0
Cost of sales			1,716.4			1,918.7			5,247.0			5,702.2
Selling and administrative			242.2			272.0			741.3			816.3
Research and development			33.8			33.8			105.5			100.5
Business restructuring and cost reduction actions			58.2			—			146.0			—
Pension settlement loss			1.6			—			14.2			—
Gain on previously held equity interest			—			—			17.9			—
Other income (expense), net			4.5			3.7			17.5			41.1
Operating Income			422.5			413.8			1,226.9			1,184.1
Equity affiliates’ income			42.4			43.1			118.5			111.7
Interest expense			28.2			31.3			80.7			96.1
Income from Continuing Operations before Taxes			436.7			425.6			1,264.7			1,199.7
Income tax provision			103.5			102.1			297.1			288.7
Income from Continuing Operations			333.2			323.5			967.6			911.0
Income from Discontinued Operations, net of tax			—			—			—			3.1
Net Income			333.2			323.5			967.6			914.1
Less: Net Income Attributable to Noncontrolling Interests			14.4			9.5			34.2			26.4
Net Income Attributable to Air Products		$	318.8		$	314.0		$	933.4		$	887.7

Net Income Attributable to Air Products
Income from continuing operations		$	318.8		$	314.0		$	933.4		$	884.6
Income from discontinued operations			—			—			—			3.1
Net Income Attributable to Air Products		$	318.8		$	314.0		$	933.4		$	887.7

Basic Earnings Per Common Share Attributable to Air Products
Income from continuing operations		$	1.48		$	1.47		$	4.35		$	4.17
Income from discontinued operations			—			—			—			.01
Net Income Attributable to Air Products		$	1.48		$	1.47		$	4.35		$	4.18

Diluted Earnings Per Common Share Attributable to Air Products
Income from continuing operations		$	1.47		$	1.46		$	4.30		$	4.12
Income from discontinued operations			—			—			—			.01
Net Income Attributable to Air Products		$	1.47		$	1.46		$	4.30		$	4.13

Weighted Average Common Shares – Basic (in millions)			215.2			212.9			214.8			212.4
Weighted Average Common Shares – Diluted (in millions)			217.4			215.4			217.2			214.9
Dividends Declared Per Common Share – Cash		$	.81		$	.77		$	2.39		$	2.25

The accompanying notes are an integral part of these statements.

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

(Unaudited)


	Three Months Ended 30 June
(Millions of dollars)	2015				2014
Net Income		$	333.2			$	323.5
Other Comprehensive Income, net of tax:
Translation adjustments, net of tax of ($30.8) and $4.0			73.0				108.0
Net loss on derivatives, net of tax of ($4.5) and ($8.2)			(13.6	)			(16.9	)
Pension and postretirement benefits, net of tax of $1.2			2.0				—
Reclassification adjustments:
Derivatives, net of tax of $.5 and $.2			1.6				.9
Pension and postretirement benefits, net of tax of $10.7 and $9.5			22.2				20.3
Total Other Comprehensive Income			85.2				112.3
Comprehensive Income			418.4				435.8
Net Income Attributable to Noncontrolling Interests			14.4				9.5
Other Comprehensive Income Attributable to Noncontrolling Interests			1.5				2.2
Comprehensive Income Attributable to Air Products		$	402.5			$	424.1

	Nine Months Ended 30 June
(Millions of dollars)	2015				2014
Net Income		$	967.6			$	914.1
Other Comprehensive Income (Loss), net of tax:
Translation adjustments, net of tax of $46.7 and ($17.7)			(403.5	)			53.8
Net gain (loss) on derivatives, net of tax of ($17.3) and ($2.9)			(37.8	)			.8
Pension and postretirement benefits, net of tax of ($1.5)			(2.6	)			—
Reclassification adjustments:
Derivatives, net of tax of $12.1 and ($7.8)			32.7				(21.8	)
Pension and postretirement benefits, net of tax of $35.5 and $28.7			71.7				60.9
Total Other Comprehensive Income (Loss)			(339.5	)			93.7
Comprehensive Income			628.1				1,007.8
Net Income Attributable to Noncontrolling Interests			34.2				26.4
Other Comprehensive Loss Attributable to Noncontrolling Interests			(3.0	)			(2.4	)
Comprehensive Income Attributable to Air Products		$	596.9			$	983.8

The accompanying notes are an integral part of these statements.

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(Millions of dollars, except for share data)	30 June 2015				30 September 2014
Assets
Current Assets
Cash and cash items		$	215.3			$	336.6
Trade receivables, net			1,440.8				1,486.0
Inventories			681.9				706.0
Contracts in progress, less progress billings			149.0				155.4
Prepaid expenses			63.4				87.8
Other receivables and current assets			551.9				523.0
Total Current Assets			3,102.3				3,294.8
Investment in net assets of and advances to equity affiliates			1,244.2				1,257.9
Plant and equipment, at cost			20,472.4				20,223.5
Less: accumulated depreciation			10,751.6				10,691.4
Plant and equipment, net			9,720.8				9,532.1
Goodwill, net			1,163.8				1,237.3
Intangible assets, net			541.5				615.8
Noncurrent capital lease receivables			1,375.1				1,414.9
Other noncurrent assets			523.8				426.3
Total Noncurrent Assets			14,569.2				14,484.3
Total Assets		$	17,671.5			$	17,779.1

Liabilities and Equity
Current Liabilities
Payables and accrued liabilities		$	1,700.6			$	1,591.0
Accrued income taxes			45.6				78.0
Short-term borrowings			1,087.8				1,228.7
Current portion of long-term debt			84.9				65.3
Total Current Liabilities			2,918.9				2,963.0
Long-term debt			4,690.5				4,824.5
Other noncurrent liabilities			1,022.5				1,187.5
Deferred income taxes			1,030.4				995.5
Total Noncurrent Liabilities			6,743.4				7,007.5
Total Liabilities			9,662.3				9,970.5
Commitments and Contingencies – See Note 12
Redeemable Noncontrolling Interest			277.9				287.2
Air Products Shareholders’ Equity
Common stock (par value $1 per share; issued 2015 and 2014 – 249,455,584 shares)			249.4				249.4
Capital in excess of par value			889.3				842.0
Retained earnings			10,411.1				9,993.2
Accumulated other comprehensive loss			(1,578.4	)			(1,241.9	)
Treasury stock, at cost (2015 – 34,473,133 shares; 2014 – 35,917,440 shares)			(2,385.4	)			(2,476.9	)
Total Air Products Shareholders’ Equity			7,586.0				7,365.8
Noncontrolling Interests			145.3				155.6
Total Equity			7,731.3				7,521.4
Total Liabilities and Equity		$	17,671.5			$	17,779.1

The accompanying notes are an integral part of these statements.

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended 30 June
(Millions of dollars)	2015				2014
Operating Activities
Net Income		$	967.6			$	914.1
Less: Net income attributable to noncontrolling interests			34.2				26.4
Net income attributable to Air Products			933.4				887.7
Income from discontinued operations			—				(3.1	)
Income from continuing operations attributable to Air Products			933.4				884.6
Adjustments to reconcile income to cash provided by operating activities:
Depreciation and amortization			701.8				702.3
Deferred income taxes			18.5				69.8
Gain on previously held equity interest			(17.9	)			—
Undistributed earnings of unconsolidated affiliates			(74.6	)			(36.7	)
Share-based compensation			37.3				32.5
Noncurrent capital lease receivables			(3.9	)			11.8
Write-down of long-lived assets associated with restructuring			27.8				—
Other adjustments			(62.9	)			102.8
Working capital changes that provided (used) cash, excluding effects of acquisitions and divestitures:
Trade receivables			(25.6	)			(77.1	)
Inventories			2.4				12.6
Contracts in progress, less progress billings			.9				(1.1	)
Other receivables			(52.3	)			(3.1	)
Payables and accrued liabilities			178.9				(125.6	)
Other working capital			(5.9	)			11.2
Cash Provided by Operating Activities			1,657.9				1,584.0
Investing Activities
Additions to plant and equipment			(1,214.7	)			(1,264.9	)
Acquisitions, less cash acquired			(34.5	)			—
Investment in and advances to unconsolidated affiliates			(4.3	)			2.3
Proceeds from sale of assets and investments			15.1				34.0
Other investing activities			(.6	)			(1.5	)
Cash Used for Investing Activities			(1,239.0	)			(1,230.1	)
Financing Activities
Long-term debt proceeds			338.0				57.3
Payments on long-term debt			(559.2	)			(591.7	)
Net increase in commercial paper and short-term borrowings			122.0				422.7
Dividends paid to shareholders			(503.4	)			(463.7	)
Proceeds from stock option exercises			92.5				106.5
Excess tax benefit from share-based compensation			26.7				22.5
Other financing activities			(45.3	)			(36.3	)
Cash Used for Financing Activities			(528.7	)			(482.7	)
Discontinued Operations
Cash provided by operating activities			—				.7
Cash provided by investing activities			—				9.8
Cash used for financing activities			—				—
Cash Provided by Discontinued Operations			—				10.5
Effect of Exchange Rate Changes on Cash			(11.5	)			5.5
Decrease in Cash and Cash Items			(121.3	)			(112.8	)
Cash and Cash Items – Beginning of Year			336.6				450.4
Cash and Cash Items – End of Period		$	215.3			$	337.6

Supplemental Cash Flow Information
Cash paid for taxes (net of cash refunds)		$	261.9			$	118.3

The accompanying notes are an integral part of these statements.

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Millions of dollars unless otherwise indicated, except for share data)

1.	BASIS OF PRESENTATION AND MAJOR ACCOUNTING POLICIES

Refer to our 2014 Form 10-K for a description of major accounting policies. There have been no significant changes to these accounting policies during the first nine months of fiscal year 2015.

The Company realigned its businesses in new reporting segments and began operating under the new structure effective 1 October 2014. Prior year segment information presented has been restated to conform with the fiscal year 2015 presentation. See Note 19, Business Segment Information, for further details.

The consolidated financial statements of Air Products and Chemicals, Inc. and its subsidiaries (“we,” “our,” “us,” the “Company,” “Air Products,” or “registrant”) included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. In our opinion, the accompanying statements reflect adjustments necessary to present fairly the financial position, results of operations, and cash flows for those periods indicated, and contain adequate disclosure to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the Notes. The interim results for the periods indicated herein, however, do not reflect certain adjustments, such as the valuation of inventories on the last-in, first-out (LIFO) cost basis, which are only finally determined on an annual basis. The consolidated financial statements and related Notes included herein should be read in conjunction with the financial statements and Notes thereto included in our latest Form 10-K in order to fully understand the basis of presentation. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

2.	NEW ACCOUNTING GUIDANCE

Accounting Guidance Implemented in 2015

Unrecognized Tax Benefits

In July 2013, the Financial Accounting Standards Board (FASB) issued guidance to require standard presentation of an unrecognized tax benefit when a carryforward related to net operating losses or tax credits exists. We adopted this guidance prospectively beginning in the first quarter of fiscal year 2015. This guidance did not have a significant impact on our consolidated financial statements.

New Accounting Guidance to be Implemented

Discontinued Operations

In April 2014, the FASB issued an update to change the criteria for determining which disposals qualify as a discontinued operation and to expand related disclosure requirements. Under the new guidance, a disposal is required to be reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on operations and financial results. This guidance will be effective prospectively for new disposals and new disposal groups classified as held for sale beginning in fiscal year 2016, with early adoption permitted.

Revenue Recognition

In May 2014, the FASB issued guidance based on the principle that revenue is recognized in an amount expected to be collected and to which the entity expects to be entitled in exchange for the transfer of goods or services. As currently issued, this guidance is effective for us beginning in fiscal year 2018 and can be adopted either retrospectively or as a cumulative-effect adjustment as of the date of adoption. In July 2015, the FASB approved a one-year deferral of the effective date as well as providing the option to early adopt the standard on the original effective date. Accordingly, we would have the option to adopt the standard in either fiscal year 2018 or 2019. We are currently evaluating the adoption alternatives and impact that this update will have on our consolidated financial statements.

Share-Based Compensation

In June 2014, the FASB issued guidance clarifying that share-based compensation performance targets that could be achieved after the requisite service period should be treated as a performance condition that affects vesting, rather than a condition that affects the grant-date fair value of the award. This guidance is effective for us beginning in fiscal year 2017, with early adoption permitted. We do not expect this guidance to have a significant impact on our consolidated financial statements.

Consolidation Analysis

In February 2015, the FASB issued an update to amend current consolidation guidance. The guidance impacts the analysis an entity must perform in determining if it should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures. The guidance is effective beginning fiscal year 2017, with early adoption permitted. The guidance may be applied retrospectively or using a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. We are currently evaluating the impact this update will have on our consolidated financial statements.

Debt Issuance Costs

In April 2015, the FASB issued guidance requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt instead of as a separate deferred asset. This change in accounting principle will be effective beginning in fiscal year 2017 with early adoption permitted and must be applied retrospectively. This guidance only affects the presentation of debt issuance costs and will not have a significant impact on our consolidated financial statements.

Defined Benefit Measurement Date

In April 2015, the FASB issued an update to provide a practical expedient on the measurement date of defined benefit plan assets and obligations including interim remeasurements related to significant events. The guidance is effective prospectively beginning in fiscal year 2017, with early adoption permitted. The guidance will not have a significant impact on our consolidated financial statements.

3.	DISCONTINUED OPERATIONS

During the second quarter of 2012, the Board of Directors authorized the sale of our Homecare business which has been accounted for as a discontinued operation.

In the third quarter of 2012, we sold the majority of our Homecare business to The Linde Group for sale proceeds of €590 million ($777) and recognized a gain of $207.4 ($150.3 after-tax, or $.70 per share). Additionally, during the third quarter of 2012, an impairment charge of $33.5 ($29.5 after-tax, or $.14 per share) was recorded to write down the remaining business, which was primarily in the United Kingdom and Ireland, to its estimated net realizable value. In the fourth quarter of 2013, an additional charge of $18.7 ($13.6 after-tax, or $.06 per share) was recorded to update our estimate of the net realizable value. In the first quarter of 2014, we sold the remaining portion of the Homecare business for £6.1 million ($9.8) and recorded a gain on sale of $2.4. We entered into an operations guarantee related to the obligations under certain homecare contracts assigned in connection with the transaction. Our maximum potential payment under the guarantee is £20 million (approximately $31 at 30 June 2015), and our exposure will be extinguished by 2020. The fair value of the guarantee is not material.

4.	BUSINESS RESTRUCTURING AND COST REDUCTION ACTIONS

The charges we record for business restructuring and cost reduction actions have been excluded from segment operating income and are reflected on the consolidated income statements as “Business Restructuring and Cost Reduction Actions.”

Business Realignment and Reorganization

On 18 September 2014, we announced plans to reorganize the Company, including realignment of our businesses in new reporting segments and other organizational changes, effective as of 1 October 2014. Refer to Note 19, Business Segment Information, for additional details. As a result of this reorganization, we will incur ongoing severance and other charges.

For the three and nine months ended 30 June 2015, we recognized an expense of $58.2 ($38.8 after-tax, or $.18 per share) and $146.0 ($98.7 after-tax, or $.45 per share), respectively. Severance and other benefits totaled $22.5 and $110.3 for the three and nine months ended 30 June 2015, respectively. During the first nine months of fiscal year 2015, the reorganization has resulted in the elimination of approximately 1,500 positions. The third quarter expense also included $35.7 for asset and associated contract actions related to the exit of product lines within the Industrial Gases – Global and Materials Technologies segments. The 2015 charges related to the segments as follows: $19.9 in Industrial Gases – Americas, $40.0 in Industrial Gases – EMEA, $8.1 in Industrial Gases – Asia, $31.4 in Industrial Gases – Global, $19.3 in Materials Technologies, and $27.3 in Corporate and other.

During the fourth quarter of 2014, an expense of $12.7 ($8.2 after-tax, or $.04 per share) was incurred relating to the elimination of approximately 50 positions. The 2014 charge related to the segments as follows: $2.9 in Industrial Gases – Americas, $3.1 in Industrial Gases – EMEA, $1.5 in Industrial Gases – Asia, $1.5 in Industrial Gases – Global, $1.6 in Materials Technologies, and $2.1 in Corporate and other.

The following table summarizes the carrying amount of the accrual for the business realignment and reorganization at 30 June 2015:


	Severance and Other Benefits				Asset Actions/Other				Total
2014 Charge		$	12.7			$	—			$	12.7
Cash expenditures			(2.2	)			—				(2.2	)
30 September 2014		$	10.5			$	—			$	10.5
2015 Charge			110.3				35.7				146.0
Amount reflected in pension liability			(11.3	)			—				(11.3	)
Noncash expenses			—				(27.8	)			(27.8	)
Cash expenditures			(88.6	)			(.6	)			(89.2	)
Currency translation adjustment			(.3	)			—				(.3	)
30 June 2015		$	20.6			$	7.3			$	27.9

2013 Plan

During the fourth quarter of 2013, we recorded an expense of $231.6 ($157.9 after-tax, or $.74 per share) reflecting actions to better align our cost structure with current market conditions. The asset and contract actions primarily impacted the Electronics Materials business due to continued weakness in the photovoltaic (PV) and light-emitting diode (LED) markets. The severance and other contractual benefits primarily impacted our Industrial Gases businesses and corporate functions in response to weaker than expected business conditions in Europe and Asia, reorganization of our operations and functional areas, and previously announced senior executive changes.

The following table summarizes the carrying amount of the accrual for the 2013 Plan at 30 June 2015:


	Severance and Other Benefits				Asset Actions				Contract Actions/Other				Total
2013 Charge		$	71.9			$	100.4			$	59.3			$	231.6
Amount reflected in pension liability			(6.9	)			—				—				(6.9	)
Noncash expenses			—				(100.4	)			—				(100.4	)
Cash expenditures			(3.0	)			—				(58.5	)			(61.5	)
Currency translation adjustment			.4				—				—				.4
30 September 2013		$	62.4			$	—			$	.8			$	63.2
Cash expenditures			(51.7	)			—				(.8	)			(52.5	)
Currency translation adjustment			(.6	)			—				—				(.6	)
30 September 2014		$	10.1			$	—			$	—			$	10.1
Cash expenditures			(9.8	)			—				—				(9.8	)
Currency translation adjustment			(.3	)			—				—				(.3	)
30 June 2015		$	—			$	—			$	—			$	—

5.	BUSINESS COMBINATIONS

On 30 December 2014, we acquired our partner’s equity ownership interest in a liquefied industrial gases production joint venture in North America for $22.6, which increased our ownership from 50% to 100%. The transaction was accounted for as a business combination, and subsequent to the acquisition, the results are consolidated within our Industrial Gases – Americas segment. The assets acquired, primarily plant and equipment, were recorded at their fair market values as of the acquisition date.

The acquisition date fair value of the previously held equity interest was determined using a discounted cash flow analysis under the income approach. The nine months ended 30 June 2015 include a gain of $17.9 ($11.2 after-tax, or $.05 per share) as a result of revaluing our previously held equity interest to fair value as of the acquisition date. This gain is reflected on the consolidated income statements as “Gain on previously held equity interest.”

6.	INVENTORIES

The components of inventories are as follows:


	30 June 2015				30 September 2014
Finished goods		$	514.7			$	493.9
Work in process			32.2				34.1
Raw materials, supplies and other			248.2				283.4
		$	795.1			$	811.4
Less: Excess of FIFO cost over LIFO cost			(113.2	)			(105.4	)
Inventories		$	681.9			$	706.0

First-in, first-out (FIFO) cost approximates replacement cost.

7.	EQUITY AFFILIATES

In 2012, we entered into an agreement with ACWA Holding to pursue industrial gas supply projects in Saudi Arabia. On 19 April 2015, a joint venture between Air Products and ACWA Holding entered into a 20-year oxygen and nitrogen supply agreement to supply Saudi Aramco’s oil refinery and power plant being built in Jazan, Saudi Arabia. Air Products will own 25% of the joint venture, invest approximately $100, and guarantee the repayment of its share of an equity bridge loan. ACWA also guarantees their share of the loan. Air Products has also entered into a sale of equipment contract with the joint venture to engineer, procure, and construct the industrial gas facilities that will supply the gases to Saudi Aramco. We provided bank guarantees to the joint venture to support our performance under the contract. For further details on the guarantees, see Note 12, Commitments and Contingencies.

We determined that the joint venture is a variable interest entity, for which we are not the primary beneficiary.

There have been no other significant changes to our investments in equity affiliates during fiscal year 2015.

8.	GOODWILL

Changes to the carrying amount of consolidated goodwill by segment for the nine months ended 30 June 2015 are as follows:


	Industrial Gases – Americas				Industrial Gases – EMEA				Industrial Gases – Asia				Industrial Gases – Global				Materials Technologies				Total
Balance at 30 September 2014		$	327.2			$	433.3			$	140.0			$	21.4			$	315.4			$	1,237.3
Acquisitions and adjustments			2.2				3.2				—				—				—				5.4
Currency translation and other			(14.5	)			(47.3	)			(3.7	)			(1.1	)			(12.3	)			(78.9	)
Balance at 30 June 2015		$	314.9			$	389.2			$	136.3			$	20.3			$	303.1			$	1,163.8


	30 June 2015				30 September 2014
Goodwill, gross		$	1,430.0			$	1,522.1
Accumulated impairment losses^(A)			(266.2	)			(284.8	)
Goodwill, net		$	1,163.8			$	1,237.3

^(A)	Amount is attributable to the Industrial Gases – Americas segment and includes currency translation of $39.0 and $20.4 as of 30 June 2015 and 30 September 2014, respectively.

Due to the reorganization of our business effective as of 1 October 2014, we conducted a goodwill impairment test in the first quarter of 2015 on our thirteen reporting units. We determined that the fair value of all of our reporting units, except Latin America within the Industrial Gases – Americas segment, substantially exceeded their carrying value. The Latin America reporting unit is composed predominately of our Indura business acquired by the Company in 2012, with business units in Chile, Colombia, and other Latin America countries. In the fourth quarter of 2014, we recorded an impairment of goodwill of $305.2 related to this reporting unit. As of 1 October 2014, the fair value of our Latin America reporting unit exceeded its carrying value by approximately 10% primarily due to depreciation, amortization, and the impact of a Chilean tax rate change which had previously been reflected in the determination of the fair value of the reporting unit but not reflected in the carrying value until the enactment date. The fair value of the Latin America reporting unit at 1 October 2014 was estimated based on a similar outlook and assumptions as those used in the 2014 impairment testing. As of 30 June 2015, the carrying value of Latin America goodwill was $218.3, or approximately 1.2% of consolidated total assets.

Management judgment is required in the determination of each assumption utilized in the valuation model, and actual results could differ from the estimates. Revenue growth and EBITDA margin assumptions are two primary drivers of the fair value of our Latin America reporting unit, and these assumptions are underpinned by our expectations for long-term manufacturing growth in the region. We will continue to evaluate goodwill on an annual basis as of the beginning of our fourth fiscal quarter and whenever there are indicators of potential impairment.

9.	FINANCIAL INSTRUMENTS

Currency Price Risk Management

Our earnings, cash flows, and financial position are exposed to foreign currency risk from foreign currency-denominated transactions and net investments in foreign operations. It is our policy to minimize our cash flow volatility from changes in currency exchange rates. This is accomplished by identifying and evaluating the risk that our cash flows will change in value due to changes in exchange rates and by executing the appropriate strategies necessary to manage such exposures. Our objective is to maintain economically balanced currency risk management strategies that provide adequate downside protection.

Forward Exchange Contracts

We enter into forward exchange contracts to reduce the cash flow exposure to foreign currency fluctuations associated with highly anticipated cash flows and certain firm commitments, such as the purchase of plant and equipment. We also enter into forward exchange contracts to hedge the cash flow exposure on intercompany loans. The portfolio of forward exchange contracts consists primarily of Euros and U.S. dollars as well as Euros and British Pound Sterling. The maximum remaining term of any forward exchange contract currently outstanding and designated as a cash flow hedge at 30 June 2015 is 3.5 years.

Forward exchange contracts are also used to hedge the value of investments in certain foreign subsidiaries and affiliates by creating a liability in a currency in which we have a net equity position. The primary currency pair in this portfolio of forward exchange contracts is Euros and U.S. dollars.

In addition to the forward exchange contracts that are designated as hedges, we utilize forward exchange contracts that are not designated as hedges. These contracts are used to economically hedge foreign currency-denominated monetary assets and liabilities, primarily working capital. The primary objective of these forward exchange contracts is to protect the value of foreign currency-denominated monetary assets and liabilities from the effects of volatility in foreign exchange rates that might occur prior to their receipt or settlement. This portfolio of forward exchange contracts comprises many different foreign currency pairs, with a profile that changes from time to time depending on business activity and sourcing decisions.

The table below summarizes our outstanding currency price risk management instruments:


	30 June 2015					30 September 2014
	US$ Notional			Years Average Maturity		US$ Notional			Years Average Maturity
Forward Exchange Contracts:
Cash flow hedges		$	4,375.9		.5		$	2,965.5		.7
Net investment hedges			515.6		4.1			685.9		2.9
Not designated			1,298.9		.4			381.5		.1
Total Forward Exchange Contracts		$	6,190.4		.8		$	4,032.9		1.0

In addition to the above, we use foreign currency-denominated debt to hedge the foreign currency exposures of our net investment in certain foreign subsidiaries. The designated foreign currency-denominated debt and related accrued interest included €757.6 million ($844.3) and Chinese Renminbi 1,108.6 million ($178.8) at 30 June 2015 and €879.3 million ($1,110.6) and Chinese Renminbi 900.9 million ($146.8) at 30 September 2014. The designated foreign currency-denominated debt is located on the balance sheet in the long-term debt and short-term borrowings line items.

Debt Portfolio Management

It is our policy to identify on a continuing basis the need for debt capital and evaluate the financial risks inherent in funding the Company with debt capital. Reflecting the result of this ongoing review, the debt portfolio and hedging program are managed with the objectives and intent to (1) reduce funding risk with respect to borrowings made by us to preserve our access to debt capital and provide debt capital as required for funding and liquidity purposes, and (2) manage the aggregate interest rate risk and the debt portfolio in accordance with certain debt management parameters.

Interest Rate Management Contracts

We enter into interest rate swaps to change the fixed/variable interest rate mix of our debt portfolio in order to maintain the percentage of fixed- and variable-rate debt within the parameters set by management. In accordance with these parameters, the agreements are used to manage interest rate risks and costs inherent in our debt portfolio. Our interest rate management portfolio generally consists of fixed-to-floating interest rate swaps (which are designated as fair value hedges), pre-issuance interest rate swaps and treasury locks (which hedge the interest rate risk associated with anticipated fixed-rate debt issuances and are designated as cash flow hedges), and floating-to-fixed interest rate swaps (which are designated as cash flow hedges). At 30 June 2015, the outstanding interest rate swaps were denominated in U.S. dollars. The notional amount of the interest rate swap agreements is equal to or less than the designated debt being hedged. When interest rate swaps are used to hedge variable-rate debt, the indices of the swaps and the debt to which they are designated are the same. It is our policy not to enter into any interest rate management contracts that lever a move in interest rates on a greater than one-to-one basis.

Cross Currency Interest Rate Swap Contracts

We enter into cross currency interest rate swap contracts when our risk management function deems necessary. These contracts may entail both the exchange of fixed- and floating-rate interest payments periodically over the life of the agreement and the exchange of one currency for another currency at inception and at a specified future date. These contracts effectively convert the currency denomination of a debt instrument into another currency in which we have a net equity position while changing the interest rate characteristics of the instrument. The contracts are used to hedge either certain net investments in foreign operations or nonfunctional currency cash flows related to intercompany loans. The current cross currency interest rate swap portfolio primarily consists of fixed-to-fixed swaps between U.S. dollars and offshore Chinese Renminbi, U.S. dollars and British Pound Sterling, U.S. dollars and Chilean Pesos, as well as U.S. dollars and Euros.

The following table summarizes our outstanding interest rate management contracts and cross currency interest rate swaps:


	30 June 2015											30 September 2014
	US$ Notional			Average Pay %			Average Receive %			Years Average Maturity		US$ Notional			Average Pay %			Average Receive %			Years Average Maturity
Interest rate swaps (fair value hedge)		$	600.0		LIBOR			2.77	%		3.5		$	600.0		LIBOR			2.77	%		4.3
Cross currency interest rate swaps (net investment hedge)		$	767.5		3.43	%		2.02	%		3.0		$	404.5		3.70	%		1.15	%		2.7
Interest rate swaps (cash flow hedge)		$	—		—	%		—	%		—		$	431.7		2.36	%		.71	%		.4
Cross currency interest rate swaps (cash flow hedge)		$	637.7		4.26	%		3.00	%		3.7		$	446.3		3.39	%		2.86	%		4.2
Cross currency interest rate swaps (not designated)		$	5.6		3.62	%		.05	%		.1		$	15.4		3.62	%		.05	%		.8

The table below summarizes the fair value and balance sheet location of our outstanding derivatives:


	Balance Sheet Location	30 June 2015			30 September 2014			Balance Sheet Location	30 June 2015			30 September 2014
Derivatives Designated as Hedging Instruments:

Forward exchange contracts	Other receivables		$	65.3		$	78.9	Accrued liabilities		$	145.2		$	61.8
Interest rate management contracts	Other receivables			29.5			21.1	Accrued liabilities			—			18.8
Forward exchange contracts	Other noncurrent assets			67.0			10.5	Other noncurrent liabilities			3.3			3.1
Interest rate management contracts	Other noncurrent assets			98.7			54.6	Other noncurrent liabilities			.8			.3
Total Derivatives Designated as Hedging Instruments			$	260.5		$	165.1			$	149.3		$	84.0
Derivatives Not Designated as Hedging Instruments:
Forward exchange contracts	Other receivables		$	37.3		$	4.0	Accrued liabilities		$	44.7		$	1.9
Interest rate management contracts	Other receivables			2.6			2.6	Accrued liabilities			—			—
Forward exchange contracts	Other noncurrent assets			17.7			—	Other noncurrent liabilities			.3			—
Total Derivatives Not Designated as Hedging Instruments			$	57.6		$	6.6			$	45.0		$	1.9
Total Derivatives			$	318.1		$	171.7			$	194.3		$	85.9

The table below summarizes the gain or loss related to our cash flow hedges, fair value hedges, net investment hedges, and derivatives not designated as hedging instruments:


	Three Months Ended 30 June
	Forward Exchange Contracts								Foreign Currency Debt							Other ^(A)								Total
	2015				2014				2015				2014			2015				2014				2015				2014
Cash Flow Hedges, net of tax:
Net gain (loss) recognized in OCI (effective portion)		$	1.8			$	(8.7	)		$	—			$	—		$	(15.4	)		$	(8.2	)		$	(13.6	)		$	(16.9	)
Net (gain) loss reclassified from OCI to sales/cost of sales (effective portion)			—				(1.2	)			—				—			—				—				—				(1.2	)
Net (gain) loss reclassified from OCI to other income (expense), net (effective portion)			(2.0	)			3.0				—				—			2.2				(.5	)			.2				2.5
Net (gain) loss reclassified from OCI to interest expense (effective portion)			.3				(.6	)			—				—			1.1				—				1.4				(.6	)
Net (gain) loss reclassified from OCI to other income (expense), net (ineffective portion)			—				.2				—				—			—				—				—				.2
Fair Value Hedges:
Net gain (loss) recognized in interest expense ^(B)		$	—			$	—			$	—			$	—		$	(4.5	)		$	2.8			$	(4.5	)		$	2.8
Net Investment Hedges, net of tax:
Net gain (loss) recognized in OCI		$	(13.6	)		$	1.5			$	(20.0	)		$	4.6		$	(20.3	)		$	(.9	)		$	(53.9	)		$	5.2
Derivatives Not Designated as Hedging Instruments:
Net gain (loss) recognized in other income (expense), net^(C)		$	(4.3	)		$	(4.7	)		$	—			$	—		$	—			$	—			$	(4.3	)		$	(4.7	)


	Nine Months Ended 30 June
	Forward Exchange Contracts								Foreign Currency Debt							Other^(A)								Total
	2015				2014				2015			2014				2015				2014				2015				2014
Cash Flow Hedges, net of tax:
Net gain (loss) recognized in OCI (effective portion)		$	(44.2	)		$	10.7			$	—		$	—			$	6.4			$	(9.9	)		$	(37.8	)		$	.8
Net (gain) loss reclassified from OCI to sales/cost of sales (effective portion)			.3				(.2	)			—			—				—				—				.3				(.2	)
Net (gain) loss reclassified from OCI to other income (expense), net (effective portion)			40.7				(15.6	)			—			—				(11.0	)			(4.2	)			29.7				(19.8	)
Net (gain) loss reclassified from OCI to interest expense (effective portion)			.1				(1.4	)			—			—				2.0				.1				2.1				(1.3	)
Net (gain) loss reclassified from OCI to other income (expense), net (ineffective portion)			.6				(.5	)			—			—				—				—				.6				(.5	)
Fair Value Hedges:
Net gain (loss) recognized in interest expense^(B)		$	—			$	—			$	—		$	—			$	3.5			$	(.6	)		$	3.5			$	(.6	)
Net Investment Hedges, net of tax:
Net gain (loss) recognized in OCI		$	56.5			$	(15.1	)		$	87.8		$	(7.1	)		$	17.1			$	6.7			$	161.4			$	(15.5	)
Derivatives Not Designated as Hedging Instruments:
Net gain (loss) recognized in other income (expense), net^(C)		$	(11.5	)		$	(4.9	)		$	—		$	—			$	—			$	.2			$	(11.5	)		$	(4.7	)

^(A)	Other includes the impact on other comprehensive income (OCI) and earnings primarily related to interest rate and cross currency interest rate swaps.

^(B)	The impact of fair value hedges noted above was largely offset by gains and losses resulting from the impact of changes in related interest rates on recognized outstanding debt.

^(C)	The impact of the non-designated hedges noted above was largely offset by gains and losses resulting from the impact of changes in exchange rates on recognized assets and liabilities denominated in nonfunctional currencies.

The amount of cash flow hedges’ unrealized gains and losses at 30 June 2015 that are expected to be reclassified to earnings in the next twelve months is not material.

The cash flows related to all derivative contracts are reported in the operating activities section of the consolidated statements of cash flows.

Credit Risk-Related Contingent Features

Certain derivative instruments are executed under agreements that require us to maintain a minimum credit rating with both Standard & Poor’s and Moody’s. If our credit rating falls below this threshold, the counterparty to the derivative instruments has the right to request full collateralization on the derivatives’ net liability position. The net liability position of derivatives with credit risk-related contingent features was $1.2 as of 30 June 2015 and $2.1 as of 30 September 2014. Because our current credit rating is above the various pre-established thresholds, no collateral has been posted on these liability positions.

Counterparty Credit Risk Management

We execute financial derivative transactions with counterparties that are highly rated financial institutions, all of which are investment grade at this time. Some of our underlying derivative agreements give us the right to require the institution to post collateral if its credit rating falls below the pre-established thresholds with Standard & Poor’s or Moody’s. These are the same agreements referenced in Credit Risk-Related Contingent Features above. The collateral that the counterparties would be required to post was $189.4 as of 30 June 2015 and $107.8 as of 30 September 2014. No financial institution is required to post collateral at this time, as all have credit ratings at or above the threshold.

10.

FAIR VALUE MEASUREMENTS

Fair value is defined as an exit price, i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:


Level 1	—	Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2	—	Inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability.

Level 3	—	Inputs that are unobservable for the asset or liability based on our own assumptions (about the assumptions market participants would use in pricing the asset or liability).

The methods and assumptions used to measure the fair value of financial instruments are as follows:

Derivatives

The fair value of our interest rate management contracts and forward exchange contracts are quantified using the income approach and are based on estimates using standard pricing models. These models take into account the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. The computation of the fair values of these instruments is generally performed by the Company. These standard pricing models utilize inputs which are derived from or corroborated by observable market data such as interest rate yield curves and currency spot and forward rates. Therefore, the fair value of our derivatives is classified as a level 2 measurement. On an ongoing basis, we randomly test a subset of our valuations against valuations received from the transaction’s counterparty to validate the accuracy of our standard pricing models. Counterparties to these derivative contracts are highly rated financial institutions.

Refer to Note 9, Financial Instruments, for a description of derivative instruments, including details on the balance sheet line classifications.

Long-term Debt

The fair value of our debt is based on estimates using standard pricing models that take into account the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. These standard valuation models utilize observable market data such as interest rate yield curves and currency spot rates. Therefore, the fair value of our debt is classified as a level 2 measurement. We generally perform the computation of the fair value of these instruments.

The carrying values and fair values of financial instruments were as follows:


	30 June 2015						30 September 2014
	Carrying Value			Fair Value			Carrying Value			Fair Value
Assets
Derivatives
Forward exchange contracts		$	187.3		$	187.3		$	93.4		$	93.4
Interest rate management contracts			130.8			130.8			78.3			78.3
Liabilities
Derivatives
Forward exchange contracts		$	193.5		$	193.5		$	66.8		$	66.8
Interest rate management contracts			.8			.8			19.1			19.1
Long-term debt, including current portion			4,775.4			4,992.2			4,889.8			5,130.7

The carrying amounts reported in the balance sheet for cash and cash items, trade receivables, payables and accrued liabilities, accrued income taxes, and short-term borrowings approximate fair value due to the short-term nature of these instruments. Accordingly, these items have been excluded from the above table.

The following table summarizes assets and liabilities measured at fair value on a recurring basis in the consolidated balance sheets:


	30 June 2015												30 September 2014
	Total			Level 1			Level 2			Level 3			Total			Level 1			Level 2			Level 3
Assets at Fair Value
Derivatives
Forward exchange contracts		$	187.3		$	—		$	187.3		$	—		$	93.4		$	—		$	93.4		$	—
Interest rate management contracts			130.8			—			130.8			—			78.3			—			78.3			—
Total Assets at Fair Value		$	318.1		$	—		$	318.1		$	—		$	171.7		$	—		$	171.7		$	—

Liabilities at Fair Value
Derivatives
Forward exchange contracts		$	193.5		$	—		$	193.5		$	—		$	66.8		$	—		$	66.8		$	—
Interest rate management contracts			.8			—			.8			—			19.1			—			19.1			—
Total Liabilities at Fair Value		$	194.3		$	—		$	194.3		$	—		$	85.9		$	—		$	85.9		$	—

11.

RETIREMENT BENEFITS

The components of net periodic benefit cost for the defined benefit pension and other postretirement benefit plans for the three and nine months ended 30 June 2015 and 2014 were as follows:


	Pension Benefits																Other Benefits
	2015								2014								2015			2014
Three Months Ended 30 June	U.S.				International				U.S.				International
Service cost		$	10.6			$	7.8			$	10.6			$	9.2			$	.7		$	.9
Interest cost			31.1				14.2				32.7				16.9				.6			.5
Expected return on plan assets			(50.5	)			(20.0	)			(47.0	)			(19.7	)			—			—
Prior service cost amortization			.7				(.1	)			.7				—				—			—
Actuarial loss amortization			19.9				10.6				19.6				9.1				.2			.4
Settlements and curtailments			3.3				—				—				—				—			—
Special termination benefits			.8				—				—				—				—			—
Other			.2				.4				—				.6				—			—
Net periodic benefit cost		$	16.1			$	12.9			$	16.6			$	16.1			$	1.5		$	1.8

	Pension Benefits																Other Benefits
	2015								2014								2015			2014
Nine Months Ended 30 June	U.S.				International				U.S.				International
Service cost		$	31.8			$	23.9			$	31.9			$	27.0			$	2.1		$	2.5
Interest cost			93.6				43.4				98.1				50.4				1.7			1.7
Expected return on plan assets			(151.5	)			(60.2	)			(140.9	)			(58.5	)			—			—
Prior service cost amortization			2.1				—				2.1				.1				—			—
Actuarial loss amortization			59.3				31.2				58.8				26.8				.6			1.3
Settlements and curtailments			18.9				(.1	)			—				.5				—			—
Special termination benefits			5.6				.9				.2				—				—			—
Other			1.3				1.4				—				1.6				—			—
Net periodic benefit cost		$	61.1			$	40.5			$	50.2			$	47.9			$	4.4		$	5.5

Net periodic benefit cost is primarily included in cost of sales, selling and administrative expense, and pension settlement loss on our consolidated income statements. The amount of net periodic benefit cost capitalized in 2015 and 2014 was not material.

Our U.S. supplemental pension plan provides for a lump sum benefit payment option at the time of retirement, or for corporate officers, six months after their retirement date. Pension settlements are immediately recognized when cash payments exceed the sum of the service and interest cost components of net periodic pension cost of the plan for the fiscal year. The participant’s vested benefit is considered settled upon cash payment of the lump sum. For the three and nine months ended 30 June 2015, we recognized a pension settlement charge of $1.6 and $14.2, respectively, to accelerate recognition of a portion of actuarial losses deferred in accumulated other comprehensive loss associated with the U.S. supplemental pension plan.

Special termination benefits for the three and nine months ended 30 June 2015 are $.8 and $6.5, respectively, related to the business restructuring and cost reduction actions. In addition, curtailment losses for the three and nine months ended 30 June 2015 of $1.7 and $4.8, respectively, are also reflected in the business restructuring and cost reduction actions charge.

For the nine months ended 30 June 2015 and 2014, our cash contributions to funded pension plans and benefit payments under unfunded pension plans were $119.2 and $64.7, respectively. Total contributions for fiscal 2015 are expected to be approximately $130.0 to $150.0. During fiscal 2014, total contributions were $78.2.

12.

COMMITMENTS AND CONTINGENCIES

Litigation

We are involved in various legal proceedings, including competition, environmental, health, safety, product liability, and insurance matters. In September 2010, the Brazilian Administrative Council for Economic Defense (CADE) issued a decision against our Brazilian subsidiary, Air Products Brasil Ltda., and several other Brazilian industrial gas companies for alleged anticompetitive activities. CADE imposed a civil fine of R$179.2 million (approximately $58 at 30 June 2015) on Air Products Brasil Ltda. This fine was based on a recommendation by a unit of the Brazilian Ministry of Justice, whose investigation began in 2003, alleging violation of competition laws with respect to the sale of industrial and medical gases. The fines are based on a percentage of our total revenue in Brazil in 2003.

We have denied the allegations made by the authorities and filed an appeal in October 2010 with the Brazilian courts. On 6 May 2014, our appeal was granted and the fine against Air Products Brasil Ltda. was dismissed. CADE has appealed that ruling and the matter remains pending. We, with advice of our outside legal counsel, have assessed the status of this matter and have concluded that, although an adverse final judgment after exhausting all appeals is possible, such a judgment is not probable. As a result, no provision has been made in the consolidated financial statements. We estimate the maximum possible loss to be the full amount of the fine of R$179.2 million (approximately $58 at 30 June 2015) plus interest accrued thereon until final disposition of the proceedings.

While we do not expect that any sums we may have to pay in connection with this or any other legal proceeding would have a material adverse effect on our consolidated financial position or net cash flows, a future charge for regulatory fines or damage awards could have a significant impact on our net income in the period in which it is recorded.

Environmental

In the normal course of business, we are involved in legal proceedings under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA: the federal Superfund law); Resource Conservation and Recovery Act (RCRA); and similar state and foreign environmental laws relating to the designation of certain sites for investigation or remediation. Presently, there are approximately 37 sites on which a final settlement has not been reached where we, along with others, have been designated a potentially responsible party by the Environmental Protection Agency or are otherwise engaged in investigation or remediation, including cleanup activity at certain of our current and former manufacturing sites. We continually monitor these sites for which we have environmental exposure.

Accruals for environmental loss contingencies are recorded when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The consolidated balance sheets at 30 June 2015 and 30 September 2014 included an accrual of $82.5 and $86.2, respectively, primarily as part of other noncurrent liabilities. The environmental liabilities will be paid over a period of up to 30 years. We estimate the exposure for environmental loss contingencies to range from $82 to a reasonably possible upper exposure of $95 as of 30 June 2015.

Actual costs to be incurred at identified sites in future periods may vary from the estimates, given inherent uncertainties in evaluating environmental exposures. Using reasonably possible alternative assumptions of the exposure level could result in an increase to the environmental accrual. Due to the inherent uncertainties related to environmental exposures, a significant increase to the reasonably possible upper exposure level could occur if a new site is designated, the scope of remediation is increased, a different remediation alternative is identified, or a significant increase in our proportionate share occurs. We do not expect that any sum we may have to pay in connection with environmental matters in excess of the amounts recorded or disclosed above would have a material adverse impact on our financial position or results of operations in any one year.

PACE

At 30 June 2015, $31.4 of the environmental accrual was related to the Pace facility.

In 2006, we sold our Amines business, which included operations at Pace, Florida, and recognized a liability for retained environmental obligations associated with remediation activities at Pace. We are required by the Florida Department of Environmental Protection (FDEP) and the United States Environmental Protection Agency (USEPA) to continue our remediation efforts. We estimated that it would take 20 years to complete the groundwater remediation, and the costs through completion were estimated to range from $42 to $52. As no amount within the range was a better estimate than another, we recognized a pretax expense in fiscal 2006 of $42 as a component of income from discontinued operations and recorded an environmental accrual of $42 in continuing operations on the consolidated balance sheets. There has been no change to the estimated exposure range related to the Pace facility.

We have implemented many of the remedial corrective measures at the Pace facility required under 1995 Consent Orders issued by the FDEP and the USEPA. Contaminated soils have been bioremediated, and the treated soils have been secured in a lined on-site disposal cell. Several groundwater recovery systems have been installed to contain and remove contamination from groundwater. We completed an extensive assessment of the site to determine how well existing measures are working, what additional corrective measures may be needed, and whether newer remediation technologies that were not available in the 1990s might be suitable to more quickly and effectively remove groundwater contaminants. Based on assessment results, we completed a focused feasibility study that has identified alternative approaches that may more effectively remove contaminants. We continue to review alternative remedial approaches with the FDEP. In the first quarter of 2015, we entered into a new Consent Order with the FDEP requiring us to continue our remediation efforts at the Pace facility. We expect the costs we will incur under the new Consent Order to be consistent with our previous estimates.

PIEDMONT

At 30 June 2015, $18.3 of the environmental accrual was related to the Piedmont site.

On 30 June 2008, we sold our Elkton, Maryland, and Piedmont, South Carolina, production facilities and the related North American atmospheric emulsions and global pressure sensitive adhesives businesses. In connection with the sale, we recognized a liability for retained environmental obligations associated with remediation activities at the Piedmont site. This site is under active remediation for contamination caused by an insolvent prior owner. We are required by the South Carolina Department of Health and Environmental Control to address both contaminated soil and groundwater. Numerous areas of soil contamination have been addressed, and contaminated groundwater is being recovered and treated. We estimate that it will take until 2017 to complete source area remediation and another 15 years thereafter to complete groundwater recovery, with costs through completion estimated to be $24. We recognized a pretax expense in 2008 of $24 as a component of income from discontinued operations and recorded an environmental liability of $24 in continuing operations on the consolidated balance sheets. There has been no change to the estimated exposure.

PASADENA

At 30 June 2015, $11.7 of the environmental accrual was related to the Pasadena site.

During the fourth quarter of 2012, management committed to permanently shutting down our polyurethane intermediates (PUI) production facility in Pasadena, Texas. In shutting down and dismantling the facility, we have undertaken certain obligations related to soil and groundwater contaminants. We have been pumping and treating groundwater to control off-site contaminant migration in compliance with regulatory requirements and under the approval of the Texas Commission on Environmental Quality (TCEQ). We estimate that the pump and treat system will continue to operate until 2042. We plan to perform additional work to address other environmental obligations at the site. This additional work includes remediating as required impacted soils, investigating groundwater west of the former PUI facility, performing post closure care for two closed RCRA surface impoundment units and establishing engineering controls. In 2012, we estimated the total exposure at this site to be $13. There has been no change to the estimated exposure.

Guarantees

During the third quarter of 2015, we entered into a 25% owned joint venture to supply oxygen and nitrogen to Saudi Aramco’s Jazan oil refinery and power plant in Saudi Arabia. Until 2020, an equity bridge loan has been provided to the joint venture to fund equity commitments, and we guaranteed the repayment of our 25% share of this loan. Our venture partner guaranteed repayment of their share. Our maximum exposure under the guarantee is approximately $100.

Air Products has also entered into a sale of equipment contract with the joint venture to engineer, procure, and construct the industrial gas facilities that will supply gases to Saudi Aramco. We will provide bank guarantees to the joint venture of up to $326 to support our performance under the contract.

The fair value of the guarantees is not material.

13.

SHARE-BASED COMPENSATION

We have various share-based compensation programs, which include deferred stock units, stock options, and restricted stock. Under all programs, the terms of the awards are fixed at the grant date. We issue shares from treasury stock upon the payout of deferred stock units, the exercise of stock options, and the issuance of restricted stock awards. As of 30 June 2015, there were 5,115,244 shares available for future grant under our Long-Term Incentive Plan, which is shareholder approved.

Share-based compensation cost recognized in the consolidated income statements is summarized below:


	Three Months Ended 30 June								Nine Months Ended 30 June
	2015				2014				2015				2014
Before-Tax Share-Based Compensation Cost		$	12.5			$	9.1			$	37.3			$	32.5
Income Tax Benefit			(4.4	)			(3.2	)			(13.1	)			(11.4	)
After-Tax Share-Based Compensation Cost		$	8.1			$	5.9			$	24.2			$	21.1

Before-tax share-based compensation cost is primarily included in selling and administrative expense on our consolidated income statements. The amount of share-based compensation cost capitalized in 2015 and 2014 was not material.

Deferred Stock Units

During the nine months ended 30 June 2015, we granted 119,272 market-based deferred stock units. The market-based deferred stock units vest as long as the employee continues to be employed by the Company and upon the achievement of the performance target. The performance target, which is approved by the Compensation Committee, is the Company’s relative total shareholder return in relation to a defined peer group over the three-year performance period beginning 1 October 2014 and ending 30 September 2017.

The market-based deferred stock units had an estimated grant-date fair value of $194.51 per unit. The grant-date fair value was estimated using a Monte Carlo simulation model as these equity awards were tied to a market condition. The model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the grant and calculates the fair value of the awards. We generally expense the grant-date fair value of these awards on a straight line basis over the vesting period. The calculation of the fair value of market-based deferred stock units used the following assumptions:


Expected volatility	19.6	%
Risk-free interest rate	.9	%
Expected dividend yield	2.5	%

In addition, during the nine months ended 30 June 2015, we granted 138,010 time-based deferred stock units at a weighted-average grant-date fair value of $144.30.

Stock Options

During the nine months ended 30 June 2015, we granted 180,619 stock options at a weighted-average exercise price of $144.19 and an estimated fair value of $37.19 per option. The fair value of these options was estimated using a Black-Scholes option valuation model that used the following assumptions:


Expected volatility	30.3	%
Risk-free interest rate	2.2	%
Expected dividend yield	2.6	%
Expected life (in years)	7.5

Restricted Stock

During the nine months ended 30 June 2015, we issued 19,691 restricted shares at a weighted-average grant-date fair value of $144.09.

14.

EQUITY

The following is a summary of the changes in total equity:


	Three Months Ended 30 June
	2015												2014
	Air Products				Non- controlling Interests				Total Equity				Air Products				Non- controlling Interests				Total Equity
Balance at 31 March		$	7,332.5			$	143.8			$	7,476.3			$	7,370.9			$	156.9			$	7,527.8
Net income ^(A)			318.8				8.3				327.1				314.0				8.4				322.4
Other comprehensive income			83.7				1.5				85.2				110.1				2.2				112.3
Dividends on common stock (per share $.81, $.77)			(174.2	)			—				(174.2	)			(164.1	)			—				(164.1	)
Dividends to noncontrolling interests			—				(8.8	)			(8.8	)			—				(8.0	)			(8.0	)
Share-based compensation			10.5				—				10.5				9.1				—				9.1
Issuance of treasury shares for stock option and award plans			11.6				—				11.6				48.5				—				48.5
Tax benefit of stock option and award plans			3.9				—				3.9				9.1				—				9.1
Other equity transactions			(.8	)			.5				(.3	)			(.9	)			—				(.9	)
Balance at 30 June		$	7,586.0			$	145.3			$	7,731.3			$	7,696.7			$	159.5			$	7,856.2


	Nine Months Ended 30 June
	2015												2014
	Air Products				Non- controlling Interests				Total Equity				Air Products				Non- controlling Interests				Total Equity
Balance at 30 September		$	7,365.8			$	155.6			$	7,521.4			$	7,042.1			$	156.8			$	7,198.9
Net income^(A)			933.4				22.7				956.1				887.7				23.3				911.0
Other comprehensive income (loss)			(336.5	)			(3.0	)			(339.5	)			96.1				(2.4	)			93.7
Dividends on common stock (per share $2.39, $2.25)			(513.5	)			—				(513.5	)			(477.8	)			—				(477.8	)
Dividends to noncontrolling interests			—				(28.1	)			(28.1	)			—				(18.2	)			(18.2	)
Share-based compensation			35.3				—				35.3				32.5				—				32.5
Issuance of treasury shares for stock option and award plans			74.5				—				74.5				96.4				—				96.4
Tax benefit of stock option and award plans			26.8				—				26.8				23.1				—				23.1
Purchase of noncontrolling interests			—				—				—				(.5	)			—				(.5	)
Other equity transactions			.2				(1.9	)			(1.7	)			(2.9	)			—				(2.9	)
Balance at 30 June		$	7,586.0			$	145.3			$	7,731.3			$	7,696.7			$	159.5			$	7,856.2

^(A)	Net income attributable to noncontrolling interests excludes net income related to redeemable noncontrolling interests, which is not included in total equity. Refer to Note 16, Noncontrolling Interests, for additional information.

15.

ACCUMULATED OTHER COMPREHENSIVE LOSS

The table below summarizes changes in accumulated other comprehensive loss (AOCL), net of tax, attributable to Air Products for the three and nine months ended 30 June 2015:


	Net loss on derivatives qualifying as hedges				Foreign currency translation adjustments				Pension and postretirement benefits				Total
Balance at 31 March 2015		$	(21.7	)		$	(740.6	)		$	(899.8	)		$	(1,662.1	)
Other comprehensive income (loss) before reclassifications			(13.6	)			73.0				2.0				61.4
Amounts reclassified from AOCL			1.6				—				22.2				23.8
Net current period other comprehensive income (loss)		$	(12.0	)		$	73.0			$	24.2			$	85.2
Amount attributable to noncontrolling interests			(.1	)			1.6				—				1.5
Balance at 30 June 2015		$	(33.6	)		$	(669.2	)		$	(875.6	)		$	(1,578.4	)

	Net loss on derivatives qualifying as hedges				Foreign currency translation adjustments				Pension and postretirement benefits				Total
Balance at 30 September 2014		$	(28.5	)		$	(268.7	)		$	(944.7	)		$	(1,241.9	)
Other comprehensive loss before reclassifications			(37.8	)			(403.5	)			(2.6	)			(443.9	)
Amounts reclassified from AOCL			32.7				—				71.7				104.4
Net current period other comprehensive income (loss)		$	(5.1	)		$	(403.5	)		$	69.1			$	(339.5	)
Amount attributable to noncontrolling interests			—				(3.0	)			—				(3.0	)
Balance at 30 June 2015		$	(33.6	)		$	(669.2	)		$	(875.6	)		$	(1,578.4	)

The table below summarizes the reclassifications out of accumulated other comprehensive loss and the affected line item on the consolidated income statements:


	Three Months Ended 30 June							Nine Months Ended 30 June
	2015			2014				2015			2014
(Gain) Loss on Cash Flow Hedges, net of tax
Sales/Cost of sales		$	—		$	(1.2	)		$	.3		$	(.2	)
Other income (expense), net			.2			2.7				30.3			(20.3	)
Interest expense			1.4			(.6	)			2.1			(1.3	)
Total (Gain) Loss on Cash Flow Hedges, net of tax		$	1.6		$	.9			$	32.7		$	(21.8	)

Pension and Postretirement Benefits, net of tax^(A)		$	22.2		$	20.3			$	71.7		$	60.9

^(A)	The components include items such as prior service cost amortization, actuarial loss amortization, and settlements and are reflected in net periodic benefit cost. Refer to Note 11, Retirement Benefits.

16.

NONCONTROLLING INTERESTS

INDURA S.A.

Redeemable Noncontrolling Interest

In 2012, we purchased a 64.8% controlling equity interest in the outstanding shares of Indura S.A. As part of the purchase agreement, the largest minority shareholder in Indura S.A. has the right to exercise a put option to require us to purchase up to a 30.5% equity interest during the two-year period beginning on 1 July 2015, at a redemption value equal to the greater of fair market value or the acquisition date value escalated by an inflation factor (the “floor value”). The put option is not accounted for separate from the minority interest shares that are subject to the put option. The redemption feature of the put option requires classification of the minority shareholder’s interest in the consolidated balance sheet outside of equity under the caption “Redeemable Noncontrolling Interest.”

Adjustments to the value of the redeemable noncontrolling interest due to the redemption feature are recognized as they occur. Currently, the floor value of the redemption feature is in excess of the fair value of the minority interest shares. Because the value of the redeemable noncontrolling interest cannot be less than the floor value, the attribution of net income between Air Products and the minority shareholders is adjusted so that the value of the redeemable noncontrolling interest is not less than the floor value.

The following is a summary of the changes in redeemable noncontrolling interest for the three and nine months ended 30 June:


	Three Months Ended 30 June
	2015				2014
Balance at 31 March		$	280.0			$	343.6
Net income			6.1				1.1
Dividends			(2.0	)			(1.2	)
Currency translation adjustment			(6.2	)			(2.1	)
Balance at 30 June		$	277.9			$	341.4


	Nine Months Ended 30 June
	2015				2014
Balance at 30 September		$	287.2			$	375.8
Net income			11.5				3.1
Dividends			(2.0	)			(4.7	)
Currency translation adjustment			(18.8	)			(32.8	)
Balance at 30 June		$	277.9			$	341.4

As of 30 June 2015, we have a 67.3% controlling equity interest in Indura S.A.

In July 2015, we completed the purchase of the 30.5% equity interest in our Indura S.A. subsidiary from the largest minority shareholder for $278 based on terms substantially consistent with the original purchase agreement. The purchase was funded by the issuance of commercial paper and will eliminate the redeemable noncontrolling interest balance on the statement of financial position.

17.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (EPS):


	Three Months Ended 30 June						Nine Months Ended 30 June
	2015			2014			2015			2014
Numerator
Income from continuing operations		$	318.8		$	314.0		$	933.4		$	884.6
Income from discontinued operations			—			—			—			3.1
Net Income Attributable to Air Products		$	318.8		$	314.0		$	933.4		$	887.7
Denominator (in millions)
Weighted average number of common shares – Basic			215.2			212.9			214.8			212.4
Effect of dilutive securities
Employee stock option and other award plans			2.2			2.5			2.4			2.5
Weighted average number of common shares – Diluted			217.4			215.4			217.2			214.9

Basic EPS Attributable to Air Products
Income from continuing operations		$	1.48		$	1.47		$	4.35		$	4.17
Income from discontinued operations			—			—			—			.01
Net Income Attributable to Air Products		$	1.48		$	1.47		$	4.35		$	4.18

Diluted EPS Attributable to Air Products
Income from continuing operations		$	1.47		$	1.46		$	4.30		$	4.12
Income from discontinued operations			—			—			—			.01
Net Income Attributable to Air Products		$	1.47		$	1.46		$	4.30		$	4.13

Outstanding share-based awards of .2 million shares were antidilutive and therefore excluded from the computation of diluted earnings per share for the three and nine months ended 30 June 2015. Outstanding share-based awards of .7 and .8 million shares were antidilutive and therefore excluded from the computation of diluted earnings per share for the three and nine months ended 30 June 2014, respectively.

18.

SUPPLEMENTAL INFORMATION

Credit Agreement

During fiscal 2013, we entered into a five-year $2,500.0 revolving credit agreement maturing 30 April 2018 with a syndicate of banks (the “2013 Credit Agreement”), under which senior unsecured debt is available to both the Company and certain of its subsidiaries. Effective 30 June 2014, the 2013 Credit Agreement was amended to increase the facility to $2,595.0. Effective 30 April 2015, the 2013 Credit Agreement was amended to decrease the facility to $2,405.0. The 2013 Credit Agreement provides a source of liquidity for the Company and supports its commercial paper program. The Company’s only financial covenant is a maximum ratio of total debt to total capitalization no greater than 70%. No borrowings were outstanding under the 2013 Credit Agreement as of 30 June 2015.

Debt

As of 30 June 2015, we have classified $250.0 of commercial paper as long-term debt because we have the ability to refinance the debt on a long-term basis under the 2013 Credit Agreement. Our current intent is to refinance this debt via the U.S. public debt market.

On 12 February 2015, we issued a 1.0% Eurobond for €300 million ($335.3) that matures on 12 February 2025. The proceeds were used to repay a 3.875% Eurobond of €300 million ($335.9) that matured on 10 March 2015.

19.

BUSINESS SEGMENT INFORMATION

The Company began operating under a new structure effective 1 October 2014. Our new reporting segments reflect the manner in which our chief operating decision maker reviews results and allocates resources. Except in the Corporate and other segment, each reporting segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments. Our liquefied natural gas (LNG) and helium storage and distribution sale of equipment businesses are aggregated within the Corporate and other segment. The prior year information presented has been restated to conform with the fiscal year 2015 presentation.

The new reporting segments are:

●

Industrial Gases – Americas

●

Industrial Gases – EMEA (Europe, Middle East, and Africa)

●

Industrial Gases – Asia

●

Industrial Gases – Global

●

Materials Technologies

●

Energy-from-Waste

●

Corporate and other

Industrial Gases – Regional

The regional Industrial Gases (Americas, EMEA, Asia) segments include the results of our regional industrial gas businesses, which produce and sell atmospheric gases such as oxygen, nitrogen, and argon (primarily recovered by the cryogenic distillation of air) and process gases such as hydrogen, carbon monoxide, helium, syngas, and specialty gases. We supply gases to customers in many industries, including those in metals, glass, chemical processing, energy production and refining, food processing, metallurgical industries, medical, and general manufacturing. We distribute gases to our customers through a variety of supply modes including liquid or gaseous bulk supply delivered by tanker or tube trailer and, for smaller customers, packaged gases delivered in cylinders and dewars or small on-sites (cryogenic or noncryogenic generators). For large-volume customers, we construct an on-site plant adjacent to or near the customer’s facility or deliver product from one of our pipelines. We are the world’s largest provider of hydrogen, which is used by refiners to facilitate the conversion of heavy crude feedstock and lower the sulfur content of gasoline and diesel fuels.

Electricity is the largest cost component in the production of atmospheric gases, and natural gas is the principal raw material for hydrogen, carbon monoxide, and syngas production. We mitigate energy and natural gas prices contractually through pricing formulas, surcharges, and cost pass-through arrangements. The regional Industrial Gases segments also include our share of the results of several joint ventures accounted for by the equity method. The largest of these joint ventures operate in Mexico, Italy, South Africa, India, Saudi Arabia, and Thailand. Each of the regional Industrial Gases segments competes against global industrial gas companies as well as regional competitors. Competition is based primarily on price, reliability of supply, and the development of industrial gas applications. We derive a competitive advantage in locations where we have pipeline networks, which enable us to provide reliable and economic supply of products to larger customers.

Industrial Gases – Global

The Industrial Gases – Global segment includes cryogenic and gas processing equipment sales for air separation. The equipment is sold worldwide to customers in a variety of industries, including chemical and petrochemical manufacturing, oil and gas recovery and processing, and steel and primary metals processing. The Industrial Gases – Global segment also includes centralized global costs associated with management of all the Industrial Gases segments. These costs include Industrial Gases global administrative costs, product development costs, and research and development costs. We compete with a large number of firms for all the offerings included in the Industrial Gases – Global segment. Competition in the equipment businesses is based primarily on technological performance, service, technical know-how, price, and performance guarantees.

Materials Technologies

The Materials Technologies segment includes applications technology to make products that provide solutions to a broad range of global industries through chemical synthesis, analytical technology, process engineering, and surface science. This segment provides specialty gases, specialty chemicals, services, and equipment to the electronics industry primarily for the manufacture of silicon and compound semiconductors as well as liquid crystal (LCD) and other displays. The Materials Technologies segment also provides performance chemical solutions for the coatings, inks, adhesives, civil engineering, personal care, institutional and industrial cleaning, mining, oil field, polyurethane, and other industries. We compete in the businesses included in the Materials Technologies segment on a product-by-product basis against companies ranging from niche suppliers with a single product to large, vertically integrated companies. Competition is principally conducted on the basis of product performance, price, quality, reliability of product supply, technical innovation, service, and global infrastructure.

Energy-from-Waste

The Energy-from-Waste segment consists of two projects that are under construction in Tees Valley, United Kingdom. Once operational, these projects will process municipal solid waste to generate renewable power for customers under long-term contracts.

Corporate and other

The Corporate and other segment includes two on-going global businesses (our LNG sale of equipment business and our helium storage and distribution vessel sale of equipment business), the polyurethane intermediates business that was exited in early fiscal year 2014, and corporate support functions that benefit all the segments. Competition for the two sale of equipment businesses is based primarily on technological performance, service, technical know-how, price, and performance guarantees.

Business Segment


	Industrial Gases – Americas			Industrial Gases – EMEA			Industrial Gases – Asia			Industrial Gases – Global				Materials Technologies			Energy- from- Waste				Corporate and other				Segment Total
Three Months Ended 30 June 2015
Sales		$	898.2		$	455.2		$	417.6		$	71.3			$	539.8		$	—			$	88.1			$	2,470.2
Operating income (loss)			206.5			87.6			100.9			(24.1	)			131.5			(2.5	)			(17.6	)			482.3
Depreciation and amortization			103.9			47.0			51.9			4.2				22.7			—				3.3				233.0
Equity affiliates’ income			17.3			12.1			12.7			—				.3			—				—				42.4

Three Months Ended 30 June 2014
Sales		$	1,064.0		$	537.4		$	366.2		$	70.8			$	524.7		$	—			$	71.5			$	2,634.6
Operating income (loss)			188.9			85.7			83.8			(14.4	)			96.6			(3.2	)			(23.6	)			413.8
Depreciation and amortization			105.6			54.9			50.0			1.7				24.5			—				2.3				239.0
Equity affiliates’ income			14.7			13.5			13.4			.7				.8			—				—				43.1

Nine Months Ended 30 June 2015
Sales		$	2,791.6		$	1,404.8		$	1,209.3		$	197.4			$	1,597.1		$	—			$	245.3			$	7,445.5
Operating income (loss)			599.7			239.9			276.1			(49.9	)			360.3			(7.8	)			(49.1	)			1,369.2
Depreciation and amortization			310.8			145.7			151.8			14.0				70.0			—				9.5				701.8
Equity affiliates’ income			49.6			30.4			36.7			.2				1.6			—				—				118.5

Nine Months Ended 30 June 2014
Sales		$	3,040.8		$	1,630.0		$	1,127.2		$	206.4			$	1,503.8		$	—			$	253.8			$	7,762.0
Operating income (loss)			543.0			258.4			237.7			(39.3	)			254.7			(9.6	)			(60.8	)			1,184.1
Depreciation and amortization			309.0			164.8			144.5			5.0				71.7			—				7.3				702.3
Equity affiliates’ income			44.9			32.5			30.6			1.7				2.0			—				—				111.7

Total Assets
30 June 2015		$	6,092.4		$	3,268.4		$	4,207.1		$	291.2			$	1,826.8		$	846.0			$	1,139.6			$	17,671.5
30 September 2014			6,240.7			3,521.0			4,045.6			389.4				1,835.7			591.9				1,154.8				17,779.1

The sales information noted above relates to external customers only. All intersegment sales are eliminated in consolidation. For the three and nine months ended 30 June 2015, the Industrial Gases – Global segment had intersegment sales of $66.3 and $180.0, respectively. For the three and nine months ended 30 June 2014, the Industrial Gases – Global segment had intersegment sales of $51.7 and $141.4, respectively. These sales are generally transacted at market pricing. For all other segments, intersegment sales are not material for all periods presented. Equipment manufactured for our industrial gases segments are generally transferred at cost and not reflected as an intersegment sale.

Below is a reconciliation of segment total operating income to consolidated operating income:


	Three Months Ended 30 June							Nine Months Ended 30 June
Operating Income	2015				2014			2015				2014
Segment total		$	482.3			$	413.8		$	1,369.2			$	1,184.1
Business restructuring and cost reduction actions			(58.2	)			—			(146.0	)			—
Pension settlement loss			(1.6	)			—			(14.2	)			—
Gain on previously held equity interest			—				—			17.9				—
Consolidated Total		$	422.5			$	413.8		$	1,226.9			$	1,184.1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Millions of dollars, except for share data)

The disclosures in this quarterly report are complementary to those made in our 2014 Form 10-K. An analysis of results for the third quarter and first nine months of 2015 is provided in the Management’s Discussion and Analysis to follow.

All comparisons in the discussion are to the corresponding prior year unless otherwise stated. All amounts presented are in accordance with U.S. generally accepted accounting principles (GAAP), except as noted.

Captions such as income from continuing operations attributable to Air Products, net income attributable to Air Products from continuing operations, and diluted earnings per share attributable to Air Products from continuing operations are simply referred to as “income from continuing operations,” “net income,” and “diluted earnings per share” throughout this Management’s Discussion and Analysis, unless otherwise stated.

The discussion of results that follows includes comparisons of non-GAAP financial measures. For 2015, the non-GAAP measures exclude: business reorganization and cost reduction actions, a pension settlement loss, and the gain on the previously held equity interest. Included in these non-GAAP measures is Adjusted EBITDA, which we believe to be a useful metric to assess operating performance. The presentation of non-GAAP measures is intended to enhance the usefulness of financial information by providing measures that our management uses internally to evaluate our performance. The reconciliation of reported GAAP results to non-GAAP measures is presented on pages 43-45. Descriptions of the excluded items appear on pages 30-31 and page 38.

THIRD QUARTER 2015 VS. THIRD QUARTER 2014

THIRD QUARTER 2015 IN SUMMARY

●

Sales of $2,470.2 decreased 6%, or $164.4, as underlying sales growth of 4% was more than offset by an unfavorable currency impact of 6% and lower energy contractual pass-through to customers of 4%. The increase in underlying sales primarily resulted from higher volumes in the Industrial Gases – Asia and Materials Technologies segments and higher project activity in the Corporate and other segment.

●

Operating income of $422.5 increased 2%, or $8.7, and operating margin of 17.1% increased 140 basis points (bp). On a non-GAAP basis, operating income of $482.3 increased 17%, or $68.5, and operating margin of 19.5% increased 380 bp, primarily due to higher volumes, higher pricing, and favorable cost performance.

●

Adjusted EBITDA of $757.7 increased 9%, or $61.8, primarily due to higher volumes, higher pricing, and favorable costs. Adjusted EBITDA margin of 30.7% increased 430 bp.

●

Net income of $318.8 increased 2%, or $4.8, and diluted earnings per share of $1.47 increased 1%, or $.01. On a non-GAAP basis, net income of $358.6 increased 14%, or $44.6, and diluted earnings per share of $1.65 increased 13%, or $.19. A summary table of changes in diluted earnings per share is presented below.

Changes in Diluted Earnings per Share Attributable to Air Products – Non-GAAP Basis


	Three Months Ended 30 June						Increase
	2015			2014			(Decrease)
Diluted Earnings per Share – GAAP Basis		$	1.47		$	1.46		$	.01
Business restructuring and cost reduction actions			.18			—			.18
Diluted Earnings per Share – Non-GAAP Basis		$	1.65		$	1.46		$	.19

Operating Income (after-tax)
Underlying business
Volume								$	.13
Price/raw materials									.11
Costs									.11
Currency									(.11	)
Operating Income								$	.24

Other (after-tax)
Interest expense								$	.01
Income tax									(.02	)
Noncontrolling interests									(.02	)
Weighted average diluted shares									(.02	)
Other								$	(.05	)
Total Change in Diluted Earnings per Share – Non-GAAP Basis								$	.19

RESULTS OF OPERATIONS

Discussion of Consolidated Results


	Three Months Ended 30 June
	2015				2014				$ Change				Change
Sales		$	2,470.2			$	2,634.6			$	(164.4	)	(6)%
Operating income			422.5				413.8				8.7		2%
Operating margin			17.1	%			15.7	%					140bp
Equity affiliates’ income			42.4				43.1				(.7	)	(2)%

Non-GAAP Basis
Adjusted EBITDA		$	757.7			$	695.9			$	61.8		9%
Adjusted EBITDA margin			30.7	%			26.4	%					430bp
Operating income			482.3				413.8				68.5		17%
Operating margin			19.5	%			15.7	%					380bp

Sales


	% Change from Prior Year
Underlying business
Volume		3	%
Price		1	%
Currency		(6	)%
Energy and raw material cost pass-through		(4	)%
Total Consolidated Change		(6	)%

Underlying sales were up 4% from higher volumes of 3% and higher pricing of 1%. Volumes increased primarily from growth in the Industrial Gases – Asia and Materials Technologies segments and higher project activity in the Corporate and other segment. The favorable pricing was driven by price increases across the Materials Technologies, Industrial Gases – Americas, and Industrial
Gases – EMEA segments. Currency unfavorably impacted sales by 6%, and lower energy contractual cost pass-through to customers decreased sales by 4%.

Operating Income and Margin

Operating income of $422.5 increased 2%, or $8.7, as higher volumes of $36 and favorable pricing net of energy and fuel costs of $33, and favorable costs of $31, were partially offset by charges associated with the business restructuring and cost reduction actions of $58, unfavorable currency impacts of $31, and a pension settlement loss of $2. Costs were lower as benefits from our recent cost reduction actions of $56 and lower maintenance expense of $17 were partially offset by higher incentive compensation. Incentive compensation was approximately $30 higher due to improved results. Operating margin of 17.1% increased 140 bp.

On a non-GAAP basis, operating income of $482.3 increased 17%, or $68.5, and operating margin of 19.5% increased 380 bp primarily due to higher volumes, higher pricing, and favorable costs, partially offset by unfavorable currency impacts.

Adjusted EBITDA

We define Adjusted EBITDA as income from continuing operations (including noncontrolling interests) excluding certain disclosed items, which the Company does not believe to be indicative of underlying business trends, before interest expense, income tax provision, and depreciation and amortization expense. Adjusted EBITDA provides a useful metric for management to assess operating performance.

Adjusted EBITDA of $757.7 increased 9%, or $61.8, due to higher volumes, higher pricing, and favorable costs partially offset by unfavorable currency impacts. Adjusted EBITDA margin of 30.7% increased 430 bp.

Equity Affiliates’ Income

Income from equity affiliates of $42.4 decreased $.7.

Cost of Sales and Gross Margin

Cost of sales of $1,716.4 decreased $202.3, primarily due to a favorable currency impact of $108, lower energy costs of $100, and lower operating costs of $25, partially offset by costs attributable to higher sales volumes of $31. Operating costs included benefits from our recent cost reduction actions of $22 and lower maintenance of $17, partially offset by higher incentive compensation of $17.

Gross margin of 30.5% increased 330 bp, primarily due to favorable costs, including energy pass-through, of 200 bp and higher price, net of raw materials, of 110 bp.

Selling and Administrative Expense

Selling and administrative expense of $242.2 decreased $29.8, primarily due to the benefits of our recent cost reduction actions of $34 and favorable currency effects of $16, partially offset by higher other costs of $20 driven by incentive compensation. Selling and administrative expense, as a percent of sales, decreased from 10.3% to 9.8%.

Research and Development

Research and development expense was $33.8 for the three months ended 30 June 2015 and 2014. Research and development expense, as a percent of sales, was 1.4% and 1.3% in 2015 and 2014, respectively.

Business Restructuring and Cost Reduction Actions

On 18 September 2014, we announced plans to reorganize the Company, including realignment of our businesses in new reporting segments and other organizational changes, effective as of 1 October 2014. As a result of this reorganization, we will incur ongoing severance and other charges. For the three months ended 30 June 2015, we recognized an expense of $58.2 ($38.8 after-tax, or $.18 per share) including severance and other benefits of $22.5 and $35.7 for asset and associated contract actions related to the exit of product lines within the Industrial Gases– Global and Materials Technologies segments. Additional charges will be recorded in future periods as the Company commits to specific actions. Refer to Note 4, Business Restructuring and Cost Reduction Actions, for additional details.

Pension Settlement Loss

Our U.S. supplemental pension plan provides for a lump sum benefit payment option at the time of retirement, or for corporate officers, six months after their retirement date. Pension settlements are immediately recognized when cash payments exceed the sum of the service and interest cost components of net periodic pension cost of the plan for the fiscal year. The participant’s vested benefit is considered settled upon cash payment of the lump sum. For the three months ended 30 June 2015, we recognized a pension settlement charge of $1.6 ($1.0 after-tax) to accelerate recognition of a portion of actuarial losses deferred in accumulated other comprehensive loss associated with the U.S. supplemental pension plan.

Other Income (Expense), Net

Other income (expense), net of $4.5 increased $.8. No individual items were significant in comparison to the prior year.

Interest Expense


	Three Months Ended 30 June
	2015			2014
Interest incurred		$	40.6		$	38.9
Less: capitalized interest			12.4			7.6
Interest expense		$	28.2		$	31.3

Interest incurred increased $1.7. The increase was driven primarily by expensing debt issuance costs associated with retired bonds and a higher average debt balance, partially offset by the impact of a stronger U.S. dollar on the translation of foreign currency interest. The change in capitalized interest was driven by an increase in projects under construction.

Effective Tax Rate

The effective tax rate equals the income tax provision divided by income from continuing operations before taxes. The effective tax rate was 23.7% and 24.0% in the third quarter of 2015 and 2014, respectively. In the current year, the effective tax rate was reduced by the business restructuring and cost reduction actions and the pension settlement loss by 120 bp. This impact was offset primarily due to U.S. taxes on foreign earnings that are available for repatriation. On a non-GAAP basis, the effective tax rate increased 90 bp from 24.0% in 2014 to 24.9% in 2015, primarily due to U.S. taxes on foreign earnings that are available for repatriation.

Segment Analysis

Industrial Gases – Americas


	Three Months Ended 30 June
	2015				2014				$ Change				% Change
Sales		$	898.2			$	1,064.0			$	(165.8	)	(16)%
Operating income			206.5				188.9				17.6		9%
Operating margin			23.0	%			17.8	%					520bp
Equity affiliates’ income			17.3				14.7				2.6		18%
Adjusted EBITDA			327.7				309.2				18.5		6%
Adjusted EBITDA margin			36.5	%			29.1	%					740bp

Industrial Gases – Americas Sales


	% Change from Prior Year
Underlying business
Volume		(1	)%
Price		1	%
Currency		(3	)%
Energy and raw material cost pass-through		(13	)%
Total Industrial Gases – Americas Sales Change		(16	)%

Underlying sales were flat as higher pricing was offset by lower volumes. Volumes were down as lower helium demand, lower onsite oxygen demand, and lower volumes in Brazil due to weaker economic conditions, were partially offset by favorable North America liquid oxygen and nitrogen volumes. Pricing was higher due to the benefit of pricing actions, partially offset by the impact of lower power and diesel fuel costs on our liquid contract pricing formulas in North America. Lower energy contractual cost pass-through to customers, primarily related to natural gas, decreased sales by 13%. In addition, currency reduced sales by 3% due to the weakening of the Chilean Peso, Brazilian Real, and Canadian Dollar.

Industrial Gases – Americas Operating Income and Margin

Operating income of $206.5 increased 9%, or $17.6, due to higher pricing net of energy and fuel costs of $14 and favorable costs of $12 were partially offset by unfavorable currency impacts of $5 and lower volume of $3. Costs were favorable as a result of our recent cost reduction actions and lower maintenance expense. Operating margin of 23.0% increased 520 bp from the prior year due to lower costs, lower energy contractual cost pass-through to customers, and higher pricing.

Industrial Gases – Americas Equity Affiliates’ Income

Equity affiliates’ income of $17.3 increased $2.6.

Industrial Gases – EMEA


	Three Months Ended 30 June
	2015				2014				$ Change				% Change
Sales		$	455.2			$	537.4			$	(82.2	)	(15)%
Operating income			87.6				85.7				1.9		2%
Operating margin			19.2	%			15.9	%					330bp
Equity affiliates’ income			12.1				13.5				(1.4	)	(10)%
Adjusted EBITDA			146.7				154.1				(7.4	)	(5)%
Adjusted EBITDA margin			32.2	%			28.7	%					350bp

Industrial Gases – EMEA Sales


	% Change from Prior Year
Underlying business
Volume		1	%
Price		1	%
Currency		(16	)%
Energy and raw material cost pass-through		(1	)%
Total Industrial Gases – EMEA Sales Change		(15	)%

Underlying sales were up 2% with higher volumes and higher pricing both contributing 1%. Volumes increased due to higher onsite and liquid oxygen and nitrogen volumes, partially offset by lower packaged gas and helium volumes. Pricing was up 1% in both packaged gas and liquid bulk. Unfavorable currency effects from the Euro, the British Pound Sterling, and the Polish Zloty reduced sales by 16%. Lower energy contractual cost pass-through to customers decreased sales by 1%.

Industrial Gases – EMEA Operating Income and Margin

Operating income of $87.6 increased by 2%, or $1.9, primarily due to favorable costs of $13 and higher volumes of $3, mostly offset by unfavorable currency impacts of $15. Operating margin of 19.2% increased 330 bp from the prior year, primarily due to favorable cost performance driven by our recent cost reduction actions.

Industrial Gases – EMEA Equity Affiliates’ Income

Equity affiliates’ income of $12.1 decreased $1.4 due to unfavorable currency impacts.

Industrial Gases – Asia


	Three Months Ended 30 June
	2015				2014				$ Change				% Change
Sales		$	417.6			$	366.2			$	51.4			14%
Operating income			100.9				83.8				17.1			20%
Operating margin			24.2	%			22.9	%						130 bp
Equity affiliates’ income			12.7				13.4				(.7	)		(5)%
Adjusted EBITDA			165.5				147.2				18.3			12%
Adjusted EBITDA margin			39.6	%			40.2	%						(60bp)

Industrial Gases – Asia Sales


	% Change from Prior Year
Underlying business
Volume		11	%
Price		(2	)%
Currency		(3	)%
Energy and raw material cost pass-through		8	%
Total Industrial Gases – Asia Sales Change		14	%

Underlying sales increased by 9% from higher volumes of 11%, partially offset by lower pricing of 2%. Volumes were higher primarily from new plants in China to supply oxygen for coal gasification and strength in helium and microbulk. Pricing was down due to continued pricing pressure on the merchant market in China. Unfavorable currency impacts decreased sales by 3%. Higher energy contractual cost pass-through to customers increased sales by 8%.

Industrial Gases – Asia Operating Income and Margin

Operating income of $100.9 increased 20%, or $17.1, primarily due to higher volumes of $15 and lower operating costs of $12, partially offset by lower pricing net of energy and fuel costs of $7 and an unfavorable currency impact of $3. The lower operating costs include the benefit of our recent cost reduction actions. Operating margin increased 130 bp from the prior year, primarily due to favorable cost performance and higher volumes, partially offset by higher energy contractual cost pass-through to customers and lower pricing.

Industrial Gases – Asia Equity Affiliates’ Income

Equity affiliates’ income of $12.7 decreased $.7.

Industrial Gases – Global


	Three Months Ended 30 June
	2015				2014				$ Change				% Change
Sales		$	71.3			$	70.8			$	.5			1	%
Operating loss			(24.1	)			(14.4	)			(9.7	)		(67	)%
Adjusted EBITDA			(19.9	)			(12.0	)			(7.9	)		(66	)%

Industrial Gases – Global Sales and Operating Loss

Sales of $71.3 increased $.5, or 1%, as higher project activity was mostly offset by unfavorable currency impacts. Operating loss of $24.1 increased by $9.7, primarily due to less profitable business mix, unfavorable project costs, and bad debt expense, partially offset by the benefits of our recent cost reduction actions.

Materials Technologies


	Three Months Ended 30 June
	2015				2014				$ Change			% Change
Sales		$	539.8			$	524.7			$	15.1	3%
Operating income			131.5				96.6				34.9	36%
Operating margin			24.4	%			18.4	%				600 bp
Adjusted EBITDA			154.5				121.9				32.6	27%
Adjusted EBITDA margin			28.6	%			23.2	%				540 bp

Materials Technologies Sales


	% Change from Prior Year
Underlying business
Volume		4	%
Price		3	%
Currency		(4	)%
Total Materials Technologies Sales Change		3	%

Underlying sales increased by 7% from higher volumes of 4% and positive pricing of 3%. Unfavorable currency impacts decreased sales by 4%. Electronics Materials underlying sales increased 18% as higher customer demand, including the memory end market, increased both volume and pricing. Performance Materials underlying sales decreased 2%, primarily due to lower volumes in the construction, coatings, industrial and institutional cleaning, and oilfield end markets.

Materials Technologies Operating Income and Margin

Operating income of $131.5 increased 36%, or $34.9, primarily from higher pricing, net of raw material and distribution costs, of $25 and higher volumes of $20, partially offset by unfavorable currency impacts of $8 and higher costs of $2. Operating margin of 24.4% increased 600 bp, primarily from the higher price and volumes partially offset by the unfavorable currency impact.

Energy-from-Waste


	Three Months Ended 30 June
	2015				2014				$ Change			% Change
Operating loss		$	(2.5	)		$	(3.2	)		$	.7		22	%
Adjusted EBITDA			(2.5	)			(3.2	)			.7		22	%

Despite technical challenges and on-stream delays typical for this type of project, the Company remains focused on bringing these assets on-stream. Future actions and assessments could impact the disposition of the investment.

Corporate and other


	Three Months Ended 30 June
	2015				2014				$ Change			% Change
Sales		$	88.1			$	71.5			$	16.6		23	%
Operating loss			(17.6	)			(23.6	)			6.0		25	%
Adjusted EBITDA			(14.3	)			(21.3	)			7.0		33	%

Corporate and other Sales and Operating Loss

Sales of $88.1 and operating loss of $17.6 were favorable versus the prior year primarily due to higher liquefied natural gas (LNG) project activity, partially offset by lower helium container sales. Costs decreased due to benefits from our recent cost reduction actions.

FIRST NINE MONTHS 2015 VS. FIRST NINE MONTHS 2014

FIRST NINE MONTHS 2015 IN SUMMARY

●

Sales of $7,445.5 decreased 4%, or $316.5, as underlying sales growth of 4% was more than offset by unfavorable currency impacts of 5% and lower energy contractual cost pass-through to customers of 3%. The underlying sales growth was primarily from higher volumes in the Industrial Gases – Asia and Materials Technologies segments.

●

Operating income of $1,226.9 increased 4%, or $42.8, and operating margin of 16.5% increased 120 bp, primarily due to higher volumes, higher pricing, and lower costs. On a non-GAAP basis, operating income of $1,369.2 increased 16%, or $185.1, and operating margin of 18.4% increased 310 bp.

●

Adjusted EBITDA of $2,189.5, increased 10%, or $191.4, primarily due to higher volumes, higher pricing, and favorable cost performance. Adjusted EBITDA margin of 29.4% increased 370 bp.

●

Net income of $933.4 increased 6%, or $48.8, and diluted earnings per share of $4.30 increased 4%, or $.18. On a non-GAAP basis, net income of $1,029.8 increased 16%, or $145.2, and diluted earnings per share of $4.74 increased 15%, or $.62. A summary table of changes in diluted earnings per share is presented below.

●

The Company realigned its businesses in new reporting segments and began operating under the new structure 1 October 2014.

●

We increased our quarterly dividend by 5% from $.77 to $.81 per share. This represents the 33^rd consecutive year that we have increased our dividend payment.

Changes in Diluted Earnings per Share Attributable to Air Products – Non-GAAP Basis


	Nine Months Ended 30 June							Increase (Decrease)
	2015				2014			Increase (Decrease)
Diluted Earnings per Share
Net Income		$	4.30			$	4.13		$	.17
Income from Discontinued Operations			—				.01			(.01	)
Income from Continuing Operations – GAAP Basis		$	4.30			$	4.12		$	.18
Business restructuring and cost reduction actions			.45				—			.45
Pension settlement loss			.04				—			.04
Gain on previously held equity interest			(.05	)			—			(.05	)
Income from Continuing Operations – Non-GAAP Basis		$	4.74			$	4.12		$	.62

Operating Income (after-tax)
Underlying business
Volume									$	.49
Price/raw materials										.25
Costs										.17
Currency										(.25	)
Operating Income									$	.66

Other (after-tax)
Equity affiliates’ income										.02
Interest expense										.05
Income tax										(.02	)
Noncontrolling interests										(.04	)
Weighted average diluted shares										(.05	)
Other									$	(.04	)
Total Change in Diluted Earnings per Share from Continuing Operations – Non-GAAP Basis									$	.62

RESULTS OF OPERATIONS

Discussion of Consolidated Results


	Nine Months Ended 30 June
	2015				2014				$ Change				Change
Sales		$	7,445.5			$	7,762.0			$	(316.5	)		(4	)%
Operating income			1,226.9				1,184.1				42.8			4	%
Operating margin			16.5	%			15.3	%						120	bp
Equity affiliates’ income			118.5				111.7				6.8			6	%

Non-GAAP Basis
Adjusted EBITDA			2,189.5				1,998.1				191.4			10	%
Adjusted EBITDA margin			29.4	%			25.7	%						370	bp
Operating income			1,369.2				1,184.1				185.1			16	%
Operating margin			18.4	%			15.3	%						310	bp

Sales


	% Change from Prior Year
Underlying business
Volume		3	%
Price		1	%
Currency		(5	)%
Energy and raw material cost pass-through		(3	)%
Total Consolidated Change		(4	)%

Underlying sales were up 4% from higher volumes of 3% and higher pricing of 1%. Volumes increased primarily from growth in the Industrial Gases – Asia and Materials Technologies segments. The favorable pricing was primarily in the Industrial Gases – Americas and Materials Technologies segments. Currency unfavorably impacted sales by 5%, and lower energy contractual cost pass-through to customers decreased sales by 3%.

Operating Income and Margin

Operating income of $1,226.9 increased 4%, or $42.8, as higher volumes of $139, favorable pricing net of energy and fuel costs of $70, lower other costs of $47, and a gain of $18 on the previously held equity interest were partially offset by charges associated with the business restructuring and cost reduction actions of $146, unfavorable currency impacts of $71, and a pension settlement loss of $14. Other costs were lower as benefits from our recent cost reduction actions of $104 and lower maintenance expense of $28 were partially offset by higher incentive compensation of $85. Operating margin of 16.5% increased 120 bp, primarily due to higher volumes, higher pricing, and favorable costs. On a non-GAAP basis, operating income of $1,369.2 increased 16%, or $185.1, and operating margin of 18.4% increased 310 bp.

Adjusted EBITDA

Adjusted EBITDA of $2,189.5 increased 10%, or $191.4, primarily due to higher volumes, higher pricing, and favorable cost performance. Adjusted EBITDA margin of 29.4% increased 370 bp.

Equity Affiliates’ Income

Income from equity affiliates of $118.5 increased $6.8, primarily due to higher volumes and favorable cost performance in our Industrial Gases – Asia and Industrial Gases – Americas affiliates.

Cost of Sales and Gross Margin

Cost of sales of $5,247.0 decreased $455.2, primarily due to a favorable currency impact of $262, lower energy costs of $236, and lower operating costs of $58, partially offset by costs attributable to higher sales volumes of $101. Operating costs included benefits from our recent cost reduction actions of $25 and lower other costs, including maintenance, of $80, partially offset by higher incentive compensation of $47.

Gross margin of 29.5% increased 300 bp, primarily due to lower costs of 110 bp, higher volumes of 100 bp, and higher price, net of raw materials, of 100 bp.

Selling and Administrative Expense

Selling and administrative expense of $741.3 decreased $75.0, primarily due to the benefits of our recent cost reduction actions of $79 and favorable currency effects of $43, partially offset by higher other costs of $47, driven by higher incentive compensation. Selling and administrative expense, as a percent of sales, decreased from 10.5% to 10.0%.

Research and Development

Research and development expense of $105.5 increased $5.0 due to higher operating costs. Research and development expense, as a percent of sales, increased from 1.3% in 2014 to 1.4% in 2015.

Business Restructuring and Cost Reduction Actions

On 18 September 2014, we announced plans to reorganize the Company, including realignment of our businesses in new reporting segments and other organizational changes, effective as of 1 October 2014. As a result of this reorganization, we have incurred severance and other charges. For the nine months ended 30 June 2015, we recognized an expense of $146.0 ($98.7 after-tax, or $.45 per share) primarily related to the elimination of approximately 1,500 positions. The expense also included $35.7 for asset and associated contract actions related to the exit of product lines within the Industrial Gases – Global and Materials Technologies segments. Additional charges will be recorded in future periods as the Company commits to specific actions. Refer to Note 4, Business Restructuring and Cost Reduction Actions, for additional details.

Pension Settlement Loss

Our U.S. supplemental pension plan provides for a lump sum benefit payment option at the time of retirement, or for corporate officers, six months after their retirement date. Pension settlements are immediately recognized when cash payments exceed the sum of the service and interest cost components of net periodic pension cost of the plan for the fiscal year. The participant’s vested benefit is considered fully settled upon cash payment of the lump sum. For the nine months ended 30 June 2015, we recognized a pension settlement charge of $14.2 ($8.9 after-tax, or $.04 per share) to accelerate recognition of a portion of actuarial losses deferred in accumulated other comprehensive loss associated with the U.S. supplemental pension plan.

Gain on Previously Held Equity Interest

On 30 December 2014, we acquired our partner’s equity ownership interest in a liquefied industrial gases production joint venture in North America for $22.6 which increased our ownership from 50% to 100%. The transaction was accounted for as a business combination, and subsequent to the acquisition, the results are consolidated within our Industrial Gases – Americas segment. The assets acquired, primarily plant and equipment, were recorded at their fair value as of the acquisition date.

Other Income (Expense), Net

Other income (expense), net of $17.5 decreased $23.6, partially due to unfavorable foreign exchange impacts and lower gains from the sale of assets and emissions credits. No other individual items were significant in comparison to the prior year.

Interest Expense


	Nine Months Ended 30 June
	2015			2014
Interest incurred		$	116.3		$	119.1
Less: capitalized interest			35.6			23.0
Interest expense		$	80.7		$	96.1

Interest incurred decreased $2.8. The decrease was driven primarily by the impact of a stronger U.S. dollar on the translation of foreign currency interest and a lower average interest rate on the debt portfolio, partially offset by a higher average debt balance and expensing debt issuance costs associated with retired bonds. The change in capitalized interest was driven by an increase in projects under construction.

Effective Tax Rate

The effective tax rate equals the income tax provision divided by income from continuing operations before taxes. The effective tax rate was 23.5% and 24.1% in 2015 and 2014, respectively. In the current year, the impacts of the business restructuring and cost reduction actions, the pension settlements loss, and the gain on our previously held equity interest decreased our effective tax rate by 90 bp. This impact was offset primarily due to U.S. taxes on foreign earnings that are available for repatriation. On a non-GAAP basis, the effective tax rate increased from 24.1% in 2014 to 24.4% in 2015, primarily due to U.S. taxes on foreign earnings that are available for repatriation.

Discontinued Operations

In the first quarter of 2014, we sold the remaining portion of the Homecare business for £6.1 million ($9.8) and recorded a gain on the sale of $2.4. Refer to Note 3, Discontinued Operations, for additional details.

Segment Analysis

Industrial Gases – Americas


	Nine Months Ended 30 June
	2015				2014				$ Change				% Change
Sales		$	2,791.6			$	3,040.8			$	(249.2	)		(8)%
Operating income			599.7				543.0				56.7			10%
Operating margin			21.5	%			17.9	%						360bp
Equity affiliates’ income			49.6				44.9				4.7			10%
Adjusted EBITDA			960.1				896.9				63.2			7%
Adjusted EBITDA margin			34.4	%			29.5	%						490bp

Industrial Gases – Americas Sales


	% Change from Prior Year
Underlying business
Volume		1	%
Price		2	%
Currency		(3	)%
Energy and raw material cost pass-through		(8	)%
Total Industrial Gases – Americas Sales Change		(8	)%

Underlying sales increased 3% from higher pricing of 2% and higher volumes of 1%. Volumes increased due to growth in liquid oxygen, nitrogen, and argon due to stronger demand across our customer base and higher hydrogen volumes due to strong demand from refinery customers and fewer outages. These increases were partially offset by lower helium volumes and continued economic weakness in Brazil. Pricing was higher due to general price increases and cost recovery.

Currency decreased sales by 3% primarily due to the impacts of the Chilean Peso, Brazilian Real, and Canadian Dollar. Lower energy contractual cost pass-through to customers, primarily natural gas, decreased sales by 8%.

Industrial Gases – Americas Operating Income and Margin

Operating income of $599.7 increased 10%, or $56.7, due to higher pricing net of energy and fuel costs of $49, higher volumes of $15, and lower costs of $6, partially offset by unfavorable currency impacts of $13. Operating margin increased 360 bp from the prior year due to the higher pricing, lower energy contractual cost pass-through to customers, and lower costs.

Industrial Gases – Americas Equity Affiliates’ Income

Equity affiliates’ income of $49.6 increased $4.7 due to improved performance in our Mexican equity affiliate.

Industrial Gases – EMEA


	Nine Months Ended 30 June
	2015				2014				$ Change				% Change
Sales		$	1,404.8			$	1,630.0			$	(225.2	)		(14)%
Operating income			239.9				258.4				(18.5	)		(7)%
Operating margin			17.1	%			15.9	%						120bp
Equity affiliates’ income			30.4				32.5				(2.1	)		(6)%
Adjusted EBITDA			416.0				455.7				(39.7	)		(9)%
Adjusted EBITDA margin			29.6	%			28.0	%						160bp

Industrial Gases – EMEA Sales


	% Change from Prior Year
Underlying business
Volume		(1	)%
Price		1	%
Currency		(13	)%
Energy and raw material cost pass-through		(1	)%
Total Industrial Gases – EMEA Sales Change		(14	)%

Underlying sales were flat as lower volumes of 1% were offset by higher pricing of 1%. Volumes decreased primarily due to lower onsite volumes from customer and planned outages. Liquid bulk and packaged gas volumes were essentially flat as higher liquid oxygen and nitrogen volumes were offset by lower cylinder and helium volumes. Pricing was up 1% on improvement in both packaged gas and liquid bulk. Unfavorable currency effects from the Euro, the British Pound Sterling, and the Polish Zloty reduced sales by 13%. Lower energy contractual cost pass-through to customers decreased sales by 1%.

Industrial Gases – EMEA Operating Income and Margin

Operating income of $239.9 decreased by 7%, or $18.5, primarily due to unfavorable currency impacts, partially offset by favorable costs. Operating margin increased 120 bp from the prior year.

Industrial Gases – EMEA Equity Affiliates’ Income

Equity affiliates’ income of $30.4 decreased $2.1.

Industrial Gases – Asia


	Nine Months Ended 30 June
	2015				2014				$ Change			% Change
Sales		$	1,209.3			$	1,127.2			$	82.1		7	%
Operating income			276.1				237.7				38.4		16	%
Operating margin			22.8	%			21.1	%					170bp
Equity affiliates’ income			36.7				30.6				6.1		20	%
Adjusted EBITDA			464.6				412.8				51.8		13	%
Adjusted EBITDA margin			38.4	%			36.6	%					180bp

Industrial Gases – Asia Sales


	% Change from Prior Year
Underlying business
Volume		10	%
Price		(2	)%
Currency		(3	)%
Energy and raw material cost pass-through		2	%
Total Industrial Gases – Asia Sales Change		7	%

Underlying sales increased by 8% from higher volumes of 10%, partially offset by lower pricing of 2%. Volumes were higher primarily from new plants, and in particular, a large onsite project in China. Pricing was down due to continued pricing pressure on merchant products in China. Unfavorable currency impacts decreased sales by 3%. Higher energy contractual cost-pass through to customers increased sales by 2%.

Industrial Gases – Asia Operating Income and Margin

Operating income of $276.1 increased 16%, or $38.4, primarily due to higher volumes of $49 and lower operating costs of $22, partially offset by lower pricing net of energy and fuel costs of $26 and an unfavorable currency impact of $7. The lower operating costs include the benefit of our recent cost reduction actions. Operating margin increased 170 bp from the prior year, primarily due to the higher volumes and favorable cost performance, partially offset by lower pricing.

Industrial Gases – Asia Equity Affiliates’ Income

Equity affiliates’ income of $36.7 increased $6.1, primarily due to higher volumes and favorable cost performance.

Industrial Gases – Global


	Nine Months Ended 30 June
	2015				2014				$ Change				% Change
Sales		$	197.4			$	206.4			$	(9.0	)		(4	)%
Operating loss			(49.9	)			(39.3	)			(10.6	)		(27	)%
Adjusted EBITDA			(35.7	)			(32.6	)			(3.1	)		(10	)%

Industrial Gases – Global Sales and Operating Loss

Sales of $197.4 decreased $9.0, or 4%, due to unfavorable currency impacts. Operating loss of $49.9 increased by $10.6 as less profitable business mix, unfavorable project costs, and bad debt expense were partially offset by the gain associated with the cancellation of a sale of equipment contract and the benefits of our recent cost reduction actions.

Materials Technologies


	Nine Months Ended 30 June
	2015				2014				$ Change			% Change
Sales		$	1,597.1			$	1,503.8			$	93.3		6%
Operating income			360.3				254.7				105.6		41%
Operating margin			22.6	%			16.9	%					570 bp
Adjusted EBITDA			431.9				328.4				103.5		32%
Adjusted EBITDA margin			27.0	%			21.8	%					520 bp

Materials Technologies Sales


	% Change from Prior Year
Underlying business
Volume		7	%
Price		2	%
Currency		(3	)%
Total Materials Technologies Sales Change		6	%

Underlying sales increased by 9% from higher volumes of 7% and positive pricing of 2%. Unfavorable currency impacts decreased sales by 3%. Electronics Materials underlying sales increased 17% from positive volume and price with strong performance from all businesses. Performance Materials underlying sales increased 3% due to volume improvements in the spray foam and appliance end markets.

Materials Technologies Operating Income and Margin

Operating income of $360.3 increased 41%, or $105.6, from higher volumes of $60, higher price net of raw material costs of $45, and lower costs of $17, partially offset by unfavorable currency impacts of $16. The lower costs include lower inventory costs and the benefits of our recent cost reduction actions. Operating margin increased 570 bp, primarily from higher volumes, higher pricing, and improved cost performance.

Energy-from-Waste


	Nine Months Ended 30 June
	2015				2014				$ Change			% Change
Operating loss		$	(7.8	)		$	(9.6	)		$	1.8		19	%
Adjusted EBITDA			(7.8	)			(9.6	)			1.8		19	%

Corporate and other


	Nine Months Ended 30 June
	2015				2014				$ Change				% Change
Sales		$	245.3			$	253.8			$	(8.5	)		(3	)%
Operating loss			(49.1	)			(60.8	)			11.7			19	%
Adjusted EBITDA			(39.6	)			(53.5	)			13.9			26	%

Corporate and other Sales and Operating Loss

Sales of $245.3 decreased $8.5, primarily due to the exit from our PUI business, which was completed in the first quarter of fiscal year 2014, and lower helium container sales, partially offset by higher LNG project activity. Operating loss of $49.1 decreased $11.7 as the exit from our PUI business and lower helium container sales was more than offset by higher LNG activity. Costs were flat, as the benefits from our recent cost reduction actions were offset by higher incentive compensation.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Millions of dollars unless otherwise indicated, except for share data)

The discussion of third quarter and year-to-date results includes comparisons to non-GAAP financial measures, including Adjusted EBITDA. The presentation of non-GAAP measures is intended to enhance the usefulness of financial information by providing measures which management uses internally to evaluate our operating performance.

We use non-GAAP measures to assess our operating performance by excluding certain disclosed items that we believe are not representative of our underlying business. We believe non-GAAP financial measures provide investors with meaningful information to understand our underlying operating results and to analyze financial and business trends. Non-GAAP financial measures, including Adjusted EBITDA, should not be viewed in isolation, are not a substitute for GAAP measures, and have limitations which include but are not limited to:

●

Our measure excludes certain disclosed items, which we do not consider to be representative of underlying business operations. However, these disclosed items represent costs (benefits) to the Company.

●

Though not business operating costs, interest expense and income tax provision represent ongoing costs of the Company.

●

Depreciation, amortization, and impairment charges represent the wear and tear and/or reduction in value of the plant, equipment, and intangible assets which permit us to manufacture and/or market our products.

●

Other companies may define non-GAAP measures differently than we do, limiting their usefulness as comparative measures.

A reader may find any one or all of these items important in evaluating our performance. Management compensates for the limitations of using non-GAAP financial measures by using them only to supplement our GAAP results to provide a more complete understanding of the factors and trends affecting our business. In evaluating these financial measures, the reader should be aware that we may incur expenses similar to those eliminated in this presentation in the future.

Presented below are reconciliations of the reported GAAP results to the non-GAAP measures:

CONSOLIDATED RESULTS


	Continuing Operations
	Three Months Ended 30 June														Nine Months Ended 30 June
	Operating Income				Operating Margin ^(A)		Net Income				Diluted EPS				Operating Income				Operating Margin ^(A)		Net Income				Diluted EPS
2015 GAAP		$	422.5			17.1%		$	318.8			$	1.47			$	1,226.9			16.5%		$	933.4			$	4.30
2014 GAAP			413.8			15.7%			314.0				1.46				1,184.1			15.3%			884.6				4.12
Change GAAP		$	8.7			140bp		$	4.8			$	.01			$	42.8			120bp		$	48.8			$	.18
% Change GAAP			2	%					2	%			1	%			4	%					6	%			4	%

2015 GAAP		$	422.5			17.1%		$	318.8			$	1.47			$	1,226.9			16.5%		$	933.4			$	4.30
Business restructuring and cost reduction actions (tax impact $19.4 and $47.3)			58.2			2.4%			38.8				.18				146.0			2.0%			98.7				.45
Pension settlement loss (tax impact $.6 and $5.3)			1.6			—			1.0				—				14.2			.2%			8.9				.04
Gain on previously held equity interest (tax impact $6.7)			—			—			—				—				(17.9	)		(.3)%			(11.2	)			(.05	)
2015 Non-GAAP Measure		$	482.3			19.5%		$	358.6			$	1.65			$	1,369.2			18.4%		$	1,029.8			$	4.74

2014 GAAP		$	413.8			15.7%		$	314.0			$	1.46			$	1,184.1			15.3%		$	884.6			$	4.12
2014 Non-GAAP Measure		$	413.8			15.7%		$	314.0			$	1.46			$	1,184.1			15.3%		$	884.6			$	4.12


Change Non-GAAP Measure		$	68.5			380bp		$	44.6			$	.19			$	185.1			310bp		$	145.2			$	.62
% Change Non-GAAP Measure			17	%					14	%			13	%			16	%					16	%			15	%

^(A)	Operating Margin is calculated by dividing operating income by sales.

INCOME TAXES


	Effective Tax Rate
	Three Months Ended 30 June								Nine Months Ended 30 June
	2015				2014				2015				2014
Income Tax Provision — GAAP		$	103.5			$	102.1			$	297.1			$	288.7
Income from continuing operations before taxes — GAAP		$	436.7			$	425.6			$	1,264.7			$	1,199.7
Effective Tax Rate — GAAP			23.7	%			24.0	%			23.5	%			24.1	%

Income Tax Provision — GAAP		$	103.5			$	102.1			$	297.1			$	288.7
Business restructuring and cost reduction actions tax impact			19.4				—				47.3				—
Pension settlement loss tax impact			.6				—				5.3				—
Gain on previously held equity interest tax impact			—				—				(6.7	)			—
Income Tax Provision — Non-GAAP Measure		$	123.5			$	102.1			$	343.0			$	288.7

Income from continuing operations before taxes — GAAP		$	436.7			$	425.6			$	1,264.7			$	1,199.7
Business restructuring and cost reduction actions			58.2				—				146.0				—
Pension settlement loss			1.6				—				14.2				—
Gain on previously held equity interest			—				—				(17.9	)			—
Income from continuing operations before taxes — Non-GAAP Measure		$	496.5			$	425.6			$	1,407.0			$	1,199.7
Effective Tax Rate — Non-GAAP Measure			24.9	%			24.0	%			24.4	%			24.1	%

ADJUSTED EBITDA

Below is a reconciliation of Income from Continuing Operations on a GAAP basis to Adjusted EBITDA:


	Three Months Ended 30 June							Nine Months Ended 30 June
	2015				2014			2015				2014
Income from Continuing Operations^(A)		$	333.2			$	323.5		$	967.6			$	911.0
Add: Interest expense			28.2				31.3			80.7				96.1
Add: Income tax provision			103.5				102.1			297.1				288.7
Add: Depreciation and amortization			233.0				239.0			701.8				702.3
Add: Business restructuring and cost reduction actions			58.2				—			146.0				—
Add: Pension settlement loss			1.6				—			14.2				—
Less: Gain on previously held equity interest			—				—			17.9				—
Adjusted EBITDA		$	757.7			$	695.9		$	2,189.5			$	1,998.1
Change from prior year			61.8							191.4
% Change from prior year			9	%						10	%

^(A)	Includes net income attributable to noncontrolling interests.

Below is a reconciliation of segment Operating Income to Adjusted EBITDA:


	Industrial Gases– Americas			Industrial Gases– EMEA			Industrial Gases– Asia			Industrial Gases– Global				Materials Technologies			Energy- from- Waste				Corporate and other				Segment Total
Three Months Ended 30 June 2015
Operating income (loss)		$	206.5		$	87.6		$	100.9		$	(24.1	)		$	131.5		$	(2.5	)		$	(17.6	)		$	482.3
Add: Depreciation and amortization			103.9			47.0			51.9			4.2				22.7			—				3.3				233.0
Add: Equity affiliates’ income			17.3			12.1			12.7			—				.3			—				—				42.4
Adjusted EBITDA		$	327.7		$	146.7		$	165.5		$	(19.9	)		$	154.5		$	(2.5	)		$	(14.3	)		$	757.7
Adjusted EBITDA margin			36.5%			32.2%			39.6%							28.6%											30.7%

Three Months Ended 30 June 2014
Operating income (loss)		$	188.9		$	85.7		$	83.8		$	(14.4	)		$	96.6		$	(3.2	)		$	(23.6	)		$	413.8
Add: Depreciation and amortization			105.6			54.9			50.0			1.7				24.5			—				2.3				239.0
Add: Equity affiliates’ income			14.7			13.5			13.4			.7				.8			—				—				43.1
Adjusted EBITDA		$	309.2		$	154.1		$	147.2		$	(12.0	)		$	121.9		$	(3.2	)		$	(21.3	)		$	695.9
Adjusted EBITDA margin			29.1%			28.7%			40.2%							23.2%											26.4%
Adjusted EBITDA change		$	18.5		$	(7.4)		$	18.3		$	(7.9	)		$	32.6		$	.7			$	7.0			$	61.8
Adjusted EBITDA % change			6%			(5)%			12%			(66	)%			27%			22	%			33	%			9%
Adjusted EBITDA margin change			740bp			350bp			(60bp)							540bp											430bp

Nine Months Ended 30 June 2015
Operating income (loss)		$	599.7		$	239.9		$	276.1		$	(49.9	)		$	360.3		$	(7.8	)		$	(49.1	)		$	1,369.2
Add: Depreciation and amortization			310.8			145.7			151.8			14.0				70.0			—				9.5				701.8
Add: Equity affiliates’ income			49.6			30.4			36.7			.2				1.6			—				—				118.5
Adjusted EBITDA		$	960.1		$	416.0		$	464.6		$	(35.7	)		$	431.9		$	(7.8	)		$	(39.6	)		$	2,189.5
Adjusted EBITDA margin			34.4%			29.6%			38.4%							27.0%											29.4%

Nine Months Ended 30 June 2014
Operating income (loss)		$	543.0		$	258.4		$	237.7		$	(39.3	)		$	254.7		$	(9.6	)		$	(60.8	)		$	1,184.1
Add: Depreciation and amortization			309.0			164.8			144.5			5.0				71.7			—				7.3				702.3
Add: Equity affiliates’ income			44.9			32.5			30.6			1.7				2.0			—				—				111.7
Adjusted EBITDA		$	896.9		$	455.7		$	412.8		$	(32.6	)		$	328.4		$	(9.6	)		$	(53.5	)		$	1,998.1
Adjusted EBITDA margin			29.5%			28.0%			36.6%							21.8%											25.7%
Adjusted EBITDA change		$	63.2		$	(39.7)		$	51.8		$	(3.1	)		$	103.5		$	1.8			$	13.9			$	191.4
Adjusted EBITDA % change			7%			(9)%			13%			(10	)%			32%			19	%			26	%			10%
Adjusted EBITDA margin change			490bp			160bp			180bp							520bp											370bp

PENSION BENEFITS

Management considers various factors when making pension funding decisions, including tax, cash flow, and regulatory implications. For the nine months ended 30 June 2015, required cash contributions to funded pension plans and benefit payments under unfunded pension plans were $119.2. For the nine months ended 30 June 2014, cash contributions were $64.7. Total contributions for fiscal 2015 are expected to be approximately $130 to $150. During fiscal 2014, total contributions were $78.2.

We recognized pension settlement losses and curtailment charges for the three and nine months ended 30 June 2015 of $3.3 and $19.0, respectively. We anticipate additional pension settlement losses and curtailment charges in the fourth quarter of 2015.

Refer to Note 11, Retirement Benefits, to the consolidated financial statements for details on pension cost and cash contributions.

LIQUIDITY AND CAPITAL RESOURCES

We have maintained a strong financial position through the first nine months of 2015. We continue to have consistent access to commercial paper markets, and cash flows from operations and financing activities are expected to meet liquidity needs for the foreseeable future.

As of 30 June 2015, we had $206.2 of foreign cash and cash items compared to total cash and cash items of $215.3. If the foreign cash and cash items are needed for operations in the U.S. or we otherwise elect to repatriate the funds, we may be required to accrue and pay U.S. taxes on a significant portion of these amounts. However, since we have significant current investment plans outside the U.S., it is our intent to permanently reinvest the majority of our foreign cash and cash items outside the U.S. Current financing alternatives do not require the repatriation of foreign funds.

The narrative below refers to the consolidated statements of cash flows included on page 6.

Operating Activities

For the first nine months of 2015, cash provided by operating activities was $1,657.9. Income from continuing operations of $933.4 reflected the non-cash gain on the previously held equity interest of $17.9 and undistributed earnings of unconsolidated affiliates of $74.6. Income from continuing operations is adjusted for reconciling items that include depreciation and amortization, deferred income taxes, share-based compensation, noncurrent capital lease receivables, and write-down of long-lived assets. Other adjustments included pension and postretirement expense of $106.0 and contributions to our pension plans of $119.2, primarily for plans in the U.S. and U.K. Management considers various factors when making pension funding decisions, including tax, cash flow, and regulatory implications. The adjustment for payables and accrued liabilities of $178.9 was primarily driven by a change in the fair value of derivative instruments that hedge the currency exposure of intercompany loans and an increase in the accrual for incentive compensation.

For the first nine months of 2014, cash provided by operating activities was $1,584.0, including income from continuing operations of $884.6. The working capital accounts were a use of cash of $183.1, including an increase in trade receivables of $77.1 and a decrease in accounts payable and accrued liabilities of $125.6, which included payments related to the 2013 business restructuring and cost reduction plan of $32.1 and payments associated with projects accounted for as capital leases of $79.8. Other adjustments include pension and postretirement expense of $103.6 and contributions to our pension plans of $64.7, primarily for plans in the U.K.

Investing Activities

For the first nine months of 2015, cash used for investing activities was $1,239.0, primarily driven by capital expenditures for plant and equipment of $1,214.7. On 30 December 2014, we acquired our partner’s equity ownership interest in a liquefied industrial gases production joint venture in North America which increased our ownership from 50% to 100%. Refer to Note 5, Business Combinations, to the consolidated financial statements for additional information.

For the first nine months of 2014, cash used for investing activities was $1,230.1, primarily driven by capital expenditures for plant and equipment of $1,264.9.

Capital expenditures are detailed in the table below:


	Nine Months Ended 30 June
	2015			2014
Additions to plant and equipment		$	1,214.7		$	1,264.9
Acquisitions, less cash acquired			34.5			—
Investment in and advances to unconsolidated affiliates			4.3			(2.3	)
Capital expenditures on a GAAP basis		$	1,253.5		$	1,262.6
Capital lease expenditures ^(A)			79.0			156.8
Purchase of noncontrolling interests in a subsidiary^(A)			—			.5
Capital expenditures on a Non-GAAP basis		$	1,332.5		$	1,419.9

^(A)

We utilize a non-GAAP measure in the computation of capital expenditures and include spending associated with facilities accounted for as capital leases and purchases of noncontrolling interests. Certain contracts associated with facilities that are built to provide product to a specific customer are required to be accounted for as leases, and such spending is reflected as a use of cash within cash provided by operating activities, if the arrangement qualifies as a capital lease. Additionally, the payment for subsidiary shares from noncontrolling interests in a subsidiary is accounted for as an equity transaction and is reflected as a financing activity in the statement of cash flows. The presentation of this non-GAAP measure is intended to enhance the usefulness of information by providing a measure that our management uses internally to evaluate and manage our expenditures.

Sales backlog represents our estimate of revenue to be recognized in the future on sale of equipment orders and related process technology that are under firm contracts. The sales backlog for the Company at 30 June 2015 was $2,101, compared to $520 at 30 September 2014. The increase in the sales backlog includes a new contract with one of our joint ventures in Saudi Arabia for the construction of an industrial gas facility that will supply gases to Saudi Aramco as mentioned above.

Financing Activities

For the first nine months of 2015, cash used for financing activities was $528.7. This consisted primarily of dividend payments of $503.4 and $99.2 million net use of cash from our borrowings (short- and long-term proceeds, net of repayments), partially offset by proceeds from stock option exercises of $92.5. Borrowings included the repayment of a 3.875% Eurobond of €300 million ($335.9) and Industrial Revenue Bonds totaling $147.2, partially offset by the issuance of a 1.0% Eurobond of €300 million ($335.3).

For the first nine months of 2014, cash used for financing activities was $482.7. Our borrowings (short- and long-term proceeds, net of repayments) were a net use of cash of $111.7, driven primarily by the repayment of a 3.75% Eurobond of €300 million ($401.0) in November 2013 and the repayment of $190.7 of other, primarily international, debt, partially offset by an increase in commercial paper and short-term borrowings of $422.7. The primary additional use of cash was to pay dividends of $463.7.

In July 2015, we completed the purchase of the 30.5% equity interest in our Indura S.A. subsidiary from the largest minority shareholder for $278 based on terms substantially consistent with the original purchase agreement. The purchase was funded by the issuance of commercial paper. Refer to Note 16, Noncontrolling Interests, to the consolidated financial statements for additional information.

Discontinued Operations

For the first nine months of 2015, there were no discontinued operations.

For the first nine months of 2014, cash provided by discontinued operations was $10.5. The sale of the remaining Homecare business, which was primarily in the United Kingdom and Ireland, generated proceeds of £6.1 million ($9.8) and a $2.4 gain which are included in discontinued operations in the consolidated statements of cash flows.

Financing and Capital Structure

Capital needs were satisfied primarily with cash from operations. Total debt at 30 June 2015 and 30 September 2014, expressed as a percentage of the sum of total debt and total capitalization (total debt plus total equity plus redeemable noncontrolling interest), was 42.3% and 43.9%, respectively. Total debt decreased from $6,118.5 at 30 September 2014 to $5,863.2 at 30 June 2015.

Commitments totaling $124.8 are maintained by our foreign subsidiaries, of which $124.8 was borrowed and outstanding at 30 June 2015.

As of 30 June 2015, we are in compliance with all of the financial and other covenants under our debt agreements.

On 15 September 2011, the Board of Directors authorized the repurchase of up to $1,000 of our outstanding common stock. During the first nine months of fiscal year 2015, we did not purchase any of our outstanding shares. At 30 June 2015, $485.3 in share repurchase authorization remains.

CONTRACTUAL OBLIGATIONS

We are obligated to make future payments under various contracts such as debt agreements, lease agreements, unconditional purchase obligations, and other long-term obligations. During the nine months ended 30 June 2015, we repaid a 3.875% Eurobond of €300 million ($335.9) and Industrial Revenue Bonds totaling $147.2. Additionally, we issued a 1.0% Eurobond of €300 million ($335.3). In July 2015, we completed the purchase of the 30.5% equity interest in our Indura S.A. subsidiary from the largest minority shareholder for $278 based on terms substantially consistent with the original purchase agreement. The purchase was funded by the issuance of commercial paper. Refer to Note 16, Noncontrolling Interests, to the consolidated financial statements for additional information. Otherwise, there have been no material changes to contractual obligations since 30 September 2014.

COMMITMENTS AND CONTINGENCIES

There have been no material changes to commitments and contingencies since 30 September 2014. For current updates on Litigation and Environmental matters, refer to Note 12, Commitments and Contingencies, in this quarterly filing.

OFF-BALANCE SHEET ARRANGEMENTS

The fair value of the guarantees is not material.

Other than the guarantees issued during the third quarter, there have been no material changes to off-balance sheet arrangements since 30 September 2014. We are not a primary beneficiary in any material variable interest entity. Our off-balance sheet arrangements are not reasonably likely to have a material impact on financial condition, changes in financial condition, and results of operations or liquidity.

RELATED PARTY TRANSACTIONS

Our principal related parties are equity affiliates operating in the industrial gas business. During the third quarter of 2015, we entered into a long-term sale of equipment contract to engineer, procure, and construct industrial gas facilities with a 25% owned joint venture for Saudi Aramco’s Jazan oil refinery and power plant in Saudi Arabia. The agreement included terms that are consistent with those that we believe would have been negotiated at an arm’s length with an independent party. Sales related to this contract are included in the results of our Industrial Gases – Global segment and were not material in the third quarter.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of our financial condition and results of operations is based on the consolidated financial statements and accompanying notes that have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Information concerning our implementation and impact of new accounting standards issued by the FASB is included in Note 2, New Accounting Guidance, to the consolidated financial statements. There have been no changes in accounting policy in the current period that had a significant impact on our financial condition, change in financial condition, liquidity, or results of operations.

NEW ACCOUNTING GUIDANCE

See Note 2, New Accounting Guidance, to the consolidated financial statements for information concerning our implementation and impact of new accounting guidance.

FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about earnings guidance and business outlook. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date this report is filed. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors not anticipated by management, including, without limitation, global or regional economic conditions and supply and demand dynamics in market segments into which the Company sells; significant fluctuations in interest rates and foreign currencies from that currently anticipated; future financial and operating performance of major customers; unanticipated contract terminations or customer cancellations or postponement of projects and sales; asset impairments due to economic conditions or specific events; the impact of competitive products and pricing; challenges of implementing new technologies; ability to protect and enforce the Company’s intellectual property rights; unexpected changes in raw material supply and markets; the impact of price fluctuations in natural gas and disruptions in markets and the economy due to oil price volatility; the ability to recover increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory investigations; the impact of management and organizational changes; the success of productivity and cost reduction programs; the timing, impact, and other uncertainties of future acquisitions or divestitures; political risks, including the risks of unanticipated government actions; acts of war or terrorism; the impact of changes in environmental, tax or other legislation and regulatory activities in jurisdictions in which the Company and its affiliates operate; and other risk factors described in the Company’s Form 10-K for its fiscal year ended September 30, 2014. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this report to reflect any change in the Company’s assumptions, beliefs or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information on our utilization of financial instruments and an analysis of the sensitivity of these instruments to selected changes in market rates and prices is included in our 2014 Form 10-K.

The net financial instrument position decreased from a liability of $5,044.9 at 30 September 2014 to a liability of $4,868.4 at 30 June 2015. The decrease was due primarily to a stronger U.S. dollar, which reduced the translated value of foreign currency debt.

The sensitivity analysis related to the interest rate on the fixed portion of our debt portfolio assumes an instantaneous 100 bp move in interest rates from the level of 30 June 2015, with all other variables held constant. A 100 bp increase in market interest rates would result in a decrease of $145 and $173 in the net liability position of financial instruments at 30 June 2015 and 30 September 2014, respectively. A 100 bp decrease in market interest rates would result in an increase of $157 and $188 in the net liability position of financial instruments at 30 June 2015 and 30 September 2014, respectively.

There were no material changes to the sensitivity analysis related to the variable portion of our debt portfolio since 30 September 2014.

There were no material changes to the sensitivity analysis related to the foreign currency exchange rate risk on our financial instruments portfolio since 30 September 2014.

Item 4. Controls and Procedures

We maintain a comprehensive set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). As of 30 June 2015 (the Evaluation Date), an evaluation of the effectiveness of our disclosure controls and procedures was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report these disclosure controls and procedures were effective.

During the quarter ended on the Evaluation Date, there was no change in internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. The Company began operating under a new structure effective 1 October 2014. As a result of the new organizational structure and requirements under COSO 2013, there have been changes to our internal controls across certain business processes; however, these have not resulted in any material change to the Company’s overall internal control framework over financial reporting.

PART II. OTHER INFORMATION

Item 6. Exhibits.

Exhibits required by Item 601 of Regulation S-K


10.1		Amendment No. 3 dated as of 30 April 2015, to the Revolving Credit Agreement dated as of 30 April 2013.

10.2		Air Products and Chemicals, Inc. Executive Separation Program as amended effective as of 20 May 2015.

12.		Computation of Ratios of Earnings to Fixed Charges.

31.1		Certification by the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.		Certification by the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

† The certification attached as Exhibit 32 that accompanies this Quarterly Report on Form 10-Q, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Air Products and Chemicals, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

SIGNATURES

Pursuant to the requirements 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.


	Air Products and Chemicals, Inc.
	(Registrant)

Date: 30 July 2015	By:	/s/ M. Scott Crocco
		M. Scott Crocco
		Senior Vice President and Chief Financial Officer

EXHIBIT INDEX


10.1		Amendment No. 3 dated as of 30 April 2015, to the Revolving Credit Agreement dated as of 30 April 2013.

10.2		Air Products and Chemicals, Inc. Executive Separation Program as amended effective as of 20 May 2015.

12.		Computation of Ratios of Earnings to Fixed Charges.

31.1		Certification by the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.		Certification by the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

Exhibit 10.1

AMENDMENT NO. 3, dated as of April 30, 2015 (this “Amendment”), to the Revolving Credit Agreement, dated as of April 30, 2013, as amended by Amendment No. 1, dated as of July 22, 2013, and as amended by Amendment No. 2, dated as of June 30, 2014 (as so amended, the “Credit Agreement”), among AIR PRODUCTS AND CHEMICALS, INC. (the “Parent”), the Other Borrowers parties thereto from time to time, the Lenders parties thereto from time to time, THE ROYAL BANK OF SCOTLAND PLC, not in its individual capacity but solely as the resigning Administrative Agent for the Lenders thereunder (“RBS”), and HSBC BANK USA, N.A., not in its individual capacity but solely as the successor Administrative Agent for the Lenders thereunder (“HSBC”) and as a Lender.

WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make loans to the Parent and certain of its Subsidiaries.

WHEREAS, immediately prior to the Amendment Effective Date (as defined below), RBS shall have assigned its rights and obligations as a Lender and as an Issuer to Mizuho Bank, Ltd. (“Mizuho”) and Mizuho shall have accepted the same pursuant to Section 12.14 of the Credit Agreement (the “RBS Assignment”).

WHEREAS, the parties hereto desire to amend the Credit Agreement on the terms and subject to the conditions set forth herein.

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1. Definitions. Capitalized terms used but not defined in this Amendment have the meanings assigned thereto in the Credit Agreement.

SECTION 2. Resignation of Administrative Agent.

(a) Effective as of the Amendment Effective Date, RBS hereby resigns as Administrative Agent under the Credit Agreement. Upon the effectiveness of such resignation, RBS shall be discharged from its duties under the Credit Agreement and the other Loan Documents, but the provisions of the Credit Agreement, including, without limitation, the indemnification provisions therein, shall inure to its benefit as to any actions taken or omitted by it while it was the Administrative Agent under the Credit Agreement. On or before the Amendment Effective Date, RBS shall transfer to HSBC all records and documents necessary or appropriate in connection with the performance of the duties of the successor Administrative Agent. RBS, for the purpose of more fully and certainly vesting in and confirming to HSBC, as successor Administrative Agent, the rights, powers, duties and obligations which RBS now holds under and by virtue of the Credit Agreement and the other Loan Documents, hereby agrees, upon reasonable request of HSBC, as successor Administrative Agent, to execute, acknowledge and deliver such further instruments of conveyance and further assurances and to do such other acts as may reasonably be required for more fully and certainly vesting in and confirming to HSBC, as successor Administrative Agent, such rights, powers, duties and obligations

SECTION 3. Appointment of Successor Administrative Agent.

(a) HSBC is hereby appointed as the successor Administrative Agent under the Credit Agreement pursuant to Section 11.10 of the Credit Agreement. HSBC accepts such appointment and agrees as of the Amendment Effective Date and immediately upon the effectiveness of the resignation of RBS as Administrative Agent that HSBC shall be the Administrative Agent under the Credit Agreement.

(b) In no event shall HSBC, as successor Administrative Agent, be liable for the acts or omissions of RBS as Administrative Agent or any other predecessor Administrative Agent. In no event shall RBS, as predecessor Administrative Agent, be liable for the acts or omissions of HSBC as Administrative Agent or any other successor Administrative Agent.

(c) This Amendment shall not constitute an assumption by HSBC of any liability of RBS, if any, arising out of a breach by RBS, if any, prior to its resignation of its duties under the Credit Agreement and the other Loan Documents. This Amendment shall not constitute an assumption by RBS of any liability of HSBC, if any, arising out of a breach by HSBC, if any, after its assumption of its duties under the Credit Agreement and the other Loan Documents.

(d) As of the date hereof, the only Loan Documents known to HSBC are (i) the Revolving Credit Agreement, dated as of April 30, 2013, (ii) Amendment No. 1 to the Credit Agreement, dated as of July 22, 2013, (iii) a Notice of Increase in Total Revolving Credit Commitment, dated as of June 19, 2014, (iv) Amendment No. 2 to the Credit Agreement, dated as of June 30, 2014 and (v) the schedules and exhibits attached to the foregoing, in each case in the form posted on the Platform. In no event shall HSBC as successor Administrative Agent be deemed to have knowledge of any other documentation or information related to the credit facility (including, without limitation, related to any Borrower) unless and until it shall, after the date hereof, receive actual knowledge of additional documentation or information that may hereafter arise or be delivered to it as successor Administrative Agent. For the avoidance of doubt, all exculpation and indemnifications provisions in the Credit Agreement shall be construed to take into effect this limitation on knowledge.

SECTION 4. Amendment of the Credit Agreement. Effective as of the Amendment Effective Date:

(a) The cover page and the recitals to the Credit Agreement are hereby amended by deleting the reference to “$2,500,000,000” in each instance and substituting in lieu thereof in each instance “$2,405,000,000”.

(b) The cover page and the preamble to the Credit Agreement are hereby amended by deleting the reference to “The Royal Bank of Scotland plc” in each instance and substituting in lieu thereof in each instance “HSBC Bank USA, N.A.”

(c) The cover page to the Credit Agreement is hereby amended (i) by deleting the reference to “RBS Securities Inc.” as a Joint Lead Arranger and Book Runner and substituting in lieu thereof “Mizuho Bank, Ltd.” and (ii) by deleting the reference to “HSBC Bank USA, N.A.” as a Co-Syndication Agent and substituting in lieu thereof “Mizuho Bank, Ltd.”

(d) Each of the definitions of “Administrative Agent,” “Euro-Rate,” “Issuer,” “LIBO-Rate” and “Prime Rate” now appearing in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“Administrative Agent” shall mean HSBC in its capacity as Administrative Agent and any successor Administrative Agent hereunder appointed in accordance with Section 11.10.

“Euro-Rate” shall mean, for any day for each Funding Segment of the Euro-Rate Portion corresponding to a proposed or existing Euro-Rate Funding Period, the applicable ICE Benchmark Administration Interest Settlement Rate (or any other Person that takes over the administration of such rate, including NYSE EuroNext) for deposits in the applicable Designated Currency appearing on an internationally recognized service selected by the Administrative Agent, such as Reuters, for such Designated Currency at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Euro-Rate Funding Period, and having a maturity equal to such Euro-Rate Funding Period, provided that, if no such service for such Designated Currency is available to the Administrative Agent for any reason, the applicable Euro-Rate for the relevant Euro-Rate Funding Period shall instead be the Reference Bank Rate at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Euro-Rate Funding Period.

“Issuer” shall mean each of HSBC Bank USA, N.A., Mizuho Bank, Ltd. and BNP Paribas and any replacement issuer of Letters of Credit named hereunder pursuant to Section 2.10(h). With respect to any Letter of Credit or requested Letter of Credit or any amounts payable relating thereto, “Issuer” means the issuer thereof. An Issuer may, in its discretion, arrange for one or more Letters of Credit to be issued by its Affiliates (so long as the applicable Affiliate has been approved by the Parent, which approval will not be unreasonably withheld), in which case the term “Issuer” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

“LIBO-Rate” shall mean, with respect to each LIBOR-based Loan, the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other Person that takes over administration of such rate) appearing on Reuters “LIBOR 01” screen (or on any successor or substitute page of such Reuters screen providing rate quotations comparable to those currently provided on such page of such Reuters screen, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates for deposits in the relevant currency in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the making of such Loan, as the rate for the offering of the relevant currency deposits with a maturity comparable to the Interest Period of such LIBOR-based Loan, provided that, if no such service is available to the Administrative Agent for any reason, the applicable LIBO-Rate for the relevant currency shall instead be the Reference Bank Rate at approximately 11:00 a.m. (London time) two Business Days prior to the day such Loan is to be made for delivery. Notwithstanding the foregoing, in no event shall the LIBO-Rate be less than zero.

“Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by HSBC as its prime rate in effect at its office located at 452 Fifth Avenue, New York, New York; each change in the Prime Rate shall be effective from and including the date such change is publicly announced.

“Reference Banks” shall mean three or more Lenders selected by the Administrative Agent with the consent of Parent (whose consent shall not be required if an Event of Default shall have then occurred and be continuing). . In no event shall the Administrative Agent (or the Parent, if applicable) incur any liability related to the selection of Reference Banks (including, without limitation, in the event that any or all of the Reference Banks are unable or unwilling to provide a Reference Bank Rate).

“Reference Bank Rate” shall mean the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Administrative Agent at its request by the Reference Banks as the rate at which the relevant Reference Bank could borrow funds in the London interbank market in the relevant currency and for the relevant Interest Period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that Interest Period, provided that, if any of the Reference Banks fail to provide a rate to the Administrative Agent, the Reference Bank Rate will be determined based on the rates provided by those Reference Banks that do supply a rate.

(e) Section 1.01 of the Credit Agreement is hereby amended by inserting at the end of the definition of “Federal Funds Effective Rate” the following new sentence:

“Notwithstanding the foregoing, in no event shall the Federal Funds Effective Rate be less than zero.”

(f) Section 1.01 of the Credit Agreement is hereby amended by inserting the following new definition in the appropriate alphabetical order:

“HSBC” shall mean HSBC Bank USA, N.A.

(g) Section 11.01 of the Credit Agreement is hereby amended by deleting the word “RBS” in each instance and substituting in lieu thereof in each instance the word “HSBC”.

(h) For purposes of consistency, the Credit Agreement is hereby amended by deleting the words “Issuing Bank” in each instance and substituting in lieu thereof in each instance the word “Issuer”.

(i) Schedule III to the Credit Agreement is hereby amended and restated in its entirety to read as set forth on Schedule III to this Amendment.

(j) Schedule IV to the Credit Agreement is hereby amended and restated in its entirety to read as set forth on Schedule IV to this Amendment.

(k) The address for any notice or other communication to the Administrative Agent under the Credit Agreement shall be as follows:

Address for Notices:

HSBC Bank USA, N.A.

452 Fifth Avenue – 8E6

New York, NY 10018

Attention: Lillian Cortes, Administrator

Email: ctlany.loanagency@us.hsbc.com

Telephone: +1-212-525-7293

Facsimile: +1-917-229-6659

SECTION 5. Representations and Warranties. To induce the other parties hereto to enter into this Amendment, the Parent, hereby represents and warrants to each of the resigning and successor Administrative Agent and the Lenders that at the time of and immediately after giving effect to this Amendment on the Amendment Effective Date:

(a) Each of the representations and warranties made by the Parent in Sections 5.03, 5.04, 5.05 and 5.07 of the Credit Agreement are true and correct in all material respects on and as of the Amendment Effective Date as if made on and as of such date, both immediately before and immediately after giving effect to this Amendment.

(b) No Event of Default and no Potential Event of Default has occurred and is continuing on and as of the Amendment Effective Date, both immediately before and immediately after giving effect to this Amendment.

SECTION 6. Effectiveness. This Amendment shall become effective as of the date (the “Amendment Effective Date”) on which:

(a) The RBS Assignment shall have (i) been duly executed and delivered by RBS, Mizuho and each Issuer and (ii) become effective.

(b) The Administrative Agent (or its counsel) shall have received counterparts of this Amendment that, when taken together, bear the signatures of each Borrower, the Required Lenders and the successor Administrative Agent.

(d) The Parent shall have paid all fees and expenses required to be paid by it on or before the Amendment Effective Date in connection with this Amendment.

SECTION 7. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Amendment.

SECTION 8. Effect of Amendment. Except as expressly set forth herein, this Amendment shall not by implication or otherwise alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement, all of which are ratified and affirmed in all respects and shall continue in full force and effect. After the date hereof, any reference to the Credit Agreement shall mean the Credit Agreement as modified hereby. This Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents.

SECTION 9. Fee Letter. By signing this Amendment, the parties to the Fee Letter agree to the modifications thereto set forth in this Section 9. The next annual payment of the Administration Fee (as defined in the Fee Letter) and each subsequent annual payment thereof shall be payable to HSBC as Administrative Agent rather than to RBS as Administrative Agent. The first full paragraph on the second page of the Fee Letter is hereby amended by deleting the words “Lead Lenders” and “Issuing Bank” and substituting in lieu thereof the word “Issuers” and “Issuer”, respectively. Mizuho Bank, Ltd. hereby replaces RBS as a party thereto. All references to the “Fee Letter” in the Credit Agreement shall refer to the Fee Letter as amended hereby.

SECTION 10. Notices. All notices hereunder shall be given in accordance with the provisions of Section 12.05 of the Credit Agreement.

SECTION 11. Direction to Administrative Agent. The Parent and the Lenders consent to the appointment of HSBC as the successor Administrative Agent. The Lenders authorize, instruct and direct HSBC, as successor Administrative Agent, to execute this Amendment and to take such further actions as may be necessary to give effect to the transactions contemplated hereby.

SECTION 12. Governing Law; Submission to Jurisdiction: Waiver of Jury Trial.

(a) Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES.

(b) Certain Waivers. EACH BORROWER, EACH LENDER, EACH ISSUER AND THE ADMINISTRATIVE AGENT WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AMENDMENT OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH (COLLECTIVELY, “RELATED LITIGATION”). IN ADDITION, EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(i) AGREES THAT ANY RELATED LITIGATION BY ANY ISSUER OR LENDER OR THE ADMINISTRATIVE AGENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN NEW YORK COUNTY, NEW YORK, AND SUBMITS TO THE JURISDICTION OF SUCH COURTS (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY ISSUER, LENDER OR BORROWER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM);

(ii) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY SUCH RELATED LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH BORROWER; AND

(iii) CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO SUCH BORROWER AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION 10 HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).

[signature pages follow]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.


AIR PRODUCTS AND CHEMICALS, INC.,

by		/s/ Gregory E. Weigard
		Name: Gregory E. Weigard
		Title: Corporate Treasurer


THE ROYAL BANK OF SCOTLAND PLC, as the Resigning Administrative Agent,

by		/s/ William McGinty
		Name: William McGinty
		Title: Director

And for purposes of Section 9 only:

RBS SECURITIES INC.

by		/s/ Michael F. Newcomb II
		Name: Michael F. Newcomb II
		Title: Managing Director


HSBC BANK USA, N.A., as the Successor Administrative Agent

by		/s/ Joseph A. Lioret
		Name: Joseph A. Lioret
		Title: Vice President

HSBC BANK USA, N.A., as a Lender

by		/s/ David A. Mandell
		Name: David A. Mandell
		Title: Managing Director

And for purposes of Section 9 only:

HSBC SECURITIES (USA), INC.

by		/s/ Michael Bieber
		Name: Michael Bieber
		Title: Managing Director


CO-SYNDICATION AGENTS

BNP PARIBAS,
As a Lender and as Co-Syndication Agent

by		/s/ Nanette Baudon
		Name: Nanette Baudon
		Title: Director

by		/s/ Ade Adedeji
		Name: Ade Adedeji
		Title: Vice President

And for purposes of Section 9 only:

BNP PARIBAS SECURITIES CORP.

by		/s/ Albert Arencibia
		Name: Albert Arencibia
		Title: Vice President

by		/s/ Ade Adedeji
		Name: Ade Adedeji
		Title: Vice President

MIZUHO BANK, LTD.,
As a Lender and as Co-Syndication Agent and an Issuer

by		/s/ Donna Demagistris
		Name: Donna Demagistris
		Title: Authorized Signatory


SIGNATURE PAGE TO THE AIR PRODUCTS AND CHEMICALS, INC. AMENDMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

BANK OF AMERICA, N.A.

by		/s/ Christopher Dibiase
		Name: Christopher DiBiase
		Title: Director


SIGNATURE PAGE TO THE AIR PRODUCTS AND CHEMICALS, INC. AMENDMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,

by		/s/ Mustafa Khan
		Name: Mustafa Khan
		Title: Director


SIGNATURE PAGE TO THE AIR PRODUCTS AND CHEMICALS, INC. AMENDMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

BARCLAYS BANK PLC.

by		/s/ Vanessa Kurbatskiy
		Name: Vanessa Kurbatskiy
		Title: Vice President


SIGNATURE PAGE TO THE
AIR PRODUCTS AND CHEMICALS, INC.
AMENDMENT DATED
AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

DEUTSCHE BANK AG NEW YORK BRANCH

by		/s/ Ming K. Chu
		Name: Ming K. Chu
		Title: Vice President

by		/s/ Virginia Cosenza
		Name: Virginia Cosenza
		Title: Vice President


SIGNATURE PAGE TO THE
AIR PRODUCTS AND CHEMICALS, INC.
AMENDMENT DATED
AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

INTESA SANPAOLO S.P.A. – NEW YORK BRANCH

by		/s/ John J. Michalisin
		Name: John J. Michalisin
		Title: First Vice President

by		/s/ Francesco Di Mario
		Name: Francesco Di Mario
		Title: F.V.P. & Head of Credit


SIGNATURE PAGE TO THE
AIR PRODUCTS AND CHEMICALS, INC.
AMENDMENT DATED
AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

JPMORGAN CHASE BANK, N.A.

by		/s/ Peter Predun
		Name: Peter Predun
		Title: Executive Director


SIGNATURE PAGE TO THE AIR PRODUCTS AND CHEMICALS, INC. AMENDMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

WELLS FARGO BANK, N.A.

by		/s/ Michael J. Gigler
		Name: Michael J. Gigler
		Title: Senior Vice President


SIGNATURE PAGE TO THE AIR PRODUCTS AND CHEMICALS, INC. AMENDMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

THE BANK OF NOVA SCOTIA

by		/s/ Michelle C. Phillips
		Name: Michelle C. Phillips
		Title: Director & Execution Head


SIGNATURE PAGE TO THE
AIR PRODUCTS AND CHEMICALS, INC.
AMENDMENT DATED
AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

MORGAN STANLEY BANK, N.A.

by		/s/ Dmitriy Barskiy
		Name: Dmitriy Barskiy
		Title: Authorized Signatory


SIGNATURE PAGE TO THE AIR PRODUCTS AND CHEMICALS, INC. AMENDMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

SANTANDER BANK, N.A.

by		/s/ William Maag
		Name: William Maag
		Title: Managing Director


SIGNATURE PAGE TO THE
AIR PRODUCTS AND CHEMICALS, INC.
AMENDMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

SUMITOMO MITSUI BANKING CORPORATION:

by		/s/ James D. Weinsteun
		Name: James D. Weinstein
		Title: Managing Director


SIGNATURE PAGE TO THE
AIR PRODUCTS AND CHEMICALS, INC.
AMENDMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE

Name Of Lender:

BANCO BILBAO VIZCAYA ARGENTARIA,
S.A. NEW YORK BRANCH



by		/s/ Veronica Incera
		Name: Veronica Incera
		Title: Managing Director

by		/s/ Luca Sacchi
		Name: Luca Sacchi
		Title: Managing Director

SCHEDULE III

ADMINISTRATIVE AGENT’S OFFICE

HSBC Bank USA, N.A.

452 Fifth Avenue – 8E6

New York, NY 10018

Attention: Lillian Cortes, Administrator

Email: ctlany.loanagency@us.hsbc.com

Telephone: +1-212-525-7293

Facsimile: +1-917-229-6659

*	or such other address and/or contact information as may be designated by the Administrative Agent with respect to any Designated Currency. In case of any such designation, the times specified in this Agreement shall, where relevant, be adjusted to the appropriate local times.

SCHEDULE IV

REVOLVING CREDIT COMMITTED AMOUNTS


HSBC Bank USA, N.A.	$	200,000,000

Mizuho Bank, Ltd.	$	200,000,000

BNP Paribas	$	200,000,000

Bank of America, N.A.	$	190,000,000

The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch	$	190,000,000

Barclays Bank PLC	$	190,000,000

Deutsche Bank AG, New York Branch	$	190,000,000

Intesa SanPaolo S.p.A. New York Branch	$	190,000,000

JPMorgan Chase Bank N.A.	$	190,000,000

Wells Fargo Bank, N.A.	$	190,000,000

The Bank of Nova Scotia	$	95,000,000

Morgan Stanley Bank, N.A.	$	95,000,000

Santander Bank, N.A. (formerly known as Sovereign Bank, N.A.)	$	95,000,000

Sumitomo Mitsui Banking Corporation	$	95,000,000

Banco Bilbao Vizcaya Argentaria, S.A. (BBVA)	$	95,000,000

TOTAL	$	2,405,000,000

Exhibit 10.2

AIR PRODUCTS AND CHEMICALS, INC.

EXECUTIVE

SEPARATION PROGRAM

As Amended Effective as of 20 May 2015

ARTICLE I

PURPOSE AND TERM OF PLAN

Section 1.01 Purpose. Air Products and Chemicals, Inc. hereby establishes the Air Products and Chemicals, Inc. Executive Separation Program (the “Plan”) for the purpose of facilitating the planned separations of Covered Executives (as defined below) and providing severance benefits to a Covered Executive.

Section 1.02 Term of the Plan. The Plan, was originally effective July 17, 2003. This amendment and restatement of the Plan shall be effective for a Termination of Employment occurring on or after 20 May 2015. The Plan will continue until such time as the Committee (as defined below) acting in its sole discretion, elects to modify, supersede or terminate the Plan in accordance with, and subject to, the provisions of Article V.

ARTICLE II

DEFINITIONS

Section 2.01 “Administrator” shall mean the Committee or, to the extent the Committee delegates its powers in accordance with Section 4.01, its delegate with respect to matters so delegated.

Section 2.02 “Air Products” shall mean Air Products and Chemicals, Inc.

Section 2.03 “Annual Incentive Plan” shall mean the Air Products and Chemicals, Inc. Annual Incentive Plan and/or any similar, successor or substitute short-term bonus plan, program or pay practice.

Section 2.04 “Benefit” or “Benefits” shall mean any or all of the benefits that a Covered Executive is entitled to receive pursuant to Sections 3.02, 3.03 and 3.04 of the Plan.

Section 2.05 “Board” means the Board of Directors of Air Products.

Section 2.06 “Cause” shall mean (a) the willful failure of a Covered Executive to substantially perform his or her duties (other than any such failure due to Disability), after a demand for substantial performance is delivered, which demand shall identify the manner in which the Company believes that the Covered Executive has not substantially performed his duties, (b) a Covered Executive’s engaging in willful and serious misconduct that has caused or would reasonably be expected to result in material injury to the Company or any of its affiliates, (c) a Covered Executive’s conviction of, or entering a plea of nolo contendere to, a crime that constitutes a felony, (d) a Covered Executive’s engaging (i) in repeated acts of insubordination or (ii) an act of dishonesty, or (e) violation by the Covered Executive of any provision of Company’s Code of Conduct.

Section 2.07 “CEO” shall mean the Chief Executive Officer of Air Products, or a former chief executive officer of Air Products whose removal from such position constituted Good Reason.

Section 2.08 “Change in Control” shall be as defined under the Company’s standard change in control agreement for senior executives or, if applicable, the change in control agreement that is in effect for a Covered Executive at the time of the Change in Control.

Section 2.09 “Committee” shall mean the Management Development and Compensation Committee of the Board, or other person or persons appointed by the Board, to act on behalf of the Company with respect to the Plan as provided in the Plan.

Section 2.10 “Company” shall mean Air Products and any of its wholly or majority owned subsidiaries and affiliates. The term “Company” shall include any successor to Air Products such as a corporation succeeding to the business of Air Products or any subsidiary, by merger, consolidation or liquidation, or purchase of assets or stock or similar transaction.

Section 2.11 “Covered Executive” shall mean the executives listed on Exhibit A.

Section 2.12 “Disability” shall be as defined under the Company’s long-term disability plan.

Section 2.13 “Employment Termination Date” shall mean the date on which a Covered Executive incurs a Termination of Employment.

Section 2.14 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

Section 2.15 “Fiscal Year” shall mean each period commencing on October 1 and ending on the subsequent September 30.

Section 2.16 “Good Reason” shall mean the occurrence of any of the following without a Covered Executive’s consent:

(a) A material adverse change in the Covered Executive’s position or office with the Company, including, without limitation, dismissal of the Covered Executive from membership on the Corporate Executive Committee and any successor senior executive committee; or a material diminution in the Covered Executive’s duties, reporting responsibilities and authority with the Company; or an assignment to the Covered Executive of duties or responsibilities, which are materially inconsistent with the Covered Executive’s status or position with the Company; provided that, any of the foregoing in connection with termination of a Covered Executive’s employment for Cause, Retirement or Disability shall not constitute Good Reason;

(b) Reduction of the Covered Executive’s Salary or failure by the Company to pay, in substantially equal installments conforming with the Company’s normal pay practices, the Covered Executive’s Salary; provided, however, that the Company may reduce a Covered

Executive’s Salary if such reduction is no less favorable to the Covered Executive than the average annual percentage reduction during the applicable Fiscal Year for all Highly Compensated Employees; provided further that the Company may adjust its normal payroll practices with respect to the payment of a Covered Executive’s Salary provided that such adjustment is applicable to all Highly Compensated Employees;

(c) A material reduction in a Covered Executive’s annual incentive opportunities under the Annual Incentive Plan without a corresponding increase in other incentive compensation payable by the Company; provided, however, that the Company may reduce a Covered Executive’s annual incentive opportunities under the Annual Incentive Plan if such reduction is on a basis no less favorable to the Covered Executive than the basis upon which the Company reduces the annual incentive opportunities payable to all Highly Compensated Employees during the applicable Fiscal Year;

(d) A material reduction in a Covered Executive’s aggregate Company provided benefits under the Company’s employee pension benefit, life insurance, medical, dental, health and accident, disability, severance and paid vacation plans, programs and practices; provided however that the Company may reduce or adjust the aggregate benefits payable to a Covered Executive if such reduction is on a basis no less favorable to the Covered Executive than the basis on which the Company reduces aggregate benefits payable with respect to Highly Compensated Employees; or

(e) A requirement by the Company that a Covered Executive relocate his or her principal place of employment by more than fifty (50) miles from the location in effect immediately prior to the relocation.

Notwithstanding anything to the contrary contained herein, a Covered Executive’s termination of employment will not be treated as for Good Reason as the result of the occurrence of any event specified in the foregoing clauses (a) through (f) (each such event, a “Good Reason Event”) unless, within 90 days following the occurrence of such event, the Covered Executive provides written notice to the Company of the occurrence of such event, which notice sets forth the exact nature of the event and the conduct required to cure such event. The Company will have 30 days from the receipt of such notice within which to cure such event (such period, the “Cure Period”). If, during the Cure Period, such event is remedied, the Covered Executive will not be permitted to terminate his or her employment for Good Reason. If, at the end of the Cure Period, the Good Reason Event has not been remedied, a Covered Executive’s voluntary termination will be treated as for Good Reason during the 90-day period that follows the end of the Cure Period. If a Covered Executive does not terminate employment during such 90-day period, the Covered Executive will not be permitted to terminate employment and receive the payments and benefits set forth under this Agreement as a result of such Good Reason Event.

Section 2.17 “Highly Compensated Employee” shall mean the highest paid one percent of employees of the Company together with all corporations, partnerships, trusts, or other entities controlling, controlled by, or under common control with, the Company.

Section 2.18 “Long-Term Incentive Plan” shall mean the Air Products and Chemicals, Inc. Long-Term Incentive Plan, approved by Air Products’ shareholders most recently on 24 January 2013, together with all predecessor and similar successor or substitute intermediate and/or long-term incentive compensation plan or program.

Section 2.19 “Pension Plans” shall mean, the Air Products and Chemicals, Inc. Pension Plan for Salaried Employees, as amended from time to time together with any similar, succeeding or substitute plan, and the Supplementary Pension Plan of Air Products and Chemicals, Inc. as amended from time to time, together with any similar, succeeding or substitute plan, and any private annuity or pension agreement between the Covered Executive and the Company.

Section 2.20 “Plan” shall mean the Air Products and Chemicals, Inc. Executive Separation Program, as set forth herein, and as the same may from time to time be amended.

Section 2.21 “Retirement Savings Plan” shall mean the Air Products and Chemicals, Inc. Retirement Savings Plan, as amended from time to time, together with any similar, succeeding or substitute plan.

Section 2.22 “Plan Year” shall mean each period commencing on October 1 during which the Plan is in effect and ending on the subsequent September 30. “Salary” shall mean an amount equal to the annual rate of a Covered Executive’s base salary payable to the Covered Executive in all capacities with the Company and its Subsidiaries or affiliates on the Covered Executive’s Employment Termination Date.

Section 2.23 “Savings Plans” shall mean the Retirement Savings Plan and the Air Products and Chemicals, Inc. Deferred Compensation Plan, as each is amended from time to time, together with any similar, succeeding or substitute plan(s).

Section 2.24 “Section 409A” shall mean Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations thereunder as in effect from time to time.

Section 2.25 “Termination of Employment” shall mean termination of the active employment relationship between a Covered Executive and the Company (a) by the Company for reasons other than the Covered Executive’s death, Disability, retirement after attaining age 65 or Cause or (b) by the Covered Executive for Good Reason; provided that, if ownership of any subsidiary, unit, division or business of the Company is divested, spun off, sold or otherwise transferred to a third party or third parties, including the stockholders of Air Products, and the Covered Executive’s employment within such divested or transferred subsidiary, unit, division or business continues, the termination of the employment relationship between the Covered Executive and the Company shall not be a Termination of Employment.

ARTICLE III

ENTITLEMENT TO AND DESCRIPTION OF BENEFITS

Section 3.01 Earned Salary; Accrued Vacation. Upon a Covered Executive’s Termination of Employment, the Company shall pay to the Covered Executive, as soon as practicable but no later than 30 days after the Covered Executive’s Employment Termination Date, the Covered Executive’s (i) Salary, to the extent earned but unpaid as of the Employment Termination Date, and (ii) vacation pay accrued through the Employment Termination Date. The Covered Executive shall also be entitled to business expenses incurred but unreimbursed as of the Employment Termination Date, earned but unpaid bonuses, and other benefits accrued under the Company’s benefit plans as of the Employment Termination Date; provided that such amounts shall be paid to the Covered Executive in accordance with the applicable Company plan, program or policy.

Section 3.02 Cash Benefits. Upon a Covered Executive’s Termination of Employment and the Covered Executive’s satisfaction of the conditions specified in Section 3.05 of the Plan, the Covered Executive shall be entitled to receive the following Benefits, as well as the Benefits specified in Sections 3.03 and 3.04:

(a) A lump sum cash severance payment equal to one times (in the case of the CEO, two times) the sum of: (I) the Covered Executive’s Salary and (II) the average of the Annual Incentive Plan awards received by the Covered Executive for the three Fiscal Years for which his or her Annual Incentive Plan awards were the highest of the last five Fiscal Years (or, if less, the number of Fiscal Years for which the Covered Executive has received Annual Incentive Plan awards); provided that, if Mr. Seifollah Ghasemi is terminated subsequent to 1 July 2017, the amount of the benefit to be paid under this subsection 3.02(a) shall be the amount determined under the Employment Agreement between Mr. Ghasemi and the Company entered as of 17 June 2014.

(b) A lump sum cash payment which shall be equal to the product of: (I) the average of the Annual Incentive Plan awards received by the Covered Executive for the three Fiscal Years for which his or her Annual Incentive Plan awards were the highest of the last five Fiscal Years (or, if less, the number of Fiscal Years for which the Covered Executive has received Annual Incentive Plan awards) and (II) a fraction, the numerator of which is the number of days in the current Fiscal Year through the Covered Executive’s Employment Termination Date, and the denominator of which is 365.

(c) (i) If the Covered Executive is a participant in the Pension Plans and is not a Core Contribution Participant under the Retirement Savings Plan, a lump sum cash payment equal to the difference between the actuarial present values as of the Employment Termination Date of:

(A) The Covered Executive’s accrued vested pension benefits under the Pension Plans, calculated assuming that payment of the benefits will commence in the form of a straight life annuity on the earliest date on which the Covered Executive could

commence payment if he or she is eligible for an early retirement subsidy on any portion of his or her accrued benefits on the Employment Termination Date, or on the first day of the month after the Covered Executive attains age 65 if he or she is not; and

(B) The Covered Executive’s accrued vested pension benefits under the Pension Plans calculated by adding one year (in the case of the CEO, two years) of service to the actual service credited under such plans for benefit accrual and vesting purposes and including any early retirement subsidy available under the Pension Plans for which the Covered Executive is not eligible due to termination before satisfying age and service requirements for such subsidy, and assuming that the Covered Executive’s benefit will commence in the form of a straight life annuity on the earliest date on which he or she could retire and commence a benefit under the Pension Plans.

For purposes of calculating the actuarial present values of (A) and (B) above, the interest rate shall be the average of the average monthly yields for municipal bonds published monthly by Moody’s Investors’ Service Inc. for the three months immediately preceding the Employment Termination Date and the life expectancy assumptions shall be those most frequently used by the Pension Plans’ actuaries for other purposes. The calculation of the pension payment described in this subparagraph shall be made by a nationally recognized firm of enrolled actuaries acceptable to the Covered Executive and the Company. The Company shall pay the reasonable fees and expenses of such actuarial firm. The calculation made by such actuarial firm shall be binding on the Covered Executive and the Company.

Section 3.03 (ii) If the Covered Executive is a Core Contribution Participant in the Retirement Savings Plan, a lump sum cash payment (in lieu of the payment described in clause (i) above) equal to the Company Core Contributions and Core Credits (as defined in the Savings Plans) that the Covered Executive would have received under the Savings Plans during the one-year period (in the case of the CEO, two-year period) following the Employment Termination Date assuming that (I) the Covered Executive remained actively employed by the Company during such period, (II) the Covered Executive’s Salary continued at the higher of the rate in effect on the Employment Termination Date or the rate in effect immediately prior to any purported reduction in the Covered Executive’s Salary constituting Good Reason, and (III) the Covered Executive’s Annual Incentive Plan awards were equal in amount to the higher of the most recent award received prior to the Employment Termination Date and the average of the awards available to the Covered Executive under the Annual Incentive Plan during and/or for each of the three immediately preceding Fiscal Years; provided that the amount payable to the Covered Executive under this clause (c) shall in no event include any Company matching contributions or credits on such Company Core Contributions or Core Credits. Non-Cash Benefits. In addition to the Benefits provided under Section 3.02, a Covered Executive shall receive, subject to the Covered Executive’s satisfaction of the conditions specified in Section 3.05 of the Plan, the following additional benefits:

(a) If the Covered Executive is covered under any of the Company’s group medical and dental plans as of the Employment Termination Date, and the Covered Executive is eligible for and timely elects continuation coverage under such plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company will pay the cost of such COBRA coverage on behalf of the Covered Executive, and each of his dependents who were covered under such medical and dental plans as of the Employment Termination Date and who are qualified beneficiaries under COBRA, for twelve months following the Employment Termination Date. Notwithstanding the preceding sentence, to the extent that any Covered Executive is eligible to commence retiree medical benefits under the Company’s group medical plan on the Employment Termination Date, the preceding sentence shall not apply to such Covered Executive with respect to such plan and shall not affect the Covered Executive’s entitlement to retiree medical benefits under the terms and conditions of such plan.

(b) Outplacement assistance at times and locations that are convenient to the Covered Executive; provided that such outplacement services will be provided for a period of no more than 12 months following the Employment Termination Date.

Section 3.04 Long-Term Incentive Plan Benefits. In addition to the Benefits payable under Sections 3.02 and 3.03, a Covered Executive’s Long-Term Incentive Plan awards shall, subject to the Covered Executive’s satisfaction of the conditions specified in Section 3.05 of the Plan, be treated in accordance with this Section 3.04.

(a) (i) All stock options and stock appreciation rights that are exercisable as of the Covered Executive’s Employment Termination Date shall continue to be exercisable following such Employment Termination Date and shall remain exercisable for the remainder of the term applicable to the stock option or stock appreciation right. All stock options and stock appreciation rights that are not exercisable as of the Covered Executive’s Employment Termination Date shall automatically terminate as of the Employment Termination Date.

(ii) All unearned performance shares and other awards with performance-based vesting shall vest as of the Covered Executive’s Employment Termination Date in an amount to be determined by multiplying (A) the number of shares or units that would have been earned by the Covered Executive under each such award at the level of performance determined by the Committee at the end of the applicable performance cycle for other senior executives of the Company by (B) a fraction, the numerator of which is the number of full months that have elapsed between the beginning of the applicable performance period and the Covered Executive’s Employment Termination Date and the denominator of which is the number of full months in such performance period. Payments in respect of such vested awards shall be made within 30 days of the Committee’s decision, or, if later, as soon as permissible under Section 409A.

(iii) All other awards, including deferred stock units (other than deferred stock units that vest under the Long-Term Incentive Plan or the applicable award agreement upon a Covered Executive’s death, disability or retirement) and restricted stock, that are subject to time-based vesting or other non-performance based conditions shall vest as of the Covered Executive’s Employment Termination Date in an amount determined by multiplying (A) the number of shares or units that are subject to the award by (B) a fraction, the numerator of which is the number of full months that shall have elapsed since the beginning of the applicable vesting period and the denominator of which is the number of full months in the vesting period. Deferred stock units and restricted stock that become vested under the Long-Term Incentive Plan or applicable award agreement upon a Covered Executive’s death, disability or retirement shall become fully vested on the Covered Executive’s Employment Termination Date. Payments in respect of such vested awards shall be made as soon as practicable after the Release Effective Date (as defined below) or, if later, as soon as permissible under Section 409A.

(b) For purposes of this Section 3.04, fractional shares of Common Stock shall be rounded up to the next highest whole share of stock.

(c) Notwithstanding anything herein to the contrary, the treatment of Long-Term Incentive Plan awards held by a Covered Executive whose Termination of Employment is a Retirement (as defined in the Long-Term Incentive Plan) shall be determined under the Long-Term Incentive Plan and applicable award agreement (and not under this Section 3.04) to the extent determined by the Committee on the Covered Executive’s Employment Termination Date to be more favorable to the Covered Executive.

(d) Notwithstanding anything herein to the contrary, in the event a Covered Executive, other than the CEO, has an Employment Termination Date between 1 December 2013 and 31 January 2016, his outstanding Long-Term Incentive Plan awards shall be treated in accordance with the following:

(i) All stock options and stock appreciation rights which are outstanding as of the Covered Executive’s Employment Termination Date will immediately vest and shall be or become exercisable on the same terms as if the Covered Executive had remained actively employed by the Company following the Employment Termination Date for the full term;

(ii) All outstanding unvested performance shares or other awards with performance-based vesting conditions shall vest as of the Employment Termination Date and be earned at a level consistent with the earn out determination made on behalf of the Company for other senior executives for the relevant award cycle, and payments in respect of such awards shall be made at the end of the deferral period for the awards under the terms of the award or, if later, as soon as permissible under Section 409A;

(iii) All outstanding restricted stock shall immediately vest and the number of shares of restricted stock held by the Covered Executive shall be reduced to satisfy any tax withholding obligations with respect to the vesting of the restricted stock; and all restrictions applicable to the remaining shares of restricted stock will lapse at the end of the Restriction Period provided under the terms of the award;

(iv) All other outstanding awards, including career shares, deferred performance shares and restricted stock units, that are subject to time-based vesting or other non-performance-based conditions, shall be fully vested as of the Employment Termination Date and payments in respect thereof shall be made at the time provided for payment of vested awards under the terms of the award or, if later, as soon as permissible under Section 409A;

provided that, for purposes of this subsection 3.04(d), Good Reason shall not include:

(i) a requirement by the Company that a Covered Executive relocate his or her principal place of employment by more than fifty (50) miles from the location in effect immediately prior to the relocation; or

(ii) a change in position, office, duties, reporting responsibilities, or authority of a Covered Executive if, in his new role, the Covered Executive continues to perform a significant policy making function at the enterprise level for the Company and serve on the Corporate Executive Committee or any successor senior executive committee.

Section 3.05 Conditions to Entitlement to Benefit. To be eligible to receive any Benefits under the Plan after the Covered Executive’s Employment Termination Date has been set, a Covered Executive must (a) continue in his then current office and perform such duties for

the Company as are typically related to the Covered Executive’s position (or such other position as the Board reasonably requests) including identifying, recruiting and/or transitioning the Covered Executive’s successor, in all events performing all assigned duties in the manner reasonably directed by the CEO in his sole discretion, or if the CEO is the Covered Executive, by the Board in its sole discretion, and cease his employment on the Employment Termination Date; (b) on or after the Employment Termination, but prior to the 30^th day following the Employment Termination Date, execute and provide to the Company a release and discharge of the Company from any and all claims, demands or causes of action, in such form as the Administrator shall determine, in his discretion, acting on behalf of the Company, and such release must not be revoked before becoming effective and irrevocable (the date on which the release becomes effective and irrevocable shall be the “Release Effective Date”); and (c) prior to the Release Effective Date, execute a noncompetition, nonsolicitation, and nondisparagement agreement that extends for the two-year period following the Covered Executive’s Employment Termination Date in substantially the form attached hereto as Exhibit B, with such changes therein as the Administrator shall determine, in his discretion, acting on behalf of the Company. No Benefits due hereunder shall be paid to a Covered Executive who has not complied in all respects with the requirements of this Section 3.05. On or after the Release Effective Date, the Company shall provide the Covered Executive with a release of claims against the Covered Executive.

Section 3.06 Method of Payment. Benefits under the Plan shall be paid as follows:

(a) The cash Benefits determined pursuant to Section 3.02 hereof shall be paid in a lump sum, subject to all employment and withholding taxes applicable to the type of payments made. Such payments shall be made as soon as practicable after the Covered Executive’s Release Effective Date, or, if later, as soon as permissible under Section 409A. In the event the permitted time between the Employment Termination Date and the Release Effective Date could span two taxable years, payment will be made in the second taxable year.

(b) The non-cash Benefits described in Section 3.03 shall be provided after the Employment Termination Date in accordance with the applicable Company plan, program or policy or as permitted by Section 409A if later;

provided that if the Covered Executive fails to comply with all of the conditions set forth in Section 3.05, the Covered Executive shall be required to repay to the Company in cash within five (5) business days after written demand is made therefor by the Company, an amount equal to the value of any Benefit received under Section 3.03.

(c) Long-Term Incentive Plan awards referred to in Section 3.04 will be paid on the later of the date contemplated under the applicable award agreement and the date (if any) provided for under Section 3.04; provided that payment shall be made in accordance with the applicable award agreement to the extent required to avoid taxes or penalties under Section 409A.

Section 3.07 Death or Disability. If a Covered Executive, incurs Disability or dies before the Employment Termination Date has been set, no Plan payments or other benefits will be due and owing to the Covered Executive or, in the case of his death, to his estate or beneficiary.

If a Covered Executive incurs Disability or dies after his Employment Termination Date has been set but not attained, the Administrator shall cause any Benefits due under the Plan to be paid to the Covered Executive or, in the case of his death, to the Covered Executive’s Designated Beneficiary as defined in the Long-Term Incentive Plan.

Section 3.08 Change in Control. In the event of a Change in Control of the Company, the change in control agreement applicable to the Covered Executive shall continue in full force and effect and the Plan shall be null and void; and, if the Change in Control occurs after the Employment Termination Date has been set but before the Employment Termination Date, the change in control agreement applicable to the Covered Executive shall continue in full force and effect and the Employment Termination Date under the Plan shall be treated under the change in control agreement as the Covered Executive’s “Termination Date” for other than death, “Disability” or “Cause”, as such terms appearing in quotations are defined in the change in control agreement, and the Plan shall be null and void.

ARTICLE IV

ADMINISTRATION

Section 4.01 Authority and Duties. It shall be the duty of the Administrator, on the basis of information supplied by the Company, to determine the entitlement of each Covered Executive to Benefits under the Plan. The Administrator shall have the full power and authority to (a) determine whether a Covered Executive’s termination of employment with the Company constitutes a Termination of Employment for purposes of the Plan and (b) construe, interpret and administer the Plan, to correct deficiencies therein, and to supply omissions. All decisions, actions, and interpretations of the Administrator shall be final, binding, and conclusive upon the parties. The Committee may delegate to appropriate Company officers its authority and its duties as it shall deem appropriate in its sole discretion, and the actions of such person or persons shall have the same force and effect as any action of the Committee in respect of the Plan (other than any action by such person or persons to delegate the Committee’s duties or authority hereunder); provided, however, that the Committee shall approve the eligibility for Benefits.

Section 4.02 Expenses of the Administrator. All reasonable expenses of the Administrator shall be paid or reimbursed by the Company upon proper documentation. The Company shall indemnify and defend the Administrator against personal liability for actions taken in good faith in the discharge of its duties hereunder.

Section 4.03 Actions of the Administrator. Whenever a determination is required of the Administrator under the Plan, such determination shall be made solely at the discretion of the Administrator. In addition, the exercise of discretion by the Administrator need not be uniformly applied to similarly situated Covered Executives and shall be final and binding on each Covered Executive or beneficiary(ies) to whom the determination is directed.

ARTICLE V

AMENDMENT AND TERMINATION

The Company, acting through the Committee, retains the right, at any time and from time to time, to amend, suspend, or terminate the Plan in whole or in part, for any reason, and, except as provided below, without either the consent of or the prior notification to any Covered Executive. Notwithstanding the foregoing and except as specifically provided under Section 7.12(d), no such amendment, suspension or termination shall (a) give the Company the right to recover any amount paid to a Covered Executive prior to the date of such action, (b) cause the cessation and discontinuance of payments of Benefits to any person or persons under the Plan already receiving Benefits, or (c) be effective to terminate or reduce the Benefits or prospective Benefits of any Covered Executive whose Employment Termination Date has been set as of the date of such amendment, suspension or termination (unless the express written consent of the Covered Executive has been obtained with respect thereto).

ARTICLE VI

DUTIES OF THE COMPANY

Section 6.01 Records. The Company shall supply to the Administrator all records and information necessary to the performance of the Administrator’s duties.

Section 6.02 Discretion. Any decisions, actions or interpretations to be made under the Plan by the Board, the Committee, the Company, or the Administrator, acting on behalf of the Company, shall be made in its or their respective sole discretion, not in any fiduciary capacity and need not be uniformly applied to similarly situated individuals and shall be final, binding and conclusive upon all parties.

ARTICLE VII

MISCELLANEOUS

Section 7.01 Nonalienation of Benefits. None of the payments, Benefits or rights of any Covered Executive shall be subject to any claim of any creditor, and, in particular, to the fullest extent permitted by law, all such payments, Benefits and rights shall be free from attachment, garnishment, trustee’s process, or any other legal or equitable process available to any creditor of such Covered Executive. No Covered Executive shall have the right to alienate, anticipate, commute, pledge, encumber or assign any of the Benefits or payments which he may expect to receive, contingently or otherwise, under the Plan.

Section 7.02 No Contract of Employment. Neither the establishment of the Plan, nor any modification thereof, nor the creation of any fund, trust or account, nor the payment of any Benefits shall be construed as giving any Covered Executive, or any person whosoever, the right to be retained in the service of the Company, and all Covered Executives shall remain subject to discharge to the same extent as if the Plan had never been adopted.

Section 7.03 Entire Agreement. Except as may be provided in a change in control agreement that is in effect for a Covered Executive at the time of a Change in Control between the Company and a Covered Executive, this Plan document, as it may be amended by the Committee, and the documents specifically referenced herein, or in such amendment, shall constitute the entire agreement between the Company and the Covered Executive with respect to the Benefits promised hereunder and no other agreements, representations, oral or otherwise, express or implied, with respect to such Benefits or any severance benefits shall be binding on the Company; provided that the Employment Agreement entered as of 17 June 2014 between Air Products and Mr. Ghasemi shall remain effective and shall control to the extent treatment under such agreement is more favorable to Mr. Ghasemi than under the Plan.

Section 7.04 Severability of Provisions. If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included.

Section 7.05 Successors, Heirs, Assigns, and Personal Representatives. The Plan shall be binding upon the heirs, executors, administrators, successors and assigns of the parties, including each Covered Executive, present and future.

Section 7.06 Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

Section 7.07 Gender and Number. Except where otherwise clearly indicated by context, the masculine and the neuter shall include the feminine and the neuter; the singular shall include the plural, and vice-versa.

Section 7.08 Unfunded Plan. The Plan shall not be funded. The Company may, but shall not be required to, set aside or earmark an amount necessary to provide the Benefits specified herein (including the establishment of trusts). In any event, no Covered Executive shall have any right to, or interest in, any assets of the Company.

Section 7.09 Payments to Incompetent Persons, Etc. Any Benefit payable to or for the Benefit of a minor, an incompetent person or other person incapable of receipting therefor shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Company, the Administrator and all other parties with respect thereto.

Section 7.10 Lost Payees. A Benefit shall be deemed forfeited if the Administrator is unable to locate a Covered Executive to whom a Benefit is due. Such Benefit shall be reinstated if application is made by the Covered Executive for the forfeited Benefit while the Plan is in operation.

Section 7.11 Controlling Law and Nature of Plan. The Plan shall be construed and enforced according to the laws of the Commonwealth of Pennsylvania to the extent not preempted by Federal law. The Plan is not intended to be included in the definitions of “employee pension benefit plan” and “pension plan” set forth under Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Rather, the Plan is

intended to meet the descriptive requirements of a plan constituting a “severance pay plan” within the meaning of regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations, Section 2510.3-2(b).

Section 7.12 Section 409A.

(a) It is intended that the provisions of this Plan comply with Section 409A, and all provisions of this Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.

(b) Neither the Covered Executive nor any of the Covered Executive’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A) payable under this Plan or under any other plan, policy, arrangement or agreement of or with the Company or any of its affiliates (this Plan and such other plans, policies, arrangements and agreements, the “Company Plans”) to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A, any deferred compensation (within the meaning of Section 409A) payable to the Covered Executive or for the Covered Executive’s benefit under any Company plan may not be reduced by, or offset against, any amount owing by the Covered Executive to the Company or any of its affiliates.

(c) If, at the time of the Covered Executive’s separation from service (within the meaning of Section 409A), (i) the Covered Executive shall be a specified employee (within the meaning of Section 409A and using the indemnification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable under a Company Plan constitutes deferred compensation (within the meaning of Section 409A) the payment of which is required to be delayed pursuant to the six-month delay rule as set forth in Section 409A in order to avoid taxes or penalties under Section 409A, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead accumulate such amount and pay it, without interest, on the first business day after such six-month period.

(d) Notwithstanding any provision of this Plan or any Company Plan to the contrary, , the Company reserves the right to make amendments to this Plan and any Company plan as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A. In any case, the Covered Executive is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on the Covered Executive for the Covered Executive’s account in connection with any Company Plan (including any taxes and penalties under Section 409A), and neither the Company nor any affiliate shall have any obligation to indemnify or otherwise hold the Covered Executive harmless from any or all of such taxes or penalties.

EXHIBIT A

COVERED EXECUTIVES

M. Scott Crocco

Seifollah Ghasemi

Guillermo Novo

Corning F. Painter

John D. Stanley

EXHIBIT B

NONCOMPETITION, NONSOLICITATION, AND

NONDISPARAGEMENT AGREEMENT

I, (the “Executive”), for and in consideration of (a) certain severance benefits to be paid and provided to me by Air Products and Chemicals, Inc. (the “Company”) under the Air Products and Chemicals, Inc. Executive Separation Program (the “Plan”), and (b) the Company’s execution of a release in favor of the Executive, I, the Executive, hereby covenant and agree as follows:

1. The Executive acknowledges that the Company is generally engaged in business throughout the world. During the Executive’s employment by the Company and for two years after the Executive’s Employment Termination Date (as defined in the Plan), the Executive agrees that he will not, unless acting with the prior written consent of the Company, directly or indirectly, own, manage, control, or participate in the ownership, management or control of, or be employed or engaged by, or be otherwise affiliated or associated with, as an officer, director, employee, consultant, independent contractor or otherwise: (a) any person who is engaged, in any manner anywhere, in any business which, as of the Employment Termination Date, is engaged in by the Company or has been reviewed with the Board for development to be owned or managed by the Company (together “competitive businesses”), or (b) any person who has an ownership interest in a competitive business or an affiliate of such a person. Executive’s passive ownership of not more than 5% of the equity of a publicly traded entity shall not be deemed to be a violation of this paragraph.

2. The Executive also agrees that he will not, directly or indirectly, during the period described in paragraph (1), induce any person who is an employee, officer, director, or agent of the Company, to terminate such relationship, or employ, assist in employing or otherwise be associated in business with any present or former employee or officer of the Company, including without limitation those who commence such positions with the Company after the Employment Termination Date.

3. For the purposes of this Agreement:

(a) the term “Company” shall be deemed to include Air Products and Chemicals, Inc. and the subsidiaries and affiliates of Air Products and Chemicals, Inc.

(b) the term “person” shall include an individual, a publicly-traded or privately-held corporation or equivalent thereof under foreign law, a partnership, an association, a joint stock company, a trust, any unincorporated association, or any business organization; and may include an affiliate of the Company.

(c) the term “affiliate” of a specified person shall mean any corporation, partnership, joint venture, business organization, trust, or other non-natural person in which the specified person directly or indirectly holds an interest, which is under common control with the specified person, or of which the specified person is an executive officer, manager, trustee, executor, or similar controlling person.

4. The Executive acknowledges and agrees that the restrictions contained in this Agreement are reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill and business of the Company, that the Company would not have entered into this Agreement in the absence of such restrictions and that irreparable injury will be suffered by the Company should the Executive breach the provisions of this Section. The Executive represents and acknowledges that (a) the Executive has been advised by the Company to consult the Executive’s own legal counsel in respect of this Agreement, (b) the Executive has consulted with and been advised by his own counsel in respect of this Agreement, and (c) the Executive has had full opportunity, prior to execution of this Agreement, to review thoroughly this Agreement with the Executive’s counsel.

5. The Executive further acknowledges and agrees that a breach of the restrictions in this Agreement will not be adequately compensated by monetary damages. The Executive agrees that the Company shall be entitled to (a) preliminary and permanent injunctive relief, without the necessity of proving actual damages, or posting of a bond, (b) an equitable accounting of all earnings, profits and other benefits arising from any violation of this Agreement, and (c) enforce the terms, including requiring forfeitures, under other plans, programs and agreements under which the Executive has been granted a benefit contingent on a covenant similar to those contained in this Agreement, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. In the event that the provisions of this Agreement should ever be adjudicated to exceed the limitations permitted by applicable law in any jurisdiction, it is the intention of the parties that the provision shall be amended to the extent of the maximum limitations permitted by applicable law, that such amendment shall apply only within the jurisdiction of the court that made such adjudication and that the provision otherwise shall be enforced to the maximum extent permitted by law.

6. If the Executive breaches his obligations under this Agreement, he agrees that suit may be brought, and that he consents to personal jurisdiction, in the United States District Court for the Eastern District of Pennsylvania, or in any court of general jurisdiction in Allentown, Pennsylvania; consents to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding; and waives any objection which he may have to the laying of venue of any such suit, action or proceeding in any such court. The Executive also irrevocably and unconditionally consents to the service of any process, pleadings, notices, or other papers with respect thereto. EACH PARTY HERETO IRREVOCABLY AGREES TO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THIS NONCOMPETITION AGREEMENT.

7. Executive further agrees, covenants, and promises that he will not in any way communicate the terms of this Agreement to any person other than his immediate family and his attorney and financial consultant or when necessary to advise a third party of his obligations under this Agreement. Notwithstanding the foregoing, the Company and Executive also agree that for a period of two years following the Employment Termination Date, Executive will provide and that at all times after the date hereof the Company may similarly provide, with prior written notice to Executive, a copy of this Agreement to any business or enterprise (a) which Executive may directly or indirectly own, manage, operate, finance, join, control or of which he may participate in the ownership, management, operation, financing, or control, or (b) with

which Executive may be connected as an officer, director, employee, partner, principal, agent, representative, consultant, or otherwise, or in connection with which Executive may use or permit to be used Executive’s name. Executive agrees not to disparage the name, business reputation, or business practices of the Company or its subsidiaries or affiliates, or its or their officers, employees, or directors, and the Company agrees not to disparage the name or business reputation of Executive.

8. The Executive hereby expressly acknowledges and agrees that (a) the provisions of the Employee Patent and Confidential Information Agreement entered into by him on , shall continue to apply in accordance with its terms, and (b) the provisions of the Executive’s outstanding incentive award agreements granted under the Company’s Long-Term Incentive Plan, as defined in the Plan, shall continue to apply in accordance with their terms except as otherwise provided in Section 3.04 of the Plan.

9. No failure or delay on the part of the Company in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power preclude any further or other exercise thereof or the exercise of any other right or power hereunder. No modification or waiver of any provision of this Agreement or consent to any departure by any party therefrom shall in any event be effective until the same shall be in writing and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any party in any case shall entitle such party to any other or further notice or demand in similar or other circumstances.

10. Notices under this Agreement shall be in writing and sent via overnight mail as follows:


To:	Company’s General Counsel	To: Executive
	7201 Hamilton Boulevard
	Allentown, PA 18195-1501

11. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without reference to its principles of conflict of law. This Agreement shall extend to and enure to the benefit of the respective successors and assigns of the Company.

Intending to be legally bound hereby, I execute the Noncompetition, Nonsolicitation, and Nondisparagement Agreement this day of , 20 .

Witness

Executive

Exhibit 12

AIR PRODUCTS AND CHEMICALS, INC., AND SUBSIDIARIES

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES

(Unaudited)


	Nine Months Ended 30 June 2015			Year Ended 30 September
(Millions of dollars, except ratios)	Nine Months Ended 30 June 2015			2014			2013			2012			2011			2010
Earnings:
Income from continuing operations ⁽¹⁾	$	967.6		$	988.5		$	1,042.5		$	1,025.2		$	1,171.6		$	967.0

Add (deduct):
Provision for income taxes		297.1			366.0			322.5			305.1			390.8			321.0
Fixed charges, excluding capitalized interest		96.2			146.2			166.9			146.7			139.4			146.3
Capitalized interest amortized during the period		7.7			9.4			10.3			9.5			9.0			8.7
Undistributed earnings of equity investees		(74.6	)		(76.1	)		(46.4	)		(54.5	)		(38.9	)		(29.2	)
Noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges		(2.1	)		(2.8	)		—			—			—			—

Earnings, as adjusted	$	1,291.9		$	1,431.2		$	1,495.8		$	1,432.0		$	1,671.9		$	1,413.8

Fixed Charges:
Interest on indebtedness, including capital lease obligations	$	73.3		$	121.2		$	143.1		$	116.0		$	113.6		$	121.8
Capitalized interest		35.6			33.0			28.3			31.4			23.4			14.5
Amortization of debt discount/premium and expense		7.4			3.9			2.1			10.6			5.6			5.6
Portion of rents under operating leases representative of the interest factor		15.5			21.1			21.7			20.1			20.2			18.9

Fixed charges⁽²⁾	$	131.8		$	179.2		$	195.2		$	178.1		$	162.8		$	160.8

Ratio of Earnings to Fixed Charges ⁽³⁾		9.8			8.0			7.7			8.0			10.3			8.8

⁽¹⁾

Income from continuing operations includes business restructuring and cost reduction actions of $146.0 ($98.7 after-tax) in 2015, a goodwill and intangible asset impairment charge of $310.1 ($308.8 after-tax) in 2014, and business restructuring and cost reduction plans of $231.6 ($157.9 after-tax) and $327.4 ($222.4 after-tax) in 2013 and 2012, respectively.

⁽²⁾	We are party to certain debt guarantees of equity affiliates. Since we have not been required to satisfy the guarantees, nor is it probable that we will, interest expense related to the guaranteed debt is not included in fixed charges.

⁽³⁾	The ratio of earnings to fixed charges is determined by dividing earnings, as adjusted, by fixed charges. Fixed charges consist of interest on all indebtedness plus that portion of operating lease rentals representative of the interest factor (deemed to be 21% of operating lease rentals).

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION

I, Seifi Ghasemi, certify that:

I have reviewed this quarterly report on Form 10-Q of Air Products and Chemicals, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: 30 July 2015

/s/ Seifi Ghasemi

Seifi Ghasemi

Chairman, President and Chief Executive Officer

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION

I, M. Scott Crocco, certify that:

I have reviewed this quarterly report on Form 10-Q of Air Products and Chemicals, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: 30 July 2015

/s/ M. Scott Crocco

M. Scott Crocco

Senior Vice President and Chief Financial Officer

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Air Products and Chemicals, Inc. (the “Company”) on Form 10-Q for the period ending 30 June 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Seifi Ghasemi, Chairman, President and Chief Executive Officer of the Company, and M. Scott Crocco, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: 30 July 2015

/s/ Seifi Ghasemi

Seifi Ghasemi

Chairman, President and Chief Executive Officer

/s/ M. Scott Crocco

M. Scott Crocco

Chief Financial Officer

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