LEHIGH VALLEY, Pa.,
July 28, 2016 /PRNewswire/ --
- On a GAAP basis, quarterly EPS from continuing operations of
$1.63 and operating margin of 22.0
percent
- Quarterly adjusted EPS from continuing operations of
$1.92, up 16 percent versus prior
year
- Quarterly adjusted operating margin of 23.0 percent and
adjusted EBITDA margin of 34.2 percent, both up 340 basis points;
adjusted Return on Capital Employed (ROCE) of 13.5 percent up 200
basis points versus prior year
- Announced new plant to provide ultra-high purity gases to
customers in Pukou Economic Development Zone in Nanjing, China
- Filed Form 10 with U.S. Securities and Exchange Commission for
Electronic Materials Division spin-off company, Versum
Materials
- Fiscal 2016 fourth quarter adjusted EPS from continuing
operations guidance of $1.91 to
$2.01, which at midpoint, represents an increase of seven
percent over the fourth quarter of the prior year
- Increasing fiscal full-year 2016 adjusted EPS from continuing
operations guidance to $7.45 to
$7.55, which at midpoint, represents an increase of 14
percent over the prior year
*The results and guidance in this release, including in the
highlights above, include "adjusted" non-GAAP continuing
operations. A reconciliation of GAAP to non-GAAP results can be
found at the end of this release.
Air Products (NYSE: APD) today reported GAAP net income from
continuing operations of $356
million, up 11 percent versus the prior year, and diluted
earnings per share (EPS) from continuing operations of $1.63, up 10 percent versus the prior year, for
its fiscal third quarter ended June 30,
2016.
On a Non-GAAP basis, adjusted net income from continuing
operations of $420 million was up 17
percent versus prior year, and adjusted diluted earnings per share
from continuing operations of $1.92
was up 16 percent versus prior year.
Third quarter sales of $2,434
million decreased one percent from the prior year, as four
percent higher volumes were more than offset by three percent lower
energy pass-through and two percent unfavorable currency. The
volume improvement was primarily driven by Industrial Gases –
Global, Asia, and North America. Pricing overall was flat
despite higher pricing in Industrial Gases – Americas and
Industrial Gases – Europe,
Middle East, and Africa (EMEA).
On a GAAP basis, operating income of $535
million increased 26 percent and operating margin of 22.0
percent improved 480 basis points versus prior year. Adjusted
operating income of $560 million
increased 16 percent, and adjusted EBITDA of $833 million increased 10 percent over prior
year. Adjusted operating margin of 23.0 percent and adjusted EBITDA
margin of 34.2 percent both improved 340 basis points over the
prior year. Adjusted ROCE increased 200 basis points to 13.5
percent. These results were primarily driven by operational
improvements and restructuring benefits.
Commenting on the results, Seifi
Ghasemi, chairman, president and chief executive officer,
said, "I am very pleased to report that our team at Air Products
delivered another set of excellent results this quarter. Despite
sluggish economic growth worldwide and continued currency
headwinds, our team stayed focused on executing our strategic
Five-Point Plan, delivering EPS of $1.92, up 16 percent over last year, and
improving EBITDA margin by more than 300 basis points. This is the
eighth consecutive quarter that Air Products has reported
double-digit EPS growth. Also, our ROCE increased 200 basis points
and now stands at 13.5 percent.
"I want to thank the people of Air Products for coming together
to prove that they have the determination and the capability to
deliver outstanding results and move our company forward to be the
best in the industry.
"As we move closer to the sale of our Performance Materials
Division to Evonik and the tax-free spin-off of our Electronic
Materials Division (Versum Materials) to shareholders, we see great
opportunities ahead to win key projects and invest in our core
industrial gases business so that we grow Air Products in the years
to come."
Third Quarter Results by Business Segment:
- Industrial Gases – Americas sales of $832 million decreased seven percent versus prior
year, as lower energy pass-through reduced sales by five percent
and unfavorable currency reduced sales by two percent. Volumes
overall decreased one percent, as strong hydrogen demand and the
benefits of a new hydrogen plant in North
America were more than offset by lower merchant demand in
South America. Pricing increased
one percent. Operating income of $235
million increased 14 percent over prior year, and adjusted
EBITDA of $362 million increased 11
percent, driven by operational improvements and the benefits from
restructuring actions. Record operating margin of 28.2 percent
improved 520 basis points; excluding lower energy pass-through, it
increased more than 400 basis points. Record adjusted EBITDA margin
of 43.5 percent improved 700 basis points over prior year.
- Industrial Gases – EMEA sales of $427 million declined six percent versus last
year, with lower energy pass-through reducing sales by five percent
and unfavorable currency reducing sales by one percent. Pricing
increased one percent and volumes decreased one percent. Operating
income of $103 million increased 18
percent from the prior year, and adjusted EBITDA of $160 million increased nine percent versus prior
year on the benefits from productivity and pricing actions. Record
operating margin of 24.2 percent increased 500 basis points;
excluding lower energy pass-through, it increased 400 basis points.
Record adjusted EBITDA margin of 37.4 percent increased 520 basis
points over the prior year.
- Industrial Gases – Asia
sales of $448 million increased seven
percent versus prior year, as volume growth of 14 percent, driven
by new plants and strong underlying business, was partially offset
by five percent unfavorable currency and two percent lower pricing.
Operating income of $118 million
increased 17 percent and adjusted EBITDA of $182 million increased 10 percent on the benefits
from productivity actions and higher volumes. Operating margin of
26.4 percent improved 220 basis points over prior year, and
adjusted EBITDA margin of 40.7 percent increased 110 basis
points.
- Materials Technologies sales of $520 million decreased four percent versus the
prior year on two percent lower pricing, one percent lower volumes,
and one percent unfavorable currency. Operating income of
$135 million was up three percent.
Adjusted EBITDA of $154 million was
flat. Operating margin of 26.0 percent was up 160 basis points, and
adjusted EBITDA margin of 29.7 percent was up 110 basis points.
- Electronic Materials sales of $243
million declined eight percent from the prior year on six
percent lower volumes and two percent unfavorable currency.
Materials volumes were flat, as growth in Advanced Materials was
offset by softer Process Materials volumes. Operating margin of
30.0 percent and adjusted EBITDA margin of 35.3 percent were up
modestly, driven by favorable pricing and mix, and
productivity.
- Performance Materials sales of $277
million were flat with the prior year as four percent higher
volumes were offset by four percent lower pricing, driven by lower
raw material costs. Operating margin of 22.7 percent increased 180
basis points and adjusted EBITDA margin of 24.9 percent increased
130 basis points, driven by productivity and favorable price/raw
material balance.
Non-GAAP results for the Company in the fiscal third quarter
exclude an income tax expense of $45.7
million, or $0.21 per share,
related to a dividend from a foreign subsidiary; $14.2 million, or $0.04 per share, of expenses for cost reduction
actions; $9.5 million, or
$0.04 per share, in legal and
advisory fees related to the intended separation of the Company\'s
Materials Technologies business; and $1.0
million for pension settlement costs.
Outlook
The capital expenditure forecast for
fiscal year 2016 is approximately $1.2
billion.
Air Products expects fiscal 2016 fourth quarter adjusted EPS
from continuing operations to be between $1.91 and $2.01 per share, which at midpoint,
represents an increase of seven percent over the fourth quarter of
the prior year.
The Company is increasing its full-year fiscal 2016 adjusted EPS
from continuing operations guidance to $7.45
to $7.55 earnings per share, which at midpoint, represents
an increase of 14 percent over the prior year. The Company's
previous guidance was $7.40 to
$7.55.
Access the Q3 earnings teleconference scheduled for
10:00 a.m. Eastern Time on
July 28 by calling
(719) 457-2634 and entering passcode
4401719, or access the Event Details page
on Air Products' Investor Relations web site.
About Air Products
Air Products (NYSE:APD) is a world-leading Industrial Gases company
celebrating 75 years of operation. The Company's core industrial
gases business provides atmospheric and process gases and related
equipment to manufacturing markets, including refining and
petrochemical, metals, electronics, and food and beverage. Air
Products is also the world's leading supplier of liquefied natural
gas process technology and equipment. The Company's Materials
Technologies business serves the semiconductor, polyurethanes,
cleaning and coatings, and adhesives industries.
The Company had fiscal 2015 sales of $9.9
billion and has a current market capitalization of more than
$30 billion. Approximately 19,000
employees in 50 countries strive to make Air Products the world's
safest and best performing industrial gases company, providing
sustainable offerings and excellent service to all customers. For
more information, visit www.airproducts.com.
NOTE: 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 (including as to the
United Kingdom and Europe the impact of the recent "Brexit"
referendum) 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; with regard
to the previously announced separation of Versum Materials, general
economic and business conditions that may affect the separation and
the execution thereof, changes in capital market conditions, or the
Company's decision not to consummate the separation due to market,
economic or other events; 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 success of productivity and
operational improvement 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, 2015. 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.
* Presented below are reconciliations of the reported GAAP
results to the non-GAAP measures.
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 ("adjusted") financial measures.
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
and manage our capital expenditures.
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 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.
CONSOLIDATED
RESULTS
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Continuing
Operations
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Q3
|
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YTD
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Operating
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Operating
|
|
Net
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Diluted
|
|
Operating
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|
Operating
|
|
Net
|
|
Diluted
|
|
2016 Q3 vs. 2015
Q3
|
|
Income
|
|
Margin(A)
|
|
Income
|
|
EPS
|
|
Income
|
|
Margin(A)
|
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Income
|
|
EPS
|
|
2016 Q3
GAAP
|
|
$
|
535.1
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22.0%
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$
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355.7
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$
|
1.63
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$
|
1,559.0
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22.1%
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$
|
1,113.3
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$
|
5.11
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2015 Q3
GAAP
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424.8
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17.2%
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320.5
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|
1.48
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|
1,234.0
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16.6%
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938.7
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|
|
4.32
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|
Change
GAAP
|
|
$
|
110.3
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|
480bp
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$
|
35.2
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|
|
$
|
.15
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$
|
325.0
|
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550bp
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|
$
|
174.6
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$
|
.79
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|
|
% Change
GAAP
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26%
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11%
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10%
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26%
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19%
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18%
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|
2016 Q3
GAAP
|
|
$
|
535.1
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|
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|
22.0%
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|
|
$
|
355.7
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|
$
|
1.63
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$
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1,559.0
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22.1%
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$
|
1,113.3
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|
$
|
5.11
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|
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Business separation
costs
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(tax impact $44.7 and
$46.2)(B)
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9.5
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|
.4%
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|
54.2
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|
|
.25
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|
|
28.9
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|
|
|
.4%
|
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|
|
75.1
|
|
|
|
.34
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|
Business
restructuring and cost reduction
|
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|
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|
actions (tax impact
$4.9 and $6.4)
|
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|
14.2
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|
.6%
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|
|
9.3
|
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|
.04
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|
22.8
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|
.3%
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|
16.4
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|
.08
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Pension settlement
loss
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(tax impact $.4 and
$1.4)
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1.0
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-
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.6
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-
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3.6
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.1%
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2.2
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|
.01
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2016 Q3 Non-GAAP
Measure
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$
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559.8
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23.0%
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$
|
419.8
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$
|
1.92
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$
|
1,614.3
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22.9%
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$
|
1,207.0
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$
|
5.54
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2015 Q3
GAAP
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$
|
424.8
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17.2%
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$
|
320.5
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$
|
1.48
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$
|
1,234.0
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16.6%
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$
|
938.7
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$
|
4.32
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Business
restructuring and cost reduction
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actions (tax impact
$19.4 and $47.3)
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58.2
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2.4%
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|
38.8
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|
.18
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|
146.0
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2.0%
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98.7
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|
.45
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Pension settlement
loss
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(tax impact $.6 and
$5.3)
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1.6
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-
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1.0
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-
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14.2
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.2%
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|
8.9
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|
.04
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|
Gain on previously
held equity interest
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(tax impact
$6.7)
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|
-
|
|
|
|
-
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|
|
|
-
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|
|
|
-
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|
(17.9)
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|
(.3)%
|
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|
|
(11.2)
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|
|
(.05)
|
|
|
2015 Q3 Non-GAAP
Measure
|
|
$
|
484.6
|
|
|
|
19.6%
|
|
|
$
|
360.3
|
|
|
$
|
1.66
|
|
|
$
|
1,376.3
|
|
|
|
18.5%
|
|
|
$
|
1,035.1
|
|
|
$
|
4.76
|
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|
|
|
|
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|
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|
|
|
|
|
|
Change Non-GAAP
Measure
|
|
$
|
75.2
|
|
|
|
340bp
|
|
|
$
|
59.5
|
|
|
$
|
.26
|
|
|
$
|
238.0
|
|
|
|
440bp
|
|
|
$
|
171.9
|
|
|
$
|
.78
|
|
|
% Change Non-GAAP
Measure
|
|
|
16%
|
|
|
|
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|
|
17%
|
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|
|
16%
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|
|
17%
|
|
|
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|
17%
|
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|
|
16%
|
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|
|
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|
(A)Operating margin is calculated by
dividing operating income by sales.
|
|
|
(B)Refer
to Note 1, Materials Technologies Separation, for additional
information on the tax impact.
|
|
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.
Below is a reconciliation of Income from Continuing Operations
on a GAAP basis to Adjusted EBITDA:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3
YTD
|
|
|
2016
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Total
|
|
|
Income from
Continuing Operations(A)
|
$
|
386.2
|
|
|
$
|
387.6
|
|
|
$
|
363.0
|
|
|
|
|
|
|
$
|
1,136.8
|
|
|
Add: Interest
expense
|
|
22.2
|
|
|
|
25.7
|
|
|
|
35.0
|
|
|
|
|
|
|
|
82.9
|
|
|
Add: Income tax
provision
|
|
135.9
|
|
|
|
132.5
|
|
|
|
179.5
|
|
|
|
|
|
|
|
447.9
|
|
|
Add: Depreciation and
amortization
|
|
232.7
|
|
|
|
232.1
|
|
|
|
230.6
|
|
|
|
|
|
|
|
695.4
|
|
|
Add: Business
separation costs
|
|
12.0
|
|
|
|
7.4
|
|
|
|
9.5
|
|
|
|
|
|
|
|
28.9
|
|
|
Add: Business
restructuring and cost reduction actions
|
|
-
|
|
|
|
8.6
|
|
|
|
14.2
|
|
|
|
|
|
|
|
22.8
|
|
|
Add: Pension
settlement loss
|
|
-
|
|
|
|
2.6
|
|
|
|
1.0
|
|
|
|
|
|
|
|
3.6
|
|
|
Adjusted
EBITDA
|
$
|
789.0
|
|
|
$
|
796.5
|
|
|
$
|
832.8
|
|
|
|
|
|
|
$
|
2,418.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3
YTD
|
|
|
2015
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Total
|
|
|
Income from
Continuing Operations(A)
|
$
|
339.2
|
|
|
$
|
298.8
|
|
|
$
|
334.9
|
|
|
$
|
351.5
|
|
|
$
|
972.9
|
|
|
Add: Interest
expense
|
|
29.1
|
|
|
|
23.4
|
|
|
|
28.2
|
|
|
|
22.8
|
|
|
|
80.7
|
|
|
Add: Income tax
provision
|
|
107.1
|
|
|
|
87.7
|
|
|
|
104.1
|
|
|
|
119.4
|
|
|
|
298.9
|
|
|
Add: Depreciation and
amortization
|
|
235.5
|
|
|
|
233.3
|
|
|
|
233.0
|
|
|
|
234.6
|
|
|
|
701.8
|
|
|
Add: Business
restructuring and cost reduction actions
|
|
32.4
|
|
|
|
55.4
|
|
|
|
58.2
|
|
|
|
61.7
|
|
|
|
146.0
|
|
|
Add: Pension
settlement loss
|
|
-
|
|
|
|
12.6
|
|
|
|
1.6
|
|
|
|
7.0
|
|
|
|
14.2
|
|
|
Add: Business
separation costs
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7.5
|
|
|
|
-
|
|
|
Less: Gain on
previously held equity interest
|
|
17.9
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17.9
|
|
|
Less: Gain on land
sales
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33.6
|
|
|
|
-
|
|
|
Add: Loss on early
retirement of debt
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16.6
|
|
|
|
-
|
|
|
Adjusted
EBITDA
|
$
|
725.4
|
|
|
$
|
711.2
|
|
|
$
|
760.0
|
|
|
$
|
787.5
|
|
|
$
|
2,196.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)Includes net income attributable to
noncontrolling interests.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 vs.
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
change
|
$
|
63.6
|
|
|
$
|
85.3
|
|
|
$
|
72.8
|
|
|
|
|
|
|
$
|
221.7
|
|
|
Adjusted EBITDA %
change
|
|
9
|
%
|
|
12
|
%
|
|
10
|
%
|
|
|
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Below is a reconciliation of segment operating income to
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
|
Industrial
|
|
Industrial
|
|
Industrial
|
|
|
|
|
|
|
|
|
|
|
|
|
Gases–
|
|
Gases–
|
|
Gases–
|
|
Gases–
|
|
Materials
|
|
Corporate
|
|
Segment
|
|
|
Americas
|
|
EMEA
|
|
Asia
|
|
Global
|
|
Technologies
|
|
and other
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
30 June 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
234.5
|
|
$
|
103.4
|
|
$
|
118.1
|
|
$
|
(13.9)
|
|
$
|
135.2
|
|
$
|
(17.5)
|
|
$
|
559.8
|
|
Add: Depreciation and
amortization
|
|
111.9
|
|
|
45.1
|
|
|
49.2
|
|
|
2.0
|
|
|
18.6
|
|
|
3.8
|
|
|
230.6
|
|
Add: Equity
affiliates' income (loss)
|
|
15.9
|
|
|
11.3
|
|
|
14.8
|
|
|
(.1)
|
|
|
.5
|
|
|
-
|
|
|
42.4
|
|
Adjusted
EBITDA
|
$
|
362.3
|
|
$
|
159.8
|
|
$
|
182.1
|
|
$
|
(12.0)
|
|
$
|
154.3
|
|
$
|
(13.7)
|
|
$
|
832.8
|
|
Adjusted EBITDA
margin
|
|
43.5%
|
|
|
37.4%
|
|
|
40.7%
|
|
|
|
|
|
29.7%
|
|
|
|
|
|
34.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
30 June 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
206.5
|
|
$
|
87.6
|
|
$
|
100.9
|
|
$
|
(24.1)
|
|
$
|
131.5
|
|
$
|
(17.8)
|
|
$
|
484.6
|
|
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
|
|
$
|
(14.5)
|
|
$
|
760.0
|
|
Adjusted EBITDA
margin
|
|
36.5%
|
|
|
32.2%
|
|
|
39.6%
|
|
|
|
|
|
28.6%
|
|
|
|
|
|
30.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
change
|
$
|
34.6
|
|
$
|
13.1
|
|
$
|
16.6
|
|
$
|
7.9
|
|
$
|
(.2)
|
|
$
|
.8
|
|
$
|
72.8
|
|
Adjusted EBITDA %
change
|
|
11%
|
|
|
9%
|
|
|
10%
|
|
|
40%
|
|
|
– %
|
|
|
6%
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin change
|
700bp
|
|
|
520bp
|
|
|
110bp
|
|
|
|
|
|
110bp
|
|
|
|
|
|
340bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
30 June 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
670.5
|
|
$
|
284.5
|
|
$
|
339.2
|
|
$
|
(44.1)
|
|
$
|
391.7
|
|
$
|
(27.5)
|
|
$
|
1,614.3
|
|
Add: Depreciation and
amortization
|
|
330.1
|
|
|
140.1
|
|
|
149.4
|
|
|
5.9
|
|
|
58.2
|
|
|
11.7
|
|
|
695.4
|
|
Add: Equity
affiliates' income (loss)
|
|
38.1
|
|
|
26.1
|
|
|
43.9
|
|
|
(.6)
|
|
|
1.1
|
|
|
-
|
|
|
108.6
|
|
Adjusted
EBITDA
|
$
|
1,038.7
|
|
$
|
450.7
|
|
$
|
532.5
|
|
$
|
(38.8)
|
|
$
|
451.0
|
|
$
|
(15.8)
|
|
$
|
2,418.3
|
|
Adjusted EBITDA
margin
|
|
42.1%
|
|
|
35.0%
|
|
|
42.0%
|
|
|
|
|
|
30.0%
|
|
|
|
|
|
34.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
30 June 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
599.7
|
|
$
|
239.9
|
|
$
|
276.1
|
|
$
|
(49.9)
|
|
$
|
360.3
|
|
$
|
(49.8)
|
|
$
|
1,376.3
|
|
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
|
|
$
|
(40.3)
|
|
$
|
2,196.6
|
|
Adjusted EBITDA
margin
|
|
34.4%
|
|
|
29.6%
|
|
|
38.4%
|
|
|
|
|
|
27.0%
|
|
|
|
|
|
29.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
change
|
$
|
78.6
|
|
$
|
34.7
|
|
$
|
67.9
|
|
$
|
(3.1)
|
|
$
|
19.1
|
|
$
|
24.5
|
|
$
|
221.7
|
|
Adjusted EBITDA %
change
|
|
8%
|
|
|
8%
|
|
|
15%
|
|
|
(9)%
|
|
|
4%
|
|
|
61%
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin change
|
770bp
|
|
|
540bp
|
|
|
360bp
|
|
|
|
|
|
300bp
|
|
|
|
|
|
470bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL EXPENDITURES
We utilize a non-GAAP measure in the computation of capital
expenditures and include spending associated with facilities
accounted for as capital leases. 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.
Below is a reconciliation of capital expenditures on a GAAP
basis to a non-GAAP measure:
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
30 June
|
|
30 June
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
Capital expenditures
– GAAP basis
|
|
$
|
262.5
|
|
$
|
324.4
|
|
$
|
797.3
|
|
$
|
987.4
|
|
|
Capital lease
expenditures
|
|
|
6.0
|
|
|
31.8
|
|
|
24.6
|
|
|
79.0
|
|
|
Capital expenditures
– Non-GAAP basis
|
|
$
|
268.5
|
|
$
|
356.2
|
|
$
|
821.9
|
|
$
|
1,066.4
|
|
We expect capital expenditures for fiscal year 2016 to be
approximately $1,200.
RETURN ON CAPITAL EMPLOYED (ROCE)
Return on capital employed (ROCE) is calculated as earnings
after-tax divided by average total capital. Earnings after-tax is
defined as operating income and equity affiliates' income,
after-tax, at our effective tax rate. On a non-GAAP basis,
operating income and taxes have been adjusted for the impact of the
disclosed items detailed below. Total capital consists of total
debt, total equity, and redeemable noncontrolling interest less
assets of discontinued operations.
|
2016
|
|
2015
|
|
2014
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Q4
|
|
|
Q3
|
|
|
Q2
|
|
|
Q1
|
|
|
Q4
|
|
|
Q3
|
|
Operating
income
|
$
|
535.1
|
|
$
|
513.3
|
|
$
|
510.6
|
|
$
|
474.3
|
|
$
|
424.8
|
|
$
|
376.9
|
|
$
|
432.3
|
|
$
|
146.6
|
|
|
|
|
Equity affiliates'
income
|
|
42.4
|
|
|
32.5
|
|
|
33.7
|
|
|
36.0
|
|
|
42.4
|
|
|
33.0
|
|
|
43.1
|
|
|
39.7
|
|
|
|
|
Earnings Before
Tax—GAAP
|
$
|
577.5
|
|
$
|
545.8
|
|
$
|
544.3
|
|
$
|
510.3
|
|
$
|
467.2
|
|
$
|
409.9
|
|
$
|
475.4
|
|
$
|
186.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business separation
costs
|
|
9.5
|
|
|
7.4
|
|
|
12.0
|
|
|
7.5
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
Business
restructuring and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cost reduction
actions
|
|
14.2
|
|
|
8.6
|
|
|
-
|
|
|
61.7
|
|
|
58.2
|
|
|
55.4
|
|
|
32.4
|
|
|
12.7
|
|
|
|
|
Pension settlement
loss
|
|
1.0
|
|
|
2.6
|
|
|
-
|
|
|
7.0
|
|
|
1.6
|
|
|
12.6
|
|
|
-
|
|
|
5.5
|
|
|
|
|
Gain on previously
held
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(17.9)
|
|
|
-
|
|
|
|
|
equity
interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and
intangible asset
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
310.1
|
|
|
|
|
impairment
charge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on land
sales
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(33.6)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
Earnings Before
Tax—Non-GAAP
|
$
|
602.2
|
|
$
|
564.4
|
|
$
|
556.3
|
|
$
|
552.9
|
|
$
|
527.0
|
|
$
|
477.9
|
|
$
|
489.9
|
|
$
|
514.6
|
|
|
|
|
Taxes —
Non-GAAP
|
|
148.7
|
|
|
140.0
|
|
|
141.3
|
|
|
131.6
|
|
|
131.2
|
|
|
115.2
|
|
|
118.1
|
|
|
124.0
|
|
|
|
|
Earnings After
Tax—Non-GAAP
|
$
|
453.5
|
|
$
|
424.4
|
|
$
|
415.0
|
|
$
|
421.3
|
|
$
|
395.8
|
|
$
|
362.7
|
|
$
|
371.8
|
|
$
|
390.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
1,043.0
|
|
$
|
1,480.9
|
|
$
|
1,539.4
|
|
$
|
1,494.3
|
|
$
|
1,087.8
|
|
$
|
1,261.0
|
|
$
|
1,283.5
|
|
$
|
1,228.7
|
|
$
|
1,115.2
|
|
Current portion of
long-term debt
|
|
715.1
|
|
|
763.9
|
|
|
407.9
|
|
|
435.6
|
|
|
84.9
|
|
|
157.7
|
|
|
54.2
|
|
|
65.3
|
|
|
69.8
|
|
Long-term
debt
|
|
3,925.6
|
|
|
3,573.2
|
|
|
3,870.5
|
|
|
3,949.1
|
|
|
4,690.5
|
|
|
4,511.5
|
|
|
4,751.3
|
|
|
4,824.5
|
|
|
4,951.0
|
|
Total Debt
|
$
|
5,683.7
|
|
$
|
5,818.0
|
|
$
|
5,817.8
|
|
$
|
5,879.0
|
|
$
|
5,863.2
|
|
$
|
5,930.2
|
|
$
|
6,089.0
|
|
$
|
6,118.5
|
|
$
|
6,136.0
|
|
Total
Equity
|
$
|
7,180.2
|
|
$
|
7,053.1
|
|
$
|
7,499.0
|
|
$
|
7,381.1
|
|
$
|
7,731.3
|
|
$
|
7,476.3
|
|
$
|
7,503.3
|
|
$
|
7,521.4
|
|
$
|
7,856.2
|
|
Redeemable
Noncontrolling
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
277.9
|
|
|
280.0
|
|
|
288.7
|
|
|
287.2
|
|
|
341.4
|
|
Assets of
discontinued operations
|
|
(18.8)
|
|
|
(20.4)
|
|
|
(938.2)
|
|
|
(893.6)
|
|
|
(845.1)
|
|
|
(724.3)
|
|
|
(688.6)
|
|
|
(591.4)
|
|
|
(475.3)
|
|
Total
Capital
|
$
|
12,845.1
|
|
$
|
12,850.7
|
|
$
|
12,378.6
|
|
$
|
12,366.5
|
|
$
|
13,027.3
|
|
$
|
12,962.2
|
|
$
|
13,192.4
|
|
$
|
13,335.7
|
|
$
|
13,858.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings After
Tax—Non-GAAP
|
$
|
1,714.2
|
|
|
|
|
|
|
|
|
|
|
$
|
1,520.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Five-quarter average
total capital
|
|
12,693.6
|
|
|
|
|
|
|
|
|
|
|
|
13,275.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROCE—Non-GAAP
|
|
13.5%
|
|
|
|
|
|
|
|
|
|
|
|
11.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
200bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OUTLOOK
Guidance provided is on a non-GAAP continuing operations basis,
which excludes the impact of certain items that we believe are not
representative of our underlying business.
|
|
Diluted
EPS
|
|
|
|
Q4
|
|
|
Full Year
|
|
|
2015 GAAP
|
$
|
1.59
|
|
$
|
5.91
|
|
|
Business
restructuring and cost reduction actions
|
|
.25
|
|
|
.71
|
|
|
Pension settlement
loss
|
|
.02
|
|
|
.06
|
|
|
Business separation
costs
|
|
.03
|
|
|
.03
|
|
|
Gain on previously
held equity interest
|
|
-
|
|
|
(.05)
|
|
|
Gain on land
sales
|
|
(.13)
|
|
|
(.13)
|
|
|
Loss on early
retirement of debt
|
|
.07
|
|
|
.07
|
|
|
2015 Non-GAAP
Measure
|
$
|
1.83
|
|
$
|
6.60
|
|
|
2016 Non-GAAP
Outlook
|
|
1.91–2.01
|
|
|
7.45–7.55
|
|
|
Change
Non-GAAP
|
$
|
.08–.18
|
|
$
|
.85–.95
|
|
|
% Change
Non-GAAP
|
|
4%–10%
|
|
|
13%–14%
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
INCOME STATEMENTS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
|
|
30 June
|
|
|
30 June
|
|
|
(Millions of dollars,
except for share data)
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
Sales
|
$
|
2,434.4
|
|
|
$
|
2,470.2
|
|
|
$
|
7,061.4
|
|
|
$
|
7,445.5
|
|
|
Cost of
sales
|
|
1,639.3
|
|
|
|
1,715.2
|
|
|
|
4,754.0
|
|
|
|
5,243.1
|
|
|
Selling and
administrative
|
|
212.0
|
|
|
|
241.5
|
|
|
|
630.5
|
|
|
|
739.4
|
|
|
Research and
development
|
|
34.1
|
|
|
|
33.4
|
|
|
|
98.8
|
|
|
|
104.2
|
|
|
Business separation
costs
|
|
9.5
|
|
|
|
-
|
|
|
|
28.9
|
|
|
|
-
|
|
|
Business
restructuring and cost reduction actions
|
|
14.2
|
|
|
|
58.2
|
|
|
|
22.8
|
|
|
|
146.0
|
|
|
Pension settlement
loss
|
|
1.0
|
|
|
|
1.6
|
|
|
|
3.6
|
|
|
|
14.2
|
|
|
Gain on previously
held equity interest
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17.9
|
|
|
Other income
(expense), net
|
|
10.8
|
|
|
|
4.5
|
|
|
|
36.2
|
|
|
|
17.5
|
|
|
Operating
Income
|
|
535.1
|
|
|
|
424.8
|
|
|
|
1,559.0
|
|
|
|
1,234.0
|
|
|
Equity affiliates'
income
|
|
42.4
|
|
|
|
42.4
|
|
|
|
108.6
|
|
|
|
118.5
|
|
|
Interest
expense
|
|
35.0
|
|
|
|
28.2
|
|
|
|
82.9
|
|
|
|
80.7
|
|
|
Income From
Continuing Operations Before Taxes
|
|
542.5
|
|
|
|
439.0
|
|
|
|
1,584.7
|
|
|
|
1,271.8
|
|
|
Income tax
provision
|
|
179.5
|
|
|
|
104.1
|
|
|
|
447.9
|
|
|
|
298.9
|
|
|
Income from
Continuing Operations
|
|
363.0
|
|
|
|
334.9
|
|
|
|
1,136.8
|
|
|
|
972.9
|
|
|
Loss From
Discontinued Operations, net of tax
|
|
(8.9)
|
|
|
|
(1.7)
|
|
|
|
(876.2)
|
|
|
|
(5.3)
|
|
|
Net
Income
|
|
354.1
|
|
|
|
333.2
|
|
|
|
260.6
|
|
|
|
967.6
|
|
|
Less: Net Income
Attributable to Noncontrolling Interests
|
|
7.3
|
|
|
|
14.4
|
|
|
|
23.5
|
|
|
|
34.2
|
|
|
Net Income
Attributable to Air Products
|
$
|
346.8
|
|
|
$
|
318.8
|
|
|
$
|
237.1
|
|
|
$
|
933.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Air Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
355.7
|
|
|
$
|
320.5
|
|
|
$
|
1,113.3
|
|
|
$
|
938.7
|
|
|
Loss from
discontinued operations
|
|
(8.9)
|
|
|
|
(1.7)
|
|
|
|
(876.2)
|
|
|
|
(5.3)
|
|
|
Net Income
Attributable to Air Products
|
$
|
346.8
|
|
|
$
|
318.8
|
|
|
$
|
237.1
|
|
|
$
|
933.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Common Share Attributable to Air Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
1.64
|
|
|
$
|
1.49
|
|
|
$
|
5.15
|
|
|
$
|
4.37
|
|
|
Loss from
discontinued operations
|
|
(.04)
|
|
|
|
(.01)
|
|
|
|
(4.05)
|
|
|
|
(.02)
|
|
|
Net Income
Attributable to Air Products
|
$
|
1.60
|
|
|
$
|
1.48
|
|
|
$
|
1.10
|
|
|
$
|
4.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
Per Common Share Attributable to Air Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
$
|
1.63
|
|
|
$
|
1.48
|
|
|
$
|
5.11
|
|
|
$
|
4.32
|
|
|
Loss from
discontinued operations
|
|
(.04)
|
|
|
|
(.01)
|
|
|
|
(4.02)
|
|
|
|
(.02)
|
|
|
Net Income
Attributable to Air Products
|
$
|
1.59
|
|
|
$
|
1.47
|
|
|
$
|
1.09
|
|
|
$
|
4.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Common Shares — Basic (in millions)
|
|
216.6
|
|
|
|
215.2
|
|
|
|
216.1
|
|
|
|
214.8
|
|
|
Weighted Average
Common Shares — Diluted (in millions)
|
|
218.5
|
|
|
|
217.4
|
|
|
|
218.0
|
|
|
|
217.2
|
|
|
Dividends Declared
Per Common Share — Cash
|
$
|
.86
|
|
|
$
|
.81
|
|
|
$
|
2.53
|
|
|
$
|
2.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data from
Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
230.6
|
|
|
$
|
233.0
|
|
|
$
|
695.4
|
|
|
$
|
701.8
|
|
|
|
Capital expenditures
on a Non-GAAP basis
|
|
268.5
|
|
|
|
356.2
|
|
|
|
821.9
|
|
|
|
1,066.4
|
|
|
|
|
(see page 9 for
reconciliation)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
30 June
|
30
September
|
|
(Millions of
dollars)
|
|
2016
|
|
|
2015
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash
items
|
|
$
|
514.8
|
|
|
$
|
206.4
|
|
|
Trade receivables,
net
|
|
|
1,563.2
|
|
|
|
1,406.2
|
|
|
Inventories
|
|
|
611.1
|
|
|
|
657.8
|
|
|
Contracts in
progress, less progress billings
|
|
|
110.9
|
|
|
|
110.8
|
|
|
Prepaid
expenses
|
|
|
80.3
|
|
|
|
67.0
|
|
|
Other receivables and
current assets
|
|
|
479.7
|
|
|
|
343.5
|
|
|
Current assets of
discontinued operations
|
|
|
18.8
|
|
|
|
1.8
|
|
|
Total Current
Assets
|
|
|
3,378.8
|
|
|
|
2,793.5
|
|
|
Investment in net
assets of and advances to equity affiliates
|
|
|
1,270.4
|
|
|
|
1,265.7
|
|
|
Plant and equipment,
at cost
|
|
|
19,967.1
|
|
|
|
19,462.8
|
|
|
Less: accumulated
depreciation
|
|
|
11,168.5
|
|
|
|
10,717.7
|
|
|
Plant and equipment,
net
|
|
|
8,798.6
|
|
|
|
8,745.1
|
|
|
Goodwill,
net
|
|
|
1,135.2
|
|
|
|
1,131.3
|
|
|
Intangible assets,
net
|
|
|
491.2
|
|
|
|
508.3
|
|
|
Noncurrent capital
lease receivables
|
|
|
1,245.6
|
|
|
|
1,350.2
|
|
|
Other noncurrent
assets
|
|
|
763.7
|
|
|
|
648.6
|
|
|
Noncurrent assets of
discontinued operations
|
|
|
-
|
|
|
|
891.8
|
|
|
Total Noncurrent
Assets
|
|
|
13,704.7
|
|
|
|
14,541.0
|
|
|
Total
Assets
|
|
$
|
17,083.5
|
|
|
$
|
17,334.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
|
Payables and accrued
liabilities
|
|
$
|
1,778.0
|
|
|
$
|
1,641.7
|
|
|
Accrued income
taxes
|
|
|
101.4
|
|
|
|
55.8
|
|
|
Short-term
borrowings
|
|
|
1,043.0
|
|
|
|
1,494.3
|
|
|
Current portion of
long-term debt
|
|
|
715.1
|
|
|
|
435.6
|
|
|
Current liabilities
of discontinued operations
|
|
|
21.4
|
|
|
|
17.0
|
|
|
Total Current
Liabilities
|
|
|
3,658.9
|
|
|
|
3,644.4
|
|
|
Long-term
debt
|
|
|
3,925.6
|
|
|
|
3,949.1
|
|
|
Other noncurrent
liabilities
|
|
|
1,414.2
|
|
|
|
1,554.0
|
|
|
Deferred income
taxes
|
|
|
904.6
|
|
|
|
803.4
|
|
|
Noncurrent
liabilities of discontinued operations
|
|
|
-
|
|
|
|
2.5
|
|
|
Total Noncurrent
Liabilities
|
|
|
6,244.4
|
|
|
|
6,309.0
|
|
|
Total
Liabilities
|
|
|
9,903.3
|
|
|
|
9,953.4
|
|
|
Air Products
Shareholders' Equity
|
|
|
7,045.4
|
|
|
|
7,249.0
|
|
|
Noncontrolling
Interests
|
|
|
134.8
|
|
|
|
132.1
|
|
|
Total
Equity
|
|
|
7,180.2
|
|
|
|
7,381.1
|
|
|
Total Liabilities
and Equity
|
|
$
|
17,083.5
|
|
|
$
|
17,334.5
|
|
|
|
|
|
|
|
|
|
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
Nine Months
Ended
|
|
|
|
|
30 June
|
|
|
(Millions of
dollars)
|
2016
|
|
|
2015
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net income
|
$
|
260.6
|
|
|
$
|
967.6
|
|
|
Less: Net income
attributable to noncontrolling interests
|
|
23.5
|
|
|
|
34.2
|
|
|
Net income
attributable to Air Products
|
|
237.1
|
|
|
|
933.4
|
|
|
Loss from
discontinued operations
|
|
876.2
|
|
|
|
5.3
|
|
|
Income from
continuing operations attributable to Air Products
|
|
1,113.3
|
|
|
|
938.7
|
|
|
Adjustments to
reconcile income to cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
695.4
|
|
|
|
701.8
|
|
|
|
Deferred income
taxes
|
|
80.4
|
|
|
|
18.5
|
|
|
|
Gain on previously
held equity interest
|
|
-
|
|
|
|
(17.9)
|
|
|
|
Undistributed
earnings of unconsolidated affiliates
|
|
(34.9)
|
|
|
|
(74.6)
|
|
|
|
Share-based
compensation
|
|
28.6
|
|
|
|
37.3
|
|
|
|
Noncurrent capital
lease receivables
|
|
61.5
|
|
|
|
(3.9)
|
|
|
|
Write-down of
long-lived assets associated with restructuring
|
|
-
|
|
|
|
27.8
|
|
|
|
Other
adjustments
|
|
83.6
|
|
|
|
(63.9)
|
|
|
Working capital
changes that provided (used) cash, excluding effects of
acquisitions and divestitures:
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
|
(188.4)
|
|
|
|
(23.2)
|
|
|
|
Inventories
|
|
39.8
|
|
|
|
2.4
|
|
|
|
Contracts in
progress, less progress billings
|
|
(7.4)
|
|
|
|
(.1)
|
|
|
|
Other
receivables
|
|
(74.1)
|
|
|
|
(52.3)
|
|
|
|
Payables and accrued
liabilities
|
|
32.6
|
|
|
|
189.7
|
|
|
|
Other working
capital
|
|
3.9
|
|
|
|
(5.8)
|
|
|
Cash Provided by
Operating Activities
|
|
1,834.3
|
|
|
|
1,674.5
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Additions to plant
and equipment
|
|
(797.3)
|
|
|
|
(948.6)
|
|
|
Acquisitions, less
cash acquired
|
|
-
|
|
|
|
(34.5)
|
|
|
Proceeds from sale of
assets and investments
|
|
76.6
|
|
|
|
15.1
|
|
|
Other investing
activities
|
|
(1.7)
|
|
|
|
(4.9)
|
|
|
Cash Used for
Investing Activities
|
|
(722.4)
|
|
|
|
(972.9)
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Long-term debt
proceeds
|
|
386.9
|
|
|
|
338.0
|
|
|
Payments on long-term
debt
|
|
(126.3)
|
|
|
|
(559.2)
|
|
|
Net increase
(decrease) in commercial paper and short-term borrowings
|
|
(434.8)
|
|
|
|
122.0
|
|
|
Dividends paid to
shareholders
|
|
(534.9)
|
|
|
|
(503.4)
|
|
|
Proceeds from stock
option exercises
|
|
76.2
|
|
|
|
92.5
|
|
|
Excess tax benefit
from share-based compensation
|
|
16.5
|
|
|
|
26.7
|
|
|
Other financing
activities
|
|
(34.4)
|
|
|
|
(45.3)
|
|
|
Cash Used for
Financing Activities
|
|
(650.8)
|
|
|
|
(528.7)
|
|
|
Discontinued
Operations
|
|
|
|
|
|
|
|
|
Cash used for
operating activities
|
|
(59.4)
|
|
|
|
(16.6)
|
|
|
Cash used for
investing activities
|
|
(97.0)
|
|
|
|
(266.1)
|
|
|
Cash provided by
financing activities
|
|
-
|
|
|
|
-
|
|
|
Cash Used for
Discontinued Operations
|
|
(156.4)
|
|
|
|
(282.7)
|
|
|
Effect of Exchange
Rate Changes on Cash
|
|
3.7
|
|
|
|
(11.5)
|
|
|
Increase (Decrease)
in Cash and Cash Items
|
|
308.4
|
|
|
|
(121.3)
|
|
|
Cash and Cash Items –
Beginning of Year
|
|
206.4
|
|
|
|
336.6
|
|
|
Cash and Cash
Items – End of Period
|
$
|
514.8
|
|
|
$
|
215.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash
Flow Information
|
|
|
|
|
|
|
|
|
Cash paid for taxes
(net of cash refunds)
|
$
|
330.1
|
|
|
$
|
261.9
|
|
|
|
|
|
|
|
|
|
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
|
SUMMARY BY
BUSINESS SEGMENTS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
|
|
Industrial
|
|
Industrial
|
|
Industrial
|
|
|
|
|
|
|
|
|
|
|
|
Gases–
|
|
Gases–
|
|
Gases–
|
|
Gases–
|
|
Materials
|
|
Corporate
|
|
Segment
|
|
(Millions of
dollars)
|
Americas
|
|
EMEA
|
|
Asia
|
|
Global
|
|
Technologies
|
|
and other
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
30 June 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
832.2
|
|
$
|
427.4
|
|
$
|
447.6
|
|
$
|
150.8
|
|
$
|
520.0
|
|
$
|
56.4
|
|
$
|
2,434.4
|
|
Operating income
(loss)
|
|
234.5
|
|
|
103.4
|
|
|
118.1
|
|
|
(13.9)
|
|
|
135.2
|
|
|
(17.5)
|
|
|
559.8
|
|
Depreciation and
amortization
|
|
111.9
|
|
|
45.1
|
|
|
49.2
|
|
|
2.0
|
|
|
18.6
|
|
|
3.8
|
|
|
230.6
|
|
Equity affiliates'
income (loss)
|
|
15.9
|
|
|
11.3
|
|
|
14.8
|
|
|
(.1)
|
|
|
.5
|
|
|
-
|
|
|
42.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
(17.8)
|
|
|
484.6
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
30 June 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
2,466.2
|
|
$
|
1,286.0
|
|
$
|
1,267.2
|
|
$
|
341.7
|
|
$
|
1,504.3
|
|
$
|
196.0
|
|
$
|
7,061.4
|
|
Operating income
(loss)
|
|
670.5
|
|
|
284.5
|
|
|
339.2
|
|
|
(44.1)
|
|
|
391.7
|
|
|
(27.5)
|
|
|
1,614.3
|
|
Depreciation and
amortization
|
|
330.1
|
|
|
140.1
|
|
|
149.4
|
|
|
5.9
|
|
|
58.2
|
|
|
11.7
|
|
|
695.4
|
|
Equity affiliates'
income (loss)
|
|
38.1
|
|
|
26.1
|
|
|
43.9
|
|
|
(.6)
|
|
|
1.1
|
|
|
-
|
|
|
108.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
(49.8)
|
|
|
1,376.3
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 June
2016
|
$
|
5,932.0
|
|
$
|
3,213.9
|
|
$
|
4,194.2
|
|
$
|
394.6
|
|
$
|
1,732.6
|
|
$
|
1,597.4
|
|
$
|
17,064.7
|
|
30 September
2015
|
|
5,774.9
|
|
|
3,323.9
|
|
|
4,154.0
|
|
|
370.5
|
|
|
1,741.9
|
|
|
1,075.7
|
|
|
16,440.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Below is a
reconciliation of segment total operating income to consolidated
operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
|
30 June
|
|
|
30 June
|
|
Operating
Income
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Segment
total
|
$
|
559.8
|
|
$
|
484.6
|
|
$
|
1,614.3
|
|
$
|
1,376.3
|
|
Business separation
costs
|
|
(9.5)
|
|
|
-
|
|
|
(28.9)
|
|
|
-
|
|
Business
restructuring and cost reduction actions
|
|
(14.2)
|
|
|
(58.2)
|
|
|
(22.8)
|
|
|
(146.0)
|
|
Pension settlement
loss
|
|
(1.0)
|
|
|
(1.6)
|
|
|
(3.6)
|
|
|
(14.2)
|
|
Gain on previously
held equity interest
|
|
-
|
|
|
-
|
|
|
-
|
|
|
17.9
|
|
Consolidated
Total
|
$
|
535.1
|
|
$
|
424.8
|
|
$
|
1,559.0
|
|
$
|
1,234.0
|
|
|
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Below is a
reconciliation of segment total assets to consolidated total
assets:
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30 June
|
30
September
|
|
Total
Assets
|
2016
|
2015
|
|
Segment
total
|
$
|
17,064.7
|
|
$
|
16,440.9
|
|
Discontinued
operations
|
|
18.8
|
|
|
893.6
|
|
Consolidated
Total
|
$
|
17,083.5
|
|
$
|
17,334.5
|
|
|
|
|
|
|
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|
AIR PRODUCTS AND CHEMICALS, INC. and
Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(Millions of dollars, unless otherwise indicated)
1. MATERIALS TECHNOLOGIES SEPARATION
On 16 September 2015, the Company
announced plans to separate its Materials Technologies business,
which contains two divisions, Electronic Materials (EMD) and
Performance Materials (PMD), into an independent publicly traded
company and distribute to Air Products shareholders all of the
shares of the new public company in a tax-free distribution (a
"spin-off"). Versum Materials, LLC, or Versum, was formed as the
new company to hold the Materials Technologies business in
November 2015 and is currently a
wholly owned subsidiary of the Company.
On 6 May 2016, the Company entered
into a definitive agreement to sell certain subsidiaries and assets
comprising the Performance Materials division to Evonik Industries
AG for $3.8 billion in cash and the
assumption of certain liabilities. As a result, the Company now
intends to include only the Electronic Materials division in the
Versum spin-off. The Company is targeting to complete the spin‑off
in calendar year 2016. Versum will be converted from a limited
liability company to a Delaware
corporation (Versum Materials, Inc.) prior to spin-off.
For the three and nine months ended 30
June 2016, we incurred separation costs of $9.5 ($54.2
including tax impact, or $.25 per
share) and $28.9 ($75.1 including tax impact, or $.34 per share), respectively, primarily related
to legal and other advisory fees. These fees are reflected on the
consolidated income statements as "Business separation costs." The
tax impact includes an income tax expense of $45.7 resulting from a dividend declared during
the third quarter to repatriate $443.8 from a subsidiary in South Korea to the U.S. Previously, most of
these foreign earnings were considered to be indefinitely
reinvested.
2. DISCONTINUED OPERATIONS
On 29 March 2016, the Board of
Directors approved the Company's exit of its Energy-from-Waste
(EfW) business. As a result, efforts to start up and operate
its two EfW projects located in Tees Valley, United Kingdom, have been discontinued.
The decision to exit the business and stop development of the
projects was based on continued difficulties encountered and the
Company's conclusion, based on testing and analysis completed
during the second quarter of fiscal year 2016, that significant
additional time and resources would be required to make the
projects operational. In addition, the decision allows the Company
to execute its strategy of focusing resources on its core
Industrial Gases business. As a result, the EfW segment has been
presented as a discontinued operation. Prior year EfW business
segment information has been reclassified to conform to current
year presentation. During the second quarter of fiscal year 2016, a
loss on disposal of $945.7
($846.6 after-tax) was recorded,
primarily to write down assets to their estimated net realizable
value and record a liability for plant disposition costs. Income
tax benefits related only to one of the projects, as the other did
not qualify for a local tax deduction. The loss from discontinued
operations, net of tax during the three months ended 30 June 2016 and 2015 primarily relates to land
leases, commercial and administrative costs, and costs incurred for
ongoing project exit activities.
3. COST REDUCTION ACTIONS
For the three and nine months ended 30
June 2016, we recognized an expense of $14.2 ($9.3
after-tax, or $.04 per share) and
$22.8 ($16.4 after-tax, or $.08 per share), respectively, for severance and
other benefits related to cost reduction actions. During the first
nine months of fiscal year 2016, the cost reduction actions
resulted in the elimination of approximately 500 positions. The
expenses related primarily to the Industrial Gases – Americas and
the Industrial Gases – EMEA segments.
4. PENSION SETTLEMENT
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 the retirement date. Pension settlements
are 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. For the three and nine months ended
30 June 2016, we recognized a pension settlement charge of
$1.0 ($.6 after-tax) and $3.6 ($2.2
after-tax, or $.01 per share). This
settlement accelerated the recognition of a portion of actuarial
losses deferred in accumulated other comprehensive loss. We expect
that additional settlement losses will be recognized during the
fourth quarter.
5. BALANCE SHEET CLASSIFICATION OF DEFERRED TAXES
In November 2015, the Financial
Accounting Standards Board (FASB) issued guidance to simplify the
presentation of deferred income taxes by requiring that all
deferred tax liabilities and assets be classified as noncurrent on
the balance sheet. As of the first quarter of fiscal year 2016, we
adopted this guidance on a retrospective basis. Accordingly, prior
year amounts have been reclassified to conform to the current year
presentation. The guidance, which did not change the existing
requirement to net deferred tax assets and liabilities within a
jurisdiction, resulted in a reclassification adjustment that
increased noncurrent deferred tax assets by $13.7 and decreased noncurrent deferred tax
liabilities by $99.9 as of
30 September 2015.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/air-products-reports-strong-fiscal-2016-third-quarter-results-300305410.html
SOURCE Air Products