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
2016
Form 10-K for a description of major accounting policies. There have been no significant changes to these accounting policies during the first
three
months of fiscal year
2017
other than those detailed in Note
2
,
New Accounting Guidance
. Certain prior year information has been reclassified to conform to the fiscal year
2017
presentation.
The results of our previous Material Technologies segment, which contained the Electronic Materials Division (EMD) and Performance Materials Division (PMD), and the former Energy-from-Waste segment have been presented as discontinued operations. Refer to Note 3, Discontinued Operations, for additional details. The results of operations and cash flows of these businesses have been removed from the results of continuing operations and segment results for all periods presented. The assets and liabilities of the discontinued operations have been reclassified and are segregated in the consolidated balance sheets. The comprehensive income related to these businesses has not been segregated and is included in the Consolidated Comprehensive Income Statement for all periods presented. The Notes to the interim Consolidated Financial Statements, unless otherwise indicated, are on a continuing operations basis.
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 (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 2017
Consolidation Analysis
In February 2015, the Financial Accounting Standards Board (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. We adopted this guidance in the first quarter of fiscal year 2017. This guidance did not have a significant impact on our consolidated financial statements upon adoption.
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. In addition, guidance was issued to allow for a policy election on the presentation of debt issuance costs associated with a line-of-credit arrangement, regardless of whether there are any outstanding borrowings. We adopted the guidance during the first quarter of fiscal year 2017 on a retrospective basis. The guidance resulted in a reclassification adjustment that decreased other noncurrent assets by
$17.0
with a corresponding decrease to long-term debt as of 30 September 2016. We will continue to present debt issuance costs associated with a line-of-credit arrangement as a deferred asset, regardless of whether there are any outstanding borrowings.
Adoption of this guidance also impacted the presentation of debt issuance costs related to our discontinued operations. As of 30 September 2016, other noncurrent assets and long-term debt balances of discontinued operations were both reduced by
$9.6
.
Share-Based Compensation
In March 2016, the FASB issued an update to simplify the accounting for employee share-based payments, including the income tax impacts, the classification on the statement of cash flows, and forfeitures. We elected to early adopt this guidance in the first quarter of fiscal year 2017. The new guidance requires excess tax benefits and deficiencies to be recognized in the income statement rather than in additional paid-in capital on the balance sheet. As a result of applying this change prospectively, we recognized
$7.0
of excess tax benefits in our provision for income taxes during the first quarter of fiscal year 2017. In addition, adoption of the new guidance resulted in a
$8.8
cumulative-effect adjustment to retained earnings as of 1 October 2016 to recognize deferred taxes for U.S. state net operating loss and other carryforwards attributable to excess tax benefits. We retroactively applied the guidance which requires presentation of excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. Cash paid on employees’ behalf related to shares withheld for tax purposes continues to be classified as a financing activity. Forfeitures have not been significant historically. We have elected to account for forfeitures as they occur, rather than to estimate them.
Definition of a Business
In January 2017, the FASB issued guidance that clarifies the definition of a business in order to assist in determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the new guidance, fewer transactions are expected to be accounted for as business combinations. We elected to early adopt this guidance prospectively beginning in the first quarter of fiscal year 2017. This guidance did not have a significant impact on our consolidated financial statements upon adoption.
New Accounting Guidance to be Implemented
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. We have the option to adopt the standard in either fiscal year 2018 or 2019 either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We intend to adopt this guidance in fiscal year 2019. We are currently evaluating the adoption alternatives allowed by the new standard and the impact the standard is expected to have on our consolidated financial statements. As the new standard will supersede substantially all existing revenue guidance affecting us under GAAP, it could impact the timing of revenue and cost recognition across all of our business segments, in addition to our business processes and information technology systems. As a result, our evaluation of the effect of the new standard will extend over future periods.
Leases
In February 2016, the FASB issued guidance which requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases, including operating leases, with a term in excess of 12 months. The guidance also expands the quantitative and qualitative disclosure requirements. The guidance is effective in fiscal year 2020, with early adoption permitted, and must be applied using a modified retrospective approach. We are currently evaluating the impact of adopting this new guidance on the consolidated financial statements, and we have started the assessment process by evaluating the population of leases under the revised definition of what qualifies as a leased asset. The Company is the lessee under various agreements for real estate, distribution equipment, aircraft, and vehicles that are currently accounted for as operating leases. The new guidance will require the Company to record operating leases on the balance sheet with a right-of-use asset and corresponding liability for future payment obligations.
Derivative Contract Novations
In March 2016, the FASB issued guidance to clarify that a change in the counterparty to a derivative instrument that has been designated as a hedging instrument does not, in and of itself, require re-designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. This guidance is effective in fiscal year 2018, with early adoption permitted. We do not expect adoption of this guidance to have a significant impact on our consolidated financial statements.
Credit Losses on Financial Instruments
In June 2016, the FASB issued an update on the measurement of credit losses, which requires measurement and recognition of expected credit losses for financial assets, including trade receivables and capital lease receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The method to determine a loss is different from the existing guidance, which requires a credit loss to be recognized when it is probable. The guidance is effective beginning fiscal year 2021, with early adoption permitted beginning fiscal year 2020. We are currently evaluating the impact this update will have on our consolidated financial statements.
Cash Flow Statement Classification
In August 2016, the FASB issued guidance to reduce diversity in practice on how certain cash receipts and cash payments are classified in the statement of cash flows. The guidance is effective beginning fiscal year 2019, with early adoption permitted, and should be applied retrospectively. We are currently evaluating the impact of adopting this new guidance on the consolidated financial statements.
Intra-Entity Asset Transfers
In October 2016, the FASB issued guidance on the accounting for the income tax effects of intra-entity transfers of assets other than inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. Under the new guidance, the income tax consequences of an intra-entity asset transfer are recognized when the transfer occurs. The guidance is effective beginning in fiscal year 2019, with early adoption permitted as of the beginning of an annual reporting period. The guidance must be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the date of adoption. We are currently evaluating the impact this guidance will have on our consolidated financial statements and plan to adopt the guidance in fiscal year 2019.
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3.
|
DISCONTINUED OPERATIONS
|
Materials Technologies
On 16 September 2015, we announced plans to separate our Materials Technologies business, which contained two divisions, Electronic Materials Division (EMD) and Performance Materials Division (PMD). As further discussed below, we completed the separation of EMD through the spin-off of Versum on
1 October 2016
. In addition, we completed the sale of PMD to Evonik Industries AG on
3 January 2017
. As a result, these divisions are reflected in our consolidated financial statements as discontinued operations for all periods presented.
Spin-off of Electronic Materials
On 1 October 2016 (the distribution date), Air Products completed the spin-off of Versum into a separate and independent public company by way of a distribution to the Air Products’ stockholders of all of the then issued and outstanding shares of common stock of Versum on the basis of
one
share of Versum common stock for every
two
shares of Air Products’ common stock held as of the close of business on 21 September 2016 (the record date for the distribution). Fractional shares of Versum common stock were not distributed to Air Products common stockholders. Air Products’ stockholders received cash in lieu of fractional shares. As a result of the distribution, Versum Materials, Inc. is now an independent public company and its common stock is listed under the symbol “VSM” on the New York Stock Exchange.
In connection with the spin-off, we entered into various agreements necessary to effect the spin-off and to govern the ongoing relationships between Air Products and Versum after the separation, including a transition services agreement by which we provide certain transition services to Versum, generally for no longer than
12
to
24
months. Balances due to/from Versum as of 31 December 2016 primarily related to the transition services agreement and were immaterial. In addition, Seifi Ghasemi, chairman, president and chief executive officer of Air Products, is serving as non-executive chairman of the Versum Board of Directors.
Sale of Performance Materials (Subsequent Event)
On 3 January 2017, we completed the sale of PMD to Evonik Industries AG for $
3.8
billion in cash subject to customary post-closing adjustments, including working capital.
Energy-from-Waste
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 the two EfW projects located in Tees Valley, United Kingdom, were 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. Since that time, the EfW segment has been presented as a discontinued operation. During the second quarter of fiscal year 2016, a loss of
$945.7
(
$846.6
after-tax) was recorded to write down plant assets to their estimated net realizable value and record a liability for plant disposition and other costs. Income tax benefits related only to one of the projects, as the other did not qualify for a local tax deduction.
During the first quarter of fiscal year 2017, we determined that it is unlikely for a buyer to assume the remaining assets and contract obligations, including the related land lease. As a result, we recorded an additional loss of $
59.3
($
47.1
after-tax), of which
$53.0
was recorded primarily for land lease obligations and
$6.3
was recorded to update our estimate of the net
realizable value of the plant assets as of
31 December 2016
. We may incur additional exit costs in future periods related to other outstanding commitments.
The following table summarizes the carrying amount of the accrual for our actions to dispose of the EfW business at
31 December 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
Actions
|
|
Contract
Actions/Other
|
|
Total
|
|
Loss on disposal of business
|
|
$
|
913.5
|
|
|
$
|
32.2
|
|
|
$
|
945.7
|
|
|
Noncash expenses
|
|
(913.5
|
)
|
|
—
|
|
|
(913.5
|
)
|
|
Cash expenditures
|
|
—
|
|
|
(18.6
|
)
|
|
(18.6
|
)
|
|
Currency translation adjustment
|
|
—
|
|
|
(1.4
|
)
|
|
(1.4
|
)
|
|
30 September 2016
|
|
$
|
—
|
|
|
$
|
12.2
|
|
|
$
|
12.2
|
|
|
Loss on disposal of business
|
|
6.3
|
|
|
53.0
|
|
|
59.3
|
|
|
Noncash expenses
|
|
(6.3
|
)
|
|
—
|
|
|
(6.3
|
)
|
|
31 December 2016
|
|
$
|
—
|
|
|
$
|
65.2
|
|
|
$
|
65.2
|
|
The loss on disposal was recorded as a component of discontinued operations. Of the remaining accrual, approximately $
60
is included in other noncurrent liabilities of continuing operations and primarily relates to land leases and $
5
is included in current liabilities of discontinued operations.
The following table details the businesses and major line items that comprise income from discontinued operations, net of tax, on the consolidated income statements for the three months ended 31 December 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
31 December 2016
|
|
|
|
|
Total
|
|
|
Performance
|
Energy-
|
Discontinued
|
|
|
Materials
|
from-Waste
(A)
|
Operations
|
|
Sales
|
$
|
254.8
|
|
$
|
—
|
|
$
|
254.8
|
|
|
Cost of sales
|
179.0
|
|
—
|
|
179.0
|
|
|
Selling and administrative
|
20.4
|
|
—
|
|
20.4
|
|
|
Research and development
|
5.1
|
|
—
|
|
5.1
|
|
|
Other income (expense), net
|
(.4
|
)
|
(6.5
|
)
|
(6.9
|
)
|
|
Operating Income (Loss)
|
49.9
|
|
(6.5
|
)
|
43.4
|
|
|
Equity affiliates’ income
|
.3
|
|
—
|
|
.3
|
|
|
Income (Loss) Before Taxes
|
50.2
|
|
(6.5
|
)
|
43.7
|
|
|
Income tax provision
(B)
|
(50.5
|
)
|
(1.1
|
)
|
(51.6
|
)
|
|
Income (Loss) From Operations of Discontinued Operations, net of tax
|
100.7
|
|
(5.4
|
)
|
95.3
|
|
|
Loss on Disposal, net of tax
|
—
|
|
(47.1
|
)
|
(47.1
|
)
|
|
Income (Loss) from Discontinued Operations, net of tax
|
$
|
100.7
|
|
$
|
(52.5
|
)
|
$
|
48.2
|
|
|
|
|
|
(A)
|
The loss from operations of discontinued operations for EfW primarily relates to land leases, administrative costs, and costs incurred for ongoing project exit activities.
|
|
|
|
|
(B)
|
As a result of the expected gain on sale of PMD that closed in the second quarter of 2017, we released valuation allowances related to capital loss and net operating loss carryforwards that favorably impacted our income tax provision within discontinued operations by approximately $
66
during the first quarter of 2017.
|
The following table details the businesses and major line items that comprise income from discontinued operations, net of tax on the consolidated income statements for the three months ended 31 December 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
31 December 2015
|
|
|
|
|
|
Total
|
|
|
Electronic
|
Performance
|
Energy-
|
Discontinued
|
|
|
Materials
|
Materials
|
from-Waste
(A)
|
Operations
|
|
Sales
|
$
|
242.6
|
|
$
|
246.9
|
|
$
|
—
|
|
$
|
489.5
|
|
|
Cost of sales
|
127.3
|
|
172.6
|
|
—
|
|
299.9
|
|
|
Selling and administrative
|
18.4
|
|
19.0
|
|
—
|
|
37.4
|
|
|
Research and development
|
10.1
|
|
5.0
|
|
—
|
|
15.1
|
|
|
Other income (expense), net
|
2.2
|
|
(1.2
|
)
|
(17.6
|
)
|
(16.6
|
)
|
|
Operating Income (Loss)
|
89.0
|
|
49.1
|
|
(17.6
|
)
|
120.5
|
|
|
Equity affiliates’ income
|
.2
|
|
.2
|
|
—
|
|
.4
|
|
|
Income (Loss) Before Taxes
(B)
|
89.2
|
|
49.3
|
|
(17.6
|
)
|
120.9
|
|
|
Income tax provision
|
24.9
|
|
14.5
|
|
(3.3
|
)
|
36.1
|
|
|
Income (Loss) from Operations of Discontinued Operations, net of tax
|
64.3
|
|
34.8
|
|
(14.3
|
)
|
84.8
|
|
|
Net Income Attributable to Noncontrolling Interests of Discontinued Operations
|
2.1
|
|
—
|
|
—
|
|
2.1
|
|
|
Net Income (Loss) From Discontinued Operations, net of tax
|
$
|
62.2
|
|
$
|
34.8
|
|
$
|
(14.3
|
)
|
$
|
82.7
|
|
|
|
|
|
(A)
|
The loss from operations of discontinued operations for EfW primarily relates to project suspension costs, land leases, and administrative costs.
|
|
|
|
|
(B)
|
For the
three
months ended
31 December 2015
, income before taxes from operations of discontinued operations attributable to Air Products was $
118.4
.
|
The following table details the major line items that comprise total assets and total liabilities of discontinued operations on the consolidated balance sheets as of 31 December 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2016
|
|
|
|
|
Total
|
|
|
Performance
|
Energy-
|
Discontinued
|
|
|
Materials
|
from-Waste
|
Operations
|
|
Assets
|
|
|
|
|
Current Assets
|
|
|
|
|
Cash and cash items
|
$
|
11.3
|
|
$
|
—
|
|
$
|
11.3
|
|
|
Trade receivables, net
|
149.5
|
|
—
|
|
149.5
|
|
|
Inventories
|
222.2
|
|
—
|
|
222.2
|
|
|
Plant and equipment, net
|
306.8
|
|
11.0
|
|
317.8
|
|
|
Goodwill, net
|
122.4
|
|
—
|
|
122.4
|
|
|
Intangible assets, net
|
23.1
|
|
—
|
|
23.1
|
|
|
Other receivables and current assets
|
12.5
|
|
1.4
|
|
13.9
|
|
|
Total Current Assets
|
847.8
|
|
12.4
|
|
860.2
|
|
|
Total Assets
|
$
|
847.8
|
|
$
|
12.4
|
|
$
|
860.2
|
|
|
Liabilities
|
|
|
|
|
Current Liabilities
|
|
|
|
|
Payables and accrued liabilities
|
$
|
59.3
|
|
$
|
10.9
|
|
$
|
70.2
|
|
|
Accrued income taxes
|
11.2
|
|
—
|
|
11.2
|
|
|
Other current liabilities
|
7.8
|
|
—
|
|
7.8
|
|
|
Total Current Liabilities
|
78.3
|
|
10.9
|
|
89.2
|
|
|
Total Liabilities
|
$
|
78.3
|
|
$
|
10.9
|
|
$
|
89.2
|
|
The following table details the major line items that comprise total assets and total liabilities of discontinued operations on the consolidated balance sheets as of 30 September 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 September 2016
|
|
|
|
|
|
Total
|
|
|
Electronic
|
Performance
|
Energy-
|
Discontinued
|
|
|
Materials
|
Materials
|
from-Waste
|
Operations
|
|
Assets
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
Cash and cash items
|
$
|
170.6
|
|
$
|
37.5
|
|
$
|
—
|
|
$
|
208.1
|
|
|
Trade receivables, net
|
134.7
|
|
159.0
|
|
—
|
|
293.7
|
|
|
Inventories
|
138.1
|
|
226.8
|
|
—
|
|
364.9
|
|
|
Plant and equipment, net
|
—
|
|
—
|
|
18.2
|
|
18.2
|
|
|
Other receivables and current assets
|
34.5
|
|
5.6
|
|
1.2
|
|
41.3
|
|
|
Total Current Assets
|
477.9
|
|
428.9
|
|
19.4
|
|
926.2
|
|
|
Plant and equipment, net
|
296.5
|
|
296.5
|
|
—
|
|
593.0
|
|
|
Goodwill, net
|
180.0
|
|
125.0
|
|
—
|
|
305.0
|
|
|
Intangible assets, net
|
75.1
|
|
25.0
|
|
—
|
|
100.1
|
|
|
Other noncurrent assets
|
37.5
|
|
6.7
|
|
—
|
|
44.2
|
|
|
Total Noncurrent Assets
|
589.1
|
|
453.2
|
|
—
|
|
1,042.3
|
|
|
Total Assets
|
$
|
1,067.0
|
|
$
|
882.1
|
|
$
|
19.4
|
|
$
|
1,968.5
|
|
|
Liabilities
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
Payables and accrued liabilities
|
$
|
85.8
|
|
$
|
72.5
|
|
$
|
19.0
|
|
$
|
177.3
|
|
|
Accrued income taxes
|
22.7
|
|
6.0
|
|
—
|
|
28.7
|
|
|
Current portion of long-term debt
|
5.8
|
|
—
|
|
—
|
|
5.8
|
|
|
Total Current Liabilities
|
114.3
|
|
78.5
|
|
19.0
|
|
211.8
|
|
|
Long-term debt
|
981.8
|
|
—
|
|
—
|
|
981.8
|
|
|
Deferred income taxes
|
50.3
|
|
6.4
|
|
—
|
|
56.7
|
|
|
Other noncurrent liabilities
|
47.4
|
|
9.6
|
|
—
|
|
57.0
|
|
|
Total Noncurrent Liabilities
|
1,079.5
|
|
16.0
|
|
—
|
|
1,095.5
|
|
|
Total Liabilities
|
$
|
1,193.8
|
|
$
|
94.5
|
|
$
|
19.0
|
|
$
|
1,307.3
|
|
|
|
|
|
4.
|
BUSINESS SEPARATION COSTS
|
In connection with the disposition of the two divisions comprising the former Materials Technologies segment, we incurred separation costs of
$30.2
and
$12.0
for the
three
months ended
31 December 2016
and
2015
, respectively. These costs are reflected on the consolidated income statements as “Business separation costs” and include legal, advisory, and pension related costs. Refer to Note
3
,
Discontinued Operations
, for additional information regarding the dispositions.
|
|
|
|
5.
|
COST REDUCTION AND ASSET ACTIONS
|
The charges we record for cost reduction and asset actions have been excluded from segment operating income.
In the first quarter of fiscal year 2017, we recognized a net expense of $
50.0
(
$41.2
after-tax, or
$.19
per share). The net expense included a charge of
$53.4
for actions taken during the first quarter of fiscal year 2017, partially offset by the favorable settlement of the remaining
$3.4
accrued balance associated with business restructuring actions taken in 2015.
Asset actions taken in the first quarter of 2017 of $
45.7
resulted from the write-down of an air separation unit in the Industrial Gases – EMEA segment that was constructed mainly to provide oxygen to one of the Energy-from-Waste plants. Severance and other benefits totaled $
7.7
and related to the elimination of approximately
50
positions primarily in the Corporate and other and Industrial Gases – EMEA segments.
During fiscal year 2016, we incurred an expense of $
34.5
for severance and other benefits related to the elimination of approximately
610
positions. No expense was recognized in the first quarter of fiscal year 2016. The fiscal year 2016 expenses primarily related to the Industrial Gases – Americas and the Industrial Gases – EMEA segments.
The following table summarizes the carrying amount of the accrual for cost reduction and asset actions at 31 December 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and
Other Benefits
|
|
Asset
Actions/Other
|
|
Total
|
|
2016 Charge
|
|
$
|
34.5
|
|
|
$
|
—
|
|
|
$
|
34.5
|
|
|
Amount reflected in pension liability
|
|
(.9
|
)
|
|
—
|
|
|
(.9
|
)
|
|
Cash expenditures
|
|
(21.6
|
)
|
|
—
|
|
|
(21.6
|
)
|
|
Currency translation adjustment
|
|
.3
|
|
|
—
|
|
|
.3
|
|
|
30 September 2016
|
|
$
|
12.3
|
|
|
$
|
—
|
|
|
$
|
12.3
|
|
|
2017 Charge
|
|
7.7
|
|
|
45.7
|
|
|
53.4
|
|
|
Noncash expenses
|
|
—
|
|
|
(45.7
|
)
|
|
(45.7
|
)
|
|
Amount reflected in pension liability
|
|
(.3
|
)
|
|
—
|
|
|
(.3
|
)
|
|
Cash expenditures
|
|
(7.6
|
)
|
|
—
|
|
|
(7.6
|
)
|
|
Currency translation adjustment
|
|
(.6
|
)
|
|
—
|
|
|
(.6
|
)
|
|
31 December 2016
|
|
$
|
11.5
|
|
|
$
|
—
|
|
|
$
|
11.5
|
|
The components of inventories are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December
|
|
30 September
|
|
|
|
2016
|
|
2016
|
|
Finished goods
|
|
$
|
126.5
|
|
|
$
|
131.3
|
|
|
Work in process
|
|
17.3
|
|
|
18.3
|
|
|
Raw materials, supplies and other
|
|
202.0
|
|
|
117.1
|
|
|
|
|
$
|
345.8
|
|
|
$
|
266.7
|
|
|
Less: Excess of FIFO cost over LIFO cost
|
|
(15.1
|
)
|
|
(11.7
|
)
|
|
Inventories
|
|
$
|
330.7
|
|
|
$
|
255.0
|
|
First-in, first-out (FIFO) cost approximates replacement cost.
Changes to the carrying amount of consolidated goodwill by segment for the
three
months ended
31 December 2016
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
Gases–
Americas
|
|
Industrial
Gases–
EMEA
|
|
Industrial
Gases–
Asia
|
|
Industrial
Gases–
Global
|
|
Total
|
|
Goodwill, net at 30 September 2016
|
|
$
|
309.1
|
|
|
$
|
380.6
|
|
|
$
|
135.2
|
|
|
$
|
20.2
|
|
|
$
|
845.1
|
|
|
Currency translation
|
|
(4.0
|
)
|
|
(26.9
|
)
|
|
(2.7
|
)
|
|
(.4
|
)
|
|
(34.0
|
)
|
|
Goodwill, net at 31 December 2016
|
|
$
|
305.1
|
|
|
$
|
353.7
|
|
|
$
|
132.5
|
|
|
$
|
19.8
|
|
|
$
|
811.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December
|
|
30 September
|
|
|
|
2016
|
|
2016
|
|
Goodwill, gross
|
|
$
|
1,064.6
|
|
|
$
|
1,103.7
|
|
|
Accumulated impairment losses
(A)
|
|
(253.5
|
)
|
|
(258.6
|
)
|
|
Goodwill, net
|
|
$
|
811.1
|
|
|
$
|
845.1
|
|
|
|
|
|
(A)
|
Amount is attributable to the Industrial Gases – Americas segment and includes currency translation of
$51.7
and
$46.6
as of
31 December 2016
and
30 September 2016
, respectively.
|
We conduct goodwill impairment testing in the fourth quarter of each fiscal year and whenever events and changes in circumstances indicate that the carrying value of goodwill might not be recoverable.
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. This portfolio of forward exchange contracts consists primarily of Euros and U.S. dollars. The maximum remaining term of any forward exchange contract currently outstanding and designated as a cash flow hedge at
31 December 2016
is
2.5 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 pairs in this portfolio of forward exchange contracts are Euros and U.S. dollars and British Pound Sterling 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2016
|
|
30 September 2016
|
|
|
|
US$
Notional
|
|
Years
Average
Maturity
|
|
US$
Notional
|
|
Years
Average
Maturity
|
|
Forward Exchange Contracts:
|
|
|
|
|
|
|
|
|
|
Cash flow hedges
|
|
$
|
4,148.1
|
|
|
.4
|
|
|
$
|
4,130.3
|
|
|
.5
|
|
|
Net investment hedges
|
|
833.3
|
|
|
2.7
|
|
|
968.2
|
|
|
2.7
|
|
|
Not designated
|
|
2,405.1
|
|
|
.2
|
|
|
2,648.3
|
|
|
.4
|
|
|
Total Forward Exchange Contracts
|
|
$
|
7,386.5
|
|
|
.6
|
|
|
$
|
7,746.8
|
|
|
.7
|
|
The notional value of forward exchange contracts not designated in the table above includes forward contracts which were hedging intercompany loans that were repaid prior to their original maturity dates in anticipation of the spin-off of Versum. The forward exchange contracts no longer qualified as cash flow hedges due to the early repayment of the loans. We entered into additional forward exchange contracts to offset these outstanding positions to eliminate any future earnings impact.
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
€910.9 million
(
$958.0
) at
31 December 2016
and
€920.7 million
(
$1,034.4
) at
30 September 2016
. The designated foreign currency-denominated debt is located on the balance sheet in the long-term debt and current portion of long-term debt 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
31 December 2016
, 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 which 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. The contracts are used to hedge either certain net investments in foreign operations or non-functional currency cash flows related to intercompany loans. The current cross currency interest rate swap portfolio consists of fixed-to-fixed swaps primarily between U.S. dollars and offshore Chinese Renminbi, U.S. dollars and Chilean Pesos, and U.S. dollars and British Pound Sterling.
The following table summarizes our outstanding interest rate management contracts and cross currency interest rate swaps:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2016
|
|
30 September 2016
|
|
|
|
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
|
|
|
2.28
|
%
|
|
2.0
|
|
$
|
600.0
|
|
|
LIBOR
|
|
|
2.28
|
%
|
|
2.3
|
|
Cross currency interest rate swaps
(net investment hedge)
|
|
$
|
522.0
|
|
|
3.24
|
%
|
|
2.41
|
%
|
|
2.3
|
|
$
|
517.7
|
|
|
3.24
|
%
|
|
2.43
|
%
|
|
2.6
|
|
Cross currency interest rate swaps
(cash flow hedge)
|
|
$
|
1,088.9
|
|
|
4.77
|
%
|
|
2.72
|
%
|
|
3.0
|
|
$
|
1,088.9
|
|
|
4.77
|
%
|
|
2.72
|
%
|
|
3.3
|
|
Cross currency interest rate swaps
(not designated)
|
|
$
|
23.1
|
|
|
3.62
|
%
|
|
.81
|
%
|
|
1.6
|
|
$
|
27.4
|
|
|
3.62
|
%
|
|
.81
|
%
|
|
1.8
|
The table below summarizes the fair value and balance sheet location of our outstanding derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
Location
|
31 December 2016
|
30 September 2016
|
Balance Sheet
Location
|
31 December 2016
|
30 September 2016
|
|
Derivatives Designated as Hedging Instruments:
|
|
|
|
|
|
|
|
Forward exchange contracts
|
Other receivables
|
$
|
62.4
|
|
$
|
72.3
|
|
Accrued liabilities
|
$
|
144.2
|
|
$
|
44.0
|
|
|
Interest rate management contracts
|
Other receivables
|
32.3
|
|
19.9
|
|
Accrued liabilities
|
—
|
|
—
|
|
|
Forward exchange contracts
|
Other noncurrent
assets
|
73.6
|
|
44.4
|
|
Other noncurrent
liabilities
|
1.9
|
|
9.1
|
|
|
Interest rate management contracts
|
Other noncurrent
assets
|
202.6
|
|
160.0
|
|
Other noncurrent
liabilities
|
14.8
|
|
12.0
|
|
|
Total Derivatives Designated as Hedging Instruments
|
|
$
|
370.9
|
|
$
|
296.6
|
|
|
$
|
160.9
|
|
$
|
65.1
|
|
|
Derivatives Not Designated as Hedging Instruments:
|
|
|
|
|
|
|
|
Forward exchange contracts
|
Other receivables
|
$
|
93.4
|
|
$
|
77.1
|
|
Accrued liabilities
|
$
|
47.7
|
|
$
|
29.5
|
|
|
Forward exchange contracts
|
Other noncurrent
assets
|
—
|
|
—
|
|
Other noncurrent
liabilities
|
.2
|
|
—
|
|
|
Interest rate management contracts
|
Other noncurrent
assets
|
—
|
|
—
|
|
Other noncurrent
liabilities
|
.3
|
|
.7
|
|
|
Total Derivatives Not Designated as Hedging Instruments
|
|
$
|
93.4
|
|
$
|
77.1
|
|
|
$
|
48.2
|
|
$
|
30.2
|
|
|
Total Derivatives
|
|
$
|
464.3
|
|
$
|
373.7
|
|
|
$
|
209.1
|
|
$
|
95.3
|
|
Refer to Note
9
,
Fair Value Measurements
, which defines fair value, describes the method for measuring fair value, and provides additional disclosures regarding fair value measurements.
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 31 December
|
|
|
Forward
Exchange Contracts
|
Foreign Currency
Debt
|
Other
(A)
|
Total
|
|
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
|
Cash Flow Hedges, net of tax:
|
|
|
|
|
|
|
|
|
|
Net gain (loss) recognized in OCI (effective portion)
|
$
|
(59.4
|
)
|
$
|
(4.7
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
49.6
|
|
$
|
20.7
|
|
$
|
(9.8
|
)
|
$
|
16.0
|
|
|
Net (gain) loss reclassified from OCI to sales/cost of sales (effective portion)
|
4.6
|
|
.9
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4.6
|
|
.9
|
|
|
Net (gain) loss reclassified from OCI to other income (expense), net (effective portion)
|
49.5
|
|
(1.8
|
)
|
—
|
|
—
|
|
(28.2
|
)
|
(20.2
|
)
|
21.3
|
|
(22.0
|
)
|
|
Net (gain) loss reclassified from OCI to interest expense (effective portion)
|
(.8
|
)
|
1.4
|
|
—
|
|
—
|
|
.7
|
|
.8
|
|
(.1
|
)
|
2.2
|
|
|
Net (gain) loss reclassified from OCI to other income (expense), net (ineffective portion)
|
(.2
|
)
|
(.4
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(.2
|
)
|
(.4
|
)
|
|
Fair Value Hedges:
|
|
|
|
|
|
|
|
|
|
Net gain (loss) recognized in interest expense
(B)
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(9.1
|
)
|
$
|
(9.0
|
)
|
$
|
(9.1
|
)
|
$
|
(9.0
|
)
|
|
Net Investment Hedges, net of tax:
|
|
|
|
|
|
|
|
|
|
Net gain (loss) recognized in OCI
|
$
|
27.9
|
|
$
|
3.0
|
|
$
|
41.8
|
|
$
|
7.6
|
|
$
|
13.1
|
|
$
|
6.5
|
|
$
|
82.8
|
|
$
|
17.1
|
|
|
Derivatives Not Designated as Hedging Instruments:
|
|
|
|
|
|
|
|
|
|
Net gain (loss) recognized in other income (expense), net
(C)
|
$
|
2.1
|
|
$
|
(.4
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
.8
|
|
$
|
—
|
|
$
|
2.9
|
|
$
|
(.4
|
)
|
|
|
|
|
(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 recognized gains and losses resulting from the impact of changes in related interest rates on outstanding debt.
|
|
|
|
|
(C)
|
The impact of the non-designated hedges noted above was largely offset by recognized gains and losses resulting from the impact of changes in exchange rates on assets and liabilities denominated in non-functional currencies.
|
The amount of cash flow hedges’ unrealized gains and losses at
31 December 2016
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
$17.4
as of
31 December 2016
and
$11.2
as of
30 September 2016
. 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. The collateral that the counterparties would be required to post was
$334.0
as of
31 December 2016
and
$267.6
as of
30 September 2016
. No financial institution is required to post collateral at this time, as all have credit ratings at or above threshold.
|
|
|
|
9.
|
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
8
,
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2016
|
|
30 September 2016
|
|
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
$
|
229.4
|
|
|
$
|
229.4
|
|
|
$
|
193.8
|
|
|
$
|
193.8
|
|
|
Interest rate management contracts
|
|
234.9
|
|
|
234.9
|
|
|
179.9
|
|
|
179.9
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
$
|
194.0
|
|
|
$
|
194.0
|
|
|
$
|
82.6
|
|
|
$
|
82.6
|
|
|
Interest rate management contracts
|
|
15.1
|
|
|
15.1
|
|
|
12.7
|
|
|
12.7
|
|
|
Long-term debt, including current portion
|
|
4,162.3
|
|
|
4,253.8
|
|
|
4,275.1
|
|
|
4,450.5
|
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2016
|
|
30 September 2016
|
|
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|
Assets at Fair Value
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
$
|
229.4
|
|
$
|
—
|
|
$
|
229.4
|
|
$
|
—
|
|
|
$
|
193.8
|
|
$
|
—
|
|
$
|
193.8
|
|
$
|
—
|
|
|
Interest rate management contracts
|
234.9
|
|
—
|
|
234.9
|
|
—
|
|
|
179.9
|
|
—
|
|
179.9
|
|
—
|
|
|
Total Assets at Fair Value
|
$
|
464.3
|
|
$
|
—
|
|
$
|
464.3
|
|
$
|
—
|
|
|
$
|
373.7
|
|
$
|
—
|
|
$
|
373.7
|
|
$
|
—
|
|
|
Liabilities at Fair Value
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
$
|
194.0
|
|
$
|
—
|
|
$
|
194.0
|
|
$
|
—
|
|
|
$
|
82.6
|
|
$
|
—
|
|
$
|
82.6
|
|
$
|
—
|
|
|
Interest rate management contracts
|
15.1
|
|
—
|
|
15.1
|
|
—
|
|
|
12.7
|
|
—
|
|
12.7
|
|
—
|
|
|
Total Liabilities at Fair Value
|
$
|
209.1
|
|
$
|
—
|
|
$
|
209.1
|
|
$
|
—
|
|
|
$
|
95.3
|
|
$
|
—
|
|
$
|
95.3
|
|
$
|
—
|
|
The following is a tabular presentation of nonrecurring fair value measurements along with the level within the fair value hierarchy in which the fair value measurement in its entirety falls:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December 2016
|
|
2017
Loss
|
|
|
Total
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
Plant and Equipment – Continuing operations
(A)
|
$
|
1.4
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.4
|
|
|
$
|
45.7
|
|
|
Plant and Equipment – Discontinued operations
(A)
|
$
|
11.0
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11.0
|
|
|
$
|
6.3
|
|
|
|
|
|
(A)
|
We assessed the recoverability of the carrying value of assets associated with the EfW discontinued operation, including the air separation unit within continuing operations of our Industrial Gases- EMEA segment. We based our estimates primarily on an orderly liquidation valuation which resulted in losses for the difference between the orderly liquidation value and net book value of the assets as of 31 December 2016. For additional information, see Note
3
,
Discontinued Operations
and Note
5
,
Cost Reduction and Asset Actions
.
|
The components of net periodic benefit cost for the defined benefit pension and other postretirement benefit plans for the
three
months ended
31 December 2016
and
2015
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Benefits
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Three Months Ended 31 December
|
|
U.S.
|
|
International
|
|
U.S.
|
|
International
|
|
|
|
|
|
Service Cost
|
|
$
|
8.3
|
|
|
$
|
6.7
|
|
|
$
|
9.0
|
|
|
$
|
6.2
|
|
|
$
|
.5
|
|
|
$
|
.5
|
|
|
Interest Cost
|
|
24.9
|
|
|
7.6
|
|
|
27.7
|
|
|
11.6
|
|
|
.4
|
|
|
.5
|
|
|
Expected return on plan assets
|
|
(52.7
|
)
|
|
(18.5
|
)
|
|
(50.5
|
)
|
|
(20.7
|
)
|
|
—
|
|
|
—
|
|
|
Prior service cost amortization
|
|
.6
|
|
|
—
|
|
|
.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Actuarial loss amortization
|
|
26.1
|
|
|
13.9
|
|
|
21.1
|
|
|
9.2
|
|
|
.2
|
|
|
.2
|
|
|
Settlements
|
|
—
|
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Curtailment
|
|
4.2
|
|
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Special termination benefits
|
|
1.1
|
|
|
.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
.5
|
|
|
—
|
|
|
—
|
|
|
Net periodic benefit cost (Total)
|
|
$
|
12.5
|
|
|
$
|
7.4
|
|
|
$
|
8.0
|
|
|
$
|
6.8
|
|
|
$
|
1.1
|
|
|
$
|
1.2
|
|
|
Less: Discontinued Operations
|
|
(.6
|
)
|
|
(.7
|
)
|
|
(1.8
|
)
|
|
(1.4
|
)
|
|
—
|
|
|
(.1
|
)
|
|
Net periodic benefit cost (Continuing Operations)
|
|
$
|
11.9
|
|
|
$
|
6.7
|
|
|
$
|
6.2
|
|
|
$
|
5.4
|
|
|
$
|
1.1
|
|
|
$
|
1.1
|
|
Net periodic benefit cost is primarily included in cost of sales and selling and administrative expense on our consolidated income statements. The amount of net periodic benefit cost capitalized in fiscal year
2017
and
2016
was not material.
In connection with the disposition of the two divisions comprising the Materials Technologies segment, we incurred settlement, curtailment, special termination benefits and other pension related costs totaling
$2.5
. These costs are reflected on the consolidated income statements as "Business separation costs".
As discussed in Note
3
,
Discontinued Operations
, we completed the separation of EMD through the spin-off of Versum on 1 October 2016. In connection with the spin-off, the Company transferred defined benefit pension assets and obligations to Versum resulting in a net decrease in the underfunded status of the Company's sponsored pension plans of
$24
. Additionally, as a result of the transfer of unrecognized losses to Versum, accumulated other comprehensive loss, net of tax, decreased by approximately
$5
.
The increase in pension expense primarily resulted from a decrease in discount rates, partially offset by favorable asset experience and the adoption of new mortality projections for certain of our plans.
For the
three
months ended
31 December 2016
and
2015
, our cash contributions to funded pension plans and benefit payments under unfunded pension plans were
$24.9
and
$51.8
, respectively. Total contributions for fiscal
2017
are expected to be approximately
$65
to
$85
. During fiscal
2016
, total contributions were
$79.3
.
|
|
|
|
11.
|
COMMITMENTS AND CONTINGENCIES
|
Litigation
We are involved in various legal proceedings, including commercial, 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
$55
at
31 December 2016
) 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
$55
at
31 December 2016
) plus interest accrued thereon until final disposition of the proceedings.
Other than this matter, we do not currently believe there are any legal proceedings, individually or in the aggregate, that are reasonably possible to have a material impact on our financial condition, results of operations, or cash flows.
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
33
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
31 December 2016
and
30 September 2016
included an accrual of
$80.1
and
$81.3
, 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
$80
to a reasonably possible upper exposure of
$94
as of
31 December 2016
.
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
31 December 2016
,
$29.8
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. The costs we are incurring under the new Consent Order are expected to be consistent with our previous estimates.
PIEDMONT
At
31 December 2016
,
$17.3
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 2019 to complete source area remediation with groundwater recovery and treatment, continuing through 2029
. Thereafter, we are expecting this site to go into a state of monitored natural attenuation through 2047. 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 have been
no
significant changes to the estimated exposure.
PASADENA
At
31 December 2016
,
$10.3
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.
|
|
|
|
12.
|
SHARE-BASED COMPENSATION
|
We have various share-based compensation programs, which include deferred stock units, stock options, and restricted stock. During the
three
months ended
31 December 2016
, we granted market-based and time-based deferred stock units. 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
31 December 2016
, there were
4,793,342
shares available for future grant under our Long-Term Incentive Plan (LTIP), which is shareholder approved.
As discussed in Note
3
,
Discontinued Operations
, we completed the separation of EMD through the spin-off of Versum on 1 October 2016. In connection with spin-off, the Company adjusted the number of deferred stock units and stock options pursuant to existing anti-dilution provisions in the LTIP, to preserve the intrinsic value of the awards immediately before and after the separation. The outstanding awards will continue to vest over the original vesting period defined at the grant date. Outstanding awards at the time of spin-off were primarily converted into awards of the holder’s employer following the separation. The adjustment to the awards did not result in incremental fair value and no incremental compensation expense was recorded related to the conversion of these awards.
Share-based compensation cost recognized in continuing operations on the consolidated income statements is summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
31 December
|
|
|
|
2016
|
|
2015
|
|
Before-Tax Share-Based Compensation Cost
|
|
$
|
9.0
|
|
|
$
|
8.3
|
|
|
Income Tax Benefit
|
|
(3.0
|
)
|
|
(2.8
|
)
|
|
After-Tax Share-Based Compensation Cost
|
|
$
|
6.0
|
|
|
$
|
5.5
|
|
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 fiscal year
2017
and
2016
was not material.
Deferred Stock Units
During the
three
months ended
31 December 2016
, we granted
116,740
market-based deferred stock units. The market-based deferred stock units are earned out at the end of a performance period beginning 1 October 2016 and ending 30 September 2019, conditioned on the level of the Company’s total shareholder return in relation to a defined peer group over the three-year performance period.
The market-based deferred stock units had an estimated grant-date fair value of
$156.87
per unit, which was estimated using a Monte Carlo simulation model. 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
|
|
20.6
|
%
|
|
Risk-free interest rate
|
|
1.4
|
%
|
|
Expected dividend yield
|
|
2.5
|
%
|
In addition, during the
three
months ended
31 December 2016
, we granted
145,604
time-based deferred stock units at a weighted average grant-date fair value of
$143.51
.
The following is a summary of the changes in total equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended 31 December
|
|
|
2016
|
|
2015
|
|
|
Air
Products
|
Non-
controlling
Interests
|
Total
Equity
|
|
Air
Products
|
Non-
controlling
Interests
|
Total
Equity
|
|
Balance at 30 September
|
$
|
7,079.6
|
|
$
|
133.8
|
|
$
|
7,213.4
|
|
|
$
|
7,249.0
|
|
$
|
132.1
|
|
$
|
7,381.1
|
|
|
Net income
|
299.8
|
|
6.6
|
|
306.4
|
|
|
363.6
|
|
8.4
|
|
372.0
|
|
|
Other comprehensive loss
|
(234.9
|
)
|
(3.1
|
)
|
(238.0
|
)
|
|
(82.7
|
)
|
—
|
|
(82.7
|
)
|
|
Dividends on common stock (per share $0.86, $0.81)
|
(187.1
|
)
|
—
|
|
(187.1
|
)
|
|
(174.7
|
)
|
—
|
|
(174.7
|
)
|
|
Dividends to noncontrolling interests
|
—
|
|
(4.2
|
)
|
(4.2
|
)
|
|
—
|
|
(8.5
|
)
|
(8.5
|
)
|
|
Share-based compensation
|
9.0
|
|
—
|
|
9.0
|
|
|
8.3
|
|
—
|
|
8.3
|
|
|
Treasury shares for stock option and award plans
|
(.3
|
)
|
—
|
|
(.3
|
)
|
|
(2.0
|
)
|
—
|
|
(2.0
|
)
|
|
Tax benefit of stock option and award plans
|
—
|
|
—
|
|
—
|
|
|
4.9
|
|
—
|
|
4.9
|
|
|
Spin-off of Versum
|
186.5
|
|
(33.9
|
)
|
152.6
|
|
|
—
|
|
—
|
|
—
|
|
|
Cumulative change in accounting principle (Note 2)
|
8.8
|
|
—
|
|
8.8
|
|
|
—
|
|
—
|
|
—
|
|
|
Other equity transactions
|
.1
|
|
.4
|
|
.5
|
|
|
.7
|
|
(.1
|
)
|
.6
|
|
|
Balance at 31 December
|
$
|
7,161.5
|
|
$
|
99.6
|
|
$
|
7,261.1
|
|
|
$
|
7,367.1
|
|
$
|
131.9
|
|
$
|
7,499.0
|
|
|
|
|
|
14.
|
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
months ended
31 December 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss on
derivatives
qualifying as
hedges
|
|
Foreign
currency
translation
adjustments
|
|
Pension and
postretirement
benefits
|
|
Total
|
|
Balance at 30 September 2016
|
|
$
|
(65.0
|
)
|
|
$
|
(949.3
|
)
|
|
$
|
(1,374.0
|
)
|
|
$
|
(2,388.3
|
)
|
|
Other comprehensive loss before reclassifications
|
|
(9.8
|
)
|
|
(281.2
|
)
|
|
—
|
|
|
(291.0
|
)
|
|
Amounts reclassified from AOCL
|
|
25.6
|
|
|
—
|
|
|
27.4
|
|
|
53.0
|
|
|
Net current period other comprehensive income (loss)
|
|
15.8
|
|
|
(281.2
|
)
|
|
27.4
|
|
|
(238.0
|
)
|
|
Spin-off of Versum
|
|
.2
|
|
|
6.0
|
|
|
5.3
|
|
|
11.5
|
|
|
Amount attributable to noncontrolling interests
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
|
(3.1
|
)
|
|
Balance at 31 December 2016
|
|
$
|
(49.0
|
)
|
|
$
|
(1,221.4
|
)
|
|
$
|
(1,341.3
|
)
|
|
$
|
(2,611.7
|
)
|
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
|
|
|
31 December
|
|
|
2016
|
|
2015
|
|
(Gain) Loss on Cash Flow Hedges, net of tax
|
|
|
|
|
Sales/Cost of sales
|
$
|
4.6
|
|
|
$
|
.9
|
|
|
Other income (expense), net
|
21.1
|
|
|
(22.4
|
)
|
|
Interest expense
|
(.1
|
)
|
|
2.2
|
|
|
Total (Gain) Loss on Cash Flow Hedges, net of tax
|
$
|
25.6
|
|
|
$
|
(19.3
|
)
|
|
Currency Translation Adjustment
(A)
|
$
|
—
|
|
|
$
|
2.4
|
|
|
Pension and Postretirement Benefits, net of tax
(B)
|
$
|
27.4
|
|
|
$
|
21.1
|
|
|
|
|
|
(A)
|
The impact is reflected in Other income (expense), net and relates to the sale of an equity affiliate.
|
|
|
|
|
(B)
|
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
10
,
Retirement Benefits
.
|
The following table sets forth the computation of basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
31 December
|
|
|
|
|
2016
|
|
2015
|
|
|
Numerator
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
251.6
|
|
|
$
|
280.9
|
|
|
|
Income from discontinued operations
|
|
48.2
|
|
|
82.7
|
|
|
|
Net Income Attributable to Air Products
|
|
$
|
299.8
|
|
|
$
|
363.6
|
|
|
|
Denominator
(in millions)
|
|
|
|
|
|
|
Weighted average common shares — Basic
|
|
217.7
|
|
|
215.8
|
|
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
Employee stock option and other award plans
|
|
2.0
|
|
|
1.8
|
|
|
|
Weighted average common shares — Diluted
|
|
219.7
|
|
|
217.6
|
|
|
|
Basic Earnings Per Common Share Attributable to Air Products
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
1.16
|
|
|
$
|
1.30
|
|
|
|
Income from discontinued operations
|
|
.22
|
|
|
.38
|
|
|
|
Net Income Attributable to Air Products
|
|
$
|
1.38
|
|
|
$
|
1.68
|
|
|
|
Diluted Earnings Per Common Share Attributable to Air Products
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
1.15
|
|
|
$
|
1.29
|
|
|
|
Income from discontinued operations
|
|
.22
|
|
|
.38
|
|
|
|
Net Income Attributable to Air Products
|
|
$
|
1.37
|
|
|
$
|
1.67
|
|
|
Outstanding share-based awards of
.2 million
and
.3 million
shares were antidilutive and therefore excluded from the computation of diluted earnings per share for the
three
months ended
31 December 2016
and
2015
, respectively.
|
|
|
|
16.
|
SUPPLEMENTAL INFORMATION
|
Cash Paid for Taxes (Net of Cash Refunds)
On a total company basis, income tax payments, net of refunds, were
$96.7
and
$66.9
for the
three
months ended
31 December 2016
and
2015
, respectively.
Subsequent Event
On 26 January 2017, the Board of Directors declared the second quarter dividend of
$.95
. The dividend is payable on 8 May 2017 to shareholders of record at the close of business on 3 April 2017.
|
|
|
|
17.
|
BUSINESS SEGMENT INFORMATION
|
Our 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.
Our reporting segments are:
|
|
|
|
•
|
Industrial Gases – Americas
|
|
|
|
|
•
|
Industrial Gases – EMEA (Europe, Middle East, and Africa)
|
|
|
|
|
•
|
Industrial Gases – Asia
|
|
|
|
|
•
|
Industrial Gases – Global
|
Business Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
Gases–
Americas
|
Industrial
Gases–
EMEA
|
Industrial
Gases–
Asia
|
Industrial
Gases–
Global
|
Corporate
and other
|
Segment
Total
|
|
Three Months Ended 31 December 2016
|
|
Sales
|
$
|
863.9
|
|
$
|
399.7
|
|
$
|
438.3
|
|
$
|
147.9
|
|
$
|
32.7
|
|
$
|
1,882.5
|
|
|
Operating income (loss)
|
223.8
|
|
88.0
|
|
118.1
|
|
8.2
|
|
(29.8
|
)
|
408.3
|
|
|
Depreciation and amortization
|
111.8
|
|
42.2
|
|
46.7
|
|
2.0
|
|
3.4
|
|
206.1
|
|
|
Equity affiliates' income
|
14.7
|
|
9.5
|
|
13.5
|
|
.3
|
|
—
|
|
38.0
|
|
|
Three Months Ended 31 December 2015
|
|
Sales
|
$
|
836.3
|
|
$
|
439.6
|
|
$
|
414.6
|
|
$
|
104.3
|
|
$
|
71.5
|
|
$
|
1,866.3
|
|
|
Operating income (loss)
|
211.6
|
|
92.3
|
|
117.3
|
|
(19.3
|
)
|
(17.4
|
)
|
384.5
|
|
|
Depreciation and amortization
|
109.0
|
|
46.8
|
|
51.9
|
|
2.1
|
|
4.9
|
|
214.7
|
|
|
Equity affiliates' income (loss)
|
14.5
|
|
7.6
|
|
11.7
|
|
(.5
|
)
|
—
|
|
33.3
|
|
|
Total Assets
|
|
31 December 2016
|
$
|
5,873.9
|
|
$
|
3,005.0
|
|
$
|
4,098.0
|
|
$
|
268.5
|
|
$
|
1,850.6
|
|
$
|
15,096.0
|
|
|
30 September 2016
|
5,896.7
|
|
3,178.6
|
|
4,232.7
|
|
367.6
|
|
2,384.5
|
|
16,060.1
|
|
The sales information noted above relates to external customers only. All intersegment sales are eliminated in consolidation. For the
three
months ended
31 December 2016
and
2015
, the Industrial Gases – Global segment had intersegment sales of
$61.0
and
$54.6
, 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 is 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
|
|
|
|
31 December
|
|
Operating Income
|
|
2016
|
|
2015
|
|
Segment total
|
|
$
|
408.3
|
|
|
$
|
384.5
|
|
|
Business separation costs
|
|
(30.2
|
)
|
|
(12.0
|
)
|
|
Cost reduction and asset actions
|
|
(50.0
|
)
|
|
—
|
|
|
Consolidated Total
|
|
$
|
328.1
|
|
|
$
|
372.5
|
|
Below is a reconciliation of segment total assets to consolidated total assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December
|
|
30 September
|
|
Total Assets
|
|
2016
|
|
2016
|
|
Segment total
|
|
$
|
15,096.0
|
|
|
$
|
16,060.1
|
|
|
Discontinued operations
|
|
860.2
|
|
|
1,968.5
|
|
|
Consolidated Total
|
|
$
|
15,956.2
|
|
|
$
|
18,028.6
|
|
