☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
23-1274455
|
||||
(State or Other Jurisdiction of Incorporation or Organization)
|
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $1.00 per share
|
APD
|
New York Stock Exchange
|
2.000% Euro Notes due 2020
|
APD20
|
New York Stock Exchange
|
0.375% Euro Notes due 2021
|
APD21B
|
New York Stock Exchange
|
1.000% Euro Notes due 2025
|
APD25
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
Emerging growth company
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
changes in global or regional economic conditions, supply and demand dynamics in the market segments we serve, or in the financial markets;
|
•
|
risks associated with having extensive international operations, including political risks, risks associated with unanticipated government actions and risks of investing in developing markets;
|
•
|
project delays, contract terminations, customer cancellations, or postponement of projects and sales;
|
•
|
our ability to develop and operate large scale and technically complex projects, including gasification projects;
|
•
|
the future financial and operating performance of major customers and joint venture partners;
|
•
|
our ability to develop, implement, and operate new technologies, or to execute the projects in our backlog;
|
•
|
tariffs, economic sanctions and regulatory activities in jurisdictions in which we and our affiliates and joint ventures operate;
|
•
|
the impact of environmental, tax or other legislation, as well as regulations affecting our business and related compliance requirements, including legislation or regulations related to global climate change;
|
•
|
changes in tax rates and other changes in tax law;
|
•
|
the timing, impact, and other uncertainties relating to acquisitions and divestitures, including our ability to integrate acquisitions and separate divested businesses, respectively;
|
•
|
risks relating to cybersecurity incidents, including risks from the interruption, failure or compromise of our information systems;
|
•
|
catastrophic events, such as natural disasters, acts of war, or terrorism;
|
•
|
the impact of price fluctuations in oil and natural gas and disruptions in markets and the economy due to oil and natural gas price volatility;
|
•
|
costs and outcomes of legal or regulatory proceedings and investigations;
|
•
|
asset impairments due to economic conditions or specific events;
|
•
|
significant fluctuations in interest rates and foreign currency exchange rates from those currently anticipated;
|
•
|
damage to facilities, pipelines or delivery systems, including those we own or operate for third parties;
|
•
|
availability and cost of raw materials; and
|
•
|
the success of productivity and operational improvement programs.
|
|
Three Months Ended
|
|||||
|
31 December
|
|||||
(Millions of dollars, except for share and per share data)
|
2019
|
2018
|
||||
Sales
|
|
$2,254.7
|
|
|
$2,224.0
|
|
Cost of sales
|
1,486.6
|
|
1,544.0
|
|
||
Facility closure
|
—
|
|
29.0
|
|
||
Selling and administrative
|
201.7
|
|
189.6
|
|
||
Research and development
|
17.7
|
|
15.0
|
|
||
Other income (expense), net
|
12.3
|
|
8.6
|
|
||
Operating Income
|
561.0
|
|
455.0
|
|
||
Equity affiliates' income
|
58.2
|
|
52.9
|
|
||
Interest expense
|
18.7
|
|
37.3
|
|
||
Other non-operating income (expense), net
|
9.1
|
|
18.5
|
|
||
Income Before Taxes
|
609.6
|
|
489.1
|
|
||
Income tax provision
|
120.7
|
|
132.1
|
|
||
Net Income
|
488.9
|
|
357.0
|
|
||
Net income attributable to noncontrolling interests
|
13.3
|
|
9.5
|
|
||
Net Income Attributable to Air Products
|
|
$475.6
|
|
|
$347.5
|
|
Basic Earnings Per Common Share Attributable to Air Products
|
|
$2.15
|
|
|
$1.58
|
|
Diluted Earnings Per Common Share Attributable to Air Products
|
|
$2.14
|
|
|
$1.57
|
|
Weighted Average Common Shares – Basic (in millions)
|
220.9
|
|
219.9
|
|
||
Weighted Average Common Shares – Diluted (in millions)
|
222.2
|
|
221.0
|
|
|
Three Months Ended
|
||||||
|
31 December
|
||||||
(Millions of dollars)
|
2019
|
|
2018
|
||||
Net Income
|
|
$488.9
|
|
|
|
$357.0
|
|
Other Comprehensive Income (Loss), net of tax:
|
|
|
|
||||
Translation adjustments, net of tax of ($10.8) and $4.9
|
264.0
|
|
|
(68.1
|
)
|
||
Net gain (loss) on derivatives, net of tax of $2.6 and ($0.7)
|
22.1
|
|
|
(10.3
|
)
|
||
Pension and postretirement benefits, net of tax of $– and ($0.8)
|
—
|
|
|
(3.9
|
)
|
||
Reclassification adjustments:
|
|
|
|
||||
Derivatives, net of tax of ($0.8) and ($0.8)
|
(3.6
|
)
|
|
(3.1
|
)
|
||
Pension and postretirement benefits, net of tax of $6.5 and $5.0
|
19.7
|
|
|
15.2
|
|
||
Total Other Comprehensive Income (Loss)
|
302.2
|
|
|
(70.2
|
)
|
||
Comprehensive Income
|
791.1
|
|
|
286.8
|
|
||
Net Income Attributable to Noncontrolling Interests
|
13.3
|
|
|
9.5
|
|
||
Other Comprehensive Income (Loss) Attributable to Noncontrolling Interests
|
15.2
|
|
|
(0.9
|
)
|
||
Comprehensive Income Attributable to Air Products
|
|
$762.6
|
|
|
|
$278.2
|
|
|
|
|
|
|
|
31 December
|
|
30 September
|
||||
(Millions of dollars, except for share and per share data)
|
2019
|
|
2019
|
||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash items
|
|
$2,406.1
|
|
|
|
$2,248.7
|
|
Short-term investments
|
—
|
|
|
166.0
|
|
||
Trade receivables, net
|
1,288.6
|
|
|
1,260.2
|
|
||
Inventories
|
400.6
|
|
|
388.3
|
|
||
Prepaid expenses
|
98.3
|
|
|
77.4
|
|
||
Other receivables and current assets
|
526.1
|
|
|
477.7
|
|
||
Total Current Assets
|
4,719.7
|
|
|
4,618.3
|
|
||
Investment in net assets of and advances to equity affiliates
|
1,339.9
|
|
|
1,276.2
|
|
||
Plant and equipment, at cost
|
23,099.8
|
|
|
22,333.7
|
|
||
Less: accumulated depreciation
|
12,407.6
|
|
|
11,996.1
|
|
||
Plant and equipment, net
|
10,692.2
|
|
|
10,337.6
|
|
||
Goodwill, net
|
816.1
|
|
|
797.1
|
|
||
Intangible assets, net
|
415.9
|
|
|
419.5
|
|
||
Noncurrent lease receivables
|
883.2
|
|
|
890.0
|
|
||
Other noncurrent assets
|
784.6
|
|
|
604.1
|
|
||
Total Noncurrent Assets
|
14,931.9
|
|
|
14,324.5
|
|
||
Total Assets
|
|
$19,651.6
|
|
|
|
$18,942.8
|
|
Liabilities and Equity
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Payables and accrued liabilities
|
|
$1,630.0
|
|
|
|
$1,635.7
|
|
Accrued income taxes
|
113.4
|
|
|
86.6
|
|
||
Short-term borrowings
|
36.5
|
|
|
58.2
|
|
||
Current portion of long-term debt
|
39.1
|
|
|
40.4
|
|
||
Total Current Liabilities
|
1,819.0
|
|
|
1,820.9
|
|
||
Long-term debt
|
2,937.0
|
|
|
2,907.3
|
|
||
Long-term debt – related party
|
328.6
|
|
|
320.1
|
|
||
Other noncurrent liabilities
|
1,826.7
|
|
|
1,712.4
|
|
||
Deferred income taxes
|
810.5
|
|
|
793.8
|
|
||
Total Noncurrent Liabilities
|
5,902.8
|
|
|
5,733.6
|
|
||
Total Liabilities
|
7,721.8
|
|
|
7,554.5
|
|
||
Commitments and Contingencies - See Note 11
|
|
|
|
||||
Air Products Shareholders’ Equity
|
|
|
|
||||
Common stock (par value $1 per share; issued 2020 and 2019 - 249,455,584 shares)
|
249.4
|
|
|
249.4
|
|
||
Capital in excess of par value
|
1,061.7
|
|
|
1,070.9
|
|
||
Retained earnings
|
14,356.9
|
|
|
14,138.4
|
|
||
Accumulated other comprehensive loss
|
(2,088.6
|
)
|
|
(2,375.6
|
)
|
||
Treasury stock, at cost (2020 - 28,777,102 shares; 2019 - 29,040,322 shares)
|
(2,023.4
|
)
|
|
(2,029.5
|
)
|
||
Total Air Products Shareholders’ Equity
|
11,556.0
|
|
|
11,053.6
|
|
||
Noncontrolling Interests
|
373.8
|
|
|
334.7
|
|
||
Total Equity
|
11,929.8
|
|
|
11,388.3
|
|
||
Total Liabilities and Equity
|
|
$19,651.6
|
|
|
|
$18,942.8
|
|
|
Three Months Ended
|
|||||
|
31 December
|
|||||
(Millions of dollars)
|
2019
|
2018
|
||||
Operating Activities
|
|
|
||||
Net income
|
|
$488.9
|
|
|
$357.0
|
|
Less: Net income attributable to noncontrolling interests
|
13.3
|
|
9.5
|
|
||
Net income attributable to Air Products
|
475.6
|
|
347.5
|
|
||
Adjustments to reconcile income to cash provided by operating activities:
|
|
|
||||
Depreciation and amortization
|
289.2
|
|
258.0
|
|
||
Deferred income taxes
|
24.4
|
|
(1.0
|
)
|
||
Tax reform repatriation
|
—
|
|
46.2
|
|
||
Facility closure
|
—
|
|
29.0
|
|
||
Undistributed (earnings) losses of unconsolidated affiliates
|
(26.2
|
)
|
1.0
|
|
||
Gain on sale of assets and investments
|
(1.1
|
)
|
(0.7
|
)
|
||
Share-based compensation
|
13.9
|
|
9.3
|
|
||
Noncurrent lease receivables
|
23.5
|
|
24.8
|
|
||
Other adjustments
|
30.8
|
|
12.7
|
|
||
Working capital changes that provided (used) cash, excluding effects of acquisitions:
|
|
|
||||
Trade receivables
|
0.9
|
|
(73.6
|
)
|
||
Inventories
|
(8.4
|
)
|
(10.4
|
)
|
||
Other receivables
|
1.4
|
|
10.3
|
|
||
Payables and accrued liabilities
|
(115.4
|
)
|
(55.4
|
)
|
||
Other working capital
|
(41.6
|
)
|
57.5
|
|
||
Cash Provided by Operating Activities
|
667.0
|
|
655.2
|
|
||
Investing Activities
|
|
|
||||
Additions to plant and equipment
|
(447.7
|
)
|
(403.4
|
)
|
||
Investment in and advances to unconsolidated affiliates
|
(7.1
|
)
|
—
|
|
||
Proceeds from sale of assets and investments
|
15.2
|
|
1.1
|
|
||
Purchases of investments
|
—
|
|
(5.3
|
)
|
||
Proceeds from investments
|
177.0
|
|
178.0
|
|
||
Other investing activities
|
1.9
|
|
3.1
|
|
||
Cash Used for Investing Activities
|
(260.7
|
)
|
(226.5
|
)
|
||
Financing Activities
|
|
|
||||
Payments on long-term debt
|
(2.8
|
)
|
(2.6
|
)
|
||
Net decrease in commercial paper and short-term borrowings
|
(10.4
|
)
|
(38.0
|
)
|
||
Dividends paid to shareholders
|
(255.7
|
)
|
(241.5
|
)
|
||
Proceeds from stock option exercises
|
5.5
|
|
4.7
|
|
||
Other financing activities
|
(6.9
|
)
|
(12.4
|
)
|
||
Cash Used for Financing Activities
|
(270.3
|
)
|
(289.8
|
)
|
||
Effect of Exchange Rate Changes on Cash
|
21.4
|
|
(6.9
|
)
|
||
Increase in cash and cash items
|
157.4
|
|
132.0
|
|
||
Cash and Cash items – Beginning of Year
|
2,248.7
|
|
2,791.3
|
|
||
Cash and Cash Items – End of Period
|
|
$2,406.1
|
|
|
$2,923.3
|
|
|
Three Months Ended
|
|||||||||||||||||||||||
|
31 December 2019
|
|||||||||||||||||||||||
(Millions of dollars, except for per share data)
|
Common Stock
|
|
Capital in Excess of Par Value
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Treasury Stock
|
|
Air
Products Shareholders' Equity
|
|
Non-
controlling
Interests
|
|
Total
Equity
|
|
||||||||
Balance at 30 September 2019
|
|
$249.4
|
|
|
$1,070.9
|
|
|
$14,138.4
|
|
|
($2,375.6
|
)
|
|
($2,029.5
|
)
|
|
$11,053.6
|
|
|
$334.7
|
|
|
$11,388.3
|
|
Net income
|
—
|
|
—
|
|
475.6
|
|
—
|
|
—
|
|
475.6
|
|
13.3
|
|
488.9
|
|
||||||||
Other comprehensive income (loss)
|
—
|
|
—
|
|
—
|
|
287.0
|
|
—
|
|
287.0
|
|
15.2
|
|
302.2
|
|
||||||||
Dividends on common stock (per share $1.16)
|
—
|
|
—
|
|
(256.0
|
)
|
—
|
|
—
|
|
(256.0
|
)
|
—
|
|
(256.0
|
)
|
||||||||
Dividends to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1.3
|
)
|
(1.3
|
)
|
||||||||
Share-based compensation
|
—
|
|
13.9
|
|
—
|
|
—
|
|
—
|
|
13.9
|
|
—
|
|
13.9
|
|
||||||||
Issuance of treasury shares for stock option and award plans
|
—
|
|
(18.5
|
)
|
—
|
|
—
|
|
6.1
|
|
(12.4
|
)
|
—
|
|
(12.4
|
)
|
||||||||
Investments by noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11.9
|
|
11.9
|
|
||||||||
Other equity transactions
|
—
|
|
(4.6
|
)
|
(1.1
|
)
|
—
|
|
—
|
|
(5.7
|
)
|
—
|
|
(5.7
|
)
|
||||||||
Balance at 31 December 2019
|
|
$249.4
|
|
|
$1,061.7
|
|
|
$14,356.9
|
|
|
($2,088.6
|
)
|
|
($2,023.4
|
)
|
|
$11,556.0
|
|
|
$373.8
|
|
|
$11,929.8
|
|
|
Three Months Ended
|
|||||||||||||||||||||||
|
31 December 2018
|
|||||||||||||||||||||||
(Millions of dollars, except for per share data)
|
Common Stock
|
|
Capital in Excess of Par Value
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Treasury Stock
|
|
Air
Products Shareholders' Equity
|
|
Non-
controlling
Interests
|
|
Total
Equity
|
|
||||||||
Balance at 30 September 2018
|
|
$249.4
|
|
|
$1,029.3
|
|
|
$13,409.9
|
|
|
($1,741.9
|
)
|
|
($2,089.2
|
)
|
|
$10,857.5
|
|
|
$318.8
|
|
|
$11,176.3
|
|
Net income
|
—
|
|
—
|
|
347.5
|
|
—
|
|
—
|
|
347.5
|
|
9.5
|
|
357.0
|
|
||||||||
Other comprehensive income (loss)
|
—
|
|
—
|
|
—
|
|
(69.3
|
)
|
—
|
|
(69.3
|
)
|
(0.9
|
)
|
(70.2
|
)
|
||||||||
Dividends on common stock (per share $1.10)
|
—
|
|
—
|
|
(241.6
|
)
|
—
|
|
—
|
|
(241.6
|
)
|
—
|
|
(241.6
|
)
|
||||||||
Dividends to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(6.9
|
)
|
(6.9
|
)
|
||||||||
Share-based compensation
|
—
|
|
8.9
|
|
—
|
|
—
|
|
—
|
|
8.9
|
|
—
|
|
8.9
|
|
||||||||
Issuance of treasury shares for stock option and award plans
|
—
|
|
(7.6
|
)
|
—
|
|
—
|
|
5.6
|
|
(2.0
|
)
|
—
|
|
(2.0
|
)
|
||||||||
Cumulative change in accounting principle
|
—
|
|
—
|
|
(17.1
|
)
|
—
|
|
—
|
|
(17.1
|
)
|
—
|
|
(17.1
|
)
|
||||||||
Other equity transactions
|
—
|
|
(0.2
|
)
|
(0.8
|
)
|
—
|
|
—
|
|
(1.0
|
)
|
—
|
|
(1.0
|
)
|
||||||||
Balance at 31 December 2018
|
|
$249.4
|
|
|
$1,030.4
|
|
|
$13,497.9
|
|
|
($1,811.2
|
)
|
|
($2,083.6
|
)
|
|
$10,882.9
|
|
|
$320.5
|
|
|
$11,203.4
|
|
1
|
.
|
||
2
|
.
|
||
3
|
.
|
||
4
|
.
|
||
5
|
.
|
||
6
|
.
|
||
7
|
.
|
||
8
|
.
|
||
9
|
.
|
||
10
|
.
|
||
11
|
.
|
||
12
|
.
|
||
13
|
.
|
||
14
|
.
|
||
15
|
.
|
||
16
|
.
|
||
17
|
.
|
•
|
The package of practical expedients, which allows us to carry forward the lease population and classification existing as of the adoption date, among other things;
|
•
|
The land easements practical expedient, which allows us to carry forward our accounting treatment for land easements on agreements existing before the adoption date;
|
•
|
The hindsight practical expedient, which is used to determine the reasonably certain lease term for existing leases as of the adoption date;
|
•
|
The component combination practical expedient, which allows us to account for lease and non-lease components associated with that lease as a single component, if certain criteria are met; and
|
•
|
The short-term leases practical expedient, which allows us to not record the related lease liabilities and right-of-use assets for operating leases in which we are the lessee with a term of 12 months or less.
|
|
Industrial
Gases– Americas |
Industrial
Gases– EMEA |
Industrial
Gases– Asia |
Industrial
Gases– Global |
Corporate
and other |
Total
|
%
|
|||||||||||||
Three Months Ended 31 December 2019
|
||||||||||||||||||||
On-site
|
|
$534.5
|
|
|
$171.4
|
|
|
$418.3
|
|
|
$—
|
|
|
$—
|
|
|
$1,124.2
|
|
50
|
%
|
Merchant
|
401.7
|
|
327.3
|
|
274.5
|
|
—
|
|
—
|
|
1,003.5
|
|
44
|
%
|
||||||
Sale of Equipment
|
—
|
|
—
|
|
—
|
|
92.6
|
|
34.4
|
|
127.0
|
|
6
|
%
|
||||||
Total
|
|
$936.2
|
|
|
$498.7
|
|
|
$692.8
|
|
|
$92.6
|
|
|
$34.4
|
|
|
$2,254.7
|
|
100
|
%
|
|
Industrial
Gases– Americas |
Industrial
Gases– EMEA |
Industrial
Gases– Asia |
Industrial
Gases– Global |
Corporate
and other |
Total
|
%
|
|||||||||||||
Three Months Ended 31 December 2018
|
||||||||||||||||||||
On-site
|
|
$596.0
|
|
|
$222.2
|
|
|
$381.0
|
|
|
$—
|
|
|
$—
|
|
|
$1,199.2
|
|
54
|
%
|
Merchant
|
393.2
|
|
302.0
|
|
245.8
|
|
—
|
|
—
|
|
941.0
|
|
42
|
%
|
||||||
Sale of Equipment
|
—
|
|
—
|
|
—
|
|
68.2
|
|
15.6
|
|
83.8
|
|
4
|
%
|
||||||
Total
|
|
$989.2
|
|
|
$524.2
|
|
|
$626.8
|
|
|
$68.2
|
|
|
$15.6
|
|
|
$2,224.0
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
Balance Sheet Location
|
31 December 2019
|
30 September 2019
|
||||
Assets
|
|
|
|
||||
Contract assets – current
|
Other receivables and current assets
|
|
$94.4
|
|
|
$64.3
|
|
Contract fulfillment costs – current
|
Other receivables and current assets
|
86.1
|
|
64.5
|
|
||
Liabilities
|
|
|
|
||||
Contract liabilities – current
|
Payables and accrued liabilities
|
284.9
|
|
247.4
|
|
||
Contract liabilities – noncurrent
|
Other noncurrent liabilities
|
53.3
|
|
49.2
|
|
|
|
||
2019 Charge
|
|
$25.5
|
|
Cash expenditures
|
(6.9
|
)
|
|
Amount reflected in pension liability
|
(0.3
|
)
|
|
Currency translation adjustment
|
(0.5
|
)
|
|
30 September 2019
|
|
$17.8
|
|
Cash expenditures
|
(5.0
|
)
|
|
Currency translation adjustment
|
0.3
|
|
|
31 December 2019
|
|
$13.1
|
|
|
|
31 December
|
|
30 September
|
||||
|
|
2019
|
|
2019
|
||||
Finished goods
|
|
|
$127.0
|
|
|
|
$128.8
|
|
Work in process
|
|
29.8
|
|
|
27.5
|
|
||
Raw materials, supplies and other
|
|
243.8
|
|
|
232.0
|
|
||
Inventories
|
|
|
$400.6
|
|
|
|
$388.3
|
|
|
|
Industrial
Gases–
Americas
|
|
Industrial
Gases–
EMEA
|
|
Industrial
Gases–
Asia
|
|
Industrial
Gases–
Global
|
|
Corporate and other
|
|
Total
|
||||||||||||
Goodwill, net at 30 September 2019
|
|
|
$156.3
|
|
|
|
$432.3
|
|
|
|
$178.5
|
|
|
|
$19.6
|
|
|
|
$10.4
|
|
|
|
$797.1
|
|
Currency translation and other
|
|
(1.7
|
)
|
|
19.2
|
|
|
1.3
|
|
|
0.2
|
|
|
—
|
|
|
19.0
|
|
||||||
Goodwill, net at 31 December 2019
|
|
|
$154.6
|
|
|
|
$451.5
|
|
|
|
$179.8
|
|
|
|
$19.8
|
|
|
|
$10.4
|
|
|
|
$816.1
|
|
|
|
31 December
|
|
30 September
|
||||
|
|
2019
|
|
2019
|
||||
Goodwill, gross
|
|
|
$1,169.2
|
|
|
|
$1,162.2
|
|
Accumulated impairment losses(A)
|
|
(353.1
|
)
|
|
(365.1
|
)
|
||
Goodwill, net
|
|
|
$816.1
|
|
|
|
$797.1
|
|
(A)
|
Accumulated impairment losses include the impacts of currency translation. These losses are attributable to our Latin America reporting unit ("LASA") within the Industrial Gases – Americas segment.
|
|
31 December 2019
|
|
1 October 2019
|
||||
Operating lease ROU asset
|
|
|
|
||||
Other noncurrent assets
|
|
$318.8
|
|
|
|
$332.3
|
|
Operating lease liabilities
|
|
|
|
||||
Payables and accrued liabilities
|
67.8
|
|
|
68.6
|
|
||
Other noncurrent liabilities
|
296.8
|
|
|
306.7
|
|
||
Total Operating Lease Liabilities
|
|
$364.6
|
|
|
|
$375.3
|
|
|
31 December 2019
|
|
Weighted-average remaining lease term (in years)(A)
|
12.9
|
|
Weighted-average discount rate(B)
|
2.1
|
%
|
(A)
|
Calculated on the basis of the remaining lease term and the lease liability balance for each lease as of the reporting date.
|
(B)
|
Calculated on the basis of the discount rate used to calculate the lease liability for each lease as of the reporting date and the remaining balance of the lease payments for each lease as of the reporting date.
|
|
|
Operating
Leases
|
||
2020 (excluding the three months ended 31 December 2019)
|
|
|
$57.5
|
|
2021
|
|
63.4
|
|
|
2022
|
|
45.0
|
|
|
2023
|
|
36.1
|
|
|
2024
|
|
28.9
|
|
|
Thereafter
|
|
179.6
|
|
|
Total Undiscounted Lease Payments
|
|
|
$410.5
|
|
Imputed interest
|
|
(45.9
|
)
|
|
Present Value of Lease Liability Recognized on the Balance Sheet
|
|
|
$364.6
|
|
|
|
Operating
Leases |
||
2020
|
|
|
$75.1
|
|
2021
|
|
62.6
|
|
|
2022
|
|
44.4
|
|
|
2023
|
|
35.9
|
|
|
2024
|
|
28.6
|
|
|
Thereafter
|
|
171.4
|
|
|
Total Undiscounted Lease Payments
|
|
|
$418.0
|
|
2020 (excluding the three months ended 31 December 2019)
|
|
$122.9
|
|
2021
|
159.2
|
|
|
2022
|
148.3
|
|
|
2023
|
142.0
|
|
|
2024
|
135.8
|
|
|
Thereafter
|
730.2
|
|
|
Total
|
|
$1,438.4
|
|
Unearned interest income
|
(463.6
|
)
|
|
Lease Receivables, net
|
|
$974.8
|
|
2020
|
|
$162.5
|
|
2021
|
156.9
|
|
|
2022
|
145.7
|
|
|
2023
|
139.4
|
|
|
2024
|
133.2
|
|
|
Thereafter
|
715.5
|
|
|
Total
|
|
$1,453.2
|
|
Unearned interest income
|
(472.3
|
)
|
|
Lease Receivables, net
|
|
$980.9
|
|
|
|
31 December 2019
|
|
30 September 2019
|
||||||||
|
|
US$
Notional
|
|
Years
Average
Maturity
|
|
US$
Notional
|
|
Years
Average
Maturity
|
||||
Forward Exchange Contracts:
|
|
|
|
|
|
|
|
|
||||
Cash flow hedges
|
|
|
$2,659.3
|
|
|
0.5
|
|
|
$2,418.2
|
|
|
0.5
|
Net investment hedges
|
|
836.2
|
|
|
0.7
|
|
830.8
|
|
|
0.9
|
||
Not designated
|
|
887.6
|
|
|
0.6
|
|
1,053.5
|
|
|
0.6
|
||
Total Forward Exchange Contracts
|
|
|
$4,383.1
|
|
|
0.6
|
|
|
$4,302.5
|
|
|
0.6
|
|
|
31 December 2019
|
|
30 September 2019
|
||||||||||||||||||||
|
|
US$
Notional
|
|
Average
Pay %
|
|
Average
Receive
%
|
|
Years
Average
Maturity
|
|
US$
Notional
|
|
Average
Pay %
|
|
Average
Receive
%
|
|
Years
Average
Maturity
|
||||||||
Interest rate swaps
(fair value hedge)
|
|
|
$200.0
|
|
|
LIBOR
|
|
|
2.76
|
%
|
|
1.8
|
|
|
$200.0
|
|
|
LIBOR
|
|
|
2.76
|
%
|
|
2.1
|
Cross currency interest rate swaps
(net investment hedge)
|
|
|
$207.8
|
|
|
4.69
|
%
|
|
3.31
|
%
|
|
3.2
|
|
|
$216.8
|
|
|
4.80
|
%
|
|
3.31
|
%
|
|
3.5
|
Cross currency interest rate swaps
(cash flow hedge)
|
|
|
$1,098.1
|
|
|
4.94
|
%
|
|
3.07
|
%
|
|
2.1
|
|
|
$1,129.3
|
|
|
4.92
|
%
|
|
3.04
|
%
|
|
2.3
|
Cross currency interest rate swaps
(not designated)
|
|
|
$15.1
|
|
|
5.39
|
%
|
|
3.54
|
%
|
|
4.0
|
|
|
$6.1
|
|
|
2.55
|
%
|
|
3.72
|
%
|
|
4.5
|
|
Carrying amounts of hedged item
|
|
Cumulative hedging adjustment, included in carrying amount
|
||||||||||
Balance Sheet Location
|
31 December 2019
|
30 September 2019
|
|
31 December 2019
|
30 September 2019
|
||||||||
Long-term debt
|
|
$403.8
|
|
|
$404.7
|
|
|
|
$4.3
|
|
|
$5.2
|
|
|
Three Months Ended 31 December
|
|||||
|
2019
|
2018
|
||||
Net Investment Hedging Relationships
|
|
|
||||
Forward exchange contracts
|
|
($9.1
|
)
|
|
$15.5
|
|
Foreign currency debt
|
(29.9
|
)
|
12.6
|
|
||
Cross currency interest rate swaps
|
(3.5
|
)
|
0.9
|
|
||
Total Amount Recognized in OCI
|
(42.5
|
)
|
29.0
|
|
||
Tax effects
|
10.2
|
|
(7.0
|
)
|
||
Net Amount Recognized in OCI
|
|
($32.3
|
)
|
|
$22.0
|
|
|
Three Months Ended 31 December
|
|||||
|
2019
|
2018
|
||||
Derivatives in Cash Flow Hedging Relationships
|
|
|
||||
Forward exchange contracts
|
|
$26.3
|
|
|
$8.9
|
|
Forward exchange contracts, excluded components
|
(4.5
|
)
|
(3.8
|
)
|
||
Other(A)
|
2.9
|
|
(16.1
|
)
|
||
Total Amount Recognized in OCI
|
24.7
|
|
(11.0
|
)
|
||
Tax effects
|
(2.6
|
)
|
0.7
|
|
||
Net Amount Recognized in OCI
|
|
$22.1
|
|
|
($10.3
|
)
|
(A)
|
Other primarily includes interest rate and cross currency interest rate swaps for which excluded components are recognized in “Payables and accrued liabilities” and “Other receivables and current assets” as a component of accrued interest payable and accrued interest receivable, respectively. These excluded components are recorded in “Other Non-operating income (expense), net” over the life of the cross currency interest rate swap.
|
|
Three Months Ended 31 December
|
|||||||||||||||||||||||||||||||||
|
Sales
|
|
Cost of Sales
|
|
Other Income (Expense), Net
|
|
Interest Expense
|
|
Other Non-Operating Income (Expense), Net
|
|||||||||||||||||||||||||
|
2019
|
2018
|
|
2019
|
2018
|
|
2019
|
2018
|
|
2019
|
2018
|
|
2019
|
2018
|
||||||||||||||||||||
Total Amounts Presented in the Consolidated Income Statement in which the Effects of Cash Flow and Fair Value Hedges are Recorded
|
|
$2,254.7
|
|
|
$2,224.0
|
|
|
|
$1,486.6
|
|
|
$1,544.0
|
|
|
|
$12.3
|
|
|
$8.6
|
|
|
|
$18.7
|
|
|
$37.3
|
|
|
|
$9.1
|
|
|
$18.5
|
|
(Gain) Loss Effects of Cash Flow Hedging:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Forward Exchange Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Amount reclassified from OCI into income(A)
|
|
$0.1
|
|
|
$0.4
|
|
|
|
($0.2
|
)
|
|
$0.2
|
|
|
|
$—
|
|
|
($11.9
|
)
|
|
|
$—
|
|
|
$4.2
|
|
|
|
($23.4
|
)
|
|
$—
|
|
Amount excluded from effectiveness testing recognized in earnings based on amortization approach(A)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
4.5
|
|
—
|
|
||||||||||
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Amount reclassified from OCI into income(B)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
2.2
|
|
|
1.0
|
|
1.0
|
|
|
13.6
|
|
—
|
|
||||||||||
Total (Gain) Loss Reclassified from OCI to Income
|
0.1
|
|
0.4
|
|
|
(0.2
|
)
|
0.2
|
|
|
—
|
|
(9.7
|
)
|
|
1.0
|
|
5.2
|
|
|
(5.3
|
)
|
—
|
|
||||||||||
Tax effects
|
—
|
|
(0.1
|
)
|
|
0.1
|
|
—
|
|
|
—
|
|
2.3
|
|
|
(0.3
|
)
|
(1.4
|
)
|
|
1.0
|
|
—
|
|
||||||||||
Net (Gain) Loss Reclassified from OCI to Income
|
|
$0.1
|
|
|
$0.3
|
|
|
|
($0.1
|
)
|
|
$0.2
|
|
|
|
$—
|
|
|
($7.4
|
)
|
|
|
$0.7
|
|
|
$3.8
|
|
|
|
($4.3
|
)
|
|
$—
|
|
(Gain) Loss Effects of Fair Value Hedging:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Hedged items
|
|
$—
|
|
|
$—
|
|
|
|
$—
|
|
|
$—
|
|
|
|
$—
|
|
|
$—
|
|
|
|
($0.9
|
)
|
|
$2.6
|
|
|
|
$—
|
|
|
$—
|
|
Derivatives designated as hedging instruments
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
0.9
|
|
(2.6
|
)
|
|
—
|
|
—
|
|
||||||||||
Total (Gain) Loss Recognized in Income
|
|
$—
|
|
|
$—
|
|
|
|
$—
|
|
|
$—
|
|
|
|
$—
|
|
|
$—
|
|
|
|
$—
|
|
|
$—
|
|
|
|
$—
|
|
|
$—
|
|
(A)
|
Net amount excluded from effectiveness testing recognized in interest expense for FY19, see Note 2, New Accounting Guidance, for additional details.
|
(B)
|
Other primarily includes interest rate and cross currency interest rate swaps for which excluded components are recognized in “Payables and accrued liabilities” and “Other receivables and current assets” as a component of accrued interest payable and accrued interest receivable, respectively. These excluded components are recorded in “Other Non-operating income (expense), net” over the life of the cross currency interest rate swap.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended 31 December
|
||||||||||||||
|
Other Income (Expense), net
|
|
Other Non-Operating Income (Expense), net
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
The Effects of Derivatives Not Designated as a Hedging Instruments:
|
|
|
|
||||||||||||
Forward Exchange Contracts
|
|
$0.2
|
|
|
|
$0.1
|
|
|
|
($0.6
|
)
|
|
|
$—
|
|
Other
|
—
|
|
|
(0.8
|
)
|
|
0.4
|
|
|
—
|
|
||||
Total (Gain) Loss Recognized in Income
|
|
$0.2
|
|
|
|
($0.7
|
)
|
|
|
($0.2
|
)
|
|
|
$—
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
31 December 2019
|
|
30 September 2019
|
||||||||||||
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
|
|
|
|
|
|
|
||||||||
Forward exchange contracts
|
|
|
$114.2
|
|
|
|
$114.2
|
|
|
|
$138.0
|
|
|
|
$138.0
|
|
Interest rate management contracts
|
|
68.9
|
|
|
68.9
|
|
|
86.2
|
|
|
86.2
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
|
|
|
|
|
|
|
||||||||
Forward exchange contracts
|
|
|
$68.0
|
|
|
|
$68.0
|
|
|
|
$110.6
|
|
|
|
$110.6
|
|
Interest rate management contracts
|
|
0.3
|
|
|
0.3
|
|
|
1.8
|
|
|
1.8
|
|
||||
Long-term debt, including current portion and related party
|
|
3,304.7
|
|
|
3,349.9
|
|
|
3,267.8
|
|
|
3,350.9
|
|
|
31 December 2019
|
|
30 September 2019
|
||||||||||||||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
Assets at Fair Value
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivatives
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Forward exchange contracts
|
|
$114.2
|
|
|
$—
|
|
|
$114.2
|
|
|
$—
|
|
|
|
$138.0
|
|
|
$—
|
|
|
$138.0
|
|
|
$—
|
|
Interest rate management contracts
|
68.9
|
|
—
|
|
68.9
|
|
—
|
|
|
86.2
|
|
—
|
|
86.2
|
|
—
|
|
||||||||
Total Assets at Fair Value
|
|
$183.1
|
|
|
$—
|
|
|
$183.1
|
|
|
$—
|
|
|
|
$224.2
|
|
|
$—
|
|
|
$224.2
|
|
|
$—
|
|
Liabilities at Fair Value
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivatives
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Forward exchange contracts
|
|
$68.0
|
|
|
$—
|
|
|
$68.0
|
|
|
$—
|
|
|
|
$110.6
|
|
|
$—
|
|
|
$110.6
|
|
|
$—
|
|
Interest rate management contracts
|
0.3
|
|
—
|
|
0.3
|
|
—
|
|
|
1.8
|
|
—
|
|
1.8
|
|
—
|
|
||||||||
Total Liabilities at Fair Value
|
|
$68.3
|
|
|
$—
|
|
|
$68.3
|
|
|
$—
|
|
|
|
$112.4
|
|
|
$—
|
|
|
$112.4
|
|
|
$—
|
|
|
Pension Benefits
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
Three Months Ended 31 December
|
U.S.
|
|
International
|
|
U.S.
|
|
International
|
||||||||
Service cost
|
|
$5.8
|
|
|
|
$5.9
|
|
|
|
$5.4
|
|
|
|
$4.9
|
|
Interest cost
|
22.8
|
|
|
6.2
|
|
|
28.4
|
|
|
9.0
|
|
||||
Expected return on plan assets
|
(47.2
|
)
|
|
(19.5
|
)
|
|
(43.1
|
)
|
|
(18.9
|
)
|
||||
Prior service cost amortization
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
||||
Actuarial loss amortization
|
21.0
|
|
|
4.9
|
|
|
16.1
|
|
|
2.8
|
|
||||
Settlements
|
—
|
|
|
—
|
|
|
0.8
|
|
|
0.2
|
|
||||
Special termination benefits
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
||||
Other
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.3
|
|
||||
Net Periodic (Benefit) Cost
|
|
$2.7
|
|
|
|
($2.3
|
)
|
|
|
$8.6
|
|
|
|
($1.7
|
)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||||
|
|
31 December
|
||||||
|
|
2019
|
|
2018
|
||||
Before-tax share-based compensation cost
|
|
|
$15.4
|
|
|
|
$9.3
|
|
Income tax benefit
|
|
(3.7
|
)
|
|
(2.2
|
)
|
||
After-tax share-based compensation cost
|
|
|
$11.7
|
|
|
|
$7.1
|
|
Expected volatility
|
|
17.8
|
%
|
Risk-free interest rate
|
|
1.6
|
%
|
Expected dividend yield
|
|
2.4
|
%
|
|
Derivatives
qualifying as
hedges
|
|
Foreign
currency
translation
adjustments
|
|
Pension and
postretirement
benefits
|
|
Total
|
|
||||
Balance at 30 September 2019
|
|
($61.4
|
)
|
|
($1,356.9
|
)
|
|
($957.3
|
)
|
|
($2,375.6
|
)
|
Other comprehensive income before reclassifications
|
22.1
|
|
264.0
|
|
—
|
|
286.1
|
|
||||
Amounts reclassified from AOCL
|
(3.6
|
)
|
—
|
|
19.7
|
|
16.1
|
|
||||
Net current period other comprehensive income
|
18.5
|
|
264.0
|
|
19.7
|
|
302.2
|
|
||||
Amount attributable to noncontrolling interests
|
5.6
|
|
9.6
|
|
—
|
|
15.2
|
|
||||
Balance at 31 December 2019
|
|
($48.5
|
)
|
|
($1,102.5
|
)
|
|
($937.6
|
)
|
|
($2,088.6
|
)
|
|
|
|
|
|
|
Three Months Ended
|
|||||
|
31 December
|
|||||
|
2019
|
2018
|
||||
(Gain) Loss on Cash Flow Hedges, net of tax
|
|
|
||||
Sales/Cost of sales
|
|
$—
|
|
|
$0.5
|
|
Other income/expense, net
|
—
|
|
(7.4
|
)
|
||
Interest expense
|
0.7
|
|
3.8
|
|
||
Other non-operating income (expense), net(A)
|
(4.3
|
)
|
—
|
|
||
Total (Gain) Loss on Cash Flow Hedges, net of tax
|
|
($3.6
|
)
|
|
($3.1
|
)
|
|
|
|
||||
Pension and Postretirement Benefits, net of tax(B)
|
|
$19.7
|
|
|
$15.2
|
|
(A)
|
The fiscal year 2020 impact includes amortization of the excluded component and the effective portion of the related hedges.
|
(B)
|
The components of net periodic benefit cost reclassified out of AOCL include items such as prior service cost amortization, actuarial loss amortization, and settlements and are included in “Other non-operating income (expense), net” on the consolidated income statements. Refer to Note 10, Retirement Benefits, for additional information.
|
|
|
Three Months Ended
|
||||||
|
|
31 December
|
||||||
|
|
2019
|
|
2018
|
||||
Numerator
|
|
|
|
|
||||
Net Income Attributable to Air Products
|
|
|
$475.6
|
|
|
|
$347.5
|
|
Denominator (in millions)
|
|
|
|
|
||||
Weighted average common shares — Basic
|
|
220.9
|
|
|
219.9
|
|
||
Effect of dilutive securities
|
|
|
|
|
||||
Employee stock option and other award plans
|
|
1.3
|
|
|
1.1
|
|
||
Weighted average common shares — Diluted
|
|
222.2
|
|
|
221.0
|
|
||
Basic Earnings Per Common Share Attributable to Air Products
|
|
|
$2.15
|
|
|
|
$1.58
|
|
Diluted Earnings Per Common Share Attributable to Air Products
|
|
|
$2.14
|
|
|
|
$1.57
|
|
|
|
31 December
|
|
30 September
|
||||
|
|
2019
|
|
2019
|
||||
Payables and accrued liabilities
|
|
|
$8.0
|
|
|
|
$8.9
|
|
Current portion of long-term debt
|
|
38.8
|
|
|
37.8
|
|
||
Long-term debt – related party
|
|
328.6
|
|
|
320.1
|
|
•
|
Industrial Gases – Americas;
|
•
|
Industrial Gases – EMEA (Europe, Middle East, and Africa);
|
•
|
Industrial Gases – Asia;
|
•
|
Industrial Gases – Global; and
|
•
|
Corporate and other
|
|
Industrial
Gases –
Americas
|
Industrial
Gases –
EMEA
|
Industrial
Gases –
Asia
|
Industrial
Gases –
Global
|
Corporate
and other
|
Total
|
|
||||||||||||
Three Months Ended 31 December 2019
|
|
||||||||||||||||||
Sales
|
|
$936.2
|
|
|
$498.7
|
|
|
$692.8
|
|
|
$92.6
|
|
|
$34.4
|
|
|
$2,254.7
|
|
(A)
|
Operating income (loss)
|
257.2
|
|
120.5
|
|
228.5
|
|
3.6
|
|
(48.8
|
)
|
561.0
|
|
(B)
|
||||||
Depreciation and amortization
|
131.8
|
|
48.4
|
|
101.6
|
|
2.4
|
|
5.0
|
|
289.2
|
|
|
||||||
Equity affiliates' income
|
20.6
|
|
19.3
|
|
16.9
|
|
1.4
|
|
—
|
|
58.2
|
|
|
||||||
Three Months Ended 31 December 2018
|
|
||||||||||||||||||
Sales
|
|
$989.2
|
|
|
$524.2
|
|
|
$626.8
|
|
|
$68.2
|
|
|
$15.6
|
|
|
$2,224.0
|
|
(A)
|
Operating income (loss)
|
219.2
|
|
105.6
|
|
201.8
|
|
3.9
|
|
(46.5
|
)
|
484.0
|
|
(B)
|
||||||
Depreciation and amortization
|
125.6
|
|
46.3
|
|
79.9
|
|
2.1
|
|
4.1
|
|
258.0
|
|
|
||||||
Equity affiliates' income
|
22.6
|
|
13.7
|
|
16.2
|
|
0.4
|
|
—
|
|
52.9
|
|
|
||||||
Total Assets
|
|
||||||||||||||||||
31 December 2019
|
|
$5,971.3
|
|
|
$3,509.3
|
|
|
$6,478.7
|
|
|
$365.0
|
|
|
$3,327.3
|
|
|
$19,651.6
|
|
|
30 September 2019
|
5,832.2
|
|
3,250.8
|
|
6,240.6
|
|
325.7
|
|
3,293.5
|
|
18,942.8
|
|
|
(A)
|
The sales information noted above relates to external customers only. All intersegment sales are eliminated in consolidation. Intersegment sales are generally transacted at market pricing. We generally do not have intersegment sales from our regional industrial gases businesses. Equipment manufactured for our regional industrial gases segments are generally transferred at cost and are not reflect as an intersegment sale.
|
(B)
|
Refer to the Reconciliation to Consolidated Results section below.
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended
|
|||||
|
31 December
|
|||||
Operating Income
|
2019
|
2018
|
||||
Total
|
|
$561.0
|
|
|
$484.0
|
|
Facility closure
|
—
|
|
(29.0
|
)
|
||
Consolidated Operating Income
|
|
$561.0
|
|
|
$455.0
|
|
•
|
Sales of $2,254.7 increased 1%, or $30.7, as higher volumes of 6% and favorable pricing of 3% were mostly offset by lower energy and natural gas cost pass-through to customers of 5%, the impact of a contract modification to a tolling arrangement in India of 2%, and a negative impact from currency of 1%.
|
•
|
Operating income of $561.0 increased 23%, or $106.0, and operating margin of 24.9% increased 440 basis points ("bp").
|
•
|
Net income of $488.9 increased 37%, or $131.9, and net income margin of 21.7% increased 570 bp.
|
•
|
Adjusted EBITDA of $908.4 increased 14%, or $113.5, and adjusted EBITDA margin of 40.3% increased 460 bp.
|
•
|
Diluted EPS of $2.14 increased 36%, or $0.57 per share. Adjusted diluted EPS of $2.14 increased 15%, or $0.28 per share. A summary table of changes in diluted EPS is presented below.
|
Changes in Diluted EPS Attributable to Air Products
|
|||||||||
|
|
|
|
||||||
|
Three Months Ended
|
|
|||||||
|
31 December
|
Increase
|
|||||||
|
2019
|
2018
|
(Decrease)
|
||||||
Diluted EPS
|
|
$2.14
|
|
|
$1.57
|
|
|
$0.57
|
|
Operating Impacts
|
|
|
|
||||||
Underlying business
|
|
|
|
||||||
Volume
|
|
|
|
$0.15
|
|
||||
Price, net of variable costs
|
|
|
0.25
|
|
|||||
Other costs
|
|
|
(0.12
|
)
|
|||||
Facility closure
|
|
|
0.10
|
|
|||||
Total Operating Impacts
|
|
|
|
$0.38
|
|
||||
Other Impacts
|
|
|
|
||||||
Equity affiliates' income
|
|
|
|
$0.02
|
|
||||
Interest expense
|
|
|
0.07
|
|
|||||
Other non-operating income (expense), net
|
|
|
(0.04
|
)
|
|||||
Change in effective tax rate, excluding discrete items below
|
|
|
(0.02
|
)
|
|||||
Tax reform repatriation
|
|
|
(0.07
|
)
|
|||||
Tax reform adjustment related to deemed foreign dividends
|
|
|
0.26
|
|
|||||
Noncontrolling interests
|
|
|
(0.02
|
)
|
|||||
Weighted average diluted shares
|
|
|
(0.01
|
)
|
|||||
Total Other Impacts
|
|
|
|
$0.19
|
|
||||
Total Change in Diluted EPS
|
|
|
|
$0.57
|
|
|
Three Months Ended
|
|
|||||||
|
31 December
|
Increase
|
|||||||
|
2019
|
2018
|
(Decrease)
|
||||||
Diluted EPS
|
|
$2.14
|
|
|
$1.57
|
|
|
$0.57
|
|
Facility closure
|
—
|
|
0.10
|
|
(0.10
|
)
|
|||
Tax reform repatriation
|
—
|
|
(0.07
|
)
|
0.07
|
|
|||
Tax reform adjustment related to deemed foreign dividends
|
—
|
|
0.26
|
|
(0.26
|
)
|
|||
Adjusted Diluted EPS
|
|
$2.14
|
|
|
$1.86
|
|
|
$0.28
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
|
31 December
|
|
|
|
|
|||||||||
|
|
2019
|
|
2018
|
|
$ Change
|
|
Change
|
|||||||
GAAP Measures
|
|
|
|
|
|
|
|
|
|||||||
Sales
|
|
|
$2,254.7
|
|
|
|
$2,224.0
|
|
|
|
$30.7
|
|
|
1
|
%
|
Operating income
|
|
561.0
|
|
|
455.0
|
|
|
106.0
|
|
|
23
|
%
|
|||
Operating margin
|
|
24.9
|
%
|
|
20.5
|
%
|
|
—
|
|
|
440
|
bp
|
|||
Equity affiliates’ income
|
|
58.2
|
|
|
52.9
|
|
|
5.3
|
|
|
10
|
%
|
|||
Net income
|
|
488.9
|
|
|
357.0
|
|
|
131.9
|
|
|
37
|
%
|
|||
Net income margin
|
|
21.7
|
%
|
|
16.0
|
%
|
|
—
|
|
|
570
|
bp
|
|||
Non-GAAP Measures
|
|
|
|
|
|
|
|
|
|||||||
Adjusted EBITDA
|
|
|
$908.4
|
|
|
|
$794.9
|
|
|
|
$113.5
|
|
|
14
|
%
|
Adjusted EBITDA margin
|
|
40.3
|
%
|
|
35.7
|
%
|
|
—
|
|
|
460 bp
|
|
Sales % Change from Prior Year
|
|
|
Volume
|
6
|
%
|
Price
|
3
|
%
|
Energy and natural gas cost pass-through
|
(5
|
)%
|
Currency
|
(1
|
)%
|
Other(A)
|
(2
|
)%
|
Total Consolidated Sales Change
|
1
|
%
|
(A)
|
Includes the impact from the modification of a hydrogen supply contract to a tolling arrangement in India in December 2018 (the "India contract modification").
|
|
Three Months Ended
|
|||||
|
31 December
|
|||||
|
2019
|
2018
|
||||
Interest incurred
|
|
$22.4
|
|
|
$40.0
|
|
Less: Capitalized interest
|
3.7
|
|
2.7
|
|
||
Interest expense
|
|
$18.7
|
|
|
$37.3
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
|
31 December
|
|
|
|
|
|||||||||
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
Sales
|
|
|
$936.2
|
|
|
|
$989.2
|
|
|
|
($53.0
|
)
|
|
(5
|
)%
|
Operating income
|
|
257.2
|
|
|
219.2
|
|
|
38.0
|
|
|
17
|
%
|
|||
Operating margin
|
|
27.5
|
%
|
|
22.2
|
%
|
|
—
|
|
|
530 bp
|
|
|||
Equity affiliates’ income
|
|
20.6
|
|
|
22.6
|
|
|
(2.0
|
)
|
|
(9
|
)%
|
|||
Adjusted EBITDA
|
|
409.6
|
|
|
367.4
|
|
|
42.2
|
|
|
11
|
%
|
|||
Adjusted EBITDA margin
|
|
43.8
|
%
|
|
37.1
|
%
|
|
—
|
|
|
670 bp
|
|
Sales % Change from Prior Year
|
|
|
Volume
|
1
|
%
|
Price
|
3
|
%
|
Energy and natural gas cost pass-through
|
(8
|
)%
|
Currency
|
(1
|
)%
|
Total Industrial Gases – Americas Sales Change
|
(5
|
)%
|
|
|
Three Months Ended
|
|
|
|
|
||||||||
|
|
31 December
|
|
|
|
|
||||||||
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
||||||
Sales
|
|
|
$498.7
|
|
|
|
$524.2
|
|
|
|
($25.5
|
)
|
|
(5)%
|
Operating income
|
|
120.5
|
|
|
105.6
|
|
|
14.9
|
|
|
14%
|
|||
Operating margin
|
|
24.2
|
%
|
|
20.1
|
%
|
|
—
|
|
|
410 bp
|
|||
Equity affiliates’ income
|
|
19.3
|
|
|
13.7
|
|
|
5.6
|
|
|
41%
|
|||
Adjusted EBITDA
|
|
188.2
|
|
|
165.6
|
|
|
22.6
|
|
|
14%
|
|||
Adjusted EBITDA margin
|
|
37.7
|
%
|
|
31.6
|
%
|
|
—
|
|
|
610 bp
|
Sales % Change from Prior Year
|
|
|
Volume
|
6
|
%
|
Price
|
3
|
%
|
Energy and natural gas cost pass-through
|
(4
|
)%
|
Currency
|
(2
|
)%
|
Other(A)
|
(8
|
)%
|
Total Industrial Gases – EMEA Sales Change
|
(5
|
)%
|
(A)
|
Includes the impact from the modification of a hydrogen supply contract to a tolling arrangement in India in December 2018 (the "India contract modification").
|
|
|
Three Months Ended
|
|
|
|
|
||||||||
|
|
31 December
|
|
|
|
|
||||||||
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
||||||
Sales
|
|
|
$692.8
|
|
|
|
$626.8
|
|
|
|
$66.0
|
|
|
11%
|
Operating income
|
|
228.5
|
|
|
201.8
|
|
|
26.7
|
|
|
13%
|
|||
Operating margin
|
|
33.0
|
%
|
|
32.2
|
%
|
|
—
|
|
|
80 bp
|
|||
Equity affiliates’ income
|
|
16.9
|
|
|
16.2
|
|
|
0.7
|
|
|
4%
|
|||
Adjusted EBITDA
|
|
347.0
|
|
|
297.9
|
|
|
49.1
|
|
|
16%
|
|||
Adjusted EBITDA margin
|
|
50.1
|
%
|
|
47.5
|
%
|
|
—
|
|
|
260 bp
|
|
Three Months Ended 31 December
|
||||||||||||||
Q1 2020 vs. Q1 2019
|
Operating
Income |
Equity Affiliates' Income
|
Income Tax Provision
|
Net Income Attributable to Air Products
|
Diluted
EPS |
||||||||||
2020 GAAP
|
|
$561.0
|
|
|
$58.2
|
|
|
$120.7
|
|
|
$475.6
|
|
|
$2.14
|
|
2019 GAAP
|
455.0
|
|
52.9
|
|
132.1
|
|
347.5
|
|
1.57
|
|
|||||
Change GAAP
|
|
|
|
|
$128.1
|
|
|
$0.57
|
|
||||||
% Change GAAP
|
|
|
|
37
|
%
|
36
|
%
|
||||||||
2020 GAAP
|
|
$561.0
|
|
|
$58.2
|
|
|
$120.7
|
|
|
$475.6
|
|
|
$2.14
|
|
2020 Non-GAAP Measure ("Adjusted")
|
|
$561.0
|
|
|
$58.2
|
|
|
$120.7
|
|
|
$475.6
|
|
|
$2.14
|
|
2019 GAAP
|
|
$455.0
|
|
|
$52.9
|
|
|
$132.1
|
|
|
$347.5
|
|
|
$1.57
|
|
Facility closure
|
29.0
|
|
—
|
|
6.9
|
|
22.1
|
|
0.10
|
|
|||||
Tax reform repatriation
|
—
|
|
—
|
|
15.6
|
|
(15.6
|
)
|
(0.07
|
)
|
|||||
Tax reform adjustment related to deemed foreign dividends
|
—
|
|
—
|
|
(56.2
|
)
|
56.2
|
|
0.26
|
|
|||||
2019 Non-GAAP Measure ("Adjusted")
|
|
$484.0
|
|
|
$52.9
|
|
|
$98.4
|
|
|
$410.2
|
|
|
$1.86
|
|
Change Non-GAAP Measure ("Adjusted")
|
|
|
|
|
$65.4
|
|
|
$0.28
|
|
||||||
% Change Non-GAAP Measure ("Adjusted")
|
|
|
|
16
|
%
|
15
|
%
|
|
|
|
|
|
|
|
Three Months Ended
|
||||||||||
|
31 December
|
||||||||||
|
2019
|
|
2018
|
||||||||
|
$
|
Margin
|
|
$
|
Margin
|
||||||
Sales
|
|
$2,254.7
|
|
|
|
|
$2,224.0
|
|
|
||
|
|
|
|
|
|
||||||
Net income and net income margin
|
|
$488.9
|
|
21.7
|
%
|
|
|
$357.0
|
|
16.0
|
%
|
Add: Interest expense
|
18.7
|
|
0.8
|
%
|
|
37.3
|
|
1.7
|
%
|
||
Less: Other non-operating income (expense), net
|
9.1
|
|
0.4
|
%
|
|
18.5
|
|
0.8
|
%
|
||
Add: Income tax provision
|
120.7
|
|
5.4
|
%
|
|
132.1
|
|
5.9
|
%
|
||
Add: Depreciation and amortization
|
289.2
|
|
12.8
|
%
|
|
258.0
|
|
11.6
|
%
|
||
Add: Facility closure
|
—
|
|
—
|
%
|
|
29.0
|
|
1.3
|
%
|
||
Adjusted EBITDA and adjusted EBITDA margin
|
|
$908.4
|
|
40.3
|
%
|
|
|
$794.9
|
|
35.7
|
%
|
Change GAAP
|
|
|
|
|
|
||
Net income $ change
|
|
|
$131.9
|
|
|
|
|
Net income % change
|
|
37
|
%
|
|
|
|
|
Net income margin change
|
|
570
|
bp
|
|
|
|
|
Change Non-GAAP
|
|
|
|
|
|
||
Adjusted EBITDA $ change
|
|
|
$113.5
|
|
|
|
|
Adjusted EBITDA % change
|
|
14
|
%
|
|
|
|
|
Adjusted EBITDA margin change
|
|
460
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
The table below reconciles operating income as reflected on our consolidated income statements to total operating income in the table above:
|
|
Three Months Ended
|
|||||
|
31 December
|
|||||
Operating Income
|
2019
|
2018
|
||||
Consolidated operating income
|
|
$561.0
|
|
|
$455.0
|
|
Facility closure
|
—
|
|
29.0
|
|
||
Total
|
|
$561.0
|
|
|
$484.0
|
|
|
Three Months Ended
31 December |
|||||
|
2019
|
2018
|
||||
Income Tax Provision
|
|
$120.7
|
|
|
$132.1
|
|
Income Before Taxes
|
|
$609.6
|
|
|
$489.1
|
|
Effective Tax Rate
|
19.8
|
%
|
27.0
|
%
|
||
Income Tax Provision
|
|
$120.7
|
|
|
$132.1
|
|
Facility closure
|
—
|
|
6.9
|
|
||
Tax reform repatriation
|
—
|
|
15.6
|
|
||
Tax reform adjustment related to deemed foreign dividends
|
—
|
|
(56.2
|
)
|
||
Adjusted Income Tax Provision
|
|
$120.7
|
|
|
$98.4
|
|
Income Before Taxes
|
|
$609.6
|
|
|
$489.1
|
|
Facility closure
|
—
|
|
29.0
|
|
||
Adjusted Income Before Taxes
|
|
$609.6
|
|
|
$518.1
|
|
Adjusted Effective Tax Rate
|
19.8
|
%
|
19.0
|
%
|
|
Three Months Ended
|
|||||
|
31 December
|
|||||
Cash provided by (used for)
|
2019
|
2018
|
||||
Operating activities
|
|
$667.0
|
|
|
$655.2
|
|
Investing activities
|
(260.7
|
)
|
(226.5
|
)
|
||
Financing activities
|
(270.3
|
)
|
(289.8
|
)
|
|
|
Three Months Ended
|
||||||
|
|
31 December
|
||||||
|
|
2019
|
|
2018
|
||||
Cash used for investing activities
|
|
|
$260.7
|
|
|
|
$226.5
|
|
Proceeds from sale of assets and investments
|
|
15.2
|
|
|
1.1
|
|
||
Purchases of investments
|
|
—
|
|
|
(5.3
|
)
|
||
Proceeds from investments
|
|
177.0
|
|
|
178.0
|
|
||
Other investing activities
|
|
1.9
|
|
|
3.1
|
|
||
Capital Expenditures
|
|
|
$454.8
|
|
|
|
$403.4
|
|
|
|
Three Months Ended
|
||||||
|
|
31 December
|
||||||
|
|
2019
|
|
2018
|
||||
Additions to plant and equipment
|
|
|
$447.7
|
|
|
|
$403.4
|
|
Acquisitions, less cash acquired
|
|
—
|
|
|
—
|
|
||
Investment in and advances to unconsolidated affiliates
|
|
7.1
|
|
|
—
|
|
||
Capital Expenditures
|
|
|
$454.8
|
|
|
|
$403.4
|
|
|
Exhibit No.
|
Description
|
|
(3)
|
Articles of Incorporation and Bylaws.
|
|
3.1
|
|
|
|
|
|
(10)
|
Material Contracts
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
(31)
|
Rule 13a-14(a)/15d-14(a) Certifications
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
(32)
|
Section 1350 Certifications
|
|
32.1
|
|
|
|
|
|
(101)
|
Interactive Data Files
|
|
101.INS
|
Inline XBRL Instance Document. The XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
104
|
Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101).
|
|
|
|
†
|
The certification attached as Exhibit 32 that accompanies this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Air Products and Chemicals, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.
|
|
Air Products and Chemicals, Inc.
|
|
|
(Registrant)
|
|
|
|
|
Date: 24 January 2020
|
By:
|
/s/ M. Scott Crocco
|
|
|
M. Scott Crocco
|
|
|
Executive Vice President and Chief Financial Officer
|
(i)
|
President, if not a member of the Board;
|
(ii)
|
Chief Financial Officer;
|
(iii)
|
General Counsel; and
|
(iv)
|
Any other Executive Officer in order of seniority.
|
|
Page
|
|
Deferred Compensation Program for Directors
|
1
|
|
General
|
1
|
|
Effective Dates
|
1
|
|
Participants
|
1
|
|
Mandatory Deferrals
|
2
|
|
Elective Deferrals
|
2
|
|
Accounts
|
2
|
|
Earnings on Accounts
|
3
|
|
Time and Manner of Making Elective Deferrals
|
4
|
|
Payment of Deferred Compensation
|
5
|
|
Election of Time of Payment
|
5
|
|
Changes in Election of Timing of Payment
|
5
|
|
Payment Following Termination of Service
|
5
|
|
Accelerated Payment
|
6
|
|
Payment on Death
|
6
|
|
Change in Control
|
6
|
|
Other Events
|
7
|
|
Miscellaneous Provisions
|
7
|
|
Withholding of Taxes
|
7
|
|
Rights as to Common Stock
|
7
|
|
Adjustments to Avoid Dilution
|
8
|
|
Participant’s Rights Unsecured
|
8
|
|
Nonassignability
|
8
|
|
Statement of Account
|
8
|
|
Administration
|
8
|
|
Business Days
|
8
|
|
Amendment and Termination
|
9
|
|
Notices
|
9
|
|
Governing Law; Section 409A
|
9
|
|
Exhibit A: Election Form
|
11
|
|
1.
|
General
|
(a)
|
Provide compensation for nonemployee directors in the form of Air Products’ equity securities to align the interests of directors with those of Air Products’ shareholders; and
|
(b)
|
Provide nonemployee directors the opportunity to defer compensation earned as a director.
|
2.
|
Effective Dates
|
3.
|
Participants
|
4.
|
Mandatory Deferrals
|
5.
|
Elective Deferrals
|
6.
|
Accounts
|
(a)
|
An Interest Account which shall be deemed to earn interest at rates established on the first business day of each calendar quarter based upon the published average long-term yields of corporate bonds of “A” rated Industrial Companies appearing in Moody’s Bond Survey or an equivalent bond rating service on such day. The Company shall credit the Interest Account with Elective Deferrals which a participant directs to the Interest Account; and
|
(b)
|
(i) An Air Products Stock Account which shall be established for each participant and shall be deemed to be invested in Air Products and Chemicals, Inc. common stock. The Company shall credit the Air Products Stock Account with that number of units (including fractions) obtained by dividing the amount of deferred compensation to be credited to such Account by the “Fair Market Value” of a share of Company common stock on the “Valuation Date” (as each term is defined in Section 6(c) below). The units thus calculated are herein referred to as “Air Products deferred stock units.”
|
(c)
|
(i) For purposes of the Program, the “Fair Market Value” of a share of Company common stock on any date shall mean an amount equal to the closing sale price for such date on the New York Stock Exchange, as reported on the composite transaction tape, or on such other exchange as the “Administrator” (as defined in Section 13 below) may determine. If there is no such sale price quotation for the date as of which Fair Market Value is to be determined, the trading date prior to such date for which there are reported sales prices on the composite transaction tape shall be used.
|
7.
|
Earnings on Accounts
|
(a)
|
Earnings on Interest Account. Interest shall be credited and compounded quarterly.
|
(b)
|
Earnings on Air Products Stock Account. Each Air Products deferred stock unit credited to a participant’s Account shall be credited with earnings quarterly as of the last date of the quarter in an amount equal to the dividend payable during the quarter with respect to a share of Air Products common stock. The amounts so credited shall then be converted into Air Products deferred stock units in the manner described under Section 6(b)(i) above.
|
8.
|
Time and Manner of Making Elective Deferrals
|
(a)
|
The amount or percentage of compensation to be deferred beginning on a future date specified in the notice until such notice is revoked or modified as to future compensation; and
|
(b)
|
The percentage of the Elective Deferrals to be credited to the Interest Account and the percentage to be credited to the Air Products Stock Account.
|
9.
|
Payment of Deferred Compensation
|
(a)
|
Election of Time of Payment. Within 30 days of commencing service as a director to the Company, a participant may make an election to receive distribution of his or her Deferred Compensation Amount in either a lump sum or in a specified number of consecutive annual installments (not to exceed ten), and may elect the date of payment in the case of a lump sum or the date payments commence in the case of installments. All such elections may be made by completing Section III of the Election Form and returning it to the Corporate Secretary. If a participant does not complete an Election Form specifying the timing of payment of his or her Deferred Compensation Amount within the first 30 days of service, such Deferred Compensation Amount will be paid as a lump sum in the first year after the year in which the director’s service as a director ends, and the director will be deemed, for purposes of the Program, to have so elected.
|
(b)
|
Changes in Election of Timing of Payment. A participant may change his or her election in regard to the timing of payment of his or her Deferred Compensation Amount by completing a new Election Form and returning it to the Corporate Secretary. Such a change in election of timing of payment will apply only to Deferred Compensation Amounts earned in future years, except a director may change the timing of payment for previously accrued Deferred Compensation Amounts only as follows:
|
(i)
|
A completed Election Form reflecting the desired change must be received by the Corporate Secretary’s Office no later than one year prior to the first scheduled payment of such Deferred Compensation Amounts under his or her currently effective Election Form(s);
|
(ii)
|
The change must delay the first payment by at least five years from the date the first scheduled payment otherwise would have been made; and
|
(iii)
|
The change will become effective one year from the date the Election Form is received by the Company.
|
(c)
|
Payment Following Termination of Service. The value of the Deferred Compensation Amount credited to a Participant’s Interest Account shall be paid in cash, and the value of the Air Products deferred stock units credited to a participant’s Air Products Stock Account shall be paid by delivery of one share of Company common stock for each unit, in each case in a lump sum or in annual installments, in accordance with the participant’s election.
|
(d)
|
Accelerated Payment. Notwithstanding the deferral period and timing of payment determined in accordance with Sections 9(a) and (b) above, the participant’s Accounts shall be paid on an accelerated basis as follows under the circumstances described below:
|
(i)
|
Payment on Death. In the event of a participant’s death, the value of his or her Interest Account shall be paid in cash; the value of his or her Air Products deferred stock units shall be distributed in shares of Air Products stock. Amounts shall be determined as of the date of death and shall be paid in a single payment or distribution to the participant’s estate or designated beneficiary as soon as practicable following the date of death. A participant may designate a beneficiary by completing Section IV of the Election Form and returning it to the Corporate Secretary’s Office.
|
(ii)
|
Change in Control.
|
(A)
|
In the event of a “change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation” as defined in Treasury Regulation § 1.409A-3(i)(5) (or any successor provision thereto) of the Company (a “Change in Control”), the value of a participant’s Air Products deferred stock units (excluding Converted Air Products Units) shall be paid to the participant in cash or Company Stock, at the discretion of the Board of Directors, as soon as practicable, but no later than 30 days after the Change in Control. If a cash payment is made, the amount shall be equal to the “Change in Control Price”, as defined by the Plan, multiplied by the number of Air Products deferred stock units credited to the participant’s Air Products Stock Account.
|
(B)
|
In the event of a Change in Control followed by a participant’s termination of service as a director of the Company, the value of the participant’s Interest Account and the Fair Market Value of his or her Converted Air Products Units, determined as of the date of termination of service as a director following or in connection with the Change in Control, shall be immediately due and payable to the participant in a single lump sum of (i) cash with respect to the participant’s Interest Account, and (ii) cash or Company Stock, at the discretion of the Board of Directors, with respect to Converted Air Products Units.
|
(iii)
|
Other Events. Upon the occurrence of any other event or conditions which permit an acceleration of payments under regulations implementing Section 409A of the Internal Revenue Code (“Section 409A”), the Administrator, in its sole discretion, may direct the Corporate Secretary’s Office to distribute the value of applicable participants’ accounts in accordance with such regulations.
|
(e)
|
Miscellaneous Provisions.
|
(i)
|
Withholding of Taxes. The right of a participant to payments under this Program shall be subject to the Company’s obligations at any time to withhold income or other taxes from such payments including, without limitation, by reducing the number of shares of common stock to be distributed in payment of Air Products deferred stock units by the number of shares equal in value to the amount of such taxes required to be withheld.
|
(ii)
|
Rights as to Common Stock. No participant with deferred compensation credited to the Air Products Stock Account shall have rights as a Company shareholder with respect thereto unless and until the date as of which shares of common stock are issued in payment of such deferred compensation. No shares of common stock shall be issued and delivered hereunder unless and until all legal requirements applicable to the issuance, delivery or transfer of such shares have been complied with including, without limitation, compliance with the provisions of the Act and of the Securities Act of 1993, as amended, and the applicable requirements of the exchanges on which the Company’s common stock is, at the time, listed. Distributions of shares of common stock in payment under this Program may be made either from shares of authorized but unissued common stock reserved for such purpose by the Board of Directors or from shares of authorized and issued common stock reacquired by the Company and held in its treasury, as from time to time determined by, or pursuant to delegations from, the Board of Directors.
|
(iii)
|
Adjustments to Avoid Dilution. In the event of any change in the common stock of the Company by reason of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares, or a rights offering to purchase common stock at a price substantially below fair market value, or other similar corporate change, including without limitation in connection with a Change in Control of the Company, the value and attributes of each deferred stock unit shall be appropriately adjusted consistent with such change to the same extent as if such deferred stock units were issued and outstanding shares of common stock of the Company, so as to preserve, without increasing, the value of deferred compensation credited to each participant’s Air Products Stock Account. Such adjustments shall be made by the Board of Directors and shall be conclusive and binding for all purposes of the Program.
|
10.
|
Participant’s Rights Unsecured
|
11.
|
Nonassignability
|
12.
|
Statement of Account
|
13.
|
Administration
|
14.
|
Business Days
|
15.
|
Amendment and Termination
|
16.
|
Notices
|
17.
|
Governing Law; Section 409A
|
o
|
Elect (or modify my prior election) to defer receipt of compensation otherwise payable to me in cash for services as a Director of the Company in the manner described below (fill in one):
|
o
|
Revoke my prior election to defer.
|
A.
|
Lump Sum Election
|
o
|
In the year my service as a Director ends.
|
o
|
In the ____ year after the year in which my service as a Director ends (not to exceed tenth).
|
B.
|
Installment Election
|
o
|
The year in which my service ends.
|
o
|
_____ year after the year in which my service ends (the last installment must be paid no later than 10 years after the year in which service ends).
|
C.
|
This election shall apply to:
|
_____
|
Future year Deferred Compensation Amounts only.
|
_____
|
All Deferred Compensation Amounts.*
|
a.
|
Each director shall be paid an annual retainer of $120,000 for serving as a member of the Board of Directors and any Board Committee(s), which retainer shall be payable in quarterly installments at the end of each quarter. Payment of this retainer may be deferred under the Deferred Compensation Program for Directors.
|
b.
|
The chairman of the Audit and Finance Committee shall be paid an additional annual retainer of $25,000. The chairman of the Corporate Governance and Nominating Committee shall be paid an annual retainer of $15,000. The chairman of the Management Development and Compensation Committee shall be paid an annual retainer of $20,000. Such retainers shall be payable in quarterly installments. Payment may be deferred under the Deferred Compensation Program for Directors.
|
c.
|
The lead director shall receive an additional annual retainer of $25,000. Payment may be deferred under the Deferred Compensation Program for Directors.
|
d.
|
Deferred stock units with a targeted dollar value of $150,000 shall be credited annually to the Air Products Stock Account under the Deferred Compensation Program for Directors for each director who is continuing in office after the Annual Meeting of Shareholders, effective as of the day of the Annual Meeting. The number of units to be credited will be determined based on the Fair Market Value of a share of common stock of the Company as determined under the Program.
|
e.
|
Deferred stock units shall be credited to the Air Products Stock Account under the Deferred Compensation Program for Directors for each newly-elected director effective as of the date the director first serves on the Board. The targeted dollar value of such units shall be the amount specified in paragraph (d) above multiplied by a fraction, the numerator of which shall be the number of full or partial months remaining until the next Annual Meeting of Shareholders and the denominator of which shall be twelve. The number of units to be credited will be determined based on the Fair Market Value of a share of common stock of the Company as determined under the Program.
|
f.
|
Directors shall be reimbursed for out-of-pocket expenses incurred in attending regular and special meetings of the Board and Board Committees and any other business function of the Company at the request of the Chairman of the Board. Expenses will be reimbursed as submitted.*/
|
*/
|
Directors are reimbursed at the rate of $.58 per mile or the current rate published by the Internal Revenue Service for use of their personal cars in connection with Company business. Directors using personal aircraft or private carrier will be reimbursed for such expenses at a rate equivalent to first-class airfare of scheduled carriers.
|
/s/ Seifi Ghasemi
|
Seifi Ghasemi
|
Chairman, President and Chief Executive Officer
|
/s/ M. Scott Crocco
|
M. Scott Crocco
|
Executive Vice President and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: 24 January 2020
|
|
/s/ Seifi Ghasemi
|
|
|
Seifi Ghasemi
|
|
|
Chairman, President, and Chief Executive Officer
|
|
|
|
|
|
/s/ M. Scott Crocco
|
|
|
M. Scott Crocco
|
|
|
Executive Vice President and Chief Financial Officer
|