Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended June 30, ~~2020~~2021


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

For the transition period from to


Commission file number			001-38730

LINDE PLC

(Exact name of registrant as specified in its charter)

~~Ireland~~

Ireland

98-1448883

(State or other jurisdiction of incorporation)

(I.R.S. Employer Identification No.)

~~The Priestley Centre~~

The Priestley Centre

10 Riverview Dr.,

10 Priestley Road,

Danbury, CT

Surrey Research Park,

United States 06810

Guildford,

Surrey

GU2 7XY

United Kingdom

(Address of principal executive offices) (Zip Code)

(203) 837-2000

+44

83 242200

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Ordinary shares (€0.001 nominal value per share)

LIN

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of ~~RegulationS-T~~Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At June 30, ~~2020, 525,360,032~~2021, 516,411,320 ordinary shares (€0.001 par value) of the Registrant were outstanding.

Table of Contents

INDEX

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

Consolidated Statements of Income - Quarters Ended June 3 0 ~~, 2020~~ 30, 2021 and ~~2019~~2020

Consolidated Statements of Income - Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020

Consolidated Statements of Comprehensive Income - Quarters Ended June 3 0 ~~, 2020~~ 30, 2021 and ~~2019~~2020

Consolidated Statements of Comprehensive Income - Six Months Ended June 30, 20 20 2021 and ~~201~~92020

Condensed Consolidated Balance Sheets - June 3 0 ~~, 2020~~ 30, 2021 and December 31, ~~2019~~2020

Condensed Consolidated Statements of Cash Flows - Six Months Ended June 3 0 ~~, 2020~~ 30, 2021 and ~~2019~~2020

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

2827

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

4443

PART II - OTHER INFORMATION

Item 1.

Item 1A.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

4544

Item 3.

Defaults Upon Senior Securities

4544

Item 4.

Mine Safety Disclosures

Item 5.

Item 6.

Table of Contents

Forward-looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by terms and phrases such as: anticipate, believe, intend, estimate, expect, continue, should, could, may, plan, project, predict, will, potential, forecast, and similar expressions. They are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances, including trade conflicts and tariffs; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics, pandemics such as COVID-19, and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from accounting principles generally accepted in the United States of America, International Financial Reporting Standards or adjusted projections, estimates or other forward-looking statements.

Linde plc assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A. Risk Factors in Linde plc’s Form 10-K for the fiscal year ended December 31, ~~2019~~2020 filed with the SEC on March ~~2, 2020 and in Item 1A. of Linde plc's Form 10-Q for the period ending March 31, 2020 filed with the SEC on May 7, 2020,~~1, 2021, which should be reviewed carefully. Please consider Linde plc’s forward-looking statements in light of those risks.

Table of Contents

LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Millions of dollars, except per share data)

(UNAUDITED)


		Quarter Ended June 30,							Quarter Ended June 30,
		2020		2019			2021		2020
Sales	Sales	6,377		7,204		Sales	$	7,584	$	6,377
Cost of sales, exclusive of depreciation and amortization	Cost of sales, exclusive of depreciation and amortization	3,619		4,280		Cost of sales, exclusive of depreciation and amortization	4,194		3,619
Selling, general and administrative	Selling, general and administrative	760		884		Selling, general and administrative	822		760
Depreciation and amortization	Depreciation and amortization	1,124		1,195		Depreciation and amortization	1,171		1,124
Research and development	Research and development	34		45		Research and development	34		34
Cost reduction programs and other charges	Cost reduction programs and other charges	249		141		Cost reduction programs and other charges	204		249

Other income (expense) - net	Other income (expense) - net	—		10		Other income (expense) - net	(17)		0
Operating Profit	Operating Profit	591		669		Operating Profit	1,142		591
Interest expense - net	Interest expense - net	18		10		Interest expense - net	18		18
Net pension and OPEB cost (benefit), excluding service cost	Net pension and OPEB cost (benefit), excluding service cost	(45)		(24)		Net pension and OPEB cost (benefit), excluding service cost	(49)		(45)
Income From Continuing Operations Before Income Taxes and Equity Investments	Income From Continuing Operations Before Income Taxes and Equity Investments	618		683		Income From Continuing Operations Before Income Taxes and Equity Investments	1,173		618
Income taxes on continuing operations	Income taxes on continuing operations	164		169		Income taxes on continuing operations	334		164
Income From Continuing Operations Before Equity Investments	Income From Continuing Operations Before Equity Investments	454		514		Income From Continuing Operations Before Equity Investments	839		454
Income from equity investments	Income from equity investments	29		28		Income from equity investments	37		29
Income From Continuing Operations (Including Noncontrolling Interests)	Income From Continuing Operations (Including Noncontrolling Interests)	483		542		Income From Continuing Operations (Including Noncontrolling Interests)	876		483
Income from discontinued operations, net of tax	Income from discontinued operations, net of tax	—		9		Income from discontinued operations, net of tax	1		0
Net Income (Including Noncontrolling Interests)	Net Income (Including Noncontrolling Interests)	483		551		Net Income (Including Noncontrolling Interests)	877		483
Less: noncontrolling interests from continuing operations	Less: noncontrolling interests from continuing operations	(25)		(29)		Less: noncontrolling interests from continuing operations	(36)		(25)
Less: noncontrolling interest from discontinued operations	Less: noncontrolling interest from discontinued operations	—		—		Less: noncontrolling interest from discontinued operations	0		0
Net Income – Linde plc	Net Income – Linde plc	$	458	$	522	Net Income – Linde plc	$	841	$	458

Net Income – Linde plc	Net Income – Linde plc					Net Income – Linde plc
Income from continuing operations	Income from continuing operations	$	458	$	513	Income from continuing operations	$	840	$	458
Income from discontinued operations	Income from discontinued operations	$	—	$	9	Income from discontinued operations	$	1	$	0

Per Share Data – Linde plc Shareholders	Per Share Data – Linde plc Shareholders					Per Share Data – Linde plc Shareholders
Basic earnings per share from continuing operations	Basic earnings per share from continuing operations	$	0.87	$	0.95	Basic earnings per share from continuing operations	$	1.62	$	0.87
Basic earnings per share from discontinued operations	Basic earnings per share from discontinued operations	—		0.02		Basic earnings per share from discontinued operations	0		0
Basic earnings per share	Basic earnings per share	$	0.87	$	0.97	Basic earnings per share	$	1.62	$	0.87
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	0.87	$	0.94	Diluted earnings per share from continuing operations	$	1.60	$	0.87
Diluted earnings per share from discontinued operations	Diluted earnings per share from discontinued operations	—		0.02		Diluted earnings per share from discontinued operations	0		0
Diluted earnings per share	Diluted earnings per share	$	0.87	$	0.96	Diluted earnings per share	$	1.60	$	0.87

Weighted Average Shares Outstanding (000’s):	Weighted Average Shares Outstanding (000’s):					Weighted Average Shares Outstanding (000’s):
Basic shares outstanding	Basic shares outstanding	525,510		542,561		Basic shares outstanding	518,950		525,510
Diluted shares outstanding	Diluted shares outstanding	529,054		546,488		Diluted shares outstanding	523,723		529,054

The accompanying notes are an integral part of these financial statements.

Table of Contents

LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Millions of dollars, except per share data)

(UNAUDITED)


		Six Months Ended June 30,							Six Months Ended June 30,
		2020		2019			2021		2020
Sales	Sales	$	13,116	$	14,148	Sales	$	14,827	$	13,116
Cost of sales, exclusive of depreciation and amortization	Cost of sales, exclusive of depreciation and amortization	7,462		8,396		Cost of sales, exclusive of depreciation and amortization	8,248		7,462
Selling, general and administrative	Selling, general and administrative	1,621		1,763		Selling, general and administrative	1,609		1,621
Depreciation and amortization	Depreciation and amortization	2,266		2,418		Depreciation and amortization	2,337		2,266
Research and development	Research and development	78		91		Research and development	69		78
Cost reduction programs and other charges	Cost reduction programs and other charges	380		230		Cost reduction programs and other charges	196		380

Other income (expense) - net	Other income (expense) - net	15		28		Other income (expense) - net	(13)		15
Operating Profit	Operating Profit	1,324		1,278		Operating Profit	2,355		1,324
Interest expense - net	Interest expense - net	42		33		Interest expense - net	38		42
Net pension and OPEB cost (benefit), excluding service cost	Net pension and OPEB cost (benefit), excluding service cost	(90)		(9)		Net pension and OPEB cost (benefit), excluding service cost	(98)		(90)
Income From Continuing Operations Before Income Taxes and Equity Investments	Income From Continuing Operations Before Income Taxes and Equity Investments	1,372		1,254		Income From Continuing Operations Before Income Taxes and Equity Investments	2,415		1,372
Income taxes on continuing operations	Income taxes on continuing operations	329		309		Income taxes on continuing operations	602		329
Income From Continuing Operations Before Equity Investments	Income From Continuing Operations Before Equity Investments	1,043		945		Income From Continuing Operations Before Equity Investments	1,813		1,043
Income from equity investments	Income from equity investments	46		62		Income from equity investments	80		46
Income From Continuing Operations (Including Noncontrolling Interests)	Income From Continuing Operations (Including Noncontrolling Interests)	1,089		1,007		Income From Continuing Operations (Including Noncontrolling Interests)	1,893		1,089
Income from discontinued operations, net of tax	Income from discontinued operations, net of tax	2		98		Income from discontinued operations, net of tax	2		2
Net Income (Including Noncontrolling Interests)	Net Income (Including Noncontrolling Interests)	1,091		1,105		Net Income (Including Noncontrolling Interests)	1,895		1,091
Less: noncontrolling interests from continuing operations	Less: noncontrolling interests from continuing operations	(60)		(59)		Less: noncontrolling interests from continuing operations	(74)		(60)
Less: noncontrolling interest from discontinued operations	Less: noncontrolling interest from discontinued operations	—		(7)		Less: noncontrolling interest from discontinued operations	0		0
Net Income – Linde plc	Net Income – Linde plc	$	1,031	$	1,039	Net Income – Linde plc	$	1,821	$	1,031

Net Income – Linde plc	Net Income – Linde plc					Net Income – Linde plc
Income from continuing operations	Income from continuing operations	$	1,029	$	948	Income from continuing operations	$	1,819	$	1,029
Income from discontinued operations	Income from discontinued operations	$	2	$	91	Income from discontinued operations	$	2	$	2

Per Share Data – Linde plc Shareholders	Per Share Data – Linde plc Shareholders					Per Share Data – Linde plc Shareholders
Basic earnings per share from continuing operations	Basic earnings per share from continuing operations	$	1.95	$	1.74	Basic earnings per share from continuing operations	$	3.49	$	1.95
Basic earnings per share from discontinued operations	Basic earnings per share from discontinued operations	—		0.17		Basic earnings per share from discontinued operations	0		0
Basic earnings per share	Basic earnings per share	$	1.95	$	1.91	Basic earnings per share	$	3.49	$	1.95
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	1.93	$	1.73	Diluted earnings per share from continuing operations	$	3.46	$	1.93
Diluted earnings per share from discontinued operations	Diluted earnings per share from discontinued operations	—		0.17		Diluted earnings per share from discontinued operations	0		0
Diluted earnings per share	Diluted earnings per share	$	1.93	$	1.90	Diluted earnings per share	$	3.46	$	1.93

Weighted Average Shares Outstanding (000’s):	Weighted Average Shares Outstanding (000’s):					Weighted Average Shares Outstanding (000’s):
Basic shares outstanding	Basic shares outstanding	528,385		544,033		Basic shares outstanding	520,691		528,385
Diluted shares outstanding	Diluted shares outstanding	532,112		547,771		Diluted shares outstanding	525,380		532,112

The accompanying notes are an integral part of these financial statements.

Table of Contents

LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of dollars)

(UNAUDITED)


		Quarter Ended June 30,							Quarter Ended June 30,
		2020		2019			2021		2020
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	$	483	$	551	NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	$	877	$	483

OTHER COMPREHENSIVE INCOME (LOSS)	OTHER COMPREHENSIVE INCOME (LOSS)					OTHER COMPREHENSIVE INCOME (LOSS)
Translation adjustments:	Translation adjustments:					Translation adjustments:
Foreign currency translation adjustments	Foreign currency translation adjustments	745		(170)		Foreign currency translation adjustments	412		745
Reclassification to net income	Reclassification to net income	—		—		Reclassification to net income	0		0
Income taxes	Income taxes	(1)		8		Income taxes	(2)		(1)
Translation adjustments	Translation adjustments	744		(162)		Translation adjustments	410		744
Funded status - retirement obligations (Note 8):	Funded status - retirement obligations (Note 8):					Funded status - retirement obligations (Note 8):
Retirement program remeasurements	Retirement program remeasurements	(7)		(32)		Retirement program remeasurements	(19)		(7)
Reclassifications to net income	Reclassifications to net income	21		23		Reclassifications to net income	44		21
Income taxes	Income taxes	(9)		1		Income taxes	(2)		(9)
Funded status - retirement obligations	Funded status - retirement obligations	5		(8)		Funded status - retirement obligations	23		5
Derivative instruments (Note 5):	Derivative instruments (Note 5):					Derivative instruments (Note 5):
Current unrealized gain (loss)	Current unrealized gain (loss)	20		(3)		Current unrealized gain (loss)	19		20
Reclassifications to net income	Reclassifications to net income	26		—		Reclassifications to net income	(3)		26
Income taxes	Income taxes	(10)		1		Income taxes	(3)		(10)
Derivative instruments	Derivative instruments	36		(2)		Derivative instruments	13		36
Securities:
Current unrealized gain (loss)		—		9

Securities		—		9

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	785		(163)		TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	446		785

COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	1,268		388		COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	1,323		1,268
Less: noncontrolling interests	Less: noncontrolling interests	(43)		(8)		Less: noncontrolling interests	(45)		(43)
COMPREHENSIVE INCOME (LOSS) - LINDE PLC	COMPREHENSIVE INCOME (LOSS) - LINDE PLC	$	1,225	$	380	COMPREHENSIVE INCOME (LOSS) - LINDE PLC	$	1,278	$	1,225

The accompanying notes are an integral part of these financial statements.

Table of Contents

LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of dollars)

(UNAUDITED)


		Six Months Ended June 30,							Six Months Ended June 30,
		2020		2019			2021		2020
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	$	1,091	$	1,105	NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	$	1,895	$	1,091

OTHER COMPREHENSIVE INCOME (LOSS)	OTHER COMPREHENSIVE INCOME (LOSS)					OTHER COMPREHENSIVE INCOME (LOSS)
Translation adjustments:	Translation adjustments:					Translation adjustments:
Foreign currency translation adjustments	Foreign currency translation adjustments	(1,995)		(47)		Foreign currency translation adjustments	(245)		(1,995)

Reclassification to net income		—		12
Reclassification to net income (Note 13)						Reclassification to net income (Note 13)	(52)		0
Income taxes	Income taxes	24		5		Income taxes	(8)		24
Translation adjustments	Translation adjustments	(1,971)		(30)		Translation adjustments	(305)		(1,971)
Funded status - retirement obligations (Note 8):	Funded status - retirement obligations (Note 8):					Funded status - retirement obligations (Note 8):

Retirement program remeasurements	Retirement program remeasurements	51		(34)		Retirement program remeasurements	1		51

Reclassifications to net income	Reclassifications to net income	43		87		Reclassifications to net income	87		43
Income taxes	Income taxes	(24)		(17)		Income taxes	(25)		(24)
Funded status - retirement obligations	Funded status - retirement obligations	70		36		Funded status - retirement obligations	63		70
Derivative instruments (Note 5):	Derivative instruments (Note 5):					Derivative instruments (Note 5):
Current period unrealized gain (loss)	Current period unrealized gain (loss)	(45)		(20)		Current period unrealized gain (loss)	40		(45)
Reclassifications to net income	Reclassifications to net income	50		—		Reclassifications to net income	(5)		50
Income taxes	Income taxes	1		4		Income taxes	(8)		1
Derivative instruments	Derivative instruments	6		(16)		Derivative instruments	27		6
Securities:
Current year unrealized gain (loss)		—		1

Securities		—		1

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	(1,895)		(9)		TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	(215)		(1,895)

COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	(804)		1,096		COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	1,680		(804)
Less: noncontrolling interests	Less: noncontrolling interests	28		22		Less: noncontrolling interests	(77)		28
COMPREHENSIVE INCOME (LOSS) - LINDE PLC	COMPREHENSIVE INCOME (LOSS) - LINDE PLC	$	(776)	$	1,118	COMPREHENSIVE INCOME (LOSS) - LINDE PLC	$	1,603	$	(776)

The accompanying notes are an integral part of these financial statements.

Table of Contents

LINDE PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions of dollars)

(UNAUDITED)


		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	4,941	$	2,700	Cash and cash equivalents	$	3,137	$	3,754
Accounts receivable - net	Accounts receivable - net	3,994		4,322		Accounts receivable - net	4,342		4,167
Contract assets	Contract assets	226		368		Contract assets	173		162
Inventories	Inventories	1,715		1,697		Inventories	1,692		1,729
Assets held for sale		3		125
Prepaid and other current assets	Prepaid and other current assets	1,194		1,140		Prepaid and other current assets	1,102		1,112
Total Current Assets	Total Current Assets	12,073		10,352		Total Current Assets	10,446		10,924
Property, plant and equipment - net	Property, plant and equipment - net	27,693		29,064		Property, plant and equipment - net	26,917		28,711

Goodwill	Goodwill	26,580		27,019		Goodwill	27,621		28,201
Other intangible assets - net	Other intangible assets - net	15,504		16,137		Other intangible assets - net	14,493		16,184
Other long-term assets	Other long-term assets	4,006		4,040		Other long-term assets	4,868		4,209
Total Assets	Total Assets	$	85,856	$	86,612	Total Assets	$	84,345	$	88,229
Liabilities and equity	Liabilities and equity					Liabilities and equity
Accounts payable	Accounts payable	$	2,816	$	3,266	Accounts payable	$	3,143	$	3,095
Short-term debt	Short-term debt	3,679		1,732		Short-term debt	3,681		3,251
Current portion of long-term debt	Current portion of long-term debt	2,723		1,531		Current portion of long-term debt	1,827		751
Contract liabilities	Contract liabilities	1,693		1,758		Contract liabilities	1,787		1,769

Liabilities of assets held for sale		1		2
Other current liabilities	Other current liabilities	4,183		3,871		Other current liabilities	4,238		4,874
Total Current Liabilities	Total Current Liabilities	15,095		12,160		Total Current Liabilities	14,676		13,740
Long-term debt	Long-term debt	11,078		10,693		Long-term debt	9,984		12,152
Other long-term liabilities	Other long-term liabilities	11,746		12,124		Other long-term liabilities	12,457		12,755

Total Liabilities	Total Liabilities	37,919		34,977		Total Liabilities	37,117		38,647
Redeemable noncontrolling interests	Redeemable noncontrolling interests	13		113		Redeemable noncontrolling interests	13		13
Linde plc Shareholders’ Equity:	Linde plc Shareholders’ Equity:					Linde plc Shareholders’ Equity:
Ordinary shares,€0.01 par value, authorized 1,750,000,000 shares, 2020 issued: 552,012,862 ordinary shares; 2019 issued: 552,012,862 ordinary shares		1		1
Ordinary shares,€0.001 par value, authorized 1,750,000,000 shares, 2021 issued: 552,012,862 ordinary shares; 2020 issued: 552,012,862 ordinary shares						Ordinary shares,€0.001 par value, authorized 1,750,000,000 shares, 2021 issued: 552,012,862 ordinary shares; 2020 issued: 552,012,862 ordinary shares	1		1
Additional paid-in capital	Additional paid-in capital	40,211		40,201		Additional paid-in capital	40,200		40,202
Retained earnings	Retained earnings	16,782		16,842		Retained earnings	17,820		17,178
Accumulated other comprehensive income (loss) (Note 11)	Accumulated other comprehensive income (loss) (Note 11)	(6,621)		(4,814)		Accumulated other comprehensive income (loss) (Note 11)	(4,908)		(4,690)
Less: Treasury stock, at cost (2020 – 26,652,830 shares and 2019 – 17,632,318 shares)		(4,836)		(3,156)
Less: Treasury shares, at cost (2021 – 35,601,542 shares and 2020 – 28,718,333 shares)						Less: Treasury shares, at cost (2021 – 35,601,542 shares and 2020 – 28,718,333 shares)	(7,336)		(5,374)
Total Linde plc Shareholders’ Equity	Total Linde plc Shareholders’ Equity	45,537		49,074		Total Linde plc Shareholders’ Equity	45,777		47,317
Noncontrolling interests	Noncontrolling interests	2,387		2,448		Noncontrolling interests	1,438		2,252
Total Equity	Total Equity	47,924		51,522		Total Equity	47,215		49,569
Total Liabilities and Equity	Total Liabilities and Equity	$	85,856	$	86,612	Total Liabilities and Equity	$	84,345	$	88,229

The accompanying notes are an integral part of these financial statements.

Table of Contents

LINDE PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of dollars)

(UNAUDITED)


		Six Months Ended June 30,							Six Months Ended June 30,
		2020		2019			2021		2020
Increase (Decrease) in Cash and Cash Equivalents	Increase (Decrease) in Cash and Cash Equivalents					Increase (Decrease) in Cash and Cash Equivalents
Operations	Operations					Operations
Net income - Linde plc	Net income - Linde plc	$	1,031	$	1,039	Net income - Linde plc	$	1,821	$	1,031
Less: Income from discontinued operations, net of tax and noncontrolling interests	Less: Income from discontinued operations, net of tax and noncontrolling interests	(2)		(91)		Less: Income from discontinued operations, net of tax and noncontrolling interests	(2)		(2)
Add: Noncontrolling interests from continuing operations	Add: Noncontrolling interests from continuing operations	60		59		Add: Noncontrolling interests from continuing operations	74		60
Income from continuing operations (including noncontrolling interests)	Income from continuing operations (including noncontrolling interests)	1,089		1,007		Income from continuing operations (including noncontrolling interests)	1,893		1,089
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Cost reduction programs and other charges, net of payments	Cost reduction programs and other charges, net of payments	239		(286)		Cost reduction programs and other charges, net of payments	95		239
Amortization of merger-related inventory step-up		—		10

Depreciation and amortization	Depreciation and amortization	2,266		2,418		Depreciation and amortization	2,337		2,266
Deferred income taxes	Deferred income taxes	(261)		(110)		Deferred income taxes	(78)		(261)
Share-based compensation	Share-based compensation	75		38		Share-based compensation	63		75

Working capital:	Working capital:					Working capital:
Accounts receivable	Accounts receivable	(118)		(188)		Accounts receivable	(388)		(118)
Inventory	Inventory	(82)		(73)		Inventory	(42)		(82)
Prepaid and other current assets	Prepaid and other current assets	(48)		(76)		Prepaid and other current assets	(20)		(48)
Payables and accruals	Payables and accruals	(27)		(247)		Payables and accruals	39		(27)
Contract assets and liabilities, net	Contract assets and liabilities, net	71		(103)		Contract assets and liabilities, net	51		71
Pension contributions	Pension contributions	(41)		(43)		Pension contributions	(28)		(41)
Long-term assets, liabilities and other	Long-term assets, liabilities and other	(52)		(274)		Long-term assets, liabilities and other	14		(52)
Net cash provided by operating activities	Net cash provided by operating activities	3,111		2,073		Net cash provided by operating activities	3,936		3,111
Investing	Investing					Investing
Capital expenditures	Capital expenditures	(1,586)		(1,708)		Capital expenditures	(1,506)		(1,586)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(41)		(140)		Acquisitions, net of cash acquired	(31)		(41)
Divestitures and asset sales, net of cash divested	Divestitures and asset sales, net of cash divested	380		4,689		Divestitures and asset sales, net of cash divested	77		380
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	(1,247)		2,841		Net cash provided by (used for) investing activities	(1,460)		(1,247)
Financing	Financing					Financing
Short-term debt borrowings (repayments) - net	Short-term debt borrowings (repayments) - net	1,945		(11)		Short-term debt borrowings (repayments) - net	1,081		1,945
Long-term debt borrowings	Long-term debt borrowings	1,656		45		Long-term debt borrowings	51		1,656
Long-term debt repayments	Long-term debt repayments	(78)		(1,311)		Long-term debt repayments	(818)		(78)
Issuances of ordinary shares	Issuances of ordinary shares	25		55		Issuances of ordinary shares	32		25
Purchases of ordinary shares	Purchases of ordinary shares	(1,828)		(1,250)		Purchases of ordinary shares	(2,082)		(1,828)
Cash dividends - Linde plc shareholders	Cash dividends - Linde plc shareholders	(1,017)		(951)		Cash dividends - Linde plc shareholders	(1,102)		(1,017)

Noncontrolling interest transactions and other	Noncontrolling interest transactions and other	(148)		(3,222)		Noncontrolling interest transactions and other	(277)		(148)
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	555		(6,645)		Net cash provided by (used for) financing activities	(3,115)		555
Discontinued Operations
Cash provided by operating activities		—		70
Cash used for investing activities		—		(59)
Cash provided by financing activities		—		5
Net cash provided by discontinued operations		—		16

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(178)		(49)		Effect of exchange rate changes on cash and cash equivalents	22		(178)
Change in cash and cash equivalents	Change in cash and cash equivalents	2,241		(1,764)		Change in cash and cash equivalents	(617)		2,241
Cash and cash equivalents, beginning-of-period	Cash and cash equivalents, beginning-of-period	2,700		4,466		Cash and cash equivalents, beginning-of-period	3,754		2,700
Cash and cash equivalents, including discontinued operations		4,941		2,702
Cash and cash equivalents of discontinued operations		—		(16)

Cash and cash equivalents, end-of-period	Cash and cash equivalents, end-of-period	$	4,941	$	2,686	Cash and cash equivalents, end-of-period	$	3,137	$	4,941

The accompanying notes are an integral part of these financial statements.

Table of Contents

INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Notes to Condensed Consolidated Financial Statements - Linde plc and Subsidiaries (Unaudited)

Table of Contents

1. Summary of Significant Accounting Policies

Presentation of Condensed Consolidated Financial Statements - In the opinion of Linde management, the accompanying condensed consolidated financial statements include all adjustments necessary for a fair presentation of the results for the interim periods presented and such adjustments are of a normal recurring nature. The accompanying condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements of Linde plc and subsidiaries in Linde's ~~2019~~2020 Annual Report on Form 10-K. There have been no material changes to the company’s significant accounting policies during ~~2020.~~2021.

Accounting Standards Implemented in ~~2020~~2021

•~~Credit Losses on Financial Instruments~~ Income Taxes - Simplifying the Accounting for Income Taxes– - In ~~June 2016,~~December 2019, the FASB issued ~~updated~~ guidance onwhich simplifies the ~~measurement~~accounting for income taxes by removing several exceptions in the current standard and adds guidance to reduce complexity in certain areas, such as requiring that an entity reflect the effect of ~~credit losses.~~an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, evaluating whether a step-up in tax basis of goodwill relates to a business combination or a separate transaction and allocating taxes to members of a consolidated group. The ~~guidance introduces a~~ new ~~accounting model for expected credit losses on financial instruments, including trade receivables, based on estimates of current expected credit losses. This guidance~~standard is effective for ~~the company~~fiscal years, and interim periods within those fiscal years, beginning ~~in the first quarter~~after December 15, 2020, ~~and requires companies to apply the change in accounting on a modified retrospective basis.~~with early adoption permitted. The adoption of this standard did not materially impact the ~~guidance had an immaterial impact on the~~company's consolidated financial statements.

•~~Simplifying the Test for Goodwill Impairment~~ – In January 2017, the FASB issued updated guidance on the measurement of goodwill. The new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. The guidance is effective for the company beginning in the first quarter 2020. The adoption of the guidance had no impact on the consolidated financial statements.

•~~Fair Value Measurement Disclosures~~Reference Rate Reform - In ~~August 2018,~~March 2020 with amendments in 2021, the FASB issued guidance related to reference rate reform which provides practical expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions that ~~modifies~~ the ~~disclosure requirements for fair value measurements.~~reference London Interbank Offered Rate (“LIBOR”) and other interbank offered rates. This update is applicable to our contracts and hedging relationships that reference LIBOR and other interbank offered rates. The ~~guidance is effective in fiscal year 2020, with early adoption permitted. Certain~~ amendments ~~must~~may be applied to impacted contracts and hedges prospectively ~~while other amendments must be applied retrospectively. The adoption of the guidance had an immaterial impact on the consolidated financial statements.~~

~~Accounting Standards to be Implemented~~

•~~Retirement Benefit Disclosures~~ - In August 2018, the FASB issued guidance that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. For Linde, the guidance is effective for the year endingthrough December 31, ~~2020 and must be applied on a retrospective basis.~~2022. The ~~company is evaluating the impact~~application of this guidance ~~will have on~~did not materially impact the ~~disclosures in the notes to the~~company's consolidated financial statements.

Reclassifications – Certain prior periods' amounts have been reclassified to conform to the current year’s presentation.

~~Other Developments~~

While the events surrounding the COVID-19 pandemic continued to evolve during the first six months of 2020 Linde's primary focus was, and continues to be, the health and safety of its employees and the needs of its customers. The spread of COVID-19 has caused the company to modify its business practices (including employee travel, employee work locations, and cancellation of physical participation in meetings and events), and the company may take further actions if required by government authorities or that it determines are in the best interests of the company's employees, customers, suppliers and other stakeholders. The ultimate magnitude of COVID-19, including the extent of its impact on the company’s operational results, which could be material, will be determined by the length of time that such circumstances continue, measures taken to prevent its spread, and the demand for the company’s products and services, as well as the effect of governmental and public actions taken in response.

~~Table of Contents~~

2. Cost Reduction Programs and Other Charges

~~2020~~2021 Charges

Cost reduction programs and other charges were ~~$249~~$204 million and ~~$380~~$196 million for the quarter and six months ended June 30, ~~2020, respectively~~2021, respectively ($~~187~~198 million and ~~$282~~$170 million, after tax). The ~~following~~following table summarizes the activities related to the company's cost reduction charges for the quarter and six months ended June 30, ~~2020:~~2021:


		Quarter Ended June 30, 2020																			Quarter Ended June 30, 2021
(millions of dollars)	(millions of dollars)	Severance costs		Other cost reduction charges		Total cost reduction program related charges		Merger-related and other charges		Total		(millions of dollars)	Severance costs		Other cost reduction charges		Total cost reduction program related charges		Merger-related and other charges		Total
Americas	Americas	$	25	$	8	$	33	$	6	$	39	Americas	$	0	$	0	$	0	$	0	$	0
EMEA	EMEA	112		4		116		(3)		113		EMEA	169		14		183		0		183
APAC	APAC	1		—		1		(5)		(4)		APAC	5		0		5		0		5
Engineering	Engineering	7		7		14		7		21		Engineering	0		6		6		0		6
Other	Other	47		2		49		31		80		Other	8		2		10		0		10
Total	Total	$	192	$	21	$	213	$	36	$	249	Total	$	182	$	22	$	204	$	0	$	204

		Six Months Ended June 30, 2020
(millions of dollars)		Severance costs		Other cost reduction charges		Total cost reduction program related charges		Merger-related and other charges		Total
Americas		$	31	$	23	$	54	$	6	$	60
EMEA		138		4		142		—		142
APAC		3		2		5		3		8
Engineering		21		7		28		8		36
Other		57		5		62		72		134
Total		$	250	$	41	$	291	$	89	$	380

Table of Contents


	Six Months Ended June 30, 2021
(millions of dollars)	Severance costs		Other cost reduction charges		Total cost reduction program related charges		Merger-related and other charges		Total
Americas	$	3	$	2	$	5	$	0	$	5
EMEA	182		21		203		0		203
APAC	7		2		9		(53)		(44)
Engineering	7		6		13		0		13
Other	9		9		18		1		19
Total	$	208	$	40	$	248	$	(52)	$	196

Cost Reduction Programs

Total cost reduction program related charges were ~~$213 million and $291~~$204 million for the quarter and $248 million for the six months ended June 30, ~~2020, respectively~~2021 ($~~151~~150 million and ~~$207~~$184 million, after tax).

Severance costs

Severance costs ~~are $192~~were $182 million and ~~$250~~$208 million for the quarter and six months ended June 30, ~~2020, respectively.~~2021. As of June 30, ~~2020 these~~2021, approximately half of the actions ~~were substantially complete,~~have been taken, with ~~the remainder anticipated~~remaining actions planned to be completed by the ~~end~~first quarter of ~~2021.~~2022.

Other cost reduction charges

Other cost reduction charges of ~~$21~~$22 million and ~~$41~~$40 million for the quarter and six months ended June 30, ~~2020,~~2021, respectively, are primarily charges related to the execution of the company's synergistic actions including location consolidations and business rationalization projects, ~~software and~~ process harmonization, and associated non-recurring costs.

Merger-related Costs and Other Charges

~~Linde incurred merger-related~~Merger-related costs and other charges ~~which totaled $36~~were flat during the quarter ended June 30, 2021 and a benefit of $52 million ~~and $89 million ($36 million and $75 million after tax)~~ for the ~~quarter and~~ six months ended June 30, ~~2020, respectively.~~2021 (charge of $48 million and benefit of $14 million, after tax). The pre-tax benefit was primarily due to a $52 million gain triggered by a joint venture deconsolidation in the APAC segment in the first quarter (see Note 13).

In addition, the quarter and six months ended June 30, 2021 include net income tax charges of $48 million and $38 million, respectively, primarily related to (i) $81 million of expense due to the revaluation of a net deferred tax liability resulting from a tax rate increase in the United Kingdom enacted in the current quarter, and (ii) a tax settlement benefit of $33 million.

Cash Requirements

~~Table of Contents~~

The total cash requirements of the ~~cost~~cost reduction program and other charges during the six months ended June 30, ~~2020~~2021 are estimated to be approximately ~~$296~~$223 million and are expected to be paid through ~~2022.~~2023. Total cost reduction programs and other charges, net of payments in the condensed consolidated statements of cash flows for the six months ended June 30, ~~2020~~2021 also reflects the impact of cash payments of liabilities, including merger-related tax liabilities, accrued as of December 31, ~~2019.~~2020.

The following table summarizes the activities related to the company's cost reduction related charges for the six months ended June 30, ~~2020:~~2021:

(millions of dollars) Severance costs Other cost reduction charges Total cost reduction program related charges Merger-related and other charges Total
Balance, December 31, 2019 $ 117 $ 16 $ 133 $ 67 $ 200
2020 Cost Reduction Programs and Other Charges 250 41 291 89 380
Less: Cash payments (64) (13) (77) (37) (114)
Less: Non-cash charges — (24) (24) (64) (88)
Foreign currency translation and other 1 1 2 2 4
Balance, June 30, 2020 $ 304 $ 21 $ 325 $ 57 $ 382

Table of Contents


(millions of dollars)	Severance costs		Other cost reduction charges		Total cost reduction program related charges		Merger-related and other charges		Total




Balance, December 31, 2020	$	283	$	22	$	305	$	64	$	369
2021 Cost Reduction Programs and Other Charges	208		40		248		(52)		196
Less: Cash payments	(85)		(5)		(90)		(6)		(96)
Less: Non-cash charges / benefits	0		(19)		(19)		54		35
Foreign currency translation and other	(5)		0		(5)		(3)		(8)
Balance, June 30, 2021	$	401	$	38	$	439	$	57	$	496

~~2019~~2020 Charges

Cost reduction programs and other charges were ~~$141~~$249 million and ~~$230~~$380 million for the quarter and six months ended June 30, ~~2019, respectively~~2020 ($~~113~~187 million and ~~$194~~$282 million, after tax)~~, including merger-related costs of $65~~.

Total cost reduction program related charges were $213 million and ~~$121~~$291 million ($151 million and $207 million, respectively, after tax). for the quarter and six months ended June 30, 2020, respectively, which consisted primarily of severance charges of $192 million and $250 million, largely in the EMEA and Engineering segments. Merger-related and other charges were $36 million and $89 million for the quarter and six months ended June 30, ~~2019, respectively~~2020 ($5236 million and ~~$105 million after tax) and synergy-related charges, primarily severance, of $76 million and $109 million for the quarter and six months ended June 30, 2019, respectively ($61 million and $89~~$75 million, after tax).

Classification in the condensed consolidated financial statements

The costs are shown within operating profit in a separate line item on the consolidated statements of income. On the condensed consolidated ~~statement~~statements of cash flows, the impact of these costs, net of cash payments, is shown as an adjustment to reconcile net income to net cash provided by operating activities. In Note 10 - Segments, Linde excluded these costs from its management definition of segment operating profit; a reconciliation of segment operating profit to consolidated operating profit is shown within the segment operating profit table.

Table of Contents

3. Supplemental Information

Receivables

~~For trade receivables an expected credit loss approach was adopted as of January 1, 2020.~~ Linde applies loss rates that are lifetime expected credit losses at initial recognition of the receivables. These expected loss rates are based on an analysis of the actual historical default rates for each business, taking regional circumstances into account. If necessary, these historical default rates are adjusted to reflect the impact of current changes in the macroeconomic environment using forward-looking information. The loss rates are also ~~critically~~ evaluated based on the expectations of the responsible management team regarding the collectability of the receivables. Gross trade receivables aged less than one year were ~~$3,982~~$4,326 million and ~~$4,390~~$4,169 million at June 30, ~~2020~~2021 and December 31, ~~2019~~2020 respectively and gross receivables aged greater than one year were ~~$302~~$316 million and ~~$249~~$358 million at June 30, ~~2020~~2021 and December 31, ~~2019~~2020 respectively. Other receivables were $130 million and $111 million at June 30, 2021 and December 31, 2020, respectively. Receivables aged greater than one year are generally fully reserved unless specific circumstances warrant exceptions, such as those backed by federal governments.

Accounts receivable net of reserves were ~~$3,994~~$4,342 million at June 30, ~~2020~~2021 and ~~$4,322~~$4,167 million at December 31, ~~2019.~~2020. Allowances for expected credit losses were ~~$416~~$430 million at June 30, ~~2020~~2021 and ~~$306~~$471 million at December 31, ~~2019.~~2020. Provisions for expected credit losses were ~~$95~~$71 million and ~~$111~~$95 million for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The allowance activity in the six months ended June 30, 2021 and 2020 related to write-offs of uncollectible amounts, net of recoveries and currency movements is not material.

~~Table of Contents~~

Inventories

The following is a summary of Linde's consolidated inventories:


(Millions of dollars)	(Millions of dollars)	June 30, 2020		December 31, 2019		(Millions of dollars)	June 30, 2021		December 31, 2020
Inventories	Inventories					Inventories
Raw materials and supplies	Raw materials and supplies	$	387	$	396	Raw materials and supplies	$	369	$	411
Work in process	Work in process	359		331		Work in process	358		337
Finished goods	Finished goods	969		970		Finished goods	965		981
Total inventories	Total inventories	$	1,715	$	1,697	Total inventories	$	1,692	$	1,729

Table of Contents

4. Debt

The following is a summary of Linde's outstanding debt at June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


(Millions of dollars)	(Millions of dollars)	June 30, 2020		December 31, 2019		(Millions of dollars)	June 30, 2021		December 31, 2020
SHORT-TERM	SHORT-TERM					SHORT-TERM
Commercial paper and U.S. bank borrowings		$	2,944	$	996
Other bank borrowings (primarily international)		735		736
Commercial paper						Commercial paper	$	2,808	$	2,527
Other borrowings (primarily non U.S.)						Other borrowings (primarily non U.S.)	873		724
Total short-term debt	Total short-term debt	3,679		1,732		Total short-term debt	3,681		3,251
LONG-TERM (a)	LONG-TERM (a)					LONG-TERM (a)
(U.S. dollar denominated unless otherwise noted)	(U.S. dollar denominated unless otherwise noted)					(U.S. dollar denominated unless otherwise noted)
2.25% Notes due 2020		300		300
1.75% Euro denominated notes due 2020 (b)		1,129		1,137
0.634% Euro denominated notes due 2020		57		56
4.05% Notes due 2021		500		499
3.875% Euro denominated notes due 2021 (b)		700		711
3.00% Notes due 2021		499		499
3.875% Euro denominated notes due 2021 (c)						3.875% Euro denominated notes due 2021 (c)	—		748
0.250% Euro denominated notes due 2022 (b)	0.250% Euro denominated notes due 2022 (b)	1,130		1,129		0.250% Euro denominated notes due 2022 (b)	1,188		1,226
2.45% Notes due 2022	2.45% Notes due 2022	599		599		2.45% Notes due 2022	600		599
2.20% Notes due 2022	2.20% Notes due 2022	499		499		2.20% Notes due 2022	499		499
2.70% Notes due 2023	2.70% Notes due 2023	499		499		2.70% Notes due 2023	499		499
2.00% Euro denominated notes due 2023 (b)	2.00% Euro denominated notes due 2023 (b)	772		776		2.00% Euro denominated notes due 2023 (b)	800		832
5.875% GBP denominated notes due 2023 (b)	5.875% GBP denominated notes due 2023 (b)	423		456		5.875% GBP denominated notes due 2023 (b)	452		460
1.20% Euro denominated notes due 2024	1.20% Euro denominated notes due 2024	616		615		1.20% Euro denominated notes due 2024	651		671
1.875% Euro denominated notes due 2024 (b)	1.875% Euro denominated notes due 2024 (b)	360		361		1.875% Euro denominated notes due 2024 (b)	374		389
2.65% Notes due 2025	2.65% Notes due 2025	398		398		2.65% Notes due 2025	399		398
1.625% Euro denominated notes due 2025	1.625% Euro denominated notes due 2025	557		556		1.625% Euro denominated notes due 2025	589		607
3.20% Notes due 2026	3.20% Notes due 2026	725		725		3.20% Notes due 2026	725		725
3.434% Notes due 2026	3.434% Notes due 2026	196		196		3.434% Notes due 2026	197		196
1.652% Euro denominated notes due 2027	1.652% Euro denominated notes due 2027	93		93		1.652% Euro denominated notes due 2027	98		100
0.250% Euro denominated notes due 2027 (c)		840		—
0.250% Euro denominated notes due 2027						0.250% Euro denominated notes due 2027	887		914
1.00% Euro denominated notes due 2028 (b)	1.00% Euro denominated notes due 2028 (b)	886		872		1.00% Euro denominated notes due 2028 (b)	925		966
1.10% Notes due 2030						1.10% Notes due 2030	696		696
1.90% Euro denominated notes due 2030	1.90% Euro denominated notes due 2030	117		118		1.90% Euro denominated notes due 2030	124		127
0.550% Euro denominated notes due 2032 (c)		835		—
0.550% Euro denominated notes due 2032						0.550% Euro denominated notes due 2032	881		909
3.55% Notes due 2042	3.55% Notes due 2042	664		662		3.55% Notes due 2042	664		664
2.00% Notes due 2050						2.00% Notes due 2050	296		296
Non U.S. borrowings						Non U.S. borrowings	257		372
Other	Other	10		10		Other	10		10
International bank borrowings		257		309
Obligations under finance leases		140		149
		13,801		12,224			11,811		12,903
Less: current portion of long-term debt	Less: current portion of long-term debt	(2,723)		(1,531)		Less: current portion of long-term debt	(1,827)		(751)
Total long-term debt	Total long-term debt	11,078		10,693		Total long-term debt	9,984		12,152
Total debt	Total debt	$	17,480	$	13,956	Total debt	$	15,492	$	16,154

(a)Amounts are net of unamortized discounts, premiums and/or debt issuance costs as applicable.

(b)June 30, ~~2020~~2021 and December 31, ~~2019~~2020 included a cumulative ~~$18~~$58 million and ~~$38~~$79 million adjustment to carrying value, respectively, related to hedge accounting of interest rate swaps. Refer to Note ~~5 for additional information.~~5.

(c)In ~~May 2020, Linde issued €750~~June 2021, the company repaid €600 million of ~~0.250% notes due 2027 and €750 million 0.550% notes due 2032.~~3.875% note that became due.

The company maintains a $5 billion unsecured revolving credit agreement with a syndicate of banking institutions that expires March 26, 2024. There are no financial maintenance covenants contained within the credit agreement. NaN borrowings were outstanding under the credit agreement as of June 30, ~~2020.~~2021.

5. Financial Instruments

In its normal operations, Linde is exposed to market risks relating to fluctuations in interest rates, foreign currency exchange rates, energy and commodity costs. The objective of financial risk management at Linde is to minimize the negative impact of such fluctuations on the company’s earnings and cash flows. To manage these risks, among other strategies, Linde routinely enters into various derivative financial instruments (“derivatives”) including interest-rate swap and treasury rate lock agreements, currency-swap agreements, forward contracts, currency options, and commodity-swap agreements. These instruments are not entered into for trading purposes and Linde only uses commonly traded and non-leveraged instruments.

There are ~~three~~3 types of derivatives that the company enters into: (i) those relating to fair-value exposures, (ii) those relating to cash-flow exposures, and (iii) those relating to foreign currency net investment exposures. Fair-value exposures relate to recognized assets or liabilities, and firm commitments; cash-flow exposures relate to the variability of future cash flows associated with recognized assets or liabilities, or forecasted transactions; and net investment exposures relate to the impact of foreign currency exchange rate changes on the carrying value of net assets denominated in foreign currencies.

When a derivative is executed and hedge accounting is appropriate, it is designated as either a fair-value hedge, cash-flow hedge, or a net investment hedge. Currently, Linde designates all interest-rate and treasury-rate locks as hedges for accounting purposes; however, cross-currency contracts are generally not designated as hedges for accounting purposes. Certain currency contracts related to forecasted transactions are designated as hedges for accounting purposes. Whether designated as hedges for accounting purposes or not, all derivatives are linked to an appropriate underlying exposure. On an ongoing basis, the company assesses the hedge effectiveness of all derivatives designated as hedges for accounting purposes to determine if they continue to be highly effective in offsetting changes in fair values or cash flows of the underlying hedged items. If it is determined that the hedge is not highly effective through the use of a qualitative assessment, then hedge accounting will be discontinued prospectively.

Counterparties to Linde's derivatives are major banking institutions with credit ratings of investment grade or better. The company has Credit Support Annexes ("CSAs") in place with ~~their~~its principal counterparties to minimize potential default risk and to mitigate counterparty risk. Under the CSAs, the fair values of derivatives for the purpose of interest rate and currency management are collateralized with cash on a regular basis. As of June 30, ~~2020,~~2021, the impact of such collateral posting arrangements on the fair value of derivatives was insignificant. Management believes the risk of incurring losses on derivative contracts related to credit risk is remote and any losses would be immaterial.

The following table is a summary of the notional amount and fair value of derivatives outstanding at June 30, ~~2020~~2021 and December 31, ~~2019~~2020 for consolidated subsidiaries:


						Fair Value																			Fair Value
		Notional Amounts						Assets (a)								Liabilities (a)					Notional Amounts				Assets (a)		Liabilities (a)
(Millions of dollars)	(Millions of dollars)	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019		(Millions of dollars)	June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
Derivatives Not Designated as Hedging Instruments:	Derivatives Not Designated as Hedging Instruments:													Derivatives Not Designated as Hedging Instruments:
Currency contracts:	Currency contracts:													Currency contracts:
Balance sheet items	Balance sheet items	$	6,866	$	7,936	$	41	$	62	$	87	$	37	Balance sheet items	$	4,972	$	6,470	$	32	$	72	$	24	$	48
Forecasted transactions	Forecasted transactions	494		748		10		14		15		15		Forecasted transactions	523		823		6		16		6		12
Cross-currency swaps	Cross-currency swaps	981		1,029		44		35		38		40		Cross-currency swaps	174		260		25		24		5		7
Commodity contracts	Commodity contracts	N/A		N/A		1		—		—		—		Commodity contracts	N/A		N/A		5		1		—		—
Total	Total	$	8,341	$	9,713	$	96	$	111	$	140	$	92	Total	$	5,669	$	7,553	$	68	$	113	$	35	$	67
Derivatives Designated as Hedging Instruments:	Derivatives Designated as Hedging Instruments:													Derivatives Designated as Hedging Instruments:

Currency contracts:	Currency contracts:													Currency contracts:
Balance sheet items		$	—	$	27	$	—	$	2	$	—	$	3

Forecasted transactions	Forecasted transactions	283		464		3		9		12		3		Forecasted transactions	264		355		4		20		4		14

Commodity contracts	Commodity contracts	N/A		N/A		—		6		4		1		Commodity contracts	N/A		N/A		36		3		—		—

Interest rate swaps	Interest rate swaps	1,892		1,908		52		39		—		—		Interest rate swaps	1,304		1,923		34		64		0		0
Total Hedges	Total Hedges	$	2,175	$	2,399	$	55	$	56	$	16	$	7	Total Hedges	$	1,568	$	2,278	$	74	$	87	$	4	$	14
Total Derivatives	Total Derivatives	$	10,516	$	12,112	$	151	$	167	$	156	$	99	Total Derivatives	$	7,237	$	9,831	$	142	$	200	$	39	$	81

(a)~~Current~~June 30, 2021 and December 31, 2020 included current assets of ~~$53~~$79 million and $110 million which are recorded in prepaid and other current assets; long-term assets of ~~$98~~$63 million and $90 million which are recorded in other long-term assets; current liabilities of ~~$112~~$32 million and $70 million which are recorded in other current liabilities; and long-term liabilities of ~~$44~~$7 million and $11 million which are recorded in other long-term liabilities.

Balance Sheet Items

Foreign currency contracts related to balance sheet items consist of forward contracts entered into to manage the exposure to fluctuations in foreign-currency exchange rates on recorded balance sheet assets and liabilities denominated in currencies other than the functional currency of the related operating unit. Certain forward currency contracts are entered into to protect underlying monetary assets and liabilities denominated in foreign currencies from foreign exchange risk and are not designated as hedging instruments. For balance sheet items that are not designated as hedging instruments, the fair value adjustments on these contracts are offset by the fair value adjustments recorded on the underlying monetary assets and liabilities.

Forecasted Transactions

Foreign currency contracts related to forecasted transactions consist of forward contracts entered into to manage the exposure to fluctuations in foreign-currency exchange rates on (1) forecasted purchases of capital-related equipment and services, (2) forecasted sales, or (3) other forecasted cash flows denominated in currencies other than the functional currency of the related operating units. For forecasted transactions that are designated as cash flow hedges, fair value adjustments are recorded to accumulated other comprehensive income ("AOCI") with deferred amounts reclassified to earnings over the same time period as the income statement impact of the associated ~~purchase.~~forecasted transaction. For forecasted transactions that do not qualify for cash flow hedging relationships, fair value adjustments are recorded directly to earnings.

Cross-Currency Swaps

Cross-currency interest rate swaps are entered into to limit the foreign currency risk of future principal and interest cash flows associated with intercompany loans, and to a more limited extent bonds, denominated in non-functional currencies. The fair value adjustments on the cross-currency swaps are recorded to earnings, where they are offset by fair value adjustments on the underlying intercompany loan or bond.

Commodity Contracts

Commodity contracts are entered into to manage the exposure to fluctuations in commodity prices, which arise in the normal course of business from its procurement transactions. To reduce the extent of this risk, Linde enters into a limited number of electricity, natural gas, and propane gas derivatives. ~~The~~For forecasted transactions that are designated as cash flow hedges, fair value adjustments ~~for the majority of these contracts~~ are recorded to ~~AOCI and are eventually offset by~~accumulated other comprehensive income ("AOCI") with deferred amounts reclassified to earnings over the same time period as the income statement impact of the ~~underlying commodity~~associated purchase.

Net Investment Hedge

As of June 30, ~~2020,~~2021, Linde has ~~€3.2~~€2.7 billion ($~~3.6~~3.2 billion) intercompany Euro-denominated credit facility loans and intercompany loans which are designated as hedges of the net investment positions in foreign operations. Since hedge inception, ~~exchange rate movements have increased~~ the ~~credit facility loan and intercompany loans by $85 million, with the offsetting~~deferred loss ~~shown~~recorded within the cumulative translation adjustment component of AOCI in the condensed consolidated balance sheets and the consolidated statements of comprehensive ~~income.~~income is $153 million (deferred loss of $16 million recorded during the quarter and a deferred gain of $58 million recorded for the six months ended June 30, 2021).

~~Linde had~~As of June 30, 2021, exchange rate movements relating to previously designated ~~Euro-denominated debt instruments as net investment~~ hedges ~~to reduce the company's exposure to changes~~that remain in ~~the currency exchange rate on investments in foreign subsidiaries with Euro functional currencies. Exchange rate~~AOCI is a gain of $73 million. These movements ~~of $206 million relating to the previously designated Euro-denominated debt incurred in the financial periods of 2019 and prior~~ will remain in AOCI, until appropriate, such as upon sale or liquidation of the related foreign operations at which time amounts will be reclassified to ~~the consolidated statement of income. Exchange rate movements related to the Euro-denominated debt occurring after de-designation are shown in~~ the consolidated statement of income.

Interest Rate Swaps

Linde uses interest rate swaps to hedge the exposure to changes in the fair value of financial assets and financial liabilities as a result of interest rate changes. These interest rate swaps effectively convert fixed-rate interest exposures to variable rates; fair value adjustments are recognized in earnings along with an equally offsetting charge/benefit to earnings for the changes in the

fair value of the underlying financial asset or financial liability. The notional value of outstanding interest rate swaps of Linde with maturity dates from ~~2020~~2022 through 2028 was ~~$1,892~~$1,304 million at June 30, ~~2020~~2021 and ~~$1,908~~$1,923 million at December 31, ~~2019 (see~~2020 (See Note ~~6 for further information)~~4).

Terminated Treasury Rate Locks

The unrecognized aggregated losses related to terminated treasury rate lock contracts on the underlying $500 million ~~3.00% fixed-rate notes that mature in 2021 and the $500 million~~ 2.20% fixed-rate notes that mature in 2022 at June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were immaterial in both periods. The unrecognized gains / (losses) for the treasury rate locks are shown in AOCI and are being recognized on a straight line basis to interest expense – net over the term of the underlying debt agreements.

Derivatives' Impact on Consolidated Statements of Income

The following table summarizes the impact of the company’s derivatives on the consolidated statements of income:


		Amount of Pre-Tax Gain (Loss) Recognized in Earnings *															Amount of Pre-Tax Gain (Loss) Recognized in Earnings *
		Quarter Ended June 30,						Six Months Ended June 30,							Quarter Ended June 30,				Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		2020		2019		(Millions of dollars)	2021		2020		2021		2020
Derivatives Not Designated as Hedging Instruments	Derivatives Not Designated as Hedging Instruments									Derivatives Not Designated as Hedging Instruments
Currency contracts:	Currency contracts:									Currency contracts:
Balance sheet items	Balance sheet items									Balance sheet items
Debt-related	Debt-related	$	37	$	(125)	$	32	$	69	Debt-related	$	10	$	37	$	29	$	32
Other balance sheet items	Other balance sheet items	(29)		4		(70)		2		Other balance sheet items	3		(29)		7		(70)

Total	Total	$	8	$	(121)	$	(38)	$	71	Total	$	13	$	8	$	36	$	(38)

* The gains (losses) on balance sheet items are offset by gains (losses) recorded on the underlying hedged assets and liabilities. Accordingly, the gains (losses) for the derivatives and the underlying hedged assets and liabilities related to debt items are recorded in the consolidated statements of income as interest expense-net. Other balance sheet items and anticipated net income gains (losses) are generally recorded in the consolidated statements of income as other income (expenses)-net.

The amounts of gain or loss recognized in AOCI and reclassified to the consolidated statement of income was immaterial for ~~both~~ the quarter and six months ended June 30, ~~2020.~~2021 and 2020, respectively. Net losses expected to be reclassified to earnings during the next twelve months are also not material.

The gains (losses) on net investment hedges are recorded as a component of AOCI within foreign currency translation adjustments in the condensed consolidated balance sheets and the condensed consolidated statements of comprehensive income. The gains (losses) on treasury rate locks are recorded as a component of AOCI within derivative instruments in the condensed consolidated balance sheets and the condensed consolidated statements of comprehensive income. The gains (losses) on net investment hedges are reclassified to earnings only when the related currency translation adjustments are required to be reclassified, usually upon sale or liquidation of the investment. The gains (losses) for interest rate contracts are reclassified to earnings as interest expense –net on a straight-line basis over the remaining maturity of the underlying debt.

6. Fair Value Disclosures

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 in active markets for identical assets or liabilities

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

~~Table of Contents~~

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes assets and liabilities measured at fair value on a recurring basis:

Fair Value Measurements Using
Level 1 Level 2 Level 3
(Millions of dollars) June 30,
2020 December 31,
2019 June 30,
2020 December 31,
2019 June 30,
2020 December 31,
2019
Assets
Derivative assets $ — $ — $ 151 $ 167 $ — $ —
Investments and securities* 21 18 — — 30 28
Total
$ 21 $ 18 $ 151 $ 167 $ 30 $ 28
Liabilities
Derivative liabilities $ — $ — $ 156 $ 99 $ — $ —


	Fair Value Measurements Using
	Level 1				Level 2				Level 3
(Millions of dollars)	June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
Assets
Derivative assets	$	0	$	0	$	142	$	200	$	0	$	0
Investments and securities*	19		21		0		0		46		47
Total	$	19	$	21	$	142	$	200	46		$	47

Liabilities
Derivative liabilities	$	0	$	0	$	39	$	81	$	0	$	0

* Investments and securities are recorded in prepaid and other current assets and other long-term assets in the company's condensed consolidated balance sheets.

Level 1 investments and securities are marketable securities traded on an exchange. Level 2 investments are based on market prices obtained from independent brokers or determined using quantitative models that use as their basis readily observable

Table of Contents

market parameters that are actively quoted and can be validated through external sources, including third-party pricing services, brokers and market transactions. Level 3 investments and securities consist of a venture fund within the Americas. For the valuation, Linde uses the net asset value received as part of the fund's quarterly reporting, which for the most part is not based on quoted prices in active markets. In order to reflect current market conditions, Linde proportionally adjusts these by observable market data (stock exchange prices) or current transaction prices.

~~The following table summarizes the changes~~Changes in level 3 investments and securities ~~for the six months ended June 30, 2020. Gains (losses) recognized in earnings are recorded to interest expense - net in the company's consolidated statements of income.~~


~~(Millions of dollars)~~	~~2020~~
~~Balance at January 1~~	$	28

~~Additions~~	—
~~Gains (losses) recognized in earnings~~	2



~~Balance at June 30~~	$	30

were immaterial.

The fair value of cash and cash equivalents, short-term debt, accounts receivable-net, and accounts payable approximate carrying value because of the short-term maturities of these instruments.

The fair value of long-term debt is estimated based on the quoted market prices for the same or similar issues. Long-term debt is categorized within either Level 1 or Level 2 of the fair value hierarchy depending on the trading volume of the issues and whether or not they are actively quoted in the market as opposed to traded through over-the-counter transactions. At June 30, 2021, the estimated fair value of Linde’s long-term debt portfolio was $12,160 million versus a carrying value of $11,811 million. At December 31, 2020, the estimated fair value of Linde’s long-term debt portfolio was ~~$14,223~~$13,611 million versus a carrying value of ~~$13,801~~$12,903 million. At December 31, 2019, the estimated fair value of Linde’s long-term debt portfolio was $12,375 million versus a carrying value of $12,224 million. As Linde AG's assets and liabilities were measured at estimated fair value as of the merger date, differencesDifferences between the carrying value and the fair value ~~are insignificant; remaining differences~~ are attributable to fluctuations in interest rates subsequent to when the debt was issued and relative to stated coupon rates.

~~Table of Contents~~

7. Earnings Per Share – Linde plc Shareholders

Basic and diluted earnings per share is computed by dividing Income from continuing operations, Income from discontinued operations and Net income – Linde plc for the period by the weighted average number of either basic or diluted shares outstanding, as follows:


		Quarter Ended June 30,						Six Months Ended June 30,							Quarter Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Numerator (Millions of dollars)	Numerator (Millions of dollars)									Numerator (Millions of dollars)
Income from continuing operations	Income from continuing operations	$	458	$	513	$	1,029	$	948	Income from continuing operations	$	840	$	458	$	1,819	$	1,029
Income from discontinued operations	Income from discontinued operations	—		9		2		91		Income from discontinued operations	1		0		2		2
Net Income – Linde plc	Net Income – Linde plc	$	458	$	522	$	1,031	$	1,039	Net Income – Linde plc	$	841	$	458	$	1,821	$	1,031
Denominator (Thousands of shares)	Denominator (Thousands of shares)									Denominator (Thousands of shares)
Weighted average shares outstanding	Weighted average shares outstanding	525,238		542,356		528,118		543,834		Weighted average shares outstanding	518,552		525,238		520,314		528,118
Shares earned and issuable under compensation plans	Shares earned and issuable under compensation plans	272		205		267		199		Shares earned and issuable under compensation plans	398		272		377		267
Weighted average shares used in basic earnings per share	Weighted average shares used in basic earnings per share	525,510		542,561		528,385		544,033		Weighted average shares used in basic earnings per share	518,950		525,510		520,691		528,385
Effect of dilutive securities	Effect of dilutive securities									Effect of dilutive securities
Stock options and awards	Stock options and awards	3,544		3,927		3,727		3,738		Stock options and awards	4,773		3,544		4,689		3,727
Weighted average shares used in diluted earnings per share	Weighted average shares used in diluted earnings per share	529,054		546,488		532,112		547,771		Weighted average shares used in diluted earnings per share	523,723		529,054		525,380		532,112
Basic earnings per share from continuing operations	Basic earnings per share from continuing operations	$	0.87	$	0.95	$	1.95	$	1.74	Basic earnings per share from continuing operations	$	1.62	$	0.87	$	3.49	$	1.95
Basic earnings per share from discontinued operations	Basic earnings per share from discontinued operations	—		0.02		—		0.17		Basic earnings per share from discontinued operations	0		0		0		0
Basic Earnings Per Share	Basic Earnings Per Share	$	0.87	$	0.97	$	1.95	$	1.91	Basic Earnings Per Share	$	1.62	$	0.87	$	3.49	$	1.95
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	0.87	$	0.94	$	1.93	$	1.73	Diluted earnings per share from continuing operations	$	1.60	$	0.87	$	3.46	$	1.93
Diluted earnings per share from discontinued operations	Diluted earnings per share from discontinued operations	—		0.02		—		0.17		Diluted earnings per share from discontinued operations	0		0		0		0
Diluted Earnings Per Share	Diluted Earnings Per Share	$	0.87	$	0.96	$	1.93	$	1.90	Diluted Earnings Per Share	$	1.60	$	0.87	$	3.46	$	1.93

There were 0 antidilutive shares for any period presented.

Table of Contents

8. Retirement Programs

The components of net pension and postretirement benefits other than pensions (“OPEB”) costs for the quarter and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 are shown below:

Quarter Ended June 30, Six Months Ended June 30,
Pensions OPEB Pensions OPEB
(Millions of dollars) 2020 2019 2020 2019 2020 2019 2020 2019
Amount recognized in Operating Profit
Service cost $ 36 $ 39 $ — $ — $ 73 $ 78 $ 1 $ 1
Amount recognized in Net pension and OPEB cost (benefit), excluding service cost
Interest cost 50 65 2 1 102 133 3 3
Expected return on plan assets (118) (113) — — (238) (232) — —
Net amortization and deferral 22 14 (1) (1) 45 28 (2) (2)
Curtailment and termination benefits (a) — 10 — — — 10 — —
Settlement charge (b) — — — — — 51 — —
(46) (24) 1 — (91) (10) 1 1
Net periodic benefit cost $ (10) $ 15 $ 1 $ — $ (18) $ 68 $ 2 $ 2

~~(a) In the second quarter of 2019, Linde recorded a curtailment gain of $7 million and a charge of $17 million for termination benefits in connection with a defined benefit pension plan freeze.~~

~~Table of Contents~~

(b) In the first quarter of 2019, benefits of $91 million were paid related to the settlement of a U.S. non-qualified plan that was triggered due to a change in control provision. Accordingly, Linde recorded a pension settlement charge of $51 million ($38 million after tax).


	Quarter Ended June 30,								Six Months Ended June 30,
	Pensions				OPEB				Pensions				OPEB
(Millions of dollars)	2021		2020		2021		2020		2021		2020		2021		2020
Amount recognized in Operating Profit
Service cost	$	38	$	36	$	1	$	0	$	78	$	73	$	1	$	1
Amount recognized in Net pension and OPEB cost (benefit), excluding service cost
Interest cost	38		50		—		2		76		102		1		3
Expected return on plan assets	(131)		(118)		0		0		(262)		(238)		0		0
Net amortization and deferral	45		22		(1)		(1)		89		45		(2)		(2)


	(48)		(46)		(1)		1		(97)		(91)		(1)		1


Net periodic benefit cost (benefit)	$	(10)	$	(10)	$	0	$	1	$	(19)	$	(18)	$	0	$	2

Linde estimates that ~~2020~~2021 required contributions to its pension plans will be in the range of $50 million to ~~$80~~$60 million, of which ~~$41~~$28 million have been made through June 30, ~~2020.~~2021.

9. Commitments and Contingencies

Contingent Liabilities

Linde is subject to various lawsuits and government investigations that arise from time to time in the ordinary course of business. These actions are based upon alleged environmental, tax, antitrust and personal injury claims, among others. Linde has strong defenses in these cases and intends to defend itself vigorously. It is possible that the company may incur losses in connection with some of these actions in excess of accrued liabilities. Management does not anticipate that in the aggregate such losses would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a significant impact on the company’s reported results of operations in any given period (see Note 1917 to the consolidated financial statements of Linde's ~~2019~~2020 Annual Report on Form 10-K).

Significant matters are:

•During 2009, the Brazilian government published Law 11941/2009 instituting a new voluntary amnesty program (“Refis Program”) which allowed Brazilian companies to settle certain federal tax disputes at reduced amounts. During 2009, the company decided that it was economically beneficial to settle many of its outstanding federal tax disputes and such disputes were enrolled in the Refis Program, subject to final calculation and review by the Brazilian federal government. The company recorded estimated liabilities based on the terms of the Refis Program. Since 2009, Linde has been unable to reach final agreement on the calculations and initiated litigation against the government in an attempt to resolve certain items. Open issues relate to the following matters: (i) application of cash deposits and net operating loss carryforwards to satisfy obligations and (ii) the amount of tax reductions available under the Refis Program. It is difficult to estimate the timing of resolution of legal matters in Brazil.

•At June 30, ~~2020~~2021 the most significant non-income and income tax claims in Brazil, after enrollment in the Refis Program, relate to state VAT tax matters and a federal income tax matter where the taxing authorities are challenging the tax rate that should be applied to income generated by a subsidiary company. The total estimated exposure relating to such claims, including interest and penalties, as appropriate, is approximately ~~$190~~$220 million. Linde has not recorded any liabilities related to such claims based on management judgments, after considering judgments and opinions of outside counsel. Because litigation in Brazil historically takes many years to resolve, it is very difficult to estimate the timing of resolution of these matters; however, it is possible that certain of these matters may be resolved within the near term. The company is vigorously defending against the proceedings.

•On September 1, 2010, CADE (Brazilian Administrative Council for Economic Defense) announced alleged anticompetitive activity on the part of 5 industrial gas companies in Brazil and imposed fines. Originally, CADE imposed a civil fine of R$2.2 billion Brazilian reais ($~~403~~440 million) on White Martins, the Brazil-based subsidiary of Praxair, Inc. The fine was reduced to R$1.7 billion Brazilian reais ($~~311~~340 million) due to a calculation error made by CADE. The fine against White Martins was overturned by the Ninth Federal Court of Brasilia. CADE appealed this

Table of Contents

decision, and the Federal Court of Appeals rejected CADE's appeal and confirmed the decision of the Ninth Federal Court of Brasilia. CADE has filed an appeal with the Superior Court of Justice and a decision is pending.

Similarly, on September 1, 2010, CADE imposed a civil fine of R$237 million Brazilian reais ($4347 million) on Linde Gases Ltda., the former Brazil-based subsidiary of Linde AG, which was divested to MG Industries GmbH on March 1, 2019 and with respect to which Linde provided a contractual indemnity. The fine was reduced to R$188 million Brazilian reais ($3438 million) due to a calculation error made by CADE. The fine against Linde Gases Ltda. was overturned by the Seventh Federal Court in Brasilia. CADE appealed this decision, and the Federal Court of Appeals rejected CADE's appeal and confirmed the decision of the Seventh Federal Court of Brasilia. CADE filed an appeal with the Superior Court of Justice, and a final decision is pending.

Linde has strong defenses and is confident that it will prevail on appeal and have the fines overturned. Linde strongly believes that the allegations of anticompetitive activity against our current and former Brazilian subsidiaries are not supported by valid and sufficient evidence. Linde believes that this decision will not stand up to judicial review and deems the possibility of cash outflows to be extremely unlikely. As a result, no reserves have been recorded as management does not believe that a loss from this case is probable.

•On and after April 23, 2019 former shareholders of Linde AG filed appraisal proceedings at the District Court (Landgericht) Munich I (Germany), seeking an increase of the cash consideration paid in connection with the

~~Table of Contents~~

previously completed cash merger squeeze-out of all of Linde AG’s minority shareholders for €189.46 per share. Any such increase would apply to all 14,763,113 Linde AG shares that were outstanding on April 8, 2019, when the cash merger squeeze-out was completed. The period for plaintiffs to file claims expired on July 9, 2019. The company believes the consideration paid was fair and that the claims lack merit, and no reserve has been established. We cannot estimate the timing of resolution.

10. Segments

For a description of Linde plc's operating segments, refer to Note 2018 to the consolidated financial statements on Linde plc's ~~2019~~2020 Annual Report on Form 10-K.

The table below presents sales and operating profit information about reportable segments and Other for the quarters and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.


		Quarter Ended June 30,						Six Months Ended June 30,							Quarter Ended June 30,				Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		2020		2019		(Millions of dollars)	2021		2020		2021		2020
SALES^(a)	SALES^(a)									SALES(a)
Americas	Americas	$	2,417	$	2,779	$	5,094	$	5,481	Americas	$	3,020	$	2,417	$	5,860	$	5,094
EMEA	EMEA	1,448		1,673		3,081		3,355		EMEA	1,875		1,448		3,674		3,081
APAC	APAC	1,295		1,488		2,631		2,915		APAC	1,544		1,295		2,980		2,631
Engineering	Engineering	810		752		1,418		1,388		Engineering	646		810		1,320		1,418
Other	Other	407		487		892		954		Other	499		407		993		892
Total segment sales		$	6,377	$	7,179	$	13,116	$	14,093
Merger-related divestitures		—		25		—		55

Total sales	Total sales	$	6,377	$	7,204	$	13,116	$	14,148	Total sales	$	7,584	$	6,377	$	14,827	$	13,116


		Quarter Ended June 30,						Six Months Ended June 30,							Quarter Ended June 30,				Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		2020		2019		(Millions of dollars)	2021		2020		2021		2020
SEGMENT OPERATING PROFIT	SEGMENT OPERATING PROFIT									SEGMENT OPERATING PROFIT
Americas	Americas	$	622	$	646	$	1,283	$	1,230	Americas	$	871	$	622	$	1,666	$	1,283
EMEA	EMEA	303		332		658		679		EMEA	487		303		938		658
APAC	APAC	294		304		575		577		APAC	389		294		740		575
Engineering	Engineering	138		99		229		177		Engineering	108		138		217		229
Other	Other	(40)		(62)		(76)		(122)		Other	(18)		(40)		(36)		(76)
Segment operating profit	Segment operating profit	1,317		1,319		2,669		2,541		Segment operating profit	1,837		1,317		3,525		2,669
Cost reduction programs and other charges (Note 2)	Cost reduction programs and other charges (Note 2)	(249)		(141)		(380)		(230)		Cost reduction programs and other charges (Note 2)	(204)		(249)		(196)		(380)

Merger-related divestitures		—		6		—		13

Purchase accounting impacts - Linde AG	Purchase accounting impacts - Linde AG	(477)		(515)		(965)		(1,046)		Purchase accounting impacts - Linde AG	(491)		(477)		(974)		(965)
Total operating profit	Total operating profit	$	591	$	669	$	1,324	$	1,278	Total operating profit	$	1,142	$	591	$	2,355	$	1,324

(a)Sales reflect external sales only. Intersegment sales, primarily from Engineering to the industrial gases segments, were not material.

2221

Table of Contents

11. Equity

Equity

A summary of the changes in total equity for the quarter and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 is provided below:

Quarter Ended June 30,
(Millions of dollars) 2020 2019
Activity Linde plc
Shareholders’
Equity Noncontrolling
Interests Total
Equity Linde plc
Shareholders’
Equity Noncontrolling
Interests (a) Total
Equity
Balance, beginning of period (a) $ 44,776 $ 2,375 $ 47,151 $ 51,175 $ 5,457 $ 56,632
Net income (b) 458 25 483 522 29 551
Other comprehensive income (loss) 767 18 785 (142) (21) (163)
Noncontrolling interests:
Additions (reductions) — 13 13 — (3,074) (3,074)
Dividends and other capital changes — (44) (44) — (76) (76)
Dividends to Linde plc ordinary share holders ($0.963 per share in 2020 and $0.875 per share in 2019) (506) — (506) (474) — (474)
Issuances of common stock:
For employee savings and incentive plans 10 — 10 (13) — (13)
Purchases of common stock — — — (526) — (526)
Share-based compensation 32 — 32 22 — 22
Balance, end of period $ 45,537 $ 2,387 $ 47,924 $ 50,564 $ 2,315 $ 52,879


		Six Months Ended June 30,																								Quarter Ended June 30,
(Millions of dollars)	(Millions of dollars)	2020										2019											(Millions of dollars)	2021				2020
Activity	Activity	Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity		Linde plc Shareholders’ Equity		Noncontrolling Interests (a)		Total Equity		Activity	Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity		Linde plc Shareholders’ Equity			Noncontrolling Interests		Total Equity
Balance, beginning of period ~~(a)~~	Balance, beginning of period ~~(a)~~	$	49,074	$	2,448	$	51,522	$	51,596	$	5,484	$	57,080	Balance, beginning of period ~~(a)~~	$	46,210	$	1,410	$	47,620	$	44,776		$	2,375	$	47,151
Net income ~~(b)~~(a)	Net income ~~(b)~~(a)	1,031		60		1,091		1,039		65		1,104		Net income ~~(b)~~(a)	841		36		877		458			25		483
Other comprehensive income (loss)	Other comprehensive income (loss)	(1,807)		(88)		(1,895)		79		(88)		(9)		Other comprehensive income (loss)	437		9		446		767			18		785
Noncontrolling interests:	Noncontrolling interests:													Noncontrolling interests:
Additions (reductions)	Additions (reductions)	—		15		15		—		(3,066)		(3,066)		Additions (reductions)	0		7		7		0			13		13
Dividends and other capital changes	Dividends and other capital changes	—		(48)		(48)		—		(80)		(80)		Dividends and other capital changes	0		(24)		(24)		0			(44)		(44)

Dividends to Linde plc ordinary share holders ($1.926 per share in 2020 and $1.75 per share in 2019)		(1,017)		—		(1,017)		(951)		—		(951)
Issuances of common stock:
Dividends to Linde plc ordinary share holders ($1.060 per share in 2021 and $0.963 per share in 2020)														Dividends to Linde plc ordinary share holders ($1.060 per share in 2021 and $0.963 per share in 2020)	(549)		0		(549)		(506)			0		(506)
Issuances of ordinary shares:														Issuances of ordinary shares:

For employee savings and incentive plans	For employee savings and incentive plans	(8)		—		(8)		(7)		—		(7)		For employee savings and incentive plans	(9)		0		(9)		10			0		10

Purchases of common stock		(1,811)		—		(1,811)		(1,230)		—		(1,230)
Purchases of ordinary shares														Purchases of ordinary shares	(1,187)		0		(1,187)		0			0		0

Share-based compensation	Share-based compensation	75		—		75		38		—		38		Share-based compensation	34		0		34		32			0		32
Balance, end of period	Balance, end of period	$	45,537	$	2,387	$	47,924	$	50,564	$	2,315	$	52,879	Balance, end of period	$	45,777	$	1,438	$	47,215	$	45,537		$	2,387	$	47,924

(a) As of the beginning of both periods ended June 30, 2019, noncontrolling interests included approximately $3.2 billion relating to the 8% of Linde AG shares which were not tendered in the Exchange Offer and were the subject of a cash-merger squeeze-out completed on April 8, 2019.


	Six Months Ended June 30,
(Millions of dollars)	2021						2020
Activity	Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity		Linde plc Shareholders’ Equity		Noncontrolling Interests (a)		Total Equity
Balance, beginning of period	$	47,317	$	2,252	$	49,569	$	49,074	$	2,448	$	51,522
Net income (a)	1,821		74		1,895		1,031		60		1,091
Other comprehensive income (loss)	(218)		3		(215)		(1,807)		(88)		(1,895)
Noncontrolling interests:
Additions (reductions) (b)	0		(846)		(846)		0		15		15
Dividends and other capital changes	0		(45)		(45)		0		(48)		(48)

Dividends to Linde plc ordinary share holders ($2.120 per share in 2021 and $1.926 per share in 2020)	(1,102)		0		(1,102)		(1,017)		0		(1,017)
Issuances of ordinary shares:

For employee savings and incentive plans	(11)		0		(11)		(8)		0		(8)

Purchases of ordinary shares	(2,093)		0		(2,093)		(1,811)		0		(1,811)

Share-based compensation	63		0		63		75		0		75
Balance, end of period	$	45,777	$	1,438	$	47,215	$	45,537	$	2,387	$	47,924

~~(b)~~(a) Net income for noncontrolling interests excludes net income related to redeemable noncontrolling interests which is not significant for ~~the~~ quarters and the six months ended June 30, 2021 and 2020 and ~~June 30, 2019~~ which is not part of total equity.

(b) Additions (reductions) for noncontrolling interests as of the six month period ended June 30, 2021, includes the impact from the deconsolidation of a joint venture with operations in APAC (see Note 13).

Table of Contents

The components of AOCI are as follows:


		June 30,		December 31,			June 30,		December 31,
(Millions of dollars)	(Millions of dollars)	2020		2019		(Millions of dollars)	2021		2020
Cumulative translation adjustment - net of taxes:	Cumulative translation adjustment - net of taxes:					Cumulative translation adjustment - net of taxes:
Americas	Americas	$	(4,090)	$	(3,357)	Americas	$	(3,729)	$	(3,788)
EMEA	EMEA	(876)		(136)		EMEA	912		1,020
APAC	APAC	(455)		(140)		APAC	330		616
Engineering	Engineering	(43)		(29)		Engineering	215		354
Other	Other	201		282		Other	(854)		(1,020)
		(5,263)		(3,380)			(3,126)		(2,818)
Derivatives - net of taxes	Derivatives - net of taxes	(21)		(27)		Derivatives - net of taxes	31		4

Pension / OPEB (net of $422 million and $446 million tax benefit in June 30, 2020 and December 31, 2019, respectively)		(1,337)		(1,407)
Pension / OPEB (net of $535 million and $560 million tax benefit in June 30, 2021 and December 31, 2020, respectively)						Pension / OPEB (net of $535 million and $560 million tax benefit in June 30, 2021 and December 31, 2020, respectively)	(1,813)		(1,876)
		$	(6,621)	$	(4,814)		$	(4,908)	$	(4,690)

12. Revenue Recognition

Revenue is accounted for in accordance with ASC 606. Revenue is recognized as control of goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled to receive in exchange for the goods or services.

Contracts with Customers

Approximately 82% of Linde's consolidated sales are generated from industrial gases and related products in 3 geographic segments (Americas, APAC, and EMEA) and the remaining 18% is related primarily to the Engineering segment, and to a lesser extent Other (see Note 10 for operating segment details). Linde serves a diverse group of industries including healthcare, petroleum refining, energy, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals and water treatment.

Industrial Gases

Within each of the company’s geographic segments for industrial gases, there are three basic distribution methods: (i) on-site or tonnage; (ii) merchant or bulk liquid; and (iii) packaged or cylinder gases. The distribution method used by Linde to supply a customer is determined by many factors, including the customer’s volume requirements and location. The distribution method generally determines the contract terms with the customer and, accordingly, the revenue recognition accounting practices. Linde's primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). These products are generally sold through one of the three distribution methods.

Following is a description of each of the three industrial gases distribution methods and the respective revenue recognition policies:

On-site. Customers that require the largest volumes of product and that have a relatively constant demand pattern are supplied by cryogenic and process gas on-site plants. Linde constructs plants on or adjacent to these customers’ sites and supplies the product directly to customers by pipeline. Where there are large concentrations of customers, a single pipeline may be connected to several plants and customers. On-site product supply contracts generally are total requirement contracts with terms typically ranging from 10-20 years and contain minimum purchase requirements and price escalation provisions. Many of the cryogenic on-site plants also produce liquid products for the merchant market. Therefore, plants are typically not dedicated to a single customer. Additionally, Linde is responsible for the design, construction, operations and maintenance of the plants and our customers typically have no involvement in these activities. Advanced air separation processes also allow on-site delivery to customers with smaller volume requirements.

The company’s performance obligations related to on-site customers are satisfied over time as customers receive and obtain control of the product. Linde has elected to apply the practical expedient for measuring progress towards the completion of a performance obligation and recognizes revenue as the company has the right to invoice each customer, which generally corresponds with product delivery. Accordingly, revenue is recognized when product is delivered to the customer and the company has the right to invoice the customer in accordance with the contract terms. Consideration in these contracts is generally based on pricing which fluctuates with various price indices. Variable components of consideration exist within ~~on-~~

~~Table of Contents~~

~~site~~on-site contracts but are considered constrained.

Merchant. Merchant deliveries generally are made from Linde's plants by tanker trucks to storage containers at the customer's site. Due to the relatively high distribution cost, merchant oxygen and nitrogen generally have a relatively small distribution

Table of Contents

radius from the plants at which they are produced. Merchant argon, hydrogen and helium can be shipped much longer distances. The customer agreements used in the merchant business are usually three-to ~~seven-year~~seven-year supply agreements based on the requirements of the customer. These contracts generally do not contain minimum purchase requirements or volume commitments.

The company’s performance obligations related to merchant customers are generally satisfied at a point in time as the customers receive and obtain control of the product. Revenue is recognized when product is delivered to the customer and the company has the right to invoice the customer in accordance with the contract terms. Any variable components of consideration within merchant contracts are constrained however this consideration is not significant.

Packaged Gases. Customers requiring small volumes are supplied products in containers called cylinders, under medium to high pressure. Linde distributes merchant gases from its production plants to company-owned cylinder filling plants where cylinders are then filled for distribution to customers. Cylinders may be delivered to the customer’s site or picked up by the customer at a packaging facility or retail store. Linde invoices the customer for the industrial gases and the use of the cylinder container(s). The company also sells hardgoods and welding equipment purchased from independent manufacturers. Packaged gases are generally sold under one to ~~three-year~~three-year supply contracts and purchase orders and do not contain minimum purchase requirements or volume commitments.

The company’s performance obligations related to packaged gases are satisfied at a point in time. Accordingly, revenue is recognized when product is delivered to the customer or when the customer picks up product from a packaged gas facility or retail store, and the company has the right to payment from the customer in accordance with the contract terms. Any variable consideration is constrained and will be recognized when the uncertainty related to the consideration is resolved.

Linde Engineering

The company designs and manufactures equipment for air separation and other industrial gas applications manufactured specifically for end customers. Sale of equipment contracts are generally comprised of a single performance obligation. Revenue from sale of equipment is generally recognized over time as Linde has an enforceable right to payment for performance completed to date and performance does not create an asset with alternative use. For contracts recognized over time, revenue is recognized primarily using a cost incurred input method. Costs incurred to date relative to total estimated costs at completion are used to measure progress toward satisfying performance obligations. Costs incurred include material, labor, and overhead costs and represent work contributing and proportionate to the transfer of control to the customer. Contract modifications are typically accounted for as part of the existing contract and are recognized as a cumulative adjustment for the inception-to-date effect of such change.

Contract Assets and Liabilities

Contract assets and liabilities result from differences in timing of revenue recognition and customer invoicing. Contract assets primarily relate to sale of equipment contracts for which revenue is recognized over time. The balance represents unbilled revenue which occurs when revenue recognized under the measure of progress exceeds amounts invoiced to customers. Customer invoices may be based on the passage of time, the achievement of certain contractual milestones or a combination of both criteria. Contract liabilities include advance payments or right to consideration prior to performance under the contract. Contract liabilities are recognized as revenue as performance obligations are satisfied under contract terms. Linde has contract assets of ~~$226~~$173 million and ~~$368~~$162 million at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Total contract liabilities are ~~$2,121~~$2,477 million at June 30, ~~2020~~2021 (current of ~~$1,693~~$1,787 million and ~~$428~~$690 million within other long-term liabilities in the condensed consolidated balance sheets). Total contract liabilities were ~~$2,106~~$2,301 million at December 31, ~~2019~~2020 (current contract liabilities of ~~$1,758~~$1,769 million ~~classified as deferred income within other current liabilities~~ and ~~$348~~$532 million in other long-term liabilities in the condensed consolidated balance sheets). Revenue recognized for the six months ended June 30, ~~2020~~2021 that was included in the contract liability at December 31, ~~2019~~2020 was ~~$708~~$791 million. Contract assets and liabilities primarily relate to the Linde Engineering business.

Payment Terms and Other

Linde generally receives payment after performance obligations are satisfied, and customer prepayments are not typical for the industrial gases business. Payment terms vary based on the country where sales originate and local customary payment practices. Linde does not offer extended financing outside of customary payment terms. ~~Contract asset and liability balances and the changes in these balances are not material.~~ Amounts billed for sales and use taxes, value-added taxes, and certain excise and other specific transactional taxes imposed on revenue producing transactions are presented on a net basis and are not included in sales within the consolidated statement of income. Additionally, sales returns and allowances are not a normal

~~Table of Contents~~

practice in the industry and are not significant.

Disaggregated Revenue Information

As described above and in Note 2018 to Linde's ~~2019~~2020 Form 10-K, the company manages its industrial gases business on a geographic basis, while the Engineering and Other businesses are generally managed on a global basis. Furthermore, the company believes that reporting sales by distribution method by reportable geographic segment best illustrates the nature,

Table of Contents

timing, type of customer, and contract terms for its revenues, including terms and pricing.

The following tables show sales by distribution method at the consolidated level and for each reportable segment and Other for the quarter and six months ended June 30, ~~2020~~2021 and June 30, ~~2019.~~2020.


(Millions of dollars)	(Millions of dollars)	Quarter Ended June 30, 2020																										(Millions of dollars)	Quarter Ended June 30, 2021
Sales	Sales	Americas		EMEA		APAC		Engineering		Other		Total		%		Sales	Americas		EMEA		APAC		Engineering		Other		Total		%

Merchant	Merchant	$	634	$	415	$	459	$	—	$	29	$	1,537	24	%	Merchant	$	821	$	556	$	551	$	0	$	43	$	1,971	26	%
On-Site	On-Site	559		304		466		—		—		1,329		21	%	On-Site	774		396		582		0		0		1,752		23	%
Packaged Gas	Packaged Gas	1,210		719		362		—		6		2,297		36	%	Packaged Gas	1,369		912		392		0		6		2,679		35	%
Other	Other	14		10		8		810		372		1,214		19	%	Other	56		11		19		646		450		1,182		16	%
Total	Total	$	2,417	$	1,448	$	1,295	$	810	$	407	$	6,377	100	%	Total	$	3,020	$	1,875	$	1,544	$	646	$	499	$	7,584	100	%


(Millions of dollars)		Quarter Ended June 30, 2019
Sales		Americas		EMEA		APAC		Engineering		Other (a)		Total		%

Merchant		$	735	$	476	$	551	$	—	$	53	$	1,815	25	%
On-Site		699		355		515		—		—		1,569		22	%
Packaged Gas		1,315		842		380		—		6		2,543		35	%
Other		30		—		42		752		453		1,277		18	%
Total		$	2,779	$	1,673	$	1,488	$	752	$	512	$	7,204	100	%

(Millions of dollars)		Six months ended June 30, 2020
Sales		Americas		EMEA		APAC		Engineering		Other (a)		Total		%

Merchant		$	1,360	$	885	$	918	$	—	$	76	$	3,239	25	%
On-Site		1,209		647		958		—		—		2,814		21	%
Packaged Gas		2,485		1,530		722		—		11		4,748		36	%
Other		40		19		33		1,418		805		2,315		18	%
Total		$	5,094	$	3,081	$	2,631	$	1,418	$	892	$	13,116	100	%

(Millions of dollars)	(Millions of dollars)	Six Months Ended June 30, 2019																										(Millions of dollars)	Quarter Ended June 30, 2020
Sales	Sales	Americas		EMEA		APAC		Engineering		Other (a)		Total		%		Sales	Americas		EMEA		APAC		Engineering		Other		Total		%

Merchant	Merchant	$	1,438	$	903	$	1,048	$	—	$	84	$	3,473	25	%	Merchant	$	634	$	415	$	459	$	0	$	29	$	1,537	24	%
On-Site	On-Site	1,401		732		1,026		—		—		3,159		22	%	On-Site	559		304		466		0		0		1,329		21	%
Packaged Gas	Packaged Gas	2,600		1,716		767		—		6		5,089		36	%	Packaged Gas	1,210		719		362		0		6		2,297		36	%
Other	Other	42		4		74		1,388		919		2,427		17	%	Other	14		10		8		810		372		1,214		19	%
Total	Total	$	5,481	$	3,355	$	2,915	$	1,388	$	1,009	$	14,148	100	%	Total	$	2,417	$	1,448	$	1,295	$	810	$	407	$	6,377	100	%

(a) Other/Other includes $25 million and $55 million for the second quarter and six months ended June 30, 2019, respectively, of merger-related divestitures that have been excluded from segment sales.


(Millions of dollars)	Six Months Ended June 30, 2021
Sales	Americas		EMEA		APAC		Engineering		Other (a)		Total		%

Merchant	$	1,592	$	1,087	$	1,035	$	0	$	95	$	3,809	26	%
On-Site	1,463		788		1,134		0		0		3,385		23	%
Packaged Gas	2,701		1,772		753		0		12		5,238		35	%
Other	104		27		58		1,320		886		2,395		16	%
Total	$	5,860	$	3,674	$	2,980	$	1,320	$	993	$	14,827	100	%

(Millions of dollars)	Six Months Ended June 30, 2020
Sales	Americas		EMEA		APAC		Engineering		Other (a)		Total		%

Merchant	$	1,360	$	885	$	918	$	0	$	76	$	3,239	25	%
On-Site	1,209		647		958		0		0		2,814		21	%
Packaged Gas	2,485		1,530		722		0		11		4,748		36	%
Other	40		19		33		1,418		805		2,315		18	%
Total	$	5,094	$	3,081	$	2,631	$	1,418	$	892	$	13,116	100	%

~~Table of Contents~~

Remaining Performance Obligations

As described above, Linde's contracts with on-site customers are under long-term supply arrangements which generally require the customer to purchase their requirements from Linde and also have minimum purchase requirements. The company estimates the consideration related to minimum purchase requirements is approximately ~~$45~~$46 billion. This amount excludes all sales above minimum purchase requirements, which can be significant depending on customer needs. In the future, actual amounts will be different due to impacts from several factors, many of which are beyond the company’s control including, but not limited to, timing of newly signed, terminated and renewed contracts, inflationary price escalations, currency exchange rates, and pass-through costs related to natural gas and electricity. The actual duration of long-term supply contracts ranges up to twenty years. The company estimates that approximately half of the revenue related to minimum purchase requirements will be earned in the next five years and the remaining thereafter.

Table of Contents

13. ~~Merger-related~~ Divestitures

As described in Note 4 of Linde plc's Annual Report on Form 10-K, as a condition of the European Commission ("EC"), the U.S. Department of Justice ("DOJ"), and other governmental regulatory authorities approval of the merger, Linde plc, Praxair and Linde AG were required to divest several businesses, including the following transactions that were completed in 2019 and 2020:

•~~In March 2019,~~Effective January 1, 2021, Linde ~~completed~~deconsolidated a joint venture with operations in APAC, due to the ~~sale~~expiration of certain contractual rights that the parties mutually agreed not to renew. From the effective date, the joint venture is reflected as an equity investment on Linde's consolidated balance sheet with the corresponding results reflected in income from equity investments on the consolidated statement of income.

The fair value of the ~~majority~~joint venture at January 1, 2021 was determined using a discounted cash flow model and approximated the carrying amount of ~~Linde AG’s industrial gases business in North America~~its net assets. The net carrying value of $852 million was mainly comprised of assets of approximately $1.9 billion (primarily Other intangibles and ~~certain industrial gases business activities~~Property plant and equipment - net), net of ~~Linde AG's in South America for approximately $2.9 billion in net cash consideration after purchase price adjustments for certain items relating to assets and~~ liabilities of approximately $1.0 billion. Upon deconsolidation an equity investment was recorded representing Linde's share of the ~~sold businesses. In addition, divestitures include approximately $0.5 billion of proceeds for incremental plant sales within the Americas under other agreements.~~

•~~In April 2019, Linde completed the sale of selected assets of Linde Korea with a sale price of $1.2 billion.~~

•~~In July 2019, Linde completed the sale of select assets of Praxair India with a sale price of $218 million and~~joint venture's net assets. The deconsolidation resulted in a gain of ~~$164~~$52 million ~~recognized in "Net gain on sale~~recorded within cost reduction programs and other charges (see Note 2) related to the release of ~~businesses" in~~ the ~~consolidated statement~~CTA balance recorded within AOCI. The company did not receive any consideration, cash or otherwise, as part of ~~income.~~

•~~In December 2019, Linde completed~~ the ~~sale of select assets of Linde India with a sale price of $193 million.~~

•~~In March 2020, Linde completed the sale of select assets of Linde China with a sale price of $98 million.~~deconsolidation.

The joint venture contributed sales of approximately $600 million in 2020. Future earnings per share will not be affected as the ownership percent remains the same.

2726

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")

Non-GAAP Measures

Throughout MD&A, the company provides adjusted operating results from continuing operations exclusive of certain items such as cost reduction programs and other charges, net gains on sale of businesses, purchase accounting impacts of the Linde AG merger and pension settlement charges. Adjusted amounts are non-GAAP measures which are intended to supplement investors’ understanding of the company’s financial information by providing measures which investors, financial analysts and management find useful in evaluating the company’s operating performance. Items which the company does not believe to be indicative of on-going business performance are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. In addition, operating results from continuing operations, excluding these items, is important to management's development of annual and long-term employee incentive compensation plans. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures.

The non-GAAP measures and reconciliations are separately included in a later section in the MD&A titled "Non-GAAP Measures and ~~Reconciliations".~~Reconciliations."

Table of Contents

Consolidated Results

The following table provides summary information for the ~~quarter~~quarters and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020. The reported amounts are GAAP amounts from the Consolidated ~~Statement~~Statements of ~~Operations.~~Income. The adjusted amounts are intended to supplement investors' understanding of the company's financial information and are not a substitute for GAAP measures:


		Quarter Ended June 30,														Six Months Ended June 30,														Quarter Ended June 30,					Six Months Ended June 30,
(Millions of dollars, except per share data)	(Millions of dollars, except per share data)	2020			2019			Variance		2020			2019			Variance		(Millions of dollars, except per share data)	2021			2020			Variance		2021			2020			Variance
Sales	Sales	$	6,377		$	7,204		(11)	%	$	13,116		$	14,148		(7)	%	Sales	$	7,584		$	6,377		19	%	$	14,827		$	13,116		13	%
Cost of sales, exclusive of depreciation and amortization	Cost of sales, exclusive of depreciation and amortization	$	3,619		$	4,280		(15)	%	$	7,462		$	8,396		(11)	%	Cost of sales, exclusive of depreciation and amortization	$	4,194		$	3,619		16	%	$	8,248		$	7,462		11	%
As a percent of sales	As a percent of sales	56.8		%	59.4		%			56.9		%	59.3		%			As a percent of sales	55.3		%	56.8		%			55.6		%	56.9		%
Selling, general and administrative	Selling, general and administrative	$	760		$	884		(14)	%	$	1,621		$	1,763		(8)	%	Selling, general and administrative	$	822		$	760		8	%	$	1,609		$	1,621		(1)	%
As a percent of sales	As a percent of sales	11.9		%	12.3		%			12.4		%	12.5		%			As a percent of sales	10.8		%	11.9		%			10.9		%	12.4		%
Depreciation and amortization	Depreciation and amortization	$	1,124		$	1,195		(6)	%	$	2,266		$	2,418		(6)	%	Depreciation and amortization	$	1,171		$	1,124		4	%	$	2,337		$	2,266		3	%
Cost reduction programs and other charges ~~(a)~~(b)	Cost reduction programs and other charges ~~(a)~~(b)	$	249		$	141		77	%	$	380		$	230		65	%	Cost reduction programs and other charges ~~(a)~~(b)	$	204		$	249		(18)	%	$	196		$	380		(48)	%

Other income (expense) - net	Other income (expense) - net	$	—		$	10		(100)	%	$	15		$	28		(46)	%	Other income (expense) - net	$	(17)		$	—		(100%)		$	(13)		$	15		(187)	%
Operating profit	Operating profit	$	591		$	669		(12)	%	$	1,324		$	1,278		4	%	Operating profit	$	1,142		$	591		93	%	$	2,355		$	1,324		78	%
Operating margin	Operating margin	9.3		%	9.3		%			10.1		%	9.0		%			Operating margin	15.1		%	9.3		%			15.9		%	10.1		%
Interest expense - net	Interest expense - net	$	18		$	10		80	%	$	42		$	33		27	%	Interest expense - net	$	18		$	18		—	%	$	38		$	42		(10)	%
Net pension and OPEB cost (benefit), excluding service cost	Net pension and OPEB cost (benefit), excluding service cost	$	(45)		$	(24)		(88)	%	$	(90)		$	(9)		900	%	Net pension and OPEB cost (benefit), excluding service cost	$	(49)		$	(45)		9	%	$	(98)		$	(90)		9	%
Effective tax rate	Effective tax rate	26.5		%	24.7		%			24.0		%	24.6		%			Effective tax rate	28.5		%	26.5		%			24.9		%	24.0		%
Income from equity investments	Income from equity investments	$	29		$	28		4	%	$	46		$	62		(26)	%	Income from equity investments	$	37		$	29		28	%	$	80		$	46		74	%
Noncontrolling interests from continuing operations	Noncontrolling interests from continuing operations	$	(25)		$	(29)		(14)	%	$	(60)		$	(59)		2	%	Noncontrolling interests from continuing operations	$	(36)		$	(25)		44	%	$	(74)		$	(60)		23	%
Income from continuing operations	Income from continuing operations	$	458		$	513		(11)	%	$	1,029		$	948		9	%	Income from continuing operations	$	840		$	458		83	%	$	1,819		$	1,029		77	%
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	0.87		$	0.94		(7)	%	$	1.93		$	1.73		12	%	Diluted earnings per share from continuing operations	$	1.60		$	0.87		84	%	$	3.46		$	1.93		79	%
Diluted shares outstanding	Diluted shares outstanding	529,054			546,488			(3)	%	532,112			547,771			(3)	%	Diluted shares outstanding	523,723			529,054			(1)	%	525,380			532,112			(1)	%
Number of employees	Number of employees	76,662			80,254			(4)	%	76,662			80,254			(4)	%	Number of employees	71,736			76,662			(6)	%	71,736			76,662			(6)	%
Adjusted Amounts (a)	Adjusted Amounts (a)																	Adjusted Amounts (a)
Operating profit	Operating profit	$	1,317		$	1,319		—	%	$	2,669		$	2,541		5	%	Operating profit	$	1,837		$	1,317		39	%	$	3,525		$	2,669		32	%
Operating margin	Operating margin	20.7		%	18.4		%			20.3		%	18.0		%			Operating margin	24.2		%	20.7		%			23.8		%	20.3		%

Effective tax rate	Effective tax rate	24.3		%	23.8		%			24.1		%	23.7		%			Effective tax rate	24.6		%	24.3		%			24.3		%	24.1		%

Income from continuing operations	Income from continuing operations	$	1,005		$	1,000		1	%	$	2,014		$	1,927		5	%	Income from continuing operations	$	1,415		$	1,005		41	%	$	2,727		$	2,014		35	%
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	1.90		$	1.83		4	%	$	3.78		$	3.52		7	%	Diluted earnings per share from continuing operations	$	2.70		$	1.90		42	%	$	5.19		$	3.78		37	%
Other Financial Data (a)	Other Financial Data (a)																	Other Financial Data (a)
EBITDA from continuing operations	EBITDA from continuing operations	$	1,744		$	1,892		(8)	%	$	3,636		$	3,758		(3)	%	EBITDA from continuing operations	$	2,350		$	1,744		35	%	$	4,772		$	3,636		31	%
As percent of sales	As percent of sales	27.3		%	26.3		%			27.7		%	26.6		%			As percent of sales	31.0		%	27.3		%			32.2		%	27.7		%
Adjusted EBITDA from continuing operations	Adjusted EBITDA from continuing operations	$	2,016		$	2,041		(1)	%	$	4,065		$	4,013		1	%	Adjusted EBITDA from continuing operations	$	2,585		$	2,016		28	%	$	5,023		$	4,065		24	%
As percent of sales	As percent of sales	31.6		%	28.4		%			31.0		%	28.5		%			As percent of sales	34.1		%	31.6		%			33.9		%	31.0		%

(a) Adjusted ~~amounts~~Amounts and Other Financial Data are non-GAAP performance measures. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" sections of this MD&A.

(b) See Note 2 to the condensed consolidated financial statements.

Reported

In the second quarter of 2021, Linde's sales were $7,584 million, 19% above prior year, primarily driven by 3% price attainment and 15% higher volumes. Currency translation increased sales by 6% in the second quarter of 2021 as compared to 2020.

Reported operating profit for the second quarter of 2021 of $1,142 million, or 15.1% of sales, was 93% above prior year. The reported year-over-year increase was primarily due to higher price and volumes and lower cost reduction programs and other charges. The reported effective tax rate ("ETR") was 28.5% in the second quarter 2021 versus 26.5% in the second quarter 2020. Diluted earnings per share from continuing operations ("EPS") was $1.60, or 84% above EPS of $0.87 in the second quarter of 2020 primarily due to higher income from continuing operations and lower diluted shares outstanding.

Table of Contents

~~Reported~~

In the second quarter of 2020, Linde's reported sales were $6,377 million, 7% below the prior year, excluding currency translation impacts, primarily due to lower volumes due to the global macroeconomic slowdown as a result of the COVID-19 pandemic, partially offset by higher pricing across all geographic segments and new project start-ups, including Engineering. Reported operating profit for the second quarter of 2020 of $591 million, or 9.3% of sales, was 12% below the prior year primarily due to higher cost reduction programs and other charges, partially offset by lower amortization of the fair value of fixed assets and intangible assets acquired in the merger. The reported effective tax rate ("ETR") was 26.5% in the second quarter 2020 versus 24.7% in the second quarter 2019. Diluted earnings per share from continuing operations ("EPS") was $0.87, or 7% below reported EPS of $0.94 in the second quarter of 2019 primarily due to lower income from continuing operations driven by higher cost reduction program charges, partially offset by lower diluted shares outstanding.

Adjusted

In the second quarter of 2021, adjusted operating profit of $1,837 million, or 24.2% of sales, was 39% higher as compared to 2020 Linde's sales were $6,377 million, 7% below the prior year, excluding currency translation impacts, primarily due to lower volumes due to the global macroeconomic slowdown as a result of the COVID-19 pandemic, partially offsetdriven by higher price and volumes and continued productivity initiatives across all geographic segments and new project start-ups, including Engineering. Adjusted operating profit of $1,317 million, or 20.7% of sales, was flat as compared to 2019 with a 230 basis point increase as a percentage of sales as the impacts of higher price and the cost reduction programs and productivity initiatives offset the impact from lower volumes.segments. The adjusted ETR was ~~24.3%~~24.6% in the second quarter ~~2020~~2021 versus ~~23.8%~~24.3% in the ~~2019~~2020 quarter. On an adjusted basis, EPS was ~~$1.90, 4%~~$2.70, 42% above the ~~2019~~2020 adjusted EPS of ~~$1.83,~~$1.90, driven by higher adjusted income from continuing operations and lower diluted shares outstanding.

Outlook

Linde believes that its project backlog is one indicator of future sales growth. The company’s sale of gas backlog represents estimated capital expenditures over $5 million for customer projects, secured by long-term contracts that lead to incremental sales and earnings growth. Linde’s sale of gas and sale of equipment backlog of approximately $8.6 billion provides a strong growth foundation for the next several years. Of this backlog, approximately $3.6 billion is for sale of gas projects where APAC and Americas represent 69% percent and 23% percent of the backlog, respectively, and the remaining backlog in EMEA. These plants will primarily supply customers in the electronics, chemicals and energy end-markets.

~~The ultimate magnitude of COVID-19, including~~the extent of its impact on the Company’s operational results, will be determined by the length of time that such circumstances continue, measures taken to prevent its spread, and the demand for the Company’s products and services, as well as the effect of governmental and public actions taken in response.

The Company is committed to the safety and well-being of its employees and to ensuring that its facilities follow the highest standards of safety and hygiene. At the same time, the Company and its employees remain committed to meeting the needs of customers and ensuring they receive products and services in a timely manner.

~~The above outlook should be read in conjunction with the section entitled “Forward-Looking Statements.”~~

Linde provides quarterly updates on operating results, material trends that may affect financial performance, and financial guidance via quarterly earnings releases and investor teleconferences. These updates are available on the company’s website, www.linde.com, but are not incorporated herein.

~~Table of Contents~~

Results of operations

The changes in consolidated sales compared to the prior year are attributable to the following:


		Quarter Ended June 30, 2020 vs. 2019		Six Months Ended June 30, 2020 vs. 2019			Quarter Ended June 30, 2021 vs. 2020		Six Months Ended June 30, 2021 vs. 2020
		% Change		% Change			% Change		% Change

Factors Contributing to Changes - Sales	Factors Contributing to Changes - Sales					Factors Contributing to Changes - Sales
Volume	Volume	(7)	%	(5)	%	Volume	15	%	9	%
Price/Mix	Price/Mix	2	%	2	%	Price/Mix	3	%	2	%
Cost pass-through	Cost pass-through	(1)	%	(1)	%	Cost pass-through	2	%	2	%
Currency	Currency	(4)	%	(3)	%	Currency	6	%	5	%
Acquisitions/divestitures	Acquisitions/divestitures	(1)	%	—	%	Acquisitions/divestitures	(3)	%	(3)	%
Engineering						Engineering	(4)	%	(2)	%
		(11)	%	(7)	%		19	%	13	%

Sales

~~Reported sales decreased $827~~Sales increased $1,207 million, or ~~11%~~19%, for the second quarter of 2021 and ~~decreased $1,032~~increased $1,711 million, or 7%13% for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019~~2020 periods. ~~On an adjusted basis sales decreased $802 million or 11% for the second quarter~~Volume growth across all end markets and ~~decreased $977 million or 7% compared to the respective 2019 periods.~~

~~On a reported and adjusted basis, sales decreased 11%, for the quarter and 7% for the year-to-date period. Volume decreased~~project start-ups increased sales by 7%15% in the quarter and ~~5% year to date primarily driven by the impact of COVID-19 in all geographic segments, partially offset by new project start-ups.~~9% year-to-date. Higher pricing across all geographic segments contributed 2%3% to sales in the quarter and 2% in the year-to-date ~~periods.~~period. Currency translation ~~decreased~~increased sales by 4%6% in the quarter and 3%5% in the year-to-date ~~periods, respectively,~~period, largely in EMEA and APAC, driven by the ~~weakening~~strengthening of the Euro, ~~British pound,~~ Australian dollar, ~~Brazilian real~~Chinese yuan and ~~Chinese yuan~~British pound against the U.S. dollar. Cost pass-through ~~decreased~~increased sales by 1%2% in both ~~the quarter and year-to-date~~ periods with minimal impact on operating profit. The ~~impact~~deconsolidation of ~~merger-related divestitures~~a joint venture with operations in APAC decreased sales by ~~$25 million~~3% in the quarter and ~~$55 million in~~year-to-date periods (see Note 13 to the ~~year-to-date period. These sales have been excluded from the adjusted numbers.~~condensed consolidated financial statements).

Cost of sales, exclusive of depreciation and amortization

Cost of sales, exclusive of depreciation and amortization ~~decreased $661~~increased $575 million, or ~~15%~~16%, for the second quarter of 2021 and ~~decreased $934~~increased $786 million, or 11% for the six months ended June 30, ~~2020~~2021 primarily due to ~~lower~~higher volumes and ~~the impact of~~currency impacts, partially offset by productivity initiatives. Cost of sales, exclusive of depreciation and amortization was ~~56.8%~~55.3% and ~~56.9%~~55.6% of sales, respectively, for the second quarter and six months ended June 30, ~~2020~~2021 versus ~~59.4%~~56.8% and ~~59.3%~~56.9% of sales for the respective ~~2019~~2020 periods. The decrease as a percentage of sales in the quarter and for the six months ended June 30, ~~2020~~2021 was due primarily to ~~lower cost pass-through and the impact of cost reduction programs and~~ productivity initiatives.

Selling, general and administrative expenses

Selling, general and administrative expense ("SG&A") ~~decreased $124~~increased $62 million, or ~~14%~~8%, for the second quarter of 2021 and decreased ~~$142~~$12 million, or 8%1%, for the six months ended June 30, ~~2020.~~2021. SG&A was ~~11.9%~~10.8% of second quarter sales and ~~12.4%~~10.9% sales for the six months ended June 30, ~~2020~~2021 versus ~~12.3%~~11.9% and ~~12.5%~~12.4% for the respective ~~2019~~2020 periods. Currency impacts ~~decreased~~increased SG&A by approximately ~~$30~~$36 million in the quarter and ~~$52~~increased SG&A by approximately $61 million for the six months ended June 30, ~~2020.~~2021. Excluding currency impacts, underlying SG&A ~~decreased~~increased in the second quarter of 2021 driven by higher incentive compensation and decreased for the ~~impact of cost reduction programs and~~six months ended June 30, 2021 due to continued productivity initiatives.

Depreciation and amortization

Reported depreciation and amortization expense ~~decreased $71~~increased $47 million, or 6%4%, for the second quarter of 2021 and ~~decreased $152~~increased $71 million, or 6%3%, for the six months ended June 30, ~~2020~~2021 primarily due to currency translation ~~impacts and lower amortization~~impacts.

Table of ~~the fair value of fixed assets and intangible assets acquired in the merger.~~Contents

On an adjusted basis depreciation and amortization ~~decreased $24~~increased $36 million, or 4%5%, for the second quarter of 2021 and ~~decreased $60~~increased $58 million, or 4%, for the year-to-date period, primarily due to currency translation impacts which ~~decreased~~increased depreciation and amortization by ~~approximately $24~~$34 million ~~for~~and $54 million, respectively. Excluding currency impacts, underlying depreciation was relatively flat as the ~~quarter and $45 million for~~impact of new project start ups was largely offset by the ~~six months ended June 30, 2020.~~deconsolidation of a joint venture with operations in APAC (see Note 13 to the condensed consolidated financial statements).

Cost reduction programs and other charges

~~Linde recorded cost~~Cost reduction programs and other charges ~~of $249~~were $204 million and ~~$141~~$249 million for the second quarter ~~2020~~2021 and ~~2019,~~2020, respectively, primarily related to merger and synergy-related costs (see Note 2 to the condensed consolidated financial statements).

Cost reduction programs and other charges were ~~$380~~$196 million and ~~$230~~$380 million, respectively, for the six months ended June 30, ~~2020~~2021 and ~~2019.~~

2020.

On an adjusted basis, these costs have been excluded in both periods.

~~Table of Contents~~

Operating profit

~~Reported~~On a reported basis, operating profit ~~decreased $78~~increased $551 million, or ~~12%~~93%, for the second quarter of ~~2020~~2021 and increased ~~$46~~$1,031 million, or 4%78% for the six months ended June 30, ~~2020. On an adjusted basis operating profit decreased $2~~2021. The increase was primarily due to higher volumes and price, partially offset by the deconsolidation of a joint venture with operations in APAC. Cost reduction programs and other charges were $204 million for the second quarter of 2021, versus $249 million for the respective 2020 period. In the year-to-date periods cost reduction programs and ~~increased $128~~other charges were $196 million ~~or 5%,~~and $380 million, respectively, for the six months ended June 30, ~~2020.~~

~~On a reported basis, operating profit decreased $78 million, or 12%, for the quarter~~2021 and ~~increased $46 million, or 4% for the six months ended June 30,~~ 2020. The decrease in the quarter was primarily due to lower volumes and higher cost reduction programs and other charges partially offset by higher price and lower depreciation and amortization related to the merger. The increase in the year-to-date period was driven by higher price, lower depreciation and amortization related to the merger, and the impact of cost reduction and productivity initiatives partially offset by higher cost reduction programs and other charges. Cost reduction programs and other charges were $249 million and $380 million for the second quarter and six months ended June 30, 2020, respectively, versus $141 million and $230 million for the respective 2019 periods.

On an adjusted basis, which excludes the impacts of purchase accounting ~~relating to the merger~~ and cost reduction programs and other charges, operating profit ~~decreased $2~~increased $520 million, or 39% in the 2021 quarter and increased ~~$128~~$856 million, or 5%32%, for the six months ended June 30, 2020. For the quarter, operating profit was relatively flat as the impact of lower volumes and unfavorable currency impacts were largely offset by higher price and the impacts of cost reduction programs and productivity initiatives. For the year-to-date period, operating2021. Operating profit growth was driven by higher volume and price and the ~~impacts~~benefit of cost reduction programs and productivity initiatives, ~~which were only~~ partially offset by ~~lower volumes, unfavorable currency impacts and cost inflation.~~the deconsolidation of a joint venture with operations in APAC. A discussion of operating profit by segment is included in the segment discussion that follows.

Interest expense - net

Reported interest expense - net ~~increased $8 million, or 80%,~~was flat for the second quarter of 2021 and increased $9 million, or 27%, for the six months ended June 30, 2020. On an adjusted basis interest expense increased $5 million, or 14%, for the second quarter and increased $1 million, or 1%, for the six months ended June 30, 2020 versus the respective 2019 period.

~~On a reported basis, interest expense - net increased $8 million in the quarter and increased $9~~decreased $4 million for the six months ended June 30, ~~2020.~~

2021. On an adjusted basis interest expense ~~- net increased $5~~decreased $7 million for the second quarter of 2021 and ~~increased $1~~decreased $15 million for the six months ended June 30, ~~2020.~~2021 versus the respective 2020 periods. The ~~increase~~decrease in ~~the quarter~~both periods was driven ~~by lower interest income, partially offset~~ by a lower effective borrowing rate. The ~~increase in the~~ year-to-date period decrease was also driven by ~~lower interest income and~~ the impact of ~~unfavorable~~favorable foreign currency revaluation on an unhedged intercompany ~~loan, partially offset by a lower effective borrowing rate driven by lower long-term debt outstanding and higher levels of commercial paper borrowings at lower interest rates.~~loan.

Net pension and OPEB cost (benefit), excluding service cost

Reported net pension and OPEB cost (benefit), excluding service cost was a benefit of ~~$45~~$49 million and ~~$90~~$98 million for the quarter and six months ended June 30, ~~2020,~~2021, respectively, versus a benefit of ~~$24~~$45 million and $9$90 million for the respective ~~2019~~2020 periods. The 2019 quarter and six month periods included charges of $10 million and $61 million, respectively, related to plan freezes and pension settlements (see Note 8 to the condensed consolidated financial statements). Excluding the impact of the settlement charge, net pension and OPEB cost (benefit), excluding service cost decreased $11 millionincrease in benefit for both the quarter and ~~$20 million for the six months ended June 30, 2020 driven primarily by the benefit of~~year-to-date periods largely relates to a higher expected return on assets and lower interest ~~cost.~~costs partially offset by higher amortization of deferred losses.

Effective tax rate

The reported effective tax rate ("ETR") for the quarter and six months ended June 30, ~~2020~~2021 was 28.5% and 24.9%, respectively, versus 26.5% and 24.0%~~, respectively, versus 24.7% and 24.6%~~ for the respective ~~2019~~2020 periods. The 2021 periods include net tax charges of $38 million primarily related to $81 million of expense due to a tax rate increase in the ~~ETR for~~United Kingdom partially offset by a tax settlement benefit of $33 million (see Note 2 to the ~~quarter is primarily due to net tax settlements and lower tax benefits from share option exercises.~~condensed consolidated financial statements).

On an adjusted basis, the ETR for the quarter and six months ended June 30, ~~2020~~2021 was 24.6% and 24.3%, respectively, versus 24.3% and 24.1%~~, respectively, versus 23.8% and 23.7%~~ for the respective ~~2019~~2020 periods. ~~The increase in the adjusted ETR in both the quarter and year-to-date periods is primarily due to lower tax benefits from share option exercises.~~

Income from equity investments

Reported income from equity investments for the second quarter of 2021 and six months ended June 30, ~~2020~~2021 was $37 million and $80 million, respectively, versus $29 million and $46 million ~~respectively, versus $28 million and $62 million~~ for the respective ~~2019~~2020 periods. On an adjusted basis, income from equity investments for the second quarter and six months ended June 30, ~~2020~~2021 was $56 million and $118 million, respectively, versus $43 million and $74 ~~million, respectively, versus $42 million and $90~~ million, in the prior respective periods. ~~Adjusted~~The increase in both the reported and adjusted income from equity investments ~~was relatively flat~~ for the ~~quarter. The decrease for the~~quarter and year-to-date ~~period~~periods was driven by the deconsolidation of a joint venture with operations in APAC which is reflected in equity income effective January 1, 2021 (See Note 13 to the condensed consolidated financial statements). The year-to-date 2020 period also includes the impact of unfavorable foreign currency revaluation ~~impacts~~ on an unhedged loan of an investment in EMEA.

~~Noncontrolling interests from continuing operations~~

3130

Table of Contents

Noncontrolling interests from continuing operations

At June 30, ~~2020,~~2021, noncontrolling interests from continuing operations consisted primarily of non-controlling shareholders' investments in APAC (primarily China) and surface technologies.

Reported noncontrolling interests from continuing operations ~~decreased $4~~increased $11 million for the second quarter of 2021 and increased $1$14 million for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019~~2020 periods primarily driven by ~~lower income from continuing operations in the quarter and~~ higher income from continuing operations, partially offset by the deconsolidation of a joint venture with operations in APAC (See Note 13 to the condensed consolidated financial statements) and the buyout of minority shareholders in the ~~year-to-date period.~~

Republic of South Africa.

Adjusted noncontrolling interests from continuing operations decreased $7$1 million for the second quarter of 2021 and decreased $2$8 million for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019~~2020 periods primarily driven by ~~lower~~the deconsolidation of a joint venture with operations in APAC (See Note 13 to the condensed consolidated financial statements) and the buyout of minority shareholders in the Republic of South Africa, which more than offset the increase from higher income from continuing operations.

Income from continuing operations

Reported income from continuing operations ~~decreased $55~~increased $382 million, or ~~11%~~83%, for the second quarter of 2021 primarily due to ~~lower~~higher operating profit and ~~a higher effective tax rate and~~ increased ~~$81~~$790 million, or 9%77%, for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019~~2020 periods, primarily due to higher overall operating ~~profit, net pension and OPEB cost (benefit), excluding service costs, and a lower ETR, partially offset by lower income from equity investments.~~

profit.

On an adjusted basis, which excludes the impacts of purchase accounting and other non-GAAP adjustments, income from continuing operations increased $5$410 million, or 1%41%, for the quarter and increased ~~$87~~$713 million, or 5%35% for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019~~2020 periods. The increase in the quarter and year-to-date periods was driven by ~~favorable changes in net pension and OPEB cost (benefit), excluding service costs, partially offset by a~~ higher ~~adjusted ETR. The increase in the year-to-date period was primarily due to higher~~overall adjusted operating ~~profit and favorable changes in net pension and OPEB cost (benefit), excluding service costs partially offset by a higher adjusted ETR.~~

profit.

Diluted earnings per share from continuing operations

Reported diluted earnings per share from continuing operations ~~decreased $0.07,~~increased $0.73, or 7%84%, for the second quarter of 2021 and increased ~~$0.20,~~$1.53, or ~~12%~~79% for the six months ended June 30, ~~2020~~2021 versus the comparable ~~2019 period.~~

2020 periods.

On an adjusted basis, diluted EPS ~~of $1.90~~ for the second quarter of 2021 increased ~~$0.07,~~$0.80, or 4%42%, and increased ~~$0.26,~~$1.41, or 7%37% for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019~~2020 periods, primarily due to higher income from continuing operations and lower diluted shares outstanding.

Employees

The number of employees at June 30, ~~2020~~2021 was ~~76,662,~~71,736, a decrease of ~~3,592~~4,926 employees from June 30, ~~2019~~2020 primarily driven by ~~decreases from~~ cost reduction actions and divestitures.

Other Financial Data

EBITDA was ~~$1,744~~$2,350 million for the second quarter ~~2020~~of 2021 as compared to ~~$1,892~~$1,744 million in the respective ~~2019~~2020 period. EBITDA ~~decreased~~increased to ~~$3,636~~$4,772 million for the six months ended June 30, ~~2020~~2021 from ~~$3,758~~$3,636 million in the respective ~~2019 period. Adjusted EBITDA from continuing operations decreased to $2,016 million for the second quarter~~ 2020 ~~from $2,041 million in the respective 2019~~ period. Adjusted EBITDA from continuing operations increased to ~~$4,065~~$2,585 million for the second quarter 2021 from $2,016 million in the respective 2020 period. Adjusted EBITDA from continuing operations increased to $5,023 million from ~~$4,013~~$4,065 million for the six months ended June 30, ~~2020~~2021 as compared to the respective ~~2019~~2020 period primarily due to higher income from continuing operations plus depreciation and amortization versus the prior period.

See the "Non-GAAP Measures and Reconciliations" for adjusted amounts sections below for definitions and reconciliations of these adjusted non-GAAP measures to reported GAAP amounts.

Other Comprehensive Income (Loss)

Other comprehensive income for the second quarter of 2021 and loss for the six months ended June 30, ~~2020~~2021 of ~~$785~~$446 million and ~~$1,895~~$215 million, respectively, resulted primarily from positive currency translation adjustments of ~~$744~~$410 million during the quarter and negative currency translation adjustments of ~~$1,971~~$305 million during the year-to-date period. The translation adjustments reflect the impact of translating local currency foreign subsidiary financial statements to U.S. dollars, and are largely driven by the movement of the U.S. dollar against major currencies including the Euro, British pound and the Chinese yuan. See the "Currency" section of the MD&A for exchange rates used for translation purposes and Note 11 to the condensed consolidated financial statements for a summary of the currency translation adjustment component of accumulated other comprehensive income by segment.

3231

Table of Contents

Segment Discussion

The following summary of sales and operating profit by segment provides a basis for the discussion that follows. Linde plc evaluates the performance of its reportable segments based on operating profit, excluding items not indicative of ongoing business trends. The reported amounts are GAAP amounts from the Condensed Consolidated ~~Statement~~Statements of ~~Operations.~~Income.


		Quarter Ended June 30,										Six Months Ended June 30,															Quarter Ended June 30,	Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2020		2019		Variance		2020		2019		%		(Millions of dollars)	2021		2020		Variance		2021		2020		Variance
SALES	SALES													SALES
Americas	Americas	$	2,417	$	2,779	(13)	%	$	5,094	$	5,481	(7)	%	Americas	$	3,020	$	2,417	25	%	$	5,860	$	5,094	15	%
EMEA	EMEA	1,448		1,673		(13)	%	3,081		3,355		(8)	%	EMEA	1,875		1,448		29	%	3,674		3,081		19	%
APAC	APAC	1,295		1,488		(13)	%	2,631		2,915		(10)	%	APAC	1,544		1,295		19	%	2,980		2,631		13	%
Engineering	Engineering	810		752		8	%	1,418		1,388		2	%	Engineering	646		810		(20)	%	1,320		1,418		(7)	%
Other	Other	407		487		(16)	%	892		954		(7)	%	Other	499		407		23	%	993		892		11	%
Total segment sales		$	6,377	$	7,179	(11)	%	$	13,116	$	14,093	(7)	%
Merger-related divestitures		—		25						55
Total sales	Total sales	$	6,377	$	7,204			$	13,116	$	14,148			Total sales	$	7,584	$	6,377	19	%	$	14,827	$	13,116	13	%

SEGMENT OPERATING PROFIT	SEGMENT OPERATING PROFIT													SEGMENT OPERATING PROFIT
Americas	Americas	$	622	$	646	(4)	%	$	1,283	$	1,230	4	%	Americas	$	871	$	622	40	%	$	1,666	$	1,283	30	%
EMEA	EMEA	303		332		(9)	%	658		679		(3)	%	EMEA	487		303		61	%	938		658		43	%
APAC	APAC	294		304		(3)	%	575		577		—	%	APAC	389		294		32	%	740		575		29	%
Engineering	Engineering	138		99		39	%	229		177		29	%	Engineering	108		138		(22)	%	217		229		(5)	%
Other	Other	(40)		(62)		35	%	(76)		(122)		38	%	Other	(18)		(40)		55	%	(36)		(76)		53	%
Segment operating profit	Segment operating profit	$	1,317	$	1,319	—	%	$	2,669	$	2,541	5	%	Segment operating profit	$	1,837	$	1,317	39	%	$	3,525	$	2,669	32	%
Reconciliation to reported operating profit:	Reconciliation to reported operating profit:													Reconciliation to reported operating profit:
Cost reduction programs and other charges (Note 2)	Cost reduction programs and other charges (Note 2)	(249)		(141)				(380)		(230)				Cost reduction programs and other charges (Note 2)	(204)		(249)				(196)		(380)
Merger-related divestitures		—		6				—		13
Purchase accounting impacts - Linde AG	Purchase accounting impacts - Linde AG	(477)		(515)				(965)		(1,046)				Purchase accounting impacts - Linde AG	(491)		(477)				(974)		(965)
Total operating profit	Total operating profit	$	591	$	669			$	1,324	$	1,278			Total operating profit	$	1,142	$	591			$	2,355	$	1,324

Americas


		Quarter Ended June 30,														Six Months Ended June 30,																			Quarter Ended June 30,	Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2020			2019			Variance		2020			2019			Variance		(Millions of dollars)	2021			2020			Variance		2021			2020			Variance
Reported sales		$	2,417		$	2,779		(13)	%	$	5,094		$	5,481		(7)	%
Sales																		Sales	$	3,020		$	2,417		25	%	$	5,860		$	5,094		15	%

Reported operating profit		$	622		$	646		(4)	%	$	1,283		$	1,230		4	%
Operating profit																		Operating profit	$	871		$	622		40	%	$	1,666		$	1,283		30	%
As a percent of sales	As a percent of sales	25.7		%	23.2		%			25.2		%	22.4		%			As a percent of sales	28.8		%	25.7		%			28.4		%	25.2		%


	Quarter Ended June 30, 2021 vs. 2020		Six Months Ended June 30, 2021 vs. 2020
	% Change		% Change
	Sales		Sales
Factors Contributing to Changes - Sales
Volume	18	%	10	%
Price/Mix	3	%	3	%
Cost pass-through	2	%	2	%
Currency	2	%	—	%
Acquisitions/divestitures	—	%	—	%

	25	%	15	%

3332

Table of Contents

Quarter Ended June 30, 2020 vs. 2019 Six Months Ended June 30, 2020 vs. 2019
% Change % Change
Sales Sales
Factors Contributing to Changes
Volume (9) % (4) %
Price/Mix 2 % 2 %
Cost pass-through (1) % (2) %
Currency (4) % (3) %
Acquisitions/divestitures (1) % — %
(13) % (7) %

The Americas segment includes Linde's industrial gases operations in approximately 20 countries including the United States, Canada, Mexico and Brazil.

Sales

Sales for the Americas segment ~~decreased $362~~increased $603 million, or ~~13%~~25%, for the second quarter and ~~decreased $387~~increased $766 million, or 7%15%, for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019~~2020 periods. Higher pricing contributed 2%3% to sales in the quarter and year-to-date period. ~~Lower~~Higher volumes ~~primarily to~~increased sales by 18% for the ~~manufacturing~~second quarter and ~~metals~~increased 10% for the six months ended June 30, 2021, led by higher demand across all end markets, ~~due to COVID-19, were partially offset by new project start-ups and higher volumes to~~with cyclical end markets being the ~~healthcare end market.~~strongest. Currency translation ~~decreased~~increased sales by 4%2% in the quarter and 3%was flat for the year-to-date period primarily driven by the ~~weakening~~strengthening of the ~~Brazilian real,~~Canadian dollar and Mexican peso ~~and Canadian dollar~~ against the U.S. Dollar. Cost pass-through ~~decreased~~increased sales by ~~1%, in~~2% for the second quarter and ~~2% in the~~ year-to-date periods with minimal impact on operating profit.

Operating profit

Operating profit in the Americas segment ~~decreased $24~~increased $249 million, or 4%40%, in the second quarter and increased ~~$53~~$383 million, or 4%30%, for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019~~2020 periods. For the quarter and year-to-date periods, operating profit ~~decreased~~increased due primarily to ~~lower volumes and unfavorable currency impacts which were partially offset by~~ higher pricing and ~~new project start-ups. Higher pricing~~volumes and ~~the impact of cost reduction and~~continued productivity ~~initiatives more than offset the unfavorable impacts of currency translation and cost inflation in the year-to-date period.~~

initiatives.

EMEA


		Quarter Ended June 30,														Six Months Ended June 30,																			Quarter Ended June 30,	Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2020			2019			Variance		2020			2019			Variance		(Millions of dollars)	2021			2020			Variance		2021			2020			Variance
Reported sales		$	1,448		$	1,673		(13)	%	$	3,081		$	3,355		(8)	%
Sales																		Sales	$	1,875		$	1,448		29	%	$	3,674		$	3,081		19	%

Reported operating profit		$	303		$	332		(9)	%	$	658		$	679		(3)	%
Operating profit																		Operating profit	$	487		$	303		61	%	$	938		$	658		43	%
As a percent of sales	As a percent of sales	20.9		%	19.8		%			21.4		%	20.2		%			As a percent of sales	26.0		%	20.9		%			25.5		%	21.4		%


		Quarter Ended June 30, 2020 vs. 2019		Six Months Ended June 30, 2020 vs. 2019			Quarter Ended June 30, 2021 vs. 2020		Six Months Ended June 30, 2021 vs. 2020
		% Change		% Change			% Change		% Change
		Sales		Sales			Sales		Sales
Factors Contributing to Changes
Factors Contributing to Changes - Sales						Factors Contributing to Changes - Sales
Volume	Volume	(7)	%	(4)	%	Volume	12	%	6	%
Price/Mix	Price/Mix	1	%	2	%	Price/Mix	4	%	3	%
Cost pass-through	Cost pass-through	(1)	%	(1)	%	Cost pass-through	4	%	3	%
Currency	Currency	(5)	%	(4)	%	Currency	10	%	9	%
Acquisitions/divestitures	Acquisitions/divestitures	(1)	%	(1)	%	Acquisitions/divestitures	(1)	%	(2)	%

		(13)	%	(8)	%		29	%	19	%

~~Table of Contents~~

The EMEA segment includes Linde's industrial gases operations in approximately 45 European, Middle Eastern and African countries including Germany, France, Sweden, the Republic of South Africa, and the United Kingdom.

Sales

EMEA segment sales ~~decreased~~increased by ~~$225~~$427 million, or ~~13%~~29%, in the second quarter and ~~decreased~~increased by ~~$274~~$593 million, or 8%19%, for the six months ended June 30, ~~2020~~2021 as compared to the respective ~~2019 period, primarily driven by lower volumes.~~2020 periods. Volumes ~~decreased 7%~~increased 12% in the quarter and 4%6% in the year-to-date period driven by ~~overall weaker industrial production and~~increased demand across all end markets, led by the ~~impact of COVID-19 during the quarter. Unfavorable currency~~cyclical end markets. Currency translation ~~decreased~~increased sales by 5%10% in the quarter and 4%9% in the year-to-date ~~periods~~period due to the ~~weakening~~strengthening of the Euro, British pound and ~~South African rand~~Swedish krona against the U.S. Dollar. Higher price increased sales by 4% in the quarter and 3% in the year-to-date period. Sales decreased 1% in the quarter and 2% in the ~~year-to-date period. Cost pass-through decreased sales by 1% in both periods, with minimal impact on operating profit. Sales decreased 1% in the quarter and~~ year-to-date periods related to the divestiture of a non-core business in Scandinavia. Cost pass-through contributed 4% to sales in the quarter and increased sales by 3% in the year-to-date periods with minimal impact on operating profit.

Operating profit

Operating profit for the EMEA segment ~~decreased~~increased by ~~$29~~$184 million, or 9%61%, in the second quarter and ~~decreased $21~~increased $280 million, or 3%43%, for the six months ended June 30, ~~2020~~2021 as compared to the respective ~~2019~~2020 periods, driven largely by ~~lower volumes and unfavorable impacts of currency translation, partially offset by~~ higher price and ~~the impact~~volumes and continued productivity initiatives.

Table of ~~cost reduction programs.~~Contents

APAC


		Quarter Ended June 30,														Six Months Ended June 30,																			Quarter Ended June 30,	Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2020			2019			Variance		2020			2019			Variance		(Millions of dollars)	2021			2020			Variance		2021			2020			Variance
Reported sales		$	1,295		$	1,488		(13)	%	$	2,631		$	2,915		(10)	%
Sales																		Sales	$	1,544		$	1,295		19	%	$	2,980		$	2,631		13	%

Reported operating profit		$	294		$	304		(3)	%	$	575		$	577		—	%
Operating profit																		Operating profit	$	389		$	294		32	%	$	740		$	575		29	%
As a percent of sales	As a percent of sales	22.7		%	20.4		%			21.9		%	19.8		%			As a percent of sales	25.2		%	22.7		%			24.8		%	21.9		%


		Quarter Ended June 30, 2020 vs. 2019		Six Months Ended June 30, 2020 vs. 2019			Quarter Ended June 30, 2021 vs. 2020		Six Months Ended June 30, 2021 vs. 2020
		% Change		% Change			% Change		% Change
		Sales		Reported			Sales		Reported
Factors Contributing to Changes
Factors Contributing to Changes - Sales						Factors Contributing to Changes - Sales
Volume/Equipment	Volume/Equipment	(9)	%	(7)	%	Volume/Equipment	19	%	14	%
Price/Mix	Price/Mix	1	%	2	%	Price/Mix	2	%	2	%
Cost pass-through	Cost pass-through	(1)	%	(1)	%	Cost pass-through	2	%	2	%
Currency	Currency	(4)	%	(4)	%	Currency	8	%	7	%
Acquisitions/divestitures	Acquisitions/divestitures	—	%	—	%	Acquisitions/divestitures	(12)	%	(12)	%

		(13)	%	(10)	%		19	%	13	%

The APAC segment includes Linde's industrial gases operations in approximately 20 Asian and South Pacific countries and regions including China, Australia, India and South ~~Korea and Taiwan.~~Korea.

Sales

Sales for the APAC segment ~~decreased $193~~increased $249 million, or ~~13%~~19%, for the second quarter and ~~decreased $284~~increased $349 million, or ~~10%~~13% for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019 periods driven primarily by volumes and unfavorable currency.~~2020 periods. Volumes ~~decreased 9%~~increased 19% in the quarter and 7%14% in the year-to-date period asdriven by increased demand across all end markets, led by the ~~impact of COVID-19~~cyclical end markets, and ~~a prior year equipment sale more than offset the contribution of new~~electronics and project start-ups. Higher price contributed 1%2% to sales in both the quarter and ~~2% in the~~ year-to-date ~~period. Unfavorable currency~~periods. Currency translation ~~decreased~~increased sales by 4%8% in quarter and increased sales by 7% in the year-to-date periods driven primarily by the ~~weakening~~strengthening of the Chinese yuan, Australian dollar and Korean won ~~and India rupee~~ against the U.S. ~~Dollar.~~Dollar in the quarter. Sales decreased $153 million, or 12%, in the second quarter of 2021 and decreased $296 million, or 12%, for the six months ended June 30, 2021 due to the deconsolidation of a joint venture with operations in Taiwan (See Note 13 to the condensed consolidated financial statements).

Operating profit

Operating profit in the APAC segment ~~decreased $10~~increased $95 million, or 3%32%, in the second quarter and ~~decreased $2~~increased $165 million, or 29%, for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019~~2020 periods. ~~Lower~~Higher volumes and price, continued productivity initiatives in both periods were partially offset by ~~higher price~~a $28 million and $56 million reduction due to the deconsolidation of the joint venture in the second quarter and year-to-date periods, respectively.

Engineering


	Quarter Ended June 30,								Six Months Ended June 30,
(Millions of dollars)	2021			2020			Variance		2021			2020			Variance
Sales	$	646		$	810		(20)	%	$	1,320		$	1,418		(7)	%

Operating profit	$	108		$	138		(22)	%	$	217		$	229		(5)	%
As a percent of sales	16.7		%	17.0		%			16.4		%	16.1		%

3534

Table of Contents

~~impact of cost reduction and productivity initiatives in both periods. Unfavorable currency translation decreased operating profit by 3% for the quarter.~~

~~Engineering~~

Quarter Ended June 30, Six Months Ended June 30,
(Millions of dollars) 2020 2019 Variance 2020 2019 Variance
Reported sales $ 810 $ 752 8 % $ 1,418 $ 1,388 2 %
Reported operating profit $ 138 $ 99 39 % $ 229 $ 177 29 %
As a percent of sales 17.0 % 13.2 % 16.1 % 12.8 %


		Quarter Ended June 30, 2020 vs. 2019		Six Months Ended June 30, 2020 vs. 2019			Quarter Ended June 30, 2021 vs. 2020		Six Months Ended June 30, 2021 vs. 2020
		% Change		% Change			% Change		% Change
		Sales		Sales			Sales		Sales
Factors Contributing to Changes
Factors Contributing to Changes - Sales						Factors Contributing to Changes - Sales
Volume	Volume	10	%	5	%	Volume	(29)	%	(15)	%

Currency	Currency	(2)	%	(3)	%	Currency	9	%	8	%

		8	%	2	%		(20)	%	(7)	%

Sales

Engineering segment sales ~~increased $58~~decreased $164 million, or 8%20%, in the second quarter 2021 and ~~increased $30~~decreased $98 million, or 2%7%, for the six months ended June 30, ~~2020~~2021 as compared to the respective ~~2019~~2020 periods driven primarily by ~~volumes and~~ project ~~start-up~~ timing, ~~slightly~~partially offset by ~~unfavorable~~ currency impacts ~~of 2%~~which increased sales by 9% in the quarter and 3%8% in the year-to-date period.

Operating profit

Engineering segment operating profit ~~increased $39~~decreased $30 million, or ~~39%~~22%, in the second quarter 2021 and ~~increased $52~~decreased $12 million, or ~~29%~~5%, for the six months ended June 30, ~~2020~~2021 as compared to the respective ~~2019~~2020 periods ~~due~~driven primarily ~~to strong~~by sales and project ~~execution and the impact of productivity initiatives.~~timing.

Other


		Quarter Ended June 30,														Six Months Ended June 30,																			Quarter Ended June 30,	Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2020			2019			Variance		2020			2019			Variance		(Millions of dollars)	2021			2020			Variance		2021			2020			Variance
Reported sales		$	407		$	487		(16)	%	$	892		$	954		(7)	%
Sales																		Sales	$	499		$	407		23	%	$	993		$	892		11	%

Reported operating profit (loss)		$	(40)		$	(62)		35	%	$	(76)		$	(122)		38	%
Operating profit (loss)																		Operating profit (loss)	$	(18)		$	(40)		55	%	$	(36)		$	(76)		53	%
As a percent of sales	As a percent of sales	(9.8)		%	(12.7)		%			(8.5)		%	(12.8)		%			As a percent of sales	(3.6)		%	(9.8)		%			(3.6)		%	(8.5)		%


		Quarter Ended June 30, 2020 vs. 2019		Six Months Ended June 30, 2020 vs. 2019			Quarter Ended June 30, 2021 vs. 2020		Six Months Ended June 30, 2021 vs. 2020
		% Change		% Change			% Change		% Change
		Sales		Sales			Sales		Sales
Factors Contributing to Changes
Factors Contributing to Changes - Sales						Factors Contributing to Changes - Sales
Volume/price	Volume/price	(13)	%	(5)	%	Volume/price	16	%	5	%
Cost pass-through	Cost pass-through	(1)	%	—	%	Cost pass-through	1	%	1	%
Currency	Currency	(2)	%	(2)	%	Currency	6	%	5	%
Acquisitions/divestitures	Acquisitions/divestitures	—	%	—	%	Acquisitions/divestitures	—	%	—	%

		(16)	%	(7)	%		23	%	11	%

~~Table of Contents~~

Other consists of corporate costs and a few smaller businesses including: Surface Technologies, GIST, global helium wholesale, and Electronic Materials; which individually do not meet the quantitative thresholds for separate presentation.

Sales

Sales for Other ~~decreased $80~~increased $92 million, or ~~16%~~23%, for the second quarter 2021 and ~~decreased $62~~increased $101 million, or 7%11%, for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019 periods, primarily due to lower volumes, partially offset by higher price largely due to helium.~~2020 periods. Currency translation ~~decreased~~increased sales by ~~2% for~~6% in the quarter and 5% for the year-to-date period. Higher volumes and price increased sales by 16% in the quarter and 5% in the year-to-date period across all businesses. Cost pass-through increased sales by 1% in both periods.

Operating profit

Operating profit in Other increased $22 million, or ~~35%~~55% in the second quarter 2021 and increased ~~$46~~$40 million, or ~~38%~~53%, for the six months ended June 30, ~~2020~~2021 versus the respective ~~2019~~2020 periods, due primarily to volume growth, higher price ~~the impact of cost reduction~~and continued and productivity ~~initiatives, partially offset by unfavorable currency translation impacts.~~initiatives.

Currency

Table of Contents

The results of Linde's non-U.S. operations are translated to the company’s reporting currency, the U.S. dollar, from the functional currencies. For most ~~foreign~~ operations, Linde uses the local currency as its functional currency. There is inherent variability and unpredictability in the relationship of these functional currencies to the U.S. dollar and such currency movements may materially impact Linde's results of operations in any given period.

To help understand the reported results, the following is a summary of the significant currencies underlying Linde's consolidated results and the exchange rates used to translate the financial statements (rates of exchange expressed in units of local currency per U.S. dollar):


		Percentage of YTD 2020 Consolidated Sales		Exchange Rate for Income Statement			Exchange Rate for Balance Sheet								Percentage of YTD 2021 Consolidated Sales	Exchange Rate for Income Statement		Exchange Rate for Balance Sheet
					Year-To-Date Average			June 30,			December 31,					Year-To-Date Average		June 30,	December 31,
Currency	Currency				2020	2019	2020	2019					Currency	Percentage of YTD 2021 Consolidated Sales		2020	2021	2020
Euro	Euro	22	%	0.91	0.89	0.89	0.88		Euro	21		%			0.91	0.84	0.82
Chinese yuan	Chinese yuan	7	%	7.03	6.78	7.07	6.87		Chinese yuan	9		%			7.03	6.46	6.53
British pound	British pound	6	%	0.79	0.77	0.81	0.79		British pound	6		%		0.72	0.79	0.72	0.73
Australian dollar	Australian dollar	4	%	1.52	1.42	1.45	1.42		Australian dollar	4		%		1.30	1.52	1.33	1.30
Brazilian real	Brazilian real	3	%	4.86	3.84	5.48	3.83		Brazilian real	4		%		5.38	4.86	5.00	5.20
Canadian dollar	Canadian dollar	3	%	1.36	1.33	1.36	1.31		Canadian dollar	3		%		1.25	1.36	1.24	1.27
Taiwan dollar		2	%	30.01	30.97	29.56	30.99
Korean won	Korean won	2	%	1,206	1,146	1,203	1,155		Korean won	2		%		1,117	1,206	1,126	1,087
Mexican peso	Mexican peso	2	%	21.43	19.16	22.99	19.22		Mexican peso	2		%		20.18	21.43	19.94	19.91
Indian rupee	Indian rupee	2	%	74.09	70.02	75.51	69.03		Indian rupee	2		%		73.32	74.09	74.33	73.07
South African rand	South African rand	1	%	16.53	14.19	17.35	14.09		South African rand	2		%		14.53	16.53	14.29	14.69
Swedish kroner		1	%	9.68	9.31	9.32	9.28
Swedish krona									Swedish krona	1		%		8.41	9.68	8.55	8.23
Thailand bhat	Thailand bhat	1	%	31.61	31.60	30.91	30.68		Thailand bhat	1		%		30.80	31.61	32.03	29.96

3736

Table of Contents

Liquidity, Capital Resources and Other Financial Data

The following selected cash flow information provides a basis for the discussion that follows:


(Millions of dollars)	(Millions of dollars)	Six months ended June 30,							(Millions of dollars)	Six months ended June 30,
		2020		2019			2021			2020
NET CASH PROVIDED BY (USED FOR):	NET CASH PROVIDED BY (USED FOR):					NET CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income (including noncontrolling interests)	Net income (including noncontrolling interests)	$	1,089	$	1,007	Net income (including noncontrolling interests)	$	1,893		$	1,089
Non-cash charges (credits):	Non-cash charges (credits):					Non-cash charges (credits):
Add: Depreciation and amortization	Add: Depreciation and amortization	2,266		2,418		Add: Depreciation and amortization	2,337			2,266
Add: Amortization of merger-related inventory step-up		—		10
Add: Deferred income taxes	Add: Deferred income taxes	(261)		(110)		Add: Deferred income taxes	(78)			(261)
Add: Share-based compensation	Add: Share-based compensation	75		38		Add: Share-based compensation	63			75
Add: Cost reduction programs and other charges, net of payments (a)	Add: Cost reduction programs and other charges, net of payments (a)	239		(286)		Add: Cost reduction programs and other charges, net of payments (a)	95			239
Net income adjusted for non-cash charges	Net income adjusted for non-cash charges	3,408		3,077		Net income adjusted for non-cash charges	4,310			3,408
Less: Working capital	Less: Working capital	(204)		(687)		Less: Working capital	(360)			(204)

Less: Pension contributions	Less: Pension contributions	(41)		(43)		Less: Pension contributions	(28)			(41)
Other	Other	(52)		(274)		Other	14			(52)
Net cash provided by operating activities	Net cash provided by operating activities	$	3,111	$	2,073	Net cash provided by operating activities	$	3,936		$	3,111
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(1,586)		(1,708)		Capital expenditures	(1,506)			(1,586)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(41)		(140)		Acquisitions, net of cash acquired	(31)			(41)
Divestitures and asset sales	Divestitures and asset sales	380		4,689		Divestitures and asset sales	77			380
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	$	(1,247)	$	2,841	Net cash provided by (used for) investing activities	$	(1,460)		$	(1,247)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Debt increase (decrease) - net	Debt increase (decrease) - net	3,523		(1,277)		Debt increase (decrease) - net	314			3,523
Issuances (purchases) of common stock - net	Issuances (purchases) of common stock - net	(1,803)		(1,195)		Issuances (purchases) of common stock - net	(2,050)			(1,803)
Cash dividends - Linde plc shareholders	Cash dividends - Linde plc shareholders	(1,017)		(951)		Cash dividends - Linde plc shareholders	(1,102)			(1,017)

Excess tax benefit on share-based compensation						Excess tax benefit on share-based compensation	—			—
Noncontrolling interest transactions and other	Noncontrolling interest transactions and other	(148)		(3,222)		Noncontrolling interest transactions and other	(277)			(148)
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	$	555	$	(6,645)	Net cash provided by (used for) financing activities	$	(3,115)		$	555

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	$	(178)	$	(49)	Effect of exchange rate changes on cash and cash equivalents	$	22		$	(178)
Cash and cash equivalents, end-of-period	Cash and cash equivalents, end-of-period	$	4,941	$	2,702	Cash and cash equivalents, end-of-period	$	3,137		$	4,941

(a) See Note 2 to the condensed consolidated financial statements.

Cash Flow from Operations

Cash provided by operations of ~~$3,111~~$3,936 million for the six months ended June 30, ~~2020~~2021 increased ~~$1,038~~$825 million, or ~~50%~~27%, versus ~~2019.~~2020. The increase was driven by higher net income adjusted for non-cash charges ~~lower~~partially offset by higher working capital requirements, ~~lower merger~~primarily due to higher cash taxes. Cost reduction programs and ~~synergy related~~other charges were $196 million and $380 million, respectively, for the six months ended June 30, 2021 and 2020. Related cash outflows were $101 million and ~~favorable changes in other long-term assets and liabilities.~~$141 million for the same respective periods.

Linde estimates that total ~~2020~~2021 required contributions to its pension plans will be in the range of $50 million to ~~$80~~$60 million, of which ~~$41~~$28 million has been made through June 30, ~~2020.~~2021. At a minimum, Linde contributes to its pension plans to comply with local regulatory requirements (e.g., ERISA in the United States). Discretionary contributions in excess of the local minimum requirements are made based on many factors, including long-term projections of the plans' funded status, the economic environment, potential risk of overfunding, pension insurance costs and alternative uses of the cash. Changes to these factors can impact the amount and timing of discretionary contributions from year to year.

3837

Table of Contents

Investing

Net cash used for investing of ~~$1,247~~$1,460 million for the six months ended June 30, ~~2020 decreased $4,088~~2021 increased $213 million versus ~~2019,~~2020, primarily driven by the proceeds from ~~merger-related~~ divestitures in ~~2019,~~2020, partially offset by lower capital expenditures and acquisitions.

Capital expenditures for the six months ended June 30, ~~2020~~2021 were ~~$1,586~~$1,506 million, ~~$122~~$80 million lower than the prior year.

At June 30, 2021, Linde's sale of gas backlog of large projects under construction was approximately $3.4 billion. This represents the total estimated capital cost of large plants under construction.

Acquisitions for the six months ended June 30, ~~2020~~2021 were ~~$41~~$31 million and related primarily to acquisitions in the Americas and ~~APAC.~~EMEA. Acquisitions for the six months ended June 30, ~~2019~~2020 were ~~$140~~$41 million and related to acquisitions in the Americas.

Divestitures and asset sales for the six months ended June 30, 2021 and 2020 ~~and 2019~~ were ~~$380~~$77 million and ~~$4,689~~$380 million, respectively. The ~~2019~~2020 period includes net proceeds from merger-related divestitures of ~~$3.4 billion~~$98 million from the sale of ~~Linde AG's Americas business and $1.2 billion from the sale~~selected assets of Linde ~~Korea (see Note 13~~China and proceeds of approximately $130 million related to the ~~condensed consolidated financial statements).~~divestiture of a non-core business in Scandinavia.

Financing

Cash used for financing activities was $3,115 million for the six months ended June 30, 2021 as compared to cash provided by financing activities ~~was~~of $555 million for the six months ended June 30, ~~2020 as compared to cash used for financing activities of $6,645 million for the six months ended June 30, 2019.~~2020. Cash provided by debt was ~~$3,523~~$314 million versus cash ~~used for~~provided by debt of ~~$1,277~~$3,523 million in ~~2019~~2020 primarily due to ~~the issuance~~bond issuances in 2020 of ~~€1.5 billion bonds~~$1,656 million, bond repayments in 2021 of $818 million and ~~increased commercial paper borrowings. The 2019 quarter and year-to-date periods also include a outflow~~lower short-term debt borrowings net of ~~approximately $3.2 billion relating to the cash-merger squeeze-out of the 8% of Linde AG shares completed on April 8, 2019 (see Note 11 to the condensed consolidated financial statements).~~repayments. Net purchases of ordinary shares were $2,050 million in 2021 versus $1,803 million in ~~2020 versus $1,195 million in 2019 driven by increased share repurchases under approved share repurchase programs.~~2020. Cash dividends of ~~$1,017~~$1,102 million increased ~~$66~~$85 million from ~~2019~~2020 driven primarily by a 10% increase in quarterly dividends per share from ~~87.5~~96.3 cents per share to ~~96.3~~106 cents per share.

~~In May~~ Cash used for Noncontrolling interest transactions and other was $277 million for the six months ended June 30, 2021 versus cash used of $148 million for the respective 2020 ~~Linde issued €750 million of 0.250% notes~~period primarily due ~~2027 and €750 million 0.550% notes due 2032 (see Note 4~~ to the ~~condensed consolidated financial statements).~~settlement of the buyout of minority interests in the Republic of South Africa in January of 2021.

The company continues to believe it has sufficient operating flexibility, cash, and funding sources to meet its business needs around the world. The company had ~~$4.9~~$3.1 billion of cash as of June 30, ~~2020,~~2021, and has a $5 billion unsecured and undrawn revolving credit agreement with no associated financial covenants. No borrowings were outstanding under the credit agreement as of June 30, ~~2020.~~2021. The company does not anticipate any limitations on its ability to access the debt capital markets and/or other external funding sources and remains committed to its strong ratings from Moody’s and Standard & Poor’s.

On January 25, 2021, the company's board of directors approved the repurchase of $5.0 billion of its ordinary shares ("2021 program") which could take place from time to time on the open market (and could include the use of 10b5-1 trading plans), subject to market and business conditions. The 2021 program has a maximum repurchase amount of 15% of outstanding shares, began on February 1, 2021 and expires on July 31, 2023.

Legal Proceedings

See Note 9 to the condensed consolidated financial statements.

3938

Table of Contents

NON-GAAP MEASURES AND RECONCILIATIONS

(Millions of dollars, except per share data)

(UNAUDITED)

The following non-GAAP measures are intended to supplement investors’ understanding of the company’s financial information by providing measures which investors, financial analysts and management use to help evaluate the company’s operating performance and liquidity. Items which the company does not believe to be indicative of on-going business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures.


		Quarter Ended June 30,									Six Months Ended June 30,													Quarter Ended June 30,			Six Months Ended June 30,
		2020			2019			2020			2019				2021			2020			2021			2020
Adjusted Sales
Reported Sales		6,377			7,204			13,116			14,148
Less: Merger-related divestitures (d)		—			(25)			—			(55)
Adjusted Sales		6,377			7,179			13,116			14,093

Adjusted Operating Profit and Operating Margin	Adjusted Operating Profit and Operating Margin													Adjusted Operating Profit and Operating Margin
Reported operating profit	Reported operating profit	$	591		$	669		$	1,324		$	1,278		Reported operating profit	$	1,142		$	591		$	2,355		$	1,324
Less: Merger-related divestitures (d)		—			(6)			—			(13)
Add: Cost reduction programs and other charges	Add: Cost reduction programs and other charges	249			141			380			230			Add: Cost reduction programs and other charges	204			249			196			380

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	477			515			965			1,046			Add: Purchase accounting impacts - Linde AG (c)	491			477			974			965
Total adjustments	Total adjustments	726			650			1,345			1,263			Total adjustments	695			726			1,170			1,345
Adjusted operating profit	Adjusted operating profit	$	1,317		$	1,319		$	2,669		$	2,541		Adjusted operating profit	$	1,837		$	1,317		$	3,525		$	2,669

Reported percentage change	Reported percentage change	(12)		%				4		%				Reported percentage change	93		%				78		%
Adjusted percentage change	Adjusted percentage change	—		%				5		%				Adjusted percentage change	39		%				32		%

Reported sales	Reported sales	$	6,377		$	7,204		$	13,116		$	14,148		Reported sales	$	7,584		$	6,377		$	14,827		$	13,116
Adjusted sales (a)		$	6,377		$	7,179		$	13,116		$	14,093

Reported operating margin	Reported operating margin	9.3		%	9.3		%	10.1		%	9.0		%	Reported operating margin	15.1		%	9.3		%	15.9		%	10.1		%
Adjusted operating margin	Adjusted operating margin	20.7		%	18.4		%	20.3		%	18.0		%	Adjusted operating margin	24.2		%	20.7		%	23.8		%	20.3		%

Adjusted Depreciation and amortization	Adjusted Depreciation and amortization													Adjusted Depreciation and amortization
Reported depreciation and amortization	Reported depreciation and amortization	$	1,124		$	1,195		$	2,266		$	2,418		Reported depreciation and amortization	$	1,171		$	1,124		$	2,337		$	2,266
Less: Purchase accounting impacts - Linde AG (c)	Less: Purchase accounting impacts - Linde AG (c)	(468)			(515)			(944)			(1,036)			Less: Purchase accounting impacts - Linde AG (c)	(479)			(468)			(957)			(944)
Adjusted depreciation and amortization	Adjusted depreciation and amortization	$	656		$	680		$	1,322		$	1,382		Adjusted depreciation and amortization	$	692		$	656		$	1,380		$	1,322

Adjusted Other Income (Expense) - net														Adjusted Other Income (Expense) - net
Reported Other Income (Expense) - net														Reported Other Income (Expense) - net	$	(17)		$	—		$	(13)		$	15
Less: Purchase accounting impacts - Linde AG (c)														Less: Purchase accounting impacts - Linde AG (c)	(12)			(9)			(17)			(21)
Adjusted Other Income (Expense) - net														Adjusted Other Income (Expense) - net	$	(5)		$	9		$	4		$	36

Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service Cost	Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service Cost													Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service Cost
Reported net pension and OPEB cost (benefit), excluding service cost	Reported net pension and OPEB cost (benefit), excluding service cost	$	(45)		$	(24)		$	(90)		$	(9)		Reported net pension and OPEB cost (benefit), excluding service cost	$	(49)		$	(45)		$	(98)		$	(90)
Add: Pension settlement charges	Add: Pension settlement charges	—			(10)			—			(61)			Add: Pension settlement charges	—			—			—			—
Adjusted Net Pension and OPEB cost (benefit), excluding service costs	Adjusted Net Pension and OPEB cost (benefit), excluding service costs	$	(45)		$	(34)		$	(90)		$	(70)		Adjusted Net Pension and OPEB cost (benefit), excluding service costs	$	(49)		$	(45)		$	(98)		$	(90)

Adjusted Interest Expense - Net	Adjusted Interest Expense - Net													Adjusted Interest Expense - Net
Reported interest expense - net	Reported interest expense - net	$	18		$	10		$	42		$	33		Reported interest expense - net	$	18		$	18		$	38		$	42
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	22			25			44			52			Add: Purchase accounting impacts - Linde AG (c)	15			22			33			44

Adjusted interest expense - net	Adjusted interest expense - net	$	40		$	35		$	86		$	85		Adjusted interest expense - net	$	33		$	40		$	71		$	86
Adjusted Income Taxes (a)
Reported income taxes		$	164		$	169		$	329		$	309
Add: Purchase accounting impacts - Linde AG (c)		95			119			217			246
Add: Pension settlement charges		—			2			—			15
Add: Cost reduction programs and other charges		62			26			98			32
Less: Merger-related divestitures (d)		—			(2)			—			(4)

Total adjustments		157			145			315			289
Adjusted income taxes		$	321		$	314		$	644		$	598

4039

Table of Contents


Adjusted Income Taxes (a)														Adjusted Income Taxes (a)
Reported income taxes														Reported income taxes	$	334		$	164		$	602		$	329
Add: Purchase accounting impacts - Linde AG (c)														Add: Purchase accounting impacts - Linde AG (c)	116			95			234			217

Add: Cost reduction programs and other charges														Add: Cost reduction programs and other charges	6			62			26			98

Total adjustments														Total adjustments	122			157			260			315
Adjusted income taxes														Adjusted income taxes	$	456		$	321		$	862		$	644

Adjusted Effective Tax Rate (a)	Adjusted Effective Tax Rate (a)													Adjusted Effective Tax Rate (a)
Reported income before income taxes and equity investments	Reported income before income taxes and equity investments	$	618		$	683		$	1,372		$	1,254		Reported income before income taxes and equity investments	$	1,173		$	618		$	2,415		$	1,372
Less: Merger-related divestitures (d)		—			(6)			—			(13)
Add: Pension settlement charge		—			10			—			61

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	455			490			921			994			Add: Purchase accounting impacts - Linde AG (c)	476			455			941			921
Add: Cost reduction programs and other charges	Add: Cost reduction programs and other charges	249			141			380			230			Add: Cost reduction programs and other charges	204			249			196			380

Total adjustments	Total adjustments	704			635			1,301			1,272			Total adjustments	680			704			1,137			1,301
Adjusted income before income taxes and equity investments	Adjusted income before income taxes and equity investments	$	1,322		$	1,318		$	2,673		$	2,526		Adjusted income before income taxes and equity investments	$	1,853		$	1,322		$	3,552		$	2,673

Reported Income taxes	Reported Income taxes	$	164		$	169		$	329		$	309		Reported Income taxes	$	334		$	164		$	602		$	329
Reported effective tax rate	Reported effective tax rate	26.5		%	24.7		%	24.0		%	24.6		%	Reported effective tax rate	28.5		%	26.5		%	24.9		%	24.0		%

Adjusted income taxes	Adjusted income taxes	$	321		$	314		$	644		$	598		Adjusted income taxes	$	456		$	321		$	862		$	644
Adjusted effective tax rate	Adjusted effective tax rate	24.3		%	23.8		%	24.1		%	23.7		%	Adjusted effective tax rate	24.6		%	24.3		%	24.3		%	24.1		%

Income from Equity Investments	Income from Equity Investments													Income from Equity Investments
Reported income from equity investments	Reported income from equity investments	$	29		$	28		$	46		$	62		Reported income from equity investments	$	37		$	29		$	80		$	46
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	14			14			$	28		$	28		Add: Purchase accounting impacts - Linde AG (c)	19			14			$	38		$	28
Adjusted income from equity investments	Adjusted income from equity investments	$	43		$	42		$	74		$	90		Adjusted income from equity investments	$	56		$	43		$	118		$	74

Adjusted Noncontrolling Interests from Continuing Operations	Adjusted Noncontrolling Interests from Continuing Operations													Adjusted Noncontrolling Interests from Continuing Operations
Reported noncontrolling interests from continuing operations	Reported noncontrolling interests from continuing operations	$	(25)		$	(29)		$	(60)		$	(59)		Reported noncontrolling interests from continuing operations	$	(36)		$	(25)		$	(74)		$	(60)

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	(14)			(17)			(29)			(32)			Add: Purchase accounting impacts - Linde AG (c)	(2)			(14)			(7)			(29)
Total adjustments		(14)			(17)			(29)			(32)

Adjusted noncontrolling interests from continuing operations	Adjusted noncontrolling interests from continuing operations	$	(39)		$	(46)		$	(89)		$	(91)		Adjusted noncontrolling interests from continuing operations	$	(38)		$	(39)		$	(81)		$	(89)

Adjusted Income from Continuing Operations (b)	Adjusted Income from Continuing Operations (b)													Adjusted Income from Continuing Operations (b)
Reported income from continuing operations	Reported income from continuing operations	$	458		$	513		$	1,029		$	948		Reported income from continuing operations	$	840		$	458		$	1,819		$	1,029
Add: Pension settlement charge		—			8			—			46
Less: Merger-related divestitures (d)		—			(4)			—			(9)

Add: Cost reduction programs and other charges	Add: Cost reduction programs and other charges	187			115			282			198			Add: Cost reduction programs and other charges	198			187			170			282

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	360			368			703			744			Add: Purchase accounting impacts - Linde AG (c)	377			360			738			703
Total adjustments	Total adjustments	547			487			985			979			Total adjustments	575			547			908			985
Adjusted income from continuing operations	Adjusted income from continuing operations	$	1,005		$	1,000		$	2,014		$	1,927		Adjusted income from continuing operations	$	1,415		$	1,005		$	2,727		$	2,014

Adjusted Diluted EPS from Continuing Operations (b)	Adjusted Diluted EPS from Continuing Operations (b)													Adjusted Diluted EPS from Continuing Operations (b)
Reported diluted EPS from continuing operations	Reported diluted EPS from continuing operations	$	0.87		$	0.94		$	1.93		$	1.73		Reported diluted EPS from continuing operations	$	1.60		$	0.87		$	3.46		$	1.93
Add: Pension settlement charge		—			0.01			—			0.08

Add: Cost reduction programs and other charges	Add: Cost reduction programs and other charges	0.35			0.22			0.53			0.37			Add: Cost reduction programs and other charges	0.38			0.35			0.32			0.53
Less: Merger-related divestitures (d)		—			(0.01)			—			(0.02)

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	0.68			0.67			1.32			1.36			Add: Purchase accounting impacts - Linde AG (c)	0.72			0.68			1.41			1.32
Total adjustments	Total adjustments	1.03			0.89			1.85			1.79			Total adjustments	1.10			1.03			1.73			1.85
Adjusted diluted EPS from continuing operations	Adjusted diluted EPS from continuing operations	$	1.90		$	1.83		$	3.78		$	3.52		Adjusted diluted EPS from continuing operations	$	2.70		$	1.90		$	5.19		$	3.78
Adjusted EBITDA and % of Sales
Income from continuing operations		$	458		$	513		$	1,029		$	948
Add: Noncontrolling interests related to continuing operations		25			29			60			59
Add: Net pension and OPEB cost (benefit), excluding service cost		(45)			(24)			(90)			(9)
Add: Interest expense		18			10			42			33
Add: Income taxes		164			169			329			309
Add: Depreciation and amortization		1,124			1,195			2,266			2,418
EBITDA from continuing operations		$	1,744		$	1,892		$	3,636		$	3,758

Reported percentage change														Reported percentage change	84		%				79		%
Adjusted percentage change														Adjusted percentage change	42		%				37		%

4140

Table of Contents


Less: Merger-related divestitures (d)		—			(6)			—			(13)

Adjusted EBITDA and % of Sales														Adjusted EBITDA and % of Sales
Income from continuing operations														Income from continuing operations	$	840		$	458		$	1,819		$	1,029
Add: Noncontrolling interests related to continuing operations														Add: Noncontrolling interests related to continuing operations	36			25			74			60
Add: Net pension and OPEB cost (benefit), excluding service cost														Add: Net pension and OPEB cost (benefit), excluding service cost	(49)			(45)			(98)			(90)
Add: Interest expense														Add: Interest expense	18			18			38			42
Add: Income taxes														Add: Income taxes	334			164			602			329
Add: Depreciation and amortization														Add: Depreciation and amortization	1,171			1,124			2,337			2,266
EBITDA from continuing operations														EBITDA from continuing operations	$	2,350		$	1,744		$	4,772		$	3,636
Add: Cost reduction programs and other charges	Add: Cost reduction programs and other charges	249			141			380			230			Add: Cost reduction programs and other charges	204			249			196			380
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	23			14			49			38			Add: Purchase accounting impacts - Linde AG (c)	31			23			55			49
Total adjustments	Total adjustments	272			149			429			255			Total adjustments	235			272			251			429
Adjusted EBITDA from continuing operations	Adjusted EBITDA from continuing operations	$	2,016		$	2,041		$	4,065		$	4,013		Adjusted EBITDA from continuing operations	$	2,585		$	2,016		$	5,023		$	4,065

Reported sales	Reported sales	$	6,377		$	7,204		$	13,116		$	14,148		Reported sales	$	7,584		$	6,377		$	14,827		$	13,116
Adjusted sales		$	6,377		$	7,179		$	13,116		$	14,093
% of sales	% of sales													% of sales
EBITDA from continuing operations	EBITDA from continuing operations	27.3		%	26.3		%	27.7		%	26.6		%	EBITDA from continuing operations	31.0		%	27.3		%	32.2		%	27.7		%
Adjusted EBITDA from continuing operations	Adjusted EBITDA from continuing operations	31.6		%	28.4		%	31.0		%	28.5		%	Adjusted EBITDA from continuing operations	34.1		%	31.6		%	33.9		%	31.0		%

(a) The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.

(b) Net of income taxes which are shown separately in “Adjusted Income Taxes and Adjusted Effective Tax Rate”.

(c) The company believes that its non-GAAP measures excluding Purchase accounting impacts - Linde AG are useful to investors because: (i) the business combination was a merger of equals in an all-stock merger transaction, with no cash consideration, (ii) the company is managed on a geographic basis and the results of certain geographies are more heavily impacted by purchase accounting than others, causing results that are not comparable at the reportable segment level, therefore, the impacts of ~~purchasing~~purchase accounting adjustments to each segment vary and are not comparable within the company and when compared to other companies in similar regions, (iii) business management is evaluated and variable compensation is determined based on results excluding purchase accounting impacts, and; (iv) it is important to investors and analysts to understand the purchase accounting impacts to the financial statements.

A summary of each of the adjustments made for Purchase accounting impacts - Linde AG are as follows:

Adjusted Operating Profit and Margin: The purchase accounting adjustments for the periods presented relate primarily to depreciation and amortization related to the fair value step up of fixed assets and intangible assets (primarily customer related) acquired in the ~~merger.~~merger and the allocation of fair value step-up for ongoing Linde AG asset disposals (reflected in Other Income/(Expense)).

Adjusted Interest Expense - Net: Relates to the amortization of the fair value of debt acquired in the merger.

Adjusted Income Taxes and Effective Tax Rate: Relates to the current and deferred income tax impact on the adjustments discussed above. The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.

Adjusted Income from Equity Investments: Represents the amortization of increased fair value on equity investments related to depreciable and amortizable assets.

Adjusted Noncontrolling Interests from Continuing Operations: Represents the noncontrolling interests’ ownership portion of the adjustments described above determined on an entity by entity basis.

~~(d) To adjust for the results of Praxair's merger-related divestitures.~~

Net Debt and Adjusted Net Debt

Net debt is a financial liquidity measure used by investors, financial analysts and management to evaluate the ability of a company to repay its debt. Purchase accounting impacts have been excluded as they are non-cash and do not have an impact on liquidity.


		June 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
(Millions of dollars)	(Millions of dollars)					(Millions of dollars)
Debt	Debt	$	17,480	$	13,956	Debt	$	15,492	$	16,154
Less: cash and cash equivalents	Less: cash and cash equivalents	(4,941)		(2,700)		Less: cash and cash equivalents	(3,137)		(3,754)
Net debt	Net debt	12,539		11,256		Net debt	12,355		12,400
Less: purchase accounting impacts - Linde AG	Less: purchase accounting impacts - Linde AG	(150)		(195)		Less: purchase accounting impacts - Linde AG	(84)		(121)
Adjusted net debt	Adjusted net debt	$	12,389	$	11,061	Adjusted net debt	$	12,271	$	12,279

Table of Contents

Supplemental Guarantee Information

On June 6, 2020, the company filed a Form S-3 Registration Statement with the SEC ("the Registration Statement").

Linde plc may offer debt securities, preferred shares, depositary shares and ordinary shares under the Registration Statement, and debt securities exchangeable for or convertible into preferred shares, ordinary shares or other debt securities. Debt securities of Linde plc may be guaranteed by ~~Praxair~~Linde Inc (previously Praxair) and/or Linde GmbH (previously Linde AG). Linde plc may provide guarantees of debt securities offered by its wholly owned subsidiaries ~~Praxair~~Linde Inc. or Linde Finance under the Registration Statement.

Linde Inc. (previously Praxair, Inc.) is a wholly owned subsidiary of Linde plc. ~~Praxair~~Linde Inc. may offer debt securities under the Registration Statement. Debt securities of ~~Praxair~~Linde Inc. will be guaranteed by Linde plc, and such guarantees by Linde plc may be guaranteed by Linde

~~Table of Contents~~

GmbH. ~~Praxair~~Linde Inc. may also provide (i) guarantees of debt securities offered by Linde plc under the Registration Statement and (ii) guarantees of the guarantees provided by Linde plc of debt securities of Linde Finance offered under the Registration Statement.

Linde Finance B.V. is a wholly owned subsidiary of Linde plc. Linde Finance may offer debt securities under the Registration Statement. Linde plc will guarantee debt securities of Linde Finance offered under the Registration Statement. Linde GmbH and ~~Praxair~~Linde Inc. may guarantee Linde plc’s obligations under its downstream guarantee.

Linde GmbH is a wholly owned subsidiary of Linde plc. Linde GmbH may provide (i) guarantees of debt securities offered by Linde plc under the Registration Statement and (ii) upstream guarantees of downstream guarantees provided by Linde plc of debt securities of ~~Praxair~~Linde Inc. or Linde Finance offered under the Registration Statement.

In September 2019, Linde plc provided downstream guarantees of all of the pre-business combination ~~Praxair~~Linde Inc. and Linde Finance notes, and Linde GmbH and ~~Praxair,~~Linde Inc., respectively, provided upstream guarantees of Linde plc’s downstream guarantees.

For further information about the guarantees of the debt securities registered under the Registration Statement (including the ranking of such guarantees, limitations on enforceability of such guarantees and the circumstances under which such guarantees may be released), see “Description of Debt Securities – Guarantees” and “Description of Debt Securities – Ranking” in the Registration Statement, which subsections are incorporated herein by reference.

The ~~company has elected to comply with Rule 13-01 of SEC Regulation S-X in advance of the effective date of January 4, 2021, as permitted by the Adopting Release.~~

~~The~~ following tables present summarized financial information for Linde plc, ~~Praxair,~~Linde Inc., Linde GmbH and Linde Finance on a combined basis, after eliminating intercompany transactions and balances between them and excluding investments in and equity in earnings from non-guarantor subsidiaries.

(Millions of dollars)
Statement of Income Data Six Months Ended June 30, 2020 Three Months Ended March 31, 2020 Twelve Months Ended December 31, 2019
Sales $ 3,290 $ 1,627 $ 6,510
Operating profit 65 113 592
Net income 28 73 2,271
Transactions with non-guarantor subsidiaries 1,076 424 3,533
Balance Sheet Data (at period end)
Current assets (a) $ 3,003 $ 2,996 $ 2,137
Long-term assets (b) 18,040 18,363 20,421
Current liabilities (c) 9,269 9,820 6,225
Long-term liabilities (d) 32,935 32,481 35,304
(a)From current assets above, amount due from non-guarantor subsidiaries
$ 774 $ 673 $ 619
(b) From long-term assets above, amount due from non-guarantor subsidiaries 5,307 5,697 7,725
(c) From current liabilities above, amount due to non-guarantor subsidiaries 900 761 737
(d) From long-term liabilities above, amount due to non-guarantor subsidiaries 18,365 19,054 21,209

Table of Contents


(Millions of dollars)
Statement of Income Data	Six Months Ended June 30, 2021		Twelve Months Ended December 31, 2020
Sales	$	3,560	$	6,876
Operating profit	226		786
Net income	59		690
Transactions with non-guarantor subsidiaries	868		2,222

Balance Sheet Data (at period end)
Current assets (a)	$	5,375	$	4,174
Long-term assets (b)	16,752		17,978
Current liabilities (c)	10,182		8,337
Long-term liabilities (d)	39,953		39,208

(a) From current assets above, amount due from non-guarantor subsidiaries	$	3,879	$	1,984
(b) From long-term assets above, amount due from non-guarantor subsidiaries	3,590		4,565
(c) From current liabilities above, amount due to non-guarantor subsidiaries	1,181		1,054
(d) From long-term liabilities above, amount due to non-guarantor subsidiaries	25,879		23,394

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Refer to Item 7A. to Part II of Linde's ~~2019~~2020 Annual Report on Form 10-K for discussion.

~~Table of Contents~~

Item 4. Controls and Procedures

(a)Based on an evaluation of the effectiveness of Linde's disclosure controls and procedures, which was made under the supervision and with the participation of management, including Linde's principal executive officer and principal financial officer, the principal executive officer and principal financial officer have each concluded that, as of the end of the quarterly period covered by this report, such disclosure controls and procedures are effective in ensuring that information required to be disclosed by Linde in reports that it files under the Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and accumulated and communicated to management including Linde's principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

(b)There were no changes in Linde's internal control over financial reporting that occurred during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, Linde's internal control over financial reporting.

4443

Table of Contents

PART II - OTHER INFORMATION

Linde plc and Subsidiaries

Item 1. Legal Proceedings

See Note 9 to the condensed consolidated financial statements for a description of current legal proceedings.

Item 1A. Risk Factors

Through the quarterly period covered by this report, there have been no material changes to the risk factors disclosed in Item 1A to Part I of Linde's Annual Report on Form 10-K for the year ended December 31, ~~2019 and Item 1A to Part II of Linde's Quarterly Report on Form 10-Q for the quarterly period ended March 31,~~ 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities- Certain information regarding purchases made by or on behalf of the company or any affiliated purchaser (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended) of its ordinary shares during the quarter ended June 30, ~~2020~~2021 is provided below:

~~Period~~

~~Total Number~~

~~of Shares~~

~~Purchased~~

~~(Thousands)~~

Average
Price Paid
Per Share

~~Total Numbers of Shares~~

~~Purchased as Part of~~

~~Publicly Announced~~

~~Program (1)~~

~~(Thousands)~~

~~Approximate Dollar~~

~~Value of Shares that~~

~~May Yet be Purchased~~

~~Under the Program (2)~~

~~(Millions)~~

~~April 2020~~

—

~~1,916~~

~~May 2020~~

—

~~1,916~~

~~June 2020~~

—

~~1,916~~

~~Second Quarter 2020~~

—

~~1,916~~


Period	Total Number of Shares Purchased (Thousands)	Average Price Paid Per Share		Total Numbers of Shares Purchased as Part of Publicly Announced Program (1) (Thousands)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (1) (Millions)
April 2021	840	$	286.64	840	$	3,991
May 2021	1,480	$	297.71	1,480	$	3,551
June 2021	1,732	$	292.03	1,732	$	3,045
Second Quarter 2021	4,052	$	292.99	4,052	$	3,045

(1) On January ~~22, 2019~~25, 2021 the ~~company’s~~company's board of directors approved the repurchase of ~~$6.0~~$5.0 billion of its ordinary shares ("~~2019~~2021 program") which could take place from time to time on the open market ~~(which~~(and could include the use of 10b5-1 trading plans), subject to market and business ~~conditions. The 2019~~conditions.The 2021 program has a maximum repurchase amount of 15% of outstanding shares, ~~and a stated expiration date of~~began on February 1, ~~2021.~~2021 and expires on July 31, 2023.

~~(2)~~ As of June 30, ~~2020,~~2021, the company repurchased ~~$4.1~~$1.96 billion of its ordinary shares pursuant to the ~~2019 program, leaving an additional $1.9 billion authorized.~~2021 program.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

4544

Table of Contents

Item 6. Exhibits

(a)

Exhibits

~~1.1~~*10.01

~~Dealer Agreement, dated May 11, 2020, among~~2021 Linde plc as Issuer and as Guarantor, Linde Finance B.V., as Issuer, Deutsche Bank Aktiengesellschaft, as Dealer and the other Dealers party thereto (Filed as Exhibit 1.1 to Linde plc's current report on Form 8-K, dated May 26, 2020, Filing No. 1-38730, and incorporated herein by reference)..

~~4.1~~

Final Terms of 0.250% Notes due 2027 of Linde Finance B.V. (Filed as Exhibit 4.1 to Linde plc's current report on Form 8-K, dated May 26, 2020, Filing No. 1-38730, and incorporated herein by reference).

~~4.2~~

Final Terms of 0.550% Notes due 2032 of Linde Finance B.V. (Filed as Exhibit 4.2 to Linde plc's current report on Form 8-K, dated May 26, 2020, Filing No. 1-38730, and incorporated herein by reference).

~~4.3~~

Guarantee and Negative Pledge of Linde plc dated May 11, 2020 (Filed as Exhibit 4.3 to Linde plc's current report on Form 8-K, dated May 26, 2020, Filing No. 1-38730, and incorporated herein by reference).

~~4.4~~

Upstream Guarantee to Linde plc provided by Linde GmbH dated May 11, 2020 (Filed as Exhibit 4.4 to Linde plc's current report on Form 8-K, dated May 26, 2020, Filing No. 1-38730, and incorporated herein by reference).

~~4.5~~

Upstream Guarantee to Linde plc provided by Praxair, Inc. dated May 11, 2020 (Filed as Exhibit 4.5 to Linde plc's current report on Form 8-K, dated May 26, 2020, Filing No. 1-38730, and incorporated herein by reference).

~~4.6~~

Fiscal Agency Agreement, dated May 11, 2020, among Linde plc, as Issuer and as Guarantor, Linde Finance B.V., as Issuer, and Deutsche Bank Aktiengesellschaft, as Fiscal Agent and Paying Agent (Filed as Exhibit 4.6 to Linde plc's current report on Form 8-K, dated May 26, 2020, Filing No. 1-38730, and incorporated herein by reference).Long Term Incentive Plan

31.01

Rule 13a-14(a) Certification

31.02

Rule 13a-14(a) Certification

32.01

Section 1350 Certification (such certifications are furnished for the information of the Commission and shall not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act).

32.02

101.INS

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

XBRL Taxonomy Extension Schema

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

101.LAB

XBRL Taxonomy Extension Label Linkbase

101.PRE

XBRL Taxonomy Extension Presentation Linkbase

101.DEF

XBRL Taxonomy Extension Definition Linkbase

*Indicates a management contract or compensatory plan or arrangement.

Table of Contents

SIGNATURE

Linde plc and Subsidiaries

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Linde plc

(Registrant)

Date: July ~~31, 2020~~30, 2021

By: /s/ Kelcey E. Hoyt

Kelcey E. Hoyt

Chief Accounting Officer

4746



Note 1. Summary of Significant Accounting Policies			11

Note 2. Cost Reduction Programs and Other Charges			1211

Note 3. Supplemental Information			1314

Note 4. Debt			15

Note 5. Financial Instruments			16

Note 6. Fair Value Disclosures			18

Note 7. Earnings Per Share – Linde plc Shareholders			2019

Note 8. Retirement Programs			20

Note 9. Commitments and Contingencies			2120

Note 10. Segments			2221

Note 11. Equity			2322

Note 12. Revenue Recognition			2423

Note 13. Divestitures			2726