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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 ~~March 31,~~June 30, 2022


☐			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						98-1448883
(State or other jurisdiction of incorporation)						(I.R.S. Employer Identification No.)

10 Riverview Drive,						Forge
Danbury, Connecticut						43 Church Street West
United States 06810						Woking, Surrey GU21 6HT
						United Kingdom

(Address of principal executive offices) (Zip Code)
(203) 837 - 2000						+44 14 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 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 ~~March 31,~~June 30, 2022, ~~503,281,693~~498,365,588 ordinary shares (€0.001 par value) of the Registrant were outstanding.

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INDEX

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Consolidated Statements of Income - Quarters Ended ~~March 31,~~June 30 , 2022 and 2021	4


	Consolidated Statements of ~~Comprehensive~~ Income - ~~Quarters~~Six Months Ended ~~March 31,~~June 30, 2022 and 2021	5

	Consolidated Statements of Comprehensive Income - Quarters Ended June 30 , 2022 and 2021	6

	Consolidated Statements of Comprehensive Income - Six Months Ended June 30, 2022 and 2021	7

	Condensed Consolidated Balance Sheets - ~~March 31,~~June 30 , 2022 and December 31, 2021	68

	Condensed Consolidated Statements of Cash Flows - ~~Three~~S ix Months Ended ~~March 31,~~June 30 , 2022 and 2021	79

	Notes to Condensed Consolidated Financial Statements	810

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2426

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4145

Item 4.	Controls and Procedures	4145

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	4246

Item 1A.	Risk Factors	4246

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4246

Item 3.	Defaults Upon Senior Securities	4246

Item 4.	Mine Safety Disclosures	4246

Item 5.	Other Information	4246

Item 6.	Exhibits	4347

Signature		4448

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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 future results or circumstances to differ materially from 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, 2021 filed with the SEC on February 28, 2022, which should be reviewed carefully. Please consider Linde plc’s forward-looking statements in light of those risks.

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LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Millions of dollars, except per share data)

(UNAUDITED)


		Quarter Ended March 31,					Quarter Ended June 30,
		2022		2021			2022		2021
Sales	Sales	$	8,211	$	7,243	Sales	$	8,457	$	7,584
Cost of sales, exclusive of depreciation and amortization	Cost of sales, exclusive of depreciation and amortization	4,798		4,054		Cost of sales, exclusive of depreciation and amortization	4,940		4,194
Selling, general and administrative	Selling, general and administrative	802		787		Selling, general and administrative	771		822
Depreciation and amortization	Depreciation and amortization	1,112		1,166		Depreciation and amortization	1,091		1,171
Research and development	Research and development	35		35		Research and development	37		34
Cost reduction programs and other charges		(4)		(8)
Russia-Ukraine conflict and other charges						Russia-Ukraine conflict and other charges	993		204

Other income (expense) - net	Other income (expense) - net	12		4		Other income (expense) - net	(36)		(17)
Operating Profit	Operating Profit	1,480		1,213		Operating Profit	589		1,142
Interest expense - net	Interest expense - net	9		20		Interest expense - net	5		18
Net pension and OPEB cost (benefit), excluding service cost	Net pension and OPEB cost (benefit), excluding service cost	(64)		(49)		Net pension and OPEB cost (benefit), excluding service cost	(62)		(49)
Income From Continuing Operations Before Income Taxes and Equity Investments	Income From Continuing Operations Before Income Taxes and Equity Investments	1,535		1,242		Income From Continuing Operations Before Income Taxes and Equity Investments	646		1,173
Income taxes on continuing operations	Income taxes on continuing operations	369		268		Income taxes on continuing operations	286		334
Income From Continuing Operations Before Equity Investments	Income From Continuing Operations Before Equity Investments	1,166		974		Income From Continuing Operations Before Equity Investments	360		839
Income from equity investments	Income from equity investments	44		43		Income from equity investments	50		37
Income From Continuing Operations (Including Noncontrolling Interests)	Income From Continuing Operations (Including Noncontrolling Interests)	1,210		1,017		Income From Continuing Operations (Including Noncontrolling Interests)	410		876
Income from discontinued operations, net of tax	Income from discontinued operations, net of tax	—		1		Income from discontinued operations, net of tax	—		1
Net Income (Including Noncontrolling Interests)	Net Income (Including Noncontrolling Interests)	1,210		1,018		Net Income (Including Noncontrolling Interests)	410		877
Less: noncontrolling interests from continuing operations	Less: noncontrolling interests from continuing operations	(36)		(38)		Less: noncontrolling interests from continuing operations	(38)		(36)
Net Income – Linde plc	Net Income – Linde plc	$	1,174	$	980	Net Income – Linde plc	$	372	$	841

Net Income – Linde plc	Net Income – Linde plc					Net Income – Linde plc
Income from continuing operations	Income from continuing operations	$	1,174	$	979	Income from continuing operations	$	372	$	840
Income from discontinued operations	Income from discontinued operations	$	—	$	1	Income from discontinued operations	$	—	$	1

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	$	2.31	$	1.87	Basic earnings per share from continuing operations	$	0.74	$	1.62
Basic earnings per share from discontinued operations	Basic earnings per share from discontinued operations	—		—		Basic earnings per share from discontinued operations	—		—
Basic earnings per share	Basic earnings per share	$	2.31	$	1.87	Basic earnings per share	$	0.74	$	1.62
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	2.30	$	1.86	Diluted earnings per share from continuing operations	$	0.74	$	1.60
Diluted earnings per share from discontinued operations	Diluted earnings per share from discontinued operations	—		—		Diluted earnings per share from discontinued operations	—		—
Diluted earnings per share	Diluted earnings per share	$	2.30	$	1.86	Diluted earnings per share	$	0.74	$	1.60

Weighted Average Shares Outstanding (000’s):	Weighted Average Shares Outstanding (000’s):					Weighted Average Shares Outstanding (000’s):
Basic shares outstanding	Basic shares outstanding	507,152		522,459		Basic shares outstanding	501,034		518,950
Diluted shares outstanding	Diluted shares outstanding	511,410		526,927		Diluted shares outstanding	505,269		523,723

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

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LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Millions of dollars, except per share data)

(UNAUDITED)


	Six Months Ended June 30,
	2022		2021
Sales	$	16,668	$	14,827
Cost of sales, exclusive of depreciation and amortization	9,738		8,248
Selling, general and administrative	1,573		1,609
Depreciation and amortization	2,203		2,337
Research and development	72		69
Russia-Ukraine conflict and other charges	989		196

Other income (expense) - net	(24)		(13)
Operating Profit	2,069		2,355
Interest expense - net	14		38
Net pension and OPEB cost (benefit), excluding service cost	(126)		(98)
Income From Continuing Operations Before Income Taxes and Equity Investments	2,181		2,415
Income taxes on continuing operations	655		602
Income From Continuing Operations Before Equity Investments	1,526		1,813
Income from equity investments	94		80
Income From Continuing Operations (Including Noncontrolling Interests)	1,620		1,893
Income from discontinued operations, net of tax	—		2
Net Income (Including Noncontrolling Interests)	1,620		1,895
Less: noncontrolling interests from continuing operations	(74)		(74)
Net Income – Linde plc	$	1,546	$	1,821

Net Income – Linde plc
Income from continuing operations	$	1,546	$	1,819
Income from discontinued operations	$	—	$	2

Per Share Data – Linde plc Shareholders
Basic earnings per share from continuing operations	$	3.07	$	3.49
Basic earnings per share from discontinued operations	—		—
Basic earnings per share	$	3.07	$	3.49
Diluted earnings per share from continuing operations	$	3.04	$	3.46
Diluted earnings per share from discontinued operations	—		—
Diluted earnings per share	$	3.04	$	3.46

Weighted Average Shares Outstanding (000’s):
Basic shares outstanding	504,093		520,691
Diluted shares outstanding	508,432		525,380

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

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LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of dollars)

(UNAUDITED)


		Quarter Ended March 31,					Quarter Ended June 30,
		2022		2021			2022		2021
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	$	1,210	$	1,018	NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	$	410	$	877

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	60		(657)		Foreign currency translation adjustments	(1,570)		412
Reclassification to net income	Reclassification to net income	—		(52)		Reclassification to net income	(134)		—
Income taxes	Income taxes	(12)		(6)		Income taxes	5		(2)
Translation adjustments	Translation adjustments	48		(715)		Translation adjustments	(1,699)		410
Funded status - retirement obligations (Note 8):	Funded status - retirement obligations (Note 8):					Funded status - retirement obligations (Note 8):
Retirement program remeasurements	Retirement program remeasurements	55		20		Retirement program remeasurements	67		(19)
Reclassifications to net income	Reclassifications to net income	19		43		Reclassifications to net income	19		44
Income taxes	Income taxes	(21)		(23)		Income taxes	(7)		(2)
Funded status - retirement obligations	Funded status - retirement obligations	53		40		Funded status - retirement obligations	79		23
Derivative instruments (Note 5):	Derivative instruments (Note 5):					Derivative instruments (Note 5):
Current unrealized gain (loss)	Current unrealized gain (loss)	18		21		Current unrealized gain (loss)	92		19
Reclassifications to net income	Reclassifications to net income	(23)		(2)		Reclassifications to net income	3		(3)
Income taxes	Income taxes	2		(5)		Income taxes	(20)		(3)
Derivative instruments	Derivative instruments	(3)		14		Derivative instruments	75		13

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	98		(661)		TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	(1,545)		446

COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	1,308		357		COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	(1,135)		1,323
Less: noncontrolling interests	Less: noncontrolling interests	(24)		(32)		Less: noncontrolling interests	(21)		(45)
COMPREHENSIVE INCOME (LOSS) - LINDE PLC	COMPREHENSIVE INCOME (LOSS) - LINDE PLC	$	1,284	$	325	COMPREHENSIVE INCOME (LOSS) - LINDE PLC	$	(1,156)	$	1,278

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

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LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of dollars)

(UNAUDITED)


	Six Months Ended June 30,
	2022		2021
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	$	1,620	$	1,895

OTHER COMPREHENSIVE INCOME (LOSS)
Translation adjustments:
Foreign currency translation adjustments	(1,510)		(245)
Reclassification to net income	(134)		(52)
Income taxes	(7)		(8)
Translation adjustments	(1,651)		(305)
Funded status - retirement obligations (Note 8):
Retirement program remeasurements	122		1
Reclassifications to net income	38		87
Income taxes	(28)		(25)
Funded status - retirement obligations	132		63
Derivative instruments (Note 5):
Current unrealized gain (loss)	110		40
Reclassifications to net income	(20)		(5)
Income taxes	(18)		(8)
Derivative instruments	72		27





TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	(1,447)		(215)

COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)	173		1,680
Less: noncontrolling interests	(45)		(77)
COMPREHENSIVE INCOME (LOSS) - LINDE PLC	$	128	$	1,603

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

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LINDE PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions of dollars)

(UNAUDITED)


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	4,464	$	2,823	Cash and cash equivalents	$	3,655	$	2,823
Accounts receivable - net	Accounts receivable - net	4,845		4,499		Accounts receivable - net	4,803		4,499
Contract assets	Contract assets	100		134		Contract assets	78		134
Inventories	Inventories	1,766		1,733		Inventories	1,786		1,733
Prepaid and other current assets	Prepaid and other current assets	1,082		970		Prepaid and other current assets	950		970
Total Current Assets	Total Current Assets	12,257		10,159		Total Current Assets	11,272		10,159
Property, plant and equipment - net	Property, plant and equipment - net	25,595		26,003		Property, plant and equipment - net	23,993		26,003

Goodwill	Goodwill	26,822		27,038		Goodwill	25,678		27,038
Other intangible assets - net	Other intangible assets - net	13,506		13,802		Other intangible assets - net	12,634		13,802
Other long-term assets	Other long-term assets	4,587		4,603		Other long-term assets	4,308		4,603
Total Assets	Total Assets	$	82,767	$	81,605	Total Assets	$	77,885	$	81,605
Liabilities and equity	Liabilities and equity					Liabilities and equity
Accounts payable	Accounts payable	$	3,387	$	3,503	Accounts payable	$	3,360	$	3,503
Short-term debt	Short-term debt	2,549		1,163		Short-term debt	3,215		1,163
Current portion of long-term debt	Current portion of long-term debt	1,074		1,709		Current portion of long-term debt	1,651		1,709
Contract liabilities	Contract liabilities	3,035		2,940		Contract liabilities	2,933		2,940

Other current liabilities	Other current liabilities	4,461		4,328		Other current liabilities	4,136		4,328
Total Current Liabilities	Total Current Liabilities	14,506		13,643		Total Current Liabilities	15,295		13,643
Long-term debt	Long-term debt	12,833		11,335		Long-term debt	11,177		11,335
Other long-term liabilities	Other long-term liabilities	11,038		11,186		Other long-term liabilities	10,373		11,186

Total Liabilities	Total Liabilities	38,377		36,164		Total Liabilities	36,845		36,164
Redeemable noncontrolling interests	Redeemable noncontrolling interests	13		13		Redeemable noncontrolling interests	13		13
Linde plc Shareholders’ Equity:	Linde plc Shareholders’ Equity:					Linde plc Shareholders’ Equity:
Ordinary shares,€0.001 par value, authorized 1,750,000,000 shares, 2022 issued: 552,012,862 ordinary shares; 2021 issued: 552,012,862 ordinary shares		1		1
Ordinary shares,€0.001 par value, authorized 1,750,000,000 shares, 2022 and 2021 issued: 552,012,862 ordinary shares						Ordinary shares,€0.001 par value, authorized 1,750,000,000 shares, 2022 and 2021 issued: 552,012,862 ordinary shares	1		1
Additional paid-in capital	Additional paid-in capital	39,972		40,180		Additional paid-in capital	39,978		40,180
Retained earnings	Retained earnings	19,387		18,710		Retained earnings	19,159		18,710
Accumulated other comprehensive income (loss) (Note 11)	Accumulated other comprehensive income (loss) (Note 11)	(4,938)		(5,048)		Accumulated other comprehensive income (loss) (Note 11)	(6,466)		(5,048)
Less: Treasury shares, at cost (2022 – 48,731,169 shares and 2021 – 43,331,983 shares)		(11,459)		(9,808)
Less: Treasury shares, at cost (2022 – 53,647,274 shares and 2021 – 43,331,983 shares)						Less: Treasury shares, at cost (2022 – 53,647,274 shares and 2021 – 43,331,983 shares)	(12,998)		(9,808)
Total Linde plc Shareholders’ Equity	Total Linde plc Shareholders’ Equity	42,963		44,035		Total Linde plc Shareholders’ Equity	39,674		44,035
Noncontrolling interests	Noncontrolling interests	1,414		1,393		Noncontrolling interests	1,353		1,393
Total Equity	Total Equity	44,377		45,428		Total Equity	41,027		45,428
Total Liabilities and Equity	Total Liabilities and Equity	$	82,767	$	81,605	Total Liabilities and Equity	$	77,885	$	81,605

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

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LINDE PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of dollars)

(UNAUDITED)


		Three Months Ended March 31,					Six Months Ended June 30,
		2022		2021			2022		2021
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	$	1,174	$	980	Net income - Linde plc	$	1,546	$	1,821
Less: Income from discontinued operations, net of tax and noncontrolling interests	Less: Income from discontinued operations, net of tax and noncontrolling interests	—		(1)		Less: Income from discontinued operations, net of tax and noncontrolling interests	—		(2)
Add: Noncontrolling interests from continuing operations	Add: Noncontrolling interests from continuing operations	36		38		Add: Noncontrolling interests from continuing operations	74		74
Income from continuing operations (including noncontrolling interests)	Income from continuing operations (including noncontrolling interests)	1,210		1,017		Income from continuing operations (including noncontrolling interests)	1,620		1,893
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		(34)		(76)
Russia-Ukraine conflict and other charges, net of payments						Russia-Ukraine conflict and other charges, net of payments	922		95

Depreciation and amortization	Depreciation and amortization	1,112		1,166		Depreciation and amortization	2,203		2,337
Deferred income taxes	Deferred income taxes	(59)		(65)		Deferred income taxes	(221)		(78)
Share-based compensation	Share-based compensation	34		29		Share-based compensation	51		63
Working capital:	Working capital:					Working capital:
Accounts receivable	Accounts receivable	(340)		(178)		Accounts receivable	(543)		(388)
Inventory	Inventory	(35)		(60)		Inventory	(144)		(42)
Prepaid and other current assets	Prepaid and other current assets	(107)		(64)		Prepaid and other current assets	(123)		(20)
Payables and accruals	Payables and accruals	51		69		Payables and accruals	70		39
Contract assets and liabilities, net	Contract assets and liabilities, net	192		191		Contract assets and liabilities, net	243		51
Pension contributions	Pension contributions	(13)		(12)		Pension contributions	(19)		(28)
Long-term assets, liabilities and other	Long-term assets, liabilities and other	(11)		92		Long-term assets, liabilities and other	74		14
Net cash provided by operating activities	Net cash provided by operating activities	2,000		2,109		Net cash provided by operating activities	4,133		3,936
Investing	Investing					Investing
Capital expenditures	Capital expenditures	(649)		(762)		Capital expenditures	(1,475)		(1,506)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(43)		(10)		Acquisitions, net of cash acquired	(49)		(31)
Divestitures and asset sales, net of cash divested	Divestitures and asset sales, net of cash divested	27		21		Divestitures and asset sales, net of cash divested	17		77
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	(665)		(751)		Net cash provided by (used for) investing activities	(1,507)		(1,460)
Financing	Financing					Financing
Short-term debt borrowings (repayments) - net	Short-term debt borrowings (repayments) - net	1,416		704		Short-term debt borrowings (repayments) - net	2,172		1,081
Long-term debt borrowings	Long-term debt borrowings	2,296		34		Long-term debt borrowings	2,291		51
Long-term debt repayments	Long-term debt repayments	(1,166)		(57)		Long-term debt repayments	(1,703)		(818)
Issuances of ordinary shares	Issuances of ordinary shares	10		17		Issuances of ordinary shares	22		32
Purchases of ordinary shares	Purchases of ordinary shares	(1,719)		(868)		Purchases of ordinary shares	(3,329)		(2,082)
Cash dividends - Linde plc shareholders	Cash dividends - Linde plc shareholders	(592)		(553)		Cash dividends - Linde plc shareholders	(1,177)		(1,102)

Noncontrolling interest transactions and other	Noncontrolling interest transactions and other	(1)		(247)		Noncontrolling interest transactions and other	(35)		(277)
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	244		(970)		Net cash provided by (used for) financing activities	(1,759)		(3,115)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	62		(46)		Effect of exchange rate changes on cash and cash equivalents	(35)		22
Change in cash and cash equivalents	Change in cash and cash equivalents	1,641		342		Change in cash and cash equivalents	832		(617)
Cash and cash equivalents, beginning-of-period	Cash and cash equivalents, beginning-of-period	2,823		3,754		Cash and cash equivalents, beginning-of-period	2,823		3,754

Cash and cash equivalents, end-of-period	Cash and cash equivalents, end-of-period	$	4,464	$	4,096	Cash and cash equivalents, end-of-period	$	3,655	$	3,137

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

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INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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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 2021 Annual Report on Form 10-K. There have been no material changes to the company’s significant accounting policies during 2022.

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

2. ~~Cost Reduction Programs~~Russia-Ukraine conflict and Other Charges

2022 Charges

~~Cost reduction programs~~Russia-Ukraine conflict and other charges were $993 million and $989 million ($889 million and $888 million, after tax and noncontrolling interests) for the quarter and six months ended June 30, 2022, respectively.

The following tables summarize the company's pre-tax charges for the quarter and six months ended June 30, 2022:


	Quarter Ended June 30, 2022
(millions of dollars)	Russia deconsolidation charges		Other Russia related charges		Total Russia charges		Merger-related and other charges		Total
Americas	$	—	$	—	$	—	$	3	$	3
EMEA	733		2		735		49		784
APAC	—		—		—		28		28
Engineering	54		112		166		0		166
Other	0		—		—		12		12
Total	$	787	$	114	$	901	$	92	$	993


	Six Months Ended June 30, 2022
(millions of dollars)	Russia deconsolidation charges		Other Russia related charges		Total Russia charges		Merger-related and other charges		Total
Americas	$	—	$	—	$	—	$	3	$	3
EMEA	733		2		735		49		784
APAC	—		—		—		24		24
Engineering	54		112		166		—		166
Other	0		—		—		12		12
Total	$	787	$	114	$	901	$	88	$	989

Russia-Ukraine Conflict

Deconsolidation of Russian entities

In response to the Russian invasion of Ukraine, multiple jurisdictions, including Europe and the U.S., have imposed several tranches of economic sanctions on Russia. As a ~~net benefit~~result, Linde has reassessed its ability to control its Russian subsidiaries and determined that as of $4June 30, 2022 it can no longer exercise control over these entities. As such, Linde has deconsolidated its Russian gas and engineering business entities as of June 30, 2022. The deconsolidation of the company's Russian gas and engineering business entities resulted in a loss of $787 million ($730 million after tax) for the quarter and six months ended June 30, 2022.

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The fair value of Linde’s Russian subsidiaries was determined using a probability weighted discounted cash flow model, which resulted in the recognition of a $407 million loss on deconsolidation when compared to the carrying value of the entities. This loss is recorded within Russia-Ukraine conflict and other charges in the consolidated statements of income.

Upon deconsolidation an investment was recorded, which represents the fair value of net assets. The company did not receive any consideration, cash or otherwise, as part of the deconsolidation. Linde will maintain its interest in its Russian subsidiaries and will continue to comply with sanctions and government restrictions. The investment will be monitored for impairment in future periods.

Receivables, primarily loans receivable, with newly deconsolidated entities were reassessed for collectability resulting in a write-off of approximately $380 million.

Other Russia related charges

Other charges related specifically to the Russia-Ukraine conflict were $114 million ($84 million after tax) for the ~~three~~ quarter and six months ended ~~March 31,~~June 30, 2022, ~~($1 million, after tax).~~ ~~Total cost reduction program related charges were $4 million for~~ and are primarily comprised of impairments of assets which are maintained by international entities in support of the ~~three months ended March 31, 2022 ($4 million, after tax), primarily~~Russian business.

Merger-related and other charges

Merger related ~~to severance in the APAC segment. Merger-related costs~~ and other charges were ~~a benefit of $8~~$92 million and $88 million ($75 million and $74 million, after tax) for the ~~three~~quarter and six months ended ~~March 31,~~June 30, 2022, ~~(benefit of $5 million after tax),~~respectively, primarily related to ~~a gain on sale~~the impairment of an ~~interest~~equity method investment in ~~a joint venture.~~the EMEA segment.

Cash Requirements

The total cash requirements of the Russia-Ukraine conflict and other charges incurred during the six months ended June 30, 2022 are expected to be immaterial. Liabilities accrued from prior periods are expected to be paid through 2023. Russia-Ukraine conflict and other charges, net of payments in the condensed consolidated statements of cash flows for the six months ended June 30, 2022 also reflects the impact of cash payments of liabilities accrued as of December 31, 2021.

The following table summarizes the activities related to the company's ~~cost reduction related~~Russia-Ukraine conflict and other charges for the ~~three~~six months ended ~~March 31,~~June 30, 2022:


(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)	Total Russia charges		Severance costs		Other cost reduction charges		Total cost reduction program related charges		Merger-related and other charges		Total

Balance, December 31, 2021	Balance, December 31, 2021	$	384	$	38	$	422	$	31	$	453	Balance, December 31, 2021	$	—	$	384	$	38	$	422	$	31	$	453
2022 Cost Reduction Programs and Other Charges		4		—		4		(8)		(4)
2022 Russia-Ukraine conflict and other charges												2022 Russia-Ukraine conflict and other charges	901		24		14		38		50		989
Less: Cash payments / receipts	Less: Cash payments / receipts	(34)		(1)		(35)		5		(30)		Less: Cash payments / receipts	—		(64)		(6)		(70)		3		(67)

Less: Non-cash charges												Less: Non-cash charges	(901)		—		(7)		(7)		(54)		(962)
Foreign currency translation and other	Foreign currency translation and other	(8)		(3)		(11)		—		(11)		Foreign currency translation and other	—		(25)		(4)		(29)		(1)		(30)
Balance, March 31, 2022		$	346	$	34	$	380	$	28	$	408
Balance, June 30, 2022												Balance, June 30, 2022	$	—	$	319	$	35	$	354	$	29	$	383

2021 Charges

Cost reduction programs and other charges were ~~a net benefit of $8~~$204 million and $196 million for the ~~three~~quarter and six months ended ~~March 31,~~June 30, 2021, respectively ($28198 million and $170 million after tax).

Total cost reduction program related charges were ~~$44~~$204 million and $248 million ($34150 million and $184 million after tax), for the ~~three~~quarter and six months ended ~~March 31,~~June 30, 2021, respectively, which consisted primarily of severance charges of ~~$26~~$182 million and $208 million and other charges of ~~$18~~$22 million and $40 million for the quarter and six months ended June 30, 2021, respectively, related to the execution of the company's synergistic ~~actions.~~ actions including location consolidations and business rationalization projects, process harmonization, and associated non-recurring costs.

Merger-related and other charges were flat during the quarter ended June 30, 2021 and a benefit of $52 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021 ~~($62~~(charge of $48 million and a 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~~segment.

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In addition, the quarter and ~~other~~six months ended June 30, 2021 include net income tax ~~adjustments.~~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.

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 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.

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3. Supplemental Information

Receivables

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 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 ~~$4,808~~$4,809 million and $4,425 million at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, and gross receivables aged greater than one year were ~~$278~~$283 million and $329 million at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. Other receivables were ~~$158~~$107 million and $150 million at ~~March 31,~~June 30, 2022 and December 31, 2021, 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 ~~$4,845~~$4,803 million at ~~March 31,~~June 30, 2022 and $4,499 million at December 31, 2021. Allowances for expected credit losses were ~~$399~~$396 million at ~~March 31,~~June 30, 2022 and $405 million at December 31, 2021. Provisions for expected credit losses were ~~$35~~$67 million and ~~$39~~$71 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, respectively. The allowance activity in the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 related to write-offs of uncollectible amounts, net of recoveries and currency movements is not material.

Inventories

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


(Millions of dollars)	(Millions of dollars)	March 31, 2022		December 31, 2021		(Millions of dollars)	June 30, 2022		December 31, 2021
Inventories	Inventories					Inventories
Raw materials and supplies	Raw materials and supplies	$	440	$	399	Raw materials and supplies	$	460	$	399
Work in process	Work in process	318		334		Work in process	321		334
Finished goods	Finished goods	1,008		1,000		Finished goods	1,005		1,000
Total inventories	Total inventories	$	1,766	$	1,733	Total inventories	$	1,786	$	1,733

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4. Debt

The following is a summary of Linde's outstanding debt at ~~March 31,~~June 30, 2022 and December 31, 2021:


(Millions of dollars)	(Millions of dollars)	March 31, 2022		December 31, 2021		(Millions of dollars)	June 30, 2022		December 31, 2021
SHORT-TERM	SHORT-TERM					SHORT-TERM
Commercial paper	Commercial paper	$	2,249	$	278	Commercial paper	$	2,974	$	278
Other bank borrowings (primarily non U.S.)	Other bank borrowings (primarily non U.S.)	300		885		Other bank borrowings (primarily non U.S.)	241		885
Total short-term debt	Total short-term debt	2,549		1,163		Total short-term debt	3,215		1,163
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)
0.250% Euro denominated notes due 2022 (b) (c)	0.250% Euro denominated notes due 2022 (b) (c)	—		1,137		0.250% Euro denominated notes due 2022 (b) (c)	—		1,137
2.20% Notes due 2022(e)	2.20% Notes due 2022(e)	500		500		2.20% Notes due 2022(e)	—		500
2.70% Notes due 2023	2.70% Notes due 2023	500		500		2.70% Notes due 2023	500		500
2.00% Euro denominated notes due 2023 (b)	2.00% Euro denominated notes due 2023 (b)	735		759		2.00% Euro denominated notes due 2023 (b)	691		759
5.875% GBP denominated notes due 2023 (b)	5.875% GBP denominated notes due 2023 (b)	415		432		5.875% GBP denominated notes due 2023 (b)	381		432
1.20% Euro denominated notes due 2024	1.20% Euro denominated notes due 2024	608		625		1.20% Euro denominated notes due 2024	576		625
1.875% Euro denominated notes due 2024 (b)	1.875% Euro denominated notes due 2024 (b)	342		356		1.875% Euro denominated notes due 2024 (b)	322		356
2.65% Notes due 2025	2.65% Notes due 2025	399		399		2.65% Notes due 2025	399		399
1.625% Euro denominated notes due 2025	1.625% Euro denominated notes due 2025	550		565		1.625% Euro denominated notes due 2025	521		565
0.00% Euro denominated notes due 2026	0.00% Euro denominated notes due 2026	777		799		0.00% Euro denominated notes due 2026	736		799
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	198		197		3.434% Notes due 2026	198		197
1.652% Euro denominated notes due 2027	1.652% Euro denominated notes due 2027	91		94		1.652% Euro denominated notes due 2027	86		94
0.250% Euro denominated notes due 2027	0.250% Euro denominated notes due 2027	828		850		0.250% Euro denominated notes due 2027	785		850
1.00% Euro denominated notes due 2027 (d)	1.00% Euro denominated notes due 2027 (d)	551		—		1.00% Euro denominated notes due 2027 (d)	522		—
1.00% Euro denominated notes due 2028 (b)	1.00% Euro denominated notes due 2028 (b)	824		879		1.00% Euro denominated notes due 2028 (b)	761		879
1.10% Notes due 2030	1.10% Notes due 2030	696		696		1.10% Notes due 2030	696		696
1.90% Euro denominated notes due 2030	1.90% Euro denominated notes due 2030	115		118		1.90% Euro denominated notes due 2030	109		118
1.375% Euro denominated notes due 2031 (d)	1.375% Euro denominated notes due 2031 (d)	821		—		1.375% Euro denominated notes due 2031 (d)	778		—
0.550% Euro denominated notes due 2032	0.550% Euro denominated notes due 2032	824		847		0.550% Euro denominated notes due 2032	781		847
0.375% Euro denominated notes due 2033	0.375% Euro denominated notes due 2033	550		565		0.375% Euro denominated notes due 2033	521		565
1.625% Euro denominated notes due 2035 (d)	1.625% Euro denominated notes due 2035 (d)	874		—		1.625% Euro denominated notes due 2035 (d)	828		—
3.55% Notes due 2042	3.55% Notes due 2042	664		664		3.55% Notes due 2042	664		664
2.00% Notes due 2050	2.00% Notes due 2050	296		296		2.00% Notes due 2050	296		296
1.00% Euro denominated notes due 2051	1.00% Euro denominated notes due 2051	767		788		1.00% Euro denominated notes due 2051	726		788
Non U.S borrowings	Non U.S borrowings	247		243		Non U.S borrowings	216		243
Other	Other	10		10		Other	10		10
		13,907		13,044			12,828		13,044
Less: current portion of long-term debt	Less: current portion of long-term debt	(1,074)		(1,709)		Less: current portion of long-term debt	(1,651)		(1,709)
Total long-term debt	Total long-term debt	12,833		11,335		Total long-term debt	11,177		11,335
Total debt	Total debt	$	16,456	$	14,207	Total debt	$	16,043	$	14,207

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

(b)~~March 31,~~June 30, 2022 and December 31, 2021 included a cumulative $4$19 million and $42 million adjustment to carrying value, respectively, related to hedge accounting of interest rate swaps. Refer to Note 5.

(c)In January 2022, Linde repaid €1.0 billion of 0.250% notes that became due.

(d)In March 2022, Linde issued €500 million of 1.000% notes due 2027, €750 million of 1.375% notes due 2031, and €800 million of 1.625% notes due 2035.

(e)In May 2022, Linde repaid $500 million of 2.20% notes due in August 2022. There was no impact to interest within the consolidated statements of income.

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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. No borrowings were outstanding under the credit agreement as of ~~March 31,~~June 30, 2022.

5. Financial Instruments

In its normal operations, Linde is exposed to market risks relating to fluctuations in interest rates, foreign currency exchange rates, and 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 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 for certain entities with 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 ~~March 31,~~June 30, 2022, 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 ~~March 31,~~June 30, 2022 and December 31, 2021 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)	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		(Millions of dollars)	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
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	$	4,460	$	4,427	$	25	$	22	$	19	$	17	Balance sheet items	$	3,237	$	4,427	$	12	$	22	$	15	$	17
Forecasted transactions	Forecasted transactions	415		537		7		6		11		11		Forecasted transactions	829		537		11		6		23		11
Cross-currency swaps	Cross-currency swaps	140		148		18		21		5		4		Cross-currency swaps	66		148		—		21		2		4
Total	Total	$	5,015	$	5,112	$	50	$	49	$	35	$	32	Total	$	4,132	$	5,112	$	23	$	49	$	40	$	32
Derivatives Designated as Hedging Instruments:	Derivatives Designated as Hedging Instruments:													Derivatives Designated as Hedging Instruments:

Currency contracts:	Currency contracts:													Currency contracts:

Forecasted transactions	Forecasted transactions	693		758		14		14		32		3		Forecasted transactions	335		758		6		14		3		3

Commodity contracts	Commodity contracts	N/A		N/A		56		49		—		—		Commodity contracts	N/A		N/A		43		49		—		—

Interest rate swaps	Interest rate swaps	885		1,251		7		24		19		—		Interest rate swaps	839		1,251		—		24		36		—
Total Hedges	Total Hedges	$	1,578	$	2,009	$	77	$	87	$	51	$	3	Total Hedges	$	1,174	$	2,009	$	49	$	87	$	39	$	3
Total Derivatives	Total Derivatives	$	6,593	$	7,121	$	127	$	136	$	86	$	35	Total Derivatives	$	5,306	$	7,121	$	72	$	136	$	79	$	35

(a)~~March 31,~~Amounts as at June 30, 2022 and December 31, 2021 included current assets of ~~$109~~$69 million and $101 million which are recorded in prepaid and other current assets; long-term assets of ~~$18~~$3 million and $35 million which are recorded in other long-term assets; current liabilities of ~~$40~~$32 million and $27 million which are recorded in other current liabilities; and long-term liabilities of ~~$46~~$47 million and $8 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 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 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. Commodity price fluctuations are largely covered through contractual pass through to customers. To reduce the extent of the remaining risk, Linde enters into a limited number of electricity, natural gas, and propane gas derivatives. 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.

Net Investment Hedges

As of ~~March 31,~~June 30, 2022, Linde has ~~€6.9~~€7.5 billion ($~~7.7~~8.0 billion) Euro-denominated notes and intercompany loans that are designated as hedges of the net investment positions in foreign operations. Since hedge inception, the deferred gain recorded within the cumulative translation adjustment component of AOCI in the condensed consolidated balance sheets and the consolidated statements of comprehensive income is ~~$269~~$679 million (deferred gain of ~~$129~~$415 million and $539 million recorded for the ~~three~~quarter and six months ended ~~March 31,~~June 30, 2022).

As of ~~March 31,~~June 30, 2022, Linde has exchange rate movements relating to previously designated hedges that remain in AOCI isat a loss of $42 million. These movements 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.

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 (See Note 4).

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 March 31,					Quarter Ended June 30,				Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2022		2021		(Millions of dollars)	2022		2021		2022		2021
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	$	51	$	19	Debt-related	$	(41)	$	10	$	10	$	29
Other balance sheet items	Other balance sheet items	(12)		4		Other balance sheet items	4		3		(8)		7

Total	Total	$	39	$	23	Total	$	(37)	$	13	$	2	$	36

* 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~~not material for the quarter and ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021, respectively. Net ~~losses~~impacts expected to be reclassified to earnings during the next twelve months are also not material.

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)

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													Fair Value Measurements Using
		Level 1				Level 2				Level 3					Level 1				Level 2				Level 3
(Millions of dollars)	(Millions of dollars)	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021		(Millions of dollars)	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Assets	Assets													Assets
Derivative assets	Derivative assets	$	—	$	—	$	127	$	136	$	—	$	—	Derivative assets	$	—	$	—	$	72	$	136	$	—	$	—
Investments and securities*	Investments and securities*	38		42		—		—		17		20		Investments and securities*	26		42		—		—		15		20
Total	Total	$	38	$	42	$	127	$	136	17		$	20	Total	$	26	$	42	$	72	$	136	15		$	20

Liabilities	Liabilities													Liabilities
Derivative liabilities	Derivative liabilities	$	—	$	—	$	86	$	35	$	—	$	—	Derivative liabilities	$	—	$	—	$	79	$	35	$	—	$	—

* 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 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. 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.

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Changes in level 3 investments and securities were immaterial.

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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 ~~March 31,~~June 30, 2022, the estimated fair value of Linde’s long-term debt portfolio was ~~$13,415~~$11,344 million versus a carrying value of ~~$13,907~~$12,828 million. At December 31, 2021, the estimated fair value of Linde’s long-term debt portfolio was $13,219 million versus a carrying value of $13,044 million. Differences between the carrying value and the fair value are attributable to fluctuations in interest rates subsequent to when the debt was issued and relative to stated coupon rates.

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 March 31,					Quarter Ended June 30,				Six Months Ended June 30,
		2022		2021			2022		2021		2022		2021
Numerator (Millions of dollars)	Numerator (Millions of dollars)					Numerator (Millions of dollars)
Income from continuing operations	Income from continuing operations	$	1,174	$	979	Income from continuing operations	$	372	$	840	$	1,546	$	1,819
Income from discontinued operations	Income from discontinued operations	—		1		Income from discontinued operations	—		1		$	—	2
Net Income – Linde plc	Net Income – Linde plc	$	1,174	$	980	Net Income – Linde plc	$	372	$	841	$	1,546	$	1,821
Denominator (Thousands of shares)	Denominator (Thousands of shares)					Denominator (Thousands of shares)
Weighted average shares outstanding	Weighted average shares outstanding	506,716		522,103		Weighted average shares outstanding	500,535		518,552		503,626		520,314
Shares earned and issuable under compensation plans	Shares earned and issuable under compensation plans	436		356		Shares earned and issuable under compensation plans	499		398		467		377
Weighted average shares used in basic earnings per share	Weighted average shares used in basic earnings per share	507,152		522,459		Weighted average shares used in basic earnings per share	501,034		518,950		504,093		520,691
Effect of dilutive securities	Effect of dilutive securities					Effect of dilutive securities
Stock options and awards	Stock options and awards	4,258		4,468		Stock options and awards	4,235		4,773		4,339		4,689
Weighted average shares used in diluted earnings per share	Weighted average shares used in diluted earnings per share	511,410		526,927		Weighted average shares used in diluted earnings per share	505,269		523,723		508,432		525,380
Basic earnings per share from continuing operations	Basic earnings per share from continuing operations	$	2.31	$	1.87	Basic earnings per share from continuing operations	$	0.74	$	1.62	$	3.07	$	3.49
Basic earnings per share from discontinued operations	Basic earnings per share from discontinued operations	—		—		Basic earnings per share from discontinued operations	—		—		$	—	$	—
Basic Earnings Per Share	Basic Earnings Per Share	$	2.31	$	1.87	Basic Earnings Per Share	$	0.74	$	1.62	$	3.07	$	3.49
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	2.30	$	1.86	Diluted earnings per share from continuing operations	$	0.74	$	1.60	$	3.04	$	3.46
Diluted earnings per share from discontinued operations	Diluted earnings per share from discontinued operations	—		—		Diluted earnings per share from discontinued operations	—		—		$	—	$	—
Diluted Earnings Per Share	Diluted Earnings Per Share	$	2.30	$	1.86	Diluted Earnings Per Share	$	0.74	$	1.60	$	3.04	$	3.46

There were no antidilutive shares for any period presented.

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8. Retirement Programs

The components of net pension and postretirement benefits other than pensions (“OPEB”) costs for the quarter and ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 are shown below:


		Quarter Ended March 31,					Quarter Ended June 30,				Six Months Ended June 30,

(Millions of dollars)	(Millions of dollars)	2022		2021		(Millions of dollars)	2022		2021		2022		2021
Amount recognized in Operating Profit	Amount recognized in Operating Profit					Amount recognized in Operating Profit
Service cost	Service cost	$	33	$	40	Service cost	$	32	$	39	$	65	$	79
Amount recognized in Net pension and OPEB cost (benefit), excluding service cost	Amount recognized in Net pension and OPEB cost (benefit), excluding service cost					Amount recognized in Net pension and OPEB cost (benefit), excluding service cost
Interest cost	Interest cost	53		39		Interest cost	51		38		104		77
Expected return on plan assets	Expected return on plan assets	(136)		(131)		Expected return on plan assets	(132)		(131)		(268)		(262)
Net amortization and deferral	Net amortization and deferral	19		43		Net amortization and deferral	19		44		38		87

		(64)		(49)			(62)		(49)		(126)		(98)

Net periodic benefit cost (benefit)	Net periodic benefit cost (benefit)	$	(31)	$	(9)	Net periodic benefit cost (benefit)	$	(30)	$	(10)	$	(61)	$	(19)

Components of net periodic benefit expense for other post-retirement plans for the ~~three~~quarter and six months ended ~~March 31,~~June 30, 2022 and 2021 were not material.

Linde estimates that 2022 required contributions to its pension plans will be in the range of $40 million to $50 million, of which ~~$13~~$19 million have been made through ~~March 31,~~June 30, 2022.

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 17 to the consolidated financial statements of Linde's 2021 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 ~~March 31,~~June 30, 2022 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 ~~$235~~$215 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 $2.2 billion Brazilian reais ($~~464~~419 million) on White Martins, the Brazil-based subsidiary of ~~Praxair,~~Linde Inc. The fine was reduced to $1.7 billion Brazilian reais ($~~359~~323 million) due to a calculation error made by CADE.

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The fine against White Martins was overturned by the Ninth Federal Court of Brasilia. CADE appealed this

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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 $237 million Brazilian reais ($5045 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 $188 million Brazilian reais ($4036 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 which was denied. In parallel, CADE filed (i) an appeal with the Supreme Court of Justice, which was denied, and (ii) a subsequent appeal to a panel of the Supreme Court of Justice where 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 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 18 to the consolidated financial statements on Linde plc's 2021 Annual Report on Form 10-K.

The table below presents sales and operating profit information about reportable segments and Other for the ~~three~~quarter and six months ended ~~March 31,~~June 30, 2022 and 2021.

Quarter Ended March 31,
(Millions of dollars) 2022 2021
SALES(a)
Americas $ 3,241 $ 2,840
EMEA 2,148 1,799
APAC 1,602 1,436
Engineering 728 674
Other 492 494
Total sales $ 8,211 $ 7,243

Quarter Ended March 31,
(Millions of dollars) 2022 2021
SEGMENT OPERATING PROFIT
Americas $ 904 $ 795
EMEA 503 451
APAC 399 351
Engineering 143 109
Other (44) (18)
Segment operating profit 1,905 1,688
Cost reduction programs and other charges (Note 2) 4 8
Purchase accounting impacts - Linde AG (429) (483)
Total operating profit $ 1,480 $ 1,213


	Quarter Ended June 30,				Six Months Ended June 30,
(Millions of dollars)	2022		2021		2022		2021
SALES(a)
Americas	$	3,518	$	3,020	$	6,759	$	5,860
EMEA	2,144		1,875		4,292		3,674
APAC	1,651		1,544		3,253		2,980
Engineering	644		646		1,372		1,320
Other	500		499		992		993


Total sales	$	8,457	$	7,584	$	16,668	$	14,827

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	Quarter Ended June 30,				Six Months Ended June 30,
(Millions of dollars)	2022		2021		2022		2021
SEGMENT OPERATING PROFIT
Americas	$	910	$	871	$	1,814	$	1,666
EMEA	536		487		1,039		938
APAC	426		389		825		740
Engineering	105		108		248		217
Other	11		(18)		(33)		(36)
Segment operating profit	1,988		1,837		3,893		3,525
Russia-Ukraine conflict and other charges (Note 2)	(993)		(204)		(989)		(196)


Purchase accounting impacts - Linde AG	(406)		(491)		(835)		(974)
Total operating profit	$	589	$	1,142	$	2,069	$	2,355

(a)Sales reflect external sales only. Intersegment sales, primarily from Engineering to the industrial gases segments, were ~~not material.~~$246 million and $477 million for the quarter and six months ended June 30, 2022, respectively, and $234 million and $423 million for the respective 2021 periods.

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11. Equity

Equity

A summary of the changes in total equity for the ~~quarters~~quarter and six months ended ~~March 31,~~June 30, 2022 and 2021 is provided below:


		Quarter Ended March 31,													Quarter Ended June 30,
(Millions of dollars)	(Millions of dollars)	2022						2021						(Millions of dollars)	2022						2021
Activity	Activity	Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity		Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity		Activity	Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity		Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity
Balance, beginning of period	Balance, beginning of period	$	44,035	$	1,393	$	45,428	$	47,317	$	2,252	$	49,569	Balance, beginning of period	$	42,963	$	1,414	$	44,377	$	46,210	$	1,410	$	47,620
Net income (a)	Net income (a)	1,174		36		1,210		980		38		1,018		Net income (a)	372		38		410		841		36		877
Other comprehensive income (loss)	Other comprehensive income (loss)	110		(12)		98		(655)		(6)		(661)		Other comprehensive income (loss)	(1,528)		(17)		(1,545)		437		9		446
Noncontrolling interests:	Noncontrolling interests:													Noncontrolling interests:
Additions (reductions) (b)	Additions (reductions) (b)	—		4		4		—		(853)		(853)		Additions (reductions) (b)	—		(53)		(53)		—		7		7
Dividends and other capital changes	Dividends and other capital changes	—		(7)		(7)		—		(21)		(21)		Dividends and other capital changes	—		(29)		(29)		—		(24)		(24)

Dividends to Linde plc ordinary share holders ($1.17 per share in 2022 and $1.06 per share in 2021)	Dividends to Linde plc ordinary share holders ($1.17 per share in 2022 and $1.06 per share in 2021)	(592)		—		(592)		(553)		—		(553)		Dividends to Linde plc ordinary share holders ($1.17 per share in 2022 and $1.06 per share in 2021)	(585)		—		(585)		(549)		—		(549)
Issuances of ordinary shares:	Issuances of ordinary shares:													Issuances of ordinary shares:

For employee savings and incentive plans	For employee savings and incentive plans	(46)		—		(46)		(2)		—		(2)		For employee savings and incentive plans	7		—		7		(9)		—		(9)

Purchases of ordinary shares	Purchases of ordinary shares	(1,752)		—		(1,752)		(906)		—		(906)		Purchases of ordinary shares	(1,572)		—		(1,572)		(1,187)		—		(1,187)

Share-based compensation	Share-based compensation	34		—		34		29		—		29		Share-based compensation	17		—		17		34		—		34
Balance, end of period	Balance, end of period	$	42,963	$	1,414	$	44,377	$	46,210	$	1,410	$	47,620	Balance, end of period	$	39,674	$	1,353	$	41,027	$	45,777	$	1,438	$	47,215


	Six Months Ended June 30,
(Millions of dollars)	2022						2021
Activity	Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity		Linde plc Shareholders’ Equity		Noncontrolling Interests		Total Equity
Balance, beginning of period	$	44,035	$	1,393	$	45,428	$	47,317	$	2,252	$	49,569
Net income (a)	1,546		74		1,620		1,821		74		1,895
Other comprehensive income (loss)	(1,418)		(29)		(1,447)		(218)		3		(215)
Noncontrolling interests:
Additions (reductions) (b)	—		(49)		(49)		—		(846)		(846)
Dividends and other capital changes	—		(36)		(36)		—		(45)		(45)

Dividends to Linde plc ordinary share holders ($2.34 per share in 2022 and $2.12 per share in 2021)	(1,177)		—		(1,177)		(1,102)		—		(1,102)
Issuances of ordinary shares:

For employee savings and incentive plans	(39)		—		(39)		(11)		—		(11)

Purchases of ordinary shares	(3,324)		—		(3,324)		(2,093)		—		(2,093)

Share-based compensation	51		—		51		63		—		63
Balance, end of period	$	39,674	$	1,353	$	41,027	$	45,777	$	1,438	$	47,215

(a) Net income for noncontrolling interests excludes net income related to redeemable noncontrolling interests which is not significant for the ~~three~~quarter and six months ended ~~March 31,~~June 30, 2022 and 2021 and which is not part of total equity.

(b) Additions (reductions) for noncontrolling interests for the ~~three~~quarter and six months ended ~~March 31,~~June 30, 2022 includes the impact of deconsolidating the company's Russian gas and engineering business entities (refer to Note 2). Additions (reductions) for noncontrolling interests for the six months ended June 30, 2021 includes the impact from the deconsolidation of a joint venture with operations in APAC.

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The components of AOCI are as follows:


		March 31,		December 31,			June 30,		December 31,
(Millions of dollars)	(Millions of dollars)	2022		2021		(Millions of dollars)	2022		2021
Cumulative translation adjustment - net of taxes:	Cumulative translation adjustment - net of taxes:					Cumulative translation adjustment - net of taxes:
Americas	Americas	$	(3,652)	$	(3,985)	Americas	$	(3,928)	$	(3,985)
EMEA	EMEA	(402)		94		EMEA	(1,384)		94
APAC	APAC	162		154		APAC	(683)		154
Engineering	Engineering	(100)		24		Engineering	(338)		24
Other	Other	59		(280)		Other	718		(280)
		(3,933)		(3,993)			(5,615)		(3,993)
Derivatives - net of taxes	Derivatives - net of taxes	72		75		Derivatives - net of taxes	147		75

Pension / OPEB (net of $284 million and $305 million tax benefit in March 31, 2022 and December 31, 2021, respectively)		(1,077)		(1,130)
Pension / OPEB (net of $276 million and $305 million tax benefit in June 30, 2022 and December 31, 2021, respectively)						Pension / OPEB (net of $276 million and $305 million tax benefit in June 30, 2022 and December 31, 2021, respectively)	(998)		(1,130)
		$	(4,938)	$	(5,048)		$	(6,466)	$	(5,048)

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

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Linde serves a diverse group of industries including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics.

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-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

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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 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~~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 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

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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 ~~$100~~$78 million and $134 million at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively. Total contract liabilities are ~~$3,874~~$3,806 million at ~~March 31,~~June 30, 2022 (current of ~~$3,035~~$2,933 million and ~~$839~~$873 million within other long-term liabilities in the condensed consolidated balance sheets). As of June 30, 2022 Linde has approximately $1.9 billion recorded in contract liabilities related to engineering projects subject to sanctions in Russia. Total contract liabilities were $3,699 million at December 31, 2021 (current contract liabilities of $2,940 million and $759 million in other long-term liabilities in the condensed consolidated balance sheets). Revenue recognized for the ~~three~~six months ended ~~March 31,~~June 30, 2022 that was included in the contract liability at December 31, 2021 was ~~$611~~$913 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. 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 practice in the industry and are not significant.

Disaggregated Revenue Information

As described above and in Note 18 to ~~Linde's~~Linde plc's 2021 Annual Report on 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.

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Furthermore, the company believes that reporting sales by distribution method by reportable geographic segment best illustrates the nature, 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 ~~three~~six months ended ~~March 31,~~June 30, 2022 and ~~March 31,~~June 30, 2021.


(Millions of dollars)	(Millions of dollars)	Quarter Ended March 31, 2022														(Millions of dollars)	Quarter Ended June 30, 2022
Sales	Sales	Americas		EMEA		APAC		Engineering		Other		Total		%		Sales	Americas		EMEA		APAC		Engineering		Other		Total		%

Merchant	Merchant	$	874	$	614	$	516	$	—	$	39	$	2,043	25	%	Merchant	$	941	$	634	$	562	$	—	$	40	$	2,177	26	%
On-Site	On-Site	883		631		655		—		—		2,169		26	%	On-Site	1,049		610		631		—		—		2,290		27	%
Packaged Gas	Packaged Gas	1,432		891		361		—		7		2,691		33	%	Packaged Gas	1,473		884		389		—		9		2,755		33	%
Other	Other	52		12		70		728		446		1,308		16	%	Other	55		16		69		644		451		1,235		15	%
Total	Total	$	3,241	$	2,148	$	1,602	$	728	$	492	$	8,211	100	%	Total	$	3,518	$	2,144	$	1,651	$	644	$	500	$	8,457	100	%


(Millions of dollars)	(Millions of dollars)	Quarter Ended March 31, 2021														(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	$	771	$	531	$	484	$	—	$	53	$	1,839	25	%	Merchant	$	821	$	556	$	551	$	—	$	43	$	1,971	26	%
On-Site	On-Site	689		392		553		—		—		1,634		23	%	On-Site	774		396		582		—		—		1,752		23	%
Packaged Gas	Packaged Gas	1,332		861		361		—		6		2,560		35	%	Packaged Gas	1,369		912		392		—		6		2,679		35	%
Other	Other	48		15		38		674		435		1,210		17	%	Other	56		11		19		646		450		1,182		16	%
Total	Total	$	2,840	$	1,799	$	1,436	$	674	$	494	$	7,243	100	%	Total	$	3,020	$	1,875	$	1,544	$	646	$	499	$	7,584	100	%


(Millions of dollars)	Six Months Ended June 30, 2022
Sales	Americas		EMEA		APAC		Engineering		Other		Total		%

Merchant	$	1,815	$	1,248	$	1,078	$	—	$	79	$	4,220	25	%
On-Site	1,931		1,241		1,286		—		—		4,458		27	%
Packaged Gas	2,906		1,775		750		—		16		5,447		33	%
Other	107		28		139		1,372		897		2,543		15	%
Total	$	6,759	$	4,292	$	3,253	$	1,372	$	992	$	16,668	100	%

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

Merchant	$	1,592	$	1,087	$	1,035	$	—	$	95	$	3,809	26	%
On-Site	1,463		788		1,134		—		—		3,385		23	%
Packaged Gas	2,701		1,772		753		—		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	%

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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. Additionally, plant sales from the Linde Engineering business are primarily contracted on a fixed price basis. The company estimates the consideration related to future minimum purchase requirements and plant sales was approximately $51 billion (excludes Russian projects which are ~~currently or expected to be~~ impacted by sanctions, ~~as discussed in Note 13)~~refer to footnote 2). This amount excludes all on-site 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

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and the remaining thereafter.

13. Subsequent Events

~~Conflict between Russia and Ukraine~~

In ~~response to the Russian invasion of Ukraine, multiple jurisdictions, including Europe and the U.S., have imposed several tranches of economic sanctions on Russia.~~

In 2021, Linde’s industrial gas business generated approximately 1% of consolidated Linde sales from Russia. Total assets in Russia represent approximately 1% of consolidated Linde assets. Sales and total assets in Ukraine are immaterial. As of March 31,July 2022 Linde ~~has approximately $2 billion recorded in contract liabilities within~~signed an agreement for the ~~condensed consolidated balance sheet related to engineering projects in Russia.~~

~~Linde continues to closely monitor the situation in Ukraine and has taken steps to ensure the safety~~sale of its ~~employees and~~GIST business. Under the ~~continuous delivery~~terms of ~~critical medical oxygen. Linde~~the agreement, the agreed sale price is ~~working with the relevant governments and authorities to ensure the company fully complies with international sanctions and~~approximately $275 million, plus potential additional earnouts. The divestment of this non-core business is ~~safely winding down affected projects in Russia. During the first quarter of 2022, engineering projects being executed for Russia that are currently or~~ expected to be impacted by sanctions and thus being wound down were approximately $0.35 billion of sales. Linde has suspended all business development for new projects and is scaling back its operations in Russia by ceasing to supply certain customers and starting the process to divest industrial assets to reduce its footprintcompleted in the ~~country.~~

It is possible that Linde may incur impairment and other charges in future quarters as these actions are defined and executed and as further sanctions are enacted that impact the Company’s operations in Russia, including industrial gases and engineering. Any charges related to such impairments or obligation to satisfy any residual contract liabilities may have an adverse effect on Linde’s resultsecond half of ~~operations or cash flows.~~2022, pending regulatory approvals.

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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."

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Consolidated Results

The following table provides summary information for the ~~three~~quarters and six months ended ~~March 31,~~June 30, 2022 and 2021. The reported amounts are GAAP amounts from the Consolidated Statements of 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 March 31,								Quarter Ended June 30,					Six Months Ended June 30,
(Millions of dollars, except per share data)	(Millions of dollars, except per share data)	2022			2021			Variance			(Millions of dollars, except per share data)	2022			2021			Variance		2022			2021			Variance
Sales	Sales	$	8,211		$	7,243		13	%		Sales	$	8,457		$	7,584		12	%	$	16,668		$	14,827		12	%
Cost of sales, exclusive of depreciation and amortization	Cost of sales, exclusive of depreciation and amortization	$	4,798		$	4,054		18	%		Cost of sales, exclusive of depreciation and amortization	$	4,940		$	4,194		18	%	$	9,738		$	8,248		18	%
As a percent of sales	As a percent of sales	58.4		%	56.0		%				As a percent of sales	58.4		%	55.3		%			58.4		%	55.6		%
Selling, general and administrative	Selling, general and administrative	$	802		$	787		2	%		Selling, general and administrative	$	771		$	822		(6)	%	$	1,573		$	1,609		(2)	%
As a percent of sales	As a percent of sales	9.8		%	10.9		%				As a percent of sales	9.1		%	10.8		%			9.4		%	10.9		%
Depreciation and amortization	Depreciation and amortization	$	1,112		$	1,166		(5)	%		Depreciation and amortization	$	1,091		$	1,171		(7)	%	$	2,203		$	2,337		(6)	%
Cost reduction programs and other charges (b)		$	(4)		$	(8)		(50)	%
Russia-Ukraine conflict and other charges (b)											Russia-Ukraine conflict and other charges (b)	$	993		$	204		387	%	$	989		$	196		405	%

Other income (expense) - net	Other income (expense) - net	$	12		$	4		(200)	%		Other income (expense) - net	$	(36)		$	(17)		(112)	%	$	(24)		$	(13)		(85)	%
Operating profit	Operating profit	$	1,480		$	1,213		22	%		Operating profit	$	589		$	1,142		(48)	%	$	2,069		$	2,355		(12)	%
Operating margin	Operating margin	18.0		%	16.7		%				Operating margin	7.0		%	15.1		%			12.4		%	15.9		%
Interest expense - net	Interest expense - net	$	9		$	20		(55)	%		Interest expense - net	$	5		$	18		(72)	%	$	14		$	38		(63)	%
Net pension and OPEB cost (benefit), excluding service cost	Net pension and OPEB cost (benefit), excluding service cost	$	(64)		$	(49)		31	%		Net pension and OPEB cost (benefit), excluding service cost	$	(62)		$	(49)		27	%	$	(126)		$	(98)		29	%
Effective tax rate	Effective tax rate	24.0		%	21.6		%				Effective tax rate	44.3		%	28.5		%			30.0		%	24.9		%
Income from equity investments	Income from equity investments	$	44		$	43		2	%		Income from equity investments	$	50		$	37		35	%	$	94		$	80		18	%
Noncontrolling interests from continuing operations	Noncontrolling interests from continuing operations	$	(36)		$	(38)		(5)	%		Noncontrolling interests from continuing operations	$	(38)		$	(36)		6	%	$	(74)		$	(74)		—	%
Income from continuing operations	Income from continuing operations	$	1,174		$	979		20	%		Income from continuing operations	$	372		$	840		(56)	%	$	1,546		$	1,819		(15)	%
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	2.30		$	1.86		24	%		Diluted earnings per share from continuing operations	$	0.74		$	1.60		(54)	%	$	3.04		$	3.46		(12)	%
Diluted shares outstanding	Diluted shares outstanding	511,410			526,927			(3)	%		Diluted shares outstanding	505,269			523,723			(4)	%	508,432			525,380			(3)	%
Number of employees	Number of employees	72,507			71,699			1	%		Number of employees	72,438			71,736			1	%	72,438			71,736			1	%
Adjusted Amounts (a)	Adjusted Amounts (a)										Adjusted Amounts (a)
Operating profit	Operating profit	$	1,905		$	1,688		13	%		Operating profit	$	1,988		$	1,837		8	%	$	3,893		$	3,525		10	%
Operating margin	Operating margin	23.2		%	23.3		%				Operating margin	23.5		%	24.2		%			23.4		%	23.8		%
Effective tax rate	Effective tax rate	24.3		%	23.9		%				Effective tax rate	24.5		%	24.6		%			24.4		%	24.3		%
Income from continuing operations	Income from continuing operations	$	1,500		$	1,312		14	%		Income from continuing operations	$	1,566		$	1,415		11	%	$	3,066		$	2,727		12	%
Diluted earnings per share from continuing operations	Diluted earnings per share from continuing operations	$	2.93		$	2.49		18	%		Diluted earnings per share from continuing operations	$	3.10		$	2.70		15	%	$	6.03		$	5.19		16	%
Other Financial Data (a)	Other Financial Data (a)										Other Financial Data (a)
EBITDA from continuing operations	EBITDA from continuing operations	$	2,636		$	2,422		9	%		EBITDA from continuing operations	$	1,730		$	2,350		(26)	%	$	4,366		$	4,772		(9)	%
As percent of sales	As percent of sales	32.1		%	33.4		%				As percent of sales	20.5		%	31.0		%			26.2		%	32.2		%
Adjusted EBITDA from continuing operations	Adjusted EBITDA from continuing operations	$	2,663		$	2,438		9	%		Adjusted EBITDA from continuing operations	$	2,746		$	2,585		6	%	$	5,409		$	5,023		8	%
As percent of sales	As percent of sales	32.4		%	33.7		%				As percent of sales	32.5		%	34.1		%			32.5		%	33.9		%

(a) Adjusted 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" section of this MD&A.

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

Reported

In the ~~first~~second quarter of 2022, Linde's sales were ~~$8,211~~$8,457 million, ~~13%~~12% above prior year, primarily driven by 6%7% price attainment and 3%2% higher volumes. Cost pass-through, representing the contractual billing of energy cost variances primarily to onsite customers, increased sales by 6%7% in the quarter, with minimal impact on operating profit. Currency translation decreased sales by 3%5% in the ~~first~~second quarter of 2022 as compared to 2021.

Reported operating profit for the ~~first~~second quarter of 2022 of ~~$1,480~~$589 million, or ~~18%~~7.0% of sales, was ~~22% above~~48% below prior year. The reported year-over-year ~~increase~~decrease was primarily due to charges relating to the deconsolidation and impairment of Russian subsidiaries resulting from the ongoing war in Ukraine and related sanctions (see Note 2 to the condensed consolidated financial statements) partially offset by higher price ~~the benefit of cost reduction programs~~ and productivity ~~initiatives and lower depreciation and amortization driven by merger related intangible assets.~~initiatives. The reported effective tax rate ("ETR") was ~~24.0%~~44.3% in the ~~first~~second quarter 2022 versus ~~21.6%~~28.5% in the ~~first~~second quarter ~~2021. Diluted earnings per share from continuing operations ("EPS") was $2.30, or 24% above EPS~~2021, driven primarily by the non-deductibility of ~~$1.86 in~~ the ~~first quarter of 2021 primarily due to higher income from continuing operations and lower diluted shares outstanding.~~

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charges related to the deconsolidation and impairment of Linde's Russian subsidiaries partially offset by the reversal of a related deferred tax liability. Diluted earnings per share from continuing operations ("EPS") was $0.74, or 54% below EPS of $1.60 in the second quarter of 2021 primarily due to lower income from continuing operations, partially offset by lower diluted shares outstanding.

Adjusted

In the ~~first~~second quarter of 2022, adjusted operating profit of ~~$1,905~~$1,988 million, or ~~23.2%~~23.5% of sales, was ~~13%~~8% higher as compared to 2021 driven by higher price and ~~the benefit of cost reduction programs and~~ productivity ~~initiatives.~~initiatives, partially offset by inflation. The adjusted ETR was ~~24.3%~~24.5% in the ~~first~~second quarter 2022 versus ~~23.9%~~24.6% in the 2021 quarter. On an adjusted basis, EPS was ~~$2.93, 18%~~$3.10, 15% above the 2021 adjusted EPS of ~~$2.49,~~$2.70, driven by higher adjusted income from continuing operations and lower diluted shares outstanding.

Outlook

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.

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Results of operations

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


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~

~~Factors Contributing to Changes - Sales~~
~~Volume~~	3	%
~~Price/Mix~~	6	%
~~Cost pass-through~~	6	%
~~Currency~~	~~(3)~~	%
~~Acquisitions/divestitures~~	—	%
~~Engineering~~	1	%
	13	%


	Quarter Ended June 30, 2022 vs. 2021		Six Months Ended June 30, 2022 vs. 2021
	% Change		% Change

Factors Contributing to Changes - Sales
Volume	2	%	2	%
Price/Mix	7	%	6	%
Cost pass-through	7	%	7	%
Currency	(5)	%	(4)	%
Acquisitions/divestitures	—	%	—	%
Engineering	1	%	1	%
	12	%	12	%

Sales

Sales increased ~~$968~~$873 million, or ~~13%~~12%, for the ~~first~~second quarter of 2022 and increased $1,841 million, or 12% for the six months ended June 30, 2022 versus the respective 2021 ~~period.~~periods. Volume growth ~~across most~~in all end markets except healthcare and project startups increased sales by 3%2% in the ~~quarter.~~quarter and year-to-date period. Higher pricing across all geographic segments contributed 6%7% to sales in the ~~quarter.~~quarter and 6% in the year-to-date period. Currency translation decreased sales by 3%5% in the quarter and 4% in the year-to-date period, largely in EMEA and APAC, driven by the weakening of the Euro, Australian dollar ~~Korean won~~ and British pound against the U.S. dollar. Cost pass-through increased sales by 6%7% in the quarter and 7% in the year-to-date period with minimal impact on operating profit.

Cost of sales, exclusive of depreciation and amortization

Cost of sales, exclusive of depreciation and amortization increased ~~$744~~$746 million, or 18%, for the ~~first~~second quarter of 2022 and increased $1,490 million, or 18% for the six months ended June 30, 2022 primarily due to inflation and higher volumes, ~~and cost pass-through,~~ partially offset by productivity initiatives and currency impacts. Cost of sales, exclusive of depreciation and amortization was 58.4% and 58.4% of sales, respectively, for the ~~first~~second quarter ofand six months ended June 30, 2022 versus ~~56.0%~~55.3% and 55.6% of sales for the respective 2021 ~~period.~~periods. The increase as a percentage of sales in the quarter and for the ~~first quarter of~~six months ended June 30, 2022 was due primarily to higher cost pass-through.

Selling, general and administrative expenses

Selling, general and administrative expense ("SG&A") ~~increased $15~~decreased $51 million, or 6%, for the second quarter of 2022 and decreased $36 million, or 2%, for the ~~first quarter of~~six months ended June 30, 2022. SG&A was ~~9.8%~~9.1% of ~~first~~second quarter sales and 9.4% of sales for the six months ended June 30, 2022 versus 10.8% and 10.9% for the respective 2021 ~~period.~~periods. Currency impacts decreased SG&A by approximately ~~$18~~$32 million inand $50 million for the ~~quarter.~~quarter and six months ended June 30, 2022, respectively. Excluding currency impacts, underlying SG&A ~~increased~~decreased in the ~~first~~second quarter of 2022 driven primarily by lower incentive compensation and increased for the six months ended June 30, 2022 due primarily to higher ~~incentive compensation.~~costs.

Depreciation and amortization

Reported depreciation and amortization expense decreased ~~$54~~$80 million, or 7%, for the ~~first~~second quarter of 2022 and decreased $134 million, or 6%, for the six months ended June 30, 2022. The decrease is related primarily to lower depreciation and amortization of intangible assets acquired in the ~~merger.~~merger and currency impacts.

On an adjusted basis, depreciation and amortization ~~increased $6~~decreased $2 million, ~~or 1%,~~ for the ~~first~~second quarter of 2022 and increased $4 million, for the year-to-date period. Currency impacts decreased depreciation and amortization by $29 million and $45 million, for the quarter and six months ended June 30, 2022, respectively. Excluding currency, underlying depreciation and amortization increased primarily due to new project start ~~ups which~~ups.

Russia-Ukraine conflict and other charges

Russia-Ukraine conflict and other charges were ~~partially offset by currency translation impacts which decreased depreciation~~$993 million and ~~amortization by $16 million.~~$989 million for the second quarter and six months ended June 30, 2022, respectively, and $204 million and $196 million for the respective 2021 periods. 2022 charges relate primarily to the deconsolidation and impairment of Russian subsidiaries resulting from the ongoing war in Ukraine and related sanctions. 2021 charges relate to cost reduction program and other charges, primarily severance (see Note 2 to the condensed consolidated financial statements).

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

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Operating profit

On a reported basis, operating profit ~~increased $267~~decreased $553 million, or ~~22%~~48%, for the ~~first~~second quarter of 2022 and decreased $286 million, or 12%, for the six months ended June 30, 2022. The ~~increase~~decrease was primarily due to Russia-Ukraine conflict and other charges, which more than offset growth from higher pricing ~~the benefit of cost reduction programs~~ and productivity initiatives and lower depreciation and amortization driven by merger related intangible ~~assets which more than offset inflation during the quarter.~~assets.

On an adjusted basis, which excludes the impacts of purchase accounting and ~~cost reduction programs~~Russia-Ukraine conflict and other charges, operating profit increased ~~$217~~$151 million, or ~~13%~~8% in the 2022 ~~quarter.~~quarter and increased $368 million, or 10%, for the six months ended June 30, 2022. Operating profit growth was driven by higher pricing ~~and the benefit of cost reduction programs~~ and productivity initiatives which more than offset inflation during the period. A discussion of operating profit by segment is included in the segment discussion that follows.

Interest expense - net

Reported interest expense - net decreased ~~$11~~$13 million for the ~~first~~second quarter of 2022 and decreased $24 million for the six months ended June 30, 2022. On an adjusted basis, interest expense decreased $19 million for the ~~first~~second quarter of 2022 and decreased $38 million for the six months ended June 30, 2022 versus the respective 2021 ~~period~~periods. The decrease in both periods was driven by a lower effective borrowing ~~rate.~~

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rate and higher interest income on cash deposits.

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

Reported net pension and OPEB cost (benefit), excluding service cost was a benefit of ~~$64~~$62 million and $126 million for the quarter and six months ended June 30, 2022, respectively, versus a benefit of $49 million and $98 million for the respective 2021 ~~period.~~periods. The increase in benefit primarily relates to lower amortization of deferred losses, partially offset by higher interest cost reflective of the higher discount rate environment year-over-year.

Effective tax rate

The reported effective tax rate ("ETR") for the quarter and six months ended June 30, 2022 was ~~24.0%~~44.3% and 30.0%, respectively, versus ~~21.6%~~28.5% and 24.9% for the respective 2021 ~~period.~~periods. The increase is primarily ~~driven by lower tax impact from share based compensation in 2022 and a non-taxable gain~~ related to the net tax expense resulting from the deconsolidation and impairment of the company’s business in Russia, driven predominantly by the non-deductibility of the impairment charges partially offset by the reversal of a ~~joint venture with operations in APAC~~related deferred tax liability. For the quarter and six months ended June 30, 2021, the ETR included net tax charges of $38 million primarily related to $81 million of expense due to a tax rate increase in the ~~first quarter~~United Kingdom partially offset by a tax settlement benefit of ~~2021.~~

$33 million (see Note 2 to the condensed consolidated financial statements).

On an adjusted basis, the ETR for the quarter and six months ended June 30, 2022 was ~~24.3%~~24.5% and 24.4%, respectively, versus ~~23.9%~~24.6% and 24.3% for the respective 2021 ~~period. The increase is primarily due to lower tax benefits from share option exercises.~~periods.

Income from equity investments

Reported income from equity investments for the ~~first~~second quarter of 2022 and six months ended June 30, 2022 was ~~$44~~$50 million and $94 million, respectively, versus ~~$43~~$37 million and $80 million for the respective 2021 ~~period.~~periods. On an adjusted basis, income from equity investments for the ~~first~~second quarter and six months ended June 30, 2022 was ~~$64~~$69 million and $133 million, respectively, versus ~~$62~~$56 million and $118 million in the prior year respective ~~period.~~periods. The increase on both basis was primarily driven by the overall performance of investments in APAC.

Noncontrolling interests from continuing operations

At ~~March 31,~~June 30, 2022, noncontrolling interests from continuing operations consisted primarily of non-controlling shareholders' investments in APAC (primarily China).

Reported noncontrolling interests from continuing operations ~~decreased~~increased $2 million for the ~~first~~second quarter of 2022 and was flat for the six months ended June 30, 2022, versus the respective 2021 ~~period.~~periods.

Income from continuing operations

Reported income from continuing operations ~~increased $195~~decreased $468 million, or ~~20%~~56%, for the ~~first~~second quarter of 2022 and decreased $273 million, or 15%, for the six months ended June 30, 2022 versus the respective 2021 ~~period,~~periods, primarily due to ~~higher~~lower overall operating profit.

On an adjusted basis, which excludes the impacts of purchase accounting and Russia-Ukraine conflict and other ~~non-GAAP adjustments,~~charges, income from continuing operations increased ~~$188~~$151 million, or ~~14%~~11%, for the quarter and increased $339 million, or 12%, for the six months ended June 30, 2022 versus the respective 2021 ~~period.~~periods. The increase was driven by higher overall adjusted operating profit.

Diluted earnings per share from continuing operations

Reported diluted earnings per share from continuing operations ~~increased $0.44,~~decreased $0.86, or ~~24%~~54%, for the ~~first~~second quarter of 2022 and decreased $0.42, or 12%, for the six months ended June 30, 2022 versus the comparable 2021 ~~period.~~ periods. The decrease was primarily due to lower income from continuing operations, partially offset by lower diluted shares outstanding.

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On an adjusted basis, diluted EPS for the ~~first~~second quarter of 2022 increased ~~$0.44,~~$0.40, or ~~18%~~15%, and increased $0.84, or 16% for the six months ended June 30, 2022 versus the respective 2021 ~~period.~~periods. The increase ~~on both bases~~ was primarily due to higher adjusted income from continuing operations and lower diluted shares outstanding.

Employees

The number of employees at ~~March 31,~~June 30, 2022 was ~~72,507,~~72,438, an increase of ~~808~~702 employees from ~~March 31,~~June 30, 2021, driven primarily by the Americas.

Other Financial Data

EBITDA was ~~$2,636~~$1,730 million for the ~~first~~second quarter of 2022 as compared to ~~$2,422~~$2,350 million in the respective 2021 period. EBITDA was $4,366 million for the six months ended June 30, 2022 as compared to $4,772 million in the respective 2021 period. The decrease in both periods was driven by lower income from continuing operations plus depreciation and amortization versus the prior periods.

Adjusted EBITDA from continuing operations increased to $2,746 million for the second quarter 2022 from $2,585 million in the respective 2021 period. Adjusted EBITDA from continuing operations increased to ~~$2,663~~$5,409 million from $5,023 million for the ~~first quarter~~six months ended June 30, 2022 ~~from $2,438 million in~~as compared to the respective 2021 period primarily due to higher adjusted income from continuing operations plus depreciation and amortization versus the prior period.

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

Other Comprehensive Income (Loss)

Other comprehensive losses for the ~~first~~second quarter of 2022 and six months ended June 30, 2022 were ~~$98~~$1,545 million and $1,447 million, respectively, resulting primarily from currency translation adjustments of ~~$48~~$1,699 million and $1,651 million during the ~~quarter.~~quarter and year-to-date periods, respectively. 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.

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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 Consolidated Statements of Income.


		Quarter Ended March 31,							Quarter Ended June 30,						Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2022		2021		Variance		(Millions of dollars)	2022		2021		Variance		2022		2021		Variance
SALES	SALES							SALES
Americas	Americas	$	3,241	$	2,840	14	%	Americas	$	3,518	$	3,020	16	%	$	6,759	$	5,860	15	%
EMEA	EMEA	2,148		1,799		19	%	EMEA	2,144		1,875		14	%	4,292		3,674		17	%
APAC	APAC	1,602		1,436		12	%	APAC	1,651		1,544		7	%	3,253		2,980		9	%
Engineering	Engineering	728		674		8	%	Engineering	644		646		—	%	1,372		1,320		4	%
Other	Other	492		494		—	%	Other	500		499		—	%	992		993		—	%
Total sales	Total sales	$	8,211	$	7,243	13	%	Total sales	$	8,457	$	7,584	12	%	$	16,668	$	14,827	12	%

SEGMENT OPERATING PROFIT	SEGMENT OPERATING PROFIT							SEGMENT OPERATING PROFIT
Americas	Americas	$	904	$	795	14	%	Americas	$	910	$	871	4	%	$	1,814	$	1,666	9	%
EMEA	EMEA	503		451		12	%	EMEA	536		487		10	%	1,039		938		11	%
APAC	APAC	399		351		14	%	APAC	426		389		10	%	825		740		11	%
Engineering	Engineering	143		109		31	%	Engineering	105		108		(3)	%	248		217		14	%
Other	Other	(44)		(18)		(144)	%	Other	11		(18)		161	%	(33)		(36)		8	%
Segment operating profit	Segment operating profit	$	1,905	$	1,688	13	%	Segment operating profit	$	1,988	$	1,837	8	%	$	3,893	$	3,525	10	%
Reconciliation to reported operating profit:	Reconciliation to reported operating profit:							Reconciliation to reported operating profit:
Cost reduction programs and other charges (Note 2)		4		8
Russia-Ukraine conflict and other charges (Note 2)								Russia-Ukraine conflict and other charges (Note 2)	(993)		(204)				(989)		(196)
Purchase accounting impacts - Linde AG	Purchase accounting impacts - Linde AG	(429)		(483)				Purchase accounting impacts - Linde AG	(406)		(491)				(835)		(974)
Total operating profit	Total operating profit	$	1,480	$	1,213			Total operating profit	$	589	$	1,142			$	2,069	$	2,355

~~Americas~~

Quarter Ended March 31,
(Millions of dollars) 2022 2021 Variance
Sales $ 3,241 $ 2,840 14 %
Operating profit $ 904 $ 795 14 %
As a percent of sales 27.9 % 28.0 %


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~
~~Factors Contributing to Changes - Sales~~
~~Volume~~	5	%
~~Price/Mix~~	5	%
~~Cost pass-through~~	4	%
~~Currency~~	—	%
~~Acquisitions/divestitures~~	—	%

	14	%

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Americas


	Quarter Ended June 30,								Six Months Ended June 30,
(Millions of dollars)	2022			2021			Variance		2022			2021			Variance
Sales	$	3,518		$	3,020		16	%	$	6,759		$	5,860		15	%

Operating profit	$	910		$	871		4	%	$	1,814		$	1,666		9	%
As a percent of sales	25.9		%	28.8		%			26.8		%	28.4		%


	Quarter Ended June 30, 2022 vs. 2021		Six Months Ended June 30, 2021 vs. 2020
	% Change		% Change
Factors Contributing to Changes - Sales
Volume	3	%	4	%
Price/Mix	6	%	5	%
Cost pass-through	7	%	6	%
Currency	—	%	—	%
Acquisitions/divestitures	—	%	—	%

	16	%	15	%

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 increased ~~$401~~$498 million, or ~~14%~~16%, for the ~~first~~second quarter and increased $899 million, or 15%, for the six months ended June 30, 2022 versus the respective 2021 ~~period.~~periods. Higher pricing contributed 5%6% to sales in the ~~quarter.~~quarter and 5% in the year-to-date period. Higher volumes increased sales by 5%3% for the ~~first~~second quarter and increased 4% for the six months ended June 30, 2022, driven by higher demand across ~~most~~all end markets except healthcare, led by chemicals and energy and manufacturing. Cost pass-through increased sales by 4%7% for the ~~first~~second quarter and increased 6% for the six months ended June 30, 2022 with minimal impact on operating profit. The impact of currency translation in the quarter and year-to-date period was not significant.

Operating profit

Operating profit in the Americas segment increased ~~$109~~$39 million, or ~~14%~~4%, in the ~~first~~second quarter and increased $148 million, or 9%, for the six months ended June 30, 2022 versus the respective 2021 ~~period,~~periods, driven primarily by higher pricing and continued productivity initiatives which more than offset inflation during the ~~quarter.~~quarter and year-to-date period. The 2022 second quarter includes a one-time charge that is negatively impacting operating margin by approximately 100 basis points.

EMEA


		Quarter Ended March 31,									Quarter Ended June 30,								Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2022			2021			Variance		(Millions of dollars)	2022			2021			Variance		2022			2021			Variance
Sales	Sales	$	2,148		$	1,799		19	%	Sales	$	2,144		$	1,875		14	%	$	4,292		$	3,674		17	%

Operating profit	Operating profit	$	503		$	451		12	%	Operating profit	$	536		$	487		10	%	$	1,039		$	938		11	%
As a percent of sales	As a percent of sales	23.4		%	25.1		%			As a percent of sales	25.0		%	26.0		%			24.2		%	25.5		%


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~
~~Factors Contributing to Changes - Sales~~
~~Volume~~	—	%
~~Price/Mix~~	11	%
~~Cost pass-through~~	14	%
~~Currency~~	~~(6)~~	%
~~Acquisitions/divestitures~~	—	%

	19	%

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	Quarter Ended June 30, 2022 vs. 2021		Six Months Ended June 30, 2022 vs. 2021
	% Change		% Change
Factors Contributing to Changes - Sales
Volume	(1)	%	(1)	%
Price/Mix	12	%	11	%
Cost pass-through	14	%	15	%
Currency	(11)	%	(8)	%
Acquisitions/divestitures	—	%	—	%

	14	%	17	%

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 increased by ~~$349~~$269 million, or ~~19%~~14%, in the ~~first~~second quarter and increased $618 million, or 17%, for the six months ended June 30, 2022 as compared to the respective 2021 ~~period.~~periods. Cost pass-through contributed 14% to sales in the quarter and 15% in the year-to-date period, with minimal impact on operating profit, while higher price attainment increased sales by 12% in the quarter and 11% in the ~~quarter.~~year-to-date period. Volumes ~~were relatively flat~~decreased 1% in ~~the quarter.~~both quarter and year to date period. Currency translation decreased sales by 6%11% in the quarter and 8% in the year-to-date period, due largely to the weakening of the Euro and British pound against the U.S. Dollar.

Linde has deconsolidated its Russian gas business as of June 30, 2022 which contributed $70 million and $128 million to sales in the second quarter and six months ended June 30, 2022, respectively (see Note 2 to the condensed consolidated financial statements). Sales in Ukraine are immaterial.

Operating Profit

Operating profit for the EMEA segment increased by ~~$52~~$49 million, or ~~12%~~10%, in the ~~first~~second quarter and increased $101 million, or 11%, for the six months ended June 30, 2022 as compared to the respective 2021 ~~period,~~periods, driven largely by higher pricing and continued productivity initiatives which more than offset inflation during the ~~quarter.~~quarter and year-to-date period.

APAC


		Quarter Ended March 31,									Quarter Ended June 30,								Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2022			2021			Variance		(Millions of dollars)	2022			2021			Variance		2022			2021			Variance
Sales	Sales	$	1,602		$	1,436		12	%	Sales	$	1,651		$	1,544		7	%	$	3,253		$	2,980		9	%

Operating profit	Operating profit	$	399		$	351		14	%	Operating profit	$	426		$	389		10	%	$	825		$	740		11	%
As a percent of sales	As a percent of sales	24.9		%	24.4		%			As a percent of sales	25.8		%	25.2		%			25.4		%	24.8		%

~~Table of Contents~~


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~
~~Factors Contributing to Changes - Sales~~
~~Volume/Equipment~~	6	%
~~Price/Mix~~	4	%
~~Cost pass-through~~	4	%
~~Currency~~	~~(2)~~	%
~~Acquisitions/divestitures~~	—	%

	12	%


	Quarter Ended June 30, 2022 vs. 2021		Six Months Ended June 30,
	% Change		% Change
Factors Contributing to Changes - Sales
Volume/Equipment	3	%	5	%
Price/Mix	5	%	4	%
Cost pass-through	4	%	4	%
Currency	(5)	%	(4)	%
Acquisitions/divestitures	—	%	—	%

	7	%	9	%

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.

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Sales

Sales for the APAC segment increased ~~$166~~$107 million, or ~~12%~~7%, for the ~~first~~second quarter and increased $273 million, or 9%, for the six months ended June 30, 2022 versus the respective 2021 ~~period.~~periods. Volumes increased 6%3% in the quarter and 5% in the year-to-date period driven by ~~increased demand across most end markets, led by~~project start-ups in the electronics and chemicals and energy end markets. Higher pricing contributed 5% to sales in the quarter and ~~project start-ups. Higher price and cost~~4% to sales in the year-to-date period. Cost pass-through ~~both~~ contributed 4% to sales in the ~~quarter. The~~quarter and year-to-date period with minimal impact ~~of cost pass-through~~ on operating ~~profit was minimal.~~profit. Currency translation decreased sales by 2%5% in quarter and 4% in the year-to-date period driven primarily by the weakening of the Australian dollar, ~~and~~ Korean won and Chinese Yuan against the U.S. Dollar.

Operating profit

Operating profit in the APAC segment increased ~~$48~~$37 million, or ~~14%~~10%, in the ~~first~~second quarter and increased $85 million , or 11%, for the six months ended June 30, 2022 versus the respective 2021 ~~period~~periods driven by higher volumes and pricing and continued productivity initiatives which more than offset the impact of inflation during the ~~quarter.~~quarter and year-to-date period.

Engineering


		Quarter Ended March 31,									Quarter Ended June 30,								Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2022			2021			Variance		(Millions of dollars)	2022			2021			Variance		2022			2021			Variance
Sales	Sales	$	728		$	674		8	%	Sales	$	644		$	646		—	%	$	1,372		$	1,320		4	%

Operating profit	Operating profit	$	143		$	109		31	%	Operating profit	$	105		$	108		(3)	%	$	248		$	217		14	%
As a percent of sales	As a percent of sales	19.6		%	16.2		%			As a percent of sales	16.3		%	16.7		%			18.1		%	16.4		%


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~
~~Factors Contributing to Changes - Sales~~
~~Volume~~	13	%


~~Currency~~	~~(5)~~	%


	8	%


	Quarter Ended June 30, 2022 vs. 2021		Six Months Ended June 30, 2022 vs. 2021
	% Change		% Change
Factors Contributing to Changes - Sales
Volume	10	%	11	%


Currency	(10)	%	(7)	%


	—	%	4	%

Sales

Engineering segment sales decreased $2 million in the second quarter and increased ~~$54~~$52 million, or 8%4%, in the ~~first quarter~~six months ended June 30, 2022 as compared to the respective 2021 ~~period~~periods driven primarily by project timing, ~~partially~~ offset by currency impacts which decreased sales by 5%10% in the ~~quarter.~~quarter and 7% in the year-to-date period.

Projects ~~being executed~~ for Russia that are currently ~~or expected to be~~ sanctioned ~~and thus being wound down~~ represent approximately ~~$350~~$300 million and $650 million of the Engineering segment sales during the ~~first~~second quarter ofand six months ended June 30, 2022.

Operating profit

Engineering segment operating profit ~~increased, $34~~decreased, $3 million, or ~~31%~~3%, in the ~~first~~second quarter and increased $31 million, or 14%, for the six months ended June 30, 2022 as compared to the respective 2021 ~~period~~periods driven primarily by project timing.

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Other


		Quarter Ended March 31,									Quarter Ended June 30,								Six Months Ended June 30,
(Millions of dollars)	(Millions of dollars)	2022			2021			Variance		(Millions of dollars)	2022			2021			Variance		2022			2021			Variance
Sales	Sales	$	492		$	494		—	%	Sales	$	500		$	499		—	%	$	992		$	993		—	%

Operating profit (loss)	Operating profit (loss)	$	(44)		$	(18)		(144)	%	Operating profit (loss)	$	11		$	(18)		161	%	$	(33)		$	(36)		8	%
As a percent of sales	As a percent of sales	(8.9)		%	(3.6)		%			As a percent of sales	2.2		%	(3.6)		%			(3.3)		%	(3.6)		%


	~~Quarter Ended March 31, 2022 vs. 2021~~
	~~% Change~~
~~Factors Contributing to Changes - Sales~~
~~Volume/price~~	1	%
~~Cost pass-through~~	1	%
~~Currency~~	~~(2)~~	%
~~Acquisitions/divestitures~~	—	%

	—	%


	Quarter Ended June 30, 2022 vs. 2021		Six Months Ended June 30, 2022 vs. 2021
	% Change		% Change
Factors Contributing to Changes - Sales
Volume/price	6	%	3	%
Cost pass-through	—	%	1	%
Currency	(6)	%	(4)	%
Acquisitions/divestitures	—	%	—	%

	—	%	—	%

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

Sales

Sales for Other ~~decreased $2~~increased $1 million for the ~~first~~second quarter and decreased $1 million for the six months ended June 30, 2022 versus the respective 2021 ~~period.~~periods. Currency translation decreased sales by 2%6% in the ~~quarter.~~quarter and decreased 4% in the year-to-date period. Underlying sales increased 6% in the quarter and 3% for the year-to-date period driven by higher aviation and electronic sales in the coatings business. Cost pass-through increased sales by 1% in the ~~quarter driven by higher pricing partially offset by lower global helium volumes.~~year-to-date period.

Operating profit

Operating profit in Other ~~decreased $26~~increased $29 million, or ~~144%~~161% in the ~~first~~second quarter and increased $3 million, or 8%, in the six months ended June 30, 2022 versus the respective 2021 ~~period,~~periods, due primarily to lower ~~volumes and~~corporate costs in the quarter which were largely offset by higher sourcing costs in the global helium ~~business.~~business in the year-to-date period.

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Currency

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 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 2022 Consolidated Sales		Exchange Rate for Income Statement		Exchange Rate for Balance Sheet			Percentage of YTD 2022 Consolidated Sales		Exchange Rate for Income Statement		Exchange Rate for Balance Sheet
				Year-To-Date Average		March 31,	December 31,				Year-To-Date Average		June 30,	December 31,
Currency	Currency			2022	2021	2022	2021	Currency			2022	2021	2022	2021
Euro	Euro	23	%	0.89	0.83	0.90	0.88	Euro	22	%	0.91	0.83	0.95	0.88
Chinese yuan	Chinese yuan	8	%	6.35	6.48	6.34	6.36	Chinese yuan	8	%	6.47	6.47	6.70	6.36
British pound	British pound	7	%	0.75	0.73	0.76	0.74	British pound	7	%	0.77	0.72	0.82	0.74
Australian dollar	Australian dollar	4	%	1.38	1.29	1.34	1.38	Australian dollar	4	%	1.39	1.30	1.45	1.38
Brazilian real	Brazilian real	4	%	5.22	5.46	4.74	5.58	Brazilian real	4	%	5.06	5.38	5.26	5.58
Canadian dollar	Canadian dollar	3	%	1.27	1.27	1.25	1.26	Canadian dollar	3	%	1.27	1.25	1.29	1.26
Korean won	Korean won	3	%	1,203	1,114	1,212	1,189	Korean won	3	%	1,231	1,117	1,299	1,189
Mexican peso	Mexican peso	2	%	20.50	20.34	19.87	20.53	Mexican peso	2	%	20.26	20.18	20.12	20.53
Indian rupee	Indian rupee	2	%	75.21	72.90	75.79	74.34	Indian rupee	2	%	76.17	73.32	78.98	74.34
South African rand	South African rand	1	%	15.23	14.96	14.61	15.94	South African rand	2	%	15.39	14.53	16.28	15.94
Swedish krona	Swedish krona	1	%	9.34	8.39	9.40	9.05	Swedish krona	1	%	9.58	8.41	10.22	9.05
Thailand bhat	Thailand bhat	1	%	33.04	30.28	33.26	33.40	Thailand bhat	1	%	33.69	30.80	35.30	33.40
Russian ruble		1	%	87.41	74.43	118.69	74.68

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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)	Three months ended March 31,				(Millions of dollars)	Six months ended June 30,
		2022		2021			2022		2021
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)	$	1,210	$	1,017	Net income (including noncontrolling interests)	$	1,620	$	1,893
Non-cash charges (credits):	Non-cash charges (credits):					Non-cash charges (credits):
Add: Depreciation and amortization	Add: Depreciation and amortization	1,112		1,166		Add: Depreciation and amortization	2,203		2,337
Add: Deferred income taxes	Add: Deferred income taxes	(59)		(65)		Add: Deferred income taxes	(221)		(78)
Add: Share-based compensation	Add: Share-based compensation	34		29		Add: Share-based compensation	51		63
Add: Cost reduction programs and other charges, net of payments (a)		(34)		(76)
Add: Russia-Ukraine conflict and other charges, net of payments (a)						Add: Russia-Ukraine conflict and other charges, net of payments (a)	922		95
Net income adjusted for non-cash charges	Net income adjusted for non-cash charges	2,263		2,071		Net income adjusted for non-cash charges	4,575		4,310
Less: Working capital	Less: Working capital	(239)		(42)		Less: Working capital	(497)		(360)

Less: Pension contributions	Less: Pension contributions	(13)		(12)		Less: Pension contributions	(19)		(28)
Other	Other	(11)		92		Other	74		14
Net cash provided by operating activities	Net cash provided by operating activities	$	2,000	$	2,109	Net cash provided by operating activities	$	4,133	$	3,936
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(649)		(762)		Capital expenditures	(1,475)		(1,506)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(43)		(10)		Acquisitions, net of cash acquired	(49)		(31)
Divestitures and asset sales	Divestitures and asset sales	27		21		Divestitures and asset sales	17		77
Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	$	(665)	$	(751)	Net cash provided by (used for) investing activities	$	(1,507)	$	(1,460)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Debt increase (decrease) - net	Debt increase (decrease) - net	2,546		681		Debt increase (decrease) - net	2,760		314
Issuances (purchases) of common stock - net	Issuances (purchases) of common stock - net	(1,709)		(851)		Issuances (purchases) of common stock - net	(3,307)		(2,050)
Cash dividends - Linde plc shareholders	Cash dividends - Linde plc shareholders	(592)		(553)		Cash dividends - Linde plc shareholders	(1,177)		(1,102)
Noncontrolling interest transactions and other	Noncontrolling interest transactions and other	(1)		(247)		Noncontrolling interest transactions and other	(35)		(277)
Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	$	244	$	(970)	Net cash provided by (used for) financing activities	$	(1,759)	$	(3,115)

Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	$	62	$	(46)	Effect of exchange rate changes on cash and cash equivalents	$	(35)	$	22
Cash and cash equivalents, end-of-period	Cash and cash equivalents, end-of-period	$	4,464	$	4,096	Cash and cash equivalents, end-of-period	$	3,655	$	3,137

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

Cash Flow from Operations

Cash provided by operations of ~~$2,000~~$4,133 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 ~~decreased $109~~increased $197 million, or 5%, versus 2021. The ~~decrease~~increase was driven primarily by ~~higher working capital requirements, which more than offset~~ higher net income adjusted for non-cash ~~charges. Cost reduction programs~~charges, partially offset by higher working capital requirements. Russia-Ukraine conflict and other charges were ~~benefits of $4~~$989 million and $8$196 million, respectively, for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021. Related cash outflows were ~~$30~~$67 million and ~~$68~~$101 million for the same respective periods.

Linde estimates that total 2022 required contributions to its pension plans will be in the range of $40 million to $50 million, of which ~~$13~~$19 million has been made through ~~March 31,~~June 30, 2022.

~~Investing~~

~~Net~~As of June 30, 2022, Linde has approximately $1.9 billion recorded in contract liabilities within the condensed consolidated balance sheet related to engineering projects in Russia. Any obligation to satisfy the related residual contract liabilities may have an adverse effect on Linde’s cash used for investing of $665 million for the three months ended March 31, 2022 decreased $86 million versus 2021, primarily driven by lower capital expenditures, partially offset by higher acquisition spend net of cash acquired.flows.

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Investing

Net cash used for investing of $1,507 million for the six months ended June 30, 2022 increased $47 million versus 2021, as higher acquisition spend and lower proceeds from asset disposals and divestitures were largely offset by lower capital expenditures.

Capital expenditures for the ~~three~~six months ended ~~March 31,~~June 30, 2022 were ~~$649~~$1,475 million, ~~$113~~$31 million lower than the prior year.

At ~~March 31,~~June 30, 2022, Linde's sale of gas backlog of large projects under construction was approximately ~~$3.5~~$3.6 billion. This represents the total estimated capital cost of large plants under construction.

Acquisitions for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 were ~~$43~~$49 million and 10$31 million, respectively, and related primarily to acquisitions in EMEA. Divestitures and asset sales for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 were ~~$27~~$17 million and ~~$21~~$77 million, respectively.

Financing

Cash ~~provided~~used by financing activities was ~~$244~~$1,759 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 as compared to cash used for financing activities of ~~$970~~$3,115 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021. Cash provided by debt was ~~$2,546~~$2,760 million versus ~~$681~~$314 million in 2021 driven by higher commercial paper borrowings and debt issuances in 2022. In January 2022, Linde repaid €1.0 billion of 0.250% notes that became due. In March 2022, Linde issued €500 million of 1.000% notes due 2027, €750 million of 1.375% notes due 2031, and €800 million of 1.625% notes due 2035. In May 2022, Linde repaid $500 million of 2.20% notes due in August 2022.

Net purchases of ordinary shares were ~~$1,709~~$3,307 million in 2022 versus ~~$851~~$2,050 million in 2021. On February 28, 2022, the company’s Board of Directors approved the additional repurchase of $10.0 billion of its ordinary shares. For additional information related to the share repurchase programs, see Part II Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Cash dividends of ~~$592~~$1,177 million increased ~~$39~~$75 million from 2021 driven primarily by a 10% increase in quarterly dividends per share from $1.06 per share to $1.17 per share, partially offset by lower shares outstanding. Cash used for Noncontrolling interest transactions and other was $1$35 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 versus cash used of ~~$247~~$277 million for the respective 2021 period due to the 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 ~~$4.5~~$3.7 billion of cash as of ~~March 31,~~June 30, 2022, 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 ~~March 31,~~June 30, 2022. 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.

Legal Proceedings

See Note 9 to the condensed consolidated financial statements.

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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 March 31,					Quarter Ended June 30,					Six Months Ended June 30,
		2022			2021				2022				2021			2022			2021

Adjusted Operating Profit and Operating Margin	Adjusted Operating Profit and Operating Margin							Adjusted Operating Profit and Operating Margin
Reported operating profit	Reported operating profit	$	1,480		$	1,213		Reported operating profit	$	589			$	1,142		$	2,069		$	2,355
Add: Cost reduction programs and other charges		(4)			(8)
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	993				204			989			196

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	429			483			Add: Purchase accounting impacts - Linde AG (c)	406				491			835			974
Total adjustments	Total adjustments	425			475			Total adjustments	1,399				695			1,824			1,170
Adjusted operating profit	Adjusted operating profit	$	1,905		$	1,688		Adjusted operating profit	$	1,988			$	1,837		$	3,893		$	3,525

Reported percentage change	Reported percentage change	22		%	65		%	Reported percentage change	(48)		%		93		%	(12)		%	78		%
Adjusted percentage change	Adjusted percentage change	13		%	25		%	Adjusted percentage change	8		%		39		%	10		%	32		%

Reported sales	Reported sales	$	8,211		$	7,243		Reported sales	$	8,457			$	7,584		$	16,668		$	14,827

Reported operating margin	Reported operating margin	18.0		%	16.7		%	Reported operating margin	7.0		%		15.1		%	12.4		%	15.9		%
Adjusted operating margin	Adjusted operating margin	23.2		%	23.3		%	Adjusted operating margin	23.5		%		24.2		%	23.4		%	23.8		%

Adjusted Depreciation and amortization	Adjusted Depreciation and amortization							Adjusted Depreciation and amortization
Reported depreciation and amortization	Reported depreciation and amortization	$	1,112		$	1,166		Reported depreciation and amortization	$	1,091			$	1,171		$	2,203		$	2,337
Less: Purchase accounting impacts - Linde AG (c)	Less: Purchase accounting impacts - Linde AG (c)	(418)			(478)			Less: Purchase accounting impacts - Linde AG (c)	(401)				(479)			(819)			(957)
Adjusted depreciation and amortization	Adjusted depreciation and amortization	$	694		$	688		Adjusted depreciation and amortization	$	690			$	692		$	1,384		$	1,380

Adjusted Other Income (Expense) - net	Adjusted Other Income (Expense) - net							Adjusted Other Income (Expense) - net
Reported Other Income (Expense) - net	Reported Other Income (Expense) - net	$	12		$	4		Reported Other Income (Expense) - net	$	(36)			$	(17)		$	(24)		$	(13)
Less: Purchase accounting impacts - Linde AG (c)	Less: Purchase accounting impacts - Linde AG (c)	(11)			(5)			Less: Purchase accounting impacts - Linde AG (c)	(5)				(12)			(16)			(17)
Adjusted Other Income (Expense) - net	Adjusted Other Income (Expense) - net	$	23		$	9		Adjusted Other Income (Expense) - net	$	(31)			$	(5)		$	(8)		$	4

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	$	(64)		$	(49)		Reported net pension and OPEB cost (benefit), excluding service cost	$	(62)			$	(49)		$	(126)		$	(98)
Add: Pension settlement charges	Add: Pension settlement charges	—			—			Add: Pension settlement charges	—				—			—			—
Adjusted Net Pension and OPEB cost (benefit), excluding service costs	Adjusted Net Pension and OPEB cost (benefit), excluding service costs	$	(64)		$	(49)		Adjusted Net Pension and OPEB cost (benefit), excluding service costs	$	(62)			$	(49)		$	(126)		$	(98)

Adjusted Interest Expense - Net	Adjusted Interest Expense - Net							Adjusted Interest Expense - Net
Reported interest expense - net	Reported interest expense - net	$	9		$	20		Reported interest expense - net	$	5			$	18		$	14		$	38
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	10			18			Add: Purchase accounting impacts - Linde AG (c)	9				15			19			33

Adjusted interest expense - net	Adjusted interest expense - net	$	19		$	38		Adjusted interest expense - net	$	14			$	33		$	33		$	71

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Adjusted Income Taxes (a)	Adjusted Income Taxes (a)							Adjusted Income Taxes (a)
Reported income taxes	Reported income taxes	$	369		$	268		Reported income taxes	$	286		$	334		$	655		$	602
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	108			118			Add: Purchase accounting impacts - Linde AG (c)	108			116			216			234
Add: Pension settlement charges	Add: Pension settlement charges	—			—			Add: Pension settlement charges	—			—			—			—
Add: Cost reduction programs and other charges		(3)			20
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	104			6			101			26

Total adjustments	Total adjustments	105			138			Total adjustments	212			122			317			260
Adjusted income taxes	Adjusted income taxes	$	474		$	406		Adjusted income taxes	$	498		$	456		$	972		$	862

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	$	1,535		$	1,242		Reported income before income taxes and equity investments	$	646		$	1,173		$	2,181		$	2,415
Add: Pension settlement charge	Add: Pension settlement charge	—			—			Add: Pension settlement charge	—			—			—			—
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	419			465			Add: Purchase accounting impacts - Linde AG (c)	397			476			816			941
Add: Cost reduction programs and other charges		(4)			(8)
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	993			204			989			196

Total adjustments	Total adjustments	415			457			Total adjustments	1,390			680			1,805			1,137
Adjusted income before income taxes and equity investments	Adjusted income before income taxes and equity investments	$	1,950		$	1,699		Adjusted income before income taxes and equity investments	$	2,036		$	1,853		$	3,986		$	3,552

Reported Income taxes	Reported Income taxes	$	369		$	268		Reported Income taxes	$	286		$	334		$	655		$	602
Reported effective tax rate	Reported effective tax rate	24.0		%	21.6		%	Reported effective tax rate	44.3		%	28.5		%	30.0		%	24.9		%

Adjusted income taxes	Adjusted income taxes	$	474		$	406		Adjusted income taxes	$	498		$	456		$	972		$	862
Adjusted effective tax rate	Adjusted effective tax rate	24.3		%	23.9		%	Adjusted effective tax rate	24.5		%	24.6		%	24.4		%	24.3		%

Income from Equity Investments	Income from Equity Investments							Income from Equity Investments
Reported income from equity investments	Reported income from equity investments	$	44		$	43		Reported income from equity investments	$	50		$	37		$	94		$	80
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	20			19			Add: Purchase accounting impacts - Linde AG (c)	—			—			—			—
Add: Cost reduction programs and other charges (e)		—			—
Add: Russia-Ukraine conflict and other charges (e)								Add: Russia-Ukraine conflict and other charges (e)	19			19			39			38
Adjusted income from equity investments	Adjusted income from equity investments	$	64		$	62		Adjusted income from equity investments	$	69		$	56		$	133		$	118

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	$	(36)		$	(38)		Reported noncontrolling interests from continuing operations	$	(38)		$	(36)		$	(74)		$	(74)

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	(4)			(5)			Add: Purchase accounting impacts - Linde AG (c)	(3)			(2)			(7)			(7)

Adjusted noncontrolling interests from continuing operations	Adjusted noncontrolling interests from continuing operations	$	(40)		$	(43)		Adjusted noncontrolling interests from continuing operations	$	(41)		$	(38)		$	(81)		$	(81)

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	$	1,174		$	979		Reported income from continuing operations	$	372		$	840		$	1,546		$	1,819
Add: Pension settlement charge	Add: Pension settlement charge	—			—			Add: Pension settlement charge	—			—			—			—
Add: Cost reduction programs and other charges		(1)			(28)
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	889			198			888			170

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	327			361			Add: Purchase accounting impacts - Linde AG (c)	305			377			632			738
Total adjustments	Total adjustments	326			333			Total adjustments	1,194			575			1,520			908
Adjusted income from continuing operations	Adjusted income from continuing operations	$	1,500		$	1,312		Adjusted income from continuing operations	$	1,566		$	1,415		$	3,066		$	2,727

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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	$	2.30		$	1.86		Reported diluted EPS from continuing operations	$	0.74		$	1.60		$	3.04		$	3.46
Add: Pension settlement charge	Add: Pension settlement charge	—			—			Add: Pension settlement charge	—			—			—			—
Add: Cost reduction programs and other charges		—			(0.05)
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	1.76			0.38			1.75			0.32

Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	0.63			0.68			Add: Purchase accounting impacts - Linde AG (c)	0.60			0.72			1.24			1.41
Total adjustments	Total adjustments	0.63			0.63			Total adjustments	2.36			1.10			2.99			1.73
Adjusted diluted EPS from continuing operations	Adjusted diluted EPS from continuing operations	$	2.93		$	2.49		Adjusted diluted EPS from continuing operations	$	3.10		$	2.70		$	6.03		$	5.19

Reported percentage change	Reported percentage change	24		%	74		%	Reported percentage change	(54)		%	84		%	(12)		%	79		%
Adjusted percentage change	Adjusted percentage change	18		%	32		%	Adjusted percentage change	15		%	42		%	16		%	37		%

Adjusted EBITDA and % of Sales	Adjusted EBITDA and % of Sales							Adjusted EBITDA and % of Sales
Income from continuing operations	Income from continuing operations	$	1,174		$	979		Income from continuing operations	$	372		$	840		$	1,546		$	1,819
Add: Noncontrolling interests related to continuing operations	Add: Noncontrolling interests related to continuing operations	36			38			Add: Noncontrolling interests related to continuing operations	38			36			74			74
Add: Net pension and OPEB cost (benefit), excluding service cost	Add: Net pension and OPEB cost (benefit), excluding service cost	(64)			(49)			Add: Net pension and OPEB cost (benefit), excluding service cost	(62)			(49)			(126)			(98)
Add: Interest expense	Add: Interest expense	9			20			Add: Interest expense	5			18			14			38
Add: Income taxes	Add: Income taxes	369			268			Add: Income taxes	286			334			655			602
Add: Depreciation and amortization	Add: Depreciation and amortization	1,112			1,166			Add: Depreciation and amortization	1,091			1,171			2,203			2,337
EBITDA from continuing operations	EBITDA from continuing operations	$	2,636		$	2,422		EBITDA from continuing operations	$	1,730		$	2,350		$	4,366		$	4,772
Add: Cost reduction programs and other charges		(4)			(8)
Add: Russia-Ukraine conflict and other charges								Add: Russia-Ukraine conflict and other charges	993			204			989			196
Add: Purchase accounting impacts - Linde AG (c)	Add: Purchase accounting impacts - Linde AG (c)	31			24			Add: Purchase accounting impacts - Linde AG (c)	23			31			54			55
Total adjustments	Total adjustments	27			16			Total adjustments	1,016			235			1,043			251
Adjusted EBITDA from continuing operations	Adjusted EBITDA from continuing operations	$	2,663		$	2,438		Adjusted EBITDA from continuing operations	$	2,746		$	2,585		$	5,409		$	5,023

Reported sales	Reported sales	$	8,211		$	7,243		Reported sales	$	8,457		$	7,584		$	16,668		$	14,827
% of sales	% of sales							% of sales
EBITDA from continuing operations	EBITDA from continuing operations	32.1		%	33.4		%	EBITDA from continuing operations	20.5		%	31.0		%	26.2		%	32.2		%
Adjusted EBITDA from continuing operations	Adjusted EBITDA from continuing operations	32.4		%	33.7		%	Adjusted EBITDA from continuing operations	32.5		%	34.1		%	32.5		%	33.9		%

(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 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 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.

(e) Impairment charge related to a joint venture in the APAC segment.

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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.


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
(Millions of dollars)	(Millions of dollars)					(Millions of dollars)
Debt	Debt	$	16,456	$	14,207	Debt	$	16,043	$	14,207
Less: cash and cash equivalents	Less: cash and cash equivalents	(4,464)		(2,823)		Less: cash and cash equivalents	(3,655)		(2,823)
Net debt	Net debt	11,992		11,384		Net debt	12,388		11,384
Less: purchase accounting impacts - Linde AG	Less: purchase accounting impacts - Linde AG	(50)		(61)		Less: purchase accounting impacts - Linde AG	(38)		(61)
Adjusted net debt	Adjusted net debt	$	11,942	$	11,323	Adjusted net debt	$	12,350	$	11,323

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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 Linde Inc and/or Linde GmbH. Linde plc may provide guarantees of debt securities offered by its wholly owned subsidiaries Linde Inc. or Linde Finance under the Registration Statement.

Linde Inc. is a wholly owned subsidiary of Linde plc. Linde Inc. may offer debt securities under the Registration Statement. Debt securities of Linde Inc. will be guaranteed by Linde plc, and such guarantees by Linde plc may be guaranteed by Linde GmbH. 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 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 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 Linde Inc. and Linde Finance notes, and Linde GmbH and 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 following tables present summarized financial information for Linde plc, 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.

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(Millions of dollars)	(Millions of dollars)					(Millions of dollars)
Statement of Income Data	Statement of Income Data	Three Months Ended March 31, 2022		Twelve Months Ended December 31, 2021		Statement of Income Data	Six Months Ended June 30, 2022		Twelve Months Ended December 31, 2021
Sales	Sales	$	2,121	$	7,767	Sales	$	4,373	$	7,767
Operating profit	Operating profit	293		973		Operating profit	300		973
Net income	Net income	192		721		Net income	75		721
Transactions with non-guarantor subsidiaries	Transactions with non-guarantor subsidiaries	364		2,067		Transactions with non-guarantor subsidiaries	721		2,067

Balance Sheet Data (at period end)	Balance Sheet Data (at period end)					Balance Sheet Data (at period end)
Current assets (a)	Current assets (a)	$	7,158	$	5,826	Current assets (a)	$	7,607	$	5,826
Long-term assets (b)	Long-term assets (b)	14,501		15,928		Long-term assets (b)	13,849		15,928
Current liabilities (c)	Current liabilities (c)	9,752		8,853		Current liabilities (c)	10,846		8,853
Long-term liabilities (d)	Long-term liabilities (d)	43,200		42,860		Long-term liabilities (d)	43,887		42,860

(a) From current assets above, amount due from non-guarantor subsidiaries	(a) From current assets above, amount due from non-guarantor subsidiaries	$	4,362	$	4,209	(a) From current assets above, amount due from non-guarantor subsidiaries	$	4,974	$	4,209
(b) From long-term assets above, amount due from non-guarantor subsidiaries	(b) From long-term assets above, amount due from non-guarantor subsidiaries	2,070		3,257		(b) From long-term assets above, amount due from non-guarantor subsidiaries	1,872		3,257
(c) From current liabilities above, amount due to non-guarantor subsidiaries	(c) From current liabilities above, amount due to non-guarantor subsidiaries	1,362		1,304		(c) From current liabilities above, amount due to non-guarantor subsidiaries	1,498		1,304
(d) From long-term liabilities above, amount due to non-guarantor subsidiaries	(d) From long-term liabilities above, amount due to non-guarantor subsidiaries	27,226		28,142		(d) From long-term liabilities above, amount due to non-guarantor subsidiaries	29,453		28,142

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Refer to Item 7A. to Part II of Linde's 2021 Annual Report on Form 10-K for discussion.

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.

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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, 2021.

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 ~~March 31,~~June 30, 2022 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 (1,2)
(Thousands)
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Program (1)
(Millions)
January 2022 1,005 $ 325.25 1,005 $ 168
February 2022 554 $ 303.26 554 $ —
March 2022 4,270 $ 294.39 4,270 $ 8,743
First Quarter 2022 5,829 $ 300.57 5,829 $ 8,743


Period	Total Number of Shares Purchased (Thousands)	Average Price Paid Per Share		Total Numbers of Shares Purchased as Part of Publicly Announced Program (1,2) (Thousands)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (1) (Millions)
April 2022	1,535	$	316.40	1,535	$	8,257
May 2022	2,196	$	310.10	2,196	$	7,576
June 2022	1,323	$	305.97	1,323	$	7,171
Second Quarter 2022	5,054	$	310.93	5,054	$	7,171

(1) 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, expires on July 31, 2023, and was fully utilized as of February 28, 2022.

~~(2)~~ On February 28, 2022, the company's board of directors approved the repurchase of $10.0 billion of its ordinary shares ("2022 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 2022 program has a maximum repurchase amount of 15% of outstanding shares, began on March 1, 2022 and expires on July 31, 2024.

As of ~~March 31,~~June 30, 2022, the company repurchased ~~$495 million and $1.3~~$2.8 billion of its ordinary shares pursuant to the ~~2021 and~~ 2022 ~~programs, respectively.~~program. As of ~~March 31,~~June 30, 2022, ~~$8.7~~$7.2 billion of share repurchases remain authorized under the 2022 program.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

(a)

Exhibits

~~4.1~~

~~Final Terms of 1.000% Notes due 2027 of Linde plc (Filed as Exhibit 4.1 to Linde plc 's current report on Form 8-K, dated March 31, 2022, Filing No. 1-38730, and incorporated herein by reference).~~

~~4.2~~

~~Final Terms of 1.375% Notes due 2031 of Linde plc (Filed as Exhibit 4.2 to Linde plc 's current report on Form 8-K, dated March 31, 2022, Filing No. 1-38730, and incorporated herein by reference).~~

~~4.3~~

~~Final Terms of 1.625% Notes due 2035 of Linde plc (Filed as Exhibit 4.3 to Linde plc 's current report on Form 8-K, dated March 31, 2022, Filing No. 1-38730, and incorporated herein by reference).~~

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.

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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: ~~May 2,~~July 28, 2022						By: /s/ Kelcey E. Hoyt

						Kelcey E. Hoyt
						Chief Accounting Officer

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Note 1. Summary of Significant Accounting Policies			911

Note 2. ~~Cost Reduction Programs~~Russia-Ukraine Conflict and Other Charges			911

Note 3. Supplemental Information			1013

Note 4. Debt			1114

Note 5. Financial Instruments			1314

Note 6. Fair Value Disclosures			1516

Note 7. Earnings Per Share – Linde plc Shareholders			1617

Note 8. Retirement Programs			1718

Note 9. Commitments and Contingencies			1718

Note 10. Segments			1819

Note 11. Equity			2021

Note 12. Revenue Recognition			2022

Note 13. Subsequent Events			2325