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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, 20202021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to
Commission file number001-38730
LINDE PLC
(Exact name of registrant as specified in its charter)
Ireland98-1448883
(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.)
The Priestley Centre
10 Priestley Road,
Surrey Research Park,
Guildford,Surrey GU2 7XY
United Kingdom
(Address of principal executive offices) (Zip Code)
+441483 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 classTrading symbol(s)Name of each exchange on which registered
Ordinary shares (€0.001 nominal value per share)LINNew York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-TRegulation 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 filerAccelerated filer
Non-accelerated filerSmaller 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 April 30, 2020, 525,185,319March 31, 2021, 520,208,493 ordinary shares (€0.001 par value) of the Registrant were outstanding.

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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: that Linde plc may be unable to achieve expected synergies from the business combination of Praxair and Linde AG or that it may take longer or be more costly than expected to achieve those synergies; the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances, including trade conflicts and tariffs; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics, pandemics such as COVID-19, and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from accounting principles generally accepted in the United States of America, International Financial Reporting Standards or adjusted projections, estimates or other forward-looking statements.

Linde plc assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A. Risk Factors in Linde plc’s Form 10-K for the fiscal year ended December 31, 20192020 filed with the SEC on March 2, 2020 and in Item 1A. of this report1, 2021, 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,
 20212020
Sales$7,243 $6,739 
Cost of sales, exclusive of depreciation and amortization4,054 3,843 
Selling, general and administrative787 861 
Depreciation and amortization1,166 1,142 
Research and development35 44 
Cost reduction programs and other charges(8)131 
Other income (expense) - net15 
Operating Profit1,213 733 
Interest expense - net20 24 
Net pension and OPEB cost (benefit), excluding service cost(49)(45)
Income From Continuing Operations Before Income Taxes and Equity Investments1,242 754 
Income taxes on continuing operations268 165 
Income From Continuing Operations Before Equity Investments974 589 
Income from equity investments43 17 
Income From Continuing Operations (Including Noncontrolling Interests)1,017 606 
Income from discontinued operations, net of tax
Net Income (Including Noncontrolling Interests)1,018 608 
Less: noncontrolling interests from continuing operations(38)(35)
Less: noncontrolling interest from discontinued operations
Net Income – Linde plc$980 $573 
Net Income – Linde plc
Income from continuing operations$979 $571 
Income from discontinued operations$$
Per Share Data – Linde plc Shareholders
Basic earnings per share from continuing operations$1.87 $1.07 
Basic earnings per share from discontinued operations
Basic earnings per share$1.87 $1.07 
Diluted earnings per share from continuing operations$1.86 $1.07 
Diluted earnings per share from discontinued operations
Diluted earnings per share$1.86 $1.07 
Weighted Average Shares Outstanding (000’s):
Basic shares outstanding522,459 531,215 
Diluted shares outstanding526,927 534,956 
 Quarter Ended March 31,
 2020 2019
Sales$6,739
 $6,944
Cost of sales, exclusive of depreciation and amortization3,843
 4,116
Selling, general and administrative861
 879
Depreciation and amortization1,142
 1,223
Research and development44
 46
Cost reduction programs and other charges131
 89
Other income (expense) - net15
 18
Operating Profit733
 609
Interest expense - net24
 23
Net pension and OPEB cost (benefit), excluding service cost(45) 15
Income From Continuing Operations Before Income Taxes and Equity Investments754
 571
Income taxes on continuing operations165
 140
Income From Continuing Operations Before Equity Investments589
 431
Income from equity investments17
 34
Income From Continuing Operations (Including Noncontrolling Interests)606
 465
Income from discontinued operations, net of tax2
 89
Net Income (Including Noncontrolling Interests)608
 554
Less: noncontrolling interests from continuing operations(35) (30)
Less: noncontrolling interest from discontinued operations
 (7)
Net Income – Linde plc$573
 $517
    
Net Income – Linde plc   
Income from continuing operations$571
 $435
Income from discontinued operations$2
 $82
    
Per Share Data – Linde plc Shareholders   
Basic earnings per share from continuing operations$1.07
 $0.80
Basic earnings per share from discontinued operations
 0.15
Basic earnings per share$1.07
 $0.95
Diluted earnings per share from continuing operations$1.07
 $0.79
Diluted earnings per share from discontinued operations
 0.15
Diluted earnings per share$1.07
 $0.94
    
Weighted Average Shares Outstanding (000’s):   
Basic shares outstanding531,215
 545,554
Diluted shares outstanding534,956
 549,147

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,
 20212020
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)$1,018 $608 
OTHER COMPREHENSIVE INCOME (LOSS)
Translation adjustments:
Foreign currency translation adjustments(657)(2,740)
Reclassification to net income (Note 13)(52)
Income taxes(6)25 
Translation adjustments(715)(2,715)
Funded status - retirement obligations (Note 8):
Retirement program remeasurements20 58 
Reclassifications to net income43 22 
Income taxes(23)(15)
Funded status - retirement obligations40 65 
Derivative instruments (Note 5):
Current unrealized gain (loss)21 (65)
Reclassifications to net income(2)24 
Income taxes(5)11 
Derivative instruments14 (30)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)(661)(2,680)
COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)357 (2,072)
Less: noncontrolling interests(32)71 
COMPREHENSIVE INCOME (LOSS) - LINDE PLC$325 $(2,001)
 Quarter Ended March 31,
 2020 2019
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)$608
 $554
    
OTHER COMPREHENSIVE INCOME (LOSS)   
Translation adjustments:   
Foreign currency translation adjustments(2,740) 123
Reclassification to net income
 12
Income taxes25
 (3)
Translation adjustments(2,715) 132
Funded status - retirement obligations (Note 8):   
Retirement program remeasurements58
 (2)
Reclassifications to net income22
 64
Income taxes(15) (18)
Funded status - retirement obligations65
 44
Derivative instruments (Note 5):   
Current unrealized gain (loss)(65) (17)
Reclassifications to net income24
 
Income taxes11
 3
Derivative instruments(30) (14)
   Securities:   
Current unrealized gain (loss)
 (8)
Reclassifications to net income
 
Income taxes
 
Securities
 (8)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)(2,680) 154
    
COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)(2,072) 708
Less: noncontrolling interests71
 30
COMPREHENSIVE INCOME (LOSS) - LINDE PLC$(2,001) $738

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, 2021December 31, 2020
Assets
Cash and cash equivalents$4,096 $3,754 
Accounts receivable - net4,139 4,167 
Contract assets137 162 
Inventories1,695 1,729 
Prepaid and other current assets1,065 1,112 
Total Current Assets11,132 10,924 
Property, plant and equipment - net26,934 28,711 
Goodwill27,472 28,201 
Other intangible assets - net14,559 16,184 
Other long-term assets4,896 4,209 
Total Assets$84,993 $88,229 
Liabilities and equity
Accounts payable$2,945 $3,095 
Short-term debt3,276 3,251 
Current portion of long-term debt2,524 751 
Contract liabilities1,863 1,769 
Other current liabilities4,419 4,874 
Total Current Liabilities15,027 13,740 
Long-term debt9,950 12,152 
Other long-term liabilities12,383 12,755 
Total Liabilities37,360 38,647 
Redeemable noncontrolling interests13 13 
Linde plc Shareholders’ Equity:
Ordinary shares,€0.001 par value, authorized 1,750,000,000 shares, 2021 issued: 552,012,862 ordinary shares; 2020 issued: 552,012,862 ordinary shares
Additional paid-in capital40,192 40,202 
Retained earnings17,563 17,178 
Accumulated other comprehensive income (loss) (Note 11)(5,345)(4,690)
Less: Treasury shares, at cost (2021 – 31,804,369 shares and 2020 – 28,718,333 shares)(6,201)(5,374)
Total Linde plc Shareholders’ Equity46,210 47,317 
Noncontrolling interests1,410 2,252 
Total Equity47,620 49,569 
Total Liabilities and Equity$84,993 $88,229 
 March 31, 2020 December 31, 2019
Assets   
Cash and cash equivalents$4,014
 $2,700
Accounts receivable - net4,084
 4,322
Contract assets311
 368
Inventories1,689
 1,697
Assets held for sale160
 125
Prepaid and other current assets1,255
 1,140
Total Current Assets11,513
 10,352
Property, plant and equipment - net27,418
 29,064
Goodwill26,073
 27,019
Other intangible assets - net15,339
 16,137
Other long-term assets4,026
 4,040
Total Assets$84,369
 $86,612
Liabilities and equity   
Accounts payable$2,965
 $3,266
Short-term debt4,848
 1,732
Current portion of long-term debt2,006
 1,531
Contract liabilities1,854
 1,758
Liabilities of assets held for sale45
 2
Other current liabilities3,772
 3,871
Total Current Liabilities15,490
 12,160
Long-term debt10,021
 10,693
Other long-term liabilities11,615
 12,124
Total Liabilities37,126
 34,977
Redeemable noncontrolling interests92
 113
Linde plc Shareholders’ Equity:   
Ordinary shares, €0.001 par value, authorized 1,750,000,000 shares, 2020 issued: 552,012,862 ordinary shares; 2019 issued: 552,012,862 ordinary shares1
 1
Additional paid-in capital40,185
 40,201
Retained earnings16,850
 16,842
Accumulated other comprehensive income (loss) (Note 11)(7,388) (4,814)
Less: Treasury stock, at cost (2020 – 26,845,143 shares and 2019 – 17,632,318 shares)(4,872) (3,156)
Total Linde plc Shareholders’ Equity44,776
 49,074
Noncontrolling interests2,375
 2,448
Total Equity47,151
 51,522
Total Liabilities and Equity$84,369
 $86,612

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,Three Months Ended March 31,
2020 201920212020
Increase (Decrease) in Cash and Cash Equivalents   Increase (Decrease) in Cash and Cash Equivalents
Operations   Operations
Net income - Linde plc$573
 $517
Net income - Linde plc$980 $573 
Less: Income from discontinued operations, net of tax and noncontrolling interests(2) (82)Less: Income from discontinued operations, net of tax and noncontrolling interests(1)(2)
Add: Noncontrolling interests from continuing operations35
 30
Add: Noncontrolling interests from continuing operations38 35 
Income from continuing operations (including noncontrolling interests)606
 465
Income from continuing operations (including noncontrolling interests)1,017 606 
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 payments40
 (167)Cost reduction programs and other charges, net of payments(76)40 
Amortization of merger-related inventory step-up
 10
Depreciation and amortization1,142
 1,223
Depreciation and amortization1,166 1,142 
Deferred income taxes(107) (14)Deferred income taxes(65)(107)
Share-based compensation43
 16
Share-based compensation29 43 
Working capital:   Working capital:
Accounts receivable(109) (56)Accounts receivable(178)(109)
Inventory(62) (32)Inventory(60)(62)
Prepaid and other current assets(92) (79)Prepaid and other current assets(64)(92)
Payables and accruals(183) (31)Payables and accruals69 (183)
Contract assets and liabilities, net176
 (84) Contract assets and liabilities, net191 176 
Pension contributions(17) (18)Pension contributions(12)(17)
Long-term assets, liabilities and other(90) (165)Long-term assets, liabilities and other92 (90)
Net cash provided by operating activities1,347
 1,068
Net cash provided by operating activities2,109 1,347 
Investing   Investing
Capital expenditures(803) (843)Capital expenditures(762)(803)
Acquisitions, net of cash acquired(41) (152)Acquisitions, net of cash acquired(10)(41)
Divestitures and asset sales, net of cash divested231
 3,455
Divestitures and asset sales, net of cash divested21 231 
Net cash provided by (used for) investing activities(613) 2,460
Net cash provided by (used for) investing activities(751)(613)
Financing   Financing
Short-term debt borrowings (repayments) - net3,149
 (533)Short-term debt borrowings (repayments) - net704 3,149 
Long-term debt borrowings16
 22
Long-term debt borrowings34 16 
Long-term debt repayments(53) (516)Long-term debt repayments(57)(53)
Issuances of ordinary shares13
 28
Issuances of ordinary shares17 13 
Purchases of ordinary shares(1,828) (725)Purchases of ordinary shares(868)(1,828)
Cash dividends - Linde plc shareholders(511) (477)Cash dividends - Linde plc shareholders(553)(511)
Noncontrolling interest transactions and other(27) (10)Noncontrolling interest transactions and other(247)(27)
Net cash provided by (used for) financing activities759
 (2,211)Net cash provided by (used for) financing activities(970)759 
Discontinued Operations   
Cash provided by operating activities
 63
Cash used for investing activities
 (58)
Cash provided by financing activities
 5
Net cash provided by discontinued operations
 10
Effect of exchange rate changes on cash and cash equivalents(179) 8
Effect of exchange rate changes on cash and cash equivalents(46)(179)
Change in cash and cash equivalents1,314
 1,335
Change in cash and cash equivalents342 1,314 
Cash and cash equivalents, beginning-of-period2,700
 4,466
Cash and cash equivalents, beginning-of-period3,754 2,700 
Cash and cash equivalents, including discontinued operations4,014
 5,801
Cash and cash equivalents of discontinued operations
 (10)
Cash and cash equivalents, end-of-period$4,014
 $5,791
Cash and cash equivalents, end-of-period$4,096 $4,014 
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 20192020 Annual Report on Form 10-K. There have been no material changes to the company’s significant accounting policies during 2020.2021.
Accounting Standards Implemented in 20202021

Income Taxes - Simplifying the Accounting for Income Taxes - In December 2019, the FASB issued guidance which simplifies the accounting for income taxes by removing several exceptions in the current standard and adds guidance to reduce complexity in certain areas, such as requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, evaluating whether a step-up in tax basis of goodwill relates to a business combination or a separate transaction and allocating taxes to members of a consolidated group. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The adoption of this standard did not materially impact the company's consolidated financial statements.

Credit Losses on Financial Instruments –In June 2016, the FASB issued updated guidance on the measurement of credit losses. The guidance introduces a new accounting model for expected credit losses on financial instruments, including trade receivables, based on estimates of current expected credit losses. This guidance is effective for the company beginning in the first quarter 2020 and requires companies to apply the change in accounting on a modified retrospective basis. The adoption of the guidance had an immaterial impact on the consolidated financial statements.
Simplifying the Test for Goodwill Impairment – In January 2017, the FASB issued updated guidance on the measurement of goodwill. The new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. The guidance is effective for the company beginning in the first quarter 2020. The adoption of the guidance had no impact on the consolidated financial statements.
Fair Value Measurement Disclosures - In August 2018, the FASB issued guidance that modifies the disclosure requirements for fair value measurements. The guidance is effective in fiscal year 2020, with early adoption permitted. Certain amendments must be applied prospectively while other amendments must be applied retrospectively. The adoption of the guidance had an immaterial impact on the consolidated financial statements.

Accounting Standards to be Implemented

Retirement Benefit Disclosures
Reference Rate Reform - In March 2020, the FASB issued guidance related to reference rate reform which provides practical expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions that the reference London Interbank Offered Rate (“LIBOR”) and other interbank offered rates. This update is applicable to our contracts and hedging relationships that reference LIBOR and other interbank offered rates. The amendments may be applied to impacted contracts and hedges prospectively through December 31, 2022. We are currently evaluating the impact of this guidance on our consolidated financial statements.

- In August 2018, the FASB issued guidance that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. The guidance is effective in fiscal year 2021, with early adoption permitted, and must be applied on a retrospective basis. The company is evaluating the impact this guidance will have on the disclosures in the notes to the consolidated financial statements.

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

Other Developments

Linde has been actively monitoring the COVID-19 situation and its impact globally. Our priority has been the safety of our employees and the needs of our customers. The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations, and cancellation of physical participation in meetings and events), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, suppliers and other stakeholders. The ultimate magnitude of COVID-19, including the extent of its impact on the Company’s operational results, which could be material, will be determined by the length of time that such circumstances continue, measures taken to prevent its spread, its effect on the supply chain and the demand for the Company’s products and services, as well as the effect of governmental and public actions taken in response.
2. Cost Reduction Programs and Other Charges

20202021 Charges

Cost reduction programs and other charges were $131a benefit of $8 million for the three months ended March 31, 2020 ($952021 (benefit of $28 million, after tax). The following table summarizes the activities related to the company's cost reduction charges for the three months ended March 31, 2020:2021:
Quarter Ended March 31, 2021
(millions of dollars)Severance costsOther cost reduction chargesTotal cost reduction program related chargesMerger-related and other chargesTotal
Americas$$$$$
EMEA13 20 20 
APAC(53)(49)
Engineering
Other
Total$26 $18 $44 $(52)$(8)



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 Quarter Ended March 31, 2020
(millions of dollars)Severance costs Other cost reduction charges Total cost reduction program related charges Merger-related and other charges Total
Americas$6
 $15
 $21
 $
 $21
EMEA26
 
 26
 3
 29
APAC2
 2
 4
 8
 12
Engineering14
 
 14
 1
 15
Other10
 3
 13
 41
 54
Total$58
 $20
 $78
 $53
 $131

Cost Reduction Programs

Total cost reduction program related charges were $78$44 million for the three months ended March 31, 20202021 ($5634 million, after tax).

Severance costs

Severance costs of $58were $26 million for the three months ended March 31, 2020 are for2021. As of March 31, 2021, the elimination of approximately 600 positions, largely in the EMEA and Engineering segments, of which approximately 450 have terminated employment. The majority of thesethe actions arehave been taken, with the remaining actions anticipated to be completed by 2021.the end of the fiscal year.

Other cost reduction charges

Other cost reduction charges of $20$18 million for the three months ended March 31, 20202021 are primarily charges related to the execution of the company's synergistic actions including location consolidations and business rationalization projects, software and process harmonization, and associated non-recurring costs.

Merger-related Costs and Other Charges

Linde incurred merger-relatedMerger-related costs and other charges which totaled $53were a benefit of $52 million ($39(benefit of $62 million, after tax) for the three months ended March 31, 2020.2021, primarily due to a $52 million gain triggered by a joint venture deconsolidation in the APAC segment (see Note 13), and other tax adjustments.

Cash Requirements

The total cash requirements of the cost reduction program and other charges during the three months ended March 31, 20202021 are estimated to be approximately $74 million.approximately $24 million and are expected to be paid through 2022. Total cost reduction programs and other charges, net of payments in the condensed consolidated statements of cash flows for the three months ended March 31, 20202021 also reflects the impact of cash payments of liabilities, including merger-related tax liabilities, accrued as of December 31, 2019.2020.

The following table summarizes the activities related to the company's cost reduction related charges for the three months ended March 31, 2020:2021:
(millions of dollars)Severance costsOther cost reduction chargesTotal cost reduction program related chargesMerger-related and other chargesTotal
Balance, December 31, 2020$283 $22 $305 $64 $369 
2021 Cost Reduction Programs and Other Charges26 18 44 (52)(8)
Less: Cash payments(54)(1)(55)(4)(59)
Less: Non-cash charges / benefits(13)(13)52 39 
Foreign currency translation and other(4)(4)(3)(7)
Balance, March 31, 2021$251 $26 $277 $57 $334 
(millions of dollars)Severance costs Other cost reduction charges Total cost reduction program related charges Merger-related and other charges Total
Balance, December 31, 2019$117
 $16
 $133
 $67
 $200
2020 Cost Reduction Programs and Other Charges58
 20
 78
 53
 131
Less: Cash payments(24) (4) (28) (36) (64)
Less: Non-cash charges
 (15) (15) (39) (54)
Foreign currency translation and other(1) 
 (1) (2) (3)
Balance, March 31, 2020$150
 $17
 $167
 $43
 $210



20192020 Charges


Cost reduction programs and other charges were $89$131 million for the quarterthree months ended March 31, 20192020 ($8195 million, after taxtax). Total cost reduction program related charges were $78 million ($56 million, after tax), which consisted primarily of severance charges of $58 million, largely in the EMEA and noncontrolling interests), including merger-related costs of $56Engineering segments. Merger-related and other charges were $53 million ($5339 million, after-tax) and synergy-related charges, primarily severance, of $33 million ($28 million after-tax)after tax).

Classification in the condensed consolidated financial statements

The costs are shown within operating profit in a separate line item on the consolidated statements of income. On the condensed consolidated statementstatements 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
For trade receivables an expected credit loss approach was adopted as of January 1, 2020. Linde applies loss rates that are lifetime expected credit losses at initial recognition of the receivables. These expected loss rates are based on an analysis of the actual historical default rates based on 2 years for each business, taking regional circumstances into account. If necessary, these historical default rates are adjusted to reflect the impact of current changes in the macroeconomic environment using forward-looking information. The loss rates are also critically evaluated based on the expectations of the responsible management team regarding the collectability of the receivables. Gross trade receivables aged less than one year were $4,177$4,125 million and $4,390$4,169 million at March 31, 20202021 and December 31, 20192020 respectively and gross receivables aged greater than one year were $261$338 million and $249$358 million at March 31, 20202021 and December 31, 20192020 respectively. Other receivables were $122 million and $111 million at March 31, 2021 and December 31, 2020, respectively. Receivables aged greater than one year are generally fully reserved unless specific circumstances warrant exceptions.exceptions, such as those backed by federal governments.
Trade receivablesAccounts receivable net of reserves were $4,084$4,139 million at March 31, 20202021 and $4,322$4,167 million at December 31, 2019.2020. Allowances for expected credit losses were $363$446 million at March 31, 20202021 and $306$471 million at December 31, 2019.2020.  Provisions for expected credit losses were $46$39 million and $56$46 million for the three months ended March 31, 20202021 and 2019,2020, respectively. The allowance activity in the three months ended March 31, 20202021 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)March 31,
2020
 December 31,
2019
Inventories   
Raw materials and supplies$374
 $396
Work in process338
 331
Finished goods977
 970
Total inventories$1,689
 $1,697



(Millions of dollars)March 31,
2021
December 31,
2020
Inventories
Raw materials and supplies$364 $411 
Work in process347 337 
Finished goods984 981 
Total inventories$1,695 $1,729 
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4. Debt
The following is a summary of Linde's outstanding debt at March 31, 2021 and December 31, 2020:
(Millions of dollars)March 31,
2021
December 31,
2020
SHORT-TERM
Commercial paper$1,979 $2,527 
Other borrowings (primarily non U.S.)1,297 724 
Total short-term debt3,276 3,251 
LONG-TERM (a)
(U.S. dollar denominated unless otherwise noted)
3.875% Euro denominated notes due 2021 (b)709 748 
0.250% Euro denominated notes due 2022 (b)1,178 1,226 
2.45% Notes due 2022600 599 
2.20% Notes due 2022499 499 
2.70% Notes due 2023499 499 
2.00% Euro denominated notes due 2023 (b)795 832 
5.875% GBP denominated notes due 2023 (b)455 460 
1.20% Euro denominated notes due 2024644 671 
1.875% Euro denominated notes due 2024 (b)372 389 
2.65% Notes due 2025399 398 
1.625% Euro denominated notes due 2025583 607 
3.20% Notes due 2026725 725 
3.434% Notes due 2026196 196 
1.652% Euro denominated notes due 202796 100 
0.250% Euro denominated notes due 2027877 914 
1.00% Euro denominated notes due 2028 (b)918 966 
1.10% Notes due 2030696 696 
1.90% Euro denominated notes due 2030122 127 
0.550% Euro denominated notes due 2032873 909 
3.55% Notes due 2042664 664 
2.00% Notes due 2050296 296 
Non U.S. borrowings268 372 
Other10 10 
12,474 12,903 
Less: current portion of long-term debt(2,524)(751)
Total long-term debt9,950 12,152 
Total debt$15,750 $16,154 
(a)Amounts are net of unamortized discounts, premiums and/or debt issuance costs as applicable.
(b)March 31, 20202021 and December 31, 2019:2020 included a cumulative $62 million and $79 million adjustment to carrying value, respectively, related to hedge accounting of interest rate swaps. Refer to Note 5 for additional information.
(Millions of dollars)March 31,
2020
 December 31,
2019
SHORT-TERM   
Commercial paper and U.S. bank borrowings$3,994
 $996
Other bank borrowings (primarily international)854
 736
Total short-term debt4,848
 1,732
LONG-TERM (a)   
(U.S. dollar denominated unless otherwise noted)   
2.25% Notes due 2020300
 300
1.75% Euro denominated notes due 2020 (b)1,113
 1,137
0.634% Euro denominated notes due 202055
 56
4.05% Notes due 2021499
 499
3.875% Euro denominated notes due 2021 (b)694
 711
3.00% Notes due 2021499
 499
0.250% Euro denominated notes due 2022 (b)1,110
 1,129
2.45% Notes due 2022599
 599
2.20% Notes due 2022499
 499
2.70% Notes due 2023499
 499
2.00% Euro denominated notes due 2023 (b)761
 776
5.875% GBP denominated notes due 2023 (b)428
 456
1.20% Euro denominated notes due 2024605
 615
1.875% Euro denominated notes due 2024 (b)356
 361
2.65% Notes due 2025398
 398
1.625% Euro denominated notes due 2025547
 556
3.20% Notes due 2026725
 725
3.434% Notes due 2026196
 196
1.652% Euro denominated notes due 202791
 93
1.00% Euro denominated notes due 2028 (b)865
 872
1.90% Euro denominated notes due 2030117
 118
3.55% Notes due 2042662
 662
Other10
 10
International bank borrowings262
 309
Obligations under finance leases137
 149
 12,027
 12,224
Less: current portion of long-term debt(2,006) (1,531)
Total long-term debt10,021
 10,693
Total debt$16,875
 $13,956
(a)Amounts are net of unamortized discounts, premiums and/or debt issuance costs as applicable.
(b)March 31, 2020 and December 31, 2019 included a cumulative $9 million and $38 million adjustment to carrying value, respectively, related to hedge accounting of interest rate swaps. Refer to Note 5 for additional information.

The company maintains a $5 billion unsecured revolving credit agreement with a syndicate of banking institutions that expires March 26, 2024. There are no financial maintenance covenants contained within the credit agreement. NaN borrowings were outstanding under the credit agreement as of March 31, 2020.2021.

12


5. Financial Instruments
In its normal operations, Linde is exposed to market risks relating to fluctuations in interest rates, foreign currency exchange rates, energy costs and to a lesser extent precious metal prices.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 three3 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 interest rate contracts are generally not designated as hedges for accounting purposes. Certain currency contracts related to forecasted transactions are designated as hedges for accounting purposes. Whether designated as hedges for accounting purposes or not, all derivatives are linked to an appropriate underlying exposure. On an ongoing basis, the company assesses the hedge effectiveness of all derivatives designated as hedges for accounting purposes to determine if they continue to be highly effective in offsetting changes in fair values or cash flows of the underlying hedged items. If it is determined that the hedge is not highly effective through the use of a qualitative assessment, then hedge accounting will be discontinued prospectively.
Counterparties to Linde's derivatives are major banking institutions with credit ratings of investment grade or better. The company has Credit Support Annexes ("CSAs") in place with theirits 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, 2020,2021, the impact of such collateral posting arrangements on the fair value of derivatives was insignificant. Management believes the risk of incurring losses on derivative contracts related to credit risk is remote and any losses would be immaterial.
The following table is a summary of the notional amount and fair value of derivatives outstanding at March 31, 20202021 and December 31, 20192020 for consolidated subsidiaries:
    Fair Value   Fair Value
Notional Amounts Assets (a) Liabilities (a) Notional AmountsAssets (a)Liabilities (a)
(Millions of dollars)March 31,
2020
 December 31,
2019
 March 31,
2020
 December 31,
2019
 March 31,
2020
 December 31,
2019
(Millions of dollars)March 31,
2021
December 31,
2020
March 31,
2021
December 31,
2020
March 31,
2021
December 31,
2020
Derivatives Not Designated as Hedging Instruments:           Derivatives Not Designated as Hedging Instruments:
Currency contracts:           Currency contracts:
Balance sheet items$6,896
 $7,936
 $64
 $62
 $109
 $37
Balance sheet items$6,002 $6,470 $26 $72 $32 $48 
Forecasted transactions580
 748
 16
 14
 32
 15
Forecasted transactions705 823 16 12 
Cross-currency interest rate swaps994
 1,029
 102
 35
 44
 40
Cross-currency swapsCross-currency swaps194 260 23 24 
Commodity contractsN/A
 N/A
 
 
 3
 
Commodity contractsN/AN/AN/AN/A
Total$8,470
 $9,713
 $182
 $111
 $188
 $92
Total$6,901 $7,553 $57 $113 $47 $67 
Derivatives Designated as Hedging Instruments:           Derivatives Designated as Hedging Instruments:
Currency contracts:           Currency contracts:
Balance sheet items$
 $27
 $
 $2
 $
 $3
Forecasted transactions136
 464
 13
 9
 24
 3
Forecasted transactions309 355 20 14 
Commodity contractsN/A
 N/A
 
 6
 14
 1
Commodity contractsN/AN/A29 N/AN/A
Interest rate swaps1,865
 1,908
 51
 39
 
 
Interest rate swaps1,859 1,923 50 64 
Total Hedges$2,001
 $2,399
 $64
 $56
 $38
 $7
Total Hedges$2,168 $2,278 $84 $87 $$14 
Total Derivatives$10,471
 $12,112
 $246
 $167
 $226
 $99
Total Derivatives$9,069 $9,831 $141 $200 $53 $81 
 
(a)Current assets of $104 million are recorded in prepaid and other current assets; long-term assets of $142 million are recorded in other long-term assets; current liabilities of $167 million are recorded in other current liabilities; and long-term liabilities of $59 million are recorded in other long-term liabilities.

(a)March 31, 2021 and December 31, 2020 included current assets of $67 million and $110 million which are recorded in prepaid and other current assets; long-term assets of $74 million and $90 million which are recorded in other long-term assets; current liabilities of $42 million and $70 million which are recorded in other current liabilities; and long-term liabilities of $11 million and $11 million which are recorded in other long-term liabilities.
13





Balance Sheet Items

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

Forecasted Transactions

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

Interest Rate/Cross-Currency Interest Rate Swaps

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

Commodity Contracts

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

Net Investment Hedge

As of March 31, 2020,2021, Linde has a €1.2€2.3 billion ($1.42.7 billion) intercompany Euro-denominated credit facility loanloans and intercompany loans which isare designated as a hedgehedges of the net investment positionpositions in its foreign operations. Since hedge inception, exchange rate movements have reduced the credit facility loan by $29 million, with the offsetting gain showndeferred loss recorded within the cumulative translation adjustment component of AOCI in the condensed consolidated balance sheets and the consolidated statements of comprehensive income.

income is $137 million (deferred gain of $75 million recorded during the three months ended March 31, 2021).
Linde had
As of March 31, 2021, exchange rate movements relating to previously designated Euro-denominated debt instruments as net investment hedges to reduce the company's exposure to changesthat remain in the currency exchange rate on investments in foreign subsidiaries with Euro functional currencies. Exchange rateAOCI is a gain of $73 million. These movements of $206 million relating to the previously designated Euro-denominated debt incurred in the financial periods of 2019 and prior will remain in AOCI, until appropriate, such as upon sale or liquidation of the related foreign operations at which time amounts will be reclassified to the consolidated statement of income. Exchange rate movements related to the Euro-denominated debt occurring after de-designation are shown in the consolidated statement of income.

Interest Rate Swaps

Linde uses interest rate swaps to hedge the exposure to changes in the fair value of financial assets and financial liabilities as a result of interest rate changes. These interest rate swaps effectively convert fixed-rate interest exposures to variable rates; fair value adjustments are recognized in earnings along with an equally offsetting charge/benefit to earnings for the changes in the fair value of the underlying financial asset or financial liability. The notional value of outstanding interest rate swaps of Linde with maturity dates from 20202021 through 2028 was $1,865$1,859 million at March 31, 20202021 and $1,908$1,923 million at December 31, 20192020 (see Note 64 for further information).


14


Terminated Treasury Rate Locks
The unrecognized aggregated losses related to terminated treasury rate lock contracts on the underlying $500 million 3.00% fixed-rate notes that mature in 2021 and the $500 million 2.20% fixed-rate notes that mature in 2022 at March 31, 20202021 and December 31, 20192020 were $2 million (net of taxes of $1 million) and $2 million (net of taxes of $1 million), respectively.immaterial in both periods. The unrecognized gains / (losses) for the treasury rate locks are shown in AOCI and are being recognized on a straight line basis to interest expense – net over the term of the underlying debt agreements.

Derivatives' Impact on Consolidated Statements of Income

The following table summarizes the impact of the company’s derivatives on the consolidated statements of income:
 Amount of Pre-Tax Gain (Loss)
Recognized in Earnings *
 Quarter Ended March 31,
(Millions of dollars)20212020
Derivatives Not Designated as Hedging Instruments
Currency contracts:
Balance sheet items
Debt-related$19 $(5)
Other balance sheet items(41)
Total$23 $(46)
 
Amount of Pre-Tax Gain (Loss)
Recognized in Earnings *
 Quarter Ended March 31,
(Millions of dollars)2020 2019
Derivatives Not Designated as Hedging Instruments   
Currency contracts:   
Balance sheet items   
Debt-related$(5) $194
Other balance sheet items(41) (2)
Total$(46) $192


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

The amounts of gain or loss recognized in AOCI and reclassified to the consolidated statement of income was immaterial for the three months ended March 31, 2020.2021. Net losses expected to be reclassified to earnings during the next twelve months are also not material.

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

6. Fair Value Disclosures
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:
Level 1 – quoted prices in active markets for identical assets or liabilities
Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
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:
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 Fair Value Measurements Using
 Level 1 Level 2 Level 3
(Millions of dollars)March 31,
2020
 December 31,
2019
 March 31,
2020
 December 31,
2019
 March 31,
2020
 December 31,
2019
Assets           
Derivative assets$
 $
 $246
 $167
 $
 $
Investments and securities*19
 18
 
 
 27
 28
                 Total
$19
 $18
 $246
 $167
 $27
 $28
            
Liabilities           
Derivative liabilities$
 $
 $226
 $99
 $
 $


 Fair Value Measurements Using
 Level 1Level 2Level 3
(Millions of dollars)March 31,
2021
December 31,
2020
March 31,
2021
December 31,
2020
March 31,
2021
December 31,
2020
Assets
Derivative assets$$$141 $200 $$
Investments and securities*20 21 45 47 
                 Total
$20 $21 $141 $200 45 $47 
Liabilities
Derivative liabilities$$$53 $81 $$
* Investments and securities are recorded in prepaid and other current assets and other long-term assets in the company's condensed consolidated balance sheets.
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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.fund within the Americas. For the valuation, Linde uses the net asset value received as part of the fund's quarterly reporting, which for the most part is not based on quoted prices in active markets. In order to reflect current market conditions, Linde proportionally adjusts these by observable market data (stock exchange prices) or current transaction prices.

The following tablebelow summarizes the changes in level 3 investments and securities for the three months ended March 31, 2020.2021. Gains (losses) recognized in earnings are recorded to interest expense - net in the company's consolidated statements of income.
(Millions of dollars)2020
Balance at January 1$28
Additions
Gains (losses) recognized in earnings(1)
Balance at March 31$27

The level 3 investments and securities as of December 31, 2020 was $47 million. During the quarter period the balance decreased $2 million related to foreign currency movements. The balance as of March 31, 2021 was $45 million.

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, 2021, the estimated fair value of Linde’s long-term debt portfolio was $12,746 million versus a carrying value of $12,474 million. At December 31, 2020, the estimated fair value of Linde’s long-term debt portfolio was $12,200$13,611 million versus a carrying value of $12,027$12,903 million. At December 31, 2019, the estimated fair value of Linde’s long-term debt portfolio was $12,375 million versus a carrying value of $12,224 million. As Linde AG's assets and liabilities were measured at estimated fair value as of the merger date, differencesDifferences between the carrying value and the fair value are insignificant; remaining differences are attributable to fluctuations in interest rates subsequent to when the debt was issued and relative to stated coupon rates.

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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:
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 Quarter Ended March 31,
 2020 2019
Numerator (Millions of dollars)   
Income from continuing operations$571
 $435
Income from discontinued operations2
 82
Net Income – Linde plc$573
 $517
Denominator (Thousands of shares)   
Weighted average shares outstanding530,952
 545,362
Shares earned and issuable under compensation plans263
 192
Weighted average shares used in basic earnings per share531,215
 545,554
Effect of dilutive securities   
Stock options and awards3,741
 3,593
Weighted average shares used in diluted earnings per share534,956
 549,147
Basic earnings per share from continuing operations$1.07
 $0.80
Basic earnings per share from discontinued operations
 0.15
Basic Earnings Per Share$1.07
 $0.95
Diluted earnings per share from continuing operations$1.07
 $0.79
Diluted earnings per share from discontinued operations
 0.15
Diluted Earnings Per Share$1.07
 $0.94

 Quarter Ended March 31,
 20212020
Numerator (Millions of dollars)
Income from continuing operations$979 $571 
Income from discontinued operations
Net Income – Linde plc$980 $573 
Denominator (Thousands of shares)
Weighted average shares outstanding522,103 530,952 
Shares earned and issuable under compensation plans356 263 
Weighted average shares used in basic earnings per share522,459 531,215 
Effect of dilutive securities
Stock options and awards4,468 3,741 
Weighted average shares used in diluted earnings per share526,927 534,956 
Basic earnings per share from continuing operations$1.87 $1.07 
Basic earnings per share from discontinued operations
Basic Earnings Per Share$1.87 $1.07 
Diluted earnings per share from continuing operations$1.86 $1.07 
Diluted earnings per share from discontinued operations
Diluted Earnings Per Share$1.86 $1.07 
There were 0 antidilutive shares for any period presented.

8. Retirement Programs
The components of net pension and postretirement benefits other than pensions (“OPEB”) costs for the quarters ended March 31, 20202021 and 20192020 are shown below:
 Quarter Ended March 31,
 PensionsOPEB
(Millions of dollars)2021202020212020
Amount recognized in Operating Profit
Service cost$40 $37 $$
Amount recognized in Net pension and OPEB cost (benefit), excluding service cost
Interest cost38 52 
Expected return on plan assets(131)(120)
Net amortization and deferral44 23 (1)(1)
(49)(45)
 Net periodic benefit cost (benefit)$(9)$(8)$$
 Quarter Ended March 31,
 Pensions OPEB
(Millions of dollars)2020 2019 2020 2019
Amount recognized in Operating Profit       
Service cost$37
 $39
 $1
 $1
Amount recognized in Net pension and OPEB cost (benefit), excluding service cost       
Interest cost52
 68
 1
 2
Expected return on plan assets(120) (119) 
 
Net amortization and deferral23
 14
 (1) (1)
Settlement charge (a)
 51
 
 
 (45) 14
 
 1
 Net periodic benefit cost$(8) $53
 $1
 $2


(a) In the first quarter of 2019, benefits of $91 million were paid related to the settlement of a U.S. non-qualified plan that was triggered due to a change in control provision. Accordingly, Linde recorded a pension settlement charge of $51 million ($38 million after tax, or $0.07 per diluted share).
Linde estimates that 20202021 required contributions to its pension plans will be in the range of $50$70 million to $80 million, of which $17$12 million have been made through March 31, 2020.2021.
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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
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defenses in these cases and intends to defend itself vigorously. It is possible that the company may incur losses in connection with some of these actions in excess of accrued liabilities. Management does not anticipate that in the aggregate such losses would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a significant impact on the company’s reported results of operations in any given period (see Note 1917 to the consolidated financial statements of Linde's 20192020 Annual Report on Form 10-K).
Significant matters are:
During May 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 the 2009, third quarter, 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, 20202021 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 $200$190 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 five5 industrial gas companies in Brazil and imposed fines. Originally, CADE imposed a civil fine of R$2.2 billion Brazilian reais ($422386 million) on White Martins, the Brazil-based subsidiary of Praxair, Inc. The fine was reduced to R$1.7 billion Brazilian reais ($326298 million) due to a calculation error made by CADE. The fine against White Martins was overturned by the Ninth Federal Court of Brasilia. CADE appealed this decision, and the Federal Court of Appeals rejected CADE's appeal and confirmed the decision of the Ninth Federal Court of Brasilia. CADE mayhas filed an appeal towith the Superior Court of Justice.Justice and a decision is pending.
Similarly, on September 1, 2010, CADE imposed a civil fine of R$237 million Brazilian reais ($4642 million) on Linde Gases Ltda., the former Brazil-based subsidiary of Linde AG, which was divested to MG Industries GmbH on March 1, 2019 and with respect to which Linde provided a contractual indemnity. The fine was reduced to R$188 million Brazilian reais ($3633 million) due to a calculation error made by CADE. The fine against Linde Gases Ltda. was overturned by the Seventh Federal Court in Brasilia. CADE appealed this decision, and the Federal Court of Appeals rejected CADE's appeal and confirmed the decision of the Seventh Federal Court of Brasilia. CADE filed an appeal with the Superior Court of Justice, and a final decision is pending.
Linde has strong defenses and is confident that it will prevail on appeal and have the fines overturned. Linde strongly believes that the allegations of anticompetitive activity against our current and former Brazilian subsidiaries are not supported by valid and sufficient evidence. Linde believes that this decision will not stand up to judicial review and deems the possibility of cash outflows to be extremely unlikely. As a result, no reserves have been recorded as management does not believe that a loss from this case is probable.
On and after April 23, 2019 former shareholders of Linde AG filed appraisal proceedings at the District Court (Landgericht) Munich I (Germany), seeking an increase of the cash consideration paid in connection with the 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.

18


10. Segments

For a description of Linde plc's operating segments, refer to Note 2018 to the consolidated financial statements on Linde plc's 20192020 Annual Report on Form 10-K.
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The table below presents sales and operating profit information about reportable segments and Other for the quarters ended March 31, 20202021 and 2019.2020.
  
Quarter Ended March 31,
(Millions of dollars)20212020
SALES(a)
Americas$2,840 $2,677 
EMEA1,799 1,633 
APAC1,436 1,336 
Engineering674 608 
Other494 485 
Total sales$7,243 $6,739 
  
Quarter Ended March 31,
(Millions of dollars)2020 2019
SALES(a) 
   
Americas$2,677
 $2,702
EMEA1,633
 1,682
APAC1,336
 1,427
Engineering608
 636
Other485
 467
Total segment sales$6,739
 $6,914
Merger-related divestitures
 30
Total sales$6,739
 $6,944


  
Quarter Ended March 31,
(Millions of dollars)20212020
SEGMENT OPERATING PROFIT
Americas$795 $661 
EMEA451 355 
APAC351 281 
Engineering109 91 
Other(18)(36)
Segment operating profit1,688 1,352 
Cost reduction programs and other charges (Note 2)(131)
Purchase accounting impacts - Linde AG(483)(488)
Total operating profit$1,213 $733 
  
Quarter Ended March 31,
(Millions of dollars)2020 2019
SEGMENT OPERATING PROFIT   
Americas$661
 $584
EMEA355
 347
APAC281
 273
Engineering91
 78
Other(36) (60)
Segment operating profit1,352
 1,222
Cost reduction programs and other charges (Note 2)(131) (89)
Merger-related divestitures
 7
Purchase accounting impacts - Linde AG(488) (531)
Total operating profit$733
 $609
(a)Sales reflect external sales only. Intersegment sales, primarily from Engineering to the industrial gases segments, were not material.

19
(a)Sales reflect external sales only. Intersegment sales, primarily from Engineering to the industrial gases segments, were not material.

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11. Equity
Equity
A summary of the changes in total equity for the three monthsquarters ended March 31, 20202021 and 20192020 is provided below:

Quarter Ended March 31,
(Millions of dollars)20212020
ActivityLinde plc
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Linde plc
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance, beginning of period$47,317 $2,252 $49,569 $49,074 $2,448 $51,522 
Net income (a)980 38 1,018 573 35 608 
Other comprehensive income (loss)(655)(6)(661)(2,574)(106)(2,680)
Noncontrolling interests:
Additions (reductions) (b)(853)(853)
Dividends and other capital changes(21)(21)(4)(4)
Dividends to Linde plc ordinary share holders ($1.060 per share in 2021 and $0.963 per share in 2020)(553)(553)(511)(511)
Issuances of ordinary shares:
For employee savings and incentive plans(2)(2)(18)(18)
Purchases of ordinary shares(906)(906)(1,811)(1,811)
Share-based compensation29 29 43 43 
Balance, end of period$46,210 $1,410 $47,620 $44,776 $2,375 $47,151 
 Three Months Ended March 31,
(Millions of dollars)2020 2019
ActivityLinde plc
Shareholders’
Equity
 Noncontrolling
Interests
 Total
Equity
 Linde plc
Shareholders’
Equity
 Noncontrolling
Interests (a)
 Total
Equity
Balance, beginning of period (a)$49,074
 $2,448
 $51,522
 $51,596
 $5,484
 $57,080
Net income (b)573
 35
 608
 517
 36
 553
Other comprehensive income (loss)(2,574) (106) (2,680) 221
 (67) 154
Noncontrolling interests:           
Additions (reductions)
 2
 2
 
 8
 8
Dividends and other capital changes
 (4) (4) 
 (4) (4)
Redemption value adjustments
 
 
 
 
 
Dividends to Linde plc ordinary share holders ($0.963 per share in 2020 and $0.875 per share in 2019)(511) 
 (511) (477) 
 (477)
Issuances of common stock:           
For the dividend reinvestment and stock purchase plan
 
 
 
 
 
For employee savings and incentive plans(18) 
 (18) 6
 
 6
Purchases of common stock(1,811) 
 (1,811) (704) 
 (704)
Share-based compensation43
 
 43
 16
 
 16
Balance, end of period$44,776
 $2,375
 $47,151
 $51,175
 $5,457
 $56,632
(a) As of the beginning of the three months ended March 31, 2019, noncontrolling interests included approximately $3.2 billion relating to the 8% of Linde AG shares which were not tendered in the Exchange Offer and were the subject of a cash-merger squeeze-out completed on April 8, 2019.
(b) Net income for noncontrolling interests excludes net income related to redeemable noncontrolling interests which is not significant for both the three months ended March 31, 20202021 and March 31, 2019 which2020which is not part of total equity.
(b) Additions (reductions) for noncontrolling interests as of the three months period ended March 31, 2021, includes the impact from the deconsolidation of a joint venture with operations in APAC (see Note 13).
The components of AOCI are as follows:
March 31,December 31,
(Millions of dollars)20212020
Cumulative translation adjustment - net of taxes:
Americas$(3,938)$(3,788)
EMEA620 1,020 
APAC327 616 
Engineering164 354 
Other(700)(1,020)
(3,527)(2,818)
Derivatives - net of taxes18 
Pension / OPEB (net of $537 million and $560 million tax benefit in March 31, 2021 and December 31, 2020, respectively)(1,836)(1,876)
$(5,345)$(4,690)
 March 31, December 31,
(Millions of dollars)2020 2019
Cumulative translation adjustment - net of taxes:   
Americas$(4,090) $(3,357)
EMEA(1,311) (136)
APAC(966) (140)
Engineering(122) (29)
Other500
 282
 (5,989) (3,380)
Derivatives - net of taxes(57) (27)
Pension / OPEB funded status obligation (net of $431 million and $446 million tax benefit in March 31, 2020 and December 31, 2019, respectively)(1,342) (1,407)
 $(7,388) $(4,814)


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12. Revenue Recognition

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

Contracts with Customers
Approximately 83% of Linde's consolidated sales are generated from industrial gases and related products in 3 geographic segments (Americas, APAC, and EMEA) and the remaining 17% is related primarily to the Engineering segment, and to a lesser extent Other (see Note 10 for operating segment details). Linde serves a diverse group of industries including healthcare, petroleum refining, energy, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals and water treatment.
Industrial Gases
Within each of the company’s geographic segments for industrial gases, there are three basic distribution methods: (i) on-site or tonnage; (ii) merchant or bulk liquid; and (iii) packaged or cylinder gases. The distribution method used by Linde to supply a customer is determined by many factors, including the customer’s volume requirements and location. The distribution method generally determines the contract terms with the customer and, accordingly, the revenue recognition accounting practices. Linde's primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). These products are generally sold through one of the three distribution methods.
Following is a description of each of the three industrial gases distribution methods and the respective revenue recognition policies:
On-site. Customers that require the largest volumes of product and that have a relatively constant demand pattern are supplied by cryogenic and process gas on-site plants. Linde constructs plants on or adjacent to these customers’ sites and supplies the product directly to customers by pipeline. Where there are large concentrations of customers, a single pipeline may be connected to several plants and customers. On-site product supply contracts generally are total requirement contracts with terms typically ranging from 10-20 years and contain minimum purchase requirements and price escalation provisions. Many of the cryogenic on-site plants also produce liquid products for the merchant market. Therefore, plants are typically not dedicated to a single customer. Additionally, Linde is responsible for the design, construction, operations and maintenance of the plants and our customers typically have no involvement in these activities. Advanced air separation processes also allow on-site delivery to customers with smaller volume requirements.
The company’s performance obligations related to on-site customers are satisfied over time as customers receive and obtain control of the product. Linde has elected to apply the practical expedient for measuring progress towards the completion of a performance obligation and recognizes revenue as the company has the right to invoice each customer, which generally corresponds with product delivery. Accordingly, revenue is recognized when product is delivered to the customer and the company has the right to invoice the customer in accordance with the contract terms. Consideration in these contracts is generally based on pricing which fluctuates with various price indices. Variable components of consideration exist within on-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 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-tothree-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 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
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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
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constrained and will be recognized when the uncertainty related to the consideration is resolved.
Linde Engineering
The company designs and manufactures equipment for air separation and other industrial gas applications manufactured specifically for end customers. Sale of equipment contracts are generally comprised of a single performance obligation. Revenue from sale of equipment is generally recognized over time as Linde has an enforceable right to payment for performance completed to date and performance does not create an asset with alternative use. For contracts recognized over time, revenue is recognized primarily using a cost incurred input method. Costs incurred to date relative to total estimated costs at completion are used to measure progress toward satisfying performance obligations. Costs incurred include material, labor, and overhead costs and represent work contributing and proportionate to the transfer of control to the customer. Contract modifications are typically accounted for as part of the existing contract and are recognized as a cumulative adjustment for the inception-to-date effect of such change.
Contract Assets and Liabilities
Contract assets and liabilities result from differences in timing of revenue recognition and customer invoicing. Contract assets primarily relate to sale of equipment contracts for which revenue is recognized over time. The balance represents unbilled revenue which occurs when revenue recognized under the measure of progress exceeds amounts invoiced to customers. Customer invoices may be based on the passage of time, the achievement of certain contractual milestones or a combination of both criteria. Contract liabilities include advance payments or right to consideration prior to performance under the contract. Contract liabilities are recognized as revenue as performance obligations are satisfied under contract terms. Linde has contract assets of  $311$137 million and $368$162 million at March 31, 20202021 and December 31, 2019,2020, respectively. Total contract liabilities are $2,233$2,511 million at March 31, 20202021 (current of $1,854$1,863 million and $379$648 million within other long-term liabilities in the condensed consolidated balance sheets). Total contract liabilities were $2,106$2,301 million at December 31, 20192020 (current contract liabilities of $1,758$1,769 million classified as deferred income within other current liabilities and $348$532 million in other long-term liabilities in the condensed consolidated balance sheets). Revenue recognized for the three months ended March 31, 20202021 that was included in the contract liability at December 31, 20192020 was $300$446 million. Contract assets and liabilities primarily relate to the Linde Engineering business.

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

Disaggregated Revenue Information
As described above and in Note 2018 to Linde's 20192020 Form 10-K, the company manages its industrial gases business on a geographic basis, while the Engineering and Other businesses are generally managed on a global basis. Furthermore, the company believes that reporting sales by distribution method by reportable geographic segment best illustrates the nature, 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 quartersthree months ended March 31, 20202021 and March 31, 2019.2020.

(Millions of dollars)Quarter Ended March 31, 2021
SalesAmericasEMEAAPACEngineeringOtherTotal%
Merchant$771 $531 $484 $$53 $1,839 25 %
On-Site689 392 553 1,634 23 %
Packaged Gas1,332 861 361 2,560 35 %
Other48 15 38 674 435 1,210 17 %
Total$2,840 $1,799 $1,436 $674 $494 $7,243 100 %
22
(Millions of dollars)Quarter Ended March 31, 2020
SalesAmericasEMEAAPACEngineeringOtherTotal%
        
Merchant$726 $470
$459
$
$47
$1,702
25%
On-Site650 343
492


1,485
22%
Packaged Gas1,275 811
360

5
2,451
36%
Other26 9
25
608
433
1,101
17%
 $2,677 $1,633
$1,336
$608
$485
$6,739
100%


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(Millions of dollars)Quarter Ended March 31, 2020
SalesAmericasEMEAAPACEngineeringOtherTotal%
Merchant$726 $470 $459 $$47 $1,702 25 %
On-Site650 343 492 1,485 22 %
Packaged Gas1,275 811 360 2,451 36 %
Other26 25 608 433 1,101 17 %
Total$2,677 $1,633 $1,336 $608 $485 $6,739 100 %
(Millions of dollars)Quarter Ended March 31, 2019
SalesAmericasEMEAAPACEngineeringOther (a)Total%
        
Merchant$703 $427
$497
$
$31
$1,658
24%
On-Site702 377
511


1,590
23%
Packaged Gas1,285 874
387


2,546
37%
Other12 4
32
636
466
1,150
16%
Total$2,702 $1,682
$1,427
$636
$497
$6,944
100%

(a) Other/Other includes $30 million of merger-related divestitures that have been excluded from segment sales.

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

13. Merger-related Divestitures
As described
Effective January 1, 2021, Linde deconsolidated a joint venture with operations in Note 4APAC, due to the expiration of Linde plc's Annual Reportcertain contractual rights that the parties mutually agreed not to renew. From the effective date, the joint venture is reflected as an equity investment on Form 10-K, as a conditionLinde's consolidated balance sheet with the corresponding results reflected in income from equity investments on the consolidated statement of income.

The fair value of the European Commission ("EC")joint venture at January 1, 2021 was determined using a discounted cash flow model and approximated the carrying amount of its net assets. The net carrying value of $852 million was mainly comprised of assets of approximately $1.9 billion (primarily Other intangibles and Property plant and equipment - net), the U.S. Departmentnet of Justice ("DOJ"), and other governmental regulatory authorities approvalliabilities of approximately $1.0 billion. Upon deconsolidation an equity investment was recorded representing Linde's share of the merger, Linde plc, Praxair and Linde AG were required to divest several businesses, including the following transactions that were completed in 2019 and 2020:

On March 1, 2019, Linde completed the sale of the majority of Linde AG’s industrial gases business in North America and certain industrial gases business activities of Linde AG's in South America for approximately $2.9 billion injoint venture's net cash consideration after purchase price adjustments for certain items relating to assets and liabilities of the sold businesses. In addition, divestitures include approximately $0.5 billion of proceeds for incremental plant sales within the Americas under other agreements.
On April 30, 2019, Linde completed the sale of selected assets of Linde Korea with a sale price of $1.2 billion.
On July 12, 2019, Linde completed the sale of select assets of Praxair India with a sale price of $218 million andassets. The deconsolidation resulted in a gain of $164$52 million recognizedrecorded within cost reduction programs and other charges (see Note 2) related to the release of the CTA balance recorded within AOCI. The company did not receive any consideration, cash or otherwise, as part of the deconsolidation.

The joint venture contributed sales of approximately $600 million in "Net gain on sale of businesses" in2020. Future earnings per share will not be affected as the consolidated statement of income.ownership percent remains the same.
On December 16, 2019, Linde completed the sale of select assets of Linde India with a sale price of $193 million.
In March 2020, Linde completed the sale of select assets of Linde China with a sale price of $98 million.



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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".Reconciliations."
Consolidated Results
The following table provides summary information for the three months ended March 31, 20202021 and 2019.2020. The reported amounts are GAAP amounts from the Consolidated StatementStatements of Operations.Income. The adjusted amounts are intended to supplement investors' understanding of the company's financial information and are not a substitute for GAAP measures:
  
Quarter Ended March 31,
(Millions of dollars, except per share data)20212020Variance
Sales$7,243 $6,739 %
Cost of sales, exclusive of depreciation and amortization$4,054 $3,843 %
As a percent of sales56.0 %57.0 %
Selling, general and administrative$787 $861 (9)%
As a percent of sales10.9 %12.8 %
Depreciation and amortization$1,166 $1,142 %
Cost reduction programs and other charges (b)$(8)$131 (106)%
Other income (expense) - net$$15 (73)%
Operating profit$1,213 $733 65 %
Operating margin16.7 %10.9 %
Interest expense - net$20 $24 (17)%
Net pension and OPEB cost (benefit), excluding service cost$(49)$(45)%
Effective tax rate21.6 %21.9 %
Income from equity investments$43 $17 153 %
Noncontrolling interests from continuing operations$(38)$(35)%
Income from continuing operations$979 $571 71 %
Diluted earnings per share from continuing operations$1.86 $1.07 74 %
Diluted shares outstanding526,927 534,956 (2)%
Number of employees71,699 79,008 (9)%
Adjusted Amounts (a)
Operating profit$1,688 $1,352 25 %
Operating margin23.3 %20.1 %
Effective tax rate23.9 %23.9 %
Income from continuing operations$1,312 $1,009 30 %
Diluted earnings per share from continuing operations$2.49 $1.89 32 %
Other Financial Data (a)
EBITDA from continuing operations$2,422 $1,892 28 %
As percent of sales33.4 %28.1 %
Adjusted EBITDA from continuing operations$2,438 $2,049 19 %
As percent of sales33.7 %30.4 %
  
Quarter Ended March 31,
(Millions of dollars, except per share data)2020 2019 Variance
Sales$6,739
 $6,944
 (3)%
Cost of sales, exclusive of depreciation and amortization$3,843
 $4,116
 (7)%
As a percent of sales57% 59%  
Selling, general and administrative$861
 $879
 (2)%
As a percent of sales12.8% 12.7%  
Depreciation and amortization$1,142
 $1,223
 (7)%
Cost reduction programs and other charges (a)$131
 $89
 47 %
Other income (expense) - net$15
 $18
 (17)%
Operating profit$733
 $609
 20 %
Operating margin10.9% 8.8%  
Interest expense - net$24
 $23
 4 %
Net pension and OPEB cost (benefit), excluding service cost$(45) $15
 (400)%
Effective tax rate21.9% 24.5%  
Income from equity investments$17
 $34
 (50)%
Noncontrolling interests from continuing operations$(35) $(30) 17 %
Income from continuing operations$571
 $435
 31 %
Diluted earnings per share from continuing operations$1.07
 $0.79
 35 %
Diluted shares outstanding534,956
 549,147
 (3)%
Number of employees79,008
 80,699
 (2)%
Adjusted Amounts (a)     
Operating profit$1,352
 $1,222
 11 %
Operating margin20.1% 17.7%  
Effective tax rate23.9% 23.5%  
Income from continuing operations$1,009
 $927
 9 %
Diluted earnings per share from continuing operations$1.89
 $1.69
 12 %
Other Financial Data (a)     
EBITDA from continuing operations$1,892
 $1,866
 1 %
As percent of sales28.1% 26.9%  
Adjusted EBITDA from continuing operations$2,049
 $1,972
 4 %
As percent of sales30.4% 28.5%  

(a) Adjusted amountsAmounts and Other Financial Data are non-GAAP performance measures. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" sections of this MD&A.
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(b) See Note 2 to the condensed consolidated financial statements.

Reported
In the first quarter of 2020,2021, Linde's reported sales were $6,739$7,243 million, 3% below the7% above prior year, primarily duedriven by 2% price attainment and 3% higher volumes. Currency translation increased sales by 4% in the first quarter of 2021 as compared to unfavorable currency translation and lower volumes, partially offset by higher price across all geographic segments. 2020.

Reported operating profit for the first quarter of 20202021 of $733$1,213 million, or 10.9%16.7% of sales, was 20%65% above the prior yearyear. The reported year-over-year increase was primarily due to lower amortization of the fair value of fixed assets and intangible assets acquired in the merger, higher price and the impact ofvolumes and lower cost reduction programs and productivity initiatives. The reported EBITDA margin was 28.1% for the 2020 first quarter versus 26.9% in the 2019 quarter driven by higher price.other charges. The reported effective tax rate ("ETR") was 21.6% in the first quarter 2021 versus 21.9% in the first quarter 2020 versus 24.5% in the 2019 quarter.2020. Diluted earnings per share from continuing operations ("EPS") was $1.07,$1.86, or 35%74% above reported EPS of $0.79$1.07 in the first quarter of 20192020 primarily due to lower diluted shares outstanding and higher income from continuing operations.operations and lower diluted shares outstanding.

Adjusted
In the first quarter of 2020, Linde's sales were $6,739 million, 3% below the prior year primarily due to unfavorable currency translation and lower volumes, partially offset by higher price across all geographic segments. Adjusted2021, adjusted operating profit of $1,352$1,688 million, or 20.1%23.3% of sales, was 11%25% higher than 2019as compared to 2020 driven by higher price and the impact of cost reduction programsvolumes and continued productivity initiatives. The company's adjusted EBITDA margin was 30.4% for the 2020 first quarter versus 28.5% in the 2019 period, driven by higher price.initiatives across all segments. The adjusted ETR was 23.9% in the first quarter 20202021, flat versus 23.5% in the 20192020 quarter. On an adjusted basis, EPS was $1.89, 12%$2.49, 32% above the 20192020 adjusted EPS of $1.69,$1.89, driven by higher adjusted income from continuing operations and lower diluted shares outstanding.
Outlook

Linde believes that its project backlog is one indicator of future sales growth. The company’s sale of gas backlog represents estimated capital expenditures over $5 million for customer projects, secured by long-term contracts that lead to incremental sales and earnings growth.  Linde’s sale of gas and sale of equipment backlog of approximately $9.4 billion provides a strong growth foundation for the next several years. Of this backlog, approximately $4 billion is for sale of gas projects where APAC and Americas represent 63% percent and 30% percent of the backlog, respectively, and the remaining backlog in EMEA.  These plants will primarily supply customers in the electronics, chemicals and energy end-markets.

The recent novel coronavirus (COVID-19) outbreak could materially adversely affect our results of operations.
Linde has been actively monitoring the COVID-19 situation and its impact globally. Our priority has been the health and safety of our employees and the needs of our customers. The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations, modification of critical supply chains and cancellation of physical participation in meetings and events), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, suppliers and other stakeholders. The ultimate magnitude of COVID-19, includingthe extent of its impact on the Company’s operational results, which could be material, will be determined by the length of time that such circumstances continue, measures taken to prevent its spread, its effect on the supply chain and the demand for the Company’s products and services, as well as the effect of governmental and public actions taken in response.
The Company is committed to the safety and well-being of its employees and to ensuring that its facilities follow the highest standards of safety and hygiene. At the same time, the Company and its employees remain committed to meeting the needs of customers and ensuring they receive products and services in a timely manner.

The above outlook should be read in conjunction with the section entitled “Forward-Looking Statements.”
Linde provides quarterly updates on operating results, material trends that may affect financial performance, and financial guidance via quarterly earnings releases and investor teleconferences. These updates are available on the company’s website, www.linde.com, but are not incorporated herein.

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

Quarter Ended March 31, 2021 vs. 2020
% Change
Quarter Ended March 31, 2020 vs. 2019
% Change
Sales
Factors Contributing to Changes - Sales
Volume(1)%
Price/Mix2%
Cost pass-through(1)%
Currency(3)%
Acquisitions/divestitures(3)%
Engineering(3— )%
%

Sales
Reported sales decreased $205Sales increased $504 million, or 3%7%, for the first quarter. On an adjusted basis sales decreased $175 million or 3%forquarter of 2021 versus the first quarter compared to the 2019respective 2020 period.

On a reported and adjusted basis, sales decreased 3%, for the quarter. Volume decreasedincreased sales by 1%3% in the quarter primarily driven by lower volumeshealthcare, electronics and a recovery in the APAC segment due to the COVID-19 impact, largely in China.cyclical end markets of manufacturing, metals, chemicals and refining. Higher pricing across all geographic segments contributed 2% to sales in the quarter. Currency translation decreasedincreased sales by 3%4% in the quarter, largely in EMEA and APAC, driven by the weakeningstrengthening of the Euro, British pound, Australian dollar, Brazilian realChinese yuan and Chinese yuanBritish pound against the U.S. dollar. Cost pass-through decreasedincreased sales by 1% in the quarter with minimal impact on operating profit. The impactdeconsolidation of merger-related divestituresa joint venture with operations in APAC decreased sales by $30 million. These sales have been excluded from3% (see Note 13 to the adjusted number.

condensed consolidated financial statements).
Cost of sales, exclusive of depreciation and amortization
Cost of sales, exclusive of depreciation and amortization decreased $273increased $211 million, or 7%5%, for the first quarter of 2021 primarily due to higher volumes and currency impacts, partially offset by productivity initiatives. Cost of sales, exclusive of depreciation and amortization was 57%56.0% of sales in 2020for the first quarter of 2021 versus 59%57.0% of sales in 2019.for the respective 2020 period. The decrease as a percentage of sales in the quarter was due primarily to higher pricing, lower cost pass-through and the impact of cost reduction programs and productivity initiatives.


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Selling, general and administrative expenses
Selling, general and administrative expense ("SG&A") decreased $18$74 million, or 2%9%, for the first quarter of 2020.2021. SG&A was 10.9% of first quarter sales versus 12.8% of sales infor the respective 2020 versus 12.7% of sales in 2019.period. Currency impacts decreasedincreased SG&A by approximately $22$25 million in the quarter. Excluding currency impacts, underlying SG&A increaseddecreased driven by timing oflower incentive compensation partially offset by the impact ofand continued cost reduction and productivity improvements.

initiatives.
Depreciation and amortization
Reported depreciation and amortization expense decreased $81increased $24 million, or 7%2%, for the first quarter of 20202021 primarily due to currency translation impacts and lower amortization of the fair value of fixed assets and intangible assets acquired in the merger.

impacts.
On an adjusted basis depreciation and amortization decreased $36increased $22 million, or 5%3%, for the first quarter 2020of 2021, primarily due to currency translation impacts which decreasedincreased depreciation and amortization by approximately $21 million for$20 million. Excluding currency impacts, underlying depreciation was relatively flat as the quarter.

impact of new project start ups was largely offset by the deconsolidation of a joint venture with operations in APAC (see Note 13 to the condensed consolidated financial statements).
Cost reduction programs and other charges
Linde recorded costCost reduction programs and other charges was a benefit of $131$8 million and $89a charge of $131 million for the first quarter 20202021 and 2019,2020, respectively, primarily related to merger and synergy-related costs (see Note 2 to the condensed consolidated financial statements).

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

Operating profit
Reported operating profit increased $124 million, or 20%, for the first quarter of 2020. On an adjusted basis operating profit increased $130 million, or 11%, for the first quarter of 2020, versus 2019.

On a reported basis, operating profit increased $124$480 million, or 20%65%, for 2021. The increase was primarily due to lower depreciationhigher volumes and amortization related toprice, partially offset by the merger, higher pricedeconsolidation of a joint venture with operations in APAC. Cost reduction programs and the impactother charges was a benefit of cost reduction and productivity initiatives. The$8 million for the first quarter, 2020 includedversus a charge of $131 million in cost reduction program and other charges. The first quarter 2019 included $89 million of merger-related charges.for the respective 2020 period.

On an adjusted basis, which excludes the impacts of purchase accounting relating to the merger and cost reduction programs and other charges, operating profit increased $130$336 million, or 11%,25% in the quarter2021 quarter. Operating profit growth was driven by higher volume and price and the impactsbenefit of cost

reduction programs and productivity initiatives, which more thanpartially offset by the impactsdeconsolidation of unfavorable currency impacts and cost inflation.a joint venture with operations in APAC. A discussion of operating profit by segment is included in the segment discussion that follows.

Interest expense - net
Reported interest expense - net increased $1decreased $4 million or 4%, for the first quarter.quarter of 2021. On an adjusted basis interest expense decreased $4$8 million or 8%, for the first quarter versus the respective 20192020 period.

On both a reported basis, interest expense - net increased $1 million in the quarter primarily driven by purchase accounting impacts.

On anand adjusted basis, interest expense - net decreased $4 million for the quarterdecrease was driven primarily due to a lower effective borrowing rate driven by lower long-term debt outstanding and higher levels of commercial paper borrowings at lower interest rates partially offset by the impact of unfavorable foreign currency revaluation on an unhedged intercompany loan.

loan in the prior year period.
Net pension and OPEB cost (benefit), excluding service cost
Reported net pension and OPEB cost (benefit), excluding service cost was a benefit of $49 million for the 2021 quarter, versus a benefit of $45 million for the respective 2020 period. The increase in 2020 versusbenefit of $4 million largely relates to a cost of $15 million in 2019. The first quarter of 2019 included the impact of a $51 million charge related to the settlement of a U.S. nonqualified plan (see Note 8 to the condensed consolidated financial statements). Excluding the impact of the settlement charge, net pensionhigher expected return on assets and OPEB cost (benefit), excluding service cost decreased $9 millionlower interest costs driven primarily by the benefitlow discount rate environment offset by higher amortization of lower interest cost.

deferred losses.
Effective tax rate
The reported effective tax rate ("ETR") for the three months ended March 31,2021 quarter was 21.6%, versus 21.9% for the respective 2020 and 2019 was 21.9% and 24.5%, respectively.

period.
On an adjusted basis, the ETR for the first quarters ofquarter 2021 was 23.9%, flat with the respective 2020 and 2019 was 23.9% and 23.5%, respectively.

period.
Income from equity investments
Reported income from equity investments for the first quarters of 2020 and 2019quarter 2021 was $43 million, versus $17 million and $34 million, respectively.for the respective 2020 period. On an adjusted basis, income from equity investments for the first quartersquarter of 2020 and 20192021 was $62 million, versus $31 million, and $48 million, respectively.in the prior respective period. The decreaseincrease in both the reported and adjusted income from equity investments was driven by the deconsolidation of a joint venture with operations in APAC which is reflected in equity income effective January 1, 2021 (see Note 13 to the condensed consolidated financial statements), and the impact of unfavorable foreign currency revaluation impacts on an unhedged loan of an investment in EMEA.

EMEA in the prior year period.
Noncontrolling interests from continuing operations
At March 31, 2020,2021, noncontrolling interests from continuing operations consisted primarily of non-controlling shareholders' investments in APAC (primarily China) and surface technologies.

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Reported and adjusted noncontrolling interests from continuing operations increased $5$3 million for the first quarter of 2021 versus the respective 20192020 period. Adjusted noncontrolling interests from continuing operations decreased $7 million for the first quarter of 2021 versus the respective 2020 period, primarily driven by higher income from continuing operations.

the deconsolidation of a joint venture with operations in APAC (see Note 13 to the condensed consolidated financial statements) and the buyout of minority shareholders in the Republic of South Africa.
Income from continuing operations
Reported income from continuing operations increased $136$408 million, or 31%71%, for the first quarter 2020 versus the 2019 period,of 2021 primarily due to higher operating profit net pension and OPEB cost (benefit), excluding service cost and a lower effective tax rate.

versus the respective 2020 period.
On an adjusted basis, which excludes the impacts of purchase accounting and other non-GAAP adjustments, income from continuing operations increased $82$303 million, or 9%30%, for 2021 versus the respective 2020 period. The increase in the quarter primarily due towas driven by higher overall adjusted operating profit and favorable changes in net pension and OPEB cost (benefit), excluding service costs partially offset by a higher adjusted ETR and lower adjusted income from equity investments.

profit.
Diluted earnings per share from continuing operations
Reported diluted earnings per shareEPS from continuing operations increased $0.28,$0.79, or 35%74%, for the first quarter 20202021 versus the comparable 20192020 period.

On an adjusted basis, diluted EPS of $1.89$2.49 for the first quarter of 2020 increased 12%$0.60, or 32% versus the respective 2019 period, primarily due to2020 period. The increase in both reported and adjusted diluted EPS is driven by higher income from continuing operations and lower diluted shares outstanding resulting from continued share buyback activity.

outstanding.
Employees
The number of employees at March 31, 20202021 was 79,008,71,699, a decrease of 1,6917,309 employees from March 31, 20192020 primarily driven by decreases from merger-related divestitures and cost reduction actions.


actions and divestitures.
Other Financial Data

EBITDA increased to $1,892from continuing operations was $2,422 million for the first quarter 2020 from $1,8662021 as compared to $1,892 million in the respective 2019 periods.2020 period. Adjusted EBITDA from continuing operations increased to $2,049$2,438 million for the first quarter 2020 as compared to $1,9722021 from $2,049 million in 2019 primarily due to higher income from continuing operations plus depreciation and amortization versus the priorrespective 2020 period.

See the "Non-GAAP Measures and Reconciliations" for adjusted amounts sections belowsection for definitions and reconciliations of these adjusted non-GAAP measures to reported GAAP amounts.
Other Comprehensive Income (Loss)

Other comprehensive lossincome (loss) for the first quarter 2021 was a loss of 2020 of $2,680$661 million and resulted primarily from negative currency translation adjustments of $2,715$715 million during the quarter. 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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Table of Contents
Segment Discussion
The following summary of sales and operating profit by segment provides a basis for the discussion that follows. Linde plc evaluates the performance of its reportable segments based on operating profit, excluding items not indicative of ongoing business trends. The reported amounts are GAAP amounts from the Condensed Consolidated StatementStatements of Operations.Income.
 
Quarter Ended March 31,
(Millions of dollars)20212020Variance
SALES
Americas$2,840 $2,677 %
EMEA1,799 1,633 10 %
APAC1,436 1,336 %
Engineering674 608 11 %
Other494 485 %
Total sales$7,243 $6,739 %
SEGMENT OPERATING PROFIT
Americas$795 $661 20 %
EMEA451 355 27 %
APAC351 281 25 %
Engineering109 91 20 %
Other(18)(36)50 %
Segment operating profit$1,688 $1,352 25 %
Reconciliation to reported operating profit:
Cost reduction programs and other charges (Note 2)(131)
Purchase accounting impacts - Linde AG(483)(488)
Total operating profit$1,213 $733 
 Quarter Ended March 31,
(Millions of dollars)2020 2019 Variance
SALES     
Americas$2,677
 $2,702
 (1)%
EMEA1,633
 1,682
 (3)%
APAC1,336
 1,427
 (6)%
Engineering608
 636
 (4)%
Other485
 467
 4 %
Total segment sales$6,739
 $6,914
 (3)%
Merger-related divestitures
 30
  
Total sales6,739
 6,944
  
      
SEGMENT OPERATING PROFIT     
Americas$661
 $584
 13 %
EMEA355
 347
 2 %
APAC281
 273
 3 %
Engineering91
 78
 17 %
Other(36) (60) (40)%
Segment operating profit$1,352
 $1,222
 11 %
Reconciliation to reported operating profit:    

Cost reduction programs and other charges (Note 2)(131) (89)  
Merger-related divestitures
 7
  
Purchase accounting impacts - Linde AG(488) (531)  
Total operating profit$733
 $609
  





Americas
 Quarter Ended March 31,
(Millions of dollars)20212020Variance
Sales$2,840 $2,677 %
Operating profit$795 $661 20 %
As a percent of sales28.0 %24.7 %

 Quarter Ended March 31,
(Millions of dollars)2020 2019 Variance
Reported sales$2,677
 $2,702
 (1)%
      
Reported operating profit$661
 $584
 13 %
As a percent of sales24.7% 21.6%  

Quarter Ended March 31, 2021 vs. 2020
% Change
Sales
Factors Contributing to Changes - Sales
Volume%
Price/Mix%
Cost pass-through%
Currency(2)%
Acquisitions/divestitures— %
Quarter Ended March 31, 2020 vs. 2019
% Change
Sales
Factors Contributing to Changes%
Volume2 %
Price/Mix2 %
Cost pass-through(2)%
Currency(3)%
Acquisitions/divestitures %
(1)%

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

Sales
Sales for the Americas segment decreased $25increased $163 million, or 1%6%, for the first quarter 2020of 2021 versus the respective 20192020 period. Higher pricing and volume each contributed 2%3% to sales in the quarter. Higher volumes toincreased sales by 4% led by higher demand from the healthcare and foodchemical and beveragerefining end markets more than offset lower volumes due to the impact of COVID-19 during the month of March.markets. Currency translation decreased sales by 3%2% in the quarter primarily driven by the weakening of the Brazilian real and Mexican peso and Canadian dollar against the U.S. Dollar. Cost pass-through decreasedcontributed 1% to sales by 2%,in the quarter with minimal impact on operating profit.

Operating profit
Operating profit in the Americas segment increased $77$134 million, or 13%20%, in the first quarter 20202021 versus the respective 2019 period,2020 period. Operating profit increased due primarily to higher pricing and the impact of cost reduction and productivity initiativeshigher volumes, which more thanwere partially offset theby unfavorable impacts of currency translation and cost inflation.translation.

EMEA

 Quarter Ended March 31,
(Millions of dollars)20212020Variance
Sales$1,799 $1,633 10 %
Operating profit$451 $355 27 %
As a percent of sales25.1 %21.7 %
 Quarter Ended March 31,
(Millions of dollars)2020 2019 Variance
Reported sales$1,633
 $1,682
 (3)%
      
Reported operating profit$355
 $347
 2 %
As a percent of sales21.7% 20.6%  


Quarter Ended March 31, 2021 vs. 2020
% Change
Sales
Factors Contributing to Changes - Sales
Volume%
Price/Mix%
Cost pass-through%
Currency%
Acquisitions/divestitures(2)%
Quarter Ended March 31, 2020 vs. 2019
% Change
10 Sales
Factors Contributing to Changes%
Volume(1)%
Price/Mix2 %
Cost pass-through(1)%
Currency(3)%
Acquisitions/divestitures %
(3)%

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 decreasedincreased by $49$166 million, or 3%10%, infor the first quarter 20202021 as compared to the respective 2019 period, primarily2020 period. Volumes increased 1% in the quarter driven by unfavorable currencyincreased demand from the healthcare end market. Higher price increased sales by 3% in the quarter. Currency translation increased sales by 7% in the quarter due to the weakeningstrengthening of the Euro, British pound and South African randSwedish krona against the U.S. Dollar. Higher price increased sales bySales decreased 2% which was partially offset by lower volumesin the quarter related to the 2020 divestiture of 1% driven by overall weaker industrial production and the impact of COVID-19 during the month of March.a non-core business in Scandinavia. Cost pass-through decreasedcontributed 1% to sales by 1%,in the quarter with minimal impact on operating profit.

Operating profit
Operating profit for the EMEA segment increased by $8$96 million, or 2%27%, in the first quarter of 20202021 as compared to the respective 20192020 period, driven largely by higher price, in the quarter. This was partially offset by lower volumescontinued cost reduction and the impactproductivity initiatives and favorable currency translation.
29

Table of unfavorable currency translation which decreased operating profit in the period.Contents
APAC

 Quarter Ended March 31,
(Millions of dollars)20212020Variance
Sales$1,436 $1,336 %
Operating profit$351 $281 25 %
As a percent of sales24.4 %21.0 %
 Quarter Ended March 31,
(Millions of dollars)2020 2019 Variance
Reported sales$1,336
 $1,427
 (6)%
      
Reported operating profit$281
 $273
 3 %
As a percent of sales21.0% 19.1%  

Quarter Ended March 31, 2021 vs. 2020
% Change
Sales
Factors Contributing to Changes - Sales
Volume/Equipment10 %
Price/Mix%
Cost pass-through%
Currency%
Acquisitions/divestitures(11)%
Quarter Ended March 31, 2020 vs. 2019
% Change
Sales
Factors Contributing to Changes%
Volume/Equipment(5)%
Price/Mix2 %
Cost pass-through %
Currency(3)%
Acquisitions/divestitures %
(6)%

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

Sales for the APAC segment decreased $91increased $100 million, or 6%7%, for the first quarter 2021 versus the respective 2019 period driven primarily by volumes and unfavorable currency.2020 period. Volumes decreased 5%increased 10% in the quarter as the impact of COVID-19, primarily in China,the cyclical end markets and a prior year equipment sale more than offset the contribution of new project start-ups. Higher price contributed 2%1% to sales in the quarter. Unfavorable currencysales. Currency translation decreasedincreased sales by 3%6% in quarter driven primarily by the weakeningstrengthening of the Chinese yuan Korean won and India rupeeAustralian dollar against the U.S. Dollar.Dollar in the period. Sales decreased $143 million, or 11%, in the first quarter of 2021 due to the deconsolidation of a joint venture with operations in Taiwan (see Note 13 to the condensed consolidated financial statements).
Operating profit
Operating profit in the APAC segment increased $8$70 million, or 3%25%, in the first quarter 2021 versus the respective 2019 period. Unfavorable currency translation decreased operating profit by 3% for the quarter. Excluding currency impacts, operating profit growth was2020 period driven by higher price and the impact ofvolumes, continued cost reduction programs and productivity initiatives which more thanand favorable currency translation, partially offset by a $28 million reduction due to the impactdeconsolidation of lower volumes.a joint venture.
Engineering
 Quarter Ended March 31,
(Millions of dollars)20212020Variance
Sales$674 $608 11 %
Operating profit$109 $91 20 %
As a percent of sales16.2 %15.0 %
 Quarter Ended March 31,
(Millions of dollars)2020 2019 Variance
Reported sales$608
 $636
 (4)%
      
Reported operating profit$91
 $78
 17 %
As a percent of sales15.0% 12.3%  

30

Quarter Ended March 31, 2021 vs. 2020
% Change
Sales
Factors Contributing to Changes - Sales
Volume%
Quarter Ended March 31, 2020 vs. 2019
% Change
CurrencySales%
Factors Contributing to Changes
Volume(1)%
Currency(311 )%
(4)%
Sales
Engineering segment sales decreased $28increased $66 million, or 4%11%, in the first quarter of 20202021 as compared to the respective 20192020 period driven primarily by unfavorablefavorable currency impacts of 3%7%. Volume decreasedVolumes increased sales by 1% due to4% driven by project timing.
Operating profit

Engineering segment operating profit increased $13$18 million, or 17%20%, in the first quarter of 20202021 as compared to the respective 20192020 period due primarily to strong project executiondriven by productivity initiatives and the impact of productivity initiatives.favorable currency impacts.
Other

 Quarter Ended March 31,
(Millions of dollars)2020 2019 Variance
Reported sales$485
 $467
 4 %
      
Reported operating profit (loss)$(36) $(60) (40)%
As a percent of sales(7.4)% (12.8)%  

 Quarter Ended March 31,
(Millions of dollars)20212020Variance
Sales$494 $485 %
Operating profit (loss)$(18)$(36)50 %
As a percent of sales(3.6)%(7.4)%
Quarter Ended March 31, 2021 vs. 2020
% Change
Sales
Factors Contributing to Changes - Sales
Volume/price(4)%
Cost pass-through%
Currency%
Acquisitions/divestitures— %
Quarter Ended March 31, 2020 vs. 2019
% Change
Sales
Factors Contributing to Changes
Volume/price6 %
Cost pass-through %
Currency(2)%
Acquisitions/divestitures %
4 %

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





Sales
Sales for Other increased $18$9 million, or 4%2%, for the first quarter 20202021 versus the respective 2019 period, primarily due to higher helium pricing.2020 period. Currency translation increased sales by 5% in the period. Lower volumes decreased sales by 2% for the quarter 4% largely due to Surface Technologies. Cost pass-through increased sales by 1%.

Operating profit
Operating profit in Other increased $24$18 million, or 50% in the first quarter 20202021 versus the respective 20192020 period, due primarily to higher price and the impact ofcontinued cost reduction and productivity initiatives, partially offset by lower volumes and unfavorable currency translation impacts.initiatives.
31

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 foreign operations, Linde uses the local currency as its functional currency. There is inherent variability and unpredictability in the relationship of these functional currencies to the U.S. dollar and such currency movements may materially impact Linde's results of operations in any given period.
To help understand the reported results, the following is a summary of the significant currencies underlying Linde's consolidated results and the exchange rates used to translate the financial statements (rates of exchange expressed in units of local currency per U.S. dollar):
 
 Percentage of YTD 2021 Consolidated SalesExchange Rate for
Income Statement
Exchange Rate for
Balance Sheet
 Year-To-Date AverageMarch 31,December 31,
Currency2021202020212020
Euro21 %0.83 0.91 0.85 0.82 
Chinese yuan%6.48 6.98 6.55 6.53 
British pound%0.73 0.78 0.73 0.73 
Australian dollar%1.29 1.52 1.32 1.30 
Brazilian real%5.46 4.43 5.70 5.20 
Canadian dollar%1.27 1.34 1.26 1.27 
Korean won%1,114 1,193 1,132 1,087 
Mexican peso%20.34 19.84 20.43 19.91 
Indian rupee%72.90 72.38 73.11 73.07 
South African rand%14.96 15.32 14.78 14.69 
Swedish krona%8.39 9.67 8.73 8.23 
Thailand bhat%30.28 31.27 31.24 29.96 
32
 Percentage of YTD 2020 Consolidated Sales 
Exchange Rate for
Income Statement
 
Exchange Rate for
Balance Sheet
 Year-To-Date Average March 31, December 31,
Currency2020 2019 2020 2019
Euro20% 0.91
 0.88
 0.91
 0.89
Chinese yuan6% 6.98
 6.75
 7.08
 6.96
British pound6% 0.78
 0.77
 0.81
 0.75
Australian dollar4% 1.52
 1.40
 1.63
 1.42
Brazilian real4% 4.43
 3.77
 5.20
 4.03
Korean won3% 1,193
 1,126
 1,219
 1,156
Canadian dollar3% 1.34
 1.33
 1.41
 1.30
Mexican peso2% 19.84
 19.20
 23.67
 18.93
Taiwan dollar2% 30.13
 30.82
 30.26
 29.99
Indian rupee2% 72.38
 70.49
 75.63
 71.38
South African rand1% 15.32
 14.01
 17.84
 14.00
Swedish kroner1% 9.67
 9.18
 9.91
 9.37
Thailand bhat

1% 31.27
 31.62
 32.75
 29.71

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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)Three months ended March 31,
 20212020
NET CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net income (including noncontrolling interests)$1,017 $606 
Non-cash charges (credits):
Add: Depreciation and amortization1,166 1,142 
Add: Deferred income taxes(65)(107)
Add: Share-based compensation29 43 
Add: Cost reduction programs and other charges, net of payments (a) (76)40 
Net income adjusted for non-cash charges2,071 1,724 
Less: Working capital(42)(270)
Less: Pension contributions(12)(17)
  Other92 (90)
Net cash provided by operating activities$2,109 $1,347 
INVESTING ACTIVITIES
Capital expenditures(762)(803)
Acquisitions, net of cash acquired(10)(41)
Divestitures and asset sales21 231 
Net cash provided by (used for) investing activities$(751)$(613)
FINANCING ACTIVITIES
Debt increase (decrease) - net681 3,112 
Issuances (purchases) of common stock - net(851)(1,815)
Cash dividends - Linde plc shareholders(553)(511)
Noncontrolling interest transactions and other(247)(27)
Net cash provided by (used for) financing activities$(970)$759 
Effect of exchange rate changes on cash and cash equivalents$(46)$(179)
Cash and cash equivalents, end-of-period$4,096 $4,014 
(Millions of dollars)Three months ended March 31,
 2020 2019
NET CASH PROVIDED BY (USED FOR):   
OPERATING ACTIVITIES   
Net income (including noncontrolling interests)$606
 $465
Non-cash charges (credits):   
Add: Depreciation and amortization1,142
 1,223
Add: Amortization of merger-related inventory step-up
 10
Add: Deferred income taxes(107) (14)
Add: Share-based compensation43
 16
Add: Cost reduction programs and other charges, net of payments (a) 40
 (167)
Net income adjusted for non-cash charges1,724
 1,533
Less: Working capital(270) (282)
Less: Pension contributions(17) (18)
  Other(90) (165)
Net cash provided by operating activities$1,347
 $1,068
INVESTING ACTIVITIES   
Capital expenditures(803) (843)
Acquisitions, net of cash acquired(41) (152)
Divestitures and asset sales231
 3,455
Net cash provided by (used for) investing activities$(613) $2,460
FINANCING ACTIVITIES   
Debt increase (decrease) - net3,112
 (1,027)
Issuances (purchases) of common stock - net(1,815) (697)
Cash dividends - Linde plc shareholders(511) (477)
Noncontrolling interest transactions and other(27) (10)
Net cash provided by (used for) financing activities$759
 $(2,211)
    
Effect of exchange rate changes on cash and cash equivalents$(179) $8
Cash and cash equivalents, end-of-period$4,014
 $5,801

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

Cash Flow from Operations

Cash provided by operations of $1,347$2,109 million for the three months ended March 31, 20202021 increased $279$762 million, or 26%57%, versus 2019.2020. The increase was driven by higher net income adjusted for non-cash charges, lower working capital requirements, lower merger and synergy related cash outflows and favorable changes in other long-term assets and liabilities. Cost reduction programs and other charges was a benefit of $8 million and a charge of $131 million for the quarters ended March 31, 2021 and 2020, respectively. Related cash outflows were $68 million and $91 million for the same respective periods.

Linde estimates that total 20202021 required contributions to its pension plans will be in the range of $50$70 million to $80 million, of which $17$12 million has been made through March 31, 2020.2021. At a minimum, Linde contributes to its pension plans to comply with local regulatory requirements (e.g., ERISA in the United States). Discretionary contributions in excess of the local minimum requirements are made based on many factors, including long-term projections of the plans' funded status, the economic environment, potential risk of overfunding, pension insurance costs and alternative uses of the cash. Changes to these factors can impact the amount and timing of discretionary contributions from year to year.

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Investing
Investing
Net cash used for investing of $613$751 million for the three months ended March 31, 2020 decreased $3,0732021 increased $138 million versus 2019,2020, primarily driven by the proceeds from merger-related divestitures in 2019,2020, partially offset by lower capital expenditures and acquisitions.

Capital expenditures for the three months ended March 31, 20202021 were $803$762 million, $40$41 million lower than the prior year.

At March 31, 2021, Linde's sale of gas backlog of large projects under construction was approximately $3.5 billion. This represents the total estimated capital cost of large plants under construction.

Acquisitions for the three months ended March 31, 2021 were $10 million and related primarily to acquisitions in EMEA. Acquisitions for the three months ended March 31, 2020 were $41 million and related primarily to acquisitions in the Americas and APAC. Acquisitions for the three months ended March 31, 2019 were $152 million and related to acquisitions in the Americas.

Divestitures and asset sales for the three months ended March 31, 2021 and 2020 and 2019 were $231$21 million and $3,455$231 million, respectively. The 20192020 period includes net proceeds from merger-related divestitures of $3.4 billion$98 million from the sale of selected assets of Linde AG's Americas business (see Note 13China and proceeds of approximately $130 million related to the condensed consolidated financial statements).divestiture of a non-core business in Scandinavia.

Financing

Cash used for financing activities was $970 million for the three months ended March 31, 2021 as compared to cash provided by financing activities wasof $759 million for the three months ended March 31, 2020 as compared to cash used for financing activities of $2,211 million for the three months ended March 31, 2019.2020. Cash provided by debt was $3,112$681 million versus cash used forprovided by debt of $1,027$3,112 million in 20192020 primarily due to increased commercial paper borrowings.lower short-term debt borrowings net of repayments. Net purchases of ordinary shares were $851 million in 2021 versus $1,815 million in 2020 versus $697 million in 2019 driven by increased share repurchases under approved share repurchase programs.2020. Cash dividends of $511$553 million increased $34$42 million from 20192020 driven primarily by a 10% increase in quarterly dividends per share from 87.596.3 cents per share to 96.3106 cents per share. Cash used for Noncontrolling interest transactions and other was $247 million for the three months ended March 31, 2021 versus cash used of $27 million for the respective 2020 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 $4.1 billion of cash as of March 31, 2021, and has a $5 billion unsecured and undrawn revolving credit agreement with no associated financial covenants.  No borrowings were outstanding under the credit agreement as of March 31, 2020.2021. The company does not anticipate any limitations on its ability to access the debt capital markets and/or other external funding sources and remains committed to its strong ratings from Moody’s and Standard & Poor’s.

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

Legal Proceedings

See Note 9 to the condensed consolidated financial statements.

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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 March 31,20212020
2020 2019
Adjusted Sales   
Reported Sales6,739
 6,944
Less: Merger-related divestitures (d)
 (30)
Adjusted Sales6,739
 6,914
Adjusted Operating Profit and Operating Margin   Adjusted Operating Profit and Operating Margin
Reported operating profit$733
 $609
Reported operating profit$1,213 $733 
Less: Merger-related divestitures (d)
 (7)
Add: Cost reduction programs and other charges131
 89
Add: Cost reduction programs and other charges(8)131 
Add: Purchase accounting impacts - Linde AG (c)488
 531
Add: Purchase accounting impacts - Linde AG (c)483 488 
Total adjustments619
 613
Total adjustments475 619 
Adjusted operating profit$1,352
 $1,222
Adjusted operating profit$1,688 $1,352 
Reported percentage change20.4% 

Reported percentage change65 %20 %
Adjusted percentage change10.6% 

Adjusted percentage change25 %11 %
Reported sales$6,739
 $6,944
Reported sales$7,243 $6,739 
Adjusted sales (a)$6,739
 $6,914
Reported operating margin10.9% 8.8%Reported operating margin16.7 %10.9 %
Adjusted operating margin20.1% 17.7%Adjusted operating margin23.3 %20.1 %
Adjusted Depreciation and amortization   Adjusted Depreciation and amortization
Reported depreciation and amortization$1,142
 $1,223
Reported depreciation and amortization$1,166 $1,142 
Less: Purchase accounting impacts - Linde AG (c)(476) (521)Less: Purchase accounting impacts - Linde AG (c)(478)(476)
Adjusted depreciation and amortization$666
 $702
Adjusted depreciation and amortization$688 $666 
Adjusted Other Income (Expense) - netAdjusted Other Income (Expense) - net
Reported Other Income (Expense) - netReported Other Income (Expense) - net$$15 
Less: Purchase accounting impacts - Linde AG (c)Less: Purchase accounting impacts - Linde AG (c)(5)(12)
Adjusted Other Income (Expense) - netAdjusted Other Income (Expense) - net$$27 
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$(45) $15
Reported net pension and OPEB cost (benefit), excluding service cost$(49)$(45)
Add: Pension settlement charges
 (51)Add: Pension settlement charges— — 
Adjusted Net Pension and OPEB cost (benefit), excluding service costs$(45) $(36)Adjusted Net Pension and OPEB cost (benefit), excluding service costs$(49)$(45)
Adjusted Interest Expense - Net   Adjusted Interest Expense - Net
Reported interest expense - net$24
 $23
Reported interest expense - net$20 $24 
Add: Purchase accounting impacts - Linde AG (c)22
 27
Add: Purchase accounting impacts - Linde AG (c)18 22 
Adjusted interest expense - net$46
 $50
Adjusted interest expense - net$38 $46 
Adjusted Income Taxes (a)   
Reported income taxes$165
 $140
Add: Purchase accounting impacts - Linde AG (c)122
 127
Add: Cost reduction programs and other charges36
 19
Less: Merger-related divestitures (d)
 (2)
Total adjustments158
 144
Adjusted income taxes$323
 $284
35

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Adjusted Income Taxes (a)
Reported income taxes$268 $165 
Add: Purchase accounting impacts - Linde AG (c)118 122 
Add: Cost reduction programs and other charges20 36 
Total adjustments138 158 
Adjusted income taxes$406 $323 
Adjusted Effective Tax Rate (a)
Reported income before income taxes and equity investments$1,242 $754 
Add: Purchase accounting impacts - Linde AG (c)465 466 
Add: Cost reduction programs and other charges(8)131 
Total adjustments457 597 
Adjusted income before income taxes and equity investments$1,699 $1,351 
Reported Income taxes$268 $165 
Reported effective tax rate21.6 %21.9 %
Adjusted income taxes$406 $323 
Adjusted effective tax rate23.9 %23.9 %
Income from Equity Investments
Reported income from equity investments$43 $17 
Add: Purchase accounting impacts - Linde AG (c)19 14 
Adjusted income from equity investments$62 $31 
Adjusted Noncontrolling Interests from Continuing Operations
Reported noncontrolling interests from continuing operations$(38)$(35)
Add: Purchase accounting impacts - Linde AG (c)(5)(15)
Adjusted noncontrolling interests from continuing operations$(43)$(50)
Adjusted Income from Continuing Operations (b)
Reported income from continuing operations$979 $571 
Add: Cost reduction programs and other charges(28)95 
Add: Purchase accounting impacts - Linde AG (c)361 343 
Total adjustments333 438 
Adjusted income from continuing operations$1,312 $1,009 
Adjusted Diluted EPS from Continuing Operations (b)
Reported diluted EPS from continuing operations$1.86 $1.07 
Add: Cost reduction programs and other charges(0.05)0.18 
Add: Purchase accounting impacts - Linde AG (c)0.68 0.64 
Total adjustments0.63 0.82 
Adjusted diluted EPS from continuing operations$2.49 $1.89 
Reported percentage change74 %35 %
Adjusted percentage change32 %12 %
36
Adjusted Effective Tax Rate (a)   
Reported income before income taxes and equity investments$754
 $571
Less: Merger-related divestitures (d)
 (7)
Add: Pension settlement charge
 51
Add: Purchase accounting impacts - Linde AG (c)466
 504
Add: Cost reduction programs and other charges131
 89
Total adjustments597
 637
Adjusted income before income taxes and equity investments$1,351
 $1,208
    
Reported Income taxes$165
 $140
Reported effective tax rate21.9% 24.5%
    
Adjusted income taxes$323
 $284
Adjusted effective tax rate23.9% 23.5%
Income from Equity Investments   
Reported income from equity investments$17
 $34
Add: Purchase accounting impacts - Linde AG (c)14
 14
Adjusted income from equity investments$31
 $48
Adjusted Noncontrolling Interests from Continuing Operations   
Reported noncontrolling interests from continuing operations$(35) $(30)
Add: Purchase accounting impacts - Linde AG (c)(15) (15)
Total adjustments(15) (15)
Adjusted noncontrolling interests from continuing operations$(50) $(45)
Adjusted Income from Continuing Operations (b)   
Reported income from continuing operations$571
 $435
Add: Pension settlement charge
 51
Less: Merger-related divestitures (d)
 (5)
Add: Cost reduction programs and other charges95
 70
Add: Purchase accounting impacts - Linde AG (c)343
 376
Total adjustments438
 492
Adjusted income from continuing operations$1,009
 $927
Adjusted Diluted EPS from Continuing Operations (b)   
Reported diluted EPS from continuing operations$1.07
 $0.79
Add: Pension settlement charge
 0.09
Add: Cost reduction programs and other charges0.18
 0.13
Less: Merger-related divestitures (d)
 (0.01)
Add: Purchase accounting impacts - Linde AG (c)0.64
 0.69
Total adjustments0.82
 0.90
Adjusted diluted EPS from continuing operations$1.89
 $1.69
Adjusted EBITDA and % of Sales   
Income from continuing operations$571
 $435
Add: Noncontrolling interests related to continuing operations35
 30
Add: Net pension and OPEB cost (benefit), excluding service cost(45) 15
Add: Interest expense24
 23
Add: Income taxes165
 140
Add: Depreciation and amortization1,142
 1,223
EBITDA from continuing operations$1,892
 $1,866

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Less: Merger-related divestitures (d)
 (7)
Add: Cost reduction programs and other charges131
 89
Add: Purchase accounting impacts - Linde AG (c)26
 24
Total adjustments157
 106
Adjusted EBITDA from continuing operations$2,049
 $1,972
    
Reported sales$6,739
 $6,944
Adjusted sales$6,739
 $6,914
% of sales   
EBITDA from continuing operations28.1% 26.9%
Adjusted EBITDA from continuing operations30.4% 28.5%
Adjusted EBITDA and % of Sales
Income from continuing operations$979 $571 
Add: Noncontrolling interests related to continuing operations38 35 
Add: Net pension and OPEB cost (benefit), excluding service cost(49)(45)
Add: Interest expense20 24 
Add: Income taxes268 165 
Add: Depreciation and amortization1,166 1,142 
EBITDA from continuing operations$2,422 $1,892 
Add: Cost reduction programs and other charges(8)131 
Add: Purchase accounting impacts - Linde AG (c)24 26 
Total adjustments16 157 
Adjusted EBITDA from continuing operations$2,438 $2,049 
Reported sales$7,243 $6,739 
% of sales
EBITDA from continuing operations33.4 %28.1 %
Adjusted EBITDA from continuing operations33.7 %30.4 %
(a) The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.
(b) Net of income taxes which are shown separately in “Adjusted Income Taxes and Adjusted Effective Tax Rate”.
(c) The company believes that its non-GAAP measures excluding Purchase accounting impacts - Linde AG are useful to investors because: (i) the business combination was a merger of equals in an all-stock merger transaction, with no cash consideration, (ii) the company is managed on a geographic basis and the results of certain geographies are more heavily impacted by purchase accounting than others, causing results that are not comparable at the reportable segment level, therefore, the impacts of purchasing accounting adjustments to each segment vary and are not comparable within the company and when compared to other companies in similar regions, (iii) business management is evaluated and variable compensation is determined based on results excluding purchase accounting impacts, and; (iv) it is important to investors and analysts to understand the purchase accounting impacts to the financial statements.
A summary of each of the adjustments made for Purchase accounting impacts - Linde AG are as follows:
Adjusted Operating Profit and Margin: The purchase accounting adjustments for the periods presented relate primarily to depreciation and amortization related to the fair value step up of fixed assets and intangible assets (primarily customer related) acquired in the merger.
merger and the allocation of fair value step-up for ongoing Linde AG asset disposals (reflected in Other Income/(Expense)).
Adjusted Interest Expense - Net: Relates to the amortization of the fair value of debt acquired in the merger.
Adjusted Income Taxes and Effective Tax Rate: Relates to the current and deferred income tax impact on the adjustments discussed above. The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.
Adjusted Income from Equity Investments: Represents the amortization of increased fair value on equity investments related to depreciable and amortizable assets.
Adjusted Noncontrolling Interests from Continuing Operations: Represents the noncontrolling interests’ ownership portion of the adjustments described above determined on an entity by entity basis.
(d) To adjust for the results of Praxair's merger-related divestitures.

Net Debt and Adjusted Net Debt
Net debt is a financial liquidity measure used by investors, financial analysts and management to evaluate the ability of a company to repay its debt. Purchase accounting impacts have been excluded as they are non-cash and do not have an impact on liquidity.
March 31,
2021
December 31,
2020
(Millions of dollars)  
Debt$15,750 $16,154 
Less: cash and cash equivalents(4,096)(3,754)
Net debt11,654 12,400 
Less: purchase accounting impacts - Linde AG(98)(121)
Adjusted net debt$11,556 $12,279 





37

  
 March 31,
2020
 December 31,
2019
(Millions of dollars)   
Debt$16,875
 $13,956
Less: cash and cash equivalents(4,014) (2,700)
Net debt12,861
 11,256
Less: purchase accounting impacts - Linde AG(170) (195)
Adjusted net debt$12,691
 $11,061


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 (previously Praxair) and/or Linde GmbH (previously Linde AG). 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. (previously Praxair, 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.

38

(Millions of dollars)
Statement of Income DataThree Months Ended March 31, 2021Twelve Months Ended December 31, 2020
Sales$1,720 $6,772 
Operating profit179 760 
Net income87 660 
Transactions with non-guarantor subsidiaries424 2,082 
Balance Sheet Data (at period end)
Current assets (a)$3,227 $3,117 
Long-term assets (b)17,420 17,892 
Current liabilities (c)10,595 8,265 
Long-term liabilities (d)36,727 38,188 
(a) From current assets above, amount due from non-guarantor subsidiaries
$949 $937 
(b) From long-term assets above, amount due from non-guarantor subsidiaries4,336 4,553 
(c) From current liabilities above, amount due to non-guarantor subsidiaries1,078 1,053 
(d) From long-term liabilities above, amount due to non-guarantor subsidiaries22,834 22,419 


Item 3. Quantitative and Qualitative Disclosures About Market Risk
Refer to Item 7A. to Part II of Linde's 20192020 Annual Report on Form 10-K for discussion.
Item 4. Controls and Procedures
(a)
(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

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.
(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

We are supplementingThrough the quarterly period covered by this report, there have been no material changes to the risk factors described under "Item 1A. Risk Factors"disclosed in ourItem 1A to Part I of Linde's Annual Report on Form 10-K for the year ended December 31, 2019 with the additional risk factor set forth below, which supplements, and to the extent inconsistent, supersedes such risk factors.2020.

The recent novel coronavirus (COVID-19) outbreak could materially adversely affect our results of operations.

The novel strain of the coronavirus identified in China has globally spread and has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns. These measures have impacted and may further impact our workforce and operations, the operations of our customers, vendors and suppliers. There is considerable uncertainty regarding such measures and potential future measures, and restrictions on our access to our manufacturing facilities or on our support operations or workforce, or similar limitations for our vendors and suppliers, and restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures, could limit our capacity to meet customer demand and have a material adverse effect on our results of operations. These restrictions and disruptions could affect our performance on our contracts. Resulting cost increases may not be fully recoverable or adequately covered by insurance, which could impact our profitability.
Furthermore, COVID-19 has impacted and may further impact the broader economies of affected countries, including negatively impacting economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates, and interest rates. Risks related to economic conditions are described in our Principal Risks and Uncertainties titled “Weakening economic conditions in markets in which Linde does business may adversely impact its financial results and/or cash flows” and “Macroeconomic factors may impact Linde’s ability to obtain financing or increase the cost of obtaining financing which may adversely impact Linde’s financial results and/or cash flows."

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, 20202021 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 (2)
(Millions)
January 2021537 $257.37 537 $1,138 
February 20211,240 $251.63 1,240 $4,688 
March 20211,719 $265.40 1,719 $4,232 
First Quarter 20213,496 $259.28 3,496 $4,232 
Period
Total Number
of Shares
Purchased
(Thousands)
 
Average
Price Paid
Per Share
 
Total Numbers of Shares
Purchased as Part of
Publicly Announced
Program (1)
(Thousands)
 
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Program (2)
(Millions)
January 20201,478
 $208.00
 1,478
 $3,408
February 20202,289
 $205.73
 2,289
 $2,937
March 20205,907
 $172.81
 5,907
 $1,916
First Quarter 20209,674
 $185.98
 9,674
 $1,916

(1)   On January 22, 2019 the company’s board of directors approved the repurchase of $6.0 billion of its ordinary shares ("2019 program") which could take place from time to time on the open market (which could include the use of 10b5-1 trading plans), subject to market and business conditions. The 2019 program had a maximum repurchase amount of 15% of outstanding shares and expired on February 1, 2021.

(2) 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, and a stated expiration date ofbegan on February 1, 2021.2021 and expires on July 31, 2023.

(2) As of March 31, 2020,2021, the company repurchased $4.1$768 million and $4.9 billion of its ordinary shares pursuant to the 2021 and 2019 programs, respectively. Under the 2021 program, $4.2 billion shares remain authorized. The 2019 program leaving an additional $1.9 billion authorized.expired on February 1, 2021.
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
10.01
31.01
(a)Exhibits31.02
31.01
31.0232.01
32.01
32.02
101.INSXBRL 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.SCHXBRL Taxonomy Extension Schema
101.CALXBRL Taxonomy Extension Calculation Linkbase
101.LABXBRL Taxonomy Extension Label Linkbase
101.PREXBRL Taxonomy Extension Presentation Linkbase
101.DEFXBRL 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 7, 20206, 2021By: /s/ Kelcey E. Hoyt
Kelcey E. Hoyt
Chief Accounting Officer

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