Air Products and Chemicals (APD) 10-Q 24 Jul 09 2009 Q3 Quarterly report Financial data

Document and Company Informatio

Document and Company Information (USD $)
In Billions, except Share data	9 Months Ended Jun. 30, 2009	Jul. 20, 2009	Mar. 31, 2008
Document and Company Information [Abstract]
Entity Registrant Name	AIR PRODUCTS AND CHEMICALS, INC.
Entity Central Index Key	0000002969
Document Type	10-Q
Document Period End Date	2009-06-30
Amendment Flag	false
Amendment Description	N/A
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			19.4
Entity Common Stock, Shares Outstanding		210,081,686

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Millions	Jun. 30, 2009	Sep. 30, 2008
CURRENT ASSETS
Cash and cash items	70.3	103.5
Trade receivables, less allowances for doubtful accounts	1332.6	1575.2
Inventories	495.8	503.7
Contracts in progress, less progress billings	115.3	152
Prepaid expenses	96	107.7
Other receivables and current assets	445.6	349.4
Current assets of discontinued operations	15.5	56.6
TOTAL CURRENT ASSETS	2571.1	2848.1
INVESTMENT IN NET ASSETS OF AND ADVANCES TO EQUITY AFFILIATES	820.6	822.6
PLANT AND EQUIPMENT, at cost	15254.7	14988.6
Less accumulated depreciation	8579.7	8373.8
PLANT AND EQUIPMENT, net	6,675	6614.8
GOODWILL	872.7	928.1
INTANGIBLE ASSETS, net	251.4	289.6
NONCURRENT CAPITAL LEASE RECEIVABLES	569.4	505.3
OTHER NONCURRENT ASSETS	478.9	504.1
NONCURRENT ASSETS OF DISCONTINUED OPERATIONS	4.4	58.7
TOTAL ASSETS	12243.5	12571.3
CURRENT LIABILITIES
Payables and accrued liabilities	1299.7	1665.6
Accrued income taxes	84.7	87
Short-term borrowings	385.6	419.3
Current portion of long-term debt	3.8	32.1
Current liabilities of discontinued operations	19	8
TOTAL CURRENT LIABILITIES	1792.8	2,212
LONG-TERM DEBT	3755.8	3515.4
DEFERRED INCOME & OTHER NONCURRENT LIABILITIES	1040.7	1049.2
DEFERRED INCOME TAXES	591	626.6
NONCURRENT LIABILITIES OF DISCONTINUED OPERATIONS	0.3	1.2
TOTAL LIABILITIES	7180.6	7404.4
MINORITY INTEREST IN SUBSIDIARY COMPANIES	134.6	136.2
SHAREHOLDERS' EQUITY
Common stock (par value $1 per share; 2009 and 2008 - 249,455,584 shares)	249.4	249.4
Capital in excess of par value	821.6	811.7
Retained earnings	7086.6	6990.2
Accumulated other comprehensive income (loss)	-803.6	-549.3
Treasury stock, at cost (2009 - 39,373,898 shares; 2008 - 40,120,957 shares)	-2425.7	-2471.3
TOTAL SHAREHOLDERS' EQUITY	4928.3	5030.7
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	12243.5	12571.3

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (USD $)
	Jun. 30, 2009	Sep. 30, 2008
Common stock, par value	1	1
Common stock, shares	249,455,584	249,455,584
Treasury stock, shares	39,373,898	40,120,957

Consolidated Income Statements

Consolidated Income Statements (USD $)
In Millions, except Per Share data	3 Months Ended Jun. 30, 2009	3 Months Ended Jun. 30, 2008	9 Months Ended Jun. 30, 2009	9 Months Ended Jun. 30, 2008
SALES	1976.2	2749.7	6126.9	7699.8
Cost of sales	1427.5	2041.1	4497.1	5666.3
Selling and administrative	232.3	284.4	709.9	815
Research and development	24.1	33.1	86.9	97.7
Global cost reduction plan	124	0	298.2	0
Customer bankruptcy	22.2	0	22.2	0
Pension settlement	8	1	8	28.7
Other income, net	5.7	3.6	13.7	30.6
OPERATING INCOME	143.8	393.7	518.3	1122.7
Equity affiliates' income	28.5	46.5	80	114.2
Interest expense	27.5	39.5	94	119.2
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND MINORITY INTEREST	144.8	400.7	504.3	1117.7
Income tax provision	25.4	98.1	99	282.4
Minority interest in earnings of subsidiary companies	4.8	7.6	11.4	18.2
INCOME FROM CONTINUING OPERATIONS	114.6	295	393.9	817.1
LOSS FROM DISCONTINUED OPERATIONS, net of tax	-1.4	-224.9	-6.5	(169)
NET INCOME	113.2	70.1	387.4	648.1
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations	0.55	1.4	1.88	3.84
Loss from discontinued operations	-0.01	-1.07	-0.03	-0.79
Net Income	0.54	0.33	1.85	3.05
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations	0.54	1.35	1.85	3.72
Loss from discontinued operations	-0.01	-1.03	-0.03	-0.77
Net Income	0.53	0.32	1.82	2.95
WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING	209.8	211.2	209.6	212.8
WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING ASSUMING DILUTION	214	218.2	212.8	219.9
DIVIDENDS DECLARED PER COMMON SHARE - Cash	0.45	0.44	1.34	1.26

Consolidated Comprehensive Inco

Consolidated Comprehensive Income Statements (USD $)
In Millions	3 Months Ended Jun. 30, 2009		3 Months Ended Jun. 30, 2008		9 Months Ended Jun. 30, 2009		9 Months Ended Jun. 30, 2008
NET INCOME	113.2		70.1		387.4		648.1
OTHER COMPREHENSIVE INCOME (LOSS), net of tax:
Net unrealized holding gain (loss) on investments, net of income tax of $1.5 (3 months 2009), $1.4 ( 3 months 2008), $1.1 (9 months 2009), $(.8) (9 months 2008), respectively	2.6		2.5		1.8		-1.7
Net unrecognized gain (loss) on derivatives qualifying as hedges, net of income tax (benefit) of $2.6 (3 months 2009), $(1.3) (3 months 2008), $(.2) (9 months 2009), $(7.7) (9 months 2008), respectively	5.4	[1]	(3)	[1]	-0.3	[1]	-14.2	[1]
Foreign currency translation adjustments, net of income tax (benefit) of $(30.5) (3 months 2009), $8.1 (3 months 2008), $(25.8) (9 months 2009), $(62.5) (9 months 2008), respectively	253.4		-10.8		-284.7		136.6
Reclassification adjustment for foreign currency translation adjustment realized in net income					0	[2]	-53.7	[2]
Pension and postretirement benefits, net of tax (benefit) of $(13.6) (3 months 2009), $- (3 months 2008), $(13.6) (9 months 2009), $(10.3) (9 months 2008), respectively	-22.7		0		-22.7		-13.8
Pension and postretirement benefits reclassified to earnings, net of tax of $4.7 (3 months 2009), $3.7 (3 months 2008), $7.3 (9 months 2009), $20.7(9 months 2008), respectively	8.7		7.3		15.8		38.6
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	247.4		(4)		-290.1		91.8
COMPREHENSIVE INCOME	360.6		66.1		97.3		739.9
[1]Amounts reclassified from other comprehensive income into earnings in 2009 and 2008 were not material. See Note 5.
[2]In the second quarter of 2008, the Company completed the sale of its Polymer Emulsions business as discussed in Note 4. Accordingly, the related foreign currency translation results of this business were reclassified from other comprehensive income into earnings.

1_Consolidated Comprehensive In

Consolidated Comprehensive Income Statements (Parenthetical) (USD $)
In Millions	3 Months Ended Jun. 30, 2009		3 Months Ended Jun. 30, 2008		9 Months Ended Jun. 30, 2009		9 Months Ended Jun. 30, 2008
Tax effects on net unrealized holding gain (loss) on investments	1.5		1.4		1.1		-0.8
Tax effects on net unrecognized gain (loss) on derivatives qualifying as hedges	2.6	[1]	-1.3	[1]	-0.2	[1]	-7.7	[1]
Tax effects on foreign currency translation adjustments	-30.5		8.1		-25.8		-62.5
Tax effect on pension and postretirement benefits	-13.6		0		-13.6		-10.3
Tax effect on pension and postretirement benefits reclassified to earnings	4.7		3.7		7.3		20.7
[1]Amounts reclassified from other comprehensive income into earnings in 2009 and 2008 were not material. See Note 5.

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (USD $)
In Millions	9 Months Ended Jun. 30, 2009		9 Months Ended Jun. 30, 2008
OPERATING ACTIVITIES
Net income	387.4		648.1
Adjustments to reconcile income to cash provided by operating activities:
Depreciation and amortization	614.8		647.8
Impairment of assets of continuing operations	67.7		0
Impairment of assets of discontinued operations	48.7		314.8
Loss (gain) on sale of discontinued operations	0.6		-119.5
Deferred income taxes	-41.6		-69.6
Customer bankruptcy	22.2		0
Undistributed earnings of unconsolidated affiliates	-45.5		-59.6
Loss (gain) on sale of assets and investments	7		-0.4
Share-based compensation	45.1		47.1
Noncurrent capital lease receivables	-74.9		-160.5
Other adjustments	-38.5		82.7
Working capital changes that provided (used) cash, excluding effects of acquisitions and divestitures:
Trade receivables	160		-195.9
Inventories	-10.8		-39.5
Contracts in progress	29.8		84.8
Other receivables	16.1		-3.7
Payables and accrued liabilities	-313.2		-20.7
Other working capital	-17.7		-26.4
CASH PROVIDED BY OPERATING ACTIVITIES	857.2	[1]	1129.5	[1]
INVESTING ACTIVITIES
Additions to plant and equipment	-899.3		-791.4
Acquisitions, less cash acquired	-29.8		(2)
Investment in and advances to unconsolidated affiliates	-1.1		-1.8
Proceeds from sale of assets and investments	30.1		18.4
Proceeds from sale of discontinued operations	39		419.5
Change in restricted cash	82.2		-135.6
Other investing activities	0		-17.8
CASH USED FOR INVESTING ACTIVITIES	-778.9		-510.7
FINANCING ACTIVITIES
Long-term debt proceeds	120.9		479.8
Payments on long-term debt	(70)		-96.7
Net increase (decrease) in commercial paper and short-term borrowings	99.2		(236)
Dividends paid to shareholders	-278.8		-256.1
Purchase of treasury stock	0		-560.2
Proceeds from stock option exercises	14.9		80.9
Excess tax benefit from share-based compensation/other	4.1		50.1
CASH USED FOR FINANCING ACTIVITIES	-109.7		-538.2
Effect of Exchange Rate Changes on Cash	-1.8		5.1
(Decrease) Increase in Cash and Cash Items	-33.2		85.7
Cash and Cash Items - Beginning of Year	103.5		40.5
Cash and Cash Items - End of Period	70.3		126.2
[1]Pension plan contributions in 2009 and 2008 were $169.5 and $123.0, respectively.

2_Consolidated Statements of Ca

Consolidated Statements of Cash Flows (Parenthetical) (USD $)
In Millions	9 Months Ended Jun. 30, 2009	9 Months Ended Jun. 30, 2008
Pension plan contributions	169.5	$123

Major Accounting Policies

Major Accounting Policies
	9 Months Ended Jun. 30, 2009 USD / shares
Major Accounting Policies [Abstract]
Major Accounting Policies	1. MAJOR ACCOUNTING POLICIES Refer to the Companys 2008 annual report on Form 10-K for a description of major accounting policies. There have been no material changes to these accounting policies during the first nine months of 2009 other than those detailed in Note 2. Basis of Presentation The consolidated financial statements of Air Products and Chemicals, Inc. and its subsidiaries (the Company or registrant) included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company, the accompanying statements reflect adjustments necessary to present fairly the financial position, results of operations, and cash flows for those periods indicated, and contain adequate disclosure to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the Notes. However, the interim results for the periods indicated herein do not reflect certain adjustments, such as the valuation of inventories on the LIFO cost basis, which can only be finally determined on an annual basis. The consolidated financial statements and related Notes included herein should be read in conjunction with the financial statements and Notes thereto included in the Companys latest annual report on Form 10-K in order to fully understand the basis of presentation. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

New Accounting Standards

New Accounting Standards
	9 Months Ended Jun. 30, 2009 USD / shares
New Accounting Standards [Abstract]
New Accounting Standards	2. NEW ACCOUNTING STANDARDS Standards Implemented Disclosures about Subsequent Events In May2009, the Financial Accounting Standards Board (FASB)issued Statement of Financial Accounting Standard (SFAS)No.165, Subsequent Events. SFAS No.165 establishes the standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. This Statement also requires the disclosure of the date through which subsequent events have been evaluated. The Company adopted this standard, as required, for the period ended 30 June2009. Adoption of SFAS No.165 did not have a material impact on the Companys consolidated financial statements. Refer to Note 14, Supplemental Information, for the required disclosure. Fair Value Disclosures Effective 1 April2009, the Company adopted FASB Staff Position (FSP)FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP extends the disclosure requirements under SFAS No.107, Disclosures about Fair Value of Financial Instruments, to interim financial statements. It also amends APB Opinion No.28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. This FSP only requires additional disclosure and did not have an impact on the Companys consolidated financial statements. Refer to Note 6, Fair Value Measurements, for the required disclosures. Disclosures about Derivatives and Hedging Effective 1 January2009, the Company adopted SFAS No.161, Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No.133. SFAS No.161 requires enhanced disclosures about how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for; and how they affect an entitys financial position, financial performance, and cash flows. This Statement only requires additional disclosure and did not have an impact on the Companys consolidated financial statements upon adoption. Refer to Note 5, Financial Instruments, for the required disclosures. Fair Value Option In February2007, the FASB issued SFAS No.159, The Fair Value Option for Financial Assets and Financial Liabilities Including an amendment of FASB Statement No.115. This Statement permits companies to elect to measure certain financial instruments at fair value on an instrument-by-instrument basis, with changes in fair value recognized in earnings each reporting period. In addition, SFAS No.159 establishes financial statement presentation and disclosure requirements for assets and liabilities reported at fair value under the election. The Company adopted SFAS No.159 as of 1 October2008 and elected not to fair value any items under this Statement. Postretirement Benefits The Company adopted the measurement date change of SFAS No.158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, for its U.K. and Belgium pension plans as of 1 October2008. SFAS No.158 required the Company to change the measurement date for these plans from 30 June to 30 September (end of fis

Global Cost Reduction Plan

Global Cost Reduction Plan
	9 Months Ended Jun. 30, 2009 USD / shares
Global Cost Reduction Plan [Abstract]
Global Cost Reduction Plan	3. GLOBAL COST REDUCTION PLAN Third Quarter 2009 During the third quarter ended 30 June2009, due to the continuing slow economic recovery, the Company committed to additional actions associated with its global cost reduction plan which resulted in a charge to continuing operations of $124.0 ($84.2 after-tax, or $.39 per share). This charge included $90.0 for severance and other benefits, including pension-related costs, associated with the elimination of approximately 1,150 positions of its global workforce. The reductions are targeted at continued cost reduction and productivity efforts, including the closure of certain manufacturing facilities. An impairment charge of $34.0 was recorded to write-down certain assets held for sale to net realizable value. The planned actions associated with the third quarter charge are expected to be substantially completed by the end of the third quarter of fiscal year 2010. First Quarter 2009 During the first quarter ended 31 December2008, the Company announced a global cost reduction plan designed to lower its cost structure and better align its businesses to reflect rapidly declining economic conditions around the world. The results from continuing operations in the first quarter included a charge of $174.2 ($116.1 after-tax, or $.55 per share). This charge included $120.0 for severance and pension-related costs, associated with eliminating approximately 1,400 positions from its global workforce. The reductions are targeted at reducing overhead and infrastructure costs, reducing and refocusing elements of the Companys technology and business development spending, and lowering its plant operating costs. The remainder of this charge, $54.2, was for business exits and asset management actions. Assets held for sale were written down to net realizable value and an environmental liability of $16.0 was recognized. This environmental liability resulted from a decision to sell a production facility. The planned actions associated with the first quarter 2009 charge are expected to be substantially completed by the end of the first quarter of fiscal year 2010. Business Segments The charges for the global cost reduction plan were excluded from segment operating profit. The tables below display how these charges related to the businesses at the segment level: Asset Severance and Impairments/ Third Quarter 2009 Other Benefits Other Costs Total Merchant Gases $ 43.0 $ .5 $ 43.5 Tonnage Gases 3.1 3.1 Electronics and Performance Materials 8.9 11.7 20.6 Equipment and Energy 35.0 21.8 56.8 $ 90.0 $ 34.0 $ 124.0 Asset Severance and Impairment/ Nine Months Ended 30 June 2009 Other Benefits Other Costs Total Merchant Gases $ 127.5 $ 7.2 $ 134.7 Tonnage Gases 14.2 14.2 Electronics and Performance Materials 30.6 58.9 89.5 Equipment and Energy 37.7 22.1 59.8 $ 210.0 $ 88.2 $ 298.2 Accrual Balance The f

Discontinued Operations

Discontinued Operations
	9 Months Ended Jun. 30, 2009 USD / shares
Discontinued Operations [Abstract]
Discontinued Operations	4. DISCONTINUED OPERATIONS The U.S. Healthcare business, Polymer Emulsions business, and the High Purity Process Chemicals (HPPC)business have been accounted for as discontinued operations. The results of operations of these businesses have been removed from the results of continuing operations for all periods presented. For additional historical information on these discontinued operations, refer to the Companys 2008 annual report on Form 10-K. U.S. Healthcare In July2008, the Board of Directors authorized management to pursue the sale of the U.S. Healthcare business. In 2008, the Company recorded a total charge of $329.2 ($246.2 after-tax, or $1.12 per share) related to the impairment/write-down of the net carrying value of the U.S. Healthcare business. In the first quarter of 2009, based on additional facts, the Company recorded an impairment charge of $48.7 ($30.9 after-tax, or $.15 per share) reflecting a revision in the estimated net realizable value of the U.S. Healthcare business. Also, a tax benefit of $8.8, or $.04 per share, was recorded to revise the estimated tax benefit related to previously recognized impairment charges. As a result of events which occurred during the second quarter of 2009, which increased the Companys ability to realize tax benefits associated with the impairment charges recorded in 2008, the Company recognized a one-time tax benefit of $16.7, or $.08 per share. During the third quarter of 2009, the Company sold more than half of its remaining U.S. Healthcare business to OptionCare Enterprises, Inc., a subsidiary of Walgreen Co., and Landauer-Metropolitan, Inc. (LMI)for combined cash proceeds of $38.1. The Company recognized an after-tax gain of $.3 resulting from these sales combined with adjustments to the net realizable value of the remaining businesses. The Company expects to conclude the sale of the remaining portions of this business in 2009. The operating results of the U.S. Healthcare business have been classified as discontinued operations and are summarized below: Three Months Ended Nine Months Ended 30 June 30 June 2009 2008 2009 2008 Sales $ 25.2 $ 58.3 $ 117.3 $ 187.1 Loss before taxes $ (3.4 ) $ (326.2 ) $ (3.2 ) $ (345.4 ) Income tax benefit (1.3 ) (82.0 ) (1.2 ) (89.3 ) Loss from operations of discontinued operations $ (2.1 ) $ (244.2 ) $ (2.0 ) $ (256.1 ) Income (loss)on sale of businesses and impairment/write-down to estimated net realizable value, net of tax .3 (4.8 ) Loss from discontinued operations, net of tax $ (1.8 ) $ (244.2 ) $ (6.8 ) $ (256.1 ) Details of balance sheet items for the U.S. Healthcare business are summarized below: 30 June 2009 30 September 2008 Trade receivables, less allowances $ 10.3 $ 47.7 Inventories 1.8 7.2 Prepaid expenses .5 1.4 Other receivables 2.9 .2 Total Current Assets $ 15.5 $ 56.5 Plant and equipment, net $ 4.3 $ 58.7

Financial Instruments

Financial Instruments
	9 Months Ended Jun. 30, 2009 USD / shares
Financial Instruments [Abstract]
Financial Instruments	5. FINANCIAL INSTRUMENTS Currency Price Risk Management The Companys earnings, cash flows, and financial position are exposed to foreign currency risk from foreign currency denominated transactions and net investments in foreign operations. It is the policy of the Company to minimize its cash flow exposure to adverse changes in currency and exchange rates. This is accomplished by identifying and evaluating the risk that the Companys cash flows will decline in value due to changes in exchange rates, and by determining the appropriate strategies necessary to manage such exposures. The Companys objective is to maintain economically balanced currency risk management strategies that provide adequate downside protection. Forward Exchange Contracts The Company enters into forward exchange contracts to reduce the cash flow exposure to foreign currency fluctuations associated with highly anticipated cash flows and certain firm commitments such as the purchase of plant and equipment. Forward exchange contracts are also used to hedge the value of investments in certain foreign subsidiaries and affiliates by creating a liability in a currency in which the Company has a net equity position. The Company recognizes these derivatives on the balance sheet at fair value. On the date the derivative instrument is entered into, the Company generally designates the derivative as either (1)a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge), (2)a hedge of a net investment in a foreign operation (net investment hedge), or (3)a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge). In addition to the foreign exchange contracts that are designated as hedges under SFAS No.133, Accounting for Derivative Instruments and Hedging Activities (SFAS No.133), the Company also hedges foreign currency exposures utilizing forward exchange contracts that are not designated as hedges under SFAS No.133. These contracts are used to hedge foreign currency-denominated monetary assets and liabilities, primarily intercompany loans and working capital. The primary objective of these forward contracts is to protect the value of foreign currency-denominated monetary assets and liabilities from the effects of volatility in foreign exchange rates that might occur prior to their receipt or settlement. Option Contracts The Company enters into option contracts to reduce the cash flow exposure to foreign currency fluctuations associated with highly anticipated export sales transactions. The Company recognizes these derivatives on the balance sheet at fair value. On the date the derivative instrument is entered into, the Company designates these derivatives as cash flow hedges. The table below summarizes the Companys outstanding currency price risk management instruments as of 30 June2009 and 30 September2008: 30 June 2009 30 September 2008 US$ Years Average US$ Years Average Notional Maturity Notional Maturity Forward exchange contracts

Fair Value Measurements

Fair Value Measurements
	9 Months Ended Jun. 30, 2009 USD / shares
Fair Value Measurements [Abstract]
Fair Value Measurements	6. FAIR VALUE MEASUREMENTS The carrying values and fair values of financial instruments were as follows: 30 June 2009 30 September 2008 Carrying Value Fair Value Carrying Value Fair Value Assets Derivatives (a) Foreign exchange contracts $ 60.3 $ 60.3 $ 54.9 $ 54.9 Interest rate swap contracts 18.8 18.8 5.6 5.6 Commodity swap contracts 8.7 8.7 7.7 7.7 Other investments (b) 18.5 18.5 31.9 31.9 Liabilities Derivatives (a) Foreign exchange contracts $ 92.9 $ 92.9 $ 109.2 $ 109.2 Interest rate swap contracts 4.2 4.2 3.5 3.5 Commodity swap contracts 4.9 4.9 2.9 2.9 Long-term debt, including current portion (c) 3,759.6 3,901.9 3,547.5 3,581.5 The methods and assumptions used to measure the fair value of financial instruments are as follows: (a) Derivatives The fair value of the Companys interest rate swap agreements and foreign exchange contracts are based on estimates using standard pricing models that take into account the present value of future cash flows as of the balance sheet date. The computation of the fair values of these instruments is generally performed by the Company. These standard pricing models utilize inputs which are derived from or corroborated by observable market data such as interest rate yield curves and currency spot and forward rates. In addition, on an ongoing basis, the Company randomly tests a subset of its valuations against valuations received from the counterparty to the transaction to validate the accuracy of its standard pricing models. The fair value of commodity swaps is based on current market price as provided by the financial institutions with which the commodity swaps have been executed. Counterparties to these derivative contracts are highly rated financial institutions none of which experienced significant downgrades since 30 September2008 that could reduce the receivable amount collectible. (b) Other investments The fair value of other investments in publicly traded companies is based on quoted market prices from the New York and Tokyo Stock Exchanges. The fair value of other investments is reported within other noncurrent assets on the balance sheet. (c) Long-term debt The fair value of the Companys debt is based on estimates using standard pricing models that take into account the present value of future cash flows as of the balance sheet date. The computation of the fair value of these instruments is generally performed by the Company. The carrying amounts reported in the balance sheet for cash and cash items, trade receivables, payables and accrued liabilities, accrued income taxes, and short-term borrowings approximate fair value due to the short term nature of these instruments. Accordingly, these items have been excluded from the above table. As discussed in Note

Inventories

Inventories
	9 Months Ended Jun. 30, 2009 USD / shares
Inventories [Abstract]
Inventories	7. INVENTORIES The components of inventories are as follows: 30 June 30 September 2009 2008 Inventories at FIFO Cost Finished goods $ 389.7 $ 365.1 Work in process 21.8 22.4 Raw materials and supplies 162.9 183.5 574.4 571.0 Less: excess of FIFO cost over LIFO cost (78.6 ) (67.3 ) $ 495.8 $ 503.7 FIFO cost approximates replacement cost. The Companys inventories have a high turnover, and as a result, there is little difference between the original cost of an item and its current replacement cost.

Goodwill

Goodwill
	9 Months Ended Jun. 30, 2009 USD / shares
Goodwill [Abstract]
Goodwill	8. GOODWILL Changes to the carrying amount of consolidated goodwill by segment for the nine months ended 30 June2009 are as follows: Acquisition Currency 30 September and Translation 30 June 2008 Adjustments and Other 2009 Merchant Gases $ 626.5 $ .2 $ (57.6 ) $ 569.1 Tonnage Gases 18.0 (3.1 ) 14.9 Electronics and Performance Materials 283.6 9.5 (4.4 ) 288.7 $ 928.1 $ 9.7 $ (65.1 ) $ 872.7 Goodwill is subject to impairment testing at least annually. In addition, goodwill is tested more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists.

Share Based Compensation

Share Based Compensation
	9 Months Ended Jun. 30, 2009 USD / shares
Share-based Compensation [Abstract]
Share-based Compensation	9. SHARE-BASED COMPENSATION The Company has various share-based compensation programs, which include stock options, deferred stock units, and restricted shares. During the nine months ended 30 June2009, the Company granted 2.0million stock options at a weighted-average exercise price of $66.90 and an estimated fair value of $20.86 per option. The fair value of these options was estimated using a lattice-based option valuation model that used the following assumptions: expected volatility of 31.2%; expected dividend yield of 2.1%; expected life in years of 6.7-8.0; and a risk-free interest rate of 3.5%-3.9%. In addition, the Company granted 403,470 deferred stock units at a weighted-average grant-date fair value of $52.21 and 40,092 restricted shares at a weighted-average grant-date fair value of $64.01. Refer to Note 15 in the Companys 2008 annual report on Form 10-K for information on the valuation and accounting for these programs. Share-based compensation cost charged against income in the three months ended 30 June2009 was $15.0 ($9.2 after-tax). Of the share-based compensation cost recognized, $10.7 was a component of selling and administrative expense, $1.9 a component of cost of sales, $1.3 a component of research and development, and $1.1 a component of the global cost reduction plan. Share-based compensation cost charged against income in the three months ended 30 June2008 was $14.1 ($8.7 after-tax). Share-based compensation cost charged against income in the nine months ended 30 June2009 was $45.1 ($27.7 after-tax). Of the share-based compensation cost recognized, $33.4 was a component of selling and administrative expense, $6.2 a component of cost of sales, $4.0 a component of research and development, and $1.5 a component of the global cost reduction plan. Share-based compensation cost charged against income in the nine months ended 30 June2008 was $47.1 ($29.0 after-tax). The amount of share-based compensation cost capitalized in 2009 and 2008 was not material.

Earnings Per Share

Earnings Per Share
	9 Months Ended Jun. 30, 2009 USD / shares
Earnings Per Share [Abstract]
Earnings Per Share	10. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (EPS): Three Months Ended Nine Months Ended 30 June 30 June 2009 2008 2009 2008 NUMERATOR Used in basic and diluted EPS Income from continuing operations $ 114.6 $ 295.0 $ 393.9 $ 817.1 Loss from discontinued operations (1.4 ) (224.9 ) (6.5 ) (169.0 ) Net Income $ 113.2 $ 70.1 $ 387.4 $ 648.1 DENOMINATOR (in millions) Weighted average number of common shares used in basic EPS 209.8 211.2 209.6 212.8 Effect of dilutive securities Employee stock options 3.1 6.0 2.2 6.0 Other award plans 1.1 1.0 1.0 1.1 4.2 7.0 3.2 7.1 Weighted average number of common shares and dilutive potential common shares used in diluted EPS 214.0 218.2 212.8 219.9 BASIC EPS Income from continuing operations $ .55 $ 1.40 $ 1.88 $ 3.84 Loss from discontinued operations (.01 ) (1.07 ) (.03 ) (.79 ) Net Income $ .54 $ .33 $ 1.85 $ 3.05 DILUTED EPS Income from continuing operations $ .54 $ 1.35 $ 1.85 $ 3.72 Loss from discontinued operations (.01 ) (1.03 ) (.03 ) (.77 ) Net Income $ .53 $ .32 $ 1.82 $ 2.95 Options on 4.6million and 7.3million shares were antidilutive and therefore excluded from the computation of diluted earnings per share for the three and nine months ended 30 June2009, respectively. Options on 1.2million shares were antidilutive and therefore excluded from the computation for the three and nine months ended 30 June2008.

Retirement Benefits

Retirement Benefits
	9 Months Ended Jun. 30, 2009 USD / shares
Retirement Benefits [Abstract]
Retirement Benefits	11. RETIREMENT BENEFITS The components of net pension cost for the defined benefit pension plans and other postretirement benefit cost were as follows: Three Months Ended 30 June 2009 2008 2009 2008 Pension Benefits Other Benefits Service cost $ 15.2 $ 19.4 $ .8 $ 1.4 Interest cost 46.2 45.3 1.7 1.4 Expected return on plan assets (50.5 ) (51.8 ) Prior service cost (credit)amortization 1.0 .8 (.3 ) (.3 ) Actuarial loss amortization 3.8 9.2 (.1 ) .5 Settlement and curtailment charges 11.8 1.0 Special termination benefits 14.4 .2 Other .4 .9 Net periodic benefit cost $ 42.3 $ 25.0 $ 2.1 $ 3.0 Nine Months Ended 30 June 2009 2008 2009 2008 Pension Benefits Other Benefits Service cost $ 45.0 $ 58.6 $ 3.1 $ 4.4 Interest cost 137.2 136.5 4.8 4.3 Expected return on plan assets (149.1 ) (155.9 ) Prior service cost (credit)amortization 3.0 2.4 (1.0 ) (1.0 ) Actuarial loss amortization 11.2 28.9 .2 1.3 Settlement and curtailment charges 11.8 28.7 Special termination benefits 29.2 .7 Other 1.2 1.9 Net periodic benefit cost $ 89.5 $ 101.8 $ 7.1 $ 9.0 Special termination benefits for the three and nine months ended 30 June2009 included $14.4 and $28.8 for the global cost reduction plan, respectively. The global cost reduction charge for the third quarter of 2009 also included $3.8 for curtailment losses related to the U.K. pension plans. For the nine months ended 30 June2009, pension contributions of $169.5 were made. Total contributions for 2009 are expected to be approximately $185. For the nine months ended 30 June 2008, pension contributions of $123.0 were made. During 2008, total contributions were $234.0. The Companys supplemental pension plan provides for a lump sum benefit payment option at the time of retirement, or for corporate officers six months after the participants retirement date. The Company recognizes pension settlements when payments exceed the sum of service and interest cost components of net periodic pension cost of the plan for the fiscal year. A settlement loss is recognized when the pension obligation is settled. Based on the timing of when cash payments were made, the Company recognized an $8.0 ($5.0 after-tax, or $.02 per share) charge in the third quarter of 2009. An additional $2 to $3 for settlement losses is expected to be recognized in the fourth quarter of 2009. For the three and nine months ended 30 June2008, the Company recognized $1.0 and $28.7 ($17.9 after-tax, or $.08 per share) of settlement charges, respectively.

Commitments And Contingencies

Commitments And Contingencies
	9 Months Ended Jun. 30, 2009 USD / shares
Commitments And Contingencies [Abstract]
Commitments And Contingencies	12. COMMITMENTS AND CONTINGENCIES Litigation The Company is involved in various legal proceedings, including competition, environmental, health, safety, product liability, and insurance matters. In the third quarter of 2008, a unit of the Brazilian Ministry of Justice issued a report (previously issued in January2007, and then withdrawn) on its investigation of the Companys Brazilian subsidiary, Air Products Brazil Ltda., and several other Brazilian industrial gas companies. The report recommended that the Brazilian Administrative Council for Economic Defense impose sanctions on Air Products Brazil Ltda. and the other industrial gas companies for alleged anticompetitive activities. The Company intends to defend this action and cannot, at this time, reasonably predict the ultimate outcome of the proceedings or sanctions, if any, that will be imposed. While the Company does not expect that any sums it may have to pay in connection with this or any other legal proceeding would have a materially adverse effect on its consolidated financial position or net cash flows, a future charge for regulatory fines or damage awards could have a significant impact on the Companys net income in the period in which it is recorded. Environmental Accruals for environmental loss contingencies are recorded when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The consolidated balance sheet at 30 June2009 and 30 September2008 included an accrual of $95.5 and $82.9, respectively, primarily as part of other noncurrent liabilities. The environmental liabilities will be paid over a period of up to 30years. The Company estimates the exposure for environmental loss contingencies to range from $95 to a reasonably possible upper exposure of $109 as of 30 June2009. During the first quarter of 2009, the Company recognized a $16.0 environmental liability associated with a production facility. The Company is required by state law to investigate and remediate a site upon its sale. In the first quarter of 2009, management committed to a plan to sell this facility. The Company estimates that it will take at least several years to complete the remediation efforts at this site. Refer to Note 19 to the Consolidated Financial Statements in the Companys 2008 annual report on Form 10-K for information on the Companys environmental accruals related to the Pace, Florida and Piedmont, S.C. facilities. At 30 June2009, the accrual balances associated with the Pace, Florida and Piedmont, S.C. facilities totaled $38.5 and $22.5, respectively.

Business Segment And Geographic

Business Segment And Geographic Information
	9 Months Ended Jun. 30, 2009 USD / shares
Business Segment And Geographic Information [Abstract]
Business Segment And Geographic Information	13. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION The Companys segments are organized based on differences in product and/or type of customer. The Company has four business segments consisting of Merchant Gases, Tonnage Gases, Electronics and Performance Materials, and Equipment and Energy. Business Segment Information Three Months Ended Nine Months Ended 30 June 30 June 2009 2008 2009 2008 Revenues from External Customers Merchant Gases $ 882.6 $ 1,087.3 $ 2,678.2 $ 3,097.7 Tonnage Gases 565.0 975.8 1,933.6 2,634.1 Electronics and Performance Materials 409.2 579.7 1,148.0 1,656.1 Equipment and Energy 119.4 106.9 367.1 311.9 Segment and Consolidated Totals $ 1,976.2 $ 2,749.7 $ 6,126.9 $ 7,699.8 Operating Income Merchant Gases $ 168.8 $ 204.3 $ 495.5 $ 593.3 Tonnage Gases 87.6 125.5 294.4 347.7 Electronics and Performance Materials 39.0 70.4 52.5 204.0 Equipment and Energy 13.1 4.0 36.4 23.3 Segment Totals $ 308.5 $ 404.2 $ 878.8 $ 1,168.3 Global cost reduction plan (a) (124.0 ) (298.2 ) Customer bankruptcy and asset actions (32.1 ) (32.1 ) Pension settlement (8.0 ) (1.0 ) (8.0 ) (28.7 ) Other (.6 ) (9.5 ) (22.2 ) (16.9 ) Consolidated Totals $ 143.8 $ 393.7 $ 518.3 $ 1,122.7 30 June 30 September 2009 2008 Identifiable Assets (b) Merchant Gases $ 4,729.6 $ 4,881.6 Tonnage Gases 3,398.0 3,335.4 Electronics and Performance Materials 2,205.2 2,341.0 Equipment and Energy 304.6 300.2 Segment Totals 10,637.4 10,858.2 Other 765.6 775.2 Discontinued operations 19.9 115.3 Consolidated Totals $ 11,422.9 $ 11,748.7 (a) Information about this charge at the segment level is discussed in Note 3. (b) Identifiable assets are equal to total assets less investments in and advances to equity affiliates. Geographic Information Three Months Ended Nine Months Ended 30 June 30 June 2009 2008 2009 2008 Revenues from External Customers North America $ 929.1 $ 1,366.7 $ 3,018.4 $ 3,744.9 Europe 663.3 895.7 2,042.9 2,559.8 Asia 336.0 430.1 931.7 1,237.5 Latin America 47.8 57.2 133.9 157.6 Total $ 1,976.2 $ 2,749.7 $ 6,126.9 $ 7,699.8 Geographic information is based on country of origin. The Europe segment operates principally in Belgium, France, Germany, the Netherlands, Poland, the U.K. and Spain. The Asia segment operates principally in China, Japan, Korea, and Taiwan.

Supplemental Information

Supplemental Information
	9 Months Ended Jun. 30, 2009 USD / shares
Supplemental Information [Abstract]
Supplemental Information	14. SUPPLEMENTAL INFORMATION Customer Bankruptcy and Asset Actions As a result of events which occurred during the third quarter of 2009, the Company recognized a $22.2 charge primarily for the write-off of certain receivables due to a customer bankruptcy. This customer, who principally receives product from the Tonnage Gases segment, began operating under Chapter11 bankruptcy protection on 6 January2009. Sales and operating income associated with this customer are not material to the Tonnage Gases segments results. At 30 June2009, the Company had remaining outstanding receivables with the customer of $16.4. At the present time, the Company does not expect to recognize additional charges related to this customer. Additionally, the Company recorded a charge of $9.9 for other asset actions which consisted of the closure of certain manufacturing facilities. This charge was reflected in cost of sales on the consolidated income statement. The customer bankruptcy charge combined with this asset write-down resulted in a total charge of $32.1 ($21.0 after-tax, or $.10 per share). Share Repurchase Program On 20 September2007, the Board of Directors authorized the repurchase of up to $1,000 of the Companys outstanding common stock. During the nine months ended 30 June2009, the Company did not purchase any shares under this authorization. At 30 June2009, $649.2 in share repurchase authorization remains. Industrial Revenue Bonds During the first quarter of 2009, the Company issued two Industrial Revenue Bonds totaling $80.0, the proceeds of which must be held in escrow until related project spending occurs. As of 30 June 2009 and 30 September2008, $95.4 and $181.2 were held in escrow from Industrial Revenue Bond issuances and classified as other noncurrent assets, respectively. Subsequent Events As discussed in Note 2, New Accounting Standards, the Company adopted the requirements of SFAS No. 165 and has evaluated subsequent events from 30 June2009 to the filing date of this report on the Form 10-Q. There were no subsequent events required to be recognized or disclosed in the financial statements.