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News ReleaseAir Products Reports Fiscal Q3 EPS from Continuing Operations of $1.32, Up 18%

July 23, 2008 Lehigh Valley, Pa.

Air Products (NYSE:APD) today reported net income of $70 million, or diluted earnings per share (EPS) of $0.32, for its fiscal third quarter ended June 30, 2008. These results include an impairment charge for its U.S. Healthcare business of $237 million after-tax, or $1.09 per share, and income from discontinued operations of $19 million after-tax, or $0.09 per share, principally from the company's sale of its remaining polymer emulsions assets. Excluding these items, income from continuing operations of $288 million increased 16 percent and diluted EPS of $1.32 increased 18 percent over the prior year.

Third quarter revenues of $2,808 million were up 16 percent from the prior year on higher volumes in the Merchant Gases and Electronics and Performance Materials segments, higher pricing in Merchant Gases, favorable currency, and higher natural gas cost pass through. Excluding the U.S. Healthcare impairment charge, operating income of $382 million increased nine percent versus the prior year. In addition, higher equity affiliate income contributed to the quarter's results, with continued growth and operating performance in a number of countries.

John McGlade, chairman, president and chief executive officer, said, "Our businesses again delivered strong growth in a challenging economic environment. Our consistent operating performance reflects the actions we have taken to transform Air Products into a higher growth and less cyclical company under any economic scenario. We also announced two major orders in Tonnage Gases, completed the sale of our remaining Polymer Emulsions assets, and as we announced yesterday, are moving forward with the decision to sell our U.S. Healthcare business."

Third Quarter Segment Performance

  • Merchant Gases sales of $973 million were up 19 percent. Operating income of $177 million increased 20 percent over the prior year on improved volumes across all regions, continued strong pricing in North America, and favorable currency impacts.
  • Tonnage Gases sales of $976 million were up 26 percent on higher natural gas price pass through. Operating income of $126 million increased four percent over the prior year due to improved plant efficiencies.
  • Electronics and Performance Materials sales of $580 million were up nine percent, and operating income of $70 million increased 13 percent over the prior year on higher volumes. Electronics sales were driven by higher specialty materials and tonnage volumes, while Performance Materials volume gains were driven by growth in Asia and higher prices.
  • Equipment and Energy sales of $107 million declined 20 percent, and operating income of $4 million decreased significantly from the prior year, reflecting the expected lower liquefied natural gas heat exchanger activity.
  • Healthcare sales of $172 million were up nine percent, and excluding the impairment charge, operating income of $13 million increased over the prior year, driven by favorable currency and continued volume growth and good cost performance in Europe.


McGlade said, "We expect to continue to benefit from our very strong new business signings and the geographic diversity of our markets and portfolio of businesses. We are not, however, relying on growth and pricing alone. We will continue to focus relentlessly on driving productivity and reducing costs."

The company currently anticipates fiscal fourth quarter EPS from continuing operations in the range of $1.37 to $1.42 per share, or 19 to 23 percent year-on-year earnings growth.

Air Products (NYSE:APD) serves customers in industrial, energy, technology and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services. Founded in 1940, Air Products has built leading positions in key growth markets such as semiconductor materials, refinery hydrogen, home healthcare services, natural gas liquefaction, and advanced coatings and adhesives. The company is recognized for its innovative culture, operational excellence and commitment to safety and the environment. Air Products has annual revenues of $10 billion, operations in over 40 countries, and 22,000 employees around the globe. For more information, visit

 NOTE: This document contains "forward-looking statements" within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's reasonable expectations and assumptions as of the date of this document regarding important risk factors. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation, overall economic and business conditions different than those currently anticipated; future financial and operating performance of major customers and industries served by the Company; the impact of competitive products and pricing; interruption in ordinary sources of supply of raw materials; the ability to recover unanticipated increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory activities; consequences of acts of war or terrorism impacting the United States' and other markets; the effects of a pandemic or a natural disaster; the ability to attract, hire and retain qualified personnel in all regions of the world where the company operates; charges related to portfolio management, goodwill recoverability, business restructuring and cost reduction actions; the success of implementing cost reduction programs; the timing, impact, and other uncertainties of future acquisitions or divestitures; unanticipated contract terminations or customer cancellation or postponement of projects or sales; significant fluctuations in interest rates and foreign currencies from that currently anticipated; the continued availability of capital funding sources in all of the company's foreign operations; the impact of new or changed environmental, healthcare, tax or other legislation and regulations in jurisdictions in which the Company and its affiliates operate; the impact of new or changed financial accounting standards; and the timing and rate at which tax credits can be utilized. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this document to reflect any change in the Company's assumptions, beliefs or expectations or any change in events, conditions or circumstances upon which any such forward-looking statements are based.

*The presentation of non-GAAP measures is intended to enhance the usefulness of financial information by providing measures which the Company's management uses internally to evaluate the Company's baseline performance. Presented below is a reconciliation of reported GAAP results to non-GAAP measures.

Continuing Operations

2008 GAAP $67.6 $50.8 $.23  
2007 GAAP 352.4 275.5 1.24  
% Change GAAP (81%) (82%) (81%)  
2008 GAAP $67.6 $50.8 $.23  
U.S. Healthcare impairment 314.8 237.0 1.09  
2008 Non-GAAP Measure $382.4 $287.8 $1.32  
2007 GAAP $352.4 $275.5 $1.24 $1.30
Gain on contract settlement -- -- -- (.11)
Global cost reduction plan -- -- -- .04
Pension settlement -- -- -- .03
Donation/sale of cost investment -- -- -- (.09)
Tax audit settlements/adjustments -- (27.5) (.12) (.05)
U.S. Healthcare results (a) -- -- -- .03
2007 Non-GAAP Measure $352.4 $248.0 $1.12 $1.15
% Change Non-GAAP Measure 9% 16% 18%  
2008 Forecast       $1.37-$1.42
2007 GAAP       $1.30
% Change GAAP       5%-9%
2008 Forecast       $1.37-$1.42
2007 Non-GAAP       $1.15
% Change Non-GAAP       19%-23%
2008 GAAP $(301.7)      
U.S. Healthcare impairment 314.8      
2008 Non-GAAP Measure $13.1      
  1. The U.S. Healthcare business will be reported as a discontinued operation beginning in the fourth quarter of 2008.

View entire earnings release with all financial tables. (65 KB)

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