Business Segments

Air Products manages its operations, assesses performance and reports results by four global business segments, which are organized based on differences in product and/or type of customer: Merchant Gases, Tonnage Gases, Electronics and Performance Materials, and Equipment and Energy.

Merchant Gases
The Merchant Gases segment provides industrial gases such as oxygen, nitrogen, argon, helium, and hydrogen, medical and specialty gases along with certain services and equipment to a wide variety of industrial and medical and healthcare customers. There are three principal modes of industrial gas supply: liquid bulk, packaged gases, and small on-sites. Most merchant product is delivered via bulk supply, in liquid or gaseous form, by tanker or tube trailer. Smaller quantities of industrial, specialty and medical gases are delivered in cylinders and dewars as "packaged gases." Other customers receive product through small on-sites (cryogenic or noncryogenic generators) via sale of gas contracts and some sale of equipment. Electricity is the largest cost input for the production of atmospheric gases.

Tonnage Gases
The Tonnage Gases segment supplies industrial gases, including hydrogen, carbon monoxide, syngas, nitrogen and oxygen via large on-site facilities or pipeline systems, principally to customers in the petroleum refining, chemical and metallurgical industries. For large-volume, or "tonnage" industrial gas users, the company either constructs a gas plant adjacent to or near the customer's facility—hence the term "on-site"—or delivers product through a pipeline from a nearby location. The company is the world's largest provider of hydrogen, which is used by refiners to lower the sulfur content of gasoline and diesel fuels to reduce smog and ozone depletion. Natural gas is the principal raw material for hydrogen. The company mitigates energy and power price changes through its long-term cost pass-through type contracts.

Electronics and Performance Materials
The Electronics and Performance Materials segment uses applications technology to provide solutions to a broad range of global industries through expertise in chemical synthesis, analytical technology, process engineering and surface science. This segment provides specialty and tonnage gases, specialty and bulk chemicals, services and equipment to the electronics industry for the manufacture of silicon and compound semiconductors, displays (LCDs, etc.) and photovoltaic devices. The segment also provides performance chemical solutions for the coatings, inks, adhesives, civil engineering, personal care, institutional and industrial cleaning, mining, oil field, polyurethane and other industries.

Equipment and Energy
The Equipment and Energy segment designs and manufactures cryogenic and gas processing equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction (LNG) and helium distribution equipment, and serves energy markets in a variety of ways. Equipment is sold worldwide to customers in a variety of industries, including chemical and petrochemical manufacturing, oil and gas recovery and processing, and steel and primary metals processing. The company serves energy markets through operation and partial ownership of cogeneration and flue gas treatment facilities. Air Products is developing technologies to continue to serve energy markets in the future, including gasification and alternative energy technologies.

Other

• Other segment operating income includes other expense and income which cannot be directly associated with the business segments, including foreign exchange gains and losses, interest income, and costs previously allocated to discontinued businesses. Also included are LIFO inventory adjustments as the business segments use FIFO and the LIFO pool is kept at corporate. Corporate research and development costs, which had previously been kept in the "Corporate & Other" segment, are now fully allocated to the business segments.
• Other segment assets include cash, deferred tax assets, pension assets, financial instruments and corporate assets previously allocated to discontinued businesses.