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We are steadily transforming Air Products into a more focused, less cyclical, higher growth and higher return company. Fiscal 2006 was our third consecutive year of double-digit sales and earnings growth and meaningful
improvement in return on capital. In addition to the solid operating performance our people delivered, we overcame
the challenges presented by last year’s hurricanes; made the decision to explore the sale and restructuring of a
major portion of our Chemicals business; divested our amines business and our dinitrotoluene (DNT) plant in
Geismar, Louisiana; acquired Tomah3 Products to grow our Performance Materials business; reorganized the company
to be consistent with our strategy going forward; and completed the first $500 million of our $1.5 billion share
repurchase program. It was nothing short of a remarkable year of change and progress. Our people once again showed
their capacity for managing change while driving growth and productivity to the bottom line.
Sales of $8.9 billion were up 14%; income from continuing operations of $795 million was up 17%; and diluted EPS from continuing operations of $3.50 was up 19% over the prior year. The 2006 amounts exclude corporate reorganization charges, and the 2005 amounts include the pro forma impact of stock option expensing. This strong performance was driven by higher volumes across most of our business segments, particularly Merchant Gases, Tonnage Gases, and Electronics and Performance Materials, and higher activity in the Equipment and Energy segment. Despite continued pricing pressure in electronic specialty materials, strong volume increases in this area outpaced pricing declines. Our Healthcare segment did not perform up to expectations, but we are taking actions to drive significant improvements in this business over the next year.
Reorganizing for Growth and Returns
 Establishing leadership for our continued evolution into a higher return and growth-oriented company, our Board of Directors appointed John McGlade President and Chief Operating Officer. And with the September sale of our amines business to Taminco N.V. for $211 million and the marketing of our polymers business, we completed a reorganization that clearly aligns our organizational structure to our strategic direction. At the end of the fiscal year, we began reporting results for six new business segments.
Certain amounts and comparisons to the prior year in this letter are considered non-GAAP measures. Click here for the comparable GAAP amounts and reconciliations.
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