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Air Products Reports Fiscal 2009 Second Quarter Earnings

Apr 22, 2009

Access the Q2 earnings teleconference scheduled for 10:00 a.m. Eastern Time on April 22 by calling 719-325-4833 and entering passcode 3284943, or listen on the Web at: www.airproducts.com/Invest/financialnews/Earnings_Releases/Teleconference.htm.

LEHIGH VALLEY, Pa., April 22 /PRNewswire-FirstCall/ -- Air Products (NYSE: APD) today reported income from continuing operations of $189 million, or diluted earnings per share (EPS) of $0.89, for its fiscal second quarter ended March 31, 2009. Income from continuing operations decreased 31 percent and diluted EPS from continuing operations decreased 29 percent from the prior year. Prior year results included a pension settlement charge of $0.08 per share, which is excluded from prior year comparisons.

Second quarter revenues of $1,955 million declined 23 percent on weaker volumes, unfavorable currency, and lower natural gas and raw material cost pass-through. Operating income of $260 million was down 31 percent from the prior year on weaker volumes and unfavorable currency.

John McGlade, chairman, president and chief executive officer, said, "The unprecedented deterioration in global manufacturing continued into our second quarter, as producers extended their holiday shutdowns. As expected, we saw weaker volumes, contributing to what we said would be our low point for our fiscal year. However, we were able to partially offset these declines with benefits from our cost and productivity actions."

    Second Quarter Segment Performance

        -- Merchant Gases sales of $870 million declined 14 percent on
           unfavorable currency, weaker volumes across end-markets globally,
           and the impact of extended customer outages, partially offset by
           continued strong pricing.  Operating income of $156 million
           declined 17 percent from the prior year on unfavorable currency
           and weaker volumes, partially offset by strong pricing and cost
           reduction.

        -- Tonnage Gases sales of $625 million were down 28 percent,
           principally on lower natural gas and raw material cost
           pass-through and a stronger dollar, and to a lesser extent, weaker
           volumes, particularly in steel and chemical end-markets.
           Operating income of $98 million decreased 12 percent from the
           prior year on weaker volumes and unfavorable currency.

           Electronics and Performance Materials sales of $332 million
           declined 41 percent and the segment saw an $11 million operating
           loss, driven by significantly lower volumes in Electronics due to
           further declines in semiconductor and liquid crystal display
           manufacturing.  While Performance Materials volumes were impacted
           by pronounced weakness in coatings, autos and housing end-markets,
           the business remained profitable in the quarter.

        -- Equipment and Energy sales of $128 million were up 22 percent on
           higher air separation unit activity.  Operating income of $16
           million increased 63 percent from the prior year on favorable cost
           performance.

Outlook

McGlade said, "In this economic environment, visibility is limited, and the business climate remains weak. We expect to see some seasonal volume pick up in Merchant Gases and Performance Materials, and a modest improvement in Electronics in the second half of our fiscal year. Our continued discipline and cost reduction actions will also further benefit earnings. Despite the challenging environment, we continue to pursue profitable growth opportunities serving energy, environmental and emerging markets."

Air Products now expects third quarter EPS from continuing operations to be between $0.93 and $1.02 per share and full-year EPS from continuing operations to be between $3.85 and $4.05 per share. Given the lack of economic momentum, the company continues to look at additional cost actions that could result in a charge in its fiscal third quarter. This guidance excludes the impact of these potential cost reduction charges.

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 had fiscal 2008 revenues of $10.4 billion, operations in over 40 countries, and 21,000 employees around the globe. For more information, visit www.airproducts.com.

NOTE: The information above 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, continuing deterioration in economic and business conditions; weakening demand for the Company's products, future financial and operating performance of major customers and industries served by the Company; unanticipated contract terminations or customer cancellations or postponement of projects and sales; asset impairments due to economic conditions or specific product or customer events; 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 epidemic or a natural disaster; charges related to current portfolio management and cost reduction actions; the success of implementing cost reduction programs and achieving anticipated acquisition synergies; the timing, impact, and other uncertainties of future acquisitions or divestitures; the ability to attract, hire and retain qualified personnel in all regions of the world where the Company

operates; 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 and other risk factors described in the Company's Form 10K for its fiscal year ended September 30, 2008 and Form 10-Q for the quarter ended December 31, 2008. 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 are reconciliations of reported GAAP results to non-GAAP measures.



    CONSOLIDATED RESULTS
                                      Continuing Operations
                            Q2                 Q2         Q3         YTD
                         Operating    Q2    Diluted    Diluted     Diluted
                          Income    Income    EPS        EPS         EPS

    Millions of Dollars
    2009 GAAP             $260.4    $189.3    $.89
    2008 GAAP              348.6     259.8    1.18
    % Change GAAP            (25)%     (27)%   (25)%

    2008 GAAP             $348.6    $259.8   $1.18
    Pension settlement      26.3      16.5     .08
    2008 Non-GAAP Measure $374.9    $276.3   $1.26

    % Change Non-GAAP
     Measure                 (31)%     (31)%   (29)%


    2009 Forecast GAAP                               $.93-$1.02* $3.30-$3.50*
    Global Cost
     Reduction Plan -
     Q1 charge                                               --         $.55
    2009 Forecast
     Non-GAAP Measure                                $.93-$1.02  $3.85-$4.05

    *This forecast excludes potential charges for future cost reduction plans
     and pension settlements.






                  AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
                          CONSOLIDATED INCOME STATEMENTS
                                    (Unaudited)

                                    Three Months Ended    Six Months Ended
                                         31 March              31 March
    (Millions of dollars,
     except for share data)          2009        2008      2009        2008
    SALES                        $1,955.4    $2,542.7  $4,150.7    $4,950.1
    Cost of sales                 1,439.9     1,871.6   3,069.6     3,625.2
    Selling and administrative      230.6       272.1     477.6       530.6
    Research and development         29.6        34.3      62.8        64.6
    Global cost reduction plan         --          --     174.2          --
    Pension settlement                 --        26.3        --        27.7
    Other income, net                 5.1        10.2       8.0        27.0
    OPERATING INCOME                260.4       348.6     374.5       729.0
    Equity affiliates' income        27.0        42.4      51.5        67.7
    Interest expense                 30.0        38.9      66.5        79.7
    INCOME FROM CONTINUING
     OPERATIONS BEFORE TAXES
     AND MINORITY INTEREST          257.4       352.1     359.5       717.0
    Income tax provision             66.5        87.8      73.6       184.3
    Minority interest in
     earnings of subsidiary
     companies                        1.6         4.5       6.6        10.6
    INCOME FROM CONTINUING
     OPERATIONS                     189.3       259.8     279.3       522.1
    INCOME (LOSS) FROM
     DISCONTINUED OPERATIONS,
     net of tax                      16.3        54.5      (5.1)       55.9
    NET INCOME                     $205.6      $314.3    $274.2      $578.0
    BASIC EARNINGS PER COMMON
     SHARE
      Income from continuing
       operations                    $.90       $1.22     $1.33       $2.45
      Income (loss) from
       discontinued operations        .08         .26      (.02)        .26
      Net Income                     $.98       $1.48     $1.31       $2.71
    DILUTED EARNINGS PER COMMON
     SHARE
      Income from continuing
       operations                    $.89       $1.18     $1.32       $2.37
      Income (loss) from
       discontinued operations        .08         .25      (.03)        .25
      Net Income                     $.97       $1.43     $1.29       $2.62
    WEIGHTED AVERAGE OF COMMON
     SHARES OUTSTANDING (in
      millions)                     209.6       212.3     209.5       213.6
    WEIGHTED AVERAGE OF COMMON
     SHARES OUTSTANDING
     ASSUMING DILUTION
     (in millions)                  212.3       219.2     212.2       220.8
    DIVIDENDS DECLARED PER
     COMMON SHARE - Cash             $.45        $.44      $.89        $.82

    Other Data from Continuing
     Operations:
      Depreciation and
       amortization                $197.1      $217.1    $397.7      $428.1
      Capital expenditures on a
       non-GAAP Basis (a)           352.8       315.6     685.7       639.3


    (a) See page 13 for reconciliation.





                  AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                     (Unaudited)

                                                  31 March      30 September
    (Millions of dollars)                             2009            2008
    ASSETS
    CURRENT ASSETS
    Cash and cash items                              $79.7          $103.5
    Trade receivables, less allowances
     for doubtful accounts                         1,272.2         1,575.2
    Inventories and contracts in progress            630.3           655.7
    Prepaid expenses                                 172.2           107.7
    Other receivables and current assets             396.6           349.4
    Current assets of discontinued
     operations                                       45.4            56.6
    TOTAL CURRENT ASSETS                           2,596.4         2,848.1
    INVESTMENT IN NET ASSETS OF AND
     ADVANCES TO EQUITY AFFILIATES                   756.5           822.6
    PLANT AND EQUIPMENT, at cost                  14,645.4        14,988.6
    Less accumulated depreciation                  8,235.3         8,373.8
    PLANT AND EQUIPMENT, net                       6,410.1         6,614.8
    GOODWILL                                         811.2           928.1
    INTANGIBLE ASSETS, net                           215.0           289.6
    NONCURRENT CAPITAL LEASE RECEIVABLES             527.1           505.3
    OTHER NONCURRENT ASSETS                          550.3           504.1
    NONCURRENT ASSETS OF DISCONTINUED
     OPERATIONS                                       12.3            58.7
    TOTAL ASSETS                                 $11,878.9       $12,571.3

    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES
    Payables and accrued liabilities              $1,307.1        $1,665.6
    Accrued income taxes                              34.2            87.0
    Short-term borrowings and current
     portion of long-term debt                       645.8           451.4
    Current liabilities of discontinued
     operations                                        9.2             8.0
    TOTAL CURRENT LIABILITIES                      1,996.3         2,212.0
    LONG-TERM DEBT                                 3,456.6         3,515.4
    DEFERRED INCOME & OTHER NONCURRENT
     LIABILITIES                                     952.8         1,049.2
    DEFERRED INCOME TAXES                            707.6           626.6
    NONCURRENT LIABILITIES OF
     DISCONTINUED OPERATIONS                            .8             1.2
    TOTAL LIABILITIES                              7,114.1         7,404.4
    MINORITY INTEREST IN SUBSIDIARY
     COMPANIES                                       126.7           136.2
    TOTAL SHAREHOLDERS' EQUITY                     4,638.1         5,030.7
    TOTAL LIABILITIES AND SHAREHOLDERS'
     EQUITY                                      $11,878.9       $12,571.3






    AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)
                                                         Six Months Ended
                                                             31 March
    (Millions of dollars)                                  2009      2008
    OPERATING ACTIVITIES
      Net income                                         $274.2    $578.0
      Adjustments to reconcile income to cash
       provided by operating activities:
        Depreciation and amortization                     397.7     428.1
        Impairment of long-lived assets                    32.1        --
        Impairment of long-lived assets of
         discontinued operations                           48.7        --
        Gain on sale of discontinued operations              --     (88.9)
        Deferred income taxes                              41.8      34.6
        Undistributed earnings of unconsolidated
         affiliates                                       (35.0)    (42.6)
        Loss on sale of assets and investments              6.6        .9
        Share-based compensation                           30.1      33.0
        Noncurrent capital lease receivables              (52.9)   (118.5)
        Pension and other postretirement costs             52.2      82.8
        Other adjustments                                 (85.3)    (89.1)
      Working capital changes that provided (used)
       cash, excluding effects of acquisitions and
       divestitures:
        Trade receivables                                 166.3    (153.3)
        Inventories                                       (41.7)    (36.6)
        Contracts in progress                              11.0      75.9
        Other receivables                                 (17.7)     10.2
        Payables and accrued liabilities                 (257.6)   (100.2)
        Other working capital                            (116.8)     16.8
    CASH PROVIDED BY OPERATING ACTIVITIES (a)             453.7     631.1
    INVESTING ACTIVITIES
      Additions to plant and equipment                   (615.8)   (522.2)
      Acquisitions, less cash acquired                     (1.6)      (.6)
      Investment in and advances to unconsolidated
       affiliates                                           (.1)       --
      Proceeds from sale of assets and investments         25.0      14.2
      Proceeds from sale of discontinued operations          .9     327.5
      Change in restricted cash                            40.7    (132.3)
      Other investing activities                             --     (18.6)
    CASH USED FOR INVESTING ACTIVITIES                   (550.9)   (332.0)
    FINANCING ACTIVITIES
      Long-term debt proceeds                             114.3     461.1
      Payments on long-term debt                          (44.2)    (93.9)
      Net increase in commercial paper and
       short-term borrowings                              183.2      84.9
      Dividends paid to shareholders                     (184.3)   (163.4)
      Purchase of treasury stock                             --    (560.2)
      Proceeds from stock option exercises                  6.8      41.8
      Excess tax benefit from share-based
       compensation/other                                   2.2      25.5
    CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES       78.0    (204.2)
      Effect of Exchange Rate Changes on Cash              (4.6)      3.4
      Increase (Decrease) in Cash and Cash Items          (23.8)     98.3
      Cash and Cash Items - Beginning of Year             103.5      40.5
      Cash and Cash Items - End of Period                 $79.7    $138.8

    (a) Pension plan contributions                       $153.5    $118.3



                AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                (Unaudited)

    (Millions of dollars)

    1. NEW ACCOUNTING STANDARDS
    Effective 1 January 2009, the Company adopted Statement of Financial
    Accounting Standard (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 entity's
    financial position, financial performance, and cash flows.  This
    Statement only requires additional disclosure and did not have an impact
    on the Company's consolidated financial statements.  The disclosures
    will be included in the Company's Form 10-Q filing.

    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 October 2008.  SFAS No. 158 required the Company to change the
    measurement date for these plans from 30 June to 30 September (end of
    fiscal year).  As a result of this change, pension expense and actuarial
    gains/losses for the three-month period ended 30 September 2008 were
    recognized as adjustments to retained earnings and Accumulated Other
    Comprehensive Income (AOCI), respectively.  The after-tax charge to
    retained earnings was $8.1.  AOCI was credited $35.8 for net actuarial
    gains on an after-tax basis.  These adjustments only affected the
    balance sheet.

    Effective 1 October 2008, the Company adopted SFAS No. 157, "Fair Value
    Measurements," for financial assets and liabilities and any other assets
    and liabilities that are recognized and disclosed at fair value on a
    recurring basis.  This Statement defines fair value, establishes a method
    for measuring fair value, and requires additional disclosures about fair
    value measurements.  Financial Accounting Standards Board (FASB) Staff
    Position No. 157-2 delayed the adoption of SFAS No. 157 for other
    nonfinancial assets and liabilities until 1 October 2009 for the Company.
    The adoption of SFAS No. 157 did not impact the Company's financial
    statements for assets and liabilities measured at fair value on a
    recurring basis.

    2. GLOBAL COST REDUCTION PLAN
    During the first quarter ended 31 December 2008, 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
    included a charge of $174.2 ($116.1 after-tax, or $.55 per share) for
    this plan.  This charge included $120.0 for severance and pension-related
    costs.  The Company will eliminate approximately 1,400 positions, or
    about seven percent of its global workforce.  The reductions are targeted
    at reducing overhead and infrastructure costs, reducing and refocusing
    elements of the Company's technology and business development spending,
    and lowering its plant operating costs.  The remainder of the charge,
    $54.2, is 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 results
    from a decision to sell a production facility.  The planned actions are
    expected to be substantially completed by the end of the first quarter of
    fiscal year 2010.

    3. 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 Company's 2008 annual report on Form 10-K.

    U.S. Healthcare
    In July 2008, 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 April 2009, the Company signed a contract to
    divest approximately half of its remaining U.S. Healthcare business and
    expects to conclude the sale of the remaining portions of this business
    in 2009.

    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 occurring during the second quarter of 2009, which
    increased the Company's 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.

    Additional charges may be recorded in future periods dependent upon the
    timing and method of ultimate disposition.

    The operating results of the U.S. Healthcare business have been
    classified as discontinued operations and are summarized below:



                                            Three Months    Six Months
                                               Ended          Ended
                                              31 March       31 March
                                            2009    2008   2009    2008

    Sales                                  $43.9   $62.6  $92.1  $128.8

    Income (loss) before taxes             $(1.0) $(10.6)   $.1  $(19.1)
    Income tax provision (benefit)           (.4)   (4.0)    --    (7.2)
    Income (loss) from operations of
     discontinued operations                $(.6)  $(6.6)   $.1  $(11.9)
    Impairment/write-down to estimated net
     realizable
    value, net of tax                       16.9      --   (5.2)     --
    Income (loss) from discontinued
     operations, net of tax                $16.3   $(6.6) $(5.1) $(11.9)


    Polymer Emulsions Business
    On 31 January 2008, the Company sold its Polymers Emulsions business
    to Wacker Chemie AG, its long-time joint venture partner.  As part of
    the agreement, the Company received Wacker Chemie AG's interest in the
    Elkton, Md. and Piedmont, S.C. production facilities and their related
    businesses plus cash proceeds of $258.2.  The Company recognized a gain
    on the sale of $89.5 ($57.7 after-tax).

    In the second quarter of 2008, the Polymer Emulsions business generated
    sales of $78.8 and income from operations, net of tax, of $3.3.  For the
    six months ended 31 March 2008, sales were $230.0 and income from
    operations, net of tax, was $10.1.

    HPPC Business
    In the first quarter of 2008, the HPPC business generated sales of $22.9
    and income from operations, net of tax, of $.2.  The Company closed on
    the sale of its HPPC business on 31 December 2007.

    4. CUSTOMER BANKRUPTCY
    On 6 January 2009, a customer of the Company began operating under
    Chapter 11 bankruptcy protection.  This company receives product
    principally from the Tonnage Gases segment. At 31 March 2009, the
    Company had outstanding net receivables with the customer of $37.3.
    Sales and operating income associated with this customer are not material
    to the Tonnage Gases segment's results.  At the present time, the Company
    does not expect any material charges related to long-term assets
    associated with this customer bankruptcy.

    5. PENSION SETTLEMENT
    A number of corporate officers and others who were eligible for
    supplemental pension plan benefits retired in fiscal years 2007 and
    2008.  The Company's supplemental pension plan provides for a lump sum
    benefit payment option at the time of retirement, or for corporate
    officers six months after the participant's 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 $26.3 and $27.7 in the three and six months
    ended 31 March 2008, respectively. The Company expects to recognize
    settlement charges in the second half of 2009.

    6. SHARE REPURCHASE PROGRAM
    On 20 September 2007, the Board of Directors authorized the repurchase
    of up to $1,000 of the Company's outstanding common stock.  During the
    six months ended 31 March 2009, the Company did not purchase any shares
    under this authorization.  At 31 March 2009, $649.2 in share repurchase
    authorization remains.

    7. SUMMARY BY BUSINESS SEGMENT


                                       Three Months Ended  Six Months Ended
                                            31 March           31 March
    (Millions of dollars)                2009      2008      2009     2008

    Revenues from External Customers
      Merchant Gases                   $870.4  $1,008.7  $1,795.6  $2,010.4
      Tonnage Gases                     624.6     867.2   1,368.6   1,658.3
      Electronics and Performance
       Materials                        332.2     562.1     738.8   1,076.4
      Equipment and Energy              128.2     104.7     247.7     205.0
    Segment and Consolidated Totals  $1,955.4$2,542.7$4,150.7$4,950.1

    Operating Income
      Merchant Gases                   $156.2    $189.2    $326.7    $389.0
      Tonnage Gases                      98.0     111.1     206.8     222.2
      Electronics and Performance
       Materials                        (11.1)     67.6      13.5     133.6
      Equipment and Energy               16.3      10.0      23.3      19.3
    Segment Totals                     $259.4    $377.9    $570.3    $764.1
      Global cost reduction plan           --        --    (174.2)       --
      Pension settlement                   --     (26.3)       --     (27.7)
      Other                               1.0      (3.0)    (21.6)     (7.4)
    Consolidated Totals                $260.4    $348.6    $374.5    $729.0

                                                      31 March 30 September
    (Millions of dollars)                                 2009         2008
    Identifiable Assets (a)
    Merchant Gases                                    $4,518.4     $4,881.6
    Tonnage Gases                                      3,266.0      3,335.4
    Electronics and Performance Materials              2,109.8      2,341.0
    Equipment and Energy                                 301.7        300.2
    Segment Totals                                    10,195.9     10,858.2
    Other                                                868.8        775.2
    Discontinued Operations                               57.7        115.3
    Consolidated Totals                              $11,122.4    $11,748.7

    (a) Identifiable assets are equal to total assets less investments in
        and advances to equity affiliates.


                                    RECONCILIATION
                                    NON-GAAP MEASURE

    The Company utilizes a non-GAAP measure in the computation of capital
    expenditures and includes spending associated with facilities accounted
    for as capital leases.  Certain facilities that are built to service a
    specific customer are accounted for as capital leases in accordance with
    EITF No. 01-08, "Determining Whether an Arrangement Contains a Lease,"
    and such spending is reflected as a use of cash within cash provided by
    operating activities.  The presentation of this non-GAAP measure is
    intended to enhance the usefulness of information by providing a measure
    which the Company's management uses internally to evaluate and manage
    the Company's capital expenditures.

    Below is a reconciliation of capital expenditures on a GAAP basis to a
    non-GAAP measure.


                                               Three Months     Six Months
                                                  Ended           Ended
                                                 31 March        31 March
    (Millions of dollars)                      2009    2008    2009    2008
    Capital expenditures - GAAP basis        $324.1  $254.0  $617.5  $522.8
    Capital lease expenditures under EITF
     No. 01-08                                 28.7    61.6    68.2   116.5
    Capital expenditures - non-GAAP basis    $352.8  $315.6  $685.7  $639.3

SOURCE  Air Products
    -0-                           04/22/2009
    /CONTACT:  Media Inquiries: Katie McDonald, +1-610-481-3673,
mcdonace@airproducts.com; Investor Inquiries: Nelson Squires, +1-610-481-7461,
squirenj@airproducts.com/
    /Web Site:  http://www.airproducts.com /
    (APD)

CO:  Air Products
ST:  Pennsylvania
IN:  CHM
SU:  ERN ERP CCA

PR
-- PH02991 --
6791 04/22/200906:00 EDThttp://www.prnewswire.com

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