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Air Products Reports Fiscal 2009 Third Quarter Earnings

Jul 22, 2009

Access the Q3 earnings teleconference scheduled for 10:00 a.m. Eastern Time on

July 22 by calling 719-325-4770 and entering passcode 3814248, or listen on

                                 the Web at:
www.airproducts.com/Invest/financialnews/Earnings_Releases/Teleconference.htm.



    LEHIGH VALLEY, Pa., July 22 /PRNewswire-FirstCall/ -- Air Products (NYSE:
APD) today reported income from continuing operations of $115 million, or
diluted earnings per share (EPS) from continuing operations of $0.54, for its
fiscal third quarter ended June 30, 2009.  These results included charges of
$110 million, or $0.51 per share, for the company's global cost reduction
plan, a customer bankruptcy and other asset actions, and a pension settlement.

    Excluding the impact of these items, income from continuing operations was
$225 million, and diluted EPS was $1.05, down 24 and 22 percent, respectively,
compared with the prior year.

    Approximately three-quarters of the fiscal third quarter global cost
reduction plan is for severance and pension costs related to the elimination
of approximately 1,150 positions from the company's global workforce.  These
reductions are targeted at continued cost and productivity efforts, including
closure of certain manufacturing facilities.  The remainder is for a
write-down of certain assets held for sale to net realizable value.

The global cost reduction plan is expected to reduce fixed costs by approximately $30 million in fiscal 2010, with annual benefits of $50 million in fiscal 2011 and beyond.

The discussion of third quarter results in this release is based on non-GAAP comparisons. It excludes the impacts of the above items. A reconciliation can be found at the end of this release.*

    Third quarter revenues of $1,976 million decreased 28 percent from the
prior year on weaker volumes, lower energy and raw material cost
pass-throughs, and unfavorable currency.  Underlying sales were down 11
percent.  Operating income of $308 million declined 22 percent from the prior
year on weaker volumes and unfavorable currency impacts, partially offset by
lower operating and overhead costs.

John McGlade, chairman, president and chief executive officer, said, "While we are still seeing the impact of the global recession on our volumes, we've seen signs of improvement during this quarter in some of our end markets, particularly in Electronics and Asia. The productivity and continuous improvement efforts of our employees are having an impact, as margins improved substantially both sequentially and versus prior year."


    Third Quarter Segment Performance

    --  Merchant Gases sales of $883 million declined 19 percent from the

prior year on weaker volumes across manufacturing end-markets globally

        and unfavorable currency, partially offset by favorable pricing.
        Operating income of $169 million declined 17 percent from the prior
        year on weaker volumes and unfavorable currency, partially offset by
        favorable pricing and cost performance.


    --  Tonnage Gases sales of $565 million were down 42 percent from the
        prior year, principally on lower energy and raw material cost
        pass-throughs, and to a lesser extent, weaker volumes in steel and
        chemical end-markets and unfavorable currency.  Operating income of
        $88 million decreased 30 percent on weak volumes, customer outages,
        lower operating efficiencies, and unfavorable currency.

-- Electronics and Performance Materials sales of $409 million declined

29 percent and operating income of $39 million decreased 45 percent

from the prior year on significantly lower volumes. While Electronics

sales increased 21 percent sequentially due to improved customer run

rates, year-on-year sales were down 35 percent. Performance Materials

        volumes improved 26 percent sequentially, reflecting seasonal
        improvement and stronger Asian sales, but declined 23 percent from the
        prior year on weaker demand from coatings, autos, housing and other
        end markets.


    --  Equipment and Energy sales of $119 million were up 12 percent over the
        prior year on higher air separation unit activity.  Operating income
        of $13 million increased from the prior year on favorable cost
        performance.

    Outlook

McGlade said, "The global recession remains challenging; however, we believe the actions we are taking to drive improvement in costs are positioning the company for continued margin improvement. We are focused on and remain committed to achieving our 17 percent margin goal."

Air Products now expects fourth quarter EPS from continuing operations to be between $1.04 and $1.14 per share and full-year EPS from continuing operations to be between $3.95 and $4.05 per share, excluding the impact of disclosed items in the fiscal first and third quarters.


    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.  In
fiscal 2008, Air Products had 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, including earnings guidance for the fourth quarter and full year. These
forward-looking statements are based on management's reasonable expectations
and assumptions as of the date of this press release. 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, longer than anticipated delay in global
economic recovery; renewed 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; 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 is a reconciliation of reported GAAP results to non-GAAP
measures.

                                          Continuing Operations
                             Q3         Q3       Q3        Q4         YTD
                         Operating   Income   Diluted    Diluted    Diluted
                           Income               EPS        EPS        EPS

    2009 GAAP              $143.8    $114.6    $.54
    2008 GAAP               393.7     295.0    1.35
    % Change GAAP             (63)%     (61)%   (60)%
    2009 GAAP              $143.8    $114.6    $.54
    Global cost
     reduction plan         124.0      84.2     .39
    Customer bankruptcy
     and asset actions       32.1      21.0     .10
    Pension settlement        8.0       5.0     .02
    2009 Non-GAAP Measure  $307.9    $224.8   $1.05

    % Change Non-GAAP
     Measure                  (22)%     (24)%   (22)%

    2009 Forecast GAAP                                $1.04-$1.14 $2.89-$2.99
    Global cost
     reduction plan                                                       .94
    Customer bankruptcy
     and asset actions                                                    .10
    Pension settlement                                                   

.02

    2009 Forecast Non-GAAP Measure                    $1.04-$1.14 $3.95-$4.05




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

                                   Three Months Ended     Nine Months Ended
                                         30 June               30 June
    (Millions of dollars,
     except for share data)          2009        2008      2009        2008
                                     ----        ----      ----        ----
    SALES                        $1,976.2    $2,749.7  $6,126.9    $7,699.8
    Cost of sales                 1,427.5     2,041.1   4,497.1     5,666.3
    Selling and administrative      232.3       284.4     709.9       815.0
    Research and development         24.1        33.1      86.9        97.7
    Global cost reduction plan      124.0          --     298.2          --
    Customer bankruptcy              22.2          --      22.2          --
    Pension settlement                8.0         1.0       8.0        28.7
    Other income, net                 5.7         3.6      13.7        30.6
                                      ---         ---      ----        ----
    OPERATING INCOME                143.8       393.7     518.3     1,122.7
    Equity affiliates' income        28.5        46.5      80.0       114.2
    Interest expense                 27.5        39.5      94.0       119.2
                                     ----        ----      ----       -----
    INCOME FROM CONTINUING
     OPERATIONS BEFORE TAXES
     AND MINORITY INTEREST          144.8       400.7     504.3     1,117.7
    Income tax provision             25.4        98.1      99.0       282.4
    Minority interest in earnings
     of subsidiary companies          4.8         7.6      11.4        18.2
                                      ---         ---      ----        ----
    INCOME FROM CONTINUING
     OPERATIONS                     114.6       295.0     393.9       817.1
    LOSS FROM DISCONTINUED
     OPERATIONS, net of tax          (1.4)     (224.9)     (6.5)     (169.0)
                                     ----      ------      ----      ------
    NET INCOME                     $113.2       $70.1    $387.4      $648.1
                                   ======       =====    ======      ======
    BASIC EARNINGS PER COMMON
     SHARE
      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 EARNINGS PER
     COMMON SHARE
      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
                                     ----        ----     -----       

-----WEIGHTED AVERAGE OF COMMON

     SHARES OUTSTANDING (in
      millions)                     209.8       211.2     209.6       212.8
                                    -----       -----     -----       -----
    WEIGHTED AVERAGE OF COMMON
     SHARES OUTSTANDING
     ASSUMING DILUTION
     (in millions)                  214.0       218.2     212.8       219.9
                                     -----      -----     -----       -----
    DIVIDENDS DECLARED PER
     COMMON SHARE - Cash             $.45        $.44     $1.34       $1.26
                                     ----        ----     -----       -----

    Other Data from Continuing
     Operations:
      Depreciation and
       amortization                $217.1      $219.7    $614.8      $647.8
      Capital expenditures on a
       non-GAAP Basis (a)           356.1       309.0   1,041.8       948.3


    (a) See reconciliation table.



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


                                                      30 June    30 September
    (Millions of dollars)                                2009          2008
                                                         ----          ----
    ASSETS
    CURRENT ASSETS
    Cash and cash items                                 $70.3        $103.5
    Trade receivables, less allowances for
     doubtful accounts                                1,332.6       1,575.2
    Inventories                                         495.8         503.7
    Contracts in progress, less progress billings       115.3         152.0
    Prepaid expenses                                     96.0         107.7
    Other receivables and current assets                445.6         349.4
    Current assets of discontinued operations            15.5          56.6
                                                         ----          ----
    TOTAL CURRENT ASSETS                              2,571.1       2,848.1
                                                      -------      

-------INVESTMENT IN NET ASSETS OF AND ADVANCES TO

     EQUITY AFFILIATES
                                                        820.6         822.6
    PLANT AND EQUIPMENT, at cost                     15,254.7      14,988.6
    Less accumulated depreciation                     8,579.7       8,373.8
                                                      -------       -------
    PLANT AND EQUIPMENT, net                          6,675.0       6,614.8
                                                      -------       -------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                                    $12,243.5     $12,571.3
                                                    =========     =========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES
    Payables and accrued liabilities                 $1,299.7      $1,665.6
    Accrued income taxes                                 84.7          87.0
    Short-term borrowings                               385.6         419.3
    Current portion of long-term debt                     3.8          32.1
    Current liabilities of discontinued
     operations                                          19.0           8.0
                                                         ----           ---
    TOTAL CURRENT LIABILITIES                         1,792.8       2,212.0
                                                      -------       -------
    LONG-TERM DEBT                                    3,755.8       3,515.4
    DEFERRED INCOME & OTHER NONCURRENT
     LIABILITIES                                      1,040.7       1,049.2
    DEFERRED INCOME TAXES                               591.0         626.6

NONCURRENT LIABILITIES OF DISCONTINUED

     OPERATIONS                                            .3           1.2
                                                           --           ---
    TOTAL LIABILITIES                                 7,180.6       7,404.4
                                                      -------       -------
    MINORITY INTEREST IN SUBSIDIARY COMPANIES           134.6         136.2
                                                        -----         -----
    TOTAL SHAREHOLDERS' EQUITY                        4,928.3       5,030.7
                                                      -------       -------
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $12,243.5     $12,571.3
                                                    =========     =========



                 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (Unaudited)

                                                          Nine Months Ended
                                                               30 June
    (Millions of dollars)                                  2009        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          --
        Impairment of assets of discontinued operations    48.7       314.8

Loss (gain) on sale of discontinued operations .6 (119.5)

Deferred income taxes (41.6)

(69.6)

        Customer bankruptcy                                22.2          --

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                                 160.0      (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 (a)             857.2     1,129.5
                                                          -----     -------
    INVESTING ACTIVITIES
      Additions to plant and equipment                   (899.3)    

(791.4)

      Acquisitions, less cash acquired                    (29.8)       

(2.0)

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 39.0 419.5

      Change in restricted cash                            82.2      

(135.6)

      Other investing activities                             --       

(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                          (70.0)      

(96.7)

Net increase (decrease) in commercial paper and

       short-term borrowings                               99.2      

(236.0)

      Dividends paid to shareholders                     (278.8)     

(256.1)

      Purchase of treasury stock                             --      

(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
                                                          =====      ======

    (a) Pension plan contributions                       $169.5      $123.0



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

    (Millions of dollars)

    1. GLOBAL COST REDUCTION PLAN

Third Quarter 2009

During the third quarter ended 30 June 2009, 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 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 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 Company's
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.

2. 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 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 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.

    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 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     Nine Months
                                               Ended            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)
                                          =====  ========   =====  =======

Polymer Emulsions Business

On 31 January 2008, the Company sold its Polymer Emulsions business to Wacker Chemie AG, its long-time joint venture partner. The Company recognized a gain on the sale of $89.5 ($57.7 after-tax).


    On 30 June 2008, the Company sold its Elkton, Md. and Piedmont, S.C.
production facilities and the related North American atmospheric emulsions and
global pressure sensitive adhesives businesses to Ashland Inc.  The Company
recorded a gain of $30.5 ($18.5 after-tax) in connection with the sale, which
included the recording of a retained environmental obligation associated with
the Piedmont site.  The sale of the Elkton and Piedmont facilities completed
the disposal of the Company's Polymer Emulsions business.

The operating results of the Polymer Emulsions business have been classified as discontinued operations and are summarized below:

                                                Three Months   Nine Months
                                                    Ended         Ended
                                                   30 June       30 June
                                                2009    2008  2009     2008
                                                ----    ----  ----     ----
    Sales                                        $--   $31.4   $--   $261.4
                                                 ---   -----   ---   ------

    Income before taxes                          $--    $1.9   $--    $17.5
    Income tax provision                          --      .8    --      6.3
                                                 ---      --   ---      ---
    Income from operations of discontinued
     operations                                  $--    $1.1   $--    $11.2
    Gain on sale of business, net of tax          .4    18.5    .4     76.2
                                                  --    ----    --     ----
    Income from discontinued operations,
     net of tax                                  $.4   $19.6   $.4    $87.4
                                                 ===   =====   ===    =====

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.

3. 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 Chapter
11 bankruptcy protection on 6 January 2009.  Sales and operating income
associated with this customer are not material to the Tonnage Gases segment's
results.  At 30 June 2009, 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).

4. PENSION SETTLEMENT

    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 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 June 2008, the
Company recognized $1.0 and $28.7 ($17.9 after-tax, or $.08 per share) of
settlement charges, respectively.



    5. SUMMARY BY BUSINESS SEGMENT

                                           Three Months          Nine Months
                                               Ended                Ended
                                              30 June              30 June
    (Millions of dollars)                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        (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
     (Millions of dollars)                                  2009         2008
                                                            ----         ----
    Identifiable Assets (a)
      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) 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 Ended   Nine Months Ended
                                            30 June             30 June
    (Millions of dollars)               2009       2008     2009       2008
                                        ----       ----     ----       ----
    Capital expenditures - GAAP
     basis                            $312.7     $272.4   $930.2     $795.2
    Capital lease expenditures
     under EITF No. 01-08               43.4       36.6    111.6      153.1
                                        ----       ----    -----      -----
    Capital expenditures - non-GAAP
     basis                            $356.1     $309.0 $1,041.8     $948.3
                                      ------     ------ --------     ------

SOURCE  Air Products
    -0-                           07/22/2009
    /CONTACT:  Media, Betsy Klebe, +1-610-481-4697, klebeel@airproducts.com;
or Investors, Nelson Squires, +1-610-481-7461, squirenj@airproducts.com, both
of Air Products/
    /Web Site:  http://www.airproducts.com /
    (APD)

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

PR
-- PH49845 --
3645 07/22/200906:00 EDThttp://www.prnewswire.com

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